Customs and Excise (Motor Spirits) Amendment Bill

This debate includes debate on the schedule.

I rise in opposition to Part 2 of the Customs and Excise (Motor Spirits) Amendment Bill. I do so for this reason. This graph that I have managed to get from the Parliamentary Library shows me that now, at this point in time, 51 percent of the price of every litre of fuel that people purchase in New Zealand is tax—without the 5c per litre increase being proposed. If we look at the breakdown of where that tax of 51 percent goes, this is what we find. The accident compensation levy accounts for 9.4 percent of it, the petroleum fuels monitoring levy accounts for 0.1 percent, the National Land Transport Management Fund gets 33 percent, local authorities petroleum tax makes up 1.2 percent, GST makes up 22 percent, and petroleum excise tax accounts for 34.3 percent. All of that makes up 51 percent of the total price of a litre of fuel. So the question I have for the Minister is this: if 51 percent of the price of a litre of fuel cannot fix the problem we have with New Zealand roads, then how can he suggest to the Parliament today that a further 5c per litre slammed on to poor old “Joe Hard-worker”, the Labour voter, will fix it?

It gets worse. If we do a little bit more research, we find that in the last decade the combined distance travelled by the motorists of New Zealand has increased from something like 15 million kilometres per year to about 30 million kilometres per year. The question that comes from that—and I would be prepared to let the Minister take a call to explain it to us—is: how much of that extra cost, which is put on people in terms of getting to work, comes out of the average weekly wage? It is a simple question. How much of an increase has there been in the cost of transport, or in the cost of going to work, in the last 10 years, with that massive increase? The Minister sits there and shakes his head. I am sure he has no idea of the answer to that question.

I ask this Minister, who is part of a Labour Government that has, so far, introduced 24 new taxes since it has been in power, this question: at what point he does he believe that poor old “Joe Hard-worker”—traditionally a Labour voter, but no more—has suffered enough at the hands of this Labour Government? I say to the Minister that having 51 percent of the price of petrol as a plethora of taxes is enough, and that another 5c will not fix the problem.

I need to address a further point, and it concerns the issue of this Government setting a precedent like none that has ever been set in this Parliament before. It is an absolute abuse of the Westminster system. I could read out a whole list of things that this Government has done, but the debate today needs to focus on the fact that the Government is increasing taxation without representation. The Committee is today debating legislation that indexes the price of petrol to the consumer price index. I ask the Minister whether he can show me an example of this having happened before. Where has there been such a blatant increase in taxation? I am thinking about the 24 new taxes that this Government has introduced since it came to power, and about this extra 5c. Where in a Parliament anywhere in the world have we seen such a blatant abuse of executive power? I would be very interested to hear the Minister’s answer to that, and I am sure that most New Zealanders would.

It is also interesting to note that throughout the whole of this parliamentary term, a number of parties have said that they are against increases in tax. Then we look at what United Future is likely to do today when we get to the final stage of the debate on this bill. Will it support this bill? That is what we want to know. We know the Greens will support it—the Greens follow blindly wherever Labour goes—and we know they will be morris dancing outside later on. But will United Future members support this legislation today? That is a question we need an answer to. I suspect that, once again, they will roll over and say: “Yes, sir, no sir—or madam. How many bags full, and how high should we jump?”.

It is a pleasure to follow Shane Ardern, who is the thinking National Party MP. I want to take up with him several of the issues he raised. He talked in his speech about the abuse of power by the executive. I would have thought the fact that Parliament is debating this legislation shows parliamentary power. This is not about the abuse of power by the executive. This bill will proceed only if 61 or more MPs vote for it. That is parliamentary power. It is not executive power. The member should get his terms correct.

Secondly, he said that the Government is abusing the Westminster system. We are using the Westminster system. I say to the National Party that it should take some of its back-bench MPs and introduce them to a training session. This is all about using the Westminster system. Mr Ardern went on to argue that this bill represents taxation without representation. The fact that he has come to this Chamber from Taranaki and is representing the views of his constituents is representation about taxation. I say to the member that he should be in touch with the constituents in his area, because they want better roads.

💬 Darren Hughes: Jim Bolger understood that.

