Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Bill

Jones Hon Shane Jones Link to this

“As slippery as a snake in wet grass” was the description of John Key. I do not think John Campbell went far enough.

He was too kind.

Smith Dr the Hon Lockwood Smith Link to this

He was particularly kind. I would suggest that the consultants be fired. Clearly they have not been doing their job.

I want an absolute assurance in the House tonight from John Key that taxpayers are not paying for that. I want an assurance that the 16 image consultants, who are being paid to build John Key up, are not being paid for by the taxpayers of New Zealand.

When is the Speaker going to bring him back to the bill?

Clearly, if we were not paying 36 people in John Key’s office, we would be able to reduce taxes further than we are doing. If we were not doing that, then the tax cuts could be bigger than they are now. If the member is so slow that he does not understand the links between Government expenditure and taxation, then Mr what’s-his-name, Mr “Auchin-something”, from the West Coast is even sillier than I thought. He is even sillier than I thought if he does not understand—

I didn’t say anything!

Horomia Hon Parekura Horomia Link to this

What? Dr Lockwood Smith would not have said that. He would not have said my speech is unrelated to the bill; he is much brighter than the member who sits next to him. Is Mr Auchinvole blaming Dr Smith? I do not really mind which of them it was; one of them interjected in that way. The point I am making is that if those image consultants are being paid by the taxpayer, it is a scandal, and if they are being paid by the taxpayer and doing a really bad job, it is a waste of taxpayers’ funds. The tax cuts could have been bigger than they are if John Key were not wasting money in that way.

But do members know what is worse than that?

What?

When asked, John Key could not tell us what he would do. It is actually a matter of relatively simple arithmetic. John Key tells us that National has a plan. He has a tax cut plan. He has one; he told us that on TV tonight. All that had to be done was a bit of basic, simple subtraction—or perhaps addition; it might be the other way round. The National Party plan minus the Labour tax cuts—that is the difference, and that is what National is promising. Could John Key do that on television tonight? He could not. One would think that with 36 advisers on this sort of matter, one of them could have got out a calculator. In fact, they probably could have done it with their fingers and toes. They could have worked out what the difference is, and John Key could have said what it is.

I think I know what John Key’s problem is.

Spin doctors.

Guy Nathan Guy Link to this

Well, no, not spin doctors. I think he has a factual problem. I think National has a problem with its plan. The problem with its plan is that low-income people and people with families would get less from National’s plan than they are to receive under Labour. John Key does not have the backbone to come into the House or to go on television, and to tell the public—

Robertson The ASSISTANT SPEAKER (H V Ross Robertson) Link to this

Members cannot refer to someone’s lack of courage or use the words that the member did. The member will desist from doing that.

I raise a point of order, Mr Speaker. I ask you, please, to rule that the member should be asked to withdraw and apologise for those remarks.

Speaking to the point of order, Mr Assistant Speaker, I point out that you have ruled and, as you are aware, that is the end of the matter.

Robertson The ASSISTANT SPEAKER (H V Ross Robertson) Link to this

Thank you. I have ruled. I have asked the member to desist, and I will be listening to him with a great deal of attention.

Jones Dail Jones Link to this

Any other former leader of the National Party would have been able to come to this House and tell us what his or her policy was. My memory does not go as far back as the 1950s on these matters, but I can remember Keith Holyoake. I can remember talking to Keith, and I can remember him living in Pipitea Street, and seeing him wander back and forth. Keith Holyoake would have been able to come into this House, whether he was in Government or in Opposition, and say what his policy was. Robert Muldoon would have been able to come into this House and tell us what National’s policy was. Jim Bolger would have stridden in and ruled the place. If he were here now, he would be saying what the policy was. I think even Jenny Shipley would have been able to do that. Don Brash certainly would have been able to. The current deputy leader, who was at one stage the leader of the National Party, would be able to tell the House what the policy is. Why cannot John Key? Why cannot the National Party have a leader in the tradition of National Party leaders—a leader who can tell the people what he is thinking, rather than what the 36 spin doctors tell him to say. That is a problem when one is a leader.

What did John Key say when he was asked where the money would come from? He said it would come from attrition in the Ministry of Foreign Affairs and Trade.

What?

Yes, that is where the money would come from—from attrition in the staffing of the Ministry of Foreign Affairs and Trade. Do members know that the current spending is $307 million? Let us suppose that attrition in the ministry, which I think is a relatively stable ministry, is at 10 percent a year, and that it happens evenly across the year. That amounts to $15 million. Well, I tell John Key that he needs $2.5 billion or $3 billion to do what he told us earlier in the week he would do. So far he has shown us where he would get $15 million. One could probably fire his 36 spin doctors, or rather the 16 who are the image consultants, and get another million or two of taxpayers’ dollars. But that is a long way short of what would be needed.

This is a good Budget; these are fair tax cuts. I like to see the National Party squirming, and I agree with John Campbell that John Key is “as slippery as a snake in wet grass”. I am sure Geoff Braybrooke would have had even more appropriate words to say, but with the prissy standards here these days, we are probably not allowed to use them.

Smith Dr the Hon LOCKWOOD SMITH (National—Rodney) Link to this

Any New Zealanders listening to this debate tonight would be disgusted at what they have just heard. When a New Zealand family has to spend more than 100 bucks to fill up the family car, when the cost goes up every time they get groceries to feed the children, and when they hear a senior Cabinet Minister make a speech like that, it is little wonder that New Zealanders are disgusted with this Labour Government. All they need to remember is that that member, Trevor Mallard, is the Labour Minister who thinks the way to solve problems is to punch someone. New Zealanders remember seeing him standing in the dock in disgrace. That is the standard of Labour Ministers today. They think the way to solve differences is to punch people.

Smith Dr the Hon LOCKWOOD SMITH Link to this

I raise a point of order, Mr Speaker. The member to whom that member refers is not currently able to defend himself, but I take exception to the personal nature of those attacks by that member. He should know better.

Robertson The ASSISTANT SPEAKER (H V Ross Robertson) Link to this

Members must be here and do that themselves.

Thank you, Mr Assistant Speaker. I am only reciting the facts. Let me say to the member who has just intervened, David Cunliffe, that it is time he told this Parliament what Graham Fortune told him about the immigration scandals. We know what Graham Fortune told him, and we know he is not being forthcoming about the briefings he received, and it is time that New Zealanders know he is not being upfront about them.

Smith Dr the Hon LOCKWOOD SMITH Link to this

Absolutely upfront.

We will get it out.

Hide Rodney Hide Link to this

I raise a point of order, Mr Speaker. That member is clearly a slow learner, if his response to a comment about his not being allowed to pass personal reflections on one member is then to pass personal reflections on the integrity of another. In this case, I take offence. I value my integrity, and I tell nothing but the truth.

With due respect to the Minister, I say that he cannot possibly take exception to that. Well, he can, but it is certainly not something for the Speaker to rule on. To suggest that a Minister’s integrity is not all that it should be, or that he may not have been entirely upfront with the House, is entirely within the Standing Orders and is a debatable point. If the Minister wants to debate it, that is fine, but I do not know what we would end up debating if it were ruled out of order.

Robertson The ASSISTANT SPEAKER (H V Ross Robertson) Link to this

Can I just refer members to Standing Order 116, which is about personal reflections. It refers to “an imputation of improper motives” or “an offensive reference to a member’s private affairs”. The member is getting fairly close to that, so I would just ask the member to be careful in the way in which he addresses the House.

Hide Rodney Hide Link to this

I raise a point of order, Mr Speaker.

