Post Budget speech

Deputy Prime Minister Winston Peters Speech to 2019 Post-Budget Luncheon hosted by Grant Thornton

(check against delivery)

‘Change versus a Modified Status Quo’

Distinguished guests, ladies and gentlemen, good afternoon.

Introduction

Thank you to Grant Thornton for the invitation to address you here today about the ‘Wellbeing Budget’ and what it will mean for New Zealand businesses. Today also presents an opportunity to discuss how the Coalition Government is delivering on its promises half way through its term. That discussion will go to the very essence of what change means.

You’ll recall that on Thursday 19 October, 2017, New Zealand First announced its decision to enter into a coalition agreement with the Labour Party. After nine years of drift and growing social deficits, we said on that October night that for too many New Zealanders capitalism had come to be viewed as not their friend but their foe.

We said capitalism had to regain its human face otherwise the types of political and economic disruptions we see all around the world would visit our shores.  

What lay behind our choice? In a word: history.

Our last major disruption occurred in July 1984, 35 years ago, when the Fourth Labour Government came to power. Some 17 months earlier a Labor Party also came to power in Australia. What stands out when comparing the two approaches is the Rogernomes preference for an unmandated policy blitzkrieg over the more measured and consensual approach adopted by Bob Hawke and Paul Keating.

Their consultative approach carried major sector groups and the Australian public with them. In New Zealand Douglas’ approach exalted in the opposite until they became addicted to big change at the expense of any common sense or common decency.  What was the result from these two very different approaches to leading big change? Thirty five years later the Australian GDP per capita has in real terms grown over 30 percent more than New Zealand’s.

We also warned in October 2017 that our negotiations had taken place against a backdrop of changing international and internal economic circumstances which couldn’t be ignored. At the same time and in that same speech we warned of dark clouds on the horizon and an economic slowdown world-wide, and that the first signs of it already existed:

  • A housing market slowdown;
  • Reserve Bank and trading bank nervousness;
  • The cessation of hot money into our economy;
  • Property ownership concerns, and;
  • Receding consumer confidence and ebbing retailer confidence.

So, there were great risks in whatever decision we made and despite our having had no influence on these risks, we knew some would attempt to heap the blame on us. That those blame caricatures were both spurious and misplaced in our view wouldn’t stop attempts to mischaracterise the cause of events.

We put that scenario out front then, and do so now, so that misplaced culpability attempts, and they have been continuous since we formed the coalition, would fail. Those predicted headwinds, now with us, affected our decision to govern with Labour because we had to decide how to best mitigate, not worsen, their impact on as many New Zealanders as possible.

The Essence of Change

In entering a coalition with Labour we made a deliberate choice for change over a modified status quo. The ‘Wellbeing Budget’ justifies the choice New Zealand First made that evening. Putting a human face on capitalism was central to that choice and we’ve delivered it.

The ‘Wellbeing’ announcements discussed today could only have been made by a Labour-New Zealand First Coalition Government. Policies for economic growth, turning our exporting decline around, taking mental health seriously, breaking the cycle on child poverty and domestic violence and investing in national infrastructure would not have been possible under a modified status quo controlled by National.

We’ve sought as a government to tackle the long-term economic and social challenges facing New Zealand and prepare the country’s workforce for the jobs of an information-age, 21st Century global economy. These challenges are not insignificant. After nine years of these social ills and economic fundamentals being ignored by National, New Zealand First remains proud of its preference for social cohesion over conflict, and change over doing nothing.

Which brings me to a reflection about the nature of change. Change is not easy. It disrupts, upsets and unsettles those who benefit from the previous status quo. We understand that which is why our change programme is a considered and planned one. It won’t happen overnight and will take multiple terms for our changes to be locked in.

  In part that is because we inherited the laissez-faire neglect that nine years of a National Government produced. It is mostly because we intend to take New Zealanders with us. That we have studied how enduring change happens over the past forty years.

While conditions can lead to big change, as we saw with the Fourth Labour Government’s revolution, and then endured further through Ruthanasia, launching transformational change without mandate or by not bringing people with you leads to unintended consequences: political cynicism, social and economic upheaval, and a lost generation of New Zealanders who were arrogantly deemed to be no longer economically viable.

We’ve been living with the consequences of that disruption ever since. So while Beltway commentators and neo-liberal partisans decry the Coalition Government’s carefully managed programme of change – with headlines like ‘Last throw of dice for Government running out of time’ and ‘New Zealand slowdown could limit wellbeing’ – we say our changes will endure because the people support them. We say that unless we all share in the land of plenty then it’s not change worth having.

Judge us at the end of our terms in office. Transformations that give all an equal stake in the future take time and we make no apology for that because we want people in the cities and regions to all prosper. By boosting the country’s natural and financial, human, as well as social capital the ‘Wellbeing Budget’ redresses social and economic imbalances to achieve balanced change. That defines this budget and this government and we’re only getting started.

‘Wellbeing Budget’

Long-term challenges had been ignored for too long so this budget provides a second building block in our attempts to effect enduring change. The key aspects of the ‘Wellbeing Budget’ see the government:

  • Managing the books responsibly and growing the economy and jobs, and;
  • Addressing long-term economic challenges like building a sustainable economy and preparing for the jobs of the future, while;
  • Taking mental health seriously, with a special focus on under 24-year olds;
  • Breaking the cycle on child poverty and domestic violence;
  • Investing in crucial national infrastructure, like building new hospitals and schools and seriously investing in rail infrastructure.

