Bishop ChrisBUDGET DEBATEDebate resumed from 30 May on the Appropriation (2024/25 Estimates) Bill.Hon CHRIS BISHOP (Associate Minister of Finance): Thank you very much Mr Speaker. Well I adjourned the Budget debate—when was it?—two or three weeks ago. A lot happened has since then and we were about to begin Budget urgency. But the debate on the Budget—a very good Budget produced by my good friend and colleague the Hon Nicola Willis—continues. I wanted to run through some of the highlights as I see it from the Budget because it was a very good Budget. It was a challenging Budget delivered in challenging times for New Zealand. I want to start with that proposition because it is clear to anybody out there walking around outside of Parliament in the real world that it is challenging out there. Interest rates are high. The official cash rate is at elevated levels. Inflation is still outside the band at over 4 percent. There is a palpable sense out there in the public that there are tough economic times and people are feeling that. We acknowledge that on the Government benches and I make the point that better times are ahead but it will be tough for quite some time because we are dealing with the hangover after the night before. We are dealing with the feeling that happens when you wake up a bit late at 11 o'clock on a Sunday morning. You start craving hash browns bacon and sausages and in my case a bit of black pudding and you think Oh gee last night I had a bit too much pinot noir from Central Otago." or in my case some whiskey and that's kind of what happened to New Zealand. We printed a lot of money and Mr Robertson came along and spiked the punch at the same time and fiscal policy was not a friend to monetary policy. In fact we just went full tilt on the accelerator. We printed a lot and we spent a lot and every year that Grant Robertson was the Minister of Finance he exceeded his Budget allowance. So he'd always turn up at the Budget Policy Statement towards the end of the year and say "Next year I'm going to spend a certain amount of money". It was normally about $2 billion to $3 billion and every year he would exceed it—every year.It's a bit like my diet. I always wake up on New Year's Day and say "Oh this year I'm going to really get down to 90 kilograms." and it never happens. It's a bit like that with Grant Robertson: he never met his allowances. As a result the spending just rolls on and as financially literate members know—they're normally on the side of the House—those numbers just cascade on top of each other. So over time you end up with enormous fiscal largesse. That's how we ended up with an 80 percent increase in Government spending in six years—because he just added to the allowances every year. They just built and built and built and built and we've ended up in the fiscal situation we're in to the point where—and this is in the Budget documents—Treasury advised there is a structural deficit. There is a structural deficit.So the first thing this Budget does is it starts the process of fiscal restraint and that is extremely important. I find the attitude of members opposite towards this bizarre because on the one hand—and Chris Hipkins is the sort of past master of this—Chris Hipkins says "Well Nicola Willis is borrowing all this money—tut tut tut. What about all the debt?" In this sort of new-found road to Damascus conversion of the friend of fiscal policy he pretends to be worried about the debt and then on the other hand he says "But you're cutting funding to this. You need to increase spending here. What about this? What about that?" He's never seen something that's a Government programme he doesn't want to increase spending on. Well actually Government is about hard decisions. Government is about making tough choices and the last Government pretended that they could just continue to increase spending and never confront trade-offs. As a result the money hose just kept being spouted and money just continued to flow to the point where we have an 80 percent increase in spending and we have massive debt that we are going to need to repay. So there are lower allowances in this Budget and we intend to stick to them.We start the process of fiscal restraint and we have gone through line by line and made a series of savings as a result of this Budget. Some of those decisions were hard. I've talked publicly about the first-home grant decision where we had to make the difficult choice to end first-home grants as low-value expenditure and reprioritise that money to social housing expenditure. Members are sort of crying a bit opposite but they know I am right when it comes to effective public—Hon Jo Luxton: You're not right.Hon CHRIS BISHOP: Oh I am right—I am right. This is effective public policy. Subsidising demand for housing does not create new houses. The way in which you create new houses is by fixing the building system fixing the resource consent system opening up land—Chlöe Swarbrick: Changing incentives Bish. Hon CHRIS BISHOP: —and funding infrastructure and that is what we are focused on. And I know Chlöe Swarbrick agrees with me. Isn't it interesting that the Labour Party have not promised to bring back the first-home grant? They've criticised us for cutting it but they have not promised to bring it back and I find that intriguing.The second thing this Budget does—and it flows from the first—is it reprioritises funding from the back office to the front line. We are unashamed about reducing the size of the bureaucracy and making sure we employ more nurses and doctors and police officers. One of the best investments in this Budget—and I want to give a shout out to the hard-working New Zealand First on this and my good friend and colleague Casey Costello—is the commitment to hiring 500 new police. We saw the first fruits of that on the weekend with the new police on the beat in our CBDs and isn't that going to be a wonderful thing? When I go out there into the real world people say to me "We want to see cops on the beat; we want to see them walking down our main streets; we want to see them out and about." and that is a real way of deterring crime in and of itself. That is just one example of the kinds of prudent and sensible investments you can make when you prioritise your resources. When you do the opposite and you just pretend that money is free and that there's a magical fairy at the bottom of the garden who can just keep inventing money essentially you don't confront those tough trade-offs and you end up in the situation we're in which is a real situation of fiscal crisis where we have to make hard decisions.The other thing this Budget does is deliver tax cuts—tax relief for hard-working New Zealanders. Now there were a few people out there during the lead-up to the Budget—commonly they're commentators—saying things like "Well the Government should really cancel the tax cuts." It's an interesting proposition—it's an interesting proposition. The thing about that proposition is it would have required the Government to break the central policy that the Government campaigned on. So I just think it's worth reflecting on—I mean the Labour Party never believed in tax cuts in the first place. They've never seen a tax increase they weren't in favour of and they've never been in favour of tax relief ever—ever. When the Government books are not going so well they say "Now is not the time for tax cuts." When the Government books are doing well they say "Now is not the time for tax cuts. We should really do something else with the money." You can never win. They'll never be in favour of tax relief and it goes to the central difference between the parties. On this side of the House between the ACT Party the National Party and the New Zealand First Party we believe in letting New Zealanders keep more of their own money because it's their money and we believe they can spend it generally better than the Government can.We also believe in this: we believe that after 14 years of fiscal drag it's time to remedy that situation. More and more people are pushed into higher and higher tax brackets paying more and more of their money to the Government every year to the point now where for people on the minimum wage towards the end of their take-home pay some of that money is in the middle-income tax brackets. That is wrong. That is crazy. Sensible countries do something about it and we are now doing that.As I say the Labour Party need to remember who they purport to represent because most of these tax relief benefits flow to low and middle income New Zealanders. On average households benefit by 60 bucks a fortnight; households with children $78 a fortnight; 94 percent of households will benefit from the tax package in this Budget.I was so proud to see that legislation go through straight away on Budget night because I know that come 31 July a huge number of New Zealanders are going to wake up with more in their back pocket as a result of that package. They'll be able to afford things they weren't able to afford before: new school shoes for their kids music lessons and actually making it easier to pay the rent on time. Those things are important. That's what the Budget package does and that's why I commend this Budget package to the House."