Taxation (Budget Measures) Bill, Government Superannuation Fund Amendment Act 1969 Amendment Bill, National Provident Fund Restructuring Amendment Bill, Social Security Amendment Bill, War Pensions Amendment Bill (No 2), New Zealand Superannuation and Ret

Hon PETER DUNNE (Minister of Revenue) Link to this

I move, That the Taxation (Budget Measures) Bill, the Government Superannuation Fund Amendment Act 1969 Amendment Bill, the National Provident Fund Restructuring Amendment Bill, the Social Security Amendment Bill, the War Pensions Amendment Bill (No 2), and the New Zealand Superannuation and Retirement Income Amendment Bill (No 2) be now read a third time.

These bills give effect to the decisions in the Budget yesterday regarding the most radical restructuring of taxation in New Zealand probably since the 1980s. The Committee has spent some time discussing the impact of those changes: the dramatic changes to personal tax rates; the reduction in the company tax rate; the lift in the rate of GST and the associated compensation made available to all those in receipt of superannuation, welfare benefits, Government superannuation, veterans pensions, etc.; and the changes to the company tax to help create a more balanced and rational tax system in New Zealand.

The Committee spent time considering the contention made by the Minister of Finance in the Budget speech that these measures as a package were designed to strengthen growth by rebalancing our tax system so that it better supports and promotes productivity, savings, and investment. I have to tell the House that although there was a lot of debate during that period of consideration, the legislation has emerged unaltered. The position that the Government advanced in the legislation has been held intact by the Committee, and as a consequence we have legislation that will give people greater incentives to work, save, and invest. It makes our tax system fairer and more coherent, and it makes it a more integrated system with more integrity. It will also encourage productive investment in New Zealand.

There was widespread agreement during the Committee stage that those aims were laudable aims for New Zealand, and the fact that this legislation emerges with majority support at the end of that debate demonstrates that this House, like the country as a whole, accepts the validity of these measures, accepts that they are the right course to follow, and looks forward to their early implementation. I am delighted to commend these bills to the House, because they give good tax reform for all New Zealanders.

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

In relation to this tax legislation we have seen the Government bring down a Budget of broken promises. The promise not to raise GST has obviously been broken by this legislation. The promise to make everybody better off has been broken by inflation, and by the skewing of this tax package to the wealthy, who need it not. The promise to protect the elderly and restore superannuation pre-funding has been broken. The promise to protect front-line services, and the funding of entitlements that the public of New Zealand expected under the previous Government, has been broken. The promise to rebalance the economy and put it on a sustainable path to growth has been broken by Treasury’s own calculations. We will prove all of these things in this third reading of the debate.

At this stage of the proceedings I guess some people over there will be feeling a bit in need of a Berocca. They will be feeling that the champagne has worn off after their orgy of self-congratulation last night. Like a lot of New Zealanders, they will be asking to be told again how this Budget leaves them better off. The Labour Opposition can tell New Zealanders that it will not leave them better off.

The first reason is that 6 percent inflation will deal in short order to the small crumbs that fell from the rich folks’ table. Middle New Zealand will see no benefit from this Budget until at least 2012 or 2013. We believe that New Zealanders will be worse off in the medium term because those upper-income tax cuts are funded in part by extra debt and extra borrowing, but the Minister of Finance has the nerve—the gall—to lecture the Labour Party about fiscal prudence. He is borrowing more to give tax cuts to the wealthy while old people go without; he should be ashamed. Inflation will feed into mortgage rises and interest rate rises. If there is one sure way to kill off a recovery, as we all know, it is to raise interest rates. Alan Bollard’s job just got harder, and New Zealanders will pay for it.

It is OK that the middle-income brackets got some income tax relief; members can bet that Labour would have done that too—and raised tax thresholds, as our leader has already said. But it is not OK—and members on this side cannot see past this—that people on a million dollars a year get a thousand dollars a week extra in the hand that they do not need and did not ask for.

AARON GILMORE (National) Link to this

It gives me enormous pleasure to stand and speak in the third reading of these various bills. Today I was phoned up by my brother in Christchurch. He said the shopkeepers, the taxi drivers, and the rubbish collectors are happy. In straw polls up and down the country about 80 percent of people are happy with this Budget. The only people who are not happy are those Labour Party members over there, because in 18 months’ time, when we get on the hustings, they will all be sad and depressed.

