Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill

Hon ANNETTE KING (Deputy Leader—Labour) Link to this

What an opportunity this Government has with the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Bill, which is before the Committee. It has the opportunity to show New Zealanders who are struggling at this time that it cares about them, and that it can do something to alleviate the stress and strain that is on the family budget at this time. But I do not believe that the Government is listening to the public of New Zealand. Just one month ago in this Chamber, I asked the Prime Minister about the effect that a rise in GST would have on some of the basics that our families purchase. I happened to mention Weet-Bix, bread, and milk. The Prime Minister said that after GST was increased, his understanding is that they would become much more affordable when the tax cuts come in on 1 October. I think that shows people that this Government is out of touch with New Zealanders. It has no idea what New Zealanders are facing, and it is not listening to what they are telling the Government.

I think it is all written in this week’s National Business Review. There is a very interesting story in the National Business Review, which is headed “John Key’s ‘Captain Panic Pants’”. Well, in this very interesting article, which I am sure that we will go into in a lot more depth in the weeks to come, this was said by an Auckland business person: “We meet John at business breakfasts and other events and he always seems to say what we want to hear—he understands the issue—and he promises to follow-up with his ministers. But there are no staff there taking notes and no evidence that anything ever does get followed up,”. I think that summed up the fact that this Government is not prepared to listen to New Zealanders.

I would like to share with this Committee a letter that the Leader of the Opposition received today, which sets out why this Government is not taking account of the charges it is imposing on New Zealanders—GST is just one of them. This letter came from an Auckland businessman who is the owner of a small transport business. He said “I am a father and a husband. I have two children.” He said to Mr Key that he had voted for him, and he had talked to many people and tried to persuade them to do the same. “This is because I truly believed”—believed—“that you were the best man to get New Zealand and the people in New Zealand back on track. I continued to do this until 6 weeks ago. Well, up to this point you have proved me wrong.”, wrote the businessman from Auckland. “You seem to be forgetting that those of us in business have survived the recession”—it is not over yet—“but we have no cash surplus left to pay your extra taxes, such as ACC, fuel tax, RUC, GST, etc., etc.”

The businessman went on to say: “This road-user charge increase has effectively sent me broke. If you had left things alone, I would have made it out of the other side. Because you are so out of touch, what you have created in my business is two more people out of work, two families with not enough income, and all this before you put up GST, causing food prices to go up, and just after you made rents go up and your tax shuffle on rental properties.” He went on to say he had to lay off an employee, a person who had a family to feed. He said: “I have spoken to many people over the last 6 weeks. You and your party have made everybody’s life harder. It’s almost impossible to pay the bills.” I ask whether we could have had it put any clearer than that businessman has regarding what this Government is doing to thousands of struggling New Zealanders who are trying to bring up a family and pay the bills.

There is one small thing that this Government could have done in this bill today. It could have given an exemption to the GST increase on rates over the next 9 months. It would have been only a small relief, but it would have shown that this Government did listen to people and did care about the plight that they are in at this moment. We hear from the Government that there has been a tough recession and that it understands what people are going through. Well, if it understands that, then I ask why it will not accept this amendment to the bill. It is a sensible amendment, and it would not cost a fortune for it to be implemented, but it would have shown in a very small way that this Government does care about people out there.

You see, if members opposite were listening to what is happening, and if they went and visited some of their citizens advice bureaus—in fact, I understand that in Wellington today, none of those members turned up to listen at the citizens advice bureau meeting; it took Labour members to go and listen to what was being said—they would know that people are feeling the pinch. Those members do not want to hear what the citizens advice bureaus are saying, because they know that on the ground people are really feeling the pinch. But if they were to go out and listen to budget advisers at the citizens advice bureaus, they would be told that thousands and thousands of New Zealanders are struggling to make ends meet, and that they are desperately worried about the increase in GST in 36 days’ time. They are desperately worried about what that will do to their ability to pay for their kids’ uniforms, their children’s shoes, and their grocery bill.

But that does not seem to worry the Government at all. It does not believe that the GST increase will be a major problem. In fact, Bill English constantly tells us that people will be better off. Well, I have to tell Mr English that that is not how New Zealanders feel. They do not feel better off now, and they will not feel better off on 1 October, because they are realistic about what is happening to them. People have faced rent increases already, and that is before GST goes up and goes on to rates, which will be passed on to rents. They have seen their mortgages go up. They have seen prices go up, even before the GST increase has been put on. So people are feeling the pinch.

I ask the Minister in the chair, the Minister of Revenue, who is a Minister who knows a bit about taxation, why the Government will not accept the amendment from the Labour Opposition, which would give people some relief in terms of their rates. It is OK in this bill to give relief to others whom many would consider to be big business interests in the community—those who have finance leases are able to have a transitional period—but not the people who will have to pay the extra 20 percent that will go on with the increase in GST on their rates. Those people will get a rates demand that comes now, and they will have to pay the increase right through to July next year, even though GST does not start until 1 October. It is only a small matter, I say to the Minister, but does the Government not think that it might give a good indication to New Zealanders that this Government listens, cares, and is prepared to entertain other ideas? No, it does not do those things.

