Taxation (Annual Rates and Budget Measures) Bill

I am happy to take a call on the title and commencement clauses of this legislation. The legislation is called the Taxation (Annual Rates and Budget Measures) Bill. I would submit that that name is not a particularly good one for this legislation. It makes it seem like something fairly innocuous, when in fact the bill breaks even more election promises that were made by National before the last election. It is dismantling KiwiSaver. It is making life harder for middle and lower income families, because of changes to Working for Families. I do not think the title of the Taxation (Annual Rates and Budget Measures) Bill really accurately sums up exactly how damaging this legislation is. The word “Budget” in the title of the bill may lead people to believe that the measures in the bill are something that will happen after the Budget, but the reality is that we have another 6 months with no plan and another 6 months of treading water while the Government does absolutely nothing to address the dire economic circumstances it has put this country in.

I think an accurate name for this legislation would be the “Taxation (Lower and Middle Income Families Will Pay for the Tax Cuts That Went to High-income Families That National Gave in the Last Two Budgets) Bill”. That is what this legislation does. We have to pass legislation that cuts entitlements to KiwiSaver and Working for Families, both of which National promised it would not cut, because National gave 2 years’ worth of completely unaffordable tax cuts, the overwhelming amount of which went to the top income earners. The tax cuts went to National members’ mates and to them. Cabinet Ministers and MPs did very, very well out of the tax cuts given by the National Government over the last two Budgets. Labour said the tax cuts were unaffordable at the time. Labour said they were unaffordable, National knew they were unaffordable, but it went ahead with them anyway, and guess who is paying for them? Guess who is paying for those tax cuts? Guess who is paying for the economic mismanagement of this Government? It is low and middle income families in New Zealand.

Another potential title for this legislation could be the “Taxation (This Will Be Incredibly Bad for Local Economies) Bill”. In my home town of Gisborne, Working for Families puts approximately $40 million into the pockets of those families. In the Bay of Plenty it is approximately $160 million. When we start to cut into that, it is money that these families will not have to spend in local businesses, on local services, or in the local economy. Provincial economies in New Zealand are already doing it tough because this Government has no plan. It has no plan.

💬 Sandra Goudie: No. They get it wrong again!

I am sure Sandra Goudie has a plan. I am sure she does. The reality is that provincial New Zealand is finding it incredibly hard at the moment, and these changes will only make it harder. These changes to Working for Families will take money directly out of provincial economies. I remind the Committee again what these changes are for. They are to pay for completely unaffordable tax cuts, 40 percent of which went to the top 10 percent of New Zealanders. Another name for this bill could be the “Taxation (These Taxation Changes are Simply Not Fair) Bill”, because they are not fair, when the overwhelming majority of tax cuts go to the people who needed them the least and to the people who were not asking for them. Tax cuts are not fair when we have to cut public services back to the bone and we have to cut KiwiSaver, Working for Families, and student loans to pay for them. Nothing in this Budget or this legislation will do anything to promote growth or reduce unemployment. In fact, it will only contract regional economies further and make the existing problems worse—all to pay for tax cuts for National’s rich mates, who did not need them and who still do not need them. National members stand up in this Chamber and defend that. I do not think it is defendable.

Another title of the bill could be the “KiwiSaver (Forget About It If You Are Self-employed) Bill”, because the self-employed will really suffer under these KiwiSaver changes. The self-employed relied on that Government tax credit. They are their own employer, so with the Government stripping away that Government tax credit, self-employed people’s savings will go down by 25 percent. A gentleman was reported in the New Zealand Herald today as saying that saving was just not worth it any more. It was the Government’s input into KiwiSaver that made it worthwhile saving, whereas the Government would now have us—

💬 Chris Tremain: Oh, come on, Moana.

Is Mr Tremain saying he is wrong? Is that man not telling the truth? Chris Tremain and National say the self-employed man in the New Zealand Herald today is wrong. He said his savings would go down by 25 percent. They are not offset by an employer contribution. Let us be realistic, even the employer contribution will be offset by wages, so we will see wages decrease as a result of these changes made here. This is the great, grand plan, apparently. This is the bright new future of National.

I put it to the Minister in the chair, the Minister of Revenue, that this Budget is bad for regional economies. It is absolutely bad, and that is why I think it should be reflected in the title of the bill. Those economies will also suffer from cuts that were announced in the Budget yesterday to public services. There was $1 billion worth of cuts, and, guess what? The Government has spent that money already in the Budget. It does not know where those cuts are coming from. It has not told us or the New Zealand public. Those cuts will come from health and education. That means extra costs on families who are receiving Working for Families and have had their entitlements cut, so that will make their lives even harder when it comes to making ends meet. It will mean that even less money will go into local economies, which will make unemployment worse, and make that backwards move in growth in provincial New Zealand even worse. I would welcome the next National member to tell us where that $1 billion worth of cuts will come from in the public sector, because the money has been spent already. That money has already been spent in the Budget so the Government better hope it can find the money, otherwise it will find itself in a whole lot of trouble. The point is that it makes it so much harder for those families on Working for Families to make ends meet, and it will mean less money going into provincial economies and the economy in its entirety.

Perhaps another name for this legislation could be—and I take this from the suggestion of my colleague Damien O’Connor earlier—the “Taxation (Saving National, not National Savings) Bill”. Essentially that is what this is about.

💬 Hon Steve Chadwick: What a gamble.

It is a gamble. National gave away unaffordable tax cuts, which everyone said it could not afford. The Government has done nothing for 2½ years—nothing to stimulate growth, nothing to bring New Zealand aggressively out of recession, as we were told we would be 2 years ago. What have we had? We have had a Job Summit that created no jobs, a cycleway to nowhere, and that is it. The Government has cut back industry training, cut investment in science and innovation, and cut all the areas that normally create jobs, and now Government members sit there and wonder why unemployment continues to rise. They wonder why more than 25 percent of young people in New Zealand are unemployed. That is a social disaster waiting to happen. Those young people are sitting there, not in training, not learning, and not in employment. Nothing in this bill will do anything to change that; in fact, it will only make it worse.

