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Budget 2013: Good - But Not Great

Budget 2013: Good - But Not Great

Speech by ACT Leader John Banks
Thursday, May 16 2013

I rise on behalf of the ACT Party and the people of Epsom to support the Appropriation (2013/2014 Estimates) Bill.  ACT will support this Budget and associated legislation.

The Budget is a good budget in difficult circumstances.

But it’s not a great budget.

On the OECD’s measure, the government sector is spending about 43 per cent of everything that New Zealanders produce.

That’s 43 per cent.  In Australia it is 34 per cent.

Government is taking too much.  And it’s making us poorer.

We have lost many of our productive young people to Australia because their economy offers a better future.

The 2025 Taskforce found the income gap with Australia was 35 per cent in 2008.  Stats for 2011 indicate that it has risen to 41 per cent.

This gap is unprecedented.

Unless we close it we can expect more and more New Zealand grandparents crossing the Tasman to visit their grandchildren.

There is no mystery.  They are richer in part because more of the wealth of Australia is left in the hands of its people.

Yet the Labour Party wants even more spending.  You would have to go back to the 1970s to find a Labour Party less ready for Government.  They are not serious about addressing the challenges faced by New Zealand.

The future isn’t about outbidding the old dudes and young fogies of the Green Party.

When I first came to Parliament the Government was trying a command and control approach to the economy.  It didn’t work then and it won’t work today.

How does this Budget measure up in terms of getting government off-the-backs and out-of-the pockets of hard pressed taxpayers?

Well first the good news.

The size of government is set to decline under this Minister of Finance providing we continue to restrain expenditure.

Spending growth has been reined in, despite the Christchurch earthquake.   This Budget continues that trend.

The Government has not blown out the fiscal deficit like so many other countries and the last Labour Government.

The Government has stayed the course on partial privatisation, despite Court action and the dodgy referendum by Labour and the Greens.

There have been significant welfare reforms.  We are starting to tackle the culture of dependency and hopelessness.

There is no tampering with the Reserve Bank Act.

There is a willingness to improve the quality of regulation. 

We will have a regulatory standards proposal for the House to consider. 

There will be meaningful change to the RMA.

The Government recognised that house prices are too high because land valves are too high.  The Government is moving to free up the supply of land which ACT has long called for.

In education, Partnership Schools are on the way.  The Budget provides just under $19 million over the next four years.  I want to thank Cabinet and the Minister of Education for making Partnership Schools happen.

The Government will spend $9.7 billion on education in this Budget.  The annual funding for Partnership Schools makes up less than half a per cent. 

From 1999 to 2008, Labour increased spending on education by 47%.  They spent billions and had no significant impact on the tail of underachievement in our schools.  

Partnership Schools are a new and innovative option specifically focused on raising achievement for our most disadvantaged students.  

Anyone who claims that spending less than half a per cent of the total education budget on a new initiative to raise achievement for our most disadvantaged students is playing petty politics.

Now for the not so good news.

The macro outlook - growth and unemployment - is still mediocre.  We look good because most member countries of the OECD look bad.   We will not close the gap with Australia without lifting growth and productivity.

The balance of payments outlook points to an international competitiveness problem.

Taxes are too high because of wasteful and unnecessary government spending.

The more expensive the government, the poorer the citizen. 

The Government needs to roll back Labour’s poor quality programmes - interest free student loans and Working For Families. 

Here is what ACT will be urging National to do in a great Budget.

We regard $78 billion dollars of gross public debt to be too high.  So we need to reduce debt through less spending.

We need to put the avgas into the assets sales programme.

I welcome the announcement that Meridian is up next.

Air New Zealand is performing well.  Running an airline is a risky and tough business.  We don’t need to issue a prospectus.   Why not sell all the Government’s shares?

National should dump the Cullen Fund.  Let’s use it to pay off our debt.  Progressively raising the age of eligibility would help make superannuation more affordable.

We have stopped the growth in Government spending.  It is time to start tackling the size of Government. 

We have to aim for around 30 per cent of GDP on the OECD measure.  That means confronting middle class and corporate welfare.

The 2025 Taskforce found that given the surpluses at that time, reducing core Crown operating expenses to 29 per cent of GDP would allow a top personal, company and trust tax rate of 20 per cent. 

The Budget projections through to 2017 start to make this lost opportunity available again.   That’s a long haul but it’s a goal worth pursuing.

Spending reductions and partial use of surpluses could fund tax cuts.

Tax cuts would improve economic growth and international competitiveness.   The risk with future surpluses is that they are simply used to expand the size of Government. 

Finally, this House needs to be braver on regulatory reform. 

Further regulatory reform would help New Zealanders to understand how dopey policies like the nationalisation of electricity would be. 

Regulatory reform would highlight how poor policies lead to poor laws and that results in poorer citizens.  We have a Regulatory Standards Bill on the Order Paper that would help.

The ACT Party and the people of Epsom back this Budget. 

We say it’s a good Budget in difficult times. 

But in order to tackle the challenges New Zealand faces we need a great Budget.

Unfortunately the most significant risk we face is from bad policy and bad politics generated from the Opposition benches.  Labour has debased itself by entering into a bidding war with Russel Norman and the Greens.

My job, indeed my duty, is to ensure they don’t get their hands on the levers of power.


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