Taxation (Budget Measures) Bill

on behalf of the Minister of Finance: I move, That the Taxation (Budget Measures) Bill be now read a second time. Ours is a broad - based low rate tax system that aims to raise revenue in the most efficient manner to support the Government’s aspirations for the economy. We value fairness in the system, to ensure that everyone pays their fair and proper share of tax. For this reason, this bill seeks to repeal two existing tax credits, replace another, and also remove the voluntary repayment bonus for student loan repayments, as well as introduce new changes to livestock regime rules. I will not go through each of these in detail, because they were covered during the first reading debate, but let me take some time to discuss some of the issues that have been raised.

I want to talk first about the tax credit for income under $9,880. This was originally devised as a temporary means for compensating a small group of workers following the 1986 tax reforms, which I think Mr Mallard will recall—maybe other members will have read about them in the history books. The important point is that today none of the original target audience of those reforms actually qualifies for the credit, but it is still being claimed by other people for whom it was not intended. There is no clear policy rationale why people who currently claim that credit, such as those who work full-time for a small part of the year, should pay less tax than others with the same income but who earn it a different way, such as someone who works part-time for the whole year, who is not eligible for the credit as it stands. It is also not fair—

💬 Hon David Cunliffe: We see him in full flight tonight!

Well, there is a long night ahead of us, I am told.

💬 Hon David Cunliffe: You’ll need all your flair.

Just be patient, Mr Cunliffe; it will come.

It is also not fair that although the majority of farmers—

💬 Hon David Cunliffe: How long has the member been in the House? We’re still waiting.

A lot longer than that member has been and is likely to be. What I was saying is that although the majority of farmers comply with the letter and spirit of the existing tax law, some farmers have been exploiting some of the existing rules with regard to the herd and the livestock schemes, the herd and the standard cost schemes, to their tax advantage. In respect of those measures, we announced in last year’s Budget a consultation process for change. This Budget gives effect to the outcome of that consultation, the decisions of which were announced in around March of this year.

I want to say a little word or two about the student loan repayment bonus changes. The important point here is that that bonus was introduced as a way of encouraging people to make their repayments, but it is being abolished now because what we have actually discovered is, one, that some of the other measures that have been put in place subsequently have been far more effective in terms of encouraging repayment, and, two, as with the transitional tax measure I referred to earlier, the purpose is being distorted, and we are getting people claiming the repayment bonus in the same year that they are making a repayment and actually benefiting from the system. That was not what was intended at all, so that is why that is being repealed.

I want to talk now about paper boys, which Mr Mallard will be delighted about. It was interesting during the first reading debate how paper boys somehow seized the public imagination. At a somewhat frivolous but none the less relevant level, I should point out that since the demise of evening papers, we actually no longer have paper boys. Mr Mallard is a wily character. He may well say—

💬 Tracey Martin: We have paper boys!

There is a squawking creature to my right, whom I will ignore. I come to Mr Mallard, who—[Interruption] I cannot understand a word you are saying, I am sorry. Mr Mallard may well say in response—

💬 Hon Trevor Mallard: Community newspapers.

Exactly, and I shall tell him that community newspaper workers are actually, funnily enough, described as “pamphlet droppers” and were never covered by this regime anyway. In fact, their income will be under the $2,340 threshold, which will still apply.

What we are doing here—and I thought that the member would be interested in this—and what we are putting in place is the last nail in the coffin of Muldoonism. The existing child tax credit was introduced by Sir Robert Muldoon in 1978 as a temporary measure, because at that time—

💬 Hon Trevor Mallard: At the point he put taxes up to 66 percent.

Probably. At that time—

💬 Paul Goldsmith: That was later—1982.

You can have this argument all you like—I think you are right actually, Mr Goldsmith; it was, because there was the caravan and the boat tax at the same period. But the point I was making was that in 1978 this was put in place because at that point most—

The ASSISTANT SPEAKER (H V Ross Robertson): Order! My left and my right: you cannot interject on each other. The Minister has the floor.

In 1978—this is a riveting story, I know, but it needs to be placed on the record, to put some context around this debate—very few employers deducted tax at source. A number of the people in the category of being paper boys and girls, and others of that ilk, found themselves facing the potential of tax bills at the end of the year because the tax had not been properly deducted. So this temporary transitional measure was put in place. Thirty-three years later, most of the paper boys and girls have long since ceased to be in that role, but, more important, most employers now actually make deductions at source, anyway. So the purpose for the concession, if you like, has become outdated. It is no longer necessary. The people who are affected, if they are earning above the $2,340 threshold, will be able to file their tax returns in the normal way that they have been able to do for some time.

💬 Hon Trevor Mallard: And if they are earning under?

And if they are earning under that, we are not particularly interested in them, frankly; the exemption will remain.

💬 Hon Trevor Mallard: No, it doesn’t. The member is absolutely wrong. He should read his own bill.

Well, I drafted it, and I should know what it says, Mr Mallard. I appreciate that that is not something—

💬 Hon Trevor Mallard: He should read his own press statement.

Well, it is rather difficult to make that claim when you actually write your own press statements.

Anyway, the point is that this is not a significant measure. It is removing something that has become completely outdated. Frankly, a lot of the heat that has been generated about it has been good fun in the context of the debate, but members opposite complained earlier about, I think, a couple of million dollars being spent on Parliament passing this allegedly unnecessary legislation, and that is a pretty expensive price to pay for a little bit of fun. I commend this bill to the House, and move its second reading.

Normally, the second reading would be taking place after a select committee process, had this bill, the Taxation (Budget Measures) Bill, been sent to a select committee. I wonder how many of what the regulatory impact statement tells us are the 68,600 children receiving the tax credit that Mr Dunne has just told us that no one is getting, whom Mr Dunne does not care about, and I wonder how many parents of these 68,600 children who are mentioned in the regulatory impact statement would have come to the select committee and said: “This tax credit is actually very good. This is about helping to teach our children about the value of work, the importance of paying tax, but that when you haven’t reached a certain income threshold you can actually get that money back.” That would have been something that might have happened in the select committee.

Is it not amazing that the Government’s big tax idea, the first thing up straight after the Budget, is to pick the pockets of paper boys and paper girls. That is the big, big idea in taxation from this Government. We are not standing here tonight debating whether or not there should be a capital gains tax. We are not standing here tonight debating whether or not we should make the tax system fairer. No, we are debating whether or not the Government should penny-pinch from children who are getting their income—

💬 Maggie Barry: Fruit and vege GST. What else have they dropped?