Labour members cannot count and they cannot read. We have heard time and time again from those members about the hairy, scary things regarding 5.9 percent inflation. I do not think those members read the Budget to page 63. I do not think they got as far as that; they got to about page 5 and gave up. On page 63 of (B.2), (B.3), in the Economic and Fiscal Update, a whole lot of numbers are outlined, and it might be a bit too tricky for some members over there. It says that, yes, the CPI will go up—as it normally does—but so will nominal wages. Low and behold, wages go up, the CPI goes up, the world is a better place, and the people are better off. We have heard all the rhetoric from the other side of the House, and we have heard all their discussions, but here it is in black and white. I encourage those members to look at page 63—

Hon SHANE JONES (Labour) Link to this

The previous speaker, Mr Gilmore, makes Paul Quinn sound and look clever. The previous speaker, Mr Gilmore, shares the name of a bikie from Wanganui who is known as Shagger, and that was the nature of his contribution to this debate in the budgetary session. Mr Mallard has suggested that he is not actually to be referred to in that fashion because he resembles the janitor, and that is why the nature of his speech and the volume of Paul Quinn’s noise show that every Kiwi knows this Budget will put the cost of living up. There is all the brouhaha about the Budget; it will pass, and in October, November, December, when interest rates are up at 9 percent, or 10 percent, property developers will realise that they have been given a “get out of jail free” card and rents will rise, and that is when people will come to us. As day follows night, the cost of living is definitely going to go up.

This Budget was designed by the Prime Minister, the “Prince of Parnell”, to create a caste society—a society where if people have wealth either inherited or from protected areas of the economy, then their mobility and their kids’ prospects are protected, but that is not the vast majority of New Zealanders. This is not a Budget that will advance social mobility. A society that is riddled with the absence of social mobility breeds resentment. It breeds fear, and society does not like being told to shut up and not be envious. That is the view of someone who is embedding a caste-like structure in our economy and forcing people to eke out an existence; in the absence of collective investment, they do not have the opportunity to advance.

The Aussies have a vision that 40 percent of their workforce will be either tertiary or advanced post-secondary qualified. Nothing in this Budget advances those people, as shown by Victoria University’s need to cut university spaces. I ask members to point out to me one single page that narrows the gap between our country and Aussie. There is not one single page. The entire Budget rests on the assumption that the only lever this Government has at its disposal to effect economic development is taxation. That is exactly the recipe used by Bill Birch, and, indeed, goes back to Ruth Richardson. What sort of economic growth or closing of disparities did we see during that period of time? We saw a worsening.

This Budget has an assumption that if we give more money to people who are already wealthy, somehow it will unleash a level of dynamism. That will not happen. In that sense, this Budget will not narrow the gap—this is the test the Government set for itself. It has said “New Zealand, judge us on how we can narrow the gap of the Tasman Sea between Aotearoa and Aussie.” It fails in every measurable form.

It needs to be said that when we change the tax system and move it more to consumption, there are some valid arguments in public policy as to why that would be done. But why would we do it in order to enrich a tiny, narrow caste of people who already exercise an inordinate amount of power through their vested interests? All it does is deepen the roots of their ascendancy; it is almost as if a group of aristocrats have seized control of the fiscal levers and are enriching themselves. So it will take a while for the average family to work it out, but as day follows night, come 2011 when families go to buy the basic necessities, they will find that they are more expensive, rents will have gone up, and those who are trying to encourage nieces, nephews, and children to buy a house will feel that 10 percent interest rate. They can look forward to that. It will hurt the people who are currently silent, not the lobbyists who toppled this Government from the property sector. If they did not like the depreciation changes, it is no wonder that the Government is afraid to take a capital gains tax to them. The lobbyists have triumphed.

There was an invitation on this side of the House at our most senior level to have an open discussion, but we learnt the lesson after we made a similar response to the emissions trading scheme—we did not want anything—that we cannot rely on the integrity. We made a similar request that if it was going to effect a substantial change and look at both income and capital, we were willing to talk. There was not a single response. The lobbyists have conquered this Government.