I suggest again that maybe this could be the “Taxation (Finally Everyone Can See the Government has No Plan, the Emperor has No Clothes, and this Legislation is Nothing More than a Political Smokescreen) Bill”. If members opposite say this is a savings Budget, why would the first piece of legislation introduced under urgency be cutting KiwiSaver? A savings Budget that cuts KiwiSaver! Even the New Zealand Herald has seen through that piece of spin. Even the New Zealand Herald, which is normally very friendly to National, has seen through that piece of spin.

💬 Sandra Goudie: They didn’t even understand the way in which dairy farmers do accounting.

Sandra Goudie says the New Zealand Herald does not understand how the economy works. I am sorry that Sandra Goudie is retiring from Parliament because that woman was heading straight for the front bench, I tell members. Mr Hutchison thought that was funny. I can tell Miss Goudie that the reality is that Labour left this National Government with an economy that the IMF and Bill English said was in an excellent position to weather the recession. We had one of the lowest Government debts in the world. We were in a net positive position. We had one of the lowest unemployment rates in the world. What has this Government done? It has frittered it away because it has had no plan and because it gave away all the money in tax cuts to people who did not need it, who did not spend it in our economy, and who did not use it in a way that was productive for New Zealand. That is why we are in the position we are in.

Thank you, Mr Chairperson, for the opportunity to speak on clauses 1 and 2 of the Taxation (Annual Rates and Budget Measures) Bill, which deal with the title and commencement. Firstly, the title is totally appropriate to ensure the viability of the KiwiSaver and Working for Families schemes. Secondly, the commencement is also totally appropriate and well signalled to the people of New Zealand, who will have their opportunity to vote on these measures on 26 November, and I am sure they will do so resoundingly.

I noted that Moana Mackey asked why the first bill we are considering in the Budget legislation is about adjusting KiwiSaver. I just happen to have here a graph that shows the extrapolation of what would happen if the spending that happened under a Labour Government continued in the same way it had done pre-2008. It shows that Government spending as a percentage of GDP would balloon to 60 percent by 2023. That is the reason why this legislation is part of the Government’s wise, pragmatic, and prudential agenda to ensure the long-term sustainability of the KiwiSaver scheme and the Working for Families scheme, both of which are adjusted in a fair, sensible, and intelligent way, particularly Working for Families.

Heather Roy made the point the other day when she asked why she should, as a mother of five, be eligible for significant tax credits when she was on a salary of $125,000. If one looks at the Working for Families adjustments, one sees that they do favour those who are less well-off and they curb the generosity to those earning over the $100,000 mark.

I noted that Kris Faafoi talked about the campaign to save KiwiSaver, but little does he realise, or have insight into, where the New Zealand economy has gone under the auspices of the failure of the previous Government to be prepared to save at the appropriate time. I was fascinated to read in the New Zealand Herald this morning that people like Owen Glenn, who is a friend of the Labour Party, say that it is about time that Kiwis started to show individual responsibility. Owen Glenn said that adult Kiwis are given opportunities through generous health and education systems and that they must learn to spontaneously look after themselves for their retirement. Here we have a scheme that, despite these minor adjustments, will still allow the Government to assist with billions of dollars per year, providing generous incentives to help Kiwis save.

Clare Curran and Dr Rajen Prasad said that the Government was making it up. Well, the Government certainly did not make it up when we realised that under Labour the number of Public Service staff increased from 26,000 to 39,000, with a decrease in productivity. We saw a doubling of spending in health from $6 billion to $12 billion, with a decrease in productivity; up to 130,000 people were on waiting lists, and those lists were being culled. Of course, in the last 3 years we have seen an enormous increase in productivity and an increase of up to 400 extra elective surgeries per week. The Government did not make up the fact that when Labour increased the top tax rate to 39c in the dollar, the number of loss-attributing qualifying companies flourished throughout New Zealand and totally distorted our tax system.

Thank you, Mr Chairman. I have been here since 11 o’clock, fighting tooth and nail for an opportunity to speak. I have seen off two other Chairs, and you are the first one who has given me the opportunity to speak in such an important debate.

The CHAIRPERSON (Lindsay Tisch): Here to help.

I am happy to make my contribution on clauses 1 and 2 now. The first clause is the title clause of this legislation and the second clause refers to the commencement date of the legislation. Clause 2(2) refers to when the family tax credit and family tax abatement changes will take place. Clause 2(6) refers to the tax credit being cut in half, and I will make detailed references to that in the course of my contribution. But I will reflect a bit before I get into the detail.

Some years ago I met a gentleman from Africa. He worked in the national parks, saving animals—very beautiful animals, including elephants and rhinoceroses. He valued the protection of these particularly large animals. The problem was that there was a lot of poaching. I asked him how people could destroy one of these beautiful animals. He said the poachers used one bullet or one slash, but generally a bullet to the head or a bullet to the heart, and they allowed the animal to bleed to death—they allowed the animal to bleed to death. I will use that analogy in terms of what is happening now with KiwiSaver and the Working for Families tax credits. What we are seeing from this Government in the introduction of its Budget is that instead of giving confidence to those who are in KiwiSaver and to those who are not in KiwiSaver, and instead of giving confidence to families who have children and who are struggling to make ends meet, this legislation destroys every shred of confidence that those families have now and will have in the future.

I draw members’ attention to this cartoon from the New Zealand Herald a couple of days ago. I do not know whether they have seen it. It is a caricature of Bill English and John Key, both of them half-naked in a pool of what looks like dirty water. Mr English is saying “This is by far my favourite economic stimulus policy”. Mr Key responds “Mine too”, and then—this is the quote I want to draw members’ attention to—he says “You can look awful busy doing bugger-all”. That is what this Government is doing: it is looking busy doing bugger all for the economy, and doing bugger all for the families of our nation. I would suggest that instead of being called the Taxation (Annual Rates and Budget Measures) Bill, the bill should be called “National’s (Bugger All Budget) Bill”.

