Volume 680 Week 11 - Thursday 24 May 2012 
Text is incorporated into the Bound Volume 
Volume 680 Week 11 - Thursday 24 May 2012 
[Sitting date: 24 May 2012. Volume:680;Page:2389. Text is incorporated into the Bound Volume.] 
Thursday 24 May 2012 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Appropriation (2011/12 Supplementary Estimates) Bill 
Procedure 
Hon BILL ENGLISH (Minister of Finance) 
: 
 I hereby present the Supplementary Estimates of Appropriations for the Government of New Zealand and supporting information for the year ending 30 June 2012 (B.7). 
Mr SPEAKER 
: That paper is published under the authority of the House. 
Appropriation (2012/13 Estimates) Bill 
Procedure 
Hon BILL ENGLISH (Minister of Finance) 
: 
 I hereby present the 2012 Budget Minister’s Executive Summary the speech the Fiscal Strategy Report (B.2.) the Economic and Fiscal Update (B.3) the Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2013 (B.5) the information supporting the Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2013 (B.5A Volumes 1-10) and the departmental statements of intent. 
Mr SPEAKER 
: Those papers are published under the authority of the House. 
First Reading 
Hon BILL ENGLISH (Minister of Finance) 
: 
 I move  
That the Appropriation (2012/13 Estimates) Bill be now read a first time 
.  
A party vote was called for on the question  
That the Appropriation (2012/13 Estimates) Bill be now read a first time. 
Ayes 64 
New Zealand National 59; Maori Party 3; ACT New Zealand 1; United Future 1. 
Noes 57 
New Zealand Labour 34; Green Party 14; New Zealand First 8; Mana 1. 
Bill read a first time. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 I raise a point of order Mr Speaker. On this side of the House we observed the ACT Party leader. He intimated no vote at all. So how— 
Mr SPEAKER 
: Order! The leader of the ACT Party recorded a vote; I heard him do so. 
Budget Statement 
Budget Debate 
Hon BILL ENGLISH (Minister of Finance) 
: 
 I move  
That the Appropriation (2012/13 Estimates) Bill be now read a second time. 
It’s a privilege to deliver the National-led Government’s fourth Budget. 
This Budget is about investing in our future. 
It shows the Government is responsibly managing its finances. We are on track to post an operating surplus in 2014/15 when we will start bringing debt down to prudent levels. 
That is a considerable achievement given the difficulties New Zealand has faced over the past three years: 
A sharp recession that started in early 2008. 
The Global Financial Crisis which is still being felt around the world. 
The destructive earthquakes in Canterbury. 
Good fiscal management is important because it helps us pursue the other three priorities of this Government. 
The first of these is building a more productive and competitive economy. The New Zealand economy lost competitiveness and built up large imbalances during the 2000s. 
Those imbalances have to be reversed if we are to achieve sustainable growth. 
The Budget is another step in creating an innovative and productive economy that sells more to the world - where people have the jobs opportunities and higher incomes to get ahead here in New Zealand. 
Secondly the Government is committed to delivering better public services. 
The Budget shows we are continuing to reform public services to deliver better results protect the vulnerable in our society and at the same time bring down many of the longterm social costs that drive public-sector spending. 
And thirdly the Budget continues the Government’s strong commitment to rebuilding Christchurch and the surrounding areas. 
Collectively these priorities are about building a brighter future for New Zealanders from all backgrounds and walks of life. 
Working constructively with the ACT United Future and Maori Parties we will continue to make balanced and fair decisions to support all New Zealanders through challenging times and put the economy on a more competitive footing for the longer term. 
Mr Speaker  
The New Zealand economy has grown modestly but steadily despite significant headwinds. 
The efforts of all New Zealanders supported by the Government’s policies are delivering results in difficult circumstances. 
Since the recession the economy has expanded in nine out of the past 10 quarters. 
Looking ahead growth is forecast to rise to more than 3 per cent in 2014/2015. 
Though moderate by historical standards New Zealand’s growth outlook is stronger over the next few years than that forecast for the Euro area the United Kingdom Japan the United States and Canada. It’s similar to forecast growth in Australia. 
Households and businesses have started to save and pay down debt. New Zealand’s household savings rate is positive for the first time in a decade and is forecast to increase to almost 4 per cent by 2016. 
That is a positive and encouraging sign. 
Increased savings will temper economic growth a little in the short term but over time will leave New Zealand considerably less vulnerable to economic shocks. 
Job creation is picking up. Over the past two years 60000 more people have been employed and the Treasury expects a net 154000 new jobs over the next four years. 
Unemployment is forecast to drop below 5 per cent by 2015. 
Growth in the near term will be driven by a number of factors. 
The rebuilding of Christchurch will be a key driver of domestic activity and is expected to contribute about one percentage point to annual growth in each calendar year from 2012 to 2016. 
Our two largest trading partners – Australia and China – are forecast to maintain reasonable growth rates therefore keeping up demand for our exports. We are also well placed to benefit from trade with other fast-growing economies in the Asia Pacific region. 
And our terms of trade are expected to remain relatively high on the back of demand for our major export commodities. 
These opportunities will be supported by Government policies to encourage businesses to invest grow and employ. 
However the global environment remains volatile. 
In particular the Euro area and the United Kingdom have yet to resolve the huge problems caused by a long-term reliance on debt and government spending to drive economic growth. 
This global weakness and volatility means New Zealand must focus on the issues it can directly control including getting back to surplus reducing government and private sector debt and improving competitiveness. 
New jobs are created and incomes grow only when businesses have the confidence to invest take risks to employ more people and pay better wages from higher revenues. 
Growth in the 2000s was built on unsustainable foundations – excessive spending including from the Government and high levels of household debt. 
We are moving towards growth that is driven by savings exports and productive investment in the parts of the economy that trade with the rest of the world. 
It is within this context that I present Budget 2012. 
Mr Speaker  
I want to talk first about responsible financial management before I go on to talk about the other three equally-important priorities of this Government. 
Over the past three years the Government has faced very considerable fiscal challenges. 
In 2008 net government debt was $10 billion. Today it stands at $50 billion and is forecast to reach more than $70 billion before we return to surplus and start paying-down debt. 
That build-up in government debt has been the appropriate response to the triple shocks of a domestic recession the Global Financial Crisis and the Canterbury earthquakes. 
The alternative would have been to dramatically slash spending or dramatically increase taxes both of which would have brought considerable pain to households and damaged the economy at a time when the recovery was still fragile. 
The Government chose to run larger deficits and absorb much of the impact of these shocks on its own balance sheet to protect vulnerable New Zealanders and enable the economy to get back on track. 
But as we made clear at the time this could not continue indefinitely. 
So the Government maintained spending but slowed its growth significantly. 
As an illustration over its last four Budgets from 2004 to 2008 the previous Government’s final-year spending on new discretionary operating and revenue initiatives totalled around $15 billion. 
For this Government the corresponding figure over four Budgets is about $750 million. 
This Government’s discipline means New Zealand is on track to return to fiscal surplus in 2014/15 and then to start reducing debt. 
The forecast fiscal surplus in 2014/15 is $197 million. This surplus is forecast to grow to $2.1 billion in 2015/16 and $4.4 billion in 2016/17. 
Mr Speaker  
These surpluses will allow the Government to rebuild New Zealand’s resilience to further shocks help lift national savings keep interest rates lower for longer take pressure off the exchange rate and reduce future finance costs. 
A significant surplus will also give us choices when it comes to public services which we don’t have while we’re running deficits. 
This Budget takes a number of balanced decisions to ensure the Government reaches surplus in 2014/15. 
These decisions include running a zero Budget again this year where $4.4 billion of new operating spending over the four-year forecast period is matched by a combination of savings and revenue initiatives. 
The Government is making significant new investment in priority areas while at the same time keeping a tight rein on growth in spending and public debt. 
In terms of savings initiatives we are continuing to reprioritise existing spending to ensure New Zealanders receive better public services especially in health education welfare law and order and science and innovation. 
This will allow core Crown expenses to fall progressively from 33.5 per cent of GDP in 2011/12 to 30.2 per cent of GDP in 2015/16. 
We are also focusing on improving the effectiveness of spending across the board. 
Effective public services that get results are good for individuals and their families and will also generate sustainable long-term savings. 
In terms of revenue initiatives the Budget continues the Government’s focus on broadening the tax base closing tax loopholes and improving the fairness of the tax system. 
This builds on the measures introduced in Budgets 2010 and 2011. 
The Inland Revenue Department will receive an extra $78.4 million to further improve its tax auditing and compliance functions. These extra compliance activities are estimated to have a net positive impact on the operating balance of $345.4 million over the four years to 2015/16. 
We are also broadening the tax base by: 
Tightening the rules for deducting costs of assets that are used both by their owners and rented out for income such as holiday homes boats and aircraft. 
Putting changes to livestock valuation rules into Budget legislation to prevent farmers who change valuation schemes receiving an unintended tax break. 
Removing three tax credits that no longer fit the purpose for which they were created. 
Together these changes will save about $410 million over the next four years and I thank the Honourable Peter Dunne for his work in this area. 
Mr Speaker  
When the Budget is in sufficient surplus the Government is committed to resuming contributions to the New Zealand Superannuation Fund. On current forecasts this is expected to happen in 2017/18. 
Furthermore decisions will also need to be made on the rate of debt repayment to meet the Government’s longer-term objective of reducing debt to 20 per cent of GDP by 2020. 
Resuming New Zealand Superannuation Fund contributions and repaying debt will require an on-going commitment to responsibly manage surpluses. 
Budget 2012 proposes changes to the fiscal responsibility provisions of the Public Finance Act to reinforce fiscal disciplines. 
We are proposing additional principles for Part 2 of the Public Finance Act which ministers will have to take into account when setting fiscal policy. These changes will bring more transparency to government spending decisions and how they affect the wider economy and future generations. 
The Government is also consulting other political parties about the possible introduction of a spending limit as set out in the National-ACT confidence and supply agreement. 
I acknowledge the initiative on this issue of the Honourable John Banks. 
Mr Speaker  
The new operating allowances for future Budgets remain as they were at $800 million for Budget 2013 $1.19 billion for Budget 2014 and thereafter rising at 2 per cent each Budget. 
This allows the Government to maintain some flexibility to deal with future spending and revenue pressures while still achieving a surplus in 2014/15. 
Mr Speaker  
As I said earlier good fiscal management is important because it helps us pursue the other three priorities of this Government. 
So I want to turn to the first of these – building a more productive and competitive economy. 
The Budget continues to support the wide range of actions the Government is taking to raise productivity and therefore create more jobs and raise incomes. 
I want to mention just a few of them. 
Budget 2012 contains $385 million of new investment over four years in research science and innovation. 
We need to support businesses and farms to innovate and stay ahead of the competition. 
And we need to ensure New Zealanders have the right skills to compete in an increasingly global labour market. 
Over the next four years Budget 2012 investments include: 
$166 million to redevelop an Advanced Technology Institute which will help New Zealand’s high-tech firms grow increase exports and ramp up productivity. 
$60 million to support a series of National Science Challenges which will seek innovative solutions to specific questions of national significance. 
$100 million additional funding for the Performance-Based Research Fund to support world-class research in New Zealand’s universities. 
$59 million to boost funding for science and engineering courses. Funding rates for engineering degrees will be increased by 8.8 per cent and for science degrees by 2 per cent. 
In its first three years the Primary Growth Partnership has stimulated more than $430 million in research and development investment from government and industry. A further $270 million of investment by the Government and industry is awaiting approval of business plans or negotiating contracts. 
Mr Speaker  
Budget 2012 continues the Government’s programme of investment in productive infrastructure and other major capital projects. 
In particular the Budget establishes the Future Investment Fund. This fund will receive all proceeds from the Government’s sale of up to 49 per cent of shares in four SOEs and Air New Zealand. 
These proceeds are expected to be between $5 billion and $7 billion. 
The Future Investment Fund will reinvest these proceeds in other public assets such as modern schools and hospitals over the next few Budgets. The Government will do this without having to borrow to pay for those new assets. 
We have earmarked $1 billion of the fund for modernising and transforming schools as part of the Government’s 21st Century Schools programme. 
This demonstrates that the partial sale of shares in the five companies does not result in any net loss of publicly owned assets but simply changes the mix of those assets. 
The Government would rather build new schools and better hospitals without having to borrow more from overseas lenders and still retain a majority shareholding in these companies. 
The share offers will provide New Zealanders with an opportunity to invest their savings in large New Zealand companies and will help to improve the transparency and accountability of the companies. 
As part of the Budget the Future Investment Fund is allocating its first $559 million. This includes: 
The first $34 million of funding for 21st Century Schools. 
$250 million towards KiwiRail’s Turnaround Plan. 
$88 million for health sector initiatives in particular hospital redevelopments. 
$76 million for the capital costs of the new Advanced Technology Institute. 
We expect to make a significantly larger contribution from the fund in Budget 2013 once the share offers are under way. 
In addition the Government is investing around $12 billion in improving state highways over the next 10 years. 
We are also investing more than $500 million a year in improving and maintaining local roads and completing the $2.1 billion upgrade of the metro rail systems in Auckland and Wellington. 
Through Transpower the Government is investing $4.6 billion in upgrading the national electricity grid over the next 10 years. 
New Zealand’s size and geographic isolation from the rest of the world mean communications technology matters. 
That is why this Government is investing up to $1.35 billion in the roll-out of Ultra-Fast Broadband and an extra $300 million in the Rural Broadband Initiative currently under way. 
Mr Speaker  
As part of the Government’s programme to deepen capital markets the Budget last year made several changes to KiwiSaver. 
We announced an increase in the minimum contribution from individuals and employers from 2 per cent to 3 per cent to take effect from 1 April 2013. 
About 15000 New Zealanders a month are joining the scheme and since March last year total KiwiSaver funds have grown from $9 billion to more than $12 billion. 
Budget 2012 further strengthens KiwiSaver. 
New disclosure rules to take effect from April 2013 will allow people in KiwiSaver to evaluate and compare the performance of different funds. Fund managers will be required to report their performance and returns fees and costs assets and portfolio holdings and liquidity and liabilities. 
In addition the Government is today issuing the terms of reference for a review of KiwiSaver default-provider arrangements to ensure they are working in the best interests of investors. 
The Government is also deferring its auto-enrolment exercise for KiwiSaver. Proceeding with auto-enrolment in 2014/15 as originally intended is now not possible without putting the updated forecast surplus at risk. Therefore public consultation on auto-enrolment has been deferred until after 2012. 
In building a more competitive economy the Government will develop initiatives across its business growth agenda. 
This will help businesses with the research capital ideas skills natural resources and infrastructure that they need to grow employ and trade successfully with the rest of the world. 
This is how the Government will support job growth. 
Mr Speaker  
Another of the Government’s priorities is delivering better public services within tight financial constraints. 
A better-performing public sector is central to the Government’s plans over the next three years. The Government wants to see better results and improved services as well as reduced costs and more efficiency. 
To assist those changes the State Sector Act the Public Finance Act and the Crown Entities Act will be amended as recommended by the Better Public Services Advisory Group. 
Earlier this year the Prime Minister announced 10 challenging results for the public sector to achieve over the next three to five years. 
We can help create better communities by achieving these results which include: reducing long-term welfare dependency; supporting vulnerable children; boosting skills and employment; reducing crime; and improving interaction with government. 
We’ve already announced one of the targets – 85 per cent of 18-year-olds having NCEA level 2 or equivalent in five years up from 68 per cent currently. 
Today we are announcing two more as part of Budget 2012. 
The first is reducing prisoner reoffending by 25 per cent in five years. Reaching this target would mean 18500 fewer victims of crime every year. 
The second is increasing the rate of participation in early childhood education to 98 per cent up from 94.7 per cent currently. This will ensure that as many children as possible have a strong platform for learning when they start school. 
We are still finalising our other Better Public Services targets and they will be announced by 30 June. 
Progress towards achieving the results will be reported publicly so New Zealanders can judge for themselves how well we are doing. 
As we’ve said achieving these results will be demanding – in fact for some of them it will be quite difficult. We make no apology for that. 
Mr Speaker  
Despite tight financial constraints this Government has made investing in better frontline health services a priority over the past three Budgets. This continues in Budget 2012. 
Over the next four years the Government is committing almost $1.5 billion extra to Vote Health partly funded by $129 million of savings identified in 2011/12. This will: 
Deliver 4000 more elective operations a year. 
