Hon PETER DUNNE (Minister of Revenue) Link to this
I move, That the Taxation (KiwiSaver and Company Tax Rate Amendments) Bill be now read a second time. Let me recap briefly the two main features of this bill. I refer first to the change in the current company tax rate from 33 percent to 30 percent, starting from a company’s 2008-09 income year. I note that, despite the votes we are going to see against this bill, no one is actually opposed to the company tax rate being cut. That is the one point of unanimity in the House so far. We are dividing on an issue that everyone agrees on. The public of New Zealand will draw their own conclusions about that. There is also broad agreement on why we are cutting the company tax rate—to improve New Zealand’s international competitiveness by aligning our company tax rate with Australia’s, making New Zealand a more attractive country in which to do business.
I know, Mr Assistant Speaker, that it is probably a breach of the Standing Orders to refer to the debate immediately passed, but I was intrigued by Mr Groser’s comment that the biggest company tax rate cut—in fact, the only company tax rate cut—in the previous 20 years is a minor measure. I say that if this measure is a minor one, and if a business tax reform package that brings in $3.4 billion of business tax adjustments over the next 4 years is a minor measure, then let us have many more of them. I am very happy to be associated with the measure. It is something that New Zealand will benefit from, and it is extremely positive.
Equally beneficial is the enhancement of the KiwiSaver scheme, and if one looks at the commentaries overnight one sees that it is viewed in a similarly positive way—I gather even by the leader of the National Party. The enhancement to the KiwiSaver scheme is the introduction of a further incentive for people by giving them a tax credit of up to $20 a week for contributions to a complying KiwiSaver scheme fund from 1 July this year. Yet again we are going to have the House dividing on something that everyone agrees on, and on something that regardless of the outcome of this vote and this bill today, and regardless of the outcome of future elections, will become a feature of New Zealand’s savings system long into the future. Again, the public of New Zealand will draw their own conclusions about what is going on here. The excuse that the Opposition parties are opposing because that is what Oppositions do has limited currency in an environment where people are expecting a positive contribution from this Parliament.
The KiwiSaver tax credit will be available to everyone over the age of 18 years and up until the age of 65. The scheme is designed to help people build their retirement savings faster. In turn, it is about giving them greater security in retirement and helping to contribute to a stronger economy. The good news is that it applies from 1 July this year. One of the reasons the publicity about KiwiSaver has been a little coy to date has been the development of this dramatic new proposal. The reaction overnight shows how positively it is viewed by many people—and by young people, in particular. They see this as an important opportunity to get a good start in life and in a working career.
In addition to those principal changes, this bill brings in several amendments that are part of the building blocks of those changes. I think it has been overlooked, but it is a very important move that the reduction in the tax rate for certain savings vehicles, from 33 percent to 30 percent, from the beginning of the 2008-09 income year—so that people who are saving through entities such as unit trusts and widely held superannuation and group investment funds will also benefit from the 30 percent rate applying for those funds—levels the playing field even further in terms of encouraging a savings culture in New Zealand. The bill also includes a number of amendments to the portfolio investment entity tax rules, to ensure the smooth introduction of KiwiSaver later this year.
Members will be well aware—and, indeed, supportive—of the idea that these changes need to be made at this point, to ensure the smooth implementation of KiwiSaver and to ensure that where interest has been shown people can effectively apply from the start of July. Already, the initial estimates from the Inland Revenue Department and Treasury about the likely uptake of the scheme are being revised upwards as people hear more details about it. It is with great pleasure that I recommend the passage of this bill through the House as quickly as possible, and I am very happy to move its second reading this morning.
Dr the Hon LOCKWOOD SMITH (National—Rodney) Link to this
This Taxation (KiwiSaver and Company Tax Rate Amendments) Bill is the first measure to implement the Government’s great money-go-round Budget.
Hon David Benson-PopeDr the Hon LOCKWOOD SMITH Link to this
What is the Minister’s name? Mr Benson-Pope thinks it is boring. I guess that is why he gets into exciting things like stuffing tennis balls into students’ mouths. Is that the kind of excitement that that member likes?
As I said, this bill implements the first part of the great money-go-round. This Government is fairly used to that kind of thing, because we already have a great money-go-round in this country, and it is called Working for Families. Probably now in excess of $1 billion is taxed off these New Zealand families by this Labour Government that knows best. This Government knows best! New Zealanders are dumb people! Only this Labour Government—and Dr Cullen, in particular—knows best. So it taxes that $1 billion off these New Zealand families, and then gives it all back to the same families. It alters the balance a bit and gives some families back a bit more than it took off them. OK, so it alters the distribution of it a bit.
But, in essence, one can actually calculate exactly how much is purely a money-go-round by looking at the average tax rate every family pays. If one looks at the tax graph of average tax rates—at the area under the tax line for those people with no children, compared with the area under the tax graphs for people with children—one can work out exactly the money-go-round and how much the same families are taxed and what they get back from this Government. It is not redistributed; it is the same tax that is taken off families and handed back to exactly the same families. This Government is reasonably familiar with the manipulation of money-go-rounds. The sad thing is that it has been estimated that to collect that $1 of tax it probably costs $1.20. While the money is churned through the bureaucracy to go back to the same people, there is a cost on the way. Of course, New Zealand is the worse off for it.
The Government has some experience in these money-go-rounds, but this one is a new one—whereby the Government, on the one hand, says it is going to reduce the amount of tax it takes off businesses and employers, but on the other hand it is going to require them to make compulsory contributions to this KiwiSaver scheme. Of course, that is another money-go-round, because on the one hand the Government says it is taking less off employers, but on the other hand it is imposing what is, in effect, an employer tax.
As we look at this bill, which implements the employees’ side of the KiwiSaver tax credits, one has to ask oneself what Dr Cullen is actually trying to achieve with this legislation. If one looks at what has happened in the economy over the last few years one can ask what the major problems have been. I would have thought, given the seriousness of the situation the New Zealand economy is in right now—and Dr Cullen admitted in his Budget speech that it is unbalanced; he used the word “unbalanced”—
Dr the Hon LOCKWOOD SMITH Link to this
He acknowledges that fact here now. But is this lack of savings, as he calls it, the biggest problem contributing to the lack of balance? I put it to Dr Cullen that there has actually been no shortage of capital in New Zealand. There has been no shortage of ability for businesses in New Zealand to acquire capital. But Dr Cullen seems to have this view that capital is only good capital if it is owned by New Zealand people. That is a kind of childish view of a global economy. What is critically important is whether businesses have the capital they need to invest in improving productivity. There is no evidence that there has been a shortage of capital. There sure is evidence that there have been problems with productivity, because under Dr Cullen’s rule he has been extraordinarily successful in damaging productivity. He inherited an economy that was growing during the 1990s. Productivity growth was 2 percent a year during most of the 1990s. It was 2 percent a year from 1992 to 2000. Dr Cullen has succeeded in reducing that productivity growth by two-thirds and he has now stalled it. Productivity growth has now virtually stalled in this country.
