Budget Debate 
Budget Debate 
[Volume:673;Page:19073] 
Budget Debate 
Debate resumed from 19 May on the Appropriation (2011/12 Estimates) Bill. 
Hon GERRY BROWNLEE (Minister for Canterbury Earthquake Recovery) 
: 
 It is my great privilege to spend a few minutes this afternoon speaking about Budget 2011. I shall reflect on how well this Budget has been received by people throughout New Zealand not only by those many commentators who have gone public with their support for this Budget but also by the tens—even hundreds—of thousands of New Zealanders in their homes who have been advantaged by this particular Budget. 
One of the biggest spends in this Budget was the commitment of some $5.5 billion to the rebuild of Christchurch. The devastation caused by the earthquakes has been well rehearsed in this House and comes as no surprise—[ 
Interruption 
] 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. It is partly about the disruption but I wonder whether the disruption might be caused by your wearing a rugby tie. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: No that is a frivolous point of order Mr Mallard. I call the Hon Gerry Brownlee. While I am on my feet I urge members who want to have private conversations to please leave the Chamber. Thank you. 
Hon GERRY BROWNLEE 
: I will not say anything other than that rugby tie you are wearing is not half as fetching as the scarf you often adorn yourself with in this House. Although the scarf itself is not a cause of disorder it is most certainly the cause of distraction at various times. 
Everyone knows that Christchurch is facing a degree of difficulty at the present time. That is significant. For many homeowners it is particularly difficult. The Government has made commitments to ensure that we get people back to close to a 3 September position as quickly as possible—albeit that will prove somewhat difficult. 
The thing that matters most to the vast majority of New Zealand families is the ability to purchase their family home and to hold that ownership. One of the pleasing things about this Budget is that it will ensure that mortgage rates for families in New Zealand remain low for a much much longer period of time. Just a short time ago—just prior to the 2008 election in fact—interest rates were well above 10 percent. Over the last 3 years we have seen those rates drop back to just over 5 and up to 6 percent. For an average family on an average mortgage that means the savings are about $200 per week—quite a significant amount. That is one of the reasons why I think New Zealanders as a whole have embraced this Budget as being particularly good for them. There was no lolly scramble in this Budget no attempt to buy off small pockets of the community with various little pet projects and other such things. The consequence of having a fiscally strong budget is the ability to deliver mortgage savings for New Zealand families. 
One of the hallmarks of the last 2½ years of the National Government has been the willingness to do what is right in the interests of the widest number of New Zealanders. We came off the election trail after the 2008 election to find that the New Zealand economy was in serious decline. As we all know despite what Mr Goff says the world was in economic meltdown. There were—and there are—ongoing effects from that meltdown. To suggest as Mr Goff did that it was all over in 2009 is simply wrong. We have a situation where the Government has had to hold up the New Zealand economy via a significant borrowing programme. One of the key features of this Budget is that from the middle of next year weekly borrowing will reduce by some two-thirds to the point that we will be looking at surpluses at a much earlier time than was previously forecast. The point about that is simply that any debt that is carried by a Government is equally shared by anybody who is a contributor to the economy. The concept of debt reduction of a Government making sure that its expenditure is not excessive while at the same time ensuring that we do not dislocate the economy so as to cause social disruption I think is something this Government can be very very proud of. 
One of the consequences of this Budget is the effect on incomes. Certainly the previous Budget which of course flows through into this one saw that two-thirds of the tax reduction was shared by all of those people whose incomes are under $48000. What does that actually mean? It means that most taxpayers now are paying about 17.5 percent as a tax rate. So we have I think an economic picture developing of a country that has high growth rates and low taxation rates. Ultimately that will lead to higher wages and higher incomes for New Zealanders. There is no reason to assume this country will be any different compared with other countries that have experienced the same sort of situation. 
One of the interesting things about the New Zealand economy and its growth will be the Christchurch effect. There are those out there who suggest that we may see in that part of the country some depopulation and various declines in economic activity. But I am full of admiration for the large numbers of people who have stayed in the greater Christchurch area who continue to operate their businesses who continue to keep their workplaces going and who continue to live their family life in those circumstances. One thing we can all be certain of is that as the $20 billion - plus that is required to repair Christchurch is spent over the next 5 years—the good news about that is that $20 billion is available and will flow through—we will see a considerable increase not only in economic activity but also I suspect in the population of the greater Christchurch area. That will flow through to the rest of the New Zealand economy. The amount of $20 billion is about 10 percent of the country’s GDP. Concentrating it—even over a short period of time—as a one-off in a small area of the country will result in significant economic growth. 
One of the confusing aspects of this Budget was the response to it from the Opposition. I have to unfortunately go through some of the contradictions that are coming through from our opponents in this particular circumstance. First we have Mr Goff’s inexplicable comments in which he is highly critical of the previous GST increases highly critical of the previous tax reductions and now highly critical of almost everything in this Budget including KiwiSaver changes and many other aspects one of which is the shared-ownership model. Not once has he said that he would reduce GST other than on a certain product line that is subject to an enormous amount of price fluctuation on a seasonal basis not once has he said that he would increase taxation although everybody on that 17.5c tax rate desires a higher income in time and would not want to be unduly penalised for their success by picking up a higher tax rate imposed by any future Labour Government and not once has he indicated what a Labour Government’s attitude would be to KiwiSaver changes. All of those comments we have heard are either Mr Goff contradicting positions or wanting to keep his options open. Second we know that in many cases on all of those issues there has been a counterview from his finance spokesman David Cunliffe and we know that is just part of the ongoing difficulty that the Opposition has in this House. 
All in all I think this Budget has delivered for New Zealanders has set forth a path to lower Government debt and has put us back into a position where the Government will be running surpluses much sooner than was expected. Importantly it makes a commitment in health and education and in other social service areas that New Zealanders deeply appreciate and expect. 
This has been a very good Budget that has been well received by New Zealanders. I am delighted to support it. 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
: 
 Malo le soifua lau afioga Mr Assistant Speaker Robertson. I just greeted you in my native tongue—Samoan. It is Samoan Language Week so I greet you in Samoan. 
Before I talk about Budget 2011 I want to touch on an incident that occurred in my electorate of Maungakiekie. It was a gas explosion on a worksite in Onehunga where I reside and work. This tragic event occurred last Saturday morning at approximately 7.30 and sadly a Watercare worker Philomen Gulland passed away. She was tragically killed and other workers were injured including Ian Winson an engineer with Watercare Services who was seriously injured. Certainly our prayers and hearts go out to the families of those who have been affected by this tragedy. 
As we speak I have reports from the site that tests are continuing in terms of gas deposits. Those involved are looking forward to proceeding with the important infrastructure work that is being conducted in my electorate. I spent some time at the site over the weekend and I thank Steve Lakin and Murray Binning the fire chiefs who were in charge of the situation; George Fraser the police superintendent in charge; and representatives from HEB Construction as well as Watercare Services who were extremely helpful in giving the local representatives myself and others including the Mayor of Auckland the right information in order that we could communicate with our constituents. A very good job was done by our emergency services. 
Budget 2011 was about building our future. It was about building prosperity in this country which suffered in the 9 long years of the previous Labour Government. It is about building jobs and it is about building a brighter future. 
Hon David Cunliffe 
: Why is unemployment going up? 
PESETA SAM LOTU-IIGA 
: “How does this happen?” Mr Cunliffe asks. Well it is about returning the economy to surplus by 2015 and that is a year sooner than forecast last December. The reason we are returning to surplus earlier is the fiscal prudence that this National Government has demonstrated over the last 2½ years. 
But the Budget is not all about rosy forecasts. It is as the honourable Minister Gerry Brownlee alluded to about reconstructing our second-largest city. The Government is committed to spending $5.5 billion as well as $3 billion in ACC funding and Earthquake Commission funding to reconstruct our schools and our infrastructure and to provide housing and trades training for the people of Christchurch. This Budget also signals an investment in front-line public services. We have not spared the expense on health and education. But this Budget is also about looking at the programmes that the previous Labour Government put in place and looking at how we can better streamline KiwiSaver how we can trim Working for Families and how we can make student loans more workable and sustainable in the long run in order to reduce the need for the Government to borrow. 
As the Prime Minister alluded to earlier this afternoon in question time this Budget is also about providing investment opportunities for mum and dad investors by extending the mixed-ownership model to four State-owned energy companies as well as extending the programme that has already been put in place for Air New Zealand. In the health area—and obviously the health portfolio has been well looked after by the Hon Tony Ryall—we are delivering an extra $2.2 billion to public health services. Although we are balancing the books and reducing Government debt we are committed to providing the health services that New Zealanders demand and expect. Those services will be given to New Zealanders in the next few years. 
What are the programmes that have been extended? Maternity initiatives have received $54.5 million to improve the safety and the quality of maternity care in this country. That is a welcome initiative. Certainly having experienced fatherhood recently I know that the care and the expense that is taken in our hospitals is second to none when compared with the services provided around the world. 
We have provided $80 million to widen access to medicines and $68 million for more elective surgery. In Greenlane in my electorate the Minister of Health has opened more elective surgery facilities that will cater for 4000 extra operations in the years to come. Funding for disability support services has been increased by $130 million and we will continue the programme that was set out by the last Labour Government in terms of general practitioner visit subsidies for the elderly and children. We are certainly proud to continue with that. 
We know that education is the cornerstone for economic growth long term and we know it is the cornerstone we must provide for our children in the coming years. We know that early childhood education is important and we have provided $1.4 billion extra in operating capital funding for education. Specifically and importantly we are focusing on those with high needs. So $550 million will be provided to increase participation rates for Maori and Pasifika families as well as low-income families. That is to be applauded. 
I have visited a number of early childhood centres not just in my electorate but across the country and certainly in South Auckland. They are demanding that the Government respond to the needs of those communities. Certainly one of the best things we can do for low-income communities and high-needs communities is to provide early childhood education services that will give children the best start to life. 
We have also provided for infrastructure spend which will provide the networks the infrastructure—the pipes if you like—for our future learning. As we indicated 2 weeks ago we are committed to the ultra-fast broadband roll-out not just in our cities but across our regional and rural areas. That will be a $1.5 billion investment over time. If Labour was in power it certainly would not commit to this investment and it certainly would not have a plan to bring about this change in a convenient and appropriate way. 
We are also providing infrastructure for KiwiRail. We know that KiwiRail was a mess when it was first bought but we are continuing our 10-year turn-round plan and that will bring about some change to KiwiRail bring some business rigour to its operations and will hopefully in 10 years bring about some commercial gain and some return on the investment we are putting in. 
Finally I tell members that we are looking forward to better public services and $980 million of savings over 3 years. If members do not believe me they should listen to the comments of Age Concern which says that Minister Ryall is committed to protecting and growing our public health services and it welcomes that assurance. 
The feedback on this Budget in my electorate of Maungakiekie has been hugely positive. People welcome the Budget. They welcome the Government’s prudence in terms of its fiscal approach and they certainly welcome the Government’s investment in services such as health education and infrastructure. This Budget has been well received in New Zealand. Thank you. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Talofa lava. I join with the previous speaker Peseta Sam Lotu-Iiga in welcoming Samoan Language Week this week. 
National MPs must think New Zealanders are stupid. They stand up and describe that they are allocating new money to this or that programme and they assume that Kiwis do not understand that the new money is less than the cost of inflation to those votes and less by a considerable margin than what the previous Labour Government gave to them. Take health. The Government has budgeted roughly an additional $500 million in this year’s Budget. Health used to get between $700 million and $800 million extra under Labour. Education used to receive an additional $400 million to $500 million under Labour. It received around half that amount this year and that is before one takes out the additional KiwiSaver costs which are being taken from within departmental baselines. This is a subzero Budget as Phil Goff said. It is not a zero balance; the Government is taking out about $1.5 billion from front-line public services that New Zealanders need. Let us have no more of those comments from the other side of the House. 