Provide better service for cardiac and cancer patients. 
Provide $12 million to reduce rheumatic fever. 
Invest $133 million in disability support services. 
In addition the Government will provide $60 million in capital for new buildings and hospitals. 
As we’ve already announced pharmaceutical co-payments will be increased from $3 to $5 up to a maximum of 20 prescription items per family per year after which items are free. 
Prescriptions for children under six will remain free. 
This is a modest increase that allows us to spend more on frontline health services than we would otherwise have been able to. 
As part of its wider health policy the Government will also continue to increase tobacco excise by 10 per cent over and above inflation each year for the next four years. 
The first increase will occur on 1 January 2013 followed by annual increases on 1 January in each of the following three years. 
Previous increases in the excise have reduced tobacco consumption as smokers have given up or cut back and fewer young people begin smoking. 
I acknowledge the work and support of the Maori Party and its ministers the Honourable Tariana Turia and the Honourable Pita Sharples in this area. 
Mr Speaker 
Raising student achievement and improving the tracking of student performance is important for New Zealand and therefore a priority for this Government. 
As we have confirmed the Government is committed to the ambitious goal of 85 per cent of 18-year-olds with NCEA Level 2 or equivalent qualifications. 
Reaching this goal means resources must be managed to get better results for all students. 
Evidence shows the single most important thing we can do to raise achievement is to improve teaching quality. So Budget 2012 makes a significant investment in this area. 
Over the next four years the Government will commit $512 million towards new frontline education initiatives. This takes the Government’s total investment in early childhood education and schooling to $9.6 billion in 2012/13. 
This Government wants to create a flexible skilled and professional workforce through these initiatives to support principals and teachers. 
We are committing an extra $60 million to lift the quality of teaching in our schools. This is in addition to the $304 million we are spending on professional learning and development for teachers in primary and secondary education over the next four years. 
Budget 2012 also sets aside further funding to support priority learners. This includes: 
$83 million in school operating grants. 
$51 million to continue the roll-out of ultra-fast broadband in schools. 
$48 million to increase participation by vulnerable groups in early childhood education. 
$19 million to support Maori-medium early childhood education providers. 
The Government will provide extra parenting programmes and relationship education in secondary schools at a cost of $4 million over four years. 
We will also support a variety of youth mental health initiatives with an extra $17 million over four years. 
To increase investment in raising student achievement and to manage the costs of increased primary-school-age children over the next four years we are making small changes to current school funding ratios. 
Mr Speaker 
I have already mentioned some of the new initiatives in tertiary education. 
In addition Budget 2012 invests in providing more pathways into work and further training for young people leaving school. 
It provides an additional free 3000 tertiary-based Youth Guarantee places at the cost of $37.7 million over four years. 
The Government will also continue to better target student assistance to where it is most needed and ensure better value for taxpayers. 
From 1 January this year we implemented tighter income rules to ensure the student allowance is fair. 
Budget 2012 confirms a number of further student loan changes from 1 April 2013 including: 
Increasing student loan repayments from 10 cents in every dollar earned over the income threshold to 12 cents. 
Widening the definition of income for student loan repayment purposes. 
For student allowances continuing the freeze on parental income thresholds until 31 March 2016. 
Targeting allowances to first degrees only and removing exemptions for long programmes such as postgraduate training taking effect from 1 January 2013. 
These changes are consistent with the Government’s intention to see better value for New Zealanders ensure the longevity of the student loan scheme and improve alignment with Working for Families and other social policy initiatives. 
Mr Speaker 
It is concerning for our future that around one in eight New Zealanders aged 18 to 64 is on a benefit and around half of them have spent at least five of the past 10 years on a benefit. 
This Government has embarked on ambitious reforms focused on supporting New Zealanders out of welfare and into work. 
The Budget invests $287.5 million over four years in the first phase of this programme. 
This funding provides more education and training for young people. It will also focus on work availability and preparation for sole parents widows women alone partners within the benefit system and parents who have subsequent children while on a benefit. 
The second phase of welfare reform will be implemented in July 2013. This will involve changes to benefit categories. 
Both phases of the reforms are a shift towards a new investment approach to welfare. 
The investment approach provides greater transparency over the long-term cost of welfare and focuses government agencies on reducing this cost through employment support and training. 
Mr Speaker 
Budget 2012 continues the Government’s policy of staying strong on crime. 
The justice sector including the Ministry of Justice and the departments of Police and Corrections is developing new ways of working together and making better use of existing resources. This includes more flexible funding arrangements and shared use of staff and assets. 
This will allow the sector to focus on results – reducing total crime violent crime and youth crime and reducing reoffending. For example the Policing Excellence programme helped reduce total crime by 5.6 per cent between 2010 and 2011. 
As I’ve confirmed today the Department of Corrections aims to reduce reoffending by 25 per cent by 2017. 
To help achieve this it will invest $145 million of reprioritised money from prison closures and cost reductions out to 2019/20 in rehabilitation programmes. 
Modernising court services will ensure that people can access services faster and more conveniently. 
Mr Speaker 
Working with non-government providers the Government is committed to improving housing affordability and providing assistance to households in need. 
Budget 2012 provides funding of $104 million for this over three years. This will be used to trial greater innovation diversity and scale in the social housing sector. 
The Government’s housing policies will work alongside welfare reform to assist people towards independence. 
We are working with the housing sector to use our $15 billion investment in state houses and almost $2 billion of annual subsidies more effectively to house people in need. 
The Government will also work with councils to improve housing affordability for all New Zealanders. 
Mr Speaker the Government’s final priority is rebuilding Christchurch. 
The Government remains absolutely committed to supporting the rebuilding of Christchurch our second largest city. 
The total cost of the damage is estimated at more than $20 billion so it is without doubt the largest – and most complex – economic project in New Zealand’s history. 
I want to pay tribute to the work of my colleague the Honourable Gerry Brownlee and the many public servants community organisations and families who have worked so hard to help each other through this disaster. 
Considerable progress is being made. 
Work on about three quarters of the 1000 buildings required to be partially or fully demolished in the Christchurch CBD has been completed. Some 13000 repair jobs are under way across greater Christchurch. 
A significant number of infrastructure repair projects worth about $820 million have been completed are under way or in the design stage. 
And nearly 5000 of the 7000 property owners in the residential red zone have formally accepted the Government’s offer to purchase their properties. 
About half of these owners have already settled allowing them to move on and restart their lives. 
Mr Speaker 
The Government is providing considerable resources for the Canterbury rebuild. 
We set aside $5.5 billion in Budget 2011 for the Canterbury Earthquake Recovery Fund. 
We established the Canterbury Earthquake Recovery Authority. 
And we passed special legislation so the Government can step in where required to remove structural barriers to reconstruction. 
Looking ahead the Government is developing a blueprint for the central city to take forward the draft Central City Plan prepared by Christchurch City Council in consultation with the people of the region. 
That blueprint will focus on anchor projects and precincts and provide sufficient direction to encourage the investment needed for rebuilding. 
The Government has assisted with land supply for housing by using special earthquake recovery powers to amend land-use rules to allow rezoning of residential subdivisions. 
There is now a significant amount of residential land available in greater Christchurch - potentially 26000 sections over the next five years. 
About 6600 greenfields sections are expected to be released to the market within the next two years. 
The Government is determined that residents can rebuild and move into their new or repaired homes as soon as possible. 
Finalising the remaining residential land zoning decisions and the settlement of outstanding insurance claims is therefore a priority. 
Mr Speaker 
It is now almost four years since the collapse of Lehman Brothers which set off the Global Financial Crisis and global recession. 
Since then we have witnessed significant disruption to economies around the world and that is likely to continue for years to come. 
The Euro area and the United Kingdom are going back into recession this year. The United States has low and uncertain growth. 
By comparison New Zealand is going through a moderate adjustment. We are avoiding the substantial cuts to public services and living standards that we are seeing in many other developed countries. 
Our outlook is more positive than most. We are a food-producing economy on the doorstep of a rapidly growing middle class in the Asia-Pacific region. 
Providing we stick to the Government’s balanced and ongoing economic programme over the coming years I am confident we will grasp these opportunities. 
Mr Speaker 
Budget 2012 sets out the next steps in that programme. 
It’s about investing in our future. 
It’s about implementing the Government’s plan to build opportunities for New Zealanders from all walks of life. 
It’s about returning to surplus in 2014/15 when we can start reducing debt brought on by the recession and the earthquakes. 
We are building a more productive and competitive economy where New Zealanders have the jobs higher incomes and opportunities to get ahead in their own country. 
We are delivering better public services within tight financial constraints. And we are firmly focused on getting better results for New Zealanders and their families. 
We are helping to rebuild Christchurch and standing beside the people of Canterbury. 
New Zealanders have shown great resilience through challenging times. Budget 2012 supports their aspirations for a brighter future. 
Mr Speaker 
I commend this Budget to the House. 
DAVID SHEARER (Leader of the Opposition) 
: 
 If that does not get people flocking to the departure lounges all around New Zealand nothing will. That is if they are still awake after that man just delivered that Budget. That man has delivered a Budget that has the worst growth in 50 years has 50000 people going to Australia has delivered 50000 more unemployed and has 50000 more people on benefits costing us $1 billion. That is a zero growth Budget a zero hope Budget and a zero reason Budget for staying here in this country. I move  
That the words after “That” be omitted and the following substituted: “this House has no confidence in this National Government led by John Key because year after year it has failed to deliver the economic growth and the growth in jobs incomes and exports it promised which has forced record numbers of New Zealanders to look for better opportunities in Australia has failed to take the tough decisions needed to generate the economic growth to keep young New Zealanders at home and as a last resort is selling our most valuable assets against the will of New Zealanders.” 
The other day I popped into one of my local schools and the principal was telling me that many parents at that school were coming to school with their kids who were really too sick to be at school so that the kids could sit in the sick bay. The reason for that was that the parents themselves were too worried about taking a day off to look after their kids and they had to go off and work. I also popped in the other day to get my car serviced and was chatting to the mechanics there. They are skilled guys good guys. They have not had a pay increase in 4 years—4 years. GST has gone up inflation has gone up and their incomes effectively have gone backwards. All around the country there are people who are working hard working longer making the tough choices and bringing their kids up in the best way that they possibly can. They expect a better deal—they expect a better deal. They expect the Government to keep its side of the deal. 
What do they expect? Well they expect to be able to send their kids to school and not have them sit in bigger classes. Class sizes have gone up—they have gone up. If your kids are in year 1 you might have a class size of 15. But if they are in year 2 well those class sizes can go up to about 28. So if your children just happen to miss out on a very special important element of learning they will not be able to have the same opportunity to catch up as they did before. I do not understand why this Government has brought out this policy because Bill English when he was spokesperson for education said small class sizes would lead to “better relationships between families teachers and students which research shows is really important for achievement particularly disadvantaged kids.” But Hekia Parata—and she must be the teacher’s pet; maybe she has got some sort of a thing with Mr English—is saying “Oh Mr English I know! I can raise class sizes for you. That will save a bit of money.” That will save a bit of money! Well that does not give our kids the best start in life. I am talking about all parents across New Zealand and I am talking about my kids as well. I am a parent; they are going to be influenced by this change as well. 
This is where the rubber hits the road. This is where the rubber hits the road for New Zealanders. The high-flying economics of a Budget goes over the heads of most people. But I tell you what they do pick up on. They pick up on the fact that their kids are going to have less of an opportunity now in schools than they did before. 
That is not where the front-line cuts start and stop. And that is a front-line cut of our future—our future. That is a front-line cut of our future. But look at the other ones such as the police: $400 million is going to be slashed out of the police budget. It is going to come off the back room of course—the back room. But the problem with that is that the police have to go into the back room to do the job of the people who were once doing the backroom jobs. That is what is going to happen and it means that fewer police are going to be on the streets looking after you and me. As for the Ministry of Foreign Affairs and Trade what a debacle that has been. What an absolute and utter debacle that has been. Murray McCully who has insisted on cuts to the foreign affairs ministry has managed to cut the very future of our trade relations with the rest of the world. In South America for example the number of our diplomats has been halved. That is the place where we are trying to negotiate a new trade agreement. It is the same with India. All over the world our future prosperity is being cut on the front line. Another front-line cut is in biosecurity. This is the very protection that keeps things like the Queensland fruit fly out of New Zealand. Fifty-four staff have been cut $3 million has been slashed from that budget and now we have a fruit fly infestation in New Zealand that has the potential to wreck our agricultural economy. This Government knows the cost of everything and the value of absolutely nothing. 
We have heard the various projections from the Minister of Finance but do we really believe them? This is the fourth Budget we have listened to from this Minister of Finance. This Minister of Finance promised in 2009 to deliver real GDP growth of 1.5 percent over the last 3 years; he delivered 0.6 percent. In 2010 National projected real GDP growth of 3.1 percent a year and it delivered 1.3 percent. In 2011 National projected real GDP growth would rise to 4 percent per year and it delivered just 1.1 percent. So why today would we want to listen to Mr English telling us that somehow this projection is going to be better in the future? After three times—after four times—you get sick of listening to these projections that never actually work out. 
Today exports are down 17 percent—$800 million down. That is the record of this Government. But do not worry about that. Do not worry about that because it can still talk it up. In 2011 this is what Mr English said. He said the economy “has in prospect the strongest growth for a decade.” He said later on that New Zealand’s growth was accelerating. It was not; it was slowing right down. “Growth is expected to accelerate in the second half of 2011 and through 2012.” It is nowhere near it. “A recovery in activity is now expected from mid-2011 with economic growth rising … and peaking at 4.0% …”. It achieved as I say 1.1 percent. In Budget 2012 this year here he is again: “The Budget documents will show we are likely to experience reasonably robust levels of growth.” “Reasonably”—what does “reasonably” mean? “Reasonably robust”—how do you have “reasonably robust” growth? Now he is saying that there is going to be a “moderate adjustment”. We have gone from “reasonably robust” down to “moderate adjustment”. At least Mr English is coming a little closer to the mark. The real mark is utter failure. 
This Government in its term in office has delivered the worst growth in 50 years. Take a look at this graph. Here are the various administrations since 1957. Here is this Government’s growth record. Those people at the back are unlikely to see it. Yes it is just above the line—just above the line. That is disgraceful. It is the worst growth in 50 years. Fifty thousand people are going to Australia 50000 more people are unemployed and 50000 more people are on benefits. Rather than the Government confronting the big issues that this country needs to focus on on looking through this Budget you see can that what it is trying to do is nickel-and-dime New Zealanders. One of its big announcements is that the tax credit that it once gave to paper boys and paper girls is being cut. That is being cut. That is what we are shooting for. It has just cut that tax credit but it is only if you earn $45 or less. That is the tax credit that has been cut. But the good news is—well actually there is a little more bad news about that because it is going to be done retrospectively. I guess these people—these paper boys and paper girls—do not vote. I hope they remember who cut their tax credit. We are picking the pockets of our paper boys and paper girls around the countryside. But the really good news is babysitters will be exempt. So the Government does have a heart after all. Mr Australia—Mr Speaker— 
Hon Members 
: Oh! 
DAVID SHEARER 
: Wait for it. We could call—[ 
Interruption 
] Thank you Mr Speaker. I appreciate that. Perhaps Mr Key should be called “Mr Australia”. Fifty-three thousand people are going to Australia. That is a record. In New Zealand’s history we have never had as many going to Australia as we have now. We have never had a bigger number. But listen to this. Who said this: “We’re here today in Westpac Stadium. It holds nearly 35000 people. And believe it or not the equivalent of this entire stadium—and more—leaves every year to live permanently in Australia … I’m convinced we can give them a reason and a purpose to stay in New Zealand. And that’s why I want to be New Zealand’s next Prime Minister.” 
Hon Members 
: Who said that? 
DAVID SHEARER 
: “Mr Australia”. That is who said it. Well I can tell you that when it comes to 2014—and I let the Prime Minister in on a little secret—I have booked Eden Park for him because he will not be able to fit everybody into Westpac Stadium this time round. I had a special word to the groundsman and he is going to roll out some spare seats because even in 2 years’ time there is going to be more particularly after a Budget like that. This is a zero Budget and there is zero reason for anybody to stay here in New Zealand. I can tell you that one of the reasons the unemployment rate is so low is that we lose 53000 people a year. The Budget will bring our unemployment rate right down so congratulations to the Government on bringing that down. 
