Cunliffe David: Budget Debate 
Cunliffe David: Budget Debate 
[Volume:654;Page:4082] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I take the opportunity to briefly congratulate the member who has just resumed her seat Metiria Turei on behalf of the Labour Opposition. We congratulate her on becoming the new co-leader of the Green Party and look forward to working closely with her and her colleagues in the years to come to demonstrate to New Zealanders that there is an alternative to the current Government: one that is red with a good hint of green. Growth that is not sustainable is not true growth; it is stealing from the future to give to the past. Although we may not have all the perfect answers we look forward to working together with the Greens on the same pathway. We know that that pathway is not slashing the conservation budget gutting the Resource Management Act weakening controls on our environment by the Overseas Investment Office review— 
Hon Shane Jones 
: Squandering fisheries. 
Hon DAVID CUNLIFFE 
: —squandering fisheries or pretending that climate change does not exist. New Zealanders face a clear choice and it will come from this side of the House. 
The importance of the Budget debate is to provide the public an opportunity to reflect in more depth on the issues that have been raised in the Budget. It is incumbent on us to understand how this Government and the Prime Minister can look in the eye the 50-something-year-old New Zealanders who have been told in the last week in effect that they can no longer count on superannuation as they knew it that the superannuation accord is dead and gone and that there is no way that their pension can be funded on current assumptions. How does Bill English look in the eye the young people of this country—the bright and hopeful Generation X and Generation Y or the vulnerable Maori and Pasifika young people—who will be the first to be thrown on the unemployment queue and say to those people that not only do they have to make it on their own but they have to pay for the superannuation of our old people and that the Government does not have the courage to partially pre-fund them now. That is why in the last week the level of insecurity in our nation has grown as the older and middle-aged New Zealanders wonder how they will provide for themselves and their families and our younger people wonder why on earth it should be left to them to make up the difference. There are 37 billion reasons why there is no free lunch and the Government is not answering any of them. 
If we strip it down there are four key issues that are wrong with this Budget. Firstly it replaces one great con with another. It says there is a free lunch: we can have all the superannuation benefits we have now we do not need to pre-fund superannuation and we will not have to make up the amount out of taxes. Secondly it exposes for ever the great con of election 2008. A party campaigned for tax cuts it knew it could not afford and rammed them through Parliament in a charade before Christmas and now has to own up and say the cuts could never have been done. Thirdly this Budget lacks vision and strategy it is a “Road to Nowhere Budget” it slashes the programmes that would have fuelled the engine of growth and it slashes the confidence of businesses in this country that there is a pathway through this thicket of recession. Finally and perhaps of most concern to members opposite it is a political time bomb. Although it preserves something of the previous Government’s programmes for 1 year it defers to next year and the one after which happens to be an election year the savage cuts that are unavoidable if projections are to be believed. Members opposite know this. 
I return to the first of those four themes. Budget 2009 replaces one great con with another. It is the great con of superannuation; 37 billion reasons why it cannot be true that we can have our lunch and eat it too. There are 37 billion reasons why our young people either are being asked to pay the bill for middle and older New Zealanders or will have their pension entitlements cut. They cannot have it both ways. Mr English cannot have it both ways. The superannuation accord is broken. Superannuation entitlements as we knew them are dead and New Zealand has been plunged into a generational debate about superannuation that I bet that Government did not want to have because it has been caught telling porkies once again on the same day it broke the last monumental con to New Zealanders. 
Let us reflect on the only two real counterarguments that Mr English has raised to that proposition. The first is that pre-funding does not matter as the Superannuation Fund was only ever going to pay 12 percent of the cost of superannuation. We checked back on the previous Government’s analysis and statements and it turns out that after tax the fund was going to pay 25 percent of the cost of superannuation. That is now largely gone because the Government has created a $37 billion hole with no way of filling it. Mr English repeated the second counterargument today in question time. He asked if I had a mortgage whether I would invest in superannuation. Well most New Zealanders have mortgages and we have been encouraging them to have savings and a superannuation plan without which this country’s finances are screwed. So of course it is reasonable to have a mortgage and a superannuation plan because people cannot eat their houses. They either have to sell their houses to pay for their retirement or they have to have a pension plan too. Thirdly it is completely illegitimate to say that a Government is borrowing for superannuation any more than they might be borrowing to fund tax cuts of which it gave one-third to the top 3 percent of earners. They cannot have that argument both ways either. 
The second great theme of this Budget is that is exposes the great con of 2008. There has been a lot of public resonance on this one and it is not because the Government is repealing the tax cuts. Everyone knew the tax cuts were ridiculous everyone knew they were unaffordable and people are relieved to have the truth told. The tax cuts were ridiculous because on 1 April the Government took $750 million off the poor and gave it to the wealthy. The Government gave one-third of the total value of its 1 April tax cuts to the top 3 percent of earners. No wonder people are glad to see the tax cuts go! 
Hon Member 
: How much did they get? 
Hon DAVID CUNLIFFE 
: One-third to 3 percent of earners. Look at the members of the Government hanging their heads in shame. Did they really campaign throughout 2008 to do that? 
I note the cynicism of it. Mr Key is a smart guy. New Zealanders think he is a smart guy. He was on the Federal Reserve Board of New York no less which is a pretty good achievement for a boy from Christchurch. He expects us to believe that Lehman Brothers and his old firm Merrill Lynch could have hit the wall and he did not notice. Two months before New Zealand’s general election Lehman Brothers went bankrupt. One month before the election the IMF warned of a catastrophic recession yet Mr Key did not notice. He gave his personal guarantee to 3 years of tax cuts. He wrote that down on a piece of paper and here is the rub: that personal guarantee is worth exactly the same as his personal guarantee on superannuation. That is why New Zealanders are worried now. 
I have only 1½ minutes left and there is so much more to say; I will have another call later. Let me introduce two other key things we have to say. The first is that this Budget is a road to nowhere. As Rod Oram questioned what was Bill English doing for the last 6 months? Could members imagine even Sir Roger Douglas being made Minister of Finance and twiddling his thumbs for 6 months while Rome burnt? There are no new ideas in this Budget. There is no positive solution. There is no programme for growth. It is a road to nowhere. Even the programmes that were there—the research and development tax cuts KiwiSaver economic development with New Zealand Trade and Enterprise to get exports up—are all gone or cut back. What is there to replace them? There is nothing. There is no vision no strategy and no plan which means no confidence for New Zealanders and Kiwi businesses that they can grow their way through. Was that not the great lesson of the 1930s? Mickey Savage and Franklin Roosevelt built confidence with a plan. Bill English has no plan and that will drive New Zealand deeper into debt and deeper into the ground. 
Finally there was the political time bomb. National did not want to break the commitment that it would completely gut social spending in the first year so with a bit of sleight of hand it managed to keep most of it going for a year and then flatlined it. Only an idiot would pretend that there are no automatic inflators in health costs or superannuation. As a former Minister of Health I can tell members that one cannot avoid about $500 million a year of extra spending just to stand still because of the costs of medicines and our ageing population.