Key John: Debate on Prime Minister’s Statement 
Key John: Debate on Prime Minister’s Statement 
[Volume:670;Page:16495] 
Rt Hon JOHN KEY (Prime Minister) 
: 
 I move  
That this House express its confidence in the National-led Government and commend its programme for 2011 as set out in the Prime Minister’s statement to Parliament 
. The year 2011 will be a very important year for New Zealand. For one thing it will be the year that New Zealand hosts the Rugby World Cup 2011. Eighty-five thousand tourists from overseas will enjoy the finest of New Zealand. There will be a thousand events up and down the country and of course the mighty All Blacks will be on display on their home turf trying to win the Rugby World Cup in 2011. 
The year 2011 is also likely to be a year in which the world grows at a faster clip than it has done in the last 3 years. It will be a year to cement in the structural changes that are so necessary for our economy. It will be a year in which we must continue to move from having a debt-fuelled consumption-based economy to having one in which there are savings investments and exports. The year 2011 will be a year in which we must continue the rebuilding of the New Zealand economy—an economy that must be competitive. But maybe most of all 2011 has to be a year in which we do not write cheques that the New Zealand taxpayer cannot afford to cash. It is a not a year for wild promises; it is a year for good strong economics. There is no room for “pixienomics” in 2011. 
The year 2011 will also be an important year for the families of the 29 men who lost their lives at the Pike River mine. It is a year in which they deserve to be given answers and the royal commission will have good work to do. It is a year in which we will start in earnest on the rebuilding of Canterbury after the devastating earthquake and we will start the work on the 175000 claims that have resulted from that earthquake. It is a year in which we will tackle some very long-term problems and some long-term issues and in which will we turn round from the very expensive years of the previous Labour Government. The year 2011 will be a year in which we continue to work hard for the hard-fought gains between Maori and Pakeha. It is a year in which there needs to be hope and promise and aspiration. The year 2011 needs to be New Zealand’s year. 
There are some very positive signs. The global economy is starting to look much stronger and we are seeing higher commodity prices: the Fonterra auction was up by 7 percent just last week lamb prices are starting to rise and wool prices are starting to rise. Of course the Rugby World Cup is likely to have a big impact on the economy and we will have the stimulus impact from the earthquake rebuilding work. That may well be the case but we also need to lock in the trends that we have seen in the last 2 years of the National Government. Despite the fact that we inherited books that were a complete mess and despite the fact that we had to contend with the worst recession since the Great Depression in the 2 years that our Government has been in office after-tax wages have risen by 16 percent while costs rose by 6 percent. That is a 10 percent net gain in 2 years. I am ashamed to even talk about Labour’s record which was a miserable 4 percent gain over 9 long years. 
There are risks of course to the global economy. We have seen that in recent weeks with the risk that there will be a great period of unsettledness in the Middle East. There are also risks of course in China if there is an asset bubble. There are risks around the global capital markets. We saw that last year with regard to Portugal Greece Spain and Ireland. There is the risk that our exchange rate will continue to rise against a very weak US economy. There is the risk—although one would not know it was there from listening to the Opposition—that comes from a rating agency like Standard and Poor’s which has put New Zealand on negative outlook. So the situation could be patchy and there could be periods when it is a case of one step forward and half a step back but overall this economy has to change from being one based on consumption and property to being one based on savings and exports. 
One of the first things the Government will continue to work on is getting its books back in order. Over the last 5 years of the previous Labour Government spending increased by an average of $2.8 billion a year in every single year. My Government has managed to pull that back to $1.1 billion a year in the last 2 years. In Budget 2011 that increase is likely to be $800 million. The message is pretty simple: we are going to spend less we are going to borrow less and we are going to take the pressure off the Reserve Bank and off New Zealand interest rates. Any political party that has not even got out of January before promising $5 billion worth of more expenditure and that thinks this might help the New Zealand taxpayer is completely wrong. We have to get our books back in order. We cannot afford the decade of deficits that we inherited from the previous Labour Government. 
