Taxation (Annual Rates and Urgent Measures) Bill

This part sets the tax rates for the 2005-06 year. Dr Cullen will no doubt be reflecting deeply through the debate on this part, because in it is the very small piece of policy that almost cost him the Government. But for the student loan bribe—as he explained to the vice-chancellors the other day—he probably would have lost the election. I do not think there is much doubt about that.

The problem for the Committee is that it needs the opportunity to consider other points of view about the tax rates for this tax year. I would like the Minister in the chair, Dr Michael Cullen, to give us a considered opinion on what the Council of Trade Unions had to say about what tax rates he should be setting. In its post-election briefing to the incoming Minister, the Council of Trade Unions stated: “We have been concerned that many workers now believe that the fiscal surplus is larger than it needs to be, and this has given impetus to the case for tax cuts.” Well, I am sure it has. I would be keen for the Minister to tell us how he will respond to the Council of Trade Unions, which, to be fair, has not put the case aggressively in its briefing, but does, I think, represent the views of many workers fairly. Every time workers see the fiscal surplus reported, they think the Government has too much money, and every time they look at their monthly overdraft, they think they have too little money. Of course, Dr Cullen will explain that the fiscal surplus is not really the fiscal surplus. That is one of his interesting little games for now, but I can assure him that it amounts to a fiscal dead end to try to shift the goalposts right over to the side of the paddock instead of leaving them where everyone knows they have always been.

So I would be interested in what Dr Cullen’s reaction is to that information from the Council of Trade Unions. When Treasury said something similar, he christened its considerations as an ideological burp. Well, I would ask what this one is. Is it an ideological reflux or an ideological cough? Is it a malapropism—something the Council of Trade Unions should not have actually said but did? The Council of Trade Unions then went on to be more specific. It did not lay out a particular set of tax scales that its members would be interested in, but it did focus on Dr Cullen’s own proposal, which was that the tax brackets be inflation-adjusted. It said that the first inflation adjustment of tax brackets should be moved forward from 2008 to 2006.

I have gone back and looked at the fiscal situation when Dr Cullen proposed that inflation adjustment, and I found that the surplus being projected then was much smaller—significantly smaller—than the surplus being projected now. If Dr Cullen is denying that, I would be happy to hear from him on it. In my view, and in the view of the National Party, there absolutely is room on the books for him to bring forward the adjustment, as the Council of Trade Unions believes he should. I do not think it is saying that for ideological reasons; I think it is saying it for political reasons. The reason is that when its workers look at where interest rates are going, they know they will be significantly worse off under a re-elected Labour Government. Workers, having voted Labour in, have figured out in the last couple of weeks that because Labour policies are pushing up interest rates, they will end up being worse off. Many of those who have benefited from campaigns like the “5 in 05” campaign run by the New Zealand Amalgamated Engineering, Printing and Manufacturing Union will be no better off. They are starting to signal that to their elders and betters in the union movement, who have been brave enough to put a specific proposal to Dr Cullen in their post-election briefing.

If Dr Cullen expects this Committee to support Part 1, then he should give members an explanation as to why he cannot bring forward that inflation adjustment. He needs to explain that move to the Council of Trade Unions, to the Committee, and to United Future.

I think one of the problems Mr English always gets himself into is that he cannot read documents properly. Of course, the Council of Trade Unions did not say that the surplus is too large.

💬 Hon Bill English: I said the workers think it is.

Ah, he said the workers think it is—precisely! The Council of Trade Unions is not arguing—[Interruption] But the member was inferring from that statement that, therefore, there was room for tax cuts. Mr English said that because people wrongly believe the surplus is too large, we should therefore respond to their wrong belief and have a tax cut.

💬 Hon Bill English: That’s right.

That is right—that is Mr English’s economic policy. That is why Mr Key has replaced him as the Opposition spokesperson on finance. What Treasury said, what the Reserve Bank said, and what the OECD said was not what National thinks they said. They all said that the surplus should be kept at its current level and that there should not be any further fiscal easing. Mr English’s problem—and for all that Southland country bumpkin thing, he is actually a first-class honours English graduate from the University of Otago—is that he knows these things. He knows that, in fact, giving a tax cut is the same as having an increase in spending in terms of fiscal easing. It goes the same way. It both lowers the operating surplus and therefore increases and stimulates demand and therefore inflationary pressures.

