Budget Debate 
Budget Debate 
[Volume:663;Page:11300] 
Budget Debate 
Debate resumed from 25 May on the Appropriation (2010/11 Estimates) Bill. 
Hon KATE WILKINSON (Minister of Labour) 
: 
 Budget 2010 is a great Budget. History will show that it is one of the best Budgets that this country has seen. What a great Budget. Labour took us from the best of times to the worst of times leading us into one of the worst recessions in history and we are now leading New Zealand out of it. This Government is focused on growing the economic pie and providing the right incentives for New Zealand families to get ahead. We want a bigger pie so everyone will get a bigger piece. Labour seems to be stuck firm and fast in the politics of envy. All Labour members do is pick and pick at the same old pie complaining that no one trusts them to slice it any more. Well they are right. 
This Budget focuses on lifting long-term economic growth to create jobs boost incomes raise living standards and help Kiwi families get ahead. It keeps us on track to reverse the deficit and get the books back into surplus notwithstanding the legacy left by Labour which squandered some of the best opportunities that this country has seen. 
The Minister of Finance has pulled off a huge coup with this Budget as has been shown by the huge levels of support from both the public and political commentators. I think we would struggle to count how many column inches and sound bites have been filled with praise and compliments for the decisive and courageous direction this Budget sets for the New Zealand economy. There is one quote that appeals to me. It is feedback from the  
New Zealand Herald 
 and it states: “The worst bit about the Budget was listening to Mr Goff respond to it in Parliament.” I think that probably says it all. Let us look at more quotes. The  
Dominion Post 
 editorial states under the heading “Bold step towards a better economy”: “Without changes to make it a more attractive destination for investment and skilled workers New Zealand was facing a further slip down world economic tables. Mr English has made a promising start to arresting the trend.” 
That is one quote; we have others that I would like to put on the  
Hansard 
 record. Bernard Hickey states: “This is the most comprehensive and coherent reform of New Zealand’s taxation system in more than 25 years. It goes a long way to tilting the economy back towards productive investment and away from property investment … Overall I’d give it 8.5 out of 10.” That is not the only one though. Another states: “Today’s Budget is a major step in the long-term aim of reversing this resource drain with the added hope that some of our best and brightest and wealthiest will consider a return home.” 
This is a great Budget. It has seen the biggest tax reform in 25 years. It delivers on four objectives. It rewards effort and helps families get ahead—something Labour does not know much about. It helps us attract and retain skilled people in New Zealand—something Labour did not know much about. It encourages savings and productive investment—something Labour did not know much about. It discourages excessive borrowing consumption and property speculation—something Labour does not know much about. 
This Budget makes the tax system fairer. It strengthens the tax rules about property investment and it gives the Inland Revenue Department extra resources for enforcement. If we look at the Budget we can see that it is a good Budget for New Zealanders. We can look at some examples. Let us take a family with a couple of children earning $76000 a year. They receive Working for Families and pay $300 a week in mortgage repayments which do not incur GST. After the tax package they will get a household tax cut of about $46 a week. They may pay an extra $21 a week in GST but they will be $25 a week better off. They will be $25 a week better off under National than they would ever be under Labour. 
Let us take an average income earner on $50000 a year. He works as a plumber and earns the average wage. He pays $120 a week in rent and saves $50 a week towards a deposit on his first home. After his tax package he will get a $29 tax cut. He will pay $13 more in GST but he will be actually $16 a week better off. Even retired couples receiving superannuation who have no other investments but who own their own homes will get a tax cut of $12 a week after the tax package. They will have a $10 a week increase in New Zealand superannuation but will pay possibly $11 extra in GST. Overall national superannuitants—retired couples—will be $11 a week better off. 
The Labour Party is a party of envy. Its members say that this Budget is just a Budget for National’s rich mates. Well I say that for some who are wealthy this is probably not the best Budget they have seen. If a couple is on a high income and has several investment properties and is claiming depreciation on those investment properties to be offset against their income tax the chances are that after this tax package they will pay more in income tax not less. So it is fallacious for Labour members to suggest that this tax package is for the rich and not for the many. 
All manner of avenues have been used in the past to avoid paying tax— 
Hon Dr Wayne Mapp 
: We’ve closed those avenues. 
Hon KATE WILKINSON 
: —and we are closing them. That should be good. That is great. It should be great news even to those on the other side to those on the Opposition benches. But no they still whinge and moan and complain. 
This is now a fairer tax system. There is a fairer tax system in place to ensure that property investors and landlords are not writing off their tax obligations through depreciation so that they may also put some money into other productive assets and ventures. New Zealanders deserve a Government that wants them to be successful. We are aspirational for New Zealanders; we want them to get ahead. They now have a Government that wants New Zealanders to be successful. 
This Budget sets the Government in a direction that provides the right incentives for people to work hard and to stay working here in New Zealand. Workers will now have more money in their pockets and National trusts them with money in their own pockets because we want to give them incentives to spend and use their money and to save and invest their money as they see fit. We trust them to spend their own money. 
Hon Member 
: That’s radical! 
Hon KATE WILKINSON 
: I know. It is a radical thought that we might trust New Zealanders to spend their own money! 
Hon Darren Hughes 
: You’re still taxing 30 percent. If tax is a problem get rid of the lot. 
Hon KATE WILKINSON 
: This Budget is not just about tax cuts; it is not just about tax cuts. 
Although the average wage earner will be about $15 a week better off and the average family will be about $25 a week better off this Budget is about spending money where we think it matters so that we can have a productive New Zealand. We are spending $321 million on science over 4 years—$321 million; that reflects the faith and confidence we have in the science industry in New Zealand. We will spend $2.1 billion on health for front-line health priorities over the next 4 years. There will be an extra $512 million in 2010-11. We are spending more and more on health because that is important to us and to New Zealanders. We are spending $1.4 billion extra for better schooling and early childhood education over 4 years. Education is important to us the National Government and to New Zealanders. We are spending $1.45 billion in 2010-11 on infrastructure projects: to upgrade rail to upgrade the wider network and to lift prison capacity. We are even spending money on conservation on cycleways and on camping grounds. This is a great great Budget. 
Hon ANNETTE KING (Deputy Leader—Labour) 
: 
 It is hard to believe that a mere 18 months after the 2008 election people are asking where the fresh start is that they were promised by John Key—“Where is the fresh start?”. What is fresh about this Government other than its leader the front man—you know the one with the flash suit and the smile that is reminiscent of a rat with a gold tooth? After 18 months we have not had a fresh start; after 18 months we have had a false start. In fact the Government’s entire agenda is based on falsehoods. 
I listened yesterday to the Minister for Social Development and Employment who said that there was a real buzz around this Budget. I say yes I agree with that Minister: there is a whiff of something very stale about this Government and about this Budget but the buzz she can hear is the buzz of bluebottles as they rush around this Budget. 
I have to tell members opposite that increasingly New Zealanders are sick of the political sideshows from this Government. There is Rodney Hide with his latest travel itinerary flags on bridges toy tossing by Tariana Turia and bottom pinching by Richard Worth. New Zealanders have had enough of the political grandstanding and sideshows from this Government. Kiwis want a Government that focuses on the issues that matter to them—that focuses on the issues that matter to them. Photo opportunities appearing on television in America globetrotting and cocktail parties are not substitutes for real leadership. They are not substitutes for real leadership for real policy or a plan for the future. 
This Government has no plan. This Government floats from cloud cuckoo-land to cloud cuckoo-land. The Prime Minister’s views depend on who spoke to him last. Someone said to him: “Let’s have a Job Summit.” He thought that was a very good idea and that it would be a step change for New Zealand. I have to tell Mr Key that it was not a step change but a step back. If we look at this Budget we see that the big losers in New Zealand are the unemployed—young people Maori Pacific Islanders and Asian people. It is a roll-call of shame for the Government. The people who are unemployed now will continue to be unemployed. 
The ASSISTANT SPEAKER (Eric Roy) 
: I am sorry to interrupt the member. I have indicated to the member Paul Quinn that he must contain himself. He is not sitting in his own seat. If he persists I will ask him to go back to his own seat. 
Hon ANNETTE KING 
: In Bill English’s own Budget documents he is planning on 60000 people to still be on the unemployment benefit in 4 years’ time. The equivalent of a city almost the size of Palmerston North will still be on the unemployment benefit in 4 years’ time. If members opposite do not believe me they should read their own Budget documents. The Government is budgeting for 145000 New Zealanders to be out of work—unemployed—in 4 years’ time. Members opposite might not know this but that is double the number of people on the unemployment benefit that National inherited when we left Government. In 4 years’ time there will still be double the number of people on the unemployment benefit than there were then. What does National think about that? It thinks that this major social and economic problem is just collateral damage to its Budget—just collateral damage. 
When I look at what the Minister for Social Development and Employment said I am appalled. She said she was excited because 12000 young New Zealanders would get short-term Job Ops jobs for 6 months over the next year. Do members opposite know how many young people under 25 years of age are unemployed today? 
Louise Upston 
: Do you prefer zero? Twelve thousand is a pretty strong number in my book. 
Hon ANNETTE KING 
: I tell that member that there are 60000 young people unemployed in New Zealand. She thinks it is 12000. No wonder National cannot get its Budget figures right. There are 60000 young people unemployed at this moment and National has promised 12000 Job Ops jobs over the next year. Job Ops jobs last 6 months and the Minister said that they are not designed to give young people a permanent job. At the same time all sorts of funding for training are being reduced. Tertiary education is being reduced. National is even cutting employment assistance for those in New Zealand who are disabled. If members look in the Budget document they will see that the disabled have had their training opportunities and employment assistance cut in this Budget. The much-vaunted Youth Guarantee which was promised at the election will give 4000 places to young people up to 2011. That is National’s commitment to those people in New Zealand who do not have a job. 
New Zealanders were promised a Budget that would deliver to all families but I tell members opposite that 170000 children in this country will live in poverty in inadequate housing and with insufficient food and heating because of this Budget. No attempt has been made to deal with children who live in poverty and the Government opposite should be ashamed. People in New Zealand are worried sick about the struggle that they know is ahead of them: the struggle to get bread on the table to pay their school fees and to pay their power bills. And yes on the front page of the  
Dominion Post 
 today a power company is confirming what we knew was right. Power bills will go up by $5 a week and gas bills by $1.75 a month. It might not be much to members of Parliament on their salaries but $5 a week means that the extra $4.17 that people have after the increase in tax cuts and after the hike in GST is gone in one fell swoop. 
New Zealanders were told that the Budget was about making them work harder save more and spend less and that they were to step up once they got this big payout from the tax cuts as they would have more money in their pockets. Well most New Zealanders—the first 3 million taxpayers in this country—will have on average $4.17 extra a week and John Key will have $218 a week. That tells us the fairness of this Budget. I do not always agree with Richard Long but I certainly agreed with his column yesterday in the  
Dominion Post 
 when he said: “… in our low-wage economy three-quarters of the workforce are going to be left clutching just a handful of extra dollars. Most of this will go on living essentials price rises and buying the kids a new pair of shoes.” 
Only about 18 months ago John Key asked the public whether they felt better-off. Well New Zealanders after two Budgets from this Government are asking that question. After two Budgets and two tax cuts New Zealanders are asking themselves whether they feel better off. We have a GST increase and interest rates are going up; do they feel better off? Inflation is set to skyrocket to 6 percent next year; do they feel better off? Wage increases are at their lowest level in a decade; do they feel better off? There are higher-wage jobs better jobs and more opportunities in Australia; do they feel better off? With cuts to health care and cuts in education for preschoolers—cuts cuts cuts—do New Zealanders feel better off? Bill English said that the recession is over. Well I ask New Zealanders whether they feel better off and no they do not. It might have been a good question to ask 18 months ago I say to Mr Key when New Zealanders were in a much better position than they are in today but I do not think Mr Key will enjoy the answer. Millions of New Zealanders those who are on low and modest incomes do not feel better off they will not feel better off and this time next year I predict many of them will be in a far worse position than they are in today. 
This Government is asking too much of too many low and middle income earning Kiwis. It is asking them to carry the burden for the high-income earners on their shoulders and at the same time it is putting a burden of debt on the same people as it borrows to pay for tax cuts—borrows to pay for tax cuts to give to those who have the most. At the same time to rub salt into the wound the Government is now saying that it will sell State assets to help pay for those tax cuts. It will sell Kiwibank—there is no doubt about it. This Budget is a very big disappointment for a party and a Government that promised a turbo-charged approach to governance in this country. What we are seeing is a false start. 
RAHUI KATENE (Maori Party—Te Tai Tonga) 
: 
 The Maori population is a young population with the median age barely reaching 23 years compared with the median age of 36.4 years in the total population. Putting it another way some 34 percent of the Maori population is under the age of 15. This demographic profile brings with it a special set of priorities which we looked for in the Budget announcement made on Thursday. When we consider the disproportionately low median income—in mid-2008 it was $500 per week compared with $530 for the total population—we see that it provides a particular context for this debate. In the health arena an additional $51 million was allocated to meet the pressure of the Very Low Cost Access programme and other primary health care services. Why is this important? A Very Low Cost Access payment is intended to support practices that maintain very low fees—practices that typically serve high-need communities. On top of this we would expect that the $1.4 billion extra funding for district health boards would also include interventions that reduce health inequalities. 
When constituents walk in my door the two biggest issues that they seek help with are health or education. In education I think that one of the unsung good-news stories of this year’s Budget has been the injection of another $1.9 billion over 4 years including a 4 percent increase in operational funding for schools. The challenge however is to look past the generalities and see what support is available to meet the areas of highest need and greatest demand. Therefore I am pleased that an additional $91.8 million is being invested in early childhood education participation for families in the areas that are under-represented. The focus is on ensuring that the families in most need have access to these services. The $91 million has been earmarked for Maori Pasifika and low-income areas out of the total investment of $107 million. 
A lot has been said about what could at the very least be described as a contentious decision in this year’s Budget about early childhood education but if there is any doubt as to the value of investment being allocated to Maori participation this week’s report from the Education Review Office proved without doubt how vital it is to support and promote early childhood education opportunities for Maori. The  
Success for Maori Children in Early Childhood Services 
 which was released on Monday reported that nearly two-thirds of early childhood teachers were not focused on helping Maori to become “competent and confident learners” and more than half of the services were failing to respond adequately to the expectations of whanau Maori. One of the most pragmatic findings was that playgroups playcentres kindergartens and other services were failing to set Maori education in a Maori context. It is not breaking news but all the research tells us that children are taught best when the context makes sense to them. For tamariki Maori that context is one that responds to them as Maori. 
The Education Review Office report concluded that centres could do some key things to increase the responsiveness of their service to whanau. They could look at the way in which they consulted whanau they could ensure that they incorporated Maori perspectives into education they could provide more professional development for educators and managers in working with Maori and they could evaluate the impact of their programmes for Maori. 
I come back to my starting point of the way in which the Budget responds to the particular and unique needs of the Maori population. While I am talking about the education sector I will also draw attention to the additional $48 million going into Youth Guarantee which will raise the number of places available next year from 2000 to 2500. Another $8.4 million is going towards helping kura retain their secondary school students. Another $12.6 million will help Maori medium schools to develop tools to assess the progress of their students. These are all important initiatives that will help to ensure that rangatahi Maori are participating achieving and succeeding in school. They will help to pave the way for future employment and further educational opportunities and in that respect will help to build a stronger workforce to face our future. 
Another key initiative that was introduced in Budget 2010 was the investment of $91 million for a new quality services fund for non-governmental organisations. This is an important mechanism to support our community groups to help to enhance their capacity and capability and to respond to the unique needs of communities across the country. 
Finally I will make some comments about what we may call the unfailing test of a civilisation—that is how we treat our most vulnerable our young and our old. Part of the Budget package includes increases of 2.02 percent for all main benefits for New Zealand superannuation for veterans pensions and for the CPI-adjusted Government Superannuation Fund. That is important of course in that it helps to provide immediate compensation for the rise in GST but for those who receive superannuation or a veterans pension there will also be a tax cut on top of the compensation for GST thereby increasing their after-tax income quite considerably. 
Although such a lot has been said about GST and tax cuts I received an email yesterday that brought everything back into perspective about Budget 2010. Moyra Bramley responding to one of the releases we issued on Budget day shared some of her own unique brand of wisdom to guide our thinking about the difference that Budget day makes. She said: “I understand the reasoning behind the increase in GST and accept we all have to tighten our belts for the sake of those who have no jobs no fathers or mothers to raise the kids and although it’s going to be hard there is a way to better the lot of those who will be affected most. If you have a plot of land and most do wherever they are living then plant some vegetables. Take cooking lessons and learn to make meals out of nothing. Nourishing meals do not need expensive cuts or expensive ingredients. Op shops have awesome clothing for a few dollars for everyone of all sizes. Shoes at $2 per pair. So it is just a matter of reprioritising where your money gives you the best value. But in this country no one should go hungry or without clothing if they spend their benefits wisely and most of all stop smoking and drinking. Buy food for your babies instead. I am so pleased I taught my kids to cook at an early age even my boys and now they have no problem stretching the dollar.” 
I chose to quote extensively from Moyra’s passage to us because so often the greatest advice comes not from the experts and the purchase advisers but from those wise souls all around us who have been through it and are still going through it. The reality is that there will always be those who say that there is not enough in the Government’s Budget for them. My brief overview of some of the essentials of Budget 2010 proves without doubt that there are some great initiatives included in this year’s approach which really focuses on those most in need. But there is also the evergreen message that ultimately no matter how great our wealth the biggest difference made can be in making the most of our resources and investing in the value of collective responsibility. It is all about whanau ora. 
Hon PHIL HEATLEY (Minister of Fisheries and Aquaculture) 
: 
 Last year National was very focused on getting the Government’s finances under control as I think the public experienced. The recession was deepening during that period and people were threatened with losing their jobs. It was a very difficult time for New Zealanders and their families. This year of course we are squarely focused on the economy and building the recovery. As Bill English has often said the recession did not begin after we came into Government. It was in New Zealand well ahead of the rest of the world. In fact we had been in recession for some time; it just did not show up until the rest of the world came under pressure. 
