It is an honour and a privilege to stand before you at this critical point, not just in our electoral cycle, but for New Zealand.
At the election in September voters will face a choice between a government led by Andrew Little with a fresh approach to give every New Zealander a fair share in prosperity or the continuation of a tired government, out of touch and stuck in the past.
A choice between fairness and inclusion or deepening inequality and division.
When Andrew asked me to take on the Finance portfolio I was clear with him that I did not view the job as one that was just about spreadsheets and statistics, or share markets and currency movements.
Don’t get me wrong, those things matter. But they don’t matter as much as people.
People like Bharat, who sent me a copy of a letter he wrote to the Prime Minister. He and his wife both work. 60 hours a week in total. He wrote because he cannot make ends meet. He had to borrow money from a friend to pay for medicine when his son got sick. His children don’t play sport because he cannot afford the fees. He finished his letter saying “I am lucky. I have a house to live in and my wife and I both work. But we are poor.”
As a country we are so much better than that. New Zealand is a better place than one where you still feel poor even if you are working or where you count yourself lucky because you have a home to live in.
We are a relatively wealthy country. We are blessed with wonderful natural resources, talented people, and strong foundations built through the hard work and vision of past generations.
When New Zealand is at its best, we are the very best.
At our best we are a proud country standing up for what is right on the world stage.
At our best we are a place where we look after each other in times of crisis and in times of prosperity.
At our best we are a country where our creators and innovators break the mould, save lives and change the world.
As Finance Minister in the Andrew Little led Labour government I want play my part in seeing New Zealand at its best. Where we put people first, and where we understand that the economy is not an end in itself. But rather that it is a means to the end of giving people like Bharat and his family lives of dignity, security and hope.
And we have seen around the world what can happen if we don’t do this. That is when people lose hope, feel disconnected from society and become susceptible to peddlers of hate and fear. Democracies rely on people believing they have a fair shot at success. We have to make that happen.
It is time for a fresh approach. The age of National’s trickledown economics is over.
It is time now for us in Labour to create a new vision for the economy. My driving ambition as the next Minister of Finance is to help create an economy with a purpose. Shared prosperity. It is time to focus on building wealth from the ground up.
And that starts with giving everyone security and opportunity. That is why the next Labour government will be relentless in getting the basics right- the building blocks of housing, education and health. In each of these areas we will take a bold and new path. Based on evidence and with a long term plan to ensure every New Zealander is secure in their knowledge that we have got their back.
These building blocks are not just important parts of our social fabric, but also make our economy work. Let’s just take Housing. Unless we have affordable, secure, warm, dry and safe housing for New Zealanders then they can not achieve their potential. Employers in Auckland are telling us that they are unable to find staff who can afford to live in the city. We also know that the low quality of our rental stock is making people sick, and spending time out of the workforce.
This is why Labour is committed to the biggest developments in housing since the first Labour government. Andrew will go into this in detail tomorrow, but secure, affordable and healthy housing is at the core our economic plans because through that we build strong and prosperous communities.
Building an economy with a purpose was also what lay behind our ground breaking Future of Work project. We must prepare ourselves now for a world of work that is changing more rapidly than ever before. I still fundamentally believe in the value of work. Not just for income but for all of the fulfilment and dignity it brings. As Minister of Finance I will re-assert Labour’s historic mission of full employment. In the first term of government we will lower unemployment to 4%.
If we boil down the big lesson of the Future of Work programme it is the central and present role of education and training as core to our current and future economic success. All the evidence suggests that the best indicator of a country’s economic success is its investment in education.
And I want to be clear. This is not a narrow view of education. Far from it. In fact what the Future of Work study told us was that more than ever we need a broad and wide-ranging education system - one that supports and encourages creativity, collaboration and problem solving. One where the humanities matter as much as science and technology.
And we are going to address the scariest number you will hear this year - the 90,000 15-24 year olds who are not in employment, education or training. Under Labour we want every young person earning or learning.
