1pm January 28, 2010 Speech
The Many. Not The Few.

Speech Notes

Check against delivery

Parliamentary colleagues:
Nanaia Mahuta and Sue Moroney
Darren Hughes and Grant Robertson.

Ladies and gentlemen

Thanks for coming along to join me.

Today I want to talk about some of the economic and social priorities that Labour will be fighting for this year.

We are entering 2010 after a tough year - a year of job losses, and for a lot of working people - a wage freeze.

This year, every major economy - every G20 economy - is out of recession.

New Zealand was fortunate to enter the slow-down with one of the lowest levels of unemployment in the world, and one of the lowest levels of government debt.

New Zealand was well-placed to deal with the global recession, which was much shallower and short-lived than earlier feared.

Westpac has said in its latest commentary that, after past recessions, New Zealand has grown at up to six per cent a year.

A six per cent growth in wages would mean a weekly pay increase of $57 for someone in an average full time job.

The International Monetary Fund yesterday said the global economy is recovering faster than previously anticipated. The world economy will grow at around 3.9 per cent this year.

So New Zealand can also expect strong growth - even without any plan from the government.

That should deliver tens of thousands of new jobs and more money in people’s pockets.

So today I’m here to say the recovery has to benefit hard working New Zealanders and kiwi families.

The benefits of economic recovery and the proposed tax changes must be shared fairly.

2010 needs to be a recovery for the many, not the few.

Labour’s priority is to make sure opportunities are there for people who are prepared to do the work.

Today people who are unemployed don’t physically line up in a dole queue for the unemployment benefit.

But last week we did see unemployed people standing in line, desperate to find work.

Over two days, three and a half thousand people queued in South Auckland for 150 jobs at the new Countdown supermarket.

I challenge anyone who thinks unemployed Kiwis don’t want to work to watch those pictures.

Last year an employer told a meeting that unemployment was a great opportunity to wind back wages and conditions in the workforce.

Many of his colleagues at the meeting agreed.

I hope they all watched those pictures and understood the effects of what he was actually saying.

That’s why dealing with unemployment needs to be a priority for this Government.

In practice, the National Government wants to sit on the sidelines doing nothing - hoping that economic recovery will bail them out.

2010 has to be the year for those who, last year, made sacrifices, lost jobs, had their hours reduced, and battled to have something left over for their families at the end of the week.

It can’t be just party on the top floor, while everyone else does it tough.

The National Government must manage New Zealand for all New Zealanders, not just for a privileged elite.

You would have thought John Key yesterday might have delivered something more than 25 cents to people on the minimum wage.

How can you raise and support a family on that sort of income? How can people hope to pay their bills at the end of the week when rent, power and doctors’ fees are going up - and they get a miserable 25 cents an hour extra.

What the lowest paid are getting doesn’t even compensate them for the rise in the cost of living over the past year.

By the time they’ve taken out tax, and put up ACC levies, how much is left?

At the end of the working week, you would be lucky to have $6 - that wouldn’t even cover a packet of Weetbix for the kids.

If you do an honest weeks work, you deserve a living wage.

That’s why Labour will introduce a bill to increase the minimum wage to $15 an hour from next year.

Compare the pay packets of those on the lowest wages with what’s going on at the other end.

The chief executives of New Zealand’s top companies get paid fifty times the minimum wage - and twenty-five times the average workers’ income.

I want everyone to do well.

But the gap between those at the top and most New Zealanders has grown too large.

If we’re going to tip the balance back towards Kiwis who are doing the hard work; in favour of the many, not the few, then the one place the government could show leadership is the public sector.

Since 1997 state sector chief executive salaries have increased by an average of 85 per cent. That’s over eight per cent a year – or more than twice the rate of inflation.

Remember - if you’re on the minimum wage this year, you’re getting less than the rate of inflation.

The government is freezing the wages of many of those who clean schools and work in our hospitals.

But there’s a different rule for state sector chiefs.

They get paid about the same as their Australian counterparts, despite the difference in size of their jobs and departments.

Under Labour no public service chief executive should be able to be paid more than the base salary for the Prime Minister.

Just under four hundred thousand a year should be enough to attract good people who believe public service means just that.

I am not going to cut existing salaries, but we will introduce a cap on new salaries at the top.

