Cunliffe David: Budget Debate 
Cunliffe David: Budget Debate 
[Volume:673;Page:19076] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Talofa lava. I join with the previous speaker Peseta Sam Lotu-Iiga in welcoming Samoan Language Week this week. 
National MPs must think New Zealanders are stupid. They stand up and describe that they are allocating new money to this or that programme and they assume that Kiwis do not understand that the new money is less than the cost of inflation to those votes and less by a considerable margin than what the previous Labour Government gave to them. Take health. The Government has budgeted roughly an additional $500 million in this year’s Budget. Health used to get between $700 million and $800 million extra under Labour. Education used to receive an additional $400 million to $500 million under Labour. It received around half that amount this year and that is before one takes out the additional KiwiSaver costs which are being taken from within departmental baselines. This is a subzero Budget as Phil Goff said. It is not a zero balance; the Government is taking out about $1.5 billion from front-line public services that New Zealanders need. Let us have no more of those comments from the other side of the House. 
Labour has no confidence in this subzero Budget because it hurts and does not help New Zealand. It is full of rosy growth projections and rubber numbers and it leaves unaddressed the key and most crucial structural questions that need to be addressed in order to turn this country’s economy round. It may surprise some New Zealanders to hear the Labour Opposition say we agree that debt is too high and must come down but what matters to New Zealanders is that that change is managed in a sensible and balanced way so that we can get New Zealanders back to work grow our savings and take care of the most vulnerable at the same time as we reduce net debt over the medium term. It is becoming increasingly clear in this most crucial of all election years that New Zealanders will have to turn to the Labour Opposition for leadership on those questions. 
Today I will cover three key issues around this Budget. Firstly what is the nature of the problem it is trying to solve for our country? Secondly what does it propose to do and what results does it project? Thirdly what would Labour do in broad terms if we were on the Treasury benches this year? 
In terms of the first of those issues what the Budget tries to achieve well if we take the Government at its word its overriding priority is to move the economy out of debt by running a fiscal surplus which it says it can do a year earlier than had been projected. But that ignores some of the other hugely important symptoms that reflect the disease in our economy. Firstly the unemployment rate is 6.5 percent. That is high by New Zealand standards and it is nearly double the 3.4 percent rate under Labour. Worse still 271000 New Zealanders say they are jobless and many of them have not even registered as being unemployed. Prices are rising faster than wages and New Zealand families are paying the price. The rate of wage growth was 1.9 percent in the last year compared with an inflation rate of 4.5 percent a food price inflation rate of 5.1 percent and an increase of over 10 percent in petrol and fuel costs. But New Zealanders are not stupid; they feel worse off because they are worse off. The difference between those numbers is a real-term cut in every New Zealander’s standard of living. 
Behind the numbers are poignant stories that have been made available to members of the Opposition like that of the pensioner who cannot afford to use milk in her tea and who saves a little bit for special occasions when she has visitors or that of the family with three boys the youngest of whom is calcium deficient. They tell me they cannot afford to buy milk at the supermarket. There are pensioners huddled in blankets in damp cold flats because they cannot afford to heat them with the price of power rising as fast as it does. There are babies and children suffering respiratory disease because mould is growing up the walls in State houses and this Government has cut the Budget for retrofitting them. 
The Government will tell us that it has no choice but to cut Government spending but it has made choices. It made the choice to give $23 billion worth of tax cuts in the last two Budgets and run a $16 billion deficit now. Those were real choices in order to give major tax cuts to the New Zealanders who least needed them while other Kiwis were suffering. 
Labour believes it has a credible and balanced plan to get debt down while getting New Zealanders back to work and getting our savings rate up. But what does the Budget propose and how is it going? I say the Budget numbers are not credible. The $380 million borrowing requirement that the Treasurer is trumpeting has been proven to be self-inflated. Treasury documents show that the Government is choosing to borrow an extra $5 billion—$100 million a week—because it says perhaps it is getting a better deal. Or has that been done simply to frighten New Zealanders into thinking that radical surgery is required by pumping up the numbers this year and taking them down again before the election? The rosy growth forecasts in the Budget are just so incredible that they have convinced nobody particularly not Standard and Poor’s which has refused to take New Zealand off negative credit watch. 
Commentators believe that the wage growth projections are rubbish when the KiwiSaver cuts are taken out. They note that the revenue forecasts of Treasury and of the Inland Revenue Department are nearly $1 billion a year apart—$3.8 billion over 4 years—and the Government has booked the higher number. The commentators note the billion dollars in unspecified cuts—cuts of a billion dollars with no clue given to the public of where those will come from. There are only two possibilities: either the Government does not know because it has not figured it out or it does know and it is not being frank and honest with New Zealanders because it does not want them to know which services are being cut before they have the chance to vote on that. 
There is all that pain and all the cuts to health to education and to KiwiSaver. Ten dollars a week has been taken off the KiwiSaver member tax credit and another $3 or $4 a week has been lost from higher employer taxes being passed through to the employee. There is the loss of every New Zealander’s birthright in the selling of our assets. The cuts to Working for Families will affect over 50 percent of all the families who receive Working for Families payments and there will be costs to families on $80000 a year of $50 a week by 2015. 
There is all that pain but what is the gain? Let us judge that question by looking at Treasury’s own numbers. Does the Budget build savings? The Government may have broken its promise in cutting KiwiSaver by 1 July this year but extraordinarily net international debt the sum total of the country’s liabilities will actually go up—let us get the numbers right—from 78 percent of GDP to 85 percent of GDP by 2015. Does the Budget build a stronger export-oriented economy? No. Nobody believes the figure of 177000 new jobs that the pixies at the bottom of the garden are to create. In fact the Budget documents show that the current account deficit will blow out again—let us get it right—from around 4 percent of GDP in 2012 to around 7 percent of GDP in 2015. There will be no more savings no more exports and no more jobs. There is no solution to the country’s ills. The Budget hurts but it does not help. 
What would “help” look like? What would a good Budget do? Labour has a credible balanced plan to turn this economy round. The plan will be fully costed and it will stand on four pillars. Firstly we will build a strong export economy using economic development using innovation and skills and changing monetary policy to lower the outrageously high exchange rate. Secondly we will increase savings and productive investment. We will not sell our assets or our land; we would only owe more to foreigners when we paid the rent to them in future. We must own our own future. That is what Labour will help New Zealand to do. Thirdly we will help all New Zealanders to get ahead by addressing the cost of living. We will take off the GST from fruit and vegetables and make the first hundred dollars a week of earnings tax-free. We will lift the minimum wage to $15 an hour and pay for it with a credible tax plan that would leave the incentives for productivity stronger not weaker. Fourthly we will reduce debt as fast as the Government proposes to do over a 10-year to 15-year period. All of that can be done within a credible and balanced plan but that is the opposite of what is being offered by this Government in a Budget that hurts but does not help.