John Key state of the nations

2007.md

Thank you for your welcome.

What a pleasure it is to be speaking to you in what I still think of as my home town. I had a good Kiwi upbringing here in Christchurch. I grew up in Hollyford Ave, just down the road from here. I attended the local schools. I played in the local streets and parks.

I was mad on sport, particularly squash, which I played next door for the Burnside Squash Club. I also played rugby for this very club, as a hooker and a halfback. I was no Justin Marshall. In fact, I think it's safe to say that no matter how big Graham Henry's rotation gets, I won't be going to the World Cup.

Six years ago I made one of the most important decisions in my life: to leave a successful career in finance to stand for Parliament. It was a decision that brought with it changes, not only for me but also for my wife, Bronagh, and our young family. I thank them today for their continuing love and support.

For me, politics is not about the pursuit of power for the sake of it. Unlike some, I won't measure the success or failure of my political career by the number of years I hold office.

For me, politics is about the ability to make change for the betterment of all New Zealanders. It's about challenging us all to dream how great our country can be and then setting out to achieve it.

Over the next 18 months, my speeches will be along two sorts of lines. I think of them a bit like the hardware and software of a computer system.

The hardware, if you like, is made up of the big topics all politicians talk about – like the economy, health services, law and order, and the environment. These are all vitally important. They are the nuts and bolts of running this country. Our policies in these areas will demonstrate that National is ready to govern.

But there's a second group of speeches I intend to deliver that are much more about shaping and defining the sort of country we want New Zealand to be.

We have, over generations, evolved a set of essential New Zealand values, attitudes and shared experiences. These represent what I call 'The Kiwi Way'.

You get a taste of this when you listen to foreigners talking about what New Zealanders are like. They typically say we are friendly and modest people; we are inventive and empathetic; we are proud of the natural beauty of our country; we believe in working hard and getting rewarded for it; we think no one is born superior to anyone else and that everybody deserves a fair crack in life.

These characteristics are part of what makes our country unique. We should celebrate these things. We should be proud of our culture and society; the sense of identity we have as a nation.

But it is also critical that we debate and challenge the direction in which our society is heading.

We are not four million spectators, having a passing interest in someone else's game. This is our country; we make the rules and we should decide its direction.

Today, in the suburb where I grew up, I want to talk about what I consider to be an important part of The Kiwi Way. I want to talk about opportunity, and hope, and how we can bring these to some of the most struggling families and communities in New Zealand.

Part of The Kiwi Way is a belief in opportunity and in giving people a fair go.

As New Zealanders, we have grown up to believe in and cherish an egalitarian society. We like to think that our children's futures will be determined by their abilities, their motivation and their hard work. They will not be dictated by the size of their parent's bank balance or the suburb they were born in.

We want all kids to have a genuine opportunity to use their talents and to get rewarded for their efforts. That's The Kiwi Way, and I believe in it. After all, I was one of the many kids who benefited from it.

My father died when I was young. My mother was, for a time, on the Widow's Benefit, and also worked as a cleaner. But the State ensured that I had a roof over my head and money for my mother to put food on the table. It also gave me the opportunity to have a good education. My mother made sure I took that opportunity, and the rest was up to me.

I always felt I had a stake in New Zealand. I saw a ladder to take me higher and I made my own way up the rungs.

For most New Zealanders, being born into a struggling household is not a life sentence.

Since I've been an MP, I've talked to a lot of people who grew up in my street, or in streets just like it. Many have done well for themselves.

However, things are different now than they were 30 years ago. It used to be that any street in any community could be the launching pad for a happy and fulfilling life. That's not the case anymore. Today many are being left behind.

There are streets in our country where helplessness has become ingrained. There are streets of people who believe they are locked out of everyday New Zealand the way most of us experience it, and are locked into a way of life for which the exit signs and the road maps have long since been discarded. These streets have become dead ends for those who live in them.

I'm not just talking about poor communities – because we all know that being poor needn't rob you of hope. I'm talking about places where rungs on the ladder of opportunity have been broken. I'm talking about streets like McGehan Close, in Owairaka, Auckland. In one week last year, two kids in that small street killed themselves and another two made unsuccessful attempts. It is a street terrorised by youth gangs.

Around the country there are other places like this. The worst are home to families that have been jobless for more than one generation; home to families destroyed by alcohol and P addiction; home to families where there's nothing more to read than a pizza flyer; home to families who send their kids to school with empty stomachs and empty lunch-boxes; and home to families where mum and the kids live in fear of another beating from dad.

I'm talking about places where happy and sparkling six and seven-year-olds become angry and resentful 14 and 15-year-olds. I'm talking about places where there is a complete lack of hope.

I know I am not alone in my concern about what the flipside of contemporary New Zealand looks like.

When I talk to New Zealanders they tell me they are worried: worried about the growing number of LA-style gangs; worried about teenagers tagging their neighbourhoods; and worried about bullies threatening the communities in which they used to feel safe.

Just look at how this year kicked off – with a spate of homicides and assaults typified by callousness and brutality. Like the vicious stabbing of Doreen Reed, a frail 77-year-old who lived by herself on the North Shore. Or the attack on Porirua dairy owner Lee Dao Hung, who was beaten unconscious by a thug who wanted cigarettes.

Last week, for the first time in its history, New Zealand Post stopped delivering mail to three streets in Hamilton. They stopped delivering to Tennyson Road, Emerson Place and Dryden Road because gang violence has made them too dangerous for posties to enter. If it's too dangerous for a postie to enter, what is it like to live there?

We are seeing a dangerous drift toward social and economic exclusion.

One possible future for New Zealand is plainly obvious in many other developed countries.

There, we see the growth of whole areas that have become so dysfunctional that only people who don't have the ability to go somewhere else will stay; where shopkeepers and other business people don't want to remain; and where there is lawlessness, disarray and deep despair.

That is not The Kiwi Way. It's not the kind of New Zealand I grew up in and it's not the kind of New Zealand I want my kids to grow up in. It's not the kind of New Zealand I want anyone's kids to grow up in.

We should not be afraid to drive down certain streets, send ambulance officers into certain houses, and take our kids to certain schools. We must not be afraid, because to give in to such behaviour is to accept it.

I know we can do better. We have to do better. Because, left unchecked, the problems of a growing underclass affect us all.

These are tough problems – very tough problems. But I have no intention of being a Prime Minister who tackles only the easy and convenient issues. I don't pretend I've got all the solutions. But I can tell you that dealing with the problems of our growing underclass is a priority for National, both in opposition and in government.

We need some new and imaginative thinking. We also need to remember the enduring principles on which the National Party is based – individual responsibility, support for families and communities, and a belief that the State can't and shouldn't do everything.

I want to make three overall points.

My first point is this: the solution doesn't lie in just throwing more money at the problem. If it did, this Labour Government would have solved it a long time ago. And yet family dysfunction has flourished under Labour.

Look at the Kahui family. The Government recognised they were a needy bunch. So what did it do? It doled out around $1,000 a week in benefits to the Kahuis and the Kings, and do any of us believe it helped them?

Families like these are trapped in a holding pen, fenced with state assistance. But we know that money couldn't protect little Chris and Cru Kahui.

Labour also funds lots of small programmes and sets up lots of committees. This is not about getting results. It's about ticking a whole lot of boxes to give the appearance of being up to the job.

You'll see this later today in Labour's response to this speech. A press release will come out listing a whole lot of programmes Labour has piloted and reviews it has introduced. It will tell you the cost of each of them.

Well, I'm not interested in spending money simply to allow me to ease my conscience, look busy, or fend off attacks from the opposition or the media. I'm interested in results. I'm interested in what works and what makes a difference. And it is clear to me that the Government's current mishmash of policies isn't working.

My second point is that we need to make changes to a whole range of government services.

Addressing the problems of the growing underclass involves tackling serious and interconnected issues of long-term welfare dependency, crime, illiteracy, poor parenting skills, social exclusion, malnutrition, drugs, and lost hope.

In all areas of social policy, I am tasking National's spokespeople to come up with policies to address the deep-seated problems in some of our families and communities.

In education, we need to ensure that all kids get an opportunity to learn from good teachers, no matter what decile school they go to. No child should be viewed as a write-off, or left behind by the school system.

Far too many kids leave after 10 or 11 years of schooling barely able to read and write, and not able to participate fully in our modern society. That is completely unacceptable.

We also need to ensure there is effective policing in all parts of our cities and in all areas of the country. We will not tolerate violence and antisocial behaviour. Under a National government, gangs will not be controlling neighbourhoods so posties can't even deliver the daily mail.

The tragic events surrounding the parole of Graeme Burton show that Labour's law and order policies seem to be based on the rights of criminals.

Let me say that under National, the parole system will be focused on protecting innocent Kiwis from hardened, unrepentant and dangerous criminals. Under any government I lead there will be no parole for repeat violent offenders.

We will do more than that to improve our criminal justice system, but for today let me send the clearest of messages. Those who break the laws of our society destroy the fabric of The Kiwi Way. No government I lead will put up with that.

We also have a serious and growing problem with long-term welfare dependency.

I have said before that I believe in the welfare state and that I will never turn my back on it.

We should be proud to be a country that looks after its most vulnerable citizens. We should be proud to be a country that supports people when they can't find work, are ill, or aren't able to work.

But we should be ashamed that others remain on a benefit for years even though work is available to them. That is no way forward for them and it is no way forward for New Zealand.

Long-term dependency robs people of confidence, motivation and aspiration. Ultimately, it robs people of a stake in their own society.

We have to ensure that Kiwis, even those with relatively low skills, are always better off working than being on a benefit. We have to insist that healthy people receiving assistance from the State have obligations, whether that be looking for work, acquiring new skills for work, or working in their community.

National will use the welfare system, on behalf of all New Zealanders, to motivate long-term beneficiaries to change their lives for the better.

Where we give opportunity we will expect responsibility. In giving a fair go we will expect a fair go in return. That's part of The Kiwi Way.

The third point I want to make this afternoon is that we are all in this together. We all stand to lose from the emergence of a growing underclass, and we all stand to gain by doing something about it.

Yes, the government has a hugely important role in creating opportunities. But no government sitting on high will ever come up with the grand solution to all New Zealand's problems. After all, even the most experienced and intelligent Cabinet will still be made up of politicians!

New Zealanders don't want us to go around putting our blue or red stamp on everything, claiming credit for all the successes in the country. They don't want us to have a finger in every pie and another finger pointing at someone else's mistakes.

Kiwis know, and I know, that creating a better New Zealand is going to require a combined effort by mums and dads, aunties and uncles, churches, charities, communities, iwi, and businesses, as well as the government.

So the mission of my leadership will be to invigorate and support us all to do our bit, and to work together to fix some of the problems in our society and to make our country great.

A National government will team up with business and community groups to deliver better services to those in need.

Here are a couple of examples I often think about.

Is it really beyond us as a country to ensure that every kid turns up to primary school with some food in their stomach? I don't think so.

Hunger and malnutrition are simply unacceptable in a developed country like New Zealand. And it's a fact that kids can't and don't learn if they are constantly hungry. Their brains don't develop properly and they can't stay focused in the classroom. An empty stomach and an empty lunchbox set kids up for an empty life.

Obviously it's a parent's responsibility to feed their children. What more fundamental parenting role could there be? But that is not what is happening in some parts of the country.

Unless we tackle this problem we are effectively punishing children for the sins of their parents.

Currently, some schools dip into their operational budgets to provide a few Vegemite sandwiches for those who miss out. That is not good enough.

I believe this is an area where government can work alongside the business community to find new and innovative solutions to a deepening social problem.

A National government will challenge the business community to work with us in backing a programme of providing food in low-decile schools for kids in need.

I also think that playing sport is an important part of growing up in New Zealand.

Kids who are out there playing rugby or netball or soccer or softball or any other sport are developing their bodies, getting fit, working in a team with others, and learning to play according to rules.

For kids with poor home lives, sport gives them something constructive to do, to fill the void they have in their spare time. Otherwise, the temptation is to fill this void by hanging round the streets, drifting into drugs and getting into trouble.

But sport can be expensive: football boots, netball uniforms and transport all cost money. It can be hard to find a coach to take the team. In my own electorate, and around the country, many people come up to me with the same observation.

Too many kids in our poorest communities are being excluded from sport because their parents can't afford it. These are the very kids who need it most.

A National government will work with schools, sports clubs, businesses and community groups to ensure that more kids from deprived backgrounds get to play sport.

We will invest in getting those kids playing sport because it reinforces The Kiwi Way.

You might ask "where will the money come from?"

The fact is we are already spending millions of dollars for Wellington bureaucrats to write strategies and to dream up and run their own schemes. I want more of those dollars spent on programmes that work, regardless of who thinks them up and who runs them.

National knows there are not-for-profit groups, businesses, and individuals who have good ideas and who are dedicated to making their communities better places. We know they can often do a better job than the government could ever do.

So I want to turbo-charge the efforts of private and community groups making a difference. I want to change the balance of spending between government and privately-run groups.

Labour often views non-government providers as its competitors, not its partners. It sees them as unprofessional. It tries to squeeze them into boxes that just don't fit. It smothers them with paperwork and makes them apply to multiple funding pools.

Well, I want to grow the competition. I want to get alongside the amazing groups that make a difference in our communities. I want to ask them what the government can do to support and extend their efforts.

I have recently visited many privately-run organisations that are helping to make New Zealand a better place to live. These organisations run innovative and effective programmes to tackle the complex problems which threaten The Kiwi Way.

Programmes like Project K, which gives 14 and 15-year-olds one-on-one mentoring to increase their confidence, and encourages them to fulfil their potential. Programmes like Big Buddy, which teams up fatherless boys to spend quality time with men from their community. Programmes run by the Family Help Trust here in Christchurch, providing child-abuse prevention services for ultra high-risk families.

I know there are many more organisations like these achieving great results. They are run by Kiwis who want to make a difference: the men and women who pour their efforts into City Missions, Citizen Advice Bureaux and the Salvation Army; the people who work at Barnardos, on their local marae, and with all the other organisations that exist to serve their communities.

A National government will get in behind these sorts of organisations. We know that with the right support they can turn deep-seated problems around.

In some cases, we will team up with private and community groups to deliver better services to those in need. In other cases these groups won't want or need our money but will benefit from our co-operation.

Because of our desire to do this, I am charging National's spokespeople to focus on listening to, and working with, the community groups behind these sorts of programmes.

They will be supported by my fellow Auckland MP Paula Bennett who, in a new position of responsibility, will act as a link person with community groups. Paula will be reporting to me personally, because I am determined that we do everything to ensure that opportunities are available to all kids in New Zealand.

When I look back on my own upbringing, I know I was fortunate. Not because of what, in a material sense, my mother was able to give my sisters and me, but because of the love, guidance and self-belief she gave to us.

I remember how it felt to be a little boy on his bike riding past this club on his way round the block.

I remember how it felt to peer in the windows of homes that were materially better than my own, looking at kids with toys better than mine, families with both a mum and a dad, and homes where the fridge was full and there was a car in the garage.

That experience didn't make me bitter or jealous. It made me determined – determined to create a better life for me and for my family. I have done that now, but I'm not stopping there.

I have not lost the ability that I had, even as a child, to work out which things were worth pursuing, to filter out the substance from the trivia, and then to figure out how to achieve my goals. It's just that once I wanted the improvements for myself and my family, and now I'm looking at the goals New Zealand should be striving for, and how best to achieve them.

My ideals have not changed; it's just that the canvas has got a whole lot larger.

Today, I say to all Kiwis that I want you to dare to think what New Zealand can be like and what all our lives can be like. Not to despair, or to feel helpless, but to form your own view of the Kiwi dream and seek to achieve it.

I know our future can be great.

But I also know that when we are frightened and sickened by acts of violence in our community, we don't have to accept it. I know that when we are appalled by how many of our young people are turning to drugs, we don't have to accept it. I know that when we are filled with despair by the problems of families and neighbourhoods, we don't have to accept it.

We can do better as a country; we can provide a future that is brighter.

In our hearts we all know that what makes us proud to be a Kiwi isn't written on a birth certificate or embodied in our passports. It's about a collective pride that ours is a great little country and we are lucky to call it home.

My time in politics will only ever be a success if I can look back knowing I played my part in building on that pride.

I believe the best years for New Zealand are ahead of us. As a nation, we have everything to look forward to. We can be a country that is coming together; not a country that is coming apart.

I am determined to lead a New Zealand that delivers on our promise. I invite you all to join me in that mission.

2008.md

This time a week ago we were saying goodbye to our country's favourite son.

Sir Edmund Hillary will be remembered through the ages as a rock-solid reminder of the heights to which we Kiwis can aspire and the feats we can accomplish.

When Sir Ed climbed Mt Everest back in 1953, he wasn't the only New Zealander on top of the world. We all were. We were among the five wealthiest countries on earth. Not any more.

Fifty-five years on, we are no longer an Everest nation. We are among the foothill nations at the base of the OECD wealth mountain. Number 22 for income per person, and falling.

But what does a wealth ranking matter, you might ask? Why does it matter if we're number 22 or number four?

It matters because at number 22 your income is lower, you have to work harder, and you can save less. You face more uncertainty when things go wrong, when you or your family get sick or lose a job. No New Zealand sports team would be happy to be number 22. Why is the Government?

This is a great country. But it could be so much greater. It has been so much greater.

So the question I'm asking Kiwi voters is this: Do you really believe this is as good as it gets for New Zealand? Or are you prepared to back yourselves and this country to be greater still? National certainly is.

Under Helen Clark and Labour, our country has become a story of lost opportunities.

Despite inheriting the tail wind of a strong global economy, Helen Clark has failed to use that momentum to make significant improvement in areas of real importance to New Zealanders. She has squandered your economic inheritance by failing to build stronger foundations for the future.

Tomorrow, Helen Clark will tell us what she thinks about the state of our nation. In all likelihood, she'll remind us how good she thinks we've got it, how grateful she thinks we should be to Labour, and why we need her for another three years.

Well, I've got a challenge for the Prime Minister. Before she asks for another three years, why doesn't she answer the questions Kiwis are really asking, like:

Why, after eight years of Labour, are we paying the second-highest interest rates in the developed world? Why, under Labour, is the gap between our wages, and wages in Australia and other parts of the world, getting bigger and bigger? Why, under Labour, do we only get a tax cut in election year, when we really needed it years ago? Why are grocery and petrol prices going through the roof? Why can't our hardworking kids afford to buy their own house? Why is one in five Kiwi kids leaving school with grossly inadequate literacy and numeracy skills? Why, when Labour claim they aspire to be carbon-neutral, do our greenhouse gas emissions continue to rise at an alarming rate? Why hasn't the health system improved when billions of extra dollars have been poured into it? Why is violent crime against innocent New Zealanders continuing to soar and why is Labour unable to do anything about it? Those are the questions on which this election will be fought.

Helen Clark thinks she can hoodwink Kiwi voters into giving her another three years to answer these questions. Well, I say she's had nine years, she's had her chance and she's wasted it. The truth is that as time has gone on, Labour has concentrated more and more on its own survival and less and less on the issues that matter to the people who put them there.

This year, signs are emerging that the winds of global growth have not only stopped but are turning into a head wind.

New Zealand cannot and will not be immune from the impacts of a slowing global economy. It's too early to say how severe the impact on our economy will be. However, we are already beginning to see the cracks appear in Labour's legacy.

