Appropriation (2014/15 Estimates) Bill — Third Reading Imprest Supply DebateText is incorporated into the Bound VolumeAppropriation (2014/15 Estimates) Bill — Third Reading Imprest Supply Debate[Sitting date: 29 July 2014. Volume:700;Page:19589. Text is incorporated into the Bound Volume.]Appropriation (2014/15 Estimates) BillThird ReadingImprest Supply DebateHon BILL ENGLISH (Minister of Finance):I move That the Appropriation (2014/15 Estimates) Bill be now read a third time and the Imprest Supply (Second for 2014/15) Bill be now read a second time. It is a pleasure to be able to put this motion to the House as we close off the debate over the 2014 Budget as we close off the Budget for 2014 and also as we look to the prospect of a general election just 8 or 9 weeks away. This Budget underpins a strong economy where the Government has sound finances an economy where there is confidence in the direction of the economy and the conduct of economic policy and credibility built up on a track record with 84000 new jobs last year and most particularly the confidence in households that they have the prospect of better incomes and of finding a job if they do not have one. That is the platform for growth and for the prospects for sustained economic performance over the next 3 to 5 years.It is that sustained economic performance that has the capacity to make a real difference to the prospects of young New Zealanders so that they can take part in a productive economy that gives them scope for the use of their capacities and also sustained growth that gives the prospect of a lift in household incomes. In the last 2 years the average wage has lifted by $3000 and in the forecasts that underpin this Budget there is the prospect that by 2018 the average wage will lift by a further $7000 to over $62000.I must say that it is a sharp contrast in outlook as we approach the election compared with that which we inherited back in 2008. I have here the 2008 Labour pre-election update—the pre-election update under the previous Labour Government. Let us read just a brief part of the executive summary: “Imbalances have built up … including inflation pressures”—well inflation was then 5 percent; today it is 1.6 percent—“[and] an overvalued housing market”. It had doubled in 7 years—it had doubled—and yes there are housing pressures in the market and I will come back to dealing with those but it is nothing like a doubling in the previous 7 years. This is Treasury. It then goes on to list high household debt. Well household debt up to 2008 reached record levels. Our households have never been as indebted as they were in 2008. Then it goes on to add to the list of its outlook for the economy. So we have already got high inflation pressures an overvalued housing market high household debt—in fact record household debt—and a large current account deficit. If there is a moral platform on which the Opposition members like to strut their stuff it is complaints about the current account deficit. What was it in 2008?Chris Auchinvole: What was it?Hon BILL ENGLISH: Currently it is less than 3 percent and Opposition members say it is terrible. I would have thought that if you went back to look at the current account deficit and you saw it as a measure of stewardship of the previous Labour Government and if it is bad at less than 3 percent it must have been less than that.Chris Auchinvole: What was it?Hon BILL ENGLISH: It was 8 percent. That is more than double. In fact it had been at record levels in 2006 2007 and 2008. It had never been that high.Hon Dr Nick Smith: What did they say then?Hon BILL ENGLISH: Well they did not say anything actually. They just did not talk about it. If credibility is an issue and it always is in an election then the current account deficit was sufficiently worse and that is not the end of the list—that is not the end of the list. Treasury then refers to implications for interest rates. What it did not say which it could have said bluntly was that under Labour’s stewardship to 2008 the first mortgage rates reached almost 11 percent. I do not think any household today believes that that could have been possible—that that was how badly managed the economy was then and that in a country where we have had the benefit of 50-year low interest rates now rising somewhat first mortgage rates were over 10 percent.All of those things are dramatically better—not a little bit better but dramatically better—now than they were then. The point of that is partly underlining the credibility of economic management over the last few years which has dealt with a major recession the earthquakes and now a recovery that brings with it its own risks of growth. But more important than that is that it demonstrates that the prospects for sustained growth from here are remarkably better than they were in 2008 and significantly better than they were in 2011. The platform for that outlook is sound Government finances heading into surplus rising but moderately rising interest rates moderate inflation strong export growth and most particularly the verdict of the people and that is in the migration figures.You see what this Government has focused on is not just the numbers; it is the resilience and positive aspirations of New Zealanders in their households and in their workplaces. What they have demonstrated in the last 5 years is impressive resilience—changing how they do business becoming more productive getting on top of their debt and taking care with their spending so that now they have built the platform for what could be 3 to 5 years of sustained economic growth that delivers higher incomes and tens of thousands of more jobs annually. The people who made the decision that that looks likely are the tens of thousands of Kiwis who decided to stay home.Interestingly tens of thousands of Kiwis are predominantly in the regions that the Opposition members say are suffering. The net outflow to Australia 3 years ago was 40000; last month it was zero—last month it was zero. Why? Well partly because the Kiwi battlers have a better understanding of the Australian economy than Australian economists. They know it is more difficult to get jobs in Australia. But more important they know that if they stay here they will not be on the dole; they will be getting jobs and that is what has happened.This economy has demonstrated an impressive ability to expand the supply of labour and capital to sustain growth. If we can stick to that New Zealand will have a period of sustained growth that will not finish off with a collapse like it did in 2008 but will continue into the future growing out our potential and generating higher incomes year after year. I think we have all learnt that getting a country in shape is like getting a household in shape. You might get a lucky break but you probably will not. You have to graft away doing everything a bit better as we have set out in our Business Growth Agenda getting 200 things a bit better. So I want to pay a tribute to the New Zealanders in their homes and in their workplaces who have turned this country round.I also want to pay a tribute to our public servants. If we can get re-elected the Public Service will be on the verge of the most substantial effective shift in the delivery of public services to vulnerable New Zealanders and all New Zealanders in 20 years.Hon DAVID PARKER (Deputy Leader—Labour):The question New Zealanders will be asking themselves after they heard that last speech is why then the Government has gone early. Why has it gone early? Why has it called an early election? Because from here on all of the forecasts show that the economic fortunes of the country get worse than they currently are. In other words this is as good as it gets. This is as good as it gets. There are 147000 people unemployed. The overall unemployment rate is still 6 percent. The youth unemployment rate the 15 to 19-year-olds—it is terrible—is 24 percent. But even the unemployment rate for 20 to 24-year-olds which is a more reliable statistic is 13 percent. There are 74000 New Zealanders not in education or training. In addition to that we have got dropping exports. The current Government inherited amongst the lowest Government debt in the world. Indeed Bill English was good enough at that time to acknowledge that it inherited amongst the lowest unemployment in the world and amongst the lowest net Government debt in the world. Indeed he said in the face of the global financial crisis and the recession around the world: “This is the rainy day that Government has been saving up for.”Hon Annette King: It wasn’t him.Hon DAVID PARKER: It was not him—no. National opposed all of the surpluses that Labour ran to leave the books in that good shape. Since then we have the gaps widening in New Zealand—we have the gaps widening in New Zealand. It is not just the Labour Party saying that; it is just about everyone.Hon Bill English: No it’s not true.Hon DAVID PARKER: Oh it is not true. It is not true says Bill English. Well I will quote for him Shamubeel Eaqub the chief economist at the New Zealand Institute of Economic Research who said: “One of the biggest issues of this generation is the widening gap between the haves and have-nots. The gaps are opening up in New Zealand and are really big across geographical race and education lines.” It is true Mr English and you know it is true. You know that it shows up in things like rising extreme child poverty. We have the lowest housing homeownership rates in 50 years and they are still dropping. You are not shaking your head now are you Mr English?Hon Bill English: I am.Hon DAVID PARKER: He is shaking his head denying that homeownership rates are the lowest in 50 years. He complained about the increase in price rises for housing under the Labour Government. It is true that by the time we left office house prices were higher than we had wanted. They have since gone up at a higher rate under this Government and from that high base that he complained about they have gone up another $200000 so that the average house price in Auckland is a fraction under $700000 for a house. As a consequence the Reserve Bank is jacking up the interest rates for everyone holding up the New Zealand currency further to the detriment of exports and as a consequence we are still losing jobs in our export industries. Bill English came to power promising that he was going to lift exports to 40 percent of GDP by 2020. When he came to office exports were 33 percent of GDP. They have now dropped to 29 percent of GDP and Treasury’s own forecast dropped them to 26 percent of GDP over the next 3 years.Hon Annette King: He didn’t mention that figure.Hon DAVID PARKER: No he did not mention that figure because again it just shows that the reason the Government has gone to an election early is that there are imbalances in the economy that have not been fixed. We have got exporters and manufacturers still cutting jobs in the face of an overvalued dollar. We in the Labour Party know that for sustained economic growth that lifts the wages of everyone rather than it all going to the people at the top who benefit from the speculative economy that booms under the National Party we need an economy built on a diverse range of sophisticated job-rich exports.That is why the Labour Party’s policies do just that. Our economic upgrade policies include a universal KiwiSaver scheme. KiwiSaver of course was a Labour Party initiative that the National Party opposed and that it now thinks is a good idea but it will not go so far as they have in Australia and have a universal work-based scheme. We know that we need that in New Zealand so that we have got more of our own capital to invest in the productive sector. Having more capital is not the only answer. That capital has to be directed towards the right parts of the economy. That is why we need a capital gains tax. Bill English did not show last night. He had agreed to come to a debate on the capital gains tax at Victoria University but he pulled out. He is pulling out of most of the economic debates between now and the election because the Government does not want to answer the difficult questions about why from here the economy gets worse. We do need a capital gains tax excluding the family home.The international experience is that in America 60 percent of their capital gains tax is paid by the top 1 percent. It is the same in Canada. In Australia 60 percent of the capital gains tax is paid by those on incomes of more than $180000. It is a fair tax as well as being economically efficient and pushing investment into the bits of the economy that we in the Labour Party want to grow. That is why we have also got a research and development tax credit to encourage innovation and why we want to encourage investment and the increases in productivity that come from the sophisticated and expensive plant that we want our manufacturers to invest in. We do that through our accelerated depreciation policies.Industry training is important. KiwiBuild is important for building some of the houses we need especially in Auckland and Christchurch. The overall package that the Labour Party has will transform the New Zealand economy it will support higher incomes and it will lower inequality. In the housing area through KiwiBuild through universal KiwiSaver and a variable savings rate which gives the Reserve Bank another tool other than interest rates to control inflation through the capital gains tax and through restrictions on overseas ownership of New Zealand land to stop offshore speculation we will stabilise the housing market and we will restore the Kiwi dream of homeownership.The reason the Government has gone early to an election is that the results from here get worse. I want to deal with the assertion that we hear so often from the Minister of Finance and the Prime Minister—because they are so nervous about it—and that is the misrepresentation of where we are at with inequality. We know that the rapid increase in inequality of income from year to year happened in the 1980s and then the 1990s.Hon Bill English: It’s not happening now is it?Hon DAVID PARKER: Well it is actually happening. The most significant increase in income inequality from year to year occurred during that period. The only significant decrease was of course through Working for Families which was opposed by the National Government which called it “communism by stealth”.Hon Bill English: It’s not happening now.Hon DAVID PARKER: Well it is happening now because the statistics that the Minister of Finance conveniently quotes exclude capital gains—exclude capital gains. The other underlying reality here is that New Zealand went from being in the best 30 percent of countries in the world to the worst 40 percent during that period at a time when the whole OECD club was getting bad. So New Zealand now has high rates of income inequality—so bad that the consequences of inequality pile up year after year. You see that in the statistics about homeownership which is at the lowest rate for 50 years and continuing to get worse. You see it in the fact that luxury car sales are taking off and they are the highest they have ever been at a time when child poverty particularly severe child poverty gets worse and worse.That is the contrast between the party on this side of the House and the National Party. We actually do have a plan for structural change. National Governments only ever trim the sails. They tinker otherwise. This Government increased GST and dropped income tax rates especially for the wealthy in its first term. This term all it has done is sell off State-owned enterprises. It has done nothing to deal with the underlying imbalances under our economy and nothing to improve savings. The Minister of Finance referred to rates of household debt decreasing during the recession and they did and they always do. Now household debt is projected to increase again because the imbalances in the economy have not been fixed and we are not exporting enough to cover the cost of our imports and interest. As a consequence New Zealand’s debt will go up and so will the sale of our land and our companies to overseas owners.New Zealand needs the economic reform package that the Labour Opposition is bringing forward. It has widespread respect out there. We know from a wide range of sources whether it is the business audiences or the union audiences—Hon Dr Nick Smith: More tax more spending.Hon DAVID PARKER: Well actually we reduce debt faster than the National Party does under our alternative Budget which has already been released.Hon CRAIG FOSS (Minister of Commerce):It is a pleasure to speak in this third reading debate on the Appropriation (2014/15 Estimates) Bill. I will pick up where my colleague Mr English left off and also pick up some of the points that the previous speaker the Hon David Parker was just making. I do note that he was monstered thrashed beaten last night by the humble Simon O’Connor one of our MPs in a debate around the capital gains tax up there at the university I believe it was. So things are looking good in showing the depth of National’s understanding of things economic and the competency across our caucus.National is working for New Zealand. National is working for all of New Zealand. National’s plan is working for all of New Zealand. New Zealanders can continue to trust in the National Party and in a National-led Government. New Zealand can continue to be confident about where our country now sits in the world and where we can be. Our families can be confident and continue to trust in the National Government to deliver for them and their families. That is in spite of the global financial crisis. That is in spite of New Zealand being in recession when the National Party came into Government in 2008. That is in spite of the decade of deficits it inherited as outlined in the pre-election update in the independent analysis by Treasury in 2008. That is in spite of the unfortunate and tragic circumstances in Christchurch and the resources we have committed to in rebuilding Christchurch.Also we continue our prudential management of the economy which delivers better public services each and every single day across a myriad of Government services. Of course New Zealand can trust and be confident that we will continue to deliver a surplus in the accounts as shown in this Budget. New Zealanders can continue to trust National to deliver results be it on interest rates—positive results on interest rates for our families—on the official cash rate on mortgage rates or on net migration. New Zealanders can continue to trust National to deliver. The cost of living is low unlike the contrast which I will talk to in a minute of when we came into Government in 2008. After-tax wages are improving under this National-led Government. A fairer tax system has been put in place rewarding all Kiwis particularly lower-income Kiwis and those receiving assistance in one way shape or form be it assistance or tax credits.We are delivering across the social sector as well as the economic sector. We are delivering in education be it in early childhood education virtually doubling the spend on early childhood education; in the primary sector with national standards helping parents be informed as to the progress of their children; in the secondary sector with targets and hard lines in the sand for attainment and achievement by our students across their demographic; or of course in the tertiary sector. In the law and order sector there is a 30-year low for various crime statistics. Reoffending statistics are low and declining. There are more police on the beat due to Better Public Services. We are also delivering across justice court time and prisons. New Zealanders can continue to trust National to deliver for all New Zealanders.The challenges a National-led Government now has are how to manage and sustain a surplus in our accounts and an ongoing growing economy create higher after-tax wages for our families deliver better public services and create wealth for our population. Those are the challenges that this Government has and they are much better challenges I gather than the challenges that Labour members are now trying to articulate and that they had