National used to be a party of aspiration. I have not heard that word in a long long time—aspiration. This was the party that was saying we have to be aspirational for New Zealand. It is actually shooting down to the floor now—shooting down to the floor—looking at Greece and saying “Thank God we’re not down there with Greece.” It is a little bit like my daughter coming home and saying: “Dad I didn’t get bottom of my class and I happened to beat the Greek kid in the corner as well.” That is not what I would expect from my kids and it is not what I would expect from a Government here in New Zealand either. A party of aspiration? No longer. This is a party that is shooting for the lowest possible bar. 
But it has got a 120-point plan. Anybody who ever worked for Merrill Lynch would call it a laundry list. It is the sort of list that you put on your fridge with a magnet and you go through the list: “Sell off State assets—tick. Sell off pokie machines—tick. I must remember to put economic growth on there; I just have not got round to that yet.” But here are some of the Government’s growth ideas: “We can effect things like labour laws and if you look at the jobs creation that we have been promoting: the Skycity convention centre more mining and exploration Australian companies coming back … they will create jobs.” That is it? That is pretty desperate. A 120-point plan and that is all it is going to come up with—the Skycity convention centre which is actually funded from the pockets of problem gamblers? That is it? That is the economic plan for our future? Australian companies coming here? That is great but they tend to be ones that are coming here for our low wages. So we have got some call centres and we have got tobacco-packing plants. We will take the jobs but what we are really shooting for is high-skilled high-value jobs not the sorts of jobs that this Government is prepared to allow Australian companies in for. 
The worst thing about the economic plan of this Government is the sell-off of its assets against the will of most New Zealanders. It says that mums and dads all over the country—“mums and dads”; is that not that a cutesy little saying—will be “at the front of the queue”. Which mums and dads? Which queue? Is that the queue of people waiting to get jobs at the local supermarket? No it is not—no it is not. Mums and dads will not be at the front of the queue because there is nothing in the legislation that will actually guarantee that mums and dads are going to be at the front of that queue. 
 Yet despite that zero Budget there is no shortage of excuses—lots and lots of excuses. So we have the global financial crisis. Of course that is being trucked out as the reason we are not doing so well.  
Hon Annette King 
: I thought it was over. 
DAVID SHEARER 
: That is a good question. The financial crisis seems to be trucking along nicely for this Government despite the fact that Australia has upped us 6:1 Canada and the US 2.5:1 and outside Europe we are second from the bottom—second from the bottom—in terms of our economic growth. Of course the other excuse is the tragedy that happened in Christchurch—and it is a tragedy. But you cannot have it both ways. You cannot blame our economic situation on Christchurch and at the same time say that our economic growth is dependent somehow on the recovery of Christchurch. This Government has rolled out the excuses. Yesterday we had the same old tired excuse of this Government having inherited it from the Labour Government. The Labour Government actually left it a surplus—9 years of surplus—which it quickly ran into deficit. 
This country needs smart innovative companies and I will congratulate the Government on its beginnings in terms of putting more money into science and innovation. That is welcome. But it cut it last year. Last year there was a $14 million cut. When you look at what Labour brought in in 2008 and at what the Government cut we are still at less than half of what Labour brought in at the end of its time even with what the Government is bringing in today. Half! 
So we are not going to grow this country in the way that we should with innovative smart high-value jobs. We are not going to get that sort of progress where people can have the right education that they deserve. Out there I know that parents are worried about their kids going to schools where they have to be in bigger classes. This Budget is more about what is missing than about what is in it—like monetary policy that makes sense. Superannuation is something that John Key puts his fingers in his ears and whistles Dixie about but I tell you what: in 3 years’ time the entire superannuation budget will be larger than the education budget in this country. Then we will start seeing the difference between what the young people today have in terms of an education or whether we have funding for our superannuation. This Budget is a zero Budget. It is a zero growth Budget. It is a zero hope Budget. And there is zero reason for people to stay on in this country. What they want to do is continue living here working in high-value jobs earning decent incomes and leading decent lives.  
Rt Hon JOHN KEY (Prime Minister) 
: 
 That speech from David Shearer went about as well as the Facebook float did. All I can say is that that was a zero response to a zero Budget—not one single idea. The kindest thing I can say about that speech is it is 20 minutes of my life I am never getting back. Do not worry one person liked it: David Cunliffe. He was licking his chops like Scar from  
The Lion King 
; trust me he is ready to pounce on Simba over there. Seeing as it is a zero Budget and there is not a lot of money to spread around let me give some free advice to David Shearer: when David Cunliffe has a shave be worried because he is coming after you. This is all very interesting because according to—[ 
Interruption 
] Well they were barking about that loudly out of the Skycity tent at the Rugby World Cup final. But do not worry they will keep; we will come back to them.  
According to David Shearer New Zealand is not doing very well on a relative basis. That is his proposition. Well the trouble is that to believe that you have to live on “Planet Labour”. You see this is the way it goes. On “Planet Labour” New Zealand was not in recession in 2008. We did not have an overpriced housing market that was getting out of control; we did not have an export sector that had been in recession for 5 years. On “Planet Labour” the previous Labour Government did not go to the 2008 election campaign and promise a deposit guarantee scheme that ended up costing taxpayers of New Zealand billions of dollars. On “Planet Labour” the global financial crisis never happened. You see according to them on “Planet Labour” Greece is this happy little place where ruins are the sorts of things you visit rather than an apt description of its banking system. On “Planet Labour” the Christchurch earthquakes never happened—never happened. On “Planet Labour” trillions of dollars were never wiped off the global stock exchange. And on “Planet Labour” 24 is the number of people that the Skycity box can host for the Rugby World Cup final not the unemployment rate in Spain. That is what it is like on “Planet Labour”. 
The trouble is that that will not wash with anyone because back in the real world New Zealanders actually know what is going on. They know there is a global economic crisis and in their own homes they are doing exactly what this Government is doing. They are saving. They are paying off their debt. They are being conservative with what they do. In the real world New Zealanders in their homes know that you have to earn your way in the world. The only response they have on “Planet Labour” is to spend money that comes from someone else. You do not earn it; you just borrow it and spend it. In the end when you spend more money than you earn it is called Greece and you go broke. 
David Shearer said there was not much to feel good about in terms of the New Zealand economy. Apparently it is all bad at the moment. So let us have a look. According to a range of economists over the next 3 years New Zealand will grow faster than the United States the United Kingdom the entire eurozone Canada and Japan. In fact the—[ 
Interruption 
] That is right. In fact—Mr Speaker you were educated in Australia. You were not Mr Australia although I am sure you would look good against the other contestants— 
Hon Member 
: He would have won. 
Rt Hon JOHN KEY 
: You would have won. In fact we will be growing at the same rate as the minerally very wealthy Australia over the next 3 years. But David Shearer says that that is not good enough—that is not good enough.  
Let us have a look at unemployment. Yes the unemployment rate in New Zealand is higher than we would like at 6.7 percent. Let us acknowledge that. But let us also acknowledge the following: more people have jobs in New Zealand than ever before in our history—more people have jobs. That is right. They are the facts. Over the last 2 years 60000 jobs have been created in this economy—60000—and 154000 will be created in the next 4 years. More people are employed as a percentage of the population in New Zealand than in Australia—more people are employed. And thanks to the Minister for Social Development there are a touch over 50000 people on the unemployment benefit in New Zealand at the moment which is 14000 fewer than 18 months ago. Apparently all that is not good enough! 
So let us have a look at the unemployment rate just for a moment. New Zealand’s unemployment rate is lower than that of just a few countries. In fact it is lower than that of Chile the Czech Republic Belgium Canada Finland—remarkably—Sweden Denmark all of Britain America—[ 
Interruption 
] It is true. It is also lower than that of Slovakia Italy France Poland Hungary Estonia the Slovak Republic Ireland Portugal Greece and Spain. And that is only including the OECD. They are all countries that have a higher unemployment rate than New Zealand.  
 The National-led Government has been very ably supported by our friends in ACT United Future and the Maori Party and we thank them for their support and contribution to this Budget. They are sensible people who are committed to growth jobs and economic stability. So anyway apparently—if I did pick anything up from David Shearer’s speech—on “Planet Labour” it is easy to create jobs apparently pretty easy. So let us do a little test shall we? OK. So let us go through all the pro-growth initiatives and let us just see for a moment which ones the inhabitants of “Planet Labour” are in favour of. OK so starting off let me give you a small tip: it is longer than  
Letterman 
’s top 10 but we will come back to that in a moment. So No. 1 do they support future intensification and development of our agricultural sector?  
Hon Members 
: No. 
Rt Hon JOHN KEY 
: No they do not. No they wanted to put it out of business last time. Do they want more mining or more oil and gas exploration?  
Hon Members 
: No. 
Rt Hon JOHN KEY 
: No OK. Do they even want Australian companies moving jobs to New Zealand?  
Hon Members 
: No. 
Rt Hon JOHN KEY 
: No. Do they want welfare reform and mutual obligation?  
Hon Members 
: No. 
Rt Hon JOHN KEY 
: No. Did they support the 90-day probation period? 
Hon Members 
: No. 
Rt Hon JOHN KEY 
: Did they support any of our labour-market reforms? 
Hon Members 
: No. 
Rt Hon JOHN KEY 
: Did they support the $1.5 billion we put into ultra-fast broadband? 
Hon Members 
: No. 
Rt Hon JOHN KEY 
: OK. Do they support foreign investment in New Zealand?  
Hon Members 
: No. 
Rt Hon JOHN KEY 
: No. Did they support the 3000 jobs that came off making the two  
Hobbit 
 movies?  
Hon Members 
: No. 
Rt Hon JOHN KEY 
: No they are  
Hobbit  
haters as I said last year. Do they support the national convention centre? 
Hon Members 
: No. 
Rt Hon JOHN KEY 
: I tell you what though they will go to the opening I reckon. Probably they will go to the opening. Well that is assuming David Shearer actually knows that there is an opening because apparently he did not know we were building a convention centre which we announced in June with Skycity and he went off to the world cup that was in October—apparently anyway. Do they support public sector reform?  
Hon Members 
: No. 
Rt Hon JOHN KEY 
: No. Do they want a less onerous emissions trading scheme?  
Hon Members 
: No. 
Rt Hon JOHN KEY 
: No. Do they support the irrigation of the South Island or parts of the North Island? 
Hon Members 
: No. 
Rt Hon JOHN KEY 
: Do they support roads of national significance?  
Hon Members 
: No. 
Rt Hon JOHN KEY 
: No. Do they support— 
Hon Members 
: No. 
Rt Hon JOHN KEY 
: No they do not. Exactly—they do not. Do they support reform of local government?  
Hon Members 
: No. 
Rt Hon JOHN KEY 
: No. And do they support the $5 billion to $7 billion coming out of the mixed-ownership model going into 21st century schools? 
Hon Members 
: No. 
Rt Hon JOHN KEY 
: That is right. They have agreed. They have passed the test. They do not agree with any pro-growth initiatives at all not one of them. That is right. And David Shearer did not have one pro-growth initiative in his speech but on “Planet Labour”—where the three Davids like each other and Grant Robertson is not really auditioning to be the next leader—money grows on trees and jobs are easy to create. I give up on them because that is what the rest of New Zealand has done. It ain’t like that in the real world. 
Let us go on to the Budget for a moment. It was a very sensible Budget for uncertain times a very sensible Budget. Let us have a look at what it delivers. In health over the next 4 years $1.5 billion will go into health—$1.5 billion. There will be more New Zealanders getting elective surgery—4000 extra elective surgical operations. More money is going into cancer care. There is more money to support the people of New Zealand following a Government whose first action was to fully pay for Herceptin for women in New Zealand who have breast cancer. Free half-hour doctors’ visits for under-sixes more money for maternity care more money for dementia care and more money to eradicate a Third World disease like rheumatic fever—that is what comes in Budget 2012. And all of that new expenditure comes because this Government knows how to manage the economy. It does not just borrow money from other people; it makes savings. 
Let us go to education—$512 million more over the next 4 years. That is a spend of just under $10 billion. Those members talk tough over there but this is the party that is actually putting more money into early childhood education for vulnerable Maori and Pacific kids. That is what is happening. This is the party that is lifting participation rates for early childhood education. This is the party that is putting more money into school operation grants. This is the party that is putting more money into professional development so that we can have better teaching outcomes for our kids. This is the party that is putting $1 billion into 21st century schools and this is the party that is putting money into the youth mental health programme. 
So let us talk for a moment about those class sizes. Let us have that conversation on nationwide TV right here and right now because this is what has happened. In the last decade the number of teachers in New Zealand has gone up by 12.5 percent so we approximately have about 50000 teachers in this country. In the last decade it went up by 12.5 percent. At exactly the same time the number of children went up by 2.5 percent and the outcomes we were receiving from those schools have broadly plateaued. So here is our chance. Here is our chance to actually focus on teaching outcomes and quality teaching for all of those 52000 teachers and kids. Just so that we understand what is happening if your child goes to school for 13 years—and we hope they do in every one of those years—for 4 of those years out of 13 the class sizes will rise; in 3 of them they will actually fall; and in 6 they will stay the same. David Shearer said before: “Oh by the way it was 1:15 and it might go to 1:28 next time.” Well actually the ratio was pretty similar before that and for 90 percent of New Zealand schools across the country the change will be either plus or minus one teacher. So let us answer this question: do we want a few more teachers in this country or do we want to pour money into lifting teacher quality and teacher outcomes? If you do not believe me in your workplace ask your mate this: do you want your child sitting in front of a teacher who is a really good teacher who is committed to the outcome of your kid with quality professional development when there are 16 kids in the class or do you want to have a situation where there are only 15 in the class but the teacher is no good and does not get quality professional development? Well I know which one I would rather have. 
Let us have a look at welfare. This is a party that is prepared to tackle the fact that 12 percent of New Zealand’s working-age population is on a benefit. It has to change; it should be a lower number. They deserve better choices and better outcomes for their families. We are investing $287 million into more childhood education more training and more education for those people. 
This is a party that believes in science and innovation and puts its money where its mouth is: $326 million into science and education $166 million into the advanced technological institutes $60 million into the national science challenge $100 million into the Performance-based Research Fund and more funding for engineers and scientists. Yes there will be $5 billion to $7 billion coming out of the mixed-ownership model and yes it will go to building 21st century schools and hospitals and advanced technological institutes. This is the truth: on the balance sheet of New Zealand the assets New Zealanders own will be going up over the next 5 years; they will not be going down. 
Let us put it like this: the world is a pretty tough place and it has been tough for the last 4 years. Yes there has been a global financial crisis. Yes there have been earthquakes in Christchurch. Yes there has been a recession that we have had to inherit. But in that time this Government has got on top of the mess we inherited from these people. We have got the export sector starting to grow. We are starting to properly fund ourselves. We will be back in surplus by 2014-15. We are protecting the entitlements of the vast bulk of New Zealanders and in years to come when they look back on this Government will they say: “Thank goodness they are there and there is not all this debt.”? Or will they say: “We wish they had those people who live on “Planet Labour” who just want to spend money from people who live on Planet Mars or some other place and one day will have to pay it back with interest.”? That is not leadership; that is passing the buck to a future generation of New Zealanders. They are wrong. This is a good Budget for the times. Bill English has done a great job. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 New Zealanders are looking to their Government for hope but this Budget I am afraid is a “zero hope Budget”. The National Government is slowly grinding middle and lower income earners into the ground while giving generous tax cuts to the wealthiest. National is slowly entrenching inequality and undermining a fair go in a land that should be a beacon of fairness opportunity and sustainability. If there is a burden to be shared then it should be shared fairly.  
Today I will be discussing a Green vision of hope for New Zealand but first I wish to acknowledge the land the waters and the natural environment of Aotearoa New Zealand—the foundation of our prosperity and wealth. I acknowledge the mana whenua of our country and Te Tiriti o Waitangi the founding document of our nation. I acknowledge the generations of New Zealanders who have come before us whose hard work laid the foundation for us today. I acknowledge those who are yet to come and I hope we keep their interests at the centre of our thoughts. Finally I acknowledge the work done by the Minister of Finance and the many public servants who worked on this Budget. We have our differences with the National Government but the Green Party believes in a society where we can still respect those with whom we strongly disagree.  
When this Government took office at the end of 2008 the New Zealand economy was in trouble. It had skyrocketing overseas-funded private sector debt—most of which fuelled the housing boom—and a current account deficit of dangerous proportions. Government debt was low but it was about to rise. When the new Minister of Finance took over he told us that it was important to rebalance the New Zealand economy away from a debt-fuelled consumption boom to an economy with more savings and a better external balance with the rest of the world. We were pleased to hear those words and we agreed with him.  
