Estimates Debate — Vote Finance

Everybody knows that this is a tax, spend, and wasteful Government, and we need no more evidence of that than to look at Vote Finance—a $57 million expenditure item in Budget 2004. Where has the wasted money gone? There has been $2.8 million for taxation advice. I have some advice for the Minister of Finance: one does not need to spend $2.8 million to know that raising the top rate of personal taxation is causing havoc amongst the business community of New Zealand, and that by raising the top rate of taxation every small business in New Zealand has to pay more in compliance costs. One does not need to spend $2.8 million to know that this was simply an ”envy tax”, and that it puts the wrong incentives into the economy. This is a tax, waste, and spend Government; everybody knows that, and one does not need to read Vote Finance to know that.

I do want to point, in particular, to $3.29 million of expenditure by the Government in Vote Finance in relation to purchasing advice on the ownership and performance of Crown companies and Government institutions. That $3.29 million was, and is, proposed to be spent by the Government on advice on the purchase and performance of Crown companies. What a waste of money that is, because when I looked at the heads of agreements for TrackCo announced on the Government website, or on the Treasury website, just a few days ago what did I see? The first thing I saw was that despite the Government spending $3.29 million in this area, no due diligence was undertaken by this Government when it bought TrackCo—no due diligence whatsoever. Why was that the case? Well, Treasury was kind enough to outline its reasons why no due diligence was taken, and there are some real beauties.

The first example of those reasons was that TrackCo was costing only $1—the Government did not need to do due diligence on it because it was costing only $1. Well, hello, has anybody in the Government worked out that we are buying hundreds of millions of dollars worth of a liability? The fact that it cost $1, I am sure, meant it did not come into part of the $3.29 million the Government is to spend on advice. The second little beauty contained in the heads of agreement in relation to due diligence was this one: the Government was going to buy TrackCo anyway, so it would not bother having due diligence done on TrackCo. Well, putting to one side what an arrogant statement that is for any Government about any purchase, one of the reasons why the Government owning a multitude of businesses can very often be the wrong thing is that “we are going to do it anyway” is no reason to fail to carry out due diligence. But maybe the best reason came last, and it was simply in the statement that the best information was held within Toll Holdings, and therefore that information would come to the Government when it purchased TrackCo anyway. The best information held by the existing owner, Toll Holdings, would come to the Government anyway. Well, has anybody in the Government worked out that it could well be in the interests of Toll Holdings—the existing owner—to have that number as high as possible? After all, those who have looked at the deal for just a cursory moment will have seen that anything under $200 million is picked up by the taxpayer of New Zealand, so it could be well within Toll Holdings’ interest to keep the number high.

Secondly, if all this failure to do due diligence on a large liability that was being purchased by the Crown was not bad enough, what did we see on Friday? We saw the reason why no due diligence was necessary, despite the fact that Dr Cullen has tried to tell the public of New Zealand on nationwide television that everything spent above $200 million on the track would be recouped through the access charge. Even he, the Minister of Finance, who has a keen sense of humour, could not keep from breaking in to a smile when he made that comment on nationwide television. But what did we see on Friday? We saw the absolute classic about the board of TrackCo, the company that the Government did not do the due diligence on because it is paying only $1 for it, and because it is going to buy it anyway. We saw three additions to the TrackCo board—jobs for the boys, with famous sort of Labour Party people like the President of the Labour Party, Mike Williams, being famously appointed to TrackCo. That is why the Government did not need to do due diligence. That is why $3.29 million has been wasted if this Government is telling the people of New Zealand that it is spending that money on getting advice, because the Government does not need to get advice when it does not do due diligence, and when it stacks the board with its mates it can get through whatever pork-barrel politics it likes.