💬 Dr Paul Hutchison: I raise a point of order, Mr Chairperson. I just seek your help in terms of describing whether that emanation from the member for Māngere, which was repeated on many occasions, was actually parliamentary.

The CHAIRPERSON (Lindsay Tisch): I thank the member for his intervention. To use the word that the member used in describing the title of a bill is unacceptable, so I tell him not do it again.

Thank you, Mr Chairperson. I was merely quoting from the New Zealand Herald article here.

Let me take members back a bit. For 9 years when Labour was in Government, we operated in surplus. Why? Because we had a Minister of Finance who knew how to manage the economy and who had a plan. He was not fixated on one particular part of the economy, but had an overall plan. We had a fair tax system. We had a fair tax system in which everybody from those on low incomes to those on high incomes paid their fair share—from 19.5 percent for those on low incomes to 33 percent for those earning between $40,000 and $60,000 and to 39 percent beyond that. We had a targeted approach to ensure that we invested in education, to ensure that we invested in early childhood centres, and to ensure that we invested in health. When the overall high cost of food began to loom, we introduced Working for Families, because that was a way to help working families through the difficult times. When we recognised that there was a need for savings, we introduced KiwiSaver. The point I am making is that both Working for Families and KiwiSaver are so important to this nation. The evidence is the $1.7 million people who have signed up to KiwiSaver.

The CHAIRPERSON (Lindsay Tisch): I just remind members that we are on clauses 1 and 2, and this is a peroration about what has happened in the debate. It is not an opportunity to bring new material into the debate. We are talking specifically about a summary of clauses 1 and 2 in relation to the title and the commencement.

I will start by responding to what the Minister in the chair, the Minister of Revenue, was talking about in relation to his response to us saying that we were making it up. I will point out a couple of figures that, of course, we all agree on in this Chamber, and that is that in a matter of 3 years we have gone from a $5 billion surplus to a $16.7 billion deficit. Nobody would disagree with that. The only thing that people would have difficulty with, I think, is understanding how on earth that actually happened. How did we go from a $5 billion surplus to a $16.7 billion deficit in the space of 3 years? People on the other side will say “Well, actually, it’s all about the earthquake.” Well, actually, even by Treasury estimates, less than 10 percent of that deficit is made up by the Christchurch earthquake. The deficit will also be described as being because of the global financial crisis, but that cannot in any way account for the degree of difference between $5 billion and $16.7 billion.

A lot of the deficit can be attributed to mismanagement, and the changes that this Government has brought in, and that includes the changes to the taxation system. The changes to the taxation system included borrowing for the latest tax cuts. I would like to hear the Minister comment on that, because that is one of the things that Treasury came up with in the Budget statement last year. That is another point: a lot of the discussion today has been about the Government’s future projections. I wonder, when we talk about making up figures, whether we can actually believe some of those projections. It has been commented on before that the difference between, for example, the forecasts of the Minister’s ministry, which is the Inland Revenue Department, and Treasury forecasts, are grossly different. Who do we believe here? I would be more tempted to believe the Inland Revenue Department’s forecasts, simply because its forecasts seem to be founded on a greater degree of certainty than Treasury’s.

I have looked at the Treasury figures that Standard and Poor’s talked about. Why Standard and Poor’s goes along with it I do not know. Certainly, the Prime Minister has led us to believe that this Budget is all about satisfying Standard and Poor’s. But Standard and Poor’s also said that the Budget foresees an operating deficit of $16.7 billion, or 8.4 percent of GDP, yet only 6 months ago the Half Year Economic and Fiscal Update was forecasting an operating deficit of $11 billion, or 5.5 percent of GDP. Yet Treasury forecasts, looking out for the next 3 years, are extraordinarily rosy. My question asks why on earth we are prepared to accept those forecasts on which this Budget is founded. Why are we prepared to accept those figures?

The other thing that I will bring up goes directly to the purpose of this bill, and that is KiwiSaver. We have had many, many speakers talking about KiwiSaver and saying that it has been halved, or gutted, yet the Minister in the chair said just a week or two ago on Q+A that he needed to make sure that “KiwiSaver survives and is sustainable and is politician-proof in the future”. And he is right.

Sitting suspended from 1 p.m. to 2 p.m.

Before the lunch break we were discussing the certainty of KiwiSaver. On the assumption that at least the return would be equal or better over a period of time, 1.7 million people put their money into KiwiSaver. I made the point that on Television New Zealand’s Q+A programme last week the Minister of Revenue, Peter Dunne, said that making sure that KiwiSaver survives, is sustainable, and is “politician-proof” in the future is necessary, but we have to make some changes now. It seems a bit of a contradiction.

I would like to conclude this point because I think it cuts to the heart of what we are trying to say in the Taxation (Annual Rates and Budget Measures) Bill. In the course of the short history of KiwiSaver, we have gone from a situation in which one regime brought it in to one in which the National Government cut the employer contribution. Now that employer contribution has been brought up slightly, but the tax rebate has been slashed by the Government. If that is not political tinkering and meddling, then I am not quite sure what is. I believe it really does make us think and contemplate the future of KiwiSaver, and the confidence New Zealanders should have in putting their money into an account, an investment, or a system of savings when it will be meddled with by politicians for political reasons.