Well, Maggie Barry wants to start a debate about GST and about it going up to 15 percent. We could have had that debate, but, no, we are not. We are not having a debate about a capital gains tax, and we are not having a debate about actually taxing all income, not just the income of actual workers but the income that people get from selling off their second homes and other capital gains that they make. We could be debating that. We could be debating how to broaden our tax base, how to make sure we actually have a fairer tax system, but, instead, the bill that comes in front of us tonight sets about picking the pockets of 68,600 children. That is a ridiculous thing for this Government to be focusing on. It is pathetic penny-pinching. It has nothing to do with growing our economy, and it has nothing to do with making our tax system fairer. Instead, that is what the Government thinks is its No. 1 priority to come to the House with tonight. It is bizarre politics.

But it fits with a Budget that has completely missed the point, that has sent people over to Australia, that has said to New Zealanders that this Government has no plans for growth, this Government has lost all of its ambition, and, instead, it wants to bring in a tax bill to get to 68,600 children and the meagre income they get from doing this kind of work. The fact is that the Inland Revenue Department collecting that money, which is a little bit of a bonus for those children at the end of the year, the bringing of them into the workforce and enabling their understanding of how things work, has to be got rid of. That is the kind of pitiful taxation bill that is in front of us tonight.

I want to also refer to the student loan repayment changes. I do think that here we have an example of where the Government is finally getting around to doing something that we have recommended from day one. Mr Mallard was highly critical of the education standards of New Zealand that might lead to people actually using the repayment bonus scheme, because it did not work for them. But it did turn out that some people did use it, which is reasonably remarkable. The fact is that not very many of them did use it, and, actually, it has not worked at all.

If we want to go back just a little bit to when National brought in the policy in terms of a loan repayment bonus, we can see some of the excited statements that were made at the time. We have a statement here that says: “We estimate that this measure will reduce repayment times of those who take up the bonus by 1.5 years, and we believe that it will decrease the upfront cost of new lending to 39.4c. How could anyone vote against that?” Anne Tolley said that in, I believe, a brief period when she was the Minister for Tertiary Education, before Steven Joyce came and took that portfolio off her. That is what she told us. She asked how anyone could vote against that. Well, it will be interesting to see what Anne Tolley does tonight. Will she vote for the repeal of this thing that she said nobody could vote against because it was going to reduce the upfront cost of lending to 39.4c? Well, it did not do that. It did not work at all, in fact, but Anne Tolley told us that.

But it was not just Anne Tolley. We also heard, in most earnest tones, the following statement: “This bill is a significant step to encourage student loan repayment and, more important, to reduce the overall repayment times. The message, very clearly, is that our young people will be debt-free sooner,”. Who said that? Louise Upston said that. She was up just after Anne Tolley, extolling the virtues of the student loan repayment bonus. But there is one more person who got on his feet to proclaim the importance of this, and he said: “I say to the House that this is a significant incentive for students to pay their loans earlier. I cannot fathom why anyone would oppose the introduction of such an incentive.”

💬 Hon Member: Who said that?

Peter Dunne said that. That is the Minister. That is the Minister who moved the bill today. That is actually a new record for Peter Dunne. Previously we have had Peter Dunne standing up in the House to repeal bills that he had put forward when he was a Minister in a Labour Government, but I do believe that this is the first time that the Minister has come to repeal a bill that he put up when he was in a National Government. It is not about shortening repayment times; it is shortening Mr Dunne’s time to go back on what he has already done.

💬 Hon Trevor Mallard: Hardly a flip-flop; just a straight flop.

Well, yes, Mr Mallard, a complete flop. From 2009 to now Mr Dunne has turned round. He said that he could not fathom why anyone would oppose the introduction of such an incentive. Well, I cannot fathom why it was introduced in the first place by Mr Dunne, and here he is, 3 years later, as Mr Mallard said, not a flip-flop, just a flop. Louise Upston and Anne Tolley got up on their feet to tell us what a wonderful thing this is. Here we are, straight after the Budget, ready on this side of the House to debate the overall taxation system and what the fiscal policies should be, but, instead, what we are debating is the National Government flip-flopping on something it did in 2009, and trying to take money out of the pockets of 68,600 children. That is the best we have got from the National Government out of this Budget: a debate about things that those members did that they want to change 3 years later, and petty penny-pinching from children in this country.

We could be having a debate today about a capital gains tax. We could be having a debate today about superannuation and about savings. We could be doing those things.

💬 Todd McClay: We did that at the election.

Todd McClay says the election. I am not sure. I went to about 22 public meetings with my National Party opponent in Wellington Central and I am pretty sure he did not get up and say: “We’re going to take the money out of the pockets of paper boys and paper girls.” I might have missed it. Did any of my colleagues hear that?

💬 Hon Members: No.

No, none of us heard that. Todd McClay said that there was an election. Mr McClay, I think Rotorua might have turned on taking the money out of the pockets of 68,600 children. I think it might have turned on that. If Mr McClay had been upfront with the voters of Rotorua and said that he was going to take money out of the pockets of paper boys and paper girls—68,600 of them, according to the regulatory impact statement—then I do not think Mr McClay or a host of other National MPs would be back here today.

Clearly, this is the most important taxation measure that this Government feels it needs to bring in front of the country. This is a ridiculous piece of legislation. This Government’s Budget is so poor that this is the best that it can do. This is the best that the National Government has got for New Zealand, and it is simply not good enough.

Where might one start after that last speech from Grant Robertson? Actually, you know, at the last election the National Party campaigned on a brighter future for paper boys and paper girls. It might be OK for members on the other side of the House to say that at the age of 40 you should still be delivering papers, but the money that we put into education in this Budget will give every single paper boy and paper girl a brighter future in this country. Before the last speaker goes, I just wanted to say that he should not be such a bully when it comes to talking about the hard-working Minister Anne Tolley and the very hard-working member for Taupō, Louise Upston. Together their majorities added up to more than the total number of people who voted for him in the Wellington Central electorate.

💬 Hon Christopher Finlayson: And he was third in the party vote.