Labour has no confidence in this subzero Budget because it hurts and does not help New Zealand. It is full of rosy growth projections and rubber numbers and it leaves unaddressed the key and most crucial structural questions that need to be addressed in order to turn this country’s economy round. It may surprise some New Zealanders to hear the Labour Opposition say we agree that debt is too high and must come down but what matters to New Zealanders is that that change is managed in a sensible and balanced way so that we can get New Zealanders back to work grow our savings and take care of the most vulnerable at the same time as we reduce net debt over the medium term. It is becoming increasingly clear in this most crucial of all election years that New Zealanders will have to turn to the Labour Opposition for leadership on those questions. 
Today I will cover three key issues around this Budget. Firstly what is the nature of the problem it is trying to solve for our country? Secondly what does it propose to do and what results does it project? Thirdly what would Labour do in broad terms if we were on the Treasury benches this year? 
In terms of the first of those issues what the Budget tries to achieve well if we take the Government at its word its overriding priority is to move the economy out of debt by running a fiscal surplus which it says it can do a year earlier than had been projected. But that ignores some of the other hugely important symptoms that reflect the disease in our economy. Firstly the unemployment rate is 6.5 percent. That is high by New Zealand standards and it is nearly double the 3.4 percent rate under Labour. Worse still 271000 New Zealanders say they are jobless and many of them have not even registered as being unemployed. Prices are rising faster than wages and New Zealand families are paying the price. The rate of wage growth was 1.9 percent in the last year compared with an inflation rate of 4.5 percent a food price inflation rate of 5.1 percent and an increase of over 10 percent in petrol and fuel costs. But New Zealanders are not stupid; they feel worse off because they are worse off. The difference between those numbers is a real-term cut in every New Zealander’s standard of living. 
Behind the numbers are poignant stories that have been made available to members of the Opposition like that of the pensioner who cannot afford to use milk in her tea and who saves a little bit for special occasions when she has visitors or that of the family with three boys the youngest of whom is calcium deficient. They tell me they cannot afford to buy milk at the supermarket. There are pensioners huddled in blankets in damp cold flats because they cannot afford to heat them with the price of power rising as fast as it does. There are babies and children suffering respiratory disease because mould is growing up the walls in State houses and this Government has cut the Budget for retrofitting them. 
The Government will tell us that it has no choice but to cut Government spending but it has made choices. It made the choice to give $23 billion worth of tax cuts in the last two Budgets and run a $16 billion deficit now. Those were real choices in order to give major tax cuts to the New Zealanders who least needed them while other Kiwis were suffering. 
Labour believes it has a credible and balanced plan to get debt down while getting New Zealanders back to work and getting our savings rate up. But what does the Budget propose and how is it going? I say the Budget numbers are not credible. The $380 million borrowing requirement that the Treasurer is trumpeting has been proven to be self-inflated. Treasury documents show that the Government is choosing to borrow an extra $5 billion—$100 million a week—because it says perhaps it is getting a better deal. Or has that been done simply to frighten New Zealanders into thinking that radical surgery is required by pumping up the numbers this year and taking them down again before the election? The rosy growth forecasts in the Budget are just so incredible that they have convinced nobody particularly not Standard and Poor’s which has refused to take New Zealand off negative credit watch. 
Commentators believe that the wage growth projections are rubbish when the KiwiSaver cuts are taken out. They note that the revenue forecasts of Treasury and of the Inland Revenue Department are nearly $1 billion a year apart—$3.8 billion over 4 years—and the Government has booked the higher number. The commentators note the billion dollars in unspecified cuts—cuts of a billion dollars with no clue given to the public of where those will come from. There are only two possibilities: either the Government does not know because it has not figured it out or it does know and it is not being frank and honest with New Zealanders because it does not want them to know which services are being cut before they have the chance to vote on that. 
There is all that pain and all the cuts to health to education and to KiwiSaver. Ten dollars a week has been taken off the KiwiSaver member tax credit and another $3 or $4 a week has been lost from higher employer taxes being passed through to the employee. There is the loss of every New Zealander’s birthright in the selling of our assets. The cuts to Working for Families will affect over 50 percent of all the families who receive Working for Families payments and there will be costs to families on $80000 a year of $50 a week by 2015. 
There is all that pain but what is the gain? Let us judge that question by looking at Treasury’s own numbers. Does the Budget build savings? The Government may have broken its promise in cutting KiwiSaver by 1 July this year but extraordinarily net international debt the sum total of the country’s liabilities will actually go up—let us get the numbers right—from 78 percent of GDP to 85 percent of GDP by 2015. Does the Budget build a stronger export-oriented economy? No. Nobody believes the figure of 177000 new jobs that the pixies at the bottom of the garden are to create. In fact the Budget documents show that the current account deficit will blow out again—let us get it right—from around 4 percent of GDP in 2012 to around 7 percent of GDP in 2015. There will be no more savings no more exports and no more jobs. There is no solution to the country’s ills. The Budget hurts but it does not help. 
What would “help” look like? What would a good Budget do? Labour has a credible balanced plan to turn this economy round. The plan will be fully costed and it will stand on four pillars. Firstly we will build a strong export economy using economic development using innovation and skills and changing monetary policy to lower the outrageously high exchange rate. Secondly we will increase savings and productive investment. We will not sell our assets or our land; we would only owe more to foreigners when we paid the rent to them in future. We must own our own future. That is what Labour will help New Zealand to do. Thirdly we will help all New Zealanders to get ahead by addressing the cost of living. We will take off the GST from fruit and vegetables and make the first hundred dollars a week of earnings tax-free. We will lift the minimum wage to $15 an hour and pay for it with a credible tax plan that would leave the incentives for productivity stronger not weaker. Fourthly we will reduce debt as fast as the Government proposes to do over a 10-year to 15-year period. All of that can be done within a credible and balanced plan but that is the opposite of what is being offered by this Government in a Budget that hurts but does not help. 
Hon KATE WILKINSON (Minister of Conservation) 
: 
 It is an absolute pleasure to speak in support of the 2011 Budget which will help New Zealanders and will help Cantabrians. This year’s Budget is about building faster economic growth around higher national savings setting a credible path back to surplus and repaying debt and rebuilding Christchurch and Canterbury over the next few years. In particular I am delighted to be able to head home to Canterbury and to tell the people of Canterbury that this Government has delivered on its commitment to build their region. This Budget is significant for Canterbury but not only is it significant for Canterbury; it is significant for New Zealand and New Zealanders. However for me personally it is particularly significant for Canterbury because this Budget delivers $5.5 billion for the new Canterbury Earthquake Recovery Fund. 
Coincidentally and interestingly 5.5 was also the force of Monday morning’s aftershock in Canterbury so 5.5 seems to be a recurring figure. The aftershocks keep coming the nerves keep rattling but we will keep supporting Canterbury because we are delivering $5.5 billion for Canterbury and that is not a sum to be scoffed at. It is no small sum because we are talking about spending on local infrastructure spending on social services and spending on roads water schools hospitals welfare support and wage subsidies. There is $5.5 billion going directly into the region and this money will bring with it employment. It will see tradesmen and support services flowing into the region with the locals being the first to pick up the jobs they need. Christchurch will be the construction capital of the country and this National Government is helping to build it and rebuild it. We are talking about tens of thousands of jobs starting this year. Rebuilding Canterbury after two—and now some more—nasty earthquakes will be a long and difficult task. For many the grief remains very real and very personal but we move on and rebuild our lives and our region and the Government is committed to providing the resources to do that. 
To break down the $5.5 billion a little bit more: $1.1 billion has already been allocated for local infrastructure $85 million for assets such as schools and hospitals and $521 million for welfare and emergency support with $3.2 billion remaining in the back pocket for future decisions on issues such as land remediation and as needed for further infrastructure. 
It goes without saying that everyone would prefer that we had never had to endure either the September or the February earthquake. We would love to spend a sunny autumn day walking down Cashel Mall and eating lunch in Cathedral Square—both now in the red zone—but our reality and our normality have changed and now we get on with what needs to be done. This Budget delivers the necessary tools and resources that will see Cantabrians getting back their lives. 
I repeat that $5.5 billion is allocated for the Canterbury Earthquake Recovery Fund to provide certainty for rebuilding Canterbury—no small sum. Earthquake bonds are being established to help Kiwis fund the recovery and provide investors with a new savings option which is a win-win. The Budget provides 4500 places for construction-related training including 1500 new places worth a total of $42 million $25 million for the Canterbury Earthquake Recovery Authority over 2 years to help the authority lead the rebuild and $10 million for social service agencies and counselling support for Cantabrians rebuilding their lives. The Canterbury Labour MPs—shame on them—will be voting against this. They will be voting against $5.5 billion going into our region which needs it so much. 
I remind the House what has already been committed and spent in respect of Canterbury: 63000 Cantabrians and their families have been supported by our $200 million wage support and job-loss cover package $6.8 million to help earthquake-affected Canterbury businesses get back on their feet $4 million to help exporters reassure partners that Christchurch is open for business—and it is—and $625000 for Christchurch and Canterbury tourism. And the Canterbury Labour MPs will vote against it. 
But this Budget does much more than that. It sets the country as a whole on the path it needs to be on. We cannot keep borrowing as we have been. It is not sustainable. We know it businesses know it and the public know it. The only people who do not know it are sitting opposite because under their plans we would end up spending $45 billion more in the coming years and that would all be paid for by hitting New Zealanders with more and higher taxes. Stuart Nash even wants to introduce a tax on turnover. Well that will work! Labour’s emissions trading scheme alone would end up costing farms about $35000 to $40000 per farm to operate. What would that do? It is quite simple. It would put the prices up. It would up the price of milk butter cheese meat and bread. Those prices would go up because of Labour’s plan. 
What is Labour’s other plan? It is to increase the minimum wage to $15 an hour. What would that plan do? It would cost up to 6000 jobs. On day one up to 6000 jobs would be gone because Labour ideologically wants to increase the minimum wage to $15 an hour which we would all love to see but which is not sustainable. It is pure ideology—6000 jobs down the gurgler just like that if Labour had its way. 
But it gets worse than that because if Labour had its way it would also throw away the 13000 people who were assisted into jobs by taking advantage of the 90-day trial period. That is the benefit of the 90-day trial period to date. So Labour’s plan is to get rid of 20000 jobs—yet Labour members say they care about the working person. It is absolute rubbish. They have no plan. They do not know even how to spell the word “sustainable” let alone what it means because if they did they would have more sensible policies than they have. 
This Government has instead produced a realistic and pragmatic Budget which aims to have us back in surplus by 2015. That means getting spending under control putting a curb on the “good time” policies that were putting this country’s finances under huge strain and directing money into the areas where the public need it. Health gets $2.2 billion in new spending over the next 4 years. Just as some examples: $68 million is spent on more elective surgery—and that has to be good for the country—$54 million for maternity care $20 million in medicines and $18 million for 40 more places in medical schools. Education gets $1.4 billion including $550 million to increase access to early childhood education. 
