Speech in House on the Imprest Supply (First for 2015/16) Bill and Appropriation (2014/15 Supplementary Estimates) Bill

Wednesday, June 17, 2015

The Budget delivered by this Government is a confident Budget, of a confident Government, in charge of an increasingly confident nation. It comes on the back of six impressive Budgets before it. My contention is that, collectively, these Budgets are reshaping the political landscape in New Zealand.

Politically and historically in New Zealand politics, the Labour Party has liked to think of itself as the party of progressive, even radical, social change. Sometimes that is true—the 1980s were a time of radical social change in New Zealand led by the Labour Party for the better. Conversely, sometimes it is claimed that the National Party is the traditional conservative party—that we manage the status quo and we build on the changes that Labour has made. But whatever is the truth of those claims, and I think they are contested, there is no doubt that the political situation today differs markedly from these perceptions.

The traditional roles of the parties have been reversed. The Labour Party is now the real conservative party: fearful of innovative policy, afraid of new ideas; the party that says no to everything as it is saying no to this Budget. Meanwhile, it is the National Party that is the genuine reformist party: determined to enter the social policy realm that the Labour Party has selfishly assumed it owned for itself, such as the welfare system, social housing, and education.

This Budget continues National’s quiet revolution in State services, such as getting Government departments to focus on results—a radical concept for the State services—asking the Government departments and the people who work in them to focus on getting results through our Better Public Services programme. That drive is having demonstrable results, as the regular target reports that we publish for ourselves, show: a 38 percent reduction in youth crime since 2011, the number of teenaged sole parents on a benefit has dropped by 40 percent since 2011, and immunisation rate for Māori is now as high as the rest of the population.

The previous Government measured success by how much money it spent, whereas we as a Government are prepared to measure success by the actual outcomes that spending delivers for New Zealanders. We are prepared to look at different ways of doing things, and this Budget and the bill that we are debating today reflects that.

We are prepared to look at different ways of doing things because simply throwing more money at social problems does not necessarily solve those problems. Between 2003 and 2008 Government spending under the previous Government rose by 50 percent in 5 years. What did the Salvation Army say when we came into office in 2008? It said that there had been little to no impact on social outcomes for that increased expenditure. Hence, we as a Government are embracing new approaches to old problems—things like Whānau Ora, things like contracting and evaluation tools through social sector trials, and things like social impact bonds.

We are transforming the welfare system towards one designed around an investment and liability prism. Rather than taking a traditional year-on-year cash view of the welfare system, we are looking at the lifetime costs of clients in the system. By taking a look at the lifetime cost, the opportunity is created to spend more today to get a better long-term outcome for individuals and households. This is leading to quite profound changes in Government policy towards people receiving welfare. We are encouraging the Government to invest in people, particularly the young, and particularly to do it early in their lives.

This social investment approach, which is reflected in this Budget, is about targeted, evidence-based investment to secure long-term results for the most vulnerable New Zealanders. As a Government we are willing to spend a bit more now to get real, sustainable change, and we can generate sustainable savings for the Crown and for taxpayers.

In social housing, we are breaking down the near-monopoly that Housing New Zealand has on social housing in New Zealand. We are growing the community housing sector and the social housing sector more generally, all with the objective of making sure tenants receive better care.

What is the response of the Labour Party to these innovative approaches to social policy? Well, the first response is often silence. That party opposite has nothing to say about social investment approaches to policy, it has nothing to say about the Better Public Services targets, and it has nothing to say about Whānau Ora other than to complain. You will not find many press releases from Labour about social investment. Those members do not talk about it, they do not mention it, and they do not understand it. You will not find parliamentary questions on it and you will not find press releases about it, so it is almost as if it is too difficult for those members to engage on the genuine issues.

So the first response from the Labour Party is often silence, to the extent that if those members do have anything to say, it is often tired and trite clichés— such as calling the Government neoliberal, which is the social democratic politician’s favourite term of abuse for centre-right Governments, notwithstanding that the term is devoid of all meaning and is hilariously inaccurate when it is applied to this Government. Often we get neoliberal thrown in with Crosby/Textor—and we just heard it from Grant Robertson not 20 minutes ago—as if just mentioning the name of Crosby/Textor and saying “neoliberal” is a legitimate argument. Labour’s response to the Productivity Commission report about social services that was released a few weeks ago was to just simply talk about the Government introducing vouchers in social services, and those members seemed completely unaware that we have a voucher system throughout a lot of our social services. That just means funding is following people when they go to particular services. They are all around us. The early childhood education system is a voucher system. Tertiary education is a voucher system. Those members have little or nothing to say about that. Then we come to social impact bonds, and Grant Robertson talked about this in his speech just before. Labour talks about people profiting from social services, but, again, profit exists throughout our social services already.

For example, in the health system, private hospitals exist. They provide surgery that is funded by the public. Private pharmacies exist, which profit by filling Pharmac scripts. Private medical manufacturers exist by developing better replacement hips, as Eric Crampton from the NZ Initiative has pointed. So profit exists already. That is not a legitimate argument against it. Then there was the nonsensical claim from people like Annette King that social impact bonds were experiments that had been proven to fail. On this critique, the Government would never do anything new.

So let us look at the countries that are dealing with social impact bonds: for example, Swaziland, which is doing a social impact bond to try to reduce the number of people contracting HIV; Uganda, to try to increase access to early childhood education; Colombia, to try to reduce teen pregnancy rates; and, India, to close the gender gap in that society in males and females. And which was the country that introduced social impact bonds in the first place? The United Kingdom. Under what Government? The United Kingdom Labour Party under the Prime Minister Gordon Brown, the doyen of social democratic parties. So the complaints from Labour on this are simply silly.

What has become clear—and this is my overall point—is that in the last few years the Labour Party opposite has been fundamentally uninterested in new approaches to old problems. It is stuck in an ideological time warp. It insists, despite all evidence to the contrary, that the Government has the answers to everything, that the bureaucratic, monolithic State can effectively address social problems, and that all that is required is yet more Government spending. Social democratic parties around the world have moved on from this 1970s view of government.

As I mentioned before, social impact bonds are being trialled all around the world, often by social democratic Governments, but in New Zealand the Labour Party appears to remain stuck in the past. My core contention from this Budget, which is reflected in the supplementary estimates and the Imprest Supply (First for 2015/16) Bill that we are debating, is that the traditional roles of the parties in New Zealand have been reversed by this Budget and the Budgets that have preceded it. These days it is the National Party that is the progressive, equitable force for change and for good in New Zealand society. We are willing to accept that more Government spending does not necessarily solve every Government problem. We are willing to look at innovative approaches to social policy, like our social housing reforms, like social impact bonds, and like, generally, the investment approach that we are embedding at the heart of the Government in this Budget. It is the Labour Party that is the conservative party in today’s society: unwilling to look at change, wanting to say no to everything, and, to the extent that it has anything to say, simply wanting to engage in the debate with tired and trite clichés. The Labour Party opposite is out of touch and out of ideas. This party and this Government is creating a brighter future for all New Zealanders.