Increasingly we are hearing, not just from commentators but also from some of what I would call the more conservative newspapers around New Zealand, which are desperately worried about what is happening to their citizens. We can look at the Taranaki Daily News from last week. We would not say that it is a very liberal newspaper—probably the locals think that it is pretty good, but it is conservative—yet this is what it said. It stated: “… it would be … terrible if the Government used the findings” of the Working Party on Welfare to dump on the many at-risk members of our society who have lost a job through no fault of their own and are paying the price for the greed of others.” I do not think that we could have said that better. Those people are paying the price for the greed of others. They have lost their jobs. They have lost their opportunities. They can see no plan from the Government in this legislation, or in anything else that we have seen put before this House, that will see a single job created for them. They can see nothing that will give them a leg up rather than the kick in the backside that is all that the Minister for Social Development and Employment has promised them.

We know that a newspaper as conservative as the Taranaki Daily News recognises that this Government is being punitive towards hard-working Kiwis who have lost their jobs, and we know that businesses have closed—like that of the businessman who owns his own transport business, and who has had to lay people off because of the charges imposed by this Government. National railed against road-user charges when it was in Opposition. Do members remember the protests on road-user charges under Labour? Oh, yes, that was a terrible thing then, even though there had not been an increase in road-user charges since the 1980s. But this time, when this Government has put one on, it is OK, and people were told not to worry about it, even though it is driving a company out of business.

Hon BILL ENGLISH (Minister of Finance) Link to this

Now we know what Labour’s policy is: cancel tax cuts and give an exemption for GST on rates. That is the policy. Well, I invite Mrs King and Mr Goff to go out to Mana in the by-election and campaign on that—cancel the tax cuts, but provide an exemption for GST on rates. Let us see how popular that is.

Hon DAVID PARKER (Labour) Link to this

The Labour Party most certainly does not support 35 percent of the income tax cuts going to the top 5 percent of New Zealand’s income earners. We are clear about that on the record. I ask how Mr English can think it is a good idea, when he is running a deficit, to give income tax cuts of which 35 percent goes to the top 5 percent of income earners. It is poor economics. It will give us a greater deficit as a consequence and a more unequal society, which is also bad.

In respect of the misrepresentation by Mr English of the Hon Annette King’s comments, the record has to be set straight. Never has Annette King suggested that GST should come off all rates. All Mrs King raised was the very good idea that if we are to give some relief to the increase in GST that is coming on 1 October for people who have 5-year financial leases, why do we not give some interim relief during the first year for rates? People who can afford to pay those rates for the full year before 1 October—that is, wealthy people—will get that relief. They will not pay the increase in GST on this year’s rates, but people who cannot afford to pay all of their rates for the full year before 1 October will not get that relief. They will pay the increased rate of GST on the balance of their rates.

The Labour Party amendment is on the floor of the House, and National members could vote for it if they had the gumption to see that this detail would give that same relief from the increase in GST for this year. It does not apply to all GST; it applies just to the increase in GST on rates for the balance of the year. That is what the amendment from the Labour Party says. It does not suggest, as Mr English tried to tell the Committee in misrepresenting the amendment, that all GST should be relieved from rates. Once again, it shows how desperate the National Government is to misrepresent Labour Party policy.

It is interesting that Mr English is the same man who says that National inherited a bad state of affairs from the previous Government, when in fact National inherited some of the lowest rates of net Government debt in the world—it had gone down to zero—and gross Government debt had come down from 35 percent of GDP to 17 percent of GDP under the previous Government. National did not inherit a bad fiscal position; it inherited a good one. The position would have been far worse had Mr English been in charge of the Treasury benches during that period of Government, because he opposed every Budget surplus that we ran. We used those surpluses to reduce Government debt and to start the savings into the Cullen fund. Instead, Mr English said that there should have been unaffordable tax cuts. If New Zealand had done that, we would have been closer to the position of Portugal, the United Kingdom, and Spain, all of which have high Government debt and, therefore, problems that this country does not face.

This bill is a lost opportunity in respect of big things like savings. The Government, through this bill, could have reinstated KiwiSaver and proper savings towards the Cullen fund. This bill does not do that. The Government has set up a Savings Working Group, because at long last it has acknowledged that one of the problems in New Zealand is our savings level. That is one of the big differences between New Zealand compared with Australia. We in Labour have been saying that for years. It is why we started Government savings through the Cullen fund and the surpluses we ran. It is why we started incentivising private savings via KiwiSaver. They are both measures that the National Government has undermined, just as it undermined the Kirk savings scheme and Mr Peters’ efforts in the late 1990s to introduce compulsory savings. The Government has no coherent plan to bridge the wage gap with Australia. This bill does nothing substantial to bridge that wage gap. It continues to grow ever wider, despite the protestations by National to the contrary.

Once again, I reinforce the point that Annette King made. There is one small thing that can be done for Kiwis who at present are pushed on their cost of living, in respect of the extra GST—not all GST—that is coming on their rates for the balance of this year. Let us give those people who cannot afford to pay all of their rates for this year by 1 October the same relief from the increase in GST that is given to those people who have already paid their rates.