Goldsmith Paul: Debate on Budget Policy Statement 
Text is incorporated into the Bound Volume 
Goldsmith Paul: Debate on Budget Policy Statement 
[Sitting date: 13 March 2013. Volume:688;Page:8486. Text is incorporated into the Bound Volume.] 
PAUL GOLDSMITH (National) 
: 
 I was very interested to hear Russel Norman the previous speaker talking about social mobility. I would have thought that the best way to achieve social mobility is to grow the economy. That is how you give people the opportunity to get on to the ladder of work to make some money and to get ahead. Everything that that member’s party stands for seems to be against economic growth and so by my reckoning is against economic and social mobility. 
This Government retains the support of so many New Zealanders at a time when many Governments around the world are struggling because it has maintained a strong and consistent economic policy. The pillars of that policy are first of all returning to surplus and getting this country’s books back in order. The Budget Policy Statement we are looking at today forecasts a modest operating surplus in 2014-15 of around $66 million which is a huge achievement taking it back from the $18 billion hole we had 2 years ago. That means we will stop borrowing for operational expenditure and we will be able to start repaying debt before too long. Why is that important? Because countries that meet spending and debt problems head on with control inspire confidence amongst investors. That reduces the costs of borrowing over time it increases the chances of investment in New Zealand and it better positions this country to grow. So I am very pleased. 
I am also very pleased that the bulk of the work in returning this country to surplus has been achieved by constraining the size of government and Government spending which is forecast to drop from a peak of around 35 percent of GDP down to 30 percent of GDP over the next 3 to 4 years. It is worth remembering that the previous Labour Government lifted us from Government spending of about 29 percent of GDP in 2003-04 all the way up to 34 percent by 2010 which is what we inherited. This was during the upturn of a cycle. 
We had a bit of a debate this morning with David Parker in the Finance and Expenditure Committee where he questioned those figures and claimed that most of the increase in Government spending was due to the earthquake and to Working for Families tax expenditure. [ 
Interruption 
] I am hoping Mr Bennett that you might listen to my speech. We were debating about the effect of Working for Families. What I would like to point out to Mr Parker is that I checked the figures and even if you take Working for Families tax expenditure out of it core government spending had increased from 28 to 33 percent during the time of the Labour Government which was a 5 percent increase. Putting it another way Labour grew the size of the core government by 18 percent or by nearly a fifth over only a few years. So that is the sort of thing that you do. 
I think that if anybody was going to apologise in the House today it should be the Labour Government for that massive increase in the size of government. Why is that important? Because basically I think the economy is divided into that part that is based on voluntary decisions—that is the private economy where people choose to either buy something or buy a service—and that of the State part of the economy which essentially is based on compulsion. I believe that we should be having a smaller State than we have got at the moment and this Government is very focused on getting it back to a reasonable balance after having an ever-expanding Government such as we had in the 2000s that was appropriating for itself the funds that entrepreneurs could have used to grow the economy. That is what we need in this country. 
We have talked about the other areas about rebuilding Christchurch and about getting better value for our public services but more important the fourth pillar of the Government’s work is building a more productive and competitive economy through a wide-ranging programme of microeconomic reform which we call the Business Growth Agenda. Also linked with that are the welfare reforms which are not meant to be mean or to save money but are there primarily because we believe work is a good thing—that seeing people getting out there and working and having earned success is an essential part of fulfilment in life. That is to free people from the dependency that FDR used to call “a subtle destroyer of the human spirit.” So welfare reform is one of the most important things that this Government is doing. 
Secondly when we look at the Business Growth Agenda it is ultimately about breaking down barriers to entrepreneurship. All of this is designed to give businesses the confidence to invest to grow and to create jobs so that we can build a more productive economy. 
So let us have a look at the sorts of things we are doing. Well funnily enough we hear from the Labour Party all about the crisis in manufacturing and the lack of jobs. I spent last weekend down in Hamilton celebrating the 75th anniversary of Gallagher Group one of New Zealand’s more successful manufacturing exporters. In fact it is a group that I wrote a book about before I was in Parliament. That company has a very interesting story. It is doing very well in a difficult time. It is continuing to succeed in an export manufacturing business despite the high dollar and is not complaining. It is getting ahead. 
When you look back over its history it went through massive times of transition from the 1970s and 1980s when as an exporter it basically paid no tax—in fact it received tax back from the tax department in the late 1980s—until a sudden transition in the late 1980s and early 1990s to a situation where it began paying the full 33 percent tax on its profits. So the Gallagher Group survived that transition and now it goes on dealing with a fluctuating dollar which is something that exporters face all around the world. It has learnt over the last 15 to 20 years how to handle those fluctuations—to be careful to hedge internally and to make sure that there are a lot of components bought in US dollars. It all makes it possible for the company to survive. 
So when we look around despite the stories of gloom in the manufacturing area there is actually growth going on in manufacturing in New Zealand. There are plenty of companies that are doing well and plenty of jobs are being created. We have just to look at the food manufacturing area for example where there are more than 1000 jobs in constructing and working in Fonterra’s new Darfield milk-processing plant. There are 300 new jobs at Tegel’s new factory in west Auckland. Yashili New Zealand Dairy Co. Ltd plans to create a Chinese-owned milk-processing plant in Pokeno. 
So there are lots and lots of manufacturing jobs being created in this economy right now and this is why I have every confidence in this Budget Policy Statement. It reflects a Government that is thinking very carefully and guiding this country safely through a difficult period on to what will be a brighter future round the corner for all New Zealanders. Thank you very much.