Taxation (Annual Rates and Budget Measures) Bill

Hon PETER DUNNE (Minister of Revenue) Link to this

I move, That the Taxation (Annual Rates and Budget Measures) Bill be now read a second time. This bill addresses two of the bigger programmes administered through the tax system—Working for Families and KiwiSaver—and the changes foreshadowed in the Budget brought down earlier this afternoon. The changes proposed in this bill are about making those programmes more sustainable by focusing them better to ensure that Government spending is directed to where it is needed most, and eliminating spending that is not.

Working for Families recipients on higher incomes will therefore find that the changes the bill makes will reduce their tax credits at a faster rate, and their reductions will begin at an earlier point in their salary scale. In brief, the changes introduced to Working for Families are an increase in the abatement rate by 1.25 cents at every inflation adjustment from 1 April next year until it reaches 25c in the dollar; a decrease in the abatement threshold at every inflation adjustment from 1 April next year until it reaches $35,000; and the removal of the inflation adjustment for family tax credit amounts for children 16 and over from 1 April 2012 until the amounts for children aged 13 to 15 catch up. Once these amounts equal the family tax credit amounts for the oldest child, the inflation adjustment will apply again. Because these changes take effect from the beginning of next year, they need to be put in place at this point to allow systems changed to cope.

The changes to KiwiSaver are intended to ensure that the scheme continues to make it easy for people to save and so be better off in retirement, while reducing the cost to taxpayers of the subsidies to individual accounts. All employer contributions to employees’ KiwiSaver accounts will be subject to the employer superannuation contribution tax, and the member tax credit is being halved for the next member tax credit year, which ends on 30 June 2012. The minimum employee contribution rate will rise from 2 percent to 3 percent from April 2013, as will the default contribution rate, and compulsory employer contributions will similarly rise from 2 percent to 3 percent at the same stage. Those changes are not included in this bill. They will come in legislation due later in the year.

These are the major measures contained in this bill. The bill also confirms the annual tax rates for the 2011-12 tax year, as is the customary process. With those few comments about the measures, which I think are about ensuring a fairer, more balanced tax system that is part of the Government’s overall strategy to return New Zealand to a pathway of economic recovery, I am happy to commend the bill to the House.

Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this

The Labour Opposition completely and thoroughly disagrees with and objects to this sham of a bill, the Taxation (Annual Rates and Budget Measures) Bill. The first point we make is to ask why we are here in urgency, debating a bill that does not take effect for 18 months. If it took effect earlier, it would be proof positive that the Government had broken its promises not to cut KiwiSaver and not to touch Working for Families in this term of Government, and its promise to go back to New Zealanders to seek a mandate—just like with asset sales. But the Government has thrown all that aside and is pushing through this bill in urgency on a sham. Those members should be ashamed. The whole Budget is a sham. It is built on flimsy foundations of unspecified cuts and divergent forecasts between different departments. It is built on a very, very flimsy foundation, to the risk and cost of all New Zealanders.

I tell the Government to talk to New Zealand families who are losing up to $50 a week because of the Working for Families cuts, or couples losing $20 a week because of the KiwiSaver cuts, and tell them why they are bearing the brunt while farmers and high-income individuals keep their tax dodges and keep their 2010 tax cuts. Working New Zealanders are picking up the tab. This bill is unfair, it is ill-timed, and it is unconstitutional because there is no mandate to do it. It is a sham, like the whole Budget is a sham. The Minister of Finance should be ashamed, the Government should be ashamed, and the public should throw them out. That is what they deserve. The public has a final, last chance on 26 November this year to stop these cuts dead in their tracks, but they will have to stop this nasty, greedy, Tory Government dead in its tracks to do so. It is the only way to protect KiwiSaver, it is the only way to protect Working for Families, and, frankly, it is the only way to restore rigour to the Budget process after the pathetic excuse of a sham that has been presented to the New Zealand people today.

CRAIG FOSS (National—Tukituki) Link to this

I find myself in the very awkward position of agreeing with members on the other side of the House on something. Before the dinner break, Mr Cunliffe and one of his colleagues who spoke earlier said that Dr Cullen would have never delivered a Budget like this one. That is so true. Let us look at some of the differences in this Budget. It is transparent, it has a path to lower debt and a surplus, it is open, and its numbers have integrity. Wherever possible, things have been front-loaded, such as putting into this year this Government’s full commitment to the reconstruction of Canterbury, which is, all up, about $8.8 billion going on to the accounts this year. The previous member started by worrying about why this bill was being debated tonight, because some of the changes do not come in until next year. I think he was asking why it was counted. I say to members that there is a little thing called the forecast period. In the Public Finance Act, I think members will find that for 3 or 4 years the Minister of Finance has to forecast anything and everything that he or she knows will affect the accounts of this country. Anything that the Minister of Finance knows is happening, has happened, or probably will happen is in this Budget. If there is something a bit further that he or she is unsure of, then it is in the various contingencies at the back. It provides certainty in very uncertain times.