Jim Bolger understood that and, as I have been through the Taranaki area, I can see why there is a great need for improvement on the roads. We cannot improve the roads on the current level of funding. I tell the member to have faith and to be a believer. This Government says that with an extra 5c per litre on petrol, it will make significant improvement in roads in Auckland, Hawke’s Bay, and Taranaki. That member should have faith and be a believer.

I say to members that this is a very simple part. It has two clauses. The essence of it is simply to make it clear that there will be a 5c per litre increase in the rate of excise duty and that there will be some changes to the schedules. This part is the guts of the legislation; it is where the amount goes up. There should not be too much debate about that, because every member wants to see improvements in the roads in the area he or she represents. If we want roads improved, then we have to put money into them, and this is the means of doing that. I look forward to the support of the member for Taranaki - King Country.

In speaking to this part the Minister, the Hon Rick Barker, said that this is a very simple part. But it is also a very bad part. This Government is not only collecting $6 billion in excess revenue and taxing New Zealanders to the hilt, but also it is implementing tolls, like in the Rodney area, where I am based. Tolls anywhere are bad enough, because they are just another excuse to tax New Zealanders twice, but if that is not enough, this Government wants to toll a main State highway in Rodney—the Albany to Pūhoi realignment—as well as raise taxes on petrol after the election.

New Zealand First says no to tolls and to the 5c increase in petrol tax. The National member Shane Ardern mentioned in his speech that since this Government came to power in 1999, it has brought in 24 new taxes. Out of those 24 new taxes, this will be the fifth tax increase on motorists. That tax now stands at 18c per litre.

I was on the Finance and Expenditure Committee that heard submissions on this Customs and Excise (Motor Spirits) Amendment Bill. The committee reported back: “Submitters generally expressed opposition to the increase in excise duty, suggesting that the funding required should be provided from the duty currently allocated as general Crown revenue,”. Only about half of the money collected from road users actually goes back into roads—we all know that. New Zealand First says that that is a disgrace. But New Zealand First does more than just say that, and does more than United Future members, who get up in the Chamber and say that the Government should decrease taxes, and so on, and that they would do this and that. However, when they come into Parliament they do exactly the opposite. New Zealand First, in our 1996 coalition agreement, set the whole legislation in motion to start implementing that very view—of making sure that the money collected from road users actually went back into roading.

This Government not only has a $6 billion surplus and is now tolling State highways and spending money on its pet projects, but it is spending millions of dollars on policy advice—which is more than the Government needs to spend in a whole lot of portfolios. For example, in the youth affairs portfolio, which has spending power of only $11 million all up, it is spending $1.3 million on policy advice. We in New Zealand First say that that is wrong. It is wrong that with the amount of money the Government is spending, throwing all around the place, and giving to its mates here and there, it still has to go to hard-working New Zealand motorists, Government supporters, and take another 5c per litre from their pockets—as if they are not paying the Government enough in tax as it is. As I said when I spoke on Part 1 in the Committee stage a few minutes ago, this Government will pay for that come the election in 6 or 7 months’ time. It will pay for that.

I was very interested in what the Minister of Customs was saying just before I spoke. He said that this was democracy at work and representative government, because we are actually debating it in Parliament. Well, I say it is the last time we will debate it.

Before I start my contribution to this Customs and Excise (Motor Spirits) Amendment Bill I remind Government back-bench members that this is actually a debate. It is an opportunity for them to stand up and justify the legislation before this Committee. I have sat through Part 1 but I have not heard even one member justify a 5c tax increase on his or her constituents. But it is early, so I hope that during debate on Part 2 I will be able to look forward to a contribution from Government back-bench members to justify this huge tax increase, as I said earlier, on their constituents. I make the point that I will be talking about that, and I will be talking about Mr David Parker, the member for Otago, and his contribution during the election campaign and beforehand as to how the Government back bench justified this significant increase—this yet-another-tax on the constituents they purport to serve.

I suspect that the constituents they purport to serve will be saying they did not vote in Mr Parker from Otago to whack them with another 5c tax. So that message will be going back.

