Customs and Excise (Motor Spirits) Amendment Bill

I move, That the Customs and Excise (Motor Spirits) Amendment Bill be now read a first time. At the appropriate time I will move that the bill be referred to the Finance and Expenditure Committee, and that the committee present its final report on or before 16 December 2004. To allow for this, I will move at the appropriate time that the committee have authority to meet to examine the bill at any time while the House is sitting, except during questions for oral answer, during any evening on a day on which there has been a sitting of the House and to meet on a Friday in a week where there has been a sitting of the House, notwithstanding Standing Orders 191 and 194(1)(b) and (c).

This bill is important because it provides a more secure funding base for the improvements in land transport that are part of the Government’s Investing for Growth strategy announced in December 2003. That strategy was designed to improve the governance of transport in Auckland and significantly boost regional land transport funding throughout the country. Good transport systems, however, cost money, and this bill is about ensuring there is money now and in the future to make improvements to land transport.

The bill contains two amendments to the Customs and Excise Act. The first amendment increases the amount of duty to be paid on petrol by 5c a litre, excluding GST. This bill provides for this increase to come into effect on 1 April next year. However, the Government will promote an amendment to this bill to provide for an increase in the petrol tax, to be brought into effect by Order in Council on a date no earlier than 1 April 2005. This allows the Government to determine the appropriate time to apply the increase, taking into account the international price of oil. The second amendment indexes to inflation the portion of fuel excise duty used to fund land transport. Indexation will be annual, and will be implemented from 1 April 2006. At expected average rates of inflation, each annual increase will be approximately half a cent per litre.

Outside the scope of this bill, the Government will also move to make an equivalent increase to road-user charges payable for diesel vehicles weighing 5 tonnes or less. This increase will also be brought into effect by Order in Council on a date no earlier than 1 April 2005. Together the increases in petrol excise and road-user charges will generate approximately $207 million annually, exclusive of GST. All the additional funds will be dedicated to land transport, allocated under the National Land Transport Programme, and distributed around the country according to population. On the basis of population, $1.3 billion will be distributed over the next 10 years to areas outside Auckland. This means, for example, that my part of the country—Hawke’s Bay—will gain approximately $70 million for road transport. The Nelson-Marlborough-Tasman area will receive $66 million extra, and, in the far north, Northland will receive an extra $73 million for road transport. Auckland, because of its population, will receive $716 million and will also receive a special grant of $900 million from the consolidated account, making Auckland’s total funding for land transport for the next decade $1.62 billion.

This funding is part of a massive Government commitment, over the next 10 years, to land transport nationwide—a commitment worth more than $18 billion in total. This commitment is by far the largest that any Government has made to land transport for some considerable time. As we all know, it is sorely needed as this Government works to rebuild the country’s worn-down infrastructure.

The bill also provides a mechanism for collecting those funds, to ensure that the result of decades of underfunding of land transport will be addressed. In the past, successive Governments have had to pass new legislation every time increases in excise tax on petrol were required. Increases to the excise duty on petrol were needed just to maintain the levels of transport initiatives. That is not only because it costs more and more to undertake land transport initiatives but also because new technologies make vehicles more fuel-efficient. While I salute fuel efficiency, it also means that we gather less excise revenue per vehicle per kilometre.

This bill provides for the rates of duty on motor spirits to be amended by Order in Council. Any new rate must be calculated in accordance with a specified formula. This formula indexes existing rates of duty in accordance with the consumer price index, excluding credit services, and by reference to the amount of duty required to be diverted to the National Land Transport Fund. So it is carefully targeted, and the increased funding resulting from indexation will be used only for the specific programme for which it was intended. By doing this, the bill puts transport on a more secure funding base than has previously existed.

As I conclude I would like to quote the National Party leader: “There is no doubt that our roads are under huge pressure.” and “The real solution to Auckland’s traffic congestion lies in building more roads, and doing so without delay.” So I say to the National Party leader: “Watch this space.” We are setting up the mechanisms to achieve that, and more. Of course, his party does not like the way we are going about it, but I say that people sitting in cars and waiting at bus stops want solutions. This Government is delivering them. This Government has identified transport as a key element in achieving the economic, social, and environmental outcomes that are desired for New Zealand in the 21st century. Our vision for transport is that by 2010 this country will have an affordable, integrated, safe, responsive, and sustainable transport system. There is still some way to go before we achieve our vision, but this bill today is one of the essential building blocks, delivering some of the funding required to make our vision a reality. I commend this bill to the House.

What this Customs and Excise (Motor Spirits) Amendment Bill reminds us is that when it comes to the Labour Party, voters should be very careful of what that party does not say. The House will remember Helen Clark’s promise back in 1999, when she said that a Labour Government would not increase income tax other than the increase to 39c for, she said, 5 percent of the people. Of course, it did not remind the public of New Zealand—the voters—that income tax is only one of dozens of taxes that people pay. This Labour Government has had a field day in lifting all the other taxes. It is gouging tax out of New Zealanders.

At the last count I saw of the tax increases under this Labour Government, this is the 24th since it has been in office. This is the 24th tax or levy increase since Labour has been in office. Those members conned the people of New Zealand that they would put up only the top income tax rate, for people on over $60,000. They said they would not put the corporate tax rate up, or GST. What they did not tell the voters is that there are lots of other taxes that people pay, and this Labour Government just keeps wrenching them up and gouging more tax. How much more has it collected? Thirty-four billion dollars more. That is a 40 percent increase in the tax that is taken off New Zealanders. This is the 24th increase in tax.

What will upset voters, and should make them very angry, is that Helen Clark’s Labour Government is going to hit them again with more expensive petrol at a time when petrol is at about the highest price it has ever been. It costs me over 80 bucks each time I fill my car up—more than $80! I am lucky; I am on a better salary than the average New Zealander. But ordinary, average New Zealanders are hit hard, and it hurts, and Labour does not care. It will just gouge another 5c a litre out of the ever-suffering motorist.

Pansy Wong: Plus GST.

Dr the Hon LOCKWOOD SMITH: Plus GST, as my good colleague Pansy Wong reminds me. What will make people angry is the fact that this Government is sitting on a surplus of $7.4 billion.

