Under our plan, we have protected the most vulnerable New Zealanders through difficult times, set a path back to surplus, and built a solid platform for growth. Under our plan, the economy is growing, wages are rising, the cost of living is well under control and there are 65,000 more jobs in the economy than there were two years ago. Under our plan, business confidence is the highest it has been since 1999, we are delivering better public services for Kiwi families, and crime rates per capita are at their lowest level in more than 30 years.
Under our plan, we are overhauling a welfare system that is trapping thousands in dependency and giving people more support to get off the benefit. Under our plan, more kids are getting early childhood education and every child's going to get breakfast.
Under our plan, more young people are achieving NCEA Level 2, and National Standards are letting parents and schools see how children are really doing in reading, writing, and maths. And finally, ably led by Gerry Brownlee, we are standing behind the people of Canterbury and supporting the rebuild of our second-biggest city. These are real achievements, of which we can be very proud. And I can promise you that through good, sound policy and economic management we will continue to make New Zealand a better place.
Fellow National Party members, you are the backbone of this Party and we couldn't have done all these things in government if it weren't for you. I want to thank all of you for your support - as volunteers, electorate chairs, regional chairs and board members.
In particular, I want to thank our Party President, Peter Goodfellow. The Party is in great shape as election year approaches. We will have to redouble our efforts next year to ensure we keep the hard-won gains New Zealand has made over the past four-and-a-half years. All of us will have to work extra hard to earn every vote.
Under MMP, all elections are close elections. And they are not just about National versus Labour, but about the centre-right versus the left. And it's clear for everyone to see that Labour has hitched their wagon to the Greens, lurching the opposition to the far left.
Make no mistake, our opposition comes from the far left of politics. The Greens are leading Labour by the nose. It's important that New Zealanders understand what a Green-dominated government would look like. They want to tax you more, rack up more debt and make you work two more years before you can retire. They want a government department to run the entire electricity system, just like it did in the old days when we had blackouts. They want to stop oil, gas and mineral exploration that would create jobs and growth. They blame foreigners for all the ills of the country when our future prosperity lies in being open and connected to the rest of the world.
They even characterize businesses relocating jobs from Australia to New Zealand as 'deeply worrying'. And they take petty, opportunistic political positions on national security in the face of the obvious need to clarify the GCSB law - a law they passed in the first place!
Well, I can tell you that as Prime Minister, I take the role of our agencies and my responsibilities in terms of national security, very, very seriously. And I always will. For our part, the National Party has a track record of sensible economic management and policies that actually make a difference to peoples' lives. We are guided by the enduring values and principles of the National Party.
They run through the 77 years of our proud history. We believe in a supportive government but also in personal responsibility. We understand that businesses large and small create jobs and prosperity in our country. We believe in supporting people's hard work and enterprise. We have tolerance and respect for all New Zealanders and we don't favour one group over another. We believe in supporting families - they are the most important institution in our society. And we have always been the party of home ownership, because we know it provides stability for families, strength for communities, and security for retirement.
Delegates, I want to spend some time today talking about home ownership.
The Government has been working on issues around home ownership and housing affordability for quite some time. We share the concerns many New Zealanders have that some young people who have worked hard to get a reasonable income, have saved to put a deposit together, and who want to settle down in a home of their own, are either being locked out of the housing market altogether, or are having to spend far too much of their incomes on housing. The National-led Government is committed to ensuring home ownership is attainable for New Zealanders.
I want to make it clear at the outset that I think orderly increases in the value of homes over time is generally a good thing. Most New Zealanders have a lot of their savings tied up in their home, so if that is increasing in value then well and good. But if those increases are so rapid they leave other people behind, we have a problem. In the nine years to November 2008, the end of the last term of the Labour government, the average wage rose about 40 per cent while the national median house price rose 100 per cent.
No wonder home ownership was much more difficult for a lot of Kiwis after that nine-year period. And no wonder Labour are feeling guilty about home ownership - they were in power all that time... and they did nothing but talk about it. Since 2008, house price rises have been more subdued. Over the last four-and-a-half years, house prices across the country have gone up only 13 per cent, while the average wage has risen 15 per cent. But the national picture hides what's going on in some regions.
