25 may. John and presenter Neil Collins talk about Budget 2008 and National's economic agenda.

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Speech to the National Party Central North Island Conference

Thank you for your welcome.

It’s good to feel the election-year buzz in the air. That’s a buzz born of excitement, but also, I hope, a sense of the size of the task ahead of us.

2008 represents a huge opportunity for the National Party. But more importantly, it’s a huge opportunity for New Zealand.

As I travel up and down the country, from places like Gisborne to the suburbs of Auckland, from schools to small businesses, from public meetings to marae, I am hearing a consistent message from our fellow New Zealanders: they’re ready for change, they’re tired of this Labour Government, and they sense that Labour is simply tired and unfocused.

New Zealanders are looking for a government which puts their needs first and which can give them real hope for the future of this country.

They want a government which is thinking about how to make the most out of tomorrow, not how to cover up the mistakes of yesterday.

They are looking for fresh leadership with fresh ideas, which is focused on tackling the problems they increasingly confront in their everyday lives.

National’s task over the coming months is to prove to Kiwis that we are ready to form the government they hope for and deserve.

There is no doubt in my mind that our MPs and our candidates are ready. We have the ideas. We have the determination. We have the energy. We have the vision. And we’re hungry for the opportunity to give this country the fresh leadership it so badly needs. We’re going to campaign hard and we’ll be relying on your help.

Acknowledgments

Each and every National Party member, volunteer, and supporter is needed to make this year’s campaign a success. So let me take this chance to thank all those who will play a part in ensuring that election 08 delivers Kiwis the positive change they deserve. Your contributions are essential and I am very grateful for your efforts.

I’d like to express my particular thanks to National Party President Judy Kirk. Judy works tirelessly for this party and I am hugely appreciative of the experience and energy she brings to our team. I’d also like to thank Central North Island Regional Chair Jo Stuart for all the work she does for the Party.

And, of course, our National Party Members of Parliament. Our caucus is in fighting form. I’m privileged to be leading a team of men and women with talent, determination, and a real understanding of the communities they are in Parliament to serve: Tony Ryall in the Bay of Plenty. Anne Tolley in East Coast. Lindsay Tisch in Piako and Allan Peachey in Tamaki.

Our valued list member Georgina Te Heu Heu. Shane Ardern in Taranaki King Country. Sandra Goudie in Coromandel. David Bennett in Hamilton, and of course Bob Clarkson in Tauranga.

I’d like to take this opportunity today to thank Bob for his contribution to the National Party caucus and to wish him well outside Parliament. I’m sure Bob joins me in wishing the Tauranga campaign team the best of luck as they select a candidate and work to once again give Tauranga representation by a National MP.

Finally, let me welcome on board this region’s candidates: Louise Upston in Taupo, Tim Macindoe in Hamilton West, Clem Coxhead in New Plymouth and Todd McClay in Rotorua. The best of luck for your campaigns.

The case for change: Kiwis are hurting and Labour has no solutions

Let’s be clear about what we’re all campaigning for this year. We’re campaigning to make Kiwis’ lives better.

New Zealand is a great place to live, work, and raise a family. But right now, thanks to Labour, everyday Kiwis are really hurting. The past nine years have been a story of lost opportunities. Labour has failed to turn the years of good economic weather into increased financial security for Kiwi families.

Labour should have used the good times to lock in real improvements in our economy, to cut tax, to improve economic productivity, to build effective public services. If it had done so, Kiwis wouldn’t be feeling the pinch so badly now.

Instead, Labour has seriously mismanaged the economy. The results of this failure are everywhere to be seen, from interest rates that have doubled, to sky-high taxes, to squeezed household budgets.

The average family has gone from having a little cash to spare at the end of each fortnight, to being further in the red.

We’ve gone backwards. And finally we get a catch-up tax cut which won’t catch us up.

But that’s okay, Labour has been busy on other things – like the Electoral Finance Act.

The result of this neglect is that more and more Kiwis are giving up on New Zealand. Last year 44,000 people voted with their feet and left New Zealand permanently to live in Australia – the highest number in 20 years. There is nothing about that in Labour’s Budget. Not a word.

New Zealanders are rightly asking, if this is what Labour can deliver after eight years of good global economic conditions, then why should we trust them to turn things around in the bad times? We don’t know yet just how difficult New Zealand’s economic situation will get, but we do know that Labour can’t be relied on to fix it.