We note how the Leader of the Opposition said earlier that he had signed the free-trade agreement with China all on his own, or something like that. After he said that, he also told us that the global financial crisis ended some time in 2009. Our Prime Minister invited him to go around the PIGS—Portugal, Ireland, Greece, and Spain—to suggest to them that the global financial crisis is over, and see what they say.

This Budget and this bill will keep interest rates lower for longer. It is as simple as that. Mortgage interest rates and working capital interest rates will stay lower for longer. They have been at record lows under this Government. They will continue to stay low under this Government. Why might that be? There are a couple of reasons. One is that this Government is getting its books and its house in order after inheriting ongoing spending increases from the previous Government, which had no corresponding revenue increases attached to it.

The second is that under this Government, real inflation is around 2.5 percent. Everyone has been compensated for the GST increase, unlike with the previous administration. Under the previous administration, inflation was running at 5-plus percent, in spite of the Reserve Bank of New Zealand Act, which Labour members now seem so keen to want to change. Yet for at least 3 or 4 years of Labour’s last period in Government, inflation well exceeded the 3 percent cap, as defined in the Reserve Bank of New Zealand Act.

This Budget and this bill pass four solid, good tests. They put New Zealand and New Zealand enterprises in a better frame to grow their exports, because this recovery has to be export led. There is only upside, since the last 4 or 5 years prior to the National administration coming through, because there was no real growth. In fact, export—the real tradable sector—went backwards after 2004. The Budget and this bill pass the test of an export growth - led economy. They will grow savings. KiwiSaver contributions are going up. Household savings rates are on the increase. Dr Bollard from the Reserve Bank noted the other day for the first time in living memory that bank deposits are growing. New Zealanders are saving more, borrowing less, and moving from the debt-laden property boom we had in the previous administration.

The Budget and this bill pass the test of reducing a deficit and of showing a lower debt track. We will have surplus sooner than was predicted even in last year’s Budget, and much, much sooner than was in the papers to the incoming administration after the election of this National Government, when the decade of deficits was forecast and when the real numbers started to hit home. Members may recall a minor problem with Budget 2008. It did not include all those things around KiwiRail and ACC, but that is for another day.

This Budget and this bill also pass the test of higher real after-tax incomes for New Zealanders, New Zealand families, and New Zealand households. Part 1 of this particular bill sets the annual rates of income tax. Therefore, they define the after-tax incomes of New Zealanders, which have grown at 6 percent after only 2½ years of this National Government. After 9 years of the previous administration and the best economic times possible, real incomes grew only 3 percent—after 9 years. There is a bit of a problem there.

Finally, I will make just one more point. Members opposite are starting to point to page 81 of the Budget and are talking about some conspiracy theory or something. As they are wont, they are reading half the page. They talked about a discrepancy between the Inland Revenue Department forecasts and Treasury forecasts on tax take. If members read the page they will see that it is all about corporate tax. I will read the first couple of sentences of paragraph 2, which the members opposite seem to keep forgetting. Paragraph 2 states—as the members opposite point out—“The lower forecasts of tax revenue from Inland Revenue indicate there may be some downside risk to our tax forecasts.” That is fair enough. It is open and honest.

The second sentence is the bit the Opposition members keep forgetting to mention: “At the same time, there are also upside risks.” Basically, that says that on the downside the tax forecasts from the Inland Revenue Department possibly could be wrong, but on the upside they possibly could be right. If Treasury is at one level and the Inland Revenue Department is at another level, they will tend to merge along the way. In fact, I recall Dr Cullen having ongoing problems with this issue, which, from memory, started an inquiry as to why his various forecasts were so discrepant from those of the Inland Revenue Department in many of his Budgets.

As we move through talking about this Budget and the taxation bill in front of us, I agree with members who, interestingly, are starting to justify previous Budgets, at least over 2 years and maybe even 11 years on from Dr Cullen. They are trying somehow to justify what they are saying today but totally forgetting to offer their own alternative plan for this Budget. Going into an election, Labour members are still stuck in the past and talking about Dr Cullen. Interestingly, I find myself agreeing with members on the other side. Dr Cullen would never have delivered a Budget like this one, because, quite simply, this Budget is attempting to fix the problems that the previous administration, under the stewardship of Clark and Cullen, put upon this country. They were quite devastating problems, but this administration, this Minister of Finance, and this Budget will arrest and fix those problems and put New Zealand on a solid and good path for growth and prosperity. Thank you.

Hon DAVID PARKER (Labour) Link to this

I will begin by correcting what I think is a misrepresentation of the real position in respect of wages that the previous speaker, Mr Foss, made in his contribution. He said that real wages after tax had increased by 6 percent since the date of the last election. Of course, these averages can be very deceptive. That figure is only right if we include the top 10 percent of income earners.

