It is my absolute honour to speak to you today, not just once again as Labour's Finance Spokesperson, but this time as the Minister of Finance.
It is an incredible privilege to have this role, and the opportunity every day to be part of a Government that is getting on with the job of transforming our country.
I want to pay tribute to the leadership of my friend, the Prime Minister, Rt Hon Jacinda Ardern. Your calm, decisive and compassionate leadership is clear at every turn. Even when you are highlighting my regular fashion faux pas. But I still stand by my life advice: “neatness isn’t everything.”
It is fantastic to be back in my old home town for this conference. Home, I might also say, of the Ranfurly Shield.
This Town Hall was the scene of some memorable events in the late 1980s. It was not so much the Labour Party conference for me but rather my band management debut for the short lived, awkwardly named, Reference to England. I stood side-of-stage in my trench coat and ripped jeans willing them to impress the crowd at the ‘city council all ages’ dance with their covers of The Beatles and Talking Heads. It was not a lucrative experience, but one that I will never forget.
I grew up just down the road from here in South Dunedin. I want to acknowledge my good friend Clare Curran as the MP for that special area. Back then South Dunedin wasn't a place where there was a lot of material wealth, but it was rich beyond compare as a place to grow up.
It was a community where I made life-long friends, had some fun and some hard knocks, learned to love our coastline and felt the warm embrace of a community which cared.
It was where I learned what values were. My Mother taught me and my brothers that we should treat others as we wished to be treated, that we are our brother and sister's keepers, and that if we worked hard, good things would happen.
I didn't have the language then, but it was an environment of manaakitanga, whakawhanangautanga and kaitiakitanga. South Dunedin taught me, if you do the mahi, you might just get the treats.
It was also where I first learned about the Labour Party. Partly because the Kings High School Parent Teacher Association kind of doubled as a Labour Party branch where people like Beryl Maultby and Lynda Mason lived out our values.
Moreover, people voted for Labour because they knew that we cared about them, we were part of the community and they trusted us to look out for their families. There were some tough times as I came to my political consciousness, where we as a Party went off course. Like anyone, we have to own our history, the good and the bad, and build our future on those lessons and foundations.
Labour is a party which can point to most of the major social progress in New Zealand as something we have driven. The creation of the welfare state, the first state housing, Nuclear Free New Zealand, the Waitangi Tribunal, Homosexual Law Reform, Kiwisaver, the Super Fund and much more besides. All Labour achievements and milestones that have shaped our nation. And now – now we have the opportunity to write the next chapters in our country's history.
And friends - you already have done that. It is your hard work, your ideas and your inspiration that have seen us one year into this Government with a record of achievement that we can all be proud of.
From the Families Package to Fees-Free, Paid Parental Leave to Pike River, we have made a tremendous start.
Let’s just take a moment to look at the Families Package, and a family like the one I grew up in here in Dunedin, earning a combined income of say $65,000 a year with three children, one of them new-born. They are better off as a result of this Government’s work
- Better off through the lift to Working for Families;
- Through the extension of Paid Parental Leave to 22 weeks and after that;
- By receiving the Best Start payment of $60 per week for their newborn;
- And through a boost to their Accommodation Supplement
And I bet the grandparents have received the Winter Energy Payment.
This package is literally changing lives. It is reducing inequality and child poverty, and beginning the journey to the promise made by our Prime Minister that New Zealand will be the best place in the world to be a child.
Delegates, that is what you have done. It is your work, your decisions that have put us in this place, and I want to say thank you.
As Finance Minister, I am proud that we are delivering for Kiwis a sense of shared prosperity.
I said last year in my speech to you that we needed to get the building blocks of our economy right. Our first Budget delivered to this country the biggest boost in health, education, housing and other public services that we have seen in a decade. And we did it at the same time as showing we are responsible managers of the economy.
I can confidently say that one year into our Government the fundamentals of the economy are strong. We have just had the strongest quarter of economic growth in two years. We have a sustainable surplus that is allowing us to invest in infrastructure and keep debt under control. Government debt is low and it provides the buffer we need to face down future shocks. Unemployment is at 4.5% and is forecast to reach our first-term goal of 4%. Importantly, we are also still ranked number one in the world by Transparency International for freedom from corruption, and just this week the World Bank re-affirmed that New Zealand is the best place in the world to do business.