There has been plenty of capital available, so it is quite clear that availability of capital has not been what has stalled productivity growth in this country. Yet productivity growth is the No. 1 issue if we want non-inflationary growth. I am sure Dr Cullen does want it, because he does not want the Reserve Bank to keep upping the cash rate because we do not have non-inflationary growth at the moment. The bit of growth that we are getting is putting a lot of pressure on inflation. Dr Cullen knows that. He knows that, yet nothing in this bill will change that balance. There has been plenty of capital available, but our productivity has collapsed, and that is the No. 1 economic problem facing this country.
Dr Cullen might claim that he is bringing the corporate tax rate down from 33c to 30c—and I accept that that is a positive step; we do not argue against that—but even he knows that corporate tax is not the final tax paid by New Zealanders. He knows that. And, of course, many New Zealand businesses and employers are not corporates. Sure, those that are incorporated will get the benefit of that tax cut, but we all know that corporate tax is not the final tax paid by New Zealanders. Personal tax is the final tax paid by New Zealanders, and this bill does nothing to help hard-working New Zealanders.
That is the first serious point I make. There is no evidence that New Zealand business has been short of capital; no evidence, whatsoever. Sure, the price of capital in New Zealand is unacceptably high—that has a lot to do with the Government’s massive spending programme over the last 6 years—but there is no evidence of a shortage of capital. So this bill, which is the first step in this programme to try to force New Zealanders to save a lot more, because Dr Cullen knows what they should do with their money a lot better than they do, will not actually do anything to New Zealand’s economy. A shortage of capital is not the issue. The issue is productivity and the damage done to our economy by excessive regulation, an excessive tax burden, and totally inadequate programmes to address the infrastructure problems of this country.
The second point I will make in relation to this bill is this. I listened to Laila Harré on the radio this morning. I ask my colleagues whether Laila Harré is a paid-up National Party member.
Tim GroserDr the Hon LOCKWOOD SMITH Link to this
I am told that she was not, when we last checked. I remember Laila Harré in this House. I remember Laila Harré being far more aligned to the left and to Labour Party thinking than to ours. What did Laila Harré say this morning about Dr Cullen’s KiwiSaver tax credit system? Laila Harré said that, sadly, it will not do anything for her members. That is the point I was trying to make to Dr Cullen yesterday—this measure, this Taxation (KiwiSaver and Company Tax Rate Amendments) Bill, does nothing for the low-waged.
Sadly, in New Zealand, as in all countries, we have people who do not earn enough. Maybe they do not have the skills to earn enough or maybe life has not smiled sufficiently on them. Either way, they do not earn enough and, sadly, it is those people who will get nothing out of this. They got nothing out of Dr Cullen’s Working for Families in the last Budget prior to the last election. That targeted middle New Zealand—not low-income people or people on benefits. This Minister talks about caring for the left. I see that Tariana Turia is nodding. She knows that many Māori people are caught in these low-waged positions and we all know, in truth, that this bill does nothing for them. It is a cynical manipulation by Dr Cullen, who thinks that he knows best.
One of the stunning features of this Labour Government is that its members think most New Zealanders are stupid. They think that most New Zealanders are stupid and that they do not know what to do with their own money. Government members think that Dr Cullen is the saviour, and that he should dictate how people’s lives should be lived, how they should raise their families, and how they should spend or not spend their money—and New Zealanders are sick of it. They are sick to death of having Dr Cullen and Labour telling them and dictating to them how their lives should be run. I look forward to the day when more New Zealanders can pursue their dreams and goals, and not have Dr Cullen foist it on them that Labour knows best.
The ASSISTANT SPEAKER (H V Ross Robertson) Link to this
Before I call the next member, I would ask the members on my right to look at Speakers’ rulings 57/3.
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
Well, at last the previous speaker got angry. He really managed to wind himself up to a full fit of totally insincere anger at the end of that speech. And what was the source of that anger? This Government is daring—daring—to provide support for saving. Who said that? Dr the Hon Lockwood Smith PhD. What is Dr the Hon Lockwood Smith PhD on? He is on a parliamentary superannuation scheme, where he contributes 8 percent of his parliamentary salary and the Government matches that at a rate of about two to one, at least. There is a money-go-round and Dr the Hon Lockwood Smith PhD has his little dibs right in the middle of it. What he is worried about is that people on ordinary incomes will also get some help from saving. “God help us! It is meant only for chaps like us.”, says Dr the Hon Lockwood Smith PhD. It is not meant for ordinary folks—the kinds of people who do not spend their lives looking at their Charolais cattle with moony eyes, saying how lovely this all looks from either end and “Here is my future.”, while the cattle look extremely anxious and worried about the prospect that may be facing them.
So he is going to vote against this Taxation (KiwiSaver and Company Tax Rate Amendments) Bill, and what is in this bill? A cut in the corporate tax rate. Dr the Hon Lockwood Smith says, angrily, that this will do nothing for the ordinary taxpayer because it is not a final tax. Well, when I said that, I was scorned by the National Party. But he did admit, finally, that it might do a little bit for productivity. He did say that there was no capital problem, but it was just that we had to borrow it from overseas, and we have to pay an interest rate premium—because we have the second-highest national debt in the developed world as a proportion of national income. So we pay an interest rate premium, and that is a cost to business—a cost to business, I say to Dr the Hon Lockwood Smith PhD. We pay higher interest rates in New Zealand, not just when monetary policy is tight; we pay higher interest rates across the board in New Zealand than many overseas countries do, because we do not save enough.
Dr the Hon Lockwood Smith asks what we are to do about those on low incomes. Well, in fact, this scheme does more for those on low incomes to help them save than it does for those on high incomes because the tax credits are worth more. You see, what is in this bill is not the compulsory employer contributions; it is only the employee tax credit. And what did Mr Key say about that? [Interruption] Yes, that is right—exactly. He said very little about it. What did Mr English say about it? Well, nothing, because Mr English has not been allowed to appear in the media because Mr English does not support the madness that says this economy is in a position of being able to have large-scale personal tax cuts. He is not allowed to say that—he said it 2 or 3 weeks ago and he has been told to shut up.
Mr Key goes on saying that what we need to do is to spend our way to prosperity, and that we will do that by borrowing some more money so that we can afford to spend our way to prosperity. Well, when one is a short-term money market trader playing with other people’s money and does not have to worry about what happens, one can do that kind of thing. But when one is running a country, and if one gets it wrong and one wants to restructure “the business”, what it means is that one has to throw hundreds and thousands of people out of work and close down businesses all over the show. It is not like the private sector—actually, it is not like the private sector. With the decisions that we have to make, people cannot suddenly say that they will go and work for somebody else. If we get it wrong, people will suffer in large numbers.