This is a remarkable Budget an absolutely remarkable Budget. It is an austere Budget but it is what New Zealand needs to bring it back on to a sound economic footing after the devastation the previous Labour Government left us some years back. Annual inflation when Labour left office in 2008 was 5.1 percent. It is now 4.5 percent. Our tax reforms mean that 75 percent of New Zealand taxpayers now face a top marginal rate of only 17.5 percent. Average after-tax wages have increased by 7.1 percent in the past year—faster than the rate of inflation—and in real terms by 4.5 percent. Increases in after-tax wages have flowed through to superannuation for our older people. Superannuation has increased $166 a fortnight for a married couple since September 2008 an increase of almost 20 percent. This is good sound economic management. This is a great Budget. This is a particularly great Budget for Canterbury and I would be ashamed if I were a Labour Canterbury MP having to vote against it. 
Hon DAVID PARKER (Labour) 
: 
 I could take 10 minutes debunking some of the spurious claims made by the previous speaker the Hon Kate Wilkinson but I think I can do it by addressing one of them. That was the economic illiteracy shown by the Minister when she claimed that asking farmers to pay for 10 percent of their agricultural emissions the cost of which is currently borne by taxpayers and other sectors of the economy would put up the price of milk. She said that increasing New Zealand costs of farmers by a small amount would put up the price of milk when Fonterra and the Government have recently been on record saying the price of milk is set by the international price paid for milk and other commodities. One cannot have it both ways I say to Ms Wilkinson. The reality is that aside from some question as to whether there is monopoly pricing New Zealand’s milk price is set by the international price for milk. 
This Budget was an important Budget for this country because it came at a time when New Zealand needed a Government to lead it to build our nation and our economy. New Zealand really is at a crossroads. This election will provide a stark choice for electors because they will see on the basis of this Budget that National is taking them in one direction and Labour would take them in another. The choice is very stark. On the one hand we have an outcome from a National Government that says pretty much that the approach should be “easy go”. The Government will cut a bit of spending here but other than that it will leave the settings of the economy pretty much unchanged and that will do. We might have to sell a bit of the family silver and we will end up not owning many of our productive assets. We will sell a bit more of our land and our dairy farms—the Government is not too worried about that. It will sell off half of the energy companies that are currently owned by the Government and similarly it will sell Air New Zealand. National would have us believe that that approach will lead us to nirvana. 
On the other hand we have the Labour Party which is saying that it is time we accept that New Zealand needs to act differently and that we need to earn our way in the world by exporting more goods and services. That is my message today. If we want to have some hope that we will have a country that grows in prosperity in the future we have to change the settings of our country in a way that leads to our exporting more goods and services. The reason for that is quite simply that for some decades now we as a country have spent more than we have earned. We have run current account deficits we have borrowed money to fund consumption and as a consequence we are in a worse position than a lot of other countries and we are in a worse position than we should be. In order to stop that happening again we have to change the economic settings of the country otherwise the same thing will happen again. It is no secret. Like every other Western country in the world New Zealand binged on consumption fuelled by rising levels of private debt. It is true that because of the prudence of the Labour Government between 2000 and 2008 we substantially reduced Government debt—very substantially. Otherwise New Zealand would be in the position of Greece Portugal Spain Great Britain Ireland—all those countries that are in a very dire position at the moment. 
For a start let no one be fooled. The truth is that Labour was contrary to the rhetoric of National fiscally responsible. We always have been as we see when we look at our history. It was National that over that period opposed every Budget surplus and called for unaffordable tax cuts that would have further fuelled inflation asset bubbles and debt bubbles. It is National that since the election has had a failed economic policy for this country that is largely based on income tax cuts 42 percent of which have gone to the top 10 percent of the population. It is that economic prescription that has led to us as a country this year facing a $16.7 billion deficit. 
It is clear that the Government has only one major plank to its economic policies and that is tax cuts. Tax policy is important. I do not deny that tax policy is important. But economic policy has to be more than tax policy and it certainly has to be more than tax policy with those income tax cuts weighted to those who already earn the most. It is plain that the economy has stalled and the reason there is little good news in terms of new export sectors which we need in this country is that the Government has no economic plan other than tax cuts weighted to those who already earn the most. 
The Budget makes for dim and dismal reading. It projects that the current account deficit will rise to over 6 percent and in fact close to 7 percent over the next 4 years. The Government is trying to convince New Zealand that we are now in such a hole that we should sell the family silver—half of all of the electricity State-owned enterprises and Air New Zealand—to fill the hole. But the reality is that changing who owns those assets that already exist does not change the output of the New Zealand economy. Again it shows how bereft the Government is of vision. 
I say that after 3 years of management—I would say mismanagement; let other people assess whether it is mismanagement—by the National Government it is fair to ask Government members whether they are doing OK. What measures should we use? The measures they chose themselves! The first was closing the wage gap with Australia. Is that getting better? No it is getting worse. The second was the promised aggressive recovery from recession. That has not occurred despite record prices being paid for our mainly primary produce exports in buoyant economies in Australia and China our major trading partners. The promised step change in the economy has not happened; in fact it has disappeared from their language. 
There is one thing I agree with the Hon Bill English on. He says that New Zealand’s total indebtedness to the rest of the world is the metric upon which we should measure our long-term success. He says it is a serious problem and I agree. What does this Budget show? This Budget projects those figures out for another 4 years. That is by the end of this Budget document National will have been in power if it has its way and is re-elected—which we obviously disagree with—for 6 years. What does the Budget project? [ 
Interruption 
] It projects that every year from here on in New Zealand’s net investment position gets worse I say to Jacqui Dean. Every year. Currently New Zealand’s net international indebtedness—that is everything we owe to the rest of the world less what they owe to us—is 78.6 percent of GDP forecast for this year. [ 
Interruption 
] Every year from here on in in the forecast period it gets worse and worse I say to Jacqui Dean. By 2015 in the words of the member’s Government’s own Budget New Zealand’s net international debt rises to 85.3 percent of GDP. In other words using the Government’s own predictions and assuming National wins the election it gets worse from here on in. It really is fair to question the Government’s management of the economy. 
The Labour Party agrees with the New Zealand Institute in its report  
A goal is not a strategy 
. New Zealand in order to lift its economic fortunes has to do more than sell primary produce. Primary produce—forestry agriculture and aquaculture—are all very important and will be the mainstay of New Zealand’s economy for a while yet; indeed for ever. But New Zealand cannot get ahead on those exports alone and that is where we need policies that will drive the breadth and value of our exports. That is the sort of economic policy that Labour is bringing forward. 
Already we have more policy out there in terms of substantial change to economic settings than National has after 3 years in Government. Labour has proposals to change monetary policy in a number of ways that will improve the outcome for New Zealand exporters. Do members know that New Zealand’s currency is more speculated in and more traded than the Russian rouble the Indian rupee and the Brazilian real? Those economies are all massively bigger than New Zealand’s yet our economy is speculated in more in part because of our monetary policy. Labour would change our monetary policy. 
The other thing we need to have a burgeoning new export sector is depth in capital markets. Therefore we need more improvement in savings to have more investment. How can we do that if KiwiSaver is cut? We need fair tax systems not income tax cuts weighted to those who are the wealthiest and a number of other changes including a research and development tax credit which we have already announced. 
Hon HEKIA PARATA (Minister for Ethnic Affairs) 
: 
 Tena koe Mr Assistant Speaker Robertson. Huri noa i to tatou Whare tena tatou i tenei ahiahi. I am pleased to take a call on Budget 2011. I am pleased because this Budget speaks to New Zealanders as smart people. New Zealanders understand that this Budget is a Budget of its time. We are still dealing with the impacts of a recession. We are still dealing with the consequences of many of the decisions that were made by Labour when in Government. We are committed to paying down debt and this Budget is very clear about that. It is unambiguous that that is a significant target of our Government. 
New Zealanders are smart people and they understand the analogy that running a Government is the same as running a household. There are only three ways that that can be tackled: find savings in the way that one operates borrow and make opportunities to create new wealth. This Budget addresses all three. New Zealanders know that continuing to borrow at the level we are at the moment is not sustainable for a meaningful long-term future. This Government is about a meaningful long-term future and that is why in the 2½ years that National has been in Government Labour and the country have been able to see that we are prepared to tackle the systemic and structural challenges that face us which Labour was unable and unwilling to do when it was in office. 
We understand that long-term improvement for this country and the opportunities to create wealth rely on our having a highly qualified highly educated society. That is why we have invested so significantly in education. In this Budget we have seen a further $1.4 billion allocated to the education sector and $550 million allocated to early childhood education. This Government understands that the first 5 years of a young person’s life are critical to the quality of the educational trajectory that they will follow in life are critical to the opportunities they will have to contribute to the society of which they are members and are critical for New Zealanders young and old to realise that this is an inclusive society. It is more and more successful based on the level of educational attainment that all New Zealanders experience. A number of our community however are not participating at the level that will ensure or secure that success. That is why we have put aside $91.8 million to target the participation rates of Maori and Pacific Island students and to ensure that they have the opportunity to participate in good-quality early childhood education. We have focused at the primary school level on national standards so that we can discover earlier rather than later whether a child is literate and numerate to the age that they should be. That is why we are focused on what research tells us—that the quality of a child’s education experience relies on the quality of the teacher in the classroom and the ability of that teacher to be informed by the results that national standards will provide them. We cannot have a situation where young people are arriving at high school in year 9 and we are discovering at that point that they are unable to read and write at the appropriate level for their age group. Trying at year 9 to catch up on 8 years of primary schooling is very very difficult. 
Moana Mackey 
: Ask your sister! 
Hon HEKIA PARATA 
: Indeed as Opposition members have pointed out I come from a family of educators and we talk all the time about what is required. We are committed—unlike Opposition members who want to bark like hyenas—and we are prepared to take the hard decisions about what is required for young people to be successful. In fact the member Moana Mackey from Gisborne is misinformed if she thinks she understands my family’s view of education better than I do. I can speak far more authoritatively on that point any day of the week in any forum and I am happy to do so. We have invested a further $1.4 billion in education with the highest-ever amount going towards funding early childhood education. 
This year’s Budget is about building faster economic growth in relation to higher national savings. We are committed to seeing higher national savings and the changes we have made to KiwiSaver respond to our need both to find higher national savings and to fund other priorities that are essential for getting this country back on to a strong growth track. We are about setting a credible path back to surplus and repaying debt. No New Zealander wants the level of debt this country has had to endure off the back of 9 years of profligacy we inherited. We are about paying down debt so that New Zealanders can look forward to the kind of growth they are entitled to. We are looking forward to the 4 percent growth forecast to occur from 2012 to 2015 during which time we expect to see 177000 jobs created as part of this economy. Unlike the Opposition we do not think that growth should be on the back of make-work schemes which tend to be characteristic of the previous Labour Government’s approach to economics. Rather we see the economy doing that and to do that we have to back businesses. In so doing we have to cut red tape and reform employment law which we have seen over the 2½ years of this John Key - led Government. We know unlike the Opposition that growth is built by businesses. That is why we have had the biggest tax reforms in a generation. That is why 72 percent of all income earners are now on a statutory tax rate of 17.5 percent or less. Again it is because this Government recognises that New Zealanders are smart people and that they can make wise decisions about the money they earn while still contributing to the central coffers to fund public services to fund schools to fund hospitals to fund roads to fund ultra-fast broadband to fund more policemen to fund more nurses and to fund more doctors. These are the real changes that New Zealanders want to see and this Government is delivering them. 
As my colleague Kate Wilkinson said previously this Budget is also about rebuilding Christchurch over the next few years. It is critical to this country that the rebuild and the recovery of Christchurch occur and that they occur as fast as possible. It is critical not only for the people of Christchurch and for the social well-being of those people who exist on frayed nerves because they are being challenged every time there is a tremor in that part of the world but also for the rest of New Zealand because Christchurch is our second-biggest economic hub in New Zealand. The rebuild is important for all New Zealanders. New Zealanders are smart people they have recognised that and they understand that the $5.5 billion allocated to the rebuild in this Budget is as much an investment in Christchurch and the wider Canterbury region as it is in the rest of New Zealand. 