I am pleased to take the first call in this debate and to respond to one or two of the slightly hysterical comments made by Mr Key. He is still learning the role, of course. Can I take him first of all through his first little topic, which was why do we have a 39c in the dollar top taxation rate? The obvious question in reply to that is why is National not promising to abolish it, as its top priority? That was National’s policy up to only a few months ago, and then Dr Brash looked at the numbers and, dithering, said: “Ah! This doesn’t look too good. This isn’t what the public wants. We’ll start talking about tax cuts for low and middle income earners instead.” —even though he said, last year, that one would have to cut the top taxation rate to get the economy moving. Despite the fact that we did not cut the top taxation rate, the economy is moving so strongly now that a northern market commentator is expecting interest rate rises—on which I cannot comment, being the only person in the country who cannot comment on interest rate rises—by the Reserve Bank within the near future. What we see is that the economy is growing extraordinarily strongly, despite the fact that various rather large pips keep squeaking occasionally because there is a very small squeeze on them. That comes, of course, from a party that once had a 66c in the dollar top taxation rate on people earning certainly less than $60,000 a year. Taxation cuts was the first winner today from Mr Key; he is going to run on the policy that the top taxation rate should be lowered. That would not affect the great majority of New Zealanders, most of whom would be delighted if they earned $60,000 a year. Most of them do not earn as much money as that, and do not expect to do so at any stage during their working lives.

But let me turn to Mr Key’s second little topic, about the railways. He said the National Party’s policy was that the Government should not have bought the railway track back. Well, that is a really popular policy, as well! I think that something like 80 percent of New Zealanders think this Government should have bought the railway track back. Why did we buy it back? We bought it back because a previous National Government sold the railway track—against Treasury advice. The sale of that asset is the only one I know of when Treasury’s advice should have been taken. When National sold the railways Treasury said the track should not be sold, because the track was the infrastructure and the Government needed to make sure it was maintained and kept in place. But what happened? The track was run down over the next years to a parlous state. Now, Mr Key says: “Oh my goodness! It’s going to cost some money to fix up the railway track”—which National sold off.

But then Mr Key says the railways board we appointed is stacked with well-known left-leaning socialists—Labour Party supporters.

💬 John Key: Hacks.

“Hacks” is the word National members used. I am sure that Cameron Moore, former president of the Canterbury Manufacturers Association—a person, I suspect, of somewhat conservative political leanings; he certainly was like that when he was head prefect of Christ’s College some 40-odd years ago—will be somewhat offended to be described as a Labour Party hack. Now, who was National’s No. 2 exhibit as a Labour Party hack? It was Dr Clive Matthewson. Well, apart from the fact that he is the uncle of Katherine Rich—we will not dwell upon that for too long; we would not want to suggest, by any chance, I had been sort of suborned by the delights of Mrs Rich on this matter—what we can say about Dr Matthewson is that the last time he was in Parliament, let us remind ourselves, he voted for a National Government on confidence and supply. Such a generous Minister or so non-hacked off am I—or so happy is he—in terms of somebody who had been a good friend but who left the Labour Party, crossed the floor and voted with National, that I have appointed him to the board of TrackCo. Why? Because Dr Matthewson happens to be an able person. He happens to be a civil engineer, and he brings crucial skills to the job.

Mr Key has suddenly gone very quiet. Let me point out that in 1996 Mr Key was still overseas, practising dodgy things on the international finance market—manipulating paper money all over the place. He was not aware that in 1996 there was a party then called the United party, which Dr Matthewson was the leader of, and which entered into, in effect, a coalition agreement with the then National Government, and saved National’s bacon—kept it in power. I appointed Dr Matthewson and Cam Moore to the board, and appointed other people to the board who are able people.

💬 John Key: Mates.

It is probably that I have lots of mates, and Mr Key does not have any. It is very hard for me to appoint people who are not mates of mine to the board of anything. I apologise for that fact.

There is nothing so embarrassing as watching two guilty parties pointing the finger at each other. I recall very well 20 July 1993, when the then National Government, with a foolish Minister of Finance called Richardson, sold New Zealand Rail for $328 million. That was a massive underpricing of the company, and within 3 months, as the international market heard about it—and Mr Key as well—the share price for Wisconsin central railroad and Fay Richwhite went up by a massive $182 million, every dollar of which was lost to the New Zealand taxpayer. Those are the facts. Back then, of course, on 20 July 1993 the Labour Party said that it supported the sale.

