Key Points:

John Key's speech - released before he delivered it at the National Party Annual Conference, at the Langham Hotel, Auckland.

Let me start by saying to all of you - thank-you.

National would not exist without you. Thank you for all the work you have done to get us to where we are today. And thank you, in advance, for the work you are going to do as we run up to the election.


I want to single out two people in particular. The first is our party president, Judy Kirk. Judy is a tireless president. She is 120 per cent dedicated to the National Party.

The other person I want to single out is Bill English. Bill is the wise old head of our caucus - even if he is four months younger than me.

I want to ask you a question. Why have we given up our weekend to gather here in Auckland?

I'll give you one reason. We're sick of Labour telling us what to do. We're sick of being told how to bring up our kids, what to put in school lunchboxes, and that we have to microchip our dogs. We're sick of being told off for buying houses and for eating pies.

But it's more than that.

We are also here because we believe in the principles of the National Party. We believe in individual freedom and individual responsibility. We believe the government should underpin our society but not dominate it. We believe in the importance of families and of home ownership. We believe in an open and competitive economy. We believe in tolerance and respect for all New Zealanders.

In my opinion, the National Party has been at its very best when it has used its heart as well as its brain. Today I want assure you that I will lead a government for all New Zealanders.

National's policies


This year I have announced some major pieces of policy.

Following my Burnside speech in January, I have made a number of policy announcements aimed at turbo-charging the efforts of community and voluntary groups.

I announced there would be unlimited tax breaks for volunteers and for charitable donations. I announced there would be significant changes in the way National would contract with community groups.

Our policy of removing the cap from charitable donations was very well received. In fact, it was so well received that Labour stole it word for word and announced it in this year's Budget.

But I know we will never break the cycles of disadvantage unless we give young people the skills they need. That's one reason I have a strong focus on education.

Another reason is this - I know from personal experience that education is a liberator. Unless we ensure that every Kiwi is equipped with a decent education, we are robbing them of a future.


As a starting point, I have announced that National will require all primary schools to test children against national standards in reading, writing and maths, and to report these results to parents.

I will not stand back as Prime Minister of New Zealand and let 1 in 5 kids leave school without anywhere near the level of literacy and numeracy they need to succeed.

And while we're at it we're going to bring hands-on trades and apprenticeship training back, where it belongs, in the heart of our school system. Let's make school relevant and interesting for all young New Zealanders.

This year I've also had a lot to say about the environment. I have made it clear that National takes the issue of climate change very seriously.

So, after careful deliberation, we announced our target of cutting New Zealand's greenhouse gas emissions by 50 per cent by the year 2050. This target strikes the proper balance between our economic opportunities and our environmental responsibilities.

It is the right thing to do. Unlike Helen Clark, I'm not going to make extravagant promises about carbon emissions that will send people to the dole queue.


Let me assure you that we are going to unfold a lot more policy over the next year, leading up to the 2008 election.

In that election, Kiwis will be voting for the sort of future they want.

The economy

I have some good news and bad news about the future. Let's start with the good news.

The prospects for New Zealand are better than they have been in decades.

We face a golden opportunity to become a more prosperous country. Demand is booming for the commodities we produce, especially dairy products. The world wants to buy protein and we are one of its biggest exporters. Countries are willing to pay good money for the food we produce, and we have a natural advantage in producing it.


What is more, some of those countries - particularly China and India - are getting wealthier all the time. They have a growing middle class, which more and more will want to buy high-quality foods. They want to travel. They want to educate their children. They will want safe places to locate their businesses.

They will look to New Zealand for these things. And they will do this on a scale which is almost unimaginable.

We are in the midst of incredibly powerful global trends which are going to sweep us along whether we like it or not. The question isn't whether those trends will happen. The question is whether we can take the most advantage of them.

We don't need 1970s vision, we need 2020 vision.

That's where I come to the bad news. The bad news is that right now there is a huge risk that we will miss the boat.

Our economy is seriously underpowered. Our productivity is declining. Because of this, our economy can't grow at more than a very modest rate without causing inflation, high interest rates, and an over-valued exchange rate. We're seeing this very clearly right now. Floating mortgage rates are over 10 per cent and the exchange rate is just off record highs.


I think of it like getting on an 80cc motorbike and trying to go 100 kilometres an hour. It's possible, but only if you rev the hell out of it. And if you do that, the engine will eventually pack in.

As a country we can't sustain that. Someone has to pay the price. Make no mistake: New Zealanders are paying the price for our underpowered economy. Homeowners, businesses, and exporters are being crippled by interest rates and the dollar.

The other result of an underpowered economy is that the rest of the world is pulling away from us. Our little 80cc economy isn't powerful enough to compete with more productive countries.

Of the 30 countries in the OECD, New Zealand is now ranked No 22 in terms of national income per person. We have managed to fall behind every single country in Western Europe with one exception, and that's Portugal. The countries we can now compare ourselves with are those in Eastern Europe, like the Czech Republic and Hungary.

So there are real issues with the fundamentals of our economy. You know what those issues are:

We have an infrastructure deficit throughout the country.