because their current challenge is to try to be positive for more than 5 minutes. It does not seem to last whatever slogans they may put on their billboards or talk about. They are not positive; they are negative.The previous speaker talked about the growth of a Labour-led Government so the only thing we really have to compare is the growth and the statistics and the metrics and the results that it had when it left Government in 2008. That is what we inherited. The growth those members talk about was actually based upon inflation. They inflated wages. Yes gross wages grew but inflation was running at 5 percent when we came in and Labour left. They talk about a big book.Actually at one point the previous speaker started talking about their capital gains tax. That is typical Labour—normal form for Labour and the Greens—talking about tax. They talk about new taxes and adding taxes which are basically other ways to take money out of our hard-working New Zealand families. Another tax is what they are talking about. This capital gains tax they talk about—Labour members say it will raise $4.5 billion in the first 4 years. That is what they said—$4.5 billion cash in the first 4 years. How does that work? I think their tax is at 15 percent so if you work the numbers it is about $1.1 billion realised tax every year for 4 years. The numbers do not add up like any of their numbers. Actually they must be trying to be a bit tricky somewhere. Under the settings that they have announced they cannot raise $4.5 billion cash over the first 4 years of their tax—yet another tax—no matter how they colour it and how they describe it.Let us look at some contrasts. The previous speaker Mr Parker was talking about contrasts and that is fair enough. It is actually quite appropriate and right as we move towards the end of this Parliament to look at where the National-led Government is at after 6 years and the economic results particularly because this is the third reading of the Budget debate and contrast that with where Labour was at when it left office in 2008. Remember some of the highlights at the time. The previous speaker spoke about exports. There was a problem. The export sector as we discovered when we came into Government had essentially been in recession for about 4 years. New Zealand is an exporting nation. The previous speaker seemed to be quite happy in fact if exports did decline. They were declining and in recession for 4 years when we came into Government. We are an exporting nation. What was Labour’s solution? Does anyone remember Export Year? That was Labour’s solution—some highlight.What else did we have back then? Back then when National came in we had 5 percent inflation. After years of good economic prospects Labour blew it and that is the test if it were to come into Government again—5 percent inflation. Absolutely the result of that is theft of financial assets and theft of savings. It actually hurts the vulnerable the most because it makes their cost of living so much more expensive than it needs to be. So yes Labour just sits on inflation to try to boost its accounts. Contrast that with where we are now. There is 1.6 percent inflation. It was 5 percent when Labour left office. After 6 years of a National Government with all the issues we have dealt with there is 1.6 percent inflation in New Zealand.The official cash rate when Labour left office was 8 percent. Labour talks about changing the Reserve Bank of New Zealand Act or something but nothing will change that part. When Labour left Government the official cash rate was around 8 percent—8 percent. It is currently just over 3 percent. It is just over 3 percent. Mortgage rates—what better measure when one talks about Kiwi families and their aspirations for homeownership. Mortgage rates when Labour left office that is the test. When we go to the election and wonder how National has performed in the economy and how Labour performed they are our test. Under National mortgage rates are just over 6 percent. Under Labour they were 11 percent—11 percent mortgages on our families in New Zealand under Labour.The current account deficit under the National Government is 2.8 percent and that is apparently deeply worrying for Labour. Under Labour the current account deficit was 8 percent—a further theft from our population. Net migration to Australia was zero this June. Net migration was 40000 in the last year of Labour and 3000 per annum. New Zealanders can trust National to continue the hard work on implementing our plan for a better sustainable brighter economic future. Thank you.GRANT ROBERTSON (Labour—Wellington Central):That member says that we can trust him. Well I wonder whether the teachers of New Zealand trust the man who brought them Novopay. That is who Craig Foss is. He is the man who oversaw teachers not being paid. If there is one thing we should be able to expect when we get into a job it is that we will get paid. Even today the legacy of Craig Foss carries on. There are still problems with Novopay today. It was Craig Foss Hekia Parata and Bill English who signed off on that and he asks us to trust him. Craig Foss asks us to trust him and he cannot be trusted.This appropriations debate is the debate where we finalise how we feel about the National Party’s Budget. The truth is that this Budget is a huge lost opportunity. This could have been the Budget where once and for all New Zealand addressed inequality and where once and for all every New Zealander was guaranteed a fair go. This could have been the Budget where every child got the best start in life with support for parenting programmes with income support and with making sure that ante-natal classes were properly funded. This could have been that Budget but it is not. This could have been the Budget that restored the Kiwi dream of owning a home and of actually having a warm dry home for every New Zealander to grow up in whether they are in their own house or in a rental house but that was a lost opportunity as well. This could have been the Budget where we put people back at the centre of the economy where we guaranteed that every New Zealander who wants to work can have a job and where we set a target and said that full employment is what we should have in New Zealand because work brings dignity and work brings prosperity to this country. It could have been the Budget where the Government stepped up and said: “We will be a partner in this economy not some bewildered bystander watching the ebb and flow of commodity prices.” But no—this Budget was a lost opportunity.All of those things I have mentioned that could have been done are a core part of the Labour Party’s economic plan. Our economic plan is not just about celebrating a statistic here and there or slapping ourselves on the back when dairy prices go up and then grimly tightening our belts when they go down because there is no other alternative for us. That is not the economy that I believe in or that the Labour Party believes in. We believe in an economy with a human purpose. It is actually about what people gain and benefit from it. It is not an end in itself and that is where the National Party runs out of ideas. It believes the economy is simply an end in itself. The statistics are all it is interested in. Well the real people out there in New Zealand are worried about their jobs whether or not there is a future for them and their children and their wages. That is the economy for most people—do they have a job and are they being paid sufficiently to meet their bills and look after their families? And time and again this National Government fails to recognise that.What we need is active job-creation policy. That comes from the very big picture as David Parker said of making monetary policy actually work for New Zealanders and saying that we will use a variable savings rate to influence monetary policy to stabilise the dollar and to give exporters a fair go. It is worth noting that a target of exports at 40 percent of GDP is a laudable one—Shane Ardern: Yeah.GRANT ROBERTSON: —but it is going in the wrong direction Mr Ardern. It is going the wrong way. It started at 33 percent hit 29 percent and is projected to go to 26 percent. The percentage of exports as a part of GDP will be down to Bill English’s poll rating before long. That needs an active Government. It needs industry policy that says we will support the industries where there are jobs to grow. We in the Labour Party are not going to rely on a big pile of raw logs in the port here in Wellington as our future. We are going to support an industry to process those logs to add value to those logs and to create jobs in New Zealand because that is what a Government does when it is a partner in the economy—Hon Dr Nick Smith: By putting energy costs up? You already did that.GRANT ROBERTSON: —not a bystander like Nick Smith would like to be. It is where we support regional development with funding to be a catalyst for making sure that there are jobs and that is a $200 million fund that we have announced for right across the regions. Lawrence Yule who is hardly a great friend of the Labour Party has said that that is a step in the right direction. What did National come up with with its great regional development idea? You get to text Paula Bennett. That is regional development for the National Government: text Paula Bennett with your ideas about crazy and loopy rules. Those are the ones like where you have to specify every single tree in your plans. That was the rule brought in by the National Government.Real regional development happens in partnership between a Government local government local industry and workers and that is what the Labour Party will bring in as part of our economic plan. The focus must be on jobs. Nearly 150000 people are still out of work in New Zealand and the National Government complacently believes that that is somehow OK and that it somehow represents a measure of success. It cannot be a success when we have that many people out of work. There are more people who are jobless today in every region bar Canterbury than when National took office. That is a measure of failure not a measure of success.We look at young New Zealanders striving to find their way into a job and to get some training and we see more than 70000 young New Zealanders not in employment education or training. The commitment of the next Labour Government is that every young New Zealander under the age of 20 will be in work education or training and that is the future we owe the next generation of New Zealanders. We owe them lifelong learning because the jobs of tomorrow have not even been thought of today in many cases. We need to provide opportunities for people to constantly train and retrain and that is what the next Labour Government will do.When we look at this Budget it is the smoke and mirrors of the National Government. It is the “fudge it Budget” as we said on the day. You shift a bit of money around for ACC people have to pay more in their levies than they need to you have a $375 million loan for a road that has never been heard of before in order to disguise spending and you have $560 million less spending on infrastructure in Canterbury all so that Bill English can come forward with his wafer-thin surplus. That is not a real economic plan. A real economic plan has to be based on more than milk prices and recovery from a disaster but that is all that National has brought to the House with this Budget. It needs to be based on a diversified economy and on a range of industries—high-value manufacturing information and communications technology agribusiness working with iwi in the post-settlement environment to develop new industries in forestry and wood right across New Zealand. That is real economic development. That is economic development with a human purpose that is about jobs.Instead “Sheriff” Steven Joyce sits in his office in the Beehive and fires off his latest silver bullet for the economy. So it is oil and gas and everyone must be in on it. Well maybe there are some opportunities for that in some regions of New Zealand but actually it is not a long-term proposition. It is not a long-term proposition from an environmental point of view and it is definitely not a long-term proposition in a number of areas in New Zealand where those resources simply are not there. Then we have the National Government’s other big solution: throw $200 million at roads. Well what is emerging as the papers for that are coming out is that there are some pretty poor benefit-cost ratios.Jonathan Young: That’s all you’re doing for the regions—$200 million being thrown away.GRANT ROBERTSON: Mr Jonathan Young might want to have a look at the papers on the Kawarau Falls Bridge—a $25 million bridge which the Deputy Speaker will be familiar with. It is a bridge with an appalling 1:1 benefit-cost ratio that Bill English has had built essentially so that he can drive from Queenstown to Dipton when he pops in on his holidays down to Dipton. It is smoke and mirrors—wasting money on things that will not actually drive economic growth in the regions.This Budget truly is a lost opportunity. The focus should have been on getting New Zealanders into work on giving New Zealanders the opportunity to own their own home and to live in warm dry safe houses and on supporting families through more spending on health and education and having more support for children. In the future we must make it our priority for New Zealand to reduce the gap between the haves and the have-nots. When that gap grows all it does is drive a wedge between New Zealanders and it limits our potential as a country. It is not just haves and have-nots when it comes to individual income; it is haves and have-nots when it comes to regions in New Zealand. We need to see widespread economic growth right across the regions. The East Coast of New Zealand and Northland deserve as much attention as Auckland does. We need to make sure that there are opportunities in the regions for good sustainable jobs. That should be the priority of the Government that should have been the priority of this Budget and it is huge lost opportunity that it is not.Hon TODD McCLAY (Minister of Revenue):That was a speech from the next leader of the Labour Party and can I say that it is one of the best speeches I have heard from a member of the Labour Party in Opposition for a long long time. But do you want to know what marks it out from a speech by its current leader? There was not a single apology in that speech and that is where it started to go wrong. As an adviser to the previous Labour Government as with all other members of the previous Labour Government he is yet to apologise to New Zealanders for the great mess that they left us when we took office. Grant Robertson needed to apologise for only one thing in that speech. He needed to apologise to his Labour colleagues who will lose their jobs on 20 September this year for not rolling David Cunliffe 3 weeks ago when he had the numbers.This is a very good Budget for New Zealand. It is Bill English’s sixth Budget in a row under very difficult circumstances where New Zealand has faced one of the steepest recessions over the last 50 years in the global financial crisis. It is a Budget to help bring New Zealanders with us because New Zealanders have been working so very hard over the last 6 years as New Zealand has had to face the effects of the previous Labour Government and the effects of the global financial crisis upon all of their jobs and upon our Budget. This Budget was about balancing the books. It was cautiously optimistic and it was all about opportunity for New Zealanders. It was about growth it was about balancing those Government books and it was about keeping interest rates lower for much longer so that Kiwis can keep extra money in their pockets.It was about immigration and a great change so that more New Zealanders find opportunity at home and choose to stay at home. Many more New Zealanders are choosing New Zealand to return to from Australia the country about which the Labour Opposition has said resoundingly over the last 6 years: “Why can’t New Zealand be more like Australia?”. Do you remember that? In our first and second Budgets when those members criticised us for being cautious they said “Why can we not be more like the lucky country?”—that is Australia. Well if New Zealanders were to vote for the Labour Party and the Green Party and the Mana Party and the Dotcom party and for every other party that those members on the other side will not rule out to form a Government in the next term then we will be more like the country that they call the lucky country. Is this not such a different Budget to that of Australia’s where everything is going in the opposite direction? I am saying that a Labour Government with the cabal on the other side that will try to form a Government would drag New Zealand in the direction that the current Australian Government is having to fix after having a Labor-Green coalition over there.This Budget was about jobs and it was about wages and about putting families and children first. Do you know what? For the first time ever in the history of this country exports have hit $50 billion. Every speaker on the side of the Opposition in this debate so far has been talking about the great myth of the manufacturing crisis and the perilous state that our export economy is in. For the first time ever we have hit $50 billion of exports based on a productive and growing economy.As a Government we have been working very hard to get the Government’s books back into shape. In our very first Budget Treasury forecast after the mess that Labour had left us that this country would almost never be back to surplus and that debt would continue to grow and grow and grow for the next 10 the next 20 and the next 30 years. Well Bill English has done a significant amount of work on behalf of New Zealanders. We are predicting through the last Budget a modest surplus in the coming financial year with those surpluses growing up to $3.5 billion through to 2018 which is a significant turn-round. We are one of the first countries in the developed world that are forecasting not only significant growth but surpluses. That gives the Government more choices about what we spend money on. Those are not choices that were there when we came to office 6 years ago. These choices that will be offered to the Government are choices that this Government over six Budgets has had to work so strongly with the help of New Zealanders to be able to deliver.Where will this come from? Well there is some very good news around the economy. It has grown by 3.8 percent to the year 31 March 2014 which is one of the higher levels of growth of any developed country and any developed economy in the world and it is forecast to grow by 4 percent next year. We will hear the cries from the Opposition members who will say: “Well that’s just because of Christchurch and Canterbury.” Well Christchurch and Canterbury are a part of that growth story but we must also remember that Christchurch was our fastest-growing city it was our second-largest city and its growth was based upon production. It was a productive growth. The earthquakes that hit Canterbury and Christchurch did great damage to the New Zealand economy and great damage to people’s livelihoods down there. For the Government to be able to invest and work with the people of Christchurch to turn that round is part of that success story—4 percent growth predicted for next year.Within that what does that mean? Well average wages have increased by $3000 over the past 2 years. There is $3000 extra on average in the pockets of hard-working New Zealanders and that growth is forecast to increase by an extra $7000 on average by the year 2018 so that the average wage will be $62300. That is why we need to make sure that we have another 3 years of stable Government another 3 years of carefully managing the economy and another 3 years of being cautious around spending of Government resources and taxpayers’ taxes so that we can continue to build on the economy and grow real-time wages for New Zealanders by an extra $7000 up to the year 2018. Eighty-four thousand jobs have been