This Budget builds a platform for savings and growth and sets a faster return to surplus but it is also an opportunity I think to cast a light on what National has achieved so far. For the past 2½ years the National-led Government has provided the responsible economic management that New Zealand was in such need of after 9 years of Labour. When we took the reins of office the financial crisis had reached its peak and New Zealand had gone into recession before anyone else. There was a big job to do because the economy had shrunk by 3 percent in a year topping off 5 years of historically low growth. Exports had flattened out completely and we know—this Government knows—that we need an export-led economy. So it defies belief that the Opposition thinks that the way one gets growth is to attack the primary producing sector: the farmers who grow meat wool and trees and the fisher folk who catch fish and contribute that to our economy. It defies belief that Opposition members while saying they are committed to export-led growth nevertheless attack the sector that is the platform for that export-led growth. Unlike the Opposition this Government understands that it takes a range of contributions to develop an economy to create opportunity and to create confidence. That is what this Budget has done. It is a Budget of its time. It speaks to New Zealanders who are smart people. They understand that we have to pay down debt they understand that they want better value in our public services and they understand that we need to grow a pathway to greater opportunity for all New Zealanders. I am proud to have spoken on the 2011 Budget. Kia ora tatou. 
Dr KENNEDY GRAHAM (Green) 
: 
 This year’s Budget is essentially more of the same: a traditional neoclassical Budget in a time of national austerity. Let me critique it from a Green perspective and offer an alternative ecological Budget in a time of global crisis. 
The 49th Parliament has passed 224 Acts in 30 months. These Acts reflect the Government’s world view to make New Zealand a better place as it sees it. What stands apart in importance for every Government and every Parliament is the annual Budget which sets the course for a country’s macroeconomic policy. 
The two overarching issues in every Budget are how large the national pie is and how we slice it—how large the economy is and how we share in its product. Government policy hugely influences how large the pie is how much the country produces how much it trades and under what conditions how it controls debt and the exchange rate that it maintains. We measure the size of our economy by our GDP. We compare ourselves with others through our relative GDP ranking. We are relatively well off here in Godzone yet in our abiding provincialism we compare ourselves only with OECD countries and harbour neurotic fears and compulsions as a result of that. 
We fall about arguing over how to catch up with Australia yet the New Zealand pie is relatively large as humanity goes. How we slice the pie is the secondary issue for the Government—the question of social policy. This addresses taxation employment labour health education and social welfare. If we add in law and order we have the general picture of our society and of how the Government sets out its strategic direction in the Budget. 
Political debate among our parties traditionally reflects the left/right spectrum: large or small government high or low taxes more or fewer benefits how much expenditure there should be and how to spread it. The debate reflects whether the annual tilt is towards defence or aid health or education prisons or community service youth or the elderly research or subsidies. The annual Budget addresses these left/right issues. The two major parties in forming successive Governments in New Zealand over the past century revolve around the centre of the horizontal spectrum centre-left or centre-right and spin a helix of mild variation around the Western world view of the past two centuries. The 2011 Budget is no exception. 
The centre-right Government of the day facing economic and financial pressure seeks to recover the good life by regenerating growth through reducing government making welfare leaner and meaner incentivising the private sector with lower tax and more support for entrepreneurship and further opening the national economy to the global market. 
The Budget is designed through a rather touching faith to retrieve material prosperity in the 21st century through the use of 20th century economic policy. The year’s topics of choice for debate are KiwiSaver Working for Families and student loans. Labour for its part critiques the Budget through polar-opposite argumentation while retaining the identical prescriptive and analytical framework. Labour too wishes to see regeneration and growth. Labour members criticise smaller government oppose tax cuts and shout in anger over welfare cuts. None the less they would concur with having a reinvigorated private sector and an open economy plugged into the prevailing neo-liberal global economic grid. 
The Opposition and the Government share the same world view on how to grow the national economic pie differing over how to slice it domestically. Both world views are born of a bygone age. The philosophical beliefs derive from the 18th and 19th centuries from the freedom of Smith and Paine and the equality of Rousseau and Marx and the economic policies derive from the 20th century from the market forces of Marshall and Friedman and the State custodianship of Keynes. This Government’s Budget and the alternative Labour version revolve around the same economic paradigm. I do not hold those beliefs to be irrelevant but they are secondary in today’s world. The past few decades have seen the birth of a new political philosophy and new economics. We are not talking simply about the social movement known as environmentalism to be tacked on to the current political agenda; we are talking about a new political agenda a complete change of world view and a new age: the age of sustainability. We are not talking about smouldering resentment and a protest movement; we are proclaiming a transformational mindset and a reform ethic for governmental management. Where people once yearned for political freedoms or social equality they yearn above all today for a healthy planet. Where movements once embraced declarations of the rights of man they now embrace the Earth Charter. 
I do not declare the left/right spectrum to be irrelevant but it is now secondary. Superimposed over it now is a vertical spectrum of sustainability versus collapse. Without sustainability freedom and equality are unattainable. In this new age our institutions are failing in a time of need. Governments pay lip-service to sustainability but they do not understand its import or magnitude. Our parliamentary procedures which are locked into 19th century tradition fail to assist us. 
Where are the Budgets that address the real problems of our time: deforestation land deterioration water scarcity ocean degradation biodiversity loss and atmospheric pollution? Where is the global Budget that identifies the safe operating space for humanity the nine planetary boundaries the ecological overshoot of the planet’s resources the global energy imbalance the need for carbon emissions to peak by 2017 and the need to switch to a low-carbon economy by 2030? And how is our national Budget to reflect these global concerns? Where does the Minister’s statement recognise these concerns and indicate how we can participate in a coordinated response to them? Where is the Budget that begins at the beginning with population growth and density around the world and here in New Zealand? 
Does this Budget consider our national ecological footprint? Does it identify whether we have an ecological surplus or deficit and how this might relate to the needs of the world? Does the Budget incorporate as its central objective the taming of climate change through contraction and convergence and putting a genuine price on fossil fuel? Does it embrace a world view before it asserts the national interest or does it assert the national interest without much of a care for the rest of the world? 
The world’s problems are our problems. The fate of the earth will be the fate of New Zealand. Our destiny lies not in seeking a false competitive advantage but in pursuing a genuine cooperation with other nations for our common survival. A Green Budget rests on that philosophical premise. 
A Green Budget recognises first the global population growth within a lifetime from 2 billion to 9 billion and a global population density growth from 13 people to 45 people per square kilometre. It recognises the current 50 percent global ecological overshoot and it rejects this as a moral outrage against other species and an irrational act of human self-destruction. A Green Budget takes as its major goal the preservation of our natural resources in perpetuity. It recognises that human success lies in ensuring that economic activity must be undertaken in harmony with nature’s bounty and must cease if it crosses certain thresholds rather than simply patching up the damage. It estimates our national population growth and our need to account for the greater number. It identifies as its main criterion of success the index of human well-being into which mortality and health education crime and the integrity of the environment are integrated with the traditional indicators of GDP: interest rates unemployment the current account balance and debt levels. 
A Green Budget aspires above all to attain sustainability. How we measure this is not an easy task. It is a work in progress and we have only just begun but we shall get there. 
My Public Finance (Sustainable Development Indicators) Amendment Bill which is in the ballot would impose an obligation on the Minister of Finance to develop a Budget along those lines. It would not be content to countenance an environmental reporting Act and debate on the environment separate from the Budget. That leaves the traditional approach to macroeconomic policy supreme and environmental concerns secondary. It needs to be the other way round. This Government and this Budget is more of the same. A Green Budget would turn the ship of State round before it is too late. 
TIM MACINDOE (National—Hamilton West) 
: 
 Before I focus on the 2011 Budget I will briefly echo the heartfelt condolences expressed by my friend and benchmate Peseta Sam Lotu-Iiga the member for Maungakiekie to the family and friends of Philomen Gulland who was so tragically killed in the water-main explosion in Onehunga on Saturday morning. I also extend my prayers and best wishes for a speedy recovery to the other Watercare Services workers who were injured in that incident. We know that the consequences were devastating for Ian Winson who was so critically injured and for his family. I am sure the thoughts of all members of this House are with those families at this distressing time. I certainly know that there is considerable sympathy for them all in my electorate of Hamilton West.  
My constituents are conscious of the very challenging circumstances that made the preparation of this year’s Budget so difficult. Members opposite do not want to acknowledge the fact but New Zealanders understand that a zero Budget was the only responsible option this year. The measures the Minister of Finance announced 2½ weeks ago are widely supported. Many of my constituents have told me that the Budget’s focus on building faster growth rebuilding Christchurch increasing national savings reining in Government debt while continuing to protect the most vulnerable New Zealanders and investing significantly more in health and education and in creating sustainable jobs built on savings exports and productive investment is exactly the right prescription for nursing the New Zealand economy back to good health.  
Budget 2011 is a Budget that I will be very proud to campaign on in the run-up to our general election on 26 November. I am proud that we are on track to achieving economic growth of 4 percent in 2012 with 170000 new jobs being created by 2015. I am proud that at a time of essential restraint we have nevertheless invested an extra $4 billion in front-line public services in areas such as health education and supporting our young people into jobs. Again that is very welcome in Hamilton where we have a large number of youth who need that assistance.  
I am proud that at a time of a record deficit—some of it caused by the tragic events in Christchurch some of it by the global recession and much of it by the irresponsible tax and spend obsession of the previous Labour administration which squandered the best economic conditions any Government has enjoyed for a generation—the Government’s average net weekly borrowing requirement will fall by over two-thirds to about $100 million a week by this time next year and that within about 3½ years the Government will start repaying the debt.  
Most members of this House will have met with constituents who have suffered the distressing experience of losing hard-earned savings—in some cases essential savings required for an imminent retirement—through the spate of finance company collapses in recent times. Although we cannot overcome that heartbreak we can and must provide more attractive and safer investment opportunities for New Zealanders who want to do all they can to provide a better future and a secure retirement for themselves and their families.  
That is why I support the extension of the mixed-ownership model to four State-owned energy companies which the Government has signalled and the reduction in the Government’s majority shareholding in Air New Zealand in order to enable more of my constituents and those of other members to invest in those important companies with the equally important proviso that the Government will retain a majority stake in all five companies and that local investors will be at the front of the queue for the shares. 
Not only will this offer better investment options for our citizens but also it will free up between $5 billion and $7 billion to pay for high-priority new capital investment in future Budgets and reduce further Government borrowing. Far from disposing of State assets as our opponents like to cry it is an intelligent option to enable us to acquire essential new ones and fund the growth that we all desire and depend upon. 
I want now to turn my attention to some important health and education initiatives that were announced by the Minister of Finance. This year’s Budget is delivering an extra $2.2 billion to public health services over the next 4 years. That is a substantial sum of money. It includes an additional $580 million worth of initiatives in the next fiscal year. In my electorate news of the $54.5 million for maternity initiatives to improve safety and quality and for extra Well Child visits has been particularly welcomed as we know that it is crucial to provide support for first-time mothers in particular as they learn to cope with the huge change to their lifestyle that having a baby totally dependent upon them places on them. 
I want to pay a very warm tribute to the Waikato District Health Board in my own area which is already making great use of the extra funding that has been allocated in the previous two Budgets to tackle the huge challenge of elective surgery. The board has made a very significant gain in reducing local waiting lists. So I am really delighted that there is a further $68 million for more elective surgery in this year’s Budget which will continue that record increase of 4000 extra operations a year that we have seen around the country and which will further reduce waiting times. I know that New Zealanders warmly welcome that focus. It was one of the core principles that we campaigned on in the last election and New Zealanders are delighted that we are delivering. 
