Ladies and Gentlemen

Can I start by saying that it’s a tremendous privilege to have won the trust and goodwill of New Zealanders for a second term in Government.

I don’t take that for granted and I never will.

I learned quickly when I came into Parliament that a government has to earn the trust and goodwill of voters again and again, every day.

And that’s what we’ll be doing.

We proved in the past three years that we can deliver strong and stable government in difficult times.

We worked constructively with a number of other parties in Parliament to get things done for the benefit of New Zealand, and we’ll continue to do that.

I don’t know exactly what the next three years will throw up.

The past three years have shown us that adversity gives little warning.

New Zealanders have had to deal with catastrophic events outside anyone’s control; from a global financial crisis to a devastating series of earthquakes in Canterbury.

New Zealand has changed over the past three years and, in fact, the whole world has changed.

The next three years will about rebuilding and strengthening the country.

And compared to a lot of other nations we are in a good position to do that.

Today I want to talk about the Government’s priorities over these next three years – in other words, how we are going to continue with our plan to secure a brighter future for New Zealand.

A brighter future is where New Zealanders from all backgrounds and all walks of life have the opportunity to better themselves and go forward in their lives; where people have the jobs, higher incomes and better living standards they aspire to and deserve; and where as a country we have the resources to provide better frontline services in health and education, stay strong on crime, protect the most vulnerable in society, and look after the environment.

How do we achieve that?

The Government has four priorities this term.

Our first priority is to responsibly manage the Government’s finances. In the world as it is today, the state of the country’s finances is all-important.

Our second priority is to build a more competitive and productive economy. That means an export-focused economy, which is selling more of what the world wants, at a competitive price, and is built on a solid base of innovation.

Our third priority is to deliver better public services to New Zealanders, within the tight budget the Government is operating under.

And our final priority is to rebuild Christchurch, our second-biggest city.

I want to talk some more about these priorities and give you an indication of where the Government is going.

But before I do that I want to talk briefly about the international backdrop.

The global economic outlook has deteriorated since the end of last year, and the European crisis, in particular, is the biggest potential threat to the world economy and therefore to the New Zealand economy.

Leading forecasters like the IMF, World Bank and Consensus Economics are expecting world growth to be weaker over the next couple of years than previously predicted.

For the most part, that is because of the ongoing turmoil in the Euro area.

The most likely outcome is that European countries manage through the crisis with the Euro intact, because it is in their collective interest to do so.

But that is by no means guaranteed.

As recently as yesterday, the IMF warned that if the required actions are not taken, the European crisis could spill over into a global recession.

Even under the more likely scenario, where Europe avoids a full-blown crisis, the Euro countries are expected to go into recession in 2012 and will be in for a protracted period of sluggish growth thereafter.

This poorer growth outlook for Europe has, in turn, contributed to lower growth forecasts for Asia, including China.

Overall, growth in China is expected to remain strong, but an easing in that growth will still have a flow-on effect for Australia, because of a lower demand for minerals.

The outlook in the United States is actually looking better than it did late last year, but growth is still likely to be subdued.

What does that mean for New Zealand?

Weaker global growth, particularly in our key export markets in Asia and Australia, will put downward pressure on the demand for our exports.

That will have a real and noticeable effect on the New Zealand economy, which is expected to grow somewhat slower than was predicted at the end of 2011.

But it won’t knock the New Zealand economy for six and it certainly won’t stop the Government pushing ahead with its priorities.

We are a small economy doing the right things, our banks are in good shape and the Government has managed effectively through the difficulties of the past three years.

The really difficult challenges will start to come if world growth continues to be revised further and further downwards, or if the European crisis triggers a global credit freeze.

Those are not the most likely scenarios for the world economy but they are certainly possible and the Government will continue to monitor global events very carefully.

So given that international backdrop, I want to talk some more about each of the Government’s priorities:

• responsibly managing the Government’s finances
• building a more competitive and productive economy
• delivering better public services
• and rebuilding Christchurch.

Our first priority is to responsibly manage the Government’s finances.

As every household and business around the country knows, that involves living within our means – budgeting carefully and deciding which things are priorities and which are not.

The Government is committed to returning to surplus in 2014/15.

Sticking to this commitment is an important part of our plan to limit debt and take pressure off interest rates and the exchange rate.

And sticking to this commitment is also important for New Zealand’s credibility with international financial markets. As we have seen overseas, a loss of credibility is very difficult to reverse and can have widespread effects across the whole country.

As you’d expect, the forecast slowdown in world growth makes our surplus target harder to achieve.

But today I can confirm that we are still on track to post a surplus in 2014/15.

The upcoming Budget Policy Statement will show a forecast surplus in the range of $300 to $500 million in that year.

Given the events in Europe, this surplus is understandably smaller than was forecast in the PREFU.

But we still remain on our tight fiscal track.

You’ll see a fuller picture of that in the BPS, which will be released on February 16.

The next update after that will be in the Budget itself.

The Budget will set out the Government’s revenue and spending, and show exactly what we are doing to meet our fiscal targets, get back to surplus and start reducing debt.

If the international outlook worsens between now and the Budget we may have to do more than we are currently anticipating to reach our surplus target, bearing in mind that the target is still three years and many forecast revisions away.

If the absolute worst happened, and there was a major shock to the global economy, the Government would look at whether retaining that surplus target would actually harm the economy by forcing a sharp reduction in demand.

But outside that scenario, we remain firmly committed to our target for surplus in 2014/15.

I want to talk now about our second priority, which is to build a more competitive and productive economy.

The reality, all around the developed world, is that the pre-GFC period of relatively strong growth, fed by a massive increase in borrowing, is unlikely to return in the foreseeable future.