created in the year to March and Treasury forecasts that 170000 jobs will be created over the next 4 years.That is quite a contrast to what we found 9 years ago when the productive economy in New Zealand was already in recession. The productive economy—the people out there who manufacture who make things who add value to them who sell them and who export them—was already in recession. In a very short period of time as the whole of the world has grappled with the global financial crisis we have been able to turn that story round so we have a stronger manufacturing base in New Zealand and we have more productive businesses. We have invested in all parts of the economy and infrastructure so that we can be more productive and therefore more competitive. This means that our economy continues to grow there are more jobs for New Zealanders and those jobs pay much better.The other great part about this Budget was some of the things that we were able to reprioritise and spend money on. Grant Robertson said that this was a Budget of missed opportunity. Well this Budget delivered by Bill English was all about opportunity and helping children and families: free general practitioner visits and free prescriptions for all children under the age of 13 4 weeks’ extra paid parental leave for families and $155.7 million extra for early childhood education getting more children participating supporting their families and keeping fees down. We are not just throwing money at a problem as the previous Government did but spending it productively so more young people in New Zealand will be able to go and be involved with increasing participation rates in early childhood education. There is $33.4 million extra to support vulnerable children including eight new Children’s Teams to work with at-risk children around the country.We are building a more productive and competitive economy. There is $69 million for New Zealand Trade and Enterprise to do more work in China South America and the Middle East and help 200 more firms break into overseas markets. There is $57 million of contestable funding for science and innovation. We are at the cutting edge of that in this country. There is $52 million to establish another three centres of research excellence; $83 million to lift tuition subsidies for science for agriculture and for health sciences; $20 million to increase apprenticeship reboot places from 6000 to 20000 places; and ACC is on track to reduce costs for New Zealanders.Finally I want to say that education is very important to us. Over 4 years $858 million of new spending will lift our investment in early childhood education and in primary and secondary schools. We will spend $10.1 billion a year. This Government and Hekia Parata’s commitment to education is second to none. It is being spent to give young New Zealanders every opportunity that they can give them. Can I say this is a good Budget for New Zealand. I want to thank Bill English for his hard work over 6 years and I look forward to the next 6 weeks when we talk to New Zealanders about the need for another 3 years of stable careful Government and careful management of our economy.Dr RUSSEL NORMAN (Co-Leader—Green):I rise on behalf of the Green Party to analyse I guess the Government’s Budget and also its economic direction and the path that it seems to be taking the country on. I think we have a pretty clear choice in front of us. We have the National Party’s pollution economy which is the direction that it is proposing to take the country in versus a smart Green economy. I think that in this election and what is in front of us at the moment with this Appropriation (2014/15 Estimates) Bill and the Government’s Budget we have got a pretty clear sense of the different paths that are open to New Zealand.If you look at the economic performance of the country under this Government it is a simplified economy. As time has progressed our export profile has become simpler and simpler. Whether you are looking at milk solids which obviously are probably the mainstay of the Government’s economic agenda whether you are looking at raw logs—and over 50 percent of all forest trees felled now are exported simply as raw logs; that is the Government’s strategy—or whether you are looking at oil and gas these are the key parts of the National Party’s economic agenda. It is a very simple very low value-add commodity-based approach to economic development. That is what National is directing the New Zealand economy towards: that kind of simplified commodity exporting.There are a number of problems with this strategy. The first problem with this strategy obviously is that it has pretty low value-add. It is pretty hard to become prosperous when you are a simple commodity producer and it is a pretty low value-add strategy. On top of that we are running into these very significant environmental constraints. If you look for example at the agri-food sector the Government’s strategy of more and more volume—increased milk powder production every year—is having this dramatic impact on the rivers and lakes across New Zealand because as every scientific study has shown if you increase the volume of production you very soon start to have this very dramatic impact on rivers and lakes which of course are downstream of intensive agriculture. As the Government has subsidised industrial dairying and subsidised dairy production we have had these very big consequences for our rivers and lakes. The Government has said that we should just accept this as a kind of Faustian bargain if you like. The idea that in order to pay our way in the world we have to accept that we are going to have toxic rivers is essentially the National Party’s position.There is of course a different strategy which is the smart Green strategy which has been promoted by the Riddet Institute which is the institute of agri-food research based out of Massey University and is the leading voice for the agri-food sector. This is much more about value-add and innovation the very opposite of the strategy being pursued by this Government. In order for that to happen of course you have to invest in research and development. If you look at the Government’s projections in its own documents it is proposing to cut investment in research and development as it said in its Draft National Statement of Science Investment. It is proposing to cut investment in research and development by 10 percent in real terms over the next 3 years whereas the Green Party is proposing to increase investment in research and development and innovation over the next 3 years by $1 billion.It is not just about the quantum of the amount of money you spend on research and development but that clearly is significant. It is also about how you do it. When the Government came in it abolished the research and development tax credit. The thing about a research and development tax credit is every business gets to direct its own innovation and its own research and development spending and then get some support from the taxpayer for that research and development spending. What the National Government replaced it with was a series of grants that Steven Joyce controls. Steven Joyce sits there and picks the winners. He says “OK you’re going to get some Government money in the form of research and development grants but only if you satisfy my particular criteria and I happen to like your business.” and all the other businesses will not get any money to support them for research and development.Instead of picking innovation as the winner which is what the Green Party approach is the National Government picks particular individual businesses that get money from Steven Joyce through research and development grants. That is a very different strategy which is kind of ironic because the Government goes on and on about not picking winners but when it comes to research and development funding that is exactly what it is doing. It abolished research and development tax credits which give all businesses the freedom to innovate and give all businesses the opportunity to get some support to do research and development and replaced it with Steven Joyce picking individual companies and saying “You’re going to get a research and development grant.”Steven Joyce is a bright guy no question about it and I kind of acknowledge him as a worthy opponent. But the thing is in spite of that Steven Joyce cannot know which are the right businesses to pick across the whole of the New Zealand economy or which are the right businesses to direct research and development support towards in order to pick the winners that are going to come out of it. Steven Joyce just is not that smart. Nobody is that smart. That is why the majority of OECD countries use research and development tax credits to support innovation across their whole economy. That is what the Green Party proposes which is the exact antithesis of picking winners which is what the National Party policy is through its research and development tax grants.You get a similar kind of issue in what you might call investigator-led research or science. The Marsden Fund basically says “Here’s money to scientists so that they can do science so that they can investigate things and do research if not development.” That is open-ended. It says “Investigators pursue things.” The Government is moving funds away from the Marsden Fund and into the National Science Challenges which has meant that lots of scientists are extremely critical of the National Science Challenges. What those science challenges are is that again Steven Joyce has picked these 10 science challenges and he has said “I am going to direct a whole bunch of money into those instead of supporting the sciences more generally.” Instead of supporting investigator-led research whereby researchers try to investigate problems and come up with solutions which tends to produce those kinds of breakthroughs that are incredibly valuable for society as well as the economy more generally once again the heavy dead hand of Steven Joyce is upon innovation in our country.Steven Joyce’s heavy hand sits on innovation in the research and development grants. You get a grant if Steven Joyce approves it whereas the other system that the Green Party is proposing is a research and development tax credit. We give all businesses the freedom to innovate. Then we see the same thing in what we might call more pure science where instead of actually supporting science across the board where scientists are given support to investigate things Steven Joyce is picking 10 particular science challenges. His dead heavy hand sits on it and says “If you’re not doing something that meets these criteria if you haven’t filled out all these forms filled out all this bureaucracy you’re not going to get the money.”That is the contrast between what the Green Party is proposing for a smarter greener economy versus the National Government which is picking winners in dirty industries. The National Government’s pollution economy says that if you are creating pollution you are probably going to get a grant because that is what the National Party is going to support. If you are doing simple commodities yes you’ll get some money. If you are doing milk powder then of course the National Party will support you. If you are doing oil and gas it turns out you will get massive support from the National Government for what you are doing. But if you are involved in innovation in all these other different fields—and there is no way any one person can understand the full field of innovation—you do not get support from this Government. That is I think the stark contrast: the pollution economy supported by the National Government versus a smarter greener innovative economy promoted by the Green Party.There is also a lack in the National Government’s Budget for all the simple things. There is no price on carbon. The Green Party put a proposal for a carbon tax cut where we put a price on carbon and return the revenue to income earners in the form of a tax cut. The first $2000 will be free of income taxes under the Green Party’s carbon tax cut plus we cut the company tax rate one point from 28 to 27 percent. The idea of that is to create a very strong incentive for those businesses that are efficient in greenhouse emissions the kinds of businesses we need to grow to protect our climate but also to build a resilient New Zealand economy in a carbon-constrained world. Instead the National Government says “Carbon is free. You can create as much pollution as you want. In fact the Government will subsidise it.” It is the same with water pollution. The National Government will subsidise it. Actually it has got the signals exactly the wrong way round if we want to build a resilient green economy that will actually prosper in the years ahead.Finally I just finish on the issue of fiscal conservatives. The National Party opposed every Budget when it was in Opposition to cut Government debt. It said the surpluses when Labour was in Government should be spent on giving tax cuts to the rich. Fortunately National was in Opposition so it lost all of those debates and we were able to cut Government debt very significantly. As soon as National got into office what did it do? It started borrowing again. It has never run a surplus not a single surplus. It gave tax cuts to the rich. It had to borrow over $5 billion to fund tax cuts for the rich. That is ridiculous. It is the most fiscally irresponsible Government we have had in living memory in New Zealand. Whether they are in Opposition or whether they are in Government National Party members are not fiscal conservatives; they are the exact opposite.PAUL GOLDSMITH (National):I always seem to get to follow the Greens which is a little bit frustrating. Dr Norman I understand has a PhD. I am sure it cannot be in history because his history is very wonky when he implies that the Labour-Greens Government left the country in good shape in 2008. Yes it did run surpluses and was reasonably disciplined for the first 6 years of the Government. But in the last term the taps were opened and spending exploded by about 50 percent over a short period of time. The final Budget that it bequeathed to this Government was a $3.9 billion deficit before any other countries in the world were going into recession and a promise of 10 years of deficit and a massive increase in Government debt if we carried on the path that it was carrying on. So it is quite incorrect what he said.This is the sixth Budget of a Government led by John Key who has the unanimous support of his entire caucus which has led this country from recession to sustained growth. It is interesting to see how Labour and the Greens try to characterise the situation. They certainly cannot go and say that the economy is weak or that the economic management of this Government has been poor because that is manifestly not the case. We have only to look at New Zealand growing by 3.8 percent in the year to March one of the highest growth rates in the world’s developed countries and much better than the 2 percent in the United States or the 0.9 percent in the Euro area. They certainly cannot point to the fact that growth is forecast to reach 4 percent next year—a far cry from the recession that we inherited in 2008.This is delivering benefits to hard-working New Zealanders. Average wages have increased by about $3000 in the past 2 years to nearly $55700. They are forecast to grow—this is the average wage in New Zealand—to around $62000 in 2018. In the past year alone as we have heard 84000 jobs were created in New Zealand and Treasury forecasts a further 172000 jobs will be created over the next 4 years. When we look at unemployment it is forecast to fall to 4.4 percent by 2018. The cost of living increases are low and that is helping New Zealand families get ahead. Inflation was 1.6 percent in the year to June—well below the nearly 5 percent inflation that we inherited in 2008.New Zealanders are looking at a brighter future here in New Zealand such as this Government promised. They are voting with their feet and staying home. When I got into Parliament like a number of people in this party I was concerned about the continual loss of New Zealanders to Australia and concerned when talking to people who loved living in New Zealand but were distressed to see all their family living offshore. That takes a long time to turn round but there was no net loss of New Zealanders to Australia in June the last month that figures have been collected for. That is the first time since 1991 and it shows that New Zealand is doing very well indeed.So where does that leave Labour and the Greens? What argument what angle can they come against us with? The angle that Mr Parker always peddles is that yes the economy is doing well but it is unbalanced. The only problem with that is that none of the arguments really stack up. He says that the economy is unbalanced and that OK it is doing very well but not everybody is benefiting from it; in fact inequality is rising. That is the argument he puts forward but it is just not backed up by the facts. Every study that has been done such as the leading study by Mr Perry shows there is no discernible increase in inequality in New Zealand thanks to the very substantial redistribution we have in the New Zealand economy.Then Mr Parker goes on: “Oh well it’s the balance of payments deficit. It’s getting worse. It’s forecast to get worse as we look out.” The only problem with that is that it has actually narrowed very very substantially since Labour was in Government. The balance of payments deficit was knocking up around 7 percent or 8 percent and now it has narrowed to 2.8 percent of GDP—a very low record. That is because New Zealanders are paying their way in the world. So that argument does not work. Then he says: “Oh well but we’ve built up a whole lot of debt.” forgetting the fact that there were the Christchurch earthquakes which we had to pay for and there was a recession we had to work our way through. Thanks to prudent management by this Government Government debt will fall to around 20 percent of GDP in 2020 if we stick with National’s plan—Dr David Clark: Record debt—$56 billion!PAUL GOLDSMITH: —well below the 60 percent of GDP that would have been the case if the party of that fellow there from Dunedin Mr Clark was in power continued its reckless ways and continued to spend more that it was earning.So that is the past. What about the future? I think that this Government is very focused on building an internationally competitive economy which is the whole basis of everything we look forward to in terms of affordable healthcare such as the free under-13s visits to general practitioners which we were able to afford in this current Budget; quality education; superannuation when we are old; and protection for the vulnerable in difficult times. Those sorts of things all rely on a strong internationally competitive economy. That is not going to come about because some well-known business expert like Russel Norman says he has the elixir the solution to smart green growth or anything like that. It is certainly not going to come about from that other well-known business expert Mr D Parker who says we should do this or that or from some activist Government.It is about fundamentally continuing to provide stable predictable competent government so that businesses have the confidence to invest to grow their businesses and to create jobs. It is businesses that create real wealth in this country and they thrive in an environment where they have the confidence to invest. That is what this Government has given over the past 6 years and that is the greatest thing we can bequeath to this economy if we are given another 3 years or 6 years to carry on the work.When we break down the detail the Government’s Business Growth Agenda outlines the future proposals we are doing and the six areas that Mr Steven Joyce and Bill English have been so effective in channelling the thinking of the Public Service into which are the areas where we need to do well to create an environment in which New Zealand businesses can be internationally competitive—so looking at building export markets by negotiating