That is why if the National Party wants to give $2 billion of tax cuts from 1 April next year, and it swallows its pride and reads the Treasury papers properly, it will find out that Treasury says, first, its policy was all wrong—it was the wrong tax cuts—and, second, that to pay for them, it has to cut spending by that amount. What Treasury actually said was that if we scrimp and save and take about $300 million off the growth in spending each year—and it cannot come up with any significant ways of doing it, other than all the usual things such as to increase the age for superannuation, and better target support for childcare, that is, more income testing, etc.—then we will have little tax cuts year by year by year. But it has never argued that we can afford large tax cuts absent a large decrease in spending. That is the Treasury position; that is the OECD position. Indeed, if we take Treasury at its face value and it cost $300 million a year, we could afford $900 million, which is less than half of the first round of what National is proposing for 2006.

Mr English, before the election, was admitting privately up and down the country that the policy did not make sense. He was going to go quiet on it and hope National did not win, because then he could become the leader after the election and reverse that silly policy. We know that Mr English, on that front bench, was the only one who actually understood that the policy did not make sense, and that was why he dissociated himself from that policy in any number of private meetings up and down the country before the election. I got plenty of reports back about that.

So all this part does is confirm the current tax rates. The challenge for members opposite is very simple: if they want to lower tax rates, tell us where the corresponding spending cuts will come from. What will get hatcheted? Mr Borrows wants more police. Mr Williamson wants more money for roads. Mr Finlayson probably wants more judges, or at least more money to be paid to judges. He certainly wants more QCs, that is for sure, and that ups their fees when we have to pay for them to represent the Crown. I have yet to hear from a single Opposition spokesperson who does not want more money spent in his or her area, both geographically and in policy terms—and that member is the worst.

I suspect that history will not treat this Minister of Finance well. This former history lecturer argues that one of the reasons Government spending is clearly not burgeoning out of control is that the Government is running a big surplus. He argues continuously that, quite clearly, Government spending is not burgeoning out of control, because we have got a big surplus, so that cannot be. Then, on the other hand, he argues that, in fact, the Government does not have a big surplus. That is what he has been arguing just now. I say to the Minister that he actually needs to get his mind focused a little better around some of these economic issues. He has a capable mind and he should focus it a little better.

As we debate Part 1, the question is whether we should now be confirming the current tax rates. I would like the Minister to answer a couple of questions. When he became Treasurer and Minister of Finance and raised the top tax rate to 39c, which is reconfirmed today, what percentage of taxpayers did he say would be affected by that and what percentage of taxpayers will pay that top tax rate next year, once we confirm these tax rates for next year? I remember when the Government raised those tax rates back in early 2000. The Minister said that not many New Zealanders would be affected by this, it would be only a very small percentage of New Zealand taxpayers. I do not know how many New Zealand taxpayers will be paying that top tax rate next year, once we confirm them. The second question is whether it is correct that last year OECD data indicated that ordinary New Zealand workers—I think the OECD calls them production workers—faced the biggest increase in tax payments, or the second biggest in the entire OECD. Is it possible that one of the reasons is that the average New Zealand production worker, as the OECD calls them, was at that $38,000 threshold of annual income from where they go on to a higher tax rate? If that is the case, why will this Minister not listen even to the Council of Trade Unions? Almost every economist, other than the most left wing, argues there should be some tax easing. Even the Council of Trade Unions argues that there should be some tax easing. Why does the Minister not bring forward, as the Council of Trade Unions argues, the inflation adjustments for those thresholds? Unless there is an inflation adjustment, clearly increasing numbers of New Zealanders will be paying higher taxes.