💬 Hon Member: Can’t believe that.

Yes, it did. If one looks at the press statements one sees Labour supported the sale back in 1993. So here we have those two parties, both as guilty as sin when it comes to selling the taxpayer’s hard-earned constructed assets, and one of them is trying to make out that it is innocent. They are both as guilty as sin. Do members know what National said back in 1993? It said it thought it would cost $200 million to do some upgrading, and it could not afford it. New Zealand Rail back then, of course, was making a significant profit. It is a lie to say it was making a loss; it was making a significant profit.

But what happened? Here are the facts. The financier of National’s 1984, 1987, and 1990 campaigns—Fay Richwhite—in October 1992 got itself made the financial adviser to New Zealand Rail. In April 1993, barely 6 months later, it jumped the table and said hello boys, it was the buyer. The National Party—Mr Key’s party, which he thinks should be in Government—was so naive and stupid it did not put New Zealand Rail to the market. It gave those insiders the full run, and sold New Zealand Rail at a bargain-basement price. Did the new owners construct $200 million of reconstruction repairs and maintenance? No, they did not. They then recapitalised New Zealand Rail, drained and sucked everything out of it, and shot through. They are the same people whom Don Brash met when he was last in Europe. They are all the same old players looking for the same old favours, smack in behind this National Party Opposition. That is why National cannot be trusted anywhere on the Treasury benches, without being totally controlled and on a very hard leash.

Mr Key is right about due diligence, because this is a case of history, sadly, repeating itself. There was no due diligence back then, and there is none now. Why on earth would Toll want this track? All over the Hawke’s Bay, and all over this country, there are significant costs awaiting the New Zealand railways, when it comes to our track. Bridges need repair and construction, and the new genius running the finance portfolio, Dr Cullen, says he will get taxpayers to pay for that. He says Toll can run the railways and make all the profit, and we will pay Toll to have the very machinery and mechanism by which it may ply its service. How stupid can one be? I have to tell New Zealand taxpayers they are tigers for punishment. They have to be, if they fall for this one. Mr Key is right—except that he is the last person in the whole wide world to make out that argument, because he comes not with the clean hands of equity or truth but with his hands totally soiled, with the DNA and blood all over them.

There is only one party that can be trusted on these matters, and that party is New Zealand First. We do not sell State assets, and particularly ones that are making a profit. But here is the extraordinary thing. I ask Dr Cullen what costs are contemplated by the taxpayer now in respect of our railways, our tracks, our bridges, and every other facility. What is the taxpayer in for now? I then ask him to tell me that what this Government has done is smart. We got the railway back; we actually were the owners of it just a little while ago. This Labour Government claims to be different from Labour in 1984 and 1990, and it has sold the railway.

I would like to speak on finance. I want to focus particularly on one area of taxation—GST. We collected close to $10 billion in GST last year. If there is any evidence that shows United Future is a party that is truly in the centre, it is our campaign to fight against the tax on a tax that is the GST on rates. Some great billboards have gone up around the country—and members may have noticed them—stating that there should be no tax on a tax.

This is a serious issue. I will take a moment to consider that the Government loves to collect taxes. There is no doubt about that. A Government needs taxes. But the people of New Zealand, the ones that members and I know, do not like paying taxes and they definitely do not like paying a tax on a tax, such as GST on rates. One can only imagine the human outcry if we decided to put 12.5 percent GST on the PAYE that we collect from workers. Yet this tax is a tax on the workers in this country.

Businesses can claim back the GST that they pay on their rates, but can the elderly claim back the GST they pay on their rates? No, they cannot. I believe that the elderly in Australia do not have to pay GST on their rates. In New Zealand, it is the workers, as they earn their money, who have to pay GST on these rates.

I believe in GST. I think it is a very good and fair tax system. I believe it is a tax system that collects tax for running the country, from everybody who passes through this country. But once it becomes a tax on a tax, we will stand against it. It will be interesting to see what happens when it comes to the vote on my fellow member Gordon Copeland’s member’s bill, because this is a very unfair tax system. I have heard from many people as we have spoken around the country against GST on rates, and they have supported us. Tax collected on false pretences—

💬 Rt Hon Winston Peters: Why are you voting for it?