high-quality free-trade agreements. That of course is opposed by the Greens at every turn because they are opposed to free trade and they are opposed to an open economy notwithstanding the fact that New Zealand has thrived following its free-trade agreement with China.It is about building capital markets and they have been given a huge boost by the partial flotation of some of the State-owned enterprises. We have the most vibrant and strong stock market we have had in years in this economy and we will continue to rebuild our financial reserves. We will establish the New Zealand Trade and Enterprise regional investment attraction programme to bring more capital into the economy. We will be implementing the legislation formerly called the Credit Contracts and Financial Services Law Reform Bill. Supporting crowdfunding and peer-to-peer lending are two of a number of projects we will be looking at over the next little while.Business innovation is another area of the Business Growth Agenda. We again hear Mr Norman complaining that the so-called simple economy is the basis of all our prosperity in New Zealand at the moment. Well that is nonsense. In the Epsom electorate where I am based services exports are very strong. In fact one of the fastest-growing areas of export in New Zealand is high-end services. IT companies like ConnectNet which I have been to in Parnell and many other IT companies health services companies architects and public relations firms are all exporting their services around the world and doing very well indeed. This Government has been enormously enthusiastic in the way that it has supported science research and development. Other areas are building skilled and safe workplaces building natural resources and making use of wind-blown trees.It is frustrating to hear Russel Norman talking about logs on the wharves. Well the main thing that is holding back the wood-processing industry in New Zealand is the cost of electricity and lo and behold it is the Greens who want to greatly increase the cost of electricity by slapping a great carbon tax on it. So they are confused and muddled and this Government is clear and stable in its progress. On that basis I commend the Appropriation (2014/15 Estimates) Bill the Imprest Supply (Second for 2014/15) Bill and this Budget to the House.RICHARD PROSSER (NZ First):I am pleased to rise on behalf of New Zealand First to take a call on the third reading of this predictably diabolical Appropriation (2014/15 Estimates) Bill. The appropriations ultimately rest on integrity. They rest on the integrity of the figures but as we all know National has a nasty habit of treating figures and facts as flexible. They mean what National wants them to mean or from time to time what National needs them to mean. National uses fudging and manipulation to cover the weaknesses of the economy. It does not want the stark facts of growing inequality in New Zealand to be revealed. Despite the best terms of trade in decades we still have a chronic balance of payments deficit. That underlying weakness puts the New Zealand economy and all the estimates and projections at risk. New Zealanders should be deeply concerned.In the 2014-15 Budget a small highly contrived Budget surplus of a few hundred million dollars was manipulated. It vanishes like a desert mirage on closer examination. National knows 100 ways—probably 200 ways—to manipulate a surplus when the Government’s income is over $65 billion. If this Government were a company the auditors would now be in jail for deception. Where is the true accounting for the hundreds of rotting school classrooms? Where is the making good of the scores of cuts and freezes in important public services and agencies?Simon O’Connor: Give one example.RICHARD PROSSER: Let us think of a few of them—more than one Mr O’Connor. Conservation is underfunded. Conservation is always underfunded. It is always required to deliver a great deal and it is never funded adequately. That is why we are talking about public-private partnerships for conservation—the “Pepsi-Cola Kahurangi National Park” is coming to you soon perhaps. But there seems to be plenty of money for additional 1080. This Government seems hell-bent on bombing the bush with more and more poison. You know New Zealand uses something like 90 percent of the world’s production of 1080. Nobody else seems to need it but we carry on increasing its use. Years ago it was all for possums. We do not hear much about them anymore; now we are chasing rats and stoats. Another $20 million is to go into dumping 1080 on another half-million hectares of conservation land—1080 which kills native birds and insects directly—and all in the name of a beech mast and a biblical plague of rats.When I wonder is this Government’s scaremongering going to start dredging up demons vampires and witches? This is a biblical plague of rats for a beech mast that we are told is unprecedented. Well beech masts occur about every 3 to 5 years and you know what? It is already over. The great beech mast with this great drop of seeds is already finished. The seeds that were not consumed are rotting on the ground or probably gone by now and yet the operation to kill the rats is only just about to start. We know that after drops like this populations of fast-breeding animals such as rats rebound much faster than slow-breeding populations of native birds. So this 1080 bombing will create a plague of rats where there was not going to be one before.The Government says there is no alternative to 1080. Well the argument for that is that lots of this country is inaccessible but I ask the question: if the country is inaccessible how will we know there is a problem there? In actual fact the country is not inaccessible. The way that we determine whether or not there is a problem with pests on the ground is by flying people in there and laying trap lines. From the trap lines we extrapolate how many rats stoats and other pests we believe are in a certain area and then calculate the amount of poison needed to kill them and go away and bomb it. When that has been done they fly the trappers in again and they lay more trap lines. When the residual trap catch is done to 6 percent or 2 percent they declare it has been a success. Well if you can fly people in to lay trap lines to determine how many pests are there in the first place then you can fly people in to lay trap lines to kill the pests. It does not even pass the logic test.Border control is another area of this Government’s chronic underfunding. The budget keeps being cut. There are fewer boots on the ground. We rely on the SmartGate. New Zealand and Australian passport holders with electronic passports used to be able to just waltz through without so much as a by-your-leave. Now that has been extended to frequent flyers from a particular Chinese airline. They could be bringing in anything at all uninspected—a jar of honey foot-and-mouth disease. We inspect only about 25 percent of shipping containers that arrive in this country—one in four. We have no idea what could be in the other three in four. It could be snakes. It could be foot-and-mouth. It could be spiders. It could be anything. We do not know. We are never going to know because we do not inspect them and we have not got enough dogs.The police budget again has been flat for 5 years and actually in this year’s Budget was reduced by $40 million. When you take inflation into account that is an actual $80 million reduction in the amount of budget that the police have for front-line operations. So the police are underfunded under-resourced and understaffed because of that and now we have the debacle of one police region reclassifying burglaries and other crimes so that they do not get recorded. If that is not covering something I do not know what is. While all of this is happening dedicated officers disappear to Australia where they get paid properly and resourced properly. Crime continues to rise but this Government rests on the falsehood that it is falling because the figures are dropping. Well the figures are dropping because crime is not being reported because people are simply aware that the police have not got the resources to respond to it.And then there is defence. Again in New Zealand defence is always underfunded and even more so under this Government. We are beginning the commemorations of the 100-year anniversary of World War I. In the Prime Minister’s speech this afternoon he made reference to our proud history of waging war at sea and in the air. And that is true—we have got a proud history of that. For a maritime nation such as New Zealand isolated completely by sea and by air it is only common sense that that is where we should focus our defence. But at the beginning of World War I at Gallipoli our forces were slaughtered because they had no air cover. That lesson was repeated on Crete where our forces were slaughtered because they had no air cover. Today under this Government we have no air cover because National never restored the strike force that 73 percent of the population wanted brought back.Simon O’Connor: They forgot to counterattack the airfield at Maleme.RICHARD PROSSER: I am not sure what Mr O’Connor is muttering about there but he is probably saying something along the lines of that we do not need it. Well there were some luminaries in Britain in 1936 in the Labour Party who almost succeeded in disbanding the entire Royal Air Force because they had decided in their prescient wisdom that those sorts of wars were never going to be fought again and that that kind of hardware would never be needed again. Three years later World War II came upon them. I would love to have the same crystal ball that the National Party has where it can predict the future and where it can say that there will be no more wars that we will never have to fight again that we will never have to defend our territory and that we will never need this high-tech hardware because it knows the future and this is not going to be a feature of it.We are getting some new trainers. The air force needed a new advanced high-tech trainer because the leased Beechcraft that we have got are coming to the end of their serviceable life. We had 17 highly advanced trainers sitting in storage—17 Aermacchis. They were bought and paid for. It cost $35 million to keep them in storage for 10 years because they could not find a buyer. In actual fact they were never going to find a buyer because Uncle Sam was never going to let them be sold. So after spending $35 million to keep these planes in storage for 10 years we flicked the whole lot off for $8 million to a private American company which is using them to assist in training for the United States Air Force. After that we go and spend $156 million on another American trainer the T-6 Texan which is not as good as the Aermacchi. If that makes economic sense—well I mean that just sums up this Government’s approach to it.What of Christchurch? What sort of Government holds back money from the Christchurch rebuild so it can claim a surplus in the Budget? There have been all sorts of devious bookkeeping with the hundreds of millions flying through the rebuild. Mr Brownlee needs to fully explain himself to the people of Christchurch and to New Zealand.The surplus is insignificant when set against the real economic problems that New Zealand has. Unemployment remains our single-biggest economic problem. Where is a measurable action plan for jobs? There are almost 150000 unemployed in this country. If you add to that the total who want to work but who are underemployed or have just given up trying we run up to about a quarter of a million people who are looking for more work than they have. It is a shocking even obscene waste of human potential. The so-called surplus is a myth. It is a scandal to pretend that it actually exists. On 20 September New Zealanders will have the opportunity to put some real integrity back into our system and some common sense by voting for New Zealand First. Thank you.JONATHAN YOUNG (National—New Plymouth):I am very pleased to stand here this afternoon in this Budget debate and the third reading of the Appropriation (2014/15 Estimates) Bill and the second reading of the Imprest Supply (Second for 2014/15) Bill. New Zealanders want a Government that is dependable one that they can trust one that is moving in the right direction one that is not lurching to distinctly different policies that have a maybe chance of success one that understands how economies work and one that is making incremental improvements every day of every week. This Government is that Government led by the strong and stable leadership of the Prime Minister John Key and also by Deputy Prime Minister Bill English who for six Budgets has produced incremental improvements that have seen the New Zealand economy through tremendously complex international difficulties and have seen the New Zealand economy come into strong growth. We believe that returning a National Government to the Treasury benches will mean that we will be able to bed that growth in over the years to come.We have a Business Growth Agenda that has 350 different initiatives. Well over half of those have been completed or are well under way. Every single one of these is bringing some positive change and assistance to our economy. That is what I mean. When we have such a number it shows the depth of understanding of the economy led by the Minister for Economic Development Steven Joyce and the team that supports and surrounds him. We understand that with 350 different initiatives every sector of New Zealand society is touched by these improvements. What we are seeing is a recovery that is gathering pace all around this nation.The Government has made good progress in delivering on its economic objectives for this term and that progress will continue should we have the privilege of governing for another term. For example New Zealand’s economy has grown by 3.8 percent in the year to March. This is one of the highest growth rates among the world’s developed economies. Our 3.8 percent annual growth compares with 3.5 percent in Australia 2 percent in the United States and 0.9 percent in the eurozone. Growth is so important because employers out there in our industries and our workplaces as they see their businesses growing and expanding as they see their cash flows improving start to think that the future is looking brighter. They start to think that there is an opportunity where they can employ somebody to continue the growth they are experiencing.So employment starts to increase; unemployment starts to decrease. We have seen exactly that. In the past year alone an extra 84000 jobs were created across New Zealand. The good news is that Treasury forecasts another 172000 jobs to be created over the next 4 years. We see that this comes about not by magic not by a Government department or a Minister fabricating jobs or creating further Government employees as happened under the previous Government but by confidence in the economy. It is confidence in the economy that private sector employers can go out there take that step and give somebody a go. One of the groups that suffer most through difficult times is the school-leavers—those who leave school at 17 or 18 and do not have experience in the workforce. When somebody advertises for somebody with experience none of them qualify. So they are the cohort of people out there who have the highest rate of unemployment.The 90-day probation measure that we put in not only for small and medium enterprise businesses but wider than that enables employers to give those young people a chance. Even though that may be decried in some quarters—we understand their philosophical point of view—our figures tell us that in the first year of that piece of legislation 13000 new jobs were created by employers stepping out and taking that chance. I know many of them in my own electorate who have said that that made a difference for them. Certainly it made a difference for those young people who were struggling to find employment.Budget 2011 forecast 171000 jobs to be added to the economy by mid-2015 mid - next year. The latest household labour force survey confirms we are on track to meet this forecast. Including the 84000 new jobs created in the past year alone there have been 131000 jobs created since Budget 2011. So I believe that the people of New Zealand who are riveted by this Budget debate can have confidence that those things that have been forecast are coming to pass. That is what I mean. You need to be a student of history in many regards. Somebody who is interested in politics and what is happening can see over time those incremental improvements and increases the buoyancy and the effect that our economic plan is creating for New Zealanders. These new jobs are helping to bring down unemployment which Treasury forecasts to fall to 4.4 percent by mid-2018 from 6 percent currently.When economies grow what also happens is that not just jobs are created but people receive higher wages and we know that in New Zealand that is very important. It is one of the reasons we are seeing people returning to New Zealand because of the opportunities that exist here when other countries like the USA Australia and Europe are not seeing that same increase. Average wages have increased by around $3000 in the past 2 years to nearly $55700 and they are forecast to grow to $62300 by 2019. This is important not just because people want to earn better wages and because we know that we have this tsunami of silver coming towards us as the population of this country ages but because we need to be a high-wage economy in order to adequately support the retired and the elderly of our population in ways that we expect.In my last couple of minutes it is good to reflect the positive progress that this Government has brought to this country. It has been progressively through six strong well-led well-managed Budgets and Budget 2014 continues in that same vein where we see new jobs being added and where we see low cost of living increases. These are also helping New Zealand families to get ahead. Inflation was just 1.6 percent in the year to June well below the average weekly wage increase of 3.2 percent in the latest statistics. New Zealanders can feel I believe a degree of confidence going forward. People can plan for their future not rashly but they can have confidence that there are opportunities that are increasing for employment and for the prosperity of this nation that is coming up.More Kiwis know that they have got a brighter future here in New Zealand. They are voting with their feet and coming home. Just last month more stayed. We had a net increase here in this country in June. There was no net loss of New Zealanders to Australia in June—the first time this has happened since 1991. Under Labour we know that 3000 New Zealanders a month left for Australia but under this Government they are deciding to stay. I am very very happy to commend this Budget legislation to the House. Thank you.JACINDA ARDERN (Labour):It is my pleasure to give a contribution in this appropriations debate. I think we should hark back to what the leadership of that National Government recently said when asked what legacy it would like to leave. I understand that it was a group of young people who asked the Prime Minister what he would like to be remembered for. His response was something along the lines of “I would like to be remembered for my management of the economy.” Not a particularly inspirational response but look if that is what he chooses to be measured on then let us measure him on that alone.Of course the National Government and National generally like to ride on the assumption that they are good sound economic managers and it is an assumption because when you drill down into the legacy that that Government has left it is not nearly as rosy as it would like to present. Think for instance about the fact that we have $56 billion in additional debt since National took office—$56 billion. It is easy when you bandy about numbers like that to lose sight of the impact that that is having on the economy and future taxpayers but that is the equivalent of New Zealanders having to pay $10 million a day in interest. That is astounding and that is debt that we took on to fund things like the Government’s tax breaks that went predominantly to the top income earners in New Zealand. That is what the rest of New Zealand is paying for.But if the Prime Minister and that Government want to be judged on their economic record let us look specifically at this last Budget. Let us look beyond debt. Let us look at their claim that they have moved the Government’s books into surplus—an admirable goal if it is real but this Government’s surplus is a surplus on paper. How did it achieve its surplus on paper? Well it kept ACC levies higher than it needed to—in fact $120 million higher than it needed to. That essentially means that New Zealand taxpayers have provided the funding for that Government to be able to say that it has a surplus. What was the second thing that it did? It put up on the books that the $375 million in New Zealand Transport Agency spending was not spending but a zero-interest loan. That was the second measure. And the third measure—perhaps the most cynical of them all—was that it spent $560 million less in this Budget on the Canterbury rebuild than it did in the last Budget. That ladies and gentlemen is the surplus delivered by that Government. It is hardly sound economic stuff but that is how it got the books to look a little more rosy.What does that all mean for individual New Zealanders for individual taxpayers? That is what is important. I think David Parker probably summed it up best when at the Labour congress recently he said: “What’s the point of a rock star economy that does not pay the roadies?”