New Zealanders cannot afford another three years of a distracted Labour Government. New Zealand can no longer afford to listen to Helen Clark and Michael Cullen.

Only National can provide a government that is focused on the big economic challenges our country is facing. Only National has a serious, considered plan for delivering financial security to New Zealanders.

National’s Economic Plan

Our economic plan focuses on the long-term needs of New Zealand. It isn’t a short-term set of band-aid solutions. It is a considered plan to get New Zealand through this downturn, put the economy back on its feet and raise incomes. Because in good times and in bad, National will be resolutely focused on strengthening our economy and delivering better wages and living conditions to New Zealanders. We won’t just care about those things in election year.

National understands that if New Zealand is to meet the challenges of an increasingly competitive world, then we must make a step change. We must make a step change to deliver our children and grandchildren the wages and living conditions they have a right to expect.

At each of the regional conferences this month I have been addressing National’s five point economic plan for making that step-change. Now that Michael Cullen has delivered his ninth budget it is clear how our plans for the economy differ from Labour’s.

This is what we are going to do.


1. National is committed to reducing your tax burden.

National believes the burden of taxation in this country is too high.

Tax revenue this year is $22 billion higher than it was when Labour came into office.

And the simple fact is, this burden is stifling New Zealand. The people we need to help make this country a wealthier place, the people who make things, grow things, and build things, are having the initiative squeezed out of them by over-taxation.

After nine years of saying we couldn’t have a tax cut, Michael Cullen finally stumped up with one on Thursday. Sixteen dollars a week. Sixteen dollars a week for the average wage earner, starting two weeks before the election!

And after the election - who knows what would happen? Michael Cullen has already cancelled one lot of tax cuts and he can’t be trusted not to cancel them again.

National has a different approach to taxation. National thinks tax cuts should be part of the normal business of government, not a policy to be used only in the most exceptional and desperate of circumstances.

Tax cuts are part of our plan to get through this downturn and onto a path of economic growth and opportunity. We believe a credible programme of tax cuts can help lift our economic performance and raise incomes.

National’s tax cuts will be part of a package of measures to deliver the right incentives in the economy. They will help New Zealanders get ahead in their lives, encourage them to work hard, and assure them that they can do as well here in New Zealand as they can anywhere else in the world.

We will lay out our plans before the election, and we will carry through. Under National, New Zealanders will do better. The plan will be better, the structure will be better, and the delivery will be better. New Zealanders will be able to trust our tax cuts and they will not have to wait 3,000 days to get them.

That’s how long you’ve had to wait under Labour. It has been too little and much, much too late.

2. National will take a disciplined approach to government spending, so that interest rates track down, not up.

Michael Cullen said after the Budget that all his spending is on vital services. According to him, none of it is a waste; none of it is a luxury.

So here’s a fact you might be interested in: Government spending has increased from $34 billion to $62 billion over the time that Labour has been in office.

Are we really to believe that every dollar of that is being spent on vital services? If that’s really the case, then you’d think that Kiwis would have noticed some huge improvements in hospital services, in school performance, and in the amount of crime on the street.

But the fact is, under Labour a lot of the $28 billion in extra spending just hasn’t made it through to the frontline services Kiwis deserve.

When you go through each organisation’s budget in detail it can be quite revealing.

Here’s one example. The Tertiary Education Commission planned to spend $3 million on consultants last year and ended up spending $10.6 million.

This is in an organisation that didn’t exist five years ago. It now employs 341 bureaucrats and costs $72 million a year to run.

What is more, the commission got a funding increase of $22 million in this year’s Budget. This fact wasn’t even mentioned by the Government in its Budget press releases – no doubt because they found it too hard to justify to New Zealand taxpayers why they were pouring more and more money into the black hole of the TEC.

This year, while families have been tightening their belts, the Government has just kept on its big spending track. That might not be so bad if over the years there was something to show for it. But Labour has failed to improve the results from the government sectors it’s been pumping cash into.

The result has been steadily increasing pressure on inflation and interest rates. Floating mortgage rates have risen from 6.7%, when Labour came in, to 10.7% today. This has hugely tightened family budgets, as an ever-greater portion of their wages have gone towards mortgage payments.

