Taxation (KiwiSaver and Company Tax RateAmendments) Bill

Dr the Hon LOCKWOOD SMITH Link to this

We do not mind, because we know that those members are upset over this Budget. New Zealanders are not stupid. They know that Labour has been taxing them far too much since it came into office. As I was about to say, in answer to a question in the House the other day, Dr Cullen admitted his cumulative operating surplus. Does Dr Cullen remember the answer he gave to the question about what was the cumulative operating surplus since Labour came into office? Do members of the Labour caucus remember what the answer was? It was $35 billion. The cumulative surplus in the operating balance, excluding revaluations and accounting changes, since Labour has been in office is $35 billion. Dr Cullen has taken that off Kiwis, and then he wonders why Kiwis cannot save! What has happened as a consequence is that Kiwis starved of cash have had to borrow. Dr Cullen has taxed them $35 billion in cumulative surpluses and left ordinary hard-working New Zealanders having to borrow.

Dr Cullen thinks he is so smart, that he has taxed them on all this money, paid back Government debt, put money into the super fund, and left New Zealanders starved of cash. They have had to borrow money while Dr Cullen thinks he is so clever. We are opposed to this bill because Labour should be giving New Zealanders back some of the money they have earned.

This bill is now, of course, subsidising Dr Cullen’s KiwiSaver scheme. It is interesting to look at what objective analysis says about that, putting prejudice aside, and looking at what the retirement policy and research centre at Auckland University says about it. We know that its spokesperson, Michael Littlewood, has a particular view on superannuation matters—

Dr the Hon LOCKWOOD SMITH Link to this

Dr Cullen should not laugh at Auckland University. The work of that research department is actually objective analytical work. It shows that—

Dr the Hon LOCKWOOD SMITH Link to this

Dr Cullen actually once used to agree with him. Back in 2002 Dr Cullen said that it makes no sense to subsidise savings. Dr Cullen actually said that in 2002 and, of course, the research centre at Auckland University has shown, through analytical work, that subsidising savings does not work. So not only is Labour taxing New Zealanders to oblivion, it is now going to subsidise its KiwiSaver scheme because it knows that without the subsidies it will do nothing, yet close analysis of subsidised savings schemes shows they do not actually work.

National members have been pointing out that, sadly, low to middle income wage and salary earners are not going to benefit at all from any of this. In fact, they are going to suffer. If members look at page 16 of the Executive Summary Budget document, they will see that it very conveniently spells out the increase in spending in this year’s Budget. One of the issues that has not been given a lot of coverage yet is the fiscal stimulus in this Budget. Labour has continued its track record of spend, spend, spend, and the fiscal stimulus is more than the Reserve Bank of New Zealand was expecting. That means that mortgage rates will stay higher for longer. Low-income Kiwis will not be able to afford to put their 4 percent into this KiwiSaver scheme, so they will not get any benefit out of those subsidies and get no benefit from that money-go-round. In fact, they suffer; they will pay tax to fund those subsidies and will not get any of the subsidies. So the first thing is that low-income Kiwis pay the tax for those subsidies but will not get any of those subsidies.

The second thing is that their mortgage interest rates will stay higher for longer because the fiscal stimulus in this Budget is higher than had been expected by the financial markets. The third thing is that employees will get lower wage increases, because, as Dr Cullen himself said yesterday, there should be a trade-off, so they will get lower wage increases. And what is more, finally, the “chewing gum tax” reductions that had been promised have been killed off by this Budget. It is little wonder that Laila Harré, a former supporter of the Labour Party, said she was so disappointed with this Budget and so disappointed with this legislation. It will hurt hard-working, ordinary, low-income New Zealanders. I have in my hand here today’s—

Dr the Hon LOCKWOOD SMITH Link to this

The junior Labour whip, Darren Hughes, should listen. These are the latest statistics today on New Zealanders leaving permanently. Does Mr Hughes know what these statistics show? The exodus is carrying on. In the year ended April, one-third more New Zealanders went than just 2 years back. It is even worse. Up until last month we were losing them only to Australia. These statistics released today show that the net permanent loss or gain is not just a permanent loss to Australia, it is now a permanent loss to both Europe and the Americas. Even when we allow for the huge influx from Asia, we have lost New Zealanders in the month of April—a big increase in the numbers going—because they are sick of “Dr Cullen knows best.” They are sick of “Labour knows best.” They are going where they have more opportunity for themselves and their families. We will vote against this third reading.

