Douglas Roger: Budget Statement — Budget Debate 
Douglas Roger: Budget Statement — Budget Debate 
[Volume:654;Page:3949] 
Hon Sir ROGER DOUGLAS (ACT) 
: 
 This is a Budget of deficits: a deficit of spending a deficit of current account a deficit of courage and most important a deficit of imagination. Why do I say a deficit of imagination? Because the Prime Minister and the Minister of Finance have taken the soft option: they have decided to borrow and hope. 
The best thing I can say about this Budget is that it is as good as any of the nine Budgets Labour’s Michael Cullen delivered. Then again that is hardly the standard one should hold oneself to. After all during Cullen’s time as Minister of Finance total Government spending increased in real terms by $5500 per person—that is $22000 per annum for a family of four or over $400 per week. I ask the Labour members to consider what the lives of those families would be like if they still had that $400. What did families get from Cullen’s spending? Much of it was wasted on the bureaucratic empires of health education and welfare without any increase in productivity. This Budget continues that trend. Some of the money was taken from us and then used to turn most New Zealand families into welfare beneficiaries under Working for Families. 
In these circumstances what happened to the Government’s line-by-line review which was meant to cut waste? The Government managed to find $301 million. Let us put that in context.: it is 0.4 percent of Government spending. Really? Was that seriously all it was able to find after Cullen had increased Government spending by $18 billion over and above inflation? In my view National has missed the opportunity to cut Government waste by scrapping some Government functions and Government departments. 
What was Labour’s response in this House to those modest cut-backs? It was outrage. To Labour every area of Government is underfunded. Having spent up large for 9 years it believes it can always find new projects to waste money on. I worry that Labour might be right. When it says it will not cut spending it is really saying that it wants to have higher taxes. Over 9 years Labour tried to tax this nation to prosperity. The only effect was to slash productivity growth helping us to slip further down the OECD ladder. Our productivity under Labour was one-third of what it was between 1984 and 2000. The difference to average New Zealanders is that today they receive 25 percent lower wages than they would have received if productivity growth had been maintained. 
After 9 years of tax abuse is National much better? The reality is that National did not have to go down the debt path. In fact National had choices. One choice was to do what National has always done—that is to take all Labour’s policies as a given tinker with them around the edges and hope to manage the system somewhat better. It could be the conservative party it always—with the possible exception of the National Government of 1991 and 1992—has been. 
The other choice was to look to the future. The party that looks to the future always sets the real political agenda. When Labour looks to the future it sees a large State higher taxes and more control for meddling politicians in Wellington and that is what we have ended up with. When National looks to the future it sees administering Labour’s programme more efficiently. It is by this Budget bereft of vision. National suffers from a deficit of courage and imagination. If National wanted a vision it could have looked towards a future of low taxes personal responsibility personal freedom and prosperity. Instead it has chosen high taxes expenditure as a percentage of GDP going up by 4 percent over the 5 years to 2013 Government ownership and delivery of social services and more power for politicians and bureaucrats. 
National has continued the trend for Governments since 1993 to take soft options deciding once again to borrow and hope. National promised that it would not touch health education and welfare but those areas make up 66 percent of the Government Budget. Saying it will not even look at ways to open these areas up to competition and other reforms is to give up on fiscal prudence and to sentence New Zealand to low productivity growth. We cannot have 66 percent of the Budget—30 percent of GDP—in areas that just take more and more money. In this Budget when underlying inflation is at 1 percent we are increasing health care costs by 6 percent. Cullen had 5 percent underlying inflation and increased health care costs by 10 percent. It is simply madness. 
Making cuts to Government spending does not mean denying anyone access to health education and welfare; all it does is change the way we go about offering help to those who need it. One way to help is to shovel money into the bureaucracy as Labour and National do and hope like hell that it will eventually reach people in the form of decent education quality health care and welfare that helps rather than harms the poor. But as we have seen through Labour’s health spending not all the money goes to those who need it. There has been a 15 percent decline in doctor productivity and an 11 percent decline in nurse productivity. That will continue. In fact the only increase in hospital productivity has been for orderlies and cleaning staff who have been outsourced to the private sector. I wonder why there was an increase there? 
The other way to help is to give money back to those who earned it and encourage them to purchase their own education their own health coverage and their own insurance against risks like job loss accident and sickness. The most obvious difference between the two systems is who has the power. In the status quo run by Labour and National the bureaucrat is all-powerful. The bureaucracy decides where our children get educated it decides whether our medical treatment will go ahead and it decides what level of income assistance is required. The recipients of handouts—be they parents patients or welfare recipients—are treated like children to be managed by a bureaucrat who knows very little about them and cares even less. 
Is it surprising in these circumstances that within this environment more money does not deliver better outcomes? The only way yet discovered of improving outcomes while keeping costs down is to restore control to the individual. Ultimately for all of us—unfortunately for all of us—in terms of this Budget National is soft. It suffers from the tyranny of the status quo. The only thing National seems to know is how to spend. If spending means borrowing then National unfortunately will borrow and hope.