SPEECH: Unleashing enterprise so Kiwis can get ahead

Kia ora tātou. Nau mai, haere mai.

Welcome and thank you to each of you for being here.

A special thank you to the EMA Forum Series for hosting us this afternoon. Thank you to Andrew Hunt, Brett O’Riley, Alan McDonald and all of your team for the great work that you do educating and advocating for business.

I want to acknowledge my good friend and National’s Deputy and Finance Spokesperson, Nicola Willis. Nicola is doing a fantastic job holding Grant Robertson to account for the cost of living crisis, and his addiction to spending that frankly isn’t delivering results.

On the 19th of May we’ll get to see what Labour plans to do with around $6 billion a year in new operating spending, plus a few billion more in capital.

That is by far and away the biggest spending Budget New Zealand has ever seen.

On Budget day we’ll also get to see Treasury’s view of what the economy will look like in the coming years.

And it’s that part I want to focus on today – how we can kick-start and enlarge our economic engine. How we can back business and unleash enterprise to lift incomes, to help Kiwis get ahead, and to give people more choices in their lives.

One of the best parts of my job is talking with Kiwis up and down this country about their hopes and aspirations.

We’re a diverse lot and we should be very proud of that. But wherever I go, most Kiwis have the same attitude: we’re aspirational about our lives and country.

We love a challenge and we’re willing to work hard to build a better life for ourselves and a better future for our children.

I want New Zealand to realise its maximum potential, and to help build a society where every Kiwi can flourish.

When I talk to Kiwis, I feel that same energy.

We want a country where if you work hard you can get ahead – and earn enough to not just look after your family today, but to create choices for your future.

A country where our kids can go overseas, but they come back because this is where the opportunity is.

Where they can buy a home with a few years of hard work and saving.

A country with amazing health and education services that work for everyone.

A Government that isn’t just spin, but actually delivers. 

Unfortunately, Labour has no plan for the economy except to spend more money and to rely on the Reserve Bank to run loose monetary policy.

This economic mismanagement has contributed to the highest inflation in over 30 years.

As a result Kiwis are going backwards, fast. Their money doesn’t buy as much as it did and they are worse off than they were a year ago.

Kiwis like the young family I met in Otaki who put everything into buying their first home 18 months ago, but now face rapidly rising interest rates that will see their yearly mortgage costs go up by more than $6,000.

Or the young couple who came up to me on ANZAC Day – a teacher and a nurse – who can’t save for a deposit for a house in the area they work because their rent and living costs are going up. They think they may be able to build a better future for themselves in Australia.

Facing a cost of living crisis, a “squeezed middle” has emerged.

But rather than addressing the drivers of the cost of living crisis – including the Government’s own policies – Labour’s approach is to just throw cash at every problem.

They’re treating symptoms, not causes.

On Budget day, Grant Robertson must take responsibility for presenting a credible plan to combat inflation, reduce costs, remove bottlenecks and ensure value for taxpayers’ money.

He could start by adopting National’s four point inflation plan.

One. Stop adding costs to business that get passed on to the rest of us, as we’ve seen with new taxes on rental properties. Stop the jobs tax and union-mandated industry-wide employment agreements.

Two. Remove bottlenecks in the economy that are constraining growth. Fix immigration settings that are worsening skills shortages.

Three. Review existing spending, and revisit plans to go on the biggest Budget spend-up in history. 

It is very hard to justify record new annual spending of $6 billion in an overheated economy.

Four. Prioritise tax relief for workers. Inflation has pushed people into higher tax brackets when Kiwis need that cash more than ever. National would inflation-adjust tax brackets, so Kiwis keep more of what they earn.

That would mean an extra $1,600 more a year for a household on an average income – those doing it tough in the squeezed middle.

A longer term priority is to make sure we don’t get into this mess again by returning the Reserve Bank to a single mandate of price stability. 

With the Budget coming up, the Government will be gearing up to proudly announce where it plans to spend billions of taxpayer dollars.

The truth is, Labour has been on an unprecedented spending spree that has achieved very little.

Spending is up a staggering 68 percent, but Kiwis are not seeing a 68 percent improvement in outcomes – far from it.

We’re spending $5 billion more in education, but have seen worse attendance and academic achievement outcomes.

$1.9 billion on mental health, but no improvement in access to services.