Mr Key famously said that he never cried when he had to sack people. Well, I am pleased that I do not go around sacking lots of people. What I can say is that one Kiwi has already decided to come back to New Zealand as a result of this Budget—Jan Cameron of Kathmandu is coming back to New Zealand. Almost every commentator has supported the KiwiSaver changes, and it was described as a bold and courageous move. When National members were asked whether they would unwind it, they said: “Hmm, well, we will have to think about this. We will have to look at that and think about it before the next election.” One can already see the retreat and the flip-flop being described in their minds as they go forward. But in the meantime, Dr the Hon Lockwood Smith PhD will get very, very angry, because ordinary New Zealanders are going to get supported to save—and that is not what is supposed to happen in his view of life. Tough!
CRAIG FOSS (National—Tukituki) Link to this
I rise to speak to the Taxation (KiwiSaver and Company Tax Rate Amendments) Bill. When KiwiSaver was originally announced it was a relatively simple project, and the original KiwiSaver bill was a relatively simple bill. Various advisers and officials said they were not sure of the take-up or the participation rate that KiwiSaver would bring. So what happened in about July last year, after the bill had gone through 6 months at the select committee? Various advisers said there would be very little take-up of KiwiSaver, and there would actually be just savings shift from some private schemes by some new entrants into the KiwiSaver scheme, who would not quite realise what they were doing and who, essentially, would be locked in for life.
Suddenly the Government had to have a bit of an incentive—a bit of a bribe, perhaps—so the specified superannuation contribution withholding tax exemption was brought in, as well as the mortgage diversion scheme, which I will talk about again in a minute. At that time participation models said that about 20 to 25 percent would participate in KiwiSaver—so that was fair enough; I guess the Government was starting to learn the meaning of the word “incentives” and what they bring to the place. But, interestingly, even if this proposal in the Budget announcement yesterday and the provisions in the bill around KiwiSaver are so wonderful, and even if these tax credits—however they are variously described—are so fantastic for our economy and so great for all participants, even at that rate, presumably only 50 percent of taxpayers will participate. So according to Treasury’s models and revenue advice, 50 percent will not participate. If the scheme were so good, would it not be 100 percent? If Labour were so true to what it says to those people it claims it represents, would not the scheme be constructed in some other way?
The reports are already coming in—we have already seen them. There was a bit of gloss on the various news channels last night, but the reports are coming in and people are asking: “Where is the cash; how can I live?”, and “Where is the cash; how can I get by?”. I would like to quote a couple of institutional analyses of the Budget, if I may. A quick quote is that Westpac describes the Budget as “a bit of give and take.” But here is the kicker; here are the bits where, once one starts reading, one sees the details of the Budget coming through: “The fiscal impulse over the next 3 years is bigger than that published in the half-year economic and fiscal update.” Listen to this: “This will keep upward pressure on inflation and interest rates.” That is, those who are least able to afford it, those who are least able to find cash, will continue to struggle. Life has just got harder for them. Their real income, their purchasing power for the next 3 to 4 years—at least under this current regime—has just been officially cut. It is an absolute disgrace that this Labour Government wants so absolutely urgently to hurt the people that its party was apparently formed to protect.
There is another comment here from the BNZ that is interesting—I will just read it out quickly as I move back to the bill. A common theme is starting to come through in descriptions of the Budget: “Budget: more angst for Bollard”, and “Fiscal stimulus bad news for the Reserve Bank of New Zealand.” What does that mean? It means that the Budget is bad news for the mortgage payers and the credit card payers of New Zealand. That is another point I will come back to. These quotes, interestingly, are very, very descriptive and, again, the kind of thing we find out when we start to wander through the back pages of the Budget. Members should listen to the BNZ’s description of some of the assumptions in the Budget: “we feel that Treasury are still making heroic assumptions …”. So there are “heroic assumptions” in the Budget—I will come back to that in a minute.
It is also interesting to note some of the reports that are coming through in this Export Year. The currency is pretty much unchanged, interest rates are signalled to go up, and it is Export Year. Let us think it through. As I noted last night, in 2000 when Dr Cullen first had the opportunity to start to help reward New Zealanders and let them share in the upside of the upcoming economic boom, the current account rate was 5 percent and he was aiming for it to come down to 2 percent of GDP. Currently it is 9 percent and the difference in currency is about 40 percent. Exporters have to work 40 percent harder just to get ahead; they are in pretty much the same position as other hard workers of New Zealand.
When KiwiSaver was first announced there was a lot of fanfare about that thing called the mortgage diversion scheme, which gave $1,000 for the first 5 years to help first home buyers, etc. We did not hear a word of this scheme in the Budget—not one word. One of the stinging criticisms of the original KiwiSaver scheme was the contradiction between a first home buyer scheme and a retirement savings scheme. One cannot have both. If this Government were somewhat courageous, or listened to some of its more sensible advisers, it would perhaps start to split out and deal to the two, rather than just give the constant shallow rhetoric we had about trying to help first home buyers, etc. Yet it has put in a scheme like this, and had a 1-hour Budget speech that totally rejects one of the original core tenets of the KiwiSaver scheme. That does not make sense to me; perhaps the Minister, Mr Carter, will have more to say on it when he gets questioned next week.
Part of the bill brings the company tax rate down to 30 percent. I say “Bravo; well done.”; we support the Government on that. But, as usual, they just cannot trust the real world. There are so many caveats, so many details, and so many uncertainties—the Government just cannot keep it simple. On that basis we will be voting against the package, the “all” in here. We want to be voting for a Budget that will build a future for New Zealand, but everything that Dr Cullen touches does not have just strings attached—it has chains.
I note the wins that the very sensible Mr Dunne has achieved in this Budget. The leverage that member has, given the small numbers of his caucus, is quite incredible. If members recall, he spoke in the past of a target of “30, 30, 30”—30 company, 30 top marginal, 30 trust, etc. Well, he is getting there; we are part of the way there. Coming down to 30 percent for company tax is a good first step in the right direction. I say congratulations to Mr Dunne on that one. But, of course, there is a double-edged sword there, because the incentives to arbitrage between the top marginal tax of 39c and this new company tax at 30c just got a whole lot bigger overnight. As per normal, the devil is in the detail here. As our leader John Key noted yesterday, John Tamihere was right: there is a subtle change in a word here, a subtle change in a word there. Down the bottom of page 67 of the Budget document, in the notes to the accounts, we see that all sorts of underlying issues and tenets are flowing through this Budget.
