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The Budget and Fiscal Irresponsibility

Don Brash

Leader of the National Party

Wednesday 25 May 2005

Address to the Napier Chamber of Commerce

Mission Estate, Taradale

The Budget and Fiscal Irresponsibility

Well you have all, by now, absorbed the Budget reaction.

The New Zealand Herald called it a damp squib and a deep, dark anticlimax.

The Dominion Post’s front page headline asked, in justified if mock surprise, “Is that it?”

Commentators have said it is good for National. Well I dispute that. It’s not good for National because it’s not good for the country. It’s not good for any of us.

Some of those same commentators have said that it demonstrates fiscal responsibility by Michael Cullen. Well I dispute that, too. Michael Cullen, more than any other finance minister in recent years, has presided over out-of-control, low-quality government spending that has carried waste to the point of irresponsibility.

Michael Cullen has presided over a 24 per cent increase in the number of civil servants since he has been in the job, and the increase in the cost of core civil servants over that period substantially exceeds $1 billion.

These are not doctors, nurses, teachers or defence force staff. We are talking about pencil pushers here, and the vast expansion of the Beehive political apparatchiks. Steve Maharey has as many advisers in his office alone as I have for the entire National Party, for example.

Then of course there are such “essentials” as the extra people to administer the hip hop tours, the Wananga spending, which has grown from $5 million in 1999 to $239 million last year, all the extra bureaucrats in Education, who have come at the expense of teachers and schools, and the extra bureaucrats in Health, who have come at the expense of extra operations to reduce the ever-growing waiting lists.

And the waiting lists are growing, let me assure you, in spite of Helen Clark’s insistence that they are reducing. What happens is that the waiting list numbers are culled after six months by sending patients back to doctors to be “monitored.” That’s Labour’s answer to the health conundrum. Billions of extra dollars are being poked in one end and fewer operations and longer waiting lists are coming out the other.

Jim Anderton’s farcical jobs machine, which costs $250 million a year, deserves a mention here. You will recall he spent $306,000 fast-tracking the sale of 10 acres of prime waterfront land to Sovereign Yachts for half a million dollars, when it was worth more like $10 million. That was supposed to create a new industry and 350 jobs. At last count they had built one yacht.

You will, I hope, recall Steve Maharey’s “Jobs Jolt”. One of its programmes cost $445,000 – and found four people work.

And that’s not to mention taxpayer-funded twilight golf courses, radio sing-along courses, the Closing the Gaps programme, now called, euphemistically, Reducing Inequalities – the list goes on.

This is what you get from a tax-and-spend Labour Government. Endless plans, initiatives, targets, grants, panels, boards and regulation. All of this staffed by numerous layers of government, a vast expanding network of bureaucrats and administrators. What do they do? They implement and administer all these plans, targets and initiatives. The Budget was stuffed full of them. That is why you were not offered a proper tax cut, a better incentive to work, to get ahead.

Michael Cullen of course dismisses the hundreds of millions of dollars involved in this waste as irrelevant. That is said with the assurance of a man who has his coffers stuffed with taxpayer funds. At the same time as he dismisses this vast waste, his Beehive spin machine sells the line that he is fiscally prudent, and fiscally responsible.

There is one word I would use to describe that: BALONEY.

Presiding over low quality, wasteful, profligate spending cannot possibly be described as fiscally prudent. And nor is holding out on tax cuts when such relief is demonstrably overdue. It is time this myth was punctured.

Since coming to power, Michael Cullen has dramatically expanded the size of Government. With the release of his 2005 Budget, Labour’s tax take will have increased by 50 per cent from $32 billion in 1999/2000 to a forecast $48 billion in 2005/06. An increase of 50% in just six years! Accumulatively, we will have paid an extra $55 billion more in taxes. Do you really see the difference? Can you measure it in Health or Education results?

What is more, the size of government is set to expand at a faster rate of growth than our economy over the next few years. While the Treasury has forecast economic growth to average 4 per cent in nominal terms over the next three years, and real growth to average just 2.8 per cent over the same period, core government expenditure is forecast to increase at 6.5 per cent annually over the same period.

National will bring in a tax system that rewards enterprise, skill and hard work. We will lessen the burden on the hundreds of thousands of middle income families who, under Labour’s policies, are taxed as if they are the new rich. These policies, to be announced in a few weeks, will be aimed at middle, mainstream New Zealand. They will be resoundingly better than the derisory 67 cents a week tax cut - delayed for three years - which Michael Cullen is offering those he has savagely overtaxed for five years.

I guess we should be grateful Helen Clark did finally realise the need for tax cuts, but she clearly has absolutely no idea how to go about delivering them.

We saw that from Labour Party president Mike Williams's comments before the Budget that it would contain the "deep dark secret" of tax relief. When that turned out to be a 67 cents-a-week hoax, Helen Clark accused the media of over-hyping the Budget and putting words into Mike Williams's mouth. The New Zealand Herald then ran the transcript of what Mike Williams said. It was accurate. Helen Clark was wrong again. She is simply all at sea over what to do and how to deliver the needed tax relief.

National will provide tax relief while improving the quality of Education and Health. Don’t let Michael Cullen fool you about that. A huge amount of Beehive spin, funded by taxpayer dollars, is going into a project to argue that you can’t have tax cuts and maintain social services.

To that I say BALONEY again. The money is there; it is Labour’s management failures that have been the problem.

And another BALONEY to Michael Cullen’s claim that National’s proposed tax relief will be inflationary. Michael Cullen and Helen Clark are trying to argue that it will be inflationary when we spend our OWN money, but NOT inflationary when Michael Cullen takes our money off us and wastes it on pet Labour projects like the ones I have mentioned earlier.

