Speech to New Zealand Society of Actuaries
Queenstown

When I was asked to speak at this conference some months ago, I accepted in my position as National Party finance spokesman.

Well, I am extremely proud to be in Queenstown today in my new position as National Party leader.

What I want to say to you today is that I am hugely optimistic about New Zealand's future.

In this country we have always had the people to give us an edge. We're hard-working, innovative and global in outlook. We have done well in the past and we'll do better in the future.

Despite living on an island, New Zealanders are not an insular people. We understand what it is to live in a global world. Many of us are migrants, or have parents who were. For decades we've gone off on our OE, worked and travelled abroad, and sent money back to relatives in far-off countries.

And when we see a fellow rugby-jersey wearer on the tube in London, we feel a sense of connectedness. Needless to say, we usually voice it, with a hearty "Gidday mate".

We know that New Zealand is more than the sum of its parts, it's more than who lives here or what is happening right here, right now within these geographic boundaries.

In the future I hope we tap more into our global connections. The opportunities are there. The forces of geography and technology are positioning New Zealand to excel on the world stage.

The growing economic powerhouses of the world – China and India – are located, if not in our backyard, then in our street. As they grow there will be increasing trade and tourism opportunities for smart New Zealanders to grasp.

They call Australia the lucky country, but we need to be the savvy country.

In addition, the internet is giving our businesses access to an-ever vaster supply of potential customers as billions can reach their shop-front with the click of a mouse.

If you want a picture of what New Zealand can be in relation to the rest of the world you need look no further than here in Queenstown.

Queenstown is populated by Kiwis with a passion for life, an entrepreneurial bent, a strong connection to the outdoors, and a desire to show themselves off to the rest of the world.

Queenstown thrives because it focuses on what's best about New Zealand, and packages that for the rest of the world. It doesn't succeed by replicating the tourism experience of Disneyland or Paris, New York or London; it succeeds because it's uniquely Kiwi. It's proud of its history and tradition but it's forward-looking.

Just take the wine-growers from these parts. Tough soils, tough climate, new vines and what is the result? World-class pinot noirs that foot it with the best in the world.

New Zealand businesses are also using the world-class merino wool currently roaming high around the Otago countryside, turning it into top-end products like Icebreaker tops. Icebreaker, and other firms, have mixed together technology, great design, marketing flair and formidable distribution channels and came up with world-beaters. The jerseys may be sewn in China but the ideas and the knowledge content is all Kiwi.

These firms are looking forwards. In contrast, the Labour Government seems to be looking backwards. Their recently launched "Buy New Zealand" campaign would have you believe that the only future for New Zealand rests in manufacturing products in Kiwi factories.

That thinking may have been fine in the Seventies but it's not always best for New Zealand today. The flares that looked hot when you were in your teens aren't always the hippest today.

New Zealand's success will be based on looking out and reaching out, not looking inwards and looking backwards.

I can't think of a better example of this than the Government's recently proposed tax subsidies for businesses.

As we have made clear many times, National's policy on tax has been, and remains, to reduce personal and company taxes across the board. We are committed to lowering the tax burden New Zealanders face.

In contrast, Labour's preference is to borrow tax ideas from the disco days of the 1970s and early 1980s – tax subsidies which have largely disappeared out of sight.

The goals of these subsidies – a skilled workforce, developing overseas markets, and promoting R&D – are laudable, and National supports them.

But the very real danger of tax subsidies is that they encourage firms to re-categorise existing spending, or to put their energies into areas they can get tax back from, rather than making changes which will promote productivity and growth.

For example, under one of the proposed tax subsidies, firms will have every incentive to formalise all of the existing on-the-job training they do, just so they can get some tax back for it.

This could get quite ludicrous.

For example, rather than Bob showing Mary how the coffee machine works, he could be designated an in-house instructor teaching a course on "Preparing and presenting filtered coffee for service". His employer could then claim tax back against this, even though nothing at all has changed.

