Taxation (Urgent Measures and Annual Rates) Bill

I think it is fair to say that many members of this House come to the third reading of this Taxation (Urgent Measures and Annual Rates) Bill late this evening with a strong sense of sadness—a sense of sadness about the process that has been employed, a sense of sadness about a wasted opportunity to make a significant positive difference for our economy, and a grave sense of sadness about the social impact of these measures. Let me take each in turn.

I said in my first reading speech that the public could, if nothing else, take from this bill that the honeymoon was over, that the sheep’s clothing had fallen from the National wolf, and that the true nature of its intentions was becoming all too clear. But I have to say that during the course of the debate the exact nature of those measures has become even clearer, and the—perhaps duplicity is not too strong a word, of the Government in this matter has been stark. It is highlighted by the process. Here we have a Leader of the House who has contradicted an earlier undertaking to the House and refuses to place bills on the Table, as has always hitherto, to my knowledge, been the practice. That is an innovation.

💬 Hon Gerry Brownlee: I raise a point of order, Mr Speaker. I think you need to be careful about allowing repetition of a point being made somewhat unfairly. The Standing Orders are very clear in this matter, and I have been pulled up considerably over the last couple of days for apparently not understanding the Standing Orders. Now I have actually cottoned on to how they work, and I am simply following the Standing Orders to the letter. It would be an absurdity, in the middle of an urgency motion, to ask a party that has voted against that motion to grant leave for the bills to be tabled in that motion. So I think we are caught in a bit of a cleft stick created by those who are utter sticklers for the way in which the Standing Orders are applied.

💬 Hon Dr Michael Cullen: There are two points here. The first is that leave is not required for the Minister to table bills under urgency. Once urgency has been taken, the bills can be put on the Table of the House immediately at that point. The member is getting confused, I think; if a bill had been tabled in a previous sitting day, then urgency could not be taken on that bill until the bill came above the line after some 3 days. The Minister can table any bills now that he wants that are being dealt with under urgency. That does not affect when they are taken during the urgency debate. The member need not worry about that fact.

Further than that, the fact that the member can be discourteous and can behave badly within the Standing Orders does not mean to say that it is not discourteous and behaving badly, and that it cannot be the subject of reference by members on this side of the House. One has to live by one’s decisions in this place. The Minister has made certain decisions. He will have to live by the consequences of those decisions.

💬 Mr DEPUTY SPEAKER: Standing Order 263 is clear, but that does not prevent members raising the timing of the availability of bills in the debate. The point that was made earlier was that there is no requirement in the Standing Orders for the bills to be tabled prior to the urgency debate taking place.

For the record, the point being made before the member’s point of order was not that it was against the Standing Orders, but that it was against an earlier undertaking given by the member. That seemed relevant because it was yet another example of the same practice that was preventing this bill going to a select committee in the first place. Mr English said that it was in their manifesto so it did not need a select committee process. By implication, everything that was in National’s manifesto could do without a select committee process. Would not that be terrific—and where would our democracy be?

This is a very, very important bill; this is a very, very serious matter. New Zealand is at a serious crossroads, facing an international crisis, the magnitude of which we have not seen in several generations. But, apparently, no select committee process is appropriate for a principal tool for dealing with this recession. It is a wasted opportunity because this bill does nothing to assist New Zealand to face the challenges. It reduces savings, paradoxically, at a time of the most serious international liquidity crisis, when our domestic savings now count for more than they ever have, and we are undermining them to the tune of $3.5 billion, plus there are the spin-offs from behaviour that that undermines. It does nothing to encourage innovation. It has the contrary effect of taking away a much-needed incentive and a much-needed international equilibrator for companies that are high-tech and that employ more, innovate more, and export more than average. Those are the companies that ought to lead us through recession to the productivity growth we all share as a goal.

And it is bad economics, because, as many speakers—and, I think most notably, Russel Norman—have contributed, it seems to mistake a short-term stimulus package, where it is a wasted opportunity, for what one of my colleagues has called medium-term wealth redistribution. There is nothing of what could be done to provide more houses for the needy, to retrofit more houses, to keep our children healthy, to boost skills, to import technology, or to improve our woeful lack of private research and development. It does none of that. It is even bad fiscal policy, because it comes against the context of formal advice from Treasury that says that the existing level of fiscal stimulus is appropriate, that we have already invested nearly $10 billion, and that this $5 billion is misdirected and unwise.

