UNEDITED COPY SUBJECT TO CORRECTION

Thursday, 17 May 2007 

BUDGET DEBATE

JOHN KEY (Leader of the Opposition): I move, That all the words after 'That" be omitted and the following inserted: "this House has no confidence in the Government led by Helen Clark because it has presided over a decline in New Zealand's competitiveness, and has failed after eight Budgets to deliver a meaningful reduction in taxes for New Zealand workers."

They are the facts, actually, and we will get to those in a minute. That was Michael Cullen's eighth Budget and they do not get any better. They have been in all shapes and sizes, we have had the lot. We have had the "chewing gum Budget", we have had the "Bondi Budget", and this afternoon we had the "money-go-round Budget."

The "money-go-round Budget", which will always certainly be a minority Budget with the bulk of people in this House either voting against it or abstaining against it, is a Budget that makes no sense.

What a cruel hoax it has been—what a cruel hoax. We have had months and months of Labour Ministers going up and down the country parading to businesses that the good news was on the way and they were in for a $1 billion tax cut. Those were the words. The little thing they forgot to tell businesses was that after the KiwiSaver contributions the Government is taking $2 billion off them.

That is the truth of this Budget. They get given $1 billion and they have $2 billion taken off them.

We will go through the maths if Michael Cullen cannot work it out in just a moment.

How do they feel out there in "mortgageville"? The chewing gum and the "chewing gum Budget" has gone. They are not even getting the chewing gum from the "chewing gum Budget". That was gone in this Budget as well. They do not get a personal tax cut. There is none of those in Budget 2007.

There is a special little treat for Aucklanders—they get a tax increase.

I look forward to Helen Clark parading around Auckland and telling Aucklanders why she has a $1.7 billion cash surplus, and a $6.3 billion surplus, but there is not enough money to pay for electrification so we have to have a tax increase. We look forward to that.

The only thing that will be very interesting for workers when they go through this is when they work out this not only will they not get a tax cut under Labour, they will not get a pay increase either, because that is going into their KiwiSaver account. They will not get a tax cut, they will not get a pay increase, and they will not get a rise in their wages for years—not for years will they get an increase.

So where was the only place there was something positive on tax in this Budget?

Well, interestingly enough it was in charities when Labour took National's policy on charities.

The interesting thing is that when I announced that policy, Steve Maharey said it was Tory charity. It was Tory charity when I announced it. When I announced it, Helen Clark said: "Tax cuts for the rich." Tax cuts for the rich is what Helen Clark said. And Michael Cullen went out and gave a speech, in which he said: "The only thing that will work is the redemptive power of the State. It doesn't matter how well-meaning charity is, it won't work."

It was not in the discussion document. National put it up, and when Labour is imploding in the polls it steals anything it can from this side of the House, because we are the only people making sense.

This is the point in the exercise where the backbenchers over there realise they are gone. What I want to do for them is to take them through the little bits that Michael Cullen did not take them through—the little bits that Michael Cullen failed to tell them about when he explained it in Cabinet.

You see, John Tamihere was always right. He changed the odd word here or there, and made it—[Interruption] Well, actually, I say to Trevor Mallard: "You could be gone, as well, son!".

But we will come back to that member in a minute, because Aucklanders know all about his economic management. Helen Clark wants to put on a regional petrol tax, and he reckons he can build a billion-dollar stadium. No he cannot. Now he only has $20 million. I say to him: "You're gone, Trevor. Goodbye! Bye, bye!"

Let us go back to the business of explaining what the backbenchers in Labour did not know.

You see, we asked the Treasury officials in the lock-up how many people would take up this account. The answer, I say to Michael Cullen, is this—and he knows it: 50 percent of New Zealanders.

Half of all workers will not take that scheme up, and I will tell members who those half are. They are those who cannot afford to, who do not earn enough. They do not earn enough and they will not take up this scheme.

I will tell members what is worse: they are now being told not to ask for a pay rise because some of their other mates, who earn a bit more and will put money into KiwiSaver, will have to forgo their pay rise. The lower-paid workers of New Zealand will have to give up their pay rise so that higher-paid workers can get a cut through KiwiSaver. So they will not do it.