This is where I come back to my first point. How can the Government argue that its spending is prudent, when it is collecting hugely increasing levels of taxation because of fiscal drag, when there are huge increases in the number of New Zealanders paying higher tax rates, when the Government is raking in massive increases in revenue, and this Minister is presiding over a 40 percent increase in Government spending, just since he has been Minister? This is the problem we have. We are confirming these tax rates, locking in the massive increase in tax revenue that this Minister has been dragging in, and, consequently, the Minister claims that the big fiscal surpluses as a result mean that he is not allowing Government spending to burgeon out of control. Treasury says that Government spending is out of control. The Reserve Bank has made it very clear that Government spending is a serious problem, as it seeks to control inflation.

The Minister does not seem to understand that the difference between Government spending and tax cuts is significant. Both, obviously, put inflationary pressure in the system, but the difference is that all Government spending puts inflationary pressure into the system. Tax cuts mean that some money is saved. Some people save money, and history shows us that. If Treasury is questioned on this matter, if the Reserve Bank is questioned on this matter—as they were at the select committee the other day—they would confirm that tax cuts are less inflationary than Government spending, because some tax cuts are saved by certain taxpayers.

💬 Hon Dr Michael Cullen: In New Zealand?

Dr the Hon LOCKWOOD SMITH: Indeed, they are. Some tax cuts are saved; all Government spending is spent. If we are concerned about interest rates and the future of this economy, we should not be confirming these tax rates.

I want to respond briefly to that traditional vein-popping speech made by Dr Lockwood Smith. He talked about the Treasurer’s place in history, as we address the setting of the tax rates. Well, I just remind Dr Smith that he was one of the three who auditioned for the National Party spokespersonship on finance, but did not make it, then lost the foreign affairs spokesmanship, and then Tim Groser came along and stole the ball gown from him and took trade.

I say to him that these tax rates today set the platform for our policies, which this Government won an election on. I note that Dr Smith did not answer the challenge that Dr Cullen put to him—where would the cuts have been made by a National Government? How many schools would it have closed and how many nurses would it have disposed of? During the election campaign members opposite went around the country saying that Labour had taken on all these policy wonks and consultants, and that they would be gutting the public service, yet they knew deep down—and, as Dr Cullen pointed out, Bill English knew this—that the vast majority of public servants under this Government are front line, such as police and nurses, and others in jobs that help the country’s infrastructure. So where would National have made the cuts? If it was not going to make cuts, then is it today surrendering and backing off on its spending promises?

Dr Smith talked about prudent fiscal management, when it was Dr Smith’s party that went into an election promising to spend billions of dollars, and based in large part, on borrowing. Even the National candidate in my electorate would not admit it, when confronted by John Key’s own words, poll-driven and said all around the country, that it was based on borrowing. No one in the National Party would admit it. So I ask the House and the people of New Zealand to reflect on the legacy of fiscal management and the integrity around Dr Smith’s statements.

These tax rates build on Labour’s commitments, and this Government, unlike that mob opposite, has a habit of keeping its promises and has a habit of delivering to the people when it fronts up to an election, and beyond. So I ask people to judge. When we are talking about a place in history, I will be proud to stand up as an Associate Minister of Finance, alongside Dr Cullen, and say that we delivered on what we said we would do, and that we were fiscally prudent. I said about two Budgets ago, when Bill English attacked the Labour Party—I am a little bit of a scholar of history—for being too tight, I never thought in my wildest dreams I would hear Bill English, a National Party front-bench spokesperson, or anyone from the National Party, attack a Labour Government for being too fiscally tight. Traditionally National tries to say that Labour blows the lot.

Dr the Hon Lockwood Smith: Spending has been massive.

I invite the member to have a look at his own party’s manifesto. I invite him to get to his feet again and tell us what he would cut out of his manifesto, the manifesto that he took to the people of Waimakariri and others right around the country, and said: “This is what we will do. This is how much we will spend on defence, on prisons, on education.”, although they were a bit short on education. When people asked what National’s education policy was the candidate would stand and say: “We are for high standards.”, and sit down. The candidate in my electorate used to do that regularly. She used to say: “We are for excellence in education.”, and then sit down. She would never tell us where the dollars were coming from. In the last election National told us how much it would spend on defence, prisons, and education, but then said it would gut the public service, which in code meant gut teachers. National cannot have it both ways. It cannot say it wants excellence in education, cut taxes—

💬 Darren Hughes: And nurses.

