Phil Goff - Budget Speech

Today, New Zealand needed a shot in the arm.

We needed a vision for a better future and a plan for how to get us there.

We got neither.

This isn’t a zero budget. It is a sub-zero budget. This budget leaves us frozen in time.

It leaves the country with a record $16 billion deficit and an unsustainable borrowing level of over $300 million dollars a week.

This budget hurts but it doesn’t help. What we needed today was a budget from a government that had the guts to make the right decisions, however tough they may be.

We needed a Government that was serious about making sure everyone pays their fair share no matter what they do for a living, no matter where they live or how much they earn.

This government fails on both counts.

We needed a government with a plan but this Budget makes it clear that National has no plan.

John Key has made much of his economic skills.

But he has failed to deliver.

Today’s budget does nothing to address the real problems facing our country – high debt, low wages, low productivity, high unemployment and poor economic growth.

Economic indicators are going the wrong way. But these aren’t just numbers - they’re peoples’ lives and dreams.

This budget will do nothing to help hardworking New Zealanders who are struggling to pay their bills every week because their incomes can’t keep up with the rising cost of living.

That’s because John Key and National have failed to face up to the big problems.

They keep promising good times are just around the corner. Really? New Zealanders don’t believe it.

They are tinkering around the edges. They want to play it safe when what the country needs right now is a bold plan to fix our broken economy.

The legacy of this budget and this Government is a $16 billion dollar deficit – seven times higher than Treasury’s 2008 prediction of what it would be in 2011.

In November 2008, the National Government inherited one of the lowest debt levels in the developed world, from a Labour Government which had run surpluses – not deficits – for 9 years and built up $14 billion of savings in the Cullen Fund.

Yes, there was a global financial crisis in 2008. But that was over by 2009.

New Zealand should have come out of it well because of Labour’s careful management of the economy. We had paid off our public sector debt and now, thanks to thriving markets for our exports, including China with which I negotiated a Free Trade Agreement, we are enjoying prices for our exports which are the highest in 35 years.

The earthquakes in Christchurch didn’t help. But $10 billion in reinsurance will flow into New Zealand to help meet the costs and only 10% of the deficit can be put down to the earthquakes.

The New Zealand economy was already in trouble before September 4th 2010, when the first earthquake hit.

We had failed to achieve the growth projected.

The National Government has no vision of what a successful New Zealand economy looks like and no plan to get us there.

Gimmicks will not do it. Job Summits that cost millions but produce no jobs. Cycle-ways as substitutes for growth, ill-conceived plans to turn our National Parks into open cast mines and broken promises from the Prime Minister when he told voters he would not increase GST are not a plan for real growth of jobs and incomes.

National’s three Budgets don’t just fail to deliver a real plan for prosperity, worse still, they also fail to meet the fairness test.

Top earners have done very well, getting hundreds and sometimes thousands of extra dollars in tax cuts every week.

In fact, the top 10% of income earners got 40% of the tax cuts. The bottom 20% got 1.4% of the tax cuts.

That’s neither fair nor smart. Spending $2.25 billion each year in tax cuts loaded towards the more wealthy when the country’s debt has in 30 months gone up by $30 billion just doesn’t make sense.

John Key and Bill English made reckless election promises in 2008 – in the middle of the global financial crisis – knowing full well the country could not afford the billions that were being promised.

What’s more they made these promises while also promising New Zealanders that huge reductions in tax revenue would not require cuts in spending or an increase in GST.

They promised they would not cut KiwiSaver. They did.

They promised they would not touch Working for Families. They have.

They promised there would be no changes to student loans. There are.

And what about the biggest promise of all – not to increase GST? Well we know what happened there.

Why has New Zealand’s deficit blown out of control?

Clearly the $14 billion of lost revenue from tax cuts was a major contributing factor.

And the failure of the New Zealand economy to continue its recovery after 2009 with growing unemployment and zero growth meant a dramatic decline in government revenue.

In 2009, John Key promised the economy was coming aggressively out of recession. He didn’t deliver on that promise.

So New Zealanders will be sceptical today about the heroic budget forecasts that predict strong economic growth and higher wages just around the corner. They always seem to be just around the corner.

Big debt means the need for prudent financial management – including reprioritising and seeking efficiencies.

Existing spending is not sacrosanct. But if cuts are to be made, they must be justifiable and fair. And they must help the economy to grow and to lift incomes. If they don’t, they just hurt and don’t work.

Despite the massive borrowing this Government refuses to reconsider the affordability of billions of dollars in tax cuts to top income earners.