Labour says the entire workforce is deserving - not just the CEOs.

We are not alone in coming to this conclusion. Even the Conservatives in Britain are proposing the same thing.

The government has to deliver for the many, not the few.

The government can’t keep rewarding the elites and the privileged at the same time as hundreds of thousands of New Zealanders are suffering a drop in real income.

When they’re finding it harder to stretch their budget to cover groceries, power prices, rents, doctors’ fees and ACC levies.

There is another thing that Kiwis have been talking to me about this year.

They don’t mind working hard to make life better for their families, and they don’t mind contributing their share for services like health care and education.

But they do object to also carrying the burden for others who are not pulling their weight.

It’s not right that greedy and reckless individuals here and overseas who caused the financial crisis have escaped responsibility for their actions.

While many Kiwis lost their life savings, their jobs, or both, the CEOs and directors of shonky finance companies still drive their Porsches, live in their mansions and enjoy their holiday resorts.

Waiting two and a half years for a response from the SFO to decide whether to prosecute those individuals just isn’t good enough.

Too many people on good incomes avoid and evade paying taxes. It’s not right that some top earners pay a lower percentage of their income in tax than those on the average wage.

Some of them move to live as tax exiles, avoiding their responsibility to the country that gave them an education and a start in life - while still expecting and getting their knighthoods.

People who take from New Zealand but don’t give back are bludgers, wherever they live and whatever their bank balance.

Frankly, I would have given the knighthoods to Heather May and James Tuhoro here in Hamilton, who spent their lives fostering nearly 400 kids and gave them a decent start in life.

We celebrate people getting ahead. But not by ripping off your fellow Kiwis.

And at the other end are those who dishonestly rip off the community for which they are not entitled; who think the rest of us owe them a living, while they make no effort to help themselves.

People like the guy from Kaikoura who spent years on ACC because he supposedly had a bad back, but his neighbours videotaped him doing hard physical work around his own property, including lifting boulders.

He was prosecuted and convicted but hasn’t had to pay the money back.

Like the Christchurch crime family who have been on a sickness benefit continuously since 1984 because they are said to be addicted to cannabis - who claimed a grant to fence the swimming pool at one of several properties they own.

They’ve got the gall to make demands on a community they are essentially ripping off, at the same time that people in genuine need are visiting WINZ offices for the first time in their lives.

We need to crack down on people whose behaviour will be used as an excuse to cut back on social services - services that are necessary for the majority of people who have a genuine need.

Labour will fight all the way to protect social services for those who need our community support because of their illness, unemployment, or adversity.

We will fight for a community where every person has the opportunity to flourish and make the most of their lives.

As Labour develops social policy this year, it will be based on the principle that no child should be held back or disadvantaged in their education or their health care because they come from a poor family.

No child should fail to reach his or her potential because a parent fell on hard times.

So we have a community responsibility to provide the means for every child to prosper.

Everyone who brings a child into this world also has a personal responsibility to ensure that the child is loved and not neglected and abused.

Every child who suffers abuse and neglect represents a human tragedy.

And they also represent huge costs in lost potential and in the social costs of angry, alienated and destructive young people who grow up in those environments.

Social workers I have talked to say that all parents want to do their best for their kids.

But this doesn’t happen where families are dysfunctional and don’t provide their children with what they need.

When parenting is failing, the community has to ensure that children get the care and priority they deserve.

We also need to be there to help out kids when they’re going off the rails, before they fall off forever.

When I was Minister of Justice, I helped set up a pilot program called Te Hurihanga here in the Waikato.

It is a place to send young offenders, hold them accountable for their behaviour, and put the work in that will turn them away from a lifetime of serious crime.

It gets hold of boys who are under seventeen and it gives them a wake up call, but it also teaches them literacy skills, teaches them how to become better men and make better decisions - a kick in the pants, and help to make them better before it’s too late.

It’s not cheap, but the alternative is far more costly and less effective.

Stopping recidivist offenders saves the victim, it saves the police, the justice system and the long-term prison costs.

Hamilton police have described the program as a ‘Godsend.’

But the government has yet to give a commitment to keep it going when the pilot ends this year.

Why would you dither over a successful program like that, but rush ahead with a three strikes policy, which over the next five years will result in locking up only about twelve extra people a year.

