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Speech Alliance Auckland, Northland Conference

17 June 2000 Speech Notes

9:30AM Saturday, 17 June 2000

The budget and the Coalition

Speech to Alliance Auckland and Northland regional conference

Trades Hall, 147 Great North Rd, Grey Lynn, Auckland

If any Alliance people have made up their minds about the budget on the basis of what they read in the Dominion, I suppose quite a few of you will be impressed.

The Dominion described the budget as 'truly socialist.'

I'm not sure what planet the Dominion is on.

Yes the Budget is a new start, a change of direction.

But 'truly socialist'?

If the Dominion is right, then every developed country in the world has woken up to a Red Dawn.

Either that, or the Dominion is out to lunch.

The reality is it is a budget for all New Zealanders.

There has been far too much tearing out of hair in recent weeks.

The Government is not anti-business.

We are committed to a genuine partnership with the private sector to promote our economic development.

I have met hundreds of businesspeople this year.

Almost all acknowledge that we going in a much needed direction.

So some of the comments that have been made by bastions of entrenched privilege need to be taken with a grain of salt.

There are people who have had it all their own way for so long, they can't handle a Government that doesn't govern exclusively for them.

For their own health, they need to be weaned from the trough.

It's time to start challenging the self-serving whingeing from the old elites.

I will always listen to fair and honest criticism.

I think I'm developing a reputation for it in Government.

But the whining and carping from small, elite sections of the community is over the top.

Take the issue of research and development tax breaks.

I told every business meeting that I addressed before the election that I didn't think tax cuts for research and development would fly.

It is a good idea to promote research and development.

If we want more high-skill jobs, exporting more high-value products, then we need more research and development than we're getting currently.

But we have decided to do it through grants, so that the government can control how much it spends.

The problem is that nobody can cost tax breaks for R&D.

Businesspeople start taking trips to the Bahamas to research the quality of sand on the beach.

If we handed out the 150% write-offs some people are talking about, then businesses would get $1.50 of tax back for every $1 spent.

That could end up costing the Government a billion dollars.

To fund that, personal income taxes would have to rise.

Are the same business commentators who are calling for tax breaks for research and development really prepared to pay more personal tax?

Or would they like to handpick the schools, hospitals and police stations that should be closed?

I'm yet to hear the business community ask for that.

If they're not prepared to pay more tax, then they better say where the money is supposed to be coming from.

Of course, if they do want to contribute more to New Zealand's needs, then I'll be prepared to look at it.

The business community should be praising the commitment this Government made to research and development and to support for industry.

The Government has increased science and research spending by more than it has ever been increased before.

We have invested in the knowledge economy.

The same people who told us they wanted hands-off, are now complaining that we haven't gone far enough.

They can't have it both ways.

If they want more spent on business, industry and research, they should be prepared to pay more tax to fund it.

And if they're not prepared to fund it, then complaining that it isn't enough is the zenith of asinine reasoning.

A week ago the Christchurch Press reported that Telstra Saturn is investing $200 million in Christchurch.

Hundreds of people will get jobs.

It's almost certainly one of the biggest one-stage capital project in the city's history.

The Canterbury Chamber of Commerce says 'it's an investment in our future and an indication of the confidence Telstra Saturn has in the future of Christchurch.'

Actually, it's an indication of confidence in the new government.

Telstra came to see the Government and said they were considering making this investment.

They're actually doing it because this Government is committed to a fair level playing field in telecommunications.

The days of a free-monopoly for Telecom are numbered.

Under the last government, the investment would not have occurred.

So we're making a difference now.

The Government brought down a good budget on Thursday.

Budgets are the ultimate test of a government.

This Government passed effortlessly.

The Coalition made the major strategic decisions constructively and cooperatively.

The issue for the Government is not that the Alliance and Labour have different policies.

Of course we do, and we always will.

That's why we are separate parties.

The issue is: Can the Government resolve those policy differences constructively?

The answer is yes.

We have to. If we were not able to do so the government would be completely unstable - what would business confidence be like then? Like it was before the last election - much worse.

We have to recognise the relative strength of the parties.

We have to recognise that this is a minority Government.

We have to take the public with us in our entire policy programme, instead of imposing policies against the will of the people as the last Government did.

We have to recognise that policies should prevail on their merits and in the best interests of all New Zealanders.

We have to work in good faith to make the government work.