Now, you might not think this is the case if you just listened to business confidence surveys. But we know from history that business tends to be a bit more pessimistic when a Government has Labour at its core, despite the economic reality. Regardless, we will keep working with the business community to lift New Zealand’s prospects.
In any event, we are not taking our careful approach to economic management to earn a few points in a business perception survey. We are doing it because it is the right thing to do for future generations.
Our careful management means we have been able to re-start contributions to the Super Fund after nine years of no Government contributions.
Our low levels of debt mean that we have the buffer to respond to an unexpected bill such as supporting farmers to fight Mycoplasma bovis, and it gives us the confidence that we can deal with anything an uncertain global picture, climate change, volatile international markets and trade disputes can throw at us.
We know that we need to get the balance right between careful management of the economy and making significant investments in our social progress. Previous Labour Governments have done it, this Coalition Government is doing it, and I know that we can keep doing it.
Budget 2018 saw us outline a plan to invest in re-building our social and public services. We are spending $25 billion more over the forecast period that the previous Government had planned.
And we are making good progress in implementing that plan:
- In health, we have hospital rebuilds announced for Auckland, North Shore and Whangerei and, yes, the work on designing a brand new hospital here in Dunedin. We are finally addressing the pay and conditions of our health workforce, particularly our nurses and midwives, and we have addressed pay equity for mental health carers and social workers.
- In education, we are rolling out the first across the board funding increase in a decade for early childhood education, and more support for special education and learning support. And delegates, think about this: In 2018 the first year of fees-free post-school education and training has been available, turning the tide on nearly thirty years of fee rises.
- And in housing, not only are the first Kiwibuild families moving in, but we are on track in building new state houses (with more than 6,000 coming on stream over the next few years), and in providing more emergency and transitional housing. And just this week we abolished letting fees.
Now, in these areas it was not just about we can do but also about what had to stop. We stopped the sale of state houses. We stopped the systemic underfunding of health. We stopped the experiment of national standards and charter schools.
There is a lot do, and we cannot make up for nine years of neglect in one year. But with the clock reset we can now work together to rebuild these critical social services.
Budget 2018 also saw us take the first steps to implementing our economic strategy. We are building an economy that is more productive, more sustainable and more inclusive.
We are seeing wages grow, and they are forecast to continue to grow at around 3% per year. Not just through our direct action such as lifting the minimum wage and a living wage in the core public sector, but also as we take action to lift productivity.
At last year’s conference, I said that there were three areas that we had to focus on:
- Getting support/investment to businesses that are ready to grow
- Lifting the skills of our workforce
- Investing in the research and science that will give us the edge
On each of these in our first year in Government, we have made a great start:
- With our Government partners we have developed the Provincial Growth Fund and the Green Investment Fund to drive investment and development across the country. We are pursuing quality trade agreements to give our exporters more opportunities to grow, including launching into the negotiations with the EU.
- On lifting skills, fees-free is helping more people into trades and apprenticeships, including record numbers in areas like construction. We are implementing Mana in Mahi / Strength in Work to support our rangatahi, and employers to take them on as apprentices. And we are implementing our Future of Work agenda, including through a skills shift programme in the manufacturing sector.
- And in R and D through the excellent work of Megan Woods and Stuart Nash we are implementing a $1 billion Research and Development Tax Incentive to drive forward our innovation agenda.
There is, of course, still much to do. Last year I also talked about the need for a just transition to a low-emissions economy. I am proud that our Government has the courage to address the issue that the Prime Minister has so rightly called her generation’s nuclear free moment.
We are taking a planned and deliberate approach for a just transition.
I saw the damage that was done to the community I grew up in here in Dunedin when the Government clicked its fingers and changed economic direction overnight. It is exactly that situation we are seeking to avoid by setting a 2050 goal for a net zero carbon economy. And that goal is supported by the business community: The Climate Leaders Coalition has brought together 60 of our largest businesses in pursuit of the same goal.
We are doing this because it is the right thing do for our planet and our people. There are also opportunities for us in this transition. New Zealand can, and should, lead the world in new and clean technology. It is the right thing to do for future generations, but it is also our brand proposition in the world.
Budget 2018 was called Foundations for the Future, and I am proud of what we are building. But, there is more to do. More to do to build an economy that is fit for purpose for the middle part of the 21st century; an economy that is focused on future generations: more productive, more sustainable and more inclusive.
