Boscawen John: Spending Cap (People’s Veto) Bill — First Reading 
Boscawen John: Spending Cap (People’s Veto) Bill — First Reading 
[Volume:675;Page:21321] 
Hon JOHN BOSCAWEN (Leader—ACT) 
: 
 It is a pleasure to stand and take a call on the Spending Cap (People’s Veto) Bill. It has been interesting to listen to how the bill’s provisions but more important the bill’s benefits have been misrepresented in this House this afternoon and this evening. Let me just take a minute to reflect on some of the key provisions in this bill. 
In essence what this bill is seeking to do is to put an upper limit on public expenditure as a percentage of GDP and that is that percentage as it is today. Then it would provide that Government expenditure can increase only in real terms. So we have a certain level of Government expenditure today and as the population increases one would expect the tax revenues to go up and as a consequence expenditure on public services necessarily to increase. Likewise with inflation; that will also affect the spending power of taxes. As a consequence one of the provisions of this bill is that a total amount of spending is adjusted upwards for increases in population and for the effects of inflation. There are also adjustments to take out and look specifically at the impact of unemployment benefits because we know that through the economic cycles unemployment goes up and it goes down. It would be wrong to include the cost of unemployment benefits within that cap. Equally borrowing expenses a function of interest rates and the level of debt are separately calculated. The cost of national emergencies such as the Christchurch earthquake is also separately calculated. We are actually adjusting for known one-off occurrences if you like of that nature and for population and inflation effects. 
Why is this bill important? Darien Fenton had a very interesting contribution. She made some comments which I am sure were tongue-in-cheek about Rodney Hide but she then went on to praise Michael Cullen. Let us just look at Michael Cullen’s record because Mr Cullen can take some credit for the fact that Government expenditure coming into the 2005 election was some 29 percent of GDP. What happened then? Well Labour fearing a defeat in the 2005 election went on a spending spree. It was a massive spending spree in a desperate effort to buy the 2005 election. We are living with the consequences of those decisions today. I suspect we will be living with the consequences of those decisions for many years to come. As a consequence of substantially increasing social welfare entitlements through Working for Families and through a massive extension to the interest-free student loan scheme we find a situation today where Government expenditure is some 36 percent of GDP—an increase from 29 percent to 36 percent. Just think if we had actually had this bill in place prior to the 2005 election and if we had been able to contain Government expenditure to 29 percent of GDP—the figure that Michael Cullen achieved prior to the 2005 election—rather than the massive blowout in expenditure the massive blowout in debt that Labour members have spoken about today we would be spending some $12 billion or $13 billion less today than we are. 
Why is that important? It is important because money that is spent has to be taken off people. It is taken off people in the form of taxes and through increased debt on future generations. That has an impact on jobs. It has an impact on the number of jobs and it has an impact on the standard of living in New Zealand. Prior to the dinner break Nanaia Mahuta was waxing lyrical about poverty in New Zealand the need to reform our social welfare system and the lack of jobs. It is unfortunate that her knowledge of the economy and how it works is not better than what it is. I suspect the same comments could be made about most members of the Labour Opposition. How do we create jobs? We create jobs by encouraging entrepreneurs to invest to build factories to create opportunities and to look for new markets overseas—that is how we create jobs. What creates that investment? It is the potential return an entrepreneur a businessman will get from investing. We live in a global market place. The investors of the world are free to invest in New Zealand in Australia in Asia and in the United States. We are competing for capital. If we want to attract capital to New Zealand if we want to create capital if we want to create the investment and the sorts of jobs that Labour members say are so precious to them we need to have a system that incentivises people to invest in New Zealand. The way to do that is to ensure that those entrepreneurs those businessmen those people saving and those people working have the greatest possible return. The way to do that is to reduce wasteful Government expenditure to bring Government expenditure under control and to allow New Zealanders to keep more of the income they earn. 
I mentioned earlier the massive spending spree that went on after the 2005 general election. We know that one of the things that was implemented was a substantial extension to interest-free student loans. When the student loan scheme started there was a write-off of 11c in the dollar. So for every dollar that was borrowed the Government ended up writing off 11c and 89c was repaid during the early to mid-1990s. By the time we got to 1999 the Government was writing off 23c in the dollar and students were repaying only 77c. If we fast-forward the clock to 2009 the write-off was approaching 50c in the dollar and students were repaying only half of what they borrowed. Why was that? It was because there was no control on Government expenditure—there was no control. The Labour Government put in a plan to buy the election and we had this massive blowout in expenditure. If we had had this very bill the Spending Cap (People’s Veto) Bill that may well not have happened we may well have had Government expenditure today at 29 percent of GDP as it was under Michael Cullen in 2005 the Government may well have been spending $12 billion or $13 billion less and we may well have had the investment and the jobs that Labour members are very happy to wax lyrical about. 
I was also interested in the comments of Russel Norman before the dinner break. He talked eloquently about the benefits of public education. What is important about public education? Surely the key issue is education—that is the key issue. Does it matter that teachers are paid by the State? Is that important? Is it important that taxpayers pay taxes to the State for the State to go out and employ the teachers? What is wrong with letting New Zealanders keep more of their own money so that they in turn can directly purchase education for their own children? What is wrong with giving New Zealanders more freedom? Russel Norman said that if we really wanted freedom in New Zealand we should have better public education. The ACT Party says that it is not important who employs the teachers; what is important is how successful those teachers are how good those teachers are. We say we need to let New Zealanders keep more of their own money let them have the freedom and let them go out there and choose whether they want to send their children to a State school where the teachers are paid for by the taxpayer through taxes or to an independent school—actually let them have the freedom. Let New Zealanders have choice. Let us ensure that those opportunities are funded equally. It is the role of the State to collect taxes and to fund education but there is no reason that a person should have to pay twice—to pay their taxes and also to pay for an independent education if that is their choice. 
Yes I say to Mr Russel Norman we do stand for freedom. What we stand for is freedom and for equal opportunity. This is a bill whose time has come. Many people have waxed lyrical about the fact that this bill will not see the light of day after the election. Well I say to New Zealanders that if they want to see decent controls on Government expenditure if they want to see expenditure back at 29 percent or less of GDP there is a very good way to do that: vote for the ACT Party with their party vote to put us into a position where we actually have some leverage on the incoming National Government. Unlike Darien Fenton I am not in cloud-cuckoo-land.