So let me tell you this today. One of the first things National will do if we are elected in October will be to go through the government accounts line by line.

We won’t cut important services. On the contrary. I know from personal experience the importance of governments providing strong public services. But we will be as careful with your taxes as you are with your household budget.

In this downturn there isn't room for luxuries. There is only room for careful spending, and fresh thinking, and we will deliver that.


3. We will stop the massive rise in head office bureaucracy that Labour has encouraged, and we will deal with the regulatory and compliance issues that smother Kiwi businesses and families.

National will also move immediately to ensure that the focus of the public service is on serving the public and we will stop any further growth in the number of head office bureaucrats.

Helen Clark’s and her ministers’ stock answer to social problems is to employ more and more bureaucrats in Wellington to tell us what we already know.

Over the past eight years the bureaucracy has grown out of all proportion to those parts of the state sector that actually serve the public.

Since 2000, the number of teachers in state primary and secondary schools has grown by 12%. But over the same period, the number of people employed in the various education bureaucracies has grown at more than three times this rate.

Since 2000, the number of nurses and doctors employed in district health boards has grown by 28%. But over the same period, the number of people employed in the Ministry of Health has grown by 51%.

Across the economy, we now have a situation where one in 50 jobs is as a bureaucrat.

And in the Budget what did we see?

We saw confirmation that the Government is going to spend $600 million on hiring hundreds of new bureaucrats for the Ministry of Foreign Affairs and Trade.

New Zealanders should be appalled that in a year when families are really struggling to make ends meet, the Government is using taxpayers’ money on things like setting up and staffing a new embassy in Stockholm.

I can promise you that under my leadership, additional public spending will be focused on frontline services and resources like those in our schools, our hospitals, and the prison system. National will ensure that Kiwis come first, not bureaucrats. And we will start on day one.

4. National will have an unwavering focus on improving education standards.

The key to a productive economy is a highly skilled workforce.

As the world becomes more competitive, Kiwis will require more skills and more knowledge to keep up with the job demands of a growing economy. In turn, those more highly-skilled jobs will lead to better pay. Pay that keeps up with the growing cost of living.

We’re already seeing what happens when skill levels don’t keep up with the needs of modern industry. New Zealand’s shortage of skilled workers has put extreme pressure on the economy and has contributed to rising inflation. It’s kept a roof on growth and ultimately a roof on wages.

So it’s not good enough that Labour continues to allow one in five Kiwis to leave school without the basic literacy and numeracy skills they need to succeed.

Or that four out of every ten kids leave school without a qualification that provides them with the foundation knowledge and skills needed for work or further study.

And it’s not good enough that more than 25,000 Kiwis aged 15-19 are not in any form of education, training or work.

Labour’s budget didn’t have any answers for these problems.

Sure, it had a little more money for schools, and that’s good. Sure, it had a little more money for a few more teachers, and that’s good too.

But the Budget didn’t have any new ideas for improving what’s actually going on in those schools and in the classrooms where those teachers are teaching.

Labour doesn’t seem to realise that the current education system is underperforming. New Zealand needs to change some things if we want our education system to take the step-up needed to give our children world-class skills and world-class jobs.

National is ready to make those changes.

National will ensure our education system is resolutely focused on standards and achievement.

We will implement a nationwide set of literacy and numeracy standards. Then we will ensure that primary school students are tested against those standards, and that schools take action to fix problems that are identified. Finally, we will ensure schools are transparent about how well students are doing when compared to these standards. We won’t let one in five kids simply slip through the cracks.

We will also ensure our senior school system better equips young people with the skills and qualifications they need to succeed.

Our trades in schools policy and our youth guarantee will ensure that students are better matched up with learning programmes that meet their interests and abilities, and that ultimately match up with the needs of the economy.

Under National, secondary school students will be able to study trades at school and in trades academies, they will be able to take up school-based apprenticeships and they will be given hands-on learning opportunities. National knows that some kids will get a lot more out of learning how to weld than they will out of reading Macbeth.

National also knows that school isn’t always the best place for every student. We will give 16 and 17 year olds the opportunity to study school-level qualifications for free at a provider that best meets their needs – be that a traditional high-school, polytechnic, wananga or private training establishment.

These are innovative ideas that are about getting the best out of every student.