Imagine those New Zealanders now who are sitting out there thinking that they just want to earn enough to pay for a house. A whole generation of them want to pay for a house.

Well, Michael Cullen has just told them that there are no tax cuts under Labour, no pay increases under Labour, and no chance for them to get their own money.

That is what Michael Cullen told them. And he is doing it in a money-go-round that is pretty interesting.

You see, when he announced KiwiSaver with no bells and whistles on it—[Interruption]

Mr Burton should be a little bit careful, because everything his colleagues say about my things they adopt later on. So he should be careful about what he starts agreeing with me on. I would just keep it to myself at the moment, if I were him.

When Labour announced the KiwiSaver scheme with no bells and whistles on, it hired 400 people in the Inland Revenue Department. What is going to happen now? What is going to happen when they have this? Hundreds and hundreds more will be employed by the State civil service. That is what will happen.

I feel sorry for the poor old employer, because Michael Cullen could not do the maths. You see, this is the way it works. About 50 percent of the country will take up the scheme—one million people.

And when they get their subsidy paid in, they will get about $700 million back through their company tax cut and $400 million or $500 million through the contribution, and they will be paying it on the average wage.

It will be about a $2 billion contribution by the time they match it at 4 percent of the average wage. So companies get $1 billion back and they pay $2 billion out. That is what happens.

And that is happening at a time when they are thinking of leaving New Zealand, at a time when they do not have the right amount of money.

Hon Trevor Mallard: Wrong, wrong!

JOHN KEY: Well, do the maths: $50,000—$2,000 times a million people is $2 billion. Hello! They are the numbers! I think we can work them out—OK? There we have it.

New Zealand companies are leaving. They are leaving because they cannot cope at the moment.

Michael Cullen does not actually trust New Zealanders to get ahead. You see, he does not believe in growth. He has no interest in growth.

The only message under Labour is that we will save through the New Zealand Superannuation Fund*. We will not make people compulsorily save through KiwiSaver.

People are already compulsorily saving through the New Zealand saving scheme.

So the only future under Labour is that the economy will not grow. That is the only future under Labour. Well, there is a future that is a lot brighter out there.

The time has come for there to be a just a little bit of focus on the inconvenient truth about Labour's economic management.

If Al Gore was here he would be making the commercial and the video right now, because the facts are pretty interesting. In 1999—[Interruption]

Well, let me remind the Prime Minister of what she said when she came here in 1999. We were 20th out of 30 countries in the OECD. She, the Prime Minister of New Zealand, said: "I'll take New Zealand up the OECD." That is what she said. Well, I will tell the House what has happened: we have not gone up; we have gone down in the OECD. We are 22nd out of 30 countries. We do not compete with America. We do not compete with the UK. We do not compete with Australia or Canada. We compete with Portugal, Hungary, and the Czech Republic. Under Labour, that is our ambition. We are on a humiliating race to the bottom.

What has also happened in the last 8 years has been quite interesting.

You see, in the last 8 years wages in Australia, after tax, have gone up at twice the rate they have in New Zealand—twice the rate. No wonder 700 Kiwis a week now leave for Australia. It is Export Year all right, but it should not be Export Year of our people.

Our people should be earning more. Seven hundred of them a week leave for Australia. It is a disgrace.

Tonight when New Zealanders are watching TV, they will be asking themselves a pretty interesting question: why, of a country of 4 million people do a million New Zealanders now live overseas? Why do one in four of them go to university? Why do one in two of them live in Australia? Why, does Australia—a county of 20 million people—have only 800,000 of its people overseas?

The answer is that in the last 8 years, for a start off, they have had some decent economic management in the form of Peter Costello, and for 5 years in a row, on Budget Day, Australian workers have got up the next morning, and said: "I've got to keep a little more of what I earn." And that is fair. Under Michael Cullen, this is the only message: the only time there could possibly be a tax cut would be election year 2008.

It has got nothing to do with the inflation rate, nothing to do with the surplus, nothing to do with the cash balance, and nothing to do with whether he believes in it; it is because election year 2008 is the only time a New Zealander is allowed a tax cut, and we say that is totally and utterly wrong. Maybe when Helen Clark is in Auckland explaining to Aucklanders why they are paying more for their petrol, despite having a massive surplus, she can explain to them why—

Hon Trevor Mallard: Oh, that's interesting, yes.

