Source: New Zealand Parliament – Hansard
Hon GERRY BROWNLEE (National): It is utterly ridiculous for that speaker to stand up, express great pride in the undoing of a Budget that was delivered 30 years ago, without recognising that it was the six years prior of utter debacle inside a Government that was the cause of that Budget’s delivery. Everyone knows that in 1990, the Labour Government at the time delivered a Budget that had, apparently, a surplus of $89 million—a wafer-thin surplus of $89 million. Then upon coming to Government, the opening of the books exercise that took place at that time—because we didn’t have the fiscal responsibility Act back then; we just had a Government able to do whatever it liked. When the books were opened, that $89 million surplus was almost a billion dollars of deficit, and you had the country’s largest banking institution teetering on the edge of failure, which would have taken most of the business community, most of the jobs in this country with it. So don’t come in here lecturing about how wonderful it is that we’ve gone back to the future in this sort of way. Because when you look at this Budget, you can’t help thinking that the next six years might look like those six years prior to the 1991 Budget.
While this bill does deliver an additional $10 a week to people earning on low incomes so that they can have a minimum income, effectively, of $31,096, the reality is that that $10 for working New Zealanders is just as little as 20 percent of what the Budget itself delivers for non-working New Zealanders. That’s an interesting sort of trend, if one were to think about what that might mean if this sort of logic was applied over a longer period of time.
When we were discussing this last time, through the committee stage, there was much claiming how wonderful all this was, as if the march of time did not have some inevitable effect on incomes as it does on everything else. So there’s nothing particularly special about this. We’re supporting it because we want New Zealanders who are in work to have a clear differential between those who are not. But, more importantly, we want a better environment to get those New Zealanders who are not in work back into the workforce.
I think there is a glimmer of hope here, inside the Government’s own statistics, where they’re saying that if you look back to 2020, payments in this regard were $2.189 billion. But in this current year, it’s going to be $2.130 billion. So here we have a larger payment with a lower quantum. That must mean that there is a very heroic assumption about people’s incomes rising in this country. That’s the only way that works—if incomes rise.
But we’ve got a Government that’s gone out to the whole State sector and said, “Nothing for the next three years. You’re flat.” And wouldn’t you think that that might translate to the private sector? So there is a deliberate Government policy of income suppression, but in this bill, the heroic assumption that incomes are going to go up somehow against that sort of prediction.
When you look at the stats—and the Minister pointed us to these stats on page 128 of the Budget Economic and Fiscal Update document—2022 sees the payment drop to just over $2 billion. Well, what does that mean? It means less people are picking up this sort of support. The only way they pick up less support is by earning more, earning more in an environment where the Government is saying “Nope, no more pay rises.” Then when we have a really good close look at it, we see that by 2025, it’s blown right out to over $2.2 billion. So they don’t even believe in their own fiscal forecast the outcomes that they’re predicting for the next couple of years. I think that is a cruel hoax on the people of New Zealand who do have hope that our economy will recover and move forward.
The speaker before, saying that “We’d laid the groundwork for the recovery of the economy by increasing benefits and by increasing family support payments.” misses the point—that is, from the economic activity, the productive side of the economy that those things are affordable. So I really do have great concerns that the Government has gone out with a big flag, saying “Look how good we are. Look how wonderful we are. We’ve got a great battle going on against poverty in this country.”, but no army behind it to make it work.
I appreciate that this is not a Budget speech and I don’t want to incur your wrath by straying too much further into these things. But I know, the whole concept of this being a cornerstone of that Budget is completely ridiculous. As I said before, the march of time always has consequence. If it didn’t, then nothing would have changed since 1990. But it has and it does, and the base level of what we now consider to be the baseline for existence in New Zealand—$31,000—would have been a massive income back then, a massive income. So don’t make out that this is something special; it’s not. It’s just part of an obligation that a Government in a country like this takes on.
Rather than take more of the House’s time, let me simply say, we support this because we do want to see the incentive at a higher level for people who are in work to stay in work and to progress in their work. We do think that incomes for New Zealanders are too low. We’ve said that for a very long time. But you only get that increased income by increased productivity within the economy, increased activity in the economy and better prices for commodities—all of that sort of thing. That’s what creates jobs; it’s what creates higher income—no question.
So it’s unfortunate, then, I think, that that’s the part that’s missing in this particular debate. The other side have concentrated on how wonderful it is that they’re doing this, without any real explanation of where all the money comes from, and then, of course, presents the utter contradiction in the Budget Economic and Fiscal Update.
Can I simply conclude by saying that we’ll support it because working New Zealanders deserve it, in an environment such as we have at the moment. Can I just say too, if you look at what this means for people—an extra $10 a week, so that your income comes up to $31,096. Yesterday, interest.co.nz published a very interesting article, and it’s worth a look, because it talks about the underlying inflation that exists in the New Zealand economy. That’s a big, big challenge. For people on that sort of income, they’re not too worried about mortgage rates, other than the fact that those mortgage rates affect their rental rates. There’s no doubt there’s been enormous rental pressure in the last couple of years. But the most interesting thing about that article was it took a basket of ordinary, regular, everyday used grocery items and compared it, price-wise, over a period of time, and came up with the conclusion that there is an underlying inflation, particularly in that sector, of around 7 percent—7 percent soaks up a lot. In $100, it’s $7, and this gives people $10 over and above about $30,000 a year. So it’s not a great value to them, as far as moving forward is concerned. It just barely holds people to where they are at the moment.
With that, I’ll conclude my remarks.