Speech to Christchurch Chamber of Commerce
Thank you for your invitation to be here and the pleasure of being in Christchurch.
As you know it is now six months since the formation of the Labour-New Zealand First coalition government with the support partner, the Greens.
Today’s speech will outline how the coalition government is operating, outline the new momentum for New Zealand’s foreign policy, and discuss Budget 2018 in general.
The coalition government
The passing of the six months milestone has seen a number of “report cards” issued in the media on the coalition government’s performance.
There are three key points overlooked, or undercooked, by our weekend newspaper columnists, and these experts who have been in politics for five minutes and know more about politics than Lianne Dalziel and me.
The first observation is the speed and efficiency in which the coalition government was formed despite all the statements about holding the country to ransom.
Followers of German coalition government negotiations can look upon New Zealand as racehorses not tortoises when it comes to forming a government.
My second key point about coalition government is that, despite fearmongering from our critics, New Zealand First has proven to be reliable partner. New Zealand First wants to achieve positive change for this country from a bedrock of stability.
And third, as a party we have prided ourselves on good coalition management and negotiation. The coalition government created a common purpose which is it translating into outcomes.
The New Zealand First point of difference
Underpinning the New Zealand First approach is a refusal to be bound by a neo-liberalism philosophical handcuffs. New Zealand First urges targeted growth through our regions and people. It doesn’t accept a disparity in wealth, nor accept degradation in our basic services – like rotting hospital buildings.
Should anyone have any doubt about the point of difference New Zealand First brings to the coalition then they should read the coalition agreement.
The very first priority written in the coalition government’s list of priorities is Regional Economic Development, and Primary Industries.
The agreement specifically states: “New Zealand First has a number of priorities to progress which Labour will support.”
And those priorities are a major investment in our regions, in particular forestry and rail infrastructure rebuilds.
As the smaller party in this coalition New Zealand First does not want the point lost about the beneficial influence it is bringing to bear, and for the support we receive.
It is my party’s view that New Zealand generally, and our regions in particular, need to transform economically, in the face of significant underinvestment.
The Provincial Growth Fund
The Provincial Growth Fund, which we secured from the coalition negotiation, will see over a three year period a $3 billion fund invest in projects that lift regional productivity and potential.
This represents a dramatic increase in investment to redress historic underinvestment in the regions.
It allows the government to support projects ranging from the very small (like feasibility studies and capability building) through to medium and large investments in sectors and infrastructure.
The PGF represents a step-change for regional economic development. It will allow regions to be more ambitious about identifying projects that will make a difference.
The goal is to target projects that:
- Increase economic activity in the regions
- Lift the skills of the workforce
- Increase employment and wages, and lower the rates of young people not in employment, education and training
- Improve utilisation of Māori assets
- Improve transport connections within and between regions
- Improve resilience and sustainability of infrastructure
- Contribute to mitigating or adapting to climate change
Priority is being given to regions that have traditionally have poorer than average outcomes such as Tai Tokerau/Northland, Tairāwhiti/East Coast, Bay of Plenty, Hawkes Bay, Manawatū-Whanganui, and the West Coast.
New Zealand First MP and Regional Economic Development Minister, Shane Jones, has a large task but he is determined to lead significant investment in all regions over the next three years.
Around a quarter of this funding is an initial investment in the One Billion Trees programme, designed to transform the forestry sector, create jobs and training opportunities, and to support the Government’s climate change objectives.
The remaining funding supports investments in tourism, transport and primary industry projects, and other priority investments identified by regions and sectors.
Coalition government’s first budget
Foreign policy direction
Earlier this week, as the Minister of Foreign Affairs, a pre-budget announcement was made to restore lost capacity in the Ministry of Foreign Affairs and Trade.
This government recognises the critical role the Ministry plays in keeping New Zealanders safe and prosperous. New Zealand needs to rebuild expertise and resourcing to respond to an increasingly turbulent global environment.
