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Key Notes - 22 September 2008

22 September 2008

It's been just over a week since the date was finally confirmed and I am really enjoying being out on the campaign trail. Click here to see video from my trip to the Wairarapa last week.

We've released a significant amount of policy in the last few weeks and more is coming - so bookmark the policy index page on the National website and come back often.

Setting the course for a return to growth

Yesterday I spoke to the Road Transport Forum in Rotorua and outlined National's economic plan, and spoke in detail about our infrastructure plans. Read the full speech here.

National is conscious of the challenging economic conditions facing the world right now.

These challenges will have serious implications for New Zealand, and we shouldn't underestimate them. The reality is that the New Zealand economy is currently in recession, and the US economy, in particular, is looking shaky.

This could well have serious effects throughout our economy for some time yet, in terms of:

• The prices our commodities fetch in overseas markets.
• The opportunities our exporters have to grow.
• The ability our businesses have to raise finance.

Bill English, members of our economic team, and I are watching these developments closely.

However, the appropriate response is not for government to give up on setting the conditions for economic growth. On the contrary, the appropriate response is for government to focus squarely on backing the businesses and workers that can get this country moving again.

This is the test against which political parties should be measured at this election. What will the next Government do to make sure workers and businesses face the right economic incentives and conditions needed to keep workers in this country? What will the next Government do to improve the economic fundamentals that have held New Zealand back for the past nine years?

So, this election campaign, every time Labour makes a big spending promise, ask yourself this question: What will this do to strengthen the backbone of our economy?

Because this is not a time for a big-spending Government with a careless attitude towards the public purse. Nor is this a time for a Government with a track-record of economic under-performance. And this is definitely not a time for a Prime Minister who wants to talk about any issue but her Government's economic management.

New Zealand needs a new, disciplined pair of hands. New Zealand needs leadership that understands what this economy needs to recover. National is ready to provide that leadership.

Our number one policy priority is to strengthen the New Zealand economy. Because I know that only a strong economy will guarantee financial security for families, well-paid jobs in New Zealand for our young people, and larger superannuation payments for our older people.

National's Infrastructure plan

Good infrastructure is vital to a well-running economy. Achieving a step-up in infrastructure development is a key part of National's economic plan.

As you know, for the past several years, New Zealand has shown all the symptoms of a severe infrastructure deficit:

- Traffic jams.
- Slow internet connections.
- Inadequate public transport networks.
- Calls to cut back on electricity use.

These individual annoyances have a big-picture effect. They constrain productivity growth, and they put huge pressure on inflation.

National will invest close to $5 billion of additional capital investment over the next six years to fund infrastructure over and above that foreshadowed by Labour.

This means that, at the most, National will be running a gross debt-to-GDP ratio around two percentage points higher than Labour is planning.

National will make this small increase in overall government debt because we know it will help get New Zealand through this downturn. Because, right now, the problem facing the government is not Crown debt.

In fact, when you look at the Crown's overall balance sheet, New Zealand isn't in the red - it's well in the black. And when you look at the Crown's gross debt, you find that the New Zealand Government has one of the lowest debt levels in the developed world.

In reality, the place to look for a debt problem is increasingly in the households of everyday New Zealanders.

Many New Zealanders are experiencing record levels of private debt. What's worrying is that this is combined with little current prospect of the income growth needed to service those debts.

The average household debt-to-income ratio is now much bigger than the Government's gross debt-to-GDP ratio. So the challenge for the Government isn't about how to reduce Crown debt. It's about how to get Kiwi incomes growing strongly again to ensure they aren't suffering from an unmanageable debt burden.

What New Zealanders need from Government right now is the prospect of increased after-tax wages.

The challenge for the next Government, then, is to ensure the economy grows fast enough to make sure Kiwis can get ahead. So the Government can afford to let the belt out a small notch in order to build the stronger foundations for economic growth.

• It's economic growth that will increase Kiwis' pre-tax incomes.
• It's economic growth that will allow Kiwis to pay off their debt faster.
• It's economic growth that will allow Kiwis to invest for the future.

So, a National Government won't obsess about a two percentage point change in the debt-to-GDP ratio.

We will focus our attention on the growth side of the equation. We will invest to create the prosperous economic future New Zealanders deserve. We will do this because we know that the alternative is that everyday New Zealanders will suffer financially, for longer.

Valuing Families

A few days ago, I spoke to the Family First New Zealand Forum on the Family and made it clear that while National is focused on the economy, we are also committed to improving the effectiveness and efficiency of core social services, especially as they affect family life.

As a brother, a husband, and a father, I certainly know that my family is the thing I value most in life. And, as National Party Leader, I am proud to support families as the most important institution in our society.

I was raised, along with my sisters, in a state house in Christchurch. Back then I thought I was poor and, by most standards we were. As I grew up, though, I recognised that what my mother gave to my sisters and I was far more valuable than money.

She instilled in us the desire to improve ourselves by our own hard work, the confidence that we were able to do it, and the hope that it was possible to do so. She instilled in me an ethic of hard work and determination and a genuine belief that "you get out of life what you put into it".

Ultimately, the mission of the next National Government will be to show all New Zealanders the truth of that saying. I urge you to read the full speech.


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