Right now, we are sandwiched between low growth and high inflation. Finance companies are falling over and taking the savings of thousands with them. Mortgage rates are rocketing upwards. Retirement savings are being slashed by the falling value of shares. Inflation is eating away at spending power and living standards.

When the going gets this tough, is it any wonder that Kiwis look longingly at our Aussie cousins? Our Aussie cousins, who get paid a third more than us for doing the same job. Our Aussie cousins, who have been given a tax cut in every Budget for the past five years and who will continue to have their taxes cut for Budgets to come.

Too many Kiwis are looking at those stats and choosing to join their cousins across the ditch. We have to give them better reasons to stay.

So today, let me say this – unlike Labour, National is not in denial about the state that many New Zealand households find themselves in.

We know Kiwis are suffocating under the burden of rising mortgage payments and interest rates. We know you cringe at the thought of filling up the car, paying for the groceries, or trying to pay off your credit card.

We know you think wistfully about how it would feel to be Michael Cullen, smugly sitting on a wad of your cash and thinking about how he can buy some more votes with it. Not all Kiwis have a surplus to fall back on Dr Cullen. They paid their surplus in tax.

My message to Kiwis is that under National you will come first – not the fanciful whims of big-spending Ministers who have long since stopped worrying about how to make ends meet.

The National Party has an economic plan that will build the foundations for a better future.

We will focus on lifting medium-term economic performance and managing taxpayers' money effectively. We will be unrelenting in our quest to lift our economic growth rate and raise wage rates. We will cut taxes, not just in election year, but in a regular programme of ongoing tax cuts. We will invest in the infrastructure this country needs for productivity growth. We will be more careful with how we spend the cash in the public purse, monitoring not just the quantity but also the quality of government spending. We will concentrate on equipping young New Zealanders with the education they need for a 21st century global economy. We will reduce the burden of compliance and bureaucracy, and we will say goodbye to the blind ideology that locks the private sector out of too many parts of our economy. And we will do all of this while improving the public services that Kiwis have a right to expect.
Because the hard truth is that Labour's economic underperformance hasn't delivered the social dividend they promised us.

So, make no mistake: this election won't be fought only on Labour's economic legacy. National will be asking Labour to front up on their social legacy, too. Many of the social problems the Government said it would solve have only got worse.

This time a year ago, I talked about the underclass that has been allowed to develop in New Zealand. Labour said the problem didn't exist. They said there was no underclass in New Zealand.

But who now could deny it? 2007 showed us its bitter fruits. The dramatic drive-by shooting of two-year-old Jhia Te Tua, caught in a battle between two gangs in Wanganui. The incidence of typhoid, a Third World disease, reaching a 20-year high. The horrific torture and eventual death of three-year-old Nia Glassie. The staggering discovery of a lost tribe of 6,000 children who are not enrolled at any school.

The list goes on and on. The fact is, that under Labour, there has been no let-up in the drift to social and economic separatism.

We don't need more of their hand-wringing, their strategies, and their interdepartmental working groups. What's needed is the courage to make the tough calls to fix these problems.

Today, I'm going to announce a new set of policies which will leave you in no doubt that National has that courage.

Youth Plan

These policies are about delivering for our young people.

Young people are a group I'm passionate about. For they, more than anyone, will determine the future shape and prosperity of New Zealand. The energy and enthusiasm of the vast majority of our young people make me hugely optimistic for our country.

But the sad fact is that a growing number are failing to deliver on their potential.

This wasted potential is there for us all to see: teenage parents with no plans for their or their children's future; illiterate and innumerate school leavers; youth gangs prowling our neighbourhoods and sporadically dishing out beatings.

More than 25,000 Kiwis aged 15-19 are not in any form of education, training or work – that's despite Labour's promise to get that number down to zero. Those young people are disengaged from education and are at a loose end.

More than one in five kids leave school with no qualifications. Almost half of all kids – four out of every ten – leave school without a qualification that provides them with the foundation skills needed for work or further study. More than 13,000 teenagers are collecting a welfare cheque and many others are filling their days with nothing but Playstation and TV soaps.

Violent youth crime is at an all-time high. Robbery is up. Grievous assaults are up. Aggravated robbery is up. Young criminals are graduating from petty crime to more serious crime; unexploded time-bombs on a fast-track to Paremoremo.

The victims are people like you and me. Innocent Kiwis randomly beaten by teens on the North Shore. A Wellington Uni student beaten to a pulp on his walk home. A dairy worker stabbed to death in South Auckland last week. A 14-year-old arrested at the weekend for a fatal stabbing in Tokoroa. The list goes on and on.

Rather than being the hope for our future, these young people represent our future fears.

The habit of the Clark Government is always to shy away from these problems. They prefer to poke their noses into the lives of good parents while ignoring the ticking time bombs right in front of them. That's not my approach.

Today, I'm going to outline some new policy that forms part of National's plan for giving young people the future they deserve. This Youth Plan will have two major aspects to it.

One part is about education. The other part is about rolling up our sleeves to prevent New Zealand's youth crime problem from becoming tomorrow's crisis.

This plan is about giving all young people the opportunity and responsibility to better themselves, no matter what their circumstances, abilities, or track record. That's the Kiwi Way.

Youth Guarantee

Firstly, let me turn to education.

In an ever more competitive and highly-educated world, we must do better at engaging our young people in education. Far too many teenagers leave school at 16 without even a basic qualification. That might have worked 30 years ago, but it won't cut it in the future I'm aiming for.

Today, I'm going to announce a new education entitlement – National's Youth Guarantee. It's based on National's expectation that all young people under the age of 18 should be in work, education, or training.

To make this possible, a National-led Government will provide a universal educational entitlement for all 16- and 17-year-olds. The Youth Guarantee will allow them to access, free of charge, a programme of educational study towards school-level qualifications. This new entitlement will be on top of, not instead of, the education entitlements they have now.

The Youth Guarantee will be wholly different from the education entitlements of the past – because a National Government won't presume that in the 21st century, school will always be the best place for every young adult to be educated.

We don't think that simply raising the school leaving age is good enough. We know there are plenty of 16- and 17-year-olds who have jobs and are learning from them. We also think there are some kids who might be more motivated and who might achieve more if they could learn in a non-school setting.

They might get more out of their education at, for example, a polytechnic, a wananga, a private training establishment, or a combination of these options. Many will still do better at school. That's fine. But it's time we provided for the minority who don't.

There are many reasons why an alternative provider might suit a young person better than their local high school.

A disengaged teenager might need more intensive reading and writing help than a typical Year 12 class is geared up to give. A young person might not be interested in the conventional subjects offered at their local high school, but could be interested in doing a basic skills course to prepare them for trade training. A pregnant teen or teen parent might not be able to access a place in a teen parent unit, but could stand to gain a lot from a specialised parenting course.

Under National's future-looking scheme, those choices won't come with a cost penalty.

Because we don't think it's fair that a 16- or 17-year-old can get a free education at their local high school, but is asked to front up with as much as $4,000 in fees for a work-skills course at their local polytechnic.

We also think this new approach will encourage tertiary education providers to develop new courses that cater to the specific needs of unqualified and lowly qualified school leavers. It will help this large and potentially productive group of people make a smoother transition from school into further education.

Rest assured, no one will be playing twilight golf or doing sing-along classes. Providers offering courses under the Youth Guarantee will have to meet quality criteria to ensure they are effectively engaging their students.

What is more, the Youth Guarantee comes with obligations. As a society, it's time to stand up and say to our young people that we will support them, but only if they are supporting themselves by developing the skills and knowledge they need to succeed.

Under National, young people who aren't working and who fail to take up their educational entitlement will not be eligible to receive a benefit.

In saying that, the policy will take account of the special circumstances that young people and their families may face. For example, some 16- or 17-year-olds may genuinely be too sick to work or participate in education. And a short stand-down period will be necessary so those who are genuinely looking for work have a reasonable window of time in which to do so.

Teenage parents will be specifically catered for. Programmes incorporating childcare, parenting advice, and tailored education will be developed to meet their particular needs.

National will be conscious that people's circumstances are many and varied. But the bottom line is this – the days of 16- and 17-year-olds being able to leave school and drift along aimlessly while being financially supported by the Government are at an end.

Youth Justice

The second part of National's Youth Plan is for dealing with the kids who already pose a serious threat to the security of our communities.

We think it's time to provide the youth justice system with a modern set of tools for getting young people out of the crime cycle.

First, we are going to extend the jurisdiction of the Youth Court so it has the power to deal with 12- and 13-year-olds accused of serious offences.

At the moment, 12- and 13-year-olds accused of high-order crimes, such as aggravated robbery and home invasion, can only be dealt with by the Family Court. National thinks the Youth Court, with its wider range of powers, could play a much stronger role in getting these young offenders back on track.

Secondly, we're going to give the Youth Court new powers for following up on proven young offenders once they walk out the courtroom doors. This will involve a new range of Youth Court orders.

Thirdly, we're going to create a tough new range of sentencing options for dealing with the hardcore group of young criminals.

Before I say anything more about these new initiatives, let me state for the record that our youth justice system does an excellent job of dealing with most young people who get into trouble.

The vast majority of youth offenders are dealt with by the Police and don't end up in court. There are lots of teenagers who make mistakes and do dumb things, but who learn their lessons and become law-abiding adults.

The problem I am talking about today is the group of serious persistent offenders. In the view of Principal Youth Court Judge Andrew Becroft, this is a group of about 1,000 young people. We don't need a pre-school check to work out who they are. We already know their names. Too often, these kids are simply sifted through the youth justice system and into adult courts in what can become a shoddy game of pass-the-parcel.

I don't think it's good enough to simply throw up our hands and allow these troublesome teens to become life-long criminals. Good, law-abiding Kiwis end up paying the price. We must act now to defuse these unexploded human time-bombs.

New powers for the Youth Court

The first set of powers I'm proposing today are aimed at the young offenders who the Youth Court thinks are at risk of becoming part of the hardcore offending group. They are not the worst kids, but they are in danger of heading down that track.

The Youth Court currently has limited tools for properly dealing with these known offenders. National will give the Youth Court three new powers for pushing them back onto the right track. We will back those powers up with increased funding to the services involved.

First, the power to issue parenting orders.

These orders will require parents of youth offenders to attend parenting courses that address problems at home that may be contributing to their child's offending. The young person will also be required to co-operate with the requirements of these programmes. Non-compliance will result in community work or fines for parents and child.

Secondly, the power to refer young offenders to mentoring programmes.

Programmes like Project K and Big Brother have been highly successful at turning around the lives of hundreds of struggling teenagers.

A mentor may, for example, give the extra push that encourages a young person to join their local rugby team and start turning up for practice. They may help a young person recognise the value of school or get them to honestly examine some of the negative things they're doing in their life.

At the moment, access to effective mentoring programmes is limited by funding shortfalls and uncertainty. National will fund these programmes properly to ensure the Youth Court can refer young offenders to them, regardless of where they live, for a period of up to 12 months.

Thirdly, the power to refer young offenders to compulsory drug or alcohol rehabilitation programmes.

As many as four out of five young offenders before the Youth Court have a drug or alcohol problem. Despite this it can be difficult for the Youth Court to ensure young offenders get the treatment they need.

A kid with a P addiction will reoffend; it's that simple. So we have to do something about getting them off the drug. National will ensure that proven drug and alcohol rehabilitation providers are funded to get these kids sober.

I'm confident these three new tools – parenting orders, mentoring programmes and targeted drug and alcohol rehabilitation – will go a long way to flushing more young people out of the crime cycle.

In all these areas, National will fund providers with proven results. We'll ensure there's a range of programmes available that cater to the individual needs of the offenders and their whanau. This would include iwi-based services and other services aimed specifically at Maori or other cultural groups.

Tougher sentences

But the fact is, those new tools by themselves won't be enough – because some young people have committed crimes so serious and so chilling that we must take far more drastic action.

Currently, the Youth Court has the power to refer the worst of these offenders – the Bailey Junior Kurarikis of this world, the rapists, the murderers, the aggravated robbers – to the adult courts. That should continue to be the case.

All offenders over the age of 16 are also referred to the adult courts. This, too, should continue to be the case. Labour thinks 17-year-olds who commit adult crimes should get youth sentences. National thinks they should pay with adult sentences. For the next group down – those who are currently sentenced by the Youth Court – there needs to be a range of tougher sentencing options. I propose three new measures:

The first is longer residential sentences.

The Youth Court currently has the power to place young offenders in youth justice residential facilities for a period of up to three months. Many are released after just two.

Last year, long-overdue legislation was tabled to allow these sentences to extend to six months. National supports this extension and in Government we will, as a matter of priority, pass the legislation to make it happen.

In addition, National will fund a new type of programme for teenagers who aren't bad enough to be put in a youth justice facility but who need a serious dose of intervention.

The 'supervision with activity' sentence is already available for these kids. It's hardly ever used, however, because though there are some very good programmes that work, there are far too few of them. Youth justice experts have been making this point for years. National has been listening, and we will act.

National will fund a new range of revolutionary 'Fresh Start Programmes'.

They will be designed to give young offenders what they need to make a fresh start – structure, routine, clear boundaries, intensive support and a sense of self-discipline and personal responsibility.

The programmes will last up to one year and will include up to three months of residential training at, for example, army facilities. Young people sentenced to Fresh Start Programmes will be intensively supervised by high-quality staff dedicated to getting them back on track.

Fresh Start Programmes will be designed to address the problems underlying a young person's offending and may include, for example, drug and alcohol rehab, outdoor and physical fitness training, literacy and numeracy teaching and work towards NCEA credits, teamwork exercises, and reinforcement of community values.

In all cases where a Fresh Start sentence is imposed, participation will be compulsory.

Graduates from Fresh Start Programmes will be expected to comply with Fresh Start contracts outlining the changes they have pledged to make in their lives. They will work with mentors and social workers to ensure the changes are permanent.

These programmes will be run by specialist providers with a proven track record of getting troubled young people back on the straight and narrow. The Army may work with others to provide these programmes. After all, they have a long and successful history of instilling values and discipline into young men and women.

Take, for example, the Limited Service Volunteers scheme (LSV) run at Burnham Army Base and aimed at long-term unemployed young people aged 17-25. It works. Seventy per cent of participants go on to full-time employment and demonstrate an improved respect for the laws and norms of society. Despite this, Labour has hacked away at LSV, ideologically reducing the number of participants year after year.

In 2002, a Ministerial Taskforce on Youth Offending recommended that the Army could run programmes for young offenders at army bases. That recommendation was ignored by Labour. National won't be so blind.

I want to make one thing clear, however. Fresh Start Programmes are not going to be some sort of short-term camp run by a tyrannical sergeant-major, which attempts to scare kids straight. What I'm talking about is a much more modern approach that tackles the underlying causes of criminal offending. I want to take the effective elements of army-type training and combine them with the most advanced expertise in youth offending and rehabilitation that New Zealand has to offer.

Providers like Graeme Dingle's Foundation for Youth Development have the expertise to develop these programmes. National will back them and others like them to get to work on dismantling some of New Zealand's ticking time-bombs.

Finally, we think the Youth Court needs better teeth for following up serious youth offenders when they are released back into the community.

I'm sick of hearing about serious young offenders who receive community-based sentences but who fail to comply with the requirements of those sentences.

I'm thinking, for example, of the case last year of a 16-year-old member of an Auckland youth gang who was sentenced to supervision and community work on nine charges, including burglary and wilful damage. While supposedly being 'supervised' in the community, he carried out seven more crimes, including assault with a weapon and threatening to kill.

That's unacceptable. Teens who don't comply with supervisory sentences should face serious consequences.

National will introduce a new "Spotlight Sentence" that can be issued by the Youth Court.

Young people sentenced to a Spotlight Sentence will be ordered to comply with a court-ordered contract. The contract will set out the court's expectations of the offender including, for example, curfews, an end to gang involvement, compliance with drug treatment programmes, or regular school attendance.

To ensure compliance, the court will wield a big stick to be used in the event of a contract breach. That stick will be intensive supervision and surveillance, including electronic monitoring of the young person using an ankle bracelet.

All these tough new youth justice measures will carry a considerable financial cost. It will be money well spent. It will save lives. It will save young people from a life of crime.

Without doubt, the financial cost of getting serious about youth justice is far less than the social and economic cost borne by the community when young offenders are allowed to go on offending without sanction.

Under my leadership, a tough approach will always be accompanied by the provision of opportunity and a second chance.

I believe in the ability of every individual to take their life in their own hands and change it for the better. That's why I want to see a new Youth Guarantee to provide under-18-year-olds with a universal educational entitlement. That's why I want to see better and more extensive provision of parenting courses, mentoring programmes, and drug and alcohol treatment programmes.

I want every young Kiwi to be able to find a way onto the path to success. I believe the only limit on our nation's ambition is the limit which our young put on their individual ambition.

We owe it to our children and to our country to have great expectations for what they can achieve. Their prospects are New Zealand's prospects. We must raise their sights.

Conclusion

The approaches to education and youth justice I've outlined today demonstrate the positive and pragmatic approach National will take in all our policies.

We will not sweep problems under the carpet. We will not meet the country's challenges by quietly lowering our expectations.

We will focus on the real issues facing New Zealand. We won't fixate on the tired old political debates from 20 or 30 years ago.

National knows New Zealand has a great future if we embrace good ideas and put them into action. And my sense is that in 2008, New Zealand is ready for those new ideas – ready for a fresh start.

At this election, the National Party has the chance to harness the growing mood for change and march New Zealand towards a better tomorrow.

We know this isn't as good as it gets. We know Kiwis deserve better than they are getting. We are focused on the issues that matter and we have the ideas and the ability to bring this country forward.

National is ambitious for New Zealand and we want New Zealanders to be ambitious for themselves.

Election 2008 is your chance to act on that ambition. Let's make it count.

2009.md

We live in challenging times.

It's been more than a year since the first tales of financial ruin started to trickle out of Wall Street.

What started as a trickle has gathered momentum. Each week we are being met with more bad news about the state of the global financial and economic system.

There can be no doubt that these waves of bad news have darkened New Zealand's economic outlook.

We are a small open economy and our fortunes rise and fall with those of the wider global economy.

The IMF predicts that global growth this year could be the weakest we have seen since World War 2. And, even worse from New Zealand's perspective, it predicts that the advanced economies, which make up most of our trading partners, will shrink by 2 percent.

The resulting forecasts for our economy are sobering. Falling growth rates. Lower commodity prices. Falling demand for our exports. Rising unemployment.

I know that some in this room are already feeling the effects of these global events, while others will be worried for their prospects in the months ahead.

I share your concerns. We are certainly facing a tough couple of years ahead.

But let me be clear from the outset. I am confident that we will get through these tough times together. The New Zealand economy will recover strongly.

As Prime Minister, I have made that recovery the No 1 priority of my Government, and all my Ministers are working towards that goal.

Later on in this speech I will announce a series of initiatives designed to provide some relief to the small and medium-sized Kiwi businesses that will play such an important role in that recovery.

Before I do so, let me outline how this package fits in with our wider Jobs and Growth Plan for the economy.

JOBS AND GROWTH PLAN

The Government's Jobs and Growth Plan is about keeping the economy running as strongly as possible, easing the sharpest impacts of the recession and preparing our economy for future growth.

In support of this plan, and in light of the deteriorating global economic situation, we have already taken several steps aimed at protecting Kiwis' jobs and financial security.

To recap.

We have overseen the introduction of retail deposit and wholesale funding guarantees.

These are designed to maintain the liquidity of the financial system, and to ensure our economy can continue to function.

