Taxation (Urgent Measures and Annual Rates) Bill

I started my address last night at 3 minutes to midnight, and I was commenting on some of the questions and issues raised by the Opposition.

The previous Minister of Finance, the Hon Dr Michael Cullen, asked the House why so many people were leaving for Australia. I commented that in Australia living standards are much higher and after-tax wages are also much higher.

The Hon David Cunliffe suggested to Craig Foss that the reduction in the top marginal tax rates was some sort of utu; that reducing the top tax rate from 39c to 37c was some sort of utu or revenge. I say to Mr Cunliffe that, no, it was not. It was the previous Government’s McLeod report on taxation that called for the top tax rate to be dropped from 39c to 33c. This is the first of many moves that I hope the National Government will make to reduce the top tax rate from 39c to 33c—and it needs to go lower.

I also noted the sarcasm in the comments of Moana Mackey and the Hon Jim Anderton on research and development incentives. The Hon Mr Anderton said that there was no mention of agriculture or exports in the Speech from the Throne. That member seems to forget that he voted for what was probably one of the biggest taxes on agriculture that this Parliament has ever passed, in the form of the emissions trading scheme. I am very proud to be part of a Government and a party that have ensured that there will be a full review of the emissions trading scheme. If Mr Anderton wants to vote for that select committee review, he will have an opportunity to do so later.

I turn now to the question of tax rates and tax brackets. The argument has been made that these tax changes are somehow an attack on the poor. Well, over the last 9 years we have had a significant increase in Government expenditure; an increase in Government expenditure, per capita and inflation adjusted, of in excess of $1,000 per month, or $12,000 per year. This tax bill simply restores the tax thresholds of people on low incomes who pay that lower tax rate of 21c; it simply restores the position of 9 years ago. In respect of higher tax payers, it does not. There is more work to be done.

The key issue of this tax bill is to provide an incentive for people who want to work hard, get on with their lives, earn higher incomes, and contribute to their families’ well-being and the productivity of this country. One of the great problems we have with our tax system is that we have perverse incentives for people to split their income and to enter into schemes that reduce their taxable incomes. When we have a high marginal tax rate of 39c, we are incentivising people not to work, and to enter into schemes that can help reduce their taxable incomes.

My colleague the Hon Sir Roger Douglas was a very proud Minister of Finance in the fourth Labour Government. Comments yesterday from the Opposition referred to the effect that these tax rates will have on those on lower incomes. Well, those folk on lower incomes generally fall into three categories, and that is what Mr Douglas tried to explain to the House. They are either beneficiaries, which I will come to very shortly, or they are the children and spouses of those on higher incomes who split their incomes, or those who have assets of high value and live off the income from their assets. The position with beneficiaries is that benefits paid to beneficiaries are based on after-tax income. We could actually drop the tax rate from 39c in the dollar to 1c and it would not make a single iota of difference to the net income paid to beneficiaries, because beneficiary income levels are based on net income, not gross income. Mr Douglas is very proud that he was the Minister of Finance who put that reform into place.

I will finish as I started in the first reading of this debate by commenting on the Speech from the Throne. The Speech from the Throne highlighted that this country needs to lift its productivity levels and its income levels. What will be fundamental to making those changes over the period of this Government will be a tax system that encourages and incentivises those people who want to get on with their lives, improve their incomes, and improve the lifestyles of their families.

Tena koe, Mr Speaker. Kia ora tātou katoa e te Whare, ā, tēnei ata. It has been great to hear the Opposition begin to grapple with what it means to participate in a mana-enhancing relationship. It would be even better if those same members started to reflect on their own behaviour in the House, and how that could demonstrate mana-enhancing principles. It is about listening and appreciating that other parties will have different points of view to their own, and there is nothing wrong with that. We need to respect that the views of others may well be different to somebody else’s.

In this final reading of the Taxation (Urgent Measures and Annual Rates) Bill, it is of interest to us that 1 day after the international Human Rights Day, Labour has a new approach to again beginning to consider the interests of vulnerable New Zealanders. The impact of those members’ actions over successive terms was never more apparent than during the urgent call from the Human Rights Commission that New Zealand must adopt a national plan to combat child poverty. Poverty did not occur just today, day three of a new Government, as Labour suggests. It has been here for some time.

The other irony is that at 1 p.m. yesterday I, on behalf of the Māori Party, along with Keith Locke of the Greens, received a petition to the House of Representatives articulating the concerns of many New Zealanders about the former Government’s record in opposing the Declaration on the Rights of Indigenous Peoples. The petition states the deep disappointment of the petitioners regarding an action that they describe as unreasonable and unjust. We cannot ignore the fact that 27 percent of Māori children live in poverty. Further, the New Zealand Income Survey reminds us that although average incomes have risen, relative to others Māori are $151 per week worse off. They are $151 worse off despite a period of economic prosperity, so the survey says.

The Māori Party will continue to speak out today for those who are not so fortunate, just as we did yesterday and will do tomorrow.

💬 Hon Lianne Dalziel: Well, explain why you voted against the Cullen amendment.

I will do that.

