Embargoed against delivery

15 June 2000 Speech Notes

2000 Budget

Mr Speaker

I would like to congratulate the Hon Dr Michael Cullen on his first budget.

I would like to congratulate the Coalition Government.

Budgets are the ultimate test of a government.

It is a test this Government has passed effortlessly.

The Coalition made the major strategic decisions constructively and cooperatively.

We have made good decisions.

The budget represents a change in direction.

It is a break with the policies of the past.

The Government can be proud.

And I would like to congratulate my colleagues in the Alliance.

They have made an important and valuable contribution to this budget.

This is New Zealand’s first people’s budget in twenty-five years.

It has been a generation since a Government introduced into this House a budget that was designed for the ordinary New Zealander.

It has been that long since a Government introduced a budget that didn’t deliberately harm a section of the community.

In late 1984 and in 1991, finance ministers introducing their first budgets shocked the nation.

This budget empowers people it does not destroy their wellbeing.

This budget doesn’t break all the promises the new government made when it was elected six months ago.

What a regrettable commentary on this Parliament’s recent history that it is remarkable that a Government isn't breaking its promises.

The last Government I was a member in couldn’t say that.

The National Government, which replaced it, couldn’t say that.

The first coalition following the 1996 MMP election couldn’t say it kept faith with its own supporters – in the case of either National or NZ First.

This Government has set out to restore the faith of the public in the process of Government.

That means doing what we said we would do.

It means governing in the interests of the overwhelming majority of New Zealanders.

Not just the top five per cent.

It means a budget that is put together with good faith and integrity.

I believe these last six months have gone a long way towards rebuilding New Zealanders’ faith in their system of Government.

And this budget is another step along the way.

This is a budget that New Zealanders voted for.

It is a budget that addresses New Zealand’s most urgent needs.

For those reasons alone this Government can be proud of this first budget.

Of course, as leader of the Alliance I am obliged to say that this budget is not the budget that would be introduced if the Alliance had been elected in its own right.

I suppose that the Labour Party would concede it is not the budget Labour would introduce if it had been elected alone.

But neither Labour nor the Alliance was elected alone.

We were elected with a mandate to govern together.

The strength of our mandate is reflected in our decisions.

Where our policies are the same or nearly the same, we have been able to make rapid progress.

Where our policies differed, we have found a constructive way through.

We can be proud of the progress we have made.

The Labour-Alliance coalition has shown that it is possible to resolve policy differences without having to behave like drama queens.

There is a triumph that every other party in this House has yet to taste.

The Opposition tried.

They failed.

The two parties in this coalition government have shown they can govern together constructively.

Of course there is more to do.

This is, after all, only the first budget in a three-year term.

And of course, there are priorities of the Alliance that we would like to achieve faster.

Those hopeful New Zealanders who voted Alliance with brave hearts will know for sure: The change project is underway.

This budget represents a new start.

A new beginning.

A fresh wind is blowing through Wellington.

There are two very significant dimensions to this budget that signal the new beginning.

Two distinctive themes to the budget that the National Party never contemplated.

First, this Government is committed to closing the Gaps.

Every New Zealander who cares for their country feels pain at the rise of inequality among us.

Between haves and have-nots.

Between Maori and Pakeha.

Between regions.

Between workers and employers.

Between young and old.

Even between sick and well.

Gaps are the legacy of the free market.

The last government ignored them at best.

It even created them at its cynical worst.

This budget begins to heal the wounds.

To open the doors.

To close the gaps.

The second distinctive theme of the budget is the commitment to transform the economic base of New Zealand.

I want to take some time to outline the Industry and Regional Developments that are a feature of this budget.

The Budget provides new funding of $331.875 million over the next four years for industry and regional development.

The money will support a range of advice and practical assistance programmes.

New programmes will be rolled out progressively between July and September.

Three major programmes will be available almost immediately:
 Regional Development
 Early Stage Financing
 Incubator Development

The Government's regional development programme will take a ground-up approach.

We will work with local communities to assist them to make the best of the assets and advantages of their regions.

Funding of up to $100,000 will be available for any single strategic planning or audit initiative in any single region.

Up to $2 million will be available for major regional or community initiatives.

About $6 million will be available from Vote Industry and Regional Development for the Regional Development Programme.