Brian Connell: How much?

Dr the Hon LOCKWOOD SMITH: It is $7.4 billion. Michael Cullen, the Minister of Revenue, will say that the operating balance excluding revaluations and accounting charges is not that big. It is over $6 billion, and no one is denying that. It is clearly within the Government’s power to change the way we fund our roading in New Zealand. To fund roading out of cash income is like trying to buy one’s house out of one’s piggy bank. If this Labour Government has not got its economic maturity above that level, it does not deserve to govern.

Pansy Wong: They are still in cash-flow accounting.

Dr the Hon LOCKWOOD SMITH: As Pansy Wong says, it is still in cash-flow accounting. It is absurd to tax today’s New Zealanders to get cash to invest in assets that will be enjoyed by New Zealand 20 years hence. That is clearly absurd, and it is wrong. There are several ways that the Government could be looking at refinancing roading in this country, because that is what it is about. There is a desperate need. This 5c increase will raise, I understand, about $165 million or thereabouts. That is a laughable amount of money when we look at the investment and the financing required. What this Labour Government does not seem to understand is that the roading problem is huge, and Transit’s 10-year plan does not even start to grapple with the magnitude of the problem out there. Trying to solve it by gouging more cash out of ordinary, hard-working New Zealanders is not the way to finance our roading.

If the Government cannot get its mind round a decent, long-term financing system for roading, it could shift across some of the petrol tax money that goes into the consolidated account. National did that in the 1990s. We shifted money across to help fund roading. The Government could do that, but, no, I guess that would be helping our ordinary citizens, and this Labour Government does not believe in doing that.

I just want Labour members to reflect on what they are doing to this country right now. On 1 April 2005 the tax on petrol will go up an extra 5c, and I suppose that by the time GST goes on top of that, it will be more that that. What will that do to the price of transport in New Zealand, when we are already being charged fuel levies—and members should not forget that the Government will put up road-user charges too—

Brian Connell: And a carbon tax.

Dr the Hon LOCKWOOD SMITH: —and a carbon tax is coming in, as well—for freight in this country? I know that Labour members would not know that, because none of them run businesses, but I can tell them that when I pay my freight accounts for the transport of livestock, there is a fuel levy as a separate line item. The freight rate charge is one thing, but there is a fuel levy in addition to that. So at a time when businesses are already being charged fuel levies, Labour wants to put the cost of transport up still further by putting petrol taxes up and increasing road-user charges. Do Labour members not care at all about what they are doing to businesses in this country? Do they not care at all about what they are doing to the average, hard-working New Zealander? If one is on the average income in New Zealand—about $37,000, I think—then 80 bucks to fill a tank with petrol is a huge hole in one’s pay packet for the week, and Labour is about to make it more expensive.

And Labour will increasingly make it more expensive, because not only does this bill put up the petrol tax from 1 April next year but from 1 April 2006 it will be indexed to inflation. If this was a reasonable, even-handed Government, and it was going to do that, one would think that it would also index the income tax thresholds, so that the average New Zealander was not being pushed up into higher income tax brackets. But, oh no, not Helen Clark’s nasty Labour Government! Those members are not interested in the welfare of the ordinary New Zealander. They want to have it both ways. They want to gouge tax both ways. In the last couple of years the average New Zealand worker, according to OECD data, has had the second-biggest increase in income tax in the OECD, largely because of the bracket creep issue. Wage and salary earners are being pushed up into higher tax brackets, because although Labour wants to index petrol taxes it will not index the income tax thresholds. So average New Zealand workers are being gouged more for income tax—the second-biggest increase in the OECD for the average worker—and now the Government is going to make it more expensive for them to fill their cars up at the petrol station.

I want the Labour Government to think about what it is doing to ordinary New Zealanders. I suppose ordinary New Zealanders would say it was OK if it was solving the problem, but I come back to the fact that Minister Barker, who introduced this legislation today, is deluded if he thinks this measure will solve the roading problem. He is in a dream world. It will not. In the next 10 years, for example, north of Auckland—where I come from—there is a plan to take the motorway through to Pūhoi. Many members of this House will not know where Pūhoi is, although it is a lovely place; it is in my electorate. This four-lane motorway will dump out into an area where there is already huge traffic congestion as Aucklanders try to get to the east coast beaches north of Auckland. There is nothing in Transit’s roading plan for the next 10 years to do anything about that, and this money will not solve the problem in any way at all.

New Zealanders will suffer from the tax gouging of the Labour Government and they will still be caught up in gridlock on our roads.

That was pathetic. If the National Party could find somebody who knew something about transport, that person would be here making a speech. The National Party has no policy and no ideas. It did nothing. The member who just resumed his seat needs to be reminded that when the National Party was in Government for 9 long years it built half of the ALPURT motorway in Auckland and did nothing else. It froze public transport spending. It had a road toll that it could not control. It had no plans ready—nothing. When I became the Minister of Transport the Opposition said we would see not one motorway project built or even started, in Auckland, in our first 3 years in Government. What happened? We got heaps of projects going and finished. Now the Grafton Gully—as the members over there would know if they had ever been there—is finished, the Puhinui interchange is finished, and State Highway 20 is about to start.

Just as important, more money has been put into road safety. When I became the Minister the Opposition said we were not going to meet our targets of stopping New Zealanders dying on our roads, unless we put in a large amount of money. Between us, the Minister of Police, George Hawkins, and I created the highway patrol and a whole raft of new road safety measures. We have got the best road safety results ever since.

Just as important, we have doubled the spend on public transport. That lot over there had frozen it for 5 years. It is absolutely ridiculous to have the National Party talking about transport. It did nothing. It had a policy called Better Transport, Better Roads. It wasted 5 years running around the country getting rubbished by everybody and it is here today with no policies and no ideas. It does nothing; that is why it is in Opposition and will stay there for a very long time.

This is a good measure. The public of New Zealand know that we have a transport infrastructure deficit created by 9 years of National Party neglect. They know they have to pay some more to fix it, which is what this bill does.