Hon Dr MICHAEL CULLEN Link to this

That is right, Mr Assistant Speaker, we are not allowed to use that word within this Parliament.

So what have we heard? We heard from Mr English. Mr English’s fundamental, basic, brilliant economic insight was that we should increase our savings but we should not reduce our consumption.

Hon Dr MICHAEL CULLEN Link to this

No. That is exactly what he said yesterday. But if we are to increase our savings, we have to reduce the rate of growth in our consumption. And if we want to sustainably grow our economy, we have to increase our saving and our investing. Mr English is caught betwixt and between. He does not believe there should be large-scale tax cuts at all in this Budget, whether it be for business or otherwise—none. That is why he was banned from television and radio after 2 o’clock yesterday afternoon, and it is why Mr Key has had to rush from pillar to post, trying to fill in and telling people they can have everything.

Dr the Hon Lockwood Smith PhD told us we could have tax cuts, because he is a brilliant economist. He told us that we had accumulated surpluses of $35 billion and we could have spent all of that on tax cuts. What that means is—I ask members to just stop; I will put it simply—that an increased debt by $35 billion, plus the interest on that $35 billion, would more than double the gross debt of the New Zealand Government in the space of 7 years, compared with where we are. That is the Opposition’s remedy. It is to borrow and spend its way to prosperity, because that’s what—

Hon Dr MICHAEL CULLEN Link to this

No, no. Jacqui Dean was getting it from overseas. But it would take a large Jacqui Dean shopping basket to get $35 billion from overseas, when she went out to collect it from somewhere or other.

We heard Mr Brownlee say on the radio that we should increase our savings, but that there should be no risk of anybody making any loss on their savings. Well, that is a pretty interesting guarantee. I do not know how we would do that—

Hon Dr MICHAEL CULLEN Link to this

Gerry Brownlee said that; I heard him on the radio, actually—just after 2 o’clock. Yes, I can see him sort of puffing and looking worried about that one. Goodness me—he should not be let loose on economic matters, either, I tell Mr English.

Then, of course, we had one from Mr Key, which was that there should be no cost to employers, but that there should be no wages/superannuation trade-off. Well, that is interesting; I do not know how anyone could achieve that one.

What we are hearing from members opposite is—let us go through the arguments. The employer contribution is set at a maximum of 4 percent. Assuming a 50 percent sign-up, that is 2 percent of an employer’s wage and salary bill. Assuming that the Government pays half of that through the tax credit, it becomes 1 percent of the total wage and salary bill—and Mr Key, Mr English, and Dr the Hon Lockwood Smith PhD say that the entire wage growth over the next 4 years will be forgone in order to pay for a 1 percent increase in the wage and salary bill—the entire increase. That is a whole new code of economics. It is no wonder National is close to Alasdair Thompson, the former social credit finance spokesperson from the Northern Employers and Manufacturers Association. It is no wonder the main critic of KiwiSaver in the public arena is one Gareth Morgan, who failed in a tender to be a KiwiSaver default provider. All right—let us get that straight in the public arena, before he goes too far off on his little crusade around KiwiSaver at the present time.

National is arguing that we should not have tax cuts for business. But we have an interesting situation: for the first time since 1988, Parliament has voted on a tax cut for business, in terms of the corporate headline rate, and the National Party has opposed it at every point. The National members have fought it to the death, to the limit of their abilities; they have fought this bill to a standstill in Parliament. Then they voted against a $20-a-week tax credit for employees—not against the compulsory provisions for employers’ part; that is in another bill, which has been sent off to a select committee. This bill deals with only the KiwiSaver employee tax credit. Those members voted against that credit, when I suspect that almost every member of the National caucus belongs to a taxpayer-subsidised superannuation scheme, which they contribute to and the taxpayer supports.