It’s why we have committed to three years free post-secondary school training and education.
It’s why have our Ready to Work programme to get long term young unemployed Kiwi’s work ready.
It’s why we will support more apprenticeships and give funding to young entrepreneurs.
It’s why we have committed to a radical overhaul of careers guidance
And it’s why we are going to give teachers the chance to focus on what they do best- teaching, not the overbearing bureaucratic nonsense of national standards and meaningless government targets.
And to offer all New Zealanders a fair share in the nation’s prosperity- we have to build a more sustainable economy that delivers higher wages.
New Zealand has the fourth lowest labour productivity in the world. What that means is that we are working harder than ever, putting in more hours at work, but we are not getting better outcomes from that.
This is not a new challenge, but it is one I am determined the next Labour government will address. To me there are three areas where we have to focus to get this right.
- Getting support and investment to the businesses who are ready to grow.
- Lifting the skills level of our workforce and
- Investing in the research and science that will give us the edge.
We will do that by being an active partner in the economy. Not telling people what to do, but supporting them to do it. Working with iwi, local government businesses, entrepreneurs, and workers to sustainably grow our economy.
In the regions of New Zealand we have committed to a $200 million fund to grow high value jobs. Already Andrew Little has announced support for a wood processing plant in Gisborne and a Centre of Digital Excellence in Dunedin. For each and every region we will work with those on the ground to develop a plan to grow sustainable and resilient economies that deliver for their people.
Our Labour government is not content to sit on the sidelines of the economy. We will introduce a Research and Development Tax Credit so that business has some certainty that they can put the time and money into new ideas. We are going to make government procurement work for New Zealand firms so that they get a fair go at the $40 billion worth of contracts given out each year. We are going to get alongside small and medium sized enterprises to reduce their compliance burden, and increase the opportunities for people to invest in them.
We have to have a fresh approach to ensure that there is a just transition to a low carbon economy. Our planet cannot continue to sustain growth that is built on burning more and more fossil fuels. We understand that will mean a change for communities and we will be alongside them to develop new opportunities for fulfilling and rewarding work.
We are going to make sure the infrastructure of this country is fit for purpose for the 21st century. We cannot have the productivity of our businesses compromised by cars and vans stuck in traffic in Auckland for hours at a time. We cannot have business opportunities lost in the regions because we have left the rail lines to rot.
Labour will make the investments in our transport infrastructure, using the power of the government balance sheet, but also through innovative financing mechanisms such as infrastructure bonds.
It is true to say that right now our infrastructure, particularly around housing and transport is under strain from the rapid population growth we are experiencing. Every country in the world manages the flow of people coming through its borders and needs to make changes to those rules from time to time.
We need to manage that carefully at the moment while we build our infrastructure back up.
But let me be very clear. This is a debate about policy. It is not a debate about immigrants. And anyone who makes it about immigrants, or indeed about their race must be called out for what they are doing as being wrong and against the values of Labour and of New Zealanders.
Immigration has been and will continue to be an important part of adding to our skill base and to the rich cultural diversity that we have. If we manage it well it will improve all of our lives, and that is what we will do.
And just as an aside- let’s remember the difference between immigration and refugee policy. I was very proud when Andrew Little announced that the next Labour government would double our refugee quota.
That is New Zealand at its best. Doing our bit to help the most vulnerable people on our planet. Only a Labour government that has the moral courage and leadership to turn that around.
The ability to give everyone a fair share in prosperity also has to be underpinned by giving workers a fair go at work.
If we are to build wealth from the ground up then re-establishing the rights to collectively bargain is absolutely critical. Of course we have to lift the minimum wage, of course the government can pay the workers it employs a living wage- but in the end if we are to lift wages across the board we need a fairer and better balance in workplace relations.
We need fresh thinking here too. In our Future of Work project we also saw new models of workplace democracy such as Air New Zealand’s High Performance Engagement programme, where unions and workers are being given a place at the table. We want to support more programmes like that.