One of the places where we will be starting is in relation to the Public Service. New Zealanders deserve to have better value and better service. We have started to work on that. In the 2 years that we have been in office we have reduced fulltime-equivalent staff in the State sector by 5 percent. We have started the process of merging Government departments: Archives New Zealand and the National Library have been merged into the Department of Internal Affairs and the Ministry of Research Science and Technology and the Foundation for Research Science and Technology have been merged into one new Ministry of Science and Innovation. But we have a long way to go. There are 80 Crown entities all with their own boards; 38 Government departments; 70 portfolios; and 60 separate Budget votes. We are by international comparison bloated and inefficient. So there has to be change. We have put together a group of officials asking for advice on how we can streamline the Public Service. There will be core principles and they are simple: we need to ensure that in costing less we ultimately deliver more to the taxpayers of New Zealand. So a big focus of attention will be around the State sector. 
The second thing we need to do is to move towards having greater savings and investment. We cannot as a country continue to have external liabilities that are at 85 percent of GDP. We cannot be in the same company as Portugal Greece Spain and Ireland and if we are we will know what that picture looks like. We are prepared to be responsible economic managers; the Labour Opposition quite simply is not. For that reason we will be looking at not only the operating budget but also the capital budget. Late last year we recognised that New Zealand taxpayers have about $220 billion worth of assets. As a Government we want to acquire $33 billion worth of new assets over the next 5 years. We have a number of options. One is to borrow more. That will not be acceptable to the rating agencies. The second option is to not build that infrastructure. That will not deliver us the jobs and the economy we want. The third option is to release some capital from assets that we already own. Through the course of this year we will be finalising our policy on mixed-ownership models whereby we will be looking to control 51 percent of Meridian Energy Mighty River Power Genesis and Solid Energy. 
Let us understand the tests in those models. The first test is that the Crown will always as a minimum retain 51 percent control. The second thing is that we will be asking Treasury to provide advice to us on how we can ensure Kiwi mums and dads are at the top of the list for buying any of the equity that we release and that includes the $1.6 million KiwiSaver accounts. It is interesting that we as a Government want those $1.6 million KiwiSaver accounts and New Zealanders to invest in our economy and in our future and Labour wants them to invest in Australia. That is what Labour wants; Labour does not want to let them invest in New Zealand. We will ensure that the Crown financial institutes the Accident Compensation Corporation and the New Zealand Superannuation Fund invest in those kinds of assets along with iwi. 
So Budget 2011 will have a focus on savings and investment and it will take on board the information that we have received from the Savings Working Group. Again the message is very simple: we need to own more of our own future we need to fund more of our own upsides and we need to have a stronger economy. Although the members on the Labour benches cannot add the issue is quite simple. When we own $220 billion of assets we maybe release $8 billion to $10 billion of capital and we buy another $33 billion of assets we will end up owning more assets over 5 years not fewer. 
The economy has to change and become a more export-led economy. We have to get away from the position we inherited from Labour which was quite simple. It was a world where we bought more from the rest of the world than we sold to it. It was a world where in 9 years Labour created no new jobs in the export sector. 
Hon Phil Goff 
: Oh rubbish! 
Rt Hon JOHN KEY 
: It is not rubbish actually. It was the period when Labour spent so wildly that interest rates rose and the exchange rate rose. Maybe overall the way to test Labour’s commitment to exports is quite simple: turn back the clock to 2007 and look at exports under Labour in that year. Labour did about 10 things and do members know what happened? Exports fell in 2007. Why did exports fall? It was because in the end if we want to have a competitive economy we have to allow it the freedom to be competitive. We have to reform the Resource Management Act we have to have a flexible labour market and we have to be prepared to build the infrastructure and invest in science and innovation. 
This year the Government will be focusing its attention on extending the free-trade agreements that we have been working so hard on. At the top of the list of course is the Trans-Pacific Partnership which is an opportunity for New Zealand to have a free-trade agreement with the United States. We will also be looking to make further progress on our free-trade negotiations with Korea and on an exciting opportunity that is presenting itself in Russia. 