The Labour members speak loudly of the vulnerable. Dr Cullen, Mr Mallard, and Nanaia Mahuta should know that this vulnerability did not just happen today. They highlighted vulnerability in talking about our vulnerable Māori. Our people have not become vulnerable just today. They have lived in vulnerability through successive Governments, with Labour being the most recent. If there are vulnerable Māori as we discuss this bill, they are likely to have been vulnerable 6 weeks ago before the election—when Labour was in power—1 year ago, and 9 years ago. If there is one thing to say, it would be to tell Labour to look in the mirror. Those members speak of vulnerability as if they are the only protectors of this group. In fact, there were a few hundred vulnerable people in the Tūhoe nation who lived in the Ruātoki valley and who were invaded by police on 15 October 2007. I did not, and I have not, heard any of those members speaking up for them, so please do not preach to me about the vulnerable.

Mr Cunliffe said that he thought that the Māori Party and Labour could have done some deals and worked together. Truth be known, those members never talked to us at all while we were on the cross benches, so any offers now are simply too late. But 3 years on, who knows? We need to remember that we could well have been sitting on that side of the House, but we have secured some gains for our people—more than we were offered by Labour, or could have expected from this National Government. We will be judged, of that there is no doubt. That is how it should be, but it will not be against this one bill; it will be over time. We will be working hard to ensure that our people will be proud of our contribution.

This debate provides an opportunity to consider how well this Taxation (Urgent Measures and Annual Rates) Bill will assist us in advancing the human rights of New Zealanders and, in particular, Māori. The taxation bill, in summary, includes personal income tax cuts and threshold changes and a new independent earner tax credit for low and middle income earners—an initiative we have a particular interest in. It is difficult to accept that those earning under $40,000 will receive no tax cut this year, I have to admit. No member of Parliament should be comfortable that low-income families continue to struggle. Families struggle to buy food and to pay for the power, and are forced to abandon their homes, which are becoming increasingly more vulnerable to mortgagee sales. We must consider those people. Unfortunately, this bill does little to address these issues. I have to say it will not reduce taxation at this point in time for the majority of the voters in my electorate and I am disappointed at that.

But it is day three in this forty-ninth Parliament; it is not a time that the Māori Party will wave the white flag of defeat and run away from the opportunity to make a difference, for we are here to make a difference. It is, after all, only day three and there are 900 or so more days to come. The Māori Party is here to make a difference as best we can in the political climate and the constraints we sometimes find ourselves in in this House.

We want to state for the record that this is not a bill we were consulted on prior to the negotiation of our relationship agreement with National. This is very much an initiative of the National Party, as explained by the Deputy Prime Minister, Bill English, and National owns it as such. We are concerned that the rebate does not do enough for those at the bottom end. We are also concerned at the targeting of particular groups in this bill without taking sufficient care for those groups whom we have always advocated for, te pani me te rawa kore [the bereft and the poor].

But this is the nature of politics, as Labour well knows. You see, we remember the disillusionment of our colleagues in the Green Party with their honourable intention to introduce legislation to abolish the discriminatory provisions that allowed young workers to receive less than the minimum wage. It was overturned overnight by the Labour caucus—yes, Labour knows about political landscape. The Māori Party argued that rangatahi should not be vulnerable to arbitrary dismissal or unilateral changes to their terms and conditions of employment. We supported the original intention of the Greens’ bill providing that young people had the right to freedom from discrimination as in the Human Rights Act 1993. Yet, as the Hansard will show, in order to win the support of Labour the Greens had to amend their legislation to the effect that they ended up supporting a new entrant sub-minimum wage for young people’s first 200 hours of work. Yes, they know about political trading. Why? Because they have done it. So, despite the concerns, we will continue to work with the National Party to consider legislation to deal with those who stand to miss out from this bill.

I want to refer to the trickle-down economic theory that says that boosting the incomes of mid to high income earners through tax cuts will create economic benefits that will trickle down to lower-income earners from the enhanced spending, which will create jobs in the subsequent demand for services. Instead, what we have witnessed over the years in Aotearoa is more akin to a trickle-up effect, which is worsening income inequalities—an effect that the Labour Government failed to give serious consideration to over 9 years.

Our greatest concern, which we share with the Government, is our concern about the inequality in disposable income—the gap between the low and the high-income earners. The Opposition is quite right that our policy is to reduce tax so that no tax would be paid on the first $25,000 earned. We had many questions about this bill and how it fits alongside our aspirations to address low-income taxpayers. Of particular importance in regard to the tax issues being placed here is manaakitanga to the less endowed and rangatiratanga for them. We think of those unable to generate a living income or to create wealth. If the nation is not willing or able to provide adequate manaakitanga to the less endowed, then the shortfall must be addressed by providing opportunities for those people to raise their productive skills, to assist them to be better managers of what skills and means they possess, and to protect them against loan sharks and pokey machine parlours. There is significant value in taking this route and it would be an expression of rangatiratanga. We need education and counselling services, coupled with community banking services, including whānau, hapū, and iwi-designed schools, promoted through community facilities, including schools. The absence of any tax relief in this legislation means that these sorts of alternatives are rather urgent.

