Budget Debate 
Budget Debate 
[Volume:654;Page:4265] 
Budget Debate 
Debate resumed on the Appropriation (2009/10 Estimates) Bill. 
LYNNE PILLAY (Labour) 
: 
 When listening to this Budget debate one cannot help but note the contrast between this Government’s Budget and the Budgets and policies of the previous Labour Government. Extraordinary policies came in under Labour Budgets and at other times things such as Working for Families KiwiSaver 20 free hours’ early childhood education interest-free student loans apprenticeships primary health organisations and of course the Cullen fund which gave guaranteed funding— 
Hon Darren Hughes 
: English fund. 
LYNNE PILLAY 
: It is the English fund now but it was the Cullen fund when it had money in it. Funding for superannuation was put aside and guaranteed for all New Zealanders. People like the previous speaker Jonathan Coleman are fast approaching the age when they will be drawing on superannuation. I can see the anxiety all over his face. He knows as a baby boomer that his superannuation is at risk. 
We saw Bill English getting accolades from his team in the Budget debate because National did not cut interest-free loans for students or contributions for Working for Families. The fact that Bill English treated those entitlements and that funding as somehow discretionary and as if it was a plus or a bonus that it was not cut shows the National Government’s true colours. I do not trust the National Government and the longevity of those policies. The policies have made it through this time but what will happen in times to come? National is a party that was vehemently opposed to those policies. It labelled Working for Families as socialism by stealth and interest-free loans as totally unaffordable totally irresponsible and some sort of ridiculous action from the then Labour Government. We saw the funding being allowed through and not cut this time but I ask all students and families out there to watch this space and watch what happens in the future. 
We have already seen the slashing of employer contributions to KiwiSaver from the high 4 percent maximum employer contribution to the now low 2 percent. This Government is intent on shattering the dreams and the security of people in their retirement. Dealing to the New Zealand Superannuation Fund must be one of the most irresponsible actions of this Government and indeed there have been many. With the slash of a pen a big hole of $37 billion was made in the future funding for superannuation. The Prime Minister says that it is all right and that we have his personal guarantee that superannuation will be maintained. Nicky Wagner said in the House today that it would be maintained at age 65 and at 66 percent. We had also heard our Prime Minister John Key say that we had his personal guarantee that we would get tax cuts. The National Party campaigned absolutely solidly on personal guarantees for tax cuts. But what did we hear? “Sorry we cannot afford it.” I ask what any Government will be in a position to do when all of this money has been sucked out of the Cullen fund—money that was to have provided superannuation for people. 
These times call for certainty and investment in people: in skills training and jobs. The boost from the previous Labour Government’s investment in skills and training had absolutely never been seen before. I saw Helen Clark when she announced the return of apprenticeships at a public meeting. I saw her get a standing ovation. I ask members why she got that standing ovation for the announcement of the return of apprenticeships. Was it just young people who applauded? No it was not. It was older people who saw a future for their children for their girls and boys—to have an apprenticeship that would give them the skills to enable them to have a fantastic career in the trades. Applause also came from business people who saw a big gap in training with no support from the National Government in the 1990s. Those business people saw a future in terms of developing the skills that enabled our economy to thrive while Labour was in Government. When apprenticeships were reintroduced those accolades did not come from just young people; they also came from businesses and parents alike. 
This National Government had its Job Summit which was going to deliver. Representatives from the whole of New Zealand were invited. Not many I have to say were from the disabilities sector. There was no one from the Labour Party. But representatives from the rest of New Zealand were working with the Government to find ideas—bright new wonderful ideas—for innovation. I congratulate in this House all those businesses those organisations the Council of Trade Unions and the myriad of organisations that did front up. I offer my sympathy to those who were not invited and I know there were many who could have made a meaningful contribution. But to those who did take part I say that I know and acknowledge that there were many great ideas. I waited as did my colleagues with real anticipation to see where in this Budget that funding would be for the skills innovation training and all the things that would boost productivity and would work through the difficult situation this country is in. But there was nothing. There was absolutely nothing in terms of developing skills and developing innovation. There was nothing except perhaps the cycleway—$50 million for the cycleway. I ask Government members how many jobs will be created from that cycleway. They have been asked before and we have not had a response. 