. That essentially is the difference between Labour and National. We both strive for Budget surpluses. In fact Labour had nine real ones under its belt when we left office. But it matters to us how we get there and it matters to us what point sound economic growth serves. Who is benefiting from the economic prosperity that we deliver as Governments? That is where you will see a difference between Labour and National. We do not believe in growth for growth’s sake. We believe in growth that benefits people and at the moment we are not seeing that. What is the point of a surplus when housing ownership is at a 50-year low when first-time home buyers and people of my generation do not fundamentally believe that they will ever own their own home? They do not believe that there is any hope for them in that regard. Jonathan Young shakes his head. All that tells me is that he has not had a conversation with a young person from Auckland in a very very long time but that is the reality.Simon O’Connor: In Grey Lynn—one in their first home in Grey Lynn.JACINDA ARDERN: I would expect the member who lives in Auckland to perhaps be slightly better versed on this issue. Housing prices in Auckland are up $200000 on average since National took office—$200000. That is absolutely astounding and that is why my generation believes that they are being locked out of what was always perceived to be almost a rite of passage in this country. What point is a Budget surplus if inequality is reaching record highs? We hit that in 2011 and as much as that Government—David Bennett: Prove it.JACINDA ARDERN: We can easily prove it. It is called the housing income survey and it tells us that actually we are still reaching high points. If you average it out all it tells you is that we are just as bad as we have always been. Nothing is getting better. We might not have reached some of the high points that we had seen in previous decades but it is still high. It is hard to celebrate something that is just as equally awful as it was for the past 3 years. Inequality is not something to be celebrated and it is not something we can deny. New Zealanders know it exists.Try telling a New Zealander that we are in surplus and everything is fine when for instance they are amongst the 46 percent of New Zealanders who did not get a pay rise last year. You can almost guarantee that they have felt the impact of rising housing costs. Their rent has gone up or they cannot afford to even save to get into their first home. And what point is a Budget surplus and a rock star economy if you still have 260000 children in poverty and as we pointed out in the House today two out of five of those families are in work? I absolutely resent the fact that the Government continues to try to portray poverty as an issue that happens to other people who almost deserve it because they are on benefits. Poverty happens to sole parents to people struggling to find work to families who are in work and it is not good enough to say that it is just because we have got low wages but that is the necessary evil of employment.This side of the House believes we can strive for full employment and we can have full employment and decent wages at the same time. What point is a booming economy if it does not benefit people? As I have said that is the difference between them and us and that is why our economic agenda for growth and prosperity is around three key themes. The first is housing. We still believe in the old mantra that everybody needs something to do someone to love somewhere to live and something to hope for—and the somewhere to live is becoming dire. A capital gains tax not only addresses the issue around supply but also addresses the fact that we at the moment have a tax system that is simply not fair.Hon Members: Oh!JACINDA ARDERN: I cannot believe that members on that side of the House continue to treat a capital gains tax like an alien thing. Two countries in the OECD do not have one but if you want to hold yourself up against Switzerland and Turkey be my guest. KiwiBuild is the second thing we will do but work the principle on which this party was founded continues to be a cornerstone of what we will campaign on in this election. We want to get unemployment down to 4 percent in the first 3 years but ultimately we believe that everyone should have the dignity of a decent paying job one that allows them to put food on the table. With our plans around regional economic development in particular we believe we can do that.Finally on families Best Start was just the beginning for us. We have an agenda that says we actually believe that parents should be able to still hold on to that mantra and that hope that their children will be better off than even they were. At the moment we are on a decline. We can reverse it but all it needs and all it requires is a vision from a Government that knows that GDP your trade deficit your surplus—none of those measures matter unless your ultimate focus is on improving the economy for people. That is why Labour deserves to be in Government after the next election.SIMON O’CONNOR (National—Tāmaki):I love it today as we hear Opposition MPs talking so negatively—a sort of a Chicken Little approach really and then you go past billboards that say “Vote Positive”. The contradiction is incredibly inherent. They talk about leadership when none of them are behind their leader. [Interruption] No Cunliffe in them—that is right. In my own electorate two Labour Party billboards have been put up in total—and two of them are illegal. They are in the wrong place and should not be there. And it is very interesting—the candidate does not want to have his face next to the face of the party leader.Jacqui Dean: Why not?SIMON O’CONNOR: My colleague on my left asks why. Look I do not know. I understand it was discussed at length today in their caucus and they were doing the numbers as well. “Vote Positive” they say.I am very pleased to take a call on this legislation the Appropriation (2014/15 Estimates) Bill in its third reading and the Imprest Supply (Second for 2014/15) Bill in its second reading. National is the party of responsible Government and careful management of the economy. Labour and its friends have outlined a grocery list of reckless spending and shocking plans for economic mismanagement and we have heard just an entrée if you like of that from the previous speaker Jacinda Ardern. Spend spend spend—their ideas but you ladies and gentlemen the Kiwi public have to pay for them.Let us have a look at some contrasts. Let us talk about the National Government. More than half of the 350 Business Growth Agenda actions across the six areas are either complete or in the implementation phase. New Zealand’s economy grew by 3.8 percent in the year to 31 March—one of the five fastest growing economies in the developed world—and growth is forecast to reach 4 percent this year a far cry from the recession that we inherited in 2008. I think it is really important for people to bear that in mind and this side of the House has certainly reminded the Opposition time and time again that we inherited an economy in recession in 2008 and we have worked darn hard since then to bring it back to surplus. Average wages have increased by $3000 in the past 2 years and they are forecast to grow by around another $7000 to about $62300 by 2018.Dr David Clark: What about real median wages?SIMON O’CONNOR: The great thing is that there are some members in the Opposition who might be learning about real wages in a few weeks’ time. This Government is proud that we have created an extra 84000 jobs in the year to March and Treasury forecasts about 172000 jobs to be created over the next 4 years—4 years under I am sure a National Government.The cost of living increases are low. Inflation was just 1.6 percent in the year to June well below the average weekly wage increase of 3.2 percent. Unemployment is coming down and Treasury forecasts it will fall to about 4.4 percent by mid-2018 from where it sits at the moment at about 6 percent. That has been falling. We have made the rate fall to about 6 percent and as I noted Treasury forecasts that it will be down to 4.4 percent.The balance of payments has popped up a few times today. The balance of payments deficit—the difference between what we earn and what we spend—narrowed to 2.8 percent of GDP in the year to 31 March 2014. It is helped by our record exports and it is less than half the deficit 6 years ago. Finally our better Government focus now is on a smaller number of 62 key priorities. This Government was not afraid to set benchmarks to test ourselves against and we will be working to help more Kiwis internationalise and sell their products overseas encourage innovation make it easier to raise capital lift young people’s achievement—and I have heard colleagues talk to that earlier—and make workplaces safer.But in contrast what do we hear from the other side? Did Labour support any of the savings that this Government made to ensure the country came back into surplus? No not at all.Did Labour support welfare reform that has seen New Zealanders get back to work? No. Did Labour support tax changes to reduce taxes paid by every single New Zealander? No not at all. Did Labour members support a 90-day probationary period? No no they did not. Did they support changes to the Resource Management Act so that people could build houses faster and support the growth in business? No. Did they support the housing accords including in Auckland? No not at all. Did they support the making of the Hobbit movies so that 5000 jobs could be created? No. What about the 3000 jobs in the South Island when it came to Tīwai Point? No. I would have thought yes but no—no again. Did they support irrigation for our farms?Hon Members: No!SIMON O’CONNOR: No indeed. Do they support gas or oil exploration? Well depending on who you are talking to it moves around but the answer pretty much is no. Do they support foreign investment or skilled migrants? No. Ultimately will they support any free-trade agreement with the largest economy in the world? No.Jami-Lee Ross: Do they support their leader?SIMON O’CONNOR: Do they support their leader? I had forgotten that one—no. When it comes to new taxes though Labour members are very happy to say yes. They are all into the capital gains tax. Earlier this afternoon—[Interruption] There are times though when you do wonder about a carbon tax with so much hot air coming from the other side. Let us stay on the capital gains tax. We heard David Parker complain earlier that he did not get a chance to debate Labour’s capital gains tax last night. He was very upset that he could not debate against the Minister of Finance. He had to make do with me. At that time he mentioned how disappointed he was to be engaging with a mere backbencher. Well given how badly David Parker fared in last night’s debate against this mere backbencher I would have thought he would be glad not to have to face off with one of the finest finance Ministers in New Zealand history. David Parker is not necessarily renowned for his humility but I have to say that I would be happy to help him become a bit more humble by debating him on the capital gains tax at any time. You see you cannot talk about growing jobs the economy and innovation and want a capital gains tax. It is an inherent contradiction.A growing economy like New Zealand’s needs risk takers. It needs people who are prepared to take risks and prepared to be rewarded for those risks. As I noted last night a capital gains tax taxes the entrepreneurial. It taxes the very people who want to invest in jobs innovative ideas and new businesses in the hope of winning and making a profit. You see we only need to look at various businesses across New Zealand where young people in particular but not exclusively have taken their business idea taken the risks with their own capital and either won or lost. Within the capital gains tax debate Labour members who want the Government now to take a share in the risk do not actually want to take a share in the losses but you will not hear them talking about that.We heard an earlier speaker talk about how the capital gains tax will make people sell their houses and so forth. Why on earth would you sell your house if you were going to be taxed on a capital gain? It makes no sense. What you see from other countries which the Opposition lauds is that people continue to pump money into their homes—more pools more double-glazed windows more of everything to increase the value but not sell. At the end of the day a capital gains tax stifles businesses stifles innovation and stifles job creation.There are reasons though why National wants to talk about good economic management and growth. It is the money that ultimately makes our way of life possible. It allows us to fund the many social programmes that Kiwis value and deserve. We are not talking about money for the greedy or to amass vast hordes of gold like some dragon under a mountain; we are talking about our hospitals and our schools welfare and Working for Families. New Zealanders need to know that when Labour says no to economic growth when the Greens say no to resource development it costs ordinary Kiwis. Their refusal to grow the economy costs it all. It makes the tax pool smaller it shrinks Government and it necessitates cuts to vital programmes.Let us be very clear. When Labour and the Greens obstruct development they hurt the poorest and the most vulnerable sectors of our society. The affluent can do without Government support—cutbacks do not hurt them—but when you cripple our economy like Labour and the Greens suggest you inflict great pain on our poorest. That is why National focuses on the economy a strong one at that the creation of jobs and fostering a rise in income—a secure safety net for all. Every time Labour and the Greens say no to economic development and careful management they are cutting the very strings that make up our social safety net.The ASSISTANT SPEAKER (Lindsay Tisch): I understand that the next call is a split call—5 minutes.Dr DAVID CLARK (Labour—Dunedin North):What a lot of bunkum from that member Simon O’Connor. I have to say I am not surprised that David Parker expressed his concern about sharing a panel with that member on the topic of the capital gains tax. My experience of sharing a panel with that member around the policy of a student loan limit of 7 equivalent full-time years was that he was very well briefed on every issue that came up in front of a group of medical students except the one that concerned the students—their access to student support. Conveniently he had not been briefed on that aspect of medical students’ concerns. He promised to take that concern back to the Minister and the medical students heard nothing more. They badgered him. They asked him and they heard nothing more from that member. That is a lesson. I think that is why David Parker was reluctant to be on a panel with him because he has a reputation for briefing himself only on the positives. He does not brief himself on those things that give a more balanced picture which explain the damage that this Government is doing.I want to talk a little bit now about why I came to Parliament. We are drawing to the end of the 50th Parliament. I came to Parliament because I was concerned about growing inequalities. That was a big part of my motivation to come into this Parliament. We are here debating the appropriations which see this widening gap between rich and poor grow ever wider and the access to resources become ever more widely spread. I interjected during the last speech that real median wages told the real story not average wages. I heard Mr Bennett yell back: “That is because average wages are more important.” He was trying to say that the net income of the economy is the most important thing and not how the benefits of economic growth are shared. Mr Bennett could only have been saying that he did not care whether those at the bottom were not getting their fair share.That is consistent with this Government’s policies. It is consistent with the policies that that member has supported—the 2010 tax package that saw the top 40 percent of the value of the tax package go to the top 10 percent of earners and the bottom 20 percent of earners get just 2 percent of the value of that tax package. Of course it was all swallowed up at the same time in a GST rise that John Key promised would not happen—the 15 percent GST rise that John Key had promised would not happen. That is part of this explanation as to why the gap between rich and poor is so great under this Government. That is part of the picture.Of course my own experience here in Parliament in the limited time I have been here is that people have put forward measures to make a difference and I have been fortunate enough to have a couple of member’s bills drawn out of the ballot. One went through this Parliament against—against—the wishes of the Government which would make sure that there was an extra day set aside for people to spend with their families and friends after Anzac Day or Waitangi Day was celebrated on a weekend. So Anzac Day and Waitangi Day would be commemorated on the actual day on a weekend—those important parts of our history would be properly commemorated—and the following Monday would be made a holiday to make sure that every year not just in 5 years out of 7 people got time with their friends and families. The Government still voted that down. It tried to vote it down. It could not because its support parties walked away from it on the issue; they were so embarrassed.The other bill I had drawn from the ballot was the minimum wage bill. It would have put the minimum wage up to $15 an hour which would make a real difference for people at the bottom of the heap but National voted that down straight away. It talks about raising wages for all New Zealanders but given the chance at the first opportunity it voted that down in this Parliament. That is the kind of Government we see opposite. That is the kind of Government that called Working for Families “communism by stealth”—Hon Annette King: But kept it.Dr DAVID CLARK: —but kept it—despite it lifting 130000 kids out of poverty. We know that there are now 260000 New Zealand kids in poverty and across the way they are content to see that pattern continue.On this side of the House we have a positive plan. Yes Mr Simon O’Connor it does involve a capital gains tax to make sure everyone pays their fair share. It is a plan that pushes money away from the speculative sector and