Yes, education also requires significant government investment. National will make that investment. But we’re simply not convinced Labour has ensured that education dollars always make it through to the classroom. Too much of that money is getting trapped in the bureaucracy, whether it be the Tertiary Education Commission, the New Zealand Qualifications Authority or the huge Ministry of Education.


5. Finally, National will invest in the infrastructure this country desperately needs to grow.

Kiwis are hard workers. But the key to improving our living standards is to grow our productivity. We need people out there creating things, building things and doing things that are of a high value.

Under Labour, productivity growth has been falling, and we have been lagging behind other countries.

Under National, policies that lift New Zealand’s productivity are going to be a key part of our agenda, including investment in key economic and social infrastructure.

National’s infrastructure goals, like all the elements of our economic plan, are focused on future-proofing the economy. We are ambitious for New Zealand and we are focused on the things we need to secure our future prosperity.

Over the past several years we’ve had a severe infrastructure deficit in New Zealand. We have ridiculous traffic jams all over Auckland and in other parts of the country, inadequate broadband services, and yearly concerns about whether the lights will be turned off.

This nationwide infrastructure deficit has severely constrained economic productivity. Labour has been way too slow to deal with it.

A month ago, I announced our broadband policy. We plan to invest up to $1.5 billion to accelerate the roll-out of ultra-fast fibre to the homes of 75% of New Zealanders. In the first six years, priority will be given to business premises, schools, health facilities, and the first tranche of homes.

National will also take steps to accelerate the roll-out of high-speed broadband services to rural and remote areas. As a first step, we will double the size of the Broadband Challenge Fund, and give it the primary focus of providing fast broadband solutions for remote and rural communities.

National’s broadband plan will be a growth-enhancing investment that will help New Zealand take a step up. It will provide positive returns to the economy as a whole, which in turn will benefit all New Zealanders.

Independent experts estimate the benefits of a plan like ours will total between $2.7 billion and $4.4 billion a year to New Zealand.

This broadband plan vividly illustrates just how different National’s investment approach will be from Labour’s.

In this week’s Budget Labour had the opportunity to put up their answer to National’s Broadband plan. But they failed to step up to the plate. Instead they offered a small sum spread over five years, without any coherent vision for what it would achieve.

Labour chose to focus their infrastructure investment in an over-priced train set that already exists and that the government didn’t need to buy.

Conclusion

National’s economic plan is the fundamental platform from which all our policies will flow.

You can be sure you will hear more of the detailed aspects of this plan as we head towards the election. You can also be sure that you will hear more of our practical, fresh ideas for approaching other issues confronting New Zealanders.

New Zealanders work hard, do the right thing, pay their taxes and try hard to raise their families responsibly. They have a right to a government which is focused on the issues that matter and which has a real plan for building a stronger future for this country.

National will lead a better-managed government that focuses on strengthening our economy, returning fairness and incentives to our tax system, retaining our best people in New Zealand, keeping dangerous prisoners away from our communities, improving our healthcare, and ensuring standards in education that equip our children with every opportunity to succeed in our modern world.

I truly believe we live in one of the best countries on Earth, and I believe we can be far greater still. But to be as good as we can be, we have to constantly think about tomorrow, and next year, and the decades ahead. We can’t get bogged down by fads, distractions, or the ideological battles of the past.

I’m just not interested in the tired old political debates from 20 or 30 years ago. I believe New Zealand’s future depends on grasping good ideas, no matter where they come from, and putting them into action.

If we are elected, I promise to bring energy, fresh thinking, and straightforward, practical ideas to the job. I also promise to bring a sense of optimism about New Zealand and its future.

I know that the National Party has the energy and determination to win this election and lead this country. Over the next five to six months, between now and Election Day, we must prove ourselves to Kiwis by being resolutely focused and disciplined.

During what I’m sure will be a challenging few months, we must never lose sight of what we are fighting for. In this election, we’re not just fighting for a National Party victory – we’re fighting for a better future for New Zealand.

While Labour may think this election is all about another trophy in the cabinet, National is focused on giving this country a real future. Every one of us must raise our sights to that goal and resist the temptation to be drawn into petty sideshows.

National is the only party ready to deliver New Zealanders the government they deserve. Election 2008 is this party‘s big opportunity. Election 2008 is New Zealand’s big opportunity.