I look at Mr Dunne’s statement on Q+A and I wonder—I would like to hear from him on exactly this matter—how he can square that statement that KiwiSaver survives, is sustainable, and is politician proof, but we will have to make some changes now. That seems to be a contradiction, because we have tampered with it twice already in the course of this Government. The Minister, I would imagine, as a member of the previous Government as well probably had something to say on the formation of KiwiSaver, what it should deliver, and how it would impact on savings for New Zealanders. Perhaps he could relate to this Government something of the advice he gave the last Government on the establishment of KiwiSaver and whether he thought that it would need meddling with and changing at that point in order for it to persist throughout its life.

We are looking at a real problem with retirement, and a baby-boom section of the population who are coming to a period when they will be collecting record amounts of superannuation and impacting on the economy in terms of their health and welfare. Other speakers have mentioned other means, but KiwiSaver is one way of ensuring that there will be some security in the economy. For it to now be meddled with means that it will erode the confidence many New Zealanders have in KiwiSaver in the future. I would not be surprised if, as a result of this Budget, we had fewer New Zealanders taking up KiwiSaver, fewer people being involved in it, because their confidence in it and the confidence that politicians will not simply meddle and play around with it has been shattered. They do not have confidence any more that that will not happen. They would rather do the thing we are trying to get away from, and that is put their money, if they have any spare, into the property market, because at least there they can see bricks and mortar—that sort of thing. That is exactly the situation we do not want, but, in effect, it is exactly what we are incentivising those people to do, to put their money into less productive areas of our economy rather than putting it into KiwiSaver.

If we look at this trend in the long term, I sincerely hope this does not happen because—if members can believe it—the projections out over the next 20 years will put about $60 billion of savings into our economy that could be used for productive enterprises. For the political expediency of the short term we are undermining the ability of KiwiSaver to persist and have the confidence of New Zealanders through time. It is so fundamental. When I look at my kids I would like to think they have an opportunity to save early and reap the rewards later on, not to have those rewards undermined by the political whims of the day. Frankly, this bill is a political whim. It is politicians playing around with our future, and it should not happen.

We are debating the title and commencement clauses of the Taxation (Annual Rates and Budget Measures) Bill. I will talk a little about the commencement date. Of course, Mr Key said he would not change KiwiSaver. That was one of the platforms he campaigned on in 2008. He also said he would not increase GST, but he did. At least with this change he said he will go to the public to seek a mandate. He has made that absolutely clear, and he has put his plan for growth on the table. Mr Key has said that his plan for growth includes cutting KiwiSaver. I suppose the thing that annoys me a little bit about that—

💬 Hon Member: A lot.

Actually, it annoys me a lot. There are 1.7 million people in KiwiSaver, and the reason they invested in KiwiSaver is that we suggested they do so. When I say “we” I mean members of Parliament: Michael Cullen; members of the National Government, actually; and the honourable Minister of Revenue himself. We went out and told New Zealanders that they needed to save more, that this country was in trouble because we have huge net debt. We have pumped a lot of money into housing, into the non-productive sector, so we need to save more. We told New Zealanders that we do not know what will happen with superannuation in time. We told New Zealanders that if they really wanted to make sure they could retire with dignity and live with respect in their older years, then they needed to put some money away for a rainy day, for their retirement.

This is what New Zealanders were told. This is what we advised them. We set up a scheme that would allow this to happen. It was quite generous. If people invested, they were given a carrot of $1,000, which is not an insignificant amount of money. Most New Zealanders realised this was a good deal. We figured that most New Zealanders needed a sweetener, so we gave them $1,000—there were some nice incentives there—and they took this up, because New Zealanders by and large are pretty well-engaged people. They are intelligent and they know a good deal when they see it, but they also know that their future is important, so 1.7 million New Zealanders invested in KiwiSaver.

The really disappointing thing with this bill, which we are debating under urgency, is that part of the incentive to invest in KiwiSaver has been taken away. I cannot understand the rationale behind that change, because New Zealanders are doing what we told them to do, which was to save, and we are taking away some of the incentive. In fact, there was a bloke on the television this morning, an ex - All Black, who felt aggrieved by this. He said he was an ex-National voter; he voted for National in 2008, but he felt that John Key and the National Government had broken a contract they had signed with voters.

There are a lot of New Zealanders out there who get this—it was a simple message to stop investing in houses, and to stop spending on plasma TVs and other consumables because that, of course, drove up international debt, increased interest rates, and was not good for our economy. It is one of the reasons we are so indebted.

The Labour Party recognises that New Zealand has issues in terms of debt. We know that the Government—any Government—cannot simply keep borrowing $380 million a week. We accept that, but I tell members that this legislation is not a plan. This legislation does not set out a plan for how to address that. If a plan is cutting KiwiSaver, then God help me. This is not a positive move to drive economic growth; it is a negative move. This is not a positive way forward for this country. It is taking us backwards.

Another point we said was so important about driving economic growth in New Zealand was the depth in our capital markets. KiwiSaver was beginning to achieve that. What we absolutely need—I thought the Prime Minister understood this, and I thought the Minister of Finance understood this—is a pool of money that can be invested in New Zealand, on behalf of New Zealanders, to grow the pie.

Someone was talking before about the scheme that was put in under Norman Kirk. It was put in by Sir Roger Douglas. Sir Roger Douglas understands the need to save, and it does not come more right wing in this Parliament than Roger Douglas—well, it did; Don Brash sits there every now and again. Sir Roger understood the need to save. Even Sir Roger put in a scheme, and if that scheme was still going now our economy would be completely different. But that scheme was axed by National.

I look at the state of our economy at the moment, with $16 billion worth of debt, and I cannot help but wonder what it would look like if 40 years worth of saving had accrued. As sure as eggs, we would not be facing a $16 billion deficit. I tell members another thing. Mr Key laid it out—he said: “OK, we will see you on the campaign trail.” This legislation is about a mandate for asset sales and a mandate for KiwiSaver. This election will be about a mandate for this bill. So this is quite important legislation—it is a small piece of legislation, but it is very important legislation. The fact that it is being rushed through under urgency makes no sense to me, because there is still enough time to take this through before the election.