$1.7 billion in law and order, but violent crime is up, ram-raids and shootings are increasing, and gang membership has exploded.

$6.8 billion more a year on benefits, despite record job vacancies and labour shortages.

This is not the Government’s money, this is taxpayers’ money. The Government should be treating it as carefully as Kiwi households and businesses do their own.

Here’s a good example – taxpayers are spending $100 million subsidising a slow train from Hamilton to Auckland that hardly gets any passengers.

It’s being subsidised to the tune of $280 per person per journey – and results in more carbon emissions and longer journey times than if everyone just jumped in a car and drove. It would be cheaper to put everyone in a taxi.

Now $100 million is a relatively small portion of total government spending. But not worrying about the effectiveness of a $100 million spend speaks to an alarming culture of poor fiscal discipline.

We want a Government that cares about how every single dollar is spent, because every single dollar the Government spends is ultimately a dollar from your pocket.

That’s what Nicola Willis will do as Finance Minister.

The Government I lead will focus relentlessly on results – delivering better outcomes for each dollar spent.

That means bringing back targets and accountability which this government have dispensed with. We’ll celebrate successes, but we’ll also hold ourselves to account when things don’t work.

It also means being pragmatic enough to know when more Wellington bureaucracy is not the solution. The best solutions often come from community organisations and businesses, and in that case government’s role is to enable – not to dominate and to centralise.

It means investing in what works, and constantly questioning whether taxpayers are benefiting.

That’s the criteria we’ll use to assess the record new spending in this Budget – not just the dollars, but what Kiwis will get for it.

By doing more with each dollar, we can lower the tax burden, pay down debt, and unleash economic opportunity for everyone while delivering better public services.

While Government spending gets lots of attention at Budget time, there’s often little focus on the wider economic settings that actually drive prosperity.

It’s those settings I want to focus on today.

National talks a lot about business and the economy – but not for their own sakes.

We want a strong economy, because that is how we drive prosperity for all Kiwis.

A strong economy is how we lift wages, grow jobs, and create choices for families.

A strong economy, with incomes growing faster than prices, is how Kiwis get ahead, and how we – as a country – can invest in the things that matter to all of us.

Like delivering world-class healthcare, education that works for everyone, a police force that keeps our communities safe, or protecting our environment.

Labour’s economic approach isn’t working because they believe government, and in particular government spending, drives prosperity.

I utterly reject that view.

It’s the reason Labour haven’t been focused on the microeconomic reforms needed to grow our economy.

National knows our future will be built on the hard work of Kiwis and businesses in communities up and down this country.

So we’re focused on policies to support these Kiwis and make it easier to have a go – easier to invest, easier to innovate, easier to employ and easier to take a punt – policies that will grow the pie for us all.

So today I want to outline a bit more about how we can kick-start and enlarge the engine-room of our economy to drive prosperity – the broader economic approach that National will implement to deliver strong, sustainable growth over the rest of this decade and beyond.

There’s not one big-bang solution to this challenge – so I’m not going to announce a big policy today and claim it will be ‘transformational’.

Instead, National’s approach is to relentlessly target the big drivers of our economic engine – education & skills, infrastructure, technology, the business environment, and our connections with the world.

These are the factors that have worked worldwide to drive prosperity, and now, as our economy falters, we need to look to them to supercharge our growth story going forward.

1) Education & skills

First, we need to ensure we have the skills needed for growth.

A great education is essential for creating opportunity. It gives young people choices, and businesses access to the talent they need.

So when we spend $5 billion more a year on education, but see no improvement in achievement, and 40 per cent of children don’t even attend school regularly, that’s not just a social failure – it’s a future economic crisis.

In maths, reading and science our kids are falling behind other countries. And these are the basics that no child in New Zealand should struggle with.

For some, the system works fine. They turn up to school, engage with great teachers, and go home to attentive parents who help them read and write.

But for far too many, we just have no idea. We’re letting too many children fall through the cracks because we’re not even paying attention.

We need to make better use of information to drive results - improving our understanding of how well each child is progressing so we can intervene where needed.

We need to know which kids are not showing up for class and why. We need to regularly assess every child’s progress and report back to parents – so they understand if their kid needs extra help. We need to know which schools are making a difference so others can learn from them.