And if you think this is a ridiculous example you haven't seen the courses available under the National Qualifications Framework, and you haven't seen tax planning in full swing!

There will no doubt be a whole industry set up to take advantage of this tax subsidy, just as there will be a whole industry set up to argue for more of them.

In 1981, in the hey-day of tax subsidies, the New Zealand tax code contained about 90 targeted tax subsidies, and as a consequence the tax system was an unholy mess.

Don't get me wrong. National supports tax cuts which deliver the right incentives – to work, to study, to save, to invest, and so on. If tax subsidies can deliver appropriate incentives, and are good value for money then that's fine. History tells us, however, that this is a high hurdle indeed.

What we don't want is for firms to be looking down at their accounts to see where they can wangle another few dollars out of the government. We need them to look up and see opportunities to expand, to export to grow, and to take on staff.

We need to have 2020 vision, not 1970 vision.

But just as we embrace global opportunities, so too must we embrace our global responsibilities. Amongst these is the responsibility to address the many challenges to our environment.

Like most New Zealanders, I take the risks posed by climate change seriously. The scientific evidence indicates that the world is getting warmer and, if this does not change, the results could be catastrophic – for our society as well as for our environment.

The devastating effect that drought is currently having on Australia, with one struggling farmer committing suicide every four days, is just one example of the human impact created by adverse climactic conditions.

It would be hugely irresponsible for any forward-looking Government to ignore that threat. If human actions are contributing to a warming world we must do what we can to reduce our impact.

But there is a balance to be struck here.

There are some people who advocate ditching all our environmental responsibility in favour of a single-minded devotion to economic growth.

Another minority would say we should do whatever we can for the planet, and to hell with the economy.

Most New Zealanders recognise, and agree, that these objectives, in as much as they compete with each other, need to be carefully weighed against each other. I can assure you that in developing our policies this is something National will have foremost in its mind.

With the technology we have now, it would certainly be possible for New Zealand to achieve carbon neutrality, as Helen Clark stated was her aim. We would just have to shut down all the factories, turn off all the lights and put all our vehicles on the scrapheap.

What is more, these actions would have little global consequence, as New Zealand contributes less than 1% of global greenhouse gas emissions. And many of those factories which were shut down would simply move to other countries, with no net change to the environment.

So, instead of looking back – in this case to the era of the Flintstones – we need to look forward to pragmatic, sensible solutions to what are deeply complex problems.

This will require some imagination in our policies and an acknowledgment that while the responsibility is shared, so are the gains. In particular I remain confident that market-based solutions to some of these problems can be found.

We can only do better than what we have at the moment.

Despite the high-minded goals we committed to at Kyoto, the past few years have seen New Zealand's greenhouse gas emissions growing faster than the Kyoto 'no shows' Australia and the United States; more trees being cut down than planted for the first time in decades; and more electricity generated from coal than ever before.

I noted with interest last month's announcement by Australian Prime Minister John Howard that he was establishing a working group to investigate an Australian emissions trading system.

New Zealand should look at being part of this process.

National has always favoured an emissions trading system, and in the end it may make sense for this to include Australia.

A trans-Tasman carbon market has some attraction.

It's possible that by aligning our emissions markets, both Australia and New Zealand's interests would be served.

Furthermore, this is the kind of initiative we have to encourage to ensure that 'non-Kyoto' countries are part of the global emission-reduction effort.

Climate change is a global problem and New Zealand has to drive for solutions that draw-in all countries, not just those that signed Kyoto.

At the very least, being part of a working group would enable us to share information and ideas at a technical level with people who are confronting the same challenges.

I am therefore calling on the New Zealand Government to initiate talks with Australia on this.

I will be visiting Canberra next week and I'll be putting this issue on the agenda for discussions with senior federal ministers.

Speech to New Zealand Society of Actuaries
Queenstown

When I was asked to speak at this conference some months ago, I accepted in my position as National Party finance spokesman.