As I said, all we have to do is look at the commencement date. There is no urgency with this, but the consequences are huge for all New Zealanders. Perhaps we could call it the “Taxation (Stealing Kiwis’ Dreams) Bill”. In a way, that is what is happening. The Government is taking away the dreams that members of Parliament handed out to people. We painted a vision to all New Zealanders that if they invested in KiwiSaver, there would be a nest egg there for them. In a way, we are taking that away. I admit that we are not taking all of that away, but let us be honest. If we take an extra $10 a week for 52 weeks a year for the next 20 to 30 years, that adds up to a significant amount of money. To take it away is, in a way, taking away the dream, stealing a little bit of that dream that New Zealanders thought we had laid out for them.

That is why I come back to the bloke in Eltham, who said the Government had broken a contract with him. I would also like to remark on the words that Mary Holm said. I very much doubt that Mary is a Labour supporter. She might be; she is certainly sensible. She understands economics and finance. She said that the Government has taken an excellent scheme and made it only very good. This scheme has gone backwards. In fact, I think the vast majority of political commentators who understand the woe that this economy is in have said that this is a step backwards. It not a step forward. It is not a plan for growing this economy. This legislation is not a plan.

Mr Key said to Phil Goff “I will see you on the hustings, Mr Goff.” I cannot wait for that. I cannot wait to stand in a public meeting with Mr Tremain in Napier as he explains to the people of Napier why this legislation is good, and why it was necessary to take $10 a week off the people of Napier. I am also keen to hear Mr Tremain explain in a public meeting why the Government has taken $120 million out of the Hawke’s Bay economy in terms of Working for Families, because that is what this bill does—it takes $120 million.

We have to remember that Working for Families did not go to the wealthy. It went to the people who had been identified as needing a little bit of a hand up—not a hand out, but a hand up. They were people who worked and had children, and the Government has taken away a portion of that from the Hawke’s Bay economy. That will hurt one of our most depressed regions. I would argue—and I would argue with my colleagues on this—that Napier is the best city in the best country in the world, but this steals a little bit out of us, because the people of Napier will lose some money.

There are more shops closed in Napier now than there have been for 10 years. This bill takes money out of the Napier economy. Working for Families gave money to people who would spend money. That is one of the reasons why the Labour Government instigated Working for Families. It realised that people who were working and bringing up children needed a little bit of a hand up so they could continue to live a decent lifestyle, which we demand for all New Zealanders.

This is why I am so disappointed with this legislation, and this is why it is such a shame that it could not go to the Finance and Expenditure Committee. I am on that committee, and Mr Foss is the chair. We could have heard all the arguments for and against this bill and made a reasoned, rational decision, then presented it back to the House. I suspect the reason why it has not gone to the select committee and why we are passing it under urgency is that the Government knows the response. The Government knows that every single Kiwi would say no—every single one of the 1.7 million New Zealanders who have invested in KiwiSaver.

I will take a call in this debate and say that the National Government should hang its head in shame over this legislation, the Taxation (Annual Rates and Budget Measures) Bill, and that the bill is entirely consistent with the philosophy, the practice, and the orthodoxy of National, which is to cut, chop, and gut. As Mr Nash has reminded us, National chopped into the superannuation savings scheme that was put in place by Labour in the 1970s. National railed then against that national superannuation scheme, put in place by Norman Kirk, on the grounds that it would buy up New Zealand. That is what National said. National said we could not have Kiwis owning New Zealand. National said that such superannuation schemes would get so big their funds could buy up New Zealand—New Zealanders would own their own history, and we could not have that! So Muldoon got rid of it. He got rid of it on the basis of a canard. The canard was that New Zealand could continue to afford, out of taxation, to pay people 80 percent of the ordinary average wage from the age of 60 until they passed on. Every newspaper editor in New Zealand knew that was a lie. Everybody knew that it was a lie, but Muldoon sold it on the basis that he would give back to every person their personal contributions and their employer’s contributions.

I was a worker in those days; I was in the scheme. People at the place I worked at figured out that if they got back their contributions, and the boss’s contributions, they could buy a new stove, a new fridge, or a new something else. They all spent the money. When National was elected in 1975, Muldoon, through his own motion, stopped contributions. Muldoon was taken to the High Court and the Court of Appeal, and he was found to be the only person who, as a Prime Minister, had acted ultra vires. It was a landmark decision that is now read all over the world. Muldoon, of his own hand, both took away and exercised the power of this Parliament. The court found him wrong. The court did not make him change the legislation, because it knew he had the power to change it, but the court said he was wrong. Muldoon was not wrong only constitutionally and legally; he was wrong morally.

If that superannuation scheme had stood, we would not have had to sell the Bank of New Zealand because the superannuation scheme itself could have bought it. We would not have had to have sold many other assets. because the superannuation scheme could have bought them and owned them. More important, the New Zealand superannuation scheme could have bought assets all over the world to make New Zealand a richer country. Instead, we have the legacy of Sir Robert Muldoon and National—

💬 Michael Woodhouse: I raise a point of order, Mr Chairperson. This is all very interesting but it certainly does not go to the title of the bill. I wonder whether the member could be brought back to the title.

The CHAIRPERSON (H V Ross Robertson): I thank the member for drawing that to my attention, but the member who was speaking has a right to refute, in debate. I am sure he will come back to the title very shortly.

That is a sign that National members feel very uncomfortable to hear their history told to them. National’s history on superannuation is dismal and grim, and a legacy of shame.