If the Alliance had been elected alone, of course the budget would have been different.

But we weren't elected alone.

We were elected with a mandate to govern together with Labour.

We have a mandate for a voice at the table.

And that means we will continue to advocate our policy.

And where we can persuade our colleagues and the public that our ideas are good, then we will prevail.

We will keep trying to persuade.

The Alliance should be proud of the contribution it has made.

Without the Alliance, this Government would not exist.

And therefore there would be no regional development programme underway.

There would be no rescue package for mental health.

There would be no visionary biodiversity package.

There would be no income-related rents for state housing.

No one should be under any illusion about the importance of delivering on those policies.

Those hopeful New Zealanders who voted Alliance with brave hearts will know for sure: The change project is underway.

The budget represents a change in direction.

It is a break with the policies of the past.

It has been a generation since a Government introduced a budget that was designed for the ordinary New Zealander.

It has been that long since a Government introduced a budget that didn’t deliberately harm a section of the community.

In late 1984 and in 1991, finance ministers introducing their first budgets shocked the nation.

Our budget empowers people.

It does not destroy their wellbeing.

This budget doesn’t break all the promises the new government made when it was elected six months ago.

What a regrettable commentary on this Parliament’s recent history that it is remarkable that a Government isn't breaking its promises.

The last Government I was a member in couldn’t say that.

The National Government, which replaced it, couldn’t say that.

The first coalition following the 1996 MMP election couldn’t say it kept faith with its own supporters – in the case of either National or NZ First.

This Government has set out to restore the faith of the public in the process of Government.

That means doing what we said we would do.

It means governing in the interests of the overwhelming majority of New Zealanders.

Not just the top five per cent.

It means a budget that is put together with good faith and integrity.

I believe these last six months have gone a long way towards rebuilding New Zealanders’ faith in their system of Government. We have single handedly saved MMP.

And this budget is another step along the way.

This is a budget that New Zealanders voted for.

It is a budget that addresses New Zealand’s most urgent needs.

For those reasons alone this Government can be proud of this first budget.

This budget represents a new start.

A new beginning.

There are two very significant dimensions to this budget.

They are the distinctive policies that the National Party never contemplated.

First, this Government is committed to closing the gaps.

Every New Zealander who cares for their country feels pain at the rise of inequality among us.

Between haves and have-nots.

Between Maori and Pakeha.

Between regions.

Between workers and employers.

Between young and old.

Even between sick and well.

Gaps are the legacy of the free market.

The last government ignored them at best.

It even created them at its cynical worst.

This budget begins to heal the wounds.

To open the doors.

To close the gaps.

The second distinctive theme of the budget is the commitment to transform the economic base of New Zealand.

The money will support a range of advice and practical assistance programmes.

There will be a regional development programme.

It will take a ground-up approach.

We will work with local communities to assist them to make the best of the assets and advantages of their regions.

Funding of up to $100,000 will be available for any single strategic planning or audit initiative in any single region.

Up to $2 million will be available for major regional or community initiatives.

About $6 million will be available in the first year for proposals that:

 Involve a number of community groups;

 Emerge from an inclusive regional development consultative process;

 Have local funding of at least 25 percent of total cost.

 Are sustainable and consistent with the Government’s policies.

There will be a programme available immediately to assist the development of innovative projects in the early stage by providing a grants programme.

It will ensure that entrepreneurs with innovative ideas are not prohibited from realising the potential of those ideas by a lack of early stage finance.
That is far more assistance to business than the last government ever provided.

It is proof that we are listening to business and working with business.

It is what the Dominion calls 'true socialism.'

Industry New Zealand’s capacity will be built up over the next twelve months and further initiatives developed.

Strategic investment grants could be available to firms that demonstrate significant net benefits to New Zealand, and no negative competitive consequences.

Grants would be available where an investment wouldn't go ahead without the incentive.

It would have to meet criteria such as having the potential for $50 million of investment over five years and 250 new jobs over five years.

If the project were in a priority region, such as Northland or the East Coast, the threshold could be reduced to $10 million, or fifty new jobs.

Those details aren't finally decided.

But they are a firm indication of the direction of my thinking.

How can projects like that be described as 'nothing'? Yet that is the word chosen by Deloitte's commentators in the NBR.

How can a policy criteria of creating jobs and stimulating business investment be described as 'hare-brained'?

Yet that is the term the NBR's editorial uses.