Today I also want to acknowledge Kristine Bartlett and the unions for their wonderful success in the carers equal pay case. But do not think for a minute our opponents came to that settlement willingly. They put that through every court process they could- and now they have legislation that seeks to make it harder for other workers in female dominated professions to get a fair deal.
A fair deal at work for women and men has only ever come about because of the labour movement- in the workplace and in Parliament, and we will do it again.
Delegates, in order to make our bold and progressive programme credible we have to demonstrate to New Zealanders that we can deliver it. They want us to show that we understand their desire for a government that manages our finances responsibly.
At this point I want to pay a tribute to the Chair of the Whakatane Branch of the Labour Party, or as some of you might know him, Dr Michael Cullen. What Michael and Helen and the last Labour government showed was that you can be disciplined and responsible with the government’s finances and still make massive social progress.
We ran surpluses, paid down debt, carefully managed government spending- and delivered the second lowest unemployment rate in the OECD and programmes like 20 hours free early childhood education, Working for Families, Kiwisaver, Interest Free Student Loans and more.
We have done it before and we can do it again. The Budget Responsibility Rules that we agreed with the Green Party give New Zealanders confidence that we will carefully manage our debt, run genuinely sustainable surpluses, invest in the long term, and undertake bold reform. And we are prepared to be held to account for these rules through an independent body.
You know for all the posturing on superannuation we saw from National earlier this year- the one thing that they could actually have done right now, today, to make a difference to the sustainability was to re-start contributions to the Super Fund. Well, you have my word that Labour will do that in our very first Budget. We owe it to future generations of New Zealanders to help give them security in retirement.
Delegates, it will not be business as usual in our overall economic framework. To build a fairer economy we need to look again at some of the underpinnings. I laid this out in a recent speech on monetary policy that I am sure you have all studied in depth.
Just to refresh. The Labour Party believes in full employment- anyone who can work should be able to work. And we want all parts of the economic apparatus working towards that goal. That is why we will expand the objectives of the Reserve Bank to include not just controlling inflation, but also maximising employment. We want to modernise our monetary policy, recognising that in 28 years a lot has changed, and we want it to work for us, not the other way around.
The same applies in terms of tax. We need a fresh approach. If we want a fair share of prosperity for all New Zealanders then we need a better, more balanced and fairer tax system. We are determined to get this right. That is why we are establishing a tax working group in government. It will not be the random and unfocused undertaking we saw from National. It will have a mandate. A mandate to develop a system that has the values of simplicity, fairness and collectability. A system where multinationals pay their fair share, where income, assets and wealth are all treated fairly, and where the new and different world of work is recognised.
In advance of that review we have made some decisions that give a clear indication of our thinking. We are cracking down on tax loopholes for property speculators, including through taxing anyone who flips an investment property within five years. We are also saying that with the changing technology it will be possible to more accurately assess your tax obligations- and therefore we can get rid of secondary tax.
We also need new thinking in government as to what is success in our economy. You will hear often talk of GDP and whether and how it is growing. Gross Domestic Product is a measure of activity in the economy. And it does a fair job of that. But it tells you nothing about the quality of that activity. The very best thing for GDP is a war. The second best thing is a major natural disaster. Neither of those are desirable economic strategies.
In government we will look to build on the work already being undertaken by The Treasury to look at a broader set of indicators. Not just GDP, but also social and environmental progress. How many children are we lifting out of poverty, what is happening to our overall health and well-being? And then to report on those and use them to guide our decision making.
And that as I said at the outset is my approach to the economy. Not an end in itself, but a means to shared prosperity.
Across the aisle at Parliament, we have an approach to the economy mired in the narrow thinking of the last century, and in some cases the century before that.
The New Zealand economy today is a little bit like the first car I ever purchased. My flatmate’s father was a used car salesman, for the sake of argument let’s call him Mr Joyce. And did Mr Joyce have a deal for me. A beautiful shiny station wagon. Boy did it look good on the outside- all buffed up. Once around the block and everything felt fine. But then driving it home there were a few rattles, and then some thumping noises. A look under the bonnet revealed all was not well, and some things were not there at all.