Robertson The ASSISTANT SPEAKER (H V Ross Robertson) Link to this

I have made a ruling, Mr Hide.

Hide Rodney Hide Link to this

Yes, I know. I just want to ask for your clarification. It is a mystery to me—and I know that you know the Standing Orders very well—as to how what Dr Lockwood Smith was saying in any way got close to offending against Standing Order 116.

Robertson The ASSISTANT SPEAKER (H V Ross Robertson) Link to this

I can only repeat my comment about the imputation of an improper motive, under Standing Order 116. I have asked Dr Smith to be careful; I have not ruled it out.

Smith Dr the Hon LOCKWOOD SMITH Link to this

Thank you, Mr Assistant Speaker. Let me come back to this tax bill. Just a few years ago we had the “chewing gum” tax cuts, which were such an insult to New Zealanders, but, worst of all, Labour then reneged on them. It broke its promise. Now, today, we have the “block of cheese” tax cuts. For the bill we are debating tonight, the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Bill, to deliver to New Zealanders 2 weeks before the election $16 a week, after 9 years of this Labour Government, is, frankly, an insult to New Zealanders. It is too little, too late, and it will not save this Labour Government. New Zealanders are sick of the kind of behaviour we have seen in this House tonight by the “Honourable” Trevor Mallard. They are also sick of the kinds of cover-ups we have had to witness recently by the “Honourable” David Cunliffe.

I ask this Government why it is necessary to pass this legislation under urgency. Nothing in this bill has to be passed under urgency. National is voting for this bill, so it is not that we are troubled by it because we disagree with it. That is not the problem. But I invite the “Honourable” Minister David Cunliffe to have a look at, for example, clause 33. Clause 33 deals with the family tax credit legislation. I would suggest to that member that the family tax credit legislation is some of the more complex legislation in our Income Tax Act. It is hugely complex legislation. The risk of clause 33 being not quite right is huge. Already in this bill we are amending matters that were passed through this House only a few weeks ago, and the bits of previous tax legislation that we are amending tonight actually went through the select committee process yet we still got them wrong. Tonight we are passing this bill without it having been referred to a select committee. We do not get the chance to question officials about the accuracy of all the measures in this bill, and we run the risk of this legislation having to come back again to be fixed up.

The only reason we can conclude for Labour to push this bill through the House under urgency is that Dr Cullen’s own colleagues do not trust him. His colleagues are frightened that if these measures are not pushed through when the Budget is being debated, he will renege on his promise straight after the election—if Labour gets the chance to run Treasury again. He reneged last time, and his colleagues are frightened he would renege again.

What troubles me the most about this tax bill as I look at it is that nothing in it actually improves the dynamics of the New Zealand economy. Nothing in it improves our tax system. I think Rodney Hide mentioned in his Budget debate contribution that nothing in this bill improves the incentives for New Zealanders to be more productive, and I want to mention that before I finish tonight. Under this Labour Government of the last 9 years, New Zealand’s productivity has collapsed. That is a serious issue. Productivity is one of the central issues to New Zealanders being able to achieve higher standards of living without inflation. I have searched this Budget document for anything that indicates that the Government has thought about how its measures might improve productivity. I would appreciate it if officials could tell me where this Budget 2008 document, which contains the Budget Speech, the Fiscal Strategy Report, and the Economic and Fiscal Update, shows how this Government’s Budget measures will improve productivity.

Even if we put aside the issue of labour productivity—because the Government has said that labour productivity has declined because employment has grown and there are fewer unemployed people; it says that that is why labour productivity has collapsed—and look at multi-factor productivity, we see that during the 1990s it averaged 2 percent growth a year, and under Labour it is down to less than a third of that. It is down to a fifth of that, for the 9 years that Labour has been in Government. And we wonder why the economy is screwed! It cannot grow without inflation. It cannot grow without inflation, because Labour’s policies have destroyed the productivity growth of our economy.

Taxation measures to improve productivity would have been hugely valuable, but the taxation measures in this bill do not do that. They do not deal with the high marginal tax rates that people face. After all the changes to the Working for Families package, and the change to the tax threshold from $42,500 to $100,000 of earned income, the lowest marginal tax rate that people with dependent children face is 50 percent. This bill does not change that. Sure, for people trying to work their way off a benefit, the reduction down to a 12.5 percent rate for the first $20,000 of income will eventually bring the effective marginal tax rate that some families face down from 91 percent to 82 percent or thereabouts. This bill has not solved the problem.

So I put to the Labour members in the House tonight that this tax bill fails totally to improve the incentives, the dynamic impacts, of our tax system. It does nothing. Sadly, it could have done something to improve the productivity of our economy, but it does not. I simply say again to the Labour members: let whoever takes the next call for Labour explain seriously how concerned those members are about ordinary men and women, families and their children, in this country today who are struggling to make ends meet, instead of giving another of the pathetic political speeches we have heard in this House this evening. They should be ashamed of themselves.

Jones Hon SHANE JONES (Minister for Building and Construction) Link to this

Kia ora anōtātou, Mr Assistant Speaker. In contrast to what we have just heard, let me issue a mihi of best birthday health to you, as you sit in the adversity of silliness, rudeness, boredom, and frustration coming from the other side of the House.

There is constant carping from my whanaunga Tau Henare, who is a variant of the prodigal son. He is too ashamed to go back to his real home in New Zealand First, and he is too ashamed to go back to “Matua Winston”. I am actually glad that the Māori wardens are getting a new grant, because if there is anyone in this House in need of the protection of the Māori wardens, it is that whanaunga of ours, Tau Henare. Every time he opens his mouth he demonstrates that his rhetoric is inversely related to his intellect. Engari, kei te pai, Tau, tēnā koe.

Now with $10.6 billion, and despite the best efforts from members on the Opposition side of the House, the grand old man of Parliament, the greatest Minister of Finance we have had for many a year, has delivered the goods. Today he stripped John Key of anything worthwhile to say. In fact, a number of people who sat in the gallery today commented on what a contrast John Key represented compared with Dr Cullen.

Too right, he did! It was an excellent contrast.

OK, we hear from the man dreamt up by Kenneth Grahame in The Wind in the Willows—Chris Auchinvole. If he is not reflecting the mannerisms of the toad, he reminds us of the relevance of the mole in The Wind in the Willows, so we will put him back to sleep. We heard a brilliant contribution from Dr Cullen today.

What was it that John Key did not like? He disliked the fact that he has had both his ideas and his own ballast stripped from him. He was reduced to talking about electoral finance and treating the debate as if it were just another ordinary general debate. His speech lacked content and contained no vision, no ideas, and no grand narrative as to where he, as potentially the next Prime Minister, would take the country. He showed that he has no intellectual home. In fact, he is of no fixed abode intellectually. He will catch any tide and paddle his waka in any direction where he thinks he can capture lazy votes.

But voters will not be fooled. New Zealanders heard today that, firstly, there will be tax cuts. They will be beyond the $1.5 billion of tax cuts that we have delivered through business. They will be in excess of the $1 billion in terms of the Inland Revenue Department tax subsidy for savers. They will be beyond the $1.67 billion, in rough terms, in respect of our family tax and child tax policy. Cuts will be $10.6 billion, with the lowest personal tax rate down to 12.5 percent. The only way that John Key can match that, Tau, is by doing one of three things. He can sell assets—

Robertson The ASSISTANT SPEAKER (H V Ross Robertson) Link to this

Order!