DAVID CLENDON (Green) Link to this

Kia ora, Mr Assistant Speaker Robertson. Kia ora koutou. I am pleased to take this first opportunity to speak to the Taxation (Annual Rates and Budget Measures) Bill and to the Budget generally. Today we heard the opening salvos in what will be a long debate. We welcome that debate and the opportunity to put up some of our ideas, beliefs, and alternative approaches to this very critical issue of where the money comes from, where we spend it, and in whose interests we undertake those transactions.

A lot can be said—and, no doubt, will be said—about this bill and about the Budget more generally, but a great deal more can be said about what has been left out of these documents. We can talk about doing a gap analysis of the series of propositions we heard from the Government today, but we can more properly talk about a chasm. There is a great white space where there could be something resembling a vision. There is a complete absence where we might have hoped to see something that would suggest there is a long-term strategy or plan to establish and create a long-term socially and environmentally sustainable economy in this country that has an absolute and clear capacity to achieve that goal and that state.

Instead, we are offered nothing more innovative or visionary than some quite mean-spirited cuts to public spending, cuts to income support, and cuts to the Government’s contribution to individuals’ and families’ long-term savings. These cuts will hurt families and households because they come at a time when incomes are at best flat and in many cases reducing, and when people are struggling to pay their day-to-day expenses and costs and to meet their bills. We see nothing in here that will give those people much hope, or much confidence that they are in good hands, that their future is being well regarded, or that they should have some hope of a better future.

We see the cuts to the Government’s contributions to KiwiSaver. That in itself is a breach of an assurance that this Government gave to the general public, to participants, and to contributors that KiwiSaver would not be meddled with. This has been a remarkably successful mechanism. KiwiSaver has been a success. It has almost been a victim of its own success, to the extent that the take-up has caused some difficulties.

An investment scheme of this sort is one of the last things that Governments should play politics with. Like superannuation funds, people need to have confidence in long-term savings schemes. They need to know there is some security and that the rules will not change arbitrarily year by year, Budget by Budget, or political term by political term. It is not helpful for the investors, who in time will utilise the sums of money that are available to them through these funding programmes and savings programmes. It diminishes the confidence of the saver and the investor, and that is not helpful.

The Government insists that it will seek a mandate for its changes at the next election, which I must say is one of the few innovative aspects of this Budget—to suggest that somehow retrospectively the Government can get a mandate for taking away something that it assured voters it would not take away.

Something like 110,000 parents will be affected by the cuts to Working for Families as unveiled in the Budget. More than 23,000—about one-quarter of those parents—will be earning less than $60,000 in their combined household incomes. Families with a combined income of some $60,000 are not well-to-do, particularly if they are still supporting mortgages that they may have taken on in happier times, or if they are paying rent on homes that are increasingly poorly maintained and often sub-standard.

We see a lowering of the abatement threshold to $35,000. We can look at what this means in practical terms for a two-parent family, with one partner working full-time for the very meagre minimum wage that this Government allows them, even given the generous 25c per hour increase. Where one partner works full-time on the minimum wage and the other is working 12 hours a week on the minimum wage, the abatement will apply to them. Raising the abatement rate to 25c in the dollar results in an effective marginal tax rate of some 58 percent, which is simply untenable. Where is the incentive for people to improve their position or to try harder? We are constantly hearing from the Government side of the House that people simply need to work harder to better their position. Where is the incentive to do that, when we take away the level of support that people have come to expect and are still reliant on to a large extent?

Much of what we have seen in this Budget, and in the tax bill we are debating here tonight, is an assumption—which can, at best, be termed an optimistic hope—that the economy will come right. The growth forecasts here are extremely optimistic, and already financial commentators are shining a light on what have been termed “heroic assumptions” about growth in the economy over the next few years. The Government is relying on Treasury estimates, but there is an unfortunate history to that. Treasury, in the last several years—particularly since 2008—has routinely overestimated growth by some 2 to 3 percentage points of GDP. Why would we depend on forecasts that have historically proved to be at best optimistic, and often plain wrong?

Perhaps it is a reflection of the Prime Minister’s former profession as a currency trader—

Hon HEATHER ROY (ACT) Link to this

The ACT Party supports the second reading of the Taxation (Annual Rates and Budget Measures) Bill. First, I have a few comments about the Budget generally. I agree with several of the comments made by the previous speaker, David Clendon from the Greens, about the need for vision and planning, and to grow the economy, but where the ACT Party differs from his ideas is on the means by which we would achieve those goals. The ACT Party has been quite disappointed in many areas of this Budget. There is too much tinkering in many areas, we think, rather than real solutions to the problems that this country faces. When we look at how to tackle the current fiscal situation that we find ourselves in, coupled with the additional burden that the Christchurch earthquakes have added to our economy, we see the need to look at a higher level. That is where I agree with the Green member David Clendon regarding his statements on vision and planning. We need to consider the state of our economy as it pertains domestically, but we also need to look at the international situation.

I would compliment the Minister of Finance on his statements today and on his actions to tackle the deficit and the debt that we face in this nation, which are far too high. The focus in this Budget, as he has outlined, is on encouraging saving. Those things are all very commendable, but they need to be coupled with actions, the actual things that will make this saving happen and tackle the deficit and the debt in a meaningful way.