—and nurses, and then say it would borrow a heap of dough to pay for its election promises, and then like some sort of road to Damascus experience say that the National Party that Dr Smith represents is somehow fiscally prudent. Give me a break!

The problem with that arrogant crew opposite is that they think people are silly, they think communities cannot see through them or add up. I recall one time when I was on the radio with National’s deputy leader and he made the inappropriate comment that New Zealanders do not understand Budgets, or how the economy works, or a set of Government books. I said to Mr Brownlee that Kiwis who can balance their own wage book, their own housekeeping money, and buy their groceries understand how the economy works. What an arrogant statement from the deputy leader. When we went around the country during the election campaign we knew that people understood that if we spend the lot and if we cut taxes and have less revenue, we would have to cut Government services. That crew opposite could not con the people of New Zealand.

The member who has just resumed his seat would never let the truth get in the way of a good rant, and that is what we have just had. One of the things that he said is that people should be able to keep their own money. That is what he said in his great ranting. He said that if people are clever enough to balance their own cheque books and their budgets, they are clever enough to understand these economic issues. Well, yes they are, and I wish he would speak very carefully to the Minister in the chair, the Hon Dr Cullen, because—

💬 Darren Hughes: That’s why the people voted for Labour.

We hear the member for Otaki, the man with the smallest majority in Parliament. Poor Mr Hughes!

Mr Cosgrove should talk to the Minister of Finance about how clever people are and that they can balance their own budgets, and should be able to keep their own money. That is what the National Party believes in.

I know it might be different in Dr Cullen’s situation, but a lot of New Zealanders have a huge amount of debt. Many people spend more than they earn, and one of the problems is that they are borrowing and borrowing. It is all very well for the Reserve Bank to say that it will put up the interest rates. In fact, there have been nine increases in the last 2 years. [Interruption] If the member opposite would like to repeat that statement outside the House, I would be very happy to sue him, and I suggest he do exactly that.

💬 Darren Hughes: That touched a wee nerve.

No, no. Some people actually have standards, and I know that member does not.

In terms of this hardship that New Zealanders are facing, at the moment they are facing very high interest rates, which this Government does not care about but encourages. It is all very well to say that that will stop them from borrowing more money. It does not help them with the debt they currently have. People were feeling quite good before, because their interest rates were a bit lower, but the values of their properties were going up. That was being driven by immigration. What we have at the moment are people who are very much hurting from the interest rate increases, and they are hurting from the credit cards they have spent up on. I know it is something that the Prime Minister might not know about, but most people are finding there are sales everywhere in the shops—they are not post-Christmas sales—because shopkeepers are starting to find it very hard. There is not enough cash to keep the economy going; there is not enough interest there.

Dr Cullen’s excuse is that he will hold all the money for us and he will dish it out occasionally for little pet projects. He thinks he is the only one who is clever enough to use the money, except it is not his money; it is the people’s money. Why can people not keep their own money? He says that National would cut all these services. There is a massive surplus that keeps on growing, as he keeps on overtaxing people. What he should be thinking is that he should not be taking so much money from the pockets of hard-working New Zealanders and that maybe he should not be saying to people, who are struggling on one income with a couple of kids to look after: “I, Michael Cullen, know best and I’ll dole out something to my favourite pet projects. And if you want your childcare, I’ll say you can have 20 hours free childcare in a kindergarten.” The only trouble is the kindergarten teachers go on strike all the time because they do not trust this Government, either. That is what they did.

Of course, what the Government does not want is for people to make their own choices about where their children go to school, or whether they have childcare. The Government wants none of that. Of course, we know why. This Government does not trust people. It tells everyone to be frightened, and that although they might be good at being in charge of their own money, they cannot trust themselves. Yet we have heard Mr Cosgrove today telling everyone how clever people are in their households. It is a shame that Mr Cullen cannot actually understand that people want their own money back. His reason for saying that is that he wants to dole it out.