I do agree with the statement by the Hon Mark Gosche that during the 9 years of a National Government little was done on roading. But we are not going to support this bill; it is an absolute load of garbage. In 1991 or 1992 I went to the Rt Hon Winston Peters—perhaps in some ways, as that is how I ended up here, I wish I had not—and told him I was a consultant for port reform.

Brian Connell: He was in the National Party, wasn’t he?

PETER BROWN: He was in the National Party at that time, yes. I told him that once we got port reform, and this country was working 7 days a week, 24/7, the trucking on our roads would be enormous and the roads would not keep up with it. In 1993 I went to see the Rt Hon Winston Peters, who had by then formed New Zealand First, at a public meeting. He put on his usual charm as I walked out and asked me to write him a transport policy. I did not dream for one minute that I would be here now trying to put it into place.

I have to tell the honourable members over there that the only thing they have got right about this is that we need to put some money into roading. I agree with Dr the Hon Lockwood Smith that the way we fund roads in this country—and this is what I told Winston way back in 1991—on a “pay as you go” system is absolutely ludicrous. People have listened to the Greens far too often in recent times. I am totally ignoring them right now. I am not going to take a blind bit of notice of the member on my left. Basically this country needs more roads fast. Lockwood Smith referred to the fact that they are intergenerational. I think he said 20 years; I hope the roading we build in this country will last a lot longer than 20 years.

Dr the Hon Lockwood Smith: They don’t; they fall apart.

PETER BROWN: They do not last, because of construction problems. We should be borrowing the money to finance these roads within the existing funding stream, particularly if the excise tax on petrol that goes into the Crown account is transferred across. That was started when we were in coalition Government—2.1c per litre of petrol went across to the roading account. That was a New Zealand First initiative, which would have continued had we stayed on the Government benches.

With that money we should be borrowing to build these roads, and building them fast. We have been absolutely dumb in this country. When we had massive unemployment we should have been building roads. A few years ago, in the 1930s, a chap called Francis Chichester came out and said there was a Depression in this country, so we should grow logs. And look at the benefits of that to this country right now. We planted timber, and it has had huge benefits.

When we had unemployment problems in the late 1980s and 1990s, we should have been building roads. [Interruption] I tell Mr Cunliffe not to take this lightly. Many people have died because of our failure to build roads and because of our inadequate roading. They will continue to die until we build adequate roading, and the way to do that is to borrow money.

United Future is a party with fortitude to some very limited degree. In the last few days its members have been pushing for tax relief here, there, and everywhere. They have not won one cent of tax relief, yet they will support this bill to increase tax on petrol. Does that make sense? It does not make sense to me, but I am just a simple sailor. United Future members have been going around the country bragging that we need a 5.6c a litre increase on petrol when we have a huge amount of money in the consolidated account.

The tax take in June this year is close to 40 percent greater than it was in June 1999. Now we are talking about slugging the motorist for another 5.6c per litre of petrol. It is an absolute disgrace. On top of that—and it is only 10 seconds away—we know that the Government is going to put in tolls here, there, and everywhere, including on the second bridge in Tauranga. United Future members are actually bragging about this. They are bragging that the motorist should be slugged for another 5.6c a litre and that we should be paying road tolls.

I say to the honourable members in the Government that, for God’s sake, they should get their wits about them and read the Allen report. It is a very significant report. It tells us what can be done, and the advantages on a dollar basis, with an investment in roading in this country. It is very, very significant. On a dollar-invested basis, the returns in Tauranga would be huge. It states that on a loan repayment at 8 percent there is a $6.50 return on a dollar invested. That is the way to go. There would not be one business in this country that would fund its expansion of business—and that is basically what we are talking about by expanding the road infrastructure—there would not be one company or any business people worth their salt who would want to pay as they go.

They would be saying “Let’s use the dollars we get in revenue to borrow and advance this business.”—be it capital, staff, or whatever. That is what we should be doing with roading in this country. We should be taking a more businesslike approach and saying that we need this amount of roading in this time frame, and we will have to borrow on this basis and pay it back from revenue earned. I listened to the argument that we will get better consumption per litre of petrol and therefore that the revenue will go down. That is quite some way away. Even with the energy-efficient cars that were outside Parliament this afternoon there will still be some revenue from petrol that will be a return. There are also road-user charges. The other thing about this bill is that it does not target the road-user charges that trucks pay. It is only the average motorist in the light diesel vehicle who will pay increased road-user charges. This bill represents nothing more than a rip-off for the motorist. This is an approach by the Government to say that motorists are an easy target and it will take them for all it can.

Hon David Cunliffe: Auckland needs it. The country needs it.

PETER BROWN: There is no argument that Auckland needs roading. Members will not get any argument from me. But I tell Mr Cunliffe that the way of funding it—and he must have some idea of finance as he is the Associate Minister of Finance, although I guess that does not give him any particular qualification—

Hon David Cunliffe: No free lunch.

PETER BROWN: He is exactly right. There is no free lunch and he should not be putting his free lunches on to the working people that he supposedly represents here. You come in here on the backs of average working people—

The ASSISTANT SPEAKER (H V Ross Robertson): No, I do not do that, Mr Brown.

PETER BROWN: The member wants to question what I am saying.

The ASSISTANT SPEAKER (H V Ross Robertson): You are bringing me into the debate.

PETER BROWN: I beg your pardon. I realise that you would not do that in any way.

I will answer the member’s concerns. If the Government wants to be fair, then it should accept that roading costs are paid for people who use the roads now and for people who will use the roads tomorrow and the day after. That is a fair way of funding the whole thing. Until we get a political party sitting in the Treasury benches that takes a businesslike approach to roading, the Government will have to slug the motorists, or whoever it can. I tell the Government that we will be there. This is the biggest issue that I think this country faces in the next few months, in terms of finances. It will be a political issue. The people who think that they can keep slugging the motorist—the average person who just goes down the road—for more dollars or cents per litre of petrol and then add road tolls will find that they will come a gutser. We will be back after the next election and we will be insisting that this tax is removed. It is not fair, it is not warranted, and we will remove it. I can categorically tell the House now that it will be removed. I say to the poodles now in the United Future seats that they can vote for it, because we will not have to worry after the next election. They will not be here and we will be taking it off.