Mr English talked about KiwiSaver as if somehow this bill were a measure designed to advance it. It caps the automatic enrolment at 2 percent, it caps the employer contribution at 2 percent, it cuts the enrolment subsidy—which is a regressive move—against low-income contributors, and it cuts the tax credit on superannuation contributions, thereby disadvantaging our more senior savers. It is a 2 percent plus 2 percent scheme, with the grave risk that it ends up with the employee bearing more and more of the 4 percent, and the employer bearing less and less, and the Government has misrepresented the position of the union movement, to boot.

So that brings us to the social re-engineering aspect of this bill. It is kind of ironic, is it not, for a party that says it has been listening and that we have not. Those members have been listening so much that they thought our poorest New Zealanders wanted a $750 million kick in the guts just before Christmas, and we have seen the most bizarre display from the Minister of Finance, attempting to veto a well-intentioned amendment from the Opposition that would have ensured that those people did not suffer at this time. He put on the Table the veto quantifying the penalty to them, and then took it off again after it was already made public—

💬 Hon Ruth Dyson: A little embarrassed.

—a little embarrassed. What we do know from our analysis is that anybody with a couple of kids who is earning less than $40,000 is worse off, and that income earners in the $14,000 to $20,000 range are particularly worse off because of the higher rate they find themselves in, relative to what is already in the law. Again, to give credit to Dr Russel Norman, he asked the question as to why this bill is urgent, because this policy is medium-term stuff. He offered the insightful comment that it is urgent because the Government does not want to be discussing this around next March or April, when the next lot of Labour-led tax cuts come into effect. National members would rather that people thought they were National’s tax cuts, even though they are rather less than many of them would have got if this bill were not to be passed tonight.

We, the media, the bloggers, and the commentators have seen through the charade. We have seen through the electoral rhetoric—the sad part is that David Bennett still believes it—and we understand this for what it is. It was remarkably frankly acknowledged by Mr Craig Foss, who reminded us that “You did 39 percent tax in your first year.” That is what this is about—taking it back again. It is about utu. Mr English said “KiwiSaver was Labour’s latest vote catcher.” That is what this is about—that we thought of it, and not National, and therefore it deserves to be undermined. That would seem to fly in the face of our higher duties to the public, which are to do what is good for New Zealand, not what is good for our own egos, and not only things we thought of first.

I guess that brings us to the rather sad position of the Māori Party. There is much in that party’s ideals that I admire, and I look forward to Labour working together with Māori of all parties to redefine constitutional relationships in the future, but not by supporting a National Government that is harming the people the Māori Party was sent here to represent.

This is a sad day for New Zealand. It is a sad, sad day for this Parliament. It is not a mana-enhancing day for any of us, actually, that to get us here on its first working week, the Government has breached longstanding constitutional practice. It has done so based on the argument that anything that was in National’s manifesto before the election does not deserve select committee consideration, and in fact it does not even deserve, we hear now, a bill to be placed on the Table after an urgency motion but before the bill has started.

And National members had the gall to say that we were not listening! My God, New Zealand is lucky that the Government has a few cards in its hand to deal in the interests of good government and New Zealand’s future. Those cards are a debt to GDP ratio that is half what we inherited from a National Government last time; the fact we have got research and development up a fair bit, mainly through Government sponsorship; the fact that income levels of our poor are a quarter higher than they were a decade ago in real terms, and therefore there is some cushion. I do not see people choosing between going to the doctor and putting food on the table or paying rent, in quite the way I used to. As someone rightly said, there are still poor people in New Zealand. Yes, there are, so I say shame on the Government for making many of them $750 million poorer through the Taxation (Urgent Measures and Annual Rates) Bill. Do not kid yourselves, and do not kid New Zealanders, I say to Mr Bennett, that you are doing it for their sake. Just be honest about it and say that you are doing it for the sake of others who voted for you—at least that is honest.