He was third in the party vote. Well, that is a good start—that is a good start. Welcome back. That is a good start. What happens on this side of the House when we do our maths is you take a majority from this member and a majority from that member, you add them together, and if it was more than the total number—

💬 Grant Robertson: I seek leave of the House to table the results from two electorates—

The ASSISTANT SPEAKER (H V Ross Robertson): No, no—order! The member knows that is not a point of order.

And that is their problem with the Budget.

💬 Hon Trevor Mallard: I raise a point of order, Mr Speaker. It is a longstanding tradition in this House that members do not sit in the Prime Minister’s seat unless they have ambitions to be there. I wonder whether that member is showing that ambition now.

The ASSISTANT SPEAKER (H V Ross Robertson): The member may well be right, and the member on my right has to suffer the consequences.

I notice that nobody is willing to sit in the seat of the Leader of the Opposition at the moment, and that tells us more about what is going on here tonight. That is the difference between this side of the House and that side of the House. When it comes to the Budget, that side is worried about the issues that New Zealanders are not caring about; we are focusing on what is important. What I want to say is that over the dinner break I was invited to go out and make a post-Budget speech and talk to some people—some everyday New Zealanders—about what is important to them. Can I tell you that it is a wonderful place: the Angus Inn Hotel on Waterloo Road in Lower Hutt. There were people lining up to come in to hear the good news about this Budget. One of them asked what the difference is between the Government and the Opposition. I said it was straightforward: we are ambitious and we want to do more for New Zealand; the Opposition wants to borrow and spend, borrow and spend, borrow and spend. Do you know what I found in that Hutt South electorate when I walked outside looking for my car to come back here? There were Greek restaurants all up and down Trevor Mallard’s electorate—all up and down the street. That is all they want to do: make us like those poor countries, those poor people over there in Europe.

This is an ambitious piece of legislation that brings balance to our tax system and that does good things for New Zealand, and I give you a guarantee that the party opposite will vote against it, just like members of the public in New Zealand voted against that party in droves only 6 months ago.

💬 Dr David Clark: Mr Speaker.

Is the member calling?

💬 Dr David Clark: Yes.

The ASSISTANT SPEAKER (H V Ross Robertson): I call the honourable member David Clark.

Mr Speaker—[Interruption]

The ASSISTANT SPEAKER (H V Ross Robertson): Order! I can hardly hear the member who is trying to seek the call. Courtesy is contagious. I call the honourable member David Clark.

💬 Hon Anne Tolley: I raise a point of order, Mr Speaker. In fairness, he did not seek the call; you asked him whether he wanted the call, and he said yes. So this side was calling for the vote, in fairness, because no one else in the House had called.

The ASSISTANT SPEAKER (H V Ross Robertson): Thank you, thank you. The member has now called.

Thank you for the call. I was somewhat surprised that the member did not have much more to say about this bill, the Taxation (Budget Measures) Bill. Then again, perhaps I should not be. There really is not too much more that one can say about this bill. It is tinkering. It is the worst kind of tinkering: pinching the money from our paper boys and paper girls around the country, but dressed up as something more. This is a Government that gave tax cuts to the wealthiest New Zealanders not very long ago. We know that in 2010 the wealthiest 10 percent of New Zealanders got 44 percent of the value of the tax cuts. Just 2 percent of the value of those tax cuts went to the bottom 20 percent. That is the Government’s idea of tax change. It has done it, it is all over, that has all happened, and now it is just tinkering. That is really not going to get us back on the right track. We have issues as a country. We have been buying more than we have been building, selling, and exporting. This has been going on for some time. Our country must address the problem that we have with our trade balance, and this Government seems to have no ideas at all.

We are here under urgency to pass a bill that would rob tax credits from 68,000 children. That is what we are reduced to. That is the base-broadening vision of this country. The base-broadening vision is to pick the pockets of the paper boys and paper girls around the country. Mr Goldsmith seemed to suggest I wanted to keep the student loan scheme situation that was encouraging students to pay off their loans more quickly; I was merely trying to point out that it fitted a pattern of trying to take things away from students. The actual detail of that part of the bill is something that Labour does not oppose, but we were merely pointing out that it fits with a pattern. Mr Dunne himself introduced it not so long ago, as we have just heard from my colleague Mr Grant Robertson, and far from doing a flip-flop, it was so recent it can only be described as a flop. It was not meeting its intended purpose.

In my previous opportunity to speak I pointed out that in the regulatory impact statement, which I am now searching for, the point is made that—thank you to my colleague Mr Mallard—businesses that employ only schoolchildren on very low wages, below $2,340 per annum, may have to begin withholding pay-as-you-earn tax from these employees from 1 April 2013. We are talking about the kids who clean after school. We are not just talking about the paper boys and paper girls of this country; we are also talking about those kids doing low-wage jobs to help them get a bit of pocket money, maybe to help out at home, maybe to buy one or two things, or maybe to buy some school books. And the Government is trying to claw that money back. As my colleague Megan Woods said, we can imagine the conversation round the Cabinet table: “How are we going to broaden that tax base? Why don’t we have a go at the kids on their bikes out delivering newspapers? That’s our big vision—we’re going to go for it.”

The point that I did not make in that previous address was that, actually, what this regulatory impact statement tells us is that there is additional compliance introduced here. Employers are being required not only to pinch from the pockets of kids but to do it at their own expense. Their time and effort is being put on the line to pinch this money from the kids. So not only is it the wrong thing to do but also it is an expensive thing to do. We know that there will be many small businesses operating pamphlet deliveries or whatever that have kids out doing that work, and they too will have an increased overhead as a result of this bill. It is not a bright idea, and not a great way to increase our future and brighten our future; it is already going to drive kids offshore to see that their opportunities are going to be greater in Australia. There will be 50,000 more people leaving the country for Australia every year, there will be 50,000 more people unemployed—this is the record of this Government—and there will be 50,000 more people collecting the unemployment benefit. But also it is going to cost business more. This is National’s big idea, and it is going to cost business more. I ask you: pinching pennies from kids and charging businesses more for the privilege—most business people would be embarrassed by that. I am pretty confident in saying that most business people will think that pinching pocket money from kids is not a good idea. And most business people would think that having to pay for the opportunity to do that is just outrageous. This is just not a good idea. But it does fit with this theme of tinkering with the tax system.