Well, I am extremely proud to be in Queenstown today in my new position as National Party leader.

What I want to say to you today is that I am hugely optimistic about New Zealand's future.

In this country we have always had the people to give us an edge. We're hard-working, innovative and global in outlook. We have done well in the past and we'll do better in the future.

Despite living on an island, New Zealanders are not an insular people. We understand what it is to live in a global world. Many of us are migrants, or have parents who were. For decades we've gone off on our OE, worked and travelled abroad, and sent money back to relatives in far-off countries.

And when we see a fellow rugby-jersey wearer on the tube in London, we feel a sense of connectedness. Needless to say, we usually voice it, with a hearty "Gidday mate".

We know that New Zealand is more than the sum of its parts, it's more than who lives here or what is happening right here, right now within these geographic boundaries.

In the future I hope we tap more into our global connections. The opportunities are there. The forces of geography and technology are positioning New Zealand to excel on the world stage.

The growing economic powerhouses of the world – China and India – are located, if not in our backyard, then in our street. As they grow there will be increasing trade and tourism opportunities for smart New Zealanders to grasp.

They call Australia the lucky country, but we need to be the savvy country.

In addition, the internet is giving our businesses access to an-ever vaster supply of potential customers as billions can reach their shop-front with the click of a mouse.

If you want a picture of what New Zealand can be in relation to the rest of the world you need look no further than here in Queenstown.

Queenstown is populated by Kiwis with a passion for life, an entrepreneurial bent, a strong connection to the outdoors, and a desire to show themselves off to the rest of the world.

Queenstown thrives because it focuses on what's best about New Zealand, and packages that for the rest of the world. It doesn't succeed by replicating the tourism experience of Disneyland or Paris, New York or London; it succeeds because it's uniquely Kiwi. It's proud of its history and tradition but it's forward-looking.

Just take the wine-growers from these parts. Tough soils, tough climate, new vines and what is the result? World-class pinot noirs that foot it with the best in the world.

New Zealand businesses are also using the world-class merino wool currently roaming high around the Otago countryside, turning it into top-end products like Icebreaker tops. Icebreaker, and other firms, have mixed together technology, great design, marketing flair and formidable distribution channels and came up with world-beaters. The jerseys may be sewn in China but the ideas and the knowledge content is all Kiwi.

These firms are looking forwards. In contrast, the Labour Government seems to be looking backwards. Their recently launched "Buy New Zealand" campaign would have you believe that the only future for New Zealand rests in manufacturing products in Kiwi factories.

That thinking may have been fine in the Seventies but it's not always best for New Zealand today. The flares that looked hot when you were in your teens aren't always the hippest today.

New Zealand's success will be based on looking out and reaching out, not looking inwards and looking backwards.

I can't think of a better example of this than the Government's recently proposed tax subsidies for businesses.

As we have made clear many times, National's policy on tax has been, and remains, to reduce personal and company taxes across the board. We are committed to lowering the tax burden New Zealanders face.

In contrast, Labour's preference is to borrow tax ideas from the disco days of the 1970s and early 1980s – tax subsidies which have largely disappeared out of sight.

The goals of these subsidies – a skilled workforce, developing overseas markets, and promoting R&D – are laudable, and National supports them.

But the very real danger of tax subsidies is that they encourage firms to re-categorise existing spending, or to put their energies into areas they can get tax back from, rather than making changes which will promote productivity and growth.

For example, under one of the proposed tax subsidies, firms will have every incentive to formalise all of the existing on-the-job training they do, just so they can get some tax back for it.

This could get quite ludicrous.

For example, rather than Bob showing Mary how the coffee machine works, he could be designated an in-house instructor teaching a course on "Preparing and presenting filtered coffee for service". His employer could then claim tax back against this, even though nothing at all has changed.

