General Debate

I move, That the House take note of miscellaneous business. Today New Zealanders have been reminded again what could have been if the Labour-led Government had focused on sound economic policy and if it had trusted New Zealanders to make their own decisions with their own money. What has reminded them has been yet again another tax reduction package from the Australian Government. One can argue about whether it is right to do a big tax reduction this Budget, but one cannot dispute that Dr Cullen and the Labour Government had the choice back in 2002-03 to start using the opportunity of a soundly growing economy to reduce New Zealanders’ taxes and they decided not to do it. They decided not to do it. Instead, they decided they would keep taking in all the tax revenue they could get. Each year New Zealanders are paying a billion dollars in extra tax just because their incomes have risen and they have ended up in higher tax brackets. The Government has collected a billion dollars in extra tax and then spent it all. Some of that spending has been important and was required, but a great deal of it has been low-quality and ineffective.

When we look across at Australia, we see that what has been done there defies Dr Cullen’s arguments. He has always said that if we lower taxes, then we will have to cut spending. Well, the Australian Budget has shown for the fifth year in a row that we can lower taxes, increase our investment in infrastructure, increase spending, help families, and do something about childcare—we can do all those things when an economy is growing. How sad it is for New Zealanders that we have lost that opportunity. When inflation was low and the surpluses were big, Dr Cullen could have done that, but his philosophy was: “We won; you lost. Eat that.” Seven hundred New Zealanders a week now are voting with their feet and crossing the Tasman. Why? Because in New Zealand the average after-tax wage has grown by 18 percent since the year 2000, while the average after-tax wage in Australia has grown by 32 percent. We started behind, and under Labour the gap has become much worse.

On the higher incomes it is worse. For someone who is on about $70,000, the after-tax income growth in Australia has been twice what it is in New Zealand. In New Zealand it is about 18 percent; in Australia, after-tax income for someone on $70,000—a plumber, a doctor, a policeman, a teacher—has grown twice as fast as in New Zealand. That is why people go. So Dr Cullen is now caught. He is caught with high surpluses that he cannot get rid of, because it will cause more inflation. He has created his own rock and his own hard place, and he is stuck between them; that is his problem.

Dr Cullen has given up running the economy. One of the more important problems at the moment is the high exchange rate and high interest rates. Dr Cullen has had 8 years to think about that. It is a well-known phenomenon in the New Zealand economic cycle; it is always going to happen. He has paid for and had the best advice in the world. And when it matters, he has flicked the issue off to a select committee. I say to Dr Cullen that if he has something he wants us to talk about, he should put a proposition out there and argue for it. People say: “Why doesn’t the select committee talk about it?”. What is there to talk about? Dr Cullen has no economic response to what is happening in the New Zealand economy. He has stopped managing it. His Budget is being run by Winston Peters, who has forced tax incentives on him—tax incentives for savings, which Dr Cullen has always opposed—and Peter Dunne, who has forced a cut in company tax on him, which he has always argued against. New Zealand does not have a functional Minister of Finance. He is not doing any economic management. He has lost control of the agenda. What will Labour do in this Budget that is from Labour? Well, it will spend more wasteful money on silly policies.

Debate interrupted.