Speech: Shearer - Bold Choices
new-zealand-labour-party
Fri May 04 2012 12:00:00 GMT+1200 (New Zealand Standard Time)
Speech: Shearer - Bold Choices
Friday, 4 May 2012, 9:51 am
Speech: New Zealand Labour Party
We’re facing a zero Budget in just two weeks’ time.
That’s a failure in my books and I’m here today to lay out an alternative and more credible plan for our future.
I’d like to start with a simple story.
A guy I was chatting to recently told me he’s working extra hours to pay off his mortgage and feed his family.
He sounded like one of those New Zealanders who are being forgotten at the moment.
Working really hard, making the right choices and spending money wisely.
But not really getting ahead.
The Government’s options for him are to work even longer hours at his job seeing his kids less or cut back even more on the things they need.
I want to give him another option to be able to work smarter, up-skill, and make more money in return for his hard work.
As a country, we’re pretty much in the same boat as this guy.
We work harder for less return than just about anyone in the developed world.
But we’re not getting ahead.
And in two weeks we’re going to see the result of that failure: Another Zero budget, or at least near zero.
Zero budgets are what you get when the economy is failing.
A zero budget is the consequence of failure, not a solution to it.
It’s a failure to grow the economy.
There’s no better illustration of that failure than yesterday, when figures came out showing unemployment went up by 9000 people.
If the economy was growing, rather than stagnating, we wouldn’t need a zero budget.
The government is trying to make a virtue of it. It’s not. It’s a tragedy.
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Nearly everyone I meet when I go around the country feels they will be worse off from the upcoming budget.
Today, I’d like to talk to you about the fundamental changes needed to ensure we’re all better off.
Let’s not forget what we’re trying to do here:
We’re trying to manage the economy to improve the lives of all New Zealanders through better jobs, higher wages and a more highly skilled workforce.
We want a clean, green, prosperous, growing economy where everyone has work and can earn a decent living.
We’ll only get there if we continue to grow.
If you look closely right now, the growth story in our economy is miserable.
The National Government has focused on the spending cuts side of the books.
They have mismanaged the other side: How we grow the wealth of the nation, our exports and our wages.
That’s where we need to focus.
The Government has failed.
Since National took office, Australia has grown almost 20 times faster than New Zealand.
We’ve grown just half a per cent. Australia has grown 10 per cent.
That’s why a thousand New Zealanders a week moved permanently across the Tasman last year.
That’s more than ever before – despite National’s promise to reverse the tide.
Even reality TV shows about New Zealanders are now set on the Gold Coast. That’s of course if you’ve heard of the GC?!
Looking ahead, things don’t get much better.
The Government’s books will limp back into surplus in a couple of years, but we still won’t be growing fast enough.
Claiming that a return to surplus is a success is like the All Blacks claiming they’re making progress by kicking off at halfway after the Wallabies have scored a try.
Getting back to halfway is just a starting point. What we really need to do is get points on the board – to grow exports, grow jobs and grow wages.
The biggest issue is not Government spending and borrowing. It’s growing our economy.
We will need to make some really hard decisions to get that growth.
We have to change the way we run the economy so we can have the new New Zealand we really want, where our kids get the right start.
We need to make some bold changes.
Only Labour will make those changes, because only Labour ever makes bold progressive economic change in the interests of New Zealand’s future.
The National Government won’t, because it tinkers.
The National Government is focused on the short term.
The National Government isn’t getting behind many Kiwis who are working hard and making good choices but are struggling to get ahead.
Until now, people have been prepared to give the Government the benefit of the doubt.
They said ‘the global financial crisis means we just have to soldier through.’
The earthquakes have certainly been costly, in human as well as in financial terms.
But now the insurance payouts are adding to the economy – even though the rebuild is way behind schedule.
And if you look behind those extraordinary events, our economy is just not performing.
New Zealand has not caught up to the world despite our export prices having been at record levels.
The problem is not just that the economy hasn’t performed this year or last year.
It’s that our long term performance isn’t good enough, and hasn’t been for decades, despite a few bright patches.
The current Government has failed to rebalance the economy, despite their rhetoric.
Their economic picture of the future goes something like this:
As China and Asia grows richer they will demand a higher protein diet. We grow protein, therefore we’re well positioned.
That’s not a strategy. It’s a hope.
At the same time, the National Government is selling off our farmland, and our power companies.
These ad hoc, short term actions ultimately make us poorer.
New Zealanders know we have to raise our productivity, but as a country, we don’t have much room to move.
We need to make the really tough decisions that New Zealand has been putting off for years and the starting point is that there isn’t much money.
Last year, Labour went into the election with a fiscal policy that would have seen us borrow more in the short term, return to surplus in the same year as National, then run larger surpluses and pay down debt more aggressively.
It would have meant we entered the next decade in a much stronger position than under National.
But we didn’t win.
New Zealanders told us they were uncomfortable about the rate of borrowing.
We have listened.
That’s why I won’t continue with Labour’s previous policy to restore contributions to the Cullen Super Fund until I think we can afford it.