The political rhetoric gets headlines, but the policy doesn’t make any real difference to make our community safer.

If we are going to create better opportunities for our young people, we need to tackle not only the kids who are already in trouble.

We also need to work on underachievement in our education system.

This applies to all of our community.

It is disproportionately an issue for Maori and Pasifika communities, with greater numbers of children who will be our students and workers in the future.

That’s why the greatest challenge for Maoridom is not about Foreshore and Seabed and even less about the tino rangatiratanga flag. It is about creating a breakthrough generation in educational achievement and job skills.

As Labour MP Kelvin Davis said recently, the greatest challenge for Maoridom (and for all New Zealanders) is that every Maori child born must be loved, fed and educated so that he or she may go on to be successful, lead and do their best for their families, their community and New Zealand.

Early intervention is vital to ensure all children can grow up in a stable and secure environment where they are loved, and where they are encouraged to get the best education they can.

So too is a change in our education system to tackle the tail of underachieving students.

One in five of our students leave school by age sixteen yet only around 10 per cent of new jobs will be unskilled.

Twenty-five thousand teenagers are not in work, education or training. This is damaging to them and our community.

Four thousand kids are kicked out of school each year. At risk kids without supervision is a social disaster waiting to happen.

If we’re going to cut crime, we need to give these kids a better education and more skills.

Around eighty per cent of those appearing in the Youth Court have left school, or don’t turn up.

Addressing educational under-achievement will be a policy development priority for Labour this year.

Lifting skills helps to improve the performance of our economy and lift incomes across the board.

Upskilling our population is a critical part of achieving lower unemployment and a more productive and wealthier society.

But to make a difference to incomes, and a long-term difference to New Zealand’s economy, we will need to do much more.

The Government is not going to make a difference to New Zealand’s long term future by sitting on the sidelines.

I’ve talked today about the need for hardworking New Zealanders and Kiwi families to be delivered higher incomes. There are clear differences between National and Labour about how to achieve that.

For example - improving investment in research and development will make our economy more productive. National cut Labour’s research and development tax credit and our Fast Forward innovation fund.

Labour believes we need to reform monetary policy to better help the productive sector.

A volatile and often over-valued exchange rate and interest rates that are often among the highest in the developed world indicate that current monetary policy is not serving New Zealand well.

The other big issue under consideration this year is changes to our tax system.

The Tax Working Group has sent options, analysis and recommendations to the Government.

The ball is now in the Government’s court.

Even though National backed out of discussions over the Emissions Trading Bill, Labour is still ready to work with the Government, ready to build consensus around tax changes, ready to make changes that will be sustainable.

The offer is there that we will work with them on tax policy, but it is a conditional offer.

The test Labour will apply to tax proposals is whether they are fair, and help the productive sector.

There is no way, for example, that Labour will agree to a deal that saw hard-pressed families face a rise in living costs through higher GST while the benefits of personal tax cuts went overwhelmingly to those on the highest incomes.

All New Zealanders need to share the benefit of tax changes - not just the privileged few at the top.

Loopholes that allow high income earners to avoid tax have to be closed.

Secondly, the tax system has to stop disadvantaging the productive economy and favouring speculative investment.

Over $200 billion is invested in property - and yet rather than getting a net return, overall the taxpayer subsidises the sector. That can’t be sustained.

Soaring property prices and lack of capital investment in the real economy works against a high-skill, high-wage future for New Zealand.

And if National wants to address the tax problem by cutting public spending, it should start by cutting the $110 billion it’s committed to paying emitters to pollute - but leave alone vital social expenditure like health and education.

Short term savings in those areas means long term costs, human tragedy and a more unfair society.

My speech today has been about the need for the Government to deliver for the many, not the few.

It’s been about how to grow and build a stronger community.

It’s been about the privileged elite carrying their fair share of the burden, just like hundreds of thousands of hard working kiwis who are struggling to get ahead.

We need a strong economy.

We also need a strong community, committed to ensuring all New Zealanders get a good start and a fair go in life.

In 2010, with economic recovery, the Government has the opportunity to deliver both.

And Labour’s priority will be standing alongside working New Zealanders to ensure that they get a fair share and the opportunity for their families to get ahead.

ENDS

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