Some colleague from this side of the Chamber talked about “no taxation without representation”. I think it was Mr Shane Ardern, was it not? Of course, I remember where that famous phrase came from. It was from the incident of the Boston Tea Party, was it not, where the English decided to tax the people of the American colony? What happened? The English were thrown overboard with the tea.

💬 Shane Ardern: A revolution!

A revolution started. It takes one little spark to trigger a major bush fire, perhaps—and this could be it. The people of this country are sick to death of the Prime Minister telling them they are very well off. If we go to speak to the people of this country—to mum and dad out there, who get out of bed in the morning, go to work, and pay their taxes—we will find that in fact they are not happy. They do not have the discretionary spending that members of this Government have. The average Joe Smith or Joe Bloggs—call him what we will—does not have that discretionary spending. There are at present 22 percent of full-time workers in this country paying the top rate of tax, and they are now being asked to pay—well, not asked, because they have not been consulted; they are being told to make—a 5c contribution that will go to the Government coffers, yet again.

I was recently at a function of rural people, of farmers. They asked me whether it was really correct that when they filled up the old farm truck and headed up their roads—roads the Government contributes nothing to—they would actually have to pay 5c a litre, which would go towards Auckland’s costs. I said: “My friend, a vast majority of those 5c will end up in Auckland.” Well, I cannot really tell the Committee what their reaction was, but let me assure members that there will be a profound reaction. They should try telling that to a Canterbury or Otago taxi driver, in tootling down the highway, as I have done. I have asked how they feel about that 5c going towards Auckland roads. Well, unless one is well strapped in one will almost go through the windscreen. They are hot about it, because they know they have never been consulted on this issue. They also remember the Prime Minister’s comment that there would be no increase in income tax. It is sort of like robbing Paul to pay Paul, is it not? We do not take it out of people’s income tax; we take it out of their so-called discretionary spending. That is something we will remind the Government about, on a constant basis during the next few months.

I am delighted to speak to Part 2, because this is simply about an extra 5c a litre being added to the petrol tax.

💬 Hon Judith Tizard: John Key’s agreed to it.

Well, unfortunately Judith Tizard interjects and asks whether I disagree with her, and let me tell her, yes, I do—for this reason: I have no doubt that roading in New Zealand is in desperate need of a lot more spending. I am happy to say that in Auckland, as in just about every other part of the country, the amount of money currently being spent on roading infrastructure is woefully low. It is way below the OECD average and way below that of those comparable countries we like to compare ourselves with, as in the case of Australia, the United States, or any individual state. In fact, in nearly every one of those jurisdictions I quote, there is not only a public spend as a percentage of their GDP that is substantially above ours but also there is a big chunk of private money spent, as well.

The Government lauded the Land Transport Management Act a couple of years ago. It was going to have the private sector in there doing things, but I ask whether members have seen a single private sector project—no! [Interruption] OK, so let us strike that down first, just before Judith Tizard gets all excited about it. We truly believe that there should be more money being spent on the roads than is currently being spent. The next question is: so where does it come from? Well, that is easy. It is really easy. There are two things—in fact, there are three points to make. First of all, the Government is currently running a surplus of around $7 billion. It’s around seven. I know that it has all those zeros. I worked it out: it has a seven and three zeros, and then millions after that. That is the Government’s surplus.

💬 John Key: $7,000 million.

It is $7,000 million—thank you—which is seven by 10 to the power of nine, for those who are scientific in their view of it. I can understand why the Labour Party would have been wanting to do this in its last time in Government, between 1984 and 1990, because it was running deficits every year it was in power. That meant it was not taking in enough even to cover the cost of running the show as it was, so I would understand that if it wanted to put some more money into roading, it would have to go out and rack up the petrol tax. But, right now, here is point one. There is a $7 billion surplus on the books. Michael Cullen is very proud of it. So why does the Government need in addition to take another $200 million, which pales into insignificance relative to that figure of $7 billion?

The next point I make is that the people who are driving around on those roads are already paying their fair share towards roading, at any rate. Well, hang on, one should look at the accounts. There is $600 million a year already coming off the motorist by way of petrol tax that does not go to roading. Now, I am hoping that Judith Tizard will leap in and say: “Oh, it does indeed”, or that it is wrong, or anything else. I really wish she would, because I know that Michael Cullen does that.