JOHN KEY: Maybe Trevor can explain this question: why is it that a house in Auckland is now the seventh most unaffordable in the world? Why does a house cost 7½ times the average earnings?

Is it because that house is so expensive? I do not think so. It is because our wages are so low.

In 7 or 8 years of Labour our wage growth has been half that of Australia's. That is why New Zealanders cannot afford a house, and after today's announcement from Michael Cullen they will never afford one, because they are not getting a tax cut and they are not getting a wage increase, what they are getting is a little more than 45 years of renting when they get to retire.

What Michael Cullen should have been doing today is getting up and giving an apology.

He should have been apologising for driving the highest interest rates in the developed world.

He knows, like the Reserve Bank knows, like the IMF knows, that the reason our interest rates are so high is that he has been out of control with the cheque book. It is not just the quantity of what he is spending on, it is the quality of what he is spending on. He has to step up and take some responsibility for those interest rates.

While he is at it, when he looks at the inconvenient truth of his economic management, maybe, just maybe, he can explain why productivity is at an all-time low.

Productivity in this country is as low as it has been since the series began in 1988 in the private sector, and in the public sector it has gone backwards. [Interruption]

As my health spokesman said, Michael Cullen is going to throw another three-quarters of a billion dollars at health, the waiting lists will get longer, the number of New Zealanders going overseas for health treatments will increase, and the quality of health care will go down.

I thought it was pretty interesting the other day when John Roughan made a very interesting comment in his newspaper article on Saturday. John Roughan said that John Key had a vision for New Zealand that was a step change up. I agree with him. That is exactly what we intend to do.

It is exactly where we intend to take the New Zealand economy. It is exactly where we intend to take things.

Under National it will not be election year when there is a tax cut. Tax cuts will be rolled out, sharing the benefit. We will not be putting on petrol taxes when we have expenses at the height that they are and when the Government has surpluses in the way that it has.

Who owns this Budget? The answer is that nobody owns it.

This is a Government that has given up on the business of governing.

Michael Cullen does not believe in company taxes. It is Peter Dunne who believes in that message. That is why Michael Cullen took $2 billion off them after he gave them a billion.

Michael Cullen does not believe in company taxes. Michael Cullen does not believe in savings incentives, either—that is New Zealand First. Michael Cullen has no solutions for monetary policy—that is why he sent it to the Finance and Expenditure Committee.

Michael Cullen does not have any economic message. It is a tired Government that has absolutely no ideas at all. While the Labour members are there, maybe, just maybe, Helen Clark might want to explain why she has racked up a bill of $1.7 billion for climate change. That is the record—$1.7 billion.

Hon Annette King: You've got 4 more minutes. Hang in there.

JOHN KEY: Maybe Annette King wants to explain why were not getting $500 million. I suppose it was Pete Hodgson who said that we were going to get a cheque for $500 million. Now we owe $1.7 billion and the Government will put $1 million into research and development to save it.

That is the whole lot that is going in there.

Let me finish by saying something that I think members will find rather interesting.

Labour's pollsters are a company called UMR. Labour members know UMR's pollsters very well. They have been running polls for them for a very long time indeed. What is just a little bit interesting is that last week a constituent of mine rang me to say they had been rung by UMR, which was undertaking a poll. The question was this: "What will voters remember of the legacy of Helen Clark and Michael Cullen?". It is a shocking sign when Michael Cullen's own pollsters think the end of nigh. They are writing the appendix now, before he has even gone.

They did not need to undertake that research. They could have rung me. I would have told them what it was.

Michael Cullen has had 8 years to capitalise on the best weather and the best economic conditions we have had in a generation.

He had an opportunity to deliver a really bright future for New Zealand and he failed, and no mickey mouse* around-about Budget is ever going to save that.

There was a time when I used to care who read Budget 2008. I will tell members this: I do not know whether it will be Michael Cullen who reads the Budget in 2008, and I do not care.

I do not care because I know who will read Budget 2009—it will be Bill English, and it will be a lot better Budget than this.