Let’s make the most of it and deliver change in 2008.

John responds to today's presentation of Budget 2008. "After nine years of waiting - just $16 a week" in tax cuts for the average earner.

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Hansard of John's speech (unofficial version)

BUDGET DEBATE
14:47:46~JOHN KEY (Leader of the Opposition)

JOHN KEY (Leader of the Opposition): I move, That all the words after "That" be omitted and the following words be inserted: "This House has no confidence in the Government led by Helen Clark, because New Zealanders have had to wait far too long to see any changes to personal tax thresholds or any lowering of personal tax rates, and over nine Budgets this Government has presided over a decline in New Zealand's standard of living compared to the rest of the world."

So there we have it—Michael Cullen's ninth and final Budget. It may have been his election-year Budget, but it was also his valedictory.

You see, he read the Budget speech but he did not believe one word of it. He did not believe one word of it. And did it not just smell of desperation?

After 9 years of putting off tax cuts I heard him read out the words. He did not believe those words, but it was a giant acknowledgment of the failure of his Government's leadership when it comes to the economy. When it came to the tax cuts it was far too little and it was far too late. It was pretty interesting that this was the Finance Minister who had been telling New Zealanders for 9 years that they could not have a tax cut. But guess what? In 4 or 5 months' time there will be an election, and 2 weeks beforehand Michael Cullen, after 9 years, will give a tax cut that he does not believe in.

It will be the only chance for a tax cut. But the saddest bit about the whole speech, because it was pretty sad, is when people start to reflect not just on the tax cut but on the price that New Zealanders are paying for the economic leadership shown by the Labour Government—or lack of leadership, as the case may be.

You see, they were led to believe, by Michael Cullen, that he would keep interest rates under control, and he has not. Interest rates have doubled under a Labour Government.

There was no apology in the Budget this afternoon to the hard-working couple who borrowed $200,000 and who now find themselves paying $150 a week more for interest—no apology to that family.

There was no apology to the families and the New Zealanders to whom he said: "Don't worry—your wages will go up." But he did not tell them that the cost of living under his leadership would rise faster than their wages.

The same people reading his Budget tonight will be the people who picked up the New Zealand Herald today and saw that cheese had gone up 112 percent, who had just gone to fill up their car and paid over $2 a litre for petrol, and who cannot afford to buy butter in the supermarkets of New Zealand because Michael Cullen has not managed to produce wages that can keep pace with those price rises. There was no apology to the 1,700 people who have lost their jobs in the last 2 months, and to whom Ruth Dyson said: "Don't worry about it because we're all doing OK."

There was no apology to those people, and no apology to the thousands of New Zealanders who every day go to a hospital and ask the question why, after 9 years when spending has doubled in health, they still cannot get their operations—why they still have to go to Australia to get cancer drugs, and why, if they take Herceptin, they are funded for 9 weeks and not for 52 weeks.  There were no apologies for all of that.

You see, the interesting thing about this Budget is that it is ideologically opposed to everything that Michael Cullen believes in. He believes in taking people's money off them and spending it faster than they can. That has been the strategy. But then, let us be honest: we have heard over the last 9 years a lot of talk from Labour. We do not hear so much of it these days. Gone is the talk of New Zealand getting into the top half of the OECD. That was where Labour started 9 years ago: "We will be in the top half for the OECD."

But Michael Cullen does not tell New Zealanders that we are not 20th any more, which is the placing we had out of 30 when Labour came to office; we are 22nd. The only place where we have literally gone up in the OECD rankings is in being more heavily taxed, and we have moved from 20th to 12th. So gone is that talk.

And gone is talk of closing the gaps. Do members remember that? That was in 2000, when the average Māori family earned an income equivalent to 82 percent of a Pākehā family's income. Has that gap closed? No! It has widened so that that income is now only 73 percent of the income of a Pākehā family. So gone is talk of closing the gaps.

Then there was talk of the knowledge wave. There was no talk about the knowledge wave in this year's Budget, and no talk of the hundred information technology companies that would have a turnover of $100 million. That has gone—no talk of that.

Does anyone remember the talk of economic transformation? I remember listening through speeches where we heard it about 30 times—economic transformation. We are still waiting—New Zealand is still waiting—for economic transformation.