The Government had a number of approaches during the last year following the last Budget. One of them was a big focus on reining in Government spending where there was no gain and where there was not a dollar of value for every dollar spent. We also looked at ways in which we could curb regulation so the Building Amendment Act was passed and the Resource Management Act was fixed as well to a very high level. Now we focus on more specific Resource Management Act reforms. Last and most important was the fiscal stimulus package that we introduced in the last Budget. Members will recall that about half a billion dollars was put in as a capital injection to housing roading and education. The thought behind that was quite simple. We wanted to spend some money in the economy but we wanted to spend it on capital items—infrastructure—not operating items. It was essentially an infrastructure package. 
We looked at housing roading and education and decided we wanted to inject capital into those areas. We also wanted to do work that was urgent and that had been on the Government’s books collecting dust for a decade. So the Minister of Transport the Minister of Education and the Minister of Housing dusted off all the plans for the roads the houses and the schools that could have been upgraded in the last decade. They asked themselves whether they were still good ideas whether it was worth injecting capital into those projects—those schools those roads or those Housing New Zealand estates. If so they asked whether they were already consented because they wanted the fiscal stimulus package to have immediate effect so it would be good if the consents were already there. They also determined whether a workforce would benefit from those construction projects. It worked very very well. The fiscal stimulus package put about $124.5 million into the State housing sector. We have upgraded about 11000 State houses over the last 16 to 18 months. That was the plan and it is trucking well on its way to completion on 30 June of this year. So 11000 houses have been painted been insulated top and bottom had clean heating installed had the kitchen renovated or had the bathroom renovated. That type of essential work has been done. It was a boost package during the recession. 
We focused on upgrades as opposed to new buildings because we did not need consents for a lot of the upgrade work. The $120 million fiscal stimulus could be virtually immediate because we did not have to go through that consenting process. Also a large number of houses were uninsulated and were in a serious state of disrepair. There were 940 healthy housing upgrades and added on to the programme that was already planned to increase the number of State houses 87 new homes were built as part of the jobs and growth package. It was important that we built new homes rather than bought existing ones. The main reason for that is that it meant people were employed. I can say that Housing New Zealand Corporation going forward now has a preference to either build its own homes on land that it owns or lease homes that are newly built on new sections. The reason is that in both those cases that increases housing supply while only purchasing houses which might happen on occasion does not increase housing supply. It is a very significant stimulus package which of course ends on 30 June. 
This year we are focused squarely on the economy—and on some other things. First of all this Budget will put economic growth at centre stage. Its overriding aim is to tilt the economy towards people working harder and longer investing more energy into their work and getting the rewards for that. So it is an economy that will be tilted towards work saving and investment and also towards exports. It will be tilted away from what was the case which was a lot of borrowing and spending. We are moving away from spending and towards saving. We are moving towards making sure that people are incentivised to work rather than not work. And so it goes. 
Secondly our major tax-reform package features across-the-board tax cuts that help families get ahead. That is where the reward is for work. Thirdly the Budget shows an improved fiscal outlook where both Crown debt and budget deficits are better than forecast. Last year there was not good news. This year it is still tough looking ahead but there has certainly been an improvement and we want to do better still. 
Finally the Government and the Minister of Finance have been very very strict with Ministers to make sure that we keep within our $1.1 billion allocation for new spending to make sure that we are not increasing spending just for the sake of it but that every extra dollar that we spend is a dollar’s worth of investment. The Minister of Finance has asked Government departments and all agencies to do more with what they have. That is a very significant shift from the previous Government’s approach. We are making sure that we test every programme before it is re-funded or gets a boost in funding. So Government departments and agencies will receive little or no new money for the next few years unless they are in the area of health which receives the biggest slice of new money—an extra $2.1 billion over the next 4 years including $512 million in the next financial year. As we have heard from the Minister of Education Anne Tolley schooling and early childhood education will also receive an extra $1.4 billion over the next 4 years including $417 million in the next financial year. Those are very significant investments. 
I have to say that one of the investments that we are most pleased with in the last couple of years has been the Housing Innovation Fund. I acknowledge members across the House who began that fund originally with about $12 million. Much of that money went into the development of housing organisations. We have switched the fund around a bit. We have increased it from $12 million to $20 million and we have said that the money has to be spent on building or purchasing houses. No longer can the money be spent on the development of plans organisations or that type of thing—what people call capacity building. It must be spent on capital expenditure. That is a change that we made as well as the funding boost. The Housing Innovation Fund has been extended again this year by another $20 million. Of that $16 million will be spent on grants or loans to support social and affordable housing and $4 million will be spent to meet the cost of interest-free loans that are provided to community housing providers. The Maori demonstration projects and partnerships will continue also this coming financial year. So far in the current year that has resulted in 96 new housing units and not all the announcements are finished yet. 
I can say that the New Zealand Housing Foundation has been allocated $3 million which goes towards its $12 million project for 30 affordable homeownership opportunities in Auckland. We have attributed $3 million out of a total of $12 million. That shows members how we can leverage input from the private sector or other housing providers. The Salvation Army received $2 million for 15 new rental properties. Other trusts such as Habitat for Humanity the Monte Cecilia Housing Trust and Queenstown Lakes Community Housing Trust received money through the Housing Innovation Fund. I am delighted to extend that fund into the next financial year. 
Hon RUTH DYSON (Labour—Port Hills) 
: 
 We can tell when Ministers are enjoying their portfolio responsibilities and their job by the energy and the passion with which they make a contribution to this House. That Minister Phil Heatley did not have any. He has clearly got over his excitement his little puppy-dog love that he used to have for his ministerial portfolio. That was a tragic contribution to this debate. 
I am very pleased to be able to support the amendment that has been moved by the Labour leader Phil Goff. The amendment is: “That all the words after the word ‘That’ be omitted and the following words substituted: ‘this House has no confidence in the National Government led by John Key which has blatantly broken its clear promise not to raise the Goods and Services Tax has pushed up other taxes and increased prices when working people have had their lowest wage rises in more than a decade has failed to implement a plan for jobs lacks any vision for a smart high skill high tech and high wage economy has cut services and assistance to the most needy in our community and has rewarded the most wealthy at the expense of middle and low income New Zealanders.’ ” Given the 100 percent truth in that amendment it is not surprising that the Minister lacked any commitment and any passion in his contribution. 
This has been a Budget of broken promises. John Key himself personally looked straight down at the camera and promised New Zealand that we would not face an increase in GST. This Budget broke that promise. GST is going up. That is the first of the three broken promises contained in this Budget. 
The second was as clear and as personal a commitment from John Key: that National would not borrow to fund tax cuts. That promise was repeated after the election—it would not be borrowing to fund tax cuts. In fact that is the reason that it had to cancel its tax cuts under urgency having previously put them through under urgency because it was not going to borrow to fund tax cuts. This Budget has broken that promise as well. This Budget sees borrowing to fund tax cuts not for low and middle income earners alone but for the people who least need a tax cut the people who are getting more in tax cuts than many people earn over the whole year working full-time. Some people are getting more in a tax cut than other fellow citizens earn working full-time. How can that be fair and how can borrowing to fund those tax cuts be justified? 
The third broken promise in this Budget was that National would not cut the number of public servants would not cut front-line health services and would not cut the level of Government support that people were getting. Every day we have more examples of front-line health service cuts and of cuts in Public Service jobs. 
The National Government has been portraying this Budget as a great fiscally neutral responsible tax-switch Budget. Well actually it has been properly described as a tax swindle. It is making it harder for good hard-working New Zealanders—not the sort that Mr Key dismissed as being just jealous of the important people the rich people—who are on low or middle incomes to get ahead with their lives. It has also been noted that the real winners out of this Budget are the people who are on the highest incomes. I have nothing against people who have a very high income. I say: “Good on them.” But they are not the people who deserve and who need the biggest support from Government particularly in these tough times. They are not finding it hard to pay the power bill every week and they are not shocked when they learn that the power bill is going up. People on very high incomes can manage very well. They do not get to the checkout counter every week or fortnight and hope they have enough money in their bank account to pay their grocery bill. The people who do are now getting more anxious that they will not be able to afford the power increase and that they will get to the checkout with their groceries for their families and not have enough money in their account to pay the bill. 
Those people are as important to our country to our economy and to our society as the people on the highest incomes; they should have got more out of this Budget to get them through the hard times. In fact they will lose out of this Budget—that is another broken promise. Do members remember that John Key started off by saying that all New Zealanders would be better off under this Budget? Then he toned it down a bit and said that most New Zealanders would be better off. Then he toned it down again and said that no New Zealanders would be worse off. Every time he has talked about the Budget his expectations have got lower. But he was still wrong even when he made his lowest prediction because some people are worse off. 
Inflation is running at nearly 6 percent. It will destroy most of the tax cuts and that means that New Zealanders will face an increase of 2.5 percent in their GST with no compensation. Again people were promised by John Key that if GST went up they would be compensated. He did not tell them though that they would face a nearly 6 percent inflation rate as well as the GST increase. If we take an average family with two children and give the income earners in that family a wage increase they will be $55 a week worse off after GST inflation and the increases in early childhood education charges. 
The Minister of Education could not work out those early childhood education charges. She was asked to multiply $1.51 by 40 and let the House know what increase in early childhood education charges that family would face if the increase was passed on from their early childhood education centre. I know that the family is facing an increase of $1.51 an hour multiplied by however many hours their child is in early childhood education; that is the additional charge that family will have to face. I am sure that my colleague Sue Moroney will be asking the Minister to have another go at that question: $1.51 times 40. Perhaps Aaron Gilmore might be able to spend some time this afternoon with his calculator and the Minister of Education explaining how that increase will make families worse off. 
As a result of the Budget we have also seen future health cuts that will make the health cuts of the last 18 months pale into insignificance. As you know very well from your own electorate Mr Assistant Speaker Roy these health cuts have not been fair on individuals and they have not been necessary. In fact they have been cruel. They have targeted the most vulnerable members in our society: people who are frail and elderly often living at home on their own and people who have been getting $20 or $30 a week in home support help have now had that cut because the Minister of Health has told the district health boards that their cuts are not strong enough. He asked them to keep cutting until they got their budget back on track before 30 June this year. 
The Budget that has been presented in this House halves the budget increase for district health boards. They do not know how they will survive and I am certain that older people and more vulnerable people in particular will be feeling the weight of those health cuts. There is effectively a $300 million hole in the health budget. That is how much extra they needed on top of what the Minister of Health announced on Budget day in order to just stand still. They needed that not in order to expand services not in order to give wage increases and not in order to make better sooner and more convenient health services available; that is how much they needed to stand still. That is the hole in the health budget. 
CHRIS TREMAIN (National—Napier) 
: 
 We know that New Zealanders have received a Budget really well when the Leader of the Opposition comes into the House for question time the very first day after the Budget and asks not one question to hold this Government to account on the Budget. We know it has been even better received when he comes into the House for question time on the second day after the Budget and cannot ask a question about the Budget to hold us to account. Literally hundreds of decisions have been made in relation to this Budget but the Leader of the Opposition cannot come into this House and ask one question to hold this Government to account. The Opposition is in tatters. 
We know as well that it has been a successful Budget when the Greens with two questions to ask day after day come into the House but do not ask one question about the environment or one question about the railways. It must be a Budget well received by New Zealanders. Where are the Greens holding this Government to account about their core policies? They are nowhere to be seen. They have asked nothing about the environment and nothing about public transport. They have not asked questions on the things they should be asking about. This Opposition is in tatters—in absolute tatters—if its members cannot come into this House and hold this Government to account. The Opposition is an absolute shambles. 
That aside we really know that the Budget has been successful when we go back to our electorates in this wonderful country—back to Tauranga to Auckland to the West Coast and to Christchurch. We listen to the people out there who are the real people in this country and who make the calls. There is no greater test than being on the Saturday morning sports field when the mums and the dads the granddads the grandmums the coaches and the volunteers are out there and talking to them about the Budget. I can tell members that the feeling on the sideline in Hawke’s Bay last weekend was absolutely fantastic. Heaps of people remarked to me about how they felt the Budget was a real step forward and had the right incentives in place. They said that it helped hard-working Kiwis in our country. 
One dad and his son from the Pan Pac Forest Products mill cutting room came up to me and said: “That’s a damn good Budget Chris. We’re really pleased with the way it went because it is out there and rewarding guys like us for getting out there and working hard.” The son had just bought a home. He said the Budget provisions would make his mortgage payments a bit easier and that he would save money. I was proud of what he said. I asked them what they thought about the top tax rate coming down. Do members know what they said? They said that if the company does not make any money they do not have jobs. 
People out there get that. We need companies and businesses doing well in this economy. We need the incentives to go ahead; that is really important. Hard-working Kiwis get that. They know that someone has to risk capital to start and to build companies. Outside the Wellington political beltway people in the provinces know that companies not Governments provide jobs. 
Hon Member 
: What! 
CHRIS TREMAIN 
: I know; it is hard to believe. They know that if companies are making money their jobs are secure. They know that if the company they work for is growing they deserve a slice of the action through improved wages and conditions. They deserve it so they are getting in behind this Budget and that is absolutely fantastic. 
Bill English’s Budget 2010 will be pivotal to this country’s future. The projections give Kiwis a slice of the action: 3 percent growth for 4 years running 170000 new jobs projected over the next 4 years and improved family income of $7000 over the next 4 years. I think that is absolutely fantastic and that is why those guys on the sideline back in Hawke’s Bay are proud of us and are supporting this Budget. 
Much has been made of the Australian comparison. They fact is that Australia got to its position by outgrowing us. In the late 1950s we had similar comparative wages to Australia. But over a 40-year period it has outgrown us by just a smidgen just a percent each and every year. That has delivered the situation in which we find ourselves today. The key message here is that growth really does matter. This Budget is about helping to tip the scales in order to achieve stronger growth and to get us on the long road towards wages that are comparable to our neighbour’s. Let us make no mistake: that is a focus for this Government. However we are realistic about the time frame over which it will be achievable. 
In fact as one commentator said the 2010 Budget has turned the tax disadvantage for workers between New Zealand and Aussie on its head. Previously the tax incentives to work in Australia versus New Zealand favoured Australia by up to $200000. Now from a tax perspective they favour New Zealand for wages of more than $50000. That is an absolutely sensational turn-round but I agree that it will not fix the wage issue immediately. That is a long-term project. Only the growth of our economy incrementally year in year out over a long-term period will fix those comparative wage levels. 
This Budget is pivotal in doing that. It provides incentives to get out there and work hard which tips the economy in favour of the productive sector. These are the drivers of growth. If we are to get wages sorted out then that is what we have to do. This Budget contains huge incentives to get ahead. Seventy-three percent of Kiwis will now face a marginal tax rate of no higher than 17.5 percent. In the mighty Hawke’s Bay closer to 80 percent of people will face a marginal tax rate of no higher than 17.5 percent and their average tax rate will be even lower. A full-time worker without children who earns a bit over the minimum wage of $15 per hour in the last 2.5 years has had his or her average wage rate drop from 19.1 percent to 12.5 percent. If that is not an incentive to get out there and work and to help the economy to grow then I do not know what is. 
We should not underestimate how incentives to get out there and work hard will drive growth in the economy. Labour members do not get it that if we incentivise people to go and do stuff they will work harder and that will drive growth. We are incentivising not only companies but also workers to get out there and do it. 
Simon Bridges 
: This is radical! 
CHRIS TREMAIN 
: I know that it is radical stuff! If we have a motivated workforce—members should listen to this—then growing businesses is a whole heap easier. Growing businesses need people to do overtime but when the marginal tax rate is too high people just say: “Well actually I can’t be bothered.” This Budget provides an incentive to get ahead and it provides it to the workers of this country which is really really important. Unless we have the workers on side companies cannot grow on their own. It is a double-edged sword; we need companies and workers going hard at it if we are going to lift wages. 
The Budget also tips the economy in favour of the productive sector and that is something I want to focus on now. A company tax rate of 28 percent gives our companies a 4-year head start on Australian businesses. The removal of depreciation claims on residential and commercial real estate properties sharpens the focus on where to invest and starts to tip economic decisions in favour of the productive economy and away from property investment. This does not mean that property prices will dive. Clearly if immigration and growth projections play out the demand for property will remain strong and will ensure that property prices remain buoyant. This Budget is pivotal to winding up this economy to grow. Over the next 3 years we have projected growth of 3 percent 170000 extra jobs and an improvement in family incomes of $7000. That is absolutely fantastic. 
In addition to those projections we have a strong focus on getting this country back to Budget surplus. Other speakers have focused on that today. There is a strong focus on keeping expenditure under control. I will give the example of one small statistic from this year; it is in only the small print. In terms of Government departments coming to the Government for new expenditure bids there were 714 bids under the previous Government. Can members guess how many bids there were under this Government? There were 30 bids. There has been a total change in culture out there. Government departments are driving lower expenditure and better efficiencies in their departments and that is absolutely fantastic. There is also a strong focus on getting our balance sheet under control which is absolutely sensational. 
All that aside I am absolutely excited that this Budget puts incentives out there for companies to grow and for workers to get in behind those companies to take this economy forward. It is a pivotal time. I am absolutely pleased with what Bill English has done; it has been sensational. I support this Budget. Thank you. 
Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) 
: 
 If Chris Tremain truly believed what he said then why are Maori constituents in his electorate not going up to him in droves patting him on the back and saying that this is a great Budget? I will tell members why they are not doing that. It is because 73 percent of people in the member’s electorate earn under $40000 and they will not benefit from any of the tax cuts he has talked about. National’s Budget will hurt Maori it will hurt low-income whanau it will hurt families with children and it will hurt young people. 
This is indeed a Budget of broken promises. It is not a Budget that delivers to the vast majority of people in Hauraki-Waikato where 73 percent of people earn under $40000. It is much the same in many of the Maori electorates. There are high rates of non-participation of young children in early childhood education. Youth unemployment has increased; 16000 young people are unemployed and that is tragic. Maori unemployment in general has increased. In 2008 when Labour was in Government that number stood at 11700. Now in 2010 22800 Maori are unemployed. It is double the amount. So something is not happening with this Government to ensure that unemployment does not keep increasing yet Government members say that this is a good Budget. 
The Government is struggling to deliver to the communities that I represent on the issues that really matter on the bread and butter issues that help whanau sustain themselves. A good job access to affordable health care affordable housing and a good education are reasonable expectations in a caring and responsible society. The Budget has failed many in my electorate on all those fronts. Those people want to make a good go of it; instead when looking for a job they are confronted with an employment market that can hire and fire in a 90-day period without warning without reason and without care. Tikaokao McClutchey on the East Coast was released from her job within the 90-day period without warning and without notice. She was gone just like that within the 90-day period. People want certainty and protection in the labour market and slowly but surely this Government is chipping chipping chipping away at the rights of those people who are hungry to work and want a job. 