toward the productive sector so that we grow our economy. That is what Labour Governments traditionally have done. We know that National Governments since World War II have grown the economy on average by 2.9 percent. Labour Governments have grown it on average by 3.7 percent. Labour Governments have grown the economy faster and they have shared the proceeds of that economy—economic growth—more fairly. That is the kind of positive change that is needed.CATHERINE DELAHUNTY (Green):Tēnā koe Mr Assistant Speaker. Tēnā koutou e te Whare. Unfortunately for Aotearoa New Zealand the Government in this legislation the Appropriation (2014/15 Estimates) Bill and the Imprest Supply (Second for 2014/15) Bill which we are addressing today cannot say the “p” word. It is unable to pronounce the word “poverty” both in this legislation and in this House. This is a disaster for the country because when poverty is biting in the way it is for so many families and the Government’s economic policies are increasing inequality this is a serious matter. They are problem gamblers who are keeping the economic downward spiral for the many but very definitely increasing the benefits for the top 10 percent.Unlike the Government in this legislation the Greens can deliver a fairer society where every child has enough to thrive. We are committed to addressing growing inequality with fresh ideas which will make a difference to the more than 260000 children who are living in poverty and their families whanau and aiga. Firstly we will help families with young children in early childhood by extending the 20 hours subsidy to 2-year-olds closing the gap in support that has cost families dearly. We want choices for families about staying at home with their children if they can afford to or wish to. But for the 40000 2-year-olds who are already in early childhood care their parents need some level of support. We will make sure that the extension of the early childhood education subsidy will alleviate some of those costs.Last week the Minister of Education denied that quality in early childhood education was an issue and said that the only thing that mattered was participation. But everyone in the sector wants to see the Greens’ commitment to a target of 100 percent qualified staff in teacher-led services and also support for Playcentre kōhanga and puna that are parent-led and also committed to quality. These two things cannot be separated and we support them both. This is affordable. There is no greater investment than in our smallest people.We have also announced an extension to free doctors visits up to the age of 18 because our rangatahi need specific medical support and they need the barriers removed for them to go to the doctor. That cost barrier would make a big difference to them. We need to invest in our young people and make sure that they are healthy and thriving so that in the end costs are reduced to our overall economy. That is what a decent society does. It makes sure that its young people up to the age of 18 can get to the doctor.We really believe that our programme for reducing poverty which is titled Schools at the Heart—the school hubs programme—is a very valuable one. I have been travelling for the last few months from Invercargill to Whangarei and everywhere to low decile schools talking to the hard-working champions in those schools—the teachers and principals. They have welcomed the idea of the community hubs. They welcome the idea of a coordinator who is paid to engage the community and they welcome the school nurse the free lunch and the out-of-school care and recreation being free for those decile 1 to 4 schools that want it. They welcome it because they are sick of being social workers. They want to be teachers. Teachers can teach if they do not have to deal with the poverty hunger and transience that are afflicting our communities because of the economic state of inequality.So for example a principal whom I met this week in Palmerston North said to me that she was exhausted by being a social worker because their kids were coming to school hungry cold and transient and in order for the children to be in a fit state to learn the teachers have to pick up the pieces of Government policies that are having huge effects on these communities. If we do not address those wider issues then it is impossible for the schools to do the work that we as public citizens have asked them to do and that as taxpayers we want them to do. Local affordable quality education can make a huge difference to the opportunities for our kids to thrive but only if we set it up in such a way that they are able to do so. The community hubs policy the Schools at the Heart policy is manifest in schools like Epuni in Lower Hutt and Victory in Nelson and the schools welcome the idea that the Greens have of extending it to schools that want to buy into it right across the country.What I found on the tour is that people are looking for hope. They are looking for hope that they can earn a decent wage that they can see their school as being local and affordable. They are looking for hope right across this country and they are not hearing it in the constant rhetoric from the Government that everything is OK. It is a self-congratulatory environment where everyone is doing well. You only have to walk through those neighbourhoods. You only have to talk to those schools to see that everyone is not doing well and that some children have been to 10 different schools by the age of 10—not because their parents are useless but because of inequality and the lack of stable jobs and housing. We will change that. All children can thrive under our watch. Kia ora tātou katoa.DAVID BENNETT (National—Hamilton East):With approximately 6 weeks to go to the election we will have a series of promises made. Today before that election period has actually started we are hearing promise after promise from the Opposition parties: how they will fix things how they will change things and that they will spend a lot of money. They will actually spend spend spend. That is what we are hearing from the Opposition and we have not even started the campaign yet. Imagine what else they are going to promise over the next 6 weeks. Some members over there have not even started promising things because they have not worked out where their campaign would want to go.The reality is that New Zealanders are not that silly. New Zealanders understand that there needs to be a strong economic base and that they need to have the money in the bank to pay for anything that we need to do. That has been the fundamental lesson that all New Zealanders have learnt during the world recession that we have been going through over the last 5 years. If you do not have the cash you cannot spend it. The Opposition parties are living in a fantasy world to think that they can go out there and promise promise promise and suddenly it will all happen.Even their promises do not make sense. If you look at things like the capital gains tax it is their answer for every expense. In every expense that you will hear about in the next 6 weeks I bet you your bottom dollar that when you ask them where the money will come from they will say that they are going to bring in a capital gains tax. That is going to be their explanation. They will not actually tell you how much it would bring in and they will not actually tell you when it would bring it in—Hon Annette King: Oh yes we do.DAVID BENNETT: Oh yes you do know the numbers? It would be lovely to hear them because those numbers will be inaccurate as they always have been coming from the Labour Party. We look forward to Annette King telling us how much Labour would raise from a capital gains tax in each year for the next 5 to 10 years.But remember this. We are not talking about a capital gains tax that is universal. We are talking about a capital gains tax that is imposed only on the wealth-accumulating businesses of New Zealand. It will be imposed on the farms businesses and those people who keep people in employment. Those are the people whom Labour wants to tax. The Labour Party wants to tax the goose that lays the golden egg you could say. That is the Labour Party’s great economic plan. Not only is it uncosted unfunded and unplanned by the Labour Party but at the same time the one thing they are using as their answer to all those issues is something that will hurt the income-earning productivity of New Zealand. It just does not make economic sense.Then you go to the Green Party which has got its great policy around the environment and how it is going to tax those productive businesses even more with a carbon tax just to redistribute that money as a blatant tax cut to try to buy votes during an election campaign. It is not using that money for environmental purposes it is not using that money to clean up our rivers or anything like that; it is using that money to give a blatant tax break to middle New Zealand to try to win votes during an election. That is not sound Green economic policy. That is not sound policy that would be effective in making New Zealanders look at their options; it is blatant politics at this time from the Green Party and it is trying to disguise it as rational economic theory.The reality is that the carbon tax and the capital gains tax are the only ways that the Opposition parties have indicated that they are going to raise money at the moment. Oh they are going to put up personal taxes as well so if you do well in New Zealand you are going to be paying more in personal tax as well. Those three things are detrimental to New Zealand’s economic growth and are detrimental to this country going forward. At the end of the day if you do not have the money you cannot spend it. That is what New Zealanders understand and that is why New Zealanders back the Government and they understand the economic management that we have gone through in the last 5 years.Let us look at what we inherited when we came in. These are the facts. In 2008 New Zealand was in recession. We were in recession before the rest of the world. Before any share market crashes or anything like that the Labour Government managed to put New Zealand in recession before the rest of the world. Under Labour there was a 50 percent increase in Government expenditure. We got that under control.Simon O’Connor: How much?DAVID BENNETT: A 50 percent increase in Government expenditure. Under Labour mortgage rates were 10.9 percent—10.9 percent; basically 11 percent. Now they are at 6 percent. Food prices were up by 10.9 percent in the last year under Labour—1.5 percent last year under this Government. House prices went up 96 percent in the 9 years of Labour—28 percent under this Government. Electricity prices went up 72 percent under Labour—20 percent under this Government. The current account deficit was 7.9 percent under Labour—3.4 percent under National. New Zealanders have realised this and they are coming home. They are coming home in droves and they are staying here because they realise that we have one of the best Western economies in the world. This is because we have had sound and prudent economic management. We have had a Government that has looked at the opportunities for our country going forward and is not afraid to make the choices that deliver the pie that we can all share out in this House.Last week I was at a school event. It was a school that had started online voting because its students cannot actually vote at the age they are. The issue raised there was inequality. It is one thing that we hear from the Greens all the time. The website basically gave the students a chance to make their comments around that issue and to vote essentially so that they could say what they thought. It was interesting that the Labour speeches and the Internet-Mana speeches at that event basically centred on that everything should be equal: that there should be an equal world out there that there should not be starting-out wages for young people trying to get a job that there should not be the 90-day probation period to try to get people into work and that everything in this world is equal and everything is the same.You look at those students. Just because you turn up to class do you all get an A? With those students just because they all go to practice with the hockey team does that mean they are going to be captain of the hockey team? No. The world does not work in that way. The world is one where you have to work hard and do your best. Some people achieve more than others. That is the nature of life. On the other side members will paint this picture of equality and say that there is some utopia out there that we can create and everything is equal and everything is in their eyes fair. But it is not fair. It is not fair to those people who want to go out there and get a good education take some risks and build their future. It is not fair on New Zealand as a country that needs to succeed. For us as a country to succeed we need to invest in infrastructure we need to invest in irrigation we need to open up our mining industries and we need to be there making a strong economic base. We cannot live in a world that is a dreamland. We cannot live in a world where we think everything is necessarily equal just for the sake of political purposes. We cannot live in a world where we can promise promise promise and spend spend spend but not actually have any costing for that.That is the decision that New Zealanders will make in 6 weeks’ time. On the one side they will see the rational economic management that has delivered results in the most trying of times and on the other side they will see people who will promise the earth spout out some dreams and some visions of things that are not realistic and then not have any basis or means to make them a reality. That is the stark choice New Zealanders have and New Zealanders are not silly. They are not going to go for the fable on one side when they have got the reality on the other side. They will not go for a wish list of dreams that will never happen when they know they can build their own future and deliver those results in a strong and competitive way. Thank you.Hon ANNETTE KING (Labour—Rongotai):That was a very disappointing and superficial speech by the current member for Hamilton East David Bennett. I need to say to that member that he just needs to perhaps read a little more open his eyes a little more. Labour’s economic policy not only has been costed and planned but has been released 3 months before the election so the public of New Zealand has an opportunity to see where our priorities are and how we will raise the money to pay for our policies.This is unlike the Pre-election Economic and Fiscal Update that we are going to receive just before the election from the National Government. We already know that it is not going to include all issues in it and that we are not going to get the clear picture. I challenge members opposite whether we are going to have all the costs for the sleepovers for example or for carers. Is that going to be costed in the Pre-election Economic and Fiscal Update before the election? I suggest that people have a look. It will not be there. You know National takes the old Muldoon approach to Budgets—keep the people in the dark and feed them manure.This is the last debate before the election and it is a time to contrast 6 years of a Government coalition of National ACT United Future and the Māori Party—a coalition of the confused and the unwilling—with the positive vision that Labour has for New Zealand come 20 September. Today we have had to listen to a story of woe of what the National Party inherited when it became the Government. Well it was nothing more than crocodile tears. If I could use the “h” word I would.That very Government told the people of New Zealand in December 2008 that the economy in New Zealand had been left in such a state that we were in a good position for the rainy day and the rainy day had arrived with the global financial crisis. Who said that? The Minister of Finance Bill English. He went on then to appoint the former Minister of Finance one Sir Michael Cullen to be the head of one of the biggest State-owned enterprises in New Zealand. So hopeless was Michael Cullen that the Minister appointed him the chair of New Zealand Post! We do not believe these sorts of stories from the National Party when its members say how bad things were under Labour because we remember our years in Government. Every year when Labour was trying to put away money into the Cullen fund set up KiwiSaver and bring in policies that New Zealanders wanted National wanted tax cuts. Bill English said we had to give tax cuts. Well if we had given tax cuts in those years there would not have been funding for National to have money for the rainy day.Labour paid down the Government debt that this country had and we left National with net zero Government debt when we left office. National was left in a position where it could manage a global financial crisis. National members talk about 10 years of deficits. Treasury predicted 10 years of deficits if nothing changed. Well do they believe the 10 years of high unemployment that Treasury—Hon Michael Woodhouse: That member campaigned on that plan.Hon ANNETTE KING: Just a moment Mr Woodhouse. Has Treasury not predicted 10 years of high unemployment under a National Government? Did Treasury not predict that just a few weeks ago? Do you believe you are going to have 10 years of high unemployment if you were to be in power that long? Well of course you do not. You are going to say there are things you are going to do. So if it is good enough for you to say that it is good enough to say that under a Labour Government we certainly had the ability to change our economy and we did.I have been an observer and a participant in this Parliament for quite a number of years. I have had the opportunity to watch the progress of our party in power and their party in power. I have to say that at times there are some things that we have in common. You see there does come a time when Ministers—who do work very hard and work long hours separated from their families in a place where doors are opened for them and due deference is given to them where “Yes Minister” is the response they get from most of their staff and the people around them—become impatient and frustrated because people criticise their hard work and do not understand the pressures they are under. Eventually that impatience and frustration turns to arrogance. The public see this Government as out of touch and in the case of some Ministers—silly Ministers—out to lunch.That is the position that the Key Government has reached today. It has stopped listening to the people of New Zealand. They have stopped listening if they believe that there is no problem with poverty in New Zealand. If they believe that it is all OK out there then that shows that Ministers have stopped knocking on doors they have stopped listening to what the people say and they are now into the zone of thinking they know best.We saw that sort of attitude from Gerry Brownlee the Minister of Transport just this last week. We see it with Nick Smith with his arrogance towards the Fish and Game people. We saw it with Judith Collins who did not think that you needed to separate your private business from your ministerial activities. And we see it with Bill English rewriting history every day of the week about how bad things were and how great they are now.Well let us just have a look at some of the facts and figures. We now have National clocking up $56 billion of debt since it became the Government. Some of that is going to be for Christchurch obviously—and we get that; we say that that is right—but this Government has clocked up $56 billion of debt and that is a debt that is costing New Zealanders $10 million a day. The big losers under this Government are the first-home buyers—the house prices in Auckland have gone up by $200000 under a National Government.This is a National Government that thinks that the only thing that matters is providing and achieving a surplus. It does not matter how you get there. It does not matter how much smoke and mirrors you use to try to show that you