New Zealand needs a strong voice on the world stage. It is the best way to protect our interests. To not do so will see our actions perceived as hollow or isolationist.
The Ministry has faced long periods under a funding freeze but we are at a point where we must protect our interests in the face of converging challenges. And being resourced to maintain our voice is the best mechanism to negotiate the challenges ahead.
If you have any doubt about converging challenges look at events of just last week.
We had a former United States Secretary of State visit our shores. She warned of the global power plays underway, including in the Pacific.
A large, and capable, vessel full of boat people was intercepted in Malaysia, their apparent intent of reaching New Zealand.
And the US President has announced he is withdrawing his country from the Iran nuclear agreement – leading to genuine questions about stability in the Middle East.
All that in just a matter of days.
Why do we need more dollars? Because our very peace and economic existence depends on it.
As a small country we rely on all the global organisations which create international rules based order. Yet that order is under threat.
Trade, the lifeblood of our country, faces an emerging protectionist trend. The threat of global trade war has become a feared prospect.
With our own pacific region Pacific people in particular are facing existential threats from climate change. The potential for migrant displacement cannot be underestimated. It is in all of our interests for New Zealand to play a leadership role, and to be able to back that up. Evidence favours response now. A lack or action will lead to greater consequences.
The government has already signalled in its Pacific reset policy that our engagement in the region needs to improve, especially at a time when the Pacific is increasingly viewed as a strategic space and where New Zealand influence has waned.
Whilst New Zealand holds a favourable reputation, our recent track record is undermining this reputation. Our response measurement on overseas development assistance has been frankly troubling.
The UN benchmark for a country committing its share of ODA is 0.7 percent of GNI. The current budgetary track would have it fall within four years to its lowest level in 50 years (by 2022/23).
The percentage of GNI was at 0.30 per cent in 2008, it was forecast to fall to 0.21 per cent over the next four years. This would see New Zealand fall further in not pulling our weight.
For that reason, the policy of MFAT support announced on Tuesday is a clear demonstration to the international community that New Zealand is serious about addressing global and regional challenges. There are serious dangers and greater costs in not doing this.
The decade of underfunding meant the Ministry of Foreign Affairs had only 248 diplomatic staff posted overseas across 58 Embassies or High Commissions. It was time to address our foreign affairs capability.
Next week the government will deliver its first Budget.
In Budget 2018 you will see the themes of restoring lost capability and rebuilding of infrastructure.
The Minister of Finance aims to deliver a budget which improves living standards by rebuilding foundations of health, education and housing while also maintaining fiscal and debt discipline.
It will take more than one budget to fix the huge holes. Poorly targeted policies have left deficits and additional issues which need tackling.
For many years we have heard a narrative that our public services should do more but with less.
However there is a certain ground truth to that narrative which this government has discovered. A rubber band only stretches so far before the fundamentals need to be addressed.
The nature of politics means it is easy to forecast the opposition criticising the coalition government’s spending decisions in the forthcoming budget.
There is no doubt the coalition government is not only conscious of the need to rebuild these foundations, but also of the urgency to develop a growing economy, as well as maintaining the investments for future generations.
Budget Responsibility Rules are a feature of the government’s plans.
Surpluses will be maintained whilst also planning to reduce core Crown net debt to 20 percent of GDP within five years of taking office.
As the Minister of Finance has indicated, he is working with combination of reprioritised spending and improved tax revenue for the forthcoming budget.
It means a coalition government intending to deliver operating surpluses across an economic cycle while also paving the way to mediate the underfunding of essential areas in health, education and infrastructure.
Ladies and gentleman, the coalition government has been in existence for six months.
In that short time the government has started an ambitious programme for New Zealand from our provinces to our foreign policy, and not predicated on mass immigration and consumption and declining trade figures.
They are just our first steps
They are first steps to rebuilding our productivity and our public services.
Very soon there will be more steps which we will boldly take.