Speech to Port Nicholson Rotary ClubTreasurer
This election campaign is shaping up around two issues. The first is how governments will be formed. The second is the economy. Today I want to tell you what lies ahead for us in the economy and how National is going to build on it.
The foundation has already been laid. Fifteen years ago New Zealand set out on what was then regarded as a radical economic course. It has now become business as usual in many countries overseas and for most New Zealanders in New Zealand. We've had a decade where the economy has grown from $70 billion to $100 billion, where that growth has meant more jobs, more wealth and a bigger cake to share.
We have been able to increase our expenditure on services such as health and education. We've been able to lower taxes for middle income families so a family with four children on $35,000 is nearly $120 per week better off. We've been able to repay debt now so our children won't have to repay it in the future. Economic growth is good for people and that's why it matters so much in this campaign.
So what can we expect over the next three years? The pre-election update opens the books and lays out how the economy will look to an incoming government.
So how does it look ? In the next three years we can expect the economy to grow by about 10 percent. We can expect 115,000 new jobs, a balanced budget this year and then rising surpluses, lower debt, increased spending on health, education and we can expect lower taxes.
I am particularly pleased at the progress that is being made in job creation. In the last 12 months the New Zealand economy has created 25,000 new full-time jobs. We are entering a job rich economic recovery.
The question then is not whether or not there is economic growth - there is. The issue in this election is what set of policies are going to build on that foundation. New Zealanders expectations have risen particularly in light of stronger economic growth across the Tasman.
I want to talk about three areas of difference that are becoming more and more apparent in this election between the National and the Labour Party.
An issue of sharp distinction is jobs - National's policies will promote job growth, Labour's policies will choke it. The New Zealand economy has produced 600 new jobs every week for the last nine years. Each week 600 New Zealanders who are coming off benefits, recovering from their redundancy, returning to the workforce after caring for children, leaving polytech or leaving school to get a foothold on the economic mainstream.
Government should do anything they can to assist in job growth. Job growth happens when people who run our small businesses decide to take on another person.
National has and will concentrate unashamedly on making it easier for employers to make the decision to employ - that's what drives more jobs. We have reduced costs such as ACC; organisations from big corporates to social service agencies will save $200m next year.
But more important than the ACC costs has been the Employment Contracts Act and the differences betweeen the parties on this issue are clear.
The Labour party has two stories on the ECA. When Helen Clark visited a local business this week, she said her new law would make no difference. Business audiences around the country are being told not to worry, not too much will change. Meanwhile Mr Hodgson says the same day "The ECA is an extreme piece of legislation which has no place in the modern economy". Does Labour mean to say their law will be just slightly less extreme ?
Labour's policy is that if you want a collective agreement then you have to become a union or join a union. It will be illegal to be in a contract with a workmate, and not be a union member.
People will be allowed to strike for multi-employer contracts.
The workplace relations bill also refers to collective contracts covering people and work. Under this law the union owns the job as well as the person - that's demarcation, unions fighting over what job they cover as well as people.
Many organisations have good industrial relations. Employers have had to learn to understand the needs of their employees. Employees have learned to understand the needs of the organisation but that will change. Labour want to rebuild the Berlin wall between staff and employers with a law that says you can't stick with your mates unless you form or join a union.
Right now only 18% of our workforce are union members. Tough luck for the other 82% if they want collective or enterprise agreements.
This is wrong for two reasons. First no-one really wants it, because no-one can see who will benefit. People have the right to collective bargaining and union membership right now. If, as Labour says, it won't make much difference then why change it ? Its just payback politics.
The second reason is that its unfair.
A flexible labour law helps people without jobs to get jobs. Rigid labour law protects current jobs in the short term at expense of the young, the less skilled, the part-timer.
National wants to maintain the ECA and extend it. The biggest fear any organisation has about taking on a new employee is that they might get it wrong. We want to allow for probationary periods where the employee and the employer can test their suitability without the risks of the employment court.
National wants to promote more jobs and our policies support that. Labour want to promote more jobs but their policies will choke job growth.
The third key area of difference this election is tax.
National supports lower taxes for two reasons. The first is that it is a step the Government can take to help New Zealand families increase their net income. If we take less, they have more. That means they have more choices, a bit less pressure and the opportunity to fulfil some of their aspirations.
The second reason is because we need to push our growth ambitions beyond 3-4% and that means backing our people and our businesses. The nation is built on commitment and risk taking. Lower taxes will help build confidence, investment, jobs and growth.
Labour stands for higher taxes. Helen Clark said in the debate on Monday night that lower taxes were just putting good money after bad. She has also said the country was crying out for investment so the government needed to raise taxes and make the investment.
Labour think a left wing government knows better what to do with your money than you do.
We have taken the view that the dividends of a growing economy can be shared between New Zealand families through tax reductions, paying off debt and increasing social spending. Labour have undertaken that they will simply increase spending and lower family's after-tax incomes.
And its not just about people earning over $60,000. Labour's budget confirmed they will collect $2.4 billion more tax than National in the next term and that the $2.4b will be paid by everyone who earns over $9500.
When we announced our policy of reducing the tax rate to 20c up to $40,000 Labour said $10 a week isn't much. When Labour say they want change, they mean your change, your small change.
They have made 200 promises amounting to $4.3 billion. You can afford anything if you collect enough tax.
And the numbers on a closer look don't add up. Dr Cullen has provided just $5m more for health next year. Most people thought Helen Clark meant it when she said she would cut waiting lists. $5m goes nowhere. And in the second budget a Labour Alliance government would have just $9m to spend. Last year we spent over $500m. Those numbers just aren't credible, and that's how they make it all fit.
But the most important thing about the tax debate is the signal we send to the community. Do we value hard work and reward for effort ?
Many people have worried about keeping business and people in New Zealand to grow our wealth. Higher taxes will export both, not keep them here. During one of my many high school visits a student said to me - "you tell me to get a qualification, to pay for some of it myself, to work hard to get into the workforce, to be innovative and optimistic, and then when I succeed, Labour will punish me for it with higher taxes". Wisdom from a 17 year old.
Whatever Labour say about economic growth, no-one believes higher taxes will help. The policy is totally inconsistent with the rhetoric.
We are heading into an economic recovery rich in jobs and stronger on exports. We can build on that recovery if we preserve what works and get to grips with the underlying issues that remain in our economy.
We won't get wealthy buying houses off each other - it will be through taking better margins from other people's markets. And that's about an integrated approach, pushing policy change where New Zealand can get the most benefit.
We have taken the political risk of shaking up the producer board structures - there has been a monopoly on good ideas for too long in the primary industries. The Dairy Board alone accounts for 18% of the economy.
We have begun our government push to build the knowledge economy with the Bright Future package. It helps with the venture capital market, sets up test panels to reduce business compliance costs, and commits to new scholarships - 500 next year - jointly funded by government and business focused on getting our talented younger people into science and technology.
We are having a close look at the government's ideas machine - our Crown Research Institutes and universities - because we need to turn more of their good ideas into commercial reality. And we have set out a vision for electronic government. The government is still 35% of the economy, and we need to use every technology we can to reduce costs and provide better services and better productivity.
I believe in our capacity to overcome our disadvantages and build on our strengths. Government has a job, and we can do it better. I want to see a country where our children will want to stay and build their future.