The ACT Party was particularly disappointed in the way that student loans have just been tinkered with. If the Government really wanted to make an impact on tackling the more than $12 billion of student debt that is now owed to the country, then we should have taken a long, hard look at re-establishing interest rates on those student loans, so that the incentives were in the right place.

The other area, which pertains directly to the bill that we are speaking about, is Working for Families. We have seen just a skimming-off from the top. Working for Families should never ever have become the middle-class welfare for those on higher incomes that it became under the previous Labour Government. I will give this example. The member for Waimakariri was busy creasing his face and wriggling around in his seat before he stood up just now, but he should remember that people who are capable of earning and of supporting their families should be doing that themselves. When Working for Families was first established in 2004, had I been the sole income earner in my household, as a backbench MP on $122,000 a year with five children, I would have been eligible for $22 per week of Working for Families tax credits. Why on this earth would anyone ever consider it reasonable that a backbench MP could be eligible for welfare? That is nothing more than middle-class welfare, and it should never ever have been on the agenda in the first place. Although I would have liked to see the National Government take a much more responsible look at Working for Families and tackle it in a much more meaningful way, at least it has taken a knife to this area, where doing that is absolutely warranted, and that is why we support this bill. It is absolutely imperative that we grow this economy. That is the way out of this situation.

I also compliment the Government on the two very thorough regulatory impact statements. I raise this issue because when Working for Families was first put forward in 2004 under the previous Government, we hardly ever saw any sort of regulatory impact statement. Those statements were always in the drafting phase; they were always about to be tabled, but never were. The regulatory impact statements that we have before us, which have been tabled in the House today, are very good, and they clearly outline where we should be going. I would like to take the Government to task, though—having just complimented it—on some of the things that are written here. It should have acted much more strongly to put many of these measures in place.

I will pick out one paragraph from the introductory comments in the KiwiSaver regulatory impact statement and quote it here: “As the quickest way for the Government to improve national saving and reduce economic imbalances would be to improve its own saving position, the identification and development of options quickly narrowed to those most likely to reduce Government spending without undermining the primary purpose of KiwiSaver.” That is very pertinent, and as we put policies in place we should remember those things. I looked at the conclusions for the KiwiSaver changes, and I also want to quote a piece from them: “The proposed measures could also encourage higher private contributions.”, which is something that we should be very mindful of in this House. The Government is making a bit of a move towards that, but, looking to the future, we should be acting very strongly in this regard. The comments also noted that “education … about the continuing importance of individual saving, to ensure resources are over and above New Zealand Superannuation in retirement, are highly desirable.” That is quite right. It is the benchmark against which we should always be measuring the policy initiatives put in place.

I have already noted our concern about the skimming-off of just the very top level of Working for Families, when much more stringent changes could have been made by the Government. Again, the conclusion statements in Working for Families regulatory impact statement say this: “Officials consider that the majority of the options identified in this RIS, including the preferred option, will generate fiscal savings, broadly protect lower income earners, and better target WFF without”—and this is the important part—“having significant impacts on incentives to work, child poverty, or income inequality.” Again, those are very good benchmarks and principles that all policy should be measured against. I compliment the Government on putting those forward.

There has been plenty of detail in the discussion in the House tonight, but I would like to come back to the point I made at the start of my speech, which is that we should look at things at a very high level before putting detail in place. We see plenty of tinkering in this Budget. We see plenty of tinkering in a number of areas where we could have made much harder decisions that would tackle debt and the deficits more quickly than they are being tackled. We are moving in the right direction, and that is why we support this Budget and this bill. But the ACT Party would have liked to see much more regard being given to getting the incentives right in all of those areas, so that we could increase the rate of economic growth much more quickly than we will be able to do. Thank you.

TE URUROA FLAVELL (Māori Party—Waiariki) Link to this

Tēnā koe, Mr Assistant Speaker Robertson. Talofa lava ki a tātou katoa i tēnei pō. Thank you for the opportunity to speak at the second reading of the Taxation (Annual Rates and Budget Measures) Bill. There has been a key word in this Budget: responsibility. The Māori Party is conscious of our responsibility to grow a country that takes us all with it by creating a positive future for every citizen in Aotearoa. We must protect our most vulnerable, and no one must be left behind. Our role in Budget 2011 has been to call for a reasonable Budget that takes account of the sharp edges of recession but also invests in our mokopuna.

Young Māori New Zealanders are particularly critical to the Māori Party, as 54 percent of Māori are under 25 years of age. We know that when we get the best deal for Māori we get the best deal for New Zealand, for Aotearoa, because New Zealand’s future is in the hands of our future workforce. Our youth, who increasingly are Māori, Pacific, and Asian, need our support now, because their education, their success, will be our support as we grow old. We need to embrace diversity, as it will be through our combined talents and strengths that we can plan for the future.

