Parker David: Supplementary Estimates — Imprest Supply Debate 
Parker David: Supplementary Estimates — Imprest Supply Debate 
[Volume:673;Page:19524] 
Hon DAVID PARKER (Labour) 
: 
 I am surprised at the contribution from the previous speaker Amy Adams because it really does not ring true given that most New Zealanders are rightly worried about whether their jobs will be there next week and whether they will be able to meet the rising costs of living. Then when I heard Amy Adams say that her Government inherited an economy that was a cot-case I thought that I really did have to put the record straight because there is no doubt that the last Labour Government the fifth Labour Government was fiscally responsible. We ran Budget surpluses for 8 years in succession each one of which was opposed by National. It was National that opposed Budget surpluses and called for tax cuts which would have further fuelled the asset bubbles and the debt and inflation pressures that New Zealand along with the rest of the Western World had at that time. So when National tries to rewrite that history and say that we were fiscally irresponsible it is just not correct. In stark contrast the National Government has now got us to a position where this year we have a $16.7 billion deficit; so rather than running surpluses we are running a very large deficit. Why? Because the economy is stagnant and is not growing.  
I think the thing that disturbs me most about the Budget and the supplementary estimates is that every time the Government comes back to this House and asks for more money to spend it has to open up and say that it is not collecting as much revenue as it thought it would because the economy is not going as well as it had previously predicted; and secondly it is having to spend more money than it was previously predicting. Every time it comes back and the deficit grows.  
After 2½ years of this current Government it is fair for the people of New Zealand to ask whether the Government is succeeding. When we ask whether it is succeeding we have to ask which measure we should use. I think we should be generous. I think we should use the measures that National was elected upon—the promises that it made. 
Moana Mackey 
: What were they? 
Hon DAVID PARKER 
: Moana Mackey asks what they were. The first promise was that National would close the wage gap with Australia and of course it has not. It has not. Despite record commodity prices in our major trading partners Australia and China the difference in income levels between New Zealand and Australia has widened. The gap has grown. National’s second promise was that it would cause a step change in the economy. Well that has not happened. That phrase has even dropped out of those members’ language.  
The more concerning thing for me is the underlying trend. In the documents that the Minister of Finance is required to produce as part of the Budget two statistics really worry me. The first is our current account deficit. The current account deficit does blip into positive figures for this year in substantial part because we get the reinsurance proceeds from the Canterbury earthquake coming into New Zealand. Therefore that is new money coming into the economy which together with the money we get from our exports overseas means that for this 1 year we have a current account surplus—a very small one.  
From every year here on until the end of the projection period New Zealand’s current account deficit gets worse as we spend more as a country than we earn. Every year New Zealand’s current account deficit grows so that by the end of the forecast period it is back to 6.9 percent of GDP which is a very substantial current account deficit. That flows through to New Zealand’s net asset position in the world or more correctly in our case our net debt position in the world because New Zealand increasingly owes more and more money overseas. I am not talking just about the gross debt or the total amount of debt but about the total indebtedness that New Zealand has to the rest of the world and what the rest of the world owns in New Zealand less what we own overseas. That is the measure that the Hon Bill English used repeatedly in this House earlier in the year as being what he said was the major indicator of New Zealand’s failing economy—that our net indebtedness position in the world was getting worse.  
Then what does this Budget show? It shows that in every year hereafter it gets worse still so that by the end of the projection period if National is re-elected and is in Government for 6 years New Zealand’s net indebtedness or its net international debt position will get worse. It rises from minus 78.6 percent of GDP this year to minus 85.3 percent of GDP by 2015. This is all predicated on the National Government being re-elected at the end of the year which we of course do not accept but if National has its way and is re-elected it is effectively saying that this great aspirational Government for New Zealand makes us poorer every year.  
When Bill English goes home in the evening he says: “Honey I shrank the economy.” That is his key line: “Honey I shrank the economy.” or “Honey I grew the debt.” because New Zealand’s net international position gets worse every year from here on according to the Budget projections.  
The difference between what the Government is proposing and what the Labour Opposition proposes is that we really do think there is a need for material structural change in the economy. Material structural change in the economy is necessary if we are to avoid the trend that the current Government has for us of getting poorer as a country.  
The economic settings of the country have been largely unchanged in the last couple of decades. There has been a little bit of a tweak made by the Government in terms of its income tax policy—which in our view disproportionately favoured those who are already best off; the top 10 percent of income earners garnered 42 percent of the income tax cuts—but the basic shape of the economy will not change as is evidenced by the fact that our current account deficit goes up and our net debt goes up as well. The only way that we will change that is if we change the breadth of our exports. We cannot catch up with the rest of the world and do better just by selling more primary produce.  
Primary produce will continue to be important and Labour will support those traditional export industries but where we differ from the Government is that we do not think that continued success in primary produce plus some more of what are generally low-value jobs in tourism will be enough to make the difference that needs to be made in New Zealand so that once again we start getting wealthier as a country rather than poorer.  
Mr English in his contribution a few minutes ago said we needed to get over borrowing for consumption yet that is what this Budget shows. We have a return to a current account deficit and more borrowing much of which will be consumed leading to higher levels of debt long term. The only way out of that is to have broader exports not just more exports from the pastoral sector. 
The Hon David Carter came to the Commerce Committee on the estimates. In response to questioning by me as to why the Government was favouring subsidies for new irrigation schemes in the agricultural sector over support for other sectors of the export economy Mr Carter after denying for a start that it was a subsidy in the end turned round and attacked me and said: “Well the Labour Party might not support the agricultural sector but National does. It’s the only game in town.” Those were his words: “It’s the only game in town.” It is that narrow vision from National that has New Zealand destined to continue down this route of getting poorer every year.  
We must broaden our exports. To do that we need to favour our export sector with policy. We need changes to monetary policy. We need improvements to savings rather than undermining KiwiSaver. We need changes to our tax system to make it fairer to exporters and less advantageous to the speculative sector. We need a range of microeconomic changes including things like a research and development tax credit the likes of which the Labour Party has recently announced. We need a lot of additional sectoral-based initiatives in new areas of our economy that can produce export jobs. Without it the trend will continue: rising debt and more people moving to Australia. We are fast becoming a training ground for people who do not have a good job in which to utilise those skills so they move to Australia. That is so much so that Julia Gillard on a recent visit said that Australia views New Zealand as a good country for the source of well-trained immigrants to Australia who build that economy stronger at a loss to ours. That is no more evident at the moment than it is in respect of the building trades where despite the need for skilled trades to rebuild Christchurch and build in Auckland we are losing them to Australia too.