And if you think this is a ridiculous example you haven't seen the courses available under the National Qualifications Framework, and you haven't seen tax planning in full swing!

There will no doubt be a whole industry set up to take advantage of this tax subsidy, just as there will be a whole industry set up to argue for more of them.

In 1981, in the hey-day of tax subsidies, the New Zealand tax code contained about 90 targeted tax subsidies, and as a consequence the tax system was an unholy mess.

Don't get me wrong. National supports tax cuts which deliver the right incentives – to work, to study, to save, to invest, and so on. If tax subsidies can deliver appropriate incentives, and are good value for money then that's fine. History tells us, however, that this is a high hurdle indeed.

What we don't want is for firms to be looking down at their accounts to see where they can wangle another few dollars out of the government. We need them to look up and see opportunities to expand, to export to grow, and to take on staff.

We need to have 2020 vision, not 1970 vision.

But just as we embrace global opportunities, so too must we embrace our global responsibilities. Amongst these is the responsibility to address the many challenges to our environment.

Like most New Zealanders, I take the risks posed by climate change seriously. The scientific evidence indicates that the world is getting warmer and, if this does not change, the results could be catastrophic – for our society as well as for our environment.

The devastating effect that drought is currently having on Australia, with one struggling farmer committing suicide every four days, is just one example of the human impact created by adverse climactic conditions.

It would be hugely irresponsible for any forward-looking Government to ignore that threat. If human actions are contributing to a warming world we must do what we can to reduce our impact.

But there is a balance to be struck here.

There are some people who advocate ditching all our environmental responsibility in favour of a single-minded devotion to economic growth.

Another minority would say we should do whatever we can for the planet, and to hell with the economy.

Most New Zealanders recognise, and agree, that these objectives, in as much as they compete with each other, need to be carefully weighed against each other. I can assure you that in developing our policies this is something National will have foremost in its mind.

With the technology we have now, it would certainly be possible for New Zealand to achieve carbon neutrality, as Helen Clark stated was her aim. We would just have to shut down all the factories, turn off all the lights and put all our vehicles on the scrapheap.

What is more, these actions would have little global consequence, as New Zealand contributes less than 1% of global greenhouse gas emissions. And many of those factories which were shut down would simply move to other countries, with no net change to the environment.

So, instead of looking back – in this case to the era of the Flintstones – we need to look forward to pragmatic, sensible solutions to what are deeply complex problems.

This will require some imagination in our policies and an acknowledgment that while the responsibility is shared, so are the gains. In particular I remain confident that market-based solutions to some of these problems can be found.

We can only do better than what we have at the moment.

Despite the high-minded goals we committed to at Kyoto, the past few years have seen New Zealand's greenhouse gas emissions growing faster than the Kyoto 'no shows' Australia and the United States; more trees being cut down than planted for the first time in decades; and more electricity generated from coal than ever before.

I noted with interest last month's announcement by Australian Prime Minister John Howard that he was establishing a working group to investigate an Australian emissions trading system.

New Zealand should look at being part of this process.

National has always favoured an emissions trading system, and in the end it may make sense for this to include Australia.

A trans-Tasman carbon market has some attraction.

It's possible that by aligning our emissions markets, both Australia and New Zealand's interests would be served.

Furthermore, this is the kind of initiative we have to encourage to ensure that 'non-Kyoto' countries are part of the global emission-reduction effort.

Climate change is a global problem and New Zealand has to drive for solutions that draw-in all countries, not just those that signed Kyoto.

At the very least, being part of a working group would enable us to share information and ideas at a technical level with people who are confronting the same challenges.

I am therefore calling on the New Zealand Government to initiate talks with Australia on this.

I will be visiting Canberra next week and I'll be putting this issue on the agenda for discussions with senior federal ministers.

Speech to North Shore National Party luncheon
North Harbour Stadium

It's a real pleasure to be giving my first speech as Leader of the Opposition here in my own electorate of Helensville. The opportunity to do so means a great deal to me.