Henare Hon Tau Henare Link to this

—Mr Henare; I apologise, Mr Assistant Speaker. But I must say to you, Mr Assistant Speaker, that the word “Tau” is spelt t, a, u, and I ask you to please consult a Māori dictionary as to what it means when it is delivered in that fashion. It refers to a part of the anatomy that it would be too impolite for me to—

I raise a point of order, Mr Speaker. I have a reasonably thick hide and I can usually—

Henare Hon Tau Henare Link to this

Point of order—

Hang on, it is a point of order. Goodness, gracious me!

Robertson The ASSISTANT SPEAKER (H V Ross Robertson) Link to this

The Minister will please be seated.

Henare Hon Tau Henare Link to this

I can usually take the barbs, but I take great offence at anybody pouring scorn on my great-grandfather’s name and using that name in the way in which my whanaunga from the north, Shane Jones, has. I ask for him to withdraw and apologise, not to me, but to my great-grandfather.

Robertson The ASSISTANT SPEAKER (H V Ross Robertson) Link to this

I refer the Minister to Standing Order 116, “Personal reflections”. He will withdraw and apologise.

Horomia Hon Parekura Horomia Link to this

I apologise for and withdraw any offence caused.

We have heard from Nathan Guy, who showed what happens to the farming community when there is a shortage of veterinarians. Farmers get too close to the rear end of a cow and they end up resembling the habits of the senior National whip.

However, I come back to the economic transformation brought about by nigh on $1 billion. It is regrettable that I should remind Dr Lockwood Smith that occasionally when I encounter many of our people in Northland, they are wont to refer to him as the Vince Martin of the National Party. He has that reputation.

He’s a bull breeder.

I know that he is a bull breeder, and that the word “bull” can be construed in a multiple number of ways, but on occasions he is said to give added meaning to the term “retread”.

However, let me come back to my contribution—an economic transformation and $700 million: I tell Dr Smith that that is where we will get our productivity. That is what comes through clever financial stewardship, whereby we are able to offer relief to taxpayers and put investments deep in the well and reservoir of human capital through the entire scientific and technological infrastructure area.

Let us not forget about community organisations. Of course, Mr Clarkson’s conception of the facts about community organisations makes them an enemy of the truth, so the less we hear from him, the better. There is $400 million - odd to enhance the ability of community organisations to deal firstly with families, and secondly with youth, sport, and culture, which is something that was completely stripped under the ideas of our friends in the Opposition.

Let us refer to the purchase of railways. Despite the idle gossip from Mr Key, the purchase of the railways has been widely accepted by people, and there will be another smile. It will not be the cheesy grin that we see from Mr Key when he talks about railway costings. Railways is a winner; people do not want to see our roads constantly clogged up. People are happy that the railways will be run professionally and will serve a public good. People are also happy that coastal freighters will be bobbing around the coastline, moving very efficiently and enhancing productivity in the goods and services of the country.

In addition to that, of course, we are throwing in a fishing line. I must not miss this opportunity to mihi to Mr Anderton for turning down the application for a marine reserve at Great Barrier Island. The man has started to redeem himself in the eyes of Ngāti Wai. Of course, that may relate to the fact that Ngāti Wai is in charge of the party that Tau Henare refuses to go back to—kei te pai, he take anōtēra. Once again, it is a further variation on the very sad story of the prodigal son.

Productivity has been raised by $700 million, and the only way in which the tax cuts can be bettered is through profligacy, the sale of assets, or the stripping of public services, so I say “Bring on the campaign.” What exactly is John Key proposing to do? Does he propose to strip money from the social welfare budget or the health budget, or to privatise schools through some sort of voucher system? No, all we can see and hear are insults in the face of a great Budget. Kia ora tātou katoa.

Groser TIM GROSER (National) Link to this

If there are New Zealanders who are actually listening to the so-called contributions of the last two Government speakers, both of whom are Ministers of the Crown, they must be wondering what is going on. They must be wondering why it is that in debating what is intended to be a central political event in the political calendar of this country, at a time when New Zealanders are, in a very real sense, under real pressure from real problems facing them and their families, two Ministers of the Crown can get up and make a series of jocular, irrelevant points as if this is some high school debating society that they represent. I think New Zealanders would say that if this Budget and the tax bill we are actually meant to be debating, which is the central part of the Budget strategy, were intended to be a circuit-breaker for this Government, then right around the country the political lights have just gone out for Labour. That is what I think they will conclude if they have had the misfortunate of listening to the last two Government Ministers speaking on this very important political day on this very important political matter that faces New Zealand families. And when reflecting on the fact that this is the ninth Budget, they will see that this is not like reading the final chapter in a book. They will see that this has to be looked at in relationship to the whole story of this Labour three-term Government.

I just want to take members back to a central point. I have always held the belief—I think many New Zealanders hold the belief—that it is a privilege to be the Government, that it is a privilege to be voted in democratically by one’s fellow countrymen and countrywomen, and that that implies a great duty of care. It implies, overriding all of this, a responsibility to take New Zealand forward. I think the test—a fair test but a brutal test—is to ask that if we look at this Budget in relationship to the last 9 years, has this Government taken this country forward on its watch? Has this Government addressed fundamental problems facing New Zealand? Has this Government actually addressed the real-world concerns? Or are Government members opposite completely lost, as were the last two Ministers of the Crown in making clever, irrelevant, and essentially high school debating speeches? Is that what their view of their responsibilities really is?

Let us just look at the tax bill and what it is intended to do in terms of the opportunity at the start of this saga. We had a Government coming in after 8 years of economic growth at an average rate of about 3.5 percent. The rate in the last year of that period, 1999, was over 4 percent in real terms. We had had stellar productivity growth in the previous 3 years. We had falling inflation and falling unemployment all set to continue during the new Government’s first 4 or 5 years. The phrase “the end of the golden weather” is the phrase that keeps on coming back to mind, and I am sure it is coming back to the minds of many New Zealanders as they stare at this “big cheese Budget”—the $16 a week tax cut! The Government has had the most favourable terms of trade for a generation or more. All of this was fuelling the largest Budget surpluses that any Government has had the unique fortune to inherit—all of it allowing Government members the opportunity to build on wealth creation to make New Zealand a place where people could base their future on, to build on the productivity growth of the past, and to take this country forward, which is their ultimate responsibility.

This is not just about dollars in the pocket, as John Key has pointed out. For the most part we live in a market economy, and that means that incentives actually matter. It is not just a matter of dollars in one’s pocket—whether one can go out and pay the bills, or whether one can go out and fill the car up, important though those are to anyone’s normal daily life—it is also a matter of constructing an economy that can incentivise middle New Zealand to take this country forward. Members opposite have had 9 years to come to terms with this, and, just as in the case of the emissions trading scheme where they have rushed through an ill-considered response—after doing absolutely nothing in their last 9 years other than spouting rhetoric—so it is exactly the same when it comes to Budget strategy and tax strategy. They have had 9 years of doing nothing on income tax. Oh, I am sorry, I have forgotten one very important exception to that.

Groser TIM GROSER Link to this

What was that?

Well, the first action Dr Cullen took was to raise the marginal tax rate to 39c—a completely futile and meaningless gesture, later revealed by his extremely impolite and inappropriate comment to John Key, which indicated his contempt for anyone with wealth; but we will not go there. So after all that, we get this $16 a week. If we divide that by 9 years we get $1.75 a year for all that Government’s time with the stewardship of this country. New Zealanders, I think, have a right to expect a little more, and they will get more from a National Government. First of all, they can be guaranteed under a National Government to actually see the second tranche of these tax cuts. We know what the history of this is. We know what the phrase the “chewing gum Budget” was all about. There is an old cynical phrase: “You mislead me once, shame on you”—

Robertson The ASSISTANT SPEAKER (H V Ross Robertson) Link to this

Order!