Of course, Dr Cullen and members opposite get up, but all they can really do is to make personal attacks: “Ha, ha, ha—you’re voting against that.” You know, if Government members were so proud of the Budget, and if they had so much ownership of it, they would be talking about the detail of the Budget. Instead, we have heard, particularly last night, of Dr Cullen’s very curious fascination with the clothes John Key wore when on Close Up.
I will touch base on the productivity issue. You know, wage earners in New Zealand took a pay cut last night, but the crux of what the BNZ is saying is that the only way out of the problem Dr Cullen has created over the series of the last seven Budgets, is productivity. Forty percent of the economy is part of this state. Members should listen to what the BNZ says this Budget entails, because this Budget is wrong: “Over the past three years labour productivity growth … has averaged 0.4% per annum and over the past 10 years has averaged 1.2% per annum. Treasury assume growth going forward will average 1.7% per annum.”
Where on earth will that increase come from? Because unless that is achieved, the numbers in this Budget, the parameters around the modelling for this KiwiSaver proposal are, absolutely, junk—absolutely, junk. This is a train crash waiting to happen, for all sorts of reasons. Its underlying assumptions are the starting point. I say well done to Dr Cullen for the company tax rate, but I tell him that the package here is an absolute nonsense.
R DOUG WOOLERTON (NZ First) Link to this
Following that speech—and I regard Craig Foss as a friend on a personal basis, I would like to think—I tell a lot of my other friends in the National Party, and I have just as many in the Labour Party, as everybody knows, in case people think there is a change of allegiance here, to not let the moneylenders and money boys take over their party. Average people do not deal on the stock market. Average people are not experts in shifting money around. Average people do not go to the financial pages of the newspaper every day. I know Mr Foss, and I go to him for advice. I regard him as an expert. I talk to Dr the Hon Lockwood Smith and respect him. But do not degrade or be nasty to the people who do not have the level of expertise of those members, because this bill evens out the situation. Lots of people are happy to invest just some part of their income in a fund that is managed by somebody else, and many people prefer to do that. I am actually one of them. I would like to think that one day I will get the time to mess around with money and shift a bit of it around different companies, but at the present time I do not want to do that. I want somebody to do it for me.
Bob ClarksonBob Clarkson will do it for me, and I could probably do worse than give him a couple of bob to look after for me, I admit that. But I prefer to give it to AMP, AXA New Zealand, the Tower Group, or somebody like that, and this is what this scheme is about. Firstly, the Government has to get the tax rate that those companies are charged, down to a reasonable level, and this bill we are talking about now goes further and does it for other entities. I applaud that. It helps the average person, or the person at the lower end whom National would like to talk about, get a tax rate that only the elite, perhaps, enjoyed previously, and it allows those people who want to invest through entities and who want to join up to KiwiSaver to have an avenue for doing so. They do not have to go to a stockbroker, they do not have to go to the bank manager, they do not have to learn about the vagaries of the financial markets, they can put the money away and basically forget about it.
We know that all is not without risk, and in the depths of this bill is some attempt, and I applaud the Government for it, to get the huge costs that these companies have previously charged, down to a reasonable rate. I applaud that as well. But this legislation is not about people who want to invest in the stock market, it is about saving to the degree that one wants. The Government has recognised that it is hard for people who do not earn a lot, and it has stepped in to make sure that that can happen. It saddens me, because those who are very financially literate in the National Party are deliberately saying that this is a wage cut for the lowly paid, when they know—because they are financially literate, and I would like to think they are responsible enough to say—that money going into the bank in the form of saving is just as important, or more important, as a wage. Because this is a wage increase that the Government is happy to help people with.
Sure, one cannot use it until one is 65, but it is putting money away, which is very important, and people on lower wages have never ever, ever, been able to do that during their lives. They do not have the expertise of Mr Tremain. They do not have the expertise of Mr Foss, Mr Bennett, or, God bless us all, Bob Clarkson, whom we recognise as having particular expertise in making money. I would liked to think that Mr Clarkson, who is known for his largesse, would have ensured that his employees had something like this given to them by him of his own free will—
Hon Damien O'Connor—because he talks about all these things. And the question my colleague Damien O’Connor asks is, “Did he?”. I think we can safely assume the answer to that is “No”. So we have had to come to this House to ensure that the Government is going to look after those people at the lower end and give them some certainty for the future. This bill does that. Will the Government do another “Muldoon”? That is the critical question as we go into the next election and as we go into the future. I tell Mr O’Connor that I do not think it will do a “Muldoon”, because it knows that it cannot do that twice in living memory. The Government cannot raid people’s futures twice in living memory.
I was in the National Party in the Muldoon years. I know what happened. I was in the hierarchy, and had been so for many years, so I know what Muldoon did and I know what people in the National Party thought of it. I can tell Mr O’Connor that the people in the National Party will in no way allow the present-day National Party to get rid of this scheme. They will not. So I can tell members just about with certainty that this scheme will remain even under a National Government whenever that may be in the future, and many of these members may not be here at that point.
Even with a money trader for a leader, there are still at this point more people who do real things rather than money trading in the National Party, and I am encouraging them to take up positions in the National Party and not to leave it all to the money traders.
Dr Cullen was quite right when he said to Dr the Hon Lockwood Smith that we in this place—every one of us—are on a scheme such as is being offered through KiwiSaver; only, ours is better. Our scheme is two for one. For every $1 we put in, we get $2 put into our savings. Now we regard that as part of our salary. When I see articles written in the newspapers about parliamentary perks and all those sorts of things, that is—
—baubles, exactly, and that is uppermost amongst them. We regard that as a very, very good scheme. I know very financially literate members in this place who do not subscribe to a recognised scheme such as AMP, the Tower Group, AXA, or whatever; they have designed their own, and that is allowed, too. But these are people at the top end. Now Dr Cullen and this Government, with New Zealand First support, is trying to extend these great benefits down to people who have, hitherto, never been able to have them. I think that that is an indictment, and I would like to think that people with the ability to spread their largesse around like Bob Clarkson would have been able to do that for their workers.
But I think, and I am pretty sure, that the National Party will not get rid of these schemes. It will certainly not put the tax rate back up for companies, but maybe it will. But I do not think it will. It will certainly not allow the tax rate to go back for providers. It will certainly not allow companies such as AXA, the Tower Group, and what not, to have their tax rates put back up. But, in fact, today, sadly, National members are talking about opposing this bill—and they are—and talking about lower salary earners getting less income. They know that that is not correct.
TARIANA TURIA (Co-Leader—Māori Party) Link to this
Tēnā koe, Mr Assistant Speaker. Tēnātātou katoa. It was Plato who once said: “The excessive increase of anything often causes a reaction in the opposite direction.” And so it is that yesterday the Minister of Finance introduced a reduction in the headline rate of corporate tax from 33 percent to 30 percent, while in the same breath he announced that there would be compulsory employer contributions to KiwiSaver phased in over the next 4 years.