Households and businesses are having to reduce the debt they built up over that time, and they are saving rather than spending.

So anyone who complains that New Zealand isn’t growing at four, or five, or six per cent a year right now is on the wrong planet.

In fact, we are doing better than most developed countries.

In both 2012 and 2013, the New Zealand economy is forecast to grow more strongly than the Eurozone, the UK, Japan, the United States and Canada.

So we are in relatively good shape.

However, it is important to understand the Government’s main role.

For the most part, New Zealand’s growth over the next year has already been set in train, and any stabilisation is the job of the Reserve Bank.

The Government’s main role is to keep looking out over the next five years or so and put in place policies that will help the economy become more competitive and productive, through good times and through bad.

Again, the European crisis offers some important lessons.

European countries are in difficulty for two main reasons.

The first is that they have high levels of government debt, and I’ve already talked about the importance of sticking to our tight fiscal track.

And the second reason is that many of the economies in Europe have lost competitiveness.

That doesn’t happen overnight – it happens slowly over a number of years.

Here in New Zealand we have also lost competitiveness over time, particularly as a result of poor policy decisions in the 2000s.

In other words, it has got harder than it would otherwise have been for our exporters to compete in overseas markets. And it has got harder than it would otherwise have been for New Zealand manufacturers to compete with imported goods that are made off shore.

As a result, the industries and sectors that compete internationally actually went into recession in late 2004 and shrank in size by almost 10 per cent in five years.

That decline in competitiveness has started to turn around over the past three years.

A good example of how government policies can help competitiveness is in ACC. As a result of the decisions we made in ACC over the past three years, levies on employers and the self-employed will fall by 22 per cent this year, reducing total costs to business each year by around $250 million.

That’s just one example among many, but there is still much more to be done.

The Government’s view has always been that there is no magic bullet – no one ‘big bang’ reform that would turn the economy on its head.

What is actually required is a series of good policy decisions and reforms over an extended period of time, in 100 different areas, to enhance the competitiveness of New Zealand firms.

And I literally do mean 100.

During the election campaign we released an economic action plan of 120 key things we had done, or were doing, to build a stronger, more competitive economy.

Most of those action points are still ongoing.

So we have a very busy economic reform agenda, following through on things we started last term and on new things we announced during the election.

For example:

We’re restructuring IRL to become an advanced technology institute to work alongside the high-tech manufacturing and services sector.

We’re rolling out ultra-fast broadband and the Rural Broadband Initiative, to lift New Zealand’s connectivity.

We’re comprehensively overhauling New Zealand’s securities law, to restore investor confidence in our financial markets.

We’re introducing a six-month time limit for consenting medium-sized projects under the RMA, to reduce costs, uncertainties and delays.

We’re allowing for choice in the ACC Work Account, to help ensure efficiency and keep a lid on costs for levy payers.

We’re encouraging oil and gas exploration with a competitive new system for processing permits.

We’re negotiating free trade agreements with nine countries in the Trans-Pacific Partnership, including the United States, and separately with a number of other countries including India, Russia and Korea.

We’re extending the mixed ownership model to four State-owned energy companies, to make better use of the Government’s balance sheet and to provide new investment opportunities for New Zealand savers.

And we’re investing heavily in roads of national significance and in the rail network, to promote economic growth and productivity.

These are a few of the initiatives in the 120-point plan, which sets out what the Government will be doing over the next three years.

I have tasked Bill English and Steven Joyce – the two most senior economic ministers – with driving this economic action plan.

I have told them I want to see this action plan regularly updated, showing progress on the existing initiatives and adding further initiatives as they are developed.

The first update will be in the middle of this year and will be publicly released.

Our third priority is to deliver better public services for families and businesses, within tight budgets.

Delivering better public services will help improve the lives and wellbeing of New Zealanders.

New Zealanders rightly expect a world-class health service, an education system that delivers for every child, a strong and effective justice system and social services that protect our most vulnerable and provide children from all walks of life with the opportunities they need to succeed.

Again, the Government has a very busy agenda over the next three years.

In education, our focus is squarely on raising achievement, in particular for those groups of students who have historically under-performed.

We’re strengthening performance measurement and accountability in schools, and we’ll be investing $1 billion of the proceeds from mixed ownership in modernising New Zealand schools.

It’s vitally important for New Zealand that students achieve because they are our future workforce.

But it’s also vitally important for the young people themselves, because a good education is the most important investment they can make in their own lives.

Welfare reform is also a very high priority for the Government.

At the moment around one in eight people aged 18 to 64 is on some sort of benefit, and about half of those have spent at least five out of the past 10 years on a benefit.

That is not only a poor position for beneficiaries themselves to be in: it's also not good for their children, for society or for taxpayers.

So we'll be moving quickly this year to get our welfare reform programme underway.

Early in the year the first Bill will be introduced to Parliament to enact the youth reforms I announced last year, targeting young people who are very much at risk of long-term welfare dependency.

That will be closely followed by another Bill in the second half of this year, to bring in the changes we campaigned on at the election.

New benefit categories will be created, and a greater proportion of beneficiaries will be required to make themselves available for work.

At the same time we will do more to help beneficiaries into work through services like childcare, training, workplace support, and access to health and disability support.

We also have a busy agenda in health, where we are working with local primary care networks throughout the country to provide free after-hours GP visits to children under six.

More people will get elective surgery, and we’re reducing waiting times for cancer treatment, first specialist appointments, diagnostic tests, elective surgery, and for people waiting in emergency departments.

In terms of public safety, we will be introducing legislation to strengthen sentencing, parole and bail laws.

We’ll be making it harder for those accused of the most serious offences to get bail and we’re increasing the penalties for child pornography.

These are all examples of individual initiatives we have underway in different areas.