This Budget proposes tax cuts that will see greater gains for those on incomes above $70000. Sadly many of those people are not Maori. In fact a good majority of them are not Maori. So how can members opposite propose that this is a good Budget when so many Maori are affected negatively by its consequences? How many in Hauraki-Waikato will benefit from this round of tax cuts? It will be very very few. Instead as I have said approximately 73 percent of earners in Hauraki-Waikato will see little or no benefit at all from the tax cuts that will take effect. They will be net losers. In fact let us look at the figures. In Hauraki-Waikato the median income is $22000. After the tax cut is calculated minus the accident compensation costs and inflation one ends up with a net loss of $11.65. Members opposite say that this is a great Budget. I say that it is not. They should look at the figures which speak for themselves. To top that off an increase in GST will hurt those same people and whanau who will pay extra for the basics: for their kai their power their petrol school costs for their kids bus or train fares rental payments and mortgage payments. The Government has done a good job of creating an illusion. It is giving with one hand and taking with the other and that is the swindle. Whanau in Hauraki-Waikato did not vote for giving tax cuts to high-income earners without taking into account the consequent effects in health education housing and employment. They did not vote for increases to GST that will hurt them in the pocket but they got them. 
The Maori Party has a lot of explaining to do. In fact the Maori Party members cannot stomach the debate and that is why they cannot be here to listen. Hone Harawira needs to know that it is no good speaking out if one’s actions do not follow one’s words. At the end of the day the Maori Party voted for these tax cuts for the GST increases and for this Budget. It did not have the mandate to do that but it did. I bet that every Maori who voted for the party did not vote for the tax cut package or the GST increases that have been delivered. They will hurt in the pocket and the Maori Party knows it. The party has a lot of explaining to do. Why is that? Hone Harawira tells us that its poor list of achievements shows too many gains to give everything away now. It might happen on 1 October! The Maori Party says that its achievement on the foreshore and seabed issue—the repeal of that Act—is one such reason. What is it to be replaced with? It will be in public ownership. The Maori Party says that its achievements on getting the Government to support the Declaration on the Rights of Indigenous Peoples is a gain but it means nothing—especially to Tuhoe. I say: “Go and ask them.” The Whanau Ora initiative was proposed as a saviour to all the ills within many Maori communities. Well it was supported in part—and funded only in part—by the Government. That was far short of the expectation raised by the Maori Party out there in many Maori communities. A measly $134 million over 4 years for Whanau Ora for only 20 providers will fall well short of the expectation that has been created in a number of communities. The GST increase as I have said before was not voted for by any of the Maori Party’s constituents. In fact the Maori Party wanted a GST decrease yet that will not be delivered because its mates in the National Government will not listen to anything the Maori Party has to say. Yet the party is still prepared to prop up the National Government and its Budget which does not deliver at all to Maori constituents. 
In my electorate the constituents who voted for the Maori Party have been sadly let down and had the wool pulled over their eyes. No one is talking about the Budget with the same fervent glow as members on the other side of the House; Maori know that they will be hit in the pocket and slapped in the face. What about leadership on the real issues that affect Maori? Making sure that our kids get a good start in life is absolutely necessary. The Government has chosen to cut funding for teachers in early childhood education centres. That will seriously affect the ongoing quality of teaching in those centres which are charged with making a difference to the lives of our children. I heard a member from the Maori Party promote the gains in Youth Guarantee but I say there is too little funding for the large number of young people who are currently unemployed and who want to go into the workforce. That is not enough of a gain. Those people want a real job and a real wage. They do not want to be part of a training-go-round scenario. There is nothing in the Budget on Modern Apprenticeships training or increasing investment in that area where young people increasingly want to take up the option to earn while they learn. What about supporting single parents? There is nothing in the Budget to ensure that those with children who are unsupported by a partner have access to the training incentive allowance to enable them to take up study beyond level 4. There is nothing whatsoever for them. 
The Budget is a sad indictment on the direction in which this Government is going. Constituents in Hauraki-Waikato want a fair go. They want to work but do not like being kicked in the guts. They want a good education to get ahead but increasing fees may prevent that. They want a good quality of life but the cost of living through increased GST will hurt them. They want to build a strong whanau strong marae and strong communities but not at the expense of creating winners and losers through contracting rounds. This Budget has broken promises and it does not care for the many at all; instead it cares for the few. It is not the kind of Budget that I would stand up in front of my electorate and promote. I am sure that many members on the other side of the House would not go into many Maori communities and promote the Budget in the same way that they do in this House. They know it just does not hit the mark at all. 
Finally I say to the Maori Party that it has a lot of explaining to do. I wait for 2011 to roll on because the shallow and hollow gains that the Maori Party thinks it has achieved will all be undone by a Budget like this. The Budget continues to undermine vulnerable and needy families and low-income families. More important it undermines the majority of Maori who want to get ahead want a job want to make a go of it and look to the future. They know that the Maori Party has let them down badly. 
PAUL QUINN (National) 
: 
 I seek leave to table a graph that was prepared by that eminent researcher and political scientist David Farrier which shows the change in the average tax rates between 2008 and 2010. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Speaker. The member said David “Farrier”; does he mean David Farrar? 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: People know what it is. Is there any objection to that course of action? There is objection. 
SIMON BRIDGES (National—Tauranga) 
: 
 I did not want to start this way but I have to say after listening to Nanaia Mahuta and her comment that the Maori Party is “shallow and hollow” that all the speeches from Labour members have been shallow and hollow. They have been shallow and hollow because Labour members were wrong-footed on this Budget. They thought this was going to be a Budget for the “rich fat cats” as they put it— 
Brendon Burns 
: Ha ha! 
SIMON BRIDGES 
: —like Brendon Burns the socialist vintner from Marlborough. They thought they were getting one thing but they got something altogether different. When we look in this Budget document at the average tax rates we clearly see that this Budget has been for the many not the few. This is a Budget where people who earn up to $48000 a year which does not make them wealthy by any stretch will have a top tax rate of 17.5 percent but their average tax rate—their effective tax rate if you like—is around 15 percent. Effectively that rate on $48000 has been halved from what we had a couple of years ago. We saw last Thursday a Budget from a National-led Government that delivers for the many not the few. Frankly that is what frustrates and demoralises the Labour Party so much. 
Often things are said in this House insincerely. They are said flippantly and the like but I come to this House to say sincerely that last Thursday Budget day in this House was the proudest day I have had as a National member of Parliament since I have had the privilege to serve the people of Tauranga. I was extremely proud to hear Bill English the Minister of Finance then John Key and his words that we got a Budget for the many. I felt we delivered on things we had promised in the election like tax cuts and a better brighter future for the people of this country. It was very good to see that and it was something I stood proudly in applause of on Thursday. 
Hon Lianne Dalziel 
: You can’t say you delivered on your promises; name one. 
SIMON BRIDGES 
: I accept that the Labour Party would like to say there is some controversy around this Budget but we heard from Chris Tremain and I heard back in my electorate that it is clear this Budget is very popular. People know that we are putting incentives in place and we are doing the right things for the right reasons. We are getting it right for the long-term prosperity and future of this country. 
I want to talk about two significant things in the Budget. The first is the tighter control on Government expenditure and finances and the second is tax reform. Chris Tremain gave the example of sports fields. The day after the Budget on Friday I was back in my electorate—and I thank the whip for that leave—for a number of meetings that I had to attend to that had been longstanding commitments. I spoke to a retirement village about the Budget. I hope the people in the retirement village will not mind me characterising the retirement village this way but it was not a top-end one. In the spectrum of retirement villages it was somewhere in the middle. I am a politician but I think I did a pretty straight fair job on what the Budget contains and where it is going. Two things were clear to me from listening to those seniors in my electorate. They were not wealthy people; I emphasise that. They were genuinely concerned about how debt rose under the previous Labour Government. They were concerned about public debt and the country’s debt which I will come back to. They were glad to know that this Government has a plan of action to make sure we do not get the kind of “Greekonomics” that were practised by members on the other side of the House. They were glad to know that and they were genuinely thankful. 
They were also pleased—and this is something Labour would like to see as controversial—that GST went up. The reason for that is that they remember and they know from their own lives and lifestyles and their household budgets that we cannot just go out and spend spend spend and consume consume consume. They really did think that we were doing the right things with our tax package system to get incentives in place. They were as I say pleased about GST. They did not think the rise would injuriously affect them because they know how to be careful with their pay packets and they thought we were doing the right things for the right reason. I explained the numbers in relation to superannuation and the tax cuts for them. They were glad to know that as a result of the Budget they will be about $560 a year better off. They were glad to hear that. 
There is a huge amount in this Budget and the details are excellent. Let me deal with a couple of the four primary objectives that the Budget had. One is reforming the tax system and the other is getting the Government’s finances under control. In some ways the finances of the Government and in fact the country paint what could be seen as a worrying picture. We know that debt in this country around the year 2000 was a bit under $100 billion. Today as I understand it it is $168 billion. By 2014 it will be $250 billion or thereabouts. That is easy to say but they are staggering figures. We are dealing with sharply rising debt in this country. This Government is doing something about that. We will not pull the rug out from under people’s feet. Bill English and the Prime Minister were very careful with the last Budget to make sure we kept entitlements going without raising those debt levels. Now as we go forward we are taking firm control of the Government’s finances. We are working within tight restraints. 
There is more spending in health education and science and that is good to see but we want to get better value from our public services. We are being much more careful with how we spend the people of New Zealand’s money. That is something that Labour members would be quite astute to realise. When we hear them talking in this debate they do not seem to realise that. Every dollar of tax is taken from people who have worked hard for that money. That is a fundamental difference between this party and that party— 
Brendon Burns 
: No it’s not. 
SIMON BRIDGES 
: Labour members are saying they do not want tight control. They want to borrow spend and hope. That is those members across from us. 
I will quickly talk about tax—$15 billion over 4 years. It is the most significant package of tax changes in the last 25 years. Labour members’ position on that is again frankly perplexing. They are all over the show. Perhaps that is why as Chris Tremain has said they have been so quiet when it comes to question time in the House following the Budget. Can the next speaker tell me what Labour’s position is on GST? Labour members drove around Tauranga and a whole lot of cities saying “Axe the Tax”. Now we hear in an appalling display by Phil Goff on  
Q+A 
 that most probably Labour would keep GST where it is. We do not know what Labour’s position is on income tax but I would like to know. On this side of the House we are very clear: tax cuts for the many. Two-thirds of the costs of tax cuts went to those on incomes below $48000 a year. That means that 73 percent of income earners will have a top statutory or income tax rate of 17.5 percent or less. Those are powerful figures. 
I will just finish on this. When Labour members get up and say that someone on $80000 or $90000 a year is a rich person or a fat cat— 
Hon Lianne Dalziel 
: We didn’t say that. 
SIMON BRIDGES 
: Well Labour members say they did not say that but they want those people to pay more tax. Let me tell members that members on this side of the House want to do something to ensure that people stay in this country and do not go overseas so they can earn and prosper here. This is a great Budget. It makes me proud. 
DARIEN FENTON (Labour) 
: 
 I am pleased to support the amendment proposed by our Labour leader Phil Goff as outlined on the Order Paper. I can tell the previous speaker Simon Bridges that over the last week since the Budget was announced Labour MPs have been out there talking to a lot of people in the community. It is fair to say that people are absolutely underwhelmed by this Budget. They are underwhelmed and they are deeply concerned. 
John Key called the increase in GST in the tax package a tax switch but for middle and low income earners it is a tax swindle. The truth is that most New Zealanders’ tax cuts will be wiped out by inflation of nearly 6 percent and most Kiwis will not be compensated for the GST rise that this Government has introduced. The Government knows that. That is based on their own numbers but they are not admitting it. They are not fronting up to the New Zealand public. They need to start telling the truth about this Budget. 
On the North Shore where I work—people have a view that it is a very affluent area—I came across a family with two young kids. Even after the wage increases factored in for the next year they will end up being $55 a week worse off after the GST increase and the cuts to early childhood education. 
The tax cuts are not only a tax swindle but also unfair. They fail John Key’s fairness test because one-third goes to the top 5 percent and 15 percent goes to the top 1 percent. The people in the middle and at the bottom are going backwards under this Budget and the people on the bottom—people on unemployment benefits and on the minimum wage—will get a pay cut. But of course that has happened before. In the next year as inflation goes up to record levels and with it the cost of food petrol power childcare and accident compensation levies we will see just how awful the swindle is. 
This is also a Budget of broken promises. John Key told New Zealand that he would not raise taxes. He was unequivocal about that. He stated: “National is not going to be raising GST. National wants to cut taxes not raise taxes … If National was to do a half-decent job it wouldn’t need to either raise GST or raise taxes.” 
Hon Lianne Dalziel 
: Well they can’t be doing a half-decent job then. 
DARIEN FENTON 
: No that is true. National is not doing a decent job and John Key has broken that promise. 
The second part of the broken promise is that the tax cuts are funded by borrow and hope—debt that will mount up for the families of today and tomorrow. We will all pay for this Budget for years to come. 
Another broken promise in this Budget is the promise not to cut public services. There are cuts in this Budget all right. The Budget is $300 million short in health. There is $400 million coming out of early childhood education. There are cuts to housing cuts to other parts of education and cuts to funding for non-governmental organisations and of course there is the gutting of the accident compensation scheme. I want to know who voted for those cuts in the last election because National was not up front about those. 
I met Mr John McGill of Northcote this week who is in his 80s. He has had his home care cut to half an hour a week even though he has recently had cataracts removed from his eyes. He also has a shoulder injury which the Accident Compensation Corporation is refusing to treat because it is age-related. Cuts to home care is another broken promise and people are being affected by those things right across the country. 
National said that it would not increase taxes but for a particular group of workers not only will they have to pay extra GST but also their tax has been increased. I am talking about workers who are made redundant through no fault of their own and who are lucky enough to have redundancy compensation in their employment agreement unlike the many that National refused to support a couple of weeks ago when it would not agree to having minimum redundancy notice and pay. 
Until this Budget if workers were made redundant from their job—and that happened to tens of thousands of Kiwi workers last year—they got a 6 percent rebate on the tax on their redundancy payment. That rebate was based on a flat rate of 6c in the dollar for redundancy pay of up to $60000. It meant for example that if a worker was paid $20000 in redundancy pay then he or she was entitled to a flat rate rebate of 6c in the dollar which came out as a $1200 rebate. That rebate has been cut by this Budget. 
The reason redundancy payments were treated differently is that they are there to compensate for lost earnings until a worker can find a new job. But because redundancy payments can be large one-off payments they can push the annual earnings of workers into a higher tax bracket meaning that those workers end up paying more tax than they should. That is unfair and it is not the intention of the income tax system. But the National Government is so mean that it will raise taxes for redundant workers who get compensation. 
Paul Quinn 
: Oh mummy mummy mummy! 
DARIEN FENTON 
: That is what the Government is doing I say to Mr Quinn. He can make silly noises but he should go and talk to workers who have been made redundant in the area where he works. 
Until 1992 the tax rate on redundancy payments was 5 percent. The previous National Government upped that rate and in 2007 Labour changed the situation so that it was much fairer for workers who get redundancy compensation. Of course National voted against that—[ 
Interruption 
]; listen to National members braying—without ever admitting that it just does not believe in fairness for workers. 
As I have said redundancy payments are different. They should not be taxed. The Government should not be increasing tax on redundancy payments. That is really really mean and I want to know exactly why the Government has proposed it. It is a shameful and sneaky tax increase. It is a mean little part of the Budget but I am not surprised. The National Government is not interested in Kiwi workers. It does not care about what happens to them when they lose their jobs. 
Hon Lianne Dalziel 
: I thought we were catching up with Australia. 
DARIEN FENTON 
: Well that is true. But Australia has redundancy compensation and fair tax—that is interesting. 
This is a Budget of lost opportunities. The Government’s tax cuts will make it harder for Kiwis to get ahead. The Budget fails to deliver on better jobs and better wages. 
One thing that the Budget did was to dump the Skills Strategy. There is nothing in this Budget about jobs and skills. 
There is absolutely nothing in the Budget to address the wages problem. We have a wages problem not a tax problem. Fiddling with the tax system will not improve our wages. Even the increase in the number of placements in the Job Ops scheme in the Budget was just a drop in the bucket. We are talking about 60000 young people who are out of work and we will have a few thousand job opportunities which have a little barb attached to them as well. Until now a job could not be accepted under the scheme if the employment agreement attached to the job contained a 90-day employment trial provision. Paula Bennett and Kate Wilkinson came to this House and said that the Government would not have the 90-day trial provision in the Job Ops scheme because those jobs were on fixed-term contracts and that would not be fair. But now those Ministers have changed their minds. In a move that is completely unfair to young job seekers the Government will open up the 90-day trial period to jobs under the Job Ops scheme. That is unbelievable. 
Let us tell the truth about the Job Ops scheme. It is a scheme through which people get 6 months’ temporary employment. I do not know how many of those people get permanent jobs—I suspect it is very few—and now under the Government’s change to Job Ops those workers will be at risk of having even less than 90 days’ employment. This is a taxpayer-subsidised scheme. Taxpayers subsidise employers through it so there should be a high level of scrutiny over the way that workers are treated particularly young workers who are in their first employment opportunity. 
I am very disappointed with the move to open up the 90-day trial period to jobs in the Job Ops scheme. I want to know why the Minister has changed her mind and I will certainly be asking about that. I suspect that the Government is readying itself to open up the 90-day trial period to all workers. I think we will see that happen. But this move does not make sense. It is completely unfair. The jobs are for 6 months only. The change is highly suspect and I am deeply worried about vulnerable young workers. They will be going into this scheme without knowing their rights and they will be getting dumped in less than 90 days while the taxpayer is subsidising the employer. 
Hard-working Kiwis will be worse off under this Budget. I say that is a shame. 
Hon GEORGINA TE HEUHEU (Minister for Courts) 
: 
 The true measure of Bill English and John Key’s Budget 2010 will be realised slightly further down the track although some of it is coming to fruition now. It will be realised when we register 3 percent growth over the next 4 years when the 175000 jobs that Treasury is forecasting start to come on stream and when the public continues to feel the absolute benefits of better more efficient public services rather than having to look at the bloated public service that was the legacy of the party opposite when it was in Government. 