So we will have householders who at the moment are having to pay very high interest rates on their home loans and credit card debts, and at the same time their teenage children will be getting absolutely interest-free money to spend pretty much as they want on anything they want. Now, how is it going to be for the 40-year-olds and the 50-year-olds who have children in that age group, who are trying to pay off their mortgages while their kids are living at home and getting interest-free money to have whatever tertiary education they want?

I am not a student of history. I have not taught history. I do not even have a good mind for history, and everybody knows that. But I will tell the House one thing. I was in the National Party for a number of years, and it has gone to the pack since then.

I was sitting here listening to the speeches from the National Party members, and I was trying to think—students of history may be able to tell me—of the last time that National cut taxes. I was trying to think of how many National Governments in the past 50 years or whatever have cut taxes. I remember working as a party volunteer for many, many years, and I remember getting a really hard time many times—not just once but many times—when National put taxes up, but I cannot remember when it put them down.

New Zealand First is happy to support this tax amendment bill, because, like most other New Zealanders, we looked at tax cuts and that sort of thing, and we decided, and have it as a policy, that there should be tax cuts for exporters. We believe there should be incentives for people to export out of this country. The people who send our goods overseas should be encouraged and should have tax breaks so they can reinvest and be better able to do those things. But, no, no, National members were not talking about that. They were talking about tax cuts across the board. It has not worked for President Bush, I might tell members, but nevertheless National members think that that is the way to go.

The thing that we in New Zealand First could not get around and the thing that worried us most of all is the thing that has been spoken about by Labour Party members this afternoon, and that is the question of where the money was going to come from. We believe we know where the money was going to come from. It was going to come, very definitely, from cuts in Government services—there is no question about that—and it was going to come from an area that we thought even National had learnt a lesson in, and that is the business of asset sales. National was going to get back into the business of asset sales. They were going to get back into the business of selling off key assets in this country, probably to the same people or associates of the same people they sold assets to some time before. I will not go down the list. I will not talk about all those things that were supposed to have worked more efficiently and better and provide better services under the free-enterprise system, in the hands of private owners, because we all know the history of Air New Zealand, rail, and all those sorts of things.

Mr Clayton Cosgrove talked about borrowing for the tax cuts, which was mooted at the recent election, and National members say that that is not correct. But I can tell members, though, that they did not deny that very strenuously at the time.

💬 Hon Clayton Cosgrove: John Key is on the record as saying they will borrow.

R DOUG WOOLERTON: He said they would borrow? Well, speaking of John Key, I can tell members that I was in this House last week when this bill was being debated—Mr Cosgrove will not believe this; he was not here, probably—and John Key gave a big speech about the bill but did not mention tax cuts. He did not even mention tax cuts. National’s finance spokesperson did not mention tax cuts. He was in the Chamber, ranting and raving, going on about everything under the sun, but he did not mention tax cuts, which is a key policy. In fact, I believe it is the only policy that was part of the National Party election campaign. The policy did not do it for them.

💬 Hon Clayton Cosgrove: Oh, no—that is because he is on 7 percent.

R DOUG WOOLERTON: Well, it is an interesting team, over here. Mr English is coming up. Dr Cullen, with due respect to him, is a smart man, but he asked: “Why is Bill English saying these things?”. He knows. He is being cute. He knows that this is not about the tax bill. This is not about any of this. They were pre-election speeches. What election? We have just had one. It is a leadership election. That is what it is about, and that is why we have the team over here. I am going to watch very carefully.

As I rise to speak on the Taxation (Annual Rates and Urgent Measures) Bill, I have to make a comment about the wonderful piece of nostalgia that that speech was. Mr Woolerton has given me the opportunity to have an appreciation of what the National Party must have been like 30 years ago when I was a child.

Kiwis doing their pre-Christmas light reading who cast an eye over this bill will be extremely disappointed. Those hard-working Kiwis who are looking for a bit extra in their pockets before Christmas will be very disappointed. Part 1 confirms the tax rates as they stand. It confirms that there will be no additional relief for those Kiwis who have worked all year and made a huge difference to this country. They have got up every morning and done the right thing—they have gone to work, paid their bills, and paid for extras for their kids—but there is nothing extra in this bill for them.