But it has also become increasingly clear to us as a Government that the way public services are organised across the board needs to be addressed.

The state sector as a whole could do much better at delivering value-for-money, and it could do much better at achieving results, particularly in areas that cut across multiple departments, and which have proved difficult to get traction on over many years.

Last year the Government established the Better Public Services Advisory Group, and we have since received its final report, which we are currently considering.

We will release this report in the next month or two, when I give a speech on where the Government intends to go with state sector reform.

As I said, we are still working through the issues, but I have been quite clear with my Ministers that there needs to be significant change in the way the state sector is run.

Greater efficiency across government is an important part of this, but it is by no means the only part.

We are also focused on the quality and responsiveness of services, on strong and effective leadership, and on orienting the state sector around achieving results that really matter to New Zealanders.

Our final priority is to get on with rebuilding Christchurch.

2011 was about dealing with the damage caused by the destructive earthquakes that hit the region.

2012 is about starting to rebuild a vibrant, strong city.

The Government is totally committed to the reconstruction of Canterbury. That’s why we put aside $5.5 billion in last year’s Budget and created a whole new government department to lead the recovery effort.

We are committed to removing the barriers to reconstruction, and I can assure you that we won’t hesitate to use the powers we have to clear blockages in the system.

It’s easy to underestimate the scale of this undertaking.

Rebuilding Christchurch and its surrounding areas is an unprecedented project – without doubt the biggest economic undertaking in New Zealand’s history.

It is also at risk of delays from more seismic activity.

I want to say again to the people of Canterbury that we really do understand the frustration and anxiety you have felt as a result of the ongoing aftershocks, particularly the latest major ones that occurred around Christmas.

We continue to stand with you and I’m determined to see that momentum is maintained.

A National Bank report last year showed that economic activity in Canterbury was growing faster than anywhere else in the country.

The Re:START shopping area in Cashel Mall is up and running, and is drawing people back to the heart of the city.

And we have seen large companies show their faith in the city by announcing new investment in Christchurch.

Nearly 70 per cent of the 1,357 buildings approved for partial or full demolition in greater Christchurch have been demolished.

And early next week, the first suburban demolition by CERA begins in the residential red zone in Bexley.

We have made changes to the Regional Policy Statement for the greater Christchurch area, which The Press has reported could pave the way for more than 45,000 new houses.

The challenge now is for local authorities to use these powers to free up new land.

The residential red zone settlement process is progressing well. There are around 6500 properties in the residential red zone in Canterbury, and around 90 per cent of those homeowners have now returned their consent forms to CERA so they can receive an offer from the Government.

Around 46 per cent have also now formally accepted either of the Government's offers to purchase their property.

The commercial redevelopment of Christchurch is well underway.

And from February, residential housing reconstruction should move up a gear, subject again to seismic activity.

Plans by employers to hire more permanent staff in Canterbury are at an eight-year high.

And as the rebuilding grows the demand for workers and materials in Christchurch will be huge.

The Government’s strong focus will be on removing roadblocks so that demand can be met.

Finally, for Canterbury’s passionate sporting fans – of which there are many – the good news is that big-match rugby returns to Christchurch on March 24 when the Crusaders play the Cheetahs at the new 17,000 seat stadium in Addington.

Can I conclude by saying that 2012 will no doubt be another challenging year.

As a country we’ve had some tough things thrown at us.

But New Zealanders have shown great resilience.

Together we’ve come through a difficult period.

Looking ahead, I am very confident about New Zealand's prospects.

We're actually in good shape to meet the challenges that will continue to come our way.

There are huge opportunities out there for New Zealand.

We are a food-producing country in a world that is demanding more high-quality food.

A growing middle class in China, India and across Asia is tuning in to the goods and services New Zealand can supply.

And we’re a country that offers great opportunities for our young people.

So I’m unashamedly positive for New Zealand. I think we’ve got a great future ahead of us.

But we need to get out and seize that brighter future – it won’t come delivered on a plate.

That is the task my Government has embarked on.

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Delivered by His Excellency Lieutenant General The Right Honourable Sir Jerry Mateparae, GNZM, QSO, Governor-General of New Zealand, on the occasion of the State Opening of Parliament, Wednesday 21 December 2011


Honourable Members of the House of Representatives. It is my privilege to exercise the prerogative of Her Majesty the Queen and open the 50th Parliament.

E nga Mema o te Whare Paremata o Aotearoa, tenei aku mihi mahana ki a koutou, tena koutou katoa.

Following the General Election in November, negotiations between political parties have resulted in the formation of a National-led Government with a majority in the House on confidence and supply.

Confidence and supply agreements have been signed between the National Party and, respectively, the ACT Party, the Maori Party, and the United Future Party.

These agreements will enable the Government to operate in an effective, stable and inclusive manner.

Beyond these agreements, my Government anticipates co-operating with other parties in Parliament on issues of mutual interest.

Honourable Members. The driving goal of my Government is to build a more competitive and internationally-focused economy with less debt, more jobs and higher incomes.

A strong economy in turn provides the resources necessary to protect the vulnerable in society, maintain the rule of law, provide high-quality public services, look after the environment, and provide opportunities for young people.

Good progress has been made already, despite some very testing times. New Zealand has experienced three challenging years, including a major recession, the worst global financial crisis since the Great Depression, and a devastating series of earthquakes that destroyed whole parts of Christchurch.

But in the worst of times we have seen the best of New Zealanders, as they have risen to these challenges.

The economy is recovering, having grown in eight of the past nine quarters, and 63,000 more people are employed now compared to two years ago. This recovery is forecast to continue.

Looking forward, the biggest risk to the New Zealand economy is from the European debt crisis. The outcome of this crisis is uncertain and, as a result, the economic outlook for the whole world has deteriorated.