We are carefully watching the operation of these schemes to ensure they are working. We are also keeping a close eye on the banks to ensure that large cuts in official interest rates are passed on to everyday Kiwis.

Secondly, we have moved to lessen the impact of unexpected job losses through the introduction of our ReStart package.

This package, introduced before Christmas, will provide extra support to those hit hard by redundancy, and it will lessen the shock of sudden job losses.

Thirdly, we have passed legislation to introduce extensive personal tax reductions on 1 April this year.

These tax reductions will help New Zealanders make ends meet and reward their hard work even as international conditions worsen. They will inject considerable stimulus into the economy.

Fourthly, we will add to that stimulus with a series of fast-tracked Government building projects. These will keep more New Zealanders working as the international crisis hits home.

I will announce details of these projects next week. They are specific projects that were chosen because they are worthwhile and can be geared-up quickly.

They will employ Kiwis with diggers, hammers and spades in regions throughout New Zealand. And in turn they will help keep suppliers and sub-contractors, shopkeepers and sales staff in business.

Larger, longer-term infrastructure projects will also be announced in the coming months.

The combined effect of this infrastructure spending, together with tax reductions, will mean that New Zealand will experience a fiscal stimulus amongst the top five in the developed world, when compared on a relative basis.

That stimulus package will help keep our economy ticking over even as global demand falls, and it will help many businesses and families keep their heads above water.

In addition to these measures, three weeks from now I will be hosting a Jobs Summit.

This will bring together industry, business and other employment experts, including training providers, iwi and unions, and will be designed to harvest practical ideas for keeping people in jobs and helping them to find new jobs.

I will ask the participants at the summit to leave their ideology at the door, and to instead focus on what will work for everyday Kiwis.

I will ask them to think about what actions they can take to keep their fellow New Zealanders employed.

And I will ask them to come to the table in a positive and collaborative spirit with the intent of agreeing on concrete, achievable measures.

The resulting ideas will feed into the Government's next steps in what I like to call our rolling maul of Jobs and Growth initiatives.

A BALANCED APPROACH

The Government will remain open-minded on future steps that may be required as economic conditions worsen over the next few months.

I am very conscious however that steps taken today to stave off the international crisis should not be devised in such a way as to undermine the economy in the years ahead.

There is a balance to be struck.

We simply must ensure that decisions taken now neither undermine the future prosperity of our country nor diminish the opportunities available to this and future generations of New Zealanders.

Because despite the wishes of some commentators and despite the gloom on the horizon, my Government won't lose sight of our determination to make a lasting difference to the lives of New Zealanders, now and in years to come.

That means rejecting some of the alarmist suggestions that will be made to us.

It means being careful, and making decisions in a disciplined way.

And it means avoiding the temptation to spend any amount whatsoever, without regard to the trade-offs that expenditure may have for the future of New Zealand.

We simply must weigh up the fiscal costs of initiatives we take now against what those costs will mean for the Government books in the longer-term.

Because I know, and you know, that if we borrow excessively to look after the taxpayers of today, we will end up saddling our children with a mountain of government debt.

In the more immediate future the prospect of an excessive level of debt would swiftly bring a downgrade from credit agencies, leading to higher interest rates and lower growth rates into the future.

So we need to be sure that the decisions we make now really hit the mark.

You can be confident then that over the next two years, as times get tougher, my Government will continue to act responsibly, because we know that a short-term sugar- fix today could lead to a diet of debt later.

FUTURE GROWTH OPPORTUNITIES

While we must be careful we can also take heart that the economic situation presents some real opportunities.

When it comes to the recession we need a dose of reality but we also need a dollop of confidence.

During this global downturn, we can work to improve the performance of our economy relative to other countries, and we can emerge better off.

That's the second, longer-term goal of the Government's Jobs and Growth Plan.

It's about improving the fundamentals of our economy. A tax structure that rewards hard work. Reform of the Resource Management Act to allow people to do more things. Reducing the red-tape that saps initiative and good ideas.

It's about policies that will future-proof our economy and set us up for a strong recovery.

These include our "Build New Zealand" proposals to future-proof our country with investments in roads, public transport, schools, housing and broadband.

When our economy starts to recover we don't want New Zealand to be constrained by inadequate transport networks and essential facilities. We want to be ready to grab opportunities for growth.

It also includes our "Frontline Services" policies to improve public services by getting more out of existing resources.

Because just as the days of cheap and easy credit are gone, so too are the days of Governments being able to spend ever more without being accountable for results.

Getting better value for taxpayer dollars is part of the day-to-day business of my Government. We will run a value-for-money ruler over everything we do.

We will also pursue "Education for Success" policies to tackle the long tail of underachievement in our schools. Because the future prospects of our economy depend on each and every Kiwi being able to make a skilled contribution.

These are the policies I campaigned on and they are policies I am committed to implementing.

Furthermore, they are policies that will play a critical role in supporting jobs and growth in the long-term. They are about ensuring that steps taken to improve our economy today can endure in the decades ahead.

SMALL-BUSINESS RELIEF PACKAGE

Let me turn now to the Government's small-business relief package.

This is a package of measures designed to lighten the load on small and medium-sized businesses in New Zealand.

Improving the environment for business, and therefore jobs and growth, is a long-term undertaking for this Government.

This task has become even more pressing in light of New Zealand's current economic predicament.

Many of our firms, some of whom may be represented in this room today, are finding their cash-flows shrinking as demand for their products and services erodes.

Some exporting firms are finding it harder to get short-term trade credit insurance.

And, even more than in the past, all firms are finding they need to focus their resources where they can most help the bottom line. As such, they are becoming increasingly intolerant of form-filling and time-wasting compliance.

The package I am announcing today is aimed at urgently improving the business environment by reducing the impact of taxes on firms' cash flows, by improving firms' access to credit, and by reducing business compliance costs.

It has five parts:

• A suite of tax changes,
• An expansion to the Export Credit Scheme,
• An extended jurisdiction for the Disputes Tribunal,
• The expansion of business advice services, and
• A prompt-payment requirement for Government agencies.

Let me deal with each of these in turn.

1. TAX INITIATIVES

A major part of today's package is a suite of 11 new tax initiatives, designed to help businesses, particularly smaller businesses, with their cash flow and to reduce the compliance costs they face.

The Government is also going to fast-track five initiatives which are in an existing tax bill, to ensure that they apply from 1 April 2009.

In total these initiatives will cost the government almost half a billion dollars over the next four-and-a-quarter-years.

That means half a billion dollars of benefit to New Zealand businesses.

In addition, and equally as important, these tax measures will reduce the compliance and form-filling that smaller business owners have to do themselves, or pay an accountant to do for them.

These changes are good news for small businesses, but I'm afraid they're bad news for tax accountants.

That's as it should be.

In these tough times, I want small businesses to be focusing on the road to jobs and growth, not on the taxman's forms.

The details of these tax changes are contained in the background material accompanying this speech, and can be found on the Beehive website.

Let me touch on some of the highlights.

First, the Government is going to help businesses with their cash flow during this recession by temporarily reducing the amount of provisional tax they are required to pay.

As you are no doubt aware, the standard method of calculating provisional tax payments is to assume that they will total 105 percent of last year's income tax, or 110 percent of the year before that.

The Government is going to lower that formula to 100 percent of last year's income tax, or 105 percent the year before that, for provisional tax payments relating to the 2008 and 2009 tax years.

This will give all firms a positive cash flow boost in the short term, allowing them to delay some of their tax payments into future years.

And for those firms who are struggling through this recession, and making reduced profits, it will reduce the chance that they overpay provisional tax.

Ultimately, firms will still have to pay the correct amount of income tax, but this initiative will allow them to manage the timing of their payments better. It will give them a bit of breathing space in what will be a challenging couple of years.

This initiative will come into effect on 1 April this year. The immediate impact for firms will be an estimated cash flow boost of $245 million between 1 April and 30 June.

The second major tax change the Government is making is a reduction in ‘Use of Money Interest Rates'.

This will ease the penalty on small businesses that, for whatever reason don't get their tax payments quite right.

We've listened to businesses who've pointed out that the taxman's interest rate is out of whack with market interest rates.

We agree that these rates must come down. This is not a time for excessive penalties from the taxman.

We will drop the underpayment penalty rate from 14.24 percent, to 9.73 percent.

This change will be effective from the end of this month.

Bringing down this rate will significantly reduce the interest cost to taxpayers for underpaid or late tax, freeing up more funds for productive uses.

It will be of particular benefit to provisional taxpayers in industries like farming that can experience significant fluctuations in their earnings.

It will also reduce the tax burden on those who cannot meet their tax obligations for a short period because of cash flow problems.

The third change is that the Government is going to cut back on the number of times many businesses have to file PAYE and Fringe Benefit Tax (FBT) returns.

We are going to set a new threshold in legislation which means that around 15,000 businesses will be able to move from paying PAYE twice a month to paying it only once a month.

Those 15,000 businesses will also be able to move from paying FBT four times a year to paying it only once a year.

As a result, those firms will benefit from increased cash flows and significantly reduced compliance costs.

These changes will apply from 1 April this year.

From that date onwards, around 98 percent of businesses will only have to file PAYE returns once a month, and will only have to file FBT returns once a year.

We'll also ease up the rules so that employers can provide employees with a greater range of smaller benefits before FBT kicks in. And we'll lower the FBT interest rate that applies to businesses providing low-interest loans to their employees.

The fourth set of changes is around GST.

We will free up to 47,000 Kiwi businesses from the cost and burden of GST compliance by changing the rules around GST registration.

We will do this by increasing the amount that a small business can turnover before it has to GST register, up from $40,000 to $60,000.

We will also allow more firms to account for GST when they actually get paid, rather than when they issue an invoice. We will do this by increasing the GST payments basis threshold from $1.3 million to $2 million, which will affect up to 14,000 firms.

Finally, we'll simplify the rules around two tax-deductibility bug-bears.

The rules around tax deductibility for legal expenditure are confusing to even very experienced business people, leading to high compliance costs.

We'll cut out the confusion by allowing all types of business-related legal expenses, up to $10,000 a year, to be deducted.

In addition, the thresholds under which businesses can deduct expenditure in the course of one tax year, instead of having to spread that deduction over several years, are being lifted. This will be for common items of expenditure such as building leases and advertising.

Those are some of the key tax changes in this package.

I now want to talk about the other measures in our small business relief package.

2. EXPANSION OF THE EXPORT CREDIT SCHEME

We have become aware in recent weeks that some good exporting businesses are finding it particularly difficult to get short-term trade credit.

This has made it very difficult for them to continue trading in some countries.

The result is that some Kiwi exporters, particularly small-to-medium exporters, have had to turn down export orders.

That is unacceptable.

We will plug the gap by expanding the powers of the Export Credit Office so it can provide short-term trade credit insurance on export contracts with payment terms of less than 360 days.

This guarantee will be provided on a temporary basis, for a period of up to two-and-a-half years.

This step will expand the lines of credit available to exporters and will help ensure trade opportunities won't be missed.

3. EXPANDING USE OF DISPUTES TRIBUNAL

We will also take action on another trouble-spot for smaller firms, by reducing the number of small claims that result in District Court battles.

We will encourage use of the lower-cost Disputes Tribunal by raising the financial threshold at which cases can be heard there.

Currently the maximum claim level of the Disputes Tribunal is $7,500 or $12,000 with the consent of both parties. We will lift those levels to $15,000 and $20,000 respectively.

This change will reduce costs in up to 3600 cases a year which will now be able to be held in the Disputes Tribunal.

4. BUSINESS ADVICE

I am conscious that in spite of the measures I have just outlined, these will continue to be uncertain and troubling times for many small and medium-sized businesses.

Many small businesses don't have the resources to call in expensive financial management advice when things get hard.

I want to ensure that when firms want help they can get it.

So from today the Government will expand an 0800 helpline to assist businesses who may want help.

As part of this service, businesses will be able to ask for a standard ‘health check' to identify any major problems and to solicit solutions to them. Businesses will also have the option of being put in touch with a suitable mentor at no cost.

In addition to these expanded 0800 line services, from today the nationwide network of Biz Centres will begin promoting seminars offering tips on how to manage businesses through an economic downturn.

5. PROMPT PAYMENT REQUIREMENT

Finally, the Government intends to show leadership by ensuring we are good payers to firms which supply us with goods and services.

All businesses who supply goods and services to government agencies should receive payments promptly. At the moment that does not always happen.

That needs to change.

At a time when the Government is doing all it can to get Kiwis through this downturn, it is not acceptable that some government agencies could undermine that effort by being tardy in paying their bills.

Therefore I have asked the State Services Commissioner to write today to the chief executive of each government department, directing them to urgently review their processes for approving and paying invoices to their suppliers and to bring forward payment dates where possible.

At the very minimum, I expect departments to pay their invoices in accordance with their posted terms and conditions and in any event no later than the 20th of the month following the receipt of the invoice.

Departments will also convey to the Crown agencies they monitor, these expectations for prompt processing and payment of invoices to suppliers.

In short, that means paying Kiwi firms without unnecessary delay.

FUTURE INITIATIVES

I want to stress that the package I have announced today is just one aspect of the Government's long-term programme for improving the business environment in New Zealand.

You will remember that before Christmas we moved swiftly to introduce our 90 days probationary employment law for small businesses.

That policy is an important tool for improving the job prospects of many New Zealanders who small firms may have otherwise been reluctant to take on.

Yesterday we announced our package of reforms to simplify and streamline the Resource Management Act.

These reforms will significantly reduce the compliance burden created for small and medium-sized businesses wanting to expand, develop and innovate.

There is more to come.

In particular I have given Rodney Hide, as the Minister for Regulatory Reform, the mission of finding and cutting additional red tape that is holding back business development, reducing investment and depriving New Zealanders of jobs.

He is hard at work on that mission and will have announcements to make in the coming weeks.

I have also asked that my Minister of Finance, Bill English, continues to monitor the economic situation facing all firms, particularly small and medium businesses.

He will report back to Cabinet at the end of March.

CONCLUSION

Some of the changes I have announced today are small, others are large.

Taken together they demonstrate the kind of practical, results-focused approach my Government will take to leading New Zealand through these tough times.

I don't pretend to have laid out all the answers today or allayed all your fears.

After all, the fortunes of the New Zealand economy are not just controlled by the good judgment of the Ministers sitting around the Cabinet table.

Nor is the New Zealand economy able to be completely immunised from the impact of world events.

Rather, the New Zealand economy is the sum of the work of many.

It is the result of the hard-work of Kiwi Mums and Dads, the smart ideas of small businesses, the output of our farmers, global demand for our products, the foresight and competitiveness of our industry and the individual leadership of business people and employers like those in this room today.

Together all of these factors play a role in the performance of our country's economic engine.

The task of Government then is not to claim to be that engine, but instead to do all that we sensibly can to keep that engine humming, tuned and free to go up a gear.

My Government is resolutely focused on this task.

That is why in the years ahead you can expect us to implement policies that aim to encourage the resilient Kiwis whose hard work, tenacity and initiative will get New Zealand through this downturn.

Because, in the end, it is the extra efforts, the good ideas and the good will of all of us that will get our country back on to a strong growth path.

And my sense is that overwhelmingly New Zealanders have confidence that through their own efforts, and with the support of their community and country, they will get through the challenges ahead.

My Government intends to back those Kiwis, and place our confidence in them and their future prospects. I urge you to do the same.

2010.md

Rau rangatira ma

Tenei te mihi atu ki a koutou

Tena koutou, tena koutou, tena koutou

E nga mate, haere, haere, haere

Today we come together to mark a very important day in New Zealand's history.

On this day one hundred and seventy years ago, just kilometres from this room, our forebears came together to sign a unique and ambitious document: The Treaty of Waitangi.

Today we remember that momentous occasion as the formal coming together of two pioneering peoples, of the Maori people who first settled this land, and of the British people who sought to share it.

The document that was signed that day, its meaning and significance, have since been the subject of much debate.

Too often that debate has been characterised by extremism and by people who have sought to weaken the strong ties that unite Maori and other New Zealanders.

As we stand here in 2010 however, the genuine and mutual respect that New Zealanders have for each other has prevailed.

In our homes and communities New Zealanders of all ethnicities live and work side-by-side in pursuit of a shared set of aspirations. No matter our cultural heritage, by and large New Zealanders value hard work and education, we seek better living standards and increased opportunities for our children, and we want this to be an inclusive nation where we respect each other and where each of us has the opportunity to get ahead.

Implicit in that set of values is an acknowledgment of the legal and cultural traditions we have in common. We share a respect for the rule of law, for property rights and for a basic sense of fairness in which Jack is as good as his neighbour.

In my view, that shared sense of justice is more powerful than anything that could ever be summarised in any one document.

This Waitangi Day, as we reflect on our history as a nation, I could take the opportunity to outline the many times in New Zealand where we have strayed from the path of justice, or acted in ways which call our basic sense of fairness into question.

No one in this room would deny the existence of such dark moments in our history. Indeed, we share this history with many other countries in the world where first peoples have been treated unfairly by those who have sought to share their lands.

But today is not the day to dwell on our failures. Let today be a day when we reflect on the prouder moments of our history, and on the growing unity that, for many decades, has underpinned the relationship between Maori and other New Zealanders.

This Waitangi Day I want to talk with you about the positive steps New Zealand has taken to address the injustices of our past. Specifically, I want to outline for you what this Government seeks to achieve through the Treaty Settlement process and the significance I place on it as Prime Minister.

As you know, the genesis of the settlement process can be traced back to the establishment of the Waitangi Tribunal in 1975.

The Tribunal was established to investigate contemporary instances where the Crown had failed to recognise Maori ownership of their lands and properties, in breach of the agreement that was signed here in Waitangi, and perhaps more importantly, in breach of the basic respect for property rights that we hold dear.

The mandate of the Tribunal was extended in 1984, so it could enquire into historical grievances.

Since the early 1990s Governments of red and blue have worked to recognise these breaches, and to negotiate settlements with the iwi which were wronged.

I believe it is to our credit as a nation that we have been prepared to confront the darker parts of our history and acknowledge the instances in which glaring injustices have occurred.

It is a credit to successive Governments and to many iwi, that redress for such injustice has been agreed to at the negotiating table, and that past mistakes have been put to bed.

Most importantly, it is a credit to New Zealand that, as a people, we share a desire to complete this redress process, so that we can move beyond grievance and towards a shared brighter future.

To my mind, that is what the Treaty settlement process is all about.

It is a process that puts into practice some of the most basic values that as parents we try to instill in our children, and that as citizens we expect from each other.

It is about acknowledging unfairness, making amends for mistakes and accepting each others' apologies. It is also about performing what for all of us can be the hardest task of all, choosing to close the door, move on from failure, forgive each other and seek a better tomorrow.

It's that desire for a better tomorrow that motivates this Government's commitment to the progress and resolution of the Treaty settlement process.

We are impatient to stop looking in the rear-view mirror at grievances past, and to instead shift our eyes to the challenges of our shared future as New Zealanders.

We want to address injustice and build a platform from which Maori and other New Zealanders will stand up and confront the challenges of a new generation. Like lifting educational achievement, improving the health of our families and improving the living standards of us all.

That's why the National Party campaigned on a goal of concluding just and durable Treaty settlements by 2014.

I think it would be a betrayal of Kiwis' basic sense of decency to forget the past and the legitimate claims of iwi. But at the same time I am determined that New Zealand will not become stuck in that past.

