Cullen Michael: Supplementary Estimates — Imprest Supply Debate 
Cullen Michael: Supplementary Estimates — Imprest Supply Debate 
[Volume:648;Page:16842] 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I move  
That the Appropriation (2007/08 Supplementary Estimates) Bill and the Imprest Supply (First for 2008/09) Bill be now read a second time 
. This legislation is introduced against quite an interesting economic background at the present time. Nearly every developed country in the world is facing very similar problems at this stage. The environment is the most challenging global economic environment that we have seen in at least a decade and in some respects for longer than that. We are facing first of all the consequences of a subprime mortgage crisis in the United States—a classic example of a divorce between risk and return—and then the cleverness of those in the financial markets who created pyramids of derivatives which then collapsed like decks of cards once in fact those risks started to eventuate. 
We have seen the pressure on global food prices coming from the growth of demand in the great economies of China and India—the emergence of substantial middle classes—and also from some ill-judged policies around the world including restrictive trade practices and unwise policies in promoting inefficient forms of biofuels in the United States and elsewhere. We have seen extraordinary increases in the price of oil over recent months also as a consequence of the growth of those great economies of China and India and the instability in the Middle East and in Nigeria and again because of the actions of speculators in the financial markets. The combination of these factors has bitten deep into the pockets of ordinary New Zealand families and individual New Zealanders. 
These challenges are very real. As I said to the select committee last week the combination of these challenges plus the effects of tightening monetary policy over the last 3 years plus the effects of the drought that had a very substantial impact upon rural New Zealand in the first few months of this year will almost certainly see a negative GDP figure for the first quarter of this year. But it is not a time necessarily to be totally gloomy; in the longer term New Zealand is in a highly favourable position. We are in a highly favourable position for a number of reasons. Firstly we have had a Government that for some years has adopted prudent fiscal policy which has meant that debt is now much smaller as a proportion of GDP and the money we spend on servicing that debt has been much reduced. It means that we have built up a pile of cash assets that we will be able to draw down over the next few years to help keep the economy moving along without excessive borrowing leading to rising debt—a burden therefore upon our children and grandchildren. 
We also face a much more favourable long-term environment globally than we have seen for the last 50 to 60 years or more. Firstly we are seeing successful trade negotiations for New Zealand in terms of China and now there are the prospects of India South Korea Japan and elsewhere. But ironically the global food crisis will also probably give an added spur to the success of the Doha round of talks which will remove some of the barriers for New Zealand’s trade that have been so strong. It is often said in New Zealand that we love to beat our breast and to blame ourselves and say that we have slipped in terms of our relative standard of living—but not our absolute standard of living. My goodness me I remember my parents bought a black and white television set in 1961. It took about 8 weeks of my father’s pay to pay for what I think was a 16-inch black and white television set. Our standard of living is immeasurably higher than it was 50 years ago although it has slipped in comparison with some others. But we have been competing in a highly unfavourable international climate where almost every other developed economy whether in Europe America or Japan has actually discriminated against the things that we do best. Almost the entire developed world has been in a kind of trade conspiracy against New Zealand in relation to the things that we are capable of doing best in this country. 
That is why we are a country that follows a strong trade liberalisation policy and now of course we are seeing our trade liberalisation opening up in the agriculture area. On top of that we are seeing—for the first time perhaps for 150 years or more—relative price movements moving in favour of food exporters such as New Zealand. For the last 50 or 60 years we have tended to see our export prices reducing in relation to the prices of other goods that we have to import but in more recent years we have seen those terms of trade moving around. So New Zealand faces both improving terms of trade and a more favourable trade environment over the next 20 or 30 years on top of which we are in a better position than almost any other developed economy—other perhaps than Australia—to deal with the challenges of an ageing population over the next 25 to 30 years. And that is not by chance; that is because of good planning by this Government. 
Yes the year 2008 will be a tough year economically. I do not believe there will be a recession but there will be a negative first quarter. Yet in the longer term this country has better prospects than many other developed economies around the world and we need to stop flagellating ourselves and instead recognise the options that that will open up. 
To take advantage of the situation we must continue to address the issues that have been concentrated on by this Government—that is issues of skills development and of making sure we are producing the skills we need in this country. We need to bring in as New Zealanders people who are skilled rather than those who are simply in the “other” categories that have dominated immigration policy until more recent years and we need to invest in our infrastructure—our roading our soft infrastructure our water and sewerage schemes—all those elements of infrastructure. This Government has massively increased capital spending as a proportion of GDP and restored it to the levels of the 1960s and the 1970s after a long-term period of decline in our capital spending and capital investment. We need to address issues of saving and investment. I could pretty well guarantee now that we have passed the total of 700000 people who have signed up for KiwiSaver and we are already getting comments about that feeding the growth of capital markets within New Zealand. That is what we are doing in this Government—all of those things and many more besides and particularly the long-term agenda of sustainability which is crucial to our success. 
So what does the Opposition offer? This afternoon we heard what it offered. It offered that we should not do things about light bulbs—that it is some kind of nanny State thing to say we should actually assist people to buy more efficient more effective and cheaper light bulbs in terms of usage because that is some kind of intrusion into personal freedom. We should let everybody consume whatever they like and then try to provide the energy required to sustain that! Indeed that offering led to the joke: how many members of the National Party does it take to change a light bulb? The answer we know is zero because they like to keep us in the dark. That is certainly the answer to how many National MPs it takes to change a light bulb because what is the National Party telling us about its plan for the future? Its plan for the future is to do whatever it takes—that is the plan. To do whatever it takes to bribe the electorate—that is the policy. 
Telecommunications was offered a big bribe but what of the detail? That will come after the election. When will we know National’s tax policy? Well maybe before the election but we cannot be sure. Will there be borrowing? Well probably. What about the selling of State assets? Well actually yes and no but maybe; who knows—possibly. Certainly there would be privatisation of accident compensation; we will come back to that later on but certainly the desire is there to do that. Would there be changes to Working for Families? Well yes and no and maybe—they are not sure; they are still trying to make their minds. What about education policy? Well National members say they stand for standards. Well that is great is it not? Goodness me Nick Smith who is semi-illiterate stands for standards in education in New Zealand! 
Look at the National front bench! Mr Ryall has had one policy announcement in the entire time he has been spokesperson on health—releasing the cap on doctors’ fees—and he had to backtrack on it in the space of about 3 or 4 days. Mr Power is supposed to have a policy on law and order but nobody can find the press statements in which he has actually said it. Mr English does not have a fiscal policy except that he has said that he is confident about New Zealand’s future. Well that is great to know. And Mr Key has no policy at all. He just wakes up in the morning and thinks about his Merrill Lynch shares but over the last 6 months he has gone back to bed again because the story has been so bad at that particular point. Who else does National have? Mr Brownlee’s energy policy is to use expensive inefficient light bulbs. That is the National Party’s energy policy. 
The party opposite thinks that it can sleepwalk to victory. It has no policy and no ideas but of course it does have a hidden agenda. We know what it wants to say and what it wants to do. It wants to say it will go back to the Employment Contracts Act it wants to say it will sell State assets it wants to say it will drop the tax cuts for those on lower incomes and transfer the cuts to those on higher incomes and it wants to say it will promote private health-care and say “Be blowed!” to the public health-care system. It does say that it will give no more money to public schools but double the money going to private schools—that is its one bit of policy. We are really waiting for the guts of this election campaign in October or November this year because we are waiting to hear when National will finally produce a single policy.