However, New Zealand is in a relatively good position to deal with any fall-out in the near term, and my Government is firmly focused on improving New Zealand’s longer-term productivity and competitiveness.

Honourable Members. My Government has a comprehensive policy agenda, and a substantial legislative programme that it intends to put before the House in the forthcoming session.

My Government intends to return to an operating surplus in the 2014/15 financial year and start to reduce net core Crown debt as a proportion of GDP. This will be achieved through tight fiscal discipline, including new operating allowances of only $800 million in each of the next two Budgets.

As agreed with the ACT Party, legislation will be introduced to limit the growth in core Crown operating spending, with some adjustments, to a rate no faster than the combination of population growth and inflation.

Once in surplus, a KiwiSaver auto-enrolment exercise will be initiated.

My Government will maintain a new, lower cap on the number of staff in core government administration. It will be focused on achieving results, seeking new and better ways to deliver public services, and continuing to contain and reduce costs. Particular attention will be paid to the recommendations of the Better Public Services Advisory Group.

My Government will extend the mixed ownership model, under which Air New Zealand currently operates, to four State-owned enterprises – Meridian Energy, Mighty River Power, Genesis Power and Solid Energy – and will reduce its stake in Air New Zealand.

In each case, the Crown will retain at least 51 per cent of the company, and New Zealanders will be at the front of the queue for shares.

Proceeds from extending the mixed ownership model will go into a new fund – the Future Investment Fund – to pay for capital projects that help grow the economy and improve public services.

As agreed with the United Future Party, legislation will be introduced to limit any sale of public assets – that is, of State-owned enterprises and Air New Zealand – to no more than 49 per cent of the shares in the company, together with a limit on ownership by a single entity.

Honourable Members. My Government believes in a more active welfare system which supports people who can work, back into work, and does not trap them in a life of limited income and limited choices.

Legislation will be introduced to reform the current system of benefits. New benefit categories will be created, and a greater proportion of beneficiaries will be required to make themselves available for work. Changes will also be made to clamp down on beneficiaries whose recreational use of drugs affects their ability to work, and those who commit benefit fraud.

As agreed with the Maori Party, a separate appropriation and governance structure will be established for Whanau Ora.

The Government will introduce changes to support disengaged young people back into education or training. It will also have a more hands-on approach with 16- and 17-year-old beneficiaries, and with 18-year-old teen parents, including wrap-around support from third parties, and an expectation that they will be in some form of education or training.

As agreed with the Maori Party, a Ministerial committee on poverty will be established to improve the co-ordination of government activity in alleviating the effects of poverty.

Honourable Members. My Government believes that high-quality education is vitally important. It provides the opportunity for children from all backgrounds to make the most of their lives, and is an essential requirement for a skilled and productive workforce.

The Government’s focus will be squarely on raising achievement, in particular for those groups of students who have historically underperformed.

The Government will work to lift participation rates in early childhood education, with a target of 98 per cent of new entrants in school having previously attended an early childhood centre.

Performance measurement and accountability in schools will be strengthened. In addition, the Government will work to improve the quality of initial teacher education, introduce more effective appraisals of teachers and principals, and reform and strengthen the Teachers Council.

$1 billion from the Future Investment Fund will be invested over the next five years to build new schools and modernise existing buildings, including with new, 21st Century teaching spaces. It will be easier for schools to employ trades specialists to deliver courses, and to set up trades or service academies.

As agreed with the ACT Party, the Government will allow for the formation of charter schools in areas where educational underachievement is most entrenched.

Tertiary education providers will be funded in a way that takes into account their performance against indicators of achievement. It will continue to drive better value for taxpayers from the interest-free student loan scheme, including an expanded campaign to recover overdue debt from borrowers living overseas.

Honourable Members. My Government believes that a competitive economy, trading successfully with the world, is the best way to build sustainable economic growth that creates jobs and grows incomes.

The Government will restructure and expand Industrial Research Ltd into an advanced technology institute to work alongside the high-tech manufacturing and services sector. It will also invest in a series of national science challenges, in areas where science can address some of the most important longer-term challenges to New Zealand’s development.

The Government will continue its programme of investment in modern infrastructure. On current forecasts, $12 billion will be invested over the next 10 years in new State highways. The most immediate priorities will be the construction of the Waterview Connection and the completion of Auckland’s Western Ring Route.

KiwiRail’s Turnaround Plan will continue to be supported and there will be an investigation into the use of Clifford Bay as a new sea freight terminal.

Ultra-fast broadband and the Rural Broadband Initiative will continue to be rolled out. A Crown-owned company will be established to invest in irrigation and water storage, drawing on the Future Investment Fund.

The Government has set aside $5.5 billion in the Canterbury Earthquake Recovery Fund to pay for its share of rebuilding essential local infrastructure in Christchurch and its surrounds.

It will provide certainty to affected homeowners in Canterbury by finishing the red zone classification process. It will continue to release land for residential subdivision and ensure there is an adequate supply of land to rebuild on.

My Government will allow for choice in accident insurance covered through the Work Account, including an expansion of the Accredited Employer Scheme. It will consider the feasibility of introducing choice into accident insurance covered through the Motor Vehicle Account and the Earners’ Account.

Legislation will be introduced to implement a new “starting-out wage”, set at 80 per cent of the adult minimum wage, to ensure young people are not priced out of the job market. Legislation will also be introduced to extend flexible working arrangements and to improve collective bargaining.

The Government will progress legislation to overhaul securities law and to criminalise anti-competitive behaviour. It will introduce tougher consumer credit legislation to target loan sharks and protect consumers.