What happened because we did not have the superannuation scheme? Australian superannuation schemes came to New Zealand instead. They bought up our banks and bought up all the rest of it, because we did not save. But National, having made such a travesty out of it, then went on and committed a further one on superannuation. National went to the election and said “No ifs, no buts, no maybes …”—it would not put a surcharge on superannuation funds. What happened? The National Government not only put on a surcharge; it put up taxes. So people said there was a complete and utter disincentive to save for their retirement, because even if they did, the Government would tax if off them. That caused a proliferation of trusts in order for people to hide and shelter their income, and get it away from taxation. That is what happened. The third travesty that will be inflicted upon—

💬 Jo Goodhew: Mr Barker, the Chair is saying to you—

If the Chair wants to speak to me, the Chair will speak to me directly by getting to his feet and taking the call.

I was just about to say that in the Taxation (Annual Rates and Budget Measures) Bill we see the third crime by the National Party against superannuation in New Zealand. National is following its philosophy of cut, gut, and chop. Whatever it gets holds of, it says: “Cut it, chop it, get rid of it.” That is what it is going to do with the legacy from our grandparents. Our grandparents built dams all over this country as a gift to the next generation. National is going to sell them off so it can go and spend the proceeds. That is what it is going to do. That is a part of National’s plan. It is also going to chop into superannuation again.

I move, That the question be now put.

It is incumbent on us at this stage of the debate, as we review the title and commencement of the bill, to try to find a phrase or a word that most aptly encompasses the real meaning of the bill for New Zealanders. Though I am never a believer that politicians should be driven by the media, it just so happens that the media have been helpful to us on this occasion, so I thought I might bring forward to the Committee some titles that have been suggested by the ladies and gentlemen of the press. How about the “Taxation (Fairytale of High Hopes on a Frayed Thread) Bill”, courtesy of the New Zealand Herald? That is not a bad start. How about the “Annual Rates (Budget Lacks Job Creation Plan) Bill”, courtesy of the National Business Review, I believe? How about the “Annual Rates (Budget Hopes Rest on Shaky Foundations) Bill”, from the editorial in the New Zealand Herald?

💬 Sue Moroney: Ouch!

Ouch! Or, from the Dominion Post, we have “Budget 2011: Battlers Asked to Give Back Bill”. Or, again from the New Zealand Herald, how about the “Shaky Quakey Budget Bill”?

💬 Sue Moroney: Ouch!

The “Shaky Quakey Budget Bill”. It seems that the ladies and gentlemen of the press might have cottoned on to the fact that a few of the assumptions or a few of the fiscals upon which these tax rates stand might be just a little bit exaggerated. That might have something to do with the fact that Standard and Poor’s, no less, today announced to the world that they are not removing New Zealand from negative credit watch. Why? It is because they do not believe the numbers, either. They do not believe the numbers, any more than the editorial writer of the New Zealand Herald who said: “This is a bunch of old codswallop.” Now everyone is scratching their head and wondering what happened at No. 1 The Terrace that this pile of rubbish got printed.

But there is more. How about these headlines in respect of the KiwiSaver components: the “Taxation (Pay More to Save the Same) Bill”, or the “Tax Credit Reduction Takes all the Gloss off Savings Bill”, or the “Experts Label KiwiSaver Move a Tax Grab Bill”? Those are a few of the headlines on KiwiSaver. How about these ones for education: the “Student Loans Cuts Discriminatory Bill”, the “Loans Cuts for Older Students Attack Bill”, the “Booster Doesn’t Cover Inflation Bill”, or the “Dog Ate My Early Childhood Education Bill”? They all make a very good set of headlines.

💬 Kris Faafoi: Even the dogs are hungry!

No, it is not all bad news, colleagues. It would be unfair of us to portray that this is all bad news. There are certain very deserving constituencies that have done extremely well out of the Budget. How about the “Tax Breaks for Rugby Bodies Bill”? That is an excellent cause, if ever there was one. We could have the “Do your Bit with the Quake Bond Bill”, or how about the “Middle Income Families Pushed Over the Edge Bill” from Stuff’s editorial? This is one of my favourite ones: “The Lack of Courage and Vision Bill”, which is something that is, of course, not a contravention of the Standing Orders, because it is not my own opinion; I am merely quoting from a newspaper headline. I will say it again, from the Dominion Post, the “Lack of Courage and Vision Bill”. Ouch! What about the “Economists Say Surplus Contingent on Recovery Bill”? That was a headline in the National Business Review, which casts certain aspersions in that direction.

💬 Sue Moroney: Ouch!

Ouch!

💬 Dr Rajen Prasad: That must hurt.

It does hurt. When even the National Business Review starts kicking holes in a Budget big enough to drive a super-tanker through, one knows one has problems. I ask my colleagues why it might be that certain august denizens of the financial sector are themselves beating the crap out of the Government over this bill. Well, there may be certain assumptions built into these financials that could be, just as they say, a little bit shaky quakey. Here are a few of the shaky quakey assumptions. There is a $3.8 billion difference between the revenue forecast from the esteemed gentlemen at No. 1 The Terrace in Treasury, and the equally esteemed gentlemen at the Inland Revenue Department, who are saying: “No, no, we do not believe your growth numbers, either. We could not possibly collect that much tax. How about $4 billion less?”.

💬 Dr Rajen Prasad: Which one did they take?

Which one does the member think the Government took? Does he think the Government took the more prudent, the more fiscally responsible lower numbers? No, it took the higher, more exaggerated, pie-in-the-sky numbers from Treasury.

What about the “Missing Billion (Dog Ate the Department Concerned) Bill”? There is a billion dollars of supposed savings here—$980 million to be precise—that nobody has the faintest idea where they are coming from. The Government has not even narrowed it down to which department. Is it health, is it education, or is it superannuation? It has stopped pre-funding that; maybe it will dig back out of it. We do not know, because they have not ascribed it. For the first time in New Zealand’s history a Government has been able to get away with an unallocated saving. Do members know what Trevor Mallard, a former Associate Minister of Finance in days gone by, would have done to a junior Minister who proffered up savings without saying what output class they came from?

💬 Dr Rajen Prasad: Not pretty.