I believe it is to the benefit of all New Zealanders that we move beyond the settlement phase of our history and into the brighter future we all seek.

I want to shift our focus and energy from the settling of historic claims and the sense of grievance it conjures, so that we can instead throw ourselves at the next phase in our history.

I am optimistic that next phase can be characterised by better race relations and an even more strongly united sense of our shared aspirations as New Zealanders.

Today let me acknowledge that achieving this Government's goal of concluding historic Treaty Settlements will be a considerable challenge.

When we came into office in 2008 there were 60 claims outstanding. If we were content to continue at the settlement pace of the previous Labour-led Government, then we would only expect to resolve those claims at a rate of 1.6 a year. In other words, we would still be signing settlements in 2048.

Proceeding at that rate would merely stall resolution, and strand New Zealand in an ongoing discussion of grievances past.

I won't accept that. We must do better. The Government has the will and my sense is that iwi have the will has well.

Last year, we held two national hui with iwi to discuss ways in which Treaty settlements could be achieved more efficiently and expeditiously. They were very successful.

Iwi leaders see the experience of others who settled in the late 1990s and how much they have achieved in the intervening period. They do not want to spend time and money on litigation and negotiation; they all want to cut to the chase, achieve good settlements and move on.

Today let me assure you that this Government shares their desire to move on. Our foot is firmly on the settlement pedal.

Let me take this opportunity to briefly outline for you the steps we have taken to speed-up the resolution of historic Treaty claims.

We have re-established the Treaty of Waitangi Cabinet Committee for the first time since Jenny Shipley was Prime Minister.

I chair that Committee.

It brings together ministers to focus on settlement issues and to ensure negotiations are not allowed to stall or fester.

We have been meeting fortnightly when Parliament sits, but this year I expect we may meet even more regularly.

The Committee is supported by a team of top-notch officials whose job it is to ensure we receive the best possible advice about progressing settlements in a way that is efficient, fair and durable.

We have also provided additional resources to the Office of Treaty Settlements, which negotiates with iwi on our behalf, so it can undertake its task effectively.

We don't think it's good enough for settlements to be stalled by an inadequate or creaky bureaucracy.

We have also brought together a high-level team of Crown negotiators to work with the Minister for Treaty Negotiations. They are a bi-partisan group and include two former Labour ministers, a former Ambassador to the United States and senior businesspeople.

Perhaps most importantly, I have appointed a Minister of Treaty Negotiations in whom I have the utmost confidence. In Chris Finlayson we have a Minister with an outstanding legal mind, years of negotiating and legal experience, and a person who shares my sense of urgency to resolve Treaty claims.

I have instructed Chris to get out there and meet iwi and to work closely with them to conclude settlements. He has been doing exactly that and has just finished an extensive hikoi visiting most of the East Coast, much of the Central North Island and the Whanganui River. He is a very busy minister, and he is getting the job done and done well.

But make no mistake, the 2014 target the Government has set for itself is ambitious. Reaching our target will require much work and goodwill from the Government, from the New Zealanders we represent, and from the iwi with whom we are negotiating.

If we are to move beyond grievance, we need all New Zealanders to be on board.

As I've travelled around New Zealand I sense that everyday Kiwis are ready to join us, they want the Government to rise to the challenge of moving on and they share my impatience to close the settlement chapter of our history.

However, we must ensure that our desire to move on is tempered with some caution.

I am determined that every Treaty settlement that this Government signs will be full and final.

I do not want to condemn our children and grandchildren to endlessly re-litigating these negotiations, due to sloppy work and inadequate attention to detail.

To ensure finality, the Government must work through a four-step process on the journey to settlement. It's not easy, it's complex work and I think it's important you have an understanding of what it involves.

The first step is to establish clearly which representatives the Crown should negotiate with to settle a claim, through what is called a 'deed of mandate'. We need to make sure we're negotiating with the right people and that they have a legitimate right to the redress they are seeking.

The second step is to progress discussions to a point where terms of negotiation are signed. This is the point at which the Crown and iwi agree that we have come together in good faith and that we're all on board for the process that will follow.

The third step is to sign agreements in principle, which set out the bare bones of a proposed settlement.

Finally, once all the detail has been worked out, we sign a binding deed of settlement that is then given full and final effect by legislation. It is a testament to New Zealand's shared commitment to Treaty settlements that, by and large, such legislation has been supported by all parties in Parliament.

So, as I've outlined, moving settlements along is no easy task. But it can be done.

I'm pleased to say that the National-led Government has got off to a great start. Since the beginning of last year we recognised eight deeds of mandate, signed seven terms of negotiation, signed 12 agreements in principle and signed four final deeds of settlement.

We are determined that this momentum carries on into 2010.

This year it is likely that much of our effort will be focused on the Auckland region, where around 20 per cent of outstanding claims are centred.

It's worth outlining some of what that may involve. Because settling historical Treaty claims by 2014 means just that - settlements have to take place.

Governments and iwi cannot just talk about settling - both sides actually have to get together and do the deals.

Several potential aspects of Treaty settlements are worthy of mention.

The first is that sometimes iwi ask for restoration of historic names. New Zealanders have nothing to fear from this. Just think of how, many years ago, Mount Egmont was renamed Egmont/Taranaki. Over time everyone has become more comfortable with the change, to the point where Taranaki is the more common name nowadays. There are other settlements where name changes have taken place and where we can envisage this happening in the future.

Sometimes iwi ask for input into how a discrete area can be looked after - be it a river, mountain, forest or similar area. In many cases the Government may deem this is reasonable, given the historical connection iwi may have with that area and the shared interest all New Zealanders have in ensuring good management or restoration of it.

In Auckland, for example, there has been some discussion over the volcanic cones or maunga.

The previous government offered the local iwi Ngati Whatua o Orakei the transfer of title and a say in the management of some of these cones.

The trouble with that approach was that other Auckland iwi had overlapping claims to the cones, meaning the issue ended up returning to the Waitangi Tribunal.

This stalled settlements in the Auckland region for three years. It's also meant that while we've been waiting for the issue to be resolved, we've had a situation where no new tree could be planted on One Tree Hill.

The Government has been talking through these issues with iwi over the past 12 months. We've made great progress. I'm pleased to say that things are now at a point where we could settle all claims in the Auckland region.

This would involve transferring the title of the volcanic cones in a way that takes account of all the iwi with legitimate interests in the cones, and that would give iwi a role in managing them, alongside the Council.

In fact, it is the same co-management model that has worked without a hitch at Orakei Basin - including the reserve and Bastion Point - since 1990 when that land was vested in local iwi.

What effect would this change have on the public? None. Public access remains the same, and that's an important bottom line principle for this Government.

Ladies and Gentlemen, these are exciting times.

In 2010 the opportunity exists for concluding just and durable settlements throughout the Auckland region, something that a few years ago would have been regarded as a pipe dream. Iwi are keen to get on with the business, the Crown is keen, and everyone agrees that public access can never be compromised.

We all have a stake in making this happen.

When I talk to New Zealanders I find the desire to justly conclude the Treaty settlement process is widely shared.

Yes, there are extremists on both sides.

These extremists cynically damage the goodwill needed to put an end to grievance and division.

There are those who can't see the point in all of it - who point to the 20 years we have already been working on Treaty settlements and who see no end in sight for a gravy train born out of actions from a time so long past that they bear no relevance in modern day New Zealand. Who believe the price for fairness is too high and that we should ignore past injustice. There are those who believe progress is impossible.

And then there are those who never want to see an end to the Treaty settlement process, who believe all the woes of today can be traced back to colonisation and the subsequent breaches of the Treaty. Who promote a culture of entitlement, disrespect and separatism. And those who believe the mistakes of the past 170 years entitle Maori to receive special treatment and to act outside the law. For whom division is the only objective.

I believe these extremes represent a small minority of New Zealanders.

By and large, New Zealanders are united in a desire to respect the settlement process, and to focus on the shared and equal aspirations of all Kiwis, no matter their ethnicity.

This Waitangi Day, I think we can all agree that it's time to consign the grievance mentality to the history books.

Why can't this be the generation of New Zealanders who open the next chapter in our history?

Let's move the conversation on from one about past injustice, to one about how to address Maori underachievement, about how to deliver world-class education standards, and how to eradicate the deficit mentality so that every child can have the opportunity to succeed, prosper and celebrate success.

Let's move on and acknowledge that in modern-day New Zealand, the history of colonisation and injustice can't be allowed to dominate decision-making or be used as a crutch for supporting dependency and a lack of personal responsibility.

The desire to see Maori improve their lot in life, to be better equipped to participate and succeed in modern day life and to no longer be overrepresented in negative statistics associated with education, health and crime lies at the heart of why both the National Party and the Maori Party chose to form a government even though neither party were compelled to do so.

This won't happen without debate, Inevitably solutions will have to be found. It will, from time to time, challenge both sides. And it won't always be perfect. But if successful it will be worth it.

A New Zealand that makes us all proud.

A New Zealand that really delivers equality of opportunity.

A New Zealand befitting the 21st century.

So this Waitangi Day, let's strengthen our resolve.

Let us get behind the settlement process so we can move beyond grievance, and towards the brighter future we all deserve.

Thank you.

2011.md

Ladies and Gentlemen.

This year is about building a brighter future for New Zealanders and their families.

That is only possible if we lift the country’s economic performance, and by doing so deliver the jobs, higher incomes and better living standards New Zealanders aspire to and deserve.

That means making responsible decisions now, as the economy picks up, to increase national savings and reduce the country’s debt.

In less than two weeks, on the first day of Parliament, I will deliver a Statement which sets out our full programme of action for the year, across all the different areas of government.

But today I want to concentrate solely on the economy, because our economic performance is the most important challenge facing New Zealand.

The good news on the economy is that 2011 is expected to be a better year than 2010.

Treasury is predicting growth in excess of 3 per cent this year, together with higher wages and falling unemployment.

As in 2010, there will no doubt be bumps in the road.

But regardless of what unfolds, it is important to look through the quarter-to-quarter economic figures and focus on the longer-term challenge.

That challenge is to build a lasting recovery based on savings, exports and productive investment.

New Zealand has been through a recession and a global financial crisis. We have a chance, now the economy is gathering steam again, to build a solid platform for future growth.

If we get this right the possibilities are exciting.

Our trade is rapidly shifting towards Asia, which is growing much faster than our traditional markets in Europe and the United States.

New Zealand is a food-producing country and world demand for food is rising. Global prices for dairy, forestry, meat and other commodities are high.

We have a genuine competitive advantage in agriculture and other primary sectors. We have world-class firms engaged in high-tech manufacturing, software, film and other industries.

These are great opportunities for New Zealand.

But as a country we have to reach out and grasp those opportunities or we risk missing the boat.

The way for New Zealand to get ahead is to sell more to the rest of the world.

That means making some changes.

Growth over the last decade was built on all the wrong things – debt, consumption, and government spending.

People borrowed heavily to buy houses and farms, property prices soared and New Zealanders felt wealthier as a result. They spent a lot on consumer goods, which led to a bubble of economic activity.

The Labour Government thought this bubble, and the tax revenue it generated, would go on forever and spent up large on permanent new spending programmes. The Government’s spending increased by more than 50 per cent in just six years.

High government and private sector consumption generated inflationary pressures, pushing up interest rates and discouraging productive investment.

High interest rates in turn led to an over-valued exchange rate which smothered the internationally-competitive sectors of the economy, like agriculture, horticulture and manufacturing.

Our exporters found it hard to sell their products at competitive prices overseas because of the high value of the dollar.

The internationally-competitive sectors of the economy actually went into recession in 2004, and experienced a 10 per cent drop in output over the next five years.

In contrast, the domestically-focused side of the economy grew strongly. Since 2004, almost 60 per cent of new jobs have been in heavily government-dominated sectors.

As a country we imported far more than we exported, leaving a gaping balance of payments deficit that persisted for year after year.

All this could never be a solid basis for growth.

Subsequent events proved that very clearly.

By the time the National-led Government came into office at the end of 2008 the economy was deep in recession, and inflation was the highest it had been in 18 years.

The Government’s books had been left in a mess, with Treasury projecting no end to budget deficits and government debt spiralling out of control.

As an incoming government, we moved quickly to steady the ship, help the economy through the recession and set a credible path back to surplus.

Even so, when we tally up everything the Government is spending this year, we still need to borrow $300 million a week on average to pay the bills.

In the worst of the recession, running a budget deficit was the right thing to do, as it gave much-needed support to the economy.

Now, as the economy recovers, borrowing $300 million a week is unaffordable and is holding the economy back.

It is crowding out our internationally-competitive sectors of the economy, keeping the exchange rate high, and tying up resources that could be better used elsewhere in the economy.

And this borrowing will, of course, have to be repaid in future years, with interest.

Annual interest payments on our debt will, in four years time, cost more than spending on the Police, defence and early childhood education combined.

Rising government debt adds to New Zealand’s total indebtedness to the rest of the world.

Through decades of under-saving, over-spending and over-borrowing, the public and private sectors have together built up a net foreign debt equivalent to 85 per cent of GDP.

That makes us heavily reliant on overseas lenders who can at any time decide that we are just too much of a risk. And if we can’t raise money overseas, or can only do so at a high price, we face the risk of a protracted recession, with a significant loss of jobs and a fall in the value of everyone’s homes, businesses and farms.

To put it in context, the only other developed countries with a foreign debt the size of ours are Greece, Portugal, Spain and Ireland.

That is very uneasy company indeed. And it is precisely the difficulties those countries are in that has led to Standard and Poor’s putting New Zealand on negative outlook.

So as the economy picks up, it is crucially important that our growth is not based, as it was in the 2000s, on debt, consumption and government spending but instead is built on the solid foundation of savings, exports and productive investment.

The National-led Government was elected in late 2008 to build that stronger growth.

We have made considerable progress already with our six-point plan for a stronger economy.

As part of that plan we undertook the biggest reforms of the tax system in 25 years to increase the incentives to work hard, save and invest; and to remove distortions and clamp down on loopholes. Importantly, we designed these tax changes so that they won’t result in extra government borrowing across the forecast period.

We hauled back new budget spending allowances and reduced the size of the bureaucracy.

We invested in much-needed infrastructure, to unblock the arteries of the economy.

We have progressed an ambitious free trade agenda.

And we introduced a number of regulatory changes to make it easier to do business.

But structural change in the economy does not happen overnight. It is a bit like turning a super-tanker around.

New Zealand’s economic imbalances have built up over several decades, so it will take more than a year or two to fix them.

It will take a number of years and considerable effort.

In our first Budget, in 2009, the Government’s focus was on getting through the recession in as good a shape as possible.

In last year’s Budget, we concentrated on reforming the tax system.

This year the theme of the Budget will be savings and investment.

The Government agrees with the Savings Working Group, in its interim report, that New Zealand as a whole needs to save more, spend less and reduce our reliance on foreign debt.

Over the last year or so, New Zealand households, businesses and farms have begun to save more, spend less and borrow less as a proportion of their incomes.

This is an encouraging change of behaviour but needs to be cemented in for the long term. And government needs to stop pushing the other way.

The Savings Working Group is due to present its report to the Government in a few weeks. We will consider this very carefully, including ideas around tax, KiwiSaver, and investment products.

The Government has already made tax changes that are pro-savings. We remain conscious, however, that effective tax rates on some forms of savings remain very high.

The Government is also interested in ideas that increase participation in KiwiSaver and raise national savings, but which don’t result in an ongoing and unaffordable fiscal cost, which again would have to be borrowed.

And in terms of investment opportunities, the Government is interested in the Working Group’s thoughts on how to expand the range of investment opportunities available to New Zealand savers.

It would be better for both investors and the economy as a whole if people had the confidence to save more and invest in a wider range of assets, not just in property.

These are all areas where the Government may be able to influence the level or allocation of private sector savings.

But a point which has been made to us very clearly, by the Savings Working Group and others, is that the government is itself a crucial part of the national savings equation.

The government simply has to get its finances in order if New Zealand is to achieve a long-term improvement in its economic prospects.

Therefore I am announcing today that the Government intends to borrow less in the future than is currently forecast.

That is going to involve action on two fronts – on the operating side and on the capital side of the Government’s spending.

First, in terms of operating spending, the Government has decided to run a tighter fiscal policy than has previously been indicated.

When we are borrowing $300 million a week, have an overvalued exchange rate, and face the prospect of a credit rating downgrade, the Government believes it should be spending less and therefore borrowing less.

I have therefore challenged my Ministers to balance the books more quickly.

Government spending will continue to increase each year in dollar terms, but at a slower pace than the rest of the economy.

As the first step in reducing spending growth, we will run a tighter Budget this year than was indicated in the Budget Policy Statement in December.

Currently we have a new spending allowance of $1.1 billion each year, compared to Labour’s average of $2.8 billion a year over its last five budgets.

Our plan is to reduce that new spending allowance in Budget 2011 even further, to around $800 to $900 million.

Nonetheless, this year’s Budget will continue to prioritise new spending to health and education in particular, and to initiatives that promote economic growth.

At the moment, Treasury is projecting the budget to return to a meaningful surplus in 2015/16. With a tighter Budget this year, and assuming revenue stays on track, the budget will in fact return to a meaningful surplus a year earlier, in 2014/15.

In addition, until we get back into surplus, we are going to allocate any upward revenue surprises to further reducing the deficit.

Throughout this year, we are also going to consider longer-term sources of savings.

In particular, the Government is determined to reduce the costs of running its own business. That process has started, but the public sector is still a long way from being a lean and efficient organisation.

Crucially, this year there will be no room at all for extravagant election promises.

We are going to campaign on being responsible managers of the economy, who make the right decisions to build a platform for future growth.

Any party that wants to ramp up spending is being economically irresponsible.

The only way to spend more money is to borrow it or to raise taxes. Borrowing more would lift our debt to dangerous levels, while raising taxes would snuff out the recovery and send even more Kiwis overseas.

In terms of capital spending, the Government is committed to building assets that will help create a stronger economy and deliver better public services.

In December, the Government released its first Investment Statement which shows what we own, how much it is worth, and how much we expect to spend on buying new assets in the future.

The Investment Statement shows that the government, on behalf of taxpayers, owns $220 billion of assets across a whole range of social, financial and commercial investments – everything from hospitals, roads, prisons, schools and Police stations to the Super Fund, electricity companies and coal mining operations.

We also expect to acquire $33 billion of net new assets over the next five years, including new schools, operating theatres, ultra-fast broadband and major investments in our state highways and other transport infrastructure. That is a considerable spend by any reckoning.

At the margin there are two ways we can acquire new assets – either we can borrow more or we can change the mix of assets we own.

As I have said, the government can’t keep building up debt forever.

As a country we have to fund more of our own future.

So we need to look at where we can change the mix of assets we own – identifying where new assets are most needed and where we have more money invested than we absolutely need to.

The greatest scope to change the mix of assets lies with the government’s portfolio of commercial assets.

In particular, the sort of mixed-ownership model under which Air New Zealand operates – where the government owns most of the company but there is a minority of outside equity – gives the best of both worlds.

Under this model, the government has a controlling stake in what is a crucial piece of transport infrastructure and guarantees that it will be majority New Zealand owned. But by not owning 100 percent of the airline, the government also has capital free to invest in other assets.

This model could be extended to more of the government’s commercial assets.

As well as freeing up capital, there are three other potential benefits of a mixed ownership model.

The first is that it broadens the pool of investments for New Zealand savers, either directly themselves, or through investment funds such as KiwiSaver.