Honourable Members. My Government believes that balanced and sensible management of our resources will protect the environment while promoting stronger economic growth.

The Government will continue to advance the Fresh Start for Fresh Water programme, and will introduce new environmental reporting systems. Legislation will be introduced to set a six-month time limit for the consenting of medium-sized projects, and to improve the Resource Management Act as part of the second phase of reforms.

As agreed with the ACT Party, legislation will be introduced to ensure there is only one resource management plan in each district.

The Government will also introduce legislation to amend the Emissions Trading Scheme. This will include moving to full obligation in three equal steps for the energy, transport and industrial sectors. It will also introduce offsetting for pre-1990 forest land owners to enable greater flexibility of land use.

My Government will encourage oil and gas exploration with a competitive new system for processing permits. It will also progress legislation to better manage the environmental effects of activities in New Zealand’s Exclusive Economic Zone, and will introduce legislation to reflect the updated Liability for Maritime Claims Protocol.

As agreed with the United Future Party, legislation will be introduced to stop helicopter hunting on the conservation estate involving the shooting of game animals from helicopters and the herding and hazing of game animals as part of the hunt. The Game Animal Council Bill will be progressed.

Honourable Members. My Government will continue to maintain an independent and bipartisan foreign policy. It will further focus New Zealand’s aid efforts on the Pacific, and will campaign to win New Zealand a seat on the United Nations Security Council for a two-year term starting in 2015.

The Defence White Paper and Capability Plan initiatives will be implemented, and legislation will be introduced to ensure the three services of the Defence Force are able to work together more effectively.

The Government will continue to pursue high-quality trade agreements, ensuring as it does that New Zealand’s best interests are always served. There will be a comprehensive programme of Government-led trade delegations to China, India, and the Association of Southeast Asian Nations.

Honourable Members. My Government will continue to deliver high-quality public services.

It will work with local primary care networks throughout the country to provide free after-hours general practitioner visits to children under six. A comprehensive after-hours telephone health advice service will be developed.

The Government’s target is that 95 per cent of all eight-month-old children will be fully immunised with three scheduled vaccinations. It will also roll out a nation-wide rheumatic fever programme targeting vulnerable communities. Alcohol and drug treatment services for young people will be expanded, as will specialist mental health services for young offenders. The Voluntary Bonding Scheme will be extended.

More people will get elective surgery, and waiting times will be reduced for cancer treatment, first specialist appointments, diagnostic tests, elective surgery, and for people waiting in emergency departments.

As agreed with the Maori Party, further work will be done on plain packaging and other anti-smoking initiatives.

My Government will continue to ensure that State houses are located in the areas of greatest need, and are going to families who need them most, for the duration of their need. It will work to increase the supply of social housing, including progressing options for iwi housing providers.

The current home insulation and clean heating programme will continue, with a specific focus on low-income households, as agreed with the Maori Party. Every State house built before 1978 that can be insulated, will be insulated.

My Government will introduce legislation to strengthen sentencing, parole and bail laws. It will be harder for those accused of the most serious offences to get bail, the penalties for child pornography will be increased, and Civil Detention Orders will be introduced.

The Search and Surveillance Bill will be progressed, as will the Victims of Crime Reform Bill. The penalties for breaching a protection order will be doubled, and funding will be available for security improvements in the homes of family violence victims.

My Government will continue to progress the review of constitutional arrangements.

It will also continue to make the full and final settlement of historical Treaty of Waitangi claims a priority.

Over the course of the forthcoming Parliamentary session, other measures will be laid before you.

Honourable Members. The fact that this is the 50th Parliament gives us cause to celebrate. New Zealand can boast of an unbroken parliamentary democracy stretching back to the 1850s, and universal suffrage from 1893.

My Government is privileged to have won the trust and good will of New Zealanders for a second Parliamentary term.

It will seek to earn anew that trust and good will every day over the next three years.

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Good morning.

Today I am releasing National’s post-election Action Plan.

The plan outlines some immediate and critical steps we intend taking to secure a brighter future for New Zealand families in a turbulent world.

We will get straight back to work on making our economy stronger, by balancing the books, repaying debt, and creating more jobs.

The plan outlines the next critical actions a National-led Government will take in several important areas – debt and the economy, welfare, law and order, education, health, and rebuilding Canterbury.

Each of these areas is vitally important to the future of New Zealand, but none more so than getting back into surplus and reducing New Zealand’s debt.

But to carry out this plan, we need a strong, stable National-led Government.

We will be firmly focused on getting New Zealand back into surplus quickly, paying off debt, and keeping costs down for businesses so they can get on with creating more jobs.

Overseas, we are seeing how political instability can threaten economic recovery.

Politicians in the US are struggling to agree on how to rein in America’s ballooning debt, and in Europe instability continues.

What is happening overseas is further proof that without a strong and stable Government, you can’t reduce debt or have a stable economy.

We don’t want that to happen in New Zealand – and it doesn’t need to happen here.

What the news from overseas does is bring into sharp focus what this election is actually all about - which is, who has the best plans for a strong economy in a turbulent world environment.

A number of opinion polls are saying National is in a strong position going into polling day on Saturday.

However, the reality is that Saturday is the only poll that counts, and the result will be much closer than some people think.

Under MMP, you can stack up the parties in all sorts of combinations and the potential for a Labour Party-led stack of minor parties is very real.

And the more complex the stack of parties, the more expensive it will be.

Two things are certain. Firstly, that a Labour-led stack will lead to more debt – around $21 billion over four years collectively so far.

Secondly, it will stack up more costs and burdens on business - Labour has 10 big extra costs of their own - and that means fewer jobs for New Zealanders.

New Zealand can’t afford that recipe.