If you look at the Government’s tax work programme for this year, you will see that there are some fair objectives, some loopholes that are going to be addressed, and some attempts to do some minor base-broadening here or there, but you will not find inspiration there. If you are going there in the morning to have something to read over your bowl of muesli, then you will be back asleep in it before you know it. We need real, inspirational change if we are going to turn our country round. We need pro-growth tax measures. We need measures that are going to support our exporters. We do not need measures that are going to take the pocket money away from our kids. I cannot say much more about this bill, because there is not much more to say about it. It is tinkering, it is no more than tinkering, and therefore we will oppose it. Thank you.

This Taxation (Budget Measures) Bill, unsurprisingly, reflects the general priorities of the Government’s 2012-13 Budget. Let me in my short time do two things: first, to judge what is in the bill and, more broadly, the Budget as presented this afternoon, and, secondly, to discern what is missing from it. In judging what is in this bill and the Budget, let me compare the National and the Green positions on the stated priorities that provide the overall framework. National’s starting point is the three demons that provide the setting for a zero Budget—one global, one national, and one local. There is the global financial crisis, there is the 2008 national recession, and there is the Christchurch earthquake crisis. These together create a dire situation that justifies a zero Budget, and on top of that was the irresponsible fiscal management of the previous Government. From that the Government justifies fiscal austerity, so that New Zealand avoids the fate of Greece.

The bill proposes to abolish three outdated tax credits, the transitional circumstances credit, the housekeeper credit, and the children’s active income credit, and there are plans to restrict the livestock valuation method for farmers and repeal the 10 percent voluntary repayment bonus in the student loan scheme. Why does the Government have to engage in this kind of tax sleight of hand? Because it judges such legislative changes to be essential to its 2012-13 Budget. There can be no other way it can afford it.

So what are the main components of such a strange Budget? There are four main components to this year’s Budget. First is the goal of sound financial management. With that as a precondition the Government identifies three priorities: economic competitiveness, public sector efficiency, and Christchurch recovery. New Zealand’s outlook, says the finance Minister, “is more positive than most. We are a food-producing economy [in] a rapidly growing middle class … region.” Unlike other developed countries New Zealand is going through a “moderate adjustment”. So long as the Government sticks to its balanced economic programme we shall pull through. “New Zealanders have shown … resilience in challenging times [and this Budget] supports their aspirations for a brighter future.”

So let us compare National and Green policy on these components. First, sound fiscal management. Rather than slash spending or dramatically increase taxes, National chooses to run larger deficits and curtail growth in public spending. The result is the proclaimed ability to stay on target for a Budget surplus by 2015. But giving tax cuts to the richer income earners is not sound financial management. Selling off State-owned assets and borrowing more from overseas is not sound fiscal management. It is a form of fiscal theft.

The alternative Green Budget has sound fiscal management. It recognises what the Government does not: that our national economy is afflicted with a structural imbalance. That imbalance is an overseas-funded private sector debt driven by excessive consumerism, exacerbated by a distorted taxation regime, resulting in a rising current account deficit and an increasing negative net investment position. The Green Budget would rest on alternative forms of both revenue and expenditure that reflect three values: sustainability, resilience, and equity. The revenue would rest on a capital gains tax, a resource rental on water, increased mining royalties, a temporary levy for Christchurch, a phase-out of emissions trading scheme subsidisation with a real price on carbon, savings off the absurd roads projects, and increased revenue from a higher minimum wage. Green fiscal expenditure would include reprioritised items, ending child poverty, reinstating training incentives, initiatives for river clean-up, new social housing, extended home insulation, and reforestation initiatives.

Consider National’s first priority: economic competitiveness. The Green Party agrees that economic competence, rather than a ruthless competitive efficiency, is a sound national goal, but how much, and how is it to be paid? With National having sold off the country’s State assets to the tune of some $6 billion, it will put $385 million of new investment in research, science, and innovation. The alternative Green Budget would apply from the savings within its fiscally neutral Budget—some $1 billion over the next 3 years—which is roughly comparable in amount to National’s plans, but the way of funding it is different. Green taxation reform would be specifically dedicated to green technology.

Consider National’s second priority: public sector efficiency. Of course this is a national goal shared probably by all parties in this House, but the difference is over what it means. National is amending the State Sector Act, the Public Finance Act, and the Crown Entities Act. It will reduce long-term welfare dependency, support vulnerable children, boost skills and employment, reduce crime, and improve interaction with government, according to its Budget speech this afternoon. The Green Budget already has plans for bringing 100,000 children out of poverty and identifies $100 million over 3 years for a start-up fund for cleantech small to medium sized enterprises.

Consider National’s third priority: Canterbury earthquake recovery. National has committed $5.5 billion over 6 years, which is about $1 billion a year. The funding has helped in the rebuilding of 75 percent of the 1,000 buildings that require demolition, some 13,000 repair jobs have been generated, and 5,000 of the 7,000 homeowners have accepted the purchase offer. So that is some modest progress, though it has not been without pain and not without continuing controversy. But the main problem is how to fund it, because National is funding this through overseas borrowing. Green funding would be a national levy that would generate $5 billion over the next 5 years—also about $1 billion a year. This would avoid the need for further overseas borrowing and greater national debt, and the Government prides itself on fiscal prudence. That fiscal prudence is a sick joke. It is a recipe for social inequality and political instability.

Finally, let us recognise what is not in this Budget, which requires the Taxation (Budget Measures) Bill. What are the omissions? What is missing in the broader recognition of the true global situation? There is no recognition of a global ecological overshoot—a 50 percent overshoot—with the current human population of 7 billion and the associated resource depletion and biosecurity loss. There is no recognition of the projected growth in human population from 7 billion to 9 billion over the next four decades, a 28 percent increase that will also increase the ecological overshoot beyond the 50 percent obtaining at present. It ignores the critical part of that overshoot: the increase in carbon emissions, which will also increase the ecological overshoot beyond the 50 percent obtaining. And it will cause serious and possibly catastrophic climate change, which in turn will cause social instability.