Groser TIM GROSER Link to this

No, no, I am referring, Mr Assistant Speaker, to “you” in the general sense, not to you as Speaker here or any member here. It is a quote. “If you mislead me once, shame on you, but if you mislead me twice, shame on me.”—shame on me for being so gullible. That is what that old cynical phrase means, and I do not think New Zealanders are going to fall for it. I think New Zealanders know what the story is, and I think New Zealanders know that actually the only way they can be guaranteed these tax cuts, as a minimum, is by the election of a National Government.

But they will not just get a National Government that will validate this minimal movement forward; they will get a Government that understands what the real problem facing New Zealand is, which is that we are not on a sustainable trajectory. We suffer from a growth deficit. We need to invest in our future. We need a concerted programme of building up the country’s infrastructure. We need a concerted programme that puts standards back at the back-end of our education system, at the primary and intermediate level—standards for numeracy and for literacy. We need a Government that is not committed to a “once every 9 years” process of re-incentivising middle New Zealanders, but one that will look for opportunities wherever they arise.

R DOUG WOOLERTON (NZ First) Link to this

In my Budget debate speech I mentioned that New Zealand First supports this Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Bill. I also mentioned that we would like to see some incentives in it for exporting, so I will not go over that matter again.

It is pretty rich for the previous speaker on his feet, Tim Groser, to be talking about cynicism, because I have to say that I have never heard a more cynical speech than the one he gave. The man who was speaking voted against Working for Families and against any other attempts at tax cuts brought in by this Government in the last 9 years. Now he talks about incentivising the system. He knows that National has no intentions to incentivise the system in the way he describes it.

What National would have done in this Budget—so its members tell us—is to give a percentage decrease in tax right across the board. It would not have attempted to attend to people who are worse off, to people who are suffering pain due to the economy right now; it would have given a 1 percentage tax cut right across the board. That is what National members opposite said, and that is what they would have done. We have no reason to disbelieve them. That is not incentivising the tax scheme; that is giving a tax cut to the wealthiest in society disproportionate to what others in society would get. It sounds simple, but that is the net effect of a scheme such as they are proposing. And I am sure middle-income New Zealanders understand that. I am sure they understand it absolutely.

We in New Zealand First were pleased to see in this Budget—in fact, the Prime Minister made an issue of it—that the Labour Government has come to the view that State assets should not be sold. We welcome that and applaud Labour for it, because we have been on about that issue for many, many years. We believe that operations essential to the infrastructure of this country should stay in the hands of the taxpayers and be administered as the Government sees fit.

Much criticism has come from the Opposition about the buy back of the railways business. We believe that if rail is run as Air New Zealand is run, then it will be a huge advantage to this country. We believe quite simply that it is wrong to give money to foreign owners so that they can carry on business in this country. We do not believe that we should be giving subsidies to people who own our infrastructure.

Likewise, we do not believe that $1.5 billion should be given to Telecom to upgrade broadband, as proposed by the National Party. If Telecom was doing the business as it promised this country it would, then it would have invested in broadband in this country because it is its responsibility to do so. But, no, it has chosen to pay its shareholders, who are mostly overseas, huge dividends running into many, many millions of dollars—hundreds of millions—over reinvesting. I do not think it is in anybody’s interests for National to say it would give Telecom $1.5 billion to upgrade the broadband service. At least under Labour’s proposal, which we heard today in the Budget statement, we are seeing a similar amount of money, but it is contestable.

I would have thought that that proposal would come from the National members, quite frankly. They are the ones who go on about private enterprise. That money is contestable so we can have other people bidding for it. I applaud the Minister, who is in the House now, on that move, because I think it is the right one. I could not believe my ears when I heard that the National Party stated publicly—[Interruption]; it is not in the past—that it would just give $1.5 billion to Telecom to upgrade the broadband system. That is outrageous and it should not happen. That is not the free market at work, at all.

We are also happy to see in this Budget the tax credits for Working for Families coming forward into this year instead of waiting until April of next year, because we believe that they are needed now by people who are under pressure for a number of reasons. In many cases it is because of a slight downturn in the economy, which we are seeing as a flow-on effect from the United States economy. I say that anybody who would oppose such a move has simply not been out and about in the community and does not understand what is happening out there right now.

As I said, New Zealand First would have liked to see some tax incentives to correct what I believe are inequities in the market when it comes to our export sector. Exporters are suffering right now with the high dollar. They are suffering with internal costs that are not of their making, and I believe that it behoves the Government of the day, whichever Government it may be—and right now it is a Labour-led Government—to make those things right for exporters. We cannot lose these people. We cannot lose the manufacturing capacity, and we cannot lose the capacity of our pastoral and agricultural industries, be they forestry, fisheries, or whatever.

So, with those qualifications, we support this tax bill. We support the reductions in taxation, not only because they are good for individuals but also because they are good for the economy.

Foss CRAIG FOSS (National—Tukituki) Link to this

It is an absolute pleasure to be speaking on and voting for the Taxation (Personal Cuts, Annual Rates, and Remedial Matters) Bill—an absolute pleasure. It feels good. I thought we would have to wait another 6 months or so to be voting for one of these bills, or to have a bill that cuts personal taxes before the House. Thank you, Mr Assistant Speaker, for the opportunity to vote on this particular bill.

As many speeches before mine have crossed into the Budget itself and this bill, I will follow suit. We are in urgency tonight. Maybe it is because Dr Cullen could not trust himself, but more likely it is because Mr Goff did not trust Dr Cullen. We are in urgency because it is urgent that there are personal tax cuts in New Zealand. It is as simple as that. It is desperate that there are personal tax cuts in New Zealand. It is overdue that there are personal tax cuts in New Zealand—9 years overdue, or, to be precise and quote John Key from his earlier speech, 3,000-odd days overdue.

In the second reading of this particular bill, and in the Budget, there is no apology whatsoever from the Government for doing nothing about personal tax rates and thresholds for 9 years of the best economic conditions that New Zealand has ever faced. There is no apology whatsoever in the Budget for the doubling of interest rates under the current regime. There is a commentary within the Budget itself where there are some very interesting graphs of the behaviour of Dr Cullen’s spend-up over the last 9 years, and they basically go straight up as interest rates have increased under his watch. There is no apology in this Budget or this bill for inflation being north of 3 percent and eating away at our wealth. Members on the other side of the Chamber go on and on and talk about public assets, etc., but inflation eats away at our wealth and our future. There is no apology in this Budget or in this bill for the lack of productivity growth in New Zealand—the only way out of the current bind that we are in. There is absolutely no apology to family, friends, and whānau who have all given up and moved to Australia for brighter futures and better income streams. There is absolutely no apology whatsoever.

Earlier speakers have spoken about borrowing. Mr Chauvel over there was saying there was no borrowing for tax cuts. Well, in this bill it is quantified at about $10 billion over 4 years. I refer members to page 104 of the Budget, which states there is net bond issuance over the next 4 years of $6.4 billion; $6.4 billion will be borrowed to help fund this Budget, and it is signed off by the Minister of Finance, who has raved on ad nauseam over the last 9 years about not borrowing for tax cuts. He does not explain how he will fund his tax cuts, other than with bonds, as it says here. He has been denying that for many years. Not only that but in the same Budget there is a $12.8 billion cash deficit forecast for 4 years down the track. How does one fund a cash deficit? The Minister says right here that this will be met by an increase in borrowing—oh, please excuse me, I meant by domestic bond issuance. Bonds are borrowing. To fund $10 billion worth of tax cuts there is $6.4 billion of bond issuance. Hello! To quote a certain Minister of Finance, from what I think was his last Budget: “What is the connection?”.