The Māori Party’s other key theme in shaping Budget 2011 has been the notion of investing in the future. Our focus in education in this round has been on addressing some fundamental challenges, such as $60 million over 4 years to build new kura kaupapa Māori and upgrade existing school buildings. I refer to a speech given by the member who tomorrow will be the former member for Te Tai Tokerau, Hone Harawira. He suggested that the Minister of Māori Affairs and Associate Minister of Education, Dr Pita Sharples, had sold out on kura kaupapa Māori. I do not think so. An extra $60 million over 4 years is pretty helpful. There is an investment of $3 million over 3 years to support Te Rūnanganui o ngā Kura Kaupapa Māori o Aotearoa to develop a curriculum and associated resources based on the philosophy of Te Aho Matua, and another $8 million—I say another $8 million—over 4 years to realign kura transport assistance, which has been capped since 1995, with that of mainstream schools. And there is $6.5 million to expand family-based literacy programmes to all decile 1, 2, and 3 schools, building on the current Reading Together programme. That is awesome—that is awesome—and it could not have come about without the help and assistance of the Māori Party, and, indeed, its promoting of this programme with the National Government.

These are just a few of the new initiatives that the Māori Party has achieved in Budget 2011. We say it is about whāia te rangatiratanga—taking control of our destiny. If we look at Whānau Ora, we see that that best embodies the concept of shaping our future, taking responsibility for our own solutions, and being successful by trusting in a collective model. This, again, is where the Māori Party comes in, in terms of getting National to change the paradigm. That has been important.

I want to return to the key planks in Budget 2011 of protecting the vulnerable and investing in the future in relation to this taxation bill. With KiwiSaver, of course we are concerned about the impact that the proposed changes will have on the vulnerable. But also, and in line with the concept of whāia te rangatiratanga—taking control of our destiny—we need to look at the wider issues around creating a savings culture. We accept that New Zealand has a poor savings culture, and we need to address this. High levels of household spending have fuelled inflation pressures over recent years, and New Zealanders have spent more than they earned. Consequently, the pressure on promoting the concept of savings is paramount. We are conscious of the need to plan for what has been called the “silver tsunami”—caring for the baby boomer generation. While savers and employers will have to pay more, in the move to make this scheme more affordable over the long term the Government is reducing its commitment, and this may have a backlash effect in terms of discouraging savers and employers. Our other concern is whether the changes might prove unaffordable for lower and middle income constituents already struggling to cope with rising costs. We believe that those people on lower incomes should carry less of a burden, proportionately, than those who are on higher income levels, and we would be concerned if any disincentive to save, such as increasing their payments, would cause them either not to enter the scheme or to take contribution holidays. But we are pleased that the changes will not happen overnight. This will give people and businesses more time to adjust.

I come back to being responsible. We have heard that KiwiSaver currently costs the Government $1.1 billion. Halving the Government’s KiwiSaver contributions would save the Government around $600 million per annum, we are told. That amount of savings has to be good for the nation.

The other big focus in this taxation bill is related to changes to Working for Families. From this legislation it would appear that Working for Families will be better targeted at low-income families who have a much greater need for assistance, and a little less generous to the families higher up the Working for Families scale. We support this change and we support the intention to do it gradually in a way that minimises the impact on families.

Outside the scope of this bill but well within the ambit of our focus is the fact that the Working for Families package as such offers no poverty relief for benefit-dependent families. It does not sufficiently address poverty or, more to the point, child poverty in Aotearoa. Although we support the refocusing of Working for Families to support the most vulnerable participants in the scheme, of course we cannot ignore the situation of so many of our families who are not even eligible for the scheme. We have a commitment to eliminate poverty. Poverty reflects worse on those who have but do not share than on the have-nots. We will continue to advocate for the protection of the vulnerable, the elderly and the young, and the disadvantaged, and we will continue to focus on restoring whānau responsibility and on investing in the future. Education is not a cost but an investment in the future prosperity of the nation. But for the purposes of the second reading of this bill, we are prepared to support this second reading.

PESETA SAM LOTU-IIGA (National—Maungakiekie) Link to this

Malo le soifua maua. Thank you. It is certainly my privilege to speak on the second reading of our Taxation (Annual Rates and Budget Measures) Bill. Today is a momentous day. It is a momentous day because this Government has set out a plan to get us on the road to recovery. It has set out a measured plan, a balanced plan, and a prudent plan in order to get this country back on the road to recovery.

As we have all heard tonight, the country is on a precipice in terms of the Budget deficit of $16 billion. It has been shaken by two major earthquakes, and, of course, we had the Pike River disaster. But the country’s future has been set out in a Budget that is prudent and balanced.

When we came into power 2½ years ago we had to cover the damage of 9 years of Labour. Under Labour there were 5 years of exports contracting and 9 years of some of the highest interest rates that our businesses and our consumers have faced. Inflation rates were well above Reserve Bank requirements. Those are the conditions we inherited.