For some time I have been concerned about the growing incidence of dementia. I have been concerned about the ability of our health providers and our social service agencies and indeed those who live with people with the condition to meet the many demands that a growing incidence of dementia in our community places on them. For everybody living with the condition dementia is a very challenging and often deeply distressing experience. 
In my own area over the last 18 months I have been supporting and encouraging in every way that I can the wonderful team who have been re-establishing the Waikato branch of Alzheimer’s New Zealand. It met with considerable difficulties and in fact went out of existence at a time when in the fourth largest city in the country we were seeing a greatly increasing incidence of dementia and Alzheimer’s disease. 
So I am absolutely delighted to report that the Waikato branch of Alzheimer’s New Zealand is back up and running. It has achieved a huge amount in very challenging circumstances and in a very short period of time. I thank the branch for that. I also thank those who have been enabling it to raise the essential funding to continue its important work. 
This year’s Budget allocated an extra $44 million over 4 years to look after people living with dementia including $40 million for residential dementia services and $4 million for additional respite care including in-home respite care for full-time carers of people with dementia. I have had some experience of that within my own extended family and I know that most other members will have also had some experience of it. I know that this initiative will be warmly welcomed. 
The news is equally good in the field of education. Schools and early childhood education will receive an extra $1.4 billion in their operating and capital funding out to the year 2014-15 with total education spending rising to a record $12.2 billion in the next year. That is a significant sum of money but it is in an area where we know that there will never be enough. So there is extra operating funding for schools extra funding of $550.3 million for early childhood education which I particularly welcome and an extra $66.5 million to increase the number of trades academies and service academies and more and that is all very good news. 
I close by saying that I was delighted to be able to attend the launch of the Waikato Trade Academy a couple of months ago. This is a partnership between Wintec—the Waikato Institute of Technology in my electorate where there are two campuses—and 12 schools throughout my region. A large number of young people are now being given an opportunity to learn a trade to develop skills and to further literacy and numeracy all of which will equip them for the modern workforce. For too long we have seen too many of these young people not provided for and leaving school too early often ill-equipped to cope with anything other than the most menial jobs and we know that there are very few of those in the modern economy. 
I salute Wintec and all the schools that have signed up to the programme and I salute the Minister of Education who is doing a wonderful job in providing these opportunities. The programme continues the efforts made by the Minister for Social Development and Employment over a considerable period of time to support young people into jobs and I am pleased to report that there is another $55.2 million in the Budget for that purpose. With $15 million more now for other employment assistance programmes the balance in this Budget is the right one. The prescription is the right one. I am proud to support this Budget and I commend it to the House. 
Hon HEATHER ROY (ACT) 
: 
 The Budget was a dire disappointment and an abject failure of nerve. Confronted with the necessity and opportunity of beginning a historic sea change away from the knee-jerk borrow-and-spend mentality that has held New Zealand back for so long the Government opted instead for cosmetics and cowardice. Yes the Government acknowledged that borrowing $380 million per week was unsustainable but it failed to make any significant assault on the mind-set that says that spending beyond our means and having to borrow heavily is the solution to our problems. Economic commentator Gareth Morgan captured the essence of our economic malaise very well in his column in this morning’s  
New Zealand Herald 
 “Bubbles on beer budget poor life choice”. He points out: “this is one of the most indebted countries in the world with a net external debt-to-GDP ratio of 90 per cent. We are still behind Ireland (130 per cent) if that’s comforting and a smidgen short of Greece (91 per cent) but Australia isn’t as bad (77 per cent) while the US (19 per cent) UK (14 per cent) and Canada (20 per cent) make us look delinquent.” He went on to say: “we continue to live it up as though we are right up there with the world’s richest. And of course you can only drink champagne on a beer budget by selling your assets or raising more debt. We do both.” 
In our present crisis the urgent imperative on the Government is to make itself much less of a burden on the productive sector. The way to do that is to discipline itself and bring its own runaway spending under control. National’s principles commit the party to small Government yet we have seen spending under this National-led Government explode. No this is not because of the earthquake. Of our $17 billion deficit this year only $6 billion is because of the earthquakes. What we needed was a major application of the brakes. Instead the Government has merely eased back slightly on the accelerator. 
One of the reasons the Government has been so timid is no doubt its fear of a chorus of accusations that to act more boldly would be uncaring. This Budget has left unchanged and unchallenged a number of situations that can scarcely be described as caring. Is it caring to condemn our young people to soul-destroying idleness by outlawing youth rates? ACT says no. It is sheer folly to prohibit employers from hiring young workers at rates that they can afford just to appease the perverse sensibilities of socialists and unionists. If a young person is prepared to work for a given rate of remuneration that should be the end to it. But then of course members on the Labour side are not known for their familiarity with the concept of choice. 
Is it caring to continue scams like Working for Families which snare thousands of people into the welfare dependency trap when their own money could simply have been left in their own pockets in the first place? ACT says no. ACT simply would leave people’s own money in their own pockets while targeting welfare at those who genuinely need it. The notion that even people on MPs’ salaries can qualify for Working for Families as I could have done in 2004 is farcical. It shows that the Government has moved from focusing its attention on those in genuine need to trying to nanny everyone. 
Is it caring to send children out of our school system illiterate? ACT says no. Our schools have been failing for decades. When the principals association criticises teachers’ literacy something is very wrong. Our schools have been in thrall to the philosophy that says literacy does not matter. The damage this mind-set has caused is incalculable. Once again simply increasing spending on Vote Education is not the answer. State schools at minimum must repair to basics and to the pursuit of excellence. Again if the field is opened up to genuine competition the natural demand of parents for the best for their children will give both State and private schools no option but to meet that demand. 
Is it caring simply to throw more taxpayers’ money at our “die while you wait” public health system when in Singapore where the Government spends just 3 percent of GDP on health as opposed to our 9 percent every measure of health success across the board is radically superior to ours—including infant mortality child mortality life expectancy emergency room waiting-times and non-urgent surgery waiting-times? ACT says no. We need to learn from places like Singapore and introduce a much greater degree of choice for patients by means of private enterprise involvement. Wherever possible rather than the Government simply throwing more and more money year after year at a system that remains stubbornly inefficient consumers should have their own money returned to them to spend on the health care of their choice as they see fit. 
To those who would have people believe that ACT is uncaring my response is that we are the only party that truly does care and has the policies to back up our caring. Those same people would also have people believe that ACT is extreme. If by “extreme” they mean unhinged then nothing could be further from the truth. But if by “extreme” they mean passionately and sincerely committed then I proudly acknowledge we are extreme. We are extreme in our desire for a vibrant full-employment economy that will afford everybody the dignity of work. We are extreme in our desire to revitalise the health system and to end waiting lists. We are extreme in our desire to transform the education system and to end a situation where one in four is functionally illiterate. 
I remind the House that the Prime Minister once said he was ambitious for New Zealand. This Budget shows Mr Key’s ambition to be extremely tepid. ACT by contrast has no qualms in proclaiming itself to be extremely ambitious for New Zealand and to mean it. 
JACQUI DEAN (National—Waitaki) 
: 
 Why does Labour hate farmers? I ask why Labour—in all that it says all that it does and all the policies that it announces—says very clearly to the agricultural sector of New Zealand that it does not like the sector and will bring in measures to clobber it. I ask why that is. 
I remember that when David Parker was the Minister for Land Information in the previous term of Parliament he worked very hard against the interests of high country farmers in the South Island. He brought in measures to include the amenity value in the setting of high country pastoral rents. It meant that because the average merino standing on the lower foothills of a high country lease had the benefit of a good view—perhaps looking down at Lake Wanaka or Lake Hawea—that factor therefore had to be reflected in the rent that the leaseholder paid to the Labour Government of the time. That type of punitive legislation brought in by the Labour Government was brought about purely to drive farmers off the land and to drive the merino industry into the ground but conversely to open up opportunities for people to walk on that land. If that policy of the previous Labour Government was said to be good for the New Zealand economy then I would dispute that. 
It has taken this National Government less than its first term in office to put that right—to put right that travesty that was visited on high country farmers so that now they can once again look to achieve productivity on their Crown pastoral leases and in the high country of the South Island of New Zealand. The merino industry is going from strength to strength and farmers are diversifying their operations and becoming more productive all the time. 
I ask why Labour hates farmers so much. I ask why Labour’s policy in answer to National’s most excellent Budget is to bring agriculture into the emissions trading scheme early in 2013. That I contend and assert in this House would simply be a tax on our productive sector. The impact of doing that is calculated at somewhere around $35000 to $40000 per annum per farm. That would have a huge impact on any business operation purely as a tax but on a farming operation that has years of very variable income it could be simply crippling. It would be I suggest a very short-sighted measure to take. 
I recall that in North Otago in some of the drought years of the late 1980s and early 1990s sheep farmers were earning very little for their stock. They were selling off capital stock just to keep making ends meet. They were going to food banks because they simply did not have the cash to buy groceries for their families. Please do not tell me that farmers are cash-rich and are there to be exploited by a Labour Government. They are not. 
Why would Labour kill off the very sector that is leading New Zealand’s economic recovery? That policy simply does not make sense. Why is Labour blind to the costs carried by the average farmer? Why does Labour mistake turnover for profit? Why does Labour mistake turnover for profit and regard turnover as being what should be taxed? That simply shows a lack of financial and economic understanding which is probably why the New Zealand economy was in the state it was in when the National Government took over in 2008. That is why we needed and we have got the Budget that we have. 
This Budget which has been brought down by Bill English is designed to build a stronger economy. Budget 2011 builds a strong platform for growth and I will talk about an example of that in a moment. Budget 2011 sets out a credible path towards a surplus and that is one of its critical aspects. It also helps to lift the level of national savings while protecting vulnerable families. It boosts investment in health and education and—most important I believe being a South Islander; there is no secret there—it rebuilds Canterbury after the earthquakes. 
I will go back to agriculture for a moment and talk about a couple of initiatives in the Budget that I think will have a long-lasting and very good impact on the New Zealand economy. Budget 2011 will allocate $35 million over 5 years in what is called the Irrigation Acceleration Fund. I and many of my other rural colleagues have been pushing for that for a number of years. I am very pleased that Prime Minister John Key agriculture Minister David Carter and Bill English our finance Minister understand completely the value of not only agriculture but also irrigation to the New Zealand economy. The allocation of $35 million will be used to bring irrigation projects to the investment-ready stage. That means—and this happens a lot in my large electorate of Waitaki—one gets a group of farmers together who know that they need water. They know that they need water in order to break through the cycle of drought low commodity prices and all the other pressures that farmers face as a matter of doing business. They know that water is the key to breaking through and becoming more productive and prosperous. This fund of $35 million will assist those groups of farmers who are business people themselves—forget the old Labour view of farmers being just cow cockies to be exploited; that is not true. Farmers are business people—agribusiness people. They have good heads on their shoulders. I tell members that when farmers set their minds to an irrigation project they really get to work and do it properly. This amount of money $35 million will assist those groups who are determined to get an irrigation scheme up and to take it to the investment-ready stage. What is the benefit of that? It means they can then go out with a good plan in order to get third-party funding. 
That is where the next part of Budget 2011’s announcement comes in and that is the $400 million in equity funding for the construction of regional-sized irrigation schemes. That will provide a little bit extra—well it is actually significant. It is not little; it is significant extra comfort for third-party lenders to become involved in irrigation projects. I have seen that firsthand with the North Otago irrigation scheme. The farmers needed just a little extra third-party funding—in that instance it was provided by the local authority a very far-seeing local authority underwriting the scheme—to enable them to go ahead with that scheme. The benefits of it to North Otago have been huge. 