Now the Government needs to be held accountable; 3½ years later it is timely to ask whether the Government has achieved its rebalancing goal. Unfortunately for all of us the answer is clearly no. The current account deficit the key marker of whether we are living within our means is currently running at 4 percent of GDP and Treasury is projecting it to increase to nearly 7 percent by 2016 in the figures that were released this morning. This one simple fact is an unmistakable sign of an imbalanced economy that is becoming only more imbalanced. It is matched by worsening international debt projections. A worsening current account deficit as the Government has projected just today means more debt and more of our land and productive assets being sold into overseas ownership. Budget 2012 fails to deliver any fundamental changes to the structural problems facing the New Zealand economy. National has failed in 3½ years to rebalance our economy and under this Budget there is zero hope of it improving.  
Moving from how the Government has managed the economy to how it is managing its own Budget it is clear that it has made a number of poor-quality decisions that are now costing ordinary New Zealanders dearly. National has made much of the difficult fiscal position and has used it to justify services cuts and new user-charges for ordinary New Zealanders. National has blamed the global financial crisis and the earthquakes for the deficit. It is true that these events have had a significant impact on the Government books but a large part of the deficit is due to poor decisions of this Government around revenue and spending.  
Another feature of the revenue and spending decisions of Budget 2012 is that they appear to be driven by political imperatives rather than economic imperatives. For example the Government’s decision to defer automatic enrolment into KiwiSaver is bad for the economy but it will help get it into surplus by a whisker which is a political imperative.  
In the 2010 Budget National introduced income tax cuts targeted at high-income earners and said it would cover the reduced revenue caused by the tax cuts by increasing GST—increasing the cost of living for middle and lower income earners. National’s 2010 tax cuts gave the chief executive officer of Westpac a $5000-a-week bonus—an extra $5000 a week—which was funded primarily by the extra GST on middle and lower income earners when they were paying for their weekly groceries. Aside from the grotesque injustice of this the tax switch was not fiscally neutral as promised. After 18 months of operation the 2010 tax switch has cost about $2 billion. At a time of high debt to borrow $2 billion to fund tax cuts targeted at the most wealthy is both obscene and fiscally irresponsible.  
A Green-led Government would also be re-evaluating the quality of this Government’s spending. Looking at National’s spending decisions it is hard to go past the reckless decision to spend $12 billion on new motorways some of which did not even have a business case when National made the decision to build them. As the Minister of Finance admitted in the House yesterday these projects have never been assessed against Treasury’s own guidelines for major capital spending; they were chosen for political reasons. Building new motorways not only is a reckless waste of precious taxes but is impeding the rebalancing of the New Zealand economy because it locks us into oil dependence right when the IMF has predicted that the price of oil will double within the next decade. We already spend $8 billion importing oil per year. National is locking us into spending even more—money that simply flows straight out of our economy worsening our current account deficit.  
Another example of poor-quality spending is National’s decision to subsidise greenhouse emissions of intensive agriculture to the tune in the current Budget of about $1.1 billion over 3 years. National has put its hand in the pocket of ordinary mum and dad New Zealanders and is taking a couple of billion dollars to give to dairy corporations. By subsidising agricultural emissions we are locking our agricultural sector into old greenhouse-intensive farm technology instead of using the price mechanism to incentivise the move to low carbon pollution. This pollution subsidy is compounded by the $400 million that was set aside—which now appears to be delayed—for irrigation subsidies to intensify agriculture more heavily. Although dairy corporations are receiving billions in Government subsidies pensioners are being asked to pay more for their prescriptions.  
One of the most fiscally reckless parts of this Budget is National’s signature policy of asset sales. After driving the Government books deeper into deficit with irresponsible top-end tax cuts and poor-quality spending John Key now tells us that we have to sell our assets to cover the fiscal hole that he created. In fact asset sales make the Government deficit worse and the national accounts worse. As Treasury has set out in this Budget selling assets would make the Budget deficit worse by about $100 million per year as the lost profits far outweigh the cost of servicing Government debt. The research we commissioned from Business and Economic Research Ltd came to similar conclusions. Asset sales would also make the country’s books worse because the dividend streams flow over to the offshore buyers of the companies. As Business and Economic Research Ltd concluded the flow of profits to foreign buyers would result in a permanent deterioration in the external deficit and the level of external debt. Privatising assets risks New Zealand’s opportunity to secure a share of the global clean-energy market because it opens the door to those companies falling into foreign ownership. As we have seen with banking foreign ownership turns key sectors of our economy into large capital drains rather than smart Green export platforms. The Green Party has joined with Grey Power the Council of Trade Unions Greenpeace and other political parties to get over 300000 signatures to force a citizens initiated referendum on asset sales. We will get the signatures and we will establish clearly that the National Government has no mandate for selling the people’s assets. Most New Zealanders do not want their assets sold. It shows only how out of touch National is that it thinks mum and dad New Zealanders have loads of cash sitting around waiting to buy shares in the privatised assets. Most mum and dad New Zealanders are struggling to pay for the groceries for the kids after John Key put up the GST to pay for tax cuts for Paratai Drive.  
This Government has dug itself into a fiscal hole through poor-quality revenue and spending decisions and now it is looking for someone else to pay the bill—that is ordinary New Zealanders and most important their kids. Successive National Budgets have cumulatively resulted in a slow creep of wealth away from low and middle income New Zealanders to the well-off. First the tax cuts targeted at the rich were part-funded by GST increases for everybody else. Now National is going back to low and middle income New Zealanders to take some more. It is going to make them pay a bit more on their student loan. It is going to cut their student allowance. It is getting rid of beneficiary mothers’ training incentive allowance. It has cut the funding for early childhood education again. People are going to be forced to pay a bit more for prescription charges. And the Government is increasing class sizes. The list goes on.  
It is ordinary New Zealand families who are paying the price. Research released yesterday by the Green Party shows that an ordinary working family will be more than $11000 a year worse off due to the cumulative Budget changes made by National while high-income earners are better off by tens of thousands. Class sizes will not be increasing at King’s College when Hekia Parata slashes teacher numbers in public schools; it will be ordinary New Zealand families who suffer. An extra $2 for medicine might not matter to those on Paratai Drive but for the average person on “Main Street” it can make the difference between getting the medicine they need or going without. The Government is passing the costs of its fiscal choices on to those who can afford it the least. It is not doing it in one big hit but everyday New Zealanders are feeling the pinch and seeing whom this Government really works for.  
In contrast the Green Party is committed to reducing inequality in New Zealand and ending child poverty. We know that investment in the early years of a child’s life is absolutely crucial to reducing inequality yet since 2008 the cost to parents of early childhood education has risen 20 percent under National. We know that many of our kids are living in temporary unhealthy and totally unsatisfactory homes. The Government’s own report found a shortage of 70000 homes with up to 20000 households in extreme need yet National chose to wind down its investment in social housing leaving thousands of poor kids cold and waiting. They will be waiting a long time after this “zero hope Budget”.  
This Budget like the others that came before it is a threat to the environment. Our sparkling rivers and lakes are a key part of what makes New Zealand such a beautiful place to live in. Healthy rivers are essential for a healthy economy. Our “clean green” brand underpins our agricultural and tourism exports but our rivers and lakes are under threat mainly from dairy intensification. Over half of our monitored rivers are unsafe for swimming one-third of our lakes are unhealthy and two-thirds of our native freshwater fish are at risk or threatened with extinction. National plans to make it worse by subsidising more intensification with no clean-water rules. It is not a smart way to farm for the long-term prosperity of the country. National is effectively mining our soils instead of farming them and that is not all it is mining. The Government is doing everything it can to promote unsafe drilling and mining. From its pro - fossil fuel energy strategy to the bill on drilling in our exclusive economic zone and subsidies for oil corporations it is clear that the Government’s priority is “Drill baby drill.” Unsafe mining is not the way to build prosperity in New Zealand. These projects will benefit very few people. Deep-sea oil will bring hardly any jobs for locals and hardly any royalties or taxes and the profits will flow offshore as the mining companies are mostly foreign-owned. The risks are high and they are real; the rewards will not even belong to us.  
New Zealand’s future prosperity depends on investment in clean green technology and sustainable jobs. The Green Party has a smart Green economic plan for the New Zealand economy—a plan that takes our national debt seriously while moving our economy on to a more sustainable footing. It is great to see the announcement today that the home insulation programme that the Greens initiated will now reach over 230000 homes. We are in Parliament because we want to look after New Zealand and all its people and this scheme is an example of how we can work with parties across the political spectrum to achieve that. We congratulate National on doing that. It is a shame that it has chosen not to extend the scheme to another 200000 homes over the next 3 years. Such an investment would employ 4000 people directly and 10000 people if you include indirect and upstream employment effects.  
There is a synergy between smart Green economic objectives and the objectives of increasing the fiscal resilience of the Government in rebalancing the economy. When you look at our capital gains tax for example it enhances the fiscal resilience of the Government but it also helps the economy rebalance by shifting capital away from the unproductive property sector. It also has the advantage of putting productive resource into the clean-technology sector if we were to support that. A capital gains tax is also fair because it results in a decrease in inequality.  
This is just one policy for a richer greener New Zealand. There are many others: reprioritising transport spending putting a price on the commercial use of water boosting research and development higher standards for fresh water higher mining royalties and creating a reserves royalty fund with the proceeds a real price on carbon supporting a living wage lowering fees on KiwiSaver accounts by offering a public option and retaining our State-owned energy companies and refocusing them towards exporting their renewable energy expertise. I am not offering a single silver bullet but a number of practical costed alternatives that will address our dangerously high current account deficit and get our economy on to a more resilient sustainable and fairer footing.  
The National Government inherited a New Zealand economy seriously out of balance living beyond its means and then rocked by a series of earthquakes. It was a remarkable opportunity to remake our economy and put it on a more sustainable footing. It has failed to do that. When you inherit an economy that is broken you have a unique opportunity to fix it. It is a moment when powerful vested interests are open to acting differently for the greater good of the nation. Unfortunately John Key’s Government has done the opposite. Our economy is becoming more unbalanced the Government is more indebted and public assets are threatened with privatisation. The casino owners the miners the property speculators the oil companies those who pollute waterways or our atmosphere—they are all doing really well under John Key’s watch but National has turned its back on the belief that we are all in this together. But it does not have to be that way. I believe we can have a country with a smart Green economy that protects our natural capital enhances our quality of life and shares our prosperity fairly. Such a country is a place where hope returns.  
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 Today the country heard the “back to the future Budget” from the National Party as though it has been in some sort of time warp for the last 21 years. I can recall this Budget because I have heard it before. I heard it back in 1991 when one called Ruth Richardson came here with the “mother of all Budgets”. It helped create hardship and misery and tens of thousands of people lost their jobs State assets were sold and large chunks of the country were flogged off overseas. 
Remember those quotes that National signed up to back then? All are repeated today as though it has learnt nothing. Remember how National was going to solve all New Zealand’s economic woes and create a better future for all of us? This is what National said back then: “For too long we have struggled in a trap of economic stagnation and rising debt … No economic growth. Rising unemployment. And a huge overseas debt …”. Does that sound familiar? On New Zealand’s external debt this is what it said: “We now owe more to foreigners relative to the size of our economy than almost any other country of our kind.” Does that sound familiar? On National’s vision back then—again repeated today—this is what it said: “A society where the disadvantaged have access to high-quality social services.” That tells you that back then National had a sense of humour as well. It was repeated today. I will go on: “A society where workplaces are creative and dynamic; … A society that is prosperous confident and paying its way in the world.” Which society was it talking about? But I heard it all again today. And it went on: “to transform New Zealand from a declining debt-ridden country into a dynamic enterprising and prosperous nation.” And on asset sales—this is the best of all—“These sales are designed to free the assets for more effective and competitive private sector management … The whole economy will benefit.” Here again is the same old mantra 21 years later. Lastly it said on the fiscal position: “The improved fiscal position has resulted in major improvement in the outlook for public sector debt.” All repeated again today. 
And from that “mother of all Budgets” came the glimmer of an idea for Ruth’s less-than-gifted colleague a young Bill English. Not only did he listen back then to that speech in the House; sadly he actually believed it. 
Hon Maurice Williamson 
: This member voted for it.  
Rt Hon WINSTON PETERS 
: I can recall him and Maurice Williamson— 
Hon Maurice Williamson 
: This member voted for it. 
Rt Hon WINSTON PETERS 
: Well thank heavens for Maurice Williamson. I can recall Maurice Williamson and Bill English coming out of the caucus row we had and do you know what they said to me back then when I said “Your economic policy’s rubbish.”? They said: “Winston what are you going to say when it all works out?”. [ 
Interruption 
] Oh yes I remember. There is my evidence. “Winston what are you going to say when it all works out?”. To which I said: “And what are you going to say when it doesn’t?”. And 21 years on there he sits representing nothing standing for nothing and those members have learnt precisely nothing in that time. Today in a sincere tribute to Ruth Bill has decided to reproduce her 1991 Budget. What an act of political courage what vision what insight! It shows that they have learnt nothing. We hear the same old rhetoric the same old excuses the same old same old. 
To be fair though this is a great Budget if you are not a pensioner with a big power bill. Last year 30000 New Zealand households had their power cut off because they could not pay the power prices. To be fair it is a great Budget if you are not an exporter trying to sell goods overseas with a dollar that is out of control and without any Government support. It is a wonderful Budget if you do not have a student loan. It is a great Budget if you are not a mother or father with children to feed and educate. It is a great Budget for workers undecided about heading to Australia. It will certainly make up their minds. And it is a great Budget if you are not an elderly New Zealander with your grandchildren and children living overseas who knows that you are never likely to see them again apart from the odd holiday that neither you nor they can afford. It is a great Budget for those people. 
New Zealand is living through its biggest economic crisis as we know since the Great Depression and as with last year and the year before this Budget will simply make the situation worse. This crisis was created by financial manipulators in the United States. This financial crisis was the result of enormous greed—right out of power and out of control—in the States and we all know who they were and one of their former employees is supposed to be running New Zealand but he is running New Zealand into the ground. This Budget is the latest example of New Zealand stumbling like a punch-drunk boxer from one panacea to the next. The reason why National has brought in this Budget is it simply has no ideas about how to deal with the situation. Its only answer is to privatise sell cut back and hope. 
The very rich will not be hurt by this Budget today. 
Hon Maurice Williamson 
: Great Budget.  
Rt Hon WINSTON PETERS 
: The National Party knows how to look after its mates. As Maurice Williamson just said it is a great Budget but he did not add “for his mates”. Remember how National was going to make New Zealand the financial capital of the world back then? Remember Mr Williamson how it was going to make New Zealand the financial capital of the world? And then just 3 years ago John Key gave that idea a rerun. What happened? He could not even get the cycleway sorted out. It is still not complete. Every now and then you know a light bulb goes off in the brains of the neo-liberal Neanderthals in the National Cabinet. If the country’s children acted like this we would put them all on Ritalin. 
Did you notice today that the cling-ons on the starboard bow—all along here—never got up to clap? Not one rose to clap. Even though they were extolled and lauded for their help for the National Government not one of those members rose to salute John Key—or anybody else for that matter. Did you witness National’s backbench clapping today? You know hands clapping up here; knees knocking down there. Let me have the list please. First of all this member Paula Bennett because of this Budget is going to be gone. Remember her? The Kate Moss lookalike. She is definitely gone. Next election because of this Budget she is out of here. Then there is somebody you have never seen before—“Miss Invisible” Nicky Wagner from Christchurch. She is going to be gone—out of here. Then you have got “I work for the bosses.”—this woman. Remember that? You ask me which one; I do not know. But this one here Kate Wilkinson she is gone. Then you have got this one who had a brief political flutter—the one from Auckland Central. Most definitely because of this Budget she is going to be gone—out of here. 
Then you have got “goodbye limousines” himself Pita Sharples. He is going to be gone as we all know. Goodnight the good life—all gone out the door. Then you have got “Mr Somersault Whatever He Can”—Peter Dunne. He is gone. He is definitely out of here. I want you to see it because it is important. I hope it is on national TV so you get to know what is going to happen here shortly. Then you have got “My life is tough at the bottom” Te Ururoa Flavell—he is going to be gone. There is no way the Maori people are going to suck up to that Budget and let him get away with it. He is definitely going to be out of there. Then we have got the possum caught in the headlights John Banks—he is definitely gone. He is definitely on his way out. 