Where are those lobbyists coming from? They are coming from a narrow range of people. There are a host of other advocates, and we will hear about them. Where are the interventions to change the structure and the nature of our wealth generation? We all know that we have soil, we have water, we have climate, we have fibre, we have food, we have fish, and we have agriculture. But, other than the filching of Jim Anderton’s scheme and its anaemic current example reflected in the Government’s research and development policies, nothing in this Budget moves our wealth up from commodity production into value added. It is probably the case that the Government does not know how to do it. The reason it does not know how to do it is that it is listening to a narrow group who feel that far too much has been done for everyone but their narrow interest. That is not a recipe for advancing a prosperous or cohesive society.

In 2011 there will be a very simple choice to be made. The choice will be made for those of us who unashamedly believe in, and want to harness the power of, collective power, not atomise individual base approaches to human welfare. That is what this is based on, and we will have that debate and we will show that the vast majority of New Zealanders who have been caught in a wage economy for way too long will not vote for the effects or the architects of this Budget. There will be people who are willing to give the Prime Minister the benefit of the doubt—we accept that. He will get the benefit of the doubt, but that doubt will be eclipsed by poverty. We should look at the statistics of the children and the grandchildren in the vulnerable parts of society where people’s ability to pay their way goes right down. That is the first point.

The second point is to look at the institutions that are designed to enable future generations of New Zealand to do better than their parents and grandparents—they are being starved. We should look at the shape and the form of the firms that currently earn our export earnings, and at how many of them have been given a recipe for a step change in collaboration with the Government. None of them have. There is a forlorn belief that by exclusively pulling on the levers of the Inland Revenue Department, a whole new entrepreneurial flow of wealth will be unleashed.

Not only did the Prime Minister break the GST promise, but he has sent garden-variety, hard-working Kiwi families out of the workforce—because they will not be able to put the mokopuna into early childhood education; but in addition to that broken promise, it reflects a narrow, quite frightening focus on the caste defined by the amount of money one can deny others enjoying, just to enrich oneself. That is why this Budget, after all the puffery has passed, will be seen as having driven up poverty in New Zealand. Kia ora tātou.

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

I apologise. I should have sought leave prior to my colleague’s very eloquent speech, after the architect—

Dr RUSSEL NORMAN (Co-Leader—Green) Link to this

I stand to speak on the third reading of the Government’s tax legislation. This is a rather sad day for our country. The reason it is a sad day is that there is in our country a dream of equality. There is a dream of egalitarianism, which runs as a thick current right through our history. It goes back to our most famous and our best Prime Minister, Michael Joseph Savage, who was a champion of egalitarianism. He dedicated his Government to making New Zealand a better place for everyone. The idea at the centre of egalitarianism is that people are judged on their moral character rather than on how much is in their wallet, or on how much was in their father’s wallet. The tragedy of this Budget is that it turns us back to the day when people were judged on how much money was in their wallets rather than on the nature of their characters.

One of the revealing facts that came out very clearly during this debate was the Prime Minister’s comments about envy. The Prime Minister said he did not think that ordinary, middle-income earners should envy those at the top. What this reveals about the Prime Minister’s character, and the Prime Minister’s view of the world, is that he thinks we should judge people on how much money they have. What it reveals about the Prime Minister’s, and the National Government’s, view of the world is that people should be judged on how much money they have.

In this Budget the Government is turning its back on decades and decades of egalitarian tradition in our country. For many years, along with the trade union movement and the Labour Party in earlier days—except for a rather unpleasant middle period during the Roger Douglas period—we have had a tradition of fighting for egalitarianism and making our country more egalitarian. Yet this Budget turns its back on that tradition. For me, it is a sad day in our country when we turn our back on one of the central traditions that is part of our identity, which is a commitment to egalitarianism: the commitment to the idea that people should not be judged on the size of their wallets but on their moral character—on the nature of their character. People should not be judged on which private school they attended, but on the kind of person that they are. That is one of the central themes in our history and in our identity, but with this Budget we are turning our backs on that tradition.

By making our tax system far more regressive than it currently is, by flattening the income tax rate, and by adding to GST, which is by its nature a regressive tax, we are sending our country down a path that is different from the one we were travelling on before. We are sending our country down a path on which there will be more haves, because there will be some people who get richer. But there will be an awful lot more have-nots, because the impact of the tax system will be to increase inequality in our country. It is also important, I think, to remember the history of inequality in our country. Up until the fourth Labour Government we had a relatively egalitarian structure, but during the period of the fourth Labour Government and in the Bolger years, inequality in our country increased dramatically. Moves to address inequality flat-lined, relatively speaking, during the last Labour Government; the only significant difference was made by Working for Families, where there was some reduction in inequality. But we have still ended up in the situation of having a dramatically unequal society, and this Budget will make it only worse.