Over the last year or so, the housing market has been heating up in parts of the country like Christchurch and Auckland. Christchurch, of course, has its own unique set of issues, which we are addressing. But Auckland, amongst other places, is a city where many people have to stretch way too far to buy a house. The problem, in a nutshell, is that not enough land has been set aside for building, planning and consenting processes are too cumbersome, and the costs of construction are too high. So not enough houses have been built to keep up with demand.Some pretty elementary economics tells you that prices for existing houses have to rise as a consequence. And they can rise very rapidly. That affects people wanting to buy a house but it also has an impact on the economy as a whole.
As the Reserve Bank has repeatedly said, rising house prices affect financial stability and put pressure on interest rates and the exchange rate. If a bubble is created and bursts, it could leave many home owners with little or no equity, and leave banks in a vulnerable position. I know that the Reserve Bank Governor is very worried about this risk, and precisely that situation has occurred in other countries. We certainly do not want it to happen here.
Ladies and Gentlemen, I want to tell you that homes can be made more affordable in New Zealand. The way to do that is pretty clear. When you have a shortage of something you make more of it. So the answer is to build more houses. That's what will really make a difference at the end of the day.And building more houses, at reasonable prices, comes down to ensuring that there is more land available to build on, that there are better consenting processes, and that costs are lower.
Addressing this set of issues is far and away the most important thing the Government can do for housing affordability. For example, we will have a law passed soon that will speed up the provision of new housing, and streamline approvals in areas where housing is least affordable. We already have a housing accord agreed with the leadership of the Auckland Council which will see 39,000 homes consented over three years - a massive increase on what we've seen in the past. And yesterday we announced a number of significant changes to the Resource Management Act.These include making councils plan for a minimum of 10 years of urban land supply, to cope with projected population growth.
On the other hand, nothing that the Labour Party wants to do - along with their bed-fellows the Greens - addresses any of the fundamental issues behind housing affordability. Their ideas are a capital gains tax that excludes three-quarters of the housing market, a ban on foreigners buying houses, and poor management of the economy so interest rates rise. If they couldn't fix the problem over the nine years they were in power, why does anyone think their misguided policies will work next time?
So they simply can't make houses more affordable to build and more affordable to buy. Meanwhile, your National-led Government is focusing very strongly on what actually drives up the price of houses.
And our good management of the Government's fiscal position is keeping mortgage interest rates lower than they otherwise would be. If mortgage rates were at 8 or 9 per cent I can guarantee you that people would be feeling a lot worse about housing affordability right at the moment. And the good news is that our focus on the fundamentals is starting to work.
Over the last 12 months, there were 5,300 consents issued for new residential dwellings in Auckland, and almost 19,000 across the whole country. That's still a long way from where we need to be, but it's a good start. And in the shorter term, there other things the Government can do to help people get into their first home.
We do some of that already - through KiwiSaver and Welcome Home Loans. And what I'm pleased to announce today is that we will significantly beef up those two programmes, to give more New Zealanders a helping hand into their first home. In KiwiSaver, if you have been a member for at least three years, after that period you can already withdraw not only your money but also any employer contributions and any investment income earned, and all of this can be used as a deposit on your first home.
That part of the scheme is not going to change.
But many first home buyers in KiwiSaver can also get extra assistance towards their deposit. They can get $1,000 for every year they have been a member, up to a maximum of $5,000. They are eligible for this extra help if their income is under a certain level, and they are buying a house under a certain price.
So the first thing I want to announce is that we are going relax these restrictions.
At the moment, for example, a couple who want to get a first home buyers' subsidy from KiwiSaver have to be earning under $100,000 together. We are going to bump that up to a new combined income of $120,000.
At the moment, you can only get the subsidy in Auckland if you are buying a house under $400,000. We are going to bump that up to $485,000. A quick look at Trade Me yesterday showed about 2,000 house listings in Auckland under $500,000.