What about growth and innovation? That was the talk.

And last but not least was carbon neutrality. Did we hear that mentioned in the speech? No. You see, Helen Clark has finally worked out what carbon neutrality means—that is, we lead the world—we lead the world in costs, we lose jobs, we lose people, and we lose opportunities, and, most of all, all we do is export carbon dioxide emissions around the world.

So let us turn to the centrepiece of Michael Cullen's Budget—tax cuts. Well it has finally happened, but it has been a long, long wait.

I can only say that I hope they last longer than the ones he announced in 2005. They may not be supported by Michael Cullen—that is OK; we will come back to the legislation that will lock them in in a minute—but do they not just reek of that cynicism? They come in on 1 October. We can put a ring around the date for the election: 18 October. But do not worry, because Labour will get a revival before going to the polls—it thinks—having given the average worker of New Zealand a family size block of cheese.

That is what the tax cut is worth. New Zealanders have had 9 years of waiting and they will get a family size block of cheese. They will get two blocks before the election and they are meant to be grateful. That is the message; they are meant to be grateful. While they are being grateful, they should think about this: the next time they get a tax cut—theoretically, under that Budget—will not be for 2 years. It is a long time between toasted sandwiches. It is a long time between servings of macaroni cheese.

People will wait 2 years and they will not get tax cuts in 2009. Do any members know why? The reason is that it is not an election year.

So in 2009 people are not allowed tax cuts. There we go; that was Michael Cullen's "tax cuts Budget", motivated by one reason alone. It is not the belief of Michael Cullen in tax cuts, but in electoral survival. That is the reason those tax cuts are there. The reason they have taken so long to get there is that Dr Cullen never wants to deliver them. He does not want to deliver them.

What will be interesting to New Zealanders, as they go home tonight and reflect on Michael Cullen's Budget, is the thought that they have waited for over 3,000 days under a Labour Government to get a tax cut—3,000 days. If they are paying the top personal rate, which kicks in at $60,000 and will eventually move up under today's Budget, then they have to wait for only 125 days from whoa to go for their tax rate to go up.

You see, under Labour, one waits 125 days and one's taxes go up, and then one waits for over 3,000 days for one's taxes to go down. Earlier this week, Michael Cullen told us that tax cuts that would deliver a reasonable amount to New Zealanders were reckless and unaffordable. Maybe Dr Cullen should have looked over the road, over the Tasman, to the Australians.

Hon Dr Michael Cullen: These are bigger than the Australian tax cuts—miles bigger.

JOHN KEY:  Well then, the design is terrible, I say to Dr Cullen. We will come back to that in a minute. Let us look at it. During the same period of time that Labour has been in office in New Zealand, people in Australia earning $47,000 a year got $100 per week as a tax cut, whereas under Labour in New Zealand they would have received zero and, 2 weeks before the election, they will get their block of cheese.

In Australia they get $100 a week, and in New Zealand they get zero until they are within 150 paces of a polling booth, when they will get $16. That is the difference. If anyone is wondering why 44,000 people left New Zealand last year and went to Australia, it is because they were looking for economic leadership. It is coming, but not under a Labour Government.

What else did we learn when we heard what was in the Budget? There will be an urgency motion tonight. The House will go into urgency. Why? It is to legislate for the tax cuts that come in on 1 October. Actually, this is the real reason—and Michael Cullen admitted it earlier in the week. He does not trust himself to deliver his own tax cuts if he does not legislate for it. He is like a chocoholic who loves Caramello, but he has had to hide it in a box at the top of the bedroom so that he cannot find it. He is legislating for his own tax cuts because he does not trust himself. What is actually worse than that is that his own colleagues do not trust him. They want the House to go into urgency.

What do Governments do? They change legislation. That is what Governments do. Beyond 2009, if New Zealanders trust Labour for a tax cut, Michael Cullen will be whipping them away. Well, enough of Michael Cullen. We will get to some policy. I want to talk about National's plan. I tell the members opposite to listen up, because they may well be beneficiaries of it. This is the message to New Zealanders: under National, tax cuts are a priority—under National, personal tax cuts are a priority.

It is a pretty simple message: under National, New Zealanders will do better. The plan will be better, the structure will be better, and the delivery will be better. Most of all, New Zealanders will be able to believe our tax cuts, they will be able to trust our tax cuts, and they will not wait 3,000 days to get them.