💬 Hon Pete Hodgson: Not “you”.

Not you, Mr Deputy Speaker. We hold you in high regard and we appreciate your chairing of this debate. We are only sorry that we do not have better news to bring to New Zealanders.

💬 Mr DEPUTY SPEAKER: The member’s time has expired. Can I make it very clear that members cannot use the words “you” or “your” in any debates. That brings the Chair or the Speaker into the debate and that is not allowed. Please abide by that ruling.

What a great, great day this is for New Zealand. It is perhaps a sad, sad day for members opposite, but it is a great, great day because we have seen democracy in action. Over 1 million New Zealanders gave their party vote to National, and at the election National laid out its personal tax cuts plan to New Zealand. It also laid out its KiwiSaver plan and its research and development plan to New Zealand. What a great day this is. We are seeing democracy in action and those measures will be delivered tonight, or perhaps tomorrow morning once the third reading of the Taxation (Urgent Measures and Annual Rates) Bill has been voted on. Many members are now waking up after the previous speech. But goodness gracious, who knows how many listeners have turned off the radio because that speech was an absolute shocker? No doubt Mr Jones is doing the numbers again tonight.

I was not going to mention debt ratios again, because I think I have mentioned them a few times, but unfortunately the previous speaker, the Hon David Cunliffe, brought them up again. I have to ask whether Labour members read or saw the Pre-election Economic and Fiscal Update. Did they look at the statistics? Labour members are stuck in the time warp of the previous administration’s May 2008 Budget, which had debt to GDP ratios of about 17 to 18 percent—that is quite right. But then everything started to unravel, and the Pre-election Economic and Fiscal Update showed us a decade of deficits that were nudging 30 percent, and, with the recent announcements that are now coming out of the fiscal closet, the deficits will quite possibly go higher than that. The previous speaker was in total denial of that. We would perhaps listen to you a bit more if you put yourself in today with the—

💬 Hon Darren Hughes: Point of order!

Excuse me, Mr Deputy Speaker, I did bring you into the debate, and I apologise for that. Thank you, Mr Hughes; I acknowledge that this has been a long day. I ask that members opposite, and in particular the Opposition spokesperson on finance, take note of the latest fiscal accounts available to the public and to all of us here in this building, then frame his comments and speeches around the latest updates and, perhaps, any other secrets that those members know.

We listened to a tirade before, but we have to face the fact that New Zealand is a capital-deficient nation. We know that. We have a savings issue in New Zealand. Both parties acknowledge that and everyone has spoken about it, but the previous speaker started to talk about the New Zealand Superannuation Fund again. He has a problem with something that National, again, placed before the public. We said we would ask the Guardians of New Zealand Superannuation to invest 40 percent of the fund within the boundaries of New Zealand. We are a capital-deficient nation and a savings-deficient nation, so I ask why someone would not endorse the fact that we are trying to keep more of that capital within these borders, rather than funding the motorways and tunnels of Australia.

Although the previous speaker did clarify matters later, he also tried to give us a lecture about the multiplier effects and other things this morning. He did seem to correct himself a bit later, so I will give him credit for doing that, but the logical conclusion of what he said—his true colours were revealed—was that tax hikes were better than tax cuts. If members read his speech in Hansard, they will see that is exactly what he was saying this morning.

I will make a couple of further points. I think two speakers on the other side of the House have talked about bloggers. Well, there is one way to get into the blogging space, and that is to talk about bloggers, so that will be highlighted somewhere tonight. I do not know the site that another member was talking about. I ask a question of the previous speaker about bloggers. I ask whether he was talking about The Standard, the union-engineered and funded blogging site. Which blogging site was he talking about? Many of those sites have gone quiet now that many of the previous Government’s employees have moved out of the Beehive.

Finally, I round off my speech by commenting on the issue of process. I have noted in other speeches in various readings of this bill that this plan was presented to New Zealand before the election and during the election, and that the public resoundingly endorsed the plan. It is our 100-day commitment to New Zealand, and we are delivering on that plan right now. Because we listened to the public then, we are acting upon that plan now. I have a bit of advice for members on the other side of the House. If they get out of denial and into the real world, and if they start to listen to real New Zealanders, they may start to do quite well.