The Greens are supporting this bill for two reasons. We are not supporting it just because there is a great lag in infrastructure funding after years of neglect, but also because at the same time we have to accomplish one of the most difficult transitions that our society has ever been through—that is, to a transport infrastructure that is much less reliant on oil than the present one. We have to quickly build a much better public transport infrastructure than we have, a much better rail infrastructure than we have, and better facilities for cycling because there is no evidence that oil will come down from US$55 a barrel to any significant degree or for any significant length of time. It will continue to fluctuate but its long-term trend is inexorably upwards.

We know that, because we have senior people in the oil industry telling us that world production cannot go much higher than it currently is, yet demand is continuing to rise. When that happens New Zealand will be hit a lot worse than Europe because Europeans have adjusted to higher fuel prices for their cars and they have bought cars that are much more fuel efficient than ours are. If ordinary New Zealanders have cars that are anything like Lockwood Smith’s, and they take $80 to fill the tank, then they will be in deep trouble because it will cost $160 to fill the tank before too long. My advice to Lockwood Smith if he is worried about the cost of filling his tank is to get a smaller car. The Europeans have learnt how to do it. It does not cost me anything like $80 to fill my car’s tank. There are solutions to this.

I would warn the Government, though, not to wait for the price to go down to what it regards as the long-term equilibrium before it brings this legislation into force. If the Government is going to wait for the price to go down to US$19 a barrel, which Treasury thinks is the long-term equilibrium, or even US$30 a barrel, which is Treasury’s revised idea of what the equilibrium might be, then this legislation will sit on the statute book and never come into force at all. It is sensible, when oil prices are fluctuating, to put a levy on it when it is in a bit of a dip, rather than on a peak. But we cannot expect that it will be back to business as usual with cheap oil for the foreseeable future. That will simply not happen.

The other objection I have to this is that diesel users are still not paying their fair share of excise tax. The petrol users pay for the roads and they also pay into the consolidated account. The diesel users pay absolutely nothing into the consolidated account. They pay only their share of the roading. I think that with the second big increase for diesel users who have vehicles that weigh below 6 tonnes, large diesel trucks will be paying less than their share—even within the terms of the Land Transport Fund.

The argument that some excise on fuel should go into the consolidated account is made because motor transport causes significant costs to the rest of the economy, which it does not pay. The principle of economic externalities suggests that those costs ought to be paid by the people who create them. The Government has produced considerable research on this. The land transport funding study that was done back in the late 1990s was not able to be very precise about the quantity of these costs that are caused to the rest of the economy, but they saw it as maybe around $1200 million. In fact, if we want to have fair and transparent pricing, then we need to cost those externalities, like the health care costs that are not covered with the ACC levies, the noise, the pollution, and the greenhouse gases that everybody else has to cover. They ought to be covered in the price of fuel itself. In Europe it is, and fuel prices are much more expensive than ours. Europe’s economy is not suffering compared with ours, and Europeans are coping.

Peter Brown believes that we should just build large quantities of roads. I wonder whether Peter has ever looked at the outlook for oil, the 20-year outlook for transport, what will be running on those roads in 20 years, and where we will be if we have nothing but roads. There is a terrible short-sightedness around. There is a refusal to even talk about the longer-term future, the huge shift we have to make, and the infrastructure that we have to build in order to be able to keep mobile after prices continue to rise, and also, I have to say, to cope with the effects of climate change. There is a lot of lip service towards climate change and the Kyoto Protocol but, quite frankly, if we continue increasing our use of fuel and our road transport, and neglecting rail and public transport, we have no hope of addressing the climate change issue. We will all go down together in a screaming heap in a warming climate.

I also have to take issue with Peter Brown’s suggestion that we should pay for our roads by borrowing, that that would solve the problem, and that future generations can pick that up. There is a rationale for all roads to be paid for by borrowing and amortised over future use. There is a rationale for paying for them on a “pay as you go” basis. But what one cannot countenance with any sense of justice is that one generation that has inherited a set of roads completely paid for by previous generations should then change to borrowing on a large scale in order to pass the costs of the extra roads they want on to future generations. It is a little bit like what was done by some members of this House, who received a totally free tertiary education, courtesy of the taxpayer when they were young, then decided they no longer wanted to pay the sorts of tax rates that it takes to pay for an educated society. All of a sudden, they decided the next generation would have to pay for its education with little in the way of student allowances, and very high student fees.

That means that one generation in the middle gets off scot-free. It inherits a really good system paid for by its parents, and it does not bother to hand that on to its children. That is what we would be doing if we turned now from our “pay as you go” system to a mainly loan-funded roading system. We would simply be passing that cost, along with all the other costs of oil depletion, climate change, and the increasing cost of fuel, to the next generations. It will not work.

I rise on behalf of the ACT party to vote against the Customs and Excise (Motor Spirits) Amendment Bill. We do so based on a number of principles.

The first is that the party disagrees with this tax-grabbing Government’s move. The Government has told the country that this increase in petrol tax is to fund the transport plan to fund roading. But when I look back to 1 March 2002 I see that when this Parliament passed a bill to increase petrol tax by 4.7c per litre, that increase was intended to fund the Government’s road transport package. I ask what has happened to all those millions of dollars that the Government told the country would fund roading. Here we are, again passing another bill to fund roading. What has happened? Is this Government so careless that it has managed to lose that money? Why did that money not go into roading? I would like the next speaker from the Labour Party to explain to us what happened to that 4.7c increase. Back in April 2002 we had a 30 percent increase in road-user charges for those people who had diesel vehicles. A 30 percent increase is a huge amount, and this bill that we are passing now provides for a 24 percent increase in road-user charges for vehicles under 5 tonnes. Back then, 2 years ago, we were told that all of that money was going to fund roading to fix the transport problems in this country, and here we are again—we have a sense of déjà vu.

This bill to increase petrol tax and road-user charges makes the fifth increase in taxes on motorists since Labour has been in power. What does this Government have against motorists, for goodness’ sake? Why is this Government picking motorists as the group of New Zealanders who should be socked with increases in taxes? That is pretty unfair, particularly if one sits in Auckland or Wellington rush hour traffic day after day. One can hardly tell one is sitting on a motorway; one probably thinks one is sitting in a great big parking lot. The traffic problems in this country are pretty diabolical, and in 5 years this Government has failed to fix those problems.