This bill, as part of the Budget, is seeking an illusory national redemption in a dysfunctional global framework. As the global economy deteriorates, the New Zealand Government believes its destiny lies in being more competitive on neoliberal terms. As we head towards the cliff, the Government presses down on the accelerator. The global framework is dysfunctional, because we focus on the global economy only and regard the ecology as external collateral damage to be remedied. We fail to realise that the economy is part of the ecology and that the global situation will be rectified only if ecological economics replaces the neoclassical economic framework as the guideline for macro policy by New Zealand. For these reasons, the Green Party will be opposing this Taxation (Budget Measures) Bill.

I would like to apologise to the previous speaker, Kennedy Graham, for the noise from my jeers. He might be rather dull, but he is very earnest, and I think we should pay him more respect because he is very earnest. I was kind of interested to find out his solution. He was talking about the growth of the human population and I wanted to know what his solution to that problem was going to be, but he did not get on to that.

We have had a lot of hot air from the other side about tinkering in this Budget. What those members do not seem to understand is that this Government, in the 2010 Budget, got the tax settings of this country in good shape. We did away with the ridiculous gap between the top income tax rate and the trust rate and shifted the weight of the tax from work to spending. That was the whole point—from income tax to GST. That has helped encourage the significant shift we have had towards saving, and the progress that we have made. This Budget from this Government is all about consistency. It is about strong, stable Government, and continuing on a path that we set out after the election in 2008, and consolidated in the important Budget of 2010.

This bill, the Taxation (Budget Measures) Bill, is about the maintenance of the tax system. It is about plugging occasional loopholes and it is about clearing up anachronistic old taxes that cost more to administer than they bring in. I think this bill, the Taxation (Budget Measures) Bill, should be read a second time, and I fully commend it to the House. Thank you very much.

It is no wonder that the Government members are taking such short calls this evening and have done so for much of the day, because their short calls reflect the size of these bills that we are presented with and the amount of information that they contain. Members sitting on the other side of the House must be embarrassed to be fronting with these sorts of documents.

If you look at them, you see they cover the likes of taxation on children. I never thought in my lifetime I would read in the explanatory note of a bill that “Section LC3 provides for a tax credit for children.” and that section LC3 is repealed. Is that not sad reading in this House? The explanatory note of the Taxation (Budget Measures) Bill mentions a tax credit for children, which is repealed. In the same piece of paper, in respect to the student loan scheme, the 10 percent voluntary repayment bonus to try to encourage students to get on top of their loans, to try to encourage them to put more money into their loans and get them paid off, is being taken away. No wonder today in Auckland there are students marching in the streets. Students are marching in the streets because, again, they are being hard done by.

Tomorrow I would not be surprised if farmers were marching in Dipton as well, because down in Dipton the farmers will probably be disappointed with the abolition of changes to the herd valuation scheme. Again you wonder whether this Government just wants to offend everybody. Do Government members want to offend everyone? They are obviously going to offend a lot of their farmer friends. They have obviously written off the fact that students may as well just get on planes and disappear overseas to get away from their student loans. They obviously want to offend the up-and-coming younger generation who are trying to save some pocket money and maybe get their taxes back. They want to offend them, as well. There are not many people at the moment they do not want to offend. The only people they seem to support are the ones whom 2 years ago they gave huge tax credits to. You start to wonder in this House how it is that 2 years ago such massive tax credits—billions of dollars—were given to their mates, their wealthy mates, and 2 years later they are going after the children of this country, they are going after the students of this country, they are going after minor adjustments to farming requirements, and they are going after absolute trivia.

It is no wonder that today there are so many reports coming out in the media saying how disappointed the nation is in this Budget. The Budget has come from the Minister Bill English, who learnt from Ruth Richardson’s “mother of all Budgets”, and today he has delivered the “mini-me of all Budgets”. This is the “pick a pocket or two Budget” where basically he is out to get the last nickel and dime—the last nickel and dime from wherever he can scrape it. There is no vision in this Budget. There is no vision at all.

I have come from a background of 30 years in exports, and I can tell you this is so disappointing for exporters. In the good old days there were incentives for exporters to get out there and earn export dollars for New Zealand, to bring more dollars home, and to put this country on the world map. Where are the tax incentives for exporters to be out there? There are none. There is nothing. There is nothing there to help our companies get offshore and make taxes. There is nothing there. And at the same time we are getting statements from the likes of the New Zealand Manufacturers and Exporters Association today saying: “The … fundamental problems, such as a lack of export growth, have once again gone ignored.” The manufacturers and exporters are saying they have gone ignored. At the same time, as I mentioned earlier in the House, today there are the appalling trade statistics that we are seeing. The April statistics show that we are 17 percent down on the same time last year for our exports—17 percent down. Our members on the National benches over there just sit there and say “What a wonderful Budget. Aren’t we producing great results?”, while our exports are down, while our Manufacturers and Exporters Association is saying this is an appallingly poor Budget, and while the online New Zealand Herald is making statements such as this is “A most forgettable (and dull) Budget”. Quite honestly, this Government should be embarrassed.

But it all boils down to, basically, the Government members having no vision. It is very clear they have no vision. We are seeing more and more in this House that this Government is running out of ideas, and so early into the second term of a Government that it is almost unheard of. You would expect a third-term Government to start running out of ideas, or maybe a fourth-term Government, but not one only 6 months into a second term to be already running out of ideas and repeating the same old promises from the Budget of 2011 and the same old promises from the Budget of 2010—and none of those promises came true. And now again they trundle out the same sorts of promises, only to know in their hearts—if they put hand on heart, they know—that half of what they have printed in these documents is incorrect in terms of where we will be in 12 months’ time.

They know that last year they promised 4 point something percent growth and we got 1.1 percent. You know, they promised more jobs and now we have got 50,000 more unemployed. John Key, when he was Leader of the Opposition, promised that the exodus to Australia, which was only at 35,000 people a year, would stop. We heard today that he said that the 35,000 people sitting in Westpac Stadium represented those who left for Australia a year. Now we are heading towards 50,000 or 60,000 a year. So 3 years later, now that he is the Prime Minister, he must be absolutely embarrassed by the statements he made when he was Leader of the Opposition that he would stop all that. He has stopped nothing.