The next area in which the Government will be spending and doing some more work is infrastructure. This year we will begin the roll-out of the $1.5 billion Government investment in ultra-fast broadband—not just in urban communities but in rural communities right across the country. We will be building more roads including the seven roads that we have prioritised as roads of national significance. That will include the Waterview Connection which is the largest roading project to be undertaken in New Zealand. There will be more investment in public transport in roads and in rail particularly in Auckland and Wellington and the rebuild of KiwiRail and the KiwiRail Turnaround Plan will continue. 
In the end though the challenge for the Government is to continue to build confidence in the business sector so that it will grow invest and prosper. Maybe in the end that is the single biggest difference between the National Government and the Labour Opposition. We trust the private sector to create jobs. We do not think the only place where we should create jobs is in the core bureaucracy. We back New Zealanders to back themselves in order to invest and to employ other Kiwis. We will do all of this for a reason: we will build a strong economy so that we can build better outcomes with better value for money and better services. 
One area where we will be undertaking significant work is that of welfare reform. I say that one should judge a society by how it looks after the sick and the vulnerable but one should also judge a society by how many sick and vulnerable people it creates. The Labour members do not want to talk about their record when it comes to the sick and the vulnerable because this is what they did in 9 years: they increased the number of people on the sickness benefit and the invalids benefit by 50 percent. That is what they did. There was no mutual obligation whereby taxpayers agreed to look after others who were down on their luck and there was no attempt to take the 200000 children who are currently trapped in welfare-based homes and give them a better future. There is a simple message from the National Government: if one can work one should work. But that does not mean that we will necessarily cut costs on day one; we have to tackle the difficult issues of childcare of increasing skills and of making sure the required jobs are there. 
The year 2011 will also be a year in which we will focus on vulnerable children. There will be specific legislative changes to support children who are in State care. There will be legislation that will protect children from abuse. There will be tougher penalties for those people who fail to protect children at risk particularly in relation to those children who face death serious injury or sexual assault. 
There will be more progress made on Whanau Ora and on housing. Our yardstick will be how many people we can get into housing that they can afford; it will not be a yardstick of how many State houses we own. From 1 July 2011 reviewable tenancies for all new State house tenants will be a feature of our programme. 
In education we will continue to make gains. This year we will spend $1.4 billion in early childhood education which is up from $400 million a decade ago. The interesting thing is that under the previous Labour Government’s policy it increased the spending on early childhood education—we all accept that—but there was no significant change in the number of children who were being educated and there was nothing for those in the poorest communities. Those kids deserve to have better outcomes. This will be year 2 of national standards. We will continue to demand that every young New Zealander leaves school with the ability to read and write properly. The future of those students in secondary schools will be enhanced by our eight trade academies. We will harvest the fruits of the 16500 additional places in tertiary education. 
In health the message is pretty simple: less bureaucracy; more front-line services. No longer do we have 81 primary health organisations; we have 46. No longer do we have the bloated numbers in the Ministry of Health or in district health boards. There will be less bureaucracy. The results that we will achieve will continue to go in the way they have done with an increase in elective surgery. Four hundred more people per week will be seen for elective surgery—20000 people a year. 
The Government will retain its focus on law and order on the police and on the courts and on making the system more efficient. We will continue to be tough on gangs and tough on hardened criminals and to make sure that we have a focus on P. 
Let me finish with this: 2011 will be a big year. It will be the time when we work on reshaping the economy on delivering better services and on delivering better outcomes. At the end of the year we will go to the polls and put ourselves up against the Labour Opposition which has learnt absolutely nothing in 9 years. It has not recognised that the world has changed its shape in one way or the other. Labour is an Opposition that is in denial. We are the economic managers who are responsible and careful and who have a plan for the future. The Opposition wants future generations to pay for more and more debt. In the end when one is Phil Goff and one is not prepared to rule out anybody what is the message? It is that one is so desperate for power that one does not care what one has to promise with whom one has to get into bed and what one needs to do. We will be the Government of responsible economic management. Labour will be as John Roughan described it recently the “coalition of losers”.