The Hon Lockwood Smith spoke in his contribution about a particular road that affects his electorate—the Albany to Pūhoi realignment B2, which is the extension of the northern motorway. That road is the gateway to the north, which is where I live. I think it is an absolute disgrace that the requirements to get planning permission for that road were completed in 1996, but it was held up for 6 years before the Environment Court, and through Resource Management Act problems. The Government has failed to address that major barrier to progress in this country. For 6 years that road was held up. The tragedy is that if permission to build that road had come through back then, it would have been seen as a No. 1 priority by the Government. The people of Auckland and Northland were promised that the $150 million—as it was back then—needed to complete that road would be put into it straight away, and the road would be built. Now, because of that 6 year delay, this Government has taken it from a No. 1 priority—knowing that it is State Highway 1, the northern motorway, and the premier road in New Zealand—down to No. 10.

Now, the people of that region and of New Zealand have been told that instead of the Government funding it, like they were promised all those years ago, it will be funded through a toll road. That is completely unfair on those people, who all knew that it was a State Highway 1 priority that was to be Government-funded through petrol tax money. That promise has been broken, and now it will be a toll road.

Meanwhile the cost has gone up from $150 million to $350 million. I wonder whether the Government cares about that. I think that sort of increase is outrageous, and I would like to know why we have a $200 million increase for 7 kilometres of roading. We are not talking about a huge amount of road. I would expect the Government to be able to explain in this debate that, yes, it does put all that sort of roading work out for competitive tender, and it does get the best value for the taxpayer dollar. I think that in this case the escalation is so extreme that questions do need to be asked.

The Hon Lockwood Smith talked about the number of stealth taxes this Government has brought in since 1999. I just want to set the record straight: this is the 34th stealth tax imposed since this Government took office. I refer to increases in petrol taxes, excise taxes on alcohol and sherry—if members recall, this Government rushed up the tax on sherry—and taxes on cigarettes, and increased levies, tariffs, and fees. If members can name it, the Government has increased it. That contributes to the $34 billion in extra taxes that Labour has taken since coming into office. It is no wonder that the tax now paid by the average working family equals 46 percent of its gross income. That is far too high. That 46 percent of gross income comes back to Wellington to fund all the things this Government is trying to do. Looking at that, one has to conclude that this Government is taking away choices from working families. It is taking away such choices as mothers being able to stay at home and care for their children. Under this Government, the pressure on those families has escalated. That is a disgrace and is certainly not in the best interests of New Zealand families.

If we then go to the issue of petrol tax, we find that of the $1.20 or so per litre that we have to pay, over 50 percent of it goes back to the Government. It goes into the consolidated account. I understand that around 13c to 14c of that money goes into roading. Of the 60c or so, only a very small proportion goes into roading. So I would say to the Government—and maybe Mr Cunliffe can put us right and tell us exactly what the figures are—that if it wants to put more money into roading, why does it not just use the petrol tax money that it already collects? Why does it have to add another levy on to motorists? That appears to me to be deceitful and totally unfair. At a time when petrol prices are rising rapidly because of external pressures, we have a Government that is putting its own pressure on to motorists, and making it almost unaffordable to get into one’s car and drive. I say that is something that the average family that owns a car can well do without.

This bill is an unfair bill. When the Prime Minister came into office she promised that there would be no tax increases for the 95 percent of New Zealanders who earn under $60,000. We know that because of the inflation that has gone on, and the creep of taxation, a whole load of New Zealanders are now in that high tax bracket, and also that a whole lot of them have to pay the unfair stealth taxes that Labour is imposing.

I rise on behalf of United Future to speak on the Customs and Excise (Motor Spirits) Amendment Bill, and to announce to the House that United Future will support the bill. We understand that nobody in this country wants to pay tax, and we would all like to see tax reduced, but we are prepared to pay tax that goes to specific purposes. Most reasonable New Zealanders, when they see a benefit from paying tax, are prepared to pay their share. We are prepared to support this legislation, because this tax is being raised to improve the conditions of our roads in New Zealand, and to build the new roads we need.

We want better roads in this country. I do not believe there is a motorist who would oppose seeing a better quality of road, which would mean safer roads for our drivers and passengers, and a more efficient transport system. We go to Europe and see their beautiful roads, and we understand the price they pay to have that. The cost of their fuel is far, far higher than what New Zealanders pay for their petrol here in New Zealand. So we are prepared to support the legislation, because 100 percent of this new tax will go to the National Land Transport Fund to be spent on the construction of new roads and the improvement of roads, which are desperately needed in New Zealand.

The second reason we will support it is because it will then be redistributed from the National Land Transport Fund back to the regions it was raised from, on a population-distribution basis. We believe that is very good news. United Future has long supported that when we devolve responsibilities to local government we should also give local government the funding it needs to carry out those responsibilities. This is one instance where local communities, which face increased costs in building their roads and in improving the State highway network, will get back the tax increase for their own regions, so that they can have some decision-making power over how the money is spent. We believe that is very good progress on United Future’s policy of devolution of funding to local government and to local communities.

We agree with the Minister of Finance that it is prudent to allow flexibility as to when to introduce the new tax, because of the recent spike in fuel prices. If, in fact, fuel prices are still very high next year, it will make sense to defer the introduction of the tax for some time; at this stage, no one can predict what the fuel price will be next year. But we do not believe that we should base all our decisions on overseas factors. We need to have roads in New Zealand, and we have to pay for them.

We should have built those roads some time ago, as has been pointed out by other speakers before me. It would have been a lot cheaper to build them in years gone past. The longer we wait to build the roads we need now, the more it will cost us in the future. We should not have been diverting as much of the fuel tax to what was the consolidated account but is now the Crown account; previous National and Labour Governments used to take a lot more of the fuel tax than happens today under this Government. We would already have had better-quality roads, and they would have been built more cheaply than their cost today. The longer we wait the more it will cost us, so, by both fuel tax and other means, we need to get stuck into the important task of building an efficient transport network in our country. The longer we wait, the more construction costs there will be, and the more costs there will be to our economy from the congestion and frustration that people face in trying to move both people and products around our country. To have a vibrant economy, we must have an efficient, affordable, integrated, safe, sustainable, and responsive transport system, and that is part of what our national land transport strategy states very clearly.