This bill focuses tax relief on higher-income earners and it intensifies the earning gap between the low and high-income earners. We do not intend to ignore these realities; we must not punish the impoverished. It was with great concern that we saw the Minister for Social Development and Employment, the Hon Paula Bennett, yesterday release papers that revealed that a substantial group of New Zealanders have continued to be deprived through a decade of relative prosperity. That is a legacy of the Labour Government we must address, and we will support this bill in honouring our confidence and supply arrangement with the National Party.

I rise to speak to the Taxation (Urgent Measures and Annual Rates) Bill in its third reading. I start by thanking the officials who have worked diligently behind the scenes. There is an excellent Māori proverb that says: “Ka pai ki muri, ka pai ki mua.”, which means that when things are working well out the back, they also work well out the front. That is definitely the case here in the third reading debate on this bill, because New Zealanders up and down the country are breathing a sigh of relief. They have seen an Opposition that went to the electorate throughout an election campaign and, faced with some pretty difficult times and pretty difficult decisions, laid its decisions and its promises on the table, to let the electorate know about them. The electorate voted on those promises, we are here with legislation in the House within 32 days of taking office as the Government, and on the 33rd day we are delivering upon those promises. Further evidence of that is the way that John Key brought about a coalition agreement with our partners, United Future, ACT, and the Māori Party. He brought that together within a week of the election—fantastic. He brought together a Cabinet, a brand new Cabinet, and here we are today, just 33 days after the election, delivering on our promises in the third reading of this bill.

There are four key parts of this bill: changing the tax rates—and certainly the threshold rates as well—the independent earner tax credit, the changes to KiwiSaver, and the research and development tax credit. Some tough decisions were made there, but decisions have been made and here we are today delivering on them.

I highlight the fact that we are in a really tough global recession now. The outlook for business is bad. Back in Napier, when I was campaigning to retain the seat of Napier, I was amongst many, many businesses, particularly our exporters and our retailers, who were all really struggling. They were looking for a new Government and wanted someone who would come to the task of bringing this taxation legislation to Parliament and delivering on it. You see, we are facing some tough times; they are not like the 9 years of fair weather that the Labour Government enjoyed over its period in office. Over that period that Government had $48 billion of tax surpluses. When there are tax surpluses of that magnitude, the Government has the ability to spend as though there is no tomorrow and to make some easy decisions. There were some good decisions, I might add, in that respect; I think the bringing in of KiwiSaver was a good decision. But I say a Government is faced with easy decision-making in that situation.

We have had a Pre-election Economic and Fiscal Update that shows 10 years of deficits. I remind the Opposition that at the start of last year we were already heading into recession. The outlook for growth was down compared with that of other countries we like to compare ourselves with, so we were already heading into recession. Then on top of that the credit crisis came through, and when the previous Government delivered the Pre-election Economic and Fiscal Update it outlined 10 years of deficits. That was the scope of what we had to campaign on and to deliver our election promises on. It meant there were some damn tough decisions.

💬 Hon Annette King: Name one!

I will name three. There are three tough decisions we have had to make in this bill itself.

One of them concerns the research and development tax credits. If we had been looking down the barrel in 2007 at a $8 billion surplus, we could have said yes, we will give people tax cuts and we will deliver the research and development tax credits. But quite frankly, that was impossible. We have had to make some tough decisions, and those tough decisions have been worsened by the fact that now we are in Government, we find out there is a big hole in the Accident Compensation Corporation’s accounts. That was not disclosed in the contingency liabilities that are required to be disclosed. In those circumstances one has to make some pretty tough calls. We made those tough calls and have come to Parliament to deliver on those promises. Now, 32 days after the election, we are in the Chamber and delivering on them with this bill. I am proud to stand and talk to the third reading of the bill.

Four keys parts of the bill deliver on those promises. The first is the changes to the tax threshold, which are addressed at those Kiwis who have been left out of the previous Government’s taxation changes. They address people in the middle-income tax bracket who did not benefit from Working for Families, specifically. Over the next 3 years the tax threshold will move up. We are starting to look at people in the middle tax bracket—people like teachers, wharfies, and police officers—who have not benefited from some of the other programmes that the previous Government was able to deliver from its $48 billion worth of tax surpluses over the past years. We are in the Chamber and delivering on that excellent promise.

Dr Cullen stood up and said those taxpayers would be better off under the Labour package. I remind the previous Minister of Finance that he introduced a change to the tax threshold a few years ago, which National nicknamed the “chewing gum tax cut”. That change was in the law, just like what he says is in the law right now, yet he changed that law. So how can the New Zealand public trust that member? He had a law in place, aimed at reducing the tax threshold, albeit in a small way, in order to benefit the hard-working Kiwis in the middle-income bracket—the engine room of this county; the people who really drive the tax take. Labour had a programme for them—fantastic. But what happened? Labour said it could not afford the change to the threshold, even though it had an $8 billion surplus! Would you believe it! So Labour axed that law.

💬 Hon Darren Hughes: He’s wired!

Is it true or not? It is true, so members opposite cry crocodile tears when they say this Government is not delivering for lower-income New Zealanders. Labour had an $8 billion surplus last year—and $48 billion over those 9 years—but said it could not deliver a small tax threshold cut to hard-working police officers, hard-working teachers, hard-working nurses, and hard-working wharfies. It thought that no, it would forget about them and spend that $8 billion on all sorts of other things.

