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“Cake for Cronies - Crumbs for Kiwis”

Rt Hon Winston Peters
New Zealand First Leader
16 May 2014


Grant Thornton New Zealand and Westpac Budget 2014 breakfast
Friday 16 May, 8am
Te Marae, Te Papa Museum, 55 Cable Street, Wellington

“Cake for Cronies - Crumbs for Kiwis”

Thank you for the opportunity to address you today.

The 2014 Budget will be received by the public with widely different perspectives

This is a New Zealand First perspective

The tone of the 2014 Budget is smug, complacent and self-satisfied.

Mr English asserted in the budget the following: “New Zealand is in a good position”.

Can that possibly be right?

Because to call the budget a disappointment would be an understatement.

For nearly six years New Zealanders have been patient.

Many New Zealanders have been remarkably tolerant and generous in how they have judged and assessed National’s performance on the economy thus far.

They have cut John Key’s Government a lot of slack over the economy because of the Western financial crisis and the Christchurch Earthquakes.

National has been given time – lots of time to set the economy on a path to recovery first, and prosperity.

But nearly six years on it’s time for a reckoning.

We are out of the period of ready excuses – the public’s expectation now is for delivery.

Yet the 2014 Budget when examined closely, and devoid of all the political spin, has not delivered.

Well, only in one sense.


It has delivered cake for National’s cronies and crumbs for Kiwis!

New Zealand First has never bought into the fiction – the myth that modern National are competent economic managers.

While all the empty rhetoric about a ‘rock star’ economy has been going on we have not been blinded by the spin or the egregious propaganda.

Between the end of 2008 and 2013 the Australian economy grew by 13 per cent.

Singapore’s economy grew by over 28 per cent – now that is a “rock star” economy

Meanwhile, over the same period New Zealand’s economy grew by 8%.

That surely is not a rock star economy.

The government has made a big deal about its so called balancing of the books.

Viewed dispassionately that claim has a breath taking audacity.

The government’s income is about $67 billion and there are a hundred ways to manipulate the accounts.

Look – you can manipulate the numbers to generate a bogus surplus but it’s the real state of the economy that actually matters.

Just two examples:

First, National inherited an economy paying billions annually into the Cullen fund. That fund, a standout performer has averaged over 9 per cent growth over its 10 years of existence.

National ceased contributions to the fund in 2009 and does not plan to resume contributions until at least 2020.

Right there, is not a $375 million surplus, but a huge deficit.

Second, as New Zealand first revealed in the House yesterday the government manipulated over $500 million into bonds held by a wholly owned government company.

You don’t have to tell the people of Christchurch facing another terrible winter - they now know that they have been sacrificed so the government can boast about its books.

Holding back on the vitally needed money to rebuild Christchurch to generate the so called surplus amounts to a crime against our own people!

The facts are clear – the government has jacked up the numbers from an insurance deal when the remains of AMI were taken over.

AMI, you will remember, was turned into Southern Response Earthquake Services and there the fiddling started.

The proceeds from this sale amounted to $252 million which was placed in Government Bonds rather than settling insurance claims.

A government deal with Southern Response required them thereafter to put surplus cash on its books into government bonds as well.

This has been boosted by money coming in from reinsurance companies – also going into government bonds.

So – behold – the books balance!

Again, right there is a contrived government surplus.

Now, you don’t have to be Merrill Lynch trained to work that out.

National’s economic performance on the economy is actually rather ordinary.

In almost six years they have done enormous damage to the economy by both what they have done and what they have not done.

They have been driven by obsolete market dogma, ideology and mantras.


They have been short sighted – and to use an old saying - penny wise and pound foolish.

In short, in almost six years they have overseen - to use a biblical expression

“The years the locusts have eaten”.

Squandered years where great damage has been done and major opportunities missed.

Let us look at the specific failure in the 2014 Budget.


Failure 1: Economic Vulnerability

The truth is that the New Zealand’s economy is not healthy and robust – it is highly vulnerable.


The structural weakness is there for anyone who cares to lift the engine bonnet on the economy and see what is really happening with the motor.


Despite the best terms of trade in 40 years we still have a chronic balance of payments deficit that the Budget totally ignored.

Balance of payments deficits equal debt.

We have not had a balance of payments surplus in years.

It is skating on thin ice and anything could go wrong.

Failure 2: Jobs

We still have very high levels of unemployment – officially almost 150,000.

If you add those who want to work but have given up trying, the number is more like 250,000.