The other aspect of this Budget that is perhaps surprising, coming from a National Government that prides itself on its fiscal probity, is that it borrows for tax cuts. There is an extra $660 million in borrowing this coming financial year, in order to pay for tax cuts. That means we will have to borrow an extra $660 million—about a billion dollars over 4 years—in order to pay for these tax cuts, in order to pay for motorways that make us more dependent on oil, and in order to pay for climate pollution subsidies. It seems to me absolutely irresponsible that a Government that is already borrowing heavily should borrow further for tax cuts that mostly go to the wealthy, to motorways that increase our dependence on oil, and to climate change subsidies.

Two parts of the triple deficit of this Budget are the fiscal deficit and the social deficit, and the third deficit is the environmental deficit. Part of that deficit, of course, is the subsidies to greenhouse gases, and part of it is the increased subsidy to irrigation schemes. We live in a country now where some of our groundwater is so polluted that it is dangerous for babies to drink, because it causes blue babies down in Canterbury, but that subsidy is a subsidy to allow further destruction of biodiversity. New Zealand is in the middle of a biodiversity crisis. We are losing native vegetation at present at the fastest rate since European colonisation, but this Budget has more subsidies for irrigation schemes, which will drive that loss further. The Budget also lacks a capital gains tax, which could have put some downward pressure on the escalation in rural land prices that is driving a lot of the biodiversity loss. So the Budget has a triple deficit at its heart: a fiscal, social, and environmental deficit.

Another aspect of this Budget that I think is quite worrying concerns the fact that we know that the National Government has said very clearly that in this term it will not privatise. In that regard accident compensation might be a debate, but within limits National has kept to that promise, to some degree. However, it is clear that in the Government’s next term in office it wants to privatise; that is in its genes, so to speak. It is also clear that the Government will use public debt as the rationale for more privatisation. So by adding to public debt, by driving out public debt further than it would have been driven as a result of paying for these tax cuts, the Government is creating the justification that it will use at the next election campaign for the privatisation debate. There will be a privatisation debate at the next election campaign, because National has made it clear that it plans to put privatisation on the agenda at the next election. It will use public debt as the justification for privatisation—mark my words.

The rationale for tax cuts in the legislation before us needs to be challenged. It has been given on the basis that it will reduce tax avoidance. Of course, the other way to reduce tax avoidance is to close the loopholes. But this Budget rewards tax avoidance, so that argument is a specious one. The Government also argued that we had to have tax cuts for migration reasons—that is, to reduce outward migration. We know that that is false from previous times, such as in 1986, when we had big tax cuts and there was a large outward migration from New Zealand. When taxes increased in 2000, after that period a lot of people came into our country, so the migration argument does not hold.

In terms of GDP growth, the argument does not hold, either. There is an awful lot of evidence, just from the New Zealand experience, that there is not much of a close relationship between the top rate of income tax and GDP growth. So that argument does not really hold, either.

One of the things that was interesting, and was a surprise, of course, was the company tax rate cut. I think two things are worth talking about, in terms of the company tax rate cut. The first is that when the whole new-right embrace of globalisation was adopted by Labour and National, the Green Party, amongst others, said the problem was that it would create a race to the bottom. It would create a race to the bottom in terms of standards and taxes. The arguments about cutting the company tax rate have proved how right the Green Party was about the race to the bottom. We are now in a race to the bottom on tax rates, and company tax is part of that. The other part of dropping the company tax rate is that we have now opened a 5 percent gap between the company rate and the top personal rate. I ask members to remember that part of the rationale for why we had to cut the top personal rate from 38 percent to 33 percent was the 5 percent gap between the top personal rate and the trustee rate. Companies were also being used to minimise tax. We have now opened a 5 percent gap between the top personal income tax rate and the company tax rate. There will be people—tax advisers—out there right now, sitting down and figuring out how they can arrange their affairs in order to take advantage of the 5 percent gap that this bill opens up. So on the one hand the Government says it wants to reduce tax avoidance, but on the other hand it has opened up a new loophole.