The news is not good. New Zealanders—and we saw it on TV tonight—are suffering double interest rates, suffering mortgage rates, and suffering fixed-rate rollovers to double figures for their 2 and 3-year mortgages. Right here, on page 70 of the same Budget, the news is not good. In the Budget fiscal update the prediction is that the 90-day bill average rate for this coming year is 8.8 percent. That is predicted to plummet to 8.6 percent next year. So I ask Government members to show where the relief is in that. In his speech the Minister kept talking about relief from interest rates. Well, I have some ideas for the Minister of Finance about how we can start to attack those interest rates, and it is not just subprime. Subprime is a credit issue; it is all about where New Zealand’s credit margin starts, and the next Government will be doing an awful lot to bring the base Government curve right down. The news is not good in this particular Budget. We have unemployment forecast to blow out to 4.5 percent at the same time that the Minister of Finance is borrowing. The current account is blowing out to 7.2 percent to 7.3 percent. It is not good news. There is one piece of good news: this particular bill. It is a pleasure to vote for a personal tax cut bill.

I will make another couple of quick points about things that are in the bill. I recall us being in urgency about KiwiSaver, the fair dividend rate, and the specified superannuation contribution withholding tax changes, etc. Right here in this bill—once again, sadly, I need to say it—there are further changes and amendments to the KiwiSaver legislation, to fix up some of the calculations that were not put into it correctly in the first instance when the bill was rushed through. Had a bit more time been spent on that bill it would not even have had to be here under urgency. There is also another fix up in here about the change to registered charities, which we will speak to during Committee stage, but again that was part of a bill rushed through. The process of this Parliament is about consideration—let the people submit to a select committee—and these mistakes will not have to reappear. The only difference this time is there is no Supplementary Order Paper. Normally there is a Supplementary Order Paper the Government races in under urgency to fix these things up. I will end my speech right there, but just again it is a pleasure to finally be voting for a personal tax cut bill.

Dunne Hon PETER DUNNE (Minister of Revenue) Link to this

Can I say to the member who has just resumed his seat that the changes on charities were hardly rushed. They began with a working party that was convened as long ago as 1988. That party then reported to the Government early in the new decade. The legislation setting up the Charities Commission was passed shortly thereafter, after full select committee consideration.

The problem that has emerged has been with the process taken to register the charities and a subsequent determination along the way that there was a potential gap in the law in so far as tertiary institutions were concerned that could have rendered them liable for taxation in a way that no one right back to the 1860s or 1870s had ever intended. So I debunk the member’s argument that these things were rushed through. These are consequences of changes, and perhaps one could argue that in the implementation of those changes not all was done that should have been done. But it was not the fault of the original legislation.

I was not going to take a call in this debate, but I have been listening to it with some interest, because an ironic sense of déjà vu is emerging through all of the speeches we have heard this evening. Essentially, what we are hearing is a two-way argument about who is better at tax cuts than the other. The reality is that neither of the major parties has a particularly proud record in this area. I have been in this House long enough to see three rounds of personal tax cuts—that is, in more than 2 decades, and that is the core of the problem—the changes around the introduction of the goods and services tax in 1986, the changes that the National-United Government made in 1996, and now these changes. The ironic thing about them is that the 1996 changes were made in two stages and today’s bill is a three-stage bill.

In 1997 the Government of the day, to fund some of the commitments it made to New Zealand First, repealed stage two of the tax bill it passed in 1996. Here we are today passing a bill that implements a three-phase tax cut. One side guarantees the sanctity of those cuts and the other is raising doubts. The irony is that that is the reverse position that both took in the 1996-97 debate, which, I guess, goes to prove that no matter what happens the one certainty in life is that the tax debate is an on-going one.

I think that there is a much more fundamental issue. Every decade we run up to the top of the cliff and have a huge cathartic experience about whether the country can afford personal tax cuts. The argument is always that the cost far outweighs the level of deliverable public expectation. The problem is not so much the size and timing of cuts themselves but the rarity with which they occur. If, in fact, we had a programme that saw more modest cuts being made on a more regular basis, a lot of the pent-up pressure that we are now seeking to deal with, and that we sought to deal with on the occasions of the 1996 and the 1986 cuts, could have been avoided.

The lesson surely has to be, once this programme is put in place, that, firstly, we should let it remain and, secondly, that it should not be 10 years hence that a further programme of tax reductions is considered, because at that point all we will be doing is repeating the folly of the last 2-plus decades. That is what causes the debate, the dilemma, the argument, and the sense that no matter what amount is delivered, it will never be enough. It is simply because the expectation gap goes far beyond what is able to be delivered.

So rather than throw these brickbats back and forward about who did what to whom and when, we ought to be focusing on how can we move to a programme that sees tax cuts as a normal part of economic management and not as something on which one builds oneself up to a peak and delivers once every now and then. That will never prove to be sustainable. That will never prove to be a position where we can say “a reasonable measure of public expectation has been met.” We need to change our thinking.

We need to redesign our tax system in such a way that it does lend itself to smaller, more regular adjustments that are more affordable and that do enable Governments, of whatever complexion, to plan with some certainty and some integrity about the way they approach these issues in the future. Until we do that, the debate we are having this evening will continue at periodic intervals. The role players will simply reverse their roles depending on their political circumstances. We will not be that much better off. We may feel short-term enthusiasm, but nothing much will change.

So I think that this Budget, this bill, does provide us with an opportunity to lock down a process of ongoing change, and that is important. The worst thing we can do now is introduce more uncertainty into a system that already has more than its fair measure. So I support this bill. I support its passage, and I support, too, the 1 October implementation date. New Zealanders should not have to wait for tax relief that is experienced once in a decade; probably two or three times in their working lives. We need to do much better than that.

Swain Hon PAUL SWAIN (Labour—Rimutaka) Link to this

There are a number of key debates in a parliamentary life, and there are probably three major ones. The first one is the Speech from the Throne, which is the one at the start of every parliamentary term that sees the Government outlining its programme for the next 3 years. Another important speech is the Prime Minister’s statement, which is given at the start of every year of a new Parliament and outlines what the priorities will be for the year, and usually gives a bit of a hint about what might happen in the Budget. But the critical debate in a parliamentary term and in the life of a Parliament is the Budget debate.

People might be wondering what all this is about when they are watching it at home—mind you, they have probably turned over to something on TV2 by now—but the critical point is that a Government has the same issues to face as a family, in the sense that a Government receives money by taxation and has to work out by Budget time how it is going to spend that money. Just like the family receiving an income, the Government also needs to set its priorities and try to live within its means. For a Labour-led Government the absolute “must do’s” are the important ones like health and education, and things like that.

There are lots of things that families would like to do with their money but cannot afford to, and so it is with Governments. In the end it is a process of trying to work out what is in the best interests of the nation, compared with the other things that everybody would like the Government to do. I have listened to 18 Budgets in my time in Parliament—

Power Simon Power Link to this

You are so young!

Cullen Hon Dr Michael Cullen Link to this

—yes, so young, but behind ticks a very old and tired brain—and nine of them from National. Unfortunately the first one, in 1991, was the rudest one—the “mother of all Budgets”. Ruth Richardson was running around Evans Bay in a pink tracksuit, as I remember, going on about how this was going to be a “spine-tingling Budget”. It certainly was spine-tingling for the people who were at the other end of it. There were benefit cuts, the asset sale programme, and the Employment Contracts Act. All those things happened at the start of that Budget period. Then we went into what one would call the drift Budgets, and none of them particularly memorable in the 9 years of the National Government.