United Future is well aware of the concerns of New Zealand motorists about the diversion of what is currently 18.5c per litre from the fuel excise tax to the Crown account. In supporting this legislation, United Future makes it very clear that we continue to have an ongoing concern about that, and we have consistently pressured the Government to complete a study into what the costs to us all in New Zealand are of petrol use for transportation—in other words, the health effects of fuel emissions, and the environmental costs and effects of vehicle use and road construction. For the last 2 years, I have urged the Ministers of Transport to complete the study so that there can be transparency in New Zealand about what the money is being diverted for. I am happy to know that, according to information given to me recently, the study is almost complete, and we will be able to have a discussion in this country about whether it is justifiable for 18.5c to be diverted to the Crown account to take care of those other, non-road costs of the use of petrol fuel in New Zealand. If we cannot answer that question transparently and openly, it is understandable that motorists begrudge the fact that more tax is coming at the same time as the Government is diverting some of the existing tax that has already been raised, without a good explanation of where it goes.

In answer to my written question to the Hon Pete Hodgson, I received the reply that last year 3.214 billion litres of petrol were sold in New Zealand. At a rate of 18.5c per litre, approximately $594 million was diverted to the Crown account. We want the Surface Transport Costs and Charges Scoping Study for New Zealand, which is the study being conducted to justify that diversion of expenditure, to be able clearly to convince New Zealanders that there is $594 million worth of reasonable cost associated with petrol use in our country; otherwise, we should see a further reduction of the amount of 18.5c that is currently being diverted to the Crown account. United Future again pledges our commitment today to the New Zealand motorist that we will faithfully and consistently remind the Government of its obligation to answer that question for motorists and to present the information to the motoring public.

We do, however, congratulate the Minister of Finance on agreeing last year to my request to reduce the diversion, to cover the cost of the Auckland funding package announced last year. Somewhere between 2c and 3c will be coming off the amount diverted, as that package comes into full effect. That is more than New Zealand First ever accomplished when it was the coalition partner of National and when the leader of New Zealand First was Treasurer for the country.

I state again, for clarity’s sake, that if the surface costs and charges study does not adequately answer motorists’ accusations of unjustified diversion to the Crown account, United Future will expect the Government, at the very least, to announce a future reduction in the amount diverted that matches the 5c we are asking motorists to put their hands into their pockets and pay for the important project of building new roads in our country.

United Future supports our building roads and paying for them via revenue raised by fuel excise tax and road-user charges, because it does make sense. It is an efficient way to raise revenue. But we do not think it is the only way to pay the cost of road construction. In fact, if we were to rely on only that method, the cost of fuel in New Zealand would rise dramatically, which would create real hardships for some sectors of our society and our economy. The NBR - Phillips Fox poll last week demonstrated that a resounding 60 percent of those polled said they supported the use of road tolls to pay for the improvement of existing roads and the building of new roads. A resounding 60 percent of New Zealanders endorsed United Future’s achievement in this term of Government in passing legislation—with the Government—that allowed for alternative methods of raising revenue to pay for road construction and road improvements. The National Business Review article stated: “The Labour-led Government has been given a wake-up call on roading issues by the latest NBR - Phillips Fox poll.” It would probably have been more accurate to say that the Green Party was being given a wake-up call, because New Zealanders want roads; or that the New Zealand First Party was being given a wake-up call, because New Zealanders are prepared to pay tolls to build new roads where necessary.

So we shall be supporting this legislation, which is only one part of a package of measures in order to improve our transport infrastructure in this country.

Firstly, I congratulate and thank that member for a very helpful and useful contribution. The United Future party has—[Interruption] Someone is making animal noises and I presume it is someone from the National Party. Oh no, it sounds like it may be someone from New Zealand First. I want to congratulate the United Future party members. I think they have had a constructive debate on, and engagement in, this policy. Their very helpful suggestions as we worked through this policy when I was the Minister of Transport ensured that more funding was siphoned off into transport, and I think that was helpful. I want to thank them for the support they have given the Government on the transport policy on its way through.

I also want to thank Green Party members for their support. They made an important contribution, as well, in indicating that transport is not just about roads—roading is an important component, and it is the component that requires the most funding—but in fact transport is about road, rail, sea, and air transport. That is what a transport strategy is about. I always ask people who go on constantly about roads, and who say that public transport does not matter, what the Wellington roading system would be like without the rail network in Wellington. It would be impossible to navigate one’s way through the traffic at a peak-hour of the morning.

So I welcome the helpful and constructive contributions to the debate from both United Future and the Greens, as opposed to the whingeing and whining that we constantly hear, for example, from the National Party. What do National members want? They want to build more roads, and they want to cut taxes. They want to build more roads, but they do not want to put any more money into it. It is the old Tory policy of somehow trying to make money out of nothing.

Darren Hughes: Voodoo economics.

Hon PAUL SWAIN: It is voodoo economics. It borders very closely on Social Credit economics, and that is why no one really takes them seriously on transport policy. No one took them seriously—everybody laughed at them—for 6 years when they went around the country with a strategy called Better Transport, Better Roads, whereby they were going to privatise the roads, as I recall. The local authorities did not warrant hardly a mention in it, and that is why the local authorities are very, very pleased with the efforts that have been made now.

I congratulate my colleague Mark Gosche, a former Minister of Transport, who got all of this going. He was the person who broke the deadlock. He got rid of the gridlock and began the programme of work. I was very happy as Minister of Transport to work with, particularly, local authorities to move forward a special package for Auckland. We are now working on one for Wellington. All of the money that results from this funding will go into transport, and we will see the next stage of development in New Zealand. I congratulate the very hard-working and conscientious Minister of Customs on pushing this bill through the House, and I thank the parties that are supporting it. What I would like to hear is just one little wee tiny bit of policy from the National Party. I am sure I will be waiting a long time.