In 2002 and again in 2005 the voters of Helensville expressed their confidence in me as their representative. Even though being Leader of the Opposition brings its own workload, I will continue to serve the people of Helensville to the best of my abilities, and I will continue to spend as much time in this electorate as I can.

And in 2008 I will be asking the voters of New Zealand to express their confidence in me as Prime Minister of New Zealand.

On many occasions I have read in the media that John Key did a good job against Michael Cullen at the last election, that John Key knows his stuff on finance, but that no one knows what John Key really stands for.

Well, I'm pleased today to have the opportunity to say a few words about what John Key stands for, because I know him rather better than most commentators. I would like to share with you something of what drives me, what I believe in, and what I will be bringing to the job of Leader of the National Party.

You may know that before entering politics I had a career in international finance. That career was sufficiently successful that from time to time the media likes to question me about what I might be "worth".

Such questions imply that in the totality of my life, my investments are the most important assets I have accrued. How wrong that is.

As a husband and father, the things I value most in life are not anything you'll see listed on the Stock Exchange.

I think all New Zealanders would agree that the security, happiness and welfare of their family, which is also dependent on the security and welfare of their community and country, is the most precious thing to them.

No amount of money insulates against the anxiety that every parent sometimes feels for, and about, their children.

No amount of money enables a parent to buy happiness and self-fulfilment for their sons and daughters. Those, like most of life's most valuable achievements, are earned, not bought.

I support families. In modern New Zealand they come in many shapes and sizes, so let me tell you that I for one will not pre-judge the construction of them. They are in my view the most important institution in our society, and any government I have the privilege of leading will do what it can to support them.

My views on parenting, on families and on society, are shaped not only by my experiences during my career, but even more by my own upbringing.

My father died when I was a young child. I do not remember him.

I was raised, along with my sisters, by my mother, in a state house in Christchurch.

Back then I thought I was poor and, by most standards, we were. As I grew up, though, I recognised that what my mother gave to my sisters and I was far more valuable than money.

She instilled in us the desire to improve ourselves by our own hard work, the confidence that we were able to do it, and the hope that it was possible to do so. She instilled in me an ethic of hard work and determination and a genuine belief that "you get out of life what you put into it".

The State gave me the education that allowed it to happen. Those fundamental characteristics that were instilled in me – and the opportunity that was given to me, which I seized – I believe readily translate to New Zealand society as a whole.

There will always be a social welfare system in New Zealand because you can measure a society by how it looks after its most vulnerable. Once, I was one of them. I will never turn my back on that.

Yet, also, you can measure a society by how many vulnerable people it creates – people who are able to work, and able to take responsibility for their own lives and their children's lives, yet end up depending long-term on the State.

My mission is to raise people's sights, to be fearless and imaginative in policies that encourage people to set their aspirations higher.

A government I lead will have fair policies that encourage enterprise and hard work, and trusts people to get on with their lives and make the best choices for themselves.

The government, of course, has an important role to play in the modern economy. But the appropriate role for the government is in the background, not in the foreground. We need to improve the regulatory and institutional conditions under which firms operate, and then step back and let them establish, grow, export and hire staff.

So, whether they are school leavers stepping into first jobs, mothers venturing back into the workforce, graduates, iwi or entrepreneurs courageously starting their own businesses, or New Zealanders abroad thinking of returning home – I want them all to know that the way to a better future is in their own hands.

I want to give them the confidence that improvement is possible, and to assure them that policies are in place that will reward, rather than discourage, their industry.

I am ambitious for New Zealand and I want New Zealanders to be ambitious for themselves.

I believe in equal opportunity for all, and in the State playing its part to ensure this. How people choose to use that opportunity is up to them. They have everything to gain.

I am by nature an optimistic person. I am, after all, a Blues supporter.

I have enjoyed my work as an MP and as Finance spokesman, and I will continue to do so as Leader of the Opposition.