Hon Dr MICHAEL CULLEN Link to this

That is brilliant—it is all right for them. That is different, you know.

Then we heard the argument that ordinary people cannot afford to save. Well, let me run through that, for the benefit of those members. If people change their jobs—as some members will after the next election, given this Budget—they will be compulsorily enrolled in a KiwiSaver scheme. They will have to make a conscious decision to pull their money out at that point, because from their first payslip their KiwiSaver contributions will be deducted. If they can continue on with those contributions, they—low-income earners—will then have their savings trebled, with the tax credit to the employee and the tax credit from the employer. The net cost to the employer, for a low-income earner, will be zero.

Hon Dr MICHAEL CULLEN Link to this

Zero—to the employer! Is that a good deal, or is that not a good deal?

Well, National members say that, no, we should not do that. But they have no alternative. They say to low-income people that they might get a $2 or $3-a-week tax cut—but those people will not save that. That will get lost in the noise, for people on low incomes. Those people will not save that. So what answer do the National members have, at all?

Hon Dr MICHAEL CULLEN Link to this

None—they have lost it; they have lost the opportunity there.

Hon Dr MICHAEL CULLEN Link to this

And I will make a firm projection, as Mr English goes “yeah, yeah, yeah!”; he is going to get up and talk about the workers, again, in another couple of minutes. I predict that by September or October of next year, or whenever we have the election, National will be supporting this scheme—just as they support the original KiwiSaver scheme, as they support 4 weeks’ holiday, as they now support nuclear-free New Zealand, as they support the Employment Relations Act, and as they support everything they have fought against at successive elections. I am just wondering what the hell I can get away with, given the way those people will flip-flop.

Hon BILL ENGLISH Link to this

People on higher incomes can do that or—much more likely—get their savings from other places and put them into KiwiSaver. That is what these schemes all do; they shift money around. That is where the bulk of KiwiSaver money will come from. But low and middle income people are worse off. They are worse off. They will have to drop their net pay, when they are already under pressure, to get the $20 tax credit in 20 years’ time, and they will all be worse off because they will not get the tax cut Labour promised them. That is what Labour is going to regret over the next 18 months—that it deserted its core constituency. People who have higher incomes, and people who are more likely to vote National, will bank the profit. They will bank it because they will say that Dr Cullen should have been reducing taxes. He was not, so they will take this bit. And they will not give him any credit for it, whatsoever.

There is another issue of equality that Labour used to care about: equality among retired people. One of the effects of KiwiSaver is that it will increase inequality among retired people. It is a Government subsidy to increase inequality among retired people, because the people who get the biggest benefit of $20 a week for the next 30 years are people on higher incomes. This will leverage them up into even higher incomes when they retire. People who work part-time, who are in and out of the workforce, who are on benefits, who are seasonal workers, who are mothers at home, or who are invalids, sick, or disabled will not get that leverage, and they will get national superannuation as they always would. Is that right?

Hon BILL ENGLISH Link to this

How is Dr Cullen going to explain that? He came into politics to reduce inequality, and he will go out of politics creating the largest Government subsidy for increasing it among old people—

Hon BILL ENGLISH Link to this

And he is feeding us. He goes on about how bad the subsidy on our superannuation is. Why is he increasing it? Is it because he plans to retire? Is that why he is doing it? I presume it is.

The other thing that has come out of this “money-go-round Budget” is the illusion, which Dr Cullen is trying to create, that there is some kind of cargo cult about savings—that if the Government puts some money into people’s accounts, somehow the country will be a whole lot better off. There is a place for incentives on savings, and National members have indicated that we support KiwiSaver. The big issue ahead of us is how far that support should go, and in making that decision we will take into account the fact that savings are not everything in an economy.