They will not be doing that. Most of all, our tax cuts will not just be about putting dollars into the pockets of hard-working New Zealanders. They will actually be about delivering the right incentives in the economy.

We know that Labour members do not believe in tax cuts, and they are admitting that. They may not like to hear it, but tax cuts deliver the right incentives. Tax cuts let New Zealanders get ahead in their lives. They encourage New Zealanders to work hard, to get extra responsibilities, to save, and to get further education.

We believe in tax cuts, we believe in the power of tax cuts, and we will deliver them. What is more, we can afford to do it. I will tell New Zealanders how we can afford to do it. This year the Government will spend $60 billion, and not one of those dollars is being reviewed—not one. The Labour Government has for 9 years wasted money hand over fist, and it does not care. One only needs to look at what is happening in Australia to know that tax cuts are possible. The Labor Government in Australia went in after 9 years of tax cuts and it still found savings and the ability to do things.

I want to make one last point about Michael Cullen. He has laboured on about interest rates, but this is the simple point: if Labour and Michael Cullen care so much about interest rates, why has he let them double under his watch?

Let me say this very clearly. We have a plan for New Zealand. It involves tax, it involves infrastructure, it involves curbing the bureaucracy, it involves having proper planning legislation, and it involves having the right future. But most of all let us answer the real question.

This is the difference between Labour and National: Labour is stuck in the past; it is the past. Helen Clark and Michael Cullen care more about the Viet Nam War and the Springbok Tour than they do about the big issues facing New Zealand today. They do not want to front up on a decent emissions trading scheme, they do not want to front up on the big issues of globalisation, they do not want to front up on the issue of why so many New Zealanders leave, and they do not want to front up on how to lift economic growth in New Zealand.

What they want to do is meander around in the past. National will not do that.

National will take New Zealand forward on a high-growth environment, where our young people know they have a future, where they know that we as a Government will back them to succeed, and where we will deliver them the tools they need. We will deliver fast broadband so they can be connected to the world; a future-looking Government that knows where it is going; and a country that is not afraid of itself, where winning is part of the national conversation, where it is not just about participation but about succeeding, and where there is aspiration, hope, opportunity, and ambition—most of all, ambition. New Zealand deserves a lot better than what it has had in the last 9 years.

New Zealand deserves a National Government, and in 5 months' time and two blocks of cheese, that is exactly what they will get.

JUST $16 A WEEK – THE BLOCK OF CHEESE BUDGET

Kiwis have waited nine long years for Michael Cullen to admit he’s wrong and deliver tax cuts. And after those nine long years he says he will give the average wage earner just $16 a week – the equivalent of a family-size block of cheese – a few weeks out from the election.

Then, once the election is over, the average wage earner will have to wait a couple of years to get just $6 more. It will be a very long time between toasted sandwiches.

No finance minister in New Zealand history has had the opportunity to cut taxes like Michael Cullen. Yet after more than 3,000 days in office, he says he will finally deliver – just days from an election. New Zealanders will see this as the desperate and cynical move it is.

Labour has squandered the golden economic weather of the past nine years, and failed to future-proof the economy. Their Budget is all about survival, not a sense of real priorities about New Zealand’s future direction.

Tax cuts are a top priority for National. They are an essential part of our five-point plan for the economy to make New Zealand a wealthier, more successful country. This plan includes:

- An ongoing programme of personal tax cuts. We will put the right incentives in place to encourage people to work and save and get ahead under their own steam. Boosting after-tax wages will help stem the flow of Kiwis overseas. It will help New Zealand keep the skilled workers we need to grow our economy and improve our public services.

- Bringing discipline to government spending. The government should be just as careful with your tax dollars as your household is with the weekly budget. National will direct spending away from low-quality programmes that push up inflation, towards frontline services like doctors, nurses, teachers, and police.

- Tackling bureaucracy and red tape. We will cap the number of bureaucrats in the core public service, and we will reform the Resource Management Act and the Building Act. We want to cut the high compliance costs that bog down everything from growing a business to building a deck.

- An unwavering focus on lifting education standards. We will introduce National Education Standards in primary and intermediate schools to improve literacy and numeracy. We will boost trades in schools and encourage teenagers to get the skills they need to make the most of themselves.