I pick up a point that Mr English made in his speech. He said the big issues around the details of the taxation changes have been thoroughly debated over the last year or two, in the debate on the various Labour and National proposals in the public arena. That is fundamentally wrong and fundamentally misleading. The National Party did not publish the details of its tax policy until early October, some few weeks before the election. From then on, National never mentioned the details of that policy, at all. Its only reference to tax cuts was in the context of everybody getting them.

That was because National’s polling showed exactly the same results as our tracking polling did. The announcement of that policy caused a sharp dip in National Party support, because it was so unpopular. People did not want KiwiSaver interfered with. People did not want the research and development tax credit to go. People were suspicious about the shape of those tax cuts. It was only when National got back on to its underwear motto—“It’s time for a change.”—that its tracking polling picked up again. That was all the election was fought on, actually. It was fought and won on that one simple motto: “Time for a change. You’re bored with the old, so in with the new. They cannot be any worse, and if they are, you can chuck them out again after 3 years.”—which is no doubt what the public will do. So let us not pretend that the National Government has got some kind of detailed mandate from the country for the details of this bill. It has no such thing at all, not in any shape or form.

In any bill dealing with taxation and related matters it is useful to summarise who the winners and losers are, because there tends to be winners and losers. The big winners are clear: very high income earners. People on hundreds of thousands of dollars a year, or more, get a pretty significant tax cut. Once the top rate is cut, it really starts to bite when one gets into those big incomes. But there are modest winners. Let us be fair: there are some modest winners. Non-saving single people on middle incomes are winners. They get about 10 bucks a week in the first year and 15 bucks a week in the second year, which is less than the amount in the 2008 Budget—which was derided, I might say. The second set of winners is bureaucrats. About 100 or so new ones will be required to administer the complex independent earner tax credit and other aspects of the bill. With a cap on the total bureaucracy and with 100 more people going into the Inland Revenue Department, 100 other people will be going from somewhere else—no doubt, bureaucrats who deliver services that affect a different group of the population.

So those are the winners. Who are the losers? They are low-income individuals earning $14,000 to $24,000. We can say people earning up to $24,000, because people in that income bracket either get less or get nothing—everybody in that income bracket, 90 percent of whom Sir Roger Douglas thinks are wealthy. That is what happens when one sits round the Business Roundtable for too long. Other losers are many modest-income families, all families with kids that earn under $44,000, but also many families with kids that earn quite a lot more than that. Families with three kids that earn $80,000 a year will be worse off under this package compared with the current law. It is not a lot—10 bucks a week—but, then, that is all that middle-income single earners will get. They will get 10 bucks a week in 2009—

💬 Hon Member: 10 bucks a week?

Yes, about 10 bucks a week. They will be worse off, because they do not qualify for the independent earner tax credit; for them, it will all get sort of washed away. Going back to the families with three kids, that is assuming that the couple are on $40,000 a year each. Beneficiaries and superannuitants who have the temerity to work part time, or have some additional investment income, will also be losers. They have saved all their lives and have got some income, and now they will be taxed more on it, because they do not qualify for the independent earner tax rebate. They will therefore be paying more, because the National Government is not going to raise that $14,000 threshold to $20,000 a year.

Those are just the losers. The big losers are the savers, the innovators, and the New Zealand economy. On the one hand, very high-income earners are winners, there is a little bit for middle-income single people who are not saving, and there will be about 100 new bureaucrats. They are on that side. On the other side we have low-income individuals, modest-income families, some middle-income families, savers, innovators, and the New Zealand economy. How does one see those scales moving? How does it look to you in the Chair, Mr Deputy Speaker? Does it look as though the winners outweigh the losers? Well, we know from the figures that the Government has used that 80 percent of taxpayers do not gain anything. It all right to quote the 630,000 who gain something; there are 3 million taxpayers in New Zealand. Eighty percent of taxpayers get nothing out of this change. Taxpayers were led to believe that they all got something out of it. Well, they do not.