But despite all that spending by the previous Government, by January of this year the country was already heading into a recession. Go figure that! The previous Government experienced the best economic situation in a generation, yet it delivered us a recession, before the credit crunch hit home. The combined result of that has put the National Government into the pretty damn difficult position of having to make some tough decisions. One of those tough decisions relates to the research and development tax credit. I think it would be wonderful to stand up and say we are delivering tax cuts and the research and development tax credit. That would be fantastic. I am like Dr Cullen—[Interruption] It would be wonderful to be able to deliver that particular tax credit; it is unbelievable that we cannot. So here we are, delivering on the changes to the tax threshold.

The second area I want to focus on is KiwiSaver. We are, again, responding to the criticism of members opposite, their crocodile tears, about the reduction in the contribution threshold, which is down to 2 percent. When I canvassed around the Napier electorate, I spoke to hundreds of workers who are not in KiwiSaver. They will now be able to afford to enter KiwiSaver. In fact, right now only one in five employees is in KiwiSaver. Let us remember that unless people are in KiwiSaver, they cannot access the credit that is available—they have to be in it. By reducing the threshold, we are allowing a lot of people who earn under the $40,000-a-year income level to access those credits and give themselves a chance to save. The Government is doing a fantastic thing in delivering on that promise. That change will allow a lot of hard-working Kiwis to go into KiwiSaver, access those tax credits, and save. That is a step forward.

There are only a few more speeches to go in the third reading of this bill. We are in the Chamber within 32 days of becoming the new Government, and we are delivering on the promises that we took to the electorate, quite transparently. It is fantastic that we are here to deliver on the things that we promised at the election. Thank you very much.

Before I address some of the comments made in Mr Flavell’s speech, which I want to do at some length, I just want to point to the Dominion Post cartoon today to sum up the totality of that member’s speech. The cartoon is of Mr English saying: “On the campaign trail I pointed out that the details of our KiwiSaver policy were printed in a micro dot on the back of our pamphlets. These radical changes would have come as no surprise to anyone with a powerful microscope.” The slash-and-burn mentality might have been global, as Mr Tremain signalled, but I say the gutting of KiwiSaver and the tax changes, where anybody under $40,000 gets a big fat zero, were not signalled at all by National. That was not signalled, because that member’s leader went out and talked about aspiration and used the tag line: “Choose a brighter future”. Well, I just point to a couple of figures, and I say to Mr Flavell that 74 percent of his constituents, some 40,008, earn under $40,000. I say to Mr Boscawen, who waxed eloquent about the ACT Party, that even in the sunset-tan paradise of Epsom, 52 percent of the Epsom electorate earn under $40,000. Those people get nothing in this bill. So the proud Mr Boscawen who waxed on about helping people, does not wash.

I want to get to Mr Flavell. I have to say the Māori Party members have a unique skill; that is, they get their research unit, and they have done it ever since they came to this Parliament, to write out verbatim, word for word, their scripts. I just say, as an observer, that I would have thought that is a bit of an insult to that great tradition of oratory in Māoridom, for a start. But today we heard the alibi for why Mr Flavell and his party are collaborating with these people in the National Party and selling out every constituent they have—in Mr Flavell’s electorate that is 74 percent of the folks who supported him. The Māori Party got the script from its research unit, presumably washed through the National Party spin doctors and press secretaries. This was to be the alibi, and it went like this. Mr Flavell said “vulnerability and poverty did not just happen today” and “the Labour Party in Government did nothing”. Well, there is a word for that. That member knows it. He is an honourable member, so I will give him the credit of assuming he does not believe what he read out, because it is piffle. But he was told to come down to the Chamber to try to provide some sort of alibi and fight-back to take home to the marae to try to convince them.

Let me remind that member that Māori unemployment fell to its lowest level in the history of this country—that was under the Labour Government, not his mates on the other side of the Chamber. We have the lowest level of unemployment generally for 20-plus years. That means 370,000 - plus jobs have been created; that helped that member’s constituents. The best thing that the Labour Government did for that member’s constituents was give them the dignity and the pride of having a job. We acknowledge that poverty and vulnerability did not start today; it started 9 years ago when we inherited it from the former National Government. We did do something about it.

So Mr Flavell came into the Chamber and made another startling admission. He says now—this is the new version of the alibi—that his party was not consulted. Now that tells us two things. They were told: “Oi, you’ve signed the deal, vote for this.” I do not know how mana-enhancing that is. There is a word for treating people like that, but I will not use it. He now says he was not consulted, and that, apparently, is the excuse for continuing to support the bill. I would have thought that, logically, if a member is not consulted, if he has not read the detail, if his coalition partner has not shown it to him—and, of course, that party has two Ministers in the executive, so I would have thought those Ministers would talk and he would see the legislation—if he does not understand it, and if he believes, as he almost said, he has been hoodwinked, then that member and his party would vote against the bill. So that is the flimflam and the alibi that the Māori Party members will take to their constituents on the marae. They will say they voted so that a person without children earning $23,999 gets nothing because they were not consulted.