It will be realised when our best and brightest decide to stay at home and contribute to our growing economy and when those who are now overseas look back at New Zealand—and I am sure some of them are already making plans to move back now—and decide to bring their skills back home. A whole lot of other things will flow from last week’s Budget in the next year and in the years after. Why would that not be the case? Because this Budget was a Budget for the long term. National managed the country through the recession and we have come out the other side in a pretty good state and we are predicting obviously better things in the years to follow. 
Talking about the party opposite I think the most immediate measure of the success of Bill English’s Budget was demonstrated by the deafening silence on the Opposition benches on Tuesday at the start of this sitting week when question time opened. It must be absolutely unheard of at question time when most of the focus is on this House for members on the other side of the House to be absolutely silent. There were no questions about the Budget. Members opposite were wasting time on other things. There was a deafening silence with no questions and no comment about the Budget. Their heads were down. 
Even when members on our side of the House were asking questions about the Budget we got an absolutely free run. Nobody from the other side interrupted our questioners on the Budget. Nobody on the other side of the House had the guts or the wherewithal to challenge the questions that were put to our finance Minister and our Prime Minister by members on this side of the House. That must be an absolute record. There was not a peep out of them and not a bang but an absolute whimper. It was pathetic—and as I said earlier why would that not be the case? The members opposite had nothing to say. Did we wrap up quite early last Friday afternoon on the Budget debate? I think we did and that is also unheard of. They ran out of steam. They did not know what to say. The support from outside— 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. There appears to be a little bit of confusion about the topic. I have been listening for some time and I think the member has just clarified it. I think she thought the Budget debate concluded last Friday. She is actually speaking in it and maybe if that could be drawn to her attention we might have something relevant. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: I listened to the words quite clearly and the member has completely misunderstood the speech. The Hon Georgina te Heuheu was referring to the debate on the tax legislation. That is how I understood it. 
Hon Trevor Mallard 
: She said “Budget debate”. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: I am on my feet. This is not a matter for an exchange at this point between the member and me. The member is perfectly entitled to speak in this debate in the manner she wishes to. It is a debate. 
Hon GEORGINA TE HEUHEU 
: Yes of course we are still in the debate but last Friday was the ideal opportunity for the Opposition to really if it had any real challenge— 
Hon Trevor Mallard 
: It was a tax bill. 
Hon GEORGINA TE HEUHEU 
: What is the difference? In the end it is all part of the Budget. 
I thank the Hon Trevor Mallard for mentioning the tax bill. The tax bill a key component of last week’s Budget is the most comprehensive tax package in 25 years. National delivered that and we delivered it on the back of a recession. Members on that side of the House were in Government for 10 years and they gave a measly tax break in their last year. Now they cannot stand to hear about where they fell short in the 10 years they were in Government. 
Another measure of the success of Bill English’s Budget is some of the feedback that has come back to us. There are comments on John Key’s Facebook page: “The Budget is a good move. It will help undo some of the damage Helen Clark did to our economy while she was in charge.” and “I like the shift away from income taxes towards flat consumption taxes. This is a great start and a brave one—well done Prime Minister. This is what New Zealand put you in office to do.” There is feedback on Bill English’s Facebook page: “Keep up the good work Bill. The budget that you have produced will move New Zealand forward and was long overdue. Appreciate all the hard work you do.” and “Wish I had the chance to shake your hand and thank you in person for your fantastic navigation through the tough times. But take this cyber thank you in lieu.” 
We are truly heartened by and grateful for the support New Zealanders gave us as we managed our country through the recession. It was not easy and it was harder for some sections of the community than others. But we truly appreciate the support we have had. We appreciate the support now. We think we signalled fairly to the New Zealand public and we laid some groundwork for the Budget. The sign that people appreciate that is now coming back to us in the form of support for the Budget. I am very proud to be part of a team led by John Key and Bill English who have looked to the long term who have put economic growth at the heart of our Budget and who are genuinely truly committed to getting New Zealand performing in a way that New Zealanders deserve and in a way that guarantees New Zealanders long-term prosperity. 
I want to turn to two or three areas that are directly my responsibility. I will say a little about our priorities for Maori and what the Budget has delivered for Maori. There is $4.5 million to grow Maori productivity and stimulate export growth and to support Maori innovation. There is $3 million over 3 years to invest in skills training and money to support Maori innovation in science. There is money to support Maori tourism and of course there is money for Whanau Ora. 
Those initiatives are about a Government saying that it supports and recognises the growing role that Maori are playing and will continue to play in the New Zealand economy. We need Maori to play that role. We need Maori to be investing to be developing their skills and to be making that contribution to the economy. Maori are stepping up to do that and with this kind of backing they will gear up even more to do so. 
I mentioned Whanau Ora. Again we are a Government that is willing to try something new. During the previous 10 years more than 50 percent of Maori boys achieved less than level 1 of the National Certificate of Educational Achievement and that says something about the slackness and lack of activity in the previous 10 years. That is not good enough from the point of view of a Government that wants to achieve real growth for New Zealanders. Whanau Ora is something new something different. It is a challenge and it is bold but that is what it is all about. It is about backing New Zealanders to back themselves. That is what Whanau Ora essentially is—helping families to strengthen their own position; their own growth and movement forward. 
I come to Pacific people where the same things apply. In 25 years one in every two babies will be brown—Maori or Pacific—and that has a huge impact on our plans to grow the economy. We want Pacific people to be skilled and educated. We want better outcomes for Pacific children in primary schools and better participation by young Pacific children in early childhood education—and there is more money in Vote Education to ensure that that is a priority—and better literacy and numeracy skills. 
The money allocated for those things will have a direct impact on the ability of Pacific children to do well at school and eventually find long-term permanent employment. The Government’s priorities for Pacific people are to lift incomes and standards of living and to make progress in Auckland and we have allocated new money to promote Pacific culture and language because Pacific culture and language underpins economic growth and enhances Pacific peoples’ position in our community. 
Hon LUAMANUVAO WINNIE LABAN (Labour—Mana) 
: 
 Kia ora talofa lava and warm Pacific greetings. I welcome the opportunity to contribute to this Budget debate and to offer some substance to the previous speaker the Minister of Pacific Island Affairs—to offer some facts versus her fiction. 
This Budget sets out clearly the Government’s economic direction for the next year and it clearly demonstrates whom and what this Government values. I had hoped to see a Budget that was fair to all New Zealanders; a Budget for the many and not for the few. But we have an unfair Budget a Budget for the “me” not the “we” and a Budget that is not fair for Pacific Island New Zealanders. It is a Budget that is not fair for elderly New Zealanders and a Budget that is unfair for most of the people in my Mana electorate. 
This Budget will hit Pacific Island people hard after what has already been a very difficult 18 months for Pacific families. The lion’s share of the tax cuts go to the wealthy at the top; for the rest the much more modest cuts will very quickly be swallowed up by the increase in GST and the highest inflation rate in decades. This is not good news for Pacific people whose average wage is $24000. The majority will feel themselves going backwards. By the Government’s own figures a family with two young children on an average income will be $55 worse off once GST inflation and cuts to early childhood education subsidies are factored in. On top of this the Budget has left a $1.2 billion hole in health funding over 4 years. This will mean reduced services for those in need and that will also hit our Pacific community hard. 
As well as this Budget’s general bad news for our Pacific communities what was truly offensive in Bill English’s Budget speech was his boast that New Zealand’s unemployment rate at about 6 percent was good news. I ask who it is good news for; it is not good news for Pacific Island New Zealanders. The unemployment rate for Pacific Islanders is more than double Bill’s “good news” rate of 6 percent. In the last 18 months under National the Pacific Island unemployment rate has shot up to 14.4 percent. This has undone all Labour’s good work during the last 9 years. Labour reduced the unemployment rate for Pacific people from 15 percent in 1999 when we took office to 6.3 percent in 2008. But in 18 months National has undone a decade of progress. If John Key really wanted to help Pacific Islanders in New Zealand to advance he would have focused on growing jobs for those who are out of work and on growing their incomes instead of robbing them through GST to help fund tax cuts for his rich mates. 
The only extra funding for the Pacific community in this Budget is now under question. It has been given to a private company that nobody in the Pacific community knows about nor whether the company has a track record of job upskilling job placement or creating jobs. Is this money for John Key’s rich Pacific mates? This Budget is unfair for Pacific Island New Zealanders. 
I turn to the people of Mana. By the time inflation GST increases and the increased costs for childcare are passed on most families in Mana will be worse off under National’s tax swindle. This Budget means that low and middle income earners in Porirua City and on the Kapiti coast will be significantly out of pocket at the end of the day. The many families in Mana with two young kids who will end up $55 per week worse off after GST inflation and early childhood charges are all taken into account. If they are renting the problem only gets worse. Property tax changes will result in higher rents. Infometrics predicts that rental inflation will be at 5 percent by March next year and will increase beyond that. How can these families possibly afford this? The reality is that people on very high incomes are much better off following Thursday’s Budget and people on average incomes are worse off. 
This year accident compensation premiums have gone up health services have been cut and now GST is being increased as are childcare costs. It is simply not fair that the majority of New Zealanders are paying for the tax cuts of a few people on very high incomes. To add salt to the wound in Mana it seems there is a drop of more than 80 percent in State housing acquisition and maintenance. Over $20 million will be lost with the demise of the Healthy Housing programme and the acquisition of new State housing units has fallen dramatically. Mana is an area that relies heavily on State housing. Of the 10000 people on the waiting list nationwide nearly 500 are in Porirua; that is one in twenty. To know that new units and further improvements to make houses warm and healthy will not go ahead will cause great concern and stress. With rents set to rise we should be supporting families into affordable accommodation rather than shutting them out. 
People who are already struggling will continue to struggle following the Budget. Labour strongly opposes the increase in GST the cuts to health services the cuts to State housing acquisitions and the increase in childcare costs for parents. In Kapiti people are losing their employment with local businesses. Last week over 50 jobs were lost when a call centre in Paraparaumu signalled it was relocating to the Philippines. In Porirua unemployment statistics have gone up by 500. 
Families in Porirua City and on the Kapiti coast realise that although National has offered them tax cuts price increases mean they will be no better off. The real winners in John Key’s Budget are the very highest earners because most New Zealanders’ tax cuts will be wiped out by inflation before they even get to the checkout. This is based on the Government’s own numbers. Inflation of nearly 6 percent will destroy most of the tax cuts and Kiwis will not be compensated for the GST rise. To fund these tax cuts National has massively increased borrowing. The Government will have to borrow an extra $1 billion over the next 3 years. This Budget is unfair for most of the people of my Mana electorate. 
I want to quickly talk about the elderly. In the last 2 weeks the first five of 19 Grey Power meetings were hosted around New Zealand. There is increasing concern about what is happening. Since we announced the investigation into aged care last month we have been inundated with calls of support from people of all ages from around the country. The sheer number of people attending the first five meetings further reinforces the pain and what is going on. The biggest concern coming through is the Government’s cutting of health funding to which several district health boards have responded by cutting home help for the elderly. We are hearing some horror stories. I am very worried about the standard of care some of our most vulnerable elderly are receiving in aged-care facilities and the way the Government is targeting the elderly and reducing access to vital support. Just this week we saw that MidCentral District Health Board is looking at cutting its overnight district nursing service. This will hit our elderly the hardest. People who have blocked catheters or oxygen supply break downs and patients lying in pain are among those who could suffer. The board is considering laying off 5.5 jobs. The most significant change will be dropping the 11 p.m. to 8 a.m. night shift. This feature is unique to New Zealand and it is important that the elderly even if they are unwell are supported as much as possible to stay in their own homes. This is too big an issue to ignore. Clearly there are deep-seated problems in this sector and we want greater scrutiny and accountability. 
The Budget is unfair for elderly New Zealanders. It is unfair for Pacific Island New Zealanders and for most of the people in my electorate of Mana. I had hoped to see a Budget that was fair to all New Zealanders that would lead us to a brighter future and that was for the many not the few but I was very disappointed with what Bill English and John Key dished up on Budget day. 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: Before I call the next speaker I want to apologise to the Hon Georgina te Heuheu. I think I omitted to ring the bell at 8 minutes. I want to assure the member that she got a full 10 minutes. I must have been distracted by her interesting fact about one in two births being Maori or Pacific Island. I was thinking about what New Zealand would look like after that. I was away in my own thoughts which were provoked by the member. 
Hon Dr JONATHAN COLEMAN (Minister of Immigration) 
: 
 Listening to the contribution of the previous speaker Winnie Laban—and she is a very fine well-meaning member—emphasised for me the real gulf between Labour and the National-led Government on issues relating to the economy and the future direction of New Zealand. I do not know what sort of unpatriotic groupthink is pervading the Labour Party research unit but just because Labour keeps on telling New Zealanders that the Budget is unfair—and it keeps on repeating that over and over—does not make it so. 
In this Budget we saw the Prime Minister and the Minister of Finance lay out a very clear vision and direction for New Zealand. It is about growing the economy addressing wasteful public expenditure and growing opportunities for the Pacific Island people of the Mana electorate. It is about growing employment and growing jobs. We have seen a clearly articulated pattern and a clear plan. We know how that plan will bring down levels of debt. It will grow and stimulate the economy over time because more New Zealanders will have more money in their pockets to put back into the economy to grow it. 
Quite frankly this Budget has gone down excellently out in the electorate. No matter how often Labour members say it is unfair or how much they bully elderly people into thinking they will be worse off— 
Grant Robertson 
: That’s ridiculous. 
Hon Dr JONATHAN COLEMAN 
: —it does not make it so; we can see the raw nerve that that comment has struck. 
Iain Lees-Galloway 
: You degrade yourself when you do that. 
Hon Dr JONATHAN COLEMAN 
: See? It has happened. As soon as we push the button we get that reaction. 
If we look at it we see that the vast majority of New Zealanders will be better off. To say that people on average incomes will not benefit is frankly not the case at all as 73 percent of New Zealanders will be paying no more than 17.5 percent as their marginal tax rate. Two-thirds of the cost of tax cuts will go to people earning $48000 or less. When we listen to the arguments of members opposite we see they were pretty well summed up in Vernon Small’s column on Monday I think when he said there is no logic to the Labour Party’s argument. Its argument is all predicated on next year’s 5.9 percent rise in inflation which drops off soon after. Labour is trying to tell New Zealand that the benefits of those tax cuts will be eroded but they will not be. Labour is using false premises to try to scare the people of New Zealand into turning away from this plan. 
The real problem is that absolutely no plan is coming from that side of the House. The member for Mana said that Phil Goff opposed the rise in GST but I do not know if that is the case because— 
Sue Moroney 
: It is. 
Hon Dr JONATHAN COLEMAN 
: That member says that Phil Goff opposes it but will she support the repeal of the increase of GST? Quite honestly if we gave that member a truth serum drug she would tell us that she does not know. That is the essential problem that Labour has. The Labour Party has no plan for how it will progress the economy. 
Those members are burnt out. They had 9 years. They were completely out of ideas. Quite frankly I think that the dirty secret of the Labour members is that they actually quite like it over there in Opposition because they are out of ideas. They do not know how they will go forward. There are major questions over their leadership. Phil Goff has a real problem. He is out there trying to connect with the electorate. He is going around in the “Axe the Tax” bus trying to connect with ordinary working people. Well he has bigger problems than that because much much closer to home even within the beltway he has issues of recognition. The Leader of the Opposition was in Copperfields cafe yesterday. He took his sandwich up to the counter and asked the young man there who presumably is one of his core constituents to put it on his account. The young man asked which account that would be and Phil Goff said: “Goff—G-o-f-f.” The whole point is that if Phil Goff cannot increase his influence his levels of recognition in the hundred yards from here to Copperfields then I ask how on earth he will make any impact in Northcote or in Hawke’s Bay. How on earth will he connect with the people of Mana who Winnie Laban tells us are so unhappy? 
I do not know whether they are really so unhappy with the Budget; I think they think that John Key is doing a fantastic job as Prime Minister. The vast majority of working people in New Zealand are so grateful that Helen Clark has taken off to the United Nations and they do not have to see her on the television each night lecturing them on how to live their lives. 
One of the other great fallacies that Labour members have come up with is about health care. It is very interesting. Winnie Laban the member for Mana was saying that there had been cuts to home help. Well what happened when Pete Hodgson was the Minister of Health? He wrote to the people of Wanganui and said that he would not cut their home-care funding; he would be reprioritising it. When a National Government increases funding to health and makes some reprioritisations within that funding according to those guys in Labour it is a cut. When Labour members want to do exactly the same thing it is some sort of reprioritisation! The actual fact is that more money is now being spent in health than ever before—$512 million over 4 years. There is more elective— 
Iain Lees-Galloway 
: Why is my electorate looking at five front-line services—five front-line services are going? 
Hon Dr JONATHAN COLEMAN 
: Well with regard to that member’s electorate—the electorate of Palmerston North—I tell him that if is lucky he may be on the list for Labour next time because there is a real chance that he will not be back as the member for Palmerston North. 
Iain Lees-Galloway 
: Not if National keeps cutting our health services. 
Hon Dr JONATHAN COLEMAN 
: There have not been cuts in Palmerston North—there have not. You see this is another thing. Labour members have this mantra. They think that if they bully and scare elderly people by saying that their home help and their health services are to be cut it will miraculously come true. Well I can tell those members that we were left with one massive problem in health by the previous Labour Government on its way out. There were massive deficits across the district health boards. We have had to come in look at it sensibly put the focus on moving the services to the front line and get more for the money that is being spent. Last year we had a record increase in elective surgery. Of course when Labour was in charge of it it was culling decent hard-working New Zealanders from surgery lists. People can see that we have had to do a heck of a lot of work. 
Getting back to this GST argument which is that we do not know whether members opposite would reverse the GST increase— 
Grant Robertson 
: Oh you wouldn’t want to debate policy Jonathan! 
Hon Dr JONATHAN COLEMAN 
: I tell the member that this is policy. Grant Robertson will not be able get up and say that Labour will reverse the GST increase. I think that he will be standing up to speak soon and I challenge him to tell people what Labour will do should it ever get back into Government. He is the young up-and-coming high-flyer. I think that he could well be negotiating in the back room— 
Hon Georgina te Heuheu 
: Who was that? 
Hon Dr JONATHAN COLEMAN 
: Grant Robertson. He is the pin-up boy of the left. I could see him with maybe Jacinda Ardern plotting a bit of a move. I do not know how electable they would truly be but I think we need to know what those members think. 
