Pre-Budget SpeechPrime Minister Budget 2017
Ladies and Gentlemen.
It’s a pleasure to be here today.
Can I start by acknowledging my Deputy Paula Bennett and paying tribute to the man who is responsible for pulling this year’s Budget together - Finance Minister Steven Joyce.
And can I say it’s a pleasure to lead a country that’s becoming more confident and sure of itself, and where we have so many positive choices.
New Zealand has an enviable international reputation.
We are known for our lifestyle, safe and friendly communities and a clean and green environment.
And we have one of the best-performing economies in the developed world, underpinned by the Government’s wide-ranging and sensible economic plan.
A growing economy and strong government accounts give us choices we didn’t have just a few years ago.
Wages are rising and new jobs are being created every day.
We’re reforming public services and investing more in them to ensure that everyone – particularly those most in need - can access the services they require.
We’re building more infrastructure like schools, hospitals, housing, public transport and roads.
And we’re doing all that at the same time as getting our books back in order.
It's no wonder that we've changed from being a place many wanted to leave, to one Kiwis want to return to.
But the job is far from done.
We’re now in a position to achieve things we hadn’t thought possible before.
We can make tangible and long-lasting improvements to even the most challenged lives and we can set our country up for real and sustained success.
I’m determined to grasp the opportunities that a strong economy gives us.
It will be no surprise to you that the Government’s top priority is to promote and encourage a strong economy.
We are supporting businesses and investment that will deliver more jobs and higher wages for New Zealand families.
As well as a growing economy, we have an increasingly diversified one.
Between 2014 and 2016, global dairy prices fell markedly, and as a result annual dairy exports fell by $3.3 billion.
Once, that would have thrown our economy into decline.
But in fact over that same period non-dairy exports grew by $5.9 billion.
IT exports have more than doubled since 2008.
Tourism is at record levels and the construction sector is booming, with over 30,000 new houses being built a year, compared with just 13,000 six years ago.
A big reason for these successes – on top of the hard work and enterprise of people like you and those who work for you – is the Government’s consistent programme of economic reform.
Our plan is set out in the hundreds of projects and ideas included in the Business Growth Agenda.
For example, the 90 day trials are making it easier to hire new staff.
We’re supporting exporters by expanding our trading ties, and we have an ambitious goal of having 90 per cent of goods exports covered by Free Trade Agreements by 2030.
We’re rolling out Ultra-Fast Broadband to 85 per cent of New Zealanders.
We’ve cut income taxes and we’ve reduced annual ACC levies by more than $2 billion since 2010.
The point of these changes isn’t economic growth for its own sake.
Far from it.
The point is that growth delivers more jobs, higher wages and more choices for New Zealand families.
After adjusting for inflation, on average, take home pay has increased twice as fast here as it has in Australia since we came into office in 2008.
And we have one of the highest employment rates in the OECD.
These are the rewards for the hard work, innovative thinking and risk taking that are driving your businesses and growing our economy.
That growing economy gives us options.
Improving public services, building infrastructure, and solving social problems is possible only because we’ve enjoyed sustained, solid economic growth.
The logic is pretty simple – a stronger economy means more jobs and higher wages, driving a greater tax take and increasing surpluses.
We’re keeping expenditure under control, because we are acutely aware that we are spending money earned by hard-working New Zealanders - people who get up early every day to milk the cows, make the kids’ lunches or catch the bus to work.
If more of that money was in their pockets, I’m sure they could do a lot with it.
It’s our responsibility to spend it carefully, investing in the areas and in the initiatives we know will make the most difference.
We’ve moved from an $18 billion deficit five years ago to a $1.8 billion surplus last year, but we still need to get debt down so we can respond to future shocks, as Steven Joyce outlined last week.
At the core of it, surpluses mean choices.
They mean we can help people through difficult times – like in Christchurch, Kaikoura and Edgecumbe – without having to cut public services elsewhere.
They mean we can increase wages for 55,000 low-paid health care workers through a $2 billion pay equity settlement, as we announced last month.