We are also raising the house price cap in other parts of the country with housing affordability problems. That includes Wellington, Christchurch, Queenstown, Hamilton, Tauranga, and here in Nelson. We're not helping wealthy people buy an expensive house - they can do that on their own. But we do want to help more people with low and moderate incomes get a foot in the door of home ownership. So that's the first thing.
The second announcement is around the Government's Welcome Home Loans scheme. We give about 850 of these a year to first home buyers. Under this scheme, the Government underwrites loans for eligible people who have sufficient incomes but may only have a relatively small deposit. Again, you have to meet certain income and house price criteria. But these haven't changed since 2003 and they are even stricter than the criteria that apply under the KiwiSaver first home buyers' subsidy.
So we are going to relax those restrictions and make them the same as the new criteria in KiwiSaver. And what is more, we are going to triple the size of the scheme so that 2,500 first home buyers a year will now be able to get a Welcome Home Loan.
The third and final thing I want to announce is that, in the future, to get a first home buyers' subsidy from KiwiSaver or to get a Welcome Home Loan, you will have to be able to put a 10 per cent deposit together, including what you can access through KiwiSaver.
At the moment, for example, you can get a Welcome Home Loan having saved a very small deposit, or no deposit, if the house is valued at $200,000 or less. International experience shows it's risky to lend 100 per cent of the value of a first home.
So in expanding these schemes, we are assisting these people to put together a deposit, but we are also requiring them to have an initial stake in their asset as well. In total, the package of changes I have outlined complement the Government's broader programme of work on housing affordability.
It will come into effect from 1 October this year, and cost $64 million over four years.
The package gives more first home buyers access to financial support, whether it's through a bigger deposit - thanks to KiwiSaver - through underwriting their mortgage - through a Welcome Home Loan - or through both these together. It encourages people to save for a bit longer, get a better deposit together, and therefore be in a more solid financial position when they own a home and become responsible for servicing a mortgage. And the expansion of Welcome Home Loans reduces the risk to banks and the economy from lending to first home buyers. We have been very careful, of course, to ensure that this package of policies doesn't contribute in any excessive way to the demand for housing.
That would put more upward pressure on house prices and that is not the intention of this policy. And we have been very careful not to cut across the Reserve Bank's options for cooling down the heated housing market. The Reserve Bank Governor has a tough decision to make. On the one hand, he can put a limit on the number of low-deposit home loans that banks can make. On the other hand, he can raise interest rates across the board, which would impact on every home owner and business in the country and most likely push up the exchange rate and affect every exporter.
That is his call to make, and he acts independently of the Government. But either way, first home buyers would be affected. Today's package is a way of ensuring that, even if lending is restricted or interest rates rise, first home buyers are looked after. First home buyers will get a significant portion of the new loans that are written, because they will be in a stronger financial position.
Over 1,600 more first home buyers each year will be getting Welcome Home Loans and, because these are government-guaranteed, they will be a priority for the banks to lend to. And we estimate we will be doubling the number of people who could potentially get a KiwiSaver first home buyers subsidy. Again it is about balance.
We want to support the Reserve Bank's objectives, which are crucially important.
But at the same time we are going to ensure that first home buyers don't unfairly carry the cost of policies intended to support the economy as a whole. I have said for some time first home buyers are a priority for the National-led Government and this is one way we are demonstrating that. Fellow National Party members, I want to tell you that our Party is thriving.
Our Government is delivering strong and stable leadership. And our country is on the right track. With your help, we are building a brighter future for all New Zealanders. A future where we celebrate achievement. Where we reward effort. Where the economy is strong. Where our communities are safe. Where education standards are high. Where what we produce is in demand. Where people understand they can get ahead under their own steam. And where people are not trapped on a path of welfare dependency.
Delegates, I'm unashamedly positive for New Zealand. National is the right Party to be leading New Zealand towards that brighter future.National is the only Party that can deliver a brighter future.
Thank you very much.
