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Budget 2005 - the Big Fizzer

20 May 2005

Budget 2005 - the Big Fizzer

No wonder Michael Cullen didn't do the traditional photo-op with the Budget - there was nothing in it to write home about. But I'm going to do it anyway.

After days of whisperings up and down the country about some form of tax relief, all we got were tax threshold adjustments, in line with inflation (really an economic necessity), in 2008 - whoopee! This is an insult to hard-working Kiwis who have spent the past six years of this Labour Government overtaxed.

And when it's all boiled down, this tinkering with the personal tax system is offset by the carbon tax, petrol tax, and the other 30 taxes that Labour has introduced since coming to power. The only reason they changed anything at all was the pressure they have come under from National, and in recent months from all sectors of society, for some tax relief.

For years now New Zealand has been losing some of our best and brightest people overseas, attracted by the high wages and low taxes that many other countries offer. Most notable in this case is Australia. We are currently losing 600 people a week across the ditch, and this Budget has done nothing to change that or to persuade Kiwis to stay here. This is a tragedy.

One of the much heralded parts of this year's Budget is the KiwiSaver scheme. There is no evidence that shows a scheme such as this will make any real difference to our savings behaviour. The United Kingdom introduced a similar scheme but it failed to generate any noticeable increase in savings. Here's an idea - higher incomes generate higher savings (this is fact), so give Kiwis higher incomes so they can save for themselves. How do you do this? Tax relief and sensible spending priorities.

This Budget further shows that Labour has no ability to sensibly manage the country's money. Look at the funding going to education. The Ministry is going to get an additional $24.3 million per year, and schools are going to get another $19.5 million. That's $4.8 million a year more going to the Ministry than to schools. So, while each and every school up and down the country is struggling to make ends meet and is fundraising to keep up, the bureaucrats in Wellington get fatter. This is outrageous. Labour has increased spending on education since it came to power and all they have to show for it is a shambles - NCEA, scholarships, Wananga, Cool-IT, twilight golf, homeopathy for pets, the list goes on. A change to a National government will see an education system that delivers high quality education to all New Zealanders.

Labour can say all it likes about how great they are . They have dramatically increased spending on health, which is fantastic, but what has it got us? Funding may have gone up but the number of surgical inpatient operations has gone down. Everybody knows waiting lists are too long. Labour's way of dealing with this is to cull people off the lists. In the Counties-Manakau DHB alone, 2,000 people have been culled off the lists. This is creative accounting at its worst. These people are in pain and they need help.

We have a residential care sector that's in crisis, with rest homes all over the country closing down, and staff leaving because of poor pay. This is unacceptable, and I hope for the sake of our senior citizens that the money announced in this Budget will make a real difference in the sector.

One of the core responsibilities of a government is the protection of its citizens from internal and external threats. We are all too familiar with the problems that the police are having. This Budget did little to lift public confidence in them. Putting 120 more officers on the streets is too little, too late. George Hawkins has once again failed to give the police more resources. A change to a National government will see more resources given to the police so they can once again make our streets safe.

Spending on defence is long overdue but is projected to grow slower than the economy. This is also the case for biosecurity. Still Labour does nothing about the reports in 2002 that said we need to do more to improve our defences against biosecurity risks.

Roading gets a funding boost of $300 million over three years. It's a good start but will do little to cover existing projects. At best that money will be enough for seven kilometres of new roads. Whoopee! All the money in the world will not fix the problems of the Resource Management Act. To fix our roads, National will put all the money from the petrol tax into roads, and fix the problems with the RMA that are slowing essential projects down.

Labour can congratulate themselves all they like over increases on this, that and the next thing, but when you look at it in real terms you can see very little benefit. All we have had from this Labour Government is a huge increase in bureaucracy, which has lead to a huge increase in compliance costs across the board, and a more intrusive state.

This Budget is just more of the same, with nothing to reward hard-working Kiwis. This was a Budget of lost opportunity. I hope no one was expecting great things, because if they were, they would be disappointed.

Post Budget Breakfast

For those of you in Christchurch who want to hear what the National Party has to say about the Labour Government's final Budget, Don Brash, John Key, myself, and other senior members of the National Party Caucus will present an overview of the Budget, what it means for business, and the implications for New Zealand and the economy. The presentations will be followed by a question and answer session.

It's all happening next Tuesday, 24 May, 7:15am at the Millennium Hotel, Cashel Street, Christchurch. Breakfast begins 7:30am sharp, and wraps up at 8:30pm.

Cost is $27 per head. Please register with Maree McEnaney at the Canterbury Employers' Chamber of Commerce, email


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