Taxation (Annual Rates, Business Taxation, KiwiSaver, and Remedial Matters) Bill

It will be unclear how historians will finally judge this eighth Budget, although I think they will look upon this as one of a series of a certain course of action, before any judgment is passed; but I personally will be remembering this Budget as the time when Dr Michael Cullen, the great Budget surplus denier, finally admitted, though not by very much, reality on this issue, when he made this very cautious statement: “Budget surpluses are still somewhat higher than necessary to be consistent with long-term fiscal objectives.” So at last we have seen at least the beginning of some admission of this reality. After $20 billion of extra tax that has been accumulated over the last 6 or 7 years, after everybody in the country knew there was a surplus, finally Dr Cullen is prepared to admit that reality—if only very marginally and very sparingly.

I actually say this with some regret, because I have quite enjoyed the last 5 years in which Dr Cullen, who is certainly capable of manipulating statistics—I called them “torturing statistics until they confess” yesterday—to the point where one gets some component of the operating balance excluding revaluations and accounting changes, and one adds this and takes away that, finally asserts that, contrary to what the National Party and others are saying, there is no Budget surplus; there is about $1.83 left, which might be enough to buy a litre of milk on a heavy discount from Pak ‘N Save.

In the course of this he has basically divided New Zealand into three categories. The first category is those who are convinced there is no surplus. That is a category of one person—himself. The second category is a somewhat larger group of bewildered and bedazzled followers of Dr Cullen who are really not quite sure, having heard the mastery of this denial of the Budget surplus in action. The third group are about 99 percent of New Zealanders who do not believe a word of it.

But, finally, we have at least the beginning, at least a small opening, recognising that there may be an issue here. I suppose we should be grateful for small mercies. The problem is, of course, that it has been forced on Dr Cullen by the underlying dependence of his Government on a diminishing group of camp followers from the third parties, and, therefore, the concessions that he made totally lack any coherence, totally lack the right sense of timing, and have missed the political winds.

The problem is that it is too late politically for this Government and it is too late economically. The time to do this was during the good years. The opportunity has been wasted. The darker clouds are coming over the horizon and now finally the recognition comes that there may be just a fraction of headroom, but these are concessions that have been wrung out of this Government by the coalition parties. They have been wrung out of this Government; with the greatest of reluctance some minor concessions have been made.

If we listen to the Government’s counter-attack on the Opposition last night, it basically amounts to a single argument: “Vote against tax cuts, vote against your own policy on charities—make our day!”. That is basically the defence of the Government. How puerile it would be for the Government to imagine that the public would expect the Opposition to vote with the Government on the very centrepiece of government, the very issue on which the New Zealand public will judge the performance of the Government—namely, its Budget strategy. I am not going to accuse the Government of literally believing this puerile approach.

💬 Chris Auchinvole: Why not?

No, I will give it the benefit of the doubt. Mr Auchinvole can take a different view, but I personally do not think the Government is so naive as to actually believe that the Opposition would vote for its Budget. Yes, there are a couple of things in this Budget that are worth doing—in particular, we have been astonished that the Government adopted National’s entire policy on charities, having only weeks ago characterised it as “Tory charity”. I thought that was a bit weak; it was back to the cloth-cap, back to the glory days of Labour’s struggle against the boss class. I thought that was pretty weak, but what really intrigued me, as it intrigued other members, was Dr Cullen’s characterisation of it as only the redemptive power of the State being able to sort this problem out. Philosophically that is quite an intriguing statement. I do not want to use today to get into higher reaches of philosophy, but some of us—the Welsh, for example—thought that Graham Henry was the great redeemer, but that was only briefly. We may, ourselves, have to take that view, depending on what happens to the selection of Ali Williams, and others, but that is for the future to determine.

I really thought it was fascinating that Dr Cullen ascribed redemptive powers to the State. We could have a whole new religious party on this. We could have hymns recast for this—“The State, the Great Redeemer”.. But I do not want to get into the higher regions of religion on this point. But for Dr Cullen, having declared this as absolute anathema 3 weeks ago, suddenly to do a U-turn and put it into his Budget, is simply astonishing. Yes, of course, we support that component, but let us take the metaphor of the curate’s egg. Just because there are some aspects of the overall deal that will be acceptable to the Opposition, to think that we would back the Government’s centrepiece of its economic strategy is utterly naive. Unlike Mr Auchinvole, who thinks Dr Cullen is capable of it, I am not prepared to believe that. I think it is sheer opportunism on the part of the Government.

The Government asked yesterday what we would say to business. Well, it should tune in and listen to what Mr John Key will be saying at midday in the North Harbour Stadium, primarily to a business audience. I think the Government will find a very adequate response.