It would not have been pretty. Mr Mallard’s jaws would have been locked around their ankles and they would have been sent scampering to their office to have another think. But this is worse than that; the Government does not even know which Minister it is. Might it be coming out of Mrs Collins’ next prison? A small dent in the supply of sow crates for prisoners, perhaps? Who knows. Might it be the Minister of Agriculture? Might there perhaps be a small reduction in the tax breaks for farmers in future Budgets? Who can tell, because we simply do not know.

There is a billion dollars missing, but why did Treasury sign off on this rubbish? That is what is what Standard and Poor’s wants to know. Kyran is going to be back on the hunt for the ladies and gentlemen of Treasury—

💬 Stuart Nash: Is that why Whitehead is leaving, do you think?

I do not think that would be the reason; I think it is more likely to be a gutsful of the National Government. But, anyway, here is the doozy. Here is what the commentators are all really concerned about, and it is not the missing billion dollars; it is not the $3.8 billion. A taxi driver said to me on the way to a meeting this morning: “Are they really going to create 177,000 new jobs? How?”. I said: “No, and no one knows.” They have no idea, because there has been a misprint in this book, the Executive Summary for the Budget documents. There is a whole chapter missing in every one of the ones that has been printed, sadly. It is the chapter on growth strategy. It is the economic development chapter. It has just gone, mysteriously, from every single volume. There is no growth plan.

But, 177,000 new jobs are magically produced by the same Hollywood pixies. Do members know what members on this side of the Chamber think it is? We think that perhaps this title should be the “Warner Bros Wrote the Budget Bill”, because it might be a little fringe benefit for the Hobbit-helpers over there. The Hobbit-helpers got Warner Bros to write the Budget, because it is a work that belongs in the fiction department of the library, not the non-fiction department.

I will return to the title of the bill. The title could be any one of the headlines in editorials that we have read out for the delight of you, Mr Chairperson, and for the public’s delight this morning. When the bubbly from the seventh floor of the Beehive ran out late last night and the hangover set in this morning, one could see that the Budget was a bit like the “beer-goggles Budget”: she looked great last night, but when one wakes up in the morning, one sees that all it is is a blue hump of cardboard with rubber numbers in it. Go figure.

💬 Michael Woodhouse: Just add a little bit more detail to that.

I thank Mr Woodhouse. How long did the member stay at the Minister of Finance’s party last night? That is what we want to know.

I can tell members that when I was doing the rounds of the press gallery this morning, as part of my constitutional duty to spread the good word, the journalists were none too impressed, because they had started reading the document and, like us, they were wondering how the numbers add up. I say to the Government that whatever it calls the Budget, and perhaps it should be called the “Lipstick on the Pig Bill”, it does not matter what colour of lipstick the Government puts on it, at the end of the day it is still a pig.

I move, That the question be now put.

Here we are on a Friday in Parliament under urgency debating the title and commencement clauses of the Taxation (Annual Rates and Budget Measures) Bill. I know the Government is ashamed of what it is doing in this bill. How do I know that? Because Government members have not even been brave enough to say in the title of the bill what it is doing. The title of the bill does not make any reference to KiwiSaver. Who will save KiwiSaver? It will not be that Government; it could be only a Labour-led Government. The title of the bill does not mention Working for Families. Government members are ashamed of what this bill does. The two things this bill does is cut and gut KiwiSaver and Working for Families, yet would Government members dare mention the name of those two schemes in the title of this bill? No, they have not been able to bring themselves to do that. They have hidden the cuts to those schemes in a title that could mean 101 different things.

It will be, if passed by this Parliament, the Taxation (Annual Rates and Budget Measures) Act 2011. I challenge members opposite to take a call to explain why they would not even mention KiwiSaver or Working for Families in the title of the bill, because that is what it is all about. It is all about taking the knife to those two initiatives that came from this side of the Chamber. They came from Labour and they have made huge differences in the day-to-day lives of hard-working New Zealanders. Government members are sitting on the other side of the Chamber knowing that the Prime Minister is getting an extra $1,000 every week in his back pocket from the tax cuts in last year’s Budget, and they will not contemplate looking at that, yet here they are having a go at hard-working New Zealand families. Those families have a day-to-day, week-to-week struggle just to make ends meet. This Government comes along with this Budget and the only thing it can think to do is disadvantage those people even more by moving up thresholds for Working for Families payments, meaning fewer families are eligible for those payments. The Government is also giving people a disincentive to save for their retirement. How mean is that?

I will talk about the commencement date of this bill. Much of the bill—in fact, five parts of the bill—does not come into force until 1 April 2012. That will be a pretty interesting day: April Fool’s Day. It is another April fool’s joke from this Government. We should note that the date is next year—2012. So what is the urgency for? Why is it that we are in Parliament today pushing through taxation legislation that will not even hit the ground running until 1 April 2012? It is not as if we have to do it quickly so that people cannot adjust the way they have their money structured in order to take advantage of the changes, as they were announced just yesterday in the Budget. None of those things matter when it comes to this bill, so I ask why we are debating it under urgency. The commencement clause makes it quite clear that there is no need for urgency to debate this.

I think my colleague Stuart Nash was onto it. I think the only reason there could be urgency for this bill was so there could be no select committee process. We are in urgency so that there could be no select committee process and Government members would not have to listen to the response they knew would come from hard-working New Zealanders. The Government did not want to hear from ordinary, hard-working New Zealanders about the impacts on them of cuts to Working for Families. Government members do not want to hear—and they are not listening—the impact on people who really do want to save for their retirement. Those people had a helping hand in that from the Labour Government, but they have had it stripped away from them by the National Government. The Government did not want to hear the stories from those people of how this bill will hurt them and their ability to save.

That is the only reason I can think of in terms of why we are in urgency to consider this bill, when it does not come into being until 1 April 2012, on April Fool’s Day. Here we are on a Friday in Parliament with the Government thinking that it is urgent to strip away people’s rights, without first even listening to what those impacts will be. So there will be no select committee process. There will be no opportunity for New Zealanders to tell that Government about the week-to-week struggle they have and how this Budget will continue to hurt them.