People know what the New Zealand Government thinks and what our plan is for the economy. John Key is quite clear about where he wants to take this country but that group over there does not have any concept at all about what it would do. I can tell members that the raise in tax on consumption is very very popular. The reason the raise in GST is popular is that everyone pays it and everyone is being compensated for that rise in GST. 
Moana Mackey 
: Go and talk to someone on less than the average wage. 
Hon Dr JONATHAN COLEMAN 
: Actually they are no worse off. People on less than the average wage are no worse off. 
Moana Mackey 
: Yes they are. 
Hon Dr JONATHAN COLEMAN 
: No they are not actually. More important they are not voting for Labour. We cannot have this bunch of ex - civil servants and political career lackeys doing voodoo hotpot economics to try to make this look wrong because frankly it works very very well. 
Moana Mackey 
: Don’t say that about Treasury. 
Hon Dr JONATHAN COLEMAN 
: No Treasury was fully supportive. But I think that the members opposite need to metaphorically take the truth serum stop the personal attacks get up and tell us what their plans for the New Zealand economy are. The truth is that Labour does not have a plan for the New Zealand economy. Its plan is to borrow more and more money. 
Bill English has done a great job of bringing down debt as a proportion of GDP. We are looking at being in surplus in 3 or 4 years. The forecasts are improving all the time. We will have a ratio of about 26 percent debt to GDP. If we take the advice of Labour members we will be there with the UK with a ratio of 80 percent debt to GDP. I tell those members that if they really let Grant Robertson run loose as the Minister of Finance then we may even be in the Greek situation—a ratio of 125 percent debt to GDP. We need to make the New Zealand public aware of what could happen if the public ever let Labour members back on to the Treasury benches. That would be very very bad for New Zealand. Thank you. 
COLIN KING (National—Kaikoura) 
: 
 It is a pleasure to follow my colleague Dr Jonathan Coleman the Minister of Immigration and an Associate Minister of Health. When Bill English finished reading the 2010 Budget speech which had the theme of building the recovery the Leader of the Opposition got to his feet and moved an amendment to the motion. I make it very clear to the House that members on this side of the House do not support that amendment to the motion. The Leader of the Opposition made the statement that he believed that the Government had failed to implement a plan for jobs and that it lacked any vision for developing a smart highly skilled high-technology and high-wage economy. That is as far from the truth as we could possibly get. To the contrary of what he said this Government is all about creating the necessary environment to effect the step change that this nation needs. We need to have a first-class economy that will provide the citizens of New Zealand with jobs and careers that are highly skilled high-tech and high-waged because that is what the hard-working citizens of New Zealand deserve. 
When we look at the Leader of the Opposition’s speech we see that it failed to resonate with New Zealand in much the way that the tired previous Labour Government failed to resonate with the citizens of New Zealand leading up to the last general election. That Government lacked the inspiration that New Zealanders require. At a quick glance we see that the speech made by the Leader of the Opposition failed in one very important area. It is an area that I will take the House through because I believe that it is a centrepiece of the 2010 Budget along with the tax provisions. The Leader of the Opposition failed to refer to the contribution that science will be able to make. When we look at the speech of the Leader of the Opposition we see that it made accusations that were unable to be substantiated. Effectively the speech was very much like Labour was before it went into Opposition: it lacked fresh thinking and there was no evidence of that coming. 
I will take the House through Budget 2010 and show how it contributes enormously to taking New Zealand forward in the field of research science and technology. 
Simon Bridges 
: What will it mean to the average sheep shearer Colin? 
COLIN KING 
: It will mean enormous stuff because it will put the sheep industry back on the map. It will put the sheep industry back on the map. But before we go into that I say that if we look at the Budget we see that it contributed $321 million of new and reprioritised funding over 4 years. That will contribute enormously to an improvement in research. It covers all industry including agriculture and it is designed to lift the spending on science and on research and development to some $750 million a year. It covers all of those industries. Added to that is the increased spending included for the operating initiatives in research science and technology amounting to $40 million in the current year moving up to $64 million in the year 2011-12 and to $80 million in 2012-13 and going out to a whopping $82 million in 2013-14. 
We know that we got it right on this side of the House when we get a thumbs up from people who give third-party endorsement and people who have integrity. I am referring to Sam Robinson the chair of AgResearch who was formerly also the chair of the Richmond meat company. He is somebody who stands out in the agricultural sector for his integrity his contributions and his leadership. “A combination of the Budget-day encouragement for private investment and a new focus by Crown research institutes has been greeted as a great advance for science development and a wealthier New Zealand” That is a quote from a report of his press release. It goes on to state “Robinson said that as a farmer and citizen he agreed strongly with English’s conclusions. ‘As a director of AgResearch I say that the reform we’re seeing is about making New Zealand more competitive and productive and science is a big part of that.’ ” What a wonderful endorsement of the Budget from someone as eminent as him. Government funding for science and research in New Zealand has closed the gap between New Zealand and the average for OECD countries but business funding was well below the OECD average. “This Budget is about fixing that and it’s pretty good I’m heartened by it.” Those were the comments of Sam Robinson. 
Sam Robinson said that he especially liked the setting up of the Rutherford Discovery Fellowships with $25 million to be allocated over 4 years to encourage science excellence and train and retain world-class scientists in New Zealand. “I think that’s really smart because business doesn’t run without world class science.” he said. I would like to highlight to those members over there that in that particular quote Sam Robinson was talking about where this Budget is being directed by allowing those scientists to keep more of the smart money that they earn. As the  
Sunday Star-Times 
 said effectively we need the rich more than they need us. I think to myself that that quote highlights why we do: we want to retain that intellectual property and those smarts. 
The Budget confirmed $45 million worth of contributions over 4 years for the Global Research Alliance on Agricultural Greenhouse Gases. It is an initiative in which about 30 countries are involved and it is aimed at reducing methane emissions from farmed animals. I like this quote from Sam Robinson: “One of the great unknowns is how the rumens work and they are the engine room of the NZ economy. Some of our best scientists are trying to understand it and you need to understand it before you can get solutions.” 
The Budget also provided additional capital funding of $6.7 million and operational funding of $14.3 million over 4 years to develop and improve joint border management systems and to replace ageing border clearance systems run by the Ministry of Agriculture and Forestry and the Customs Service. On top of that another $200 million is to be rolled out for ultra-fast broadband on top of the $200 million that was rolled out last year under Budget 2009. 
It is also wonderful to see that the Primary Growth Partnership has commissioned a number of projects. Three primary sector organisations will receive $20 million over the next 5 to 7 years and that relationship between the Government and industry partners was announced in Budget 2009 with the industry funding and the value of the partnership expected to exceed $45 million. It is a wonderful endorsement that we see this Government so focused on making sure that there is a step change in this country’s economy. 
I finish off with another contribution by Merino New Zealand. Merino New Zealand and the Government Primary Growth Partnership have announced a $36 million 5-year initiative designed to amplify the momentum and economic returns already evidenced in New Zealand’s fine wool sector. What does the chair John Nichol acknowledge? He acknowledges the role of the Government. The process has been robust and at times demanding but it has forced us to further raise the bar in our thinking regarding sector innovation integration and the particular value capture to farmers and the broader economy of New Zealand. 
But the comment that I really do like which really reinforces that Budget 2010 is squarely focused on making a step change and creating an innovative society was the comment by John Brakenridge the chief executive of Merino New Zealand. He referred to the new Primary Growth Partnership as the start of the great New Zealand sheep revolution one that will once again have sheep as the mainstay of our economy but in a lot more market-driven manner than the situation described by the former clichés. 
The New Zealand sheep industry will also be very proud and positive about this Budget as are the rest of New Zealanders and we have put science at the very centre of the Budget. I do not have the time to keep on elaborating about it but it is an absolute pleasure to speak on this Budget. It is a stunner. 
MOANA MACKEY (Labour) 
: 
 It is a little bit difficult to sit here and be lectured on science and research and development funding by National members because National when it first came into Government cut the programmes that the previous Labour Government had put in place and sent us with one swift sign of the pen down to the bottom of the OECD when it came to investment and research and development. In one move New Zealand went straight to the bottom of the OECD. I note that with National’s much-lauded new grants for business Fisher and Paykel Healthcare has said that it will be getting a couple of million dollars out of those grants but that is only half as much as it would have got out of Labour’s research and development tax credits. 
The other important thing about Labour’s research and development tax credits was the fact that small businesses were eligible—small businesses. Under National’s programme small businesses miss out. In fact small businesses get only a paltry few crumbs from that research and development package despite the fact that they are some of our most innovative companies and despite the fact that they are the very ones who cannot afford to invest in research and development so need that extra assistance. But the National Government has said no; it has said that it will cut small businesses out of those grants entirely and they will not be eligible for any of those research and development benefits. 
National members have also gone on about their Primary Growth Partnership which is a ghost of a policy because no money has ever been allocated out of it. There was $700 million sitting in a bank account for Labour’s Fast Forward Fund to fund agricultural and horticultural science. It was sitting there ready to go but National transferred it back into the consolidated account and said sorry to the science community. National was going to put it in a place that so far—as far as we are aware—does not even exist. So I say to National members that they may want to be very careful. 
National has renamed a few of Labour’s policies as its own and “reprioritisation” is the new catchword after National was caught out calling a “cut” a “change”. It now calls a cut a “reprioritisation”. National has brought back some of the policies it cut out of last year’s Budget and it is now trying to claim them as great new brilliant ideas. But—and there is a theme of broken promises in this Budget; this is a Budget of broken promises—where is the money it promised to Crown research institutes? It promised them $350 million so where is it this year? Oh the National members have all gone quiet now. But that is another broken promise in this year’s Budget. 
I come to Jonathan Coleman and I say to that member that the only way Iain Lees-Galloway would lose his seat in Palmerston North would be if Jonathan Coleman became his campaign manager. That is the only way he would lose that seat. Jonathan Coleman spent 8 minutes personally attacking every single member on this side of the House but when one person interjected on something to do with policy he told us not to get personal. The Hon Jonathan Coleman said that Labour was bullying elderly people because we had been sticking up for them while the National Government had been cutting their home help. He said we were bullying them. 
Hon Dr Jonathan Coleman 
: Yep—bullying and scaring. 
MOANA MACKEY 
: Oh bullying and scaring them! So we have been bullying those people down in Southland who have had their home care cut by raising that in the House and holding the Minister of Health to account? It says a lot for the National Government that advocacy equals bullying in its view. I say to Jonathan Coleman that we will not stop raising issues about cuts in front-line services—another broken Budget promise. 
Melissa Lee 
: Twist the truth! 
MOANA MACKEY 
: Well I challenge that member to go down to Southland and tell those elderly people who have had their home care cut that they are twisting the truth. 
Melissa Lee 
: Scaring the public! 
MOANA MACKEY 
: I say to Miss Lee that we do not need to scare the public. We do not need to scare the public because they know that the cuts are there. They are feeling them when they get a phone call from a district health board which they do not realise is an assessment and then get told that their home help will be cut. Thirty dollars a week is not a lot to members on the opposite side of the House—it is not a lot to them—but it is to those elderly people when they get that home help for only 1½ or maybe 2 hours a week. Labour will defend those public services that the National Government seems so intent on cutting. 
I will talk about housing in this Budget. Members might ask why I would talk about housing in this Budget because there is no housing in this Budget and that is true. After this year’s Budget there will be even less housing in New Zealand particularly Housing New Zealand Corporation housing. I want to take members back to the time after the election and to the glorious spectacle that was the Minister of Housing Phil Heatley. He was quite a flamboyant Minister. He would get up he would wave his arm around and he would dance. His colleagues would all cheer and clap as he went on about how much more State housing National would build how much it cared about State house tenants how National members cared more about State house tenants than did Labour members how he was the man for State house tenants and how he was going to fix everything. Well Phil Heatley sat there like a broken man during the Budget statement slinking further and further down into his seat because he knew that this Budget was bad for housing. More than 80 percent of the housing budget from last year has been cut from this year’s Budget. 
Worse than that the Minister went on radio this week and said that if the Housing New Zealand Corporation wants to build more State houses—and I remind members that nearly 11000 families are waiting on Housing New Zealand Corporation waiting lists around the country—it will have to fund that out of existing baseline funding. It will have to make savings elsewhere within its organisation. So basically the word to Housing New Zealand Corporation staff is “Bring a pen from home because the stationery budget is cut and we need to build a few more houses.” What makes it so offensive is that this Minister sat idly by while the Housing New Zealand Corporation paid consultants $600 an hour to develop a business case—just a business case—that cost $11 million. 
What was that business case for? It was for a computer upgrade when a consultancy report that the Housing New Zealand Corporation itself had commissioned had told the corporation that it did not need an upgrade. The corporation’s own report told it that the existing system was fit for purpose. The system was developed so that it could be continually upgraded as things changed; upgrades can be made to the existing Rentel system. The Finance One system was upgraded a couple of years ago so I do not know why the corporation is doing that again. The fact is that the Housing New Zealand Corporation is about to spend $50 million and that is if we believe that that is all it will cost because it first said that the business case would cost $6 million. Then we discovered it would cost $11 million and now some inside information has told us that it will actually cost more than $20 million. 
How does that sit alongside a Budget that has cut money for housing when that Minister of Housing has refused to do anything about that? He has refused to step in to say that the upgrade is a waste of public money; he has refused even to ask any questions about it. Do members know what he has said? He has said that it is a matter for the Housing New Zealand Corporation board. Why do we even have a Minister of Housing if the Housing New Zealand Corporation board is able to throw away money like that—money that should be spent on our most vulnerable families? That money should be spent on building on upgrading and on maintaining State houses. 
Labour did a good job in its 9 years in Government. We had a deficit of 14000 State houses that the previous National Government had sold. We had to build more houses during one of the biggest housing booms we have ever had in this country. It was not easy but we stuck to our promise and we did what we could in that respect. But now we see that there are huge cuts in housing. 
We asked the Minister whether he had had any advice on the impact of the increases in GST inflation and rents coming out of this Budget on the demand for State housing and whether he had even bothered to ask whether the demand for State housing would get worse. No he had not even bothered to ask that. He is not concerned about what that means to the most vulnerable families. 
Infometrics has said that rents will go up by up to 8 percent the Property Investors Federation predicts that rents will go up by up to 6.5 percent—and that is the landlords’ group. We know that 30 percent of New Zealand households pay rent and of that 30 percent a full 50 percent have combined household incomes of under $50000—that is household incomes of under $50000. But these are the people who are getting nothing out of this year’s Budget. What paltry gains they will make in tax cuts they will lose in GST increases in inflation increases and in rent increases—doubly over. Those are the people who will be the most impacted upon. 
I will talk briefly about affordable housing. We have been promised the National Government’s grand Gateway Housing scheme for two Budgets now—two Budgets. Where is it? There is nothing again for affordable housing. There is nothing to address the housing pressures particularly in Auckland. In Manurewa the electorate my colleague George Hawkins comes from one house is being built for every 14 households that are moving to that area. There was nothing in the Budget for them. In fact throwing more GST on to the costs of building a house will not help to alleviate housing pressures in Auckland. This Minister of Housing has no plan for affordable housing. He has no plan for dealing with homelessness around the country and in Auckland. There is absolutely nothing about that. 
We can see that more families will move into that very sad situation as a result of this Budget but the Minister has had nothing to say about that. His press release basically just lauded the fact that he did not lose the Housing Innovation Fund—that he did not lose that particular fund. Then he went on to talk about three policies two of which were Labour Party policies that he adopted when he became a Minister—and we say congratulations; we are happy that he did that—and one that was about letting State house tenants buy their own homes. But in 1 year only 17 people have been able to do that which is why we have said that it is a cruel hoax. Fewer people will be able to do that now with the increases in GST in inflation and in rent; this Budget is incredibly bad for housing. 
DAVID CLENDON (Green) 
: 
 Kia ora koutou. The Budget is very much a document about money. It is a very practical document. But it is also a way in which a Government can express its vision. It can share its vision for this country by the way in which it assigns funding. Each Budget has its own unique character; something that defines and differentiates it from other years. This year’s Budget clearly will enter the record as the inequality Budget—a singular statement that it is OK to transfer wealth from the least well off to the most well off. That is a very unfortunate vision for the Government to have. It is not the vision that we have heard being spoken of but we must go by what people do rather than by what they say. 
We are told that this Budget is about improving growth and improving the country’s economic performance but it is very hard to see anywhere in this Budget any net benefit for the small and medium sized enterprises that are the heart and soul of this country’s economy. They always have been and we can expect that they always will be. The big headline treat on offer—the lollies as it were—for business is the cut in the tax rate for companies and for high-income earners. But as any hard-working small-business owner knows in order to pay tax a business must first make a profit. That has been very difficult for many of our smaller businesses to do over the last year or two. There is not a great deal in this Budget that will help them to achieve that profit and start to pay any tax at all. 
The figures tell us that the tax cut will leave on average about $365 million a year in the pocket of businesses. On the face of it that is a good thing. But we have heard less about the fact that the rise in other costs will quickly erode the value of that tax cut. In fact that erosion has already begun. The rise in the accident compensation work levy will come out at about $150 million a year; something like 40 percent of the tax cut will be gone before businesses even see it. That 40 percent increase in the accident compensation levy was based on the back of an entirely bogus so-called accident compensation scheme crisis which was manufactured by the Minister for ACC over the last year. The increase in GST will hurt business and we know this. There will be a one-off cost to all retailers and particularly to our smaller retailers. There will be the one-off cost of changing computer systems and relabelling but also ongoing consumer resistance as retailers will need to renegotiate. Reassessing pricing points for various products means that either businesses will lose because they will be unable to absorb the cost or consumers will lose because retailers will feel obliged to put up their ticket prices. A recent survey of over 400 retailers revealed that more than 80 percent of them expect the rise in GST to be bad for business. 
We know that small and medium sized enterprises had no opportunity to comment on or to inform the Minister of Finance or the Government of the potential effects of GST because we asked the Minister that question. He confessed that prior to making decisions about GST there was no consultation with small business there was no acknowledgment and no opportunity for them to say their piece or to influence that decision. 