New, quality listings on the stock exchange would give “mum and dad” investors the option of putting their savings into large and proven companies, rather than relying, as is so often the case, on property investments.

The second is that the company reaps the benefits of sharper commercial disciplines, more transparency and greater external oversight.

Under the mixed ownership model Air New Zealand has been a creative and innovative company and a model corporate citizen. It has also offered some very competitive prices for air travel.

I am convinced that Air New Zealand would not be run as well, nor provide as good a service to customers, if it was owned 100 percent by the government.

And the third potential benefit is the opportunity for the companies involved to obtain more capital to grow further, without depending entirely on a cash-strapped government to support them.

For all these reasons, the Government has asked Treasury for advice on the merits and viability of extending the mixed ownership model to four other state-owned companies – Mighty River Power, Meridian, Genesis and Solid Energy.

In each case, the government would retain majority ownership and control, and the freed-up capital would be used to purchase other public assets, thereby reducing the government’s need to borrow.

The Government has also asked Treasury for advice on the merits and viability of reducing the government’s shareholding in Air New Zealand, again while retaining a majority stake.

Only the companies I have just mentioned will be considered for a mixed ownership model. But the Government will continue to look for commercial arrangements in other areas where private involvement can help drive performance, in the way we have been doing with public-private partnerships, for example.

I can see a strong appetite from New Zealand investors for participation in a mixed ownership model. Between KiwiSaver, other managed funds, iwi, mum and dad investors and the government’s own investment arms – including the Super Fund – there is a very substantial capacity to invest in quality New Zealand assets.

We would envisage these groups being at the front of the queue in any offering, and taking the majority of any stake that was offered.

In particular, I think it would be great if Kiwi mums and dads had more of a stake in the New Zealand economy by owning shares in good Kiwi companies. That, in my view, would be progress towards building a better savings and investment culture in New Zealand.

Ownership by New Zealand investors would of course be on top of the government’s majority stake, which is held on behalf of all New Zealanders. That majority stake would always ensure New Zealand control for the benefit of New Zealanders.

As far as possible, without compromising commercial sensitivities, the Government will publicly release the advice we receive from Treasury.

We have always been clear that if there was to be any change to our policy on state-owned assets in any way, we would seek the support of New Zealanders at an election, and that is exactly what we will do.

Our final policy will be decided prior to this year’s election, and we will seek a mandate from the electorate before proceeding with any change.

The mixed-ownership model presents the possibility of real benefits for New Zealanders.

But let me be clear – we will only proceed with a mixed ownership model if it meets the following tests:

the Government would have to maintain a majority controlling stake by owning more than 50 per cent of the company;

New Zealand investors would have to be at the front of the queue for shareholdings, and we would have to be confident of widespread and substantial New Zealand share ownership;

the companies involved would have to present good opportunities for investors;

the capital freed up would have to be used on behalf of taxpayers to fund new public assets and thereby reduce the pressure on the Government to borrow; and

the Government would have to be satisfied that industry-specific regulations adequately protected New Zealand consumers.

In particular, I want to stress that the Government is interested in what works, not in following any particular ideology.

Governments of all stripes, all around the world, regularly consider the mix of assets they own and whether they are deployed in the right places. That is what we are doing as well.

I want to finish by emphasising the importance of getting the New Zealand economy back on a solid and durable growth path.

We got off that path in the mid-2000s, and doing so has proven very harmful.

Getting back on the growth path again means playing to our true strengths – allowing our export industries to start expanding again, and not tying up resources in less-efficient, domestically-focused government sectors.

Increasing national savings is key to supporting this shift.

That is why the theme of this year’s Budget is going to be savings and investment.

We recognise that New Zealand’s high level of foreign debt is our biggest vulnerability.

We have asked the Savings Working Group to consider policy options to increase national savings.

But the Government is already committed to playing its part. We have to increase our own savings and reduce public sector debt.

That is why the Government is going to reduce growth in its spending, get back to surplus faster than previously indicated and look to better allocate its assets across competing uses.

As I said at the outset of this speech, New Zealand has some great opportunities to get ahead again and have a more prosperous future. But to do so we have to give our internationally-competitive sectors the platform to succeed.

This Government is prepared to do that. We will take the steps required to build stronger growth, and build that brighter future for New Zealanders.

New Zealanders deserve nothing less.

2012.md

Ladies and Gentlemen

Can I start by saying that it’s a tremendous privilege to have won the trust and goodwill of New Zealanders for a second term in Government.

I don’t take that for granted and I never will.

I learned quickly when I came into Parliament that a government has to earn the trust and goodwill of voters again and again, every day.

And that’s what we’ll be doing.

We proved in the past three years that we can deliver strong and stable government in difficult times.

We worked constructively with a number of other parties in Parliament to get things done for the benefit of New Zealand, and we’ll continue to do that.

I don’t know exactly what the next three years will throw up.

The past three years have shown us that adversity gives little warning.

New Zealanders have had to deal with catastrophic events outside anyone’s control; from a global financial crisis to a devastating series of earthquakes in Canterbury.

New Zealand has changed over the past three years and, in fact, the whole world has changed.

The next three years will about rebuilding and strengthening the country.

And compared to a lot of other nations we are in a good position to do that.

Today I want to talk about the Government’s priorities over these next three years – in other words, how we are going to continue with our plan to secure a brighter future for New Zealand.

A brighter future is where New Zealanders from all backgrounds and all walks of life have the opportunity to better themselves and go forward in their lives; where people have the jobs, higher incomes and better living standards they aspire to and deserve; and where as a country we have the resources to provide better frontline services in health and education, stay strong on crime, protect the most vulnerable in society, and look after the environment.

How do we achieve that?

The Government has four priorities this term.

Our first priority is to responsibly manage the Government’s finances. In the world as it is today, the state of the country’s finances is all-important.

Our second priority is to build a more competitive and productive economy. That means an export-focused economy, which is selling more of what the world wants, at a competitive price, and is built on a solid base of innovation.

Our third priority is to deliver better public services to New Zealanders, within the tight budget the Government is operating under.

And our final priority is to rebuild Christchurch, our second-biggest city.

I want to talk some more about these priorities and give you an indication of where the Government is going.

But before I do that I want to talk briefly about the international backdrop.

The global economic outlook has deteriorated since the end of last year, and the European crisis, in particular, is the biggest potential threat to the world economy and therefore to the New Zealand economy.

Leading forecasters like the IMF, World Bank and Consensus Economics are expecting world growth to be weaker over the next couple of years than previously predicted.

For the most part, that is because of the ongoing turmoil in the Euro area.

The most likely outcome is that European countries manage through the crisis with the Euro intact, because it is in their collective interest to do so.

But that is by no means guaranteed.

As recently as yesterday, the IMF warned that if the required actions are not taken, the European crisis could spill over into a global recession.

Even under the more likely scenario, where Europe avoids a full-blown crisis, the Euro countries are expected to go into recession in 2012 and will be in for a protracted period of sluggish growth thereafter.

This poorer growth outlook for Europe has, in turn, contributed to lower growth forecasts for Asia, including China.

Overall, growth in China is expected to remain strong, but an easing in that growth will still have a flow-on effect for Australia, because of a lower demand for minerals.

The outlook in the United States is actually looking better than it did late last year, but growth is still likely to be subdued.

What does that mean for New Zealand?

Weaker global growth, particularly in our key export markets in Asia and Australia, will put downward pressure on the demand for our exports.

That will have a real and noticeable effect on the New Zealand economy, which is expected to grow somewhat slower than was predicted at the end of 2011.

But it won’t knock the New Zealand economy for six and it certainly won’t stop the Government pushing ahead with its priorities.

We are a small economy doing the right things, our banks are in good shape and the Government has managed effectively through the difficulties of the past three years.

The really difficult challenges will start to come if world growth continues to be revised further and further downwards, or if the European crisis triggers a global credit freeze.

Those are not the most likely scenarios for the world economy but they are certainly possible and the Government will continue to monitor global events very carefully.

So given that international backdrop, I want to talk some more about each of the Government’s priorities:

responsibly managing the Government’s finances building a more competitive and productive economy delivering better public services and rebuilding Christchurch. Our first priority is to responsibly manage the Government’s finances.

As every household and business around the country knows, that involves living within our means – budgeting carefully and deciding which things are priorities and which are not.

The Government is committed to returning to surplus in 2014/15.

Sticking to this commitment is an important part of our plan to limit debt and take pressure off interest rates and the exchange rate.

And sticking to this commitment is also important for New Zealand’s credibility with international financial markets. As we have seen overseas, a loss of credibility is very difficult to reverse and can have widespread effects across the whole country.

As you’d expect, the forecast slowdown in world growth makes our surplus target harder to achieve.

But today I can confirm that we are still on track to post a surplus in 2014/15.

The upcoming Budget Policy Statement will show a forecast surplus in the range of $300 to $500 million in that year.

Given the events in Europe, this surplus is understandably smaller than was forecast in the PREFU.

But we still remain on our tight fiscal track.

You’ll see a fuller picture of that in the BPS, which will be released on February 16.

The next update after that will be in the Budget itself.

The Budget will set out the Government’s revenue and spending, and show exactly what we are doing to meet our fiscal targets, get back to surplus and start reducing debt.

If the international outlook worsens between now and the Budget we may have to do more than we are currently anticipating to reach our surplus target, bearing in mind that the target is still three years and many forecast revisions away.

If the absolute worst happened, and there was a major shock to the global economy, the Government would look at whether retaining that surplus target would actually harm the economy by forcing a sharp reduction in demand.

But outside that scenario, we remain firmly committed to our target for surplus in 2014/15.

I want to talk now about our second priority, which is to build a more competitive and productive economy.

The reality, all around the developed world, is that the pre-GFC period of relatively strong growth, fed by a massive increase in borrowing, is unlikely to return in the foreseeable future.

Households and businesses are having to reduce the debt they built up over that time, and they are saving rather than spending.

So anyone who complains that New Zealand isn’t growing at four, or five, or six per cent a year right now is on the wrong planet.

In fact, we are doing better than most developed countries.

In both 2012 and 2013, the New Zealand economy is forecast to grow more strongly than the Eurozone, the UK, Japan, the United States and Canada.

So we are in relatively good shape.

However, it is important to understand the Government’s main role.

For the most part, New Zealand’s growth over the next year has already been set in train, and any stabilisation is the job of the Reserve Bank.

The Government’s main role is to keep looking out over the next five years or so and put in place policies that will help the economy become more competitive and productive, through good times and through bad.

Again, the European crisis offers some important lessons.

European countries are in difficulty for two main reasons.

The first is that they have high levels of government debt, and I’ve already talked about the importance of sticking to our tight fiscal track.

And the second reason is that many of the economies in Europe have lost competitiveness.

That doesn’t happen overnight – it happens slowly over a number of years.

Here in New Zealand we have also lost competitiveness over time, particularly as a result of poor policy decisions in the 2000s.

In other words, it has got harder than it would otherwise have been for our exporters to compete in overseas markets. And it has got harder than it would otherwise have been for New Zealand manufacturers to compete with imported goods that are made off shore.

As a result, the industries and sectors that compete internationally actually went into recession in late 2004 and shrank in size by almost 10 per cent in five years.

That decline in competitiveness has started to turn around over the past three years.

A good example of how government policies can help competitiveness is in ACC. As a result of the decisions we made in ACC over the past three years, levies on employers and the self-employed will fall by 22 per cent this year, reducing total costs to business each year by around $250 million.

That’s just one example among many, but there is still much more to be done.

The Government’s view has always been that there is no magic bullet – no one ‘big bang’ reform that would turn the economy on its head.

What is actually required is a series of good policy decisions and reforms over an extended period of time, in 100 different areas, to enhance the competitiveness of New Zealand firms.

And I literally do mean 100.

During the election campaign we released an economic action plan of 120 key things we had done, or were doing, to build a stronger, more competitive economy.

Most of those action points are still ongoing.

So we have a very busy economic reform agenda, following through on things we started last term and on new things we announced during the election.

For example:

We’re restructuring IRL to become an advanced technology institute to work alongside the high-tech manufacturing and services sector.

We’re rolling out ultra-fast broadband and the Rural Broadband Initiative, to lift New Zealand’s connectivity.

We’re comprehensively overhauling New Zealand’s securities law, to restore investor confidence in our financial markets.

We’re introducing a six-month time limit for consenting medium-sized projects under the RMA, to reduce costs, uncertainties and delays.

We’re allowing for choice in the ACC Work Account, to help ensure efficiency and keep a lid on costs for levy payers.

We’re encouraging oil and gas exploration with a competitive new system for processing permits.

We’re negotiating free trade agreements with nine countries in the Trans-Pacific Partnership, including the United States, and separately with a number of other countries including India, Russia and Korea.

We’re extending the mixed ownership model to four State-owned energy companies, to make better use of the Government’s balance sheet and to provide new investment opportunities for New Zealand savers.

And we’re investing heavily in roads of national significance and in the rail network, to promote economic growth and productivity.

These are a few of the initiatives in the 120-point plan, which sets out what the Government will be doing over the next three years.

I have tasked Bill English and Steven Joyce – the two most senior economic ministers – with driving this economic action plan.

I have told them I want to see this action plan regularly updated, showing progress on the existing initiatives and adding further initiatives as they are developed.

The first update will be in the middle of this year and will be publicly released.

Our third priority is to deliver better public services for families and businesses, within tight budgets.

Delivering better public services will help improve the lives and wellbeing of New Zealanders.

New Zealanders rightly expect a world-class health service, an education system that delivers for every child, a strong and effective justice system and social services that protect our most vulnerable and provide children from all walks of life with the opportunities they need to succeed.

Again, the Government has a very busy agenda over the next three years.

In education, our focus is squarely on raising achievement, in particular for those groups of students who have historically under-performed.

We’re strengthening performance measurement and accountability in schools, and we’ll be investing $1 billion of the proceeds from mixed ownership in modernising New Zealand schools.

It’s vitally important for New Zealand that students achieve because they are our future workforce.

But it’s also vitally important for the young people themselves, because a good education is the most important investment they can make in their own lives.

Welfare reform is also a very high priority for the Government.

At the moment around one in eight people aged 18 to 64 is on some sort of benefit, and about half of those have spent at least five out of the past 10 years on a benefit.

That is not only a poor position for beneficiaries themselves to be in: it's also not good for their children, for society or for taxpayers.

So we'll be moving quickly this year to get our welfare reform programme underway.

Early in the year the first Bill will be introduced to Parliament to enact the youth reforms I announced last year, targeting young people who are very much at risk of long-term welfare dependency.

That will be closely followed by another Bill in the second half of this year, to bring in the changes we campaigned on at the election.

New benefit categories will be created, and a greater proportion of beneficiaries will be required to make themselves available for work.

At the same time we will do more to help beneficiaries into work through services like childcare, training, workplace support, and access to health and disability support.

We also have a busy agenda in health, where we are working with local primary care networks throughout the country to provide free after-hours GP visits to children under six.

More people will get elective surgery, and we’re reducing waiting times for cancer treatment, first specialist appointments, diagnostic tests, elective surgery, and for people waiting in emergency departments.

In terms of public safety, we will be introducing legislation to strengthen sentencing, parole and bail laws.

We’ll be making it harder for those accused of the most serious offences to get bail and we’re increasing the penalties for child pornography.

These are all examples of individual initiatives we have underway in different areas.

But it has also become increasingly clear to us as a Government that the way public services are organised across the board needs to be addressed.

The state sector as a whole could do much better at delivering value-for-money, and it could do much better at achieving results, particularly in areas that cut across multiple departments, and which have proved difficult to get traction on over many years.

Last year the Government established the Better Public Services Advisory Group, and we have since received its final report, which we are currently considering.

We will release this report in the next month or two, when I give a speech on where the Government intends to go with state sector reform.

As I said, we are still working through the issues, but I have been quite clear with my Ministers that there needs to be significant change in the way the state sector is run.

Greater efficiency across government is an important part of this, but it is by no means the only part.

We are also focused on the quality and responsiveness of services, on strong and effective leadership, and on orienting the state sector around achieving results that really matter to New Zealanders.

Our final priority is to get on with rebuilding Christchurch.

2011 was about dealing with the damage caused by the destructive earthquakes that hit the region.

2012 is about starting to rebuild a vibrant, strong city.

The Government is totally committed to the reconstruction of Canterbury. That’s why we put aside $5.5 billion in last year’s Budget and created a whole new government department to lead the recovery effort.

We are committed to removing the barriers to reconstruction, and I can assure you that we won’t hesitate to use the powers we have to clear blockages in the system.

It’s easy to underestimate the scale of this undertaking.

Rebuilding Christchurch and its surrounding areas is an unprecedented project – without doubt the biggest economic undertaking in New Zealand’s history.

It is also at risk of delays from more seismic activity.

I want to say again to the people of Canterbury that we really do understand the frustration and anxiety you have felt as a result of the ongoing aftershocks, particularly the latest major ones that occurred around Christmas.

We continue to stand with you and I’m determined to see that momentum is maintained.

A National Bank report last year showed that economic activity in Canterbury was growing faster than anywhere else in the country.

The Re:START shopping area in Cashel Mall is up and running, and is drawing people back to the heart of the city.

And we have seen large companies show their faith in the city by announcing new investment in Christchurch.

Nearly 70 per cent of the 1,357 buildings approved for partial or full demolition in greater Christchurch have been demolished.

And early next week, the first suburban demolition by CERA begins in the residential red zone in Bexley.

We have made changes to the Regional Policy Statement for the greater Christchurch area, which The Press has reported could pave the way for more than 45,000 new houses.

The challenge now is for local authorities to use these powers to free up new land.

The residential red zone settlement process is progressing well. There are around 6500 properties in the residential red zone in Canterbury, and around 90 per cent of those homeowners have now returned their consent forms to CERA so they can receive an offer from the Government.

Around 46 per cent have also now formally accepted either of the Government's offers to purchase their property.

The commercial redevelopment of Christchurch is well underway.

And from February, residential housing reconstruction should move up a gear, subject again to seismic activity.

Plans by employers to hire more permanent staff in Canterbury are at an eight-year high.

And as the rebuilding grows the demand for workers and materials in Christchurch will be huge.

The Government’s strong focus will be on removing roadblocks so that demand can be met.

Finally, for Canterbury’s passionate sporting fans – of which there are many – the good news is that big-match rugby returns to Christchurch on March 24 when the Crusaders play the Cheetahs at the new 17,000 seat stadium in Addington.

Can I conclude by saying that 2012 will no doubt be another challenging year.

As a country we’ve had some tough things thrown at us.

But New Zealanders have shown great resilience.

Together we’ve come through a difficult period.

Looking ahead, I am very confident about New Zealand's prospects.

We're actually in good shape to meet the challenges that will continue to come our way.

There are huge opportunities out there for New Zealand.

We are a food-producing country in a world that is demanding more high-quality food.

A growing middle class in China, India and across Asia is tuning in to the goods and services New Zealand can supply.

And we’re a country that offers great opportunities for our young people.

So I’m unashamedly positive for New Zealand. I think we’ve got a great future ahead of us.

But we need to get out and seize that brighter future – it won’t come delivered on a plate.

That is the task my Government has embarked on.

2013.md

Ladies and Gentlemen

I hope you all had a good Christmas break and that you're starting 2013 eager and energised.

I know I am.

And I know the Government is, because there are a lot of things to get done this year.

We have a re-energised team of Ministers, which I announced earlier this week.

And we have a very busy agenda.