This bill provides for the tax rate changes and the KiwiSaver enhancements announced in the Budget. The idea is that the company tax rate reductions will increase productivity and improve international competitiveness, meaning that overseas companies will want to come over here and do business. That might be well and good, but it does make me think about the likely impacts on our own local businesses and business people.
We have already experienced New Zealand companies shutting up shop and moving overseas, businesses downsizing, and a fall in wages. There is also the not insignificant matter of some 300,000 New Zealand children living in poverty. What about the basics, like being able to afford to heat the home, buy clothing, pay for transport, and participate in sport? What about the ability to eat a decent meal unhampered by missing or decayed teeth?
Māori Party members support a reduction in company tax rates as part of our taxation policy, so we are hardly going to oppose the notion of it. We believe that larger corporations should be encouraged to grow, to increase employment of rising quality, and that a decline in their tax rate from 33 percent to 30 percent will help to effect that. But the wider issue is that the tax relief will not go to those who need it most urgently, and those are beneficiaries and people on low incomes.
We looked to the 2007 Budget with one clear aspiration—that is, that all people should have sufficient income to be able to participate in society and in their communities. We expected there to be initiatives to support meaningful, full-time work and for people to benefit from a realistic minimum wage. We have talked before in this House about the need to raise to $25,000 the maximum level of income that people may earn before they are taxed, but we have yet to see a system that redistributes wealth equitably. We continue to note that the KiwiSaver scheme is not accessible to all—namely, beneficiaries and those on low incomes—yet through the enhanced KiwiSaver scheme it is expected that 50 percent of New Zealanders aged from 18 to 65 years will actively contribute to KiwiSaver or a complying superannuation fund.
The economy should not be a “game of two halves”. If 50 percent of New Zealanders are benefiting from KiwiSaver, it does not take the use of a calculator to realise that 50 percent are not. One-half of New Zealanders are getting a pretty good deal—and I include ourselves in those who are getting a pretty good deal. Those opting into this scheme or a complying superannuation fund will receive a tax credit, dollar for dollar, of their contribution, up to a cap of $20 a week. Those opting into the scheme or a complying superannuation fund will receive compulsory matching employer contributions, starting at 1 percent in 2008, and reaching 4 percent of gross salary or wages by 2011. But for some vaguely defined different subgroups of the labour force—that is, the working poor and beneficiaries—the benefits will be negligible.
This new category of people, “subgroups”, appears in the general questions and answers section of the KiwiSaver package. I wonder whether these are the people who earlier this year were referred to as “the underclass”—“sub” meaning subordinate, secondary, below the radar, or inferior. These different subgroups, presumably, are those families who live with net-of-housing cost incomes below the 60 percent line—23.6 percent of whom are Māori, 40.2 percent of whom are Pasifika, and 15 percent of whom are Pākehā. Subgroups are also, no doubt, those who live in houses defined as overcrowded—23 percent of all Māori, 43 percent of all Pasifika, and 5 percent of all Pākehā. Subgroups are no doubt those who live in severe hardship, with below-average earnings and high-frequency visits to food banks. Subgroups are no doubt those who live in clusters, drawing a benefit. Subgroups are obviously not those who will benefit from the Government’s largesse in this Budget.
The Māori Party does support the enhancements to KiwiSaver that act as incentives to join the scheme, but we will not desist from confronting the situation for beneficiary New Zealanders living, or struggling to live, on a measly few hundred dollars a week. For average people on an unemployment benefit, a 4 percent contribution would see them put about $12 into KiwiSaver. Although they will not of course receive any employer contribution, they will get a tax credit of $12. That will bring them to a grand total of $24 in savings a week. That may not sound very much to people who are in this House, but if it means sacrificing 20 litres of milk a week, or bus fares for the kids to get to school, then the prospect of savings becomes remote.
The question of whether low-income workers will be able to commit to giving the minimum 4 percent of their pay to join up to KiwiSaver has of course been frequently raised by the Māori Party, and it is ironic that just 2 days after the bill to protect the rights of children was passed, another bill is before the House that still continues to leave our poorest families behind. The proportion of all children in severe hardship or significant hardship in New Zealand has increased from 18 percent to 26 percent since the year 2000. I am reminded of the wisdom of Bishop Desmond Tutu, who said: “If you are neutral in situations of injustice, you have chosen the side of the oppressor. If an elephant has its foot on the tail of a mouse and you say that you are neutral, the mouse will not appreciate your neutrality.”
The ongoing injustice of social exclusion is evident in the thousands of New Zealand families who are struggling to live on incomes well below the poverty line. We cannot collude with the silence of neutrality or the “fairness for all” rhetoric, which ignores the reality that too many New Zealanders are unable to participate in their communities. Benefit levels are still far too low to enable families to do anything about the situations of social distress they find themselves in. We contrast that with the projected $3 billion to enhance the KiwiSaver scheme, and the $2.1 billion that the reduction in company tax will cost the country in lost revenue.
We believe that the moral test of a Government is how it treats those who are at the dawn of life, those who are its most vulnerable, and our poorest and socially impoverished citizens—amongst them, tragically, a disproportionate number of young people. The Māori Party believes that if we invest in people and give priority to our human capital, our whole society will prosper. We believe that the amount of the benefit should be raised to that of the minimum wage, and that work should be meaningful, productive, and skill-enhancing. These are aspirations that are worthy of urgency at any time of the year. Tēnā koe.
Hon TREVOR MALLARD (Minister for Economic Development) Link to this
I thank the co-leader of the Māori Party for her comments, and for what I perceived to be general support for the legislation, even if she says it does not go far enough. I think that is the summary of what I took from her comments, because she indicated that, as far as they went, the company tax rate changes and the KiwiSaver enhancements were good things. I agree with her on that. I disagree with her final point. My view is that it is appropriate to keep a difference between the rate of a benefit and the rate of the minimum wage. I think if we are to encourage people to go to work, we have to accept that going to work costs, and that that should be recognised as part of our remuneration system. But, generally, I thank her for her comments.
I also say that we should be able to work together on ensuring that Māori are involved in KiwiSaver to the greatest extent possible. I think that given the way it works, with people going to new jobs and with people having job changes, Māori are likely to be disproportionately enrolled in the scheme as a starting point. Part of our challenge, I think, is to encourage them to stay enrolled and not to opt out. But also we need to look at people who are in jobs and staying in jobs, and to work on ways to encourage them to join up. Frankly—and I agree with Ms Turia on the Māori mortality statistics—there is not a fair deal for Māori from superannuation given the way it works, because the collection rates are not nearly as high as for other people, as a result of the shorter lifespans of Māori. The difference with KiwiSaver is that the money put into the scheme will stay with the family; it will stay with the estate. Until we get the gap closed, so to speak—and we did quite a lot of work on that together in the past—that will provide an equity for the family. Having that transfer, I think, is useful.