- Boosting infrastructure to help this country grow. We have a $1.5 billion plan to bring ultra-fast broadband to businesses, schools, hospitals, and homes. And we will work with the private sector to substantially boost investment in roads, electricity, and water.

Our plan for the economy is focused on getting New Zealand onto a much stronger path of economic growth and opportunity, and building a wealthier future for all New Zealanders.

GETTING EMISSIONS TRADING RIGHT

In a speech http://johnkey.co.nz/index.php?/archives/383-SPEECH-Lower-North-Island-Regional-Conference.html I gave to the National Party’s Lower North Island Regional Conference on Sunday, I called for a delay in the emissions trading legislation currently going through Parliament.

As a responsible international citizen, New Zealand must do its best to reduce greenhouse gas emissions. A well-designed, carefully-balanced Emissions Trading Scheme (ETS) is the best tool available for efficiently reducing emissions across the economy. But Labour has been racing towards a political deadline - the 2008 election – to set up the ETS and it has been prepared to cut corners to get there.

We are not prepared to cut those corners – not when the financial security of Kiwis is at risk, and not when getting the ETS wrong means exporting jobs, ratcheting up inflation, and viciously squeezing household budgets.

National believes that the current rushed timetable for the design of the ETS and the select committee process is reckless, given the importance of the issue. That’s why we will not support the bill going to a second reading until we are satisfied that it meets six key principles:

1. The ETS must strike a balance between New Zealand's environmental and economic interests. It should not attempt to make New Zealand a world leader on climate change. Kiwis simply can't afford to pay the price for that particular experiment.

2. It should be fiscally neutral rather than providing billions of dollars in windfall gains to the government accounts at the expense of businesses and consumers. National does not think it's responsible for government to use green initiatives to pad the Crown’s coffers while thinning out Kiwis' wallets.

3. It should be as closely aligned as possible with the planned Australian ETS, with common compliance regimes and tradability. In my second speech as National Party Leader, I called for close co-operation with our biggest trading partner on this issue, and I continue to call for it. Given the Australian timetable for developing an ETS, I believe it's still possible.

4. The ETS should encourage the use of technologies that improve efficiency and reduce emissions intensity, rather than encourage an exodus of industries and their skilled staff to other countries.

5. It needs to recognise the importance of small and medium enterprise to New Zealand and not discriminate against them in allocating emissions permits.

6. It should have the flexibility to respond to progress in international negotiations rather than setting a rigid schedule. This way, industry obligations can be kept in line with those of foreign competitors.

National does not expect to be the sole judge of whether the revised bill meets these principles. We believe that the views of New Zealanders must be heard and responded to.

For that reason, significant amendments to the bill should be tabled in Parliament, referred to the select committee alongside the bill, and subject to public submissions. 

This will most likely mean carrying the legislation into the next Parliament. I believe that's a small price to pay for ensuring New Zealand gets the best ETS possible.

John Key MP
Leader of the National Party

New Zealanders have waited nine long years for Michael Cullen to admit he's wrong and deliver tax cuts giving the average wage earner just $16 a week, says National Party Leader John Key.

"Michael Cullen says he will give the average wage earner $16 a week – the equivalent of a family size block of cheese – a couple of weeks out from the election.

"Then, once the election is gone, the average wage earner will get just $6 more a couple of years later.  It will be a very long time between toasted sandwiches.

"No finance minister in New Zealand history has had the opportunity to cut taxes like Michael Cullen.  Yet he has squandered the golden economic weather and failed to future-proof the economy.  He doesn't believe in tax cuts, and still doesn't.

"Yet after more than 3,000 days in office, he says he will finally deliver – just days from an election.  New Zealanders will just see this as the desperate and cynical move it is.

"Labour's move is all about survival, not a sense of real priorities about New Zealand's future direction.

"And who can trust Labour and Michael Cullen on tax?  He cancelled the 2005 'chewing gum' tax cuts, and still doesn't believe in them. What odds on 2010 and 2011?

"Tax cuts are a top priority for National.

"We will have an ongoing plan of meaningful tax cuts as an essential part of our five-point economic plan that will make New Zealand a wealthier, more successful country.

"Our plan is focused on getting New Zealand through this downturn and onto a much stronger path of economic growth and opportunity."