Budget Debate 
Budget Debate 
[Volume:663;Page:11525] 
Budget Debate 
Debate resumed from 1 June on the Appropriation (2010/11 Estimates) Bill. 
Hon MAURICE WILLIAMSON (Minister for Building and Construction) 
: 
 It is such a delight and a pleasure to take part in this appropriation debate on the Budget which was delivered in this House on 20 May. I join with my colleague John Carter who said the other day that of the 23 Budgets he had sat through in this House the Budget delivered on 20 May this year was the best. I will expand on that. I agree that it was the best Budget I have sat through but the response I have had from the voters back in my electorate of Pakuranga was that it was by far the best Budget that has ever been delivered. I have been on the rough end of a pineapple of a few Budgets. I remember the response that we had from the “mother of all Budgets” in 1991. I would not say that that Budget was universally applauded and I can still remember the words that some of the members of Grey Power had to say to us. I think that Budget had to be done; I am not going into the past now but it was not well received. But the Budget of 20 May this year was in my view a stunning Budget. It took a step in the most unbelievably right direction that we could take. 
I have always believed that having a taxation system that tries to chop down people’s income by putting very high marginal tax rates on income is wrong. The best thing that we can possibly do is to leave as much money in the hands of the taxpayer as possible and to tax things that we would like to see decrease over time. One of those things of course is spending. If people are going to go out and splurge on plasma screens and on all sorts of other things that are discretionary expenditures then I am happy for a tax to lie on those things. Hopefully one day many years in the future this nation might move to an even more indirect tax system and have even less direct tax on income but this Budget was about a rebalancing of the tax system. It did just that. 
Before I talk about the stuff in my own portfolio that I am really pleased with in the Budget I will spend a couple of minutes to respond to what some Labour members have said about it. The first thing is that I would ask the people who are out there listening to this debate what they think of a party that introduced GST to New Zealand when it was in Government without ever canvassing it before an election. That is right Labour never mentioned it. If people check the Labour Party’s campaign of 1984 they will see that there was not a mutter not a murmur and not a mention of GST. Then Labour got into power and bang it put in GST. 
Then 2 years later—again without a mutter or a murmur or a mention—Labour increased GST by 2.5 percentage points and by the way no compensation was given to the affected parties. Remember that is a 25 percent increase on 10 percent. If GST goes from 10 percent to 12.5 percent that is a 25 percent increase. There was not a single element of compensation for any of the beneficiary groups or the superannuitant groups. Then when National signals that not only will we put up GST by a smaller percentage—going from 12.5 percent to 15 percent is not a 25 percent increase; it is smaller—but also we will put in place proper compensation for all the affected parties at the bottom end there is howling and screaming from Labour members about how evil and how dreadful it is and about what a shock it is for National to be doing so. 
I ask the people listening to this debate whether they can think of a word that describes that sort of behaviour. I ask how people would describe a party that puts in GST without telling people that it is coming or even canvassing on it and then after GST has been in place for a while it increases it and does not compensate people for it but complains when someone else does that. 
I love the absolute confusion in the Labour Party about the policy on GST that Phil Goff has floated. Well it did not really float; it sort of sank. He tried to float the idea of exempting fresh fruit and vegetables from GST. What does that mean? Does that mean my truffles will now not have GST on them? How about something like caviar? 
Carmel Sepuloni 
: Who eats truffles? 
Hon MAURICE WILLIAMSON 
: Well I thought that all us Tories and our rich mates would eat them. They are fresh vegetables. How about getting rid of GST on truffles? I would love to be importing beautiful truffles from the south of France rooted out by pigs and not have to pay GST. That is how silly that argument gets. 
Then we get to the arguments about whether something that is cooked or in a sandwich should be included. For example if it is chicken it might be covered and if chicken is just part of the food it might not be but a piece of ham is covered and so on. Even the Labour Party does not believe in that policy. Labour members were floundering around to find something. If they did believe in that policy they certainly would have changed the GST scheme after 9 years in office. Labour had 9 long years in office and it did the right thing actually. Let us give Labour credit for that. The best thing about the GST structure in New Zealand is that it is flat and it applies to everything. The moment we start trying to create exemptions we get all sorts of anomalies on the barriers. Wherever we draw a line in the sand we have anomalies on the other side. 
I would have thought that a GST exemption could apply not just to fruit and vegetables but also to beverages. How about sports drinks? That would be good. I know let us go with wine and beer. We could exempt them from GST as well because people rely on those things. What a nonsense! It is no wonder that Labour is floundering in the polls and its leader is sinking just like the policy to exempt fresh fruit and vegetables. New Zealanders know that there is no sincerity in a political party that claims to want to do something but does not in fact believe in that policy. 