—is something that Mr Peters would disagree with. Yet I believe we started with a tax on a tax, and now we move into other things like the development contributions that we have in my own home town of Albany. I read in the paper that the costs of a home and land in the Auckland area are getting out of hand. It states on the North Shore City Council’s website that before one even starts to build a minor dwelling in the little area of Albany one will be paying around $60,000 by the time one cuts off the little piece of land and pays the reserve contribution, permit costs, and development costs.

This cost of $60,000 is nothing short of a tax under another name. This has happened under a Government that said it would not increase taxes, yet we have seen these types of stealth taxes beginning to increase over every little area—here a little, there a little. But United Future will fight for this one. We are pleased that our member’s bill has come out of the draw and that we can put it to this House so we can flush out the true colours of some of these parties as we debate these taxes upon taxes. It will be very interesting to sit and observe. The elderly people in this country will be extremely interested to see who supports Gordon Copeland’s bill to see that GST on rates is removed, because we believe—

💬 Craig McNair: Talk about the Budget.

This is about revenue. This is a tax on a tax and, as I said, the Government has collected just under $10 billion in GST over this last 12-month period. I believe that that is an incredible amount of money. I agree that we need to see how the expenditure on a lot of these departments is going. We should give the poor taxpayers in this country a break and reduce some of these overheads, not keep increasing them.

I seek leave for an extension of time for the United Future party to now tell us why they are voting for this Budget, which has that very tax in it.

The CHAIRPERSON (H V Ross Robertson): Under Speaker’s rulings 1/5 and 1/6, a member cannot seek leave for someone else.

I am moving an extension of time.

The CHAIRPERSON (H V Ross Robertson): The House is the master of its own destiny. Is there any objection? There is.

The speech preceding my United Future colleague’s speech was very interesting, because Mr Peters demonstrated that amnesia is here to stay in respect of the New Zealand First Party. If we look at the unemployment figures during the time that Mr Peters was Treasurer and compare them with what we have now, we see a huge gap. So let us bring this debate on finance and revenue estimates, and the progress of the economy, back to some bedrock facts. We have Huey, Dewey, and Louie over there in New Zealand First. I say to Mr Mark—[Interruption]

The CHAIRPERSON (H V Ross Robertson): I am sorry to interrupt the member. I know it is the first day back, but can I ask members to please look at Speaker’s ruling 56/1. Interjections are to be rare, reasonable, relevant, restrained, and, as a former colleague—the honourable member Geoff Braybrooke—said, if at all possible, witty.

💬 Ron Mark: I raise a point of order, Mr Chairman. In keeping entirely within the Standing Orders, could you remind members that they are to refer to other members in the House by their honourable names, not nicknames such as “Huey, Dewey, and Louie”. To do such a thing would result in me calling that member “Punch and Grow”, or something like that. We could not have that, could we?

The CHAIRPERSON (H V Ross Robertson): The member is right—Speaker’s rulings 26/7 and 26/8.

Mr Speaker, I thank you for your indulgence. I would tell Mr Mark to stick to ski trips that never existed. He needs to get his facts straight.

I will now concentrate on this finance and revenue debate, and look at some hard facts, which of course the Opposition will not like. From 1990 to 1999 the economic growth figures under the National Government averaged 2.6 percent. Now New Zealand is enjoying the most sustained period of economic growth in three decades. Suddenly the silence from Mr Key is deafening. The figures show that our annual growth rate was 3.4 percent on average in the past 3 years—well above the OECD average of 1 percent.

If we are to have a debate about the finance and revenue estimates, we should deal with the facts. I will look at tax, which we have heard a lot about today. The latest statement on the National Party’s tax policy—when it finally sorts it out, because we know that Dr Brash is a bit agnostic and uncomfortable, or whatever—along with its ACT partners, would give Dr Brash and Mr Hide and others in this place an extra $600 a week. Somebody below $39,000 would get zip, and that is the difference.

