Williamson Maurice: Budget Debate 
Williamson Maurice: Budget Debate 
[Volume:654;Page:4157] 
Hon MAURICE WILLIAMSON (Minister for Building and Construction) 
: 
 Some things in life really grate with people and one of the things that grates with me is to have sat watching an economic cycle of nine of the best golden years the world economy has enjoyed and certainly New Zealand was bearing the fruits of that. But during those 9 years National was sitting in Opposition and watching what I think was a lot of the benefits of those golden years being squandered. Then suddenly we got our turn in the sun suddenly we were elected to Government but it happened at a time when as everyone knows the entire world’s economy had fallen into a complete abyss. 
The Labour Party’s opposition to Bill English’s Budget can be summarised under about four headings and if I am wrong I am happy for Labour members to contradict me. I will take each in turn. The first one is that those members attacked us for backtracking on our commitment to three tranches of tax cuts. I think that that is the first one I can talk about. Then I think they attacked us for stopping the contributions to the Cullen fund. And I think they attacked us with regard to a slash-and-burn Budget. I will deal with each and every one of those because there is a lovely old Latin saying “contra vera nihil obstat”—against fact there is no argument. 
So let us start with when National’s policies were being developed during the course of last year. Everyone will know that the campaign was well under way during the middle part of the year so let us have a look at what came out from the Government. First of all let us look at its forecast for the financial year that is about to start at the end of the month—the new financial year starting on 1 July. Let us have a look at what the Government told us would be the situation but we must remember that that was the environment under which National was developing its policies. 
Michael Cullen released his Budget on 22 May and in that Budget he said that for the financial year about to start in a few weeks’ time there would be a surplus of 0.5 of 1 percent of GDP—a surplus was what Michael Cullen said then. But that shows us how rapidly the world changed. I am not blaming Labour for that change; this is how rapidly the change came about. National put in a lot of its policy work. I can remember the policy formulation going on at that time a year ago in May of last year. 
So let us now look at what happened. We were going forward but there were some statements made by the Hon Dr Michael Cullen that I think are worth listening to. By September of last year Labour finance Minister Michael Cullen thought the worst of the economic recession was probably over and that Labour’s tax cuts would help push the economy back into positive growth just as the voters head to the polls. How out of touch could anyone possibly be to say on 12 September last year that the recession was over and that we would be pushed into positive territory? Everyone knows that this recession still has a long way left to run. 
We will move forward to 1 October which was about 3 weeks later: “Labour finance Minister Michael Cullen is optimistic that Congress will ultimately approve a rescue plan.” The rescue plan was actually not for New Zealand; it was for America. “Cullen sees no need to urgently reorder Labour’s spending plans to take account of the deteriorating conditions.” So that was the finance Minister who had all the detail and who knew the state of the economy who was making those public statements. 
Then came the pre-election fiscal update which came out 5 days later on 6 October and we watched that with interest. Members should remember that we are now up to 6 October; the election is only 4 weeks away at the beginning of November. 
Chris Tremain 
: The critical bit. 
Hon MAURICE WILLIAMSON 
: This is the critical document. I remind members that National’s policies had been out there and we had been campaigning on them for months so it was not as though we wrote the policy after the pre-election fiscal update. But the pre-election fiscal update was not even that bad. On 6 October we were told: “Well yes that 0.5 of 1 percent surplus that Michael Cullen said in the Budget back in May isn’t quite right. It is actually a deficit of 0.9 of 1 percent.” All right I can tell the House that National members all looked around and said that that was going to make it tough but still we believed that what we had was affordable: we would cut our cloth accordingly; our election promises could stand. When the shadow finance Minister and the shadow Prime Minister—Bill English and John Key—were asked at the time they said: “No. Our election promises are fully costed.” and that even with the pre-election fiscal update as it stood on 6 October we could make it work. 
I want members now to listen to what happened when the December fiscal update came out which was about 8 weeks after National was elected to Government and Ministers were only just getting their feet under their desks. Then came the ultimate whammy: Treasury’s December fiscal update said we were to forget the half a percent surplus we had written our policy on. We were to forget the 0.9 of 1 percent deficit that we had campaigned on. Treasury told new National Ministers and the Prime Minister to listen up and listen clearly because the best estimate was a deficit of 2.2 percent of GDP. That was a huge deficit—not a surplus but a deficit of 2.2 percent. But wait there is more! As Bill English was developing the Budget for this year Treasury came with even more grim Reaper bad news saying that the economic downturn around the world was even more serious more severe than anyone expected and that when it had put out the Budget forecast on 28 May the deficit—the deficit—was 4.4 percent of GDP. It had gone from a 0.5 of 1 percent surplus a year before to a 4.4 percent deficit. 
Labour says that we reneged on our promises. But hang on let us see whether there is any track record for this. I remember that in 2005 Michael Cullen brought in a minute tax cut. It was minuscule but at least it was a tax cut. It was called the “chewing gum tax cut”. But straight after Labour was re-elected at the 2005 election when fiscal conditions were not changing by the hour and when everything was stable in surplus and doing well and when there was no reason for any change Labour reneged on the tax cut and cancelled it for no reason. But now when National is struggling with the world’s worst economic conditions in 60 years and trying desperately to keep the ship afloat it gets attacked by Labour for doing something that we basically had no alternative but to do after Labour had done exactly the same thing at a time when it had every reason to have left tax cuts in place and not cancel them. I know there is a word that is not allowed to be used in this House but it rhymes with Hippocratic oath and a few other words along the way and that is what I would call it. 
By the way there are some wonderful remedies for how we could fix the economy from I think David Cunliffe. He was on the  
Q+A 
 programme and members should listen because it gets no better than this. Paul Holmes said to him: “If you were writing the Budget as well you might have to be attacking health education and welfare given the present circumstances wouldn’t you?”. But oh members should listen to this little gem; this is a cracker. This is how David Cunliffe the finance spokesperson for Labour responded to how he would fix things: “Well you know I think the analogy here is with a bus going up a hill. It’s struggling with the gradient and what National’s prepared to do is throw the passengers off. What we would do is drop a gear and power up the engine. And that’s the way to go.” What on earth does that mean? What in God’s name does that mean if he is the finance spokesperson? Is he somehow going to drop a gear and power the bus up? There was not a word of what Labour would do with the deficit. There was not a word of what it would do with taxes. Do members know what that bus is? It is a blunderbuss. That is what that is; it is a blunderbuss I tell Mr Cunliffe. 
Now we come to the cracker of all the attacks—stopping contributions to the Superannuation Fund. I would like to do a straw poll around the House. How many people here if their financial circumstances at home meant they were in deficit and short of money would go out and borrow money on the market to invest in shares at present? Who would do that? I want to know whether any members in this House if they did not have the money or spare cash and if they were struggling to pay their home and household bills would do that. Yet that is exactly what Labour is saying we should do. In fact Phil Goff was caught on that one because he could not finish his answer. When Paul Henry interviewed him on  
Breakfast 
 he asked: “Would you go out and borrow money now to invest because I’m not doing that and I’m sure you’re not doing that?”. Phil Goff said: “Yes but it’s a good time to be out there buying because shares are cheap. Well who knows they might not get any cheaper.” When Paul Henry said: “But you haven’t got any money to do it and you wouldn’t do it if you didn’t have any money.” Phil Goff said: “Oh no.” and moved on to something else. This is a great Budget. I am proud of it and I am proud of doing such a phenomenal job in such unbelievably difficult economic times.