This is very much a business as usual Budget. It tweaks here and there it changes things around the margin but it completely misses the point that business as usual is not an option given the changes in the national and international context in which our business people must operate and will operate in into the future. The market nationally and internationally is crying out for products that deal with the very new challenges we face such as the challenges of climate change and peak oil. There is also the challenge of the changing preferences and expectations of consumers both here and overseas and in particular in the high-end consumer markets—those who have disposable income and those who have choices about where they spend their consumer dollar. That is the way of the future for New Zealand and there is very little in this Budget that will in any way fulfil the vision of building an economy and a business sector that can meet these new needs. We know that there is a demand for safe food for organic food and for novel fibres. We know this because some of our small-business owners and not-so-small business owners are already endeavouring to meet that demand. 
One of the keys to unlocking the potential in our economy is in research and development to find new products new materials and new processes that are resource-efficient environmentally benign or that enhance the environment and meet the demands of socially responsible consumers. In New Zealand as elsewhere consumers are becoming more socially and environmentally conscious. Research undertaken in New Zealand tells us that over one-third of consumers now look at the environmental and social characteristics of a product before they purchase that product and that number has been growing demonstrably over time. The research that has been carried out over the last decade or so tells us that. 
The so-called Lifestyles of Health and Sustainability—LOHAS; there is even an acronym for these people—is a market place for consumers in North America Japan and Germany and indeed here in New Zealand. This is the growing market for New Zealand - manufactured and designed products. Nothing in this Budget contributes or supports the businesses and the innovation that might help to meet this growing demand.  
Small to medium sized enterprises in New Zealand the small and creative businesses that have historically been the producers of ideas and innovation will look in vain for any real assistance in this Budget. A significant chunk of the increased funding for research in there the so-called new funding of $321 million was in fact stolen from environmental research—reprioritisation I believe is the phrase that has been used. We are already under-investing in environmental research. We were embarrassed when we produced our first state of the environment report in 1999 that the most common phrase in that report was “We don’t have the information. We don’t know.” By the time of the second environmental report in 2007 the situation had not improved. This country lives and dies by its green brand its “100% Pure New Zealand” brand; that is what our economy rests on. If we do not do the basic environmental research and monitoring we will lose the integrity of that brand and our markets will diminish accordingly.  
To suggest that new research funding is supporting business endeavours when in fact a large chunk of it is removed from a key area of Government activity is a sham. In any case the research funding that has become available is very much targeted to the large companies—those with a track record in research and those with a large spend already. I do not think those companies ought not to be supported but relatively small amounts of money could be disbursed to small growing businesses. We see the voucher system proposed as being overly bureaucratic and difficult; most businesses will look at it and think the opportunity cost of applying for those small amounts of funding simply will not be worth the candle. The likelihood is that it will be underutilised.  
This is a time when the Government should be investing as it never has been investing before and supporting companies that want to break into new products new markets and innovations. The Government should know this because in a matter of weeks of National being elected to Government the Prime Minister was written a letter by some of New Zealand’s most successful and well-known business people. They were pleading with him to grab the vision of green technology and of new technologies that will deal into the future with the very real problems that are faced locally and internationally. They were people like Phillip Mills who took a successful local business and turned it into a larger and very successful international business; people like Geoff Ross who developed 42 Below from very humble beginnings; people like Jeremy Moon who saw the opportunity in the research around fibres and turned that into a multimillion dollar international business; people like those running Ecostore—a gentleman and his wife started making soap by hand at Mangawhai and they now have their product in every supermarket in the country and are exporting to the US and the UK.  
These success stories were in part built on support from the previous Government through funding streams to support non-governmental organisations and to support environmental development agencies in large ways and small. There was active support from the Government to enable these companies to grow to fill the gap and critically to assure them they were actually supported by this Government. The challenge for this Government now is to demonstrate that it has some vision and to model best practice around Government procurement and around its own actions; not to talk about supporting business and critically small business but to actually put the policy settings there to put the funding there and to provide the practical assistance that will grow our small companies grow our economy and really give us some genuine growth and some genuine prosperity which this country needs—growth that is sustainable growth that meets the needs of current demands. Kia ora koutou. 
Hon STEVEN JOYCE (Minister of Transport) 
: 
 I am very proud and privileged to serve in this John Key - led Government and to stand up to support this Budget. It is a fantastic Budget from a Government that is determined to help New Zealand grow faster. It is a Budget for building a brighter future. It is a Budget that delivers the statistic the Opposition does not like to hear—170000 new jobs over the next 4 years. 
I welcome unexpectedly the contribution of the previous speaker David Clendon about businesses because I think that far too little is spoken about businesses in this House. Last week and the week before I was privileged to attend and speak at two award ceremonies: the New Zealand Hi-Tech Awards and the Wellington Gold Awards. Both ceremonies were full of entrepreneurs innovators and ideas people. Being at both events reminded me of why we do what we do. It reminded me once again of how jobs are created and growth is achieved. 
Governments do not create many jobs. We can help a little in the short term with the initiatives we have such as Job Ops and Community Max but Governments cannot hold up the sky. Ultimately jobs are created by businesses and not just any businesses but businesses where we have a competitive advantage in this country to create ongoing jobs and wealth. New Zealand is a small country at the bottom of the world. Just about everybody who is here has ancestors who came here and survived on their wits and their ingenuity. As a country we traded to get ahead. We are a nation of traders. 
The previous Labour Government forgot that. It thought that New Zealand could grow and grow by increasing the size of the public sector and that the traders would look after themselves. The Government sector the services sector and the household sector all grew and grew while the people who traded went backwards and when the global recession came so came the financial reckoning. As a country we were up the proverbial without a paddle. 
Warren Buffet has a saying about recessions: when the tide goes out we see who is swimming naked. As a country we surely were. Suddenly at the apex of the biggest Government spending boom in this country companies and people had stopped paying taxes and we inherited a huge fiscal hole and a decade of deficits. We had to act and we did last year with a very careful Budget. It was done carefully and well. As a result we had a milder recession in this country than most countries and we have borrowed one of the least amounts of additional funding for stimulus packages. And Labour criticised us. Then we set to work to help the economy grow faster and to encourage our traders so they trade more goods they trade more food they trade more resources and they trade more bits and bytes. 
How do we do that? We do that by building a tax system that encourages initiative and rewards hard work. It is done by reforming regulations and ensuring the country’s laws give more people more room to do more things to encourage industries to grow and add more jobs. It is done by unlocking responsible mining opportunities for jobs unlocking irrigation opportunities for jobs and unlocking more aquaculture space. All those things are challenging to do but we are determined to do them and in so doing get New Zealand to grow faster. 
Meanwhile Labour is in the rut that it led New Zealand into. Labour members lecture the Government about creating more jobs but they did nothing to tackle any of these issues. On tax they are even worse. They remain completely in denial about the impact their 39c envy tax had on New Zealand. They made everybody pay it if they earned more than 60K a year. The Labour Government started a raft of tax avoidance a flight of skilled workers across the Tasman and it removed any incentive for people to better themselves and get ahead. It choked growth in the tradable sector and New Zealanders know it. A majority of New Zealanders know that that tax should go and that is what has happened. 
What are Labour members saying now? Have they seen the error of their ways? No. They say they would keep the GST increase and put the envy tax back on. They have not learnt a thing. It strangled growth in the productive sector it created massive incentives for people to spend their time avoiding it and it sent record numbers of Kiwis overseas but they say they would bring it back. 
What do Labour members say about Government expenditure? Surely they would support the Government’s reasonable efforts to stop the growth in Government spending in the face of the world economic recession. Have they seen that uncontrolled increases in Government spending have to stop? No they have not. They have criticised every single Government move to curb spending every decision to stop low-quality spending and every move to put fiscal discipline back in the Public Service. They oppose every move to cap the massive rise in the size of the core Public Service that happened under their watch. They oppose it all. They still bleat on about Labour programmes that we had to stop a year and a half ago. 
The only conclusion we can come to about Labour members and spending is that they have not learnt a thing. Controlling public sector spending is one of the key ways in which the Government can help to get the tradable sector to grow. Uncontrolled public spending means more borrowing borrowing means higher interest rates than we would have otherwise and higher interest rates make it harder for firms to invest and raises the cost of living. 
Higher than necessary interest rates from higher than reasonable public spending means something else too: it means higher exchange rates. So here is the irony. The Labour Party decided last year that exchange rates were too high. It declared that it would break the consensus on monetary policy which is a bit like breaking the consensus on gravity. It does not know what else to do but it is raging against high exchange rates. What is the main lever that Governments have to achieve sustainable interest rates? It is Government spending. That is right. If we keep spending under control we keep interest rates on a lower track less money flows in and over time the exchange rate is lower and more sustainable. That is how one does it. So that is the irony. The party that is the last of the big spenders rails against the exchange rate yet wants to turbocharge Government spending and increase our debt again. 
God forbid that Labour gets back in charge of Treasury with David Cunliffe as the finance spokesman. That is the Labour Party—it has not learnt a thing. Labour members still think that losing the 2008 election was a cruel hoax. One would think that they would be over it a bit by now. They have not woken up to the stifling effect they had on the New Zealand economy. 
This Budget does four crucial things. Firstly it rebalances our economy for growth and it encourages more money into savings and investment and less into property and consumption. That is the first and very important thing it does. Secondly it lowers tax rates to encourage more people to work hard and get ahead. It lowers the marginal tax rates. Seventy-six percent of New Zealanders now have a marginal tax rate of 17.5 percent. It lowers the top marginal tax rate—and that is important—to keep more skilled workers in New Zealand. 
Thirdly it keeps Government debt under control and puts more of the money that we do have into health and education. It emphatically does that. The health budget from next year from 1 July until 30 June will be $13.6 billion. That is the highest health budget ever but also the highest ever percentage of New Zealand’s GDP to be spent on health. Yet members opposite say that it is a cut. That just goes to show that they cannot count. We have also invested a huge amount in education. Health and education have been the big beneficiaries in spending in this Budget and that is what spending on core public services is all about. 
Finally the fourth and most important thing that this Budget does is invest in and encourage sectors that will help New Zealand grow faster like the science sector the transport sector the communications sector and the tourism sector. Extra money has gone into tourism marketing. The Budget also signals other things we are putting effort into such as reducing regulations providing more opportunities to private businesses and putting more resources into aquaculture. These are the things we need in order to get New Zealand to grow faster. 
It is so important that this country grows faster because unless we get a faster growth rate we cannot afford all the things that members opposite rail on about at all times. But no matter how fast the country grows we cannot afford undisciplined public expenditure and that is what members opposite have to offer. This Budget is a fantastic Budget for its time. It has been acknowledged by New Zealanders to be a good Budget for this country. I am obviously happy to support it and I commend it to the House. 
IAIN LEES-GALLOWAY (Labour—Palmerston North) 
: 
 I am not convinced that the National Party has fully come to grips with the fact that it is in Government. After listening to the speakers from the Government benches this afternoon one would think they were still in Opposition. They do not have the ability to talk about the Budget which we are supposed to be debating this afternoon. Mr Joyce has just spent 6 or 7 minutes of his speech talking about the previous Labour Government. He tried to create a mythology as to what the Labour Party is all about. He could not tell us what the National Party believes in or what it has in the way of a plan for New Zealand because there is no plan. Instead he spent the bulk of his speech talking about the Labour Party and what it did when it was in Government before 2008. 
Hon Dr Jonathan Coleman 
: Was he right? Yes. 
IAIN LEES-GALLOWAY 
: Jonathan Coleman lowered himself to personal abuse in his speech. He looked along the ranks of the Opposition benches to see who was here and thought that he would have a crack. For most of his speech he talked about Phil Goff. Then he had a go at my colleague Grant Robertson. Then he had a go at me. He reckoned that I did not have a chance of winning my electorate. I can tell the House that my first decision for the campaign at the next election will be to make sure that I do not employ Jonathan Coleman as my campaign manager. I will not have “The Maestro” in charge of my campaign—that is for sure. Melissa Lee tried that and look where it got her. 
Then we heard from Colin King. To be honest I do not think any of us was quite sure what Colin King was on about because he put us all to sleep. Paul Quinn did his best to stay awake and to look enthusiastic. A couple of things caught my attention when Colin King was talking. He went on about what a wonderful thing this Government was doing for research and development. It is part of the big swindle that this Budget is about. In the last Budget the Government took away the Fast Forward Fund and everything that Labour was doing in that regard. Then a year later it said that we could have maybe half of it back. That was the National Government’s big investment in research and development. The only other thing in Colin King’s speech that caught my attention was the great New Zealand sheep revolution. There is a great movie called  
Black Sheep 
 which is about genetically engineered sheep that try to take over the farm and turn into “weresheep”. That was the vision I had of the great sheep revolution rising up against this Government. 
It is no surprise whatsoever that this Government does not want to talk about this Budget because this Budget of broken promises whacks just about everybody in New Zealand. It whacks low-income earners it whacks Maori and it whacks the unemployed. It absolutely wallops most people in this country. The biggest swindle in this Budget is that the people who are getting absolutely thumped are middle-income hard-working New Zealand families. This Government is trying to tell them that they will get something fantastic out of the miserly tax cuts they will receive. It has given a little with one hand but it takes so much more away with the other. It is fine for the few who are wealthy who are doing fine and who are getting by OK because they get to feast at the tax cut table. They get the bulk of the tax cuts. 
Simon Bridges 
: And what will you do with your tax cut? 
IAIN LEES-GALLOWAY 
: The member asks what I will get in the way of tax cuts. It will be the same as the members gets. 
Hon Trevor Mallard 
: No no he gets more than you do. 
IAIN LEES-GALLOWAY 
: Does he get more? OK. 
Hon Trevor Mallard 
: It’s private income. 
IAIN LEES-GALLOWAY 
: Yes of course. The thing is that the member would agree that he was doing just fine before the Budget and he will be doing a whole lot better after it courtesy of what this Government is doing. It gives with one hand and it takes away with the other. 
It is fine for those who are feasting at the table but all the people who could really do with a tax cut—the battlers the workers and the families—get to do is gather the crumbs from underneath Bill English’s seat. The truth is that the Government does not want most hard-working families to have even the scraps. That is the truth. What has the Government done? It has increased GST so that it can take some of that back. GST applies to everybody. Everybody will have to pay more GST but if some people already have a lamb dinner in front of them and somebody plonked down a roast chicken those people would not be too concerned if Bill English came along and nicked off with a leg or wing. That is not so much of a problem. On the other hand if all they get is the crumbs if all they get is a couple of peas off Gerry Brownlee’s plate and somebody comes along and takes those peas away— 
Grant Robertson 
: Gerry probably wouldn’t drop much. 
IAIN LEES-GALLOWAY 
: That is true. If all they get is the crumbs and that is taken away it is a really big deal. That is what the Government is doing to working families. It is giving with one hand and taking away far more with the other. 
The Government tells people to not be jealous if they feel that it does not seem quite right that those who are already well-off get much more. It is not just GST increases that will obliterate the miserly tax cuts that hard-working Kiwis will receive. High inflation high mortgage rates increased rents and hikes in accident compensation levies will each take a little bit more out of the back pocket each week. Kiwi families will find they are far worse off as a result of this Budget. When we take all of that into consideration it quickly becomes obvious just how much of a swindle this Budget is. Heaven forbid that people would be foolish enough to have children! Kiwi families who have children particularly young children will see that tax cut whipped away in one go. Families who have children in early childhood education will see the entire tax cut pretty much whipped away. 
It is another one of the Government’s broken promises. It said it would not fiddle with the 20 free hours early childhood education scheme but it has cut over $250 million worth. That will result in higher costs for working families with young children. Depending on what types of services their kids are in—an education centre kindy or kohanga reo—the increased cost will vary but they are looking at $23 to $31 a week. That is the whole tax cut wiped out in one go. Never mind inflation GST and everything else that will be added on. That is it; it is all gone in one go. From the Government’s point of view this is about quantity and not quality. It wants to diminish the quality of early childhood education. It is dumbing down our children and dumbing down their opportunities in the future. I tell members that that is not good enough for my kids and it is not good enough for anybody else’s kids either. 
This is not happening just in education but also in health. People in my electorate are asking me what on earth is going on in the health sector. Tony Ryall stood up the other day and told the House that the health budget is larger than it has ever been. He said there is more money in health than ever. Yet in my electorate the district health board is looking at cutting district nursing services particularly those that provide palliative care to people who want to die with dignity in their own homes. Those services are being cut. It is looking at cutting sexual health services and diabetes services. The public health services are going to be cut. Rehabilitation services will be cut. 
I get emails and letters every day and at my last count before I came down to the House I had a dozen today from concerned constituents asking what on earth this Government is doing to our health sector. They ask what is going on in their hospital. What really is going on? Cuts in services are going on. When we bury down and look at the supposed increases in funding that this Government is giving us we see that it has increased health’s budget a bit but it needed to increase health’s budget by 5 percent just to stand still. Before 2008 the Labour Government made sure the increases were enough to cover at the very least the current services if not increase them. This Government has given at best a 3.5 percent increase. That is not enough for the health sector to stand still and that is why this Budget will deliver cuts to front-line services. That is another broken promise from National. 
This Budget is quite simply an unfair swindle that hammers hard-working Kiwi families in the back pocket then tries to pull the wool over their eyes and tell them they will be better off. I tell the Government that the people are wise to what it is doing. People are figuring out what this Government is doing and that will burn this Government in the long run. 
Hon JUDITH COLLINS (Minister of Police) 
: 
 I do not know where the previous speaker Iain Lees-Galloway has been spending his time because certainly where I spend my time in Papakura people are very happy. In fact they are extraordinarily happy that we have such a fantastic Government. I have to say this Budget is the best I have ever remembered. It is certainly the best Budget I have seen in my 8 years in Parliament which frankly is not saying much—apart from last year’s Budget which was pretty good too. But this is a Budget of aspiration it is a Budget that is fair and it is a Budget that starts to give people back more of their own money so they can make decisions. The member who has just resumed his seat asked what is happening in health. I can tell him what is happening. We have an awful lot of elective surgery going on. 
Hon Member 
: Cuts. 
Hon JUDITH COLLINS 
: The only cuts going on are the surgery cuts because people are actually getting their surgery nowadays. In the area served by the Counties Manukau District Health Board—in my region—we now have the most fantastic amount of elective surgery and an awful lot of that has to do with the leadership the Hon Tony Ryall is showing in the health sector. He is demanding that we get the surgery that the front-line services get the support they need and that we have fewer and fewer reports—unlike under the last Labour Government; it used to talk about how it was going to help health so it had a lot of reports. That is about all the health sector got. It did not get the surgery but it got the reports. An awful lot of money was invested into all sorts of long-winded reports that nobody read but it made Labour feel as though it was helping someone. It was helping its mates not the people who paid the bills. 