But the key will be to make sure that people go into the KiwiSaver scheme. The test I have been doing to gauge the attractiveness of the scheme is to take a green $20 note and say to people that if they can get one of these each week, then the Government will put another one on top of it, and the employer—with a 100 percent Government subsidy, actually—will put—
Hon TREVOR MALLARD Link to this
We are talking about $20, with a 100 percent subsidy on $20. The member knows that. He has a reasonable reputation in some areas, but not in mathematics; we are talking about a $20 contribution. And that is the nicest thing I have said about a Tory for a long time—that the member has a reputation for being good in some areas.
I will go back to Tariana Turia’s point. If we can take $20 from a person, $20 from the taxpayer, and $20 from the employer—totally subsidised—then that is $60 a week. That is over $3,000 a year sitting in a fund before any interest goes on to it—before any returns go into it—and that is a nest egg that builds. People, as they become more Internet savvy, will be able to check on it each week and watch their money go up. People will get statements and they will see some real returns. That is positive.
I turn now to the National Party, and I say to its members that I am looking forward to sending Bill English’s speech on this bill to every employer in my electorate—the bit where he says that National will vote against a cut in company tax. The National Party!
Darren HughesHon TREVOR MALLARD Link to this
Well, no, it is believable. When was the last time the National Party voted for a cut in the company tax rate?
Hon TREVOR MALLARD Link to this
No, I do not think it was. I do not think the company tax rates were cut in the 1960s. I think it was before I was born. It is really ancient, ancient history. In fact, I have a real question—and Mr Dunne may know the answer to this. Has the National Party ever in its history, since the 1930s, voted for a reduction in the rate of company tax? Never! Never in its life! In 1988—and I can remember back as far as that; I was about David Cunliffe’s age at the time—National voted against that.
National used to be a party that supported business. It used to be a great party. It used to be the party of Holyoake and of Marshall. It had a history of supporting business and doing things for business. It has been a party with a history of calling for tax cuts for companies and voting for them. If I were outside the Parliament, I could call that hypocritical, but I am not, so I will not.
Hon TREVOR MALLARD Link to this
It is a big “H” word. The big “H” word is another one, actually. It stands for “Helen” in my case, so I will not say it, at all.
I ask National members why they do not just vote for the second reading of this bill. Why do they not vote for the company tax rate cuts at the Committee stage? They may want to vote against some of the other bits. I welcome this. I thank them for it—
Hon TREVOR MALLARD Link to this
I say that as far as Craig Foss is concerned, the employers in his electorate will be receiving copies of Bill English’s speech, too—and that turkey will have—
The ASSISTANT SPEAKER (H V Ross Robertson) Link to this
No. The member will not use nicknames or any other names. He will withdraw.
Hon TREVOR MALLARD Link to this
We are not allowed to call members turkeys? That is a new one. I withdraw.
HEATHER ROY (Deputy Leader—ACT) Link to this
I rise to speak to the second reading of this bill. Here we are yet again pushing through a hugely complex bill about matters that affect every person in the country—businesses and individuals. Here we are sitting under urgency on a Friday, pushing through something that none of us on the Opposition side of the House have had a chance to have a proper look at.
That is quite right. More bureaucrats will be needed as a result of this legislation. And here we are. Many of us have had to cancel appointments with constituents around the country so we can be here today to defend democracy.
A quick look at the explanatory note shows me that the bill is about a huge number of things. Here we have enhancements to KiwiSaver and changes to the company tax rate—changes that I have to say are a bit of a backhander. On the one hand we are—properly—giving businesses a reduction in company tax rates; they should have been done well before Dr Cullen’s eighth Budget. On the other hand we are saying that employers now have a compulsory obligation to contribute so that the Government gets the honour and the glory for giving people a savings scheme. Where is the fairness in that? Many employers will be worse off as a result of this Budget. If they are supposed to be grateful, then this is no sort of Government at all—as we know it is not.
There are changes relating to research and development tax credits. Again, there are more complications. This Government loves penalties, and here we are putting in place penalties that we have not even had a chance to look at to consider whether they are fair and proper. This bill is not going to go to a select committee. No one will have the opportunity to look—
Good—I am pleased it is going to a select committee, because it jolly well should—[ Interruption] It is a bit confusing, because we were given this bill last night to have a quick look at and now we are supposed to be experts on it so we can stand here and talk on it with some degree of authority. It is all very well for Mr Peter Dunne. He has had the chance for months to look at the legislation, so that at election time he can say: “Look at the gains I’ve made from this Government.”
Other policy includes tax exemptions, implementation of fair dividend rates in life insurance—the list goes on and on. There is a huge degree of detail and complexity, and we are supposed to be grateful that we are here on a Friday debating on behalf of the people of New Zealand who have great concerns; they are not going to get the chance to voice those concerns themselves. There are a great number of concerns, and this is not democracy working as it should.
Dr Cullen promised us that his policies would bring New Zealand 4 percent growth in GDP. He actually said at one point—many years ago—that that was how he would be measured. Well, under National Certificate of Educational Achievement standards, Dr Cullen has just scored Not Achieved. Or, if we are talking about unit standards, he has scored Fail. Actually, he has not, because one is not allowed to say “fail”. That is not allowed in this day and age. So on his score card there will be nothing. There will be just Not Achieved.
What do we have today? Is it 4 percent growth in GDP? No. Today it is 2 percent growth in GDP. What is Dr Cullen’s forecast for the next 3 years? It is less than 2 percent. There is a bit of a gap, is there not, between 4 percent and less than 2 percent? He is not doing very well even by his own standards, let alone by the standards of the rest of us on the Opposition side of the House. We have some ambition for this country, but, sadly, Dr Cullen does not. What is Dr Cullen’s forecast for the next 5 years? It is an average of 2.3 percent. Already we are seeing a huge shortfall against his own self-imposed 4 percent yardstick. Dr Cullen’s yardstick—and perhaps this will be a message to him, or enlighten him—will not get New Zealand’s GDP per capita into the top half of countries in the OECD. The country is being dragged—with kicking and screaming from members on the Opposition side of the House—right to the end of the bottom half of the OECD. Dr Cullen has certainly failed.
We need a flat-tax rate of 20 percent. That would really kick-start the growth that New Zealand desperately needs if we want a First World health and a First World education system, and if we want decent economic growth. The way to achieve more savings and more investment is to put more money in people’s pockets to achieve higher economic growth. That means across-the-board comprehensive tax cuts—not just to the company tax rate where it has been given with one hand and taken away with the other. It means bringing the top rate of personal taxation down to the same level as company taxation rates. That level too should be dropped to 30c in the dollar, and other rates dropped significantly, if we could not look realistically at a flat-tax rate of 20 percent. That would mean more savings, more investment, and a more prosperous future.