We come then to 9 years of Dr Cullen’s Budgets. I think it is fair to say that as Dr Cullen delivers more Budgets, the better they get. He is probably like an old, good red wine—the older he gets the better he gets.

Hear, hear!

Barnett Tim Barnett Link to this

Dr Cullen says “Hear, hear!”, and why would he not say that?

More like a single malt.

R Doug Woolerton Link to this

I see. I see him more as a good pinot noir or a shiraz, personally.

But I do not want to be distracted; I always get distracted by interruptions from the Hon Dr Cullen. I want to box on and say that after 18 Budgets this is the only one I can remember being supported by all parties. All parties in this House are voting for it. After 18 Budgets I can remember only one such occasion, and this is the one. So one would think that after 9 years Dr Cullen has got it about right. Finally people have recognised that what Dr Cullen did in the first few Budgets was to get New Zealand back on track again, by trying to sort out the mess that was left by the previous Government in education, health, housing, defence, superannuation, and all those matters. The Government squirrelled some funds away in the good times in order to deal with the times we knew were coming, which were when things were going to get tough. As Dr Cullen outlined in the first part of his Budget speech, we are heading into those times now. What a good thing it is that some funds are available in order to help people and give them some relief. I congratulate Dr Cullen, because he has delivered in a very, very difficult time in New Zealand’s history.

Although I want to talk about the tax cuts, I think it is important to recognise that this Budget is not only about tax cuts. That has somehow been the fixation of everybody. There are a lot of things in here that—

They have probably got a fixation on talking about the bill; that is probably the problem.

R Doug Woolerton Link to this

Possibly, yes, but I think one has to give some context to the bill, which is what I am attempting to do. Dr Cullen has always said that tax cuts have to be measured against four criteria. The first criterion is that tax cuts will not lead to greater inequality. A number of speakers have said that, yes, the bill will not lead to greater inequality—the tax cuts are across the board—and, by the way, there is also a top-up for Working for Families. Secondly, tax cuts will not require cuts to public services, and we have already heard that that will not happen as a result of these tax cuts. The tax cuts have been designed not to exacerbate inflationary pressure—and the Governor of the Reserve Bank will be watching this Budget very, very carefully—and I note, for those who have not quite got the point, that this is a three-step process. The final criterion is that the tax cuts will not require borrowing to fund them. So there are four criteria. In the little box that I have, which was given to me by Dr Cullen, those boxes are all ticked—surprise, surprise!

What would have happened if that measure had been applied to the National Party? Well, in respect of the first criterion, about tax cuts not leading to greater inequality in our society, we know that John Key and all his mates would have done extraordinarily well out of their Budget, and that the person at the lowest level would have got sod all. So inequality in New Zealand would have been exacerbated, and that is not the way to run a tax cuts programme.

In respect of the criterion about tax cuts not requiring cuts to public services, we heard John Key say that a ruler would be run over every Government department and every Government agency. So every Government agency must be quivering, thinking about what that means. We know that the only way a National Government will be able to do this is with some big cuts. One does not try to fund billions of dollars of tax cuts by removing the odd adviser in a Government department. John Key could make quite a lot of headway by reducing the 36 people employed in his office.

That would be a start.

Power Simon Power Link to this

That would be a start, I suppose.

But the point is that one does not get the billions of dollars that are required at the margins by fiddling around with the odd policy adviser. There is no doubt that public services will be cut. Why? Because we know that a National Government has done it before. Do people remember that under National people started to pay to go to hospital? It was called the bed-night charge. It sounded like people were going to a motel. It was the motel people went to that they did not want to go to but had to go to, and as they left they had to pay a bill. This was a most bizarre way to run a health system.

The third criterion is that tax cuts should be designed not to exacerbate inflationary pressure. If a National Government dumped its 50-plus tax cuts in one hit, what would happen? People would get them on the one hand, and on the other hand the Reserve Bank would have to adjust the interest rate regime, and money would be taken back through increased costs on people’s mortgage charges. So National’s tax cuts cannot possibly be sensible and sound, as far as inflation is concerned. As far as not being required to borrow for tax cuts is concerned, well, of course, Mr Key has already said National will be borrowing for tax cuts. As I recall, one of National’s members said that National would not borrow but just get the money from overseas. We are still scratching our heads on this side of the Chamber, trying to work that out.

Of course, there are lots of other things in the Budget. There are lots and lots of things in the Budget about transport, health, education, defence, skills training, and innovation. So this is not just about tax cuts. We are talking about tax cuts because this is what the bill is about, but it is important for people at home to remember that this Budget is not just about tax cuts; it is about a whole lot of things. I congratulate Dr Cullen. This is a Budget for this particular time, for this particular year, and it does two important things. It gives a tax break to those who need it, at a time when the cost of living is rising. It does so without putting on extra inflationary pressure, which means that people will not lose it back through their mortgage, while at the same time it continues the programme of continuing to fund the things that New Zealanders actually want us to fund—health, education, superannuation, housing, transport, police, and defence. This is another fabulous Budget from Dr Cullen. I applaud him for it, and I certainly support the second reading of this bill.

Tremain CHRIS TREMAIN (National—Napier) Link to this

It is always a pleasure to follow the Hon Paul Swain in any debate in this House. As he quite rightly points out, he has been here for 18 years—

He’s a cheerful member.

Tremain CHRIS TREMAIN Link to this

He is a cheerful member. I have enjoyed his company on the Finance and Expenditure Committee, and he has taught me more than a thing or two in my time there. But I have to say that after 18 years he has fallen into the same trap as his leader fell in today of regurgitating the memories, the policies, and the issues of the past. Once again we heard him drag up the asset sales of the past. I might add that Michael Cullen was an Associate Minister of Finance at the time of a number of asset sales. Paul Swain dragged up the bed-night charge, which I think goes back to the days of Florence Nightingale. Like his leader he slipped into the habit of bringing up the past in respect of a whole lot of issues. Quite frankly, they are issues of a bygone era. They are issues of another century. For members of this House who were aged 10, 12, or 13 then, those days are history.

This Budget, this Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Bill, is too little, too late. That is the phrase that is ringing out around the country. That phrase is ringing out from Doug Woolerton’s part of the country up north, from Mark Gosche’s area of Auckland, from Mr Swain’s electorate of Rimutaka, and even from Dr Cullen’s home area of Napier in Hawke’s Bay. That is what people are saying around the country—that it is too little, too late. That is the phrase that is ringing out from over 1.6 million hard-working Kiwis from Napier, Taradale, Hastings, Puketapu—from all around the country. Those 1.6 million hard-working taxpayers have not had a tax break in over 9 years under this Labour Government. We have had 9 years of the best economic conditions that any Treasurer of any nation in the OECD could expect. We have had 9 long years when the tax take has risen from $32 billion to nearly $60 billion. We have had 9 years when hard-working Kiwis have been taxed harder and longer than people in most other countries in the OECD.

And after 9 long years, we have achieved the remarkable feat—and it is a remarkable feat—of having 79,000 Kiwis leave our country per annum for a brighter future, with 40,000 of them going to Australia alone. Just this week, Helen Clark said that that is not a problem, because we have got net positive migration. She does not care that 79,000 hard-working Kiwis are leaving this nation, because they are being replaced with people from overseas. But she forgets that we have invested millions and millions of dollars in those Kiwis over the years, in their education and in all sorts of things to get them to a level where they can contribute back to New Zealand.