The situation is getting worse and the people of New Zealand are starting to wake up to it. I was out on the streets in North Shore last week and I was surprised. I was getting signatures for the petition to keep our assets and I was surprised to have National voters coming up and saying: “Please let me sign the petition.” They were even saying: “I’m a National voter, and I have been a National voter, but I am pleased to sign this thing. Boy, am I getting pretty disgruntled with this Government, and I won’t be voting for them again.” National voters in a blue ribbon seat like North Shore—Maggie Barry over there knows that it is blue ribbon—are coming up and saying “We won’t be voting for National again. They are selling us down the river.” And it is not down the river on a cabbage boat. It is not down the river on a cabbage boat. It is absolutely down the river, well and truly.

We have been the witnesses of, yet again, an appalling Budget today. This country is looking for growth, it is looking for export drive, it is looking for lifting our performance internationally, and we are not doing that. This is like the Skycity conference centre—this is looking inwards. This is concrete bunker stuff, looking inwards. This Government is looking inwards on itself, not looking outwards to expand our opportunities internationally on the export market and globally. This is all about cut, cut, and more cut. When you run out of things to cut you start cutting into the children of this country. Quite frankly, I think the Minister of Finance will not sleep well tonight. He will probably have dreams about Ruth Richardson from 20 years ago. He will be dreaming about Ruth and the “mother of all Budgets” and saying: “My God! I’ve done it all over again. I’ve brought in another failure of a Budget.” In 20 years’ time people will look back and say: “My goodness, National made a huge mistake in 2012, made a huge mistake in 1991. Why did the people of this country allow that to happen?”. New Zealand First will certainly continue to oppose this Budget. We will stand for growth in the economy, growth in our international markets, growth in job opportunities, and growth in opportunities for our young people. We will not be a “Fagin Government” like this Government is.

Today we have a great Budget for New Zealand and New Zealanders. It is a Budget that sets up the future for this country going forward, and it is a Budget that has the right signals and incentives. It is a Budget that the people wanted and they got. But all Opposition members can do in this House tonight is talk about students and children losing some tax credits. They cannot talk about the big things that will grow an economy. They do not understand what the people out there actually want. People want stability.

💬 Hon Clayton Cosgrove: I raise a point of order, Mr Speaker. I just raise the point that the member is speaking rather loudly, and Mr Finlayson is asleep or maybe—

The ASSISTANT SPEAKER (H V Ross Robertson): No, the member will be seated. That is not a point of order and the member knows it. He has been here a long time.

For new members, that is the Clayton Cosgrove trick. When he thinks that a speech is going the wrong way for his party, he tries to raise points of order.

Labour members are scared because they know they have got it wrong. They have gone out to the public, and what will the public think tomorrow? They will think that the Labour Party and the New Zealand First Party are not interested in what people are going through out there. They are not interested in getting money on the table so that people can pay their mortgages. They are not interested in people having jobs tomorrow. They are not interested in building a stronger community that will give people that brighter future. All they are interested in is picking holes and—what is it—nickel-and-diming. Well, if that is all you can find wrong in this Budget, then there is not much to worry about. This is a good Budget. It sets a good springboard for the New Zealand economy going forward. We look forward to it going through this Parliament tonight.

I thought it was quite interesting to hear from the New Zealand First Party that we should not look inward. For the New Zealand First Party of all parties to talk about not looking inward! This is a Budget for New Zealanders, for the right time and the right place. It has been accepted and supported by the public, because they understand what is needed this time. We look forward to the success of this Budget building that stronger economy.

Today has been a day of fantasyland in this House. This has not been a Budget about New Zealand and its future. This has not been a Budget about growth. This has been a Budget about picking away at the most trivial issues in this country. This is not a Budget for growth and it certainly is not, as the last speaker said, a Budget for the people. It has been a Budget for a very small number of people, but not for the people who are struggling and hurting in this country today. This has not been a Budget to grow the economy.

Let us recall what the challenges are that we have at the moment. So we have a country where the net Crown debt is about $50 billion. We have a Budget that has a deficit now, for the financial year that we are talking about, of $9 billion. We are steadily heading towards a net Crown debt of over $70 billion. What do we have? We have the removal of a tax credit for 68,000 kids, which is going to raise $14 million. It will raise $14 million, but the problem is $70 billion big. This is not a Government that is taking this country and this economy seriously. It is a waste of time. We have got a country with the slowest growth ever, with wage growth stagnant, and with a real economy that simply is not working—and getting smaller. We have a Government whose own projections are showing an economy in crisis. What does the Government want to do? It cuts a tax credit worth $14 million. I think we could have expected better.

We were entitled to expect the Budget to talk about the people on the street. The New Zealand Herald—that balanced, august piece of journalism in this country—is now reporting that this is a Budget that has either disappointed or not even registered the interest of 70 percent of New Zealanders. That is how this Budget has attracted the attention of New Zealand. It is a Budget that has done nothing, by a do-nothing Government. The New Zealand Herald described it this morning, in anticipation, as “The Love Song of J Alfred Prufrock” Budget—that great piece of poetry by T S Eliot. It was described that way because that poem describes eking out, coffee spoon by coffee spoon. There is another line in that poem that says:

I grow old … I grow old …

I shall wear the bottoms of my trousers rolled …

Do I dare to eat a peach?

This is a Budget about trivialities; this is a Budget about trivialities. This is a Government whose Ministers and whose members could not care about what is happening to people who are struggling, who do not get pay increases, who are struggling to make ends meet. All the Government is concerned about is taking a bit of extra money off the kids, out of their pockets, taking their pocket money, and making it harder for everyone.

The Government’s only strategy, apart from reducing Government revenue and increasing its debt, is to sell off the revenue-generating assets that it owns. It is selling the revenue-generating assets that it owns. Well, that is the big strategy. When I look at the practices of the Tory rich—[Interruption]

The ASSISTANT SPEAKER (H V Ross Robertson): Order! I am sorry to interrupt the member, but I would like to refer the members on my right and on my left to Speakers’ ruling 60/5 about interjections.

I could barely hear myself speak. The greatest travesty of this Government, and there are many of them, let us face it, but the greatest travesty just today is its reaffirmation of a policy that is about continuing the bankrupt policies for this country. So now it wants to take the great blue-chip revenue-generating assets of the country and it is going to proceed down the path of selling them. The Government has now introduced this new fund that it is going to put them into. So having told the public it is going to sell these assets and pay down some debt, now it has a new fund that the sort of best guess of $5 billion, or $6 billion, or $7 billion is going to go into. We are now going to repaint the schools and upgrade the hospitals. There is not a single revenue-generating asset amongst them. So we will destroy the balance sheet, we will lose the revenue, and we will be no better off. What a crooked Government. What a crooked thing to tell the people of New Zealand when we are looking for some hope and looking for some vision. This Budget offers neither. It offers nothing else.