What I love are Labour’s attacks on Bill English for his floating the concept that maybe in the next election in the next electoral cycle National might look to partly privatise some public assets. We will campaign on that matter. We will put it out to the public before the election. We will let the public choose and they will get to vote. That is all that Bill English said and Labour said it was a disgrace and an outrage that National would sell public assets. Well let us look at the list of public assets that Labour sold. Oh by the way it did not canvass the matter in an election campaign. It did not share that with anybody. It did not tell people that if they voted for it it would sell some State assets which is what National’s policy is. Oh no! Labour’s policy was a lot more brutal— 
Sue Kedgley 
: I raise a point of order Mr Speaker. I ask whether you could remind the member that he has a microphone and that there is no need to shout. I am having difficulty hearing him with that level of tone. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: With respect to the member that is not a point of order. 
Sue Kedgley 
: But I was having difficulty— 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: I understand that but a point of order is about the order of the House. Let us be clear about that. It is not a point of order. The point has been made that the volume is a bit high but in part that was because of some of the other background noise around the House. I draw members’ attention to that. 
Hon MAURICE WILLIAMSON 
: Thank you Mr Assistant Speaker. I am the first to admit that I am getting excited about the Budget of 20 May and it is hard not to get excited. It is hard not to get carried away. It is hard not to go back to my electorate hear the response of the public and not feel some form of overwhelming joy. 
I will talk now about a couple of things in the Budget. One of the items in this year’s Budget is one of the biggest-ticket items ever: the leaky homes package. I have to say that that was one of the hardest pieces of work we have had to carry out in Government. We have come into office at a time in the economic cycle when there is no spare money when the Government is borrowing money to keep the ship afloat and when the finance Minister quite readily tells every Minister: “I do not know which part of ‘no’ you do not understand but we do not have that leeway.” But to be fair what is good about the situation is that John Key our Prime Minister has said that we just cannot sit back and do nothing. He said we could not just sit back and see tens of thousands of families in this country living in leaky homes with no potential to move forward from where they are stuck and do nothing. 
We began a process of negotiations. They were tough. Everybody wanted more than the Government could put up but we finally agreed on a package that is not only a fantastic outcome but also one that I am damned proud of. We are saying to New Zealanders who have a leaky home that if they want to buy into the package then it is their choice. It is a voluntary package. No one has to take it so if members ever hear people on the hustings saying that they do not like it well that is fine. There is no compulsion. 
We are saying that if people want to buy into the package then the Government will stump up with 25 percent. Let us say that a person’s house will cost $200000 to repair. Central government will stump up with $50000—just like that. The local government equivalent be it in Wellington or Auckland will stump up with another $50000. That is half of the cost of the repairs paid for and we will have in place Government-guaranteed bank loans for the remaining $100000 which the homeowner can take out as a loan. The money will be paid only on receipt of work done so it will not be going to lawyers and it will not be going to homeowners who then pocket the money and do not repair their houses. 
I am so proud of this package. I have met with huge blocs of families who were in tears and said that they had nowhere to go. The Budget gave people that package and it did some wonderful stuff in the area of customs but there is not enough time to cover all the good news. 
KEVIN HAGUE (Green) 
: 
 Talofa lava. Malo le soifua. In the days since the Budget the Government has been attempting to defend its treatment of health by expressing health spending as a proportion of GDP. This defence is suggestive of a more fundamental issue. In the relationship between the economy the environment and society this Government—and many before it to be fair—have put the cart before the horse. Protection and restoration of the environment and a fair and just society are not just “nice to haves” if it suits the economy. Rather they are the goals that we have an economy for in the first place—or at least they should be. 
Surveys in New Zealand and elsewhere routinely show that when people are asked about what is most important in life and encouraged to think before answering most people say they believe that happiness health and a future for our kids are the most important and that monetary wealth ranks quite a long way down the list. That suggests that education and health services along with other services geared to meeting our greatest needs and to what we really believe is important should be the central targets of the Budget. Instead this is a Budget that has at its centre big tax cuts for the already rich a continuation of the Government’s orgy of apparently boundless spending on motorways and big subsidies to encourage more pollution. 
The Government is funding this low-quality spending by increasing borrowing from overseas by widening the gap between the haves and have-nots and by underfunding core Government services. As Russel Norman said in his speech on Budget day this is a Budget of deficits: fiscal environmental and social and above all there is a deficit of vision. The Government has cynically calculated that New Zealanders will be blinded by what for most will be a small income tax cut so will be less able to see the increase in GST the steady erosion of Government services and above everything else the fact that the tax cut will be paid for by our children in the future. 