In addition to Industry New Zealand and funding for research, science and technology, there are a wide-range of policies to boost New Zealand’s economic development.

There is:

 A national electronic commerce strategy.

 A modern apprenticeship scheme to provide opportunities for young people

 An increase in the Industry Training Fund.

 And a range of initiatives supporting Maori and Pacific Island economic development.

This is a comprehensive business growth strategy.

The previous government neglected its responsibilities.

It abandoned industry.

It abandoned the regions of New Zealand.

And as a result, joblessness was sheeted in to New Zealand society for the first time in forty to fifty years.

New Zealanders’ incomes are lower than they should be.

This Government’s commitment to industry and regional development is a commitment to doing better.

To more jobs.

To rising incomes.

Now compare those aims with the sorts of comments that are being made by some commentators.

Listen to this misshapen logic from a stock market commentator in the National Business review: "The death throes of the Alliance could be good news for the sharemarket."

Oh, so the Alliance is the reason western culture as we know it is at risk.


In ten years of a National-Act government, the sharemarket went virtually nowhere.

And now they want to blame us?

Let me outline some of the reasons that New Zealand has a pitifully performing sharemarket. In 1987 it crashed because we ran a financial sector like the wild west without a sherrif.

One reason is that, for all the rhetoric, the free market policies of National and Act were anti-business.

Cutting a billion dollars out of benefits in 1991 drove the economy into a recession.

Business profits went down.

Running a high-interest rate, high-exchange rate through most of the nineties crucified our productive sector.

Every time the economy struggled off the floor, it was delivered another David Tua-sized blow that sent it back onto the canvass.

Where were the voices of entrenched privilege then?

I didn't hear them squealing the way they are squealing now.

There are other obvious reasons for the poor state of the sharemarket.

Take the lack of rules to stop insider trading.

It's still the Wild West without a sheriff.

It's a bit rich to complain about the Government when the Chairman of a major New Zealand corporate gets caught insider trading, and virtually nothing happens to him.

The public demonstration that insider trading is virtually risk-free in New Zealand must be doing much more to undermine business confidence than anything the this Government has done.

More and more investors are putting their money in to funds because if they buy shares directly, they are left at the mercy of unscrupulous business practices.

Minority shareholders get squished.

Another reason for the sharemarket's lacklustre performance is the lack of innovative campaigns to promote new-economy businesses.

The Government is having to do that itself.

Where is the stock market in putting together angel networks?

Where are the stockbrokers, and the business lobby groups promoting the innovative new businesses that the economy needs to create jobs and higher incomes?

I'll tell you where they all are.

They're down at the Wailing Wall complaining about the Government instead of running businesses.

If anything should be reassuring Alliance activists that your long efforts in putting the party into Government were worthwhile, it is the attacks from National and Act.

Think of the policies a National-Act Government would have announced.

 Yet another cut in superannuation

 Tax cuts for the most affluent, and huge user charge-tax increases for low and middle income earning New Zealanders.

 The sale of New Zealand assets.


 New Zealand Post - not a people's bank initiative.

 The remaining baby-ECNZs.

 The public hospitals.

 Even the roads.

Overseas owners would be on a spending spree at the National-Act fire sale.

There would be another round of vicious and divisive attacks on beneficiaries and the low paid.

Tariffs would be on an express train to obliteration…along with the tens of thousands of jobs that depend on a fair and reasonable balance in trade.

That is the bleak budget a National-Act coalition would have introduced.

What else would National and Act take away?

There would be no income-related rents?

There would be more hospital closures and privatisations.

No more money for waiting lists.

National and Act ran down the hospitals.

They ran down the schools.

They forced students into mountains of debt.

They laid waste to the natural environment.

They left New Zealanders doubtful that Government and democracy itself could deliver what they needed.

Winston Peters claimed there was nothing in the budget for poor white people.

Does he think there are no pakeha on superannuation?

Does he think there are no pakeha in state houses?

Are there no little pakeha kids at schools that are not going to have bulk funding imposed in them?

Are there no pakeha on hospital waiting lists?

Parties like National and Act and NZ First want to take us backwards.

Back to the failed policies of the eighties and nineties.

They're stuck in the last century.

We can’t go back.

We need a new beginning.

And that is just what this budget and this coalition Government have set out to achieve.

As Alliance activists, you deserve your share of credit for helping to bring it about.

Media contact: John Pagani 025 570 872

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