The economy has actually been growing about 3 or 4 percent a year on low savings. So we can have growth without having a whole lot of savings. Japan is drowned in savings, actually. Its savings have been so large that it has had a 10-year recession and a 1 percent interest rate. It has had no growth at all. I do not think that even KiwiSaver is going to achieve that. The point is that we need a much more balanced approach. There is no point in making people save, and therefore compelling investment of their money, unless there is a productive, growing economy in which to invest. That means an economy with decent education standards and an infrastructure where Government money can actually be spent after it has been promised. It means an economy where labour productivity is growing, an economy where young people feel that if they stay in this country they will get incomes higher than they would get if they went across the Tasman to Australia, and an economy where people believe they—not just the Government—have a say about their money.

Unless we have all those other factors, savings will not contribute to the growth of this economy. Savings are a quantum of money. What is done with them is what matters. So the Government may grow the pile of savings—I am a bit sceptical; there may be some more—but on the other side of the equation it will gradually suffocate all the incentives for the economy to improve and for incomes to rise. You see, Labour members might not understand this because of where they are in the electoral cycle. Labour members are all heading towards retirement, but the country is not. The people of this country are not all heading for retirement at the next election. Government members are winding down when we need to wind this country up.

Our message to 20 to 25-year-olds in New Zealand will be that they can choose either to support a Labour Party that is totally focused on building up money to deal with demographic risks that are 30 years away, or to support a party that will help them save but will also help make a productive economy where they can invest that money and lift their incomes. I found when talking to 20 to 25-year-olds that they do not regard what is going to happen in 2040 as a vision for their future. Labour’s vision for today’s 20-year-olds is that they can have a big bank balance when they are in a retirement home. The best they can hope for in this country is to put up with low incomes, be told by the Government what to do with all their money, and get a bank balance when they are sitting in a rest home.

Well, National does not believe in that; fundamentally, there is a basic philosophical divide. Dr Cullen is absolutely dismissive of what New Zealanders would do with an extra dollar. He says they will waste it. The only person in this country who is capable of deciding what to do with an extra dollar is Dr Michael Cullen PhD. Well, there is a choice: back Michael Cullen or back New Zealanders. National backs New Zealanders. It believes that they can make good decisions about a dollar they earn. It believes that a dollar taken off them in extra tax by the Labour Government is likely to be wasted.

R DOUG WOOLERTON Link to this

I am supporting a tax cut; National is voting against it. It was back in the days when dear old “Kiwi Keith” was the Prime Minister that National last gave a tax cut to the people of this country.

In the last election National ran a campaign on tax cuts, aided and abetted by the Exclusive Brethren—maybe they put their hands up National’s back—yet National has had no history of tax cuts since 1966. I am not trying to shove that up National; I am just saying I am surprised that, given this wonderful opportunity, National does not grab it with both hands in order to rectify the situation by at least going into the next election saying: “At least we voted for a tax cut. There’s been nothing from National since 1966 to 2007, but we voted for a tax cut in 2007. There’s our track record, and we will cut some more after the 2008 election.” But National is not even doing that, which is sad. I did not even know of that history, and I think it is a bit unfortunate.

A lot of this legislation, over a number of bills, lines up our taxation law with that of Australia. It is cutting the corporate tax rate to line up with the rate of Australia, a country with which we must be competitive. It is Australia’s savings—its mountain of money—that is being used to come over and buy our companies. New Zealand First’s concession, in terms of the global economy, is that we would not even mind if Australians came over here—accent and all—and started up new businesses. But they do not do that. They come over here and buy things like banks, and buildings in the central business district of Auckland; they do not come here and involve themselves in entrepreneurial activity. Thank you.

PETER BROWN Link to this

I know, it is beyond belief. These tax cuts—and that is what they are; no ifs, no buts, no maybes—will encourage savings.

PETER BROWN Link to this

These reductions will encourage savings and will encourage investment in this country.

I may stand corrected, but I did not hear Bill English say much more than one word on the tax cuts in this bill. The only aspect he talked about was the KiwiSaver regime. Dr the Hon Lockwood Smith used, as the champion of his debate, Laila Harré. Laila Harré belongs on this side of the House. It is most unusual for the National Party to drag up her name as their champion.

I challenge National members to say whether, if this bill is so wrong, they would scrap it if they became the Government. Will they tell us that now, loud and clear? Would they scrap it? Would they reverse it?