I have spoken several times in this House about the relationship between poor health status and marginalisation. Ill health injury and early death are not randomly distributed but are clustered in communities either geographic communities or communities of identity that are dispersed right through society as well as in communities that are marginalised by poverty or by discrimination. Poor housing poor educational and social welfare outcomes and crimes are also clustered in precisely those same communities. This is a Budget that will increase poverty and will therefore increase ill health. 
I am talking about not only absolute poverty but also relative poverty. Both are strongly associated with adverse health outcomes which is an extremely well-established finding at the international level. For example the World Health Organization convened a Commission on Social Determinants of Health which reported last year on what would be required to meet the aspirational goal of achieving health equity within a generation. It stated: “Social justice is a matter of life and death. It affects the way people live their consequent chance of illness and their risk of premature death. We watch in wonder as life expectancy and good health continue to increase in parts of the world and in alarm as they fail to improve in others. A girl born today can expect to live for more than 80 years if she is born in some countries—but less than 45 if she is born in others. Within countries there are dramatic differences in health that are closely linked with degrees of social disadvantage. Differences of this magnitude within and between countries simply should never happen.” I continue to quote from the report: “Social and economic policies have a determining impact on whether a child can grow and develop to its full potential and live a flourishing life or whether its life will be blighted. Increasingly the nature of the health problems rich and poor countries have to solve are converging. The development of a society rich or poor can be judged by the quality of its population’s health how fairly health is distributed across the social spectrum and the degree of protection provided from disadvantage as a result of ill-health.” 
This same connection between social and economic disadvantage and ill health has been established strongly in New Zealand research too. I think of the work led by Professor Tony Blakely on the 
 Decades of Disparity 
 for example or Dr Jamie Pearce’s work demonstrating dramatic differences in health outcomes depending on wealth. Pearce concludes: “If policy makers are committed to reducing health inequalities then more redistributive economic policies are required.” 
But we have a Minister of Health and a Government that have removed the goal of reducing health inequalities. It is beyond dispute that this Budget will widen income inequalities and thereby exacerbate existing health inequalities which will produce overall worse health outcomes especially for the poorest citizens but in fact overall as well. It is simple mathematics that those on the lowest incomes will at best be no worse off—at least to begin with because once inflation kicks in those extra few dollars will be cold comfort—while those on the highest incomes will be substantially better off. So if we believe that good health is indeed one of the goals for our society then this Budget will take us further from it. Good health services are essential for good health outcomes of course and can help to mitigate the ill health effects of marginalisation. 
Now for the second year running the Government has cut the funding for Vote Health in real terms. I have heard the Minister deny that but his denial was half-hearted and his mathematics does not stand up to the slightest scrutiny. Indeed even in his own media release to accompany the Budget he says that the $512 million increase “will help protect our public health services in real terms against inflation and fully fund population growth.” In other words the funding increase will not be adequate to cover population growth and inflation let alone the ageing of the population that is driving demand. What is more a substantial proportion of that $512 million is not even available for increasing costs and increasing demand because it has been earmarked for new services. The New Zealand Council of Trade Unions and the Association of Salaried Medical Specialists have calculated that the sector will need at least an increase of $555 million just to stand still. 
Although the Budget documents are written to maximise opacity it seems clear that the sector will be at least somewhere between $100 million and $160 million short of this target in the first year at least. This means that we will see more services slashed in order to deliver Tony Ryall his balanced budgets. If we were to hazard a guess at where those cuts can be expected then the first places I would look are those areas of the sector that used to have targets but no longer do: public health diabetes management mental health services dental health and home-based support services for older people. It is the same old trick; although the Minister trumpets new money for more elective surgery new machines and new expensive drugs these will all be bought by savage cuts to the community-based services that actually make the biggest difference for most people. 
Dr Gareth Morgan in his book  
Health Cheque 
 identifies public health services intended to keep people well as services requiring more investment because they provide by far the best health gain for money. He conversely identifies the more specialised end of the services spectrum—where massive resources are used to prolong life by short periods often with very low-quality—as the area we need to look at if we are to live within a constrained Budget. The problem with Mr Morgan’s rational approach with which I agree is the 3-year electoral cycle and in this Government’s world view dominated as it is by the immediate over the important that makes these services the prime targets for cuts. 
In conclusion I tell members that I do not know how many community-based mental health services or diabetes checks will pay for the Minister’s new positron emissions tomography scans but our children will certainly know. Fa’afetai soifua. 
Dr PAUL HUTCHISON (National—Hunua) 
: 
 I move  
That this debate be now adjourned 
. 
Motion agreed to.