But the real loser is the New Zealand economy, and that is the sad thing. We are living in the middle of the worst international financial crisis for getting on for 80 years, and, in part, that crisis is driven by a growing gap between saving nations and borrowing nations. We are right at the far end of the borrowing nations. This policy, this bill, says “Let’s borrow more.”—borrow more by the Government and borrow more by individuals. Why? Because then we might spend a bit more and keep the economy moving along over the short term. As long as we are going into Briscoes, the Warehouse, Farmers, etc., all will be well with the world. We do not need to produce anything.

You see, the Government’s coalition partner is ACT, which is the Association of Consumers and Taxpayers. What is sickeningly missing in that description is producers, wealth creators, innovators, researchers, and anybody who is actually creating a stronger economy. We are all just consumers and taxpayers, according to the ACT Party. The National Party believes the same. It does not believe any longer in the rural sector being the backbone of the nation. It does not believe in a backbone of the nation; it believes in the shopping bag of the nation. If somewhere or other somebody trundles a shopping bag around, we do not need a spine to hang it on. That is National approach to the New Zealand economy. And we do not need research and development; we just live off other people’s research and development. We do not need it.

And we do not need to change our savings culture—our appalling savings culture in New Zealand. A Government all of whose members qualify for an 8 percent or a 20 percent employer subsidy on their own superannuation is cutting the employer subsidy for ordinary earners from 4 percent to 2 percent. Those members try to claim that all KiwiSavers are wealthy. Actually, the median income of KiwiSavers is about $36,000 a year. If one takes out the kids, the median income is about $40,000 a year, which is well below the average wage. Indeed, that median income has been moving down since the first rush of transferees out of existing superannuation schemes into KiwiSaver, as new people are signing up and new savers are appearing. We are actually getting 18 to 40-year-olds to regularly save. Mr English says there are only 830,000 people in the scheme. That is after 16 months, by which time we expected to have about 350,000 people in KiwiSaver. At this rate, particularly once the financial markets pick up and stop scaring people so much, we will pass 1 million easily, and we will be pushing on to 1.5 million to 2 million people in KiwiSaver. Within 5 to 10 years most people in the workforce will be in KiwiSaver, and they will be people on modest incomes, because for those on high incomes there are better options than KiwiSaver. But for those on modest incomes KiwiSaver is an absolute boon, because it is structured to give a stronger benefit to those on lower incomes than to those on high incomes.

We learnt today why KiwiSaver is being changed. Mr English finally let the mask drop. He finally showed what a little man with a little mind he is, when he described KiwiSaver as Labour’s latest bribe to the voters. So it had to be punished, and the previous Government had to be punished. And, of course, I had to be punished, because I was the author of KiwiSaver, and I suspect there is a bit of personal, silly stuff in all of this. Well, actually KiwiSaver was not about him nor about me; it was actually about New Zealand and changing our savings behaviour. For the second time in the last 40 years, a National Government has destroyed our best chance to change our savings habits in New Zealand, to turn us into a capital-rich country, to emulate Australia, to provide reasons why people should stay here, and to provide a basis for a stronger financial sector within New Zealand—because the Australian scheme has been a massive boon to the Australian financial sector over the last 25 years. All of those things are being given away in the hope that, somehow or other, some people having 10 bucks extra a week will transform the New Zealand economy. That is not a brighter future; that is a dumber future. It is a dumber future from a dumber Government.

The Green Party is looking for a transition. We are looking for a transition to a more sustainable and a fairer society and economy. That is how we judge this tax bill. We judge this tax bill on whether it helps in the transition to a more sustainable society and economy and a fairer society. It seems to us that that is how we have to approach it. That is the bar against which we compare it.

One way to look at the bill is to divide it into two parts. One part is the tax cuts and what is going on there, and the other part is how the tax cuts are to be paid for. When we look at the tax cuts we see that we are replacing the already legislated-for tax cuts with these new tax cuts. These new tax cuts reduce what is going to low to middle-income earners, and increase the tax cuts that are going to the very wealthy. That is what we are doing here. If we did nothing—if this Parliament did not pass this law—then low to middle-income earners would be better off. So if we are going to say that if this bill does not make our country a fairer place, if this bill does not even make New Zealand fairer, and if letting the existing tax law just run would make New Zealand fairer, then, in terms of fairness criteria, in terms of making our society fairer, how could one possibly support the bill, because it does not make our country fairer?

