Clark Helen: Budget Debate 
Clark Helen: Budget Debate 
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Rt Hon HELEN CLARK (Prime Minister) 
: 
 That must surely be his last Budget speech as leader of the National Party. That was the classic recipe of spend more tax less and diminish the surplus—all in contradiction to Don’s article in the  
Dominion Post 
 this morning. He agreed with the Minister of Finance that it was not time to blow all the surplus and increase spending and reduce taxes. He said “were I finance minister I would not do so.” so there we are. The Leader of the Opposition has had all year to prepare a decent speech on fiscal issues and the economy and all he has got is that embarrassing stuff on energy: “Please don’t put in any extra stand-by generation.”—he would prefer his cold shower like he had at boarding school! 
He attacked the Government for having a long list of programmes; I am proud of every one of those programmes and I will go for programmes over no policy any day of the week—programmes like getting school-leavers into work affordable health-care for young people more houses for the needy and more police. They are the programmes that are the substance of this Government. 
These are uncertain times internationally and of course the more uncertain they are the happier the National Party is. “Please more misery!” it cries; “Please more Sars!”. It wants more reduced growth in the OECD so that it can moan on. We all know that there are external factors that impact on our economy’s ability to grow and there is no need to rehearse them here today. We do not control those factors. What we must do is manage round them. That is what creates the stability for business and for each of our communities and that is what people look to this Government for. 
This Government’s stewardship of the economy is very strong. I congratulate the Minister of Finance on the Budget and on the stability and certainty he has brought to the management of the economy. The facts about the economy speak for themselves. The growth that has been achieved under this Government is well above OECD averages and even next year’s Budget forecast of 2.2 will be twice the OECD average. We are performing well when compared with our peers because other countries are in a worse position to cope with international circumstances than we are. 
In the last few months we have seen unemployment reach a 15-year low and it is well below the OECD average. We have seen very strong net migration. This Government wants the people with skills that are going to drive our economy and we will welcome them and treat them as Kiwis as they should be treated. 
The operating balance has come in very very strong with over $4 billion projected for 2002-03. There are good surpluses projected out ahead and gross debt is at its lowest level since the data on gross debt began more than 30 years ago. Those are very very strong economic figures and they are what give the Government the confidence to plan the partnerships for growth that it has and the steady improvement in social spending. This Budget is about steady improvements in social spending—the community knows that and that explains a lot about the high and continuing level of support for this Government. 
I want to address some of the key areas in the Budget. I see the first 3 years of this Government as having been about creating a stable platform and foundations for growth. When one comes to the second term one begins to build the house upon the foundations. One is never complacent. One keeps pushing ahead with a vision of what this country can be. This country can be prosperous. It is tolerant and inclusive and it cares about its people under a Labour-Progressive Government. We thank United Future for the support it has given us for this Budget and it has real achievements in this Budget. 
The key areas that the Government singled out for pushing along growth through innovation were in education and skills; innovation research and development; business industry and export growth; and those enabling sectors that the public-private sector task forces have been working on. This Budget follows through on all those areas. Education spending is at phenomenal levels. It is up by $393 million in this Budget. The spending for early childhood education which is the foundation of education is up 8 percent this year. There is more funding for literacy teachers the retention and recruitment of teachers and information and communications technology investment in our schools and there are big increases in support in the tertiary area. 
I want to draw special attention to an area that I know is of great interest to young people families and the business community and it is the investment that is going into skills training. I compliment the Minister of Social Services and Employment for his absolute dedication to that area and to seeing young people have the chance to get into a trade and technical training which provide the essential skills that build this country. 
I was privileged to be part of an announcement with him on Monday this week when we saw two students from Wainuiomata College who were on the Gateway programme which is an initiative of this Government. They are two young people of many who are involved with that project which is being rolled out all over New Zealand. It may be distressing to the Opposition but there is enormous expansion of the possibility for school students to be in that to have 1 day a week out of school to go to a workplace and to start earning qualifications on the programme. When one talks to the students they say that without that opportunity they would not have stayed in school and would have probably been drifting without having any work. Now they can see a career ahead. That is what we want for those kids. We have something like 25000 to 45000 young people at present who drift out of school and do not go on to work or further education. We want those kids able to contribute to this economy and that is what this Budget enables them to do. 
There is an enormous amount of extra money going into the Modern Apprenticeships scheme. We are aiming to increase the number of Modern Apprenticeships to some 7000-odd over the next few years. That is another initiative of this Government. There are tremendous goals and funding in place for the whole industry training area. That is what will drive our economy for the future. 