💬 Hon Dr Michael Cullen: Worse off.

They will be worse off. A person on 50 grand and in KiwiSaver with one child loses $70 per week. “We weren’t consulted”, that member will say, “but we voted for it anyway, like lapdogs.” Two people, one on $33,000 and the other on $22,000, with three kiddies, will be worse off by $14 a week, but the Māori Party will vote for it because it was not consulted and did not read the bill. It will just line up in the stalls and tick the box.

I say to that member that that is a disgrace. I say to him that I would hate to be in his position. It is worse than the National Government, because everybody knows this is what National does when it gets into Government—it puts the boot in at the lower end. Everybody knows that, so they sort of expect it. But it is worse for that member, as his party has a modicum—up until today—of an honourable tradition. It is worse for that member and his colleagues to go back to the marae and explain that to the most vulnerable. On this side of the Chamber we know that the member’s colleague Mr Harawira is bitterly torn about this bill. We could see it a couple of nights ago when he had to put his hand up to vote—he crawled behind his desk.

It is not good enough for Mr Flavell, even if he was not consulted, to say what he said after 2 days of debate in this House, when the Labour Party has fought tooth and nail. The media might say we are dragging the chain and filibustering—oh no, it is actually called fighting for what one believes in and standing up for one’s principles, which is something that one or two members opposite might want to learn. We will continue to fight this legislation, and we will take it out on the streets. We look forward to people rocking up to our electorate offices and asking why National said they would get a fair go when they are actually paying more at the bottom end. The member Kate Wilkinson, who is sitting quietly in the back row, with the hatchet ready on the next bill on 90-day probationary periods, stood up at candidate meetings and said everybody would benefit from this. I remember it. I remember Woodend and Rangiora. I look forward to quoting her, because I wrote her remarks down. I look forward to those people coming up to me who get nothing from this legislation. We will take this out on the streets, and we will remind people. I say to Mr Flavell that what we have here is a typical Tory trick. It is a hoax: go out and tell the people what they want to hear, then come back—

💬 Chris Tremain: Like the “chewing gum tax cuts”! Answer the question about the “chewing gum tax cuts”. What were they? Was that a promise? That was in law, and you guys cancelled it.

I think the member has had too many fizzy drinks.

💬 Chris Tremain: You cancelled it.

I think you have had too much Coke for morning tea.

💬 Mr SPEAKER: Order!

Well, if he gives it, he is entitled to get it back.

💬 Mr SPEAKER: The honourable member knows he does not include me in the debate.

I apologise. I know that you are not a Coke drinker, Mr Speaker; you are a fit man, sir. I suspect you are a Coke Zero man. I was trying to say that I suspect that the member has had too much sugar. [Interruption] I said a “fit” man.

It will be interesting when people get their pay packets, look at their KiwiSaver accounts, and know they have been done over. We have seen reports today in the paper where people will lose $300 on what they would have got out of KiwiSaver, and some of those people are on very modest incomes. We know everybody who is on KiwiSaver is a net loser because of this Government. Many of Mr Flavell’s constituents will be members of KiwiSaver.

I just come back to a point that I think Dr Cullen made to Mr Tremain. Mr Tremain says, as every member opposite parrots, that National is dropping the rate on KiwiSaver to encourage more participation. If that were true, I suspect we would all line up and tick the box. But the problem, I say to Mr Tremain, which he and his colleagues have never addressed, is that if National is trying to create greater participation, why has it not budgeted for that greater participation in its Budget documents and its plans? National has not done so. If we are going to create greater participation, where will the dough come from?

To conclude, I say that we are at the end of the process of the third reading. I invite Mr Flavell to go back to his office with his colleagues and look in the mirror and try to reflect on what he did today, because he sold his constituents out today.

It is a pleasure to rise in the third reading of the Taxation (Urgent Measures and Annual Rates) Bill. This bill is an example of the National Government delivering to the public of New Zealand, of the National Government making firm and wise decisions in the best interests of this country, and of the National Government having a plan and a direction to build and rebuild this economy so that we can actually deliver the social services that the people of New Zealand deserve and expect.

The reality is that the legacy of the previous Government was a very poor economy and a recession hitting here before the world recession hit. We had some of the highest interest rates in the OECD, and high inflation, and there is a decade of deficits ahead for the incoming Government. That is the reality of what Labour left behind for this country and for the National Government of the day. With this legislation we are taking the first steps to turn that round and provide the direction and incentive for New Zealanders who want to get ahead and prosper. These tax cuts are exactly that; they are there for ordinary, hard-working New Zealanders who want to make a go of their lives, and we want to give them a growing economy so that they can do so.

This legislation is also a stimulus for the economy, at a time of economic decline around the world. We need to be out there putting some money back into the economy so that it grows and provides opportunities for employment for all New Zealanders in these tough economic times.

