Cunliffe David: Financial Review Debate — In Committee 
Cunliffe David: Financial Review Debate — In Committee 
[Volume:661;Page:9460] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Thank you for that introduction and in keeping with past practice the Opposition would like to begin by commenting on the general state of the Crown accounts reflecting on several of the important macro-aggregates and then proceeding to look at individual departments. 
New Zealanders are asking themselves three key questions in respect of the Crown accounts and the Government’s economic performance. Why is there no coherent plan for growth and jobs? Why is the Government talking down the recovery rather than boosting confidence in it? Why is the Government raising GST after the election when National certainly did not tell New Zealanders that was its plan before the election? 
Let me talk first about the Crown accounts themselves. There is no doubt that these accounts show that the impact of the recession on New Zealand’s books was serious. But as economic conditions start to improve the Minister of Finance and the Prime Minister need to ensure that all New Zealanders will benefit from the recovery. It is time that the Minister of Finance was frank with New Zealanders that the books are improving to ensure that he does not talk down the recovery as cover for delivering a tough Budget that New Zealanders will not want to hear. 
The recent Crown accounts show that New Zealand is doing much better than forecast. Gross debt was $2.9 billion lower than forecast and continues Labour’s legacy of trajectory towards lower debt with gross Crown debt the third-lowest in the entire OECD. The operating deficit was $1.4 billion lower than forecast and is now only $630 million negative and that closes the operating gap by around 70 percent. Net worth is $1.3 billion higher than forecast. The Labour Opposition does not pretend New Zealand’s economy is out of the woods yet. To do so would be irresponsible. But when the gap between the forecast deficit and the actual deficit has been closed by approximately three-quarters we believe it is time the Government was frank with New Zealanders about the progress that is being made. New Zealand does not need to face a decade of deficits or anything like it. New Zealand does not need to forget about pre-funding superannuation thereby risking the future of the scheme. New Zealand does not need to starve much-needed social services in health and education of the necessary funding to offset cost growth. 
It is very notable that some of the most successful of the Crown’s investments were in the New Zealand Superannuation Fund and the Accident Compensation Corporation both of which tracked above forecast. With those improved forecasts Labour challenges the Government to resume payments into the New Zealand Superannuation Fund noting that the Crown accounts would now be much better if they had not been suspended. New Zealanders have gone without during the recession. The Minister of Finance was kind enough to draw attention to some of the activities of the Labour Party’s tax tour of the country during the parliamentary adjournment. I can reassure the Minister that in the small towns up and down New Zealand people are very clear about the tax package. They did not vote for an increase in GST because National did not tell them it was going to do it. It told them the opposite. They are feeling shafted I think is the word in the mining communities by this Government. What they really cannot get their heads around is that even if they could believe the rhetoric from the Minister of Finance that they would be “no worse off after compensation”—leaving aside inflation of course which he would not discuss today—they cannot understand why it is OK for the middle class to stand still at best while the wealthiest New Zealanders get a major windfall gain from a tax reduction from 38c to 33c in the dollar or perhaps as low as 30c in the dollar. That is a one-way street towards redistribution from the middle of our society and the bottom towards the top. It is Robin Hood in reverse. It makes no sense in terms of social equity and even less in terms of good economics. 
As we were going around during the adjournment New Zealanders up and down the country were also asking what the game plan is for growth. What is the Government’s strategy for recovery from this recession? In advance of the May Budget which the Minister of Finance knows well will compress new Government spending to the lowest levels in many years he is trying to convince New Zealanders that the crisis is still as bad as it looked 18 months ago and it patently is not because the gap has been closed by three-quarters of those original forecasts as revealed in these Crown accounts. The risk in trying to keep New Zealanders gloomy so they will accept his harsh medicine is that he is not telling them the full story and he will talk down the prospects of recovery. It is no surprise that commentators and journalists—even those at perhaps the more conservative end of the media spectrum people like Fran O’Sullivan—are increasingly saying they are frustrated with this Government that seems incapable of making decisions and incapable of laying out a plan for New Zealanders that business can understand and investment can get behind. 
We have a duality. Business says it wants to see a game plan and ordinary New Zealanders say that the game plan the Government is showing them so far looks absolutely rotten to them. That is why this Government is stuck in a cold hard place between the focus groups that the Prime Minister cannot take his eyes off and the reality of the Crown accounts which is that the books are improving. They are improving because we are moving out of a cyclical recession. It is a recession we went into with some of the lowest debt and lowest unemployment in the OECD thanks to the previous Government. 
Just this morning Statistics New Zealand released productivity data that shows that for the years 2000 to 2008 labour productivity grew by a little over 1.5 percent per annum but it declined when the recession hit in 2008 through 2009 and it has not shown the slightest hint of improving according to the Government’s programme. I ask members what the Government has done. It has a cycleway to nowhere and a 9-day fortnight scheme that was good as far as it went but did not go far which the Government has now cancelled removing the sporran from the Scotsman—the fig leaf of activism—that it never had. New Zealanders are left wondering whether the Government has been doing any thinking at all about how to take the country forward or any thinking about how to get growth back in the economy. Businesses are asking why the Government will not get behind their efforts rather than staying on the sideline or worse talking the recovery down. Why is the Minister ignoring the fact that in these Crown accounts the operating deficit gap has been closed by three-quarters yet still using the rhetoric of the dark early days of the global financial crisis? 
I challenge the Minister to take a call and explain to New Zealanders exactly why it is that when the operating deficit forecasts have reduced by three-quarters he has not changed his song at all and he is talking New Zealand into a funk. New Zealanders are still waiting for the answers to their three key questions: how will we get growth and protect jobs; why is the Minister talking down recovery; and why is this Government raising GST on ordinary people just to fund a massive tax cut for the few? Thank you.