And they mean we can invest in new infrastructure, like the $800 million to rebuild State Highway One through Kaikoura, as Simon Bridges announced last week.
We know that to keep growing we need to invest in infrastructure to support that growth.
In 2007 John Key stood in the 35,000-seat Westpac stadium and said the number of New Zealanders heading offshore every year was enough to fill it.
Nine years later that 35,000 is down to almost zero.
In fact, in the 12 months to March the net outward migration of Kiwis was at its lowest level for any March year since 1964.
That’s a vote of confidence in New Zealand.
We celebrate that and we’re building for it.
Over the next four Budgets the Government will allocate a further $11 billion toward capital infrastructure – taking our total capital investment over the next four years to around $23 billion.
That’s on top of the $20 billion of capital investment the Government has made over the last five years.
And we will be setting out the next steps of that programme in the upcoming Budget.
The growing economy and growing surpluses also give us the ability to dig into long-term social problems.
Too often, past governments have judged success only by what they spent, rather than what difference that spending made to people’s lives.
Yet changing lives is the whole point.
It’s what drove me to enter Parliament, and it’s what drives me now as Prime Minister.
People often struggle to comprehend just how big our social services are.
Our health sector is bigger than the dairy sector.
And if you add education, justice and welfare that’s a $47 billion a year industry.
We want to get that whole lot operating more efficiently and focused on what matters to New Zealanders.
In 2012 the Government set 10 challenging targets aimed at doing just that, delivering results for our customers, by reducing welfare dependency and crime, and increasing immunisation and achievement at school.
We’ve made improvements across the board:
- Over 50,000 fewer people are now on a benefit than in 2011.
- We’ve reduced rheumatic fever by 23 per cent.
- 94 per cent of 8 month olds are now fully immunised.
- Crime is down 14 per cent, with youth crime down by a third.
- And 85 per cent of 18 year olds now have NCEA Level 2, meaning 6000 more young New Zealanders each year are getting the start they need to move into a job or further training.
These targets were deliberately meant to be challenging, so although not everyone has been met yet, I’m proud of what we have achieved, alongside New Zealand families.
Each of these statistics represents tangible improvements for real people, with a flow on effect to their families and communities.
Their success inspires me, and my ministers, because we’re achieving results that only a few years ago seemed impossible - and we now know we can be even more ambitious.
So today I’m pleased to announce a new group of 10 targets.
I’m setting my clear expectations for Ministers and the public service to deliver even better results for New Zealand families.
In particular, I expect improved maths and literacy skills in primary schools.
I expect better health outcomes for new mums and their children.
I expect reductions in child abuse and in the number of victims of serious crimes.
I expect the number of people dependent on welfare to reduce further.
And I expect the public service to cut the time it takes people to access social housing.
Today the Government is publishing the specific, measurable targets we want to achieve in each of these 10 areas.
Most targets are new while some build on existing achievements.
We are persisting with our existing targets to reduce welfare dependency and serious crime because we want to achieve more alongside the New Zealanders and their communities whose lives are blighted by these issues.
Every six months we will publish an update on our progress, so you can see exactly how your money is making a difference.
And you will be able to see that lives are changing.
The targets are challenging.
They demand a lot of the public service and community organisations.
But I’ve seen the skill, dedication and commitment of our teachers, nurses, doctors, police, social workers, corrections staff, NGOs and other public servants.
I know that we can do even better, by focusing on our customers and working together.
I’ve spoken to many of you before about the Government’s programme of Social Investment – intervening early to help the most at-risk people lead better lives and become more independent.
The more we help people who have complicated and sometimes chaotic lives, the more independence they will gain, and the more they can participate in the wider community.
And when they have better lives, we save on public services.
In other words, what works for the community works for the Government’s books.
So in the lead up to Budget 2017 we set a challenge for Government agencies.
The Cabinet said that where agencies could demonstrate their ideas would deliver significant results for New Zealanders and a long-run payoff, we would fund them.
This might sound logical to most people, but that investment focus is new in the public service.
