Election-year Budgets are usually sweeteners to entice voters in advance of the campaign. The 2011 Budget is a marked departure from that trend. The country needs responsible economic management and that's what National will deliver.
It will be measured and contain significant savings. It will set a credible path back to surplus. But it will not be a slash-and-burn exercise.
It will protect vulnerable New Zealanders and boost frontline services such as health, education and law and order. The Prime Minister has also signalled changes to Working for Families, interest-free student loans and the KiwiSaver scheme.
We'll reduce how much money the Government borrows overseas to put into KiwiSaver, and increase the level of genuine savings from the private sector. We'll change the mix of contributions to KiwiSaver accounts, with less coming from the tax credit and more from individuals and employers. The $1000 kick-start for new KiwiSaver members will stay.
Increased contributions from people and businesses will happen when the economy has recovered, and when wages and jobs are growing.
We'll better target Working for Families at lower-income families needing more help. It will be less generous to higher-income families.
We will make changes gradually, in a way that minimises the effect on families. We'll also adjust the Student Loan Scheme but keep it interest free.
None of the changes will affect people before the election, so New Zealanders will be voting with all the information they need and can make their own choice.
The election year choices have never been clearer: continue along the path of a tax framework that keeps more money in the pockets of hardworking New Zealanders, controls growth in Government spending and maintains net public debt at a sensible level; or reinstate punitive tax rates, loosen the reins on public spending and plunge future generations of New Zealanders into a greater level of debt than is necessary or appropriate.
I'm very proud of, and prepared to campaign on, the Government's achievements. These include tax changes that mean three-quarters of New Zealanders pay a top marginal tax rate of just 17.5% and that a family with two children earning the average wage pays no effective income tax. Zero.
Interest rates are at their lowest level in two generations. After-tax wages have risen 7% in the past year.
Contrasting this approach is the Labour Party, which clings tightly to policies of tax, borrow, spend and hope. It has not learnt the lessons of the 2000s about how not to manage economic policies.
Under Labour, an internationally competitive economy stagnated through the effects of punitive tax increases and markedly increased government spending which grew by 50% in just five years since 2004. Interest rates soared. The domestically focused side of the economy grew strongly, fuelled by Labour's spending and a housing boom, but our export sector shrank.
The regulatory environment under Labour became increasingly and unnecessarily more complex. One of the best opportunities in decades to meaningfully grow our economy was squandered in favour of government spending and a debt-fuelled domestic consumption boom.
Given the paucity of information coming from the Opposition benches it is difficult to discern whether Labour even has an alternative plan, much less what that plan might be. But from the information available it appears that, rather than learn from that experience, Labour promises more of the same.
Its reckless spending promises are at well over $5 billion and rising. It will need to increase borrowing to fund those promises unless it has secret plans to increase taxes on middle-income earners.
Not only will your children have to pay that debt back, but your mortgage interest rates could rise. I know it sticks in the craw of hard-working Kiwi families, who are being careful with their money and reducing their own debt, to hear Labour promising to do quite the opposite with taxpayers' money.
David Clark suggests smart investment is the way to economic growth. The Government agrees, which is why we have replaced Labour's lazy R&D tax credit with targeted investment in research science and technology. We've committed billions to upgrade roading infrastructure, develop high-speed broadband and improve rail assets and the electricity grid.
I'm very optimistic about the future under a National Government. Our economic plan of tax reform, disciplined government spending, reduced bureaucracy, improved education standards and investment in infrastructure has positioned the country to rebound strongly from the recession. The rebuilding of Christchurch and the Rugby World Cup add impetus to the recovery.
Strong job growth and wage growth above the rate of inflation are projected. Now is not the time to be reckless with taxpayers' money. I expect the Government to deliver a Budget that provides that strong platform for growth.
The choice will then be yours.
- Michael Woodhouse is a National list MP and candidate for Dunedin North in the forthcoming election.