In addition, there are tens of thousands who are gravely underemployed. Sadly, we rely on such primitive statistics that say that if you have one hour’s work a week you are employed, not unemployed.

Failure 3: Cost of Living

Many Kiwis are struggling to make ends meet - over the last year around half the workforce did not get a real pay increase.

National has deliberately promoted a low wage economy – partly by allowing large scale immigration and have done nothing to lower the cost of living.

You can’t deliver six Budgets with the same outcome for the majority of new Zealanders and then deny in 2014 that you don’t want a cheap labour economy.

To be honest though don’t just blame National. Because for years we have heard the previous government and then this government talk about striving towards per capita income parity with Australia.

But neither governments really meant it. Moreover, they still refuse to concede that the economic ideology to which they are servants does not work for a country like New Zealand.

We all know that the electricity sector is a complete shambles.

We have a system that can only generate price gouging and now requires total overhaul.

In fact, National’s asset sales programme, if you understand business, can only have one design and that is to perpetuate an electricity and power sector that plunders both business and the public.

Our currency is seriously overvalued so says the IMF, Treasury and the Reserve Bank. Yet again yesterday’s budget showed no plan to redress this serious distortion of an export dependent economy.

Failure 4: Foreign Ownership


The Budget does nothing to counter the fact that far too much of our productive asset base, including our prime agricultural land, has gone into foreign ownership.

National has actively aided and promoted this takeover.

When this experiment started in 1984 foreigners owned 19 per cent of our sharemarket, today they own over 70 per cent.

Today foreigners own over 90 per cent of our banking.

None of that is good for New Zealand business, or workers.

In contrast, New Zealand First has plans, such as KiwiFund, (establishing a government owned KiwiSaver provider) to encourage savings some of which will support buying back our assets and investing in infrastructure.

If foreigners think both are great investments why would we not think that?

Failure 4: Housing

In the important area of housing – the budget totally ignores the two elephants in the room: high immigration and the wholesale buying of our housing stock by non-citizen/non residents.

But worse still, up to possibly 42,000 immigrants are coming in the ensuing year which means the crisis points National weakly attempted to address in yesterday’s budget will just get a whole lot worse.

Unless New Zealand bites the bullet and restricts non citizens from buying here, Kiwis will be squeezed out of the market – both by rising prices and by the sheer number of buyers from overseas.

New Zealand houses are selling like hot cakes to foreign buyers.

Why?

- Because many overseas buyers can get low interest loans, around 2%, while Kiwis struggle with much higher interest rates and lately, controls by the government.

- Because there are no taxes on non citizens who speculate in the New Zealand market. They buy, often leave houses empty till property prices climb, and then sell. They pay no taxes on this.

We are a speculators dream. There is money to be made for them. But for New Zealand there is no gain.

We can build all the houses we want, Kiwis will still be on the back foot. Buyers from overseas have all the advantage.

Unless we restrict non citizens from buying homes.

That is exactly what New Zealand First will do.

Failure 5: Infrastructure

The budget has done nothing significant for infrastructure – other than the endless spending on motorway projects in Auckland.


Auckland has a deep infrastructure deficit thanks to rapid population growth and decades of underinvestment in public transport.

The budget could have had some vision and commitment to the Auckland City Rail Link.

National has taken the easy way out and kicked this vital project into the stands.

Failure 6: Regional Policy

There is nothing substantial in the Budget for the regions –the heartland of New Zealand.

The 2014 Budget will not move New Zealand on one inch towards long term sustainable prosperity.

It can be summed up as a Cake for Cronies - Crumbs for Kiwis - Budget.

7. Promises

If you look carefully many of the budget’s promises will not be delivered now, but some time in the future.

When New Zealanders work out not just the what, but the when, they will have pause to think.

Conclusion

Probably some of you think that it is “steady as you go”. But where? And when?

We have been on a long slide down the rates of OECD economic performance for a long time.

One would like to report that our decline against the performances of First World economies will be turned around by yesterday’s statement.

If you think this is as good as it gets then you may be happy.

However, if you think that given all the resources and advantages we have we could, and should, be doing much better then clearly the next four-month lead up to Election 2014 will be of great interest to you.

This doesn’t sound, look, or feel like an election-winning budget.

There’s nothing in it for the Māori Party, there’s nothing in it for the ACT Party, and as you know the United Party doesn’t give a rat’s derriere as long as there is something in it for Peter.

ENDS

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