Joyce Steven: Debate on Prime Minister’s Statement 
Joyce Steven: Debate on Prime Minister’s Statement 
[Volume:660;Page:8964] 
Hon STEVEN JOYCE (Minister of Transport) 
: 
 Last year the world was gripped by the global financial crisis. It is quite easy in the New Zealand context to forget that as the rest of the world is still coping with some of the financial conditions and the aftershocks of that crisis. In fact in Europe now countries like Greece and Ireland are still grappling with the effects of the global financial crisis. 
Last year this Government worked hard to mitigate the worst effects of the global financial crisis in the New Zealand environment. With the help of our friends across the Tasman and the Asian countries we were able to prevent the worst of the recession from coming home to this country to the point where most New Zealanders are now of the view that the global financial crisis was not too bad. But across the rest of the world of course it was very harsh indeed. 
This year we have a different set of challenges. This year we have different decisions to make. Those decisions which are for all New Zealanders were alluded to by the Prime Minister in his speech. We will take some decisions to enhance growth for the benefit of New Zealand families in 2010. Will we deal with this country’s tax issues which discourage savings and growth and result in the exporting of some of our most skilled labour overseas? Will we take reasonable steps to advance some industries that can add growth and wealth to New Zealand and New Zealand families like the mineral sector and the aquaculture sector to name just two? 
Will we take reasonable steps to control State sector spending to stop the State sector crowding out the private sector and to improve productivity in the State sector which has lagged the private sector in productivity growth in this country? Of course productivity is a huge part of creating growth and wealth. Will we invest in infrastructure? Will we give ourselves the ability to do more in the infrastructure space? Will we tackle the skills shortage that has bedevilled this country for a long period of time? Will we tackle the underachievement whereby 20 percent of children are leaving school without suitable levels of literacy and numeracy? 
These are the questions we have in front of us and some of the answers are not easy. Some of them are a little discomfiting at times and some of them are a little challenging but these decisions do need to be made. And that is the challenge the Prime Minister has laid down before us this year in his statement to Parliament. Are we going to make the changes that will encourage economic growth and prosperity for New Zealand families? 
Labour did not take those chances. It did not meet those challenges and it did not make the decisions. During 9 years in Government Labour spent a lot of time calling for reports then not acting on them. It had lots of reports. It had the Knowledge Wave the growth and innovation framework and things like the Skills Strategy. It had a group called the Small Business Advisory Group. It got that group together and asked it to come up with a whole range of things and then it ignored most of them. 
Labour’s other solution was to not make any hard decisions around public spending. It layered spending programme on top of spending programme. If a programme was not working it would not stop it. It would just add another one and if somebody asked Labour members why they did not stop the first one they would say that it might upset a few people. Labour just kept putting programme on top of programme and this Government is left with trying to unpick some of the mess it left. If it did try to do something for growth and encountered any opposition then it would throw more money at the problem. That was its solution. I personally am very familiar with that in relation to a certain roading project in Auckland that came up with a highly expensive $2.8 billion option because the Government was not prepared to discuss the project with the community and come up with a sensible mitigation proposal that did not place the country further in hock. 
Under Labour the Government sector grew hugely the private sector grew anaemically and the tradable sector went backwards for 5 years. As a result we were the first country in the world to go into recession in 2008 before the global financial crisis. It is no coincidence that with a new National Government we have come out of it better than we would have if we still had the old Labour Government. 
Labour members still do not understand what is required. They still believe in the fiscal fairies at the bottom of the garden. They opposed every change in spending priorities that this Government has put forward. They have called for more public spending all the time. They have called for us to legislate for higher wages. It is true economic illiteracy to suggest that we can legislate for higher wages when wages are paid for by people who actually get out engage in entrepreneurship and pay what they can afford. We cannot legislate for a wealthier economy and it is time the Labour Party worked that out because if it does not it will remain an economic joke. 
Labour members have opposed all significant changes in regulation and some of the insignificant ones. I note that the chainsaw massacre of trees has not yet occurred in Auckland. A few trees are still up in that proud city—apparently only a couple but they are all still there—and the Armageddon of trees did not come to pass in that city. 
But the nadir of Labour’s economic understanding came with its little committee last year to try to tie down the New Zealand exchange rate. Labour members just did not understand the grand irony of that because the one big contribution the Government makes to high exchange rates is high levels of public spending which lead to high interest rates which contribute to high exchange rates. They were all sitting in a room saying that they wanted to get exchange rates down but they did not want to talk about the rather large elephant in the middle which was how much they grew public spending over the last 9 years. 
I think New Zealanders are ready for change. I think New Zealanders are ready to step out for a brighter future. They are ready to make the decisions that the 9-year Labour Government did not make. This year we will make those decisions and the Prime Minister’s statement lays them out very carefully and very sensibly indeed. One of the most important which I want to focus on for a couple of minutes is on tax. 
Why is tax so important? It is because tax is the one area where the Government is pervasive in people’s lives. Like it or hate it—it is death and taxes is it not? The Government fortunately does not control death but it certainly controls taxes and that is the one thing where the Government has the greatest impact on the economic outcomes. It is tax that determines the incentives for New Zealand families. The greater the tax burden on a particular part of life the less people do it; the lesser the tax burden the more people will do it. So in New Zealand what do we do? Currently we tax labour at a high rate. We tax people’s personal work at a high rate. We tax savings and investment at the same high rate. We tax consumption comparatively at a lower rate and we tax investment property negatively. 
As I said people respond to incentives so is it any wonder that in this country people over-invest in property over-consume relative to their incomes and do not save enough? Is it any wonder that a huge swag of our skilled people and their families take themselves off to Australia—which was incidentally Labour’s skills strategy? People respond to incentives and if we want to lower consumption stop people over-investing in property reward people better for their labours so they stay and labour here and reward people for savings and interest we have to make adjustments to the tax rate. Until Labour works that out it will not know how to grow an economy. That is the reality of it and it is time Labour learnt that fact because we could not afford another 9 years of its economic mismanagement. So we need to deal with taxes. 
We need to get a much more productive public sector and we are working very very hard on that. We need to encourage innovation and the Prime Minister has laid out some challenges in the areas of science and research and technology. It also has to be said that we are working very hard in the trade area. We have our two men about the world Mr Groser and Mr McCully who are out there working very very hard. We have trebled the efforts of the previous Government in striving to achieve free-trade agreements. 
We are also reforming regulation. We are driving reform in the regulation area to allow more things to be done and of course we are doing huge things in terms of infrastructure. Modesty prevents me from going on at great length about the transport sector and the communications sector but we are flat out and we are putting a lot of work into the rail sector as well. 
Finally education is crucially important. The irony is that Labour which is supposedly the education party—nobody believes that except Labour members and their union mates—has been arguing against tackling the shameful tail of underachievement that comes out of our school sector. They have been afraid of tackling it and now they do not want us to tackle it. 
This year is a year of change. This year is the year for us to grow the economy much faster. I believe that New Zealanders are ready for that change. I know the Prime Minister does; that is why he laid out the opportunities for New Zealand in the brilliant speech he read out in Parliament just over a week ago. We are ready to step out for a brighter future. Thank you.