Whether it's welfare reform, law and order, education, the rebuild of Christchurch, or continuing our improvements in public services, it's full steam ahead.

But the big focus for New Zealand remains the economy.

The economy will be front and centre this year.

The Government has a very substantial programme of work ahead of it.

I have told Ministers I want them to get on with the job.

And I've told them to step up momentum, building on the work we've already done over the last four years.

That work has been substantial.

We've made a huge turnaround in the government's books, we've brought in the biggest changes to the tax system in a generation, and we're making significant changes to reform the welfare system and strengthen work obligations.

Among other things, we've introduced 90-day trials; set time limits for the consenting of large projects under the RMA; introduced a competitive new system for awarding oil and gas exploration permits; got ACC back into good financial shape; and kick-started a multi-billion dollar programme of infrastructure investment.

And throughout that time we've been dealing with three major challenges:

• an economy that was left unbalanced, and in poor shape, by the previous government

• the impact of the Global Financial Crisis

• and the Canterbury earthquakes.

Each one of those challenges is still with us.

Around the world, for example, the recovery from the financial crisis is proving the most difficult since the Great Depression of the 1930s.

Europe is struggling with high levels of government debt and poor productivity. The United States has well-known fiscal issues to deal with. And, only yesterday, the IMF again downgraded its expectations of world growth.

But I remain hugely positive about the future for New Zealand.

Our economy is robust.

Since the bottom of the recession, in mid-2009, the economy has grown at an average of just under 2 per cent a year, and economists are expecting that to strengthen further.

Our employment rate is very high in comparison to other countries, with over three-quarters of all New Zealanders aged 20 to 64 in work.

There are still too many people looking for work who can't find it. But forecasts show employment continuing to increase and unemployment falling.

Interest rates are at 50-year lows. Prices for primary exports are holding up, and our terms of trade remain high.

That is helping to support a high New Zealand dollar, which is proving a head wind for other exporters and firms that compete with imports.

But the flipside of a high dollar is that goods priced on world markets are cheaper than they otherwise would be. This includes goods that are crucial to households like food, clothing and fuel. So inflation is running at less than one per cent a year, food on the whole costs less than it did a year ago, and businesses are taking advantage of cheaper capital goods to invest in plant and machinery.

Looking ahead, New Zealand faces some big opportunities.

Our trade and investment links are increasingly with Asia, which is the fastest growing region in the world. Over the last four years, our exports to China have trebled.

And New Zealand faces a domestic construction boom.

That will be centred, of course, on Christchurch, where the spend is now estimated to be around $30 billion.

But construction is also expected to pick up in other areas, and manufacturers across the country will be gearing up to supply materials.

The Government, for its part, is going to press on and expand its economic programme.

We've been very clear and consistent about that programme.

We're managing the Government's finances to get back to surplus and start reducing debt.

And we're pressing ahead with a wide range of measures to build a more productive and competitive economy.

That's an economy where growth is based on the solid foundations of investment, exports and savings.

Investment is crucial.

Because the truth is, you only get jobs and growth in the economy when people invest money, at their own risk, in setting up a business or expanding an existing business.

Why has Australia been doing so well over the last few years?

Because there has been massive investment in its economy.

Investment in Western Australia, for example, has seen the lowest unemployment rate, and highest population growth, of any Australian state.

Over this side of the Tasman, the Taranaki region has attracted significant oil and gas investment. It has a low unemployment rate and workers' incomes have grown faster than anywhere else in the country.

The key factor is investment, and not just in oil and gas.

So here in New Zealand we have to be a magnet for investment.

That's investment by individuals and small businesses as well as big businesses; and it's investment by people from overseas as well as Kiwis.

The more investment we get, the more jobs will be created.

That's not to say there won't also be jobs lost.

In any three-month period in New Zealand, between 100,000 and 200,000 jobs disappear, and between 100,000 and 200,000 new jobs are created, as businesses start up, expand, contract and close altogether.

The labour market is a very dynamic place.

But the only way net new jobs can be created is by private investors putting their money into businesses in New Zealand.

Governments can encourage investment but they can also discourage investment.

A government can load up big costs and uncertainties onto business.

It can make people unwelcome because they are considered to be the wrong nationality to invest here, or in the wrong industry.

And it can lock up the resources of the country.

That would certainly discourage investment.

But as I said, we have to be a magnet for investment.

That's why my Government is working hard to reduce costs and uncertainties for business.

That's why we welcome investment that benefits New Zealand.

That's why we are keeping our own costs down.

That's why we are ensuring people have the right skills to contribute to the workforce.

That's why we are ensuring the country has the infrastructure it needs to grow.

And that's why we're focused on opportunities to use our natural resources productively and sustainably.

This programme is set out in our Business Growth Agenda, which details a large number of initiatives in six main groupings: skilled and safe workplaces, infrastructure, natural resources, exports, capital markets and innovation.

There is a lot to that Agenda, but today I want to pick out a handful of things which are either new or where I really want us to step up this year.

Skilled workplaces

First, in terms of skilled workplaces, the big challenge for New Zealand over the next few years - especially in the context of Christchurch - is to have people in the right place to do the work that's available, and to have people with the right skills.

Put simply, there is going to be a lot of work in Canterbury, and there are going to be people in other parts of the country who need that work and could do it, particularly if they get the right training.

The first element of that - getting people in the right place - is going to require some initiative from workers, but also a good deal of innovation from businesses involved in the rebuild, and from the Government.

We aren't going to micro-manage that process, but we can help it. That's what we've done - for example, with the new Canterbury Skills and Employment Hub, which provides a one-stop shop to link local employers with people looking for work, before turning to immigration.

We're also looking closely at how we can encourage people to work in Christchurch.

In terms of skill-matching, we are focusing in particular on young people and on vocational training.

This year we are launching five new vocational pathways that clearly signpost the subjects young people should take to prepare for vocational careers in construction, manufacturing, the primary sector, the service sector and social services.

This year there will be over 4000 places available in trades and services academies, allowing young people to explore vocational career opportunities while still at school.

And there will be around 8700 Youth Guarantee places for young people to study fees-free outside the school environment.

But the big changes we are making this year are to industry training and, in particular, to apprenticeships.

Under Labour's wasteful management, up to 100,000 people a year listed as being in industry training were in fact "phantom trainees" who achieved no credits and in some cases were no longer alive.

So we have been streamlining this scheme, reducing the number of qualifications and putting the emphasis on achievement rather than token participation.

That has freed up some very significant funding to re-invest in expanding apprenticeships.

Currently, Modern Apprenticeships are only available for people who begin their training between the ages of 16 and 21 and they attract a significant top-up in funding to pay for advice and mentoring. The top-up is in fact greater than the subsidy that supports their learning programme.

So today I am announcing a new initiative to expand and improve apprenticeship training.

This has a number of parts to it:

1. From 1 January next year, we are going to combine Modern Apprenticeships and other apprenticeship-type training under an expanded and improved scheme called New Zealand Apprenticeships. These new apprenticeships will provide the same level of support, and the same level of subsidy, for all apprentices, regardless of their age. Fewer than half the people doing apprenticeship-type training are actually funded as proper apprentices, through the Modern Apprenticeship scheme, and we are going to change that.

2. We are going to boost overall funding for apprenticeships. The current top-up for Modern Apprentices will be redistributed across all apprentices, regardless of age, as an extension to their learning subsidy. In addition, overall subsidy payments will be increased by around $12 million in the first year, rising over time. Increased funding for apprenticeships will allow industry training organisations to invest in the quality of education for apprentices, lower fees for employers and encourage growth in the uptake of apprenticeships.

3. We are going to boost the educational content of apprenticeships. At a minimum they will require a programme of at least 120 credits that results in a level four qualification.

4. We are going to set clearer roles and performance expectations for ITOs, and give employers other options if their ITOs don't perform; and

5. To lift the profile of, and participation in, apprenticeships, we are going to give the first 10,000 new apprentices who enrol after 1 April this year $1000 towards their tools and off-job course costs, or $2000 if they are in priority construction trades. The same amount will also be paid to their employers.

As a result of these changes, and stimulated by the boom in construction and other trades that is already underway in Christchurch, we estimate that around 14,000 new apprentices will start training over the next five years, over and above the number previously forecast.

The whole idea is to kick-start new apprenticeship opportunities ahead of the curve, so that thousands of New Zealanders get to learn a new trade that will last them a lifetime.

Infrastructure

Moving on to infrastructure, the Government will this year continue its significant programme of investment, which supports thousands of jobs across the country.

And we are doing so in a way that involves private sector disciplines as much as possible.

The first major public-private partnership ever undertaken in New Zealand will open this year, with the first group of students attending the new Hobsonville Point primary school.

A new secondary school at Hobsonville is also being developed through a PPP, as is the new prison at Wiri and the Transmission Gully project.

By the middle of this year, around 300,000 businesses and homes will be able to connect to ultra-fast broadband, and around 1300 schools and 30 hospitals will have fibre to the gate. In addition, almost 100,000 rural homes and businesses are expected to have access to faster broadband through the Rural Broadband Initiative.

The Government is also continuing to support the development of water infrastructure. Earlier this week we announced we would be establishing a new Crown-owned company to invest in commercial-scale water storage and irrigation projects, and set aside $80 million for the initial stages of its operation.

In terms of housing, the Government is itself planning to build more than 2000 houses over the next two financial years but, more importantly, wants to work with local councils on the underlying problems of land supply, building and resource consents and provision of infrastructure.

We need more houses built in New Zealand, at a lower cost.

That means we need more land available for building, more streamlined processes and less costly red tape.

This doesn't require the Government to spend a lot of money. We are already a huge player in the housing market and I'm very wary of spending more of taxpayers' money.

But there are plenty of private sector investors who want to invest in housing - if only we can remove the roadblocks that are slowing down the process and driving up costs.

It's ridiculous, for example, that developers can wait six to 18 months for a resource consent.

It's ridiculous that we allow councils to demand almost anything as a condition for the consent.

And it's ridiculous that we allow them to charge whatever fees they want.

Unless these sorts of issues are dealt with there won't be more affordable housing built.

Labour's so-called 'plan' to build 100,000 houses doesn't do anything to fix the actual cost of building - so will either fail miserably, deliver dwellings that people don't want to live in, or require massive taxpayer subsidies.

It's dishonest and it doesn't stack up.

As I said, we want to work co-operatively with local councils and I believe our goals in the end are the same.

In particular we are keenly awaiting the Auckland Council's spacial plan, and I'm expecting it to include multiple options for both greenfields and brownfields residential property developments.

But if councils aren't able to change their planning processes, then the Government would have to get a lot more proactive, because we are very serious about resolving this issue.

Natural resources

In terms of natural resources, I think all New Zealanders are aware that our economy and natural resources are closely linked.

New Zealand is rich, for example, in minerals. The Greens and Labour oppose it, but we are going to continue to encourage development of our country's oil, gas and mineral resources.

Looking across our resource base as a whole, what's clear is that we need a much better system of planning and resource management - one that enables growth and provides strong environmental outcomes, and does so in a timely and cost-effective way.

We've already made changes to the resource management system and we've got more in the pipeline. There is a Bill already in Parliament to set a six-month time limit on the processing of medium-sized consents, and to establish a streamlined process for Auckland's first Unitary Plan.

But as a country, we're still not planning well enough for our future.

The RMA is constantly cited as a source of frustration, both by investors wishing to develop on their land, and by communities left waiting for years to know the outcome of a project.

There is not enough national consistency. Across New Zealand's 78 local authorities there are over 170 resource management planning documents. Consistency is important because New Zealand is a small country and local decisions have significant effects on our national economy and national environment.

We also need to ensure that local plans aren't overly restrictive and that consent processes are proportionate to the scale of the activity.

Public participation on whether an individual builds a deck on their property, for example, is profoundly different from a decision affecting water quality in a lake.

So the Government is working on a comprehensive package of reforms to the resource management system, which we'll release in the next few months.

I want to see big improvements in this area and it's going to be a high priority for the Government this year.

Export markets

In terms of developing export markets, the Government is currently negotiating free trade agreements with 11 countries in the Trans-Pacific Partnership, including the United States, and separately with a number of other countries including India, Russia and Korea.

We're also about to begin negotiations for a new 16-nation regional free trade agreement across Asia and the Pacific.

Trade agreements can take a long time. But the TPP negotiations are well advanced and negotiators have been asked to try to conclude the broad outline of an agreement by October this year.

The Greens and their fellow travellers say the TPP is anti-democratic. That is nonsense.

A high-quality free trade agreement with the world's biggest economy, that includes agricultural exports, would be a significant achievement.

The Government has also been ramping up its engagement with Asia, because we see there are huge opportunities there for New Zealand businesses.

This year, for example, we will continue to focus on Chinese tourism.

Before Christmas, some of our opponents thought it was a tremendous scandal that high-value, low-risk and well-travelled Chinese were able to get a New Zealand visa with a little less red tape.

I thought it was a scandal that we hadn't done this earlier, because Chinese tourism has the potential to be huge for New Zealand.

Finally, on tourism, the best thing we can do to increase high-value tourist numbers - as I've said time and time again - is to facilitate the development of a national convention centre in Auckland. The sooner that can happen the better.

Capital markets

When it comes to capital markets, the biggest thing happening this year is the Government's offer of shares in state-owned energy companies.

Subject to the Supreme Court's decision, this will start in the first half of the year with our offer of up to 49 per cent of the shares in Mighty River Power.

We also want to proceed with another IPO later this year.

The whole share offer programme will be a shot in the arm for New Zealand's capital markets.

It will give New Zealand savers an opportunity to invest in big New Zealand companies, and the companies themselves will benefit from better monitoring and market disciplines.

At the same time, the Government will maintain majority ownership of the companies, and will use the proceeds to invest in other public assets, like schools and hospitals.

New Zealanders will be at the front of the queue for shares in these particular companies, but in general we continue to welcome foreign investment in New Zealand.

That's because overseas investment in New Zealand adds to what New Zealanders can invest on their own.

It creates jobs, boosts incomes, and helps the economy grow.

Overseas capital can make things happen here that wouldn't otherwise happen, grow businesses that wouldn't otherwise have the means to grow, create jobs that otherwise wouldn't exist, and pay wages that are higher than they would otherwise be.

So it's sad to see the Labour Party that was such an advocate of trade and investment in the past somehow turning into the number one defender of Fortress New Zealand.

Innovation

Finally, despite tight times, the Government is continuing to put a real priority on science and innovation.

Research funding will be greater this year than it ever has been, because new ideas are a key driver for a modern economy.

In particular, this year will see Callaghan Innovation, the new advanced technology institute, up and running, and working with firms involved in high-tech manufacturing and services.

The National Science Challenges will be finalised in the next few months, and a greater proportion of resources put towards addressing these challenges.

So as you can see, we've got plenty on.

But I can guarantee you one thing - Labour will oppose almost all of it.

And the few things they might find to like, Russel Norman or Winston Peters will vehemently oppose.

And that's the irony of the New Zealand Opposition in 2013.

They criticise the Government for being too hands-off; and yet between each of the Opposition parties they oppose every hands-on change we make to encourage investment, growth and jobs.

Tax changes - they oppose.

Major roading projects - they oppose.

A free trade agreement with the US - they oppose.

RMA changes - they oppose.

90 day trials - they oppose.

Work expectations for beneficiaries - they oppose.

Oil and gas exploration - they oppose.

The Hobbit legislation - they oppose.

A national convention centre - they oppose.

Every piece of legislation or policy we have developed to encourage growth and jobs they have opposed.

And that's because there is only one type of activist government they know - the big-spending and big-borrowing kind that we know so well from the Labour Party and the Greens.

It's called "chequebook activism" and New Zealanders know it well because they've seen it before.

As a country we are still paying for it - literally.

It means big, wasteful and unaffordable spending, charged to the taxpayer's bill. And it means Labour and the Greens meddling and choking off private sector investment.

As for the National-led Government, our plan will encourage investment, strengthen the economy and boost jobs.

People know what that plan is, we have stuck to it and we will continue to stick to it.

And New Zealand is heading in the right direction.

The Government's economic programme is laying the foundations for a stronger economy, sustainable jobs and higher incomes.

The world is full of opportunities for New Zealand over the next few years.

We need to seize those opportunities with both hands.

That's why the Government is getting on with the job.

Thank you.

2014.md

Good morning. I hope you all had a good Christmas break and you're starting 2014 eager and energised.

I know I am.

And I know the Government is, because there are a lot of things to get done this year.

Later in the year there'll be an election, where I'll seek the support of New Zealanders to continue the direction this country is going in.

The economy is growing. More jobs are being created. Family incomes are rising.

Crime is falling. More elective surgery is being done in public hospitals. Long-term welfare dependency is falling. And we're continuing to help families and older New Zealanders with generous income support.

As a country, we can keep going in this direction and continue to make gains, or we can change direction and go backwards.

And moving forwards is the only way to ensure we achieve the long-term growth that really changes New Zealand's fortunes and provides more opportunities for Kiwi families.

I can assure you I take nothing for granted when it comes to the election.

Each and every vote will have to be earned.

We have to work hard as a government, every day, to keep earning the trust and support of New Zealanders.

It may be election year but we won't be slowing down. There is far too much to be done.

MMP guarantees that every election is a tight contest.

We've shown we can deliver strong and stable government. We work with other parties for the good of the country, even when those parties have different policies.

That's what MMP requires.

I have always been optimistic about New Zealand.

As a country we have huge potential.

And as we begin 2014, things are really picking up.

The economy will grow strongly this year.

Our economic growth is forecast to be one of the highest in the developed world in 2014.

That means wages will keep growing, more jobs will be created and living standards will improve right across the country.

And it means we are catching up to other countries.

The Government will produce a budget surplus next year, when most other countries will still be in deficit and building up debt.

At the same time we are returning money to families and businesses through hundreds of millions of dollars of ACC levy reductions.

We have a business growth agenda with hundreds of initiatives to improve the productivity and competitiveness of the economy.

These range from negotiating free trade agreements, to boosting funding for business R&D, to rolling out ultra-fast broadband.

The Government's investment in infrastructure is bearing fruit as projects get off the ground and others are completed.

A lot of work, for example, will be done this year on the Waterview Connection in Auckland, which will transform the roading network in our biggest city. And this year construction will begin on the Kapiti Expressway and Wellington's long-awaited Transmission Gully project.

This summer is the most active season ever for oil and gas exploration, with the industry spending up to $750 million. At the same time, the Government is strengthening the regulations that govern drilling, particularly in deep water.

We have a big programme of work this year to increase the number of houses being built around the country so there are more opportunities for young families to own their own home.

We are working to deliver better public services for New Zealanders _ through the Police, courts, public hospitals, schools, tertiary training, and the many other ways that people and businesses deal with government.

Our approach is to put everyday New Zealanders at the heart of everything the Government does, so we organise services around them.

We now have more Police spending more time on the front line. We've introduced a range of measures to make communities safer, support victims, and rehabilitate offenders. Recorded crime is now at its lowest level in more than 30 years, with a 17 per cent drop over the past three years.

Over 40,000 more New Zealanders will get elective surgery this year than in 2008, and they will get that surgery faster. Almost all children under six can now go to the doctor after hours for free.

We are improving industry training and rebooting apprenticeships, and we're on track to get 14,000 additional new apprentices in New Zealand.

More people than ever are getting tertiary qualifications.

We're delivering significant reforms to the welfare system, with a far greater emphasis on work.

We're making progress in the big task of cleaning up waterways, and protecting and improving water quality right across New Zealand.