Speaking of jobs we have not seen job growth but instead we have seen job cuts. We have seen the public sector decimated with the loss of some 1200 to 1500 jobs. It was not a capping which was promised. The Government said that public sector jobs would be capped. No; we have seen the axing of jobs. We have seen cuts in education in the primary secondary and tertiary sectors. And where have we seen money being injected into schools and the education sector? We have seen an injection of cash into private schools. When we look at the tax cuts that happened we see that they went to the rich. We are now seeing the exact reverse of Robin Hood’s policy. We see this Government’s tax cuts and its funding of private schools at the cost of public schools as the robbing of the poor to give to the rich. 
We can talk about déjà vu in other areas. In 1991 the previous National Government cut out the Apprenticeship Act and dumped the new pay equity legislation. National has returned to Government and what do we see? There is no money for skills training and innovation research and development tax credits have been axed and pay equity has been dumped again. Social workers and special needs assistants in schools in this country were well on their way to having their pay gap addressed. One of the chants we heard from National before the last election was that it would close the pay gap. Well that was one opportunity to see two very valued groups of workers get a pay jolt. What did we see? We have seen that project axed. We have seen no funding for wage increases for public servants or for those who really need it. The losers in this Budget are our families our children public servants teachers tertiary education staff low-paid workers and our environment. Those are the losers. This is a mean-spirited Budget. It is an insult and an assault on the people of this country. Thank you Mr Assistant Speaker. 
JOHN BOSCAWEN (ACT) 
: 
 It is a pleasure to stand and take a call in this Budget debate. We have heard a lot over the last 2 days about the need to preserve employment the need for fiscal stimulus and the need to keep the economy growing in the face of a worldwide recession. One of the reasons I believe that we are in a recession is due to the many hundreds of millions of dollars that have been lost in finance company collapses over the last 2 or 3 years. In fact it is estimated that some $5 billion to $6 billion is tied up in moratoriums and receiverships or has otherwise been lost. This is a subject I have spoken on many times since giving my maiden speech in Parliament in November and I have called for an inquiry into the collapse of finance companies at the Commerce Committee level. 
Just yesterday as I stood on the corner of New North Road and Mount Albert Road campaigning in Mt Albert at 7 o’clock in the morning—and a frosty morning it was—I came across a local teacher who told me about his parents who had mortgaged their home in a Blue Chip New Zealand scheme. Unless the situation was resolved in the next 6 months they simply would not be able to carry on and would be forced to sell their home. 
The last time I spoke on this subject I talked about the idea that any company that wanted to vary its moratorium or to bring a proposal to its bondholders should first of all seek the approval of the court rather than go back to its bondholders. I have to say that was not my original idea; it was an idea I gleaned from listening to a person with expertise in this area who was talking on this issue. I wish that I could give him credit this evening but because of the rules of Parliament I cannot but I hope to do so at some stage in the future. I said at the time that I was aware through discussions I had had with colleagues that there was at least one company that presented to its bondholders a proposal for a moratorium that the directors did not believe could be achieved. In fact I was told that the directors of this particular company were secretly planning to go back to their bondholders 12 months hence to seek a variation of that moratorium. 
When making those comments I did not specifically identify the company involved although I understand that some 12 companies or more are involved in moratoriums. I then went on to discuss certain aspects of the moratorium on the Hanover Finance group of companies and held up in my hand the Hanover Finance document relating to that moratorium. Last week I received a letter from David Henry the independent chairman of Hanover Finance. I should record that David Henry was appointed on 1 April this year subsequent to the passing of the moratorium. He alleges that my comments contained a number of errors or omissions that needed to be brought to my attention. I totally refute the comments of Mr Henry; I do not believe I made any errors or omissions. Mr Henry went on to allege that in holding up the Hanover Finance moratorium I was insinuating that Hanover Finance was the company I was referring to when I said that there was at least one company out there that took a proposal to its bondholders that it did not believe it was capable of fulfilling. 