I think the attitude was best exemplified when Sir Roger Douglas talked about beneficiaries. He said to put them to one side, because they get Government money. Somehow if people are beneficiaries and they get a benefit from the Government they can be put to one side. They do not have to be factored into making policy in this country, or they do not need to be factored into our democracy. If one is a beneficiary, one can just be put to one side because one does not have to be considered. I think that typifies ACT’s approach to ordinary New Zealanders.

I would also say, of course, that one of the things we would have liked to see fixed up by this bill was the Working for Families discrimination against beneficiaries. One of the problems with the previous Government was actually the discrimination against beneficiaries under the Working for Families package. It would have been great had National actually moved to fix that anomaly instead of adopting a more unfair scheme.

The other side of this bill is how we are to pay for the tax cuts. One way we will pay for them is by reducing incentives in research and development. That is not a good idea. The Green Party would like to see our research and development tax incentives targeted towards sustainability, rather than just in general, but none the less having tax incentives for research and development is a good idea.

The other way this bill proposes to fund the tax cuts is through reducing incentives towards savings. For a country with a chronic current account deficit, incentives to savings are critical, and reducing incentives to savings does not seem to make much sense to us. We do agree with the incoming Government that using some of the superannuation fund, and directing it more towards New Zealand where there are profitable ways to invest the superannuation fund money towards New Zealand, does make sense. There is also, I think, an interesting argument to be had: there is a question mark about whether it is a very wise thing to be doing at the moment, at a time of running big deficits where we are borrowing money from overseas, to be channelling borrowed money from overseas into the superannuation fund. I think we need to have that debate. We also agree with having a 2 percent entry level within KiwiSaver, but of course we also want to have the 4 percent.

Then there is the question of how we should pay for the tax cuts. Aside from what is in this bill about how it proposes to pay for the tax cuts by reducing incentives to get smart and reducing incentives to save, how should we pay for the tax cuts? That is where the Green Party supports ecological tax shifting. We think that, as it says in the briefing note to the bill, we should broaden the tax base. The briefing note to the bill states that we have to broaden the tax base and lower the rates. Well, there is no broadening of the tax base in this bill. A way to broaden the tax base is to introduce resource rentals such as a water levy, which would broaden the tax base and create incentives to actually use resources more efficiently, and to have a polluter-pays principle when it comes to greenhouse emissions, which would also broaden the tax base and create incentives to produce fewer greenhouse emissions. That would ease the pressure on the taxpayer, who, as the emissions trading scheme is watered down under this Government, will have to pick up more of the cost of the polluter.

The other option for broadening the tax base, which is seldom discussed in New Zealand is, of course, using a capital gains tax, excluding the primary family home. After all, why should capital gains—people who make gains out of capital—not be taxed but other sources of income are taxed? The Green Party would exclude the primary family home, but we think that is a way to broaden the tax base. If we are serious about broadening the tax base, and I think we should be, then we need to look at resource rentals, polluter pays, and some form of a capital gains tax. We also need to look at the question around ring-fencing losses on investment properties, which has been a major problem in our tax system over the last years.

In terms of macroeconomics, this policy is designed to be a stimulus policy, but it has major problems in it. It would be much better if we were to invest in sustainable infrastructure—that is, public transport, which would prepare us for the future of having to reduce our greenhouse gas emissions, and higher oil prices. It would be much better to invest in planting hillsides. We have a major problem of erosion in New Zealand. That would be a much better way to invest in terms of a stimulus package.

Our sewerage schemes are desperately in need of attention right around the country. I am going to Whangarei on Friday because their sewerage scheme up there is leaking into the harbour and that is not really very good for tourism in our country. To clean up our rivers and lakes would cost money. That would be a fantastic investment. It would create jobs.

