Parker David: Supplementary Estimates — Imprest Supply Debate 
Parker David: Supplementary Estimates — Imprest Supply Debate 
[Volume:655;Page:4513] 
Hon DAVID PARKER (Labour) 
: 
 The previous speech by the Minister of Finance Bill English should be contrasted with what he was saying before the election as the Opposition spokesperson on finance. He was saying to the electorate that they could have everything that they had under Labour plus tax cuts. He was not saying that the social spending or tax credits that surround both Working for Families and KiwiSaver were profligate. He told people that those policies were there they were secure they were good policies and people could rely upon National to protect them and superannuation—people could have everything they had under Labour plus tax cuts. 
He was warned before the election by journalists that Lehman Brothers had failed and the IMF was giving warnings of a major slowdown in the world economy. Those facts were put to Mr English when he was the Opposition spokesperson on finance and he was asked whether as a consequence the promises that he was making were unrealistic and unaffordable. He denied that they were. He made promises that he knew could not be kept in order to win the Treasury benches. Straight after the election we were here under urgency passing legislation for those unaffordable tax cuts. Not only were those tax cuts unaffordable but also they were so weighted to those who were already well off that they were terribly unfair. They were patently unaffordable and that was proven within 6 short months when we were back here in this Chamber reversing some of those tax cuts that we had voted for under urgency prior to Christmas. 
The Minister of Finance continues to pretend that his Government inherited a difficult set of cards but his Government inherited one of the best fiscal positions in the Western World. The third-lowest Government debt in the OECD is a wonderful set of cards to inherit in a time of recession not a difficult set of cards. The Minister has had more room to move than virtually every other Minister of Finance in the developed world. He should not complain to members of the previous Labour Government that we left a situation that was in a parlous state because nothing could be further from the truth. When Mr English last left Government—he was Minister of Finance in the last National Government—the Labour Government inherited Government debt of 38 percent of GDP. When the Labour Government gave back the Treasury benches to the National Government following the last election the National Government inherited Government debt that was less than 18 percent of GDP. 
Today the Prime Minister heralded the fact that New Zealand’s unemployment rate is in his view not too bad because it is at 5 percent when some of the rest of the world have higher rates. In a numerical sense that is true but who should get credit for that? The prior Government oversaw real growth in this economy. That growth saw New Zealand’s unemployment be the lowest or second-lowest rate in the world a position we swapped from time to time with South Korea. That is the legacy the Labour Government left to the incoming National Government. 
Mr English says that productivity growth was low in the period prior to the election. On an annual basis during the 9 years of the Labour Government growth in New Zealand was higher than it was in Japan the USA the European Union the United Kingdom and even although just slightly Australia during that period. It is true that growth in labour productivity during that period was not high but that is the statistical effect of reducing unemployment. If we have unemployment going down to the very low levels that we had in New Zealand the last people who are back in the jobs are the lowest skilled. Similarly the first who get laid off and cannot get a new job are generally the lowest skilled. Ironically when we have reducing unemployment we can also have low rates of increases in labour productivity. Mr English knows that well but he denies it in this House. 
There are a number of criticisms that can be made of the Budget. This Budget does very little to set up New Zealand to come out of the recession in a stronger position than we went into it because it takes money away from the training of people who through no fault of their own are normally made unemployed. It does not fund their training whilst unemployed. Sir Roger Douglas presided over the finances of this country in a very difficult time in the 1980s and he did some good things and some bad things. I congratulate him on floating the dollar and some other good things. One of those good things he and that Labour Government did was that in that period of dislocation when there was rising unemployment money was put into the retraining of people who were made unemployed. This Budget does not do that; in fact this Budget reduces payments to a lot of good courses. Let us look at the 9-day fortnight one of the big three ideas to come out of the Job Summit. It is an idea that I think most people in this House inherently think is a good idea if it is well managed but there is no skills package around it. The people who are not in work fully are not getting training as a way to improve themselves and therefore improve the future productivity of our economy. 
I want to deal with one of the exaggerations that we hear from the Minister of Finance relating to the increase in Government expenditure during the term of the Labour Government; Sir Roger Douglas does this too. They both include tax credits in the definition of “Government expenditure”. The Working for Families tax credits—effectively a tax reduction for people with families; over $100 a week per family with children was the average of the Working for Families tax credits that were voted by the previous Labour Government—and the KiwiSaver tax credits that encourage people to save are both counted as Government expenditure under the definition used by the Hon Bill English today and at times by the Hon Roger Douglas. They exaggerate the increase in Government expenditure by including the tax credits which are effectively tax reductions. If they did not agree with those tax credits they would have campaigned against them. But of course the National Party said it would keep them because it agreed that in the end they were a good way to deliver assistance and effective tax reductions to families with children. 
The other big glaring mistake in this Budget—I will not deal with some of the smaller choices like putting more money into private schools rather than public schools—is the issue of superannuation. New Zealand has an ageing population. We currently have approximately 500000 superannuitants in New Zealand and a rapidly ageing population. Baby boomers born from the time of World War II to 1960 are approaching retirement age. Between now and 2030 an additional 500000 of those baby boomers will move into retirement. At the same time the number of people in the workforce will decrease proportionately because we will have fewer working-age people as a proportion of our population. It is obvious that in order to maintain future superannuation entitlements Governments of today need to collect taxes from the people who are working today in order to fund that future superannuation. If that does not occur we create not just uncertainty as to future superannuation entitlements and we certainly do that but also we create intergenerational unfairness because we will have a generation of people expected to fund a million or so people on superannuation from a smaller working population. That would not be fair and it may not be politically sustainable. 
That reality is clear to everyone but it is denied by the National Government as it has stopped contributions to the superannuation fund not for 1 year but for the decade. So there will be $20 billion plus earnings less in that fund in the future when that increased number of people will be reliant on superannuation. As a consequence future entitlements to superannuation are at risk. The likelihood of means testing or age changes or decreased generosity of superannuation is denied by the National Government. It has again broken its promise on superannuation.