Labour won’t give us tax relief because they are philosophically committed to stealing as much as they can from the taxpayer and redistributing it themselves. They want to control everything and keep funding the wasteful politically correct programmes that are at the heart of Labour thinking.

National believes workers should keep much more of their own money and we should reduce the waste, while maintaining public services. And the coming election in a few months will make this issue one of the key tests.

This is now a fundamentally important turning point for New Zealand. It is a test of whether we become a second-rate Pacific backwater, or a vibrant economy which can retain its brightest and its best.

We can’t at the moment. Last week, around 600 Kiwis left permanently for Australia, attracted by lower taxes, higher pay packets and less nanny state interference in their lives. Michael Cullen’s Budget did nothing to stop this. This week another 600 will leave. And next week. And that will keep happening till National changes the tax system and improves the incentives.

Perhaps at this stage I could quote John Shewan, a senior partner with PricewaterhouseCoopers and one of New Zealand’s top tax experts, in his commentary on the Budget. For those of you who did not see it, John said: “Nothing in this policy mix encourages hard work, entrepreneurship or wealth creation. When it comes to tax rates, the policy framework means that individuals will generally be better off to live and work overseas and companies will aim to generate profits overseas. This is not conducive to increasing workforce participation, labour productivity, or growing the economy.”

The Budget was an opportunity lost. Education is another opportunity lost under Labour. The NCEA scholarship debacle characterises the whole woeful oversight of an area that is so vital for our children and this country’s future. Now the Minister who was brought in to solve the NCEA scandal has been stood down from the Cabinet, pending an inquiry into allegations of bullying when he was a schoolteacher.

Back into the space comes Trevor Mallard, who had oversight of the problems in the first place. Under Labour, the Education bureaucracy in Wellington has expanded at enormous pace, while schools have been starved of resources and the time of teachers has been wasted in endless form-filling to appease the Wellington bureaucrats. National will bring choice back to Education. Parents and pupils will have the rights, not the bureaucrats and the teacher unions.

Bill English exposed the NCEA and other problems in Education. He has a passion about this. You can imagine what a good job Bill English will do in this portfolio. He knows the portfolio and how a Government works. And he would be assisted by people like Allan Peachey, with his down-to-earth coal-face experience as a top principal of a top school. What a formidable team in an area which has been disgracefully handled by Labour!

As many of you know, I left the Reserve Bank to enter Parliament. I wanted to become a parliamentarian; but I certainly wanted no part in the culture of evasion, deceit and half-truth that has sometimes been seen as an inevitable part of politics, and which certainly pervades Helen Clark and the Labour Party. We have now seen eight Cabinet Ministers depart for a variety of reasons, including telling lies.

That is not “strong leadership” as the taxpayer-funded Beehive spin machine likes to portray it. That is a farcical claim, all too eagerly swallowed by some compliant commentators. That is actually a rotten administration – rotten to the core.

New Zealanders deserve better than that. They have every right to expect better than that.

Just look at the extraordinary Labour attack this week on Tim Groser, New Zealand’s international trade negotiations expert, who decided to undertake a long-held ambition to be a National MP. National recognises the importance of the current World Trade Organisation talks and made it clear that Mr Groser would be freed from party politics in order to continue the talks at this vital stage. New Zealand’s vital interests and billions of dollars are at stake.

Labour first criticised National for appointing Mr Groser as a list candidate, then Mr Groser himself for a traitorous act of betrayal. Then Helen Clark had a complete panic attack and decided that the man lauded by many countries as the most able of trade negotiators no longer had the confidence of the Labour Government.

Helen Clark, who likes to dictate every aspect of life in New Zealand, is now going to tell the 148 members of the World Trade Organisation they should sack Mr Groser as chairman of the agricultural negotiations committee. In other words the Labour Government will actively seek to undermine the New Zealand appointee – their own appointee.

New Zealand's vital trade interests are at stake in this and Helen Clark should not be playing petty, spiteful party politics with an issue of this importance.

And, as you will have seen from today's newspapers, warnings from officials have finally got through, it seems. Helen Clark has had to backtrack from her fit of pique and the Government has confirmed Mr Groser in place in the meantime, to try to keep these important trade talks on the road.

Over recent weeks, as Helen Clark’s involvement in the Doone affair has been exposed, and as she has been asked to explain herself, we have seen the extent to which she will go to achieve her ends.

It has now become shamefully clear in court documents that Helen Elizabeth Clark secretly and deliberately fed wrong information to a Sunday Star Times reporter about the then Police Commissioner Peter Doone.

She repeatedly confirmed this information to the reporter and editor in follow-up calls, to ensure that they published the incorrect information and later stood by it. And even though Helen Clark practically dictated the story herself to the paper, the article reported her as saying she had “no comment.”

Anyone who is prepared to read the Hansards of her answers to Parliament on the one hand, and her signed briefs of evidence to the Court on the other, is left with a sense of wonderment that Helen Clark’s nose hasn’t grown three feet long.

And all this was happening when Helen Clark was presiding over what was supposed to be an impartial process considering the Commissioner’s future. That amounts to a conspiracy by the most powerful person in the land against an individual, with the country’s largest Sunday newspaper being misused as a pawn.

Today, I want you to know that the credibility of Helen Clark, the ability of our Prime Minister to tell the truth, the ability of her Ministers to tell the truth and to give honest answers in our Parliament, is firmly on the agenda as an issue for the 2005 general election. I make no apology for that.

New Zealanders have had enough of the culture of evasion, deceit and half-truth which characterises not just this Prime Minister but her Cabinet, and in a few weeks’ time they will have the opportunity to do something about it.


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