I want to talk about middle-income New Zealanders—who are somewhat amorphously called “middle New Zealand”. Those are the Kiwis who pay for everything. They pay for their medical bills. They pay a lot of education fees. They pay for everything. They do not get any handouts from Work and Income, they do not get any extras, and they are currently struggling to pay their bills. There is nothing in this bill for them. There is nothing for the hard-working electricians, plumbers, and gasfitters who have been coming to talk to our select committee week after week. [Interruption] “The Grinch Who Stole Waimakariri” is sitting over there. He should be wanting to play Santa to some of his hard-working constituents. There is nothing in this bill for those Kiwis—nothing at all.

I take issue once again with Mr Woolerton. I cannot believe that John Key would stand in this House, speak to this bill, and not mention tax cuts. That member has lived and breathed that policy for the last 6 months.

That policy, I think, shows a fundamental difference between the parties. National believes that New Zealanders deserve to keep more of their own money in their pockets. Labour believes that it is best to take that money out of their pockets, then to hand it back, and it expects those who do get something back to be gracious for that support. We believe that New Zealanders can make up their minds about how they spend their money. We trust them to spend their money in the ways they see fit, and we do not make any judgments about who deserves tax relief more than anybody else. One of the things we find with some of the tax plans put forward by Labour is that they are very selective indeed. There will be nothing for a person who happens to be a single worker without children. There will be nothing for a person who happens not to be a student with a student loan.

One of the things we will find, when the Government starts to dabble with the present tax system, is there will end up being distortions. Already we are seeing some students saying they will take out a greater loan because it is free—they are actually financially motivated to do so. Labour does not think that will happen, but there is not one single person who understands the way financial markets and financial incentives work who would say that students will not be encouraged to take out additional funding and invest it if they are able to do so.

We have seen some interesting comments about inflation. I wonder why Dr Cullen thinks that if New Zealanders spend their own money, it is inflationary, but if the Government cranks up the amount it spends, it is not inflationary. I would have thought that a dollar was a dollar, no matter how it was spent. So that is an interesting, selective view of economics.

One of the things National believes in is a move towards flattening the tax rates. It is not just National that is saying that; Treasury is also saying it. We need to simplify the tax system we currently have, yet every single idea put forward by Labour will just add a greater amount of complexity to the current tax rates, and will not introduce any greater amount of simplicity at all, and that will make administration costs a lot higher. I would like to hear Dr Cullen talk about what the cost will be of the implementation of the Working for Families package—a churning process that will take money from New Zealanders, only to hand it back, with the Government expecting them to be gracious for the donation.

The antiseptic language of Part 1 covers up and camouflages the fact that this is a foolish economic policy. But having heard the outstanding contribution made by my friend Ms Rich just a few seconds ago—

💬 Darren Hughes: Kiss of death for Katherine!

—I have decided that rather than yell and scream like the boy wonder from Otaki, who is busily talking himself out of a seat—

💬 Darren Hughes: How did this guy do? He got beaten up in Mana.

I did not even seek the electorate vote. What is the definition of a marginal seat? It is a safe seat held by Darren Hughes. If we give him a little more time, he will not even be here. So my advice to the member for Otaki is sit still, wait for a few minutes, and listen to my appeal to—I was going to say sweet reason, but in the case of the Minister of Finance it would be malignant reason.

The tax rates are a major reason why the economy is not as productive as it should be, why opportunities are constantly being lost to New Zealand, why 650 people per week move to Australia, and why New Zealand is slipping down the rank of OECD nations. Dr Cullen is a historian. I suggest that he reads—I may even buy him a copy—a very good Economist publication, The World in 2006. The first time I bought such a publication was in 1988. Then New Zealand, in terms of its standard of living, was ahead of Spain and Ireland, and was also miles ahead of Portugal. If we look at it today, obviously we see we are behind Ireland, very much behind Spain, and just marginally ahead of Portugal. One of the key reasons for that is New Zealand’s mediocre economic performance, and a major reason for that mediocrity is the tax rates.

