Young Jonathan: Budget Debate 
Young Jonathan: Budget Debate 
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JONATHAN YOUNG (National—New Plymouth) 
: 
 I thank the Opposition member Su’a William Sio for some of those figures he gave us. I am very pleased to hear that the previous Labour Government left us with zero debt at the end of its term. I wonder how come it might be that it started in its term of Government with a $34.4 billion debt and ended with a $34.7 billion debt. 
Michael Woodhouse 
: How does that work? 
JONATHAN YOUNG 
: How does that work? Perhaps if Labour members could figure that one out they might be able to figure out how to get back on the Treasury benches. Considering that when we increased GST 2.02 percent compensation was given to all New Zealanders I also ask what the amount was that the Labour Government at the time compensated the people of New Zealand with when it increased GST from 10 percent to 12.5 percent. Does anybody recall that amount? What was that amount? 
Melissa Lee 
: Fat zero. 
JONATHAN YOUNG 
: Zero percent—zero percent. There was no compensation. 
Michael Woodhouse 
: How fair is that? 
JONATHAN YOUNG 
: Yes how fair is that? I think it is quite obvious that we have Opposition members who are very selective in their memories regarding the issues of their fiscal management. 
We have heard much in this Budget debate but we need also to understand the history this Government has inherited. We have heard much about the property bubble of the 2000s. There has even been recent talk about a commodity bubble. In a world of inflation and deflation bubbles go up and they go down and sometimes they also pop. This Government is all about bringing some equalisation some balance and some sustainability into the growth of our economy so that wealth generation does not go through speculative boom and bust cycles. Savings and investment rather than in many cases borrowing and speculation will ensure that New Zealanders in the future will have a stronger foundation for their wealth creation. 
As we look back on the 15 years to the end of 2004 we see that New Zealanders experienced significant improvements in their standards of living. Real GDP increased by an average of 3.2 percent and during that time nearly a half a million jobs were created. That is over 33000 jobs per year. So when Treasury forecasts 4 percent growth and lifts that figure from 33000 jobs upwards we can understand that that sort of estimation is based upon a historical record. However since the performance of the economy up until 2004 the strength of that growth has steadily declined. Real GDP per person has not grown since 2004. The economy was in recession even before the global financial crisis hit. The downturn in economic performance coincided with a number of factors—for example the construction and the housing market boom with the prices of existing houses increasing by 115 percent between 2001 and 2007. Household debt as a share of disposable income rose from 105 percent in 2001 to almost 160 percent in 2009. We were growing our wealth based on borrowing and speculation. This Budget brings New Zealanders and the Government to a place where we look at a stronger fiscal foundation for our growth towards the future. 
Also seen during this time was a decrease in the growth of our exports. Real export growth from 2004 onwards averaged less than 1.4 percent per year compared with 5.4 percent in the previous 15 years. No new jobs were created in the export sector from 2004 onwards. We were in a very sad and sorry situation as a country. But what was growing was an increase in the State sector by 50 percent under the previous Government. Over the last 2½ years the New Zealand economy has of necessity been readjusting. We have seen the absolute necessity of bringing the economy on to a more sustainable footing. This is what Budget 2011 does. We can borrow only for so long until the odds turn against us. As a country our net debt being private and public borrowing has put us in an uncomfortable position of being seen in the same category as nations such as Portugal Ireland Greece and Spain. We have seen a massive increase in spending over this last decade. That spending has been not just in the private sector around the purchase of perhaps domestic properties but also in relation to spending on core Crown initiatives and expenses. In 2004 our core Crown spending was sitting at just over 27 percent of GDP. That figure has grown to 35 percent. 
New Zealand has become used to spending more and expecting more. We have gone through a decade of opulence. But after facing the global financial crisis New Zealanders are now seeing the need for more prudence which is why the vast majority of New Zealanders support this Budget. Prudent prosaic pragmatic economics such as this needs to rule the day. Budget 2011 does this. The Government in its prudent management has looked ahead. It has asked what is sustainable in its present form and what is not—unlike members opposite who continue to put their heads in the sand and have a borrowing borrowing and spending spending programme which does not address the real issues in terms of the thinking of New Zealanders. 
We have asked what we can truly afford not only for the economic cost but also the social cost to our country. We have identified programmes that New Zealanders support such as KiwiSaver and Working for Families that needed some adjustment in order to be truly sustainable on a long-term footing. This Budget is about building certainty and sustainability. We have been working on State sector improvements and on front-line services since the beginning of this Government’s term. For 2 years we have signalled to the public sector the need for greater efficiency following large increases in public spending in the last decade. Why? Because the tradable sector the sector that earns our country income must become more predominant in our economy and the State sector needs to take a smaller piece of the pie. 
We are committed to better value for money from public spending so that we can build better smarter public services for all New Zealanders. National is capping back-office jobs and streamlining bureaucracy to focus on front-line services. As a result of these efficiencies we have seen 300 more police officers 1600 more teachers 1000 more nurses and 500 extra doctors. The total number of equivalent positions in important front-line areas has increased by about 6 percent. We have capped core Government administration excluding front-line services at around 38000 people. There are now 2000 fewer full-time positions but that is during a time when we have increased front-line positions. Under National there are 17 percent fewer communications and public relations advisers in the Public Service. Although we have seen increases in front-line staff the overall total of equivalent full-time staff in the State sector has decreased. We are achieving more for less—more for less. Public Service administration grew by 50 percent under Labour. Growth in the Public Service averaged 5 percent or about 1800 people per year. We are seeing this Government providing more public services for less cost to the New Zealand taxpayer. That is why this Government has popular support in relation to Budget 2011. Thank you.