There is one group of New Zealanders whom we need to concentrate on when we look at this bill, and that is our young people. They are people starting out on their life process. They have an education and they are starting jobs. They tend not to earn too much money when they are young, and they need to have some breaks and incentives. That is what this bill provides. We want to give some hope and direction to the young people of New Zealand who want to buy a house and start a family. Those people need some incentives and some support, and this bill gives them a chance. It puts some money in their hands so that they can save and deliver the dream they have—the Kiwi dream of starting that family, owning that house, and building a better, brighter future for themselves in this country. That is what this bill is about: it is about investing in the young people of New Zealand, it is about investing in the future of this country, and it is about giving young people the chance to take a risk and be a success.

Those people do not have to leave New Zealand now; they have a future here. They can see a future here, because we are delivering the right economic environment for them to have that future and that direction. I think this bill is very important for the young people of New Zealand. It is part of setting up the economic growth that will provide opportunities for them in the future, but it also helps them in a practical way in their current circumstances. It provides the impetus for them to get ahead and to buy that first house.

💬 Hon David Cunliffe: How?

Because it puts money in their hands, and that is what the Labour Government would not do. Labour would not put money in people’s hands. Labour sat on years of Budget surpluses. It was happy to sit there, take that money, invest in US stock exchanges, and lose money. And now Labour members come back here and criticise things like this.

Labour would never give a tax cut. The Hon Dr Michael Cullen is against tax cuts; that is the reality. This is not a case of Labour putting up a big fight. If this is the best fight that it can put up, Labour members will be gone before they know it. There is no fight from Labour about this bill. Labour does not like tax cuts. It just does not like them. It does not want to give money to people so that they can make their own choices. That is the reality. Labour has never given a tax cut to people. Where is the tax cut, the “chewing gum tax cut”, that the Hon Dr Michael Cullen was supposed to deliver for the people of New Zealand? It has gone. The Labour Government had a Budget surplus, as Chris Tremain said, but it did not deliver that tax cut. Now Labour is voting against another tax cut for individual New Zealanders. Labour does not want to give tax cuts to hard-working New Zealanders. That is the message of the day. The message of the day is that Labour is against New Zealanders, hard-working Kiwis, keeping the money that they have earned and having some ability to decide their own future.

Labour inherently believes that it knows better than ordinary New Zealanders. Labour members think they know better than New Zealanders how to spend their money. That is what Labour is all about. That party will not give tax cuts. But National members believe in our people. We believe in our young people and we are going to give them the chance to make a future in this country. We are going to give them that direction, so that they can make their own choices and can deliver for themselves and their families what they want. That is the choice the public made at the election a few weeks ago. That is what National will deliver to this country, and this legislation is an important element of it.

Not only do we have personal tax cuts—something that Labour is ideologically opposed to—but also we have the independent earner tax credit, which is very important for young people who are trying to get ahead. It gives them that start. We also have the KiwiSaver changes, which are important for young people because they mean that they can now get into that scheme. The 4 percent rate was just too much for a lot of young people who are trying to get ahead. The 2 percent rate will give a lot of them the opportunity to join KiwiSaver. It will be very difficult for New Zealanders to save in the coming years, because the economic conditions will be very difficult. Anything that we can do to provide an opportunity for New Zealanders to save should be encouraged, given the tough economic times that are coming. It is the economic reality—

💬 Hon David Cunliffe: I raise a point of order, Mr Speaker. I seek your advice. Standing Order 106 refers to a member’s rights in respect of him or her being misrepresented. What would be your judgment where a member is misrepresenting himself or his own party’s position? What recourse would the House have? The member is saying that this bill will benefit young people by providing more retirement savings. It is an accepted—

💬 Mr SPEAKER: By way of point of order, the member is actually introducing a debating matter. That is not something I consider appropriate at all. According to the Standing Orders, points of order are not to be used to introduce debating material.

Thank you, Mr Speaker. For the new members of the House, I say that that is a common ploy that members of the Opposition use when they are in trouble and know that a member’s speech is hitting at the heart of them.

💬 Hon Dr Michael Cullen: I raise a point of order, Mr Speaker. As you well know, once a ruling has been given by yourself we do not proceed to debate it in any shape or form.

💬 Mr SPEAKER: The member has made a perfectly valid point.

This legislation is important for the youth of New Zealand. It delivers the direction and the incentive for them to go ahead and provide the future that they demand in this country. National will deliver that future.

One of the hardest things during the campaign trail was to hear Labour Party members out there talk about research and development. This legislation has a research and development component to it, through the tax credit. Labour members tried to be very regal in the campaign, saying that they were there for the research and development community and that they would provide some great scheme for the future. The reality is that at the same time as they were talking up their research and development policy, they were laying off people from AgResearch, in Hamilton. There is a word that cannot be used in the House that describes that, and it begins with the letter “h”.

💬 Hon Tau Henare: What’s that?

Yes, what is it? The Labour Government was laying off scientists—the scientific base of this country. Scientists in New Zealand are paid 15 percent less than any other profession. Labour had 9 years in Government—9 years of the best economic conditions—and what did it do for scientists in New Zealand? Nothing! What did it do during the election campaign for scientists who were going to lose their jobs? Nothing! What do Labour members actually think about research and development? They do not give a damn about it. They give a damn about their little special projects only. They gave redundancies; that is what they gave scientists during the election campaign. It took National to stand up for those scientists and deliver to them a future. That is the reality of what has happened. Labour members cannot go around the country any more, talking about research and development; their heads should be hanging low in shame at the way that they treated scientists in this country for 9 years. The approach they took was shameful.