PETER BROWN Link to this

Yes. I draw to the attention of members that Australia has had compulsory superannuation for many a year now. It came in under the Keating Government. We have something like $15 billion under the Cullen fund, or thereabouts. In Australia, if my information is correct, they have in excess of NZ$1 trillion. We can imagine what that can do. National members tell us weekly how many Kiwis go from here to there. Why do they go? One reason is that they get security in retirement.

The second reason is that Kiwis get higher rates of pay in Australia. National gave an increase of $1 in the minimum wage in the 9 years it was in power in the 1990s. From 1990 to 1999 the previous National Government gave a $1 total increase in the minimum wage, yet National members talk about people being poor. I have not looked it up—and I will look it up—but I would not mind betting that that increase occurred when New Zealand First was in coalition with National.

PETER BROWN Link to this

That is when it occurred.

This bill is a good bill for this country. New Zealand First has long been an advocate for savings in this country. We have said for many a year now that we need to save more in this country, not only for our economic well-being now but also for our future economic well-being. We cannot live on debt; we cannot live on borrowed time. New Zealand First is absolutely delighted to put this bill through, and to do so under urgency.

I would urge National members to think again—to think about where they really stand on this issue for New Zealanders and for this country. They are just playing games. Thank you, Mr Assistant Speaker.

TE URUROA FLAVELL Link to this

No, not David Bennett. It was another David. He said: “The fact of the matter is our economy is well behind most countries. In fact it’s safe to say we're not even on the same page. It’s plainly obvious that our economy is going downhill.”

Of course, it is not just individuals who are hurting from a Budget that continues to support a world in which the gaps are growing, a world in which the poor suffer more. Representative of the views of other community groups were the comments from the Federation of Voluntary Welfare Organisations. Its chief executive, Tina Reid, commented that there are many low-paid and part-time staff who will find it very difficult to contribute to the KiwiSaver scheme. In her words, she said, and I quote: “If the Government is serious about supporting the sector for the long term, it will have to address issues broader than today’s tax break—such as including rates of pay in a comprehensive way as part of the funding framework for the sector.”

Earlier this afternoon I listened to Mr Dunne promoting the fact that everyone thinks we should be providing for retirement, and that everyone agrees with superannuation and planning ahead. So it was really interesting to read the comments of Michael Littlewood, the co-director of the retirement policy and research centre of the University of Auckland. If anyone would know about the needs and the nature of retirement, I think it would be him. I ask members to listen to what he said: “Where is the evidence that we need KiwiSaver? As someone with a long-time interest in this topic, I know the evidence doesn’t exist. The 2007 Budget has just made things stunningly worse with further complex, government-run interventions in the savings behaviour of New Zealanders.”

What interests me even further is that research from the Ministry of Social Development has reported that today’s retirees have the lowest levels of hardship of any major group. Indeed, only 8 percent show any degree of hardship, at all. Yet the same ministry, in other research—the Social Report 2006 and the living standards report—gives another side of the story about where our investment should be best spent.

As we have said again and again, the people who suffer the greatest poverty in New Zealand are children, with 38 percent in hardship categories and an ever-escalating increase in severe hardship. These are the children whom people talked about this morning in a meeting hosted by the Child Poverty Action Group to share their bitter disappointment at the lack of vision in this Budget. These are the children who will not benefit from any investment in their future from this Budget—a Budget that plugs a few holes, and throws a few meagre lollies out, but has little else to go on. People at that breakfast talked about how this Budget could have been an ideal opportunity to produce something in a non-election year that could help the youth—a bold and courageous stand that stood up for the rights of children.

It makes no sense to make the children suffer any further by subsidising savings schemes without first increasing the very level of a living income, a meaningful wage, and a standard of life. Why should there be hunger, neglect, Third World diseases, and poverty, when we have more than ample knowledge and resources to do something about it?