The only other revenue-generating measure the Government has is to increase the price of smokes. It will put the price of smokes up, because this is a Government that is about to go up in smoke. It will do that, but it will not raise much revenue. Sure, people will stop smoking and it might help the health statistics a little bit, but it is not going to fix the core problem. This Government does not have an idea about investing in productive activity and investing in the productive investment sector to get real growth, to get jobs—high-skilled jobs, high-wage jobs—that will make a difference to people and give them a chance to get ahead. The Government is interested in the low-value jobs. It does not mind when foreign direct investment is about simply substituting for investments we have already got and promoting and encouraging low-value jobs.

Labour is a party that wants to do the opposite—encourage investment and good skilled and high-skilled good jobs, and increase the wage base. We do not want to see good New Zealand workers going overseas. This Budget and these measures are about driving more Kiwis offshore. Can we please have a Government that leaves the kids alone, and leaves their pocket money alone? When it comes to them being in the classroom, leave them with their good quality teachers. Do not jam more kids in the classroom, put the teachers under more stress, and make it harder for them. That is not going to help anybody. That is not part of the high-wage, high-skill economy; that is the old way.

This is a tired old Government, and it is in only its second term. It is a tired old Government with no new ideas but to fleece the kids, make it harder for the kids, and harder for their families. What a travesty. What a tragedy. [Interruption] And they know it—and they know it. Members opposite sit in the back rows and they run out of words because they have no arguments to defend it; they have no arguments to defend it. This is not a great day. They sit there and cheer on the ringmaster, but the rest of us know that the joke is on us. They are the clowns and we are meant to laugh, but the joke is on the rest of New Zealand. The joke is on the rest of New Zealand, because this is a Government that has introduced a zero Budget that will take us nowhere. We are debating a zero bill, the Taxation (Budget Measures) Bill, like the finance Minister; a zero bill, part of a zero Budget, that will take us absolutely nowhere, and members opposite know it. They know it, because the more I remind them of it, the louder they get, and they hate it.

Well, this is not good, and we will debate every measure, because it is important that every New Zealander knows—the 70 percent who are disappointed in it or do not even know about it will know—that this Government has gone off them, does not care about them, will take the money out of their kids’ back pockets, will jam more kids in the classrooms, take away their teachers, reduce the skills of their teachers, and we will just wave to more good Kiwis as they go to the airports, pay their departure taxes, and take the poisoned fruit into Australia, because we do not have any biosecurity here; we will wave them goodbye.

That is the tragedy for New Zealand: a Government that offers no hope, no real measures, and nothing for the working Kiwi. They are looking hard, because the thing about this side of the House is that we rub shoulders with them. They are looking for something better, and they are looking to Labour and the parties of the Opposition. They say: “You parties offer us real hope. We don’t want the party of the rich any more, taking money out of our kids’ pockets. We don’t want the party of the rich doing down our teachers and jamming more kids in the classrooms. We want something better.” They will get it better. We will have this debate, and we will work to make this country a better place, where kids can grow up in confidence. They will know that when they do their paper rounds and do the gardening and mow the lawns for the old ladies, they will reap the benefits and the rewards of the labour, and they will learn what being good citizens is about, unlike the members opposite. We will have that debate, and we will remind New Zealand that we offer a better chance, a better hope, and a better country.

Order! I just remind members, regarding interjections, that running commentaries are out of order. Interjections are to be rare and reasonable. I ask members to have a look at Speakers’ ruling 60/5(1), (2), (3), and (4). You might learn something.

I must say to my own people on this side of the House that there is a lot we can learn from members opposite about trivia, about going up in smoke—or do they inhale it? What manner of nonsense have we heard from these people? What a ridiculous notion.

I am a fan of recycling; this is taking it too far. We saw the unedifying spectacle of one of the members for Dunedin reading the same speech twice. Fortunately his colleagues came up to him and they gave him notes to help him out. It was pretty much a waste of time, though. We are looking at Groundhog Day over here. They are recycling the most trivial of notions and making them work. We saw the unedifying spectacle of the list member of Parliament for North Shore roaming around the streets of Takapuna, pestering the locals—and the foliage, possibly, as well—and annoying people about things that had no relevance at all, and then bringing it into a debate about taxation. I guess largesse takes on whole new definitions when it comes to their interpretation of speaking to a bill, but truly the trivia and the nonsense—

💬 Jami-Lee Ross: What about the little man with the big voice?

The little man with the big voice? Stuart Little? Yeah, the mouse that roared—yeah, absolutely. But, I mean, the braying and the nonsense that we are getting from the other side of the House does not detract from the purpose. It does not detract from the fact that this Taxation (Budget Measures) Bill is an excellent bill, and it is a sensational Budget.

This is a day to be proud to be in the National ranks. We are doing well. We have an excellent taxation measure, meticulously worked through, as I said earlier, by the Minister of Revenue, Peter Dunne, rather than dwelling on the minutiae of the occasional piece of stuff that members opposite pick up. They have not got the intellectual rigour to actually examine what he has pulled up, but what we are doing is examining the detail of it.

This is a good bill. I commend it to the House, and I am sure it will get through this very evening. Thank you.

Just before I call the honourable member, I wish to advise members that this is a split call. For the speakers, they will get a bell with 1 minute to go.

The test of a good Budget is not only what is in it but also what is not in it. Here we are in urgency, we are debating, but we have deferred the main Budget debate. We are taking away the main select committee process, and this bill, the Taxation (Budget Measures) Bill, is retrospective. What could be so important that we are doing all those things? I know: we are picking the pockets of paper boys—picking the pockets of paper boys—and that is the best this dreary Government can come up with. You know, it would be laughable if it was not so sad.

Is this the secret base-broadening measure that Bill English and John Key were talking about, the measure that would bring fairness to the tax system, the measure that got the journos thinking they were going to do a capital gains tax after all? No, no; nobody guessed. Penny-pinching pickpocketing of paper boys—that was the big, deep dark Budget secret. Were they going to do something brave like, I do not know, reinstate capital gains tax or research and development tax credits that would turn our companies into engines of innovation? Were they going to do that? Nope, they are going to pick the pockets of paper boys.