As you all know, after my visit to the South Island yesterday, I will be on our campaign bus tomorrow and Friday visiting towns and cities throughout the North Island.

I will be campaigning hard right up to Friday night, seeking every party vote I can for National.

So my message to New Zealanders is this - only a party vote for National can deliver the strong, stable, government that New Zealand needs in these uncertain economic times.

Only a party vote for National will mean less debt, more jobs and a brighter future for New Zealand.

I say to New Zealanders, your party vote is vital under MMP. Every vote is vital to ensure a strong and stable National-led Government.

Thank you.

Visit the post-election Action Plan at:
http://national.org.nz/PDF_General/Post-Election_Action_Plan_.pdf

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Good afternoon.

As you know, the Government has had a very strong focus on welfare over the last three years.

We introduced a number of changes to benefits in 2010 which are already having positive effects, and in August we announced a new approach to welfare as it affects teenagers.

What we are announcing today is a much bigger step forward – a comprehensive reform of the benefit system, building off the recommendations of the Welfare Working Group.

It is not the last of our announcements on welfare, and you should expect to see more in the future and into next year.

But it is probably the most significant.

I think it’s clear to almost everyone that the current benefit system is not working.

328,000 people are receiving a benefit, which is around 12 per cent of the entire working-age population.

In other words, 1 in 8 people aged 18 to 64 is on some form of main benefit.

More than 170,000 of those have spent at least five out of the last ten years on a benefit.

And there are 222,000 children living in benefit-dependent homes.

These are poor outcomes for beneficiaries, for their children, for society and for taxpayers, and I don’t believe it’s what the architects of the welfare state had in mind.

The stand-out feature of New Zealand’s benefit system is how passive it is.

For the most part it simply hands over benefits and leaves people to their own devices.

Most beneficiaries are not expected to be available for work, or to take up work if it is offered to them.

Naturally, many don’t.

The benefit system also lacks a focus on intervening early.

We know, for example, that the longer people stay on a Sickness Benefit the more it gets entrenched.

But the benefit system as it currently stands is not good at directing resources early on, to help prevent people from becoming long-term beneficiaries.

All this is going to change.

I want to be clear about one thing, however, and that is that there won’t be any cuts to main benefit rates, and these rates will continue to be adjusted for inflation.

We are, however, going to introduce a much more active benefit system.

We will expect a lot more people on a benefit to make themselves available for work.

But at the same time we will do more to help them into work through things like childcare, training, workplace support, and access to health and disability support services.

All of that will cost money.

But we are prepared to make an upfront investment because the pay-off is a better life for beneficiaries and their children and, over time, a reduction in the long-term costs of welfare.

Of course, some people on a benefit will realistically never be able to work, because they have a very debilitating and long-lasting condition, or are terminally ill.

The welfare system will always be there to support these people.

But they are in the minority.

For most people, a benefit is there to provide temporary support until they can return to work.

In fact, there is little chance of a better future for beneficiaries and their children unless they do come off a benefit and work for an income.

Some argue that people on a benefit can’t work.

But that’s not correct.

A lot of people who get up in the morning and go off to work are just like people on benefits – they are not well off, they are sole parents, and they have medical conditions of their own.
And actually, it’s these working people who are paying taxes to keep the benefit system going.

Paula Bennett will go through some of the details in a moment, but I want to give you an outline of what we are doing.

The new benefit system will consist of only three main benefits and I’ll go through these in turn.

First, we are going to introduce a new work-focused benefit, called Jobseeker Support, which will be the biggest benefit category.

This will include people currently on the Unemployment Benefit or Sickness Benefit, and sole parents whose youngest child is 14 or older.

Everyone receiving the Jobseeker Support will be expected to be available for work, either full-time or part-time as their capacity allows.

The only exception will be for people who cannot work for the time being, because of sickness or injury, and who will therefore get a temporary exemption.

This is quite a different approach from the way the Sickness Benefit, in particular, currently works.

We are going to work more actively with people towards a target return-to-work date, and we are going to introduce much more comprehensive work capacity assessments to get a better picture of what people can do and to determine what the right obligation is for each person.

The new approach recognises that most people will recover their health and ensures they receive the right help and support to be employable again.

And it also recognises that work can be a key part of getting well.

Sole parents will also be treated differently under the new benefit system.

As I just said, sole parents whose youngest child is 14 or over will be required to be available for full-time work, and are included in Jobseekers Support.

There is no over-riding reason why these sole parents can’t work full time – and in fact a great many outside the benefit system do.

The age threshold is also a fair one, because when children are 14 they can be left without parental supervision.

Other sole parents will go onto a new benefit called Sole Parent Support.

Sole parents on this benefit will have to be available for part-time work when their youngest child is five years old, which lines up with age most children start school.

Other sole parents, while they won’t face work obligations, may be required to undertake pre-employment activities that will increase their likelihood of getting a job in the future.

Parents who have an additional child while on a benefit will receive a temporary exemption from their existing work obligations, but that will only last for 12 months.

Part-time and full-time obligations will remain at 15 and 30 hours a week, and we will introduce more flexibility around these targets.

For both jobseekers and sole parents, we will provide more support earlier on, particularly for those groups most at risk of long-tem benefit dependence.

This support won’t be fully in place in year one, but will build up over time.

The third benefit will be called the Supported Living Payment, and will be for two groups of people:
• those who are permanently and severely disabled or terminally ill, and who currently receive the Invalids Benefit
• and people caring for someone who requires the equivalent of hospital-level care, who currently receive a benefit called the DPB – Care of Sick and Infirm.

People on the Supported Living Payment will not be expected to make themselves available for work.

I believe that changing benefit categories, and asking more people to make themselves available for work, sends a strong signal about the degree of change we are seeking – not just to beneficiaries, but also to case managers at Work and Income, and to the general public.