Under this bill, we see a change in personal tax rates. National has been calling for that for years, and it is a step in the right direction, but it is a timid step. National will support the legislation, because we believe that we need to return dollars to hard-working Kiwis’ pockets, regardless of the size of the tax cut offered under this Budget—regardless of its size. We believe that Kiwis know better than the Government how to spend their money, and any acknowledgment of that should be welcomed, and that is why we are supporting this bill. But I should remind Mr Swain that it is this bill that we are supporting, not the Budget. We are supporting this bill, not the Budget—which is not what he pointed out to members tonight. You see, these tax cuts will deliver between $12 and $28 per week to hard-working Kiwis, and in 3 years’ time, in April 2011, they will deliver a total of between $22 and $55 per week. That is an increase of between $5 and $13.50 per week in 2010 and in 2011. What are Kiwis around the country saying about that? They are saying it is too little, too late.

I am a relatively new boy to this House. I am from a generation of people who are not interested in the political battles of the 1980s and 1990s—the debates over the Viet Nam War or the Springbok Tour. I think I was 12 at the time of the Springbok Tour, and I watched a couple of the All Black games with my family, which was part of the rugby community at that time. But who cares about those debates of the 1980s and 1990s? We are here to look to the future, to where we are taking this country. As members know, not just Generation X and Generation Y but most Kiwis want to look forward. Only the tired old Labour Party members sitting across the House want to continue to dwell in the cellar of the past.

Our generation is interested in the future. We are interested in putting Treaty settlements behind us, and that is why Kiwis support National’s policy of settling all Treaty settlements by 2014. We are interested in getting our kids educated and improving the tail end—the 25 percent of kids at National Certificate of Educational Achievement level 1 who cannot read properly. We know that we are in an increasingly global community, and that educational skills are gold. That is why Kiwis are listening to National’s policy about introducing national education standards and focusing on trade training at schools. They are good policies that we have rolled out. We are interested in how we can connect with the world, and that is why National’s policy of a $1.5 billion investment in broadband has got Kiwis excited about the future under a National Government. It is another policy that takes us forward into the future. We are interested in ensuring that the rate of violent crime comes down, and that New Zealand is a safe place to live. That is why Kiwis are listening to National’s policy to strengthen the bail laws and to make it illegal to be a member of a criminal organisation. That is why Kiwis support the stand taken recently by Judge Tony Adeane in Napier.

Many of my generation are living overseas, where they have great-paying jobs, but, quite seriously, they want to come home, and they want to come home to different cities around New Zealand, to the places where they were born. They are actually looking for excuses to come home. That is why my generation believes in a programme of ongoing personal tax cuts. We want a Government that is serious about curbing its spending, that will rein in the burgeoning bureaucracy, and that will invest in our infrastructure. We want to know where this nation is heading over the next 10 years, not just the next 2 or 3 years with a $6 tax break in 2 years’ time. We are looking for a leader who is not immersed in the ideology of the 1980s, who has a strong vision for New Zealand, and who has the capacity to deliver that vision. That is why New Zealanders are looking to John Key for the future, and that is why they are looking to a National Government.

Hide RODNEY HIDE (Leader—ACT) Link to this

I have been reflecting on the Taxation (Personal Tax Cuts, Annual Rates, and Remedial Matters) Bill that we are debating, which is a bill to cut taxes, and I was thinking how marvellous it is that a bill to cut taxes in New Zealand is passing through the House with no dissent. It is quite extraordinary, if we think about it, that such is the overwhelming support for people to keep more of the money they earn that the parties in Opposition or sitting on the cross benches are joining with the Government to vote for a tax cut, and, indeed, that Labour members, one after another, are standing up and praising a tax cut measure.

I remember first coming to Parliament and calling on parties to see the need for tax cuts, and ACT was the only party to do that. I do not think that we are responsible for Dr Cullen’s tax cuts, but I do recall calling for tax cuts in the 1990s and being shut down by every political party in the House as if it was nonsense and we could not have tax cuts. But now we fast forward a few years and find that every political party here today is voting for Dr Cullen’s tax cuts. I cannot really count the Greens, because they are not voting for a tax cut, but to give them their due they are not voting against it. The only thing that is a bit disappointing is the fact that the tax cuts are a bit small, but it is a long way for Dr Cullen to come, in order to give us a tax cut.

I will pick up on a point that Dr Cullen made and that the Prime Minister referred to. It was that when times were getting tough, the previous National Government sold assets, but now this Labour Government—apparently, this is a good thing—has bought back assets. That is to say, it has taken assets held in private hands and brought them in to be owned by the Government. The example that we have here is rail. We heard Dr Cullen say that buying back rail was great because Kiwis wanted to use rail. Well, the interesting thing is that if that is the test of what the Government should buy back, then what would we leave to be run by the private sector? If the fact that people wanted to use a service is the justification for State ownership, then we should perhaps buy McDonald’s, Woolworths, and Foodstuffs.

Of course, if Kiwis want to use rail, and pay the price, then how come the Government has had to step in and buy it? I ask Dr Cullen how smart it is to take—what was it—$665 million of taxpayers’ money and give it to Australians. How does that make New Zealand richer? By taking $665 million from Kiwis and giving it to Australians, the only thing that has changed is that the railway now supposedly belongs to the Government.

Michael Cullen’s answer will be that we have the advantage that the Government will be able to operate the rail more efficiently. Well, when has that ever been the case? When has the Government ever run anything more efficiently than the private sector? Even when the private sector is losing money, it does not actually run things badly. But what we know about having the Government sector running a business is that it runs it poorly whether it is making money, losing money, or doing nothing.

Then Dr Cullen said that we have to pour more money into rail, so the poor taxpayer will be hit year after year, and he is telling us we need to do that because “Kiwis want to use rail”. But clearly we are not prepared to use rail for what it costs, so that is a loss of resources. Clearly, we are backing a loser. We actually had the Australians owning a loser. They are now $665 million better off, and the economic wizard is saying that this is somehow a victory for New Zealand. I do not get it.

I will tell members another thing. If I were an old-style Labour Minister or MP, I could understand the Government’s wanting to own and run things, because that is the ideology of the Labour Party—the ownership of the means of production. But people around the world can see, everywhere they look, that any country that is half decent is divesting itself of enterprises. Why? Because those countries find that the private sector does the better job. Why? Because there is competition and choice. But we in New Zealand cannot even mention the word “privatisation”.

I put it on record that ACT believes wholeheartedly in privatisation and private enterprise. We believe that we need more privatisation and that New Zealand is out of step. Governments around the world are all privatising, except, as far as I can tell, for these countries: North Korea, Cuba, Burma, and New Zealand under either a Labour or a National Government. Why is that? Do we not believe in private enterprise? Do we not believe in competition and choice? Have we not learnt the lessons of Government ownership and control?

How is it such a great victory for New Zealand taxpayers to have given $665 million to Australian investors, and in the process to have given them for free the largest trucking company in New Zealand? We have given them rent-free all the depots in the railway yards, and given them preferential pricing on rail. I thought that Mr Woolerton cared about provincial New Zealand. Provincial trucking companies, owned and built by Kiwis, are now competing against an Australian company that has $665 million of taxpayers’ money. It has obtained the trucking company for free, with something like 430 trucks.

Hide RODNEY HIDE Link to this

Biggest in the country.