Finally, I come back to climate change. It is hard to believe that we are sitting in this Parliament debating this tax legislation, but not putting climate change at the centre of it. Climate change is the central greatest challenge facing our planet right now; it is the central greatest challenge facing our country right now. I had the privilege of going to a talk by Dr Robert Bindschadler, who is the former Chief Scientist of the National Aeronautics and Space Administration’s Hydrospheric and Biospheric Sciences Laboratory, earlier this week. We are facing at least 1 metre of sea level rise this century. There is little doubt that we will have at least 1 metre of sea level rise this century, and that will require the displacement of 145 million people globally. It will have a dramatic effect on our country and on the rest of the world. Yet this Budget provides subsidies to greenhouse polluters. It does not make any sense. What kind of Budget is it that does not put climate change at its centre? Instead it provides subsidies for greenhouse polluters. Climate change should be at the centre of this Budget.

JOHN BOSCAWEN (ACT) Link to this

What a great place that is to start from, because we have just heard from Mr Norman that the central greatest challenge that we face as a country is climate change. He reminds me of Kevin Rudd, who said just last year that the greatest moral dilemma facing the world was climate change. That is what Kevin Rudd said. And what did he do? He planned to introduce an emissions trading scheme, then less than a month ago he said he would not introduce an emissions trading scheme until at least 2013. The impact of that is to put New Zealand right out in front; we are the first and the only country to have an emissions trading scheme, which will put our businesses and our exporters at risk when our three largest trading partners, Australia, China, and the United States, do not have an emissions trading scheme and do not put a tax on electricity and petrol in the same way that we will be doing. I challenge Mr Smith to name one country in Europe with those same costs in relation to its three largest trading partners. I say to Mr Norman that to suggest that the great challenge is climate change puts him in the same place as Kevin Rudd.

There is much to commend in this Budget. One of the great tragedies of the last 10 years is that it has been a period of wasted opportunity. It started off in December 1999 when the then new Prime Minister, Helen Clark, imposed an envy tax. She increased the top marginal rate from 33c in the dollar to 39c in the dollar, and what did that do? That spurred out best and our brightest to commit their time and resources to tax evasion and tax restructuring. We had a whole growth in trust developments, and tens of thousands of new family trusts were formed to take advantage of that gap that opened up between the 33c and the 39c rates. On this occasion the National Government has moved to reduce that top marginal rate from 38c to 33c. That is one thing to congratulate this Government on. It has also moved to lower marginal tax rates.

It has reduced the rate of company tax from 30c in the dollar to 28c in the dollar. The Prime Minister was very proud yesterday—indeed, he should have been—that our company tax rate is now lower than Australia’s. What he did not say, however, was that we have an emissions trading scheme tax on electricity. Our electricity is already more expensive than electricity generated in Australia, and we will make our electricity even more expensive. So it is little wonder that we need to reduce our company rate of tax from 30c to 28c to enable our businesses and our exporters to compete.

I want to focus on just three groups of people affected by this Budget. I turn first to farmers, because National has been very good at saying farmers are affected by this Budget or by the emissions trading scheme no more than the average New Zealander. That is simply not correct. Meat and Wool New Zealand has calculated that the cost of the emissions trading scheme for the average dairy farm will be $10,200 by 2015. Those costs fall into three categories. First, they fall into the cost of electricity and petrol, which most New Zealanders would pay, and Meat and Wool’s estimate of the cost to the average dairy farmer is $1,300 from 1 July this year.

Second, dairy farmers are faced with the costs of Fonterra: Fonterra’s processing costs and the costs incurred by other dairy processors—that is, electricity, and the emissions they have to pay for on gas and coal that they purchase to create steam that is necessary for processing milk. The costs that Fonterra and other dairy processors are expected to incur come to $2,600 from 1 July, with a further $2,600 coming in 2013, and those costs are borne by the dairy farmers. Fonterra is a cooperative of dairy farmers, and those costs fall to dairy farmers. So the cost that dairy farmers will face in the first year of the emissions trading scheme is $3,900.