I move, That the question be now put.

We have noticed that this Government called this session of urgency but has spent all its speaking opportunities trying to close down the debate on the Taxation (Annual Rates and Budget Measures) Bill. That makes no sense whatsoever.

I follow on from my colleague Sue Moroney by saying this debate is about cuts and the removal of opportunities for our country to save. It is about gutting KiwiSaver and gutting Working for Families. I say to members on the other side of the Chamber that I hope they are prepared to stay overnight, because they called this urgency and we will keep holding them to account today.

We are talking about clauses 1 and 2. The bill should be called the “Families Who Are Struggling Are Still Struggling Bill”, because despite the Government’s rhetoric that the Budget is helpful to the general public, the fact remains that those who were struggling are still struggling today. Cuts to KiwiSaver and cuts to Working for Families will not help those people, at all.

We could call the bill the “Families Who Want to Save Will Now Have Second Thoughts Bill”. KiwiSaver was designed to encourage people to save. Incentives were there to promote and encourage people to save. What did we have? We had 1.7 million people saving under the scheme. But what will this legislation do? It will discourage those people, because instead of receiving what they were entitled to under the previous legislation, we are now asking them to have their support cut in half. We could also call this bill, as my colleague David Cunliffe said, the “Making It Harder for Kiwis to Save Bill”. Is that not what the Government is doing here? It is cutting support for people to save, so the “Making It Harder for Kiwis to Save Bill” is probably a better name. It could also be called the “Pay More to Save the Same Bill”. Is that not what the New Zealand Herald called it? That is a good name for it.

It could be called the “Broken Promises Bill”, because many of the public would recall that prior to the 2008 election Mr Key made promises that no cuts would be made to KiwiSaver and Working for Families. What did we get after National won the election in 2008? Tinkering. What did we get in 2009? More tinkering. What did we get in 2010? Another tinkering. What do we now get in 2011? Two major tinkerings. That is what I meant. The way to destroy something good is to allow it to bleed. This Government is allowing things to bleed by tinkering here, tinkering there, sitting on its hands, and doing nothing about the overall economic plan except focusing people’s attention on the debt we have.

The other issue is that according to its plan we are supposed to come out of debt a year earlier. Instead of a $16 billion deficit, somehow, miraculously, we will have an $8 billion deficit, one year before the previous estimates. If the estimates were wrong in 2009 and 2010, how the heck can we expect the Government to have it right this time? How the heck can we expect the Government to miraculously create 177,000 jobs? We have 155,000 people still unemployed and the Government’s own projections show there will be a 4.5 percent unemployment rate right until the year 2025.

Where is the support the Government keeps talking about while it cuts money from initiatives that are there for the sake of this country? I want the Minister of Revenue, to answer. Could he please answer yes or no whether there is a cut of $2.6 million from KiwiSaver—

💬 Sue Moroney: Billion.

Billion. Can he also tell us whether there is a cut of $448 million from Working for Families? The Minister is not saying anything, so we can assume, ladies and gentlemen, that the whole purpose of this bill is to cut, chop, and gut Working for Families and cut, chop, and gut KiwiSaver, which are there for the benefit of this country of ours. That information gives people a little view about what this debate is all about. I note a remark made by one of the other members of the Opposition earlier this week: when we consider this Budget on the whole, it seems that it is a gambler’s Budget. Gamblers do not care whose money they use.

I move, That the question be now put.

I raise a point of order, Mr Chairperson. I regret that I am raising this point of order in the middle of what is happening, but I refer you to Speaker’s ruling 67/6 and I ask for your clarification. It is my understanding that in fact it is up to the dissenting voice to call for a party vote rather than the presiding officer to offer a party vote. Therefore, I ask that you direct the senior Opposition whip, if he is a dissenting voice, to request the party vote rather than to wait for it to be offered to him.

The honourable member Jo Goodhew makes a very good point that it is always the dissenting voice that calls for a party vote. But there is sometimes some conjecture about who has won and who has lost it. I am entitled to contest the vote in several ways. I just say that, as the honourable member Jo Goodhew knows, I have said to you on a couple of occasions that the “Noes” had it, because I sincerely believed that if we took it on voices the voices of the “Noes” were much louder than the voices of the “Ayes”. What normally happens in the Chair is for the Chairperson to listen to where the weight of the sound and the voices is. Clearly, on voices for that vote there were more “Noes” being recorded than there were “Ayes”. And not only was that so, but the voices raised in opposition were both louder than the “Ayes”—

The CHAIRPERSON (H V Ross Robertson): Thank you.

At that point, Mr Chairman, if you were going to proceed, then I would be perfectly entitled to ask for a party vote, which I know very well. I just took your suggesting a party vote as an act of human kindness and generosity.

The CHAIRPERSON (H V Ross Robertson): Thank you, the member will be seated. We have all been here long enough and we know the procedure. The vote has been called and we will abide by that. I advise the Clerk to take the vote, please.

I raise a point of order, Mr Chairperson. After the honourable member Jo Goodhew’s point of order I am wondering whether she wants the call nullified, or taken again.

The CHAIRPERSON (H V Ross Robertson): That is a frivolous point of order. The member will be seated. We will take the vote, Clerk, please.

I raise a point of order, Mr Chairperson. I want it to be clear on the record that there was an interchange across the Chamber between the Hon David Carter and myself. I do not want in any way to leave the implication that I was intimidated by his conversations with me.

The CHAIRPERSON (H V Ross Robertson): I know that it is getting late on a Friday afternoon, colleagues, and we have all had our fun, but members will be aware that it can be seen as intimidation. In fact it can actually lead to a breach of privilege.

Bill reported without amendment.

Report adopted.

Third Reading