And this one is going to be very sad because this one is all about paradise lost—he will be gone. Sam Lotu-Iiga is going to be out of the way. I like you Sam but your party let you down and you should have paid more attention at Budget time.  
 Then you have got “I’ve had enough of this already.”—Tariana Turia. She is gone. She will not be able to take any more of this because this is embarrassing. It is embarrassing to be seen to be signing up to that sort of economic rubbish and hoping to win an election. 
But that is not all; you have got these ones here. These are on the list. This one here Melissa Lee is No. 34—hello Pyongyang. No more National Party now. Then you have got Kanwaljit Singh Bakshi. Is there another corner dairy available? He will be on his way. There is no way he can last—not with a Budget like that. Then you have got Jian Yang. I hope there is a Chinese restaurant in Dominion Road still not taken up yet. But he is going be gone as well. Nice men but they are going to be gone. Then you have got Alfred Ngaro. No more “kia orana”. The man from the Cook Islands he is gone because that is what happens when you are careless about a Budget. Then you have got—if you have seen YouTube lately—“Miss South Carolina” Katrina Shanks. Have you seen the YouTube interview? She is gone. And then “Uncle Tom”—Tau Henare—needs a new job. He is definitely going to be gone. And the man with the unfortunate name—nice guy—from the West Coast called Chris Auchinvole. A very unfortunate name that. I will not say any more than that. And the last one is the ventriloquist’s dummy—Paul Goldsmith. He definitely is going to be gone. This man is definitely going to be gone. 
You see the point is they have not been paying attention. National is spending tens of millions of dollars dragging us into free-trade agreements that make New Zealand look like some sort of international knock shop. And in the meantime the exporters the manufacturers the provincial engine rooms of the economy are totally forgotten. Look today in the paper this is what this man said. He is hardly a New Zealand First or Labour supporter I do not think. The Chief Executive of the New Zealand Manufacturers and Exporters Association John Walley said he did not have high hopes. “Will it do much for growth no because the Government has resiled from changes to monetary and fiscal policy … We will see much more of the same widening current account deficits more borrowing and more pressure on the currency [and] lower returns to exporters.” All there in a nutshell. My advice to him is wake up and smell the coffee and go and vote New Zealand First. He has a chance here. 
Every month we lose a bit more of our manufacturing base. Every month another plant closes and more workers lose their jobs. This happens because our currency is way overvalued. It suits the speculators and currency traders—the sorts of John Keys of this world. He made his money in that sort of exploitative greedy corrupt environment and we all know it because Merrill Lynch had to be bailed out by the American taxpayer—as did the financiers and the overseas banks. This Government drools over mining in our conservation estate and it gets excited about fracking for oil or drilling in a pristine ocean setting but it will do nothing to keep one factory open or help one exporter earn one more dollar or keep one more job. Tough times are ahead. Dairy prices are falling. We are staring down the barrel of really hard times. The real people in heartland New Zealand did not create these problems but this Government is going to make them pay for it. 
You know advanced economies like Singapore Sweden Germany and Norway have two things in common. First of all they have high savings—far greater than 10 percent of their GDP. Also they also have great manufacturing bases—far greater than 25 percent of GDP. And we in New Zealand were once like that when we were one of the greatest countries on Earth. We had savings well above 14 percent. Today they are negative. We had manufacturing as a percentage of GDP at 30 percent. Today it has now dropped to 13 percent. There sits Bill English and the National Party front bench and John Key and they have got no idea what they are going to do about it. I mean you do not have to be a rocket scientist but I heard not one word about how they are going to redress these two critical factors to make us like those great countries. Once we were greater than all those countries. 
 We will never get rich again without tax policies that encourage high savings research and development and investment in productive plant assets that create high-margin exports and jobs. We will never get rich when we flog off our timber in its most raw state without any added value. We will never get rich with a fishing industry part-owned by the Japanese or using foreign rust buckets with poorly cared for kamikaze crews. We will never get rich with the great Marlborough wine industry like all the others up to 50 percent foreign-owned and getting worse. We will never get rich with a political party with its cling-ons who has learnt nothing from this disastrous experience. We will never get rich if we ignore the need for new Kiwi IT industries to bloom and grow in a sympathetic tax environment that keeps them here that also starts up the industry yet gives them reasons to stay. 
To be fair though this Government does one thing really well. The millions it spends on public relations spin-doctors consultants media manipulators and navel-gazers creates an appearance of normality where chaos prevails. It is spending $120 million just on selling these assets—$120 million just on selling these assets. I am looking at the press up in the gallery. There is not one person there who could not do the job for free. Make an application because I tell you this is exploitation of the very worst sort. And do you know what the $120 million is going to? In some cases to Aussie banks to give us independent advice about how we should sell the assets. We are going to give Aussie banks all these millions to give us independent advice about how to sell the assets. 
This is a rotten Budget. It contains all the putrid elements of 20 years of failure. It did not work in 1991-92 and it will not work 20 years later in 2012. But there was one great benefit from the 1991-92 Budget and do you know what it was? Well we booted the legs out of first past the post and we got MMP. There was one great benefit. We saw these people sell the party down the line—as Maurice and them all did. They could not wait to sell the party out and down the tubes they went. They went from the biggest victory ever in 1990 to 3 years later a hung Parliament and MMP. So there will be some good coming out of this and do you know what it is going to be? An early election. For 21 years the Minister of Finance has come to Parliament at great expense to the long-suffering people of Dipton and the rest of the taxpayers and guess what he has learnt? He has learnt absolutely nothing in all those years since Ruth gave that stupid Budget. 
But of course who else is in charge of this? Well “Mr Spray and Walk Away” himself. Someone who was headhunted by of all people Michelle Boag who was found to have tried to corrupt a commission of inquiry in this country. Well that did not stop her from going on to be the National Party president. She was caught red-handed trying to corrupt the wine-box inquiry and she headhunted him. How appropriate. He is a man who trained in principles and ethics and sharp business practice at Merrill Lynch an outfit engaging in every shonky business practice that almost collapsed the Western society and economies back in 2007-08. That is his background. I know that there are people in this country who think: “Well he’s wealthy; he must be good.” But how did he get his wealth? If you are one who salutes Merrill Lynch then frankly you have no idea how damaging it has been to Western society and to ordinary people’s lives to people who in the main have lost in many cases everything they ever had because of this greed. That is the fact of the matter. He is a man whose time is well up and an early exit now awaits him and his incompetent party because frankly this country wants leadership not someone who does this in this photo—minces and simpers around the country. He will not miss a photo opportunity for anything. He goes to the opening of an envelope. But when it comes to the tough issues he is never there. He is a man who has actually put on All Blacks gear and modelled it but then he got confused as to who had just won the Rugby World Cup so he ended up shaking hands with both the president and the captain at the same time. 
I say that their time is up because they have proven in their fourth Budget that they have not got any ideas to be of benefit to their people and the sooner they go—and I believe that it will be long before 2014 when this term of 3 years is up—the better for everyone concerned. 
Hon Dr PITA SHARPLES (Co-Leader—Maori Party) 
: 
 Tena koe Mr Assistant Speaker. Tu atu au ki te korero ki te Tahua Putea nei mo te Pati Maori. Tuatahi kua oti ke ta matau mohio ki te take he tahua putea korekore ai i tenei wa. Na reira kare matau e ngau tuara ki te ru whenua ki Otautahi a ki te hekenga o te ohanga o te ao me te whakapaunga o nga putea e nga iwi o Aotearoa ki te hoko whare me era atu ahuatanga. Na reira na tena kei te mohio matau he tahua putea korekore tenei na reira kei te kimi matau i etahi hua mo to tatau iwi. 
Engari tuatahi hari koa matau i whawhai kia pupuri tonu kia pupuri tonu ki te kotahi rau ono tekau ma wha miriona taara mo te Whanau Ora na te mea ko te Whanau Ora he kaupapa matua ehara mo te Pati Maori anake engari mo Aotearoa. Na reira tena te mea nui ki ahau i tenei wa ahakoa he tahua putea korekore kua mau tonu ki tena putea.  
Te take i tae mai te Pati Maori ki te Paremata kia noho matau i te tepu ahakoa ko wai te kawana. Na te aha? Kia riro mai etahi hua mo to tatau iwi me te manaaki tiaki i te hunga i kiia nei ko te hunga rawakore. Na reira koina taku e ki atu ki a koe kei te noho tata matau me te Kawanatanga i tenei wa ki te whiwhi i enei taonga mo to tatau iwi.  
[ 
Thank you Mr Assistant Speaker. I rise to speak to this Budget on behalf of the Maori Party. Firstly we knew beforehand why this was going to be a zero Budget at this point in time. As a consequence we will not be doing any backbiting about the Christchurch earthquake the global recession or how the people of New Zealand spent money purchasing houses and other things. And because of that we knew that this would be a zero Budget and we looked for ways that would create benefits for our people.  
But first of all we were pleased that we fought to hang on to the $164 million for Whanau Ora because it is a major initiative not just for the Maori Party but for New Zealand. That is the most important thing for me at this moment even though this is a zero Budget. We have retained that funding.  
As to the reason why the Maori Party came to Parliament it was so that we could sit at the table regardless of who the Government was. Why? To enable our people to receive benefits and to enable those without to receive care and protection. So I say to you that we are working closely with the Government at this point in time to receive these precious essentials for our people. 
] 
So it is with the knowledge of the state of the country’s economy that we come to speak to this Budget and to tell you that we are pleased that we have been able to make some headway i.e. in getting some assets for Maori at this troubled time—for example our fight against rheumatic fever. It has taken a few years to double the amount of funding. Instead of $12 million we have got $24 million now going out because Maori are 23 times more likely to get rheumatic fever and Pacific Islanders are 50 times more likely than other ethnic groups. The impacts of this disease are really serious and long term. Approximately 145 people die each year from that disease. Worse still it is a disease of the Third World of developing countries so it should not even be here. 
Clare Curran 
: Improve the housing. 
Hon Dr PITA SHARPLES 
: Housing is a very important thing and that is why we have supported the social housing fund. 
Clare Curran 
: Not enough. 
Hon Dr PITA SHARPLES 
: True; it is not enough. It is a start at least. We have turned towards that and we are hoping that we will have a say or our people will have a say in the development of housing. But not only that there is the Warm Up New Zealand programme. We have had a significant effect on the Warm Up New Zealand programme. I know that we have now reached 150000 houses that have been warmed up and we have added 20000 of those houses to that programme the Maori Party has so we are pretty pleased that that has happened.  
Two nights ago I launched a cadetship programme whereby 50 trainees and they are actually in work have the desire to go on to pursue a career and a degree in the electricity supply industry. We had companies like Contact Energy InfraTrain Mighty River Power Northpower Transpower Vector and so on who took on Maori trainees with a view to guiding them into the industry. That was the end result of 150 cadetships that we have launched. And today I announced another 250 Maori cadetships for Maori to begin this training in various occupations. That will get 1000 into those positions over 4 years. Hopefully in a year’s time we can match that with another $10 million to get another 1000. These are the kinds of things that the Maori Party has been working on.  
As one who has spent a lot of time on rehabilitation programmes in prisons I am really pleased that we have been able to find $65 million to go towards rehabilitation programmes which include drug programmes job training education programmes and actually getting people into work. It is not going to be an easy programme because when you do things behind the wire there is a prison culture which makes it very difficult. But at least it is a big change from the path that the Government has taken in recent times of the hard line on imprisonment. So that has got to be a good thing that has happened there for us.  
I would like to talk about the tobacco measures. This work has been led by our party ever since we got into Parliament. We believe that we should have a drive to cease smoking in this country on the grounds of what smoking contributes to ill health and the related diseases that it accentuates. We are proud to say over each of the next 4 years there is going to be an increase in tobacco prices of 10 percent. So I am telling smokers now to just get ready to pay more and more and more—it is cumulative. We are also proud of the $20 million that the Government has put forward for a new innovation called Pathway to Smoke-Free in 2025. This is a good thing. It is interesting that an Otago University study showed that even smokers recognise that these moves to make tobacco sales tougher including plain packaging which the Maori Party supports have got to be a good move for New Zealand.  
There will be $132 million for the disabilities programme. Tariana Turia is the Minister for Disability Issues. We all know that this will help with their way of life. It is quite a lot of money but it is a need that has to be met.  
There will be $7.6 million for Enviroschools. We have championed the funding of Enviroschools Kura Taiao right from their beginning. As far as I can tell we are the only party that has done that until now when the National Government has come in behind us and with us as partners to float this programme for another 4 years and allow the programme to grow. What is good about Kura Taiao is that it teaches children respect for Papatuanuku and Rangi Sky Father and it also teaches them to grow food whakatupu kai and to learn about the environment and preservation. It is an excellent programme. It is a very good one. 
Catherine Delahunty 
: Yes it is. We started it. 
Hon Dr PITA SHARPLES 
: Well I have been going around the schools now for 5 years and this is my thing. So this is it and we launched this programme out at a kura just last week. So these are good programmes that we have launched despite it being a zero Budget and a hard time for us.  
In education there are many benefits that have come through this Budget. Although it is reorganised money nevertheless this is what is going out for Maori: $90 million to improve Maori-medium early childhood services; for kohanga reo and te puna reo another $8.5 million in resources to support that learning; $50 million in equity funding especially with te reo and tikanga Maori; and $33 million to lift Maori achievement in mainstream schools. I might just talk about that because we have instigated a programme called Reading Together and we trialled it in two areas. It was so good in bringing mothers and parents into the school to help their children with reading that now with this Government we have put it into every—and I mean every—decile 1 2 and 3 school in New Zealand. This has got to make a major change in the reading ability and therefore the comprehension and learning growth of our children in schools.  
There are other things but I see you waving at me Mr Speaker so thanks very much for the opportunity to talk on the Budget. Although again these are hard times and it is a zero Budget there are benefits in there for people recognising the situation that we are in. Kia ora. 
HONE HARAWIRA (Leader—Mana) 
: 
 Kia ora Mr Speaker. Kia ora tatou katoa e te Whare. We have heard what National’s Budget will be for the next 12 months. But before we look forward I suggest we take a good look at where we are right now. We have got 160000 unemployed and another 107000 who cannot get enough work. We have got 500000 people earning less than $16 an hour. We have got 200000 kids and their families living in poverty right here in Aotearoa. Because of all that we have also got 52000 Kiwis leaving for Australia every year because the wages are higher there are heaps more jobs and the first $18000 is tax-free. Maori are leaving in their droves because they are getting a chance to show what they can do away from a deeply racist society. I say to them all “Go with our blessings. Flourish and succeed and then come back one day and turn this place on its head”. So that is where we are right now.  
Where is it that this Government is taking us over the next 12 months? What is the nature of the Budget it proposes to help rebuild our nation? Well Bill English calls it a zero Budget and for once I suspect a lot of people agree with him because it is certainly a Budget that offers zero opportunity zero growth zero solutions and zero hope for the thousands of Kiwis who are asking why they bother to stay here. Yes there is a global financial crisis but that does not mean we have to follow the failed austerity policies from the other side of the world. The fact is that we have been conned into thinking that a zero Budget is what we need to get back into the global game to become a player again in the global economy.  
But just what is this zero Budget and what does it mean for ordinary New Zealanders? Well what it means is that if you want money for health you are going to get zero; if you want money for education you will get zero; if you want money for housing you will get zero; if you want money for decent wages you will get zero; and if you want money for old people you will get zero. Of course the Maori Party insists on being an equal coalition partner so it got zero as well. There are zero dollars for kohanga reo zero dollars for kura kaupapa zero dollars for wananga zero dollars for hauora Maori and now the Maori Party can boast that it has also got zero dollars for marae development Maori employment initiatives Maori economic development Matauranga Maori for implementing the United Nations Declaration on the Rights of Indigenous Peoples for cultural and intellectual property rights for the right to te reo Maori for Maori broadcasting and for Maori land resource development. All the Maori Party got was a squeak for its flagship programme Whanau Ora. As for Te Puni Kokiri the future is even worse because not only will it lose money but also it will lose many of its programmes and whole bunch of its staff as well.  
