Parker David: Debate on Budget Policy Statement 
Parker David: Debate on Budget Policy Statement 
[Volume:661;Page:9564] 
Hon DAVID PARKER (Labour) 
: 
 We are here today in March 2010 approximately halfway through the term of the National Government. In a month or two the Minister of Finance will be delivering the second of his three Budgets so it is time for us in this Parliament to look at how the National Government is performing. I think we should look at a couple of questions. At the time of this Budget fiscal update we should look at how the Government is doing whether it is achieving what National said to electors it would achieve whether it is keeping or breaking its promises and how the future is looking. 
I suppose the first point to be made when we are looking at the Budget Policy Statement is that we should have some focus on the performance of the Minister of Finance. One thing I would say at the start is that he is a very backward-looking Minister of Finance. He spends his whole time even now coming up to his second Budget looking back and inventing criticisms of the previous Government rather than advancing the interests of our country. We heard it again today. He was out there again with the Crosby/Textor speech saying that the previous Labour-led Government had 9 years of economic mismanagement. It falls upon me as it did with prior speakers to show just how ridiculous that assertion is. We reduced Government debt very significantly. Gross debt went down from 38 percent of GDP to under 20 percent of GDP. It was 17.7 percent at the time of the election. We reduced net debt down to virtually nothing. Unemployment was amongst the lowest in the world at 3.4 percent. Growth in New Zealand during that period was higher on average than it was in the United States the whole of Europe Japan or the United Kingdom. Indeed during the period of our Government it was virtually identical to growth in Australia during the same period. It was a very strong economic performance. 
Perhaps the Minister of Finance has been so backward looking because it is true—I think this is a matter of public record and I do not take pleasure in saying this—that he has been more than beset with his own irregularities and problems in terms of claims for household accommodation for his personal budget and he has taken his eye off his more important responsibilities as Minister of Finance. Clearly he has had a horror year. 
I ask members what the Government is doing in terms of achieving what National promised New Zealanders it would achieve. Its first promise was a step change in the New Zealand economy. The Government promised to close the income gap with Australia and to rebalance the economy towards the tradable sector. What meaningful steps or changes has it made towards those goals? Sadly the answer is none. I accept that infrastructure is important. Members on this side of the House clearly accept that. Indeed it was the Labour Government that markedly increased spending on infrastructure and started to improve our roading and our public transport infrastructure. 
Hon David Cunliffe 
: Broadband. 
Hon DAVID PARKER 
: It was Labour that made progress towards broadband which has stalled since this Government came in and made the necessary investments through State-owned enterprises and other private sector electricity companies in electricity generation and transmission. There has been no step change there since the election. 
Let us turn to the next big lever that can be pulled. The Government called for a review of the taxation system. That was a wise thing to do but it was unwise to get the review and then effectively trash its contents. It was a ruse because in the end the Minister of Finance has done what National Governments always do. In the end stripped to the basics it is increasing the tax burden of low and middle income groups and decreasing the tax paid more than proportionately by those who already earn the most. That is what National always does that is what National has done this year and that is what New Zealanders know it is doing. New Zealanders know that that is breaking the promise made during the election that National would not increase GST. Perhaps as important—I will not say “more important” because there is nothing worse than a broken promise—it does not go anywhere towards rebalancing the New Zealand economy. 
Members on this side agree with the Minister on Finance that New Zealand’s economy has been and remains imbalanced. We invest too much in property and we do not invest enough in the productive sector. The tax levers should have been pulled to help rebalance the economy but they have not been. The leadership shown by the Government in this area is wrong. It is bad for two reasons. One is that National’s economic ideology is so simplistic. Essentially it is unsophisticated. National says that we should tax high-income people less and low and middle income people more. That is National’s ideology. Its ideology relates to taxation rather than to management of the economy. So the Government is failing to achieve a step change in New Zealand. 
The gap with Australia rather than closing is widening in every area except one and that is unemployment. It should be of no pleasure to the Government that in the one area where New Zealand is narrowing with Australia it is going in the wrong direction even though it inherited a lower unemployment rate than was the case in Australia. New Zealand’s unemployment rate is growing while Australia’s has been dropping. 
Hon David Cunliffe 
: Did we catch up? 
Hon DAVID PARKER 
: We have caught up on unemployment by getting a worse unemployment record and in every other way we are doing worse. 
There is another area of important policy where the Government sits on its hands and that relates to monetary policy. Last year Labour said that it no longer agreed with the current monetary policy settings and that the consensus had broken down. At the time both the Prime Minister and the Minister of Finance said that Labour was wrong that it was all perfect and that New Zealand had the best monetary policy in the world. What has happened in the last month? The International Monetary Fund has produced a report stating that Labour was right and National was wrong on this issue. The report highlights the difficulties caused to the tradable sector to the real economy from the consequences of New Zealand’s existing monetary policy. It points out the damage that it has done through imbalance and the risks that it creates to the financial sector and also notes the difficulties that are faced by our tradable sector. Our exporters face a volatile exchange rate. Still the National Government sits on its hands and does nothing. 
If we look at how the Government is doing the answer is not well. How is the future looking? The future is looking increasingly dire for New Zealand. The latest Treasury and Reserve Bank forecasts show our current account deficit will increase in the next couple of years to more than double its present rate. That means that if as predicted it goes back to 7.2 percent of GDP every year New Zealand is losing its sovereignty. Every year more of our main enterprises are owned by overseas interests. Every year New Zealand as a country is getting poorer not by a small amount but by a predicted 7.2 percent of GDP per annum. Far from rebalancing the economy so as to encourage exports savings and investment the imbalances are on the rise. 
The National Government is leading New Zealand towards a repeat of the worst excesses in consumption and property-related investment. It has not done anything meaningful to change the policy settings. New Zealand will have a future of poor savings. The Government has undermined KiwiSaver; it has done nothing to fix it. We have inadequate savings and we have monetary policy settings that mean New Zealand enterprises are paying higher interest rates than their competitors overseas. They suffer the double detriment of a volatile exchange rate and interest rates that are higher than the rates paid by the businesses competing to buy those same assets in New Zealand. The competitiveness of New Zealand businesses decreases as we see the hollowing out of the New Zealand economy and the gap between New Zealand and Australia getting worse. Indeed we see more and more of New Zealand being owned by Australia and by other companies from other jurisdictions including China. New Zealanders are getting poorer and the gap between Australia and New Zealand is growing which is the exact opposite to what was promised. We are coming up to the second Budget and the Government is not achieving what it told the New Zealand electors it would achieve.