I do not believe I insinuated that whatsoever; they were two totally separate topics. But for Mr Henry’s benefit and for the benefit of members of this House I am very happy to record that Hanover Finance was not the company I was referring to. In fact at the end of my speech I intend seeking the leave of the House to table the letter I received from Mr Henry dated 22 May. 
However Mr Henry’s letter raises a number of other issues that I think further confirm my view that if a company wants to vary its moratorium it should go back to the court rather than to bondholders. I think that if one of the options we as parliamentarians have is to pass a law that would be the case. Mr Henry disputes my calculation as to how much the Hanover Finance shareholders would be putting into the moratorium. In particular he refers to the fact that the directors estimate that they put $66 million of additional equity by way of property into Hanover Finance. That may or may not be true and certainly that is the directors’ estimate so without a question that is what the directors have said. 
But one of the things that is not disclosed in the moratorium document—and I have it with me; it is a rather substantial document—is what debt is associated with those properties. What is the debt if in actual fact $66 million worth of property was transferred into Hanover Finance with no debt whatsoever? If those properties were to achieve only 50c in the dollar then without a doubt there would be a $33 million additional capital contribution. If however those properties were worth $166 million and there was $100 million of debt associated with them it would require only for the proceeds of sale to drop from $166 million to $100 million before the net proceeds would be wiped out. In this rather extensive document I have in my hand I cannot see any reference to the actual gearing on those properties. It does make reference to the fact that the detailed experts report is available on the website. My staff tried to find that report today on the website and have been unable to do so. I guess not surprisingly it has been taken down because this was passed into law 6 months ago. 
What I am highlighting is that when one is dealing with property and particularly vacant property—and I understand that a number of the properties passed into Hanover Finance may well have been vacant residential sections—one is dealing with very very uncertain values. If a company wanted to vary its moratorium I think it is quite prudent for parliamentarians to require the company to go to the court. I repeat that I have no evidence that it was Hanover Finance which is what the Hanover Finance chairman believes. 
One of the other issues that Hanover Finance raises in its letter is the level of disclosure. It suggests that I was being disingenuous and was suggesting that the report of PricewaterhouseCoopers was not fully reflected or that its views were not fully displayed. Hanover Finance makes the point that there is very very full disclosure in this document. I acknowledge there is very full disclosure; it is a very substantial document and the very detailed experts report was available on Hanover Finance’s website. One of the things that I note is not in the document or I certainly could not see it is the fact that over the last 2 years prior to the moratorium the directors of Hanover Finance passed dividends of $84 million to shareholders. That is my understanding. I cannot see a reference to it; I read about it on blog sites. That has no doubt been disclosed in the annual reports of Hanover Finance in previous years but I cannot see it particularly in this moratorium. I would have thought that that is the sort of information that would be disclosed. The chairman of Hanover Finance Mr David Henry has offered to meet me and to brief me fully on Hanover Finance’s finances. I intend taking him up on that offer and if necessary raising this issue on a future occasion. 
The House is involved in a Budget debate. We are discussing issues of the economy and how we reflate the economy. One of the reasons we are in this situation is that many hundreds of millions of dollars have been lost; literally billions. Those are the losses of hard-working people mainly the elderly but not totally. They are the constituents of all of us in this House. I repeat I made a speech 3 weeks ago calling for the House to make a law that would require that any company wanting to vary its moratorium would first have to go to a court and I believe that to be very very much the case. That is my speech. 
I seek the leave of the House to table a document from Hanover Finance to myself dated 22 May 2009. 