It will help to shift people’s attitudes and set genuinely different expectations about being available for work.

It is also part of the new investment approach we are taking to welfare.

If we can spend money in the short term to reduce dependency in the longer term, it ultimately saves the government, and therefore taxpayers, significant costs.

What is more, we improve the lives of many people by helping them become productively engaged in the world of work.

I’ve often said that you measure a society by how it looks after it’s most vulnerable.

But you also measure a society by how many vulnerable people it creates.

At the moment it is creating too many vulnerable people and trapping them in a life of limited income and limited choices.

By contrast, I want New Zealand to be a country of work, and enterprise, and self-reliance.

To do this, we need a benefit system that:

- focuses on what people can do, rather than on what they can’t do;
- that challenges people, not treats them as passive recipients of benefits;
- and that provides support, training and opportunities for people to return to the workforce.

That’s what our package of reforms is all about.

I’d now like to hand over to the Minister to talk through it in more detail.
 

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I want to start by acknowledging the good work Business New Zealand does on behalf of businesses and employers throughout New Zealand.

I know a lot of Ministers meet with you regularly to discuss things in their portfolios, from Education and Skills to Science to Transport.

Thank you for inviting me this morning to kick off a full day of discussions on business and the economy, as we head into this year’s election – an election where the stakes for New Zealand are high.

In the end, this election is going to come down to two things.

First, it’s about who can provide strong, stable leadership in difficult and uncertain times.

And second, this election is about who has the most credibility when it comes to the economy.

National has a straightforward and comprehensive plan to build a more competitive economy.

We’re balancing the books sooner by getting back to surplus in three years.

That means less debt and lower interest rates for households and businesses.

We’re creating incentives for people to work hard, save and get ahead, through changes to tax and welfare.

And we’re building better roads, broadband and other infrastructure so businesses can grow.

Through these actions, we’re creating a more competitive economy and backing Kiwis’ ability to get out there and take on the world.

That means a more export-focused economy with more jobs for our kids.

And it means we can have better frontline services in health and education, stay strong on crime, and get on with the job of rebuilding Christchurch.

That’s our plan, and I can promise you this election is about the delivery of that plan.

In this respect you know exactly what you’re getting from National.

We have set out our stall over three years and in each of Bill English’s three Budgets.

Putting that plan in place has not been easy, with everything that has happened over the past three years.

But Bill has done a great job in tough times. I can’t think of any other Minister of Finance who has had to cope with so much in their first three years – and he has done a great job.

When the PREFU came out last week, I reflected on the 2008 PREFU, three years ago, which was headlined in The Press the next day as “Treasury books ‘sea of red ink’”.

The economy was in very poor shape, following a debt-fuelled consumption boom and an increase in government spending of 50 per cent in only five years.

Interest rates rose to very high levels, as did the exchange rate, and the internationally-competitive sectors of the economy that are so important to us went backwards every year from 2004 onwards.

Not surprisingly, having lost so much competitiveness, the economy went into recession in early 2008, well before the rest of the world.

The economy was in recession for a year, from March 2008 to March 2009. In that time the economy shrank 3.5 per cent and 33,000 more people became unemployed.

As an incoming government, we not only had to deal with this recession, but also with the worst effects of the global financial crisis.

In late 2008 and into 2009, the banking system around the world, including in New Zealand, was at risk of grinding to a halt.

Ordinary New Zealanders lost billions of dollars of savings in failed finance companies.

And along the way, the people of Canterbury were hit by a series of devastating earthquakes that destroyed whole parts of the city.

I know it’s been a difficult time for New Zealanders.

We’ve had more than our fair share of adversity, and we’ve all been tested.

But difficult times are when sound, stable and responsible government matters more than ever.

Faced with challenges, the National-led Government set about dealing with them in a measured and balanced way.

Our first Budget, in 2009, halted the rapid accumulation of government debt, while supporting the economy through the worst of the recession.

Budget 2010 continued this improvement, while undertaking the largest overhaul of the tax system in 25 years.

We cut personal tax, company tax, and taxes on savings; increased taxes on consumption and property investment; and closed a lot of loopholes and opportunities for tax avoidance.

Budget 2011 laid out a faster return to surplus and even more control of government debt, despite funding the government’s share of Christchurch’s reconstruction.

We took a number of steps to increase genuine national savings, including greater private contributions to KiwiSaver.

Over all three Budgets, the Government took up the challenge to pay down debt by hauling back new Budget spending allowances, reprioritising billions of dollars of spending towards frontline services, and making government more efficient.

The results are already starting to show.

The economy has grown in eight of the past nine quarters since our first Budget was delivered, despite the earthquakes and the lingering impact of the global recession.

Interest rates have fallen to 45-year lows, in part because investors know the Government will continue to be fiscally responsible.

Households this year will have a positive savings rate for the first time in nearly a decade.

Exporters have been getting very good prices for what they produce and our trade with Asia is booming.

The important thing is that ordinary New Zealanders have benefited from this recovery, even though it hasn’t always been easy.

43,000 jobs were created last year.

Wages in the pocket have been rising faster than prices.

And the Government has been able to deliver better public services, with a focus on results.

Hospitals, for example, are performing 27,000 more elective procedures each year.

And crime is down in every region of the country.

We’ve been investing heavily in infrastructure projects like new State Highways, rolling out ultra-fast broadband, and upgrading the rail network.

In fact, over the next five years the Crown is going to acquire a net $22 billion of new assets in total. That is a very substantial investment programme.

Yesterday I announced that we will put the proceeds of the mixed ownership model – which are expected to be between $5 and $7 billion over the next three to five years – into a new Future Investment Fund, which will be used to buy new assets and upgrade our existing assets.