Tax is too high in this country. The rates in schedule 1 are impeding growth, destroying self-reliance, and forcing people to go overseas to Australia, where the standard of living is 20 percent better than ours. The rates reflect the Government’s know-all approach to the governance of its citizens. It thinks it knows best, so it can take our money and spend it for us. It is not surprising that the Prime Minister’s favourite model for the way to organise a country is the Scandinavian approach of bloated bureaucracy and high tax rates.

But as Mr English said, the Government should not just take our money from us. The same litany is repeated by Business New Zealand, the Council of Trade Unions, and Treasury, the Minister’s own department. We are all singing the same song. Tax cuts are necessary to strengthen the economy, and to provide the incentives required to keep New Zealanders at home. We will shortly debate the student loan bribe introduced at the 11th hour by the Labour Party. The detail of that proposal can be debated then, but if we put money into tax cuts and divert it away from that suicidal scheme, that would be one obvious example that would answer the Minister’s question as to how we in the National Party would fund tax cuts.

What surprises me, and the member for Otaki should listen very carefully to this, is that even the Australian Labor Party favours tax cuts in the Australian economy. The only question is as to the size, the scope, and so on. [Interruption] Why can the New Zealand Labour Party—[Interruption] The member should be quiet. Why can the New Zealand Labour Party not listen to its labour cousins? The New Zealand Labour Party is stuck in the era of the first Labour Government, whereas the Australian Labor Party has moved on. Labour should get off its high horse, put aside its pathetic “soak the rich” attitude to life, listen to what the independent commentators are saying, and move towards tax cuts. I strongly advise the Minister that that is the correct approach, and that even at this late hour in his ministerial career he can revise upward what the historians will say about him in 15 years’ time. Rather than being seen as the man who presided over the locust economy, he could be seen as the man who, at the 11th hour, saw that his previous 6 years had been a foolhardy administration of the economy and decided he would do something about it.

It is not just the National Party that says that. The Māori Party says the same thing. United Future secretly agrees, which is why it is such a shame that it entered into that Faustian bargain with the Labour Party. ACT agrees, and I am sure that New Zealand First secretly agrees.

I am opposed, and my party is opposed, to this bill. I want to concentrate on a few points—why the bill is being dealt with under urgency, the “wet”, the Working for Families package, student loans, and party votes—and I have only 5 minutes! I also want to note who are supporting this bill and why they are doing so.

Why does this bill require urgency? I ask why we are in urgency right now when more cash is being siphoned from hard-working businesses that are now taking an extra 7 days to pay their bills—45 days as opposed to 35½ days in the last quarter. There is a surplus that was charging towards $8 billion at last look. Why is the Government so keen to take a $2 billion hit on New Zealand’s balance sheet, my balance sheet, and my family’s balance sheet? The future of my country is about to take a hit of $2 billion because of the write-off of interest on student loans. This bill will be voted on under a party vote, but I suggest that all those members opposite intending to vote for it should examine their consciences. How on earth could New Zealand First members, United Future members, and, in particular, the Māori Party members vote for this bill? How can they play politics with the future of New Zealand by racing through this bill? The funds are not required right now.

I would like to touch on the “wet”—the wine equalisation tax—particularly as I represent the best wine-growing area in New Zealand. I want to express one point of caution with the wine equalisation tax—that is, New Zealand is starting to accommodate Australian tax law. Of course this is a good measure for the winegrowers of New Zealand—

The CHAIRPERSON (Hon Clem Simich): The member will come to Part 1, please.

I apologise, Mr Chairperson. I will move on to the Working for Families package.

The CHAIRPERSON (Hon Clem Simich): No, Part 1 only.

Income tax rates—OK, sure. Income tax rates need to be cut, and they should be cut. Treasury has more than enough money to allow for the cuts. We have a crisis coming in New Zealand. Our exchange rate is fluctuating and it is about to plummet. Interest rates are going up every day. The official rates have gone up nine times in the last year. Mr Bollard recently suggested that we should have room for tax cuts because New Zealanders are essentially rational investors. Mr Cosgrove recently accused the National Party of treating taxpayers as silly. I suggest to Mr Cosgrove that they are rational investors, because Mr Bollard is increasing interest rates to stop people from borrowing, to help slow down the economy, which has been pumped along by the public sector. As we have seen in the recent Reserve Bank policy announcement, public expenditure, public GDP growth, is about to stay constant at about 5.5 percent for the next few years. Private growth is plummeting to negative in 2007-08. We need room for tax cuts. Locking New Zealand in at rates of 33 percent and 39 percent, with the difference between the income rates for trusts and personal income tax, and, of course, for corporate tax, needs to be readdressed.