Agencies had to clearly answer three questions:
- First, what people where – who are we trying to help, and how do they need our support?
- Second, who has the relationship to earn the trust of these people and help them change their lives?
- And third, how do we know we are making a difference?
As we ask these questions, we’re increasingly finding that programmes tailored to the needs of quite small groups can have the biggest long term impact.
So Social Investment is pushing us to customise the services we deliver, particularly where people’s lives are challenging and complex.
Today I can also announce that Budget 2017 will include a $321 million Social Investment Package of 14 new initiatives that went through this new process and met the investment threshold.
I want to thank Social Investment Minister Amy Adams for her leadership in this area.
One particular focus of the Government’s work on Social Investment is ensuring all New Zealand children have a good start to life.
That’s why three of the 10 better public services targets I mentioned focus on young children.
And that’s why, as part of the Social Investment package in Budget 2017, I can confirm today that $69 million will be provided to support children most at risk of long-term dysfunction.
The new funding will allow for the nationwide roll-out of Family Start – a programme that provides intensive, weekly in-home support targeting young children in homes where there may be mental health issues, addiction problems, family violence or other child development risks.
This programme has proven to work well in certain communities, but we want it to be available to all New Zealand families who need it.
The new money also allows us to support a further 1000 children with behavioural issues to improve their self-control.
This is a key factor in their ability to learn, function socially and lead better lives as adolescents and adults.
And finally we will invest in targeted and specialist support for three and four year olds with oral language needs, to help prevent these children from turning up to school unable to communicate properly.
Without these skills, they cannot learn and participate as well as other children.
These seem like simple and obvious interventions – but they’re backed by rigorous analysis to ensure we’re putting taxpayer’s money in the right place to make a difference.
We now have a much better understanding of the drivers of long-term social dysfunction – and we can see some of those drivers in children as young as five.
Of the children known to the care and protection system, fewer than 40 per cent will receive NCEA Level 2, and 70 per cent will be on a benefit by age 21.
These children are seven times more likely to be in trouble with police as teenagers, and nine times more likely to receive a custodial sentence.
These are children who have come to the attention of social services, usually because of problems in their own families.
So they rely on all of us, on our money, our ideas, and our people to help them have better futures.
I’m proud of what this Government has already done to support families with young children.
Last year we increased benefits for the first time in over 40 years, and increased Working for Families payments for those on lower incomes.
We’ve increased access to early childhood education, with participation rates now at 97 per cent.
We’ve made sweeping changes to family violence laws to keep victims safe and to change perpetrator behaviour.
And we’ve established the new Ministry for Vulnerable Children, Oranga Tamariki, which has an explicit focus of supporting those most in need.
All New Zealanders will benefit from these changes.
That’s because all of us and our children pay in one way or another for poor parenting.
All our kids will get a better education when every child can behave and learn.
All of us feel safer when we can help someone into a job rather than choosing crime.
When I said at the beginning of this speech that New Zealand is a great place to live, it's not just for the clean air.
It's also for our sense of community, our view that a great country is one where children with a tough start will be supported so they can live good lives.
Ladies and Gentlemen,
A hallmark of this Government has been to think long-term.
We will continue to do that because it’s working for New Zealand and it’s working for New Zealanders.
In recent years our country has weathered, storms, floods, earthquakes and a global financial crisis.
But we never lost sight of our long term goals.
And we’ve emerged stronger than ever.
We are mainstays at the top of international rankings recognising our quality of life, prosperity, equality, transparency and ease of doing business.
Solid economic growth is driving more jobs and higher wages.
That’s creating more opportunities here, so more Kiwis are staying at home because they know they can build positive and prosperous lives.
We’re investing in the infrastructure and public services needed for a growing country while delivering surpluses and paying down debt.
That all adds up to a country able to make positive choices.
We’ll seek your support in the election later this year because the longer we can govern, the more we can achieve.
We’re a busy and energised Government.
And as I’ve outlined today we’ve got a clear plan for the future.
If we stick to that plan we can deliver sustained success.