You see what this whole zero Budget beat-up is about is making poor people think that they have to give up something just like everyone else when in fact they are the only ones giving something up. The rich are giving up bugger all. In fact with the assistance of this National Government rich people will still be able to play the financial markets and pay no tax; finance companies can still fail knowing that National will bail them out; and company directors can steal hundreds of millions of dollars and keep their knighthoods while poor people steal from a dairy and go to jail. Wealthy private contractors already control much of our health sector. Now they are lining up to take over our education system run our prisons and take over accident compensation as well. Rich people here pay a lower tax rate than in France Australia Germany Ireland Japan the Netherlands the UK and even the USA. The Government is proposing to let big business walk away from wage negotiations while fining workers for daring to strike. Rich people will be the only ones who can afford to buy our State assets. And as we have seen just over the past few days filthy rich people with filthy little minds will still be able to give the unbackable ACT Party unbelievable amounts of money to do unspeakable things to Maori while the Race Relations Commissioner huffs and puffs and does nothing about it. Somehow this whole zero Budget thing seems to zero in on only the poor and the dispossessed.  
So what does Mana think we should be doing? Simple. Ignore the demands to cripple the poor to keep the rich afloat—that was the solution they tried in Europe and the people over there are finally waking up to the fact that it ain’t working. Then redistribute the wealth to ensure that all New Zealanders can become positive contributors to the nation’s economy. Yesterday Bill English called on Mana to support offshore oil drilling if we really support job creation. Mana’s response is that we will not be supporting offshore oil drilling because it is not about job creation; it is about wealth creation for overseas businesses that this Government licenses to rape our seas leave the mess and sail away with 94 percent of the profits. Mana’s response is to say we should tax the rich and free the poor reverse National’s $2 billion of tax cuts to wealthy New Zealanders lift the tax rate for the super-rich from 33 percent to 45 percent establish a proper capital gains tax under which all income regardless of where it comes from is taxed at the personal tax rate replace GST with a financial transaction tax which will put money straight into the hands of the poor reduce speculation on the Kiwi dollar increase our export earnings commit at least 20 percent of tobacco taxes to smoking cessation programmes make the first $27000 a person earns tax-free so that everyone gets a decent start in life and here is a biggie: spend whatever it takes to eliminate acute rheumatic fever.  
At the moment 98 percent of those who get this disease of the super-poor are Maori and Pacific Island children. If it were Pakeha kids suffering I guarantee it would be on the front pages of the nation’s papers today the first item on the news tonight a national scandal tomorrow and by next week legislation would be passed to eliminate the problem. A measly $3 million for throat swabs just because the kids are brown is a bloody disgrace and is an indictment on the racism that underpins the way in which health funds are spent in this country.  
We should help new mums get a start in life by offering them assistance with newborns instead of contraception and helping them with money for their kids to go to school. It is not hard; it is what they do in Australia. We should drop the lie about bigger classes being good for a child’s education. The research does not support it teachers do not buy it parents do not agree with it and I bet no Government Minister is going to let their kids get put into bigger classes. If you are not going to have it for your kids do not impose it on anyone else’s. We should make it easier for kids to go to university by increasing access to student allowances and extend student allowances to cover postgraduate study. We should lift the minimum wage from $13.50 an hour to $20 an hour. We should launch a programme to build 20000 State houses over the next 2 years. This would instantly reduce unemployment and create apprenticeships in building plumbing and electrical work and in painting and cabinetmaking. It would be a huge social and economic investment in the future of our nation. It would create jobs begin to lower our startling levels of homelessness and reduce our problems with the poor and it can all be paid for by people renting their houses.  
We should cancel prescription charge increases because they hurt poor people and old people. Here is an email I got from a constituent just yesterday. It reads like this: “Kia ora ra. My mum is 80 this year worked two jobs most of her working life to feed us when we were kids and still feeds her mokopuna from her garden. She turned her hot-water cylinder off 3 years ago when her partner died to keep the power bill down. My mokopuna went to stay with her one night and said ‘Aw I had to have a cold bucket-bath at Nan’s.’ My mum and her peers are really stressed about the $2 hike in prescriptions. Like most elderly she takes up to 10 pills a day.”  
These are common-sense proposals which a generation ago would have been mainstream policies to help build a decent New Zealand. We cannot go back to the past but we can bring forward the values of previous generations to turn our future round. Tax the rich and free the poor. It might sound like a radical suggestion in this House but it is one that is gathering strength on the streets of this country. Kia ora tatou katoa. 
Hon JOHN BANKS (Leader—ACT) 
: 
 Let us start with one indisputable fact and one ACT Party proposition. The indisputable fact is that 49.9 percent of every dollar spent in New Zealand was spent by the Government or an agency of the Government—50c in every dollar. Now for the proposition: ACT believes that taxpayers can spend their money better than any politician or collective group of politicians in this Parliament. We believe that hard-working New Zealanders can spend their money better than anyone in this Parliament. There are many good things in this Budget. Compared with the Budgets Labour gave us particularly for the last 4 years of the Helen Clark Government this Budget is a very sound and sensible document. Here is another indisputable fact: under Labour core Crown expenditure increased from $35 billion to $64 billion from 2000 to 2009. That is a $29 billion increase over 9 years. The total expenditure under this ACT Party - supported Government has risen only $8 billion in four Budgets. Beneath that headline figure are many good stories that this Government is doing with less. This Government clearly understands that the proposition from the other side of the House today that you can borrow more spend more and tax more to get us out of our small corner of the world in the global recession is mistaken. 
The welfare reforms for which the ACT Party has long campaigned are a welcome change. After 20 years of no inflation adjustment raising the price of prescriptions by $2 is just common sense. It frees up taxpayers’ money and improves incentives to use medicines well. The parliamentary Opposition would say let us go to the Crown account and borrow more money each week to fund everything that everyone thinks they need. We in the ACT Party are hopeful that this Budget heralds the beginning of a new era in education an era in which we accept that teachers can make a difference and we pay for them to make a difference. We believe that teachers can make a difference and we want to pay teachers to make a difference. 
The announcement that we will fine-tune the Public Finance Act is very good news—fine-tuning of the Public Finance Act. New Zealand has a growing tradition of better fiscal performance through better financial reporting and that goes back to the 1990 Government when I sat over there in the 1990 Government. This Budget makes major beneficial additions to those traditions. [ 
Interruption 
] I want the Opposition to listen to this because it is critical stuff. Treasury produces a triennial 40-year forecast of New Zealand’s finances. The first one in 2006 was called  
New Zealand’s Long-term Fiscal Position 
. In 2006 Treasury predicted that if we carried on business as usual—if we carried on with a Helen Clark Government and a Michael Cullen financial ministry—then by 2050 we would end up with Government debt at 106 percent of GDP. That is exactly where Greece was before the collapse. 
The next report in 2009 makes more interesting reading. It is called  
Challenges and Choices: New Zealand’s Long-term Fiscal Statement 
. That report said that under spending patterns present in 2008 and 2009 we would have public debt of at least 223 percent of GDP by 2050—223 percent. Under this Budget and this National Government supported by ACT and my other friends here in this coalition we will well and truly have all of that structural debt repaid by then. We will not have public debt at 223 percent of GDP by 2050. This is the beginning of saving our great-grandchildren yet to be born from having to foot the bill of the interest costs of the massive debt that the Labour Party and its friends over there would ramp up on their backs. 
The message is clear: if we return to the spending patterns of the previous decade of Labour Governments then as Jane Clifton put it “PIGS-R-US”. That is what Treasury would be calling future forecasts if the parliamentary Opposition was on this side of the House today. Can you imagine increases in taxes capital gains taxes everything-that-moves taxes more borrowing more spending and more handing out? We would not be the Government spending 50c in every dollar; it would go to 55c 60c 70c. The Russians have plenty of evidence that this has never worked. 
The ACT Party believes that we can do better. Labour introduced $15 billion of completely new spending in its first four Budgets—$15 billion. As we were going into a global recession it went out and spent more and more borrowed more and more and taxed more. The ACT Party has supported the coalition Government’s introduction of only $750 million in its first four Budgets. This Government has spent only an additional $750 million in its first four Budgets. We need to reduce expenditure because every dollar the Government spends is a dollar taken out of the pockets of a hard-working New Zealander. That is a dollar that could have gone towards a weekly grocery bill. It is a dollar that could go towards a kid’s school shoes. It is a dollar that could have been invested in starting up a business. It is a dollar that could have gone into savings for retirement. But these people want to take all those dollars and they want it distributed. That is called middle-class welfare and it does not work and it is unfair. 
Last year the Government’s financial statements recorded that 49.9 percent of the New Zealand economy was the Government. The ACT Party says that is wrong. The ACT Party says we have to reduce the size of Government reduce the size of the State get off the backs of the workers and stay out of the lives of business people who create wealth and jobs and make sure that we give them a fair go. These people opposite believe they know best and the bottom line is that they believe that they can spend your money much better than you can spend your money. So we say today in this Parliament in this first Budget debate after 12 years’ interregnum roll back the excesses of Working for Families. Roll back the election bribe given to our most able earners in the form of student loan interest write-offs. Roll back the pension age to 67 as so many of our trading partners have done and the Retirement Commissioner believes we should do—that would save $1.6 billion a year. Roll back free doctors’ visits for millionaires and the early childhood education funding which was almost entirely captured by families already using early childhood education. 
We aspire on this side of the House to a New Zealand where people who work save take risks raise their families are good citizens and invest are rewarded. That is what we aspire to. We aspire to hard work savings risk taking investment and hard work. Less Government spending means more private sector growth and more money left in New Zealanders’ pockets to reward their hard work. We say to the people opposite to get off the backs of the taxpayers and let them spend their money as they see fit because they have done the hard graft to earn it. It would be a New Zealand where the tax wedge separating effort from reward would be thinner. That tax wedge from reward and effort must be thinner and New Zealanders’ pay packets must get thicker. 
I finish as I began: hard-working New Zealanders can spend their money much better than the Labour Party has ever spent their money. And remember this: any Government big enough to give you everything you want is a Government big enough to take from you everything you have. The ACT Party supports this Budget and we will keep supporting Budgets and sensible Budgets for the benefits of hard-working New Zealanders. This is a good start in difficult circumstances. I am glad I am on this side of the House and those people opposite are not on this side of the House. As I have said before imagine those ferocious and very very greedy rabbits inside the lettuce patch of the Treasury finances on this day as we go forward. There would be more borrowing there would be more spending there would be more taxing there would be no hope. They would be on the backs of the taxpayers and New Zealanders today are glad that this Government is in charge of the finances under these difficult circumstances— 
The ASSISTANT SPEAKER (Lindsay Tisch) 
: I am sorry to interrupt the member but his time has expired. 
Hon PETER DUNNE (Leader—United Future) 
: 
 I want to begin this afternoon with two quotations that are relevant to the context of this year’s Budget. The first is from the OECD yesterday and it says in respect of New Zealand: “The government needs to adhere to its fiscal consolidation plans given the twin vulnerabilities of rapidly rising public debt and high external debt. Delaying monetary tightening is appropriate in light of the fiscal contraction and risks to global growth though as reconstruction accelerates capacity pressures will bear close watching. As the government shrinks reinvigorated structural policies are needed to channel resources into productive economic uses.” That was the OECD yesterday. The second quote is a little longer in its history—it is from President Kennedy in 1961—but it is still relevant in the context of this Budget. He said: “We sometimes chafe at the burden of our obligations the complexity of our decisions the agony of our choices. But there is no comfort or security for us in evasion no solution in abdication no relief in irresponsibility. … For it is the fate of this generation … to live with a struggle we did not start in a world we did not make.”  
In terms of New Zealand’s place in the world and the international conditions that have very much shaped the context of this Budget it was a struggle that we did not start and it was certainly a world that we did not make. But there is one other important point in the OECD report that goes to the heart of some of the issues in this year’s Budget. It noted that apart from falling commodity prices and the ongoing impact of the Christchurch earthquakes one of the impediments to growth in New Zealand at present has been household deleveraging.  
When you look at the Budget tables and you look at the experience over the last couple of years one can see that since the Budget 2010 tax initiatives there has been a significant increase in household saving rates—probably far greater than was ever envisaged at the time—and that is likely to continue to strengthen with the increase in the KiwiSaver contribution rate from April of next year. So on the one hand New Zealanders are relieving themselves of debt; on the other because of that they are not spending in consumption which is slowing our rate of growth. I must say that one of the things that did disappoint me in the Budget was the deferral of the auto-enrolment exercise for KiwiSaver. I understand the reasons why but I actually believe that it is time to move to make KiwiSaver a compulsory savings scheme and then some of the costs associated with an auto-enrolment scheme could be got over because you actually remove those incentives.  
I think when one looks at the Budget and the context of it and at the commentators who have spoken about it and compared New Zealand’s situation with the rest of the world the one thing you can say with absolute certainty is that the claim by the Leader of the Opposition that a zero Budget is a no-growth Budget would be one of the greatest fallacies of all time. What this Budget does very cleverly in my view is reprioritise just under $5 billion of spending into a much higher-quality level of spending by seeking better performance rather than just simply throwing more money at problems. In so doing it lays out a couple of challenges: one to the Government sector to continually up its game in terms of the quality of service and the quality of performance for the service it delivers and the second challenge—and the bigger challenge—is to the productive sector of this economy to start to take those lessons on board now and to make a positive contribution to New Zealand’s growth moving forward. So in other words contrary to Mr Shearer’s assertion that the only way you can get growth in the economy is for the Government to grow what this Budget is saying is that the Government is setting its own house in order so that the circumstances are there for the productive sector of the economy to take the lead and for it to grow for it to create the jobs for it to create the revenue for it to create the opportunities for the people of our country.  
Again you have got to see this in an international context. New Zealand does have an issue with debt; the OECD acknowledged that. But high debt to GDP ratios are far stronger in Europe in Britain even in Japan for instance and in many other countries. They have higher rates than New Zealand. We are better positioned. We might not like the position we are in. We might well say that we can do better but we are better positioned than many of those countries and many of those countries now face much harsher choices as a consequence of their position. For instance we are not talking here thankfully about cuts in Public Service salaries in the way that the Greeks or the Irish have been speaking or even about what the new socialist Messiah M. Hollande has spoken of in France. In fact cutting senior Public Service salaries was one of his first acts. That is not on New Zealand’s agenda because we do not need to do that. Nor do we need to follow the rest of Europe in this headlong rush to a crazy complicated unworkable financial transactions tax or even go down the path that some here advocate of a capital gains tax.  
What we are doing here through this Budget and through the careful and prudent reprioritisation that is occurring is setting the scene for future growth. I think that marks a considerable difference from many of the 28 previous Budgets I have seen delivered in this House. All of them have had an understandable—for different reasons at the time—preoccupation with the short term: the next electoral cycle or the next immediate crisis. This Budget is brave enough to stand aside from that and say that over a long track of 4 to 5 years—very long in our parliamentary terms—the Government is making some decisions about the future shape and structure of the New Zealand economy that will in turn inform the decisions that many of the key players within that economy will make. And it is starting to send some signals that I think are long overdue and welcome.  
For years successive Governments—particularly actually Governments of the left—in New Zealand have talked about the need for partnerships. They have called them strategic alliances or accords—all those sorts of things. And in fact what this Budget does is actually start that process because it recognises that the Government can no longer do everything. You see the challenge used to be that people talked about partnerships but partnerships were always led and dominated by the Government. What this Budget is really saying is the Government cannot have all the answers but it can know where and who the most productive or most effective groups in the economy to deliver certain needs are. So what you are starting to see in terms of the Government’s relationship with business in terms of what is going on in the health and education sectors is a much greater focus on working with the key groups to get the best outcome for the dollars that are invested.  
I will give you one very specific example. I am currently in the midst of a review of our mental health strategies. One thing that has become very obvious during that review is that the previous pattern has been that essentially mental health issues and mental health services are Government-delivered. We have a vibrant non-governmental organisation sector—highly skilled highly capable—that actually wants to get involved and there is no reason why it cannot get involved in doing its job best to deliver effective services for that particular group of people. That is but one example.  
What we are starting to see is that the challenges that the Governments of the future will face are not going to be about that traditional distribution issue; they are going to be about the increasing demands of technology and the expectations that the public have in respect of that. Even silencing equipment might not be a bad advance in that respect. In other words it is about the point of entry that people have into the availability of public sector services. That is why things like the Inland Revenue Department’s technology system for the future are so important and the investment in that is going to be so critical. It is why we talk about the need to protect this little ship in a very turbulent international economy. We are a country that because of our history relies on our ability to trade—on that big picture. But we are the one trading nation that is at the far end of the world; we are the developed country furthest away from any of our major trading partners. So we have got to be a global citizen. We cannot pretend that the world around us does not exist.  
