Debate on Prime Minister’s Statement

Tuesday, February 8, 2011

It is a pleasure to rise on behalf of the ACT Party to respond to the Prime Minister’s speech. I take this opportunity to acknowledge and congratulate the Government on much of what it has done during its first term. I say “much”, but not all. However, amongst the achievements have been the reform of the Resource Management Act, which the ACT Party has participated in, and the rationalisation and streamlining of various Government departments, and I should also mention the passing of ACT’s “three strikes” law, which has already started to make New Zealand citizens safer in their homes and on their streets. I say it is ACT’s “three strikes” law because no one can deny that that law would not be on our statute book but for the promotion of it by the ACT Party. The Prime Minister freely acknowledges that the “three strikes” law would not have been passed without the ACT Party nudging and cajoling the National Government at every step along the way.

The ACT Party and National have also implemented, and then expanded, the 90-day trial period for employment contracts. This has helped to align our employment practices with those of the rest of the developed world. But, more important, it has given employers the opportunity to take on new employees in the confidence of knowing that if they make a mistake, they are able to find an alternative employee. It is important to give confidence to employers so that new employees can be taken into the workforce. The ACT Party, once again, was instrumental in getting that policy extended to cover not just employers of fewer than 20 employees but all employers in New Zealand, to give all employers the opportunity to improve their productivity and employment of New Zealanders.

Although unemployment, at 6.5 percent, is higher than Australia’s rate, we can take some comfort from the fact that it is not around the levels of the United States and the United Kingdom, which have rates of around 9 and 10 percent. We are told informally that if we included those people who are looking to work full-time in the United States, the level would be closer to 15 percent. But the fact that our unemployment rate is higher than Australia’s should be a concern to us. Already we have seen in the last week the New Zealand Herald  report that net outwards immigration to Australia is back on the increase. We need to focus continually on our relationship with Australia, because unless we do and unless we move to reduce the income gap between New Zealanders and Australians, we will see ever-greater numbers of New Zealanders move overseas, and move overseas permanently. It is a fact that for generations young New Zealanders have travelled overseas to gain experience: to gain job experience, and to seek out new endeavours and new experiences. Traditionally they have always returned to New Zealand, but increasingly they are not doing so. That should be a concern to all New Zealanders, as more and more of our children and grandchildren grow up in countries other than New Zealand.

It was this concern about the declining living standards of New Zealand versus those of Australia that caused the ACT Party to campaign on reducing that gap. We made it a fundamental plank of our 2008 election campaign. In fact, we put out a 20-point plan to reduce that gap. As part of our confidence and supply agreement with National, we got National to commit to the concrete goal of reducing that gap, eliminating that gap, and bringing our living standards alongside those of Australia by 2025. The ACT Party, once again, was instrumental in nudging National, and in convincing National to appoint the 2025 Taskforce, chaired by Don Brash. It is a big challenge. As the task force pointed out in its most recent report last November, if we continue on as we are doing now, we face the risk that a further net 400,000 New Zealanders will leave our shores for Australia by 2025.

It is interesting, then, that we have in this morning’s New Zealand Herald  an editorial entitled “National needs new policy for closing the gap.” The New Zealand Herald reminds us that from the convenience of Opposition, National was able to make promises, and was able to criticise the previous Labour Government’s position on the economy. But the New Zealand Herald points out that the challenge of raising our living standards is still there. It says the Government knew, and certainly knows now, that comparative success relative to Australia would require bold and disruptive interventions. The New Zealand Herald says National is standing up and making that commitment. Making a commitment to a concrete goal of lifting our living standards to the levels of Australia’s requires bold policies and courage. The ACT Party has always led the way in promoting policies to raise New Zealand’s living standards and align them with those of our closest neighbour. The editorial concludes by stating: “For its own sake, New Zealand needs bold economic initiatives that will position the country for sustained growth.” Let me repeat that to the members in the House from the National Government tonight: “For its own sake, New Zealand needs bold economic initiatives that will position the country for sustained growth.”

It is the role of the ACT Party to advocate for those bold initiatives and to promote those policies. When I first rose this evening, I congratulated the National Government on much of what it has done. Tragically, it has done some things that have not been helpful for the economy, and that have not moved the country in the direction of reducing that gap. I think of youth rates. I think of the National MPs voting against Sir Roger Douglas’ member’s bill to reinstitute youth rates. I will remind members for a brief minute of that debate. We saw the previous Labour Government legislate to abolish youth rates: legislate to require employers to pay 16 and 17-year-old young people the minimum wage. What is the natural reaction of an employer when faced with employing someone who is, say, 30, who has life experience, who has had jobs and has gained skills experience, or when faced with employing a 16 or 17-year-old? It is a lay down misère; it is obvious. Anyone who has spoken to employers knows that an employer will go for the most experienced person.

Young people are being denied the chance to get on to the bottom rung of the ladder. This Parliament has denied young people, young 16 and 17-year-olds, the opportunity to go out and get a job at $11 an hour, $10 an hour, $9 hour, or whatever their economic value is to an employer. We have said we will throw them on the scrap heap and give them the unemployment benefit of $4.50 an hour. How does that help to raise New Zealand’s productive capacity? How does it raise our prosperity? We have seen that there has been a significant increase in youth unemployment since the previous Labour Government first passed the legislation that abolished youth rates.

We have also seen a very significant cost to the economy from the emissions trading scheme. This scheme was introduced by the previous Labour Government. It came into effect on 1 January 2008, and it operates as a massive subsidy to foresters—a massive subsidy to foresters. Essentially, what the previous Labour Government put in place was a massive grant, a grant that essentially gives tree planters a one-off gain of about 230 tonnes of carbon. Mr Chauvel knows that is about $5,000 a hectare. The previous Labour Government put into place a grants system that requires New Zealanders to pay some $500 million a year more for their electricity and petrol in order to subsidise those massive subsidies. Nothing annoys me more, nothing makes me laugh more, than to hear Mr Goff stand up and talk about the price of electricity and the price of petrol going up. Mr Goff knows full well that the emissions trading scheme established under the previous Labour Government would have resulted in not a 5 percent increase in electricity but a 10 percent increase—a 10 percent increase in the price of electricity.

We can be thankful that the emissions trading scheme was modified by National, but it should not have been put there in the first place. It should not operate as a $500-million-a-year subsidy to foresters. Mr Chauvel thinks that is funny; he thinks it is funny. But I tell him that his Government put into place a system to pay massive subsidies to foresters, and the National Government carried it on. Anyone in the industry who is smart knows that. All New Zealanders are paying for that subsidy with their electricity and their petrol costs. If anything contributes to the gap between New Zealand and Australia, it is the emissions trading scheme. Thank you.