Boscawen John: Reports — Reserve Bank of New Zealand’s Financial Stability Report May 2010—Consideration of Report of Finance and Expenditure Committee 
Boscawen John: Reports — Reserve Bank of New Zealand’s Financial Stability Report May 2010—Consideration of Report of Finance and Expenditure Committee 
[Volume:665;Page:13047] 
JOHN BOSCAWEN (ACT) 
: 
 It is a pleasure to take a call to debate the report of the Finance and Expenditure Committee on the Reserve Bank’s financial stability statement of May this year. In drafting the comments that I intended to make this evening I focused on three sections in the report: principally on the comments relating to unemployment on taxation policies and the effect of GST and lastly on the importance of agriculture in our economy. But the previous speaker Mr Cunliffe has just made a number of points three of which I think need to be responded to. Before proceeding with my planned comments I will briefly comment on some of the things that Mr Cunliffe has said. 
Mr Cunliffe started by saying the Reserve Bank in its testimony—because he said these were the words of the Reserve Bank not the words of the Government—focused on the need to rebalance the economy and in particular to direct funds away from consumption which had been funded by high levels of private sector debt and to put that money into first paying off debt and second savings. He said that if this Government does not have a plan the Labour Party does. Well the question that has to be asked is why we got into this situation in the first place. Why is the economy not balanced? Why do we need to rebalance it? The answer is very simply that there had been 9 years of mismanagement by the previous Labour Government. The current Government has to address these problems because of the situation that it found itself in when it took over the Treasury benches in November 2008. 
The next point that Mr Cunliffe made was that the Government on coming into power reduced the subsidy on contributions to KiwiSaver from 4c in the dollar to 2c in the dollar. Why was that necessary? The reason is that the Government accounts were in a huge deficit. In essence if we look at KiwiSaver we see that although it has a number of attractive features which I personally support effectively it subsidises people on higher incomes. So it is a subsidisation by people on lower incomes who are not in a position to save. They are subsidising—using Government funds or taxpayers’ money—the savings of people who are in a much better position to save than they are. 
Mr Cunliffe also criticised the Government for backing away from pre-funding New Zealand superannuation. Once again why is the Government not setting aside funds for the New Zealand Superannuation Fund? Very simply as Mr Cunliffe is very very well aware the Government is in deficit. It is running a huge deficit and that situation was bequeathed to it by the previous Labour Government. Mr Cunliffe suggested that it does not matter whether we have a $3 billion $4 billion or $5 billion deficit every year; he would like us to go out borrow some more money and invest it through the New Zealand Superannuation Fund. Mr Cunliffe knows more than anyone else that at the beginning of this year the money in the so-called Cullen fund was actually less than the dollars that had been put in and invested. Despite the pre-funding we had less than a dollar for every dollar that had been invested. 
I now come to the comments that I intended to make. I will start at the back of the report where there are comments on unemployment. They refer to the fact that the Reserve Bank governor informed us that the labour market is lagging in terms of the overall economic recovery of New Zealand. We do not have higher levels of employment. Unemployment is still hanging rather high at over the 6 percent mark. We have just had a debate on a member’s bill which was voted down this evening on the proposal to cancel the 90-day employment trial period. If we want to address the issue of unemployment we need to do everything that we can to incentivise employers to create jobs and offer jobs and to make it as easy as possible for people to get those jobs. That is one of the great things about the 90-day trial. It has enabled employers of companies with fewer than 20 people to go out and hire employees knowing full well if they make a mistake and the person they employ does not work out then they do not have an ongoing liability for that. The 90-day trial is about to be extended to all employers in New Zealand. If there is anything that will make a move to address the higher levels of unemployment that the governor referred to in his testimony that will be it. 
I thought it was particularly interesting that Nanaia Mahuta in speaking about that bill talked about the 60000 unemployed young people. I ask why we have such high levels of unemployed young people. The very simple answer to that is that the previous Government took out the youth rates. Previously an employer could go out and hire a young person—a 17 or 18-year-old—and pay something less than the adult minimum wage. Someone who did not have previous full-time work experience was able to go out there and employers had an incentive to take on a young person. The previous Government passed a law to abolish the youth wage rate. What happens now when an employer is faced with choosing between two potential employees? Let us say one is a family person who is 35 has a couple of young children as dependants has 10-15 years of work experience—has a proven track record and has commitments—and has proven his or her reliability. Let us say the other is a 16 or 17-year-old who does not have the same experience and cannot show the same track record of reliability. When faced with having to pay those two people exactly the same wage the minimum wage I ask why the employer would not hire the mature person who has experience and a track record of reliability. 
It was one of the great disgraces of this Parliament that when it had a chance to reinstitute youth wages earlier this year and support the member’s bill of my colleague the Hon Sir Roger Douglas this Parliament both the Labour and National members chose to vote it down. I think that that was a disgrace. One would expect that sort of thing from Labour members but one certainly would not expect it from National. I think that the National members when they talk about youth unemployment should realise that the answer to that problem lay in their own hands. They had a chance to do something about that but they missed that opportunity. That is tragic for those young people. As my colleague Sir Roger Douglas said a young person might be prepared to work for $9 or $10 an hour but the parliamentarians in this House do not believe that that young person should have the chance to do that. Instead that young person is put on an unemployment benefit of about $160 a week. 
I now refer to the section of the report on agriculture. The select committee’s report states that agriculture makes up some 16 percent of the total lending by New Zealand banks and that as the cash-flow position of farms has improved the demand for credit has declined. The report talks about the impact of the recent financial crisis on the agriculture industry. Once again one of the great tragedies of this Parliament is that we proceeded with the emissions trading scheme on 1 July. We became the first country outside Europe to have an emissions trading scheme and in the words of the Hon Nick Smith the Minister for Climate Change Issues it is the “most comprehensive” emissions trading scheme in the world. Those were his words from 24 September last year and he repeated them again in the third reading of the Climate Change Response (Moderated Emissions Trading) Amendment Bill on 24 November—the “most comprehensive” scheme in the world. Those were his words which are in  
Hansard 
 and he has the nerve to suggest that New Zealand is not leading on climate change. 
What is the impact of the emissions trading scheme on farmers? Well Beef and Lamb New Zealand has said the impact of the emissions trading scheme will add some $3900 a year to costs for the average dairy farmer. Those costs do not come in in 2015; they came in on 1 July this year. Dairy farmers face up to $3900 in additional costs from 1 July this year. Do the farmers in Australia pay those costs? No they do not. Do the farmers in Japan pay those costs? 
My time is coming to an end but I finish by simply saying that if the Labour Party members are concerned about the fact that we have had to reduce the subsidy on KiwiSaver contributions and if they are concerned about the fact that we have not been able to put funds into the New Zealand Superannuation Fund the so-called Cullen fund the reason for that is very much in their hands. 
Mr DEPUTY SPEAKER 
: I am sorry to interrupt the member but his time has expired.