Speech To The NBR Budget BreakfastFinance
Plaza International, Wellington
I would like to do two things this morning.
Firstly run through what for me are the three key features of this Budget
- education and research, and
- social policy
Secondly I would like to pay tribute to the man who has made fiscal prudence popular - Bill Birch.
This Budget is a step on the road ahead - the next 10 years.
Tax will be one of the key economic arguments of the next 10 years.
Let me assure you, lower taxes are here to stay with this Government. We will continue to have progressive taxes, but we
can lower the rates, and we can pick off taxes that are there just for revenue, as this budget does.
The economic benefits of lower taxes are simple. More pay at the end of the week for families means they can better achieve
their aspirations. More retained profits for business means more investment and that means more jobs.
But we must not forget that public support for lower taxes will depend on our determination to secure for people education
and health that works. Our tax policy needs to take account of New Zealanders social concerns, for their own services, and
their concern that others get the services they need. This budget achieves that.
The Budget also emphasises education and research.
Success in the knowledge economy is about the engine of ideas, about talented people who can adapt, who can use the new
tools to change the way the way we do our current business - making the dinasours dance, so to speak - and creative people
who grasp new ways of generating jobs and wealth.
We're moving to fuel the ideas machine now from primary schools through to the blue skies research. None of us know all
the answers about how the economy will change in the new century, but we know we need more people who have the skills
and the flexibility to meet whatever chances come our way.
The budget has a heavy investment in education and research, but it's only a start. The country has a large investment in the
knowledge industry, most of it through Government, but we have a huge job to understand how to make our New Zealand
ideas machine as dynamic, as flexible and as entrepreneurial as it needs to be. I want to make sure that smart young people
can use their talents here, so they don't have to head overseas to get the opportunities and incomes they want.
The third key feature in the Budget is the funding for innovative social policy.
I'm proud of this Government's social policy and I think it matters. It matters because $25 billion of your taxes is spent on
health education and welfare. And it matters because an economic policy which leaves too many people too far behind does
not reflect the kind of society I believe New Zealanders want. I am pleased that we are laying the foundations for more
effective use of the 25% of our GDP that we spend on social services.
This Budget continues the roll-out of a new programme called Family Start. Family Start is about getting in early to support
people who face a wide range of problems, before a crisis occurs. The programme brings together all the bits of government
services that, undirected, simply feed off social failure. We know it works better for people and it costs less. It is a common
sense approach to policy.
Which brings me to the achievements of my friend and colleague Bill Birch.
Bill Birch has made fiscal prudence popular.
He has made debt repayment popular.
Every week that he has been a Minister in this Government, New Zealand has created 600 new jobs.
He has shifted the ground enormously on lower taxes by delivering large tax reductions for low and middle income families.
And he has never let up on the changes which are hard now but which will pay off later - with ACC being the best current
Bill Birch has done this through the most turbulent political period in 70 years. He has served as Minister of Finance or
Treasurer, in one majority government, one minority government and two different coalitions. He's worked with an effective
parliamentary majority of one for almost six years.
The best thing I can do to make his achievements of the last six years worthwhile is to build on them in the next 10 years with
the same relentless sense of purpose.
Bill won't want to see his hard work frittered away. The economy must go forward and it is my ambition for the New
Zealand economy to be up with the best in the world.
This is a flying start.