One cannot underestimate the benefits of irrigation to regional New Zealand. I have only mentioned two allocations in this Budget but I can tell that the impact of those two measures the $35 million irrigation-ready fund and then the possibility of a further $400 million investment in irrigation construction activities will be huge now and well into the future for New Zealand. 
This Budget is sensible pragmatic and a budget for our times. It sets out the next steps to build faster growth to increase national savings and to create sustainable jobs. I go back to the irrigation initiative. That will bring sustainable jobs for New Zealanders. I am very proud to stand and commend this Budget to the House. 
Hon CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 It is a truism about this Budget that members on both sides will take a different view as to its effectiveness and strategic positioning and its effect on our communities. If we look at this Budget we see that—and it is worth noting as I have noted in other speeches in respect of this Budget—despite the recasting of history the political record Government to Government that this Government inherited was 9 long years of surpluses. 
Government members do not like it when this is pointed out because it is a fact. Every Budget for 9 long years under a Labour administration was in surplus. Those surpluses ranged—I do not have the figures in front of me but I have used them previously in the House; they are in  
Hansard 
 and they go back to 2000—from $500 million - plus in I think 1999 to a peak in the mid to late years of our term of $7 billion. In the final year if my memory is correct there was a surplus of about $5.5 billion. So every year there was a Budget surplus. 
As I said in other contributions to this debate I recall getting attacked by the then Opposition spokesperson on finance Bill English for being a mean-spirited Labour Government that refused to fritter away throw out and dish out the surpluses. It was a good thing that we did not because the rainy day of the global economic meltdown came along. Mr English is again in print and in  
Hansard 
 thanks to his comments of 19 December from memory which have been quoted in this House. He said in essence that the economy he inherited on taking office was in pretty good shape to weather the storm. 
I think it is important as we go through and dissect this Budget—as we are wont to do for the general public—that we set the historical context. There were 9 long years of Budget surpluses as opposed to three hundred-and-something million dollars a week of borrowing and debt. There was today or yesterday an admission by this Government that it is borrowing a hundred million bucks a week more than it needs to. Mum and dad Kiwi do their housekeeping every day. They do their own budget every week as the pay packet shrinking though it is is brought home and as the pile of bills grows and the cost of living increases. They sit around the table and do their own budget and they are scratching their heads and trying to work out why this Government is borrowing a hundred million dollars a week more than it needs. 
The answer is pretty simple. The Government delivered a tax cut that gave my constituent in Kaiapoi—and this was reported in the local paper; she wishes to remain anonymous—$7 a week and gave the millionaires a thousand bucks a week. The journalists were not making it up. The journalists reported this in the  
Northern Outlook  
last week. A couple one working one struggling to look for work on about $40000 a year which is the same as 72 percent of my electorate got a $7 a week tax cut the lady told us. The husband got $7 a week from this glorious benevolent tax cut. The Prime Minister and those millionaires got a thousand bucks a week. 
So Mum and dad Kiwi now in possession of that information understand why this Government by its own admission is borrowing a hundred million bucks a week more than it has to. It is financing a tax cut for those who do not need it to put it bluntly. They love to get it but they do not need it. If one is at the top end one receives a thousand bucks and more a week as opposed to my constituent who got $7 a week. This constituent is not well served by this Budget. I had never seen I have to say a $36-a-month power bill. I thought it was impossible to have one. How could one get a power bill down to $36 a month? This woman and her husband had done it. How did they do it when they have a mortgage they are desperately trying to keep their home and pay that mortgage and they end up with a discretionary income of about $300 a fortnight to live on? 
How did they get the $36 power bill? Well they turn on the hot water cylinder for a couple of hours a day. The lady said that they buy candles they turn off all the lights they go to bed early and they do not turn on the heater. I met this woman with Annette King 2 weeks ago in Kaiapoi which is in my electorate. I asked her: “When was the last time you and your husband had a night out on the town just to get away from it all?” because they are in the belly of the beast that is Kaiapoi the earthquake zone. She said that they did so a couple of months ago. I asked them what a night out for them was. She said it was a jug of beer between her and her husband—that is one jug luxury though it is—once a month down at the workingmen’s club. That is the luxury they impose upon themselves. 
They have a telephone bill that is as low as it can be. I asked her how many times they ate meat a week. She said it was twice if they were lucky as long as sausages were on special. The husband has a decent feed of cereal every morning for breakfast does not have lunch and comes home and carbs it up on the rice or whatever is in the cupboards and has a decent feed at night. So as those Government speakers get up and laud this Budget and say it is wonderful and it sets a course for people all over the country I say to them that I know of a couple with no kids where mum is desperately looking for work and will do anything to add to the money coming into the house. Dad is earning about 40 grand and does all the overtime he can if it exists. They have no kids admittedly so there is no added expenditure there—I accept that—and they end up with about 300 bucks a fortnight to pay for the lot. 
Maybe this woman should be the Minister of Finance because amazingly she manages. God knows how. When Annette King and I looked through her books her power bill her phone bill and her expenses she said to us: “I buy bras from the Salvation Army shop at 50c a pop second-hand and it was a bit rough because they went up to $2 and $3.”—and that is a fact. When one sits with that woman who is a hero she ain’t saying this Budget has done a lot for her. She is scratching her head back home thinking: “Why is it that those earning the most get the most?”. 
The Government feels so benevolent and puffs itself up saying: “Well she got a $7 a week tax cut.” which immediately got eaten up by the GST rise that the Government imposed—the increase that John Key said he never would impose—and all the other charges like petrol etc etc. I can say that the woman is a decent person. I do not actually know what her politics are to be honest. I did not ask and was not told—and one should not ask. But I say this: she and her husband know that they get absolutely squat out of this Budget. They are going backwards and they are a productive couple with a mortgage who are trying to make it. They are an average Kiwi couple—72 percent of people in my electorate earn $40000 or less—and they get $7 a week tax cut. 
Jo Goodhew 
: We have the lowest mortgage interest rates in 40 years thanks to this Government. 
Hon CLAYTON COSGROVE 
: Oh the lowest mortgage interest rates in 40 years! I will return to that constituent in Kaiapoi and say: “You should feel lucky because you’re getting seven bucks a week in a tax cut! You’re 50 or 60 bucks worse off and you can’t afford to have more than two meals a day but you should feel grateful to that member for the lowest mortgage interest rates in 40 years.” That shows how out of touch that member is. I invite that member if she is so staunch about this Budget to answer this question. Will she come with me and explain how benevolent the Government is? If the constituent will agree I will take that member to Kaiapoi and she can sit across the kitchen table as Annette King and I did and she can tell that woman how grateful she should be to the member and her Government. Will she accept? [ 
Interruption 
] Oh no she will not accept. She will sit there of course and interject but she will not front up. 
I will do it for her. I will revisit that woman and her husband and say they should be grateful. I will tell that couple they should be grateful to the member opposite because they have low interest rates and they should be grateful because they get a miserly $7 a week whereas the Prime Minister gets a thousand. They should be grateful to the member. I invite her if she really wants to put her money where her mouth is to join me get out of this Chamber whip down to Kaiapoi and front up. But no she will not. 
I say to those members opposite that they should look at the real world. They should go out and talk to some constituents and talk to this couple who are a battling Kiwi family and ask them whether they should feel grateful to this Government for its benevolence. I say they will not feel grateful and that woman and her husband are heroes. That is one very practical reason why we oppose this Budget. 
ALLAN PEACHEY (National—Tamaki) 
: 
 This afternoon we have heard three of the so-called heavy hitters of the Labour Party front bench on today’s Budget. What has been particularly troubling to the country is that two of those so-called heavy Hitlers—heavy hitters sorry; that was a Freudian slip—two of those so-called heavy hitters are considered contenders for the leadership. 
Hon Members 
: No! 
ALLAN PEACHEY 
: Two of them are considered contenders for the leadership and it will not have gone unnoticed how poorly they debated the economic issues facing this country this afternoon. I will make one prediction now: the pair of them—Messrs Cunliffe and Parker along with the yet-to-arrive and may-not-even-make-it-here Mr Little—will each have their turn at leadership in the next 3 years and the only debate really is going to be in which order they will be anointed and how quickly they will fall over. What is becoming increasingly apparent in this debate is how jolly difficult it must be to be a socialist at the moment and how extraordinarily difficult it must be to be a member of the Labour Opposition. The problem that the Labour party has is that it cannot live down its past. However hard it tries it cannot live down its past. It cannot escape the fact that this Government has been in office for less than 3 years. It cannot escape the fact that in that time the economy of this country has been transformed. It cannot escape the fact that the incoming Labour Government in 1999 inherited the best of times and squandered them. 
In 2004—and I invite the next Labour speaker to get up and deny this—New Zealand entered an export-led recession. That previous Government covered it up. It covered it up with continued excessive spending. It cannot hide from the fact that in 2000 for no reason but the fact that the Labour Party is a big-tax policy party unnecessarily increased income tax and took money that New Zealanders were better able to spend for themselves. What is coming out of this debate is that they want to do it all over again. What this Budget debate is demonstrating in spades is the failure of leadership of Mr Goff. 
Mr Goff needs to explain to this House how it can be that in 2011 removing GST from fruit and vegetables can be a good thing. How can it be that in the late 1980s when he sat in the Cabinet that introduced GST he accepted all of the arguments that GST in order to be fully effective had to apply across the board? I ask Mr Goff the question: what has changed? What has changed between those years in the late 1980s and 2011 that suddenly it is good taxation practice to begin excluding those products from GST? Mr Goff needs to explain that to this House. What has changed? 
In all humility I could perhaps offer my explanation as to what has changed. What has changed is we have a Labour Party leader under immense pressure from young new backbenchers who are economically illiterate who have no ideas as to how business operates who are desperately in fear that they will lose their seats in November and will be forgotten very quickly as one-term MPs. They are putting enormous pressure on Mr Goff to make what are basically inconsistent statements and ones that he knows he cannot stand by. 
The other thing Mr Goff has been unable to do of course is explain how he will replace the $250 million in Government income that would be lost with the removal of GST from those products. That is the other dilemma that the socialists have. They want to spend but they do not want to tell us where the money is coming from. I invite the next Labour speaker to get on his or her feet and tell this House how the $250 million will be compensated for. Or will Mr Goff just borrow it? Thank heavens we will never know because Mr Goff will never have the opportunity to deal with that problem. Thank heavens we will never know whether Mr Cunliffe’s four pillars that he referred to today—I am trying to think what they were; I do not recall them as being particularly economically profound—work as he will never get the opportunity to find out. You see New Zealanders have figured it out. This Budget debate has confirmed in their minds that the Labour Party has no future in determining the way this country will develop economically—no future at all. It is devoid of ideas it is devoid of sound economics and it is devoid of common sense. 
Amy Adams 
: Devoid of leadership. 
ALLAN PEACHEY 
: As my wise colleague says it is totally devoid of leadership—totally devoid of leadership. This Government has delivered to the people of New Zealand three Budgets in sequence each of which dealt with the particular economic circumstances of the time each of which was well accepted by the people of New Zealand and each of which—and above all else I stress this point—amounted to sound economics. That is the bit that the Labour members do not get. They do not get sound economics just as they cannot figure out why in areas like Glen Innes—in the electorate of Tamaki which I represent in this House—which they consider to be their strongholds the people are turning against them. 
