Douglas Roger: Taxation (Annual Rates and Budget Measures) Bill — First Reading Second Reading In Committee 
Douglas Roger: Taxation (Annual Rates and Budget Measures) Bill — First Reading Second Reading In Committee 
[Volume:672;Page:18894] 
Hon Sir ROGER DOUGLAS (ACT) 
: 
 This Budget was one that could be described as fiddling while Rome burns. In many ways I believe that although it may not do much harm it will cause a degree of uncertainty which we could do without. There is a need I think for some comprehensive change and we certainly have not got it in this Budget. As a result there is not much to this piece of legislation and we may as well pass it and get on with it. 
One point I do want to raise is I believe that the assumptions that lie behind this Budget are in some ways quite heroic. They might prove to be accurate and I am sure that Treasury or whoever advises the Government has done its best. I want to raise three or four points. Since 2008 nominal GDP has risen by $16 billion from $183 billion to an estimated $199 billion. In the same period core Crown expenditure has risen by $16 billion from $56 billion to an estimated $72 billion. In other words the Government has taken to itself the entire increase in nominal GDP. Nominal GDP went up by $16 billion. Government expenditure went up by $16 billion. What did the Government leave for the private sector? Nothing. The Government crowded the private sector out and no wonder the country is in some difficulty. 
I ask the public what they get from that massive increase in expenditure. For a family of four that increase in Government expenditure is $16000 a year. I ask the average family out there what they get for that $300 a week extra the Government is spending on their behalf—so-called. Do they feel better off? The families I meet certainly do not feel any better off. Can they buy more groceries as a result of the Government spending an extra $300 a week on their behalf? I do not think so. Can they take their kids to the movie theatre? No I do not think so. There is no free lunch. 
So what do we make of it? Let us have a look at one point and this comes back to my reference to heroic assumptions. The estimates of core Crown expenditure by the Government in recent Budgets have systemically underestimated core Crown expenditure by on average 6.83 percent a year. What leads us to believe that this year the Government has got it right? In previous years we have seen a massive increase. The Government is talking about it being flat from now on. If we take the case that this year core Crown expenditure increases by 6.83 percent which is the average over and above estimates of recent years another $4 billion or thereabouts would be added to the Budget deficit. Also in terms of GDP growth recent Budgets have overestimated GDP growth by 1.8 percentage points over the last 6 years. Again what assurance do we have that the figures which are quite high in terms of GDP growth wage growth etc. are any more accurate than they have been in recent years? Core Crown expenditure as I said has hit an all-time high as a percentage of GDP; it has gone up by about 5 percent in 3 years or by $10.5 billion. I think this House needs to start to question itself. We have increased Government expenditure in the last 3 years in nominal terms by $16 billion which is $4000 a person and $16000 per family of four. So $16 billion is the entire increase in nominal GDP. Nominal GDP is up $16 billion and Government expenditure is up $16 billion. Nothing—nothing not one cent—is left for the private sector and we wonder why we are in difficulty. I want to know whether the estimates that the Government has made in this Budget will prove any more accurate than the estimates that we have had in the last four or five Budgets. The estimates have been way out in terms of expenditure. Expenditure has always been higher than estimated and GDP growth has been lower. 
The final point I want to make is about the Labour Party and the Greens. Although I am critical of National in terms of its estimates I really wonder about the Labour Party and its attack on high-income earners. That does surprise me. It is over the top. The Labour Party has this strong focus on distributive questions—that is it tends to think that to help the poor we must hurt the rich. We have heard it in speech after speech from the Labour Party and from the Greens. They are reluctant to face the fact that in New Zealand’s current situation it is almost impossible to help the poor without also helping a section of the rich—those who invest in productive areas. If we do not help that group we will certainly not be able to help those on lower incomes. If those old colleagues of mine were not so one-eyed they could just possibly construct something really radical—a radical scheme that might just be redistributive and growth orientated. I do not hold my breath. The fact is that in the way they operate at the present time they are simply unable to formulate sensible attitudes towards any of the basic social issues we face which are invariably tied to economic ones. Although I know that a lot of those people are highly intelligent and knowledgable on all sorts of things—that is those things one can put on a lapel badge—they are often intellectually at least lopsided.