And we are continuing to support Cantabrians through the aftermath of the earthquakes and the rebuilding of their city.

Household incomes have been rising faster than the cost of living, right across the board, and income inequality has been declining. Despite what our political opponents try to claim, it is simply not true that the rich are getting richer and the poor are getting poorer.

We are a very steady, centre-right government with the interests of all New Zealanders at heart.

Our approach is always to take the public with us by clearly outlining our actions and priorities, and always keeping in mind why we are in government _ to make New Zealand a better place for Kiwis and their families.

So when I look forward to 2014, I do so with confidence and with optimism.

But that doesn't mean the job's done _ in fact it's just begun.

It's vitally important that over the next few years we continue to build on the hard-won gains we are making as a country.

That includes a huge improvement in managing the country's finances.

We have made careful savings, been disciplined with spending, and run the public sector far more efficiently.

That's a lot different than the previous government, which increased spending by 50 per cent in just five years. That spending helped push mortgage rates to almost 11 per cent and crippled the internationally competitive parts of the economy.

New Zealand can't afford that approach again.

The Government will get back to running surpluses next year. At first they will be very small but they will build up over time. There might be some room for modest spending or revenue initiatives, but the top priority has to be getting our debt down.

The Government has borrowed _ on behalf of New Zealanders _ around $50 billion over six years to get the country safely through a recession, the greatest financial crisis since the 1930s, and one of the most expensive natural disasters in history.

In better economic times we have to reduce that debt.

That will lift national savings, and help keep a lid on interest rate rises as the economy heats up.

We also have to lock in the improvements we are making to New Zealand's economic settings. And we have to lock in the progress we are making in delivering better public services.

Those changes will continue to serve the country well.

New Zealand now has the opportunity to significantly improve its economic fortunes and provide a better future for New Zealand families.

We can achieve the long-term lift in economic performance that this country has aspired to for so long, providing we keep to our steady and responsible programme.

The alternative to locking in our programme of change is to go off into left field. And I really do mean left field.

I'll give you an example. If Labour and the Greens ever got in they would be the only government in the world to want less competition in their electricity market.

Less competition means higher prices. In Ontario, where they have the closest thing to Labour's electricity proposal, electricity prices have gone up more than twice as fast as in New Zealand.

On top of that, Labour wants an emissions trading scheme that would put up household energy bills by $500 a year _ just like that.

They want people to work two more years before they can retire.

They want to reintroduce national awards like we had in the seventies _ so hello strikes and goodbye productivity.

They want to put up income taxes and introduce a new tax on all productive businesses and farms in the country.

When you look at it closely, the alternative prescription from Labour and the Greens is a combination of high spending, untried economic experiments and a lack of focus on what really matters.

It would be a huge step backward when the country is so obviously moving forward.

So this year I want people to think hard about where New Zealand is going, and how to keep us on the right track.

I want people to think about who can provide strong, stable government in what is still an uncertain world.

And I want people to think about whose judgement and integrity they can trust.

I have always been very clear that the biggest influence on my judgement, and the way I think about politics, has been my upbringing.

I came from a family that didn't have much. But I was able to do well and have a successful career.

That's partly because of the beliefs instilled in me at home _ to work hard and to aim high.

But equally important was the education I received at my local primary and high schools in Christchurch, and at Canterbury University.

That education opened the world to me.

So my upbringing and schooling shaped my views quite profoundly.

I believe people are ultimately responsible for their own lives and the well-being of their families.

But I also believe the Government should do what it can to provide children and young people with opportunities to succeed and do well, no matter what their family background or life circumstances.

That's why I have personally pushed through a number of policies for young people, including better mental health services, better trades training, greater support for teen parents, and breakfasts in schools.

I visit a lot of schools around the country, because they play a huge part in shaping the lives of our young people.

And I take my hat off to the teachers and principals across New Zealand who are making a real difference in lifting achievement.

A mountain of evidence shows that the quality of teaching _ inside the classroom _ is the biggest influence on kids' achievement.

I think everyone can remember the best and most inspirational teachers they had at school. I certainly can, and they made a big difference to my education.

The evidence also shows that, after teaching quality, the second biggest influence on achievement is school leadership.

To recognise this, we've introduced the Prime Minister's education awards for, among other things, excellence in teaching and school leadership.

That excellence is part of the reason our top students do as well as the best students anywhere in the world, and we should be rightly proud of that.

But we can't be complacent.

As I've said a number of times, far too many kids do poorly at school, and that's not something to be proud of.

New Zealand stands out among other countries for the wide gap we have between our top students and our lowest-performing students.

International studies also show that we are not keeping pace with achievement in other countries, particularly in maths and science. In fact, we have been on a gradual downward slide since the early 2000s.

In 2000, for example, our 15-year-olds were ranked fourth in the OECD's study for achievement in maths, with only Hong Kong, Japan and Korea ahead of us. Now we're ranked 23rd.

Today's 15-year-olds in New Zealand are performing worse, on average, than 15-year-olds in 2000.

That's despite a lot more money being spent on education.

So that has to be a call to action for all of us.

There's no doubt we have a good education system. But it's not as good as it could be. We need to make some changes.

For some time, the Government has been looking at what international research and evidence in education tells us, what the best performing countries are doing, what teachers and principals are saying they need, and what initiatives have been working here in New Zealand.

The first thing we did was start collecting better information, through national standards, because without good information everyone is simply stumbling around in the dark.

National standards have taken time to bed in, and we're working to improve the consistency of assessments. But the information they provide has been invaluable in determining where to put resources and effort to lift achievement.

Because lifting achievement, each year and in measurable steps, is the whole point of going to school.

So what's next?

Well, if teaching practice and school leadership are the most important factors for achievement, then it's obvious we need to strengthen the teaching profession and strengthen school leadership across the 50,000 teachers and 2,500 schools in New Zealand.

There are a number of things we want to do.

We want to keep top teachers in the classroom rather than having to go into management positions, or leave teaching altogether, to progress their careers. At the moment, our best teachers work their way up the career ladder by doing less teaching, and that shouldn't be the way it works.

We want to support a culture of collaboration within and across schools. That means the really good principals and teachers spending a lot more time sharing what they know, and how they work, with other principals and other teachers.

We want the best teachers and principals to lead a step change in achievement and we are going to pay them more to get it.

So today I am announcing four new roles for principals and teachers in New Zealand schools, and investing an extra $359 million into teaching and school leadership over the next four years.

These are changes that will benefit kids across New Zealand, because high-quality teaching leads to better achievement at school.

The first new role is an Executive Principal.

Executive Principals will be the top principals from across the country.

They will provide leadership across communities of schools, supporting other principals to raise student achievement.

We envisage there will be around 250 Executive Principals, or about one for every 10 schools, on average.

An Executive Principal will remain in charge of their own school but be released for two days a week to work across a grouping of schools, which will include primary and secondary schools.

Executive Principals will have a proven track record in raising achievement and they will pass on their knowledge and expertise to other principals.

They will be appointed by an external panel, for up to four years. Executive Principals will be paid an annual allowance of $40,000 on top of their existing salary, and they will be judged on their results.

So that's the first new role.

The second is a similar sort of position, again working across a group of schools, but at the teacher level.

These teachers we are calling Expert Teachers, and we intend to establish around 1,000 of these new positions.

Expert Teachers will have a proven track record in raising the performance of their students, particularly in maths, science, technology and literacy.

Expert Teachers will be based in their usual school, but will be released for two days a week to work across their school grouping, under the guidance of their Executive Principal.

They will get alongside other teachers, working with them to develop and improve classroom practice and raise student achievement.

Executive Principals will oversee the appointment of Expert Teachers and the appointment will be for up to four years. They will be paid an annual allowance of $20,000 on top of their usual salary.

Executive Principals and Expert Teachers will drive a whole new level of collaboration between schools and between teachers, with best practice becoming widespread across school communities.

The third new role we are going to introduce is for the top teachers in schools.

We want the best teachers to be recognised for improving student achievement and to act, in a formal sense, as role models for other teachers.

So we are going to introduce a new role _ a Lead Teacher. There will be around 5,000 Lead Teacher positions across the country.

Lead Teachers will be high-performing teachers who can demonstrate the best classroom practice.

Their classrooms will be open to other teachers almost all the time, so teachers can observe and discuss classroom practice with a model professional.

Lead Teachers will be paid an annual allowance of $10,000 on top of their existing salary. That allowance is in recognition of their status and their new responsibility in helping other teachers to raise achievement.

These new roles of Expert Teachers and Lead Teachers means more good teachers will stay in a teaching role, because they can see a career path that keeps them in the classroom where they are so effective. And that has huge benefits for the children they teach.

We are going to give extra funding to schools so teachers can take time out of their normal classroom to work with Expert Teachers and Lead Teachers.

And we are also going to establish a $10 million fund for schools and teachers to develop and research effective teaching practice in areas such as writing, maths, science and digital literacy.

The final change I want to announce today is that we are also going to better match up schools that are really struggling, with really excellent principals.

To do this we are going to establish a new role of Change Principal.

Change Principals will be top principals who are paid an additional allowance of $50,000 a year to go to a struggling school and turn it around.

Around 20 Change Principals will be appointed each year, for up to five years.

At the moment, the incentive is for principals to go to larger schools, where the salary is higher, rather than to schools that are the most challenging.

We are going to change that.

So those are the four new roles we are creating _ Executive Principals, Change Principals, Expert Teachers and Lead Teachers.

With all these new roles there are details to fill in and employment implications for teachers. The next step is to sit down over the next few months with representatives of the education profession, including unions, to further develop these proposals.

That process might result in some changes to the details of the policy, but our intent is clear. We want to recognise excellent teachers and principals, keep good teachers in the classroom, and share expertise across schools and amongst teachers.

And we intend to introduce the new principal and teaching roles from next year.

We plan to spend an extra $359 million over the next four years to fund these proposals, with the full-year cost rising to more than $150 million a year by the end of that period.

That's because we are prepared to invest in long-term policies that lift achievement.

In the end, these initiatives are about kids.

High-quality teaching leads to better achievement at school _ the evidence is overwhelming.

And doing better at school has a profound impact on the lives of young New Zealanders _ economically, of course, but also in terms of their ability to participate in society and contribute to their families and communities.

As you can see, we've got plenty on, and plenty of new ideas to keep pushing the country forward.

New Zealand is heading in the right direction.

The Government's economic programme is laying the foundations for a stronger economy, sustainable jobs and higher incomes.

We are making real progress in delivering better public services for New Zealanders and getting on top of issues like crime and welfare dependency.

And as you can see today, we have big plans for education.

It's important we continue to lock in and protect the gains we've made and keep making progress.

That takes constant hard work, oversight and judgement.

It takes a team working together and all heading in the same direction.

And it takes a government that is united, focused and energised.

Ladies and gentlemen, that's what I can promise New Zealand in 2014.

Thank you.

2015.md

Ladies and Gentlemen.

New Zealand is in good shape and getting better.

We are making great strides towards building a stronger, more prosperous country - a country where we can have a great lifestyle and earn a good income that compares well with the rest of the world.

That progress is due to the hard work and positive attitude of New Zealanders.

It's also because of the stability, cohesion and confidence that's come from six years of strong and stable government.

New Zealand is doing well compared to other countries.

The economy is growing, employment is increasing and wages are rising.

Consumers are benefiting from low inflation and a long period of stable, low interest rates.

We are growing new industries like ICT and high tech manufacturing, and strengthening existing ones like our food industry, tourism and international education.

The Government is working towards a surplus and repaying debt.

We're making good progress in areas like welfare, education and law and order, to help improve the lives of New Zealanders and their families.

New Zealanders endorsed our approach four months ago by re-electing the Government with an even stronger mandate.

I thank them for the confidence they've shown in us.

The election result allows New Zealand to experience a different third term government than has been the case in the past.

We have a mandate and a strong platform to achieve further steady reform that delivers better results for New Zealanders.

And there is much to do.

I can tell you that there will be no slackening in pace.

We have three busy years ahead of us.

We must also manage the many global risks and challenges that could throw New Zealand off track.

That was reinforced for me at the World Economic Forum in Davos, which I've just attended.

Europe's debt issues are far from resolved, growth is slowing in China and global prices for many commodities remain weak.

These, and other factors, make it all the more important to continue improving our economy, boosting our competitiveness and encouraging new investment, so we build a stronger and more resilient New Zealand.

The Government's focus this term will be on our four priorities:

responsibly managing the Government's finances

building a more productive and competitive economy

delivering better public services

and continuing to support the rebuilding of Christchurch.

I want to talk to you today about housing, which is an important part of all these four priorities.

After the election, I appointed three Ministers to housing-related portfolios.

Paula Bennett is the Minister for Social Housing, in charge of supporting New Zealanders with the highest housing needs.

Bill English is the Minister responsible for Housing New Zealand, which owns or leases 68,000 properties.

And Nick Smith is the Minister for Building and Housing.

So you can see that housing policy is important to this Government.

One of the biggest and most longstanding issues is the supply of new housing, particularly in Auckland.

Previous governments have put this in the too-hard basket.

We're actually doing something about it.

We're taking steps that will result in more houses being built, and more affordable homes in the market.

We've passed new legislation and signed housing accords with six councils, including Auckland, to fast-track new housing and release more land for residential development.

Last week, Nick Smith outlined significant changes to the Resource Management Act to improve the supply and affordability of housing.

Already you can see signs that our approach is working.

Residential construction increased 21 per cent last year and more than 24,000 building consents were issued - the highest number since 2008.

This growth in construction is set to continue as special housing areas accelerate land availability and consenting.

That will help to ease the pressure on house prices.

But we should also recognise that housing affordability includes more than just prices.

Incomes have been rising faster than inflation and people are feeling confident about the future.

Interest rates are low, which makes servicing a mortgage easier.

These factors are actually supporting the growth in house prices in some areas. People are assessing their own ability to pay and are bidding on that basis, as they've always done.

It's often hard, though, to save for your first house.

That's where the Government's new HomeStart programme for first home buyers comes in.

It begins in April this year and we estimate it will help 90,000 people into their first home over the next five years.

On top of that, we're improving the quality of New Zealand's housing stock.

Nearly 300,000 homes around the country are warmer, drier and healthier thanks to our Warm Up insulation and heating programme, and the insulation of Housing New Zealand properties.

For people on low incomes, the Government subsidises housing costs from a total budget of $1.9 billion this year.

Around $1.2 billion of that is for the accommodation supplement, which helps people with the costs of private rentals and sometimes mortgage payments.

The other $700 million is for the income-related rent subsidy, which supports low-income people with the greatest housing needs, in what's known as social housing.

People in social housing are those whose circumstances and finances make private renting or home ownership difficult.

They could be a sole parent, for example, an older person, or someone with mental health issues.

Often, they are receiving other assistance, like a benefit or disability support.

This issue - social housing - is what I want to talk to you about today.

Until last year, to get the most intensive housing assistance from the Government, which is an income-related rent, you had to live in a Housing New Zealand property - a state house, as they are commonly called.

But that's not the case anymore.

Now, the Government will also support people with high housing needs if they are living in a property run by an approved community housing provider, and if they've been referred there by the Ministry of Social Development.

The financial support they get is exactly the same as it is for people in Housing New Zealand properties. They pay an income-related rent - usually 25 per cent of their income - with the Government paying the difference between that and the property's market rent.

This change took effect last April.

It's why we talk about "social housing" rather than "state housing", because you no longer have to live in a state house to get a high level of government housing support.

It's an important change.

Community housing providers already own around 5,000 houses and some are long established.

There's a lot of potential there.

Locally-based providers can be closer and more responsive to their community.

Providers that focus on particular types of tenants can integrate housing with the other services they provide, like mental health, disability or budgeting support.

Non-government housing providers can also bring in new approaches and access new sources of funding.

I'll give you a nice example.

The Dominion Post had a story last month about Paula Bennett opening new housing units in Wellington for people with disabilities.

There's a lovely photo of Paula and one of the tenants - Daniel - sharing a joke.

He's obviously delighted to be moving into one of eight brand new and specially designed units that are owned by Accessible Properties, a community housing provider.

It bought the units with help from the Government's Social Housing Fund, which we established in 2011.

Its tenancy managers specialise in working with people with disabilities.

Some of the tenants are getting the income-related rent subsidy.

And quite apart from the social housing side of the development, there are also 10 other new units on the site that are available for sale into the general market.

As the article says, this is the changing face of social housing in New Zealand.

It's not change for the sake of it. It's change to improve the circumstances of those who need the most help.

And it's part of our wider approach to delivering better services to New Zealanders who need them.

Currently, only a small number of social housing tenants are in properties run by an approved community housing provider.

We want that number to grow over the next few years.

We want a better range of social housing options for people in need.

At the same time, we want Housing New Zealand to be doing the best job it can.

It will continue to be by far the biggest provider of social housing in New Zealand.

But the experience of countries like Australia and the United Kingdom is that having non-government organisations involved in social housing, alongside the government, is a better way of doing things.

That's just one part of the Government's overall package of social housing reforms, which has five objectives.

The first objective is to ensure that people who need housing support from the Government can get it.

We are going to ensure that more people get into social housing over the next three years, whether that is run by Housing New Zealand or a community provider.

The social housing budget provides for around 62,000 income-related rent subsidies a year.

We are committed to increasing that to around 65,000 subsidies by 2017/18, which will cost an extra $40 million a year.

In particular, there will be an increase in social housing in Auckland and increase in Christchurch.

In Auckland, as part of this growth in social housing, an initial 300 income-related rent subsidies will shortly be offered to community housing providers.

We're also concerned about people sleeping rough or in substandard accommodation.

Paula Bennett has given MSD a big programme of work to reduce pressure on organisations working with homeless people and to reduce the number of people waiting on the social housing register.

This includes a $500,000 cash injection for the emergency housing sector, a wider review of funding and the introduction of an emergency housing database in Auckland.

MSD will work more intensively with people on the social housing register who have less urgent needs, to help them into private rentals where possible.

And by increasing the number of social housing places, getting a better alignment of houses with demand, and freeing up houses occupied by market renters, we'll help more vulnerable New Zealanders into better housing.

Our second objective is to help social housing tenants to independence, as appropriate.

We want to help people to move out of social housing and into private rentals or home ownership, if and when their circumstances improve.

Currently, around 3,300 tenants are living in Housing New Zealand properties but are earning too much to get an income-related rent subsidy. These market renters could in many cases go into private accommodation.

The Government has decided that an additional 3,000 tenancy reviews will begin over this year and the next, focusing on market renters and those who are close to paying market rents.

This will take the total number of reviews to almost 5,000 over this two-year period.

People will be encouraged and supported to move into other housing if they are in a position to take that step.

That frees up a place for someone else with greater needs.

I can assure people that every review will take into account people's individual circumstances and the availability of alternative accommodation. We understand the importance of certainty for tenants, particularly those with serious and long-term needs.

The third objective in this reform programme is to ensure that properties used for social housing are the right size and configuration, and in the right areas.

Around a third of Housing New Zealand properties are in the wrong place, or are the wrong type to meet existing and future demand.

Thirty per cent of people waiting for social housing require a one bedroom place, for example, but these make up only nine per cent of Housing New Zealand properties.

More houses are required in the bigger cities - Auckland in particular - and fewer in some other parts of the country.

And many state houses are showing their age.

Housing New Zealand is already working on its portfolio of properties - disposing of houses that are no longer required, or in the wrong place, and building new ones where they are needed.