Dr Cullen and the Labour Party do not seem interested in those things for New Zealand, but that is why I came to this House. I want to see decent economic growth in this country. I want to see a decent health system where everybody gets the treatment they need. I want to see a decent education system. Our Minister of Finance should be aiming at much more than a Not Achieved, he should be aiming at an Excellence, but he has no idea how to go about doing that.
Once again this is a Budget for tax accountants to get fat on. The Inland Revenue Department must be sitting today wondering how it is supposed to introduce the detail and deal with the complexity of it. No doubt, as Mr Clarkson points out, there will be more employment. There will be more bureaucrats and more people trying to deal with the complexity of a system that did not need to be that way. The tax package is incoherent. It is cutting company tax independently of personal rates, and that makes absolutely no sense at all. The complicated tax credits for investing in Government schemes just add to the complexity of our tax system.
People out there are focusing on KiwiSaver in the Budget, and that is exactly what Dr Cullen intended. I was in a taxi this morning and the taxi driver said that it was all people in his office have been talking about this morning. But, guess what, those people cannot afford 4 percent of their income to go into savings. They need that to pay their mortgage and to feed their families; they certainly cannot entertain the idea of 8 percent. It might sound all very attractive on paper, but where are they supposed to get that money from? Dr Cullen has not addressed that. He should be here in this House telling us how that is going to happen.
They are not a people party at all; they are here for themselves. The Christchurch Press“Perspectives” column is very interesting this morning. It contains a very interesting article written by Michael Littlewood, who is the co-director of the retirement policy and research centre at Auckland University. He made some very interesting comments, and I am going to read a few of those out. Firstly he said: “Until recently, New Zealand had a simple, transparent”—[] Perhaps the Minister Mark Burton would like to stand and take a call because I cannot hear myself over here.
The ASSISTANT SPEAKER (H V Ross Robertson) Link to this
I remind members on my right to look at Speakers’ ruling 57/3. Interjections are to be “rare and reasonable”, and, as a former colleague once said here, if at all possible, witty. At the moment we are having conversations.
I want to read out some of the comments that Michael Littlewood, a very well-respected gentleman, has made on the KiwiSaver tax breaks and the Budget. He said: “Until recently, New Zealand had a simple, transparent tax and retirement income structure that has served us well. In fact, it was a world leader in simplicity, in transparency, and equity but not a lot of New Zealanders understood that.” He went on to say: “The Government and other commentators have created a straw man.” He said that the Government is telling New Zealanders this: “you’re hopeless savers; you can’t be trusted with your own money; you own too much property; you’re drowning in debt; we here in Wellington”—“we” meaning the Government—“know much better what to do with your money and here’s how it’s all going to happen.” Those comments are exactly right. This is a “we know best Budget”. The Government is saying poor people out there know nothing and need to come and listen carefully to what the Government has to say because it knows best how people should spend their money.
The article continues: “In the United States, tax breaks for retirement saving are expensive, favour the rich, are complex, and don’t seem to increase saving.” We never look around the world to see how other countries are getting on; we just rush forward and do these things ourselves. Michael Littlewood says that in Australia, compulsory tax-favoured savings seem only now, after 15 years, to be having a little impact, and it is only very little. He continues: “In Britain, tax breaks for saving favour the rich at the expense of the poor.” That is where the taxi driver was absolutely right this morning. Half the value of tax incentives goes to the top 10 percent of taxpayers, who do not need any incentive to save; that makes absolutely no sense.
This Budget is a Fail. Mr Littlewood’s final comment could not have summed it up any better. He says: “So, we seem not to have a retirement saving problem; retirees seem to be in good shape;”—and they are—“tax incentives are costly, complex, regressive, inequitable, and ineffective; governments seem to affect citizens’ total behaviour only a little but most important of all, what we already had actually seemed to be working.” So here we are putting in place something we know is not going to work and that people will have no control over.
CHRIS TREMAIN (National—Napier) Link to this
The Minister of Finance has challenged those of us on this side of the House to go back to our provincial areas and explain why National will not be voting for this bill. I have a challenge for the Labour members, and it is to go back to their provincial electorates and explain to their constituents how this bill will really impact on small to medium enterprises in their electorates, and how it will particularly impact on exporters in Export Year—the year of the exporter. I want to tell Government members, in case they have not opened their eyes, where exporters are in Export Year. Many of our exporters are not making one dollar at all. If they are not making money, they do not get any sort of tax break whatsoever. But when they get hit with a payroll tax, guess what happens?
David BennettThey have to pay it, so, unfortunately, they end up losing more. I want to begin my speech by talking about one exporter from my electorate, Design Spun, and an email that this exporter recently sent to me. I want members to understand the impact that this bill will have on exporters such as this and on their ability to improve exports out of this country. It is my opinion that I will be able to explain with ease to these guys why I voted against this bill for them.
Here is the email from Mr Jackson of Design Spun: “As a manufacturer and an exporter”—he then has in brackets a big “was”, with exclamation marks—“New Zealand’s current economic environment is an extremely difficult place to be trading in. We have spent the last 2 years building on our export market and it has been very disappointing to watch those efforts eroded daily by the level of the New Zealand dollar. We are being caned from both ends, with the higher dollar making our major competitor, imported yarns, even cheaper, affecting our domestic market, also. Government legislation has also played a significant part, with direct cash-cost increases in the form of minimum wage increases, the additional week’s holiday, particularly in the form of significant ongoing compliance adding cost and detracting from the business at hand.”
But, guess what, another tax is coming for that business, and I will explain that shortly. Mr Jackson goes on to explain: “We talk to a number of different businesses daily and they are not experiencing the rosy times that commentators would have them believe. They are in similar positions to us, except that they are currently holding off making decisions regarding their future, hoping the environment will change.” Mr Jackson said that they were not quitters but that this was too tough and they had had enough. He says: “Watch this space. There’s a helluva lot more of us out there that feel the same way. Every way you turn these days there’s a barrier of some description.” [Interruption]
These are the sorts of people that Mr Hughes will have to explain this payroll tax to when he goes back to his electorate. I would have welcomed this bill if it were purely to reduce company taxes, without a sting in the tail. But there is a sting in the tail. This bill does not include a tax rate. It comes with a payroll tax that employers like Mr Jackson will have no ability to overcome. The sting in the tail is compulsorily matching employer contributions to employee savings, and it is this kick that is the reason that National will be voting against the bill. Up front the bill looks good, and the spin will be fantastic, but I ask members to think about Mr Jackson in this regard.