Let me tell the House why the people of communities like Glen Innes have given up on the Labour Party and why they do not see the Labour Party as holding the key to their future. It comes down to one word: aspiration. This Government delivers Budgets that aspire to better for all New Zealanders regardless of their circumstances—for all New Zealanders. Labour MPs opposite will discover that the people in what they used to think were their strongholds have found them out. Nine years of failure were followed by 3 years of good economics. The future of this country rests on good economics. Thank you. 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 That speaker Allan Peachey provides the evidence if we needed any that this Government has completely lost its way. It has completely lost touch with the reality of ordinary lives. I am absolutely surprised that the member opposite dedicated his entire speech to the Labour Opposition and actually highlighted why we will be the next Government. At the very last breath he gets to the word “aspiration”—aspiration! It is unbelievable that that man would devote his entire Budget speech to talking about the Labour Opposition rather than defending his Government’s Budget which he cannot do because it is indefensible. Budget 2011 should have been the Budget that delivered what was promised by John Key back in the 2008 election. I do not know whether anyone remembers what John Key said back then. Does anyone remember? I think he said he was ambitious for New Zealand. Do members remember that? He said he was ambitious for New Zealand. I am afraid I cannot see anything in this Budget that measures up to somebody who was ambitious for New Zealand. 
As a Christchurch MP I have to say and put on the record of this House that I am deeply concerned that we in Christchurch will be used as an excuse to do the sorts of things that this Government is signalling—and indeed delivering—in this Budget. The unpalatable aspects of the Budget I think are perfectly plain: the attack on KiwiSaver the sale of our country’s assets cuts to Working for Families cuts to student loans and borrowing as if there were no tomorrow. The Government pretends it has to borrow because of the work that has to be done in Christchurch. That is not the case. We know that it has to borrow because of the unsustainability of the tax cuts it gave to the highest earners in this country. We are not talking about tax cuts that were evenly spread—a tax switch. It certainly was not a tax switch for a lot of the people I have been talking to over recent days who tell me that the increase in GST as well as the increase in the cost of living has had a major impact on how much they have at the end of the week. Many people are in fact struggling to make ends meet and that is why I think the Prime Minister has proved just how out of touch he is with the everyday reality that so many constituents now face. 
I have been looking at something called disaster recovery since the beginning of the year for obvious reasons. In Christchurch we have serious issues to confront. But unlike members of the Government’s Cabinet committee on Canterbury earthquake recovery I have actually read our local civil defence and emergency management recovery plan. People in this House would be gobsmacked to know that actually we have one. In fact every part of this country has a civil defence and emergency management plan. They are required to have it under very good legislation that is in place and we have an excellent process in place to ensure we are prepared. The problem is that there is no translation between what is written on paper and an understanding of the preparedness for recovery. Our response effort is brilliant—absolutely brilliant—when it comes to the defence of people’s lives. Obviously what happened in the central business district on the days following 22 February was nothing less than extraordinary. But I have to say that what happened in the eastern suburbs did not meet the mark as far as response goes. And as far as recovery efforts go this Government has failed lesson No. 1. Rule No. 1 of all recovery planning processes is not to re-entrench pre-existing vulnerabilities when one is involved in the recovery. 
What was our economy’s pre-existing vulnerability leading up to this Budget? What do members think the biggest issue was? I think I have read somewhere that it was our savings record as a country. Yes savings have a major impact in terms of where our country is able to go. So what would a Government do if it was faced with a national crisis in savings? Would it do something about enhancing our KiwiSaver or do members think it would knock it back a little bit? Would a Government have a crack at it? Would a Government actually have an idea about what it might do? I have to say that this Budget represents the second time that National has tinkered with this scheme. Cutting KiwiSaver was one of its first acts in office in 2008. The problem I have is that this continual tinkering with the scheme moves the goalposts on New Zealanders creates uncertainty and reduces confidence in the country’s pivotal savings vehicle. Why would we do this if we are serious about addressing the recession we have been confronted with as a nation? Why on earth would we use this Budget to attack one of the fundamental ways we can address our savings problem? KiwiSaver has proven to be incredibly successful in meeting the objective of ensuring that people have the mechanism for saving. Government incentives for KiwiSavers are now relegated to the “nice-to-have” category which is simply not good enough. 
I am actually disappointed that National has decided to turn its back on the sort of cross-party buy-in we see across the Tasman. If anyone wants to look at how a country can actually address these matters then they should just look at the Australians and what they have had with their Australian workplace savings scheme. Yet we in New Zealand are confronted with a Government that is so short-sighted it is attacking one of the absolute fundamentals for getting our economy right. Without a savings culture in New Zealand Government debt levels may have been low when Labour left office—we left a very good record for this Government to pick up on—but household debt was already through the roof. That is something we need to address. 
I am deeply concerned about where National is going with all of this because I think this Budget signals to the people of New Zealand that this election is a referendum on asset sales. That is what this country is up for. I can go back to the previous time when National was faced with a situation similar to this: the financial meltdown post the stock market crash in the 1980s. I was here on the day when Ruth Richardson read the Budget out to the House and what was the particular approach that that Government the National Government took? It said we should sell assets. We should deregulate the labour market we should reduce welfare and we should introduce market rents for State housing. We should sell assets. We should corporatise the public health and education systems and outsource major components to the private sector as well as to the voluntary and community sector. We should sell assets. We should cut Government spending we should pare back the Public Service devolving more to the community and then—the triumph of theory over practice—we should introduce policy operations and funder-provider splits in the name of Government efficiency and get the community sector into a competitive market for commercial contracts. 
What is the Government doing now? It is doing exactly the same thing. As someone once said famously it is déjà vu all over again. That is exactly what it is. This Government is falling back reverting to type and doing exactly what it has done before. My point is that all of these measures are short-term opportunistic interventions that fail both tests. They are not sustainable and they do not build resilience. But we have to build resilience as a result of what has happened to our country; we have to make sure we are able to withstand the shocks that will continue to come. Let us not condemn ourselves to repeat the histories that recent history has warned us about. We need actually to learn another disaster-recovery lesson which is that if we are to get our economy back on track we need a Government that is prepared to co-opt all of us into the same pathway and to co-opt all of the resources available to us. That means we need more than a Government-controlled agenda at a talkfest called a Job Summit that produced a few predetermined results like a national cycleway. We need a Prime Minister who can do better than that. He promised to turbocharge the economy but he has done nothing more than kick the tyres. 
Hon PHIL HEATLEY (Minister of Fisheries and Aquaculture) 
: 
 It is true that the National Party as Lianne Dalziel refers to is reverting to type. That is true. We are reverting to type: we are managing the economy well. That is what National does. If you wandered up and down Queen Street—or more famously Cameron Street in Whangarei—and you talked to Green Party voters— 
Mr DEPUTY SPEAKER 
: Order! 
Hon PHIL HEATLEY 
: Lindsay Tisch the Deputy Speaker could talk to Green Party voters Labour Party voters or National Party voters and say: “On balance we appreciate that you do not necessarily vote for the National Party. On looking at the polls you probably do at the moment but no matter if you don’t.” I am using the collective “you” Mr Deputy Speaker so it is not so much referring to you. We could be speaking to a person; we will call him Thomas to make it easier. We appreciate that Thomas would not necessarily vote for the National Party but he probably does looking at the polls at the moment. Even if he did not vote for the National Party we could ask him which party he thought managed the economy well. We would find that most people would come back and say National. On balance National is a better economic manager. 
It is the same if we said to Thomas that we appreciated he might not be a Labour voter a National voter or a Green Party voter but if he had to say what party was involved in social engineering—was really really good at social engineering—what party would it be? Most people would say that the Labour Party was better at social engineering and the National Party was better at managing the economy. So yes we have returned to type. 
We can see quite clearly at the moment that we have a Budget that says we are now going to return the country to surplus in about 2014-15 which is a year sooner than was forecast even last December. In fact 2 or 3 years ago the country would not have believed that we would be able to return the country’s books to surplus so much sooner let alone by the year 2014-15. 
Basically New Zealanders are out there with all sorts of voting preferences and they understand two things. Firstly the Nats manage the economy better on balance and always have. We agree with Lianne Dalziel that National has returned to type and is managing the economy better. Secondly—it is a huge surprise and I guess the country is filled with a bit of hope on seeing it—we will return the books to surplus in 2014-15. 
There has also been heartfelt concern for the people of Canterbury. People are very very pleased to see the Budget deliver $5.5 billion in the Canterbury Earthquake Recovery Fund over the period of the next few years. Most New Zealanders support that. They understand the need for it and they think the National Government has got it about right. Those are the two messages the broad messages that this Government has sent and that the general public has received regardless of voting preferences: National is managing the economy well and we are supporting Christchurch. 
I will spend some time on one issue that the member Clayton Cosgrove talked about: his mocking receipt of the news that we are keeping mortgage interest rates currently at about 5.5 percent. He said: “Big deal!” and was very very proud to say that when Labour was in Government it was able to manage mortgage interest rates at about 8 9 or 10 percent. He felt that that did not affect households. But I say to Labour members that the best thing we can do for a first-home buyer for a family paying off a mortgage or for those coming up to retirement who would love to see their mortgage written off is to keep interest rates under control. We currently have a Government that is managing the economy such that mortgage interest rates are about 5 or 6 percent. When in Government Labour managed an economy in which mortgage rates were 9 or 10 percent. 
If we quickly do the maths we see that it shows the difference between Labour managing an economy with interest rates at 10 percent and us managing an economy with interest rates at 5 or 6 percent. The final difference is about 5 percent in mortgage interest rates. If families have a mortgage of about $200000 that difference of about 5 percent means they are looking at not having to pay $10000 interest a year under the National Government. That is about $200 a week. We are saying that under John Key the management of the economy is saving people roughly $10000 a year or $200 a week but the Labour Party thinks that does not matter. The Labour Party thinks $200 a week does not matter. I would like to see the Labour policy to write a cheque of $10000 to every householder with a $200000 mortgage. I do not see that policy. I see John Key managing an economy in a way that saves every $200000 mortgage-holder $10000 a year. That should be celebrated; it is the best thing we can do for a first-home buyer. 
It was appropriate that through its Budgets the Government ran larger deficits over the last few years to protect New Zealanders and to support jobs during the recession. If ACT had been in charge we might have seen some slash and burn and we would have seen the most vulnerable families come under pressure. If Labour had been in charge we would have seen cash flying here there and everywhere: cash for this cash for that and cash for every rinky-dink scheme it could possibly think of. But National has run that very fine line of not being too hard on those welfare recipients during the recession but also understanding that we cannot throw cash at everything. 
This is the election dilemma for the Labour Party: it is going into an election where it cannot use cash for votes. No one will expect the normal routine of the Labour Party and Phil Goff of a lolly scramble. No New Zealander—not a Green voter or even a Labour voter—will believe that Phil Goff can just write out cheques for every idea that comes through the post or to his door. He cannot throw cash at this that and every rinky-dink scheme like he normally would because no one accepts under the current environment that that is possible. 
That is why I agree with Lianne Dalziel: the National Party is returning to type. We are managing the economy well. The Labour Party is in a difficult dilemma because it cannot return to type. It cannot promise this election to throw cash at every problem because no one will believe it. It cannot return to type because it cannot promise the way it normally would and has in every previous election. I must say that managing the country through this recession has been difficult but it is nothing like the difficult job that the Labour Party has this election when it will not have New Zealand’s hard-earned dollar to spend on votes. I feel sorry for it. 
DAVID SHEARER (Labour—Mt Albert) 
: 
 That was an extraordinary speech by Phil Heatley who thinks that this Government has been responsible for bringing down interest rates as part of its policy. It probably has a little more to do with the world economic situation at the moment I say to Mr Heatley and the fact that interest rates in the United States are around 0.5 to 1 percent which is one of the reasons why our interest rates are so low not because of the policies of his Government. However his speech does show one thing. It underscores for me the degree of this Government’s understanding of the New Zealand economy and the way it is functioning at the moment. 