It wouldn’t have increased net debt because it gave us an asset that matched the liability.
However, New Zealanders saw this as borrowing to invest and they didn’t like that.
We’ve decided that until we are back in surplus, any new spending will have to be paid for out of existing budget provisions, new revenue, or by re-prioritising.
However, it goes without saying that if I was leading the Government today I would allow limited borrowing rather than selling our most productive assets.
That’s because the return on the assets is more than the cost of borrowing.
And we’ll get to keep them for future generations.
If they’re sold now, they’re gone forever.
We have to be thrifty. But we also need to look at our priorities.
We’d certainly make some different decisions from the National Government when it comes to spending taxpayers’ money.
I wouldn’t have spent hundreds of millions of dollars delaying agriculture’s entry into the emissions trading scheme.
I wouldn’t spend $2 billion on a holiday highway to Puhoi.
It would be nice to have but we simply can’t afford it right now.
I wouldn’t spend $12 million on foreign consultants to restructure MFAT.
And I wouldn’t spend $120 million on selling our state assets.
Because that kind of spending won’t grow our economy.
What I will do is look at what the government has been ignoring – the need for bold and fundamental changes to our economy so that it benefits everyone, not just a few.
National’s narrow focus on the government’s deficit sweeps the bigger issues under the carpet.
Their plan has more missing from it -- than it has in it.
We need to move to a high growth, more productive economy.
There are four areas that stand out for me.
1. PRO-GROWTH TAX REFORM
The first is creating pro-growth tax reform.
That includes a capital gains tax that will encourage people to invest in productive parts of our economy rather than speculation. And that is frankly fairer.
At the moment the Government is starving our productive exporters of the investment capital they need.
New Zealanders are borrowing heavily overseas because we don’t export enough to pay for our imports and interest.
That’s also why assets and land are being sold.
Helping New Zealanders to save more, removing the tax bias that favours speculative investment, and better rewarding research and development will help us increase our productivity.
2. PRO-EXPORTS
We must also do more to support our exports.
Take our dollar and interest rates, for example - neither are export friendly.
Our dollar is volatile, frequently uncompetitive, and interest rates rip into the productive sector.
Our current monetary policy gets the inflation targeting about right, and the independence of the Bank exactly right.
But the Reserve Bank’s objectives were designed for an era when inflation was the main problem in our economy.
They’re out of date. We need to take another look at them. Today, growth and private debt are at least as urgent.
3. AFFORDABILITY OF NEW ZEALAND SUPER
One of the most critical issues National has also ignored is the future affordability of superannuation.
Bold decisions are needed.
I am the first to accept that last year we didn’t signal our intentions very well in this area, to raise the age to 67.
The reality is that over the next 40 years the cost of Super will double.
Any government has to come up with a credible way to pay the bill.
In 40 years, we’ll have half as many workers for each retiree - 2.4 workers for each superannuitant, compared to 5.6 today.
If we don’t make changes, it could cost $100 billion over 30 years.
Imagine how many zero budgets we’ll be having then!
We don’t want to end up with a government forced to choose between young and old.
I don’t want to see a country divided that way.
I don’t want us to deny to our children and young people the advantages and opportunities you and I had when we were young.
We are willing to discuss this openly and across all political parties – because it’s such a tough decision and deserves the widest consensus.
4. EDUCATION AND SKILLS
There’s another looming issue that the National Government is not confronting.
That is, growing our skills and productivity.
I know politicians have been talking about a high skill, high-value economy for a long time.
We’ve had lamb-burgers, value-added, and knowledge wave as the solution to our long term problems.
The National Government’s contribution to this transformation was its cycle way. I’m pretty sure there were more people at the jobs summit than the jobs it created.
But missing from National’s plan is a real vision for lifting educational achievement, growing our science and research, and up-skilling New Zealanders.
I would start right at school, reach in to get hold of kids before they drop out.
We have 87,000 young people with no jobs, who aren’t in training, or education.
Even if they manage to find a job after dropping out, we know that those low skill jobs don’t lead very far. This is short-term thinking, with long-term consequences.
I would steer far more of our young people into apprenticeships and a rewarding career in trades.
I would back our world class scientists, instead of trying to boost science by shuffling ministries around.
The main policy affecting science this year is that the Ministry of Science is being merged with the department of social housing.
What’s missing is a plan to grow our science, our design, to capitalize on our creativity.
In conclusion, what I’m saying is that a Labour-led government will balance the books.
We will be thrifty as so many New Zealanders are being right now.
But that’s not the end of what I will bring to Government. It is merely the beginning.
We need a new economy - a clean, green and clever economy.
I will reform the tax system to promote growth and innovation.
I’ll back our exporters, hang onto our productive assets and build our savings.
New Zealand is a place of opportunity that attracts people from around the world who want to make it their home.
I believe in our potential as a country.
We have the creativity and the determination to make a better life for ourselves.
But only if we make the tough decisions.
As a country we have the ability and resolve to overcome the barriers.
That’s why I’m prepared to meet these challenges head-on.
And that’s exactly what I’ll do when I’m Prime Minister
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