Thank you very much, Mr Speaker. New Zealanders, I think, are realistic about the scale of the challenge facing this Government. They know that in November 2023, they voted for a new Government and a new direction and a change of approach away from tax, spend, and record debt. And I think over the last 18 or so months—because we are at the inflection point of this Government’s time in office, or at least so far—the scale of the challenge has become really apparent.
I think they intuitively knew back in November 2023 that things were going awry in the country. They knew that debt was up by 120 billion bucks in six years. They knew that Government spending had risen by around 80 percent in that time, and they did get to November and say, “What have we actually accomplished in the last six years? We’ve had a lot of talk about kindness and empathy. We’ve had banning of oil and gas. We’ve had a lot of spending. We’ve had a bucket load of discussion documents, working groups.”—I think we got to 275 or something by the end; we had David Parker issuing industry transformation plans as if the Government could sit here in Wellington in the Beehive and write these massive doorstop documents that no one ever read apart from the officials. I think they thought, “What have we really got to show for it? Because child poverty hasn’t improved. In fact, it’s got worse. The number of kids living in material hardship has increased. It’s got worse.”
They looked at our energy crisis and said, “Well, hang on a minute, we’re importing millions of tons of Indonesian coal at the same time as we banned oil and gas exploration.” They looked at our education standards and thought, “Why is it that in a country as wealthy on paper as New Zealand, kids go to school and can’t read and write? Despite millions of dollars poured into the education system, educational results are getting worse because we’ve got a curriculum based on airy-fairy notions, not based on facts, not based on knowledge.”
They looked at our welfare system and said, “Why is it that 18- and 19-year-olds who go on the benefit spend 20 years on average when they go on to the benefit?” They looked at law and order and said, “How is it that in a country like New Zealand, we have kids as young as 14 and 15 going out at night and literally ramming the doors of dairies and Four Squares and Pak ‘N Saves around the country, and there don’t seem to be any consequences for bad behaviour? Why is it that we live in a country like that?” And they thought, “Law and order is out of control, education is in crisis, you can sit around on welfare and there are no responsibilities—no, there’s all the rights but no responsibilities.”, and they voted for a better way.
But fundamentally underlying it all, there was a sense that the previous Government had no idea what they were doing about the genuine issues facing New Zealand. In particular, they had no real pathway forward when it comes to growth, because many of the problems facing New Zealand, like child poverty, educational underachievement, law and order, social inequity throughout our society—many of those issues—not all of them but many of them; I would say almost all of them—are so much easier to deal with when you have an economy that is growing. And we inherited, as a Government, a recession. We inherited an economy that had not really grown for a number of years. In fact, in per capita terms, we’ve been declining for a long time.
What we have now, and this Budget demonstrates this, is a Government focused not just on the short term—which is very important, and I’ll turn to that—but fundamentally, a Government focused on the levers of growth, dealing with the underlying economic settings that have held us back for far too long. You can see that through Resource Management Act reform. You can see that through the reforms we’re making around housing. You can see that in the reforms we are making to our education system and the reforms that we are making to our welfare system.
Because there’s no one silver bullet to our productivity challenges and our growth challenges. The honest answer is we have to do a whole lot of things really well. We have to focus on a whole lot of things all at the same time, and we haven’t been doing that; instead, we’ve put many issues in the too-hard basket.
But the first task of this Government—and this Budget reflects this—is to get back to some level of fiscal discipline because the fiscal Armageddon that we inherited in November 2023 was utterly out of control. What last year’s Budget and this year’s Budget does is—it’s actually a concept that used to be known. It was known in the 2008 to 2017 period. It was a concept that was deleted from the dictionaries in the six years after that, and it’s a concept called reprioritisation, which is that if the Government wants to spend more money on a particular thing, the first thing we should do is look at what the Government spends money on now and say, “Hang on a minute, might there be a better way? Might there be something we can stop doing and invest it in higher-priority areas?”
Education is a classic example of that. A focus on reprioritisation by the Minister of Education has meant that this Government—this Government that the Opposition says hates the poor and everyone who’s underprivileged in society—is making the single biggest investment in learning support in a generation. Hundreds of millions of dollars for more teacher-aide hours, for early intervention, looking after those who have been failed by the system for year after year after year. And we can do that while we reprioritise lower-value expenditure inside the Ministry of Education.
So reprioritisation is a concept that was a foreign notion to members opposite. Grant Robertson—here’s how I reckon he did his Budgets: all the bids came in and he put all the bids on his big notice board in his office, then he got out his big darts and he literally just threw them at the notice board and whatever he hit went into the Budget. There was never any savings, except right at the very last minute when he tried to save his skin during the election campaign and he realised that a 2 percent baseline cut—which even members on the Opposition, who were in the Government at the time, complained about that and said, “Oh, this is going to be a nightmare. How are we going to do this? You’re asking us to save money.”
This was in an environment when Government spending had gone up by 80 percent in six years—baseline increases. Remember all the operating allowances? He would dutifully intone at every half-year update: “This is going to be a tough Budget. We’re going to stick to our $3.5 billion new operating allowances.” Everyone would say, “Oh, yeah.”—and bear in mind, the operating allowance on this Budget is the lowest it’s been for a decade: $1.3 billion—and everyone would say, “Oh yes, well, he’s really tightening the screws on the economy this time around”. Every May, on the third Thursday of the month, he’d turn up and he’d say, “Oh, look, due to circumstances outside my control, we’ve had to break the allowance in $4 billion, $5 billion, or $6 billion.” In fact, Budget 2022, which was the nadir of this approach—that’s the Budget, remember, when dead people, French backpackers, and investment bankers in London got the cost of living payment; a billion-dollar payment in that year. That was counted as outside the allowance. He’d invented his own fiscal rule and said, “No, no, no, we’re not going to count that as recurrent spending. Just count that outside the allowance.”
So they never got to grips with the idea that, ultimately, it is taxpayers’ money. It’s not the Government’s money; it is taxpayers’ money. It is money taken from New Zealanders, who expect us to deliver public goods and expect us to deliver on the things that they pay taxes for, like a police force, like a prison system, like an education system that actually teaches our kids how to read, like a welfare system that doesn’t provide a hammock for people but makes sure that people who are in need get support, people in housing need get support, but not an endless largesse that just gives money over for nothing. And that is ultimately what they don’t understand.
Their response to the Budget has been instructive. In five days, they had five different positions on pay equity. Chris Hipkins firstly said they’d reverse it. Then he said that he’d changed his mind and that they’d have to look at it. Then Barbara Edmonds said that they would reverse it. Then they said that they might reverse it, and then, finally, they ended up saying, “Whatever happens, we’ll reverse it, regardless of the cost.”
Well, this Government has had to make tough decisions, and pay equity is one of those tough decisions to get the Government’s books back into the black in time and to refocus the Budget on priorities that actually matter to New Zealanders. They have no plan for New Zealand other than tax, spend, and borrow and hope. As New Zealanders showed in November 2023, that is no plan at all, and I’m looking forward to the next 18 months.