If a child can’t read or add as well as their peers, we need to know. Otherwise they will spend the next five years sitting at the back of the classroom, feeling excluded and becoming disillusioned.

As well as building talent through education, we can support that talent by enhancing our workforce through immigration.

That doesn’t just mean opening up the doors to anyone and everyone, but it does mean competing with the rest of the world to attract the best and brightest.

Unlike Labour, the National Party doesn’t see immigration as a zero-sum game. An ambitious migrant coming here to work doesn’t mean fewer jobs or lower wages for Kiwis – it means more opportunities and better outcomes as it grows the pie.

Talent builds talent, and we need more of it.

 2) Infrastructure

We all know New Zealand has an infrastructure deficit that is holding back growth and productivity.

The previous National-led Government made a good start on addressing it.

Ultra-Fast Broadband was rolled out on time and under budget thanks to National.

We built Waterview and the Waikato Expressway.

Transmission Gully was talked about for 50 years. National funded it and started it.

One of the first things Labour did upon coming to office was to cancel a series of important roading projects underway under National, only to resurrect them in election year 2020 – and then cancel a few of them again right after the election.

Under Labour the delivery of infrastructure is stagnating. National gets things done.

I will have a lot more to say about infrastructure in the coming year, but I want to signal a few things today.

The government I lead will be visionary and bold when it comes to planning ahead.

New Zealand has generally taken a “just-in time” approach to infrastructure. We build things when we think we need them. That usually means “too late”. Think of the City Rail Link, which National funded in 2013.

The government I lead will have an intense focus on delivering the infrastructure needed for new housing. That’s why Chris Bishop has both portfolios.

We don’t want a lack of transport links or pipes to be an impediment to going up in our cities and going out at the edge of them.

We will partner with local government to facilitate the new housing that we so desperately need.

We will also innovate more on the financing of infrastructure.

We need to get serious about tapping into different sources of funding – ensuring borrowing is used for genuine investments, exploring new pricing mechanisms, accessing third-party finance to share risk and free-up capital. Everything should be on the table.

And we need regulation that’s not a barrier. We desperately need to get on with replacing the RMA and delivering simple rules that protect what should be protected without bogging progress down in endless back and forth between lawyers and bureaucrats.

Unfortunately, the Government’s current approach runs a real risk of making things worse.

Developers are spending $1.3 billion on consenting alone each year. And the time it takes to get a consent has more than doubled in the last decade.

We’re holding ourselves back with red tape just when we need to be accelerating.

 3) Technology, capital & innovation

But skills and infrastructure aren’t enough by themselves. You can have skilled workers with fast commutes, but you also need to give them the tools to become more productive.

Kiwis are rightly proud of our history of making-do. The ‘number eight wire’ mentality worked for us for a long time. But we are in a period of fundamental change, and the make-do attitude needs an update.

The impact of digital disruption and new technologies is uncertain, but we already know that the way we live and work right now is very different to what it was yesterday – and more change is coming.

New and emerging technologies will transform lives at work, at school and at home at an unprecedented pace, coalescing with the changing shape of our workforce and our communities to create both opportunities and challenges for our country.

And I want to acknowledge the great work my colleague Judith Collins is doing to develop the policies to support the technology sector to grow. The message to New Zealand’s best and brightest minds, both here and overseas, is that technology and innovation will be championed by a National Government.

This isn’t just about digital tech like cloud computing. I mean technology and capital in the widest sense – our ability to invest in new plant, machinery, processes, and software. Tools that require a bit of investment upfront, but set the stage for Kiwis to create much more value down the track.

We have some amazing success stories like Xero and Rocket Lab. But more generally, slow technology adoption and low capital intensity is one of the reasons why if you take a Kiwi and plonk them down in Sydney or Singapore the value they can create instantly increases.

We need to remove barriers preventing our small businesses from accessing capital and growing into large ones.

That means ensuring New Zealand is the kind of economy that welcomes investment and has more businesses competing on the world stage. Particularly investment that comes with expertise attached – investment into businesses with the goal of making them much bigger, much faster. 

4) Business environment

Which brings us to the broader business environment. Because we must make it easier to build a business in this country.

Kiwis thrive when we have a dynamic, competitive economy – and it’s the Government’s job to get the settings right so that businesses can step-up and achieve that.

That means a predictable and consistent regulatory environment.