That contribution was from the Minister of Immigration—the Minister who is going to bring in 1,000 Pacific Islanders to build roads in New Zealand and another 1,000 Pacific Islanders to be prison officers. That was that Minister’s contribution.

It brings me to a point that is important for United Future to note. We were told by Minister Rick Barker during the first reading of the bill that the Government was committed to ensuring that all of the 5c of extra tax would go into building roads. United Future members said that the only reason they were supporting this legislation was that all of the 5c would go into building roads. Then we heard from the Minister of Immigration, who said that it was not all about roads. Unfortunately, United Future did not give a wake-up call to the Labour Government; as usual, it just keeled over and was submissive to it.

It is important to point out that nowhere in the bill does it state that all the 5c will go into building roads. All it states is that the extra 5c will go into the National Land Transport Fund, which has three main objectives: the road safety administration programme, road funding, and funding for passenger transport. So I want to put on the record United Future’s statement that if it finds out that not all the 5c goes into building roads, it will not continue to support this legislation. Currently, out of the $1.20—

Paul Adams: I seek the leave of the House to be able to give a short explanation as to why all of this 5c will be going to road construction.

The ASSISTANT SPEAKER (H V Ross Robertson): The reality is, of course, that the House is master of its own destiny. If the member is seeking leave, he is quite entitled to do that. It is up to the House whether it grants it. Is there any objection to that course of action being taken? There is.

PANSY WONG: That member has already had a full 10 minutes, and he did not even explain United Future’s policy. I think he should negotiate with Labour, because it has many calls left. That member has been so helpful to the minority Labour Government that I am sure it will be happy to yield a call to him.

At the moment motorists pay, depending on where they are, about $1.20 a litre, and out of that 41c already goes to the National Land Transport Fund. Today this bill is stating that they will pay an additional 5c, but I want to make it very clear that it is not just an additional 5c, because there is GST on top of it. More than that, the Government is also going to introduce an indexation formula, which means that the amount will be automatically adjusted according to the inflation rate. The Governor of the Reserve Bank has already told the Finance and Expenditure Committee that in the coming year it is very likely that the inflation rate in New Zealand will hit the top mark of the 0 to 3 percent range. The select committee has been warned that the inflation rate is likely to hit 3 percent or even exceed 3 percent. Make no bones about it, Labour is sneaking in that indexation formula basically to avoid coming back to Parliament to get a mandate to sneak in another tax.

Brian Connell: How much?

PANSY WONG: As my colleague Dr Muriel Newman of ACT has already pointed out, 34 tax increases have been sneaked in. Can members guess how much extra tax has been introduced by this Labour Government in 5 years? There have been 34 tax increases, bringing in $34 billion. Thirty-four is a good number to remember—34 tax increases, $34 billion. Those are numbers that it is important to remember. This bill before us today introduces the 35th tax increase. National still wants to hear whether it will be put into road construction.

Also, I want to know why United Future would support a bill with an indexation formula, when Labour flatly refused to support United Future’s amendment to the taxation bill that would have introduced an indexation formula into the tax threshold, to relieve some of the tax pressure on individuals. United Future told its supporters that it was coming into Parliament to keep Labour honest, to give it a wake-up call, but today we are still waiting to see that. I see that Gordon Copeland put out a press release stating that United Future’s task in Parliament is actually only to embarrass the Labour Government. Members should just think about that. What sort of political party would come into Parliament only to embarrass the Government?

Hon Trevor Mallard: Why didn’t the member turn up this morning?

PANSY WONG: We now have the pleasure of the Minister of Education joining us in the House. He is the Minister who has single-handedly caused a 50 percent drop in international student numbers coming to New Zealand. Now our primary and secondary schools have to look for alternative funding to make up for the shortfall. Unfortunately, parents have to mow more lawns, paint more buildings, and bake more cakes to increase their schools’ funding.

The Minister should take a call. When Labour members cannot hack it, they just sit there yelling their heads off. They should take a call and tell New Zealanders why any political party should support their Government’s 35th tax increase, when it has proudly announced a $7 billion surplus. Yesterday the Finance and Expenditure Committee was told that the Inland Revenue Department has $8 million to spend on promoting the Working for Families package, to attract the 48,000 people who might potentially be entitled to its benefits—$150 per person. The Inland Revenue Department is the department that makes sure everybody pays his or her taxes, but of course, when it comes to a certain Labour Minister, that seems to be overlooked in the process.

Let me make the National Party’s position clear. It was outlined by Dr Smith, but Labour still does not understand it. Labour is still in the cash-flow accounting stage, and it thinks it can tax everybody in order to build roads that will last for a long time. Also, I remind United Future about the NBR - Phillips Fox poll: 60 percent of respondents said that tolls were the way to go, rather than tax increases. Why, when the Government has announced a $7 billion surplus and channelled a lot of money to the consolidated account, should the motorist once again be asked to contribute more? We must not forget that today we are voting in not just a 5c a litre increase; it is 5c a litre plus GST, and also with indexation—and, according to the Governor of the Reserve Bank, New Zealand is looking at inflation being at the high end of the range, which is 3 percent.

The other cynical point made by the Minister of Finance was that he just might defer the introduction of the tax if petrol prices stay high. So, after this increase has been introduced, what will happen in 2006 if petrol prices hit an all-time high? Will that mean that that particular increase is withdrawn?

It is a great pleasure to take a short call on the Customs and Excise (Motor Spirits) Amendment Bill. My whips have asked me to keep it to a mere 8 minutes, so I will give the member only four quick lessons in transport economics.

The first lesson is this: road transport is good—but so is rail, ferry, air, and public transport. A lot of congestion on the roads can be relieved by a bit of petrol tax. Auckland has a billion dollars worth of congestion a year, according to some estimates. The second lesson is—wait for it—this: roads cost money. They have to be paid for—somebody has to pay for them. Whether it is by a combination of Government spending, the odd toll road here or there, or the odd public-private partnership, in order to be built roads have to be paid for. The third lesson is that there is no free lunch. If there was no 5c per litre excise tax on petrol, the money would have to be taken out of the consolidated account, and that would mean either having another tax or cutting other expenditure. There is no free lunch. The fourth and final lesson in my short call is this: just because the previous National Government ran an infrastructure deficit all the way through the 1990s, that does not mean we have to make it worse now. Two wrongs do not make a right—or was that two “Wongs”?

