Smith Nick: Budget DebateText is incorporated into the Bound VolumeSmith Nick: Budget Debate[Sitting date: 21 May 2014. Volume:699;Page:18212. Text is incorporated into the Bound Volume.]Hon Dr NICK SMITH (Minister of Conservation): The most significant part of Budget 2014 is that we are in the black. I am wearing a black tie to mark that because it is hugely significant. It is great news and a mark of respect for John Key and Bill English in bringing down a balanced Budget in such difficult circumstances—something that is the envy of developed countries around the world. Let me talk about how significant it is. I still remember and I have brought it down to the House with me the Pre-election Economic and Fiscal Update of October 2008. This is when Labour had control of the Treasury benches and the officials’ advice. Labour said—and let me list the figures to remind the House of where we have come from—that we would have a decade of deficits. In fact I checked that.Hon Todd McClay: How many?Hon Dr NICK SMITH: A decade—10 years—of ever-increasing deficits. For the financial year that we are debating Labour said that the Government would be spending in 2014-15 $5 billion more than what it would be receiving. But it gets worse. It said that debt would now be at $80 billion and even worse it said that on abusiness-as-usual basis carrying on with Labour’s policies by 2020 that debt would be $130 billion. That is a Greek level of debt. That is a bankruptcy level of debt. That is the sort of dire state that New Zealand was inin 2008.It is not like the intervening 5 years have been easy. The global financial crisis that bit in 2009 was the biggest economic downturn since the Great Depression. In fact Bill English has had the toughest job of any Minister of Finance 25 of them in terms of the global economic circumstances and then throw on top of that New Zealand’s worst ever natural disaster: the earthquakes in Christchurch. Add those circumstances together and you would say that it was a near miracle that we are in the black for 2014-15. I acknowledge that it is a small number $360 million but what is so encouraging is that we are going to have choices in the next 3 years with surpluses of $1 billion $2 billion and $3 billion out into future years. That is an outstanding tribute.Just to get the numbers clear debt today is $20 billion less than the pre-election forecast from 2008 and in 2020 when the projections would have us wallowing in $120 billion of debt those debt levels will be back to 20 percent of GDP with the New Zealand Government’s finances better than those of pretty much anywhere else in the world. That is an extraordinary achievement for which Bill English deserves huge credit.Listening to contributions from members opposite they sort of say that getting to surplus would have been easy. Well where have they been for 5 years? Let us go back to 2009 and 2010. Labour members including Mr Cunliffe were demanding that there be a greater stimulus package and that the Government borrow more and spend more. In every single area in which this Government has done the hard yards to get us in the black members opposite have screamed and whined and opposed and sniped. Let us give a little example. One of the things where saving was done was around the issue of night classes. Do you know what it meant in my area? I can remember a constituent in my area who was earning over $150000 strongly objecting that he was now going to have to pay for his own Pilates classes. Well sorry get a grip. Is balancing the books more important or is it the Government paying for well-off people’s Pilates classes?But it is not just there. Whether it is in terms of conservation whether it is foreign affairs whether it is defence or whether it has been primary industries across the board members opposite have opposed every attempt to get this country in the black and now they have the gall to come to this House and say that getting to surplus would have been easy. It was not. It has been hard yards. If New Zealand wants to know what it would be like with a Labour-Green Government just look across the Tasman. Australia just last week tabled a Budget with a $50 billion deficit. It is putting up taxes. It is cutting core services. It has got enormous difficulty on its hands as a consequence of the very policies that members opposite advocate for New Zealand and we say: “Not on your nelly! Let us keep New Zealand on course and in the black.”In this Budget are provisions extra steps around the issue of affordable housing. I was listening to the Budget debate and there was a contribution from a Green member. It was so extraordinary that I have to quote it. They said this: “What has the cost of building materials got to do with affordable housing?”. I am sorry but I am one of those practical engineering types. I have got news for the Greens. Houses are made of things like wood and concrete and plasterboard. If they are expensive that makes houses expensive. If we as a Government can make steps so that those things might be more affordable we actually make houses more affordable.I saw a policy announcement from parties opposite that said that they were going to grant every first-home buyer an extra $2000 and that was going to make houses more affordable. Firstly where does the $2000 that the Government gives away come from? It actually comes from homeowners from people who are trying to pay the mortgage. Itis just a money-go-round. It is actually not making things more affordable. But I say this: every country that has tried to provide grants and to simply feed the demand side of housing actually does not get there. You need to address the fundamentals. You need to go after the issues of land supply which we are going after at pace. Members opposite opposed every step this Government took last year with the Housing Accords and Special Housing Areas Bill to free up the process so that we might get more sections available so that houses are more affordable.Tomorrow we are going to be debating the Government’s changes around development contributions. They have gone up more than any other item over the last 10 years. Members opposite are opposing reductions in those development contributions and somehow pretend that they are about addressing the issues of housing affordability. There is no magic bullet to that challenging issue. We need to do the things that the Productivity Commission said we should do. But do you know what I find particularly galling? In every year from 2003 to 2008 house prices went up by more than 10 percent. One year they went up by 19 percent. What did members opposite do? Absolutely diddly-squat. Absolutely nothing. House prices went up by 96 percent over that entire period and there is not a bill or reform in any area that would have made any difference.Reflect on our 5 years. Actually house prices in New Zealand for the first 3 years during that global financial crisis period went down. In fact I had questions from members opposite asking what the Government is doing about the risk of house prices dropping. The worst year was last year. House prices last year increased nationally by 9 percent. We have introduced over six different reforms to get on top of that issue and to make a real difference and those are the real long-term answers to the issues of housing affordability.I have one last point on that question and it is that the worst thing for homeownership and housing affordability is the issue of interest rates. The Budget documents and the Treasury advice is absolutely clear that if you spend like drunken soldiers you will drive interest rates up. Treasury has very clearly put in a spending cap of $1.5 billion which we are following and every utterance I hear from members opposite is that they would exceed that drive up interest rates and rob New Zealanders of their hopes and dreams of housing affordability.This is an awesome Budget. It is a good Budget in the black making progress for New Zealand and it should be commended to the House.