Where have we been in the last 2½ years? This Government has been about investment: investing in infrastructure, investing in people, and, particularly, investing in our schools and in our health system. I am proud of this Government. In my local electorate our local high schools have received a services academy—an investment in our young people to grow and develop. One Tree Hill College had a music suite put in place. Admittedly, that was started under the last Labour Government, but it was certainly constructed and opened under the National Government. We have an arts centre at Onehunga High School. These are the types of investments in our young people that this Government stands for.

It has also been about investing in our roads and in our infrastructure, in broadband. Investment in State Highway 20, which runs through my electorate and is one of the biggest State highways in the country, demonstrates the Government’s commitment to infrastructure. It was constructed on time, to budget, to scale, and to specification. That is the type of Government that people want to see.

Hon CLAYTON COSGROVE (Labour—Waimakariri) Link to this

We now know the marketing strategy of the National Government. Say a cut is a modification, say a cut is streamlining but do not call a cut a cut. This is the sort of spin that the previous speaker has come up with. “We modified Working for Families.” [ Interruption] No, no. The facts are that 200,000 participants in that scheme are getting a cut. It is a small word of three letters. Everybody, apart from that member, understands what it means. It is not streamlining.

Likewise for KiwiSaver. On the one hand members, and especially the member who has just spoken, say they want to encourage a savings culture. That member said that the Government has modified, or streamlined, KiwiSaver. No, no, the Government has kicked it in the guts. Every participant in KiwiSaver has had a kick in the guts from that member’s Government. They do not feel like they have been streamlined or modified. They know what it is. The people are not stupid. That member thinks his constituents are stupid. They know and smell a cut when they see it. It is not a modification.

I say to that member that it is very interesting. The National Government, of course, has banked this whole Budget on a series of projections—the creation of 170,000 jobs, and 4 percent wage growth over 3 or 4 years. But that is a very interesting set of projections. I can remember another set of projections nigh on a year-plus ago. The great plan was going to be a Job Summit. That then went west and we had a cycleway, which was to be the nirvana in terms of job creation for this country. I am told that to date the numbers are around 70 people employed on a cycleway to nowhere. Then that went west. Gerry Brownlee, the parliamentary blunderbuss of the Chamber, had a brilliant idea—and the first, I suspect, in his terms, in his life—and it was to mine national parks. That lasted 5 minutes. That was to be the great job creator, the roads would be paved with gold, and other miracles, according to Gerry. Then, of course, we had: “No, that’s off. We’re going to make New Zealand an international financial hub.” That was a great slogan. It lasted 5 minutes, and we have never heard of it again.

The plan of Government members, because they know the people know they have no plan, is to say they have a plan, say it often enough, and hopefully people will believe it. They did not get it last time. No member on that side of the House, when they articulated a plan, actually put it into place. So I ask those members whether they really think people will believe them now.

I also say this. They use the Canterbury earthquake—and I must say I do get a little raw that these members would use the Canterbury earthquake over and over again as some sort of alibi to cover their tracks in terms of what they are doing now. They make a case that says somehow the great contributor to the $16 billion deficit, which they have delivered in this Budget, was the Canterbury earthquake. If they read the Budget documents they will now know that the Canterbury earthquake, according to Treasury’s own figures, contributed a mere 10 percent of accumulated deficit—10 percent of that accumulated deficit. Now we have dealt with that load of bunkum and that alibi, I tell members to think carefully before they use the people of Canterbury and the earthquake as an alibi for a $16 billion deficit. We now know, thanks to the Government’s own Budget documents, that that is not the case.

The previous speaker talked about the record of the last Government. I say this. Here are a couple of facts—low unemployment, high growth, and 9 years of surpluses. Who agreed with us on that? On 19 December 2008, just some days after taking office, the finance Minister Bill English said the following in the New Zealand Herald: “I want to stress that New Zealand starts from a reasonable position in dealing with the uncertainty of our economic outlook.” I will say it again slowly for the more challenged members on the other side: “I want to stress that New Zealand starts from a reasonable position in dealing with the uncertainty of our economic outlook.” To unbundle that statement, Mr English was saying: “Thank God we had 9 years of surpluses, so we can actually try to deal with this global economic meltdown as it impacts on New Zealand, unlike other countries that spent the lot.”

When I was speaking on the first reading, I recalled, as an Associate Minister of Finance, being taunted, as we all were in Government, by Bill English, the then Opposition spokesperson, saying we were mean-spirited because we did not spend the dough. We were squirreling away all these surpluses, day after day, and that we were a mean Government and we should be frittering it away. [Interruption] That member at the back of the Chamber squawking was not in the Chamber at the time, so I forgive him for his lack of historical knowledge. We were told we were being mean because we did not spend the lot.

