ETS Widening Gap With Australia

Hon John Boscawen response to Prime Minister’s Statement; Parliament; Tuesday, February 8, 2011

Mr Speaker,

It is a pleasure to rise on behalf of the ACT Party to respond to the Prime Minister’s speech, and 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.

Among the achievements have been the reform of the Resource Management Act, which the ACT Party has participated in; the rationalisation and streamlining of various Government departments; and I should also say the passing of ACT’s ‘Three Strikes’ law, which has already started to make New Zealand citizens feel safer in their homes and on their streets.

I say that it is ACT’s ‘Three Strikes’ law because no one can deny that that law would not be on our statute books but for its promotion 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 every step of 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 with the confidence to know that, if they are making a mistake, they are able to find an alternative. It is important to give confidence to employers so that new employees can be taken into the workforce.

The ACT Party 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 them the opportunity to improve their productivity and employment of New Zealanders.

Although unemployment at 6.5 percent is higher than Australia’s, we can take some comfort from the fact that it is not around the levels of the US and the UK of around nine and 10 percent We are told informally that if we included those people who are looking to work full-time in the US, the level would be closer to 15 percent.

The fact that our unemployment rate is higher than Australia’s should be a concern to us. Already we have seen in the past week the ‘New Zealand Herald’ reporting that net outwards immigration to Australia is already back on the increase. We need to be focusing continually on our relationship with Australia because, unless we do – 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. 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 for the declining living standards of New Zealand versus Australia that caused the ACT Party to campaign on reducing that gap, making it a fundamental plank of our 2008 election campaign.

In fact, we put out a 20-Point Plan to reduce that gap and – as part of our Confidence & Supply Agreement with National – 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 was, once again, instrumental in nudging National and convincing it to appoint the 2025 Taskforce chaired by Don Brash. It is a big challenge. As the Taskforce pointed out in its most recent report last November: if we continue on as we do 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 titled ‘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 criticise the then Labour Government’s position on the economy. It points out that the challenge to raise our living standards is still there. It says that the Government knew, and certainly knows now, that the comparative success against Australia would require bold and disruptive interventions. The ‘New Zealand Herald’ says that National is making that commitment in standing up.

Making that commitment to a concrete goal of lifting our living standards to Australia’s requires bold policies and courage. ACT has always led the way in promoting policies to align and to raise New Zealand’s living standards 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, there are some things the National Government has done that have not been helpful for the economy; that have not moved the country in the direction of reducing that gap.

I think of youth rates – of the National MPs voting against Sir Roger Douglas’ Private 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 30, who has life experience, who has jobs, who has skills experience or employing a 16 or 17-year-old? It is a lay down misere. 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 the chance to go out and get a job at $10 or $11 an hour, or whatever their economic value is to their employer. The Government has said that it will throw them on the scrap heap and give them the Unemployment Benefit of $4.50 an hour. How does that help raise New Zealand’s productive capacity? How does it raise our prosperity? We have seen that with the significant increase in youth unemployment since the Labour Government first passed that legislation abolishing youth rates.

We have also seen a very significant cost to the economy in the Emissions Trading Scheme. This scheme was introduced by the previous Labour Government, came into effect on January 1 2008, and operates as a massive subsidy to foresters.

What the previous Labour Government essentially put in place was a massive grant that gives tree planters a one-off gain of about 230 tonnes of carbon – around $5,000 a hectare.

The previous Labour Government put into place a grant system that requires New Zealanders to pay some $500 million a year more in electricity and petrol to subsidise those massive subsidies.

Nothing annoys me more – nothing makes me laugh more – than to hear Labour Leader Phil Goff stand up and talk about the price of electricity and petrol going up. Mr Goff knows full well that the Emissions Trading Scheme under the previous Labour Government would have resulted, not in a five percent increase but, a 10 percent increase in the price of electricity.

While we can be thankful that the scheme was modified by National, the fact is that it should not be there in the first place. It should not be operating as a $500-million-a-year subsidy to foresters. The previous Labour Government put into place a system to pay massive subsidies to foresters, which required the National Government to carry it on. Anyone in the industry who was smart knew that.

All New Zealanders are paying for that with their electricity and their petrol. If anything is contributing to that gap between New Zealand and Australia, it is the Emissions Trading Scheme.

Thank you.

ENDS

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