It is pretty rich for them to come into this House now and talk about research and development tax credits, which are not what the science community wants. The science community wants a strong, growing economy, and we will deliver that. These tax cuts are the first step in delivering it. Not only are we delivering that economy but we are giving the young people of New Zealand the chance, the inspiration, and the aspiration to follow their dreams. We are giving them some reward for making good, bold decisions. This measure will go down in history as the first step, and one of the important steps, in delivering a brighter future for New Zealand and our young people. Thank you, Mr Speaker.

This is a very sorry measure indeed. I begin by reflecting on the lack of consultation on this bill. I want us to consider the regulatory impact analysis team report on the regulatory impact statement. I think it is such a good report that I want to read it into the record. It states: “The Regulatory Impact Analysis Team has reviewed this Regulatory Impact Statement and considers it to cover the information required and to accurately reflect the analysis undertaken in relation to the proposal. The analysis itself is considered to be adequate in relation to the problem definition and the level of impact analysis undertaken (with information gaps having been explicitly acknowledged). However, due to the timeframes involved, the RIA consultation requirements have not been met.” We now have a Minister for Regulatory Reform and this is the first bill that has been through the office of the new Minister, the Hon Rodney Hide. It is the first bill of the National - Māori Party - ACT Government, and what does it do? It does not even meet the requirements of its own regulatory impact analysis. As long as information gaps are explicitly acknowledged, then that is OK under this Government and under this Minister for Regulatory Reform. I can only say, as a former Minister of Commerce, what a disappointment this is. What a tragic disappointment! We all expected a lot from Rodney Hide, because he had his bill in front of the select committee earlier in the year. But what a disappointment he has turned out to be.

I remind this House that business welcomed the introduction of the KiwiSaver scheme with open arms—particularly those who recognised the need in New Zealand to grow real depth in our capital markets. They are appalled that National is passing this bill under urgency, without proper consultation. All of them felt that there would be an opportunity for input, either in terms of the bill before it was introduced or at least being able to make submissions to a select committee. This process is appalling. It does not meet anyone’s standards of appropriate regulatory impact.

I want to ask a question of the Government. It is too late now for the answer to be provided, but what do the default providers think of the cut from 4 percent to 2 percent? No one has mentioned that. No one has talked about the scale and scope of the KiwiSaver scheme as a whole, and the impact that this gutting of the scheme will have on the default providers, who quite legitimately put up their proposals to become default providers on the basis that it would be a “4 plus 4” plus Government contribution scheme. What do they say, now that that cut has occurred? Will they be coming back to the Government to ask for some further changes to be made, because the consultation has not been done?

What does the Australian Government really think about the portability of a scheme that has been gutted by the incoming National - ACT - Māori Party Government? A statement from the Aussie officials has apparently been waved around by the odd member—and I use the word “odd” advisedly of the Government members—but not by Ministers, so it did not have to be tabled in the House. That is not good enough. What does the Australian Government say about portability now? And why did the National Ministers not even think of asking the Australians about the portability arrangements before they gutted KiwiSaver? What sort of Government would campaign on bringing people home from Australia, yet put at risk the millions of dollars that are sitting in accounts in Australia ready for repatriation to KiwiSaver accounts in New Zealand? There was no offer of portability before KiwiSaver, and there is no guarantee of portability now. Why would someone come back from Australia anyway, when the contribution is 9 percent and completely paid for by the employer? In New Zealand it was “4 plus 4” plus the Government contribution but now it is “2 plus 2” plus the Government contribution. I will come back to the Government contribution in a minute, because I think there has been a shameful campaign by the National Party to cover up the real cutting to this scheme.

I have listened to the nonsense of the Government saying that the KiwiSaver cuts are designed to make it accessible to low-income workers—that is the first time I have ever heard them be concerned about low-income workers. Never mind the fact that over 800,000 members of KiwiSaver represents more than 150 percent of the actual Treasury estimates of what the KiwiSaver uptake would be! Apparently the 2 percent is there to help people who are not yet in the scheme to save, yet National has budgeted not one cent for an increase in the number of savers. That is because it has no expectation of increased savers. This is robbing Peter to pay Paul.

The lie that the unions asked for “2 plus 2” has been repeated over and over again. The unions asked to retain the original introductory measure that the Government provided for at the time: the entry level of “2 plus 2”, increasing to the “4 plus 4” over 2 years that we had in place until this Government decided to rip the guts out of the scheme. But the that would have created a compliance nightmare for employers, particularly those who had a high staff turnover. So actually it is a Labour-led Government that cares about the compliance costs of business—not the National Party, at all.

This has been ill-conceived from start to finish, and it has been mounted on false premises every step of the way—just like hiding in the fine print the increased taxation required for those who are paying over the 2 percent contribution already, and also implying that low-income workers contributing at 2 percent would still gain the full member tax credit at $1,042.86 a year, without mentioning that if one is earning $26,000 a year and paying only 2 percent, one will get $521.43.