I again suggest that members examine their consciences. Can they look taxpayers in the eye and say that this is good legislation and this is a good bill? Can they seriously look them in the eye? They should stop playing politics with New Zealand’s future and take only as much as they need to run the country in the best and most proficient way, and let those who earn the funds in the first place look after their future and make their decisions. If they were brave enough and progressive enough to cut people’s taxes and leave extra money in their pockets, they might be surprised to find that people start paying off their mortgages.

If these rates are stuck in stone, and if this bill does go through, New Zealand will become the land that time forgot, because all the decent earners are whipping across to Australia. We have the dinosaurs: the “Cullenosaurus” taking taxes from all over the country, a front bench full of “MPosauruses”, and a party that promotes only “policyosauruses”—a party with a policy of tax structures, tax rates, and fiscal policies that are backward-looking, not forward-looking, and not investments in New Zealand’s future; they are only constant references to the past. If we do not restructure, and if we do not examine and do what is fair with these tax rates, New Zealand will be stuck, at the very best, right where it is right now, and many other countries will race right past us.

I move, That the question be now put.

As someone who is a new member of Parliament, I was initially astounded, then quite simply appalled, at the inside information on how democracy works for this Government. Forgive me my naivety, but, the way I understand it, the House is in urgency this week so that the Government can quickly push through legislation that affects all New Zealanders’ lives. It is pushing it through so quickly that there is no time for public submissions, so the public does not get to have a say in the direction that the country is heading. But I gather that that is the way that New Zealand works under a Labour - New Zealand First Government. It seems appalling that the Government works in that way. It is a busy time for everyone with Christmas looming, and the Government chooses to try to push through a very flawed piece of legislation that turns earners of the average wage into beneficiaries, and discriminates against all New Zealanders.

It is about equality for all New Zealanders. It is about putting more money into the pockets of more New Zealanders. What the Government does not seem to understand is that it is the people’s money. These people are working hard in their jobs and deserve to have across-the-board tax cuts, not this sort of flawed bill that gives something to minorities and individuals whom the Government deems to be worthy of its tax relief.

💬 Moana Mackey: For families.

Well, let us define families a little bit. Under a Labour Government, families seem to be defined as those with dependent children, and the Working for Families bill most certainly does that. What New Zealanders deserve, though, is across-the-board tax cuts. Under a National Government, those earning between $38,000 and $50,000 would have got tax relief—down to 19 percent. Being taxed at 19 percent would have put more money back into the hands of everyone.

It is about self-determination. Let New Zealanders decide how they want to spend their money. The arrogance and the hypocrisy of the Government in taking that money from them to spend it in the way that it deems best is purely that—arrogance. What do people expect from a Government? They expect an education system that supports them, a health system that is available to them in their times of need, and retirement income that sees them living the sort of life that people in New Zealand so deserve. Instead, though, the Government takes that money off them, and does not utilise it properly. It does not identify that it is all New Zealanders who deserve to have a tax cut—not just some individuals. It seems to me that people deserve some understanding. It is about them and their working lives—working hard to have the means to get on and do what they determine to be best. Instead, we have a Labour Government that decides that it knows what is best for everyone, and just picks out individual people within the community, whether they be students or those with dependent children, whom it deems to be worthy of a tax cut.

I oppose, obviously, this piece of legislation. I find it absolutely astonishing that we are here under urgency, pushing through something that does not allow all New Zealanders to have a say in what exactly is happening. All New Zealanders deserve the right to say what happens to their money, but it seems that, instead, we have a Government that puts things through under the reign of urgency, and does not support everyone as it should.

I move, That the question be now put.