You know, it is laughable—because it can only be a joke—that the Government’s top priority was retrospectively pinching pocket money from our children: 68,000 children lose their pocket money because this is the Government’s top priority on Budget night. It suspended the Budget debate so we can pickpocket our kids. But I think it is actually quite sad. Sad because it is a lost opportunity, and sad because of all the New Zealand families that are working hard, playing by the rules, and trying to get ahead, and this Government is absent without leave, absent on the job. It ought to be lifting the standard of living for New Zealanders, instead of picking the pockets of paper boys. But are they doing it? No.

Where is the vision in this Budget? There is not one. It is a zero Budget, by the Government’s own admission: zero vision, zero hope, zero plan, zero new exports, zero new jobs, and zero future. And that is why 50,000 New Zealanders a year, 1,000 a week, are heading for the airport departure lounge, because they have given up on John Key’s National Government, and, sadly, given up on their homeland. How many grandparents do we know around the country who are worried that their grandchildren are going to be brought up in a country not their own because these clowns think the top priority is taking pocket money off paper boys?

It is just so ludicrous, is it not? We suspended the Budget debate to take pocket money off children. That is going to turn the boat round, and members opposite are squirming. They are squirming in their seats. Mr Bennett with his three dairy farms, sitting pretty; he knows that this is not going to turn the boat round. The “member for Vodafone”, Mr Lotu-Iiga; he knows it is not going to turn the boat round. Mr Ryall, sitting there, knows he has not given the health system enough to keep going. He knows people are going to get sick and die because of this Budget, yet the best they can do on Budget night is pinch the penny pocket money off paper boys—pinch the pocket money off paper boys.

John Key continues to overpromise and under-deliver. Every year growth is just around the corner, every year there are going to be 70,000 new jobs, except not this year. This year the Government has finally admitted the truth: there are not going to be that many jobs. This year, yet again, it has had to push back the growth, because it is not happening. It is not happening because Christchurch is too slow, it is not happening because there is no growth plan—it is not happening.

The Government trumpets science and innovation in this Budget. Megan Woods knows that this was the big new spend. Do you know what? The Government took away three times more out of economic development than it put into science. It took away $120 million out of economic development and put $40 million a year into science, and that is supposed to be vision. Here is a so-called pro-growth Government that is killing off the Ministry of Economic Development, building a new Titanic for Steven Joyce, and pinching the pocket money off paper boys as its top priority.

This is my first Budget as a new MP, and I would like to take just a moment to talk about how deeply strange I am finding it. It is quite interesting that we have suspended debate on the Budget, and just before 5 p.m. tonight we were told that the Government would be introducing three bills into the House relating to the Budget. The Opposition parties were given a copy of this bill, the Taxation (Budget Measures) Bill, at 4.45 p.m. Labour, at least, was required to speak on this bill just after 5 p.m., and the Greens, you know, we had a bit more time. I know I am a political naïf, but this does not seem like democracy to me. I thought, you know, in that idealistic view, that we would have bills, and we would consider them, and we would debate them on the content, and we would come to a common understanding. I know it is naïve, but that is just how it is. I have to say I am disappointed. I am disappointed in the process of democracy that I am seeing displayed tonight.

I would like to speak tonight briefly about a couple of points in the bill: the abolition of the transitional circumstances tax credit—also known as the income under $9,880 tax credit—and the repeal of the 10 percent voluntary repayment bonus for student loans. But before I get to those specific points, I would also like to take just a moment to talk about Budgets and the economy. So much of the commentary that I have heard around this Budget has been about the importance of the economy, as if the economy was something in itself, and something that was worth pursuing for itself, whereas, in actual fact, although the Greens obviously have a very clear vision of how to grow our economy, the point of the economy is to serve our people and our environment. The economy has no purpose in itself, beyond serving our people. Part of the tragedy of traditional economics is that it has made our lives and our environment into an abstract theory that enables almost sociopathic behaviours to result from the practices. All too often people’s lives, and the impacts of these decisions on people’s lives, are lost.

I would now like to talk a little bit about the experiences that people have that are related to these changes. I would like to talk a bit about a mother I met recently, who, when her daughter complained about getting stones and grass in her shoes because she had holes in them, had to tell her: “Don’t worry, it’ll make you run faster.” because she could not afford to get her kid new shoes. These are the people whom this Government is taking money from. I would like to talk about another woman I met, whose abusive ex-partner took all of her furniture when he left. Work and Income refused her $15 for a chair from the Salvation Army so that an elderly aunt could visit her in her home. These are the people whom this Government is taking money from. The children who are living in cold, damp houses who are getting sick and are ending up in hospital—we are paying for that because we are so abstracted from the concept of what it means to be connected to our fellow human beings that we allow these kinds of things to happen.

Also, with the student loan aspect of this bill, I think there has been a picture created that students are the ones out drinking, so getting just a bit tough on them and increasing the repayments of the graduates is going to be a good thing. Well, actually, 40 percent of those with student debts are couples aged between 18 and 24 with children, and about 30 percent of those with student debts are between 25 and 34. This group is already shouldering a completely unreasonable burden, and they really feel as if this is an intergenerational attack on them by this Government. It is hard to see how it is not. Most of the people in this Government managed to get the largesse of a free education, and now they are pulling it away from the next generation.

It is an honour to speak on this Taxation (Budget Measures) Bill. I just want to bring the debate back to the bill and talk about the benefits of this bill. What this is is an omnibus bill. It deals with livestock valuation rules, and the changes to those will bring about over $184 million over 4 years in savings. It will also remove three tax credits that are no longer fit for purpose, which the Hon Peter Dunne has referred to, and it cancels the student loan repayment incentive scheme, which will save $12 million a year. So what does that mean? Well, added up it equals $349 million over the next 4 years. That is right—$349 million over 4 years. And why is that important? Well, it is important because it funds the early childhood education of our children. It is important because it will build new hospitals and new roads for those of us who want to get on with our lives. It is important because this Government is creating an environment and a framework for job growth, for export growth, and for opportunities. It is important because those people out there who want to work will work, with some of our welfare reforms. So I support this bill because this bill actually provides for a better future for our children, our communities, and this country. I support this bill.