This Budget delivers the most extensive rework and readjustment of the tax system that anybody can remember in 45 years. It is the most fantastic rejig of the system. In the run-up to this Budget Labour members spent all their time saying that the Government would just give tax cuts to the rich. Nobody remembered to tell Labour that the really rich people in this country do not pay much tax. They certainly never paid at the top end of the tax system. I recall seeing an article just the other day from Sam Morgan a very rich New Zealander who skited that he did not pay any tax. That was of course under the previous regime. He will certainly be paying a little bit more GST now and that is one way of getting the tax. One person in Papakura who wrote to me was upset with the Budget and said he was not going to vote National any more. The reason is that he has 10 residential properties that he leases out. He is obviously affected by the Working for Families rort that we sorted out. He is not going to vote for us any more because he would rather vote for some other party that will let him rort the Working for Families system. I think we can probably do without the vote from someone like that. I think we would be very proud to be a party that actually starts to even up the tax system because if there was ever a rort it was that sort of rort where people could have multiple residential properties and then turn round and claim a Working for Families tax credit. That system was supposed to be set up to help hard-working Kiwis with young children trying to get ahead. Instead it was being rorted by people like that and frankly he knows what he can do. 
Labour members have been talking about lots of slogans tonight. I heard the previous speaker talk about personal abuse and then he delivered a whole lot of personal abuse at my colleagues on this side. I have to say that is not a very good thing for a new member in this House to learn. It is much better to stick to the issues. We are seeing some very sensible Government spending. Every big Government department has to look at how it spends it money and that is not just for my departments of corrections police and veterans affairs. We all have to do that and there is a reason: other than in forestry money really does not grow on trees. Someone has to pay for Government spending it all has to be paid by taxpayers and they should be able to know that we are spending their money wisely in their best interests and in the very best way we can. There will always be circumstances where we think we need to trial something and see how that works. It may not work out but it is very important that everybody in the Public Service is focused on trying to get the best value for taxpayers and understands that although the Budget helps to deliver this money none of it comes unless we have the taxpayer paying it. That is why we need the economy to grow. 
When we look at the growth measures in the Budget we see the work on research science and development and the huge input into trying to grow our science sector. For years and years we saw big input into the arts and I think that was probably a good thing but unfortunately there was not the same emphasis on the science sector. A country like New Zealand and an economy like ours built on agriculture and all the other things that spin off from that should have been investing better in the sciences yet for years we were not. That is being turned round under this Budget. What we are seeing as well is some extremely good work in social development—getting people back into work making sure that it is worth people’s while to work. That is one of the great things about the tax cuts. They are not just for the rich not at all like Labour said they were going to be but actually right across the spectrum so that every working New Zealander will have a chance to save some more money and have an incentive to earn some more money. Many of us know of instances where people have said that there is no point going for a higher-paying job because they would lose their Working for Families credit or it would all go in tax because they would shift into a higher tax rate. Under this Budget we have lots of police officers corrections officers and nurses now getting a reasonable tax rate rather than being called “the rich” because they earn over $70000 and therefore having to pay that extraordinarily high rate of tax that Labour thought we should have—the envy tax. We think it is very important to trust Kiwis give them back some more of their money let them keep it and then let them make decisions. No wonder people could not save under the previous Government their money was all going in tax. Was the Government saving then? No. An awful lot of low-value high-paid spending was going on. 
It is extremely important that we always keep a focus on what is productive. I will talk a little bit about an innovation in corrections that my colleague the Hon Dr Pita Sharples is bringing in. It is the Whare Oranga Ake which is all about looking at rehabilitation and reintegration particularly in a Maori context. Obviously there will be a focus on trying to deal with the massive recidivism that we have in our prisons particularly with regard to Maori offending. That is important because if we could start to bring Maori offending down to the same levels as the rest of the community we would not need all the prisons we currently have. That is one of the things we are trying to do here. Unfortunately Labour and particularly the Hon Clayton Cosgrove called it a separate Maori justice system when it is not that at all. What it is actually doing is trying to look at what might work. Dr Sharples has funding under this Budget—and I am very proud to be able to support him in that—to start two of those units so we can see whether they can make a positive difference. If they are a positive force I hope that all parties in this House will see the value of that innovation. 
We are continuing with our commitment to have 600 extra police by the end of next year. We now have about 350 extra police on the beat in front-line roles since we became the Government. Many of those have gone into the Counties-Manukau area. Last year my opponent Mr Cosgrove said that having extra police in Counties-Manukau was an ill-thought-out scheme. He should go and tell that to the people of Counties-Manukau. I quite enjoy going around Manurewa Papakura and other areas in Counties-Manukau in my patch and saying to people when they talk about how they feel so much safer now that Labour members would not agree with that because they did not think we should be able to have 300 extra police on the beat in Counties-Manukau. It is making a huge difference and I am extremely pleased with the way in which the police have taken up the challenge as well to modernise the way they do policing to look at alternative dispute resolution and to trial different ways of doing things. They have that extra support in terms of people but also in terms of the almost $200 million extra that we gave them in last year’s Budget—which by the way has been characterised by Labour as a $20 million loss; only Labour maths could do that. They are doing some very innovative work. I am extraordinarily proud of the work that they and the Department of Corrections are doing. The Department of Veterans Affairs is a great little organisation which is working very well with the Ministry of Defence. I am very pleased with that. 
We have also by the way—I will just finish on this—kept the Serious Fraud Office which the previous Labour Government was going to get rid of. It had legislation about to go through its third reading before thankfully the people of New Zealand voted in a National-led Government. 
Hon CHRIS CARTER (Labour—Te Atatu) 
: 
 I rise to criticise this Budget. Listening to the previous speaker the Hon Judith Collins I thought that she seemed to spend more time talking about her opponent Mr Clayton Cosgrove than she did about the details in the Budget. 
It was very interesting to hear that member talk about the importance of science and research. I could not help thinking as she was trumpeting the miserly amount that was in the Budget for that area that it was a belated recognition that science and innovation are the only ways that we will lift New Zealand industries to make them even more competitive internationally. The $750 million in the Fast Forward Fund was the very first thing the National Government cut when it was elected to Government. So much for the Government’s commitment to science! The 10 to 15 percent tax credit that companies could get for research and development was gone as well of course. A little bit of it has come back but it is nothing compared to what the previous Labour Government had in place. 
Today we heard in question time the Minister of Education trumpeting extra spending for education. She was skiting about a 4 percent increase in the operations grant. I have to say that in 2008 when I was the Minister of Education there was a 5 percent operations grant increase. What they did not get then and what they are getting now is death by a thousand cuts. 
Let us just review some of the programmes in education that have been cut putting aside that skiting about the 4 percent. We could talk about the $400 million that has been plucked out of early childhood education. The Minister of Police gave a speech a couple of minutes ago crowing about the extra police officers. She did not mention that the Labour-led Government over 9 years put in 2000 extra police officers. Police officers of course are not the only answer to crime; we have to address the causes of crime. Almost all of the young men who are in our jails would have had a bad educational start right from the beginning. In Counties-Manukau which the previous speaker was talking about only 23 percent of preschoolers go to early childhood education. That might involve one afternoon a week for an hour at the local church hall so the quality of education of even those 23 percent who are attending early childhood education before they enter primary education is of very variable quality. 
The National-led Government has cut out $400 million from the early childhood education budget. That was the very thing that would address a lifetime of crime—getting those kids off to a good start so that they have educational success and so that they are literate and skilled. Every profile of young and not-so-young people in jail shows the vast majority had a very poor education. Many of them are illiterate or only semi-literate. The failure in the education system is partly to blame for a lifetime of crime. That failure is compounded by poor homes poor nutrition and bad life experiences. Those are all cumulative things that are hard to deal with. They are not solved by a few extra police officers; they are solved by investing in quality social services and in quality education. 
Four hundred million dollars has been taken out of early childhood education. I recall the last election campaign in 2008 where the then Opposition spokesperson on education fronted up at many meetings with me for the New Zealand Educational Institute and she talked about the failure of 20 percent of our students—actually it is about 18 percent and falling. It is about a good start and about programmes in schools that address literacy not all the nonsense about national standards. How will a national standard catch a kid who is failing? Where are the extra resources in education that will lift a child who is failing in literacy or numeracy? Already in schools— 
Hon Georgina te Heuheu 
: Leave them to fail that’s what that Government did. 
Hon CHRIS CARTER 
: I can hear the Associate Minister of Maori Affairs going on about education failure. She of all people should know that far too many young Maori in our country are not succeeding in education. If we went into any school any kura or any kohanga reo in this country and asked the teachers there to tell us which kids are not succeeding instantly they would be able to tell us. They have already identified them. They already know who those children are. A national standard will not improve that knowledge; teachers already know. What those teachers need is extra resources for extra staff to work one-on-one in small groups to lift those children up. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
Hon CHRIS CARTER 
: I am sorry that I have only about 5 minutes remaining. I would like about 25 minutes because I have a lot to say tonight. I have had about 1½ hours to reflect on my first 5-minute contribution before dinner. 
I was inspired by the member who spoke before me Judith Collins the Minister of Police. I know she said a lot about my colleague Clayton Cosgrove because she has a special affection for him but also she made reference to many interesting points that are very good points to rebut. One of them was her comment that her Government has a commitment to science. I mulled over the irony of that statement because I was talking about education before the dinner break. One of the first things that the Minister’s colleague Mrs Tolley did as Minister of Education was to get rid of the science advisers in schools. Science it seems for the Minister of Education at least does not count. Science advisers physical education advisers and music advisers are all out. Mrs Tolley argued in this House that she wanted school advisers to focus just on numeracy and literacy because we were failing in those. Strangely enough she is not too good in numeracy herself. She got her figures wrong yesterday and had to apologise. 
In the OECD rankings of the developed countries—the so-called PISA or Programme for International Student Assessment scores—we come first in the English-speaking world. Our schools are very successful internationally. New Zealand teachers are first-rate educators and New Zealand learners in our schools are doing very well. So why should we have these national standards? I talked a little bit about them before. On the issue of science advisers we have heard about the Government’s commitment to science. Science advisers and physical education advisers are out and art is out—it does not count. We will not have a test we are told for national standards. Australia the UK and the US have tests and they are getting rid of them now. Half of the primary schools in Britain are on strike over doing tests because as the educators there quite rightly say those tests are a farce. They actually hinder education; they do not help it. 
Mrs Tolley has come up with what she calls OTJ—objective teacher judgment. It seems now that our new national standards—which we have spent millions developing and for which teachers have been forced to attend numerous professional development courses—have boiled down to objective teacher judgment. In other words a teacher sitting in his or her classroom doing the school report will decide whether a child is a pass a fail or average. There will be no moderation between classrooms in a school. There will be no moderation between schools in Auckland. There will be no moderation between schools in Auckland and Otago. There will be absolutely no criteria for comparing a teacher in a classroom in west Auckland who says that Judith Collins aged 7 has passed. There will be absolutely no comparative objective comparison between one classroom and another. It is to be objective teacher judgment. What a farce! All of the money that has been spent to justify a slogan that was used in an election campaign by National and the $250 that every school has had to find to cover a reliever for a teacher who is obliged to go to a professional development course on national standards boils down to objective teacher judgment. What a joke! 
I hope that viewers who are watching Parliament tonight had a chance to see TV3’s news tonight. In the first item we heard about the Highwater incident when John Key said he did not own a vineyard but was caught on tape saying that he did. I guess in a way that summarises this Budget. It is all about spin. It is all about delusion. My colleague Jim Anderton earlier in the Budget debate described it as not the Robin Hood Budget—Robin Hood took from the rich and gave to the poor—but the Sheriff of Nottingham Budget: the Budget that takes from the poor and the middle class and gives to the rich. 
It is an illusion to say that it is a fair Budget. It is an illusion to say it is a progressive Budget. It is an illusion to say that it is a Budget for New Zealand and an investment for the future. Judith Collins talked about National finally—finally—recognising that science and innovation and investment in research are really important. I remind viewers listeners and colleagues here in the Chamber that $750 million for the Fast Forward Fund was done away with as soon as National was elected to office. The tax credit for research and development of 10 to 15 percent was done away with. This Budget is not an investment for New Zealand’s future. It is about trying to buy votes and it will not work. 
SHANE ARDERN (National—Taranaki - King Country) 
: 
 It is my pleasure to rise in support of the motion moved by the Minister of Finance and to totally oppose the amendment moved by the Leader of the Opposition the Hon Phil Goff that states that he has no confidence in the National Government and in this Budget. Let me tell members why that is the case. Everybody in the community has had a view on this Budget. Based on recent responses about 85 percent of people support the content of the Budget and the direction of the Government. 
Hon John Carter 
: They think it’s fair. 
SHANE ARDERN 
: They think it is the best Budget there has been for a long time. I guess that probably explains why we are on this side of the House and Labour is on the other side of the House. Over 9 long years in Government Labour never realised what it would take to turn round the New Zealand economy and capture the opportunities that were there for us in huge abundance. In a time when the economic circumstances were better than what we have seen in a generation Labour squandered enormous opportunities. 
I will tell the House what the National Government will do. First of all there is $14.3 billion worth of tax cuts for middle income New Zealanders for hard-working mums and dads up and down this country who just want a fair go so that they can compete with their Australian cousins compete in the businesses they run and compete internationally. The previous Labour Government never understood that. So that is the first thing this Budget does. 
A typical two-child family with a household income of $76000—we would hardly call them rich by today’s standards—will be $25-a-week better off once this Budget comes into effect. It is the biggest tax reform we have seen in this country in a quarter of a century. In 9 years of the Labour Government what did we get? We got a health system that was crumbling. The waiting lists for elective surgery were getting longer and longer. What do we have after two Budgets from the National Government? We have more operations than we have ever had before. We have better health outcomes: more faster and sooner front-line health services than we have ever seen in the history of New Zealand. What do we have in education? 
Hon Ruth Dyson 
: That’s not true. 
SHANE ARDERN 
: We have better faster and higher standards in education. Members opposite bay and say “That’s not true.” I ask them which parts of it are not true. They should stand up and tell us which parts are not true. Every single bit of that statement is a fact. 
The Taranaki - King Country electorate—I am sure people will be interested to hear—despite the fact that it has a farming background is a low socio-economic area. It has a large number of small towns with decile 1 2 and 3 schools and there are very long distances to travel for core health services. It is a low-decile and low-socio-economic area. The people companies firms businesses and mum and dad operators in that electorate will benefit more substantially from these Budget initiatives than the initiatives of the previous Labour Government in the last 9 years. All of this comes at the time of what has been described as a worldwide economic crisis. I have not used that term; in fact I think it is probably overstated but that is what the economic markets are saying and that is what the commentators who are apparently more knowledgable than us on these issues are saying. In this economic crisis the National Government has been able to deliver the greatest tax reforms we have seen in 25 years. 
I will tell the House what else is in this Budget for people. First of all we see that our superannuation payments have gone up. How long ago is it since that happened under a Labour Government? We would have expected that Labour would be very conscious of what is happening with elderly folk in New Zealand because elderly folk are one of its core constituency groups. But what did Labour do? It loaded on to the elderly more and more costs more and more inflation worse health-care worse education for their grandchildren and layers and layers of cost. But this Government under this Budget for the first time in many many years is now able to turn round the great ship of New Zealand in a more economic direction and start to stimulate the growth jobs and opportunities that we so desperately need. 
I say to the House that on looking at the reaction from Labour members throughout this debate I see that I would not want to be where they are. It is so much nicer on this side of the House and we will be here for a long time because of the outcomes of this Budget. So those members opposite should suck it in and get used to being in Opposition. It is a great place to be if members are Labour members. They are better in Opposition than they ever were in Government—and they were no good in Government either. They should get used to it. This Budget will do more for mums and dads and for “Joe Hard-Worker” than anything that happened under the previous Labour Government. 
Let us look at what is happening in regard to research and development in the agricultural sector in its primary partnerships. For a start an announcement has been made that $36.15 million will be expended on Merino New Zealand’s fine wools programme which it has been promoting for some time. The expenditure will allow it to develop markets and to do genetic work to improve the meat yield or meat quality from merino sheep. I say to Mr Assistant Speaker Roy that he is in a very good position to know how important that is to the New Zealand economy. It is one slight success story on what has been a pretty dull horizon for the wool industry. But now that industry has stepped forward and will take full advantage of the money that has been made available by the Government to help them in that research programme. 
The forestry sector is another sector that has been on the back foot for a long time. Forestry in New Zealand has been in decline for about the last 7 years. There have been fewer plantings in the forestry sector for the last 7 years. But what has happened in the last 2 years? Suddenly we are starting to see investment flow into that sector. 
Hon Steve Chadwick 
: How happy are farmers at the moment? 
SHANE ARDERN 
: The member from Rotorua is baying from the other side of the House. I say to her that Rotorua is one of the biggest forestry areas in the country. She should have a look at what has been announced in the Budget for the forestry sector: a $5.5 million programme to develop better harvesting technologies. Why would we want to invest in that? Firstly it makes forestry more efficient and therefore more competitive internationally. Secondly there is far less environmental impact when we develop that type of technology. We would think that the former member for Rotorua would be quite keen on some of that stuff and that she would give a more passionate speech in support of it than I am giving. But no the role of Opposition is always to oppose. It does not matter how good something is; members opposite will no doubt oppose it. The Primary Growth Partnership between the Government and the forestry sector will bring about substantial development in that regard. 
There are a number of other initiatives. It was announced today that a number of people in the agricultural and primary industry sector are making very loud noises in regard to what they may do. They have not said exactly what they will do but they are working closely with the National Government in regard to what will be spent on research and development. If we are to get New Zealand up and running then it will be the agricultural sector once again that achieves that. New Zealand is an exporter of protein and has three sources: fish meat and dairy products. The dairy industry is growing year on year. It is strong and the tax initiatives announced in the Budget will help that industry. 
The Budget will equally help other industries. The Government’s work towards aquaculture—and the future legislation that will potentially come to this House in that area—can be only positive for New Zealand. Meat and wool particularly with the announcements today have a bright future as well. 
I totally support this Budget. It is a substantial step forward for New Zealand and it is something I am very proud to be associated with tonight. 