I got a copy of Hansard from May of 1995, when the Hon Winston Peters put forward a bill saying that all petrol tax collected should go to the roads, and guess what? There is one Dr M Cullen voting “Yes”. There we are! Dr Michael Cullen, now Minister of Finance, voted in this House, because he thought it was right then—it is the old Steve Maharey principle: it was right when one was in Opposition and not right when one is in Government—that all the petrol tax collected from the motorist went to roads. If the Minister did that alone and took the $600 million, he would not need this piddly $200 million. He would not need to even think about this figure. It is 18c he is ripping off to the consolidated account, and now he will add another 5c on and say: “What a good boy am I.” What a joke!

Then we come to the third point I want to make about Transfund, the body that gets all the money into its kitty to spend on roading. Now, we would have to say that last year it must have ended up completely strapped for cash, it had no money left, and it could not move. [Interruption] That is right. My colleague Shane Ardern from the Taranaki - King Country area is dead right. It had $239 million unspent in its coffers. When I asked Transfund why it ended the year with all that money when there is so much need for new roading out there, it said it could not find any projects that were ready to go. What does that tell us about this situation? So the Government will take another $200 million from the motorist, when it could not spend the $230 million that stayed as a carry-over surplus in the Transfund account, but it is taking $600 million out of petrol tax already that does not go near it. So I make that point, because I know Labour is trying to portray it as National not wanting to spend more on the roads. Oh, yes, we do! We think there is a desperate need for a big ramping up of expenditure on roads, but I say to the Minister that the Government is already getting the money. It is getting it in spades, and I use that expression carefully.

I want to follow on from the words of my colleague Mr Williamson, who is quite correct. National does want to invest far more heavily in our infrastructure. But I want to draw the debate to Part 2 in a couple of ways. The first is to say, without stating the obvious, that there is a reason why the Labour members who are in the Chamber today are not hooting, hollering, and getting terribly excited in this debate. The very simple reason for that is that this is a deeply unpopular tax. I will tell the Committee why it is so deeply unpopular and why we know that to be so. There is something very sinister, very deceitful, and rather dishonest happening with regard to this legislation.

The Hon Dr Michael Cullen, the Minister of Finance, was very happy to put this tax on when it was to happen well and truly before the election. He was very happy to do that, except that one day late last year he toddled down to the Chamber, and in the answer to a supplementary question asked by the honourable member Peter Brown, he said he was suspending the introduction of this petrol tax on the basis of world oil prices. So I got to my feet and I asked Dr Cullen to tell us, expressed in New Zealand dollars—because there is the oil price component in the exchange rate to consider—exactly what the rate was that he was targeting. Well, he did not have an answer to that. The normally chipper, chirpy Minister of Finance, who gets a bit lippy in the Chamber, did not have an answer to that one. He did not want a bar of it. When we went off to the officials and asked them what the answer was, they said that they had given him lots of advice. That answer did not quite correlate with the written parliamentary question where I asked Michael Cullen to produce the advice and he said that he did not have any.

There is a reason that the Government does not want the petrol tax to come in. It has nothing to do with economics, the impact on the economy, or whether oil prices are US$40 or US$45 a barrel. This Government is running the biggest surplus in New Zealand’s history, while workers are going down the drain with higher mortgages and higher credit card bills. The Government does not have the guts to front up and—

The CHAIRPERSON (H V Ross Robertson): To infer that anyone lacks courage is a personal reflection, and is out of order. The member will desist from that.

This Government absolutely lacks the fortitude to come to the Chamber and tell the people of New Zealand it is going to take another 5c per litre in petrol tax from them, at a time when it is running a $7.4 billion surplus. It is not 5c per litre, for the record. It is 5.6c per litre, because there is GST to add on top of it.

I want to add a second point. [Interruption] No, it never ends. Not only do Government members not want to front up, but here is a very interesting point. Michael Cullen has spent the last 4 or 5 years trying to tell every journalist in the country that we do not understand accrual accounting. We are all idiots; we are looking at a $7.4 billion surplus. According to the very bright Michael Cullen, we do not understand accrual accounting. There is a $7.4 billion surplus, but we should be looking at available cash, because that is the issue in accrual accounting in all the capital expenditure. So, what is the Minister doing? Let us look at that. He is putting a $200 million petrol tax on at a time when he could go to his other capital expenditure and spend the same amount—$200 million—on roads every year, and it would cost his surplus $12 million. That is the truth of it.