But more and more businesses I speak to are bringing up constantly changing regulation as a barrier to growth and investment.

A business owner I spoke to recently told me he was turning down a big export contract because it would mean hiring more staff and investing in new plant, but it wasn’t worth it because of the constantly changing rules and red tape.

New regulations should be justified on outcomes – not politics and spin. Old regulations should be constantly re-tested – if they’re no longer fit-for-purpose they should be amended or repealed.

That’s hard work – but it matters. No single regulation will kill a business – but the total cost of dozens of outdated rules and unresponsive systems can be substantial. And it drives up prices across the economy.

Our regulatory environment needs to reflect this. Small businesses need room to be agile. Growth should be encouraged, not punished. Innovation and competition should be welcomed, not shunned. 

Removing the most costly rules needs to become part of the standard operating procedure for any government. Some of the most obvious – like Labour’s misnamed Fair Pay Agreements – can be unwound relatively quickly.

But Ministers need to think twice before introducing counterproductive rules like the CCCFA lending crackdown that made it harder for people to borrow for a home, or the removal of 90 day trials which made it riskier to take a punt on someone.

We also need to make it far easier for businesses to employ skilled migrants without jumping through endless paperwork to sponsor visas.

And regardless of the content of the rules, businesses need certainty and speed when they are applied.

The delay in getting rulings on consents is adding millions to the cost of development. I’ve had employers tell me horror stories about employment cases that take literally years to work their way through the courts.

Meanwhile, constant change and a lack of predictability – such as the Government’s surprise introduction of taxes on housing – undermine confidence and have a chilling effect.

And with inflation already running at a 30-year high, it shouldn’t be controversial to call for the Government to stop adding costs onto businesses which will ultimately be passed on to consumers. 

5) Connections with the world

Finally, to rebuild our economy, we need to rebuild our connections with the world.

New Zealand has a proud history of looking outward and stepping onto the world stage. We need to reclaim that – not close ourselves away.

Some might think global events are moving in the other direction. That countries are retreating, and closing themselves off. War, populism, and protectionism have made an unwelcome return.

New Zealand can and must buck this trend.

As a small, isolated economy we need to remain open for business.

Australia now has a trade deal with India. It’s not perfect, but it’s more than we have. We must get back out there into the world in force, and open markets that will help Kiwi firms grow and compete.

We also need to be open to investment.

As a small, isolated economy, you’d think we’d be doing whatever it takes to attract investment into the country. But instead, we have the second most restrictive regime for foreign investment in the entire OECD.

We need to attract genuine, growth enhancing investment to our shores that makes New Zealand firms stronger, and helps New Zealand workers work smarter and earn higher wages.

New Zealand has a chance now to re-connect with the world better than we did before the pandemic. On trade, investment, and migration.

Opening up to the world supports competition, faster technology adoption, deeper capital markets and more access to international know-how. It’s a good thing.

There’s a global market of almost 8 billion people out there, and we’d be foolish not to embrace it.

Our plan is to focus on each of these five levers of prosperity – education & skills, infrastructure, technology, the business environment and our connections with the world.

That’s the pathway to unleashing enterprise. That’s the pathway to delivering a stronger economy and lifting incomes.

To achieving real growth, where wages outpace the cost of living and Kiwis can get ahead.

A new approach is critical right now.

There’s a squeezed middle watching the cost of everything skyrocket while this Government seems to have forgotten about them entirely.

But I’m aspirational for New Zealand. I believe that with a fresh approach from government, we can realise New Zealand’s massive potential.

We have great talent and a great natural environment. And with the right approach, I’m confident New Zealand can meet the challenges of the 21st century and overcome them.

It’s what we need so people like that young Otaki family can earn enough to cover their rising mortgage costs. Or that young couple from Botany can pay their rent and actually put aside some savings for their first home.

So a generation of young Kiwis feel they can make their futures here – in New Zealand.

I’m optimistic about New Zealand.

A growing economy – where entrepreneurship and innovation delivers great jobs and higher incomes for all Kiwis.

A relentless focus on outcomes in health, education, and infrastructure – rather than spending more and getting less.

A government working with business and the community, rather than freezing them out and trying to do it all on its own.

In an uncertain, difficult world, National is ready to take on the serious job of delivering for all New Zealanders.

Thank you.