I want to say a word aboutscience and innovation because this Government started out 3½ years ago with New Zealand having an appallingly low level of investment in science by international standards. Over the 3½ years with some significant changes we have made a difference. The latest figures show that business spending on research and development is up by almost a third. The Government spending is up around 14 percent and the universities’ spending by 16 percent. Why is that important? It is important because what will characterise First World affluent economies in the 21st century will be the fact that they are the ones that can create their own innovation rather than buying it in from others all the time. We aim to be a nation of innovators and we will back our innovators. The Minister of Research Science and Technology has been a driving force in getting that investment up. He has done that by targeted spending by which the Government supports more and more research and design in the private sector and also by an important change in the tax treatment of science. Those two things together have produced that increase in gross domestic product that is going into science. 
This Budget has more good news in that area. It has $140 million of new operational funding in research science and technology over the next 4 years. This year the Government’s spending in that area will be up 6 percent. That is very significant. In addition one of the Minister’s priorities has been to support the incubators because bright young people are coming out of our universities and our polytechnics with ideas that have commercial potential. They need to be nurtured. The incubator programme went from nothing when we came into Government to around 15 today. There is more money in this Budget for those business incubators to support young up-and-coming businesses and people. 
Another very important initiative concerns the need that new start-up businesses have for access to capital. As a Government we have put a lot of money aside and formed joint ventures for early-stage capital but there was still a gap and this Budget delivers $19 million over the next 4 years to invest in pre-seed projects—those that are still in the very early incubator stages. The Minister has correctly identified a very real area of opportunity to get more business growth in the economy. 
There are very important changes on the way for small business generally as a result of this Budget. The Minister of Finance’s speech referred to the significant discussion document coming out in August that contains key tax proposals that will help small business. That will be followed through with a major small-business summit to be held in February next year. We are working very very hard on getting a more supportive environment for the small businesses of New Zealand. 
As part of the growth and innovation framework the Government identified those four enabling sectors that can help drive growth. They are biotechnology information and communications technology and two in the creative industries: screen production and design. In this Budget we have set aside $110 million in the next 4 years to respond to the recommendations of those task forces to build capability in those sectors and they will make a significant contribution to the growth of our economy. That is all contained in this Budget. 
On the issue of improving New Zealand’s trade and export prospects one area worth singling out for mention right now is extra support to fund not only a range of initiatives like the offshore export platforms but also increased capacity for the Ministry of Foreign Affairs and Trade which contains our trade negotiators to get out and negotiate for New Zealand. The Uruguay round of the World Trade Organization brought gains to this economy of about half a billion dollars a year. We are expecting gains as big or bigger again out of the Doha round if it succeeds and we have a role in ensuring that it does succeed. 
Social spending continues to be very very strong in this year’s Budget. Health spending is running at high levels. The particular area of initiative this year as the Minister of Finance spelt out is the support for primary health-care. We now see 700000 New Zealanders in primary health organisations which are offering lower health-care costs. That is a fantastic achievement. This year the Minister of Health is able to add to that with more funding that will lower fees for 6 to 17-year-olds and lower prescription charges for children young people and others in the primary health-care organisations. Of course the funding to charge for combating the meningococcal epidemic begins this year which is a very very important priority. 
In the housing area we have more than a quarter of a billion dollars budgeted over the next 4 years for housing initiatives. That means an enormous amount to the poor families of New Zealand. There will be more State houses—well over 3000—on the way and there will be modernisations and upgrades. There will be a great deal of activity in the housing portfolio. 
 I want to say a word about the flagship policy for United Future the Families Commission. I hope everybody in this House appreciates that the family is the basic building block of this society. If our families are healthy the society will be healthy and I hope that that commission will work with us and with all the community groups to make sure we have family policies we can be very very proud of. I am confident that we can do that ourselves. Some modest improvements have been able to be made this year on lifting thresholds for family support child tax credit and parental tax credit. We hope to be able to do more in that area next year if and when we are convinced that surpluses are structural rather than cyclical. There is also an important change in lifting the number of subsidised childcare hours for poor families which helps get them back to work. The key initiative I will be looking for next year is to see more in the welfare to work area. 
Obviously I am proud of what has been able to be achieved inarts and culture. I do think the arts culture and heritage define New Zealand as a nation and I want to see what will be possible through Creative New Zealand. Our ballet our museums and galleries and our Historic Places Trust are very very important for this society. 
The aim of this Government has been to see New Zealand rebuilt as a prosperous country an inclusive country a tolerant country and a confident country that can hold its head up knowing that it offers a standard of living and quality of life unparalleled in the world. We have been a Government that has stood for fairness opportunity security the right to have a go the chance for every Kiwi to be able to work to get an education to build a business and to contribute through the social and community sectors. This Government is about participation inclusion and the community moving ahead together. It is about security for our young people our old people our sick people and our disabled people. We are a Government with a vision and we have funded it in this Budget.