Proposals must:

 Involve a number of community groups;

 Emerge from an inclusive regional development consultative process;

 Have local funding of at least 25 percent of total cost.

 Be sustainable and consistent with the Government’s policies.

The second programme available immediately will assist the development of innovative projects in the early stage by providing a grants programme.

It will ensure that entrepreneurs with innovative ideas are not prohibited from realising the potential of those ideas by a lack of early stage finance.

Funding will be available to:

 Develop existing research for commercial applications

 Establish a firm

 Expand a firm that is very small or has a limited track record.

Grants for early stage ventures will be available to individuals and businesses with well-developed early stage project proposals that are committed to growth.

Initially, grants will be limited to $10,000 in any one-year and will be available for obtaining advice and expertise to develop early stage projects.

Grants will be paid on the basis of a minimum contribution of 50% from non-government sources.

Over time, the grants programme will evolve into a more flexible scheme, with a limit of up to $50,000 for applicants to devote to early stage projects.

About $5 million will be available from Vote: Industry and Regional Development for early stage grants this financial year.

The third element of the programme available immediately is an Incubator Development Programme.

It consists of three parts:

 A national programme of workshops and seminars training small businesses in the requirements and implications of obtaining investment capital.

 A national network of "ideas brokers", providing in-depth assessment of ideas, deal-making expertise and coordination.

 Support for the development of incubators.

About $2 million will be available from Vote: Industry and Regional Development for early stage grants this financial year.

Industry New Zealand’s capacity will be built up over the next twelve months and further initiatives developed.

Programmes to come include Industry Specialist Support and Strategic Investment Support Services.

This is specialist expertise aimed at helping firms with high growth possibilities to realise their potential.

Many innovative kiwi companies with high growth potential just don’t have the capability to manage or exploit that potential.

Industry NZ will employ or contract with private sector industry specialists.

These are reputable experts who will identify firms with significant job and earnings growth potential.

They will appraise each firm’s requirement to reach that potential.

They’ll help to facilitate the necessary resources to successfully grow the business and manage the growth stage.

Firms will be able to get grants to help employ specialist support services that can help the business with activities such as:
 Raising venture capital or borrowing money
 Strategic and business planning
 Market research
 Intellectual property protection.

New Zealand needs to do what it can to influence businesses to locate here and to expand.

At the moment there is no one single agency coordinating the Government's interaction with businesses making significant investment decisions, such as decisions about where to locate or whether to expand.

Industry New Zealand's Strategic Investment Support Services will play this role.

The sorts of things it can do include:

 Making it easier to connect investors with the right central and local government contacts.

 Providing information about regulations and how to speedily pilot your way through the Government's processes.

 Helping to make contact with potential suppliers or partners.

 Providing assistance with feasibility studies

 Promoting flexibility in operating policies where appropriate.

A strategic investment grants programme to support this service will make grants available for feasibility studies and significant implementation projects.

A business angel network will be set up including both network forums and a database of angels and opportunities.

The network would generally target businesses seeking funding of $50,000 to
$500,000.

In addition to Industry New Zealand, the budget contains a broad-based set of policies to promote New Zealand’s economic development.

There is:

 A record increase in funding for research, science and technology.

 A national electronic commerce strategy.

 A modern apprenticeship scheme to provide opportunities for young people

 An increase in the Industry Training Fund.

 And a range of initiatives supporting Maori and Pacific Island economic development.

This Government is committed to a partnership with the private sector and with local communities.

The previous government neglected its responsibilities.

It abandoned industry.

It abandoned the regions of New Zealand.

And as a result, joblessness was sheeted in.

New Zealanders’ incomes are lower than they should be.

This Government’s commitment to industry and regional development is a commitment to doing better.

To more jobs.

To rising incomes.

Our commitment to partnership sets this Government’s approach apart.

The free market era is over.

There are other triumphs in this budget.

The mental health blueprint will be implemented.

This Government is committed to significant improvements to the mental health system in New Zealand. Such a commitment is long overdue.

There aren’t too many votes in mental health.

But it is a crisis.

It’s a tragedy.

The neglect of the mentally ill in this county has been nothing short of scandalous.

It’s a scandal that has swept up countless individuals and their families.

It is a daily reality in prisons, in community hospitals…and in cemeteries.

And too infrequently…in hospitals.