SU’A WILLIAM SIO (Labour—Mangere) 
: 
 After 18 months of being in Government I think that the tide is now turning for National as people see that this Budget was a defining one for this Government. Whether or not National members like it the true nature of the National Government has been revealed for all New Zealanders to see. It is about big business. Those members have no concern whatsoever about ordinary working New Zealanders. 
I rise to support the amendment moved by the Hon Phil Goff the leader of the Labour Opposition: “That all the words after the word ‘That’ be omitted and the following words substituted: ‘this House has no confidence in the National Government led by John Key which has blatantly broken its clear promise not to raise the Goods and Services Tax has pushed up prices when working people have had their lowest wage rises in more than a decade has failed to implement a plan for jobs lacks any vision for a smart high-skill high-tech and high-wage economy has cut services and assistance to the most needy in our community and has rewarded the most wealthy at the expense of middle and low income New Zealanders.’ ” That says it all for this particular Government and its second Budget. 
There is a well-known truism in the Pacific Island community that when people are given authority and use that authority to gratify their pride or vain ambition then exercise control dominion or compulsion upon the people to cover up their mistakes nothing good comes of it and the people end up suffering. 
Before the general election Mr John Key looked down the lens of a TV camera and when asked by a reporter promised that if he were in Government there would be no GST increase. He broke that promise when last Thursday his Government under his leadership announced that the GST rate would increase by 20 percent going from 12.5 percent to 15 percent effective from 1 October. This Prime Minister has broken his pre-election promise to all the ordinary families who voted for him who thought that as he had been raised in a State home he would somehow understand the struggles of ordinary Kiwis and empathise with them. Never did those middle New Zealanders imagine that the smile of the Prime Minister would somehow trap them into facing a GST increase which has effectively increased the cost of living for all struggling Kiwi families. The GST increase will mean price increases for food power petrol phones rates school uniforms early childhood education fees and much much more all because that man the Prime Minister and his Government broke their pre-election promise that they would not raise GST. 
His Government has since attempted to pacify the people who supported him—the same people who are now angry about the rising cost of living—by restructuring the tax system and producing tax cuts that will give more money to those who earn significantly higher incomes. These tax cuts come at a cost to the whole nation of about $17.8 billion which must be paid for in the years to come. The Prime Minister said that tax cuts and an increase to GST is called a tax switch and that it will be cost neutral. But for low and middle income earners it is a tax swindle. This Budget hurts the most vulnerable groups in our communities right across New Zealand. It hurts low-income groups especially people on fixed incomes. It hurts solo parents and their children it hurts workers on the minimum wage it hurts the disability community and it will hurt the elderly young people and those on invalids benefits. The 81 percent of people in Mangere earning $40000 or less a year have been swindled by the Government’s tax package because they will actually be worse off under this Budget. It is a tax swindle because someone in Mangere on the median wage of $20600 may on the one hand get a tax cut of about $9 a week but after the increases in the cost of living and accident compensation costs are factored in that person will be worse off by $11 a week. 
I blame the Prime Minister Mr Key for the suffering that many in my community will continue to feel under his Government. He is the leader and it is his Government that is responsible. He broke his promise on GST and attempted to hide his mistake by introducing a tax swindle by manipulating an appeal to the desperation that many families face with low incomes rising prices and the genuine desire of all families to get ahead and make ends meet. There is no future for ordinary working families under this Government. There is no future under this Prime Minister for the communities he once called the underclass. 
Where is the future for children in Manukau where since December 2008 nine early childhood centres have closed? Where is the future for the children in Mangere where there have been five early childhood centres closed since National came into power? Where is the future for the children of Mangere families when parents could face costs of up to $20 or $40 a week more per child for early childhood education? Some centres estimate that the real cost could be up to $60 per week per child. Last Friday the Kiwicare Preschool of Tennessee Avenue in Mangere which the Prime Minister opened last year sent a letter to its staff stating that it will have to review its staff numbers due to cuts from this Government. Where is the future for these workers who will possibly be laid off and their lives added to the pile of discarded unemployed workers who still number above the Australian unemployment figures? There is no future for the people of Mangere under this Government. 
I note that leading up to the Budget and even today the Minister of Customs has been crowing loudly about the wonderful work of customs officers at our borders. Labour supports the work and commitment of our customs and border officers and the significant number of narcotic interventions that we have heard so much about in recent days. We have not heard so much about how the Government rushed the SmartGate electronic passport control system into New Zealand’s airports against the advice of three Government departments. The House has not heard that despite warnings from the Department of Labour Treasury and the State Services Commission the Minister of Customs approved the purchase of SmartGate. The three departments had serious concerns about whether the SmartGate system offered value for money and was the best technology to meet the future challenges of border control. I suspect that the Minister of Customs may have wanted to do the right thing follow the official advice and put up SmartGate for a public tender process but it seems that that advice was ignored because Prime Minister John Key asked officers to give highest priority to advancing the integration of trans-Tasman border clearance. Official documents show that despite reservations about SmartGate its purchase and implementation were rushed so that John Key could announce its introduction at a meeting with the Australian Prime Minister last August. 
I have the same concerns about the way that this Government has approved $4.8 million to a little unknown private company called the Pacific Economic Development Agency Ltd. There is widespread concern about it from the Pacific Island community from Invercargill to Kaikohe and from Taranaki to Gisborne. Last week the company’s register showed that there were two original shareholders but as of this week there is only one shareholder and one director. Labour asked the Minister of Pacific Island Affairs whether the funds underwent a public tender process before being approved for a private company. Only yesterday we finally got an answer and we heard it on  
Morning Report 
. The answer she gave sparks more questions. Why did the Minister not undertake a rigorous tender process? Why was the money not given to the Pacific Business Trust which has a long and strong track record in the community? Where did this money come from? Who were the people who lobbied the Minister so that she would approve this money without it going through a public tender process? Was she bullied by the Minister of Finance or the Prime Minister into making this decision? Those questions need to be answered because that $4.8 million is public money. We of the Pacific community want to know what outcomes will be achieved from this $4.8 million. It is appalling that on  
Morning Report 
 yesterday after announcing that she was supporting this group with $4.8 million she revealed that she does not really know too much about what this company will provide. We demand those answers. 
CHESTER BORROWS (National—Whanganui) 
: 
 What a wonderful week it has been to be in Government! It is wonderful to feel the euphoria after a fantastic Budget has been released to the public and it is wonderful to see the way in which it has been received around the country. It is great to walk down the street and have people come up and say: “Gee you know John Key is doing a wonderful job. He is doing a fantastic job.” We have heard that phrase right across the country from people who have worked for years and years without any show of understanding of the pressures on them in making ends meet. They have worked hard backed themselves and made a success of themselves and they never received the time of day from the previous Government. I am so pleased to be part of a Government that recognises that people across the board need some sort of tax relief. 
The left continually associates wealth with callousness and cynicism. We continually hear those members say that those who succeed only got there on the backs of the people they employed and that it is time those people received a break. It is interesting to look across the House and listen to those members’ speeches. I have to congratulate the member who has just resumed his seat Su’a William Sio. That was the most ably read speech out of the Labour Party media unit I have heard for some time. I believe he did that incredibly well. It is a shame he could not remember the lines himself and deliver it with a little more passion but there we go. 
The trouble with the other side of the House is it believes absolutely and fundamentally that it has to keep its supporters poor and pissed off so they do not have to ever look to themselves to stand up under the pressures and the struggles. It was interesting to hear the member who has just resumed his seat talk about the history of our Prime Minister John Key. He said in a scoffing sort of way that Mr Key believes he understands the struggle of the working class because of his upbringing. The problem with the Labour Party is it has never understood the aspirations of the working class. It has never for a moment understood the aspirations of the people who support it when times are tough. When people manage to stand up overcome their struggles and do better for their children they recognise that they will never get better under a Government that comes from the left. 
Who does the left call wealthy? Apparently it is anyone who earns over $70000 a year. We know that 75 percent of those who earn over $70000 earn less than $100000 a year and who are they? They are the detectives the ward managers—the people we used to call sisters—the assistant principals and some of the teachers. They are working for that level of pay and members on the other side of the House—the previous Government—want to tax them at 39c in the dollar. They want to grab every cent they can from those people and they rubbish their aspirations to get on and do better. That is not on. Labour is not the party of aspiration because it continually slags off anybody who achieves who works hard or who experiences success. 
I was in Nelson on the weekend visiting my family. My dad and mum are 85 and 78. Dad is pretty crook; he is not keeping too well. They still manage to tick over by growing a few veges. They live pretty frugally and all the rest of it. They voted Labour all their lives until one day they woke up and realised they were not getting ahead. Even as pensioners existing on the pension they found it a struggle and they were kept where they were. 
I had a great conversation with my mum on the weekend. She was so pleased she voted National in the last couple of elections and she will for the foreseeable future because she knows that under National people are being encouraged. For instance I look at my cousins who earn an average wage of about $50000 per year. They are now paying half the tax they paid 2 years ago. A number of members on this side of the House have kids who are in their 20s and want to save up and buy a house. Those are the sorts of people who want to get on. They want to get their ducks in a row and have the hallmark of success in this country by owning a little plot of ground for themselves. They want to put a house on it and raise a family. That is what they aspire to. They hold good and wholesome values. They are being encouraged to do that under this Government whereas in the past they were seen to be people who were too wealthy for their own good and who were to be knocked as hard as Labour possibly could. 
Let us look at who else has been saying a bit about the last Budget. There are those huge apologists for National like Vernon Small who stood up and stated: “English can also take a bow for keeping a rein on spending”. Well good on him. I must admit that I never expected to read that from him. Then there is that other huge advocate for the National Party the  
Dominion Post  
whose editorial of 21 May stated: “the Budget is a coherent document that should encourage saving and investment and discourage consumption and speculative investment in property.” It was great to see some moves being made to pull back those people who are making the sly best of good times by hiding income in property investment and in trusts. 
A hell of a lot of us have worked for wages all our lives. We are completely frustrated when people who are employed by a family trust send their kids off to university and their kids can get a student allowance and all the rest of it while people on middle incomes working for wages working say as a Government servant and working damned hard cannot do that. I am pleased to see that this Government has been able to tighten a loophole on that. It surprises me that members opposite who had 9 long years in which to close that loophole and who hate everything that those people stand for never ever had the foresight to do that very simple thing. 
It was wonderful to be in this House last Thursday to hear the Minister of Finance deliver his Budget and to hear the speech that was delivered by the Prime Minister after it. The Budget was a celebration of all that Kiwis aspire to. It was a celebration of 18 months of a successful Government in this country and we can see the reception it has received. 
It was sad to look at the reception on the other side of the House. As we looked along the faces on the front and middle benches on the other side of the House what did we see? We saw some members who thought: “Well I have been here for a few years and I was really hoping I would be able to beat the hell out of the Government on this because we promised that the Government would put up a Budget that would encourage only the wealthy. And here we are absolutely stuffed because 75 percent of wage earners in this country now pay only 17.5 percent tax in the dollar.” That is the top rate and members opposite were thinking: “I do not know whether I can stand another 18 years of this in Opposition.” because that is what they will be relegated to and they know it. 
It will be very very interesting to see who chucks in the towel over the next few months. As we lead up to an election year next year which members on this side of the House are all looking forward to it will be incredibly interesting to see which members will throw in the towel and say that they have had enough. I reckon we can speculate as to whom those members will be. Some members are looking forward to the next election about as willingly openly and keenly as they are looking forward to the release of the expenses budget for the Labour Ministers who were in Government just a few months ago. We are looking forward to that. 
The New Zealand public are looking forward to another 20 years under a National Government knowing that they can achieve the aspirations that they have held for so long. Those people who were oppressed under the left are looking forward to standing up with their chins out and their chests out and achieving under a National Government. Thank you. 
Hon STEVE CHADWICK (Labour) 
: 
 We allowed Chester Borrows the member opposite who has just resumed his seat to walk along the sunny side of the street for a wee while. But we have been out there walking the streets. We are in Opposition we are out there walking the streets and we are hearing some very interesting things coming out of the shadows on the street. People are now coming up to us saying: “We thought that it was a bit of a jammy Budget. It was pretty good. It was spread around tax cuts tax cuts tax cuts.” which is all that National knows to do as a way forward to an aspirational future. But now not even 1 week later people are saying: “Hang on a minute. I have got out the calculator and it does not quite work out. It will all be wiped out by inflation increases. My little bit of jam will have a bit of bread splattered on it and it will be wiped out on the bench before us.” 
Also on the dark side of the street which we remember on this side of the House people are already starting to see that there could be asset sales. Only 1 day after the Budget after the Government had had its day in the sunshine Bill English came out and said that the Government was now getting geared up for asset sales with Kiwibank being the first off the rank. Then the Prime Minister told Government members not to do that. He told them not to get too keen or carried away and not to bask in the sun for too long and get too puffed up. That is especially good advice when we hear Chester Borrows say that he thinks this National Government will be in for 20 years; I think that 20 years is more than the world could bear of a conservative Government that has no plan and no economic strategy other than tax cuts tax cuts and tax cuts. 
I am very pleased that the Minister for Senior Citizens is in the House today. 
Hon Ruth Dyson 
: Who? 
Hon STEVE CHADWICK 
: Mr John Carter who is sitting next to the whip. We have been at a Grey Power meeting in Rotorua today. It was a big Grey Power meeting and we were very very positively received. The senior citizens passed a resolution unanimously—not one vote against it—that they are adamantly opposed to asset sales. The Government needs to hear that message after its members have walked along the sunny side of the street because the storm clouds are brewing. 
The senior citizens also realised that this sale is a direct attack on Kiwi wealth. It is a direct attack on the Kiwi dream that we all as Kiwis want to be proud of. They were most unhappy today. This Budget is a bit of a case of “test it and see”. It is wait and see. By this time next year—which interestingly enough is when the Rugby World Cup is coming up—everybody who goes to the supermarket will start to realise what the impact of these tax cuts on their back pocket will be. They will see that the price of bread goes up the price of milk goes up and the price of cheese goes up. In fact a lot of people got only the price of a litre of milk in their tax cuts and they will realise that that has been wiped out by inflation. 
So it is a bit of a wait-and-see Budget. You know people will wait and see. But I believe that by this time next year those who have done their reckoning will also realise that any gain will be wiped out. But worst of all this is a Budget of broken promises. I think New Zealanders are starting to see that with this smile-and-wave Prime Minister. His front-bench Ministers are doing the damage as he goes around the country smiling and waving. He has broken promise after promise. 
He said he would not borrow for tax cuts. He said: “I would never borrow for tax cuts.” Well what is $1 billion? What is $240 million this year to pay for the tax cuts that were given on the one hand? He also said that GST would not rise. Well it has risen. The senior citizens at the Grey Power meeting today got that message about broken promises. He also said there would be caps on public services and he has already broken that promise with several cuts to public services. They are front-line cuts; they are not just managers. I will get on to that matter in a minute. 
Also I say to Mr John Carter at the Grey Power meeting today senior citizens heard that rates rebates have been cut by $58 million and they were most unhappy about that. This is an interesting one: they also learnt that senior citizens’ ability to borrow a student loan has gone. Many of them really enjoyed keeping intellectually engaged and now they cannot afford to do that any longer. We also learnt that there is no contract in Rotorua for elder abuse and Age Concern is very very worried about that. I ask what the Minister for Senior Citizens has done about that. Elder abuse contracts need to be given around the country. These seniors are very very worried about what this Government is doing. 
I will talk about the impact from the cradle to the grave. I feel that what the Government has done with young families is very very sad. We believe in education and we believe in skills development and a skills strategy which was missing from this Budget. But it is the impact of the cuts of $250 million on our early childhood education with the 20 free hours policy for parents that is most cruel for families. An average family with two young children—and the member opposite talked about them having aspiration and hoping that they get into their own home—will benefit from this only initially and then will be $55 a week worse off— 
Hon Nanaia Mahuta 
: How much? 
Hon STEVE CHADWICK 
: Families will be $55 a week worse off if their children are in early childhood education. It is quality early childhood education; it is the building blocks for kids going to school ready to learn rather than this aspirational drive that the Government had on numeracy and literacy. Why was the first rung of the ladder taken away from young parents who were trying to get on in society by cutting $250 million out of quality teacher-led 20 free hours’ early childhood education? I think that is an indictment on how the Government values children and families. It is a disgrace and parents are out there now working it out on their little reckoner on this Budget and saying they will be $55 a week worse off. Early childhood education is the beginning building block for children to learn and get on in this society. 
So where will the money come from? This huge cut to early childhood education funding means that parents will have to pay for it. They will have to meet the shortfall themselves from their own back pocket as well as meet the shortfall on the food they need to put on the table to grow healthy children and keep them well and engaged in learning. So I feel that that is absolutely appalling. 
I remember when we brought in the measure that teachers before children in early childcare had to be qualified and we were not popular for that. But I congratulate Trevor Mallard on saying that children are our most vulnerable and therefore deserve the best in front of them. Every teacher in front of them in early childhood education knows that parents will pay for it—$55 a week—and when members go out there and meet young parents in their constituency they will realise that this was an appalling cut. 
I will say a bit about arts. I am the arts culture and heritage spokesperson and I hear Government members asking what we did for 9 long years. Well Helen Clark led a cultural recovery in the arts and Chris Finlayson is really now at the stage of palliative care for the arts. There is nothing new no new ideas. He has taken a little bit of money from NZ on Air and the Film Commission and put that over to save the Film Archive. Great! But that is not new money. That is money taken off the creative industry to prop up the Film Archive. It should have been new money because those are New Zealand stories that we must keep in safekeeping for our children and our grandchildren. 
The other thing that he has done for the arts—and there has been no crowing about the arts—is to bring in $5 million. Where has it come from? It has not come from an increase in baseline funding but from lotteries. So he has $5 million from lotteries which is a bit of a creative switch across to disburse to the creative community and that is the only funding that the arts culture and heritage budget got. I do thank the Minister which is not common for the $100000 for the protection of Pukaki a taonga that is of special heritage value to us in Te Arawa. 
It is a difficult Budget it is one that will tell its story next year and I think then the chickens will come home to roost. 
Hon JOHN CARTER (Minister of Civil Defence) 
: 
 I move  
That this debate be now adjourned. 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 68 
New Zealand National 58; ACT New Zealand 5; Maori Party 4; United Future 1. 
Noes 53 
New Zealand Labour 43; Green Party 9; Progressive 1. 
Motion agreed to.