Dr the Hon Lockwood Smith: Really!

Yes. It is $12 million, because he has to pay it exactly right—the financing cost.

So when it comes to suiting Michael Cullen, we are all idiots and do not understand accrual accounting, but when it comes to fronting up, he is not happy to front up, at all.

National will build a lot more roads than this Government ever will. National will get Tauranga, Auckland, and many other parts of the country going again.

💬 Hon Judith Tizard: Will take credit for what we have done!

Judith Tizard has nothing to be proud of with regard to what is happening in Auckland, because very little is happening, indeed. Every year we have spent the same amount of money—that is the great illusion and great myth from the Labour Government. It is not true. And National will do it at a time when every worker in New Zealand will have more from his or her taxes, because we are not greedy and we know the difference between foolish and wise Government spending. This Government does not know that.

This measure is a disgrace. That is why those members hang their heads in shame—and so they should.

Well, that was a very interesting contribution made by my colleague John Key. I thought he made some worthwhile points, as did the Hon Maurice Williamson. I was a little worried when Maurice Williamson was talking about privatisation. I thought that he was perhaps talking about the same sort of privatisation that Tranz Rail had. Dr Elder of Solid Energy said this morning that he would buy some ships, because when the railway lines were looked after by private people, they were effectively stuffed. So he said he would go into buying his own shipping fleet.

We do not need privatisation to put our roads in order. We need a funding stream that is continuous and sustainable—and we have it. In addition to all the fuel levies that go on to the roads, the petrol motorist pays something like $600 million a year, which goes into the consolidated account. As John Key said, that is not justified when there is a $7 billion surplus. There is not a Government member who will stand up and justify that. Government members do not have the fortitude—I think that is the word that I am allowed to use—to stand up and say the 5.6c per litre increase is justified, although the Government is taking $600 million from the motorist. So 18.475c per litre plus GST goes into the consolidated account.

Where will this money go? Maybe the Minister will answer that, because it is a serious question.

💬 Shane Ardern: You will never get a serious answer from that Minister.

I think that the member might be right, but I will try. Will the money that will be regionally distributed be allowed to be spent on the Tauranga Harbour link?

💬 Shane Ardern: A small percentage.

Well, it is my understanding that not one cent will be able to be spent where the region would like it to be spent, on its No. 1 priority. I would suggest that it is the same with the Albany to Pūhoi realignment: not one cent of this regional money will be spent on the main priority of that region. I do not know whether Government members are aware of that. Maybe the Minister in the chair, Judith Tizard, can tell me whether I am factually correct in saying that, and, if I am correct, why in Tauranga—[Interruption] I cannot answer so many questions at once. I am concentrating on the Minister in the chair; I can see she is taking my point on board. Will she explain why this money, which is supposedly collected on a regional basis, cannot be spent on a region’s highest priority? I cannot understand why it would not be the case.

Equally, I cannot understand why the Māori Party is voting for this bill. The many, many Māori people in this country love their cars. They are like me; they love their cars. I love cars, and I want decent roads to drive on, for safety’s sake. I am certain that is the same for Māori, and I do not believe that the average Māori member will want to have imposed on him or her—

💬 Hon Maurice Williamson: This member loves ships, too.

I do love ships, also—and there are not very many of them, either.

💬 John Key: Not on the roads!

No. I want to know why the Māori Party is supporting this bill.

I also want to know from the United Future members—and I am certain they will take a call—how they can justify to themselves, never mind to Parliament, adding 5.6c per litre to the price of petrol, knowing that Transfund could not spend $240 million—

💬 Hon Maurice Williamson: $230 million.

It could not spend that amount of money, even if it tried. Yet United Future is saying that it supports an increase in the price of petrol of 5.6c per litre, 5c of which is to go into the regional-based petrol tax and 0.6c to GST. In the last year or so United Future has come out and said that it objects to a tax on a tax, but it is going to support this increase. There is absolutely no justification for it. There is plenty of money—oodles of it. All that needs to be done is to get the funding stream stabilised.