This government is taking a new approach.

The reintroduction of income related rents will lift tens of thousand of families out of poverty.

Housing costs are the biggest single cause of poverty.

Even the Alliance’s alternative budget had a three-year programme for the removal of market rents.

This Government is achieving the policy in one year.

I want to congratulate Sandra Lee on the funding she has achieved for a biodiversity programme.

As numerous conservation and environment ministers before her will know, it is no easy task to secure funding to protect our natural environment.

To put into perspective the package she has achieved…the kiwi recovery programme alone is more significant than the combined element of all other ‘green’ initiatives put together.

No grandstanding.

No self-serving amateur dramatics.

Just delivery.

And Sandra Lee’s DOC will save the kiwi because of it.

There are many more announcements in the budget that the Government can be proud of.

How different this budget is from the budget that the National Act Opposition would bring in.

Think of the policies a National-Act Government would be announcing today:

 Yet another cut in superannuation

 Tax cuts for the most affluent, and huge user charge-tax increases for low and middle income earning New Zealanders.

 The sale of New Zealand assets.

 TVNZ.

 New Zealand Post.

 The remaining baby-ECNZs.

 The public hospitals.

 Even the roads.

Overseas owners would be on a spending spree at the National-Act fire sale.

There would be another round of vicious and divisive attacks on beneficiaries and the low paid.

Tariffs would be on an express train to obliteration…along with the tens of thousands of jobs that depend on a fair and reasonable balance in trade.

That is the bleak budget a National-Act coalition would have been introducing today.

I have a challenge for National and Act.

State clearly now – which parts of this budget would they cut back if they were in government?

Industry and regional development?

Is the National Party’s finance spokesperson going to travel down to Dipton today and announce that if it was up to him he would take away their Topoclimate funding?

Does he support regional development or not?

Or does he only support it in his own electorate?

And if he does support it in only his own electorate, does he also support high income earners in his electorate paying six cents in the dollar more tax to help fund the programme?

Of course not.

What else would National and Act take away?

Will they abolish income-related rents?

Will they get up in this House now and announce rent increases for seventy thousand of the poorest and most vulnerable members of the community?

Will they cut back the public health system still further?

Will the acting leader of the National Party – the health spokesperson – name the hospitals he will close or privatise?

Will National and Act give a guarantee that they not close or privatise any more hospitals?

And if not what are the ones they want to close? Which do they intend to sell?

National and Act ran down the hospitals.

They ran down the schools.

They forced students into mountains of debt.

They ignored the arts.

The laid waste to the natural environment.

They left New Zealanders doubtful that Government and democracy itself could deliver what they needed.

The National-Act approach of the last sixteen years failed.

The economy they produced was failing badly.

We are deeper in debt than ever before.

How is it that after selling everything they could get their hands on, the economy now owes more overseas than it produces in an entire year?

We hold the world record for balance of payments deficits.

The last time we made a surplus overseas was 1973.

The free market policies of National and Act sheeted in permanently high levels of unemployment.

200-thousand New Zealanders are jobless.

Under National and Act, Treasury predicted that the level of jobless wouldn’t fall below 6% of the workforce for the next fifty years.

What an admission of failure.

What an admission of hopelessness.

The incomes of ordinary working New Zealanders are far lower because of their failed economic experiment.

New Zealanders’ incomes were falling behind those of other developed countries.

For the sixteen years when National-Act budgets were being introduced, New Zealand’s per capita GNP fell as a proportion of the rest of the developed world.

National and Act failed because they couldn’t transform the economy.

They crossed their fingers and hoped the market would fix it.

It didn’t.

Our economy needs to change.

We are far too dependent on the strength of our world-class agricultural sector.

Only 8000 of 259,000 or 3% of kiwi firms are exporting.

The vast majority export less than half a million dollars worth of goods each year.

We have the lowest proportion of exports of complex manufactured goods in the entire OECD.

New Zealand is not even beginning to hold its own in the knowledge economy.

We need to invest in high-skill, high-value, high technology, job-rich industries of tomorrow.

This Government is investing in that future.

We can’t go back to the blind market failures that national and Act led us into in the last century.

We need a new beginning.

We need to close the gaps.

We need to develop the economy by investing in the regions and in new industries.

And that is just what this budget achieves.

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