The ASSISTANT SPEAKER (Eric Roy) 
: Leave is sought for that purpose. Is anyone opposed to that course of action? There appears to be no objection. Leave is granted. 
Document by leave laid on the Table of the House. 
H V ROSS ROBERTSON (Labour—Manukau East) 
: 
 Kia ora tatou. No reira e te Whare e nga iwi e nga reo e nga hau e wha tena koutou tena koutou tena koutou katoa. I stand this afternoon to speak for the people of Manukau East as their member of Parliament. It is a community with 185 different ethnic groups residing within it. It is represented not only by me as the local member of Parliament but also by the Hon George Hawkins Su’a William Sio and Dr Ashraf Choudhary. [ 
Interruption 
] We have no confidence in this Budget. I see that Mr Hide is not surprised at that. We have no confidence in this Budget because it does not have a plan to protect and create jobs and to support New Zealanders through the economic crisis. 
This Budget fails on three counts. First it fails to invest in people and to develop the innovation the skills and the training that give us a strong economy. 
Hon Dr Jonathan Coleman 
: What does that mean exactly? 
H V ROSS ROBERTSON 
: The member knows exactly what it means. The reality is that this Government has failed with the Budget on three counts. The second count is that the Budget fundamentally undermines the future well-being of New Zealanders by creating a $37 billion hole in our future funding for superannuation. I feel for those in the 30-40 year age group. Thirdly the Budget repeals tax cuts promised by the National Party in the election campaign when its members knew full well that those cuts were unaffordable. 
This Budget should be about integrity about honesty and about keeping one’s word but on all three counts the Key Government has failed. While the world economy dithers and while the Government uses that as an excuse—which is understandable but a man’s word is his bond—the Prime Minister has failed not once not twice but three times when he promised this country tax cuts. He promised them but then he did not deliver to the low and middle income groups that really need them. He promised that tax cuts would be for all New Zealanders. It was Mr Key’s personal guarantee in order to win the election. But the promise was reckless; he knew that the world was slipping into recession because of his background and training as a money dealer in New York. So this Budget is about leadership and leadership is the ability to motivate and inspire others to follow. The Prime Minister did that; he won an election. But was it an honest win or did he mislead this country by promising tax cuts that could not be afforded? 
Nathan Guy 
: Are you talking about the pledge card? 
H V ROSS ROBERTSON 
: No I am not talking about that. Either the Prime Minister was oblivious to the catastrophic recession when he announced his tax cuts or he did know about it but chose to continue with the cuts anyway. And that is not good enough. A man’s word is his bond and he failed. 
I listened to Paula Bennett and I was reminded that non-governmental organisation heads tell me that when social welfare problems are raised with that Minister all they get is a laugh and a giggle to solve the problems. Well I tell the Minister that that is not good enough. Much has been said on this side of the House about the impact of the Budget on New Zealanders who will turn 65 after the year 2031. That year 2031 is not too far away. The Government’s decade of deferring payments to the Superannuation Fund will inevitably have two major impacts. The first is that it will reduce the level of superannuation people will receive or second it will necessitate a raise in the age of entitlement for superannuation. 
But this Budget also has an impact on today’s superannuitants in a way that has not yet been discussed. In the fine print of the Economic and Fiscal Update it is revealed that the following risk has “been removed since the 2008  
Pre-Election Economic and Fiscal Update 
:”. This is found on page 107 of the volume containing the Minister of Finance’s Executive Summary. This Budget has scrapped the “Energy Subsidy for SuperGold Card Holders” which was being developed by the fifth Labour Government. Officials had been instructed to look at that very thing and in the Budget papers presented to Parliament by National not only were no new Government concessions offered but the most important one for older people—help with paying their power bills—has gone. Staying warm in winter is vital to maintaining one’s health as one gets older so that is a callous cut and it will cause unnecessary stress and strain and a curtailment of activities for the elderly. I am aghast at the temerity of a Government that gave tax cuts to the wealthy but gave nothing to superannuitants. 
Debate interrupted.