What have we done in these estimates? We have put a package together that targets middle and low income hard-working New Zealanders. I would have thought that that mob on the other side of the House would actually be in favour of giving the workers—whom the Opposition says from time to time that it represents, as long as they are on six-figure salaries—a little bit back. Under this Budget, low and middle income workers, if they are on $39,000 with kids, get $150 a week extra. If they are on $55,000 with kids, they get up to around $200 a week extra. I think it is good to go to hard-working families and say that if they work, look after their kids, and do the right things, the Government will stand beside them and assist. But the only people the Opposition will stand beside are those who drip in Christian Dior earrings and jewellery, and have elegant diamond pens. The National and Act parties will stand beside those people who have, like Mr Key as he told the Finance and Expenditure Committee, the black American Express card. I must confess that I had never heard of a black American Express card. I think I had a gold one, but I never heard of a black one. I am told one has to do a number of things in the private sector for American Express to show that amount of faith and trust to get a black American Express card.

Let us look at it. The Opposition has called for company taxes to be lowered. They have always said how badly New Zealand does and how over-regulated we are compared with Australia in respect of tax. Here is what the Chief Executive Officer of Fletcher Building, Ralph Waters, had to say: “If I didn’t choose New Zealand’s 33 percent regime against Australia’s lower rate but with payroll and capital gains taxes, as well as stamp duty added on, then I shouldn’t be doing the job I am.”

If we look at Australia’s top two rates of personal tax, they are ahead of our top rate. Australia’s company tax rate, on the face of it, is lower than ours, but if we add in their equivalent of accident compensation—I think their equivalent of accident compensation is about double ours—Medicare, and payroll, then their rates are, far and away, higher than ours. But that is the sort of dynamic place that the National Party wants to take us.

Let us look at these finance and revenue estimates and what will be achieved this year, and what previous estimates under Dr Cullen have achieved. If we look at unemployment, the number of Kiwis in work has grown by 193,000 in 4 years under Labour. In 1999, when Labour came in, the unemployment rate was 6.3 percent. Where are we now? We are just tilting over 4 percent, or just tilting under, depending on what one reads. I challenge Mr Key to match those facts.

What an illuminating debate this has been. There was Clayton Cosgrove, the head of the Finance and Expenditure Committee, who one would think would know better, because one would think he had been reading the reports that come from Treasury, produced out of the $3.29 million worth of policy advice given to the Minister of Finance. One would think he would read those reports. Those reports indicate quite clearly that Treasury has significant concerns about the growth rate. Treasury does not apportion any of the growth rate to the current policies of this Government; it apportions them to the reforms of the 1980s. So do members of the OECD and any other external commentators who have taken a moment just to have a look at our things.

When we look at the policy advice provided to the Minister of Finance pre the Budget, Treasury was quite clear in the things it wanted the Minister to do. One of them was to address the top rate of personal taxation, and I think the second one, off the top of my head—I read the report only three or four times, clearly more times than the Minister of Finance read it—was to cut the company rate of taxation.

Treasury does not believe in the Clayton Cosgrove - Michael Cullen definition of forming tax policies for companies. It does not believe that we have to take the best of our system—let us say, no payroll tax and no capital gains tax—and then take the best of the Australian system, a lower nominal rate. Treasury is a lateral thinker in the world of finance. It knows—OK, I am extending things slightly—that one can design tax policy that, indeed, has the best of the New Zealand system: no capital gains tax and no payroll tax; and the best of the Australian system: a lower company rate of taxation.

The next point I want to address just for a moment is that the Minister of Finance stated that he believed I said that the Government should not have bought the railway tracks. That was not the statement I made, at all. The Minister should go and reflect on that. The statement I made was that the taxpayers of New Zealand have a right to know that due diligence was done when the Crown, on behalf of the people of New Zealand, assumed a huge liability.

💬 Darren Hughes: What wishy-washy stuff is this?