These measures, as the Victoria University economist Geoff Bertram recently observed, seek to enhance the country’s natural, human, social as well as financial capital. They form part of Treasury’s ‘Living Standards Framework’ upon which the ‘Wellbeing Budget’ rests.

The budget announced a $1.4 billion boost in operational spending to rebuild and enhance our existing mental health services. There is another $365 million operational as well as $134 million capital investment committed to homelessness, emergency and transitional housing. Another $137 million is allocated to transforming the lives of children from state care to fulfilling lives in the community.  

Money alone cannot fix our social ills because their causes are complex and multi-faceted. But doing nothing for those New Zealanders who suffer from mental illness or who are living rough is no longer tolerable. Every government and nation is judged by how well it protects its most vulnerable citizens and we intend that their human faces are not hidden any longer.

So too with our youngest New Zealanders facing deprivation. They need hope, they need vision, and so in the budget the government is making major investments to reduce child poverty, to improve child wellbeing, and to address family violence. This includes, over the next four years, major investments of $650 million in operating and $95 million in capital expenditure to help parents with their children’s education costs and increased funding for learning support.

We are also addressing in the ‘Wellbeing budget’ the issue that New Zealanders are most concerned about, because mental distress knows no boundaries. It crosses all sections of society. It is, therefore, a society-wide problem and one that we are tackling head on.

Only a Labour-New Zealand First Coalition Government could make these investments in response to the laissez-faire neglect of our predecessors. We are proud of our investments but realise they will take time to work. That is because nine years of National’s ‘out of sight-out of mind’ approach to mental health have torn at our social fabric and restoring lost capacity is hard but necessary adaptive work.

Infrastructure Investments

Restoring the human face of capitalism does not by itself define this budget. We are also making changes to enhance our social and economic capital through major capital investments. The $1 billion committed to investing in KiwiRail is one signature example. Unleashing regional economic potential, enhancing regional connectivity, and taking more trucks off our clogged roads are the goals of our rail strategy and Budget ’19 helps deliver it because rail has a crucial contribution to make to transport policy over the long-term, alongside roading and coastal shipping.

The Provincial Growth Fund has already committed more than $180 million for projects such as reopening the Napier-Wairoa line and upgrading the Whanganui line, while investments have also been made towards establishing a new, hi-tech road-rail hub near Palmerston North to help manage increasing North Island freight volumes over the coming decades.

After years of ‘managed decline’ under National, rail is at the forefront of our promoting regional economic growth and jobs. Whatever the pettifogging criticisms inside Wellington’s beltway, we know the PGF is being celebrated in the regions because for the first time in a very long time regional New Zealanders know they have a government that is with them.

Other major capital investments include $1.7 billion for the P-8A Poseidon aircraft, to modernise our ageing air wing; funding for the Dunedin Hospital redevelopment, and a further $1.9 billion for DHB capital investments and deficit support.

Headwinds

The Coalition Government is delivering for business and workers. We’ve managed New Zealand’s finances prudently and I congratulate the Minister of Finance for his responsible fiscal leadership. We also understand that before spending money the country must first earn it. The government’s projections for New Zealand will see us grow at 2.4 percent in 2019 and 3.0 percent in 2020.

The average growth for advanced economies in the same period is projected to be 1.8 percent and 1.7 percent respectively. We are projected by the IMF to grow faster than the UK, Japan, Canada, the Eurozone and Australia.  

The coalition has made tax fairer, putting an end to unnecessary secondary tax and we’ve changed the law so multi-nationals start paying their fair share of tax. New Zealand First also ensured there would be no unwieldy Capital Gains Tax for people who have followed the cues provided to them.

Our research and development credits, a key part of the Coalition Agreement, are incentivising investment in research and helping to create more high-paying jobs and keeping New Zealand businesses at the forefront of innovation.

The coalition has also increased wages, employment and training opportunities. We lifted the minimum wage to $17.70 per hour, benefiting more than 200,000 workers. Some 55,000 jobs have been created since December 2017 and unemployment is down to 4.2 percent.

In summation, there is more money flowing in and around the economy than ever before so there is no good reason for business not to prosper. We have done our part to stimulate economic activity. Now it’s up to you to take advantage of the opportunities this stimulus is providing.

That said, and as we warned back on 19 October 2017, and restated here today, there are gathering storm clouds in the global economy. We warned back then of an economic slowdown and the current maelstrom of weakening growth, a tariff war between the US and China, and endemic political uncertainty across Europe after the 23 June 2016 Brexit decision have created a global slowdown.

New Zealand is not immune to these global economic forces so our exporters are operating in an environment that is both unstable and uncertain. But our fundamentals are strong. The dollar is sympathetic to exporters and under this government export growth was 7.5 per cent in the last year compared to 2018. In contrast, the National Government’s last year in office saw a paltry increase of 0.1 per cent in export growth.

The Coalition Government will continue to implement change and carefully manage the country’s finances while carrying the people with us. That is our lesson drawn from New Zealand’s own painful history. Predictability, progress and prosperity are our goals and the ‘Wellbeing budget’ is an important milestone in achieving them.

Thank you

ENDS – 2152 Words