English Bill: Taxation (Urgent Measures and Annual Rates) Bill — Second Reading 
English Bill: Taxation (Urgent Measures and Annual Rates) Bill — Second Reading 
[Volume:651;Page:109] 
Hon BILL ENGLISH (Minister of Finance) 
: 
 When I rose last night and spoke very briefly I moved that this bill be read a second time and I pointed out that the one thing that was obvious from the first reading debate was that Labour still does not realise it has lost the election. With the attitudes on display I see that that is a realisation that will take some time to sink in but I will come back to that. 
I remind members of the context in which this legislation has come before the House. New Zealand has already been in recession for a year and of course there are questions about how we managed to get into recession before other countries did. The 2008 calendar year will show virtually zero growth—the much-vaunted legacy of the previous Government I presume. During this debate I expect that Labour members will be able to explain to us just why the economy was in such apparent great shape when it had zero growth. We have been in recession for longer than any comparable economy and that was before the international events that are now concerning us. So we are introducing this legislation in the context of an economy that already had quite significant problems because of 9 years of complacency about what it takes to grow an economy and allow people to have all the benefits that go with a growing economy. That is the first point. 
We are introducing this legislation in the context of a country that was already in recession well before the international events that have created so much uncertainty. Of course we have seen those events occur in the last couple of months and we are surprised that in its dying days the Labour Government did not make much of them. The reason is that Labour was doing all of its dirty tricks and that is a very obvious and high-profile legacy of this Government in the public mind; at a time when it should have been going through our proposals in detail which are embodied in this legislation and outlining its own ones in detail it was chasing dirt files in Australia on the current Prime Minister. 
If those members do not understand the detail of the legislation that is laid out now that is why. They were too busy being focused on continuing their legacy of personal denigration and continuous scandal and on issues that did not matter to the people who trusted them. That is why those members are on that side of the Chamber. Instead of looking at the detail of our economic policy and debating it in the election campaign in a way that would reflect the interests of the people who trusted them Labour members were too busy chasing their strategy of personal denigration. The dirty complacent Labour Party let its own people down because it did not focus on the issues that mattered to its own people. We did and that is one of the reasons why Labour lost the election. 
Looking ahead we see that the New Zealand economy faces very significant uncertainty and that uncertainty is—at the moment anyway—largely to do with the state of the economies of our trading partners. In the last couple of months the economies of our trading partners with the exception of China as a significant partner are almost all headed into recession. That has happened quite quickly even in Australia which as recently as 2 months ago was forecast to grow at 2 percent per annum but is now looking at a couple of quarters of negative growth despite the Government over there saying that it would not happen. So this legislation is part of a fiscal stimulus of around $7 billion over the next 2 years. That is not all of it; this will add to the stimulus created by a fairly big-spending Budget in 2008—well another big-spending Budget from a Government that has tried all sorts of tricks to hide some of the impacts of its worst decisions—then the tax cuts on 1 October 2008. Those tax cuts were made somewhat reluctantly by the previous Government. Having spent 9 years saying it would never do that it did. Having spent 9 years saying it would never borrow for tax cuts in its dying days it turned round and borrowed for tax cuts. That is another reason Labour lost the election: it ended up doing the opposite of what it said after 9 years which was “We will never cut personal taxes.” Then because National won that argument the Government was forced to cut them and it lost the election anyway. 
There is nothing worse than giving way on one’s principle and then regretting that one did it; that is what those members are sitting there doing. Would they not love to be able to say “We stood firm; we never gave in; we never cut personal taxes.”? They cannot; at the last moment along with the blowout in Treaty settlements endless promises on rail and the big hole in the Accident Compensation Corporation accounts they caved in and made tax cuts. Well we are happy to claim those tax cuts as part of our stimulus package because in Dr Cullen’s immortal words “He lost”—he lost the tax cut argument. 
When we add those three things together—the big-spending Budget in 2008 the 1 October tax cuts and this tax package—the economy over the next 2 years will benefit from $7 billion of stimulus. Why does that matter? Well it matters because it will put cash in people’s pockets. 
Hon Darren Hughes 
: Not all people. 
Hon BILL ENGLISH 
: Well actually just about everybody. I want to pay attention to one particular issue that has been raised and that is the issue around Working for Families. Over the last 3 or 4 years there have been substantial increases in the net incomes—the after-tax incomes—of people with children. 
Hon Darren Hughes 
: Opposed by the member. 
Hon BILL ENGLISH 
: Well no actually we support it. Many other New Zealanders who were not part of Labour’s political strategy got nothing so in this package people who got nothing for 9 years—loyal Labour voters who were meant to be looked after by the previous Government which spent all its time on a campaign of personal denigration and incompetent scandal—will get something. It is true that there are no increases in Working for Families here. That is simply for this reason: families with children have had big increases over the last 2 or 3 years; people without children have had nothing. This tax package will give them some cash in their pockets which will help to keep this economy ticking over and will protect people from the sharpest edge of recession. 
As it happens this is a decision consistent with our long-term goals which are to improve incentives in the economy to encourage people to get ahead and to let them make their own decisions with their own money instead of being told what to do by a Government that takes too much tax off them. So the decisions that will help the economy in the short term to cushion the effects of a recession will also help the economy in the long term to achieve our objectives of raising our long-term growth performance. Of course who would know where Opposition members start from? They are against tax cuts; they are for them. They are against borrowing; they did it. They think the economy matters but when it matters they never talk about it such as in an election campaign. They talked about everything else. I suspect that it will take probably another 12 months for Opposition members to figure out that Labour is no longer the Government.