I don’t begrudge anyone who earns a high income through hard work and good fortune. Good on them. But like anyone else they need to share in the sacrifices that have to be made at this time – not push it onto the people who can afford it the least.

Why should low and middle income earners lose their KiwiSaver and Working for Families tax credits when top income earners keep their thousands of dollars in tax cuts every week.

While top income earners have got richer over the last few years, those on middle incomes have become the new working poor and low income people struggle to simply survive.

And shouldn’t more top income earners in government lead by example?

Why is it somehow OK for old people to be denied home help to live independently in their own homes, while Cabinet Minister get record level payments to live in their own homes on top of their big tax cuts?

Ruby Martin in Timaru is 86 years old and crippled with arthritis, so crippled she can’t even hang out her washing. She lost her home help – about $30 a week and is struggling to live independently while the Finance Minister wanted to pay himself $45,000 a year to live in his own home.

People can’t afford to put petrol in their car while Murray McCully spends $75,000 on an airforce plane when he could have got to his destination for $4000.

Middle income people who are working hard are finding their incomes dropping behind the cost of living.

Melanie Sutton got off the benefit to find work but rising costs mean that she is struggling to make ends meet and couldn’t even afford to get medical care for her daughter when she broke her arm on Boxing Day because of the cost of after-hours care.

More and more, lower income families are becoming the underclass John Key promised in McGehan Close he would do something about.

I was in McGehan Close last weekend, Mr Key, and they wanted to know when he would front up there again and explain why he has broken all the promises he made to them.

Unemployment, with 155,000 Kiwis out of work, is a serious problem that should have been the focus of this Budget.

A Labour Budget would have concentrated on building the economy and productivity by addressing skills shortages and investing in research and development.

We need to be a smart economy, not a low wage one.

It would have put in place monetary and taxation policies to promote growth in the productive and export economy where real jobs and wealth are created rather than favouring investment in speculation which adds nothing to the country’s wealth.

This Budget won’t turn around the record level of 77,000 young people who are out of work – one in four. Young people who should be earning or learning are becoming the lost generation on the scrapheap of unemployment. This is a ticking time bomb – a social disaster waiting to happen.

This Budget should have massively extended trade training. The Building and Construction industry says by next year there will be a shortfall of 90,000 skilled and semi-skilled workers in their sector.

The training package for Canterbury is too little and too late. It’s spending is less than the Government’s cut to skills training last year. And nine months after the September earthquake, no new trainees have yet been taken on in Christchurch, according to the Minister in the House yesterday.

It’s not good enough for Mr Key to talk of bringing in skilled workers from the Phillipines and Malaysia.

Over 10,500 15 to 24 year olds are currently unemployed in Canterbury. Giving them the skills to rebuild their own city should have been the priority.

We need to own our own future and promoting savings would have been a priority in a Labour Budget.

National has done the opposite. Even Standard & Poor’s have warned that National’s actions on KiwiSaver risks damaging Labour’s successful scheme and pushing New Zealand further into debt.

National doesn’t have a clue. Its cuts to KiwiSaver are short-sighted. One of its biggest changes is to reverse the change it made just two years ago.

Worse still, by going back on its word not to cut entitlements it is constantly shifting the goalposts. This will erode trust and confidence in KiwiSaver.

There is another area where Labour would be taking a fundamentally different approach.

Selling off efficient and profitable state assets like the power companies is bankrupt politics.

No individual or business would do something so stupid.

National hasn’t learnt from history. The election will be about whether National has the mandate to sell off assets built up and owned by New Zealanders much of which will end up being foreign owned.

This country is a great country. Its people are creative and hard-working. Kiwis want to believe in this country but thousands are quitting it every month for Australia because of this Government’s lack of vision and lack of a plan for our future.

Boasting that our wages are a third lower than in Australia, Mr English, does nothing to close the gap which National promised at the last election.

Far from closing it, it has become according to former National leader Don Brash, a chasm.

This Budget is a failure and this Government is simply tinkering with the problems hurting Kiwis but not making a difference.

We needed bold and courageous action. We didn’t get it.

Labour has set out its alternative plans for how to build a stronger economy.

We have foreshadowed a strategy to up-skill New Zealanders and to create a smart economy through research and development.

We have signalled changes we will make in monetary policy and will announce policies in coming months in taxation and promoting savings.

We have announced policies to relieve the pressure from the rising cost of living because we think New Zealanders deserve a break.

We will take GST off fresh fruit and vegetables.

We will make the first $100 a week tax free.

We will put hardworking families at the centre of all that we do.

We are driven by the belief that things don’t have to be like this.

We can turn things around with vision and courage.

There is a different and better way and we will prove it.

That’s my guarantee to New Zealand.