1 in 5 Kiwi kids leave school unable to read, write and do maths at the minimum expected level.

Skilled people are deserting the country in droves. Each week 760 people leave New Zealand to live in Australia.

New Zealanders are completely frustrated by the bureaucracy and over-regulation that hampers anything they try to do.

This Government shows no signs of being willing or able to deal with these issues. As Bill English talked about yesterday, Labour's main focus for the rest of this term is getting its Electoral Finance Bill passed so it can silence its critics in election year.

If ever there was a sign of a desperate, distracted, and dying government, surely this is it.

Our country is simply not living up to its potential.


We desperately need to grow our productive capacity. We can't just keep on pushing our existing capacity to the max. We need an engine that's bigger than 80cc. Then we could have good growth in our economy without pushing interest rates and the exchange rate sky high.

National has a plan for growing New Zealand's engine. Bill talked about this yesterday. We know what it takes.

It starts with progressively cutting personal taxes, and that will begin in Bill's very first Budget.

We will take a disciplined approach to government spending. You work too hard for us to waste your money.

We will stop the massive rise in head office bureaucracy that Labour has encouraged.

We will deal with the regulatory and compliance cost issues which smother New Zealand businesses.


We will invest in the infrastructure this country desperately needs to grow.

We will have an unwavering focus on education.

And, yes, as Nick Smith told Conference yesterday, we will reform the Resource Management Act.


I unashamedly want New Zealand to be a more prosperous country.

I want us to foot it with the most privileged countries in the world. I want our families to have a pay packet each week that ensures them genuine choices in their lives. I want Kiwi families to have a feeling of security, and not to be living from one week to the next. I want our children and our grandchildren to be able to chase their dreams here in New Zealand, not for their dream to be leaving New Zealand.


Families are tremendously important. I think most New Zealanders would agree that the security, happiness and welfare of their family are the most precious things to them in the world. Perhaps that is why most of us can scarcely believe the horrific cases of child abuse that are becoming a regular feature of our news bulletins.

I was sickened to the very pit of my stomach by reports of the barbaric abuse that cost the life of three-year-old Nia Glassie.

In my first major speech as leader, at Burnside, I talked about there being an underclass in New Zealand. If anyone was wondering if this underclass really existed, then surely the circumstances of Nia Glassie's horrific death has erased all doubt.

Every five weeks in New Zealand a child dies at the hands of their parent or caregiver. As a society, and as a government, we must be single-minded in our intolerance of such behaviour.

These are the individual acts of individual New Zealanders. It doesn't matter what excuses are dreamed up for child abusers, there's no getting away from the fact that they are personally responsible for their actions.

We don't need to hear excuses for violence, we need it to stop. I want to send a very clear message:


Under a government I lead, child abusers will be severely punished.

As Simon told Conference yesterday, National is committed to making changes to the Sentencing Act that reflect the way we think society should deal with these people.

Families are, in my view, the greatest institution in our society, however they are made up. A government I lead will support them.

But supporting parents, most of whom do a good job of raising their children, does not mean meddling in their lives or telling them what to do all the time. I believe in the power of people to effect a real change in their family's circumstances, if they are given the space and the encouragement to do so.

So I want to talk about two aspects of government support for families.

The first is Working for Families. There are a number of aspects of Working for Families I don't like.


I don't like the fact that it makes families face high effective tax rates and therefore penalises them if they want to better themselves. I don't like the way it reaches into relatively high income brackets. I don't like the way it subjects many taxpayers to the indignity of claiming their own money back in government payments.

Hard-working New Zealand families deserve a break, but we do best by giving them a break through cutting their taxes.

I know it is tough out there for people with kids, who are working long hours and trying to get by on a modest wage. In the absence of any tax cuts, families have been forced to rely on Working for Families payments to keep their heads above water.

So today I want to give New Zealand families some reassurance. National will address the issues of high effective tax rates under Working for Families. We will also take higher income families out of the Working for Families loop. But we will make these changes in conjunction with significant personal tax cuts.

A government I lead will take from taxpayers only what it needs. It won't take more than it needs, return it to you via the welfare system, and expect you to be grateful for the privilege.

The bottom line is that families will be better off financially under National. We are going to give New Zealanders the chance to get ahead under their own steam because that's what New Zealanders want and that's what they deserve.


Home ownership

The second issue relating to families I want to talk about is home ownership.

When you buy a house for the first time you are doing so much more than just shaking off your landlord. You are taking a long-term stake in a neighbourhood, and in the local community. You are buying a place where family occasions will be celebrated and memories made for as long as you want to live there.

Because you will be paying rates and a mortgage for the first time, you might start taking more interest in your local council, and in the New Zealand economy.

So buying a house is a vote of confidence in your own future and in New Zealand's future.

But the Kiwi dream of home ownership is under threat. Fewer New Zealanders own their own home than ever before. Some choose not to buy a house, but many more simply can't afford to buy one.