Here is a question I posed for the Labour Party yesterday, and it is one that I think people need to really understand. For most businesses the biggest cost in expenditure is the cost of labour. I talked about that yesterday. A good example is Mr Jackson’s business: after materials, labour will be his biggest cost. It is all very well when a business is making big profits, because a 3 percent reduction in the headline corporate tax rate will actually improve its position. However, when exporters make no money, there is no advantage in a tax rate drop, but there is a huge cost in increasing the compulsory employee payments that the exporter will have to come up with.
Yesterday I used the example of a business that was making a profit, and I used the example of a travel agency. I am no longer involved in those businesses, but I know enough about them to give members an example. In the travel business, labour costs are about 40 percent of the total top line. If a travel company is making a profit of 10 percent, it is doing well. But I am talking about exporters that are making no money right now. Let us take a business that has a $250,000 turnover, with labour costs of $100,000 and a $25,000 bottom line. That business would be paying tax right now of $8,250 at 33 percent, but the tax will be dropped to $7,500—much lower, a $750 drop in taxation. That business, even if 50 percent of its employees take on the KiwiSaver programme, after it has taken on the tax credit that is available from the Government, will be having to front—[Interruption] You cannot deny this, Mr Jones.
The ASSISTANT SPEAKER (H V Ross Robertson) Link to this
The member cannot use the word “you”; it refers to the Speaker.
My apologies. Mr Jones cannot deny that a company in that situation will be faced with additional costs for its business—I ask him to tell that company that that will not be the case. In the case of small businesses, as soon as they get above an average pay of $25,000, for every dollar after that that is contributed, the employers will have to come up with the money themselves.
The Government tells us that it is not a problem, because it is 1 percent, 2 percent, 3 percent, and 4 percent. The Government tells us it is not a problem, and that the phase-in of the compulsory matching employer contributions will be taken into account in wage and salary bargaining, as is the case with the current campaign by the Engineering, Printing and Manufacturing Union. That is what we were told yesterday. The problem is that there are a couple of key things. The first point in that statement is that the Government expects—[Interruption]; no, it does not guarantee that that will be the case—that the phase-in of the compulsory, and members should note the word “compulsory”, matching employer contributions will be taken into account in wage and salary bargaining, as is the case in the current campaign by the Engineering, Printing and Manufacturing Union.
Here is where we really see the sting in the tail. The Labour Government expects there will not be changes, but there are no guarantees. The employer contributions will now be compulsory. There is a huge difference here. The big difference is when one is on the other side of the negotiating table. Where we got to here is that when something is not compulsory, it is a bargaining chip, and that is what I said yesterday. When it is compulsory, it is a given. In this case now, the employee contribution, above the average pay of $25,000, is compulsory. So when employers are sitting around a bargaining table with their employees, do they think that employees will sit—
I ask Mr Hughes whether he honestly believes that employees and unions will sit on the other side of the negotiation table, now that it is compulsory for employers to make contributions, and say: “That is OK now. We won’t take a pay rise.”—just out of good faith—“That additional 1 percent will be fine.”
It’s not about no pay rise; it’s about the rate of the pay rise. Look at what the Australians do, with a higher unionised workforce in Australia.
With the unionised situation they will not take account of the position that employers have to find themselves in—they will not. There is a big difference—a huge difference. The point I make today is that we are introducing additional costs to employers, and, particularly in the year of the exporter, to companies like Design Spun. Such companies, which are not making any money, will not benefit from a drop in the corporate tax rate. They will have to struggle on. But what we are getting is an increase in the costs and an increase in the payroll tax, so that businesses will face increased costs, thereby making it more difficult for them to export. I will find it easy to vote against that. Thank you, Mr Assistant Speaker.
SHANE JONES (Labour) Link to this
Overnight a deluge of patriotism has graced the pages of the media that has been upholding our Budget. Why? Because people have finally seen the light: if they stick with the other side of the House, they not only will see their promises dashed but they will see economic confetti. People have confidence in this side of the House; they see that the Budget is not only addressing our more recent problems but laying down a pathway that they will be the first to ride upon. [ Interruption]
National members have been told to come here, be noisy, and demonstrate that their greatest contribution at this tender stage of their career is to create noise and mayhem. Unfortunately for Mr Clarkson, but fortunately for the people of Tauranga, that noise as it rises is inversely related to the period of time he will spend in this House. It will be goodnight and haere rā for him.
Our friend Mr Bennett came to the House mistakenly believing he could achieve a career by attacking our rangatira from Ngāti Wai, the leader of Aotearoa Tuatahi, Winston Peters. We, however, have noted—and, I am sure, Winston has commented on—that the more Mr Bennett talks, the more his head glistens. It is evident that the very healthy dosages of oil that he applies to his heavily lacquered head are not actually improving his prospects of recovering lost hair growth. His rhetoric and his intellectual contributions are as bald as his head. He is not like our other pakeke, who is the salt of the earth, a man of the land. He understands completely both ends of the dairy industry; the only one David Bennett from the Waikato understands is the udder he sucked on in order to get here. That is it—never a truer word has been spoken. That is why we actually do not fear Mr Bennett. We will lament, however, with the people of Tauranga that in a passing fit of foolishness they sent Mr Clarkson here.
I turn back to the Budget. Every single thing that we have offered here we know National will ape. I am not talking about physiological characteristics; I am talking about patterns of behaviour once we get close to the next election. For the 18 months we have been here, not one single original idea has flowed from the new people—not one.
Steve ChadwickOh yes, they have talked about tax cuts, but when we do cut tax, National is the first to vote against it. Secondly, National members complain that people are leaving to go to Australia. Of course, their rhetoric is adding to the reasons why those people want to flee. But we are providing a brilliant remedy that will cause many of those people to take up the stance of patriotism. That is what we have done, and it has been covered in the newspapers. Savings are to be deepened, thus building a wider and more handsome pool of capital to grow private enterprise and business. National members are just disappointed that this side of the House has been able to introduce a system that causes both employers and employees to accept the full range of their duties.
Absolutely! They know that in the 1990s there was a bare, Spartan approach that the market would take care of everything, and employers owed no obligations to anyone other than the shareholders. Fortunately, as a consequence of this Budget, employers, as time passes and once they are able to dismiss the confusion inside the rhetoric of the Opposition, will gladly embrace their responsibilities. More employees will have a greater sense of security going forward.
I look forward to this bill coming to the Finance and Expenditure Committee, where I have no doubt that the more talented members on that side of the House will assume a very productive role. I refer to the rear members, not the fore members. Kia ora tātou.
A party vote was called for on the question,
That the Taxation (KiwiSaver and Company Tax Rate Amendments) Bill be now read a second time.
Ayes 61
- New Zealand Labour 49
- New Zealand First 7
- United Future 2
- Progressive 1
- Independent 2 (Copeland, Field)
Noes 50
Abstentions 3
Bill read a second time.