Often in this complex we can see Parliament as a microcosm of the very society we live in. In winding up my in-depth, analytical, robust consultation on this bill, I say that this morning I received a letter from a current employee within this complex. I will take a moment to read what she had to say: “I feel very let down by this Budget. I have been unemployed for some years now with an on-call job paying just over $14 an hour. As the unemployment pays $178 a week and we are allowed to earn $80 over and above that we pay seventy cents in every dollar earned from then on. I was looking forward to being able to join up with the Kiwi retirement fund and at least get a few dollars extra to help out when I turned 65. I feel that this Budget has done nothing to offer people like myself that works for some kind of sanctity and pays seventy cents in every dollar after the $80 earned.”

We must look around this parliamentary complex, outside the walls of this debating chamber, to the people who clean the floors, the people who open the doors, and the people who keep us safe and secure, warm, well fed, and able to do our jobs as MPs. What is their experience of the promise anticipated in Budget 2007? We talk a lot in this House about an inclusive society. It is indeed time that we faced up to the processes of alienation that we have created and supported through our behaviour with a Budget such as this—a Budget that could have been a little bit more inclusive. This Budget will undoubtedly benefit some people—and we will not stand in their way—but it will continue to alienate others and will fail to help the poor. As one of our own workers in Parliament told us, “I feel very let down by this Budget. ”

HEATHER ROY Link to this

I will repeat that sentence, because I think the member from Wanganui, who will not be here for much longer, missed it. I say to Mrs Pettis that she should listen to this: “In fact, it was a world leader in simplicity, transparency and equity …”. But what we will see as a result of both these bills, which we have had to come back and sit through on a Friday when we should be out there talking to our constituents, is complex legislation full of detail that will make our tax system much, much more difficult.

HEATHER ROY Link to this

I thank Mr Duynhoven, but I take my duties seriously, and I too see constituents.

The worst news about KiwiSaver is that tax breaks now mean it might make sense for families who cannot afford 4 percent—and a lot of people cannot—to borrow their required KiwiSaver contributions in order to join and get the tax breaks and subsidies. When we have perverse incentives put forward by this Government, which is supposed to care for the people, what hope is there?

We seem to be intent on ignoring the incentives that have been put forward by other Governments with regard to saving, but, in fact, more savings seem to be an outcome of economic growth rather than a cause. The richer a country gets, the more its citizens save.

I would like to briefly examine some of the statements Dr Cullen made, and some of the things that were announced in yesterday’s Budget. Quite some time ago Dr Cullen promised us that his policies would bring New Zealand 4 percent GDP growth. He went further than that, in fact, and said that he would stake his reputation on it and that it would be his yardstick.

Well, let us see what he has achieved. What do we have today? We have 2 percent economic growth. Is that turning us into a wealthy country, when our target was 4 percent or possibly more? Absolutely not. What is Dr Cullen’s target, his forecast, for the next 3 years? It is for worse economic growth than we have today: less than 2 percent. What is Dr Cullen’s forecast for the next 5 years? It is for a mere 2.3 percent economic growth. It may be news to Dr Cullen that this will not get us into the top half of the OECD. Dr Cullen has failed. If we were looking at it in terms of National Certificate of Educational Achievement parlance, we would say that he has earned a mark of Not Achieved. That is hardly satisfactory when he is targeting 4 percent economic growth.

ACT would have liked to see several significant things in the Budget that would lead to economic growth in this country. ACT would have dropped the income tax rate to 20 percent. There has been a drop in the company tax rate to 30 percent. This, of course, is a move in the right direction, but the top rate of personal tax should have been dropped to match that 30 percent, at the very least. Ideally, we should have had income tax dropped to a rate of 20 percent across the board.

Government spending should have been held in real terms. It has increased by 32 percent during the time this Government has been in power. What have we seen in return for an increase in Government spending of 32 percent? Well, in the health sector we have seen nothing at all. In fact, we are moving backwards, and most other Government departments cannot put forward a much better prospect.

