Brownlee Gerry: Budget Debate 
Brownlee Gerry: Budget Debate 
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Hon GERRY BROWNLEE (Minister for Economic Development) 
: 
 One of the interesting things about the delivery of the Budget last week and the public commentary on it afterwards has been the way in which the Government has been greeted almost universally as having delivered exactly the right mix that is required for the times. I say “almost universally” because it has also been interesting to watch the Labour Party being totally caught in the headlights and unable to deal with this Budget in any concise or I suppose we could say organised fashion. 
At the start of the debate on the Appropriation (2009/10) Estimates Bill the Hon Phil Goff moved an amendment that amongst its many requests of the House suggested that the Budget needed to have a “plan to address the growing number of jobs lost and the increasing number of New Zealanders worried about losing their livelihoods and their homes.” At the same time we have Mr Goff out there railing against the decision to postpone payments into the New Zealand Superannuation Fund. Mr Goff appears not to understand that the money for those payments would have had to be borrowed. Each year that would have made a $2 billion addition to the growing deficit that the Government is currently trying to deal with. 
Hon Phil Goff 
: No effect at all on the net debt. The member would know that if he understood it. 
Hon GERRY BROWNLEE 
: Mr Goff can sit over there for as long as he likes saying it would have had no effect but the reality is that when someone borrows money that creates debt. There is no way that someone can borrow money without having debt. The consequence of that borrowing might well have been that the various rating agencies throughout the world took a dimmer view of the New Zealand economy. 
It gets interesting here because Mr Goff says we should not listen to the rating agencies as they are the people who loaned into the US markets in the last few years. His classic response is to say those agencies said Enron had a triple A rating and all the rest of it so we should just ignore them. Well if New Zealand was to just ignore them we would pay the price of their putting a negative rating on us. The reality is that this Government past Governments and all Governments for as long as New Zealand has existed as a sovereign nation have borrowed and need to borrow at the most favourable rates. The effect of what Mr Goff is suggesting would have been perhaps a 1 to 1.5 percent increase in the mortgage rates of all the people out there whom he claims in his amendment to be concerned about. So he is saying his party wants the Government to go into more debt in order to try to hold up a superannuation fund that may or may not be successful over the years to come and in so doing Labour is quite happy for the mortgage rates of New Zealanders out there to be put up by 1 to 1.5 percent. 
Hon Steve Chadwick 
: What about the personal guarantees? 
Hon Phil Goff 
: That’s right. 
Hon GERRY BROWNLEE 
: He is saying that is right. I ask him what sort of analysis he is getting there in Opposition. How many people in his research unit really understand anything about economics at all? 
The first point that needs to be made is that if the Superannuation Fund continued to receive its contributions at the current rate right out to 2030 at the very best it would have started to contribute to the payment of New Zealand superannuation at a rate of about 12 percent. That would mean that beyond 2030 the total amount of superannuation paid to New Zealanders under current entitlements from revenue collected at that time would be no less than 88 percent. Effectively that means that Mr Goff is prepared to say he wants a couple of generations of New Zealanders to pay higher interest rates for what might be a 12 percent discount on future superannuation payments. That is completely unacceptable. 
Hon Shane Jones 
: You’re cutting the pension Gerry. 
Hon GERRY BROWNLEE 
: Unfortunately Mr Goff has managed to convince some of the more gullible members in his caucus to believe in the sort of wizardry that he is trying to put out there such as the idea that we can just stack the bills up or whack it on the bill as has been suggested and expect future generations to pay for it. 
I heard Mr Jones over there ask about entitlements. I say to Mr Jones that he should breathe easy. I know that he is a man who is approaching 65 and that he is looking forward to collecting the pension. There is an absolute certainty that he will collect it and that successive generations of New Zealanders will collect it. A long time ago this country went through the argument about the age of entitlement and the percentage basis of the entitlement and all the rest of it. The National Government stands by those decisions completely utterly and totally to the extent that the Prime Minister has said he would resign if that was ever changed. 
Hon Shane Jones 
: He’ll be gone in 3 years. 
Hon GERRY BROWNLEE 
: Well he may not be gone by 2030. Things are going very well at the moment I say to Mr Jones. Mr Key is a young man and by 2030 he will be just a young chap. He will be only 69 and what would be wrong with him continuing in the role of Prime Minister? I find the ageist attitude from the Labour Party is just a little too much to take. 
Mr Goff also expressed in his amendment concern about the livelihoods of New Zealanders. Another thing he does not seem to understand is that ensuring access to capital for businesses is paramount for the maintenance of the workforce. There is absolutely no question about that. Not only would Mr Goff’s recipe see mortgage rates rise but also it would cause business lending to become much more costly putting considerable stress on the businesses that employ many New Zealanders. Mr Goff wanted to talk about his recipe in the House even today suggesting that some Treasury official backs him up. He is saying there is more money to be made by borrowing and putting money into foreign stock markets than by saving the money and putting it back into the economy of New Zealand. I ask whether Mr Goff and his finance spokesperson Mr Cunliffe are prepared to give a few tips to New Zealanders about where they might put their money in order to make such fantastic returns on the stock market. The alleged Treasury advice—and I stress that it is “alleged” Treasury advice—suggests that this particular method would return some 6.75 percent. The history of the New Zealand Superannuation Fund is that it has had an average return of just 3.65 percent since it started. 
We all know that if we ring up a broker and we have some sort of superannuation policy we are likely to be told that over a 30-year period we rely on about 10 to 15 good days in order to seriously move the funds forward. We know that in the last year thousands tens of thousands hundreds of thousands indeed millions of people throughout the world have had their retirement savings slashed to bits because those same funds had at least 10 to 15 bad days in a much shorter period of time. If Mr Goff and Mr Cunliffe know something that the rest of the world does not they need to share that information with Parliament today so that New Zealanders can make the decision to go down to their banks to raise loans and to put their borrowed money into the stock market or into other funds that Mr Cunliffe and Mr Goff seem to think would be very good for New Zealand. 
This Budget has focused on protecting jobs in the economy and indeed on creating jobs. In that regard I am delighted by the funding that has been committed to the fund for home insulation. Jeanette Fitzsimons and I have worked on that and we will be announcing further details of it on 18 June. We know it will effectively be a billion-dollar exercise because the Government contribution over the next 4 years of $323 million is just one-third of what will be spent on the insulation of New Zealand homes. Let us be clear that there are significant health benefits to be had through this programme. We are told that for a person who suffers from respiratory illness the cost of staying one night in Wellington Regional Hospital is about the same as the cost of insulating one home. Once again I congratulate the Greens on being able to get something out of a Government for once. Nine years of trying to cooperate with Labour gave them very very little indeed. It did not take a lot of convincing on our part that this was a very good policy and I am delighted to have been part of negotiating the policy and its design with Ms Fitzsimons. Appropriately this policy was announced prior to her stepping aside as co-leader of the Greens.