have achieved a surplus. What is important? Sure getting a surplus is important but it is also important that you invest in the things that really matter.I want to mention health because health is in trouble—in serious trouble—under this Government. I am going to use Treasury’s own words and they came out in the July papers. After the Budget when Treasury released its papers—when you see some of the truth—this is what it said about health. It said that it thinks the funding package provided is a very real challenge for district health boards. It said it is going to take a mix of salary restraint efficiency productivity improvements and service reconfiguration. We all know what service reconfiguration is. It said that the CPI is going to be up by 2.2 percent for 2014-15 and it said that it has advised the district health boards that the funding that they have received is for demographic purposes only with a contribution—let me repeat that word a contribution—towards cost pressures. The funding is a contribution towards cost pressures.So what did the district health boards get? Inflation is running at 2.2 percent and they have got cost pressures. What did they get? Well only three of the district health boards got an increase in funding above 2.2 percent. Therefore 17 district health boards—17 district health boards—got less than the CPI in terms of their increase. They have faced in real terms a net 2.3 percent cut in their budget and now it is starting to show—now it is starting to show.Last night I was with members opposite—Scott Simpson and other members of the Health Committee—talking about mental health. There were 200 people there who provide mental health services. Did they think that they had had a lot of money provided to them? Many of them have had no increase in their NGO funding for 5 years and only four district health boards have passed on funding to the NGOs—and even then it was less than they paid themselves. We have got a mounting problem in health. If that is not recognised by an incoming Government—one led by Labour which has committed to additional funding in health to meet those cost pressures—then the people of New Zealand will find that they do not get the health services they need. Already they are saying that they are missing out. When I get a moment I will release just how few people are getting orthopaedic surgery now compared with when we were in Government.JAMI-LEE ROSS (National—Botany):I remember that when I was still at school in the very late 1990s and the early 2000s when Annette King was a Minister she used to be a positive happy contributing member of this Parliament. Look at how things have changed with the Labour Party. Those members are so negative they are down on New Zealand they are no longer positive they do not have anything positive to contribute and it is sad. The public can see that this Government is upbeat this Government is positive for New Zealand this Government brings stability and gives confidence to New Zealanders and this is a Government that New Zealanders can trust. They can trust it to implement the policies that are needed to lift New Zealand even further and trust it to implement the policies that will help this country to grow even more to deliver better public services for New Zealanders and to build a better New Zealand for all of us.We have delivered over the past 6 years and this Budget shows further progress for New Zealand being delivered by the John Key - led Government. More New Zealanders are getting jobs more New Zealanders are seeing their wages rise under this Government and the economy is growing at one of the fastest rates in the OECD. When New Zealanders head to the polls in less than 2 months they can compare our record as a Government with the Labour Party’s promises and negativity and the Labour Party’s down on New Zealand attitude towards New Zealand politics. It is not positive it is not going anywhere and it is not good for New Zealand.I was listening carefully to a number of the speeches and I heard the member Jacinda Ardern my Friday morning TV3 sparring partner talk about housing affordability. I want to touch on that myself because just a couple of weeks ago I held a public meeting on housing in my electorate. We had a number of signs up around the place and it was advertised in all of the public newspapers. It had a good turnout. I was expecting to get grilled on housing because I know that there is a lot of discussion about housing out there. I was surprised actually at how comfortable New Zealanders are with the progress we are making on housing affordability. I almost had to drag questions out of the public because the public can see that on housing affordability and housing in New Zealand we have a plan that is going to see housing become more affordable in the long term. We are getting more building consents coming through the system and we are building more houses in Auckland. The Labour Party thinks that the solution to housing is the high mortgage rates that it delivered when it was last in Government.Phil Twyford: No we’re going to reduce interest rates.JAMI-LEE ROSS: No do not shake your head Mr Twyford. Mr Twyford knows that when Labour was in office when people like me were getting our first mortgages we were paying 10 or 11 percent—10 or 11 percent mortgages. That was Labour’s record when it was in charge of the economy. Mortgage rates were at 10 or 11 percent. If you think that first-home buyers can afford a home—well you might think so too Mr Assistant Speaker—if the Labour Party thinks that first-home buyers can afford a home with a 10 or 11 percent mortgage then it is just kidding itself. We have delivered an economy that has supported lower interest rates for New Zealanders. If the Labour Party wants to think about the issue that hurts first-home buyers the most it is mortgage rates.The best way to try to get housing under control in Auckland is to open up more land build more housing and make it easier for New Zealanders to get into housing. I am proud of the fact that in my area of Flat Bush one of the largest special housing areas has been delivered. The National Government under Nick Smith’s guidance is delivering 39000 houses over the next 3 years. They are going to be built by the private sector and delivered by the private sector. The Labour Party thinks that it will build 100000 houses. It wants to build houses in Auckland. It cannot even build a caucus that likes itself but it thinks it can build housing in Auckland that will be affordable. Its plan just will not work.We are delivering a better plan for Auckland when it comes to housing affordability. We are delivering more houses more building consents are going through and we are opening up more land. We are making it easier for the council to change its rules. The Auckland Unitary Plan is going to be in place in about 3 years. We are also taking the cost down when it comes to building materials and we have injected $30 million into the community housing sector.Phil Twyford: He cannot say how many houses have been built. What a failure.JAMI-LEE ROSS: The only people who can look at failure are Phil Twyford and the Labour Party when they delivered high interest rates for first-home buyers. We are delivering more housing we are delivering more consents we are opening up more land and we are making it easier for New Zealanders to get into housing. New Zealanders know that they can trust us and have confidence in our leader and our Minister of Finance to deliver policies that will make it easier for them.The ASSISTANT SPEAKER (Lindsay Tisch): I am sorry to interrupt the honourable member. The time has come for me to leave the Chair for the dinner break.Sitting suspended from 6 p.m. to 7.30 p.m.JAMI-LEE ROSS: Before the dinner break I spent a few minutes telling Mr Twyford about the real world out there in Auckland and the real world in New Zealand where we are seeing more houses being built. He does not believe it but building consents are at a 7-year high. Building consents in Auckland are soaring and we are delivering more housing for New Zealanders. Mr Twyford believes that a Soviet-style socialist Government housing and building programme is going to solve Auckland’s housing issues. The real solutions are being delivered by Nick Smith. The real solutions are opening up land for Aucklanders to build housing on making it easier for housing to be consented and also reducing some of the regulatory barriers to building housing in Auckland which is exactly what we are doing.As I sit next to my colleague Alfred Ngaro the next MP for Te Atatū he could tell you and colleagues across the House that in Auckland we are seeing a boom. In Auckland we are seeing progress and prosperity and it is being delivered by this Government. How do we know that New Zealanders believe this Government is delivering? We know New Zealanders believe this Government is delivering because they are voting with their feet—they are voting with their feet. When Labour left office every single month 3000 New Zealanders were leaving this country to go to Australia.Hon Tony Ryall: How many?JAMI-LEE ROSS: Three thousand Mr Ryall—3000 New Zealanders every single month.Hon Tony Ryall: How many now?JAMI-LEE ROSS: Right now fewer than 100 are leaving every single month to go to Australia. That is a huge turn-round. The brain drain that we saw under Labour when Phil Twyford was supporting a Labour Government that delivered high mortgage rates that made it difficult for first-home buyers to get housing—Phil Twyford and the Labour Party were seeing 3000 people a month leaving this country.Iain Lees-Galloway: Say “Phil Twyford” again. Go on.JAMI-LEE ROSS: Iain Lees-Galloway is irrelevant in Palmerston North. He is about to lose that seat just like Phil Twyford is going to lose his seat. But while he is still here for a couple more days he is welcome to take a call and give his valedictory in this debate. It might be entertaining for 10 minutes. People in Palmerston North and people in Te Atatū know we are delivering.I was in my electorate on Friday with the Hon Hekia Parata. We were visiting schools in my electorate—schools that are seeing achievement levels going up and up every year. Achievement levels under this Government show that more children are getting the education they need. When Labour left office one in three children was leaving school without the right education qualifications. We are now getting four out of five and we are aiming for five out of five. In Counties Manukau we are seeing crime rates coming down with the extra 300 police officers that we have delivered. More decreases in crime rates will be delivered by this Government. Reoffending rates are on the way down too. We are making it easier for people to do business and we are making it easier for children to get the health care that they need. The immunisation rates are up. The number of Botany residents getting operations are on the up because of Ministers like the Hon Tony Ryall.This Government is delivering. The public know that John Key can be trusted to deliver what he outlines in this election campaign. The business community knows it can have confidence to invest in this country. It knows it can have confidence that the economy will continue to improve and that is why this Government deserves to have this Budget passed tonight. This Government deserves to have another 3 years because we are delivering and the other side just simply does not have a clue.PHIL TWYFORD (Labour—Te Atatū):Tēnā koe Mr Assistant Speaker. I am going to talk about housing in this debate. Housing was I think the empty heart of this Budget. The people of New Zealand had such high expectations that this Government would finally take the housing crisis seriously. They looked to the Budget for some evidence that the Government was going to put its money where its mouth is and that it would have some serious policies to address the housing crisis that is gripping New Zealand. But sadly that was not the case.I want to talk about the National Government’s lack of a decent political and policy response to the housing crisis. If I was going to tweet my speech in two tweets this is what I would say. Tweet one: we have a housing crisis and National is in denial. Tweet two: only Labour has the policies and the political will to fix the housing crisis. Those are my two tweets but I will if I may expand on them a little in the remaining minutes that I have.It is interesting that the housing crisis has really touched a lot of people in New Zealand. It used to be the case in this country that when house prices went up everybody assumed that was a good thing because the homeowners were getting richer. But actually what is happening now is that there are so many people in New Zealand who are affected by the housing crisis. They know that something is not working and that we desperately need change.For a starter first-home buyers find themselves shut out of the market not only in the overheated housing markets of Auckland and Canterbury but in fact all over the country. In Auckland and Canterbury it is because of skyrocketing prices. In Auckland now the average house price is around $700000. House prices are going up. In the last 12 months in Auckland the average house price went up by $72000. How could any first-home buyer save enough to keep up with that sort of house price inflation?But the thing that has really knocked it on the head for first-home buyers all over the country are the 20 percent minimum deposits which are the consequence of loan-to-value ratio lending restrictions brought in by a Reserve Bank that was pushed into a corner by this Government’s failure and its resolute unwillingness to tackle property speculators in the Auckland housing market. First-home buyers’ parents and grandparents are standing by watching appalled as their young ones face no prospect of getting into the housing market and owning a home of their own.People in the regions are distressed because they are copping again the failure of this Government to deal with a housing market that has melted down in Auckland and Canterbury. People in the regions are facing thousands of dollars more on their mortgage repayments every year because of interest rates heading north of 8 percent under this Government and because of loan-to-value ratios. What is happening is that even though 90 percent of house price inflation is coming out of Auckland and Canterbury the other half of the country is being hit by loan-to-value ratio lending restrictions and interest rates going up.In many places people are facing a serious decline in their home equity. Over the last 6 years since National has been in power while house prices have been skyrocketing in Auckland they have diminished in real terms inflation adjusted by 20 percent on average in the far north. In Southland prices have gone down by 30 percent on average. This is an asset that people have spent their lives working for and paying off and right before their eyes they are seeing the value stripped out of their houses as the market declines in the regions. People in the regions feel justifiably that they have been the victims of a failed housing policy.In Canterbury because of this Government’s near criminal neglect in failing to get the residential rebuild happening only just over 2000 houses have actually been built in Christchurch since the last earthquake when the Canterbury Earthquake Recovery Authority says that Christchurch needs 25000 houses. This is why rents have gone through the roof. Rents have gone up by over 45 percent. House prices are up 30 percent in the last 6 years in Canterbury because of this Government’s hands-off approach in Christchurch. It is tweaking the planning rules and hoping somehow that a broken market will fix itself. That has left thousands and thousands of Cantabrians as the victims of a broken market. That is why people are in their fourth winter in Canterbury now and you have got people paying hundreds of dollars to live in sleep-outs in caravans and in all manner of substandard accommodation.We have a housing crisis but John Key does not think so. He is in denial in spite of the OECD and the IMF saying that we have some of the most overvalued housing in the Western World. Both of those pre-eminent institutions have recently looked at the New Zealand housing market rated us against every other country in the Western World and said that little old New Zealand’s housing market is one of the most overvalued in the Western World. Interestingly the OECD data looked at two different indicators. It looked at house prices to wages and house prices to rents. The difference between those two the very big difference between house prices and rents was interpreted by them and a number of other economists since then as indicating that the Auckland market is particularly driven by speculation; people essentially farming rental properties for capital gain. I want to come back to that because that is one of the very big gaps in this Government’s housing policy.Shamubeel Eaqub the economist from the New Zealand Institute of Economic Research brought out a report recently on housing in New Zealand. One of the really shocking bits of data in that report was that back in the late 1980s—when my wife and I bought our first home—on average it took 30 years to save up a deposit and pay off a mortgage on the average home. The figure now for my son’s generation? In Auckland it takes an average of 50 years to save a deposit and pay off a mortgage.Poto Williams: How long?PHIL TWYFORD: Fifty years. People are not buying houses now according to the last census data until they are in their 30s. So what does that mean? The current generation if they can get that 20 percent deposit together if they can service the mortgage are going to be in their 70s before they have paid off that house.So we clearly have a housing crisis. National has done very little to address it. The centrepiece of its policy is these housing accords. In spite of the bluster from Jami-Lee Ross in his last contribution not a single new house has been built in the special housing areas. After 6 years in office and 14 months after it announced its policy of these special housing areas in Auckland not a single new house has been built in those special housing areas. In fact the rate of new building consents is only half what it should be in order for Auckland just to stand still in terms of new house construction. So the Government’s policy of tweaking the planning rules and hoping that the market will fix itself has clearly failed.We have seen a whole lot of other tinkering. Government members have been talking for the last 6 years about reforming the Resource Management Act but they have failed to bring legislation to the House in this term to speed up residential building consents. So there has been a lot of talk but no action on the Resource Management Act. On trying to drive down the cost of building material the best that the National Government could do was to temporarily suspend anti-dumping duties and tariffs off varnish and nails and a few other building products hoping that this might knock a few thousand dollars off the cost of a new house. How pathetic is that?Labour is the only party that has the policies to seriously deal with the housing crisis. We will bring in a capital gains tax that excludes the family home. It will take the steam out of the Auckland property market. We will through KiwiBuild build 10000 affordable starter homes every year for a decade. We will end the housing shortage and we will bring the dream of affordable homeownership back within the reach of a new generation of New Zealanders. We will change the law so it will be illegal under the next Labour-led Government for a landlord to rent out a property that is cold and damp. Our healthy homes guarantee will ensure that before a property can be rented it must meet the standards of insulation and it must have an effective heating source. Finally a national policy statement under the Resource Management Act will give strong direction to local bodies that they must increase the rate of building of new houses and increase the supply of affordable