HEATHER ROY Link to this

We are better than Chad. Well, that is a relief, is it not? ACT would have dealt to red tape through a regulatory responsibility bill. Fortunately for this country there is one of those bills on the Order Paper—Rodney Hide’s bill, which I hope the House will look at very carefully, realise the sense of, and vote in favour of. We should have been demanding transparency and accountability for all Government departments through service level agreements that would see heads of departments fired for failure to deliver, and Cabinet Ministers held accountable when they do not keep their promises to the people of this country. We hand over our taxes in good faith in return for services that we should be able to expect, but that are too often not delivered. Cabinet Ministers should be held accountable for that.

In this Budget we should have seen shares in State-owned enterprises distributed to everyone so that every New Zealander, every Kiwi, would be a stakeholder in those. The Cullen fund should have been dismantled, with a dividend paid into everyone’s KiwiSaver, or given to an education endowment. That would have been a real Budget—a Budget that New Zealanders could have been proud of. That would have seen economic growth in this country, not the economic growth of less than 2 percent that Dr Cullen is forecasting for the next 3 years, nor the mere 2.3 percent forecasted for the next 5 years. Dr Cullen has failed his own self-imposed yardstick.

The ACT party will not support this bill or the Budget. It is an awful Budget. It is a Budget where employers have been hoodwinked. They thought they were getting something that would help them compete overseas and help them with productivity. Instead they have been given something with one hand and it has been taken away with the other. That will not do anything for the future of this country. New Zealanders—like the Opposition in this Parliament—should be very, very disappointed indeed with this Budget.

CHARLES CHAUVEL Link to this

—I will come to that—what a great thing the targeted research and development tax exemptions will be and how fantastic they will be for keeping research and development onshore. They are saying what a great thing they will be for keeping head offices in New Zealand rather than our losing them overseas. That is what the people from the corporate sector are saying today. That is what they have been on the phone to say to me today. They think it is great they will get a reduction in corporate tax levels of 3c in the dollar, because that proves that this is a Government that is listening to business and wants to see the best thing for investment in New Zealanders. That is what the business community is saying about this Budget.

But let me turn to the ordinary workers and tell members about two recent situations I was in. I was talking to real live ones, I say to Mr English, not the pretend ones the National Party members tell us they talk to. I was at two recent events: an engineers union delegates forum in Petone, and the launch of the industrial branch of the Labour Party in Gisborne. Mrs Tolley might like to listen to this. They are not the wealthy workers we heard about, who Mr English thinks will worship in some sort of cargo cult that he accuses this Government of creating. They are ordinary, working people who know that the Working for Families package has made a big difference to their lives, and for whom the extension to the programme in April made an even bigger difference.

One of them told me a story about how his wife used to have to work before the Working for Families package came in. They had to arrange for the wife’s mother to pick up the kids after school and look after them. The wife would then pick them up when she had finished work, go home, and look after them. Do members know what happens now? That does not have to happen. She can stay at home and look after the kids, which is what she wants to do. It is a great thing. People really like having that choice, which we have allowed them to exercise by the roll-out of the Working for Families package.

What we are seeing with KiwiSaver is just the latest example of a roll-out of that sort of programme that allows people to realise their dreams—in this case, building up a nest egg for a deposit on a house. What could be better than that? What could be better for ordinary New Zealanders than fulfilling that sort of dream? That is what they want, and that is what this Government is delivering. Members opposite will see the results of that at the next election.

I want to record for the House some interesting comments made today on the Budget. I would just like to read them. The ANZ said today: “once again, Dr Cullen has struck a good balance between running prudent fiscal policy and not fanning an excessive domestic economy.” That was the comment from the ANZ. First NZ Capital said the Reserve Bank is now “unlikely to be driven towards changing its policy stance as a result of the fiscal update.” Standard and Poor’s has said the Budget places “New Zealand’s fiscal position amongst the ranks of AAA rated sovereigns such as Sweden, Norway and Australia.” Those comments demonstrate that this Budget has been good for ordinary Kiwis, because it continues Labour’s long tradition of targeting assistance to those who need it the most. It is good for business, because it will help keep head offices and research and development onshore, and help build up a strategic reserve of capital for use in New Zealand, rather than our having to rely on overseas funds. It is a good Budget for New Zealand, because it will continue to balance our programme of savings and investment in our future.