Then finally because it is tied up with all of this we have got to commit to the rebuilding of Christchurch after not one but four major earthquakes in a 13-month period. I think people forget that and think that this was just some one-off event that had minimal impact. It has had a huge impact on that city and province and a significant impact on New Zealand and because of its unusual unique nature it continues to have an impact today. One simply cannot pretend that that $20 billion impact can be ignored or that it will go away.  
What this Budget is about is giving New Zealanders the opportunity and taking the chance to focus on our future and to build constructively for the needs we have as a country moving forward not just dealing with today’s issues but taking a very positive long-term focus. 
Hon GERRY BROWNLEE (Leader of the House) 
: 
 I move  
That the debate be now adjourned 
.  
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 64 
New Zealand National 59; Maori Party 3; ACT New Zealand 1; United Future 1. 
Noes 57 
New Zealand Labour 34; Green Party 14; New Zealand First 8; Mana 1. 
Motion agreed to. 
Urgency 
Hon GERRY BROWNLEE (Leader of the House) 
: 
 I move  
That urgency be accorded the introduction and passing of the Taxation (Budget Measures) Bill the Social Security (Long-term Residential Care—Budget Measures) Amendment Bill and any bills into which they may be divided and the introduction and first reading of the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill and its referral to a select committee. 
 These bills give life to the announcements in today’s Budget speech around livestock valuations reforming outdated tax credits ending the voluntary payments bonus for student loans altering the annual adjustment for aged-care asset thresholds and increasing the excise rate on tobacco products in 2013 2014 2015 and 2016. These bills are designed to make the tax student loans and aged-care asset-testing systems fairer and fiscally sustainable and to improve the health of New Zealanders. Urgency is desirable as these changes have already been announced and it is preferable to introduce these changes and provide certainty for taxpayers and citizens as soon as possible. The Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill will progress through its second and third readings and the Committee of the whole House stage under the usual House sitting procedures as the first excise increase is proposed for 1 January 2013. I think those statements set out the necessary particularity to support the motion. 
A party vote was called for on the question  
That urgency be accorded. 
Ayes 64 
New Zealand National 59; Maori Party 3; ACT New Zealand 1; United Future 1. 
Noes 57 
New Zealand Labour 34; Green Party 14; New Zealand First 8; Mana 1. 
Motion agreed to. 
Taxation (Budget Measures) Bill 
First Reading 
Hon PETER DUNNE (Minister of Revenue) 
on behalf of the Minister of Finance: I move  
That the Taxation (Budget Measures) Bill be now read a first time. 
 The year 2012 is going to hold challenges with economic uncertainty ahead and the Budget announced this afternoon is one therefore aimed at returning the New Zealand economy to surplus. A key to that is getting the Government’s finances in order getting debt under control and reducing our overreliance on foreign debt. To continue to provide effective public services and functions it is important that Government spending continues to be financed through efficient taxes that are as fair and efficient as possible. It is also important that the Government makes prudent choices about where and how it spends taxpayers’ funds. The measures contained in this bill therefore continue the Government’s focus on improving fairness in the tax system by ensuring that the tax burden is shared fairly and on removing unjustifiable spending. This bill will repeal the tax credits for income under $9880 and the tax credit for childcare and housekeeper expenditure. It will replace the tax credit for the active income of children with a limited tax exemption. It will legislate a change made in March this year to the livestock valuation election rules and will repeal the student loan voluntary repayment bonus.  
In Budget 2011 the Government announced its intention to review the rules for livestock valuation elections and the tax treatment of assets that are used for both business and private use. With regard to livestock valuations the previous rules were too loose and allowed some farmers switching between the two main livestock valuation methods to receive an unfair tax advantage over those farmers who applied the rules as they were intended. In March the Government moved to disallow elections to exit from the herd scheme except in narrow circumstances effective to elections made from 18 August 2011. This bill will put that change into law with the supporting detail to be included in legislation later this year.  
This bill will also abolish three outdated tax credits that are expensive and frankly unjustifiable. These are the credit for income under $9880 the tax credit for childcare and housekeeper expenditure and the tax credit for the active income of children. The tax credit for the active income of children is being replaced with a limited tax exemption. That credit will ensure that children will not need to file a tax return if they have small amounts of income that are not taxed at source—for example from mowing their neighbour’s lawn. Transitional rules have been developed for people who are claiming one of these tax credits in the current year through the PAYE system. The transitional rules will provide employers with time to update their payroll systems.  
I described the tax credits as outdated; let me illustrate what I mean. When the tax credit for income under $9880 was introduced it was aimed at people on a full-time salary of less than $10000 per annum. Times and salaries have moved on significantly from that time and the tax credit no longer applies to the group it was originally established to support. Similarly the child tax credit was a transitional measure introduced by Sir Robert Muldoon in 1978 in an era when most employers did not deduct tax at source. Now they do so that credit has similarly become outdated.  
I mention also in this context the housekeeper tax credit which dates from 1933 in a time of completely different social practices to those that prevail today. I also mentioned earlier the need to focus on prudent spending and the Budget this afternoon contained measures that are designed to improve the quality of the Government’s investment in the student loan scheme. This bill will repeal the voluntary repayment bonus. The Government continues to focus on encouraging student loan borrowers to pay their loans back. However the repayment bonus does not seem to be improving the value of the scheme and it has failed to achieve the policy objective of encouraging repayment from borrowers who were slow to repay in the first instance. Instead it appears that what has been happening has been that the people claiming the bonus are borrowers already repaying their loans anyway. More alarmingly there is evidence that the bonus was actually encouraging some students to borrow when they did not need to. In 2011 alone some 2611 borrowers repaid their loans in the same year that they borrowed them receiving $1.8 million in bonuses from approximately $13 million of annual bonus payments. This has resulted in a cost to the Government one which is clearly unnecessary. The $44.6 million being released by repealing the bonus will be able to be better used on other priorities.  
Like the tax credits I have mentioned the bonus scheme has also been overtaken by events and the Government has since introduced a number of initiatives to increase student loan repayments. Overall the measures that I have outlined so far will make the tax system fairer; they will also raise additional revenue. These measures and this bill are a measured and judicious response to the difficult challenges facing the country today. It is a prudent set of responses enabling us to move forward and I commend the bill to the House. 
Hon DAVID PARKER (Labour) 
: 
 This Budget has already been termed by some of the commentators as a drab Budget without any really pro-growth agenda. This Budget legislation the first piece of Budget legislation that the Government is passing under urgency is illustrative of how little of substance there is in this Budget. The Taxation (Budget Measures) Bill runs to nine pages. Although it is dropped on us under urgency without any forewarning in the 5 minutes that I have had to study it it is abundantly clear it is not a substantial piece of legislation that is going to affect the future growth prospects of our country because it does not deal with the difficult issues.  
There are three parts to this legislation. The first part deals with as the Minister has said removing some tax credits. I think we have already heard the phrase that this Budget picks the pockets of paper deliverers. It picks the pockets— 
Hon Trevor Mallard 
: Who said that? 
Hon DAVID PARKER 
: I think it was Trevor Mallard who said that first. It was a very good characterisation of this Budget—picking the pockets of paper girls and paper boys up and down the country and ignoring the big issues that this country faces.  
Now why do I criticise the fact that the Taxation (Budget Measures) Bill does not have more substantial measures in it? Well the reality is that the Government’s own forecasts show that under current settings it has had to downgrade its growth forecast. Not only have we already had the lowest growth under any Government in the last 50 years for the period that this Government has been in office so far but also for this coming year it has downgraded the growth forecast from 4 percent to 3 percent and for the following year it has downgraded it even more to 2.6 percent. We have got lower growth than was previously projected. We have got lower employment growth than was previously projected which has gone down from 170000 new jobs to 154000 new jobs over a 4-year period. So the growth in our economy is not as good as was previously predicted.  
In addition to that we have got rising net international indebtedness and the sorts of measures that are needed to address that are a lot more substantial than those that are in this taxation bill. The Government’s own Budget figures show that the current account balance gets worse every year from here. So under the current tax settings in this economy our current account deficit goes from negative 3.6 percent of GDP this year to negative 6.7 percent of GDP in 2016 and it is negative every year in between. The current account deficit gets worse every year. What does that mean? That means that every year New Zealand has to sell more assets and borrow more money from overseas to bridge the gap. Even after the Government limps back into surplus in the Government’s books it will not have dealt with the structural imbalances in our economy.  
What does that mean in terms of New Zealand’s net investment liabilities in the world? What we owe to the rest of the world grows and our net investment position goes backwards so that by 2016 New Zealand’s net international indebtedness our net international liabilities increase to 80 percent of GDP—80.1 percent. That totals an astounding $205 billion—$205 billion—of net international liabilities by then which is up from where it is currently this year at $134 billion. That is just about all private debt; it is not Government debt. It is because we do not earn enough from our exports to pay for the cost of our imports and our interest. And what does this Budget show? It shows that getting worse not better.  
In terms of the pretty miserable GDP growth that we have got in this Budget just about all of it comes from residential investment. The great majority of it comes from residential investment rather than from investment in our export economy and growth in exports. In fact our growth in exports is miserable. We heard the Prime Minister today reading a speech that had been prepared some days ago saying that exports were up on the very day that Statistics New Zealand said that exports are down by about $700 million compared with last year. No wonder this bill from the Government is so narrow in its focus.  
There are some measures in it that we agree with. In fact I was one of the ones with Stuart Nash who called for overhauling the rort that we had in the agricultural system whereby you could change from revenue account to capital account for your capital livestock. What farmers could do was—if dairy prices were going up and they had 1000 cows and those 1000 cows were going to increase in value by $200 each that would be a $200000 increase in their assets. If it looked like the cows were going up in value they could elect early enough to put it on capital account and they would pay no tax on that increase in value. But if it was going the other way and dairy prices were going down there could be a $200000 decrease in the value of their livestock. They could put it on revenue account claim a tax deduction and reduce their taxable income. That was a real rort. We called for its overhaul. We are glad to see that is being fixed up.  
We also agree with changes to abolish the 10 percent bonus on early student loan repayments. We opposed that when it was brought in because we knew it would not work. This is the Government reversing one of its own measures from one of its recent Budgets. The measure was so silly that 3 years or 2 years later the Government is having to repeal it because it did not work. The Government created a 10 percent bonus for early repayments and the only thing it found was that it was not getting any extra repayments. So it gave away the 10 percent voluntary repayment bonus for no increase in overall voluntary repayments. It is that sort of mismanagement of the economy that means that this Government is not growing the economy in the way it should. [ 
Interruption 
] That is right. If we had performance pay in these ministries and on the part of the Government then there would be a fair number of its Ministers who would be having a drop in salary. They would be earning less than backbenchers in Labour because they are not as good as we are on this side. They will not do that for themselves even though they are enforcing it upon the teaching profession.  
This Budget is a “no-growth in exports” Budget. The export profile going forward is flat. As a consequence the current account deficit goes up and the New Zealand deficit goes up. Debt goes up and we have to sell more assets as well as borrow more money to meet that gap.  
The fiddling around with the tax credits that were previously available to some low-income people is necessary partly because the Government’s income tax cuts in prior Budgets spent $2.5 billion per annum in respect of income tax cuts to the top 10 percent of income earners. I think that 40 percent—was it Mr Cunliffe—of the income tax cuts in that Budget went to the top 10 percent and as a consequence of the pressure that that has put on the Government’s finances it is now having to take away the small amount of tax break that a person doing a paper round used to get.  
This Taxation (Budget Measures) Bill will do nothing to stop the flow of people to Australia. Indeed the Budget documents themselves show that New Zealand’s changes in population and labour force assume that a large number of people will continue to head to Australia for the next 2 or 3 years. They assume that we are going to be losing a large number of people. As David Shearer said today it was somewhat ironic to have the Prime Minister before he was elected saying that if he was elected he was going to stop the equivalent of a Westpac Stadium crowd going to Australia every year. And now of course he would have to make that same speech and substitute Eden Park with some extra seats because that is the number of people who are leaving. More than 1000 a week are going to— 
Hon Trevor Mallard 
: The stands—the temporary stands. 
Hon DAVID PARKER 
: What is that? 
Hon Trevor Mallard 
: You’d have to bring back the temporary stands. 
Hon DAVID PARKER 
: Bring back the temporary stands—yeah that is right. The ones that they had up at the Rugby World Cup would have to be rolled out so that the stadium in Auckland could fit in enough people to represent the number of people who are going to Australia in a year—now more than 1000 people a week.  
This Budget has lower growth forecasts lower employment growth forecasts higher external debt rising to over $200 billion and a $70 billion increase in external liabilities—net international liabilities—over the next 5 years. This is a very very narrow bill which does not do anything to cure the fundamental problems in the New Zealand economy. 
Peseta SAM LOTU-IIGA (National—Maungakiekie) 
: 
 It is my honour and pleasure to stand and talk about this Taxation (Budget Measures) Bill. Today has been a historic day. It has been a historic day because we have seen clearly in this House the difference between true leadership in John Key the Prime Minister and a make-believe pretender in David Shearer. When the two leaders spoke today we saw the reactions from the respective benches. The reactions were of positivity clapping and handshakes from the National benches. We looked across at the Labour benches and we saw a lot of planning and backstabbing because we do not know who the leader is today. 
But it was about John Key’s leadership in managing the finances. This is a responsible Budget. It is a Budget that will put New Zealand back on the track to recovery. It is a Budget that will get us to surplus by 2014-15. It is also a Budget that smoothes out the rough edges of the recession protecting the vulnerable by investing funds in both health and education as well as in science spending. It is also about creating jobs because the only way we will get out of the economic mess that we inherited from Labour is by creating jobs. There have been in the last 2 years 60000 net new jobs and we estimate that in the next 4 years 154000 will be created. 
I would like to also acknowledge the work of the Hon Bill English. Bill English has shown a plan in his fourth Budget. In his first Budget he spoke about the road to recovery. He spoke about the mess that we inherited from Labour and what we would do about it. In his second Budget he talked about building recovery. He talked about the tax switch which was fairer to all New Zealanders put more money into New Zealanders back pockets and put a lot more trust and confidence into New Zealanders. Last year the Budget despite it being an election year was built on building our future and it was a responsible balanced Budget. But this year we talk about investing in our future. And what does investing in our future look like? Well it looks like increasing spending on science and innovation because we the National Government are about building a more productive and competitive economy. 
The Prime Minister also talked about the Future Investment Fund and how those proceeds will go towards modernising schools and building roads of national significance—which I know that the Hon Gerry Brownlee will be happy about. It will also be about hospital redevelopments. The investment of $4.42 billion in new spending is focused on front-line public services. So we know that health and education will get more spending. We know that law and order is part of National’s focus in terms of getting the crime statistics down. I also know intimately as chairman of the Social Services Committee the welfare reforms that we are putting in place. And we cannot forget about rebuilding Christchurch. Christchurch may have the best rugby team in New Zealand but it also requires assistance from the Government and from all New Zealanders. 
What does the increase in the science and innovation fund look like? Well it is $1.3 billion a year—[ 
Interruption 
] That is right Simon O’Connor the member for Tamaki; it is $1.3 billion every year right through to 2015-16. I acknowledge Minister Joyce for creating a superministry that will be the engine room and the catalyst for providing the framework and conditions for us to get out of our economic predicament. It is also about $166 million that will be put towards developing a new Advanced Technology Institute. But it is also about $100 million extra to increase the Performance-based Research Fund. I look at members across the aisle there. They do not believe in performance. They do not believe in performance in schools. They do not believe in performance in public services. They just do not care because their idea of growth in this country is to tax more to borrow more to spend more and to hope a lot more. 
The Future Investment Fund is about ultra-fast broadband. We heard from the Hon Bill English that it is about planning for spending on 21st century schools. I know that this is exciting in my electorate of Maungakiekie—from Point England to Onehunga. Kids are thirsting for knowledge they are thirsting for a breakthrough in technology and they certainly will welcome the investment that we are going to put into broadband and into our schools. 
We have also set some targets. We are the only Government of recent note to set targets: 85 percent of 18-year-olds to have National Certificate of Educational Achievement level 2 or equivalent by the year 2017. That is up from the current rate of 68 percent. Some would call it ambitious but we would call it aspirational because we are a Government that believes in aspiration hope and expectations. It will help Maori and Pacific audiences because it is about lifting expectations lifting achievement and lifting the quality of teaching in our schools. 