housing. Only Labour has bold policies that will make a difference and fix this housing crisis.The ASSISTANT SPEAKER (H V Ross Robertson): Just before I call the next speaker this is to advise the House that we have a split call. There will be two 5-minute calls. I recognise the honourable member Eugenie Sage. Tēnā koe Ms Sage.EUGENIE SAGE (Green):Tēnā koe Mr Assistant Speaker and thank you. This Government and its Budget rely on National’s pollution economy continuing to grow at the expense of our environment at the expense of a fairer society and at the expense of a diverse and innovative economy. National’s legacy over the last 6 years will be debt. Mountains of debt—fiscal debt economic debt social debt and environmental debt. When John Key became Prime Minister in 2008 Government debt was $14 billion. Now it is $61 billion. That is $13500 for every man woman and child in the country—$10000 more per person than when John Key took office. Certainly some of it is for the Christchurch rebuild but a lot of it is to subsidise National’s favoured industries—more irrigation more oil exploration. That debt means we have a billion dollars in interest costs every year and a billion dollars less to spend on education housing health and the environment.The legacy of the last 6 years will be 30 percent of New Zealand children living in poverty. The legacy will be a 50 percent increase in our greenhouse gas emissions and New Zealand being shamefaced on the international stage because we have not done our share to reduce greenhouse gas emissions and avert a climate catastrophe. The legacy will be more pollution of our lakes rivers and aquifers. That is because National lacks ambition in relation to the environment except to exploit it. National’s legacy is about subsidising environmental exploitation. It found $40 million more in this Budget to subsidise irrigation but not a single dollar more to increase the funding for the Department of Conservation to look after our treasured landscapes and threatened species.New Zealanders identify with our wild places. They identify with our natural landscapes. They are the basis of our “100% Pure New Zealand” brand which allows us to sell our food fibre and primary products overseas and which draws tourists to this country. But National is not investing in protecting the brand. It is not investing in protecting the environment which is the basis of a healthy economy. What have we seen in water? National has set very unambitious standards. It wants New Zealanders to be able to go wading in and boating on our rivers and lakes. The level of faecal coliform that is set in the National Policy Statement for Freshwater Management is to allow wading and boating. So the message to tourists is: “Welcome to New Zealand. Go boating but make sure you don’t fall out of the boat because you risk getting sick.”The Green Party has a plan to clean up our rivers to protect our aquifers and our lakes. We would have a much stronger regulatory framework under the Resource Management Act and a much stronger national policy statement that reflected New Zealanders’ aspirations and hopes to be able to swim in rivers and lakes. So we would set a level for swimmable rivers. That would require more controls on land use and much more innovation. Regulation drives innovation as we have found in Christchurch where we have had innovation after a strong clean-air plan to drive low-emission woodburners.Stronger regulatory standards to protect water would help shift the basis of our economy from producing more and more milk more and more raw commodities like milk powder into adding value to the milk that we produce. Dairying has reached its limit in many catchments in New Zealand. We cannot continue to have dairying expand on to marginal soils where there is huge leaching of nitrate into rivers and aquifers. We must add value. That is why we in the Green Party announced a major innovation package to transform the basis of our economy—to invest a billion dollars in research and development over 3 years to fund another thousand places in education science and technology at our tertiary institutions.There is no limit to human creativity and innovation. We can add value. We can stop the free fall in manufacturing jobs. We can create more smart jobs and change the basis of our economy to one that is innovative and creative not one that relies on exploiting nature and creating more pollution as National’s does.JULIE ANNE GENTER (Green):I love New Zealand. That is why I became a member of Parliament for the Green Party. I want to look after New Zealand and make it an even better place to live not just in the short term but in the long term. I worked as a transportation planner before I got involved in politics. I can tell you that the most successful cities all over the world are doing well because they have taken a new approach to transport one that prioritises people and goods rather than just focusing on more vehicles which are very costly. Unfortunately John Key and this National Government are taking New Zealand backwards particularly when it comes to transport. It is like they are completely unaware of everything that has been going on in the rest of the world for the past 20 years. So I had to get involved in politics. I had to stand up because I could see that it is politicians who know nothing about transport—like the ones who are in charge right now—who are making the big decisions about where the money goes.Where is the money going? National is spending huge sums of money on just a few motorway projects that do nothing to reduce congestion or to reduce the cost of getting goods and people around our towns and cities or indeed around the country. In fact they are even going to be taking on debt to pay for some of these projects. We had the Transmission Gully public-private partnership announced today. Essentially a public-private partnership is a more expensive way of borrowing. The Crown is borrowing from the private sector and future taxpayers are going to be paying back $125 million every year for a quarter of a century for this road. Just to put that in context it is $125 million a year for one stretch of motorway. The Government policy statement on transport funding has allocated only $70 million to $80 million a year for regional transport improvements around the entire country. So we will be paying for 25 years for this one project that has very low benefits.Recently National announced it would be using some of the Future Investment Fund to pay for regional roads. Of course it has come out that there was no proper economic analysis of those projects before it picked them. So we have a Government that is selling off productive assets to pay for projects that can buy it votes in some regions but are not even the best use of money for building a stronger economy and one that is actually going to deliver in the long term. But there is an alternative to this. The Green Party in fact has the most sensible costed financially responsible programme for transport.What would we do? The Green Party actually does think that roads are an essential part of our transport system and we want to look after our existing roads maintain them better make them safer and make them work better. How do you make roads work better? The best way to do that is to give more commuters the opportunity to take a fast frequent bus or train to work. We can make it easier and more affordable for people to use public transport and then there will be fewer cars congesting our roads freeing them up for the essential freight and other vehicles that need to use them. We can make it safer for kids to walk and cycle to school a Kiwi birthright. Everybody knows that there is practically no congestion during school holidays. By simply making it safer for our kids to walk and cycle to school we can remove huge numbers of cars from the roads at peak time at very low cost.But it is not just low cost; it is better for our kids and for our environment. They arrive at school fresh invigorated and ready to learn. There is research from Denmark that shows that kids who walk and cycle to school are actually half a year advanced on their counterparts. I know that New Zealanders love their towns and cities. They want to be able to let their kids walk and cycle to school and it is not going to cost them more money. It is not impractical. All we need to do is reprioritise the transport budget and put people first. It is actually basic common sense.But I have to tell the people of New Zealand that in order to do this they cannot vote for the National Party. If it gets one more term in Government it is going to put us into even more debt for transport projects that are actually going to aggravate congestion and do nothing to help most commuters. So to get a smart green transport system that is going to enable us to have towns and cities that people love to live in and that work well party vote Green.MAGGIE BARRY (National—North Shore):It is with great pleasure that I rise to take one of the final calls on the Budget debate in the third reading of the Appropriation (2014/15 Estimates) Bill and the second reading of the Imprest Supply (Second for 2014/15) Bill. I could be tempted to be derailed—no pun intended really—by the previous speaker Julie Anne Genter. From that one phrase alone that there are no traffic jams in the school holidays—I used to think that the Greens lived on another planet; now I cannot come close to guessing where they belong and where they live. They are so completely totally and utterly out of touch that I am not going to dignify the nonsense we just heard from the previous speaker with a response beyond saying that it is the usual fruit loop rubbish they come out with.Let us concentrate instead on something that is a matter of substance and that is Bill English’s sixth Budget. What a fair and cautiously optimistic document it is and one that is also extremely appropriate for managing our fragile economy and its recovery. For those who are unaware the economy grew at 3.8 percent this year. That is a fantastic thing. We are looking likely to grow at 4 percent next year. That compares really favourably when you look around the world. The USA is at 2 percent and it is around 0.9 percent in the euro area. These are the kinds of countries that would give a great deal to be in our strong financial position. Look at what that actually means to individuals. It is all very well to talk about the growth in the economy—3.8 percent going up to 4 percent—OK but what does that mean? Well what it means in terms of average wages when you look at that as a measurement is a $3000 increase in the average wage which has brought that up to about $55700. That is forecast to grow to $62300 and that will be by the year 2018.So OK we are getting higher average wages. What else do we have? We have better situations now when it comes to unemployment. It is 6 percent now; Treasury forecasts are saying it will be down to 4.4 percent in mid-2018. In the past year alone an extra 84000 jobs were created across the country and Treasury forecasts another 172000 new jobs over the next 4 years. That means that our children and our people are able to get work. What does that mean for people who are in impoverished situations and who actually are not getting the sort of deal out of society they would like to get? Well when we look at what has happened with the welfare into work scheme that is where we see some really significant gains: 16000 fewer people are on benefits now than there were in June of last year. That means that thousands of children are now growing up in households that are financially independent. For young people to get ahead and for young people to get the role models of parents and caregivers in work that is what they need to have happen—that the parents move off the benefit. Some 30000 fewer children are now living in benefit-dependent homes compared with just 2 years ago.Let us look at the figures and the facts and let us not dwell in the twilight zone of hyperbole and hypotheticals which the Opposition gets bogged down in. On average 1600 people a week are moving from welfare into work. Some things are priceless. That is a wonderful thing. We are not stopping there though. When it comes to new funding $100 million was allocated in this Budget and that was on top of the $188.6 million in the Budget last year. That is to support people getting off welfare and into work. There have been a lot of different initiatives around training and employment. Eight thousand more employment and work readiness places have been targeted specifically at beneficiaries who are at risk of long-term welfare dependency. We have been trialling new approaches for beneficiaries with complex needs.Youth one-stop shops now provide support to young people and they have received under this Budget an additional $8.6 million. Twenty-two million dollars has been put aside for helping people with budgeting because if they have grown up in welfare-dependent households and they are not sure what is involved in balancing a chequebook because no one around them has ever been into that unknown territory then the budgeting services will be helping them with that. It is an important part of them getting the education and the life skills that they need to be able to manage their own finances and be independent. The cradle-to-the-grave mentality that the Opposition parties have fed upon for decades—generations really—is something that needs to be stopped and needs to be addressed. It is not the way that this country needs to be built in its future. We need to want more for our people. We need to want more for their health for their education and for their employment prospects. That is what this Budget has delivered for them.When you look at what we have done in health there are really exciting developments like free general practitioner visits and free prescriptions as well for the under-13s. That costs about $90 million which is a lot of money but when you think about what it saves parents what it saves the children in terms of their health—and actually if you are looking at it pragmatically it is a lot more expensive in the health dollar sense to cure children who have had an illness for a lot longer than if you catch it at an early stage. Having free general practitioner visits and free prescriptions removes that problem. It removes that sense of pressure that parents will have.We have also increased the parental tax credit by $70 a week. That brings it in now at $220 a week and it has been extended out by 2 weeks to 10 weeks. The parental tax credit is one part of helping young people out of poverty and of course there is the paid parental leave. There are 4 weeks extra there and we have extended it to caregivers other than parents. That is a fact that has been lost sometimes in the cacophony of the debate around this. There are a lot of children in this country who are not brought up by their own parents. Caregivers were not eligible but under the paid parental leave provisions and the extension of 4 weeks we have managed to extend that out for caregivers other than parents like grandparents who are bringing up their mokopuna and families who bring up foster children. These are the kinds of people who get various allowances but these are targeted and they are focused and the children are always at the centre of it. That is why I think these initiatives have worked so extremely well.Our Business Growth Agenda is something that is really exciting the people in my electorate. On the North Shore there are a lot of small to medium sized enterprises and there are really significant opportunities for them internationally but they need a bit of extra help. There is $69 million extra for New Zealand Trade and Enterprise to grow New Zealand’s presence across a variety of nations—we have got China South America and the Middle East. That amount of money—$69 million for New Zealand Trade and Enterprise—is going to help some 200 more firms in New Zealand break into overseas markets. I can tell you there are a lot of businesses on the North Shore that are clamouring and looking forward to trying to get involved with that. They know that it is going to mean the difference between their businesses staying at a reasonably small level or actually growing exponentially. We had a firm in my electorate that got a research and development grant. It was a fantastic thing for the firm. It managed to grow its business up over the $10 million mark. Now with a bit of additional input it has been able to as a pharmaceutical company grow its business to a $50 million turnover annually. Now it is looking to break into China and India with the help of New Zealand Trade and Enterprise. These are practical sensible ways in which people can get ahead.The Opposition throws around this notion of a living wage. You would talk to most people in a small to medium sized enterprise and they would not pay themselves a living wage because that is what an investment in your business is all about. You get it up and running you get it going and you need to be able to invest money back into your business so the idea that they would pay themselves a living wage as people who own a business is a joke. They will wait until the business has had the development that it needs and they employ a number of people and then they might look at putting money into their own pockets as a result. This is the kind of thing that has to happen really if you want to actually grow your business and to grow what is happening in your own small community as well as in the wider interests of the economy.The Future Investment Fund which was widely pilloried by the Opposition parties has been put to very good use by Bill English. It raised $4.7 billion and it has funded vital assets such as schools and hospitals. The big thing is that we have not had to borrow. We have not had to go with the begging bowl out overseas and borrow to fund these particular elements. We have invested for example a further $1 billion of the Future Investment Fund. That included that $200 million in the health sector $172.5 million to schools and $40 million for irrigation and KiwiRail has also absorbed $198 million. This is money that we did not have to borrow. This is money that we have been able to use and turn around from our Future Investment Fund which is a policy that we programmed on.I was around in the 1980s when that lot over there in Labour was selling everything off lock stock and smoking barrels—100 percent. Phil Goff was a chief cheerleader for GST. Oh how things have changed! But in fact when you look at what we have done it is to actually retain the ownership of it the people who you put on the board and the chairs of those boards as well. So we have managed with some prudent rearrangement of things to get what we need for health and education the priorities that matter to New Zealanders and their families. We are not sidetracked by the antics and the show pony sort of nonsense that comes through from the Opposition. We are indeed focused on the things that matter to New Zealand.Bill English has handed down this Budget after two earlier ones where not very much money at all was given out—in fact none. I cannot remember a time in New Zealand when we did not have lolly scrambles at all around the Budget but Bill managed that twice. As a result of that and that very prudent management of our public services we have had the money to invest in the things that matter to New Zealand to New Zealanders to the growth of our economy and to the growth and benefit of all of our families. That is why I commend the Appropriation (2014/15 Estimates) Bill and the Imprest Supply (Second for 2014/15) Bill to the House. Thank you.A party votewas called for on the questionThat the Appropriation (2014/15 Estimates) Bill be now read a third time and the Imprest Supply (Second for 2014/15) Bill be now read a second time.Ayes62New Zealand National 59; Māori Party 2; United Future 1.Noes56New Zealand Labour 34; Green Party 14; New Zealand First 7; Mana 1.Appropriation (2014/15 Estimates) Bill read a third time.Imprest Supply (Second for 2014/15) Bill read a second time.