I notice that Mr Mallard was quoting from the tax tables in this morning’s Dominion Post. The newspaper also states that dairy farmers would need to be earning in excess of $150,000 for them not to be worse off as a combination of the emissions trading scheme tax and this Budget. The same can be said of beef and sheep farmers. They do not incur costs to the same extent, but they certainly incur far more than the average New Zealander, and they incur them not just for electricity and fuel—diesel, and petrol. I say to the farmers of New Zealand that there is only one party here that is prepared to stand up to fight the emissions trading scheme, because this Budget was a real opportunity for the Government—

RAHUI KATENE (Māori Party—Te Tai Tonga) Link to this

The confidence and supply agreement the Māori Party has with the Government requires us to vote in support of the tax changes that the Government proposes. We well know that without the supply of funds, the Government cannot function, so from the outset of this legislation it was always quite simple: if we voted against the legislation, we would effectively be voting against the hefty achievements that were announced yesterday. Amongst them are Whānau Ora, Whare Oranga Ake, Māori tourism and enterprise, and the Youth Guarantee for 16 and 17-year-olds, as well as other generic initiatives such as the $91.8 million worth of support to the early childhood sector, targeting low socio-economic communities—of which many will be Māori and Pasifika—or the $90 million allocated to the Community Response Fund. That was a price too dear for our constituents to pay.

As a party we have been talking with our members and our constituents ever since the Prime Minister mooted the increase in GST. We have received back a very clear, very strong message to honour the agreement we made with the Government, to vote in favour of the changes, and to continue to get all the wins we can. No matter how strongly we feel as individuals, ultimately, as a party built on kaupapa Māori, the wishes of the group prevail over those of any individual. That is the expression of kotahitanga.

As we have said throughout this debate, we appreciate the rationale for why tax changes are necessary, and we have some sympathy with that view. We support the notion that it is our collective responsibility to clear the heavy burden of debt that our generation has built up and not leave it to the next generation to clean up. This is consistent with our kaupapa of manaakitanga, whanaungatanga, and kaitiakitanga.

There are three key planks to the Māori Party’s economic policies: tax relief for those on the lowest incomes, small business development, and better targeting of Government funding to achieve positive outcomes for Māori. With Whānau Ora and an additional $9 million invested into Māori exporter firms and tourism operators to grow their businesses, we are confident that two of those three key planks are well on the way. But we are not a “two out of three” party. We are not satisfied that the Taxation (Budget Measures) Bill has delivered what we needed it to deliver to close the gap and support those on lower incomes.

I am proud to confirm that we will not shirk the responsibility of continuing to promote the need for protection for those on the lowest incomes and, in particular, addressing the unacceptable levels of child poverty evident in Aotearoa. The entire country will suffer if the number of children living in poverty continues to rise. We agree with the Child Poverty Action Group that the Government could have used the opportunity of the tax reforms to improve incomes for beneficiaries with children by immediately extending the in-work tax credit to all low-income families. That did not happen, despite the 2 percent lift in spending on benefits, superannuation, Working for Families, and the student allowance. The problem is that no matter how the other side of the House may paint it up, the Working for Families package has always been highly selective, and in doing so it leaves about 220,000 children behind. These are largely the children whose parents do not meet the paid work hours requirement and/or are on benefits. No matter the crocodile tears shed now by that side, this decision was made by the previous Government. Of these children, about 150,000 live in families experiencing severe and significant hardship. These families miss out on at least $60 a week for their children. Labour had 9 years to clear it up and it did not.

It gets worse. The costs of poverty-related disease afflict the nation in many ways. Estimates suggest that up to $136 million is spent every year on the costs of hospitalisation and deaths from diseases such as rheumatic fever, meningococcal disease, whooping cough, viral hepatitis, and tuberculosis, which are all preventable and were not dealt with under the previous Government.

In this context, I assure the House that we in the Māori Party will continue to advocate hard for taking GST off healthy food. I want to let the House know that there has been a tremendous groundswell of support for my bill to remove the goods and services tax from healthy food. I have received letters of support from, amongst others, the Māori Women’s Welfare League and the Federation of Country Women’s Institutes. I believe that all members will have this week received a letter of endorsement for my bill from Dr Gay Keating, the chief executive of the Public Health Association of New Zealand. She alerts MPs to the research from the University of Auckland that showed that when GST was removed there was an 11 percent increase in the buying of healthy food. She went on to say—

JOHN BOSCAWEN (ACT) Link to this

I seek leave to table the Greenplan Forestry Investments newsletter dated December 2009, which refers to the windfall gains to 1990 foresters.