I say to members that I have a document from a series of Budgets, starting from 2000, and I will read a couple of figures. These are the surpluses that we had: “year 2000, $594 million; year—

CHRIS TREMAIN (National—Napier) Link to this

The Hon Clayton Cosgrove is the constituency MP for the seat of Waimakariri. By all accounts, he is a pretty good constituency MP, but not once tonight have I heard him speak about a matter of importance, a cornerstone of this Budget, which is the repair and recovery of Christchurch. At the very least he could have acknowledged that this Government has put together—

Hon SHANE JONES (Labour) Link to this

Kia ora nō tātou—greetings, Mr Assistant Speaker Robertson. Today we saw a Budget that really has to be called the “Tui Budget”—yeah, right! It is so far to the right that there is no way that members on this side of the House will shrink from fighting an election on, firstly, the wholesale privatisation and sell-off of our assets. Those assets are not starved of capital. Those assets are well run, but we are to lose their valuable revenue and valuable dividends. Worse still, the Māori Party will be there, as an active and consistent helper, to watch the dilution and liquidation of those historical assets of the Crown estate.

The Prime Minister got up and delivered one of his trademark Eurotrash contributions. He is a man who has learnt his oratory and his life skills as he has wandered around amongst the super-rich of the world. He has no compassion, no empathy, and no understanding. If I were to go to the senior whip on the Government side of the House, and use his figures, then I would tell members that 75,000 Kiwi workers earn less than $45,000 a year. But there has not been a single bit or sliver of empathy from the Prime Minister towards them. He has also had the cheek to tell New Zealanders, as he puts their assets on the block, that they will be the beneficiaries of that. How many of those people will be actually in a position to purchase shares in those assets? We will watch the inexorable slide towards further foreign ownership of key monopoly assets, etc.

Not only is the Prime Minister presiding over the sell-off of those assets but he has based everything on a heroic assumption that he can trust Treasury’s figures. Well, we trust what the Inland Revenue Department had to say, as the Dominion Post showed us yesterday on page one. Those figures will not let us down. Just as they did not let us down yesterday, neither will they let us down in the future. But Treasury’s heroic assumptions were concocted, unfortunately, when aggressive politics met sterile analysis. Those heroic assumptions are all that the Prime Minister’s vision for the future is written on.

Let us just think about what the Prime Minister is telling Kiwis through his “Tui Brewery Budget”. The first thing is that everything is for sale. The second thing is that he wants people to save, but he will not actually incentivise or help them to do so, because encouraging savings is a Labour legacy. Muldoon destroyed the first savings initiative, Jenny Shipley destroyed the second savings initiative, and John Key and Bill English, as a consequence of their narrow partisanship against the legacy of Dr Cullen and the Labour Government, are continuing to tinker with and unravel the savings legacy that we put into place. The man has said to Kiwis that National wants to see savings increased, and that it wants to reduce the country’s reliance on overseas sources of capital, but National has used this Budget to further undermine and gut KiwiSaver.

These are great issues upon which to fight the next election. At least we did not hear simpering from the Prime Minister—but we have heard it from the Māori Party—when he told Phil Goff that National would meet us in the halls and on the hustings, and would fight the election on these issues. Labour cannot wait for that.

OK, so we have heard a little from the Māori Party, which is a brief improvement on the simpering contributions that we have endured over the last couple of days. I have news for those members: the love-in is over. The love-in is over, as the low tide has revealed how unpopular and irrelevant the Māori members on the Government side of the House have become. They have been able to secure nothing else but what we might call kongakonga, crumbs. That is a simple reprioritisation where Peter pays Paul, or, as we might say, it is a nick-and-tuck contribution for the Māori Party—a nick-and-tuck contribution. Its legacy is to be the nick and tuck. The assets of hard-working Kiwis, politically speaking, are about to be nicked, and the Māori Party is tucked up. Those members do not care that ordinary, hard-working Kiwis—or should I say garden-variety Kiwis—will be worse off as a consequence of this asset sell-off. No. The Māori Party members are focused on constitutional reform, yet they will definitely lose Tāmaki-makau-rau and Te Tai Tokerau. They have already lost them anyway as a consequence of poor management with regard to Hone Harawira, without a doubt.

Given the importance of jobs, a decent income, and the provision of housing, why have our colleagues on the Government side of the House, whether they are the Māori in discredited National or in the ebbing Māori Party, forgotten about those core issues? Why are they running around talking about flags and, now, a constitutional review, which, as a consequence of their mean-spiritedness, they did not invite this side of the House to contribute to? How can they with any sliver—with any measure—of sincerity say they want to change the constitution of New Zealand, then wander off and with Wīremu Pākehā, Bill English, as their handmaiden think they are going to do it on behalf of all iwi? Their views about constitutional review will be revealed on 26 November and they will be in the form of a UB40—that is, an application for an unemployment benefit. That benefit is likely to disappear as a consequence of the very parsimonious approach that we have seen evidence of today in Bill English’s speech.