I say to Mr Hughes that if we had done some due diligence, we could understand. It may be a great shock to Mr Hughes, but my 20 years in the finance industry were not spent telling companies to go out and buy whatever they felt like, willy-nilly, without doing any due diligence, because they were buying a huge black hole at $1 and should ignore the liabilities, because they were going to do it anyway, or because the best information was held by the seller.

It is quite standard practice to do due diligence. It is not an unusual sort of thing. In fact, given the amount of time that Chris McKenzie and the group had up in Auckland, I would have thought that they must have been doing something. They were obviously enjoying the Auckland lifestyle and having a few laughs. Clearly they were not doing due diligence work, and I say to Mr Hughes that they told us that. That is just a very interesting point to note.

Can I also reflect on the comment made by the member for United Future about abolishing GST on rates. What a misguided policy that is—putting to one side, of course, the $230-odd million that they would be expected to find somewhere else. One of the great principles of the New Zealand GST system is that GST is on everything. We do not have it not on uncooked chickens and on cooked chickens; we do not have it on this and on that. We have it on everything. It is a fair system and we understand the rules. I might add that just last week I saw employees of the local authority in the area I live in, out chopping trees.

💬 Darren Hughes: Which one’s that?

In a number of places. They were chopping trees, and if I had undertaken that myself, I would have had to pay GST. It is a fundamentally flawed policy.

I want to talk just for a moment in Vote Finance about the build-up of the State sector. There was a very interesting answer to a parliamentary question I asked just a few weeks ago. The information that came back stated that in 2000 the Government had at its disposal about 1,700 policy analysts. Now we find that at the end of 2003—and this number will already be considerably larger now, because we are 7 months into the year; and I might add that it is 2 years to the day since the election of 2002, but that is an aside—there are now 650 more policy analysts than that.

I would like to continue the theme of the articulate National finance spokesperson John Key, who is very well respected in the business and economic sectors. He raised a very good point about whether the Labour Government understands business, and whether the New Zealand public can trust the Labour Government to manage New Zealand’s economic direction. I want to use a very tidy example, one of the Labour Government’s economic initiatives, to demonstrate what typifies Labour’s approach to business activities. Firstly, Labour is ignorant of what makes business tick; secondly, it believes in throwing money away just to make itself feel good; and, thirdly, it has very little respect for how it uses taxpayers’ money.

I want to use the example of the Export Credit Office, which was opened with fanfare and was trumpeted by the then Associate Minister of Foreign Affairs and Trade, Pete Hodgson. He said in 2001 that the export credit scheme was part of the Government’s drive to improve export growth. The Government reckoned that the scheme started with good research and consultation, and that it was the solution for New Zealand’s small exporters. He predicted that as soon as the office opened up for business, small exporters would be queuing to take up this credit insurance. The Government was so confident about it that Cabinet was told that the Export Credit Office would recover its costs and would not cost taxpayers a cent, that it would not compete with commercial providers—that was written into its contract—and that the scheme would operate for New Zealand’s small and medium-sized enterprises.

After the scheme had operated for 12 months, research was conducted to find out why none of the small exporters had taken up the offer from the Export Credit Office. The report told us that, in hindsight, when the Export Credit Office was set up the extent and significance of the gaps why small exporters were not able to export to foreign markets had not been quantified. So the Labour Government, as usual, had charged into unknown territory and claimed it had a solution. Over $1 million was used to set up the office and almost $1 million was spent every successive year to prop up that office, without, in effect, any understanding of the problems facing small exporters in increasing their business.

So in the review of the finance estimates that was conducted recently, I once again raised this issue with the Minister of Finance, and asked how many export contracts that office—$3 million and 3 years later—had actually signed.

💬 John Key: How many?

The answer was zilch—none. Then the Minister—and I think this is a very worrying thing, which I want to share with the public—said that although the office had not signed up any contracts, he reckoned that $3 million was a small price to pay in order to have the Export Credit Office, which provides some underpinning of confidence for small exporters. So the Labour Government was very generous with the taxpayers’ money, spending $1 million a year to give exporters some confidence.

In reply, I thank members for their sometimes lucid participation in the debate—at least, from Mr Clayton Cosgrove.

