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Cullen Budget Third Reading Speech - Hansard


Turn(s) 14 to 15.1 Tuesday, 24 August 2004 3:07 PM


Third Reading

Hon Dr MICHAEL CULLEN (Minister of Finance): I move, That the Appropriation (2004/05 Estimates) Bill be now read a third time and the Imprest Supply (Second for 2004/05) Bill be now read a second time.

Those two questions involve the final stage of the Budget debate—the third reading—and the second reading of the Imprest Supply Bill*, which is normally moved in concurrence with it at this stage to provide for expenditure through to the end of the financial year, including expenditure in advance of appropriation, income expenses, and expenses incurring liabilities in advance of appropriation.

There is a spectre haunting the Leader of the Opposition, and that spectre is the fact that the New Zealand economy is going very well and is in good heart. When one has committed one’s professional life to being “Dr Misery Guts”, it is difficult indeed to respond to almost untrammelled, consistent economic success.

Madam DEPUTY SPEAKER: No. The member should refer to other members by their correct names.

Hon Dr MICHAEL CULLEN: Ah! Oh, right.

Madam DEPUTY SPEAKER: The member knows that he must call members by their correct names, and not imply a name that is derogatory.

Hon Dr MICHAEL CULLEN: Dr Brash—the appropriately named Dr Brash in this case—has spent his life being miserable about the economy, and now is faced with an economy that is out-performing not merely his expectations but, I have to be fair, even the Government’s expectations.

The problems we face are the problems created by growth and success, not the problems of misery, failure, and social division, such as those of the 1990s.

Firstly, we have had strong growth, making us one of the key successful economies in the OECD over the last 4 years. When could we have said that for 4 years in a row in some decades in New Zealand’s economic history? Not since the early 1970s.

Secondly, we have low unemployment. Our unemployment rate is now the second lowest in the OECD, though that to be fair does not count the National Party caucus in the figures.

Thirdly, there is moderate inflation, which is securely within the 2 to 3 percent band.

Fourthly, we have growing household incomes, particularly because of those growing levels of employment. More than 2 million New Zealanders are employed for the first time in our history, and they are looking forward to the implementation of the Working for Families package that will deliver massive gains to 60 percent of all New Zealand families with children.

But, of course, those at the top end will miss out, and that will cause terrible problems for those members opposite. Indeed, 60 percent of that money will go on families who are in employment—not that Dr Lockwood Smith would know anything about families; whether they were in employment or out of employment.

The social report released only a couple of days ago shows that we are in the top half of the OECD for the majority of the key social indicators that count.

That is what is important to people—the life they are enjoying, not some abstract measure of per capita growth per GDP. We are catching up in terms of per capita DGP. We are catching up on the rest of the world—particularly on the rest of the countries in the OECD—for the first time in a very, very long time.

This economy is growing faster on a per capita basis than most other developed economies. We are on a roll. But then, we have had Dr Brash appear, and for about the third time, he has unburdened himself of his strange views in an Australian financial magazine. He seems to cut a scurry across there in order to write his little bits and pieces, and hopes they do not get noticed back home in New Zealand.

Now, having said this previously, I will say it quite carefully: he appeared to be the Rip Van Winkle of New Zealand politics. Having spent 4 decades asleep, he woke up to find that the natives were getting restless, and he had some trouble understanding the changes that had occurred in New Zealand society in the interim.

But now he has become the sort of Cassandra-like figure, going around, as one of the cartoonists said, with “The end is nigh” billboards plastered on back and front. The end must be nigh, according to him, because life is getting better under a centre-left Government.

That simply cannot be true, according to Dr Brash. It may be what is happening, but it cannot be allowed to happen. We have seen all the newspaper headlines and comments: “Bumbling Brash loses plot”, said the Otago Daily Times, as it tracked his movements around the country.

Fran O’Sullivan—no great friend of the left, let it be said—saw “no road map for the future” in Dr Brash’s comments. According to John Armstrong, his politics did not only “border on the ridiculous” but they were “silly politics to boot”, and of course we had the Dominion Post saying that what Dr Brash said was simply “wrong”.

So what do we see?

First of all, according to Dr Brash, we are becoming a “Pacific State” country in terms of our economy, despite the fact that our GDP per capita is ten to thirty times that of Pacific States.

But Dr Brash is just about ready to pull on his *lava lava and throw in the future, as far as the New Zealand economy is concerned. Secondly, he says that Australia is doing better than New Zealand.

Well, let us have some facts.

Fact: between 2000 and 2004, their economy grew 3.1 percent per annum on average; ours grew 3.5 percent on average.

Fact: their inflation rate averaged 3.6 percent; ours averaged 2.5 percent.

Fact: their unemployment rate averaged 6.3 percent; ours averaged 5.1 percent.

We are going to hell in a handcart, according to Dr Brash, but it is certainly a *Rolls-Royce handcart as far as most New Zealanders are concerned. With regard to *GDP per capita, we are going backwards, says Dr Brash.

Well, here are some good figures, though, because he used to like figures in the old days, when he took some notice of them. In 1990, when the National Government took office, Australia’s GDP per capita was 39 percent higher than ours.

By 2000 Australia’s GDP per capita was 47 percent higher than ours. We went backwards from 1990 to 2000 in terms of per capita GDP. By 2003 Australia was 30 percent ahead of New Zealand.

Opposition Member: Oh, come on.

Hon Dr MICHAEL CULLEN: “Oh, come on”—yes! Of course, he said “30 percent” and he was right. What he did not say was that it was 47 percent when we became the Government, but he left all that out, because it does not matter. Yet although Australia is seen as the most successful developed economy in recent years, we beat Australia on every major economic figure in that period of time. Yet again, we are carrying on doing that; yet again we are beating them in the individual pursuit event.

Of course, in 2000 Dr Brash was not worried about Australia and New Zealand growing differentially. Then, when he was the Governor of the Reserve Bank and supposed to do something about economic growth, he said that whether the growth rate was differential was neither good nor bad; it just meant New Zealand was different in some respects.

Why does he see Australia as the model?

Is it because of their higher tax rates?

Is it because of their higher public liability insurance?

Is it because of more regulation of their labour markets?

Is it because Australians have longer holidays and shorter working years?

Is it because Australians have higher welfare dependency?

Is it because Australia has more active business support funding?

Is it because they have a higher level of economic regulation and economic nationalism than New Zealand has?

But what does he want to do? He wants to take a holiday—yours. He has suggested dropping all benefits to the *able-bodied. He has promoted raising the age of eligibility for *New Zealand superannuation. On many occasions, he has agreed to the absence of a capital gains tax, and he has supported removing local control of resource planning issues. None of that will address New Zealand’s comparative performance.

He says: “Woe is us! We are behind Australia, so what we have to do is adopt policies that are even more different from Australia’s than they are now.” Now that is pretty illogical. I now invite Dr Brash, having returned from his unsuccessful provincial tour of the last year or so, to stand up to address Parliament, stop attacking his country when he is overseas, and tell us what a National Government would do, apart from the failed policies of the early 1990s that were designed to impoverish New Zealanders and drive social wedges between us.


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