The first priority for that funding will be a $1 billion programme of modernising and transforming New Zealand schools.

Having this Fund reinforces that the mixed ownership model is a win-win for New Zealand.

It means we can invest in new, priority assets – like schools – without having to borrow.

New Zealand savers will have the opportunity to invest in something other than housing or finance companies.

We’ll have a stronger stock market, which will help New Zealand grow faster.

And through it all, the government retains control of the assets by owning at least 51 per cent of each one.

So these are the things you can see right now.

What does the future hold?

Well, looking ahead, it’s very clear what you’ll get with our plan out into the future – it’s in last week’s Pre-Election Update.

The PREFU shows the budget deficit reducing significantly over the next two years, before we run a $1.5 billion surplus in 2014/15.

National is committed to this target because a tight fiscal track helps keep the pressure off interest rates and reduces the amount we have to borrow from overseas lenders.

Once we’re back to running healthy surpluses, we’ll be able to auto-enrol workers who are not members of KiwiSaver, pay down debt and resume contributions to the Super Fund.

The PREFU also shows that we will limit net government debt to under 30 per cent of GDP, which again is low by OECD standards, and is less than half the level projected back in 2008.

The economy is expected to grow at an average of three per cent a year over the next four years, with 170,000 more jobs than at the time of the Budget.

Unemployment will fall steadily to below five per cent.

Wages will continue to rise.

Interest rates will remain low.

And the government will continue to invest in high-quality public services.

So actually, compared to 2008’s ‘sea of red ink’, the 2011 PREFU is a little ray of sunshine.

It shows that we are on track.

And while that’s pretty good, I actually think we can do better than this.

There are huge opportunities out there for New Zealand.

We’re a food-producing country in a world that is demanding more food.

Our trade is increasingly shifting towards Asia – the most vibrant economic region in the world.

A growing middle class in China, India and across Asia is tuning in to the goods and services New Zealand can supply.

I’m unashamedly positive for New Zealand. I think we’ve got a great future ahead of us.

But we need to get out and seize that future – it won’t come delivered on a plate.

No-one owes New Zealand a living – we have to earn it.

That’s why it’s so important to create a more competitive economy.

An economy where businesses have the confidence to invest, expand, and take on new staff.

And an economy where we sell more of what the world wants to buy.

However, the world comes with challenges, too.

The global environment is full of uncertainties and the Treasury has highlighted the European debt crisis as a major risk to the world economy.

That makes it even more important to have a strong, stable government at the helm.

So that’s what National has to offer this election:

• strong, stable government
• sound, proven economic management that builds on our progress over the past three years
• and a positive vision for New Zealand, where the dividends of growth are seen in jobs, wages and better public services.

The alternative is Labour.

Labour is a party without a plan.

Instead, they have a collection of election gimmicks and slogans, like GST off bananas, all of which come with a hefty price tag.

Together they would create a $16 billion hole in the government’s accounts over the next four years alone – and far more over the longer term – which would have to be funded through borrowing.

And now they’ve suddenly decided to put the Super age up, to try to balance out some of this spending.

But even then, their numbers are a long way from adding up.

Labour is simply borrowing more, spending more, taxing more and imposing more costs on every business in the country

And now they are pushing back everyone’s well-earned retirement.

This is the party that thinks the answer to a global debt crisis is more debt.

It just doesn’t make sense.

But it’s certainly true to form.

When Labour was last in government, they increased their spending by 50 per cent in only five years.

In Opposition, they have opposed every piece of spending restraint we’ve introduced.

And now their election promises consist of – you guessed it – more spending and more borrowing.

And when it comes to loading costs onto business, they’re in a league of their own:

• A big increase in the minimum wage
• a KiwiSaver policy that hugely ramps up costs to employers
• a new capital gains tax on all businesses
• a more expensive ETS
• an irrigation tax on farmers
• a reintroduction of regional fuel taxes
• and a1970s industrial relations policy.

All of these would add up to big cost increases for the 500,000 businesses in New Zealand.

That’s seven significant extra costs on business.

Businesses, both big and small, have only a handful of ways to meet these sorts of costs – reduce wages, cut jobs, increase prices or simply shut up shop altogether.

Labour is showing a fundamental lack of understanding about how businesses work.

I know, and you know, that the only way people get jobs and wage rises, is when someone is prepared to put money and time into their business, seek out new opportunities and grow.

Through the promises it’s made, Labour is telling those people not to bother.

Well, I am far more optimistic than Mr Goff.

I back New Zealanders to get ahead.

But we have to give them the right environment to operate in, and a platform from which they can compete with the best in the world.

That happens only when we think carefully about things like taxes, and about regulations, and about the overall flexibility of the economy.

And it happens only when we keep debt low, invest in modern infrastructure and encourage savings.

You can’t create jobs or increase wages with the stroke of a pen.

That’s what Labour has completely wrong.

So in terms of economic and fiscal credibility, it’s very simple – Labour doesn’t have any, because they don’t understand what really drives the economy.

That’s vitally important, because when we talk about the economy we really mean our economy.

We’re all a part of it.

Our economy keeps firms in business, people in their jobs, and families in their homes; it pays for medicines and health care, educates our kids, and pays our Super when we’re older.

So, whether a party has economic credibility or not has very real consequences for very real people.

That means New Zealanders have a clear choice this election.

They can choose to go forward with a strong, stable National-led government and build on the past three years.

Or they can stop, and then head backwards with a negative Labour Party that wants to borrow more, spend more, tax more, and put more costs on business.

Personally, I think New Zealanders are aspirational for their future.

That’s why I’m asking them to give their party vote to National on November 26, so we can all have that brighter future we’re working towards.

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