It is the biggest in the country. The company has access to the depots for free for 6 years and has preferential pricing on New Zealand Rail—which the New Zealand taxpayer will prop up from now until eternity—and New Zealand First is saying that it is a good idea for New Zealand.

R Doug Woolerton Link to this

Yeah, it is.

Hide RODNEY HIDE Link to this

Well, I would love it to be explained, because the Australians are laughing all the way to the bank. Look at their share price! New Zealand First and the Labour-led Government stopped Canadians from buying into an airport—which is already privately owned because Mr Peters sold it—but it is OK to give to Australians the largest trucking company in New Zealand. I am sorry; it does not compute.

Gosche Hon MARK GOSCHE (Labour—Maungakiekie) Link to this

I watched the Budget debate and the debate on the first reading of this Taxation (Personal Tax Cuts, Annual Rates and Remedial Matters) Bill, and it was interesting to see the look of horror upon National members’ faces. They had to sit with Roger Douglas and Richard Prebble, who were like a couple of old crows beside them. Their presence reminded New Zealanders of the bad times. Rodney Hide can rewrite history all he likes, but the ACT party, if it had had its way on policy, would have seen no railway system in New Zealand. It would have allowed the system to collapse. So I tell Mr Hide not to rewrite history. Rail was under threat of utter collapse—so was Air New Zealand—but this Government stepped in. We had the prudent financial management of Dr Michael Cullen, who was able to rescue New Zealand from a fate that ACT would have supported—no international airline and no railway. Can members tell me of any modern economy in the world that could sustain that, particularly one at the bottom of the South Pacific? We are completely dependent on having an airline owned by this country.

Coming to this bill and looking at the personal tax package, I can relate a very interesting example I was given about what this means to real people. Let us call this couple Lisa and Paul. They are in their late 30s and have one child who is 4 years of age. This is a pretty typical sort of family in my electorate of Maungakiekie. Let us say that Lisa works as a hospital cleaner. What will she get out of this Budget and this bill in terms of changes to her tax? First of all, let us look at what she might earn—$29,640 a year. For a start, how is she earning that? It just so happens that this year the Government put a significant amount of money into the public health system, which allowed Lisa, the hospital cleaner, to earn $29,000. Under the 9 long years of the previous National Government, her wages had gone backwards. First of all, she is now earning $29,000, up from the pitiful amount she would have earned under a National Government. In those days, she would have earned a minimum wage if she were lucky. She will be better off by $620 per year from 1 October. As well, she will receive $588 from Working for Families.

Her husband—let us call him Paul—is a labourer on the minimum wage. Let us remember that the minimum wage was $7 an hour when Labour came into power just over 8½ years ago, because National had not moved the minimum wage for such a long time. It moved about 60-odd cents in 9 years, so nobody noticed. Let us say that Paul is on the minimum wage, which is now $12 an hour, not $7. He will get a tax cut as well, so the family will be $1,800 a year better off on 1 October because of this bill and the changes to Working for Families. In fact, by the time this process is completed in 2011, that family, just from this tax package and the Working for Families package, will be $3,500 a year, or 68 bucks a week, better off.

National members scoff at that. Some people out there say that that amount is nothing. Well, I tell them that when people are earning $12 an hour—or $14.25 as these people would be—that is a lot of money. National members scoff at that and say that it will not make any real difference. Well, I tell them that people in my electorate on that sort of money—often people in the normal family situation—will thank us very much and say that it is of great use to them and they appreciate it. National members and members of other parties like ACT denigrate this package, but to real people who earn real wages and do real work, it is significant. It will make a significant difference to them when they go to the supermarket, pay the rent or mortgage, fill up the petrol tank, and do all the other things they have to cope with in an economy that is changing because the world is changing. Oil prices are going up through the roof in a way we have not seen in our lifetime. When the products we sell overseas, like cheese, butter, milk, and those sorts of things, are suddenly in huge demand in growing economies like China, we have to pay those prices in the supermarkets. It is getting tough for people, but this Government listens to them.

I also think about the 4-year-old child in my sample family. The child will go off next year to a school in my electorate. When Labour came into Government and did away with bulk funding, Maungakiekie schools received an extra $2 million in their operations grants in 1 year. We took money that National had sat on and refused to give out because it could not get its way on bulk funding, and we put it into schools in my electorate. We put in an extra $2 million. In this Budget, as well as Paul and Lisa getting an individual tax cut and extra money through Working for Families, their kid will go to a school next year that has an extra 5 percent in its operations grant. Extra money has been given to primary and secondary schools, and it will pay for teacher aides, people who work in schools, computers, and all of the things that local schools now take for granted but that were not there in the 1990s. Those things were cut. In my electorate the schools did not have the money to do the sorts of things they do in their schools now.

Of course, expectations have gone up. I chaired a board of trustees. We were always looking to improve the school—looking for more computers, better property, and more people to work with the teachers to cover the extra duties that are now expected in schools. They will also be able to take that child to the doctor for free. They will be able to pay for the prescription and not wait till pay day before they can fill it, as so many families had to do under National—when they had to get a mortgage to fill the prescription, even if they could actually get to the doctor in the first place. Our memories are not short, and our working-class people understand that this is real money, that it sits alongside an improvement in the public health system, and an improvement in the education system and in their local schools. My local schools do not have a big pile of international students coming in to prop up the budget; they rely on the Government and the operations grant, and some money from the community. This tax cut will actually give the people in our community a chance to be able to buy things that have gone up in price, to be able to make sure their local schools get donations when they ask for them, and to be able to send their kids to school with lunch, and all those sorts of things.

I shall look at a few other examples—that is, of real money, going to real people, who are in our electorates and who earn this sort of money. I will just grab another couple of examples. First, a one-earner couple with two children under the age of 13 are earning 45 grand, which is a pretty normal wage for a lot of people in the ordinary sorts of jobs where they work hard and struggle along. What will they be better off by, come 1 October, as a result of this bill? They will be better off by $30.83, as a result of the personal tax cut and the Working for Families package. They will not turn their noses up at that and say that it is meaningless. They know how much milk costs. They know how much bread costs. They go and do the shopping every week, as I do in Countdown at Mount Wellington. I have seen the prices go up. I can afford them on my wage; I am an MP. People on 45 grand need this sort of money. That is why they will get a real tax cut, and the wealthiest people will get one, too, but they will not get the sort of tax cut that National would give them. National would give them big fat tax cuts but leave the people in my electorate scrabbling about on a few cents. That is what National has done in the past when it has tried to redistribute through the taxation system.

I will finish off by talking about a part of the speech from the Prime Minister. We are in tough times, economically, in the world, but this is not a Government that has said: “Aw! We have to cut back, so who do we hit first?”. If it were National, it would be the pensioners. That is what National did last time, and that is what it would do again. Look at what the pensioners in our electorates are getting; the people who actually live on the pension.

Hon Steve Chadwick Link to this

Hearing aids.

Gosche Hon MARK GOSCHE Link to this

Yes, they will be able to get hearing aids. Yes, they will be able to get that money—the rates rebate, and all of those things—in this Budget. They will be helped by the fact that we have sensible, affordable, sustainable tax cuts in this bill, plus spending on things like hearing aids and increases in the pension.

We did not do the National Party trick of saying: “Oh well, we’ve got to save money somewhere. Whack those old people over. Damn them—we couldn’t care less.” We actually put the pension up. We look back at National and see that it sold the family silver to pay for its tax cuts. National hocked off rail to their mates, who completely wrecked it. Talk about the private sector doing things better! They were selling off the rails, the sleepers, the trains, and anything they could lay their hands on. And then they shifted off to Switzerland.