I totally agree with the Government’s focus on broadband—not necessarily the way it is doing it, but I think investing in broadband clearly is critical to the future of New Zealand. Home insulation is an obvious thing to do if one wants a short-term stimulus package. I think it was Rod Oram who said on the radio that home insulation is something that can be ramped up very quickly. It employs people. One can use New Zealand products so one does not add to the trade deficit, and ultimately the current account deficit. And, of course, there are State houses, which have a high local content. By building more State houses, one actually has high local content so it does not add to the current account deficit or the trade deficit.

To focus on that kind of a stimulus package makes a lot more sense in terms of macroeconomic policy than going through this tax cut policy. In terms of the kinds of transition that the Green Party is looking for, which is a transition to a more sustainable and fairer New Zealand, it makes a lot of sense to actually invest in those kinds of projects.

There are a few positive aspects about this bill: the 2 percent that I talked about, and there are some other aspects on it. But overall this bill is not helping to make the transition towards a more sustainable and fairer Aotearoa New Zealand, and it is for that reason that the Green Party has opposed this bill and will continue to do so. We think, actually, it is a missed opportunity. There has been a lot of talk in the National Party about Bluegreens, and it is something the Green Party has been very interested in, because our view, and why we come to this place, is actually to get progress on our policy. We do not care, especially, that we do not have seats in the Government. What really matters is to make progress on policy. Were we able to convince National to actually embrace Green ideas, then that would be a good thing. We were encouraged when the Conservative Party in the United Kingdom seemed to be open to some Green ideas. We were encouraged by the talk about Bluegreens in New Zealand. But when it came down to it, in this bill that we are looking at today, where there was a real opportunity to do ecological tax shifting, and to have a stimulus tax package that would have sustainable infrastructure in it, and when this brand-new Government had an opportunity to think outside the blue box and think a bit about the green box, it completely failed, and we got a classic blue policy. We did not get anything green in this, nothing green at all.

So this was a missed opportunity from the point of view of the Greens for National to think a little bit outside its boundaries. I hope that over the next 3 years those in the National Government—and I know they do exist—who care about the future of our country and sustainability actually put some pressure on the leadership of National to think outside the blue box and think about how we make the Bluegreen thing real. But because this bill does not, as it stands, help a transition towards a more sustainable and fairer Aotearoa New Zealand, we will be voting against it.

Once again it is an honour and a privilege to speak in support of the Taxation (Urgent Measures and Annual Rates) Bill. One of the great challenges that confronts this country is the requirement to get our rate of productivity growth up. One of the key issues that was in the supply and confidence agreement between the ACT Party and the National Party was to set an aspiration to raise New Zealand’s living standards up to the level of Australia’s by 2025. That is some 16 years away, but that is no easy task, and it is likely to require increases in productivity of over 3 percent per annum. A key aspect of achieving those productivity gains is to have a taxation system that encourages hard work, thrift, and responsibility.

It has been very interesting to listen to this debate over the last couple of days, because the Hon Dr Cullen asked the question earlier today, why do people move to Australia? He quoted as an example the 9 percent superannuation contribution to employees’ superannuation savings by their employers. I put it to Dr Cullen that the reason people move to Australia is that the standard of living there is far superior to the standard of living in New Zealand.

💬 Hon Dr Michael Cullen: Oh!

I tell Dr Cullen that it is far superior to that here. The incomes in Australia are 25 percent or more higher than those in New Zealand, and one of the reasons that has contributed to that is that Government spending, under the last 9 years of the Labour Government here, has been in excess of the per capita inflation-adjusted base by over $18 billion—$1,000 per household per month; $12,000 per household per year. I tell Dr Cullen that that has resulted in the tax rates in New Zealand cutting in at the highest top marginal rate of 39c in the dollar.

Dr Cullen talked about the winners under this legislation being those on hundreds of thousands of dollars of income a year. My point to Dr Cullen is that the winners under this legislation are the 80 percent of New Zealanders who will be paying no more than 20 percent as their top marginal rate of tax from 1 April 2011.

Debate interrupted.

Sitting suspended from 12 midnight to 9 a.m. (Thursday)