I remind people what was being said about this Budget in January or February of this year. This was touted as the innovation and savings Budget and Bill English has on record a number of speeches and comments which we can get off the web talking about exactly that. I listened to a number of different speeches by Wayne Mapp. He talked up Denmark as the great hope for New Zealand in the way it invested in research and development and the way it was progressing. Prime Minister John Key talked about the type of technology being developed in Taiwan. The only thing is that those examples have nothing to do with and no resemblance to the New Zealand economy. There is no resemblance no strategy and no plan that would allow us to think that the New Zealand economy is moving towards the sort of situation in places like Denmark Taiwan or Israel where Wayne Mapp is at the moment with the Prime Minister’s science advisor Peter Gluckman. 
National talked about boldness and step change. What have we seen in this Budget that allows us to talk about boldness and step change? I tell members what we have in the research and development sector. This is the front-page headline: “Reprioritising $36 million over 4 years”. Now that is bold! That will get us to where Denmark Taiwan Singapore and Israel are at the moment will it not! That is an overall drop in funding for research and development of $12 million so overall we are going backwards and that is exactly where this Government is going right now. 
We need a plan a strategy and a growth strategy to move our economy forward. We are not moving forward; we are going backwards. We have not seen any bold thinking. We have a $16 billion deficit. We were $5 billion in surplus just 3 years ago and we are going backwards. If we want to know what “bold” looks like let us take a look at some of the other countries around the world that we should be emulating and to which Dr Mapp looks to for inspiration although not much more than that. 
Let us look at Finland. In 1991 Finland had an inflation rate of 10 percent an unemployment rate of 20 percent and its sharemarket had halved. What did it do? It made some tough decisions but most importantly it increased its research and development spending by 70 percent putting it into the high-tech growth industries. Where is Finland today? Finland today is where we want to be and aspire to be but without a plan we will not get there. Finland also recognised that it needed to have a consensus on what was broken in the economy and its people understood that they needed to find the answers to their economic malaise and to promote economic growth. They also understood that their real resource was their brains and their smart innovative thinking. 
This is what they did: they increased their research and development spending by 70 percent and they charged ahead. We have gone backwards by $12 million in this Budget. We have gone backwards in the sense that our research and development spending as a proportion of GDP was 1.2 percent whereas Finland spends 3.5 percent and the model that Dr Wayne Mapp talks about Denmark spends more than 3.3 percent. This is where Finland Denmark and those other smart countries are going and where we should be going. 
So what is this Government planning to do? Last year it increased our research and development spending by $55 million a year. On the face of it that looks good but it spent it in the form of grants and vouchers. When we are an innovative company and we really want to expand and do more in the research and development sector we have to come along to a Government bureaucrat for more money so that we might be able to get a grant or a voucher. Do members know what happens? Sixty percent of companies that do that get turned down. They are not successful in getting those research and development grants and vouchers. They fail. So they go back and struggle along by themselves. What does that do to increase the amount of research and development by New Zealand businesses? We have a woeful spend within our businesses on research and development. What does it do? Well it actually does zero. Those companies are coming to the Government for money. They are not reorganising themselves and doing more research and development. They are asking for a handout from the Government. As a result in comparison with these other places we are going backwards not forwards. That is why straight after the delivery of the Budget 2 weeks ago the Labour Party announced its research and development tax policy for the coming election. It is 12.5 percent in terms of tax credits. Why did we do that? I will tell members why. It was because that increases the research and development spend amongst the companies that most need it. So instead of going for a handout they simply write it off the bottom line. It incentivises them to look at research and development within their company in a more strategic way. 
We know that research and development increases innovation and we know that innovation is the very thing that increases our economic wealth. Treasury itself says that every dollar spent through a tax credit will generate $1 extra in research and development spend by those companies. We are likely to see New Zealand starting to climb to the very place where we want to be where Dr Mapp would like us to be and where John Key says he would like to be as well. That is why it is Labour’s policy to increase our research and development. That is why two-thirds of OECD countries have tax credit policies. That is why Australia right now has almost the exact carbon copy of Labour’s research and development tax credit policy sitting in front of its Senate about to be passed into law. The Australians came over here and took our tax credit policy back to Australia and are about to put it into practice. 
We want an innovative clean green society where smart innovative thinking is the way to go promoting our economy and increasing our ability to grow rich. It is not a choice between agriculture and high-tech. It is not an “or”; it is an “and”. We need the agriculture but we need to develop this type of growth within New Zealand. This is $280000 per job and tax credits are a start on the path to that point. We have to look for a clean green clever and innovative society a place that Paul Callaghan calls the place where talent wants to come and live. That is what we aspire to— 
Mr DEPUTY SPEAKER 
: Give the speaker a fair go. There is too much noise with too many interjections. If members want to have conversations they should go to the lobbies. 
DAVID SHEARER 
: That is the sort of economy and the sort of society that I want to see here in New Zealand—a clean green clever smart and innovative country where people want to come and live. 
Can I just say in closing a special farewell to John Carter. We always have our differences but we have enjoyed having him in the House and I have learnt a lot from him. 
Hon NATHAN GUY (Minister of Internal Affairs) 
: 
 I wish to take a call on the Appropriation (2011/12 Estimates) Bill which covers the recent Budget. Before I do this is the appropriate time for me to acknowledge my colleague the Hon John Carter who will be giving his valedictory this evening. He is a Minister a former Government whip and indeed a good bloke. We wish him well in his new chosen career in the Cook Islands. 
We will miss his humour around this place. We have heard plenty of stories. We will miss his wisdom. When I came into Parliament in 2005 he shared an office close to mine in the old parliamentary building. He taught me a few tricks. We now share the same level in Bowen House. I know that the Parliamentary Rugby Team will sorely miss the prowess of the Hon John Carter in the scrum on the side of the scrum at half back or wherever he chooses to play in the future. I have no doubt that he will be opening up invitations to the Cook Islands and we wish him all the very best. 
I also acknowledge today Craig Foss whom the Prime Minister has announced as the new Minister to take over from Minister Carter. We wish him well. Mr Foss came in and stole the Tukituki seat from the Labour Party in Hawke’s Bay. He has worked tremendously well with his parliamentary colleague Chris Tremain the senior Government whip in backing the Bay. He is a proven performer in the Finance and Expenditure Committee and he will make a huge contribution in his new role. We wish him all the very best. The House should know also that Mr Foss’ parents are fine constituents of the Otaki electorate. I welcome him to level 6 of Bowen House. 
More important John Carter has sat in this House for 24 years—almost a quarter of a century—and he has never seen such a woeful Opposition. He has been in Opposition but it has never been as woeful as the current Opposition. This Opposition is more focused on the size length and style of carpet in Premier House and how many pails of paint are being used on that historic building. This Opposition is more focused on Helen Clark’s purchase of the BMWs and more on the air transportation that the fine Rt Hon John Key chooses to get around in in his important role as Prime Minister of this country. 
Su’a William Sio 
: Talk about the Budget. 
Hon NATHAN GUY 
: I will talk about the Budget in a moment but it is important that I lead into Labour’s woeful performance in this House. We talk about Labour and Phil Goff still struggling to connect with New Zealanders. It is no wonder when we hear him every day on the stumps talking about things that are not at all relevant to getting the economy moving. We look forward to the Labour Party no doubt running more on the texts from New York. I wonder whether Phil Goff will receive texts from Chris Carter; he may choose not to. 
We know that Labour is in disarray. We have heard in Labour members’ speeches—I have sat here for a couple of hours this afternoon—that their focus is more on spend and hope. They have no plan. They are talking about releasing their Budget in due course and we wait with bated breath. All we hear from members on that side of the House is that we should spend more. In fact it is very hard for the Labour Opposition to criticise this Budget. 
Coming into the election campaign Labour is likely to look to tax businesses on revenue and not on profit. We know that Stuart Nash is focused on that. We have also heard in recent times in response to the Budget that Labour members are very keen to bring agriculture into the emissions trading scheme. 
Hon Member 
: Early. 
Hon NATHAN GUY 
: Indeed—bring agriculture in early. We have worked out that that will cost every farmer in New Zealand—every cocky in this country—about $35000 to $40000. Of course right now we know that we are relying heavily on the rural sector of New Zealand. Why on earth would Labour want to bring agriculture into the emissions trading scheme early when we know that the price of milk will go up? Those members are complaining about that now. We know that the price of bread the price of eggs and the price of meat will go up because Labour wants to bring agriculture into the emissions trading scheme early. It makes no sense at this point in time. 
We have also heard from Labour members that they want the first $5000 of earnings to be tax-free. That policy would not be targeted; everyone would get it—everyone. It would not be targeted at all. It would be about 10 bucks on average per week. When our Government chooses to increase the minimum wage to 13 bucks an hour—which is on average an increase of about 10 bucks a week—we hear from the other side of the House that no way is that enough. No way was that increase enough we heard from the Labour Opposition. Yet it is fine for them to roll out a stupid policy that is not targeted which would make the first 5000 bucks a year tax-free for those hard-working New Zealanders. 
We have also heard recently that Labour wants to increase the minimum wage to 15 bucks an hour. Of course we all want to head in that direction over time but it will take us on this side of the House a bit of time to turn round the economy. Why on earth would Labour come out right now and say it will increase the minimum wage to 15 bucks an hour when we would see from every Work and Income New Zealand office up and down the country a total of 6000 extra unemployed in 2011 from this daft policy? 
Let us focus on some positive things we have done in this Budget. I acknowledge the fine work of our Minister of Finance Bill English. He has worked tirelessly with Treasury and his Cabinet colleagues to deliver a pragmatic Budget. I also acknowledge the fine work of our Prime Minister up and down the country. He is out there selling this Budget to hard-working New Zealanders. This is a solid and pragmatic Budget that will turn this economy round. It is not a spend and hope wish such as we see from the other side of the House. This Budget is focused on turning this economy round. It will get us into surplus quicker by about 12 months. It will reduce debt. It is focused on rebuilding Christchurch; it put $5.5 billion extra into Christchurch. There will be 170000 new jobs created over the next 4 years as a result of this Budget. There will be 4 percent economic growth in the next 12 months as a result of this Budget. 
Everyone agrees that the changes at the top end to Working for Families needed to be made. The changes to KiwiSaver will get us on to sure footing for the future. It makes no sense for this Government to borrow to save at this point in time. In terms of the mixed-ownership model mums and dads will be at the front of the queue. There will be savings across the State sector of close to $1 billion over the next 3 years. The tax reform means that 73 percent of hard-working New Zealanders now pay 17.5 percent tax. Is that not fantastic for hard-working New Zealanders? 
It is interesting that this Budget has been so well received. When I looked at the  
Kapiti Observer 
 I saw that its reporters went out into Coastlands which is a fine shopping place for anyone who wants to come and spend money in my electorate on the weekend. The reporters did a little vox pop in Coastlands. One lady Bev Coxon said: “I feel that they haven’t gone quite far enough with slashing some things”. Leon McDonald is a worker; he said: “something has to be done” and that Christchurch needs some help in its rebuild. Paulen St John thought that the Government tackled the right areas: “I reckon John Key is doing a good job”. Caroline Kinvig said: “I think something’s got to be done. We can’t keep borrowing money without putting something back. That’s just ordinary economics.” Finally David Nokes said: “In general I think it’s a good idea I’ve got nothing against what they have done.” That is support from the people in my electorate. 
Congratulations and all the best to John Carter. 
Debate interrupted.