As is the case for Mr Joyce’s economy. The high level indicators might look good. GDP is growing, there is lots of activity in tourism and construction. Some people are doing very well indeed.
However below those high level indicators, under the bonnet of the economy, there are issues that paint a different picture. GDP per person, described once by Bill English as being what matters most for higher living standards has not got above 1% in the last few years, and actually went backwards in the last quarter. 45% of New Zealanders did not get a pay rise last year and 67% got less than inflation – meaning their wages did not catch-up with the cost of living. The number of people unemployed for more than six months has trebled.
Our economy is being propped up by population growth and housing speculation. The National government has created a massive infrastructure deficit by its failure to invest in the housing and the transport links that have been needed.
And then there are the social deficits that have been created under National. You all know the list. We are about to face another winter with forty thousand New Zealanders homeless - living in cars or garages or overcrowded houses.
I still cannot get out of my head the story of TA, an eleven year old girl who was looked after by Te Puea Marae last year. She was living in a van with her other six family members. She was trying to do her homework by torch light.
Delegates, New Zealand is not at its best if there are children doing their homework by torchlight in a van.
Mr English and Mr Joyce, hear this- you cannot raise a family in a car. It is time to stop and re-assert our values as a nation that every child deserves the security and opportunity to achieve their dreams.
You will hear a lot in the coming Budget from the National Party about social investment. A more classic piece of double speak you could not find.
I mean, who could oppose what Bill English has called using the best data available to intervene early to help the most at risk people lead better lives and become more independent?
Actually if that is all it is then we could congratulate the National Party on finally having caught up with what Labour has been saying for a century.
But its not. Because you cannot trust National when it comes to getting it right on social issues.
And here’s why. Because for them it is always money before people. And Bill English gave it away in his pre-Budget speech. Straight after he gave that motherhood and apple pie definition for social investment he said “and when they have better lives, we save on public services”.
Therein lies the rub. National’s Social Investment isn’t about investing in people. It is about reducing what the government sees as liabilities on their balance sheet. It is a cloak for the old National Party agenda- cutting funding, privatisation and individualism.
The kind of social investment I believe in is about investing to create a better society for us all. Investing in strong communities and improving people’s lives.
It is not about reducing people’s complex and intertwined lives to a single data point, target or indicator. It’s not talking about people as customers and clients. Our job as politicians is not to be some kind of political actuary, seeing numbers not people.
You know hearing Bill English talk about delivering social services you get the feeling he is a bit annoyed he can’t do to people what he has done to our other assets- sell them off.
Of course data is useful for determining policy. Of course early intervention is the best way to head off problems down the track. Of course government agencies should work together better. None of that is up for debate, and none of that is new.
This is just National finding another form of words to reduce real people to numbers, to focus on the individuals in isolation rather than the community as a whole and to narrowly target support and spending.
We cannot and will not support it.
So, let’s be clear about real social investment. Labour’s investment means putting people first. It means focusing on improving people’s lives, strengthening the community that they live in so that everyone has security and opportunity.
And that is the difference between Labour and National. They know the cost of everything and the value of nothing. We believe in valuing each and every one of our people and the contribution that they can make.
That is when New Zealand is at its best. When we have an economy that is managed responsibly and with people at its centre. When we do not set our people against each other, but give them a reason to believe in each other.
We have so much to be proud of in our country. We are a prosperous and wealthy nation. The challenge for the next government is to give everyone a chance to share in that prosperity. Only Labour can meet that challenge.
The challenge for the next Minister of Finance is to properly move our economy into the 21st century. To focus on lifting our productivity; building a Future of Work with sustainable, high paid jobs and delivering security and opportunity so every New Zealander gets to make choices about the lives for them and their families. I am up for meeting that challenge.
With your help, we will get New Zealand at its best. A fresh approach. An economy with a purpose. A fair share for all in prosperity. That is the Labour way.