I really need to come back to the Budget in order for the members on the Government side of the House to fully understand the sort of electoral debate that we are about to have. Where are all the contributions about cutting red tape? There is not one single initiative—not one single initiative. Rodney Hide—off he goes, and Don Brash comes in, ceding to those villains the opportunity to cut red tape. Where is the supposed business-friendly party delivering opportunities for both small and medium sized businesses? Those opportunities are somewhere near zero. Although the ACT Party vaunts itself and promotes itself as being a great friend of the world of business, it is not. There is destruction of savings and a sell-out at knock-off prices of State-owned enterprises. There is absolutely no plan in terms of the long-term growth of the key pastoral sector. What have we seen? We have seen ongoing further corporate welfare—ongoing corporate welfare.

We realise that the Māori Party has not learnt all the acronyms—along with Steven Joyce—nor has it actually understood what the man is doing in terms of the damage to the taxpayers as a consequence of his broadband scheme. No, there is no plan. In fact, although the man boasts about infrastructure, the only infrastructure we are going to see there is a new subsidy that the taxpayer will write out as the much-vaunted infrastructure plan sinks out of sight. The man will not back down. It shows how ill-conceived the plan was that Steven Joyce was outsmarted by Rahui Katene. If there is any evidence that this is not a plan to take this country forward, there it lies.

I am sorry, Mr Assistant Speaker Robertson, but please let me explain to Māori that there are 2 more minutes of this wisdom—of this very judicious contribution. Let me also talk now about Mr Steven Joyce and his contributions via the discredited script that is otherwise known as the Budget. Why is he stinging Aucklanders with a $500 million bill for a transportation system that the super-city mayor has a mandate for? Not only has the Government alienated savers, disappointed the business community, and shown an absolute barrenness of empathy and of compassion through the Eurotrash contribution of the Prime Minister today in what ought to be a prime ministerial speech, but it is now sticking it to Aucklanders. Aucklanders do not want Steven Joyce to continue in that supercilious manner. They do not want that. They are waiting for the opportunity to show him the exit. But it will be a crowded exit, because as he moves to that door, Te Ururoa Flavell, Tariana Turia, Rahui Katene, and, indeed, Dr Pita Sharples will be singing “Now is the Hour”. Kia ora tātou.

CHESTER BORROWS (National—Whanganui) Link to this

I raise a point of order, Mr Speaker. I wish to seek a clarification in respect of language used in the House. I was watching the debate earlier when the Hon Clayton Cosgrove was speaking, and I believe I heard him refer to a member on this side of the House as “Sooty”.

Dr PAUL HUTCHISON (National—Hunua) Link to this

It is indeed a pleasure to speak on the second reading of this Taxation (Annual Rates and Budget Measures) Bill. But I must say that perhaps it is a dubious pleasure to be following the Hon Shane Jones, who is the quintessential example of the Labour work ethic. After all, he was the man who on Make the Politician Work went off through the Manukau Heads. But what happened to him? He slept. He was asleep. Out he went, through the Manukau Heads, but, when the crew came looking for him, they could not wake him up. In fact, they had to turn on a fire alarm to wake him. If they had not had the fire alarm, he would have gone out there for 3 days and come back, having achieved nothing.

I acknowledge firstly the Hon Bill English for delivering a highly intelligent and balanced Budget for the times. It is a Budget that is extraordinarily prudent and responsible, and a Budget that ensures that health, education, and our justice services are well provided for. Indeed, they are the core winners of this Budget, and they are the core concerns of ordinary New Zealanders. The Budget delivered by the Hon Bill English makes a clear setting for our country to come out of deficit by 2014-15.

Secondly, I acknowledge the outstanding Prime Minister, the Rt Hon John Key, for the finest Budget speech I have ever heard. It was the finest Budget speech I have ever heard, and it rebutted the Hon Phil Goff at every single point, and clearly demonstrated the dire position that Labour is in.

Thirdly, I acknowledge the Hon Peter Dunne, who is responsible for this bill that deals with the fiscal costs of the KiwiSaver scheme and the Working for Families tax credit programme. This bill is one of the reasons why health, education, and our justice services are winners in this Budget.

I pay tribute, by the way, to the outstanding stewardship of Vote Health by the Hon Tony Ryall, because in health alone we see that $54 million in this Budget will be delivered to maternity services, including Plunket and Well Child checks. Those are hugely important for the potential of our children. There is $44 million in the Budget for dementia care. Again, that area is often left out, but this excellent National Government has put in that extraordinary amount in difficult times. There is $68 million more for elective surgery—and how we remember the days when Annette King grew the waiting lists to over 130,000 and then culled them at the rate of 10,000 at a time. There is $20 million more for medicines at a time when Governments around the world are cutting their budgets for health, and certainly for medicines.

There is a spectacular graph that shows the trajectory of where spending would have gone under a Labour Government from 2008, if its rate of spending had continued in the same way. The graph demonstrates that by 2023 the public debt would have ballooned to 60 percent of GDP. That is the sort of irresponsible trajectory that a Labour Government would have put on the people of New Zealand. Any sensible economist I have come across, when talking about the New Zealand economy, has said that we must curb our spending. We have heard the rhetoric of David Cunliffe, the man of the people, who runs his electorate, downtrodden there in Grey Lynn—