Hon Dr NICK SMITH (Minister for the Environment) Link to this

I seek leave to table the New Zealand Environment and Energy Business Week, in which Mr Rodney Hide said he supported carbon credits going to foresters.

JOHN BOSCAWEN (ACT) Link to this

I seek leave to table the Meat and Wool New Zealand calculations of the cost of the emissions trading scheme on beef farmers, sheep farmers, and dairy farmers.

JONATHAN YOUNG (National—New Plymouth) Link to this

We are gratified to hear of the concerns that the Opposition has in regard to inflation in this country. Its members must be very happy that we repealed their emissions trading scheme, which would have seen 10 percent added to power prices on 1 January as well as an increase of 7c a litre in fuel prices.

Looking at the third readings of the bills arising from the Taxation (Budget Measures) Bill, we understand that the legitimate increase of wealth essentially comes in two ways in this country: either by what people earn or by what the Government gives them—or in the case of tax cuts, what the Government gives back. We need to be reminded that the previous Labour Government gave nothing back—oh, of course, 1 month out from the last election it gave us a tax cut. After 108 months of Government, what a coincidence that in the last month we got a tax cut! Well, it was because Labour could never afford to give tax cuts, for a number of reasons. One them was that it just could not afford to. The previous Labour Government’s expenditure grew by 50 percent in its last 5 years, a bureaucratic blowout to regulate and control New Zealanders.

In fact, the 2007 Budget papers released under the Official Information Act, show that the previous Labour Government Ministers were well aware of the contribution overspending would make to higher interest rates and higher exchange rates. Treasury warned them that they needed to stay close to previously agreed limits, otherwise the Government would risk an interest rate response from the Reserve Bank, an exchange rate staying higher for longer, and a more pronounced economic slow down. And that is exactly what happened.

National came into Government at a time of dire financial circumstances. It was great to read what John Armstrong from the New Zealand Herald said about yesterday’s Budget announcement. He said: “It has turned those muddy economic waters into wine by constructing a clever package of significant tax cuts when the Government’s books are written in deep dark red.”—just like Mr Mallard’s tie.

New Zealanders should know what Phil Goff said, should they ever consider returning Labour to the Treasury benches. He said that he would lift the highest marginal tax rate back up to 38c, he made no commitment to reduce GST back to 12.5 percent, and Shane Jones said today that Labour would consider a capital gains tax. New Zealanders see the economic futility of the type of Government that Phil Goff wants to go back to. True wealth generation, in essence, is not about what the Government gives or gives back. Stimulus packages can assist, and it is important for the Government to prime the pump at times, but true wealth generation is when New Zealanders can, with confidence, invest their money into businesses, big or small, which will, in turn, earn them a profit. They can then employ other New Zealanders.

Our incomes are below those of countries we like to compare ourselves with, including Australia. It is important that the legislation arising from the Taxation (Budget Measures) Bill sends a signal to all New Zealanders that this Government has confidence in the country’s future and confidence in New Zealanders to be able to build true wealth, given the right environment. As I close, I congratulate the Minister of Finance, the Hon Bill English, and his team, and the Prime Minister, on their great leadership of this nation. Thank you.

Hon TREVOR MALLARD (Labour—Hutt South) Link to this

I raise a point of order, Mr Speaker. I put on the record the fact that Mr Quinn has accepted my donation to his campaign for Hutt South on the basis that he will be my candidate. I want to put that on the record. Thank you very much.

STUART NASH (Labour) Link to this

It is easy to have a bit of a laugh, but it is not easy to have a bit of a laugh when I look at this tax package and see that it delivers absolutely nothing. It was interesting that the gentleman who last spoke, Jonathan Young, asked whether we wanted to return to the sort of Government that we had had. I will tell him about the sort of Government that we had. We had a Minister of Finance who completely eradicated Government debt. Our leader did not stand in front of a camera and say: “I will not increase GST.”, then do that. What do we call that? The sort of leader we have in the Labour Party would not stand in front of a camera and say: “I will not borrow to pay for tax cuts.”, then do that. What did the National leader do? He broke his promise. This is a Budget of broken promises and these bills are broken promises. It is a disgrace.