We want to accelerate that process, to get the location and size of Housing New Zealand properties lined up with the people who need them.

The Government has decided to commission a strategic review of Housing New Zealand in the first half of this year.

Its asset management plans will be part of this review so we can ensure its properties are right for tenants, given Housing New Zealand's ongoing role as the biggest social landlord in the country.

We'll give more details when the strategic review is completed.

Our fourth objective is to help increase the supply of affordable housing for people to buy, especially in Auckland.

How we manage social housing can help with that.

Housing New Zealand is the biggest residential landowner in the country and could free up more land for housing development.

Housing New Zealand owns neighbouring sections, for example, where a few existing properties could be replaced with a lot more new homes, with some or all of them remaining as social housing.

On a larger scale, there are opportunities to redevelop and revitalise whole state housing suburbs. These redevelopments could result in a mix of Housing New Zealand properties, other social housing, affordable housing and higher cost homes.

Large and small redevelopments are already happening.

In Auckland, for example, the Tamaki Redevelopment Company - a partnership between the Government and Auckland Council - is rejuvenating the suburb. It's delivering new social housing alongside affordable housing and other homes as a major urban renewal project.

Again, we want to accelerate these processes, so small and large redevelopments of Housing New Zealand land and properties are undertaken with more urgency.

The Government is still considering how and where that might happen.

A large redevelopment could involve existing properties being transferred out of Housing New Zealand ownership and into a special urban development entity.

But I want to emphasise again that the total number of social housing places across Auckland will increase as a result of what we are doing.

And existing tenants will be supported through any changes.

Our fifth and final objective is to encourage and develop more diverse ownership of social housing.

To some extent we can do that by involving community housing providers in redevelopments of Crown land.

However, the overwhelming dominance of Housing New Zealand leaves little room at the moment for non-government organisations to play a significant role.

But we can change that if community housing providers take ownership or management of some existing Housing New Zealand properties, with tenants remaining in them.

The Government is prepared to do that if we're satisfied we can get better services for tenants and fair and reasonable value for taxpayers.

We'll look at doing that in areas where demand is stable and where housing providers are keen to expand.

These areas will be determined after engagement and consultation, including with community housing providers and iwi, to ensure we understand everyone's rights and interests.

We'll then look to sell between 1,000 and 2,000 Housing New Zealand properties over the following year for use as social housing run by approved community housing providers.

In doing so, we'll use open and competitive processes.

Community housing providers may want to buy properties on their own, or they may go into partnership with other organisations who lend them money, contribute equity, or provide other services.

Properties will have to stay in social housing unless the government agrees otherwise, and existing tenants will continue to be housed for the duration of their need.

Selling properties in this way doesn't reduce the number of social housing places. It just means more of the tenancies will be managed by a non-government housing provider rather than Housing New Zealand.

We're very conscious that the sale of properties has to work for taxpayers.

We're looking to get a fair and reasonable price for these properties, bearing in mind they're being sold as ongoing social houses with high-need tenants.

We're not selling them as private homes or rentals.

So we might not get the book value of the properties. But that's only because, under accounting rules, the value of houses in the Government's books is based on a theoretical sale in the open market. And that's not what we're doing.

All going well, we might initiate more sales over the next three years, but that has yet to be decided.

Cabinet will review progress in November, and any further steps will be announced after that.

Property sales and large redevelopments will reduce the size of Housing New Zealand's portfolio.

But it will continue to be by far the biggest provider of social housing in New Zealand, and we will ensure that in 2017 it provides at least 60,000 properties.

It may have more than that, depending on how quickly transactions and redevelopments proceed.

Initially, we will free up capital from these sales, which we'll use for housing and other capital projects needed across government.

But we'll be spending more each year on income-related rent subsidies.

In summary, the package I've outlined today will help more people and families get social housing, ensure more of that housing is supplied by community housing providers, improve services for social housing tenants and release more land for new houses.

Of course, our opponents will say that the Government should own and run everything in social housing.

But that system didn't work as well as it could for tenants, or for taxpayers.

If we're to succeed in solving some of New Zealand's longstanding social challenges, the Government needs to be open to working with community groups, non-government agencies and the private sector.

We don't have a monopoly on good ideas, resources and expertise.

So we're taking a different approach to provide quality social housing for New Zealanders who need it.

It's just one of the many areas where the Government will be working hard for New Zealanders over the next three years.

Our economic programme is laying the foundations for a stronger economy, sustainable jobs and higher incomes.

And we're making real progress in delivering better public services for New Zealanders.

That takes constant hard work, oversight and judgement.

It takes a team working together and all heading in the same direction.

And it takes a government that is united, focused and energised.

That's what I can promise New Zealand.

Thank you.

ENDS

2016.md

Good afternoon. It's great to see so many of you here today.

I want to start by acknowledging Mayor Len Brown, the Auckland Council and the Chamber of Commerce - all strong advocates for this city.

And I want to thank the Chamber for hosting this event.

Finally, can I acknowledge my ministerial colleagues Steven Joyce and Nikki Kaye. Unfortunately, Transport Minister Simon Bridges cannot be here today as he's visiting Antarctica.

It's home to one third of Kiwis, it's our biggest commercial centre and our shopfront to the rest of the world.

Every region of New Zealand is crucial to our growth and progress.

But on New Zealand's behalf, Auckland is competing with Asia-Pacific's great global cities. It's our version of Sydney, Singapore or Shanghai.

Lifting our standard of living requires strong and enduring global relationships, because we won't get rich selling to ourselves.

New Zealand must expand its global supply chains, attract more investment and develop new markets.

As Prime Minister, I work every day to lead an open and confident country that backs itself on the world stage.

Auckland is at the forefront of that.

It's important for all of New Zealand that Auckland succeeds as a great place to live and do business.

With success, however, comes challenges.

Strong growth is putting pressure on infrastructure, housing, public services and transport.

That's typical of fast-growing cities around the world.

It's one reason we decided in our first term to unite the city under one council, so we could better tackle these challenges.

It's also why we're backing Auckland by investing billions of dollars in modern infrastructure.

I'll update you on some of those projects shortly.

But I first want to talk about the Government's busy policy programme for 2016 and beyond.

As the National-led Government enters its eighth year, I can tell you it's fantastic leading a team of ministers and MPs who remain energised and full of new ideas.

Busy agenda for 2016 We're as busy now as we were in 2008. And that's how it should be.

This year, for example, the Government will respond to a review of Child, Youth and Family to ensure our most vulnerable children get the care and protection they deserve.

We'll press on with our social housing reforms to do a better job for tenants.

We'll maintain our strong focus on law and order.

We'll respond to a major review of security and intelligence agencies.

And we'll complete an assessment of the Emissions Trading Scheme.

These are just a few examples of our work programme.

But building a strong economy that attracts new investment and creates more jobs will remain front and centre of the Government's agenda.

That's vitally important.

A strong, growing economy encourages businesses to boost investment in new products and markets, hire more staff and pay good wages.

It means New Zealanders can be rewarded for their enterprise and hard work.

And a strong economy supports better healthcare, education and other public services New Zealanders need.

We frequently hear Opposition parties calling for the Government to magic up more jobs, to increase wages or to spend more on any number of things.

Actually, governments can't do any of those things without a strong, confident economy.

The Government's role is creating an environment that gives businesses the confidence to invest and grow.

And to do that in the knowledge they'll be backed by clear and sensible government policies.

My Government works on those issues every day.

We're resolutely focused on improving our competitiveness.

TPP will help diversify the economy

A good example is the Trans-Pacific Partnership Agreement.

It will be New Zealand's biggest free trade agreement, giving our exporters much better access to more than 800 million customers in 11 countries across Asia and the Pacific. It's our first FTA with the largest and third-largest economies in the world - the United States and Japan.

It will eliminate tariffs on 93 per cent of exports to our new FTA partners - the United States, Japan, Canada, Mexico and Peru.

Successive New Zealand governments have worked hard to achieve this for 25 years. They knew it would help diversify and grow the economy.

So it really is unthinkable that any responsible government would now walk away from the TPP.

It will be positive for our country and for our future.

The Government also remains focused on controlling spending, and demanding better results from our investment in public services.

We're reducing ACC levies and maintaining competitive tax rates.

And we're pushing on with our Business Growth Agenda, which includes hundreds of initiatives spanning export markets, investment, skills, natural resources, innovation and infrastructure.

They're all essential ingredients in a competitive economy where businesses can thrive and grow.

Faced with a world economy full of risks and challenges, it's important that we continue to focus on things we can influence - such as our own competitiveness.

The New Year has reminded us of those risks.

Concerns about China's economic outlook and lower commodity prices have rippled through financial markets this month.

But global challenges are nothing new. They're a fact of life in the modern world.

A resilient, competitive economy can deal with them.

And this Government has a track record of supporting New Zealanders through some of the biggest challenges you can imagine - including the global financial crisis and Canterbury earthquakes.

New Zealand well placed As we look forward to 2016, New Zealand is well placed.

Global dairy prices remain low. But over time, they will recover and the New Zealand dairy sector is well-placed to attract growing numbers of middle-class customers in key markets.

In the meantime, tourism, construction, international education, ICT, high-tech manufacturing, services and a number of our primary industries are all growing and underpinning a solid outlook.

We remain one of the best places to do business.

Consumer and business confidence is picking up and I sense a feeling of optimism among New Zealanders.

The Treasury's latest forecasts show economic growth averaging just under 3 per cent over the next five years.

Unemployment at 6 per cent remains higher than we would like and we're working hard to help bring it down.

But the headline unemployment rate tells only part of the story.

An extra 160,000 jobs were created in the past three years - nearly 66,000 of them here in Auckland.

The Treasury expects another 195,000 jobs to be created across New Zealand by 2020.

While we've been the Government, the average wage has increased by more than double the rate of inflation.

And New Zealand has the third highest employment rate in the developed world.

That's right: Our businesses employ a higher proportion of the working age population than almost any other developed country.

In terms of the Government's finances, under Bill English's careful management, we achieved our surplus target last year.

The Government is also investing billions of dollars in upgrading New Zealand's infrastructure, to get the country moving - literally.

Since we took office, we've invested $4.5 billion in roads of national significance.

Central and local government have together allocated $8.8 billion for local roads.

In Auckland, we've completed the Victoria Park Tunnel, the Upper Harbour Highway and replaced the Newmarket Viaduct.

Taxpayers have also invested $3.2 billion in rail, including metro rail in Auckland and Wellington.

We've provided over $1.7 billion to roll out ultra-fast broadband and another $400 million for rural broadband.

All up, taxpayers have committed around $17 billion to the Canterbury rebuild.

And the Government is investing in schools, hospitals, housing and a lot of other public infrastructure.

Looking forward, we'll invest another $11.5 billion in capital projects over the next two years alone.

This amounts to a significant investment in New Zealand's future.

And these infrastructure projects are a rich source of jobs.

For example, Treasury estimates the Government's Roads of National Significance will involve around 35,000 construction jobs.

Another 2,100 are expected from the regional state highway programme.

The major rail upgrade and electrification projects since 2009 are expected to result in over 3,000 jobs.

And a further 4,000 jobs are expected from rolling out ultra-fast and rural broadband.

So I'm pleased to make further announcements today about important infrastructure projects.

City Rail Link and business plan The first concerns Auckland's City Rail Link.

This will be one of New Zealand's largest transport projects, with an estimated cost of around $2.5 billion.

The 3.4 kilometre underground line will run from Britomart station through the CBD to connect with the existing western line at Mt Eden station.

Auckland Transport estimates commuters travelling between Henderson and the planned Aotea Station will save an average 17 minutes per trip.

A couple of years ago, I said the Government was committed to a joint business plan for the Rail Link with Auckland Council in 2017.

We agreed to provide a share of funding for construction to start in 2020.

And we were prepared to consider an earlier start if Auckland's rail patronage and CBD employment hit certain thresholds committed to by the Auckland Council.

CBD employment levels are still some way from the 25 per cent growth threshold.

But strong growth in rail patronage since 2013 means it will reach the 20 million annual trip threshold well before 2020.

It's become clear that we need to provide certainty for other planned CBD developments affected by the Rail Link.

This means we see merit in starting the project sooner.

So I can today confirm the Government will work with the Council to bring forward the business plan and formalise our funding commitment from 2020.

The Council has indicated this would allow construction of the Rail Link's main works to start in 2018 - at least two years earlier than currently envisaged.

It would also allow the council to get on with negotiating contracts and providing certainty for investors in other important Auckland CBD projects. These include the $350 million NDG Auckland Centre next to the new Aotea Station and the $680 million Commercial Bay tower opposite Britomart.

Timely confirmation of these and other projects, alongside the Rail Link, will encourage more people, businesses and jobs into the heart of Auckland.

It should also reduce the period of disruption in the central city by concentrating construction over a shorter timeframe.

We still need to work through a number of important and quite complex issues with the Council.

These include how project costs will be finally shared between the Government and the Council and how the Rail Link will be owned and managed.

Providing these issues are resolved - and I'm confident they can be - we'll aim to finalise the business plan later this year.

The Rail Link is one of several significant government transport projects in Auckland.

East-West Connection a priority Another is the East-West Connection between the Southern and South-Western motorways, which is estimated to cost over $1 billion.

This is a large and complex project.

It's a priority for Auckland because it will improve travel and freight times in this busy part of the city. It will also provide much better access between the Eastern Suburbs and the Airport.

We consider it a project of national significance.

So today I'm confirming the East-West Connection will go through a streamlined consenting process later this year to bring forward its construction.

That means a consenting decision will need to be made within nine months of application.

Subject to approval, it's the Government's intention to fund the East-West Connection through the Land Transport Fund so construction can start as early as 2018.

I've asked ministers and officials for advice on how this can be managed and achieved.

In the meantime, the Transport Agency will start early project work later this year on widening State Highway 20 between Neilson Street and Queenstown Road.

This is integral to the wider East-West Connection and will support traffic growth when the Waterview Tunnels open.

All up, over the next three years, around $4.2 billion will be invested in transport in and around Auckland.

We're on track to complete the Western Ring Route by 2019.

The $200 million Te Atatu and Lincoln interchanges will open in March, and the $1.4 billion Waterview Connection is expected to open early next year.

Construction of the $1.3 billion Auckland Manukau Eastern Transport Initiative is underway. Stage one has been completed and work has started on designing and consenting for stage two.

The $268 million Southern Motorway upgrade started in October and is scheduled to be completed in late 2018.

And construction of the Northern Motorway Upgrade is expected to start in 2018. It will connect with the Western Ring Route and see the completion of the Northern Busway Extension through to Albany.

These projects underscore the Government's strong backing of Auckland.

Commitment to regional roading Ladies and gentlemen: Communities and businesses in our regions also need modern infrastructure that's fit-for-purpose.

The Government is investing heavily in rural broadband and we're developing regional highways.

In 2014, we set out an accelerated regional roading package.

It aimed to bring forward construction of regional highway projects that had previously struggled to attract national funding in the face of wider priorities. Five of these projects are either finished or underway.

The Transport Agency last year confirmed funding for a further four projects, including bridge replacements and safety improvements in Horowhenua, the West Coast, Northland and Taranaki.

Today I'm pleased to confirm the Government is providing up to $115 million to complete the next four regional projects in this programme.

The two largest will be in Taranaki, where modern by-passes will allow motorists to avoid Mount Messenger and the Awakino Tunnel.

These new projects were not envisaged when we announced the regional roading programme two years ago.

Over many years, the northern gateway into Taranaki has suffered from a poor safety record, closures and delays.

Calls to improve this stretch of highway go back decades.

In fact, we've found a newspaper article from July 1918.

It reported a local deputation complaining to the Minister of Public Works about the impassable and unsatisfactory road over Mount Messenger.

The paper says, and I quote: "The Minister made a lengthy reply, stating that he had instructed his district engineer to prepare plans of work and that he would give as much money as could be obtained from the Minister of Finance."

Believe me - I know how difficult that can be.

But Bill English has done better than his predecessors, and he's coming up with the money needed for this important work.

Construction of the by-passes is expected to start in the next two years. This will bring huge benefits to Taranaki.

The Government will also provide funding to replace the single lane Motu Bridge on State Highway 2 near Gisborne with a new two-lane bridge.

And we'll replace the Opawa Bridge on State Highway 1 near Blenheim with a safer bridge to accommodate increasing traffic volumes in Marlborough.

Improving housing supply I'd also like to make some comments today about housing.

Housing supply, especially here in Auckland, is a longstanding issue.

There is no quick fix. That's been the experience in fast-growing overseas cities.

Today, I want to make the Government's expectations absolutely clear. We must continue lifting the supply of new houses in Auckland to meet the demands of this growing city.

Everyone has a part to play - the Government, the Council, developers and community organisations.

And it's encouraging to see a broader consensus emerging that this is a supply issue.

Progress is being made Around 9,000 building consents were issued in Auckland in the year to November.

That's the highest figure for just over 11 years, although it's still short of the 13,000 new houses forecast to be needed each year.

Officials estimate government-initiated projects will deliver at least 10,000 extra houses in Auckland by 2020 - including developments at Hobsonville Point and Tamaki.

The Government's National Construction Pipeline Report predicts an extra 80,000 new homes will be built in Auckland in the six years to 2020 - more than double the rate of the preceding six years.

The Government is determined to ensure this busy pipeline delivers the houses Auckland needs as quickly as possible.

One priority is reforming the Resource Management Act to support more housing alongside better environmental management.

We introduced legislation just before Christmas and it's currently before select committee.

It's important we improve the RMA so we can tackle planning issues standing in the way of getting houses built faster.

So if other groups say they're concerned about Auckland housing, you should tell them they need to support the RMA reforms.

Another priority is working intensively with the Auckland Council and others to free up land so more houses can be built sooner.

That includes the Auckland Housing Accord, which has seen almost 24,000 dwellings and sections consented in its first two years. The target is 39,000 consents before the end of this year.

We've set up 106 Special Housing Areas in Auckland.

And we're working to resolve issues such as infrastructure development and building sector capacity.

For its part, the Government is identifying surplus Crown land that can be freed up for new housing and we'll soon be in a position to make further announcements about the first projects.

In the Budget last year, we moved to ensure residential property investors - particularly those from overseas - pay their fair share of tax when buying and selling residential property for profit.

And we provided Inland Revenue with extra funding for compliance and enforcement.

Combined with the Reserve Bank's tighter loan-to-value rules, these changes appear to have taken some heat out of the Auckland housing market in recent months.

Last month the Real Estate Institute reported the number of Auckland homes sold in November fell to the lowest level since 2011. And QV noted the rate of price growth was easing.

It's still early days and we'll need to see more data to be sure.

Conclusion Ladies and gentlemen: I sought election as Prime Minister because I believed New Zealand could do better as a country - much better.

I wanted us to become a more prosperous, more ambitious and more confident nation; a successful country comfortable in its own skin.

I also believed that if we set a course of considered and sensible reform year after year, we could again be one of the world's best places to live and work. We're making good progress in a world full of challenges.

Our households and businesses are more resilient and more outward looking. We're grasping the many opportunities opening up on our doorstep in Asia and the Pacific.

And we're providing more of our young people with opportunities to raise their families here instead of heading overseas.

But the job is far from finished.

Our challenge over the next few years is to stay on course and build on the good momentum we're now seeing.

My Government is motivated to continue working hard for all New Zealanders.

Providing we stick with a plan that's working, I know we can deliver the opportunities New Zealanders and their families deserve.

Thank you.