I move, That the question be now put.

In speaking to Part 2, I am staggered that this Government, in 2005, has come into Parliament with a proposal such as this—one it believes will solve the roading crisis in New Zealand. It reminds me of someone setting out to build a home with the contents of his or her piggy bank. Do members remember the little money boxes we had as kids? My colleague, who is to be the next Minister of Finance, had a money box. He did not grow up in a rich family. Back when I was a kid we used to put pennies, thruppences, sixpences, and shillings in our money boxes. This legislation is like using the cash from that money box to build a house. To think we could solve the roading crisis in New Zealand with a bit of cash like this, ripped off motorists, is just pig ignorant.

💬 John Key: It’s laughable.

Dr the Hon LOCKWOOD SMITH: It is laughable. There should be a proper rational strategy for investing in our roading infrastructure. As my good colleague John Key pointed out a moment ago, with accrual accounting it should not be the whole cash expenditure that is coming into our annual accounts; it should be the cost of financing that infrastructure investment. The Labour Government is approaching this matter in such a childish way. We should never forget, of course, that Helen Clark knows best—that our terribly popular and competent Prime Minister, who is a victim of her own success, knows best in these matters! But this is just pig ignorant. I say to the Minister in the chair, Rick Barker, that he does not know the situation, because he probably does not get up north very often. Last Sunday I was heading north from Auckland—

💬 John Key: Slowly.

Dr the Hon LOCKWOOD SMITH: I was OK; I was heading north, but I pitied the poor, suffering New Zealand voters and taxpayers who were heading south. Following the speeches made by Don Brash, Ōrewa is a very famous place. As people head north from there, they go through a place called Hatfields Beach, where Rob Muldoon used to have a bach. Last Sunday, the traffic was travelling at 5 kilometres an hour south through Hatfields Beach. As people travel north from there, they go up the Waiwera hill, then down it to Waiwera. The traffic on Sunday was travelling at 5 kilometres an hour, bumper to bumper. Going further north from Waiwera, travellers go up and down the Pūhoi Hill, where the Albany to Pūhoi realignment B2 will dump four lanes out on to the poor old State Highway 1. That Sunday, the traffic was still bumper to bumper, gridlocked at 5 kilometres an hour heading south. In fact, by this stage the traffic was stationary.

Heading north from there, people come to a passing lane that Transit has been building. It has taken Transit more than 12 months to construct a passing lane that is not even half a kilometre long, and it is still not finished. That is how efficient Transit is. The traffic had absolutely stopped at that point. As people head north from there, they go up Schedewy’s Hill on to Windy Ridge, and the traffic situation was still the same. This was an ordinary Sunday afternoon.

💬 John Key: It was a hot Sunday afternoon.

Dr the Hon LOCKWOOD SMITH: It was an ordinary, hot Sunday afternoon. It was not a long weekend but an ordinary Sunday afternoon, and back almost to Warkworth, the traffic was gridlocked. It was totally gridlocked.

Yet this Labour Government is increasing the price of petrol by 5c per litre. That increase will be felt by taxpayers, although the total amount of money raised will not be much at all. It will do nothing to solve the roading crisis, because Labour does not have its mind around the full extent of that crisis. It does not have its mind anywhere near it. The crisis is getting worse by the quarter. Every 3 months at the moment it is getting exponentially worse, but the Labour Government just sets up committees and taxing facilities and does nothing to solve it.

What is more, the public will feel it, because right now businesses are being charged levies for higher fuel prices. It is very cynical that if this legislation passes, as it will, because United Future will support it—

💬 Hon Maurice Williamson: No it won’t.

Dr the Hon LOCKWOOD SMITH: It will; it is just a doormat. The worst feature is that this bill gives the Government the power to decide when to impose this tax, and we know that it will use that power cynically. Michael Cullen will not seek to impose it until after the election, because he knows that the public will be very angry when the extra tax on fuel goes on. The public is not silly. It knows that this is not the way to properly finance our roading.

I move, That the question be now put.