Mr Gilmore stood up and said before that it was all going to be OK and we should not worry about it; the statistics on page 63 of the Economic and Fiscal Update say that it is all going to be OK. Well, I can tell members that in the same document, on page 65, Treasury says that it assumed that pre-tax wages would not respond fully to the price rises caused by the higher rate of GST. That is what Treasury says—that is what Treasury says.

As for Ms Rahui Katene, I cannot believe that she stood up and said that she is not satisfied with this legislation. I tell the House that we are not satisfied with this legislation, either. What we do when we are not satisfied with legislation is vote against it—that is what we do. How dare that member opposite stand up and say that she is not happy with the legislation, then vote for it! What is that called?

HEKIA PARATA (National) Link to this

Tēnā koe, Mr Deputy Speaker. Tēnā tātou e te Whare. Is it not terrible that we have to sit here and listen to a depressing outlook from people who are sent to this Parliament in the best interests of this country? We have been treated to a tired litany of lethargic arguments about what is wrong with the country. We on this side of the House are committed to a better New Zealand. We are committed to the politics of hope. We are committed to the politics of potential. Unlike members on the other side of the House, we are not mired deep in the hope that things will go wrong. That is the wishful thinking that we have been treated to by the Opposition this afternoon.

New Zealanders will be ashamed of the kind of sentiment that has been expressed by members on that side of the House. Their ambition is so low that it is below the lowest, as we sit here and listen to the terrible hopes of members on that side of the House about what could possibly go wrong. It is our settled conviction that this Budget is transformational. It is transformational because it strikes the balance between giving immediate opportunity and gain to New Zealanders, and restructuring for the long-term focus on how we get growth and productivity. Unlike members on that side of the House, we do not focus on how we can get ever smaller slivers of the pie; we focus on how we can grow it bigger so that more people can enjoy a higher quality of living and have greater prospects for the future, for themselves and for their children. This Budget is a transformation.

From that side of the House we have heard quoted a figure of 72 percent. Well, let me tell members a remarkable fact: 73 percent of income earners will now face a statutory income tax rate of 17.5 percent or less. For those near the top of that income range the tax rate has been halved—it is down from 33 percent in just 2 years—and this rate will apply to their incomes and savings, including KiwiSaver. So there we are—three-quarters of New Zealanders paying tax will now be on the 17.5 percent rate. Do members know why? It is because this Government trusts New Zealanders to make better choices for themselves.

BRENDON BURNS (Labour—Christchurch Central) Link to this

It is interesting to follow the previous speaker, Hekia Parata, and her comments about this being a transformational Budget. A transformational Budget it will be, all right; it will transform the wealthy into the super-wealthy—that is what this Budget is about. This is a shiny Budget, but it is a hollow Budget. It is a Budget that has been designed to repay the shiny but hollow men. It has some sizzle in it, but there is not much meat in the sausage. It is a cappuccino Budget with a lot of froth.

What it exercises and what it shows is that the National Party in Government has only one raison d’être, it has only one real tool in the economic toolbox, and that is tax cuts. There is nothing new in that, because the National Party promised tax cuts as the main plank of its election platform in 1999. It promised them as the main plank of its election platform in 2002. It promised them as the main plank of its election platform in 2005. It promised them as the main plank of its election platform in 2008. Here we are in 2010 and those at the top end of town are getting their third tax cut in 3 years, and all the time we are being told that, somehow, cutting taxes will lead us out of the economic woods. Well, where have we heard that before? I wonder whether that is a philosophy that Greece followed. Effectively, it had tax cuts, because nobody paid tax, and now it is in economic meltdown.

We are in a world that is still so precarious that somebody entering a wrong figure on to a Wall Street screen can take billions of dollars off the value of Wall Street. We are somehow meant to believe that all is well, we have gone through the recession, we are absolutely out of the woods, and it is time to deliver the third set of tax cuts for the top end of town, when we have just got through supposedly the worst economic situation the world has faced since the 1930s. I say to the National Party members opposite that you are supposed to be the conservatives. Where is the fiscal prudence in this Budget? Where is the party that was once the introducer of fiscal responsibility? You are supposed to be a conservative party; that means conserving. You accuse the Labour Party of being—

TODD McCLAY (National—Rotorua) Link to this

Before coming to the House I asked my colleague Dr Cam Calder whether, if I listened to Brendon Burns in the House, I would live longer. He said I would not, but it will certainly feel like that was the case.