Mr Peters asked a number of questions about the TrackCo issue and why the Government is putting money into the track. It is because, firstly, the track needs it; secondly, the public interest is in keeping expanding traffic on the rail; and, thirdly, if the Government does not do it, the cost will fall back on the public anyway, through increased costs of roading. Unfortunately, there is no no-cost option for the Government in this particular area.

The TrackCo deal is a very simple one. Basically, we have agreed to put $200 million of capital upfront into upgrading of the track and delayed maintenance. Toll, as a consequence, is committed to a level of upgrading of its own capital equipment, and the Government will recover, by way of charging, any expenditure above the $200 million. In terms of due diligence, firstly, I think it is fair to say that the Government knew more about the nature of the track than Toll did when it bought Tranz Rail. We could not actually warn it about it, because of the nature of legislation around companies, etc. Secondly, as I said, we will recover expenditure above $200 million in terms of the charging regime.

With regard to Mr Adams and the issue of GST on rates, I say that in my view it will stay in force. We certainly oppose it. I remind the member that it passed the Labour caucus in 1984 by one vote, which was that of Mr Dunne. He actually voted for imposing GST on rates. I can say that I voted against it at that point. Had Mr Dunne voted against it in 1984, GST would not have been imposed upon rates; it would have lost in the Labour caucus by one vote. But since that time, firstly, we have learnt that we were right, in terms of the majority position—that is, that keeping the GST system simple and as broadly based as possible is actually central. It is one of the reasons we have the best value-added tax in the world. It is a much better value-added tax than the Australian goods and services tax. Secondly, in fact, rates have increasingly become a fee for service of one sort or another, and are less and less related to ability to pay, or variable. The more rates are a fee for service, the more the case is absolutely clear that GST should be applied. Finally, I point out that even if GST on rates is seen as a tax upon a tax, it is not the only case; GST is applied on top of excise duties on petrol, tobacco, and alcohol products, but that does not seem to arouse the same concern.

Mr Key came back to the good old issue of the top rate of income tax. If that is the National Party’s obsession, and clearly it is the thing that sends its members to sleep at night—thinking about reducing that top income tax rate—why is it not National’s “Key” policy, so to speak? It does not seem to be its “Key” policy; it is not even its “Brash” policy now. It used to be. It has kind of dropped down in relevance, in terms of the National Party’s approach.

As for the company tax rate, I say that the only beneficiaries from lowering the company tax rate are foreign investors in New Zealand. For New Zealand investors it is an imputation credit. If it were a classical tax regime, then the argument might be different, but there is an imputation tax regime in New Zealand on company tax, and therefore it is only a timing issue. As long as New Zealand public companies pay out just about all of their profits by way of dividends, their argument is extremely weak, because it is clear they are not ploughing their profits back into growth. And that is another issue the Government is looking at.

Of course, the National Party cannot get its position right on this issue, or its position right on the track. Mr Key could not tell us what the National Party’s position on buying back the track was. He was asked during his speech, but he would not give it. The problem is, of course, those members have to wait for the signals from “Foggy Bottom” before they know what their position should be on any particular issue before the New Zealand public, whereas we in the Labour Government make our own decisions.

Finally, I will address the issues raised by Pansy Wong, who has this obsession with the Export Credit Office. What has happened is that a lot of deals have gone though as a result of the Export Credit Office being in place. There are now exporters who can indicate their ability to finance for greater than 1 year. I have a whole series of examples here of exporters who have been able to proceed because of the existence of the Export Credit Office. It has been successful in that respect. I have examples of a Canterbury exporter, an Auckland exporter able to offer finance, a marine exporter offering finance terms, and a communications company offering finance terms. They were able to proceed to make those offers because the Export Credit Office was standing in the background. The fact that, in the end, they did not need to use it is actually—if Mrs Wong cares to think about it—a positive, because therefore no Government money was actually put at risk in any of those deals. But the fact that the Government backing was there enabled those exports to occur. If Mrs Wong is telling us that National would remove the Export Credit Office, I say to her: “Make our day.”