When the Minister in charge of this bill introduced it to the House, he bragged about taking money from one section of society and giving it back to another—robbing Peter to pay Paul. He cannot understand why people are not standing in the aisles and applauding him. Then we had the rather pathetic sight of Mr Gosche standing up and taking a call. He is another has-been Labour Government Minister. He had the audacity to say that the National Party had no idea. When we asked him what his idea was, he said it was taxation— that Labour was going to tax everyone. Well, that is not a novel idea, because this Government has already done that 34 times.

Pansy Wong: How many times?

BRIAN CONNELL: Thirty-four times. That is that member’s idea of how to fix the problem. Then, when he should have sat down and shut up, he made things worse, because he went on to take credit for having split the police force and the traffic department, and for putting cops on the roads. They are the most hated members of New Zealand society—and he wants us to applaud him for that! Then Mr Swain got to his feet, and said he wanted to know what the Tories’ policy was. I say to him that it is very simple: we are going to get rid of the Government he belongs to. Then the big schoolyard bully, Mr Mallard, staggered into the Chamber. He took a couple of cheap shots, but he did not have the strength of character to stand up and take a call. I challenge him now to stand up and take a call. In fact, I will yield the rest of my call if Mr Mallard gets up to take a call. There is the challenge. He had a lot to say before, but will he do that? No, he will not do it. Mr Cunliffe got to his feet as well, and the less said the better about his speech.

Surprise, surprise! Here we are again, debating another piece of legislation that is nothing but a cheap and greedy tax take. This Government seems determined to tax anything that moves. I say to people across New Zealand that if they want to avoid being clobbered by the Labour Government’s tax machine, they should change their last name to Tamihere. That is the only way they will avoid getting belted for tax in this country. If this Government would only share some of that koha—just a little of it—with fellow New Zealanders by giving them a tax break, they would not feel as badly off as they do. I find it absolutely staggering that this Government can even contemplate introducing legislation such as this when international oil prices are going through the roof. Rather than give fellow New Zealanders a break when the Government has a surplus of $7.5 billion, what is it doing? It is imposing more and more tax.

Pansy Wong: How much more?

BRIAN CONNELL: How much more have Labour members taken in taxes since they have been in Government?

Pansy Wong: Yes, how much?

BRIAN CONNELL: A staggering $34 billion. That is a 40 percent increase, and now they want to take some more. Michael Cullen is smiling, because he knows that I am right.

How are we supposed to encourage production in this country, when we are giving investors every reason to look elsewhere? Our electricity prices are going through the roof. Supply is uncertain, thanks to “Blackout Pete”. Our compliance costs—

Mr SPEAKER: The member knows he cannot say that. If he says that again his speech will be terminated.

BRIAN CONNELL: Our compliance costs are going through the roof, and the Resource Management Act is choking off any sort of productive capacity in this country. Yet this Government now wants to put the boot in, just in case there is any doubt that it wants to make this place as unattractive as it possibly can be as an investment destination. What this country needs is nothing less than an extreme makeover. In fact, what this Government needs is an extreme makeover, so it can cut out the endemic dishonesty and deception that it now practises in its everyday politics. Export industries in this country are seriously suffering as a result of the high exchange rate of the New Zealand dollar. The last thing that exporters need is to have another production cost added. Some members in the United Future party will cringe at the fact that they are building costs into the productive sector in this country, because I know that some of them have run businesses before, and they know that the way to erode profit margins is to build in costs. But other members of that undistinguished party, I am afraid, just want to give a tick to the Government, regardless of whether it is the right thing to do or the wrong thing.

Our export industries are a bit like John Tamihere. Their problems just keep being compounded and compounded by the fact that someone keeps building in more and more costs and explanations, and sometimes one just does not know which way is up. But, unlike Mr Tamihere, the industries of this country do not have the protection of the Prime Minister. She is not interested in the primary production of this country; she is more interested in taxing hard-working Kiwis. She is more interested in Labour ideology, and in being out of the country when anything difficult breaks. She is more interested, in fact, in reshuffling her Cabinet or putting in place meaningless inquiries in order to take the pressure off Cabinet members who are up to no good. That has become endemic in that party.

What will this Government tax next? It is a hard one, because there have been 34 tax increases so far. Michael Cullen is going a bad shade of red—

Pansy Wong: What about the “fart tax”?

BRIAN CONNELL: Carbon tax; that is the answer—there is to be a carbon tax. If people in this country think the situation is bad at the moment with 5c more tax per litre on petrol, very soon they will find it will be 6c more per litre on petrol. And now there is to be 7c more tax per litre on diesel. But let us relax. We are told that is OK, because it will all go into roading. But who would believe that? Who would believe a Government that said that after that one “envy tax” there would be no more taxes? Who would believe a Government that had a Cabinet Minister in its midst who said he would not take a golden handshake, and that we could trust him? Well, that sort of thing is endemic. Labour has gone through seven Ministers, and, judging by the way that Mr Barker went a bad shade of red earlier during question time, I suggest the number may be eight soon. I suggest there may be more soon, because the Grim Reaper—the people of New Zealand—will come looking for the Labour people who engage in mistruths.

Members probably have a strong feeling by now that the National Party does not support this legislation. It is just another cheap tax, and it will not fix our roading problems in this country.

One can almost hear the groans of embarrassment from the people of Rakaia every time that member gets to his feet to do his Lockwood Smith imitation of being angry about every single piece of legislation that comes before the House. Every piece of hyperbole that one could ever imagine gets thrown around the Chamber. I know, as a rural member of Parliament, how important the roading network is. I look forward to seeing this bill go to a select committee, so that it can investigate alternative ways of funding roading improvements around our country. This legislation will make a big difference in rural areas, and I support it.

I move, That the Customs and Excise (Motor Spirits) Amendment Bill be referred to the Finance and Expenditure Committee for consideration, that the committee present its final report on or before 16 December 2004, and that the committee have the authority to meet at any time during a sitting of the House, except during questions for oral answer, during an evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 191 and 194(1)(b) and (c).