I have lived overseas, in Asia and in Europe, but I chose to come home.

It is a privilege to be a New Zealander, not only because, as they say, it is a good place to bring up children, or even because we produce the world's best oysters.

It is also a good place to achieve your ambitions.

The tyranny of distance is reducing, with a billion people now having access to the Internet. The growing economic powerhouses of the world – China and India – are located, if not in our backyard, then in our street. New Zealand businesses have access to the world.

However, though I think there's no better place in the world to live, we all know New Zealand can be a better country still.

We have some companies achieving world-best standards, but too few. We have some world-class tourism operations, but too few.

We are inclined to say educational standards are good enough, because they are better than some other countries.

I heard someone say recently that crime rates have been improving, as though averaging more than one murder a week is something we should all be relaxed about.

Well I'm not. National has never been a party that thinks mediocrity is good enough, nor will it be under my leadership. As a boy, I had high aspirations for myself, and as a politician, I have high aspirations for my country.

Building our nation's confidence, instilling a real pride and a sense of what it is that binds us together as New Zealanders, striving for excellence, and ensuring we use our past successes as a bridge to even greater achievements, will be paramount should National become the government.

If you are looking for a guide to my political philosophy then I suggest you look no further than the core values and principles of the National Party.

Personal freedom, individual responsibility, a competitive economy, and support for families and communities are the very principles under which the party was formed 70 years ago, and they are as relevant today as they were then.

Individual policies – those that deliver on the core values and principles – will of course be specific to each generation as our nation changes and as the challenges we face change.

To not do so would argue that what worked in 1976 will be just as effective in 2006, and for a variety of reasons I doubt this is so.

What you can be assured of is that our policies will always be measured against our core principles. Let me be also clear that I make no excuses for saying those polices will be harvested from wherever we see the best results being achieved.

I am interested in what works, and not what should, or could, or might work in theory.

I do not intend to blindly follow an ideological path without ever challenging the concept or considering its appropriateness in our unique New Zealand setting.

And New Zealand is unique. That is quite clear. Our peoples are unique and our environment is unique.

While there is only one New Zealand, it is made up of people from many backgrounds. There are people whose parents, or grandparents, or great-great-grandparents came from Europe, from the islands of the Pacific, from Asia, from all around the globe, together with the indigenous people of this country.

The National Party will always believe in one standard of citizenship and I want to make this very clear to you today.

Yet within that standard of citizenship we should celebrate the cultural, religious and ethnic differences we all bring to New Zealand.

Maori are the tangata whenua of this country, and we have nothing to fear by acknowledging that. It is part of what makes New Zealand unique.

I welcome the Maori renaissance, and some of the great initiatives like the kohanga reo movement which have come from Maori, for Maori.

It is encouraging to see Maori using the resources they have to help address the obstacles that are standing in the way of their own young people achieving their potential.

It is in the interests of no one, and to the shame of us all, that an under-class has been allowed to develop in New Zealand. This under-class is represented by all ethnic backgrounds, and when I talk about lifting people's sights, I am talking about all New Zealanders.

It is not the New Zealand way, and if left to fester it will impinge upon us all. My party is deadly serious about addressing these issues.

As I just said, we have a unique people and a unique environment.

When I left university, if anyone had heard of global warming they were keeping it to themselves. Now, no one with any awareness of the world can be ignorant of it.

It is a mystery to me why the political Left acts as if it has a monopoly on environmental policies, when it is obvious to anyone who cares to look that all of us, across the political spectrum, with the exception perhaps of the Greens, have taken too long to put the protection of our environment at the forefront of our thinking.

That needs to change. In the National Party we have taken steps to do this, and we will be taking more steps.

I hope this gives you a brief overview of some of the core principles that motivate me as Leader of the National Party.

There is much, much more to come, and I relish the challenge of building the policies and vision that will help create for New Zealand a more dynamic future.