Key John: Debate on Budget Policy Statement 
Key John: Debate on Budget Policy Statement 
[Volume:615;Page:11519] 
JOHN KEY (National—Helensville) 
: 
 That was one of the poorer and more confused speeches I have ever heard from the member for Waimakariri and quite frankly I was pretty disappointed. I had higher hopes for the member. I see him in action on the Finance and Expenditure Committee but I was very disappointed indeed in that speech. I think when he goes back and reads his  
Hansard  
tonight—because he will be the only person in New Zealand reading it—he will reflect on my comments and probably ring me in my office later on this evening with a personal apology. 
Mr Cosgrove spent the entire time telling us firstly that National did not have policies; then he told us that National did have policies but that he did not like them. He went on to tell us that New Zealand is doing pretty well in the OECD. Well I do not want to point out to the member that we are 20th in the world in the OECD—20th out of 30 places. We have gone up one place—we have gone past Spain by a few thousand dollars. We are 20th and the Minister of Finance Dr Michael Cullen himself told the Finance and Expenditure Committee that we would have to go a long way before we ever went up from that number again—a long long way. He said the void was so great. 
Then the member rolled out Ralph Waters the Chief Executive Officer of Fletcher Building and his comments about corporate taxation. Ralph Waters is a very respected chief executive officer in New Zealand and I think he has done a wonderful job with Fletcher Building but I simply point out that if that is the best the member can roll out then I suggest I should deliver to Mr Cosgrove’s office the OECD reports on New Zealand the IMF reports on New Zealand and about 3 miles of Treasury reports on New Zealand that counter all the comments he made. 
The 2004 Budget will be an absolute disgrace for anyone caring about New Zealand and for anyone wanting higher living standards for New Zealand because it will deliver one thing and one thing alone—that is the tax-and-spend policies of the Labour Parties of old because this is a desperate Government that is going to spend up big. It is in free fall in the polls. The Minister outlined the Government’s $2.1 billion of new spending. Will it be going to pro-growth initiatives? Will it be going on things to drive productivity in New Zealand? The Government itself admits that productivity is so poor it intends to set up a productivity commission but the only reason it has not announced the commission is that no one can be found in the private sector who wants to stump up and go on it. That is how hopeless this Government has been. Government members are quiet because they know that that is the truth—I tell Mr Mallard that that is absolutely the truth—and they should go and have a look at why the productivity commission has not been rolled out. 
This Government is going to spend a lot of money that is for sure; but it will spend it on beneficiaries. This Government should be ashamed that despite the economic growth that has taken place in this country we have 300000 New Zealanders out of work and on a benefit—in spite of the best conditions and in spite of themselves. That is how woeful it has been. 
We are not going to see pro-growth policies on infrastructure. We are not going to see spending on infrastructure. What we did see was the Minister of Finance jacking up tax rates by 5c in the litre to pay for new roads in Auckland because the Government wants to spend the money on dishing out more to beneficiaries. That is what the Future Directions package will deliver and that member knows it very well. The financial markets are so worried that the Bank of New Zealand’s economist came out just 2 days ago and told the Minister in no uncertain terms what is likely to happen—that the Minister’s own over-spending to save this Government in free fall in the polls will be reflected in an increase in interest rates. That is what the financial markets think of this Budget. 
I want to point for a moment to the issue of growth. The Government introduced the Budget Policy Statement by giving us some pro-growth statement we were meant to buy into. Let us look at the facts for just one moment. Growth in New Zealand between 1993 and 2003 on a per capita basis was at a rate of 2.4 percent. For every man woman and child this country grew by 2.4 percent. Treasury’s forecast for the next 10 years is an average of less than 2 percent and by year 10 it is 1.4 percent. Clayton Cosgrove had the audacity to come down here and tell us: “We are going to do better and be in the top half of the OECD.” when his own Government has stopped printing the propaganda it used to print. His own Minister is banned from making promises about when we will get there because he knows as I know that to get back into the top half of the OECD any time in the next 10 years will take a growth rate of 4.1 percent per capita. With policies like those of this Government it does not have a hope in Hades of producing it—not a hope in hell of getting us back into the top half of the OECD with those growth rates. 
It is not just about the area of tax. Let us look at that area and speak about it for a moment. The budget for the operating balance excluding revaluations and accounting changes will be around $6 billion—that is 4 percent of GDP. But have we seen any comment at all about a tax refund for hard-working New Zealanders? No there has not been a single one. Why should New Zealand families be worried about their tax bill? 
Clayton Cosgrove 
: Give us a quarter of a policy. 
JOHN KEY 
: Let me point out to the member a little fact that may have eluded him because he is so tied up in the Labour spin machine. Since 1999 in the 4 years this Government has been in power every family in New Zealand has spent $2600 a year more on tax. Every family is worse off because of the policies of this Government so its members should not tell us they are doing a lot for hard-working families in New Zealand. This Government is doing nothing for those families. It is taking money from the working and productive sector and buying votes to try to stay in power. That will not work because the people of New Zealand have seen through the Government’s race-based policies and now they will see through its economic policies. It simply will not work. 
For a moment I want to touch on the issue of the exchange rate because it has been rising against the US dollar. It has caused concern for our exporters and it was a major part of the Budget Policy Statement. 
Clayton Cosgrove 
: What would that member do? 
JOHN KEY 
: We would not intervene. Let me tell members about the confused thinking the Minister of Finance Dr Michael Cullen has had. He came to the Finance and Expenditure Committee in November and told us he was not without options. The Minister of Finance signalled about five different positions during the course of the next 3 months but last week came his crème de la crème statement: he told the country through the media that he would intervene through the exchange rate and that he would do it with a policy similar to that of Australia. Clayton Cosgrove smiles. He knows how ridiculous that is because he was there when Michael Cullen while telling the select committee about the Budget Policy Statement said that it was a hopeless policy that it did not stop and change the direction and that it would not do anything. 
I want to point out just a small fact because it may have missed the Minister’s attention. At the start of 2003—this relates to the very policy from Australia he wants to follow—Australia’s cash foreign exchange reserves were $30 billion. By the end of last year in 12 months they had risen to $40 billion. Australia stole $10 billion smoothing and intervening—[ 
Interruption 
] If Mr Peters wants to know why we would not get involved it is because the mark-to-market loss for Australia was $3.7 billion last year. If New Zealand had had the same policy and the same amount of reserves we would have lost three-quarters of a billion dollars. 
Rt Hon Winston Peters 
: Which country does nothing? 
JOHN KEY 
: I know that Winston Peters is a lot smarter than that. He can find ways to spend three-quarters of a billion dollars on hard-working New Zealanders in ways that would be better than giving it to the rich guys at the top end of town in foreign exchange markets. That is what the Government wants to do; it would be one of the most retrograde steps our country could see—when Michael Cullen thinks he is the next George Soros. He should focus on building a pro-growth economy for New Zealand on lowering tax rates on fixing the Resource Management Act on fixing occupational health and safety legislation on keeping Margaret Wilson out of anything that has to do with business and on scrapping the Employment Relations Act. 
It will be a very disappointing Budget and a very expensive Budget for New Zealand. When we look back—just as we were disappointed with Clayton Cosgrove’s speech—we will see that the people of New Zealand were very disappointed with Budget 2004.