To that end, in Budget 2019 we are making a significant change that will embody our values. Budget 2019 will be New Zealand’s first Wellbeing Budget.
Last year, and the year before that (and the year before that), I have spoken about the limitation of tracking our success on a narrow measure such as GDP growth. Well, now we are doing something about it. We are moving beyond GDP to not just look at our financial health, but also the wellbeing of our people, the health of our environment and the strength of our communities.
As the Minister of Finance I will report on all of those measures at Budget time, including on how we are tracking at reducing child poverty.
It is essential that this is based on a robust and credible framework. At the core of our approach will be the Living Standards Framework developed by the Treasury, based on the work of the OECD. It is grounded in core economic concepts to assess the stock of our wellbeing. So, you will hear about financial capital, human capital, natural capital and social capital.
Next month the Treasury will release its first Living Standards Dashboard. This will show a range of indicators of our current wellbeing as a nation. It includes the tangible, like incomes and home ownership, but also the intangible like life satisfaction and cultural wellbeing. It is a work in progress. We need to make sure it is truly reflective of Aotearoa New Zealand, and all that makes us unique. It will evolve over the coming years. But it is a great start to a new way of thinking about what counts as success.
The Living Standards Framework is designed to outlive any particular Government. It will be a critical input to our Wellbeing Budget, but it will not be the only one. We are using the Child Wellbeing Strategy, evidence from here and overseas about intergenerational success and the advice of experts such as government science advisors.
And that is the critical difference in our Wellbeing Budget. Not only are we going to measure our success differently, we are putting our Budget together on a wellbeing basis as well.
We have identified five core priorities that will define our first Wellbeing Budget. I will announce the detail of these during the Budget Policy Statement next month, but they cover the areas where we think the outcomes will make a substantive difference to both our current and future wellbeing.
These priorities will include sustainably growing and modernising our economy, lifting children’s wellbeing, and yes, we will finally be giving mental health the priority and focus that it deserves.
As we speak, my Ministerial colleagues are working together to produce initiatives that will be squarely focused on long-term intergenerational outcomes. This means we are breaking down the silos of government to form a long-term view.
And we have already started. When we first came into Government we faced a decision about what to do with Waikeria Prison. We were told that we should build a 2,500 bed American mega-prison because it had the cheapest per-prisoner cost. But maybe, just maybe, we could do better if built a smaller prison, with a mental health unit attached to address the underlying causes. And if we focused on more drug and alcohol rehabilitation and more on prisoner housing to support re-integration. That is what we have done and that is a wellbeing approach.
And just this week the Prime Minister, Phil Twyford and Kelvin Davis announced a once-in-a-generation community renewal in Porirua. Now, this could have been a project just to build more houses, but we see it as a major integrated urban development plan - including education, recreation, social services, and yes, lots of houses. And delivered in partnership with iwi and local council. That is a wellbeing approach.
And we are serious about embedding this approach. Chris Hipkins and I are both working on the most fundamental change to the State Sector and Public Finance legislation in thirty years. This will ensure that collaboration and wellbeing is embedded in how our government agencies work.
So delegates, 2019 will be the Wellbeing Budget, and the first steps in changing our yardstick of success. I will still keep a close eye on our finances and a steady hand on the economic wheel. We owe that to future generations. But we also owe to them and to all of our communities the chance to live fulfilling and meaningful lives - and to be valued more than just as numbers on a balance sheet.
This is breaking new ground. Thirty years on from the last time our Party met in Dunedin, much has changed in the world and in our economy. We face complex, intertwined challenges in the Future of Work, Climate Change and reducing inequality. We need a different, 21st century approach to meeting them, and that is what the Wellbeing Budget is about.
And while much has changed in our world, some things have endured. Our values - fairness, opportunity and our PMs favourite: kindness. It is these values that will guide me through this new approach to our economy and Budgets.
Delegates, it is time to change gear on our economy, to lift our sights, to grow and share our prosperity, and focus on the long-term intergenerational wellbeing of our people and country.
As wise person I know once said: when it comes to the Well-Being Budget, Let’s Do This.
Tena Koutou, Tena Koutou, Kia Kaha, Tena Tatou Katoa.
Watch the livestream of the speech here.