The whole point of the KiwiSaver scheme is that it has two elements to it. A mortgage scheme is built into it so that first-home buyers can use their savings over the first 5 years and get a Government contribution. But when one cuts the contribution that the workers and the employers are making, then the money is not available for that deposit gap, which is what it was designed to do. I am absolutely appalled that the Government has not come clean on the real issues that will confront those who expected to use their KiwiSaver accounts to buy their first home. I believe the Government should be held to account for this. Nowhere was that mentioned in the National Party campaign.

Finally, I say that business has again expressed concern that the research and development tax credit has gone without any opportunity for business to have a say. An optimistic statement at the end of the New Zealand Manufacturers and Exporters Association press statement on Tuesday morning says it all. It said—and it was very optimistic—“Hopefully the new Government will revise their ideas on the R&D tax credit and other policies that can better support their stated growth objectives for exports, even in the face of the problems in the world.” Well, that was gone by lunchtime, was it not? Little did the association know that the bill had actually already been printed, and it was not even going to a select committee. It had no chance to have any say. So this so-called business-friendly Government has failed to pass its first test, and that is no credit to any member of the National - Māori Party - ACT Government. We expect them to shaft ordinary working New Zealanders. We are used to that over here; it is no surprise. But to shaft the business community and our capital markets—

💬 Chris Tremain: I raise a point of order, Mr Speaker. I take personal offence to the word “shaft”.

💬 Hon Dr Michael Cullen: “Shaft” is a pretty standard New Zealand colloquial term, and if we are to stop using terms of that nature, then we will not need even a pocket Oxford Dictionary in the front there; we can get ourselves a new, very small version with a couple of hundred basic words, which will include “crusade”, “literacy”, and “numeracy”, but not much else.

💬 Chris Tremain: The word “shaft” has connotations. If we are to uphold a sense of decorum in this House, I think we should refrain from words that have connotations of that nature. Derogatory expressions like the word “shaft”, I think, have a sexual connotation that is unnecessary in this House.

💬 Mr SPEAKER: I can understand that members get concerned about language being used. I think the debate has been of very good tone; it has been robust and a very good debate. I do not want to rule too many words out in this House, especially words that are in pretty general usage, but I would urge members to be mindful that some people can find certain words unhelpful.

As I said, we expect the National Party to undermine the lives of ordinary working people. But we do not expect it to undermine business or to undermine our capital markets in its first day in office. No one would have expected that. The National Party has run a smoke and mirrors campaign, but what is deeply disappointing is that the Māori Party has been conned into believing the rhetoric. There are huge disadvantages for the people it says it represents, and it is shameful—shameful—that the homework has not been done in this case.

Well, it seems that the outrage from the left is back. They have rediscovered, in part, who they think they represent, and then have come up to this House with all sorts of screaming rhetoric about how everybody and anybody who disagrees with them is somehow against anybody and everybody who agrees with them. That is no way for a political party to make progress, particularly when we are so close to the time when the last election was held. I cannot help thinking that underlying all of this is the absolute shock that Labour members and former Ministers have that they could find themselves turfed out of office by a party that went out and very openly, up front, publicly, and with nothing hidden told New Zealanders what they intended to do, and then—to the outrage of the Labour Opposition—came into the House and actually did it.

We have actually moved to lower taxes, and to pay for it by getting rid of a 15 percent tax credit on research and development, which, frankly, is not the end of the story—that has been made very clear. We think it was a poorly targeted way to recognise that. We have also told New Zealanders that we want KiwiSaver to be more accessible, to be open to more people, and we are making those changes so that its affordability for a greater number of people can be assured. All these things were made clear to the very people whom Labour now seems to think we have somehow misled. Well, I do not think so—I do not think so. This is very good legislation, and I am very pleased that it will pass through this House very shortly. Workers up and down this country will be waiting for their payslips, to get the confirmation that the choice they made for a Government was exactly the right one.

It is also worth noting, I think, that although Labour members are saying “Well, we were offering tax cuts, and they are included in this particular package.”, they are not recognising that their record was to promise tax cuts and then not deliver them. After hiding so much of the true state of the New Zealand economy for the last 5 or 6 months, denying that there is a problem with accident compensation—which costs every New Zealander—

💬 Hon Members: Ha, ha!

They are laughing—they are laughing because they think that is a huge joke; that is one they put over top of us, and all those sorts of things; they are now saying they would not have come back into this House and lowered taxes. So it is a little bit rich to say that all the new National Government is doing is what they would have done; their record speaks for itself.

I want to comment on some of the vitriol that has come from the other side of the House, directed at the Māori Party. I think it has been utterly disgusting—utterly disgusting. But it typifies what has gone wrong with the relationship in this country, the longstanding relationship, between Māori and the Labour Party. There is no respect whatsoever, no understanding whatsoever, but just this clarion call that “You guys should be with us! If you are not, then you will pay a price.” That is just an unacceptable way for any Parliament to conduct itself. The respect of one member for another should be at the highest possible level.

This has been a strong debate, it has been a long debate, and I think it has been a well-considered debate. It has exposed the weaknesses in the Opposition and the great strengths in the new Government. I look forward to supporting the bill.