International surveys rank New Zealand as having the second worst housing affordability problem in the world. Auckland is one of the 25 least affordable cities on the planet. But it's not just a problem in Auckland. You can buy a condo on the Miami waterfront for less than the price of the latest beachfront apartment on the Kapiti Coast.

Even if you can afford a deposit on a home, you'll face higher mortgage interest rates in New Zealand than almost anywhere else in the developed world.

Young people who are working hard, and who are trying hard to save, don't know whether they will ever be able to afford their own home.

Frankly, I thought it was a bit rich of Helen Clark to say last weekend that Labour was concerned about housing affordability. Her Government has spent eight years over-taxing New Zealanders and letting interest rates go through the roof.

Tonight, Helen Clark should look in the bathroom mirror and ask: "What have I done for housing affordability in the past eight years?" She'll have answered before she's squeezed out the toothpaste. Nothing.

The truth is that when it comes to housing affordability, this Government is the problem, not the solution. It is the Government's economic management and its heavy-handed regulation that has made owning your own home unattainable for many people.


Onerous rules and requirements have made land more expensive and building on that land more expensive. Meanwhile, we're running out of people who are able to build houses in the first place. As a result of all this, there are not enough houses being built to replace the old ones and to keep up with population growth.

But I want to assure our young people that they needn't despair. A National Government will actively preserve and promote the home-ownership aspirations of everyday New Zealanders. We are a party founded on the principle of home ownership and we intend to deliver on that principle.

Back in 1936, when Labour was concerned with nationalising the means of production and advancing socialism, the National Party was concerned with home ownership and standing up for wealth creation through a property-owning democracy.

Unlike Labour, this issue is not new for our party. Mind you, it is true that Labour has been talking more about housing in recent times. The difference is that Michael Cullen has yet again been looking for new ways to tax it.

Unlike Labour, National has a concrete plan for making housing more affordable. It has four parts to it:

Ensuring people are in a better financial position to afford a house.


Freeing up the supply of land.

Dealing with the compliance issues that drive up building costs, and

Allowing state house tenants to buy the houses they live in.

I want to talk about these points in a little more detail.

No 1. We will make sure people can better afford to purchase and pay their mortgage on a home. We will lower personal income taxes, which will ease the burden of mortgage repayments, and will also help people who are saving for a house deposit.

We will also keep interest rates down by growing the productivity of the New Zealand economy. That will make a huge difference to people's ability to service a mortgage.


No 2. We will take the legislative actions required to ensure there is an increased supply of suitable land available to build houses on. Difficulties with the Resource Management Act, and disagreements between various arms of local government, too often slow the release of land. This drives up its price and the cost of its development.

Any changes we make to streamline and speed up the process of zoning or land release will require developers to build on that land within a reasonable timeframe. This will prevent the land-banking that is currently choking off the supply of land.

No 3. A high legislative priority for National will be amending the Building Act to pull back the red tape and instead drive quality through greater commercial accountability.

Labour's new Building Act has added enormous costs and delays for builders and councils. Development and building levies have tripled under Labour. Quite simply, these costs are making houses unnecessarily expensive for the average Kiwi family.

No 4. We will allow Housing New Zealand tenants who want to purchase the house they live in, to do so. Under National, they can own the place they call home. We will reinvest the proceeds straight back into replacement houses for those desperately needy families on the waiting list.

It's a win-win for everyone. The state housing stock is maintained, some families get to experience home ownership for the first time, and the most vulnerable in our communities get to move off the waiting list into affordable housing.


Alongside this four-point plan, National is also going to increase trades-training opportunities so New Zealand has more skilled people to build and develop new houses. This will start with our trades-in-schools programme, and will include boosting apprenticeship training. New Zealand has faced a critical shortage of builders, plumbers and electricians for far too long.

I can assure you that there is a whole lot more policy development to come in this area. We've been a party of home ownership since our inception in1936 and that's where we'll stay.

Under National, every young New Zealander should know that if they work hard and are disciplined about saving, they can expect to buy their own home.


Delegates. It is said in politics that governments get voted out, oppositions don't get voted in. Maybe that in itself is a good enough reason to toss this Government out.

But surely if the only reason we are elected in 2008 is because Labour has come to the end of its run, we will have failed ourselves. Our party has much more to offer than that. New Zealanders deserve more than that.


Our people deserve a vision for this country - a vision that's about them, not what's best for the Labour Party.

So let me say this. My vision is that when our children and our grandchildren are deciding where to make their life, they choose New Zealand; that in a global world where they are free to call almost any country home, they choose New Zealand.

And they do it because they can see a positive future where they will be paid what they are worth.

And they do it because we're a country that's growing in confidence.

And they do it because we're a country where people are safe and where we can see out our final years in dignity.

And they do it because we're a country that respects and cares for the land we live on.


And we care about our communities.

And fundamentally we care about one another.

So when you leave here today, and as you prepare for next year's election, never forget what you are fighting for. You are fighting for tomorrow. For the chance to shape tomorrow. For the chance to make a difference and to leave behind a better New Zealand

Because it's time. It's time for confidence. It's time for optimism. It's time for a National Government. It's our time.

That's what we are fighting for and it can't come soon enough.