We will also be about reducing prisoner reoffending by 25 percent by the year 2017. That is right—25 percent. Recently I visited Paremoremo jail to check on the programmes. 
Hon Trevor Mallard 
: And they let the member go? 
Peseta SAM LOTU-IIGA 
: The member for Hutt South might actually get to know Paremoremo very well given the court case currently facing him. He could get to know the boys at Parry very very well—thank you very much Mr Mallard. 
I also want to acknowledge Minister Turia. She has put $6 million into a Pacific Innovation Fund. That will help with services across the various portfolios whether it be education health or justice. 
This Budget as I said at the beginning builds on the Budgets of 2009 2010 and 2011. This is a Government with a plan for growth. This is a Government with a plan for employment and opportunities. And this is a Government that is responsibly looking after our finances. I commend this bill to the House. Thank you. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 This is an interesting debate on the Taxation (Budget Measures) Bill. I think we have just had a leader—or someone who aspires to be the leader of a party—make a speech pretending that he was a leader speaking on the Appropriation Bill which was the previous legislation rather than on the bill that we are currently debating. The member has been here for 4 years now and I would have thought that at some stage he would know that the leaders speak on the Budget and then we deal with other legislation. He totally missed— 
Hon Member 
: It’s called the Budget measures bill. 
Hon TREVOR MALLARD 
: It might relate to Budget measures but there is enough— 
Peseta Sam Lotu-Iiga 
: I’ll take a call.  
Hon TREVOR MALLARD 
: Well if the member wants to have a general wide-ranging debate and keep it going for days well then I am quite willing to do it. But I am telling the “member for Vodafone” that he should at least read the bill that is being debated rather than having a very wide-ranging debate on things that do not even come close to it.  
Peseta Sam Lotu-Iiga 
: I raise a point of order Mr Speaker.  
Hon TREVOR MALLARD 
: I want to work backwards through the bill and start off with the student loan repeal— 
Mr DEPUTY SPEAKER 
: Order! A point of order has been raised.  
Peseta Sam Lotu-Iiga 
: I raise a point of order Mr Speaker. I am happy to take that member’s call if he is— 
Mr DEPUTY SPEAKER 
: No that is not a point of order. The member will sit down.  
Hon TREVOR MALLARD 
: Thank you very much Mr Deputy Speaker. I am not going to refer to a point of order but I did notice that the member could not even get to the bill himself. He could not even get to the bill himself. Maybe Vodafone did not give him the notes. Maybe the deputy chair of the Commerce Committee at the time who was dealing with regulatory matters should have thought twice about accepting a trip from Vodafone. Absolutely— 
Maggie Barry 
: So says the scalper! 
Hon TREVOR MALLARD 
: Sorry? He is a scumbag? I agree with the member. 
Maggie Barry 
: Scalper. 
Hon TREVOR MALLARD 
: He is a scumbag says Maggie Barry. I absolutely agree that that was a terrible thing to do but I am surprised that Maggie Barry said it to start with.  
Let us go back to the repeal of the 10 percent voluntary repayment bonus in respect of student loans. We told the Government this was nuts. We told the Government that this scheme was a sign of absolute educational failure. Anyone who was not in the last 18 months of their repayment period who did this was nuts. It would have been an indication that the tertiary education system—at least in the numeracy and accounting area—had failed because it was better to stick the money in the bank to collect the interest on the money and to pay it back once someone got close to the end of the loan rather than use the scheme. We told the Government that. Now I am told actually that there were a few students who used it and that is a bit sad. But it is an indication of the quality of our tertiary education system. I probably take some responsibility for that over time. That is sad. But what is also not made clear now is that that actually was doing the Government good. The Government is claiming that it is saving money by abolishing this scheme. But that is actually not true. That is actually not true because if people were paying the money back early then in fact the bonus was going to the Government and not to the student. But it was nuts. It should not have been introduced and Part 3 is something that we will support. 
I think it is fair to say that Part 1 of the bill is a bit of a mixture. I think that David Parker made some comments about things that both you Mr Deputy Speaker and Mr Speaker who comes down from up north know pretty well and that is that farmers are good at rorting the livestock system. They move their valuations around to take advantage of the tax loopholes that are available. I can see from the wry smile on the face of Mr Deputy Speaker he understands exactly what I mean. It is a loophole that David Parker called for to be closed at one stage in the past. Members opposite said it was ridiculous at the time and we should not do it. But I am glad to see that someone has learnt something over the years about closing loopholes. On this particular occasion it will not hurt for this rort to be closed although there are plenty of others that farmers take advantage of that are still open. 
The reason that the Labour Party is voting against this bill is the mean attack on the kids who deliver newspapers around New Zealand. It is a mean attack on the kids who earn under $45 a week and previously got a tax credit—like a way of saving. Either they get it directly or they could leave it with the Inland Revenue Department and at the end of the year get a tax credit. For some of them it was $50 or $60 a year. Sometimes they got $50 or $60 a year back. That was a good thing and a fair thing. They got all of their tax back if they earned under $45 a week and they were kids. I want to make it clear that that was earned income. It is not the farmers putting the assets in the kid’s name and the interest being paid to the kid as a way of minimising the parents’ tax. This is earned income. When it is earned income under $45 a week the kids used to get it back and that was fair. What has happened here? Bill English and John Key have put one hand each into the kids’ pockets and taken the money away. They have taken the money away.  
The worst thing is they have done it retrospectively. We have had these kids since 1 April this year accumulating $1 or $1.50 a week with the Inland Revenue Department as part of their tax credits and what is happening? John Key is taking the money off them. That money is theirs and is sitting in the Inland Revenue Department and this retrospective legislation is retrospectively picking the pockets of the kids who deliver papers. Is it the kids of the members opposite? No it is the kids of the poorest New Zealanders who need the money to survive. They thought they were saving up a bit of money with the Inland Revenue Department but the Government has reached in there and taken that money from them. It is cruel it is nasty and it is typical of Tories to pick on poor kids—to pick on poor kids who need the money. Some of them earn only 20 bucks a week. Their— 
Hon Chester Borrows 
: You’re a bloody bigot. You wouldn’t know what our kids did to earn pocket money. 
Hon TREVOR MALLARD 
: Sorry? 
Hon Chester Borrows 
: You wouldn’t know what our kids did to earn pocket money. You’re just a bloody bigot. 
Hon TREVOR MALLARD 
: Mr Deputy Speaker I think you were just called a bloody bigot.  
Mr DEPUTY SPEAKER 
: Order! I was checking something out in the Standing Orders and I did not hear what was said or the context it was said in but it certainly sounded unparliamentary. I just caution the House that we will desist from that.  
Andrew Williams 
: I raise a point of order Mr Speaker. I clearly heard the statement from this point in the House. I was offended by it and I would like that member to stand apologise and withdraw. I was offended by it.  
Hon TREVOR MALLARD 
: Speaking to the point of order just to make the Standing Orders clear to the member the only person who could object to it was the Deputy Speaker because he was the person who was described as a bloody bigot.  
Mr DEPUTY SPEAKER 
: Order! I have just said it is inappropriate. We will desist from it. As for the context in which it was said I have to apologise to the House; my attention was somewhere else. Let us move on.  
Hon TREVOR MALLARD 
: Thank you Mr Deputy Speaker. I want to make it clear that the people who have little Tory pocket money schemes where the parents slip their kids the cash will not be taxed. So the people who go out to work and the kids who go out to work are the ones who will pay tax and the ones whose parents can afford to give them their allowances will not be taxed.  
Andrew Little 
: It comes out of their trust fund.  
Hon TREVOR MALLARD 
: It comes out of their trust funds. They do not care where it comes from. We are voting against this legislation because of one rotten area in it.  
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 Speaking briefly to this bill the Taxation (Budget Measures) Bill because I do not think it is worth a very long speech the Greens will also be opposing the bill on the basis of the elements in it that are punishing hard-working children which seems a very strange thing for the National Party to be doing by introducing a scheme that makes it harder for children to go and earn a bit of pocket money. I would have thought that the National Party was of the view that we want to get people into the work ethic early on. So we want to encourage them but then the Government is introducing a special piece of legislation to punish newspaper boys. It is having a special piece of legislation coming into the House and there will be millions of dollars spent on it—because you have got all these people sitting around and they are all going to discuss it—so that we can punish kids who are earning a little bit of pocket money. That seems a very strange thing for the National Party to bring to this House as part of its great tax reforms.  
Of course what is really needed in this bill the missing pieces of this bill are the structural transformations in the economy driven by the tax changes. Where is the thing in this bill about introducing a capital gains tax? Why is that not within this bill? If we were talking about making the structural changes in the New Zealand economy so that we can actually move capital into the productive sector then we would have a bill in front of us and part of the bill would be that it was introducing a capital gains tax. When you look at the projections that are in the Budget that was just put out they are for the current account deficit to get worse. Let us be clear: the Budget papers put out today which form the background to the bill in front of us were for the current account deficit to get worse over time. The background to the bill that we have in front of us is the Government’s Budget analysis and it says that as a result of what this Government is doing the imbalances in our economy will get worse. If it was serious about dealing about the real imbalances in our economy then surely it would deal with that and that would be something that would be within this bill.  
I mean to look at it in a larger picture when this Government came in during 2008 the real economy was in trouble. There was a very large current account deficit and large private sector debt but the Government books were in excellent shape. During this period of economic crisis the Government has been able to use the fact that there has been a lot of leeway to borrow money on the Government account so it has borrowed a lot of money on the Government books to buffer the situation we have been through. It had the advantage of that very low Government debt. However when it is kicked out of office in 2014 we are going to have a situation where not only will the real economy still be in deep trouble—because its projections are that it will still be in deep trouble with a large current account deficit and the net international investment position getting worse—and in a bad position like the one National inherited but also there will be no opportunity to buffer it through Government borrowing because National is borrowing $75 billion.  
The big picture that sits behind this Budget is that National is ruining one of the good things it inherited from the Labour Government that came before it which was that the Government’s debt was very very low. That has given it the opportunity to buffer the situation that we are in. When National loses office in 2014 not only will the real economy still be in deep trouble because of the huge current account deficit the huge imbalances in our economy which Bill English quite rightly identified when he first became finance Minister but has done nothing to fix according to his own projections in his own Budget. He has done nothing to fix it but then by 2014 the big buffer that the Government had available to it which was the ability to borrow money on the Government account will be gone. Not only will we be left with very large levels of Government debt but also we will have an underperforming economy with huge imbalances. That will be the legacy based on the projections in the Budget that was presented today of this Government.  
We have a bill in front of us to make some very small changes in terms of “broadening the tax base” as I believe Bill English described these things—putting a tax on newspaper deliverers is broadening the tax base these days—when the real thing that we should have been doing to broaden the tax base and to actually make structural reform within the New Zealand economy is not happening. That is the reality of what this Government has done. That is a terrible travesty; that is a missed opportunity. It had the opportunity to actually begin the rebalancing of the New Zealand economy and it has failed to do it.  
One of the things of course that the Government talks about a lot is Kiwi mums and dads. Well I think in the context of this bill we should also talk about Kiwi mums dads and kids because you know the Government is putting a tax on children. The Government constantly tells us that Kiwi mums and dads have all of this special cash out there which they are going to be using to buy shares in the State-owned assets when they are privatised—and children perhaps as well; I do not know—but the reality for actual real New Zealand mums and dads is that they are struggling to pay the bills. The reality because this Government is so wildly out of touch with the real world is that real Kiwi mums and dads are struggling to pay the bills so they do not have lots of cash out there that they can use to buy shares in these State-owned enterprises which they currently own as taxpayers. They are actually struggling to pay the bills because GST was put up by the Government in order to pay for tax cuts for upper income earners. The reality for real mums and dads is that they have to pay more for their food because the Government increased GST. Why did it increase GST? In order to pay for tax cuts for the wealthy—for upper income earners. That is a ridiculous fiscal strategy and it is an offensive fiscal strategy.  
The Green Party will not be voting for the bill to tax hard-working kids. We think it is a ridiculous proposal. What we would like to see the Government bring to this House are some actual proposals that will rebalance the economy and make some real reforms rather than this kind of legislation.  
KANWALJIT SINGH BAKSHI (National) 
: 
 It is my pleasure to take a brief call on the first reading of the Taxation (Budget Measures) Bill. National is focused on building a more competitive and productive economy. This can be achieved only by lifting our economic performance creating more jobs boosting incomes of all New Zealanders and improving living standards.  
This bill deals with a very important aspect by removing three tax credits that no longer fit the purpose for which they were set up. First is the income under $9980 tax credit second is the childcare and housekeeping tax credit and third is the tax credit for the active income of children the latter of which will be replaced by a limited exemption. The changes will save $117 million over the next 4 years. These changes will help modernise the tax system and ensure tax deduction and tax credits are being targeted to the areas they are intended and needed for. I commend this bill to the House.  
ANDREW WILLIAMS (NZ First) 
: 
 I rise on behalf of New Zealand First to oppose the Taxation (Budget Measures) Bill. It reminded me today when I heard about the nickel-and-diming of our paperboys of a song that was sung back when I was on the stage. I was the Artful Dodger and Fagin sang that famous song: “You’ve got to pick a pocket or two You’ve got to pick a pocket or two boys You’ve got to pick a pocket or two.” I could recall being on the stage back then and as a young person who delivered newspapers back then who made money delivering newspapers and delivering the milk on a cold morning in Waipukurau I could remember those words of Fagin’s. We are reminded of those words today by this incredibly incredibly austere Budget which ends up basically going after the young children of New Zealand because they will not even get a tax credit for the small wages that they make. The babysitter who makes a few extra dollars will not get a tax credit for that. 
This is appalling. This means that basically this Government has run out of ideas so much so that it has to start going after the young children of this country who earn a pittance. Why did it not go after the likes of the people who sold TradeMe for $700 million and did not pay a dollar in tax? You can sell TradeMe for $700 million but the Government does not go after you; it goes after the children of New Zealand. 
Why does it look forward 3 years and suggest that it can make only a $197 million surplus in 2014-15 in 3 years? If that was a poll that would be less than the margin of error. If the Government can come up with only a $197 million surplus in 2014-15 in its Budget then basically it is working within the margin of error. We heard all the promises in 2009-10 we heard the promises in 2010-11 and they were repeated in the House today. All those promises of the two previous Budgets under the Minister of Finance Bill English have come to nothing. Most of the promises have been just absolutely not worth the huge piles of paper that they are written on. They are not worth the paper they are written on because the promises of those last two Budgets have come to nothing. The promises of this Budget will be the same. 
We heard today from the Rt Hon Winston Peters who was in the House with a number of the members here when the “mother of all Budgets” was delivered by Ruth Richardson 20 years ago. The Rt Hon Winston Peters said that this Budget is a repeat all over again of failed measures by the National Government failed policies going back 20 years. We could call this the “mini-me Budget”. This is the “mini-me Budget”. Bill English was a mini-me back then under Ruth Richardson in those days. Now mini-me has grown up to be the big mini-me who is delivering the same Budget 20 years later which basically is another failed Budget. 
The Minister of Revenue is trying to net sprats instead of going after the sharks. This is a nickel-and-dime Budget. This is a pathetic Budget that really does bring New Zealand down to the lowest common denominator maybe putting us just slightly above Greece in terms of our financial capabilities. Instead of this Government going after the big-picture stuff it is going after the little sprats. I am not surprised to see today the headlines from the papers already after this Budget. The headline in the online  
New Zealand Herald  
this afternoon was that this Budget is “A most forgettable (and dull) Budget”—a most forgettable and dull Budget. Imagine the biggest newspaper in this country and that is how it describes this Budget. Further the New Zealand Manufacturers and Exporters Association this afternoon has put out a statement saying that this Budget still needs step change to turn round the economy and that the “fundamental problems such as a lack of export growth have once again gone ignored.” That is from our own New Zealand Manufacturers and Exporters Association. It says the fundamentals are being ignored and once again there will be a lack of export growth.  
Hon Gerry Brownlee 
: Who said that? 
ANDREW WILLIAMS 
: That is the chief executive of the New Zealand Manufacturers and Exporters Association. 
Hon Gerry Brownlee 
: What’s his name? 
ANDREW WILLIAMS 
: You should know his name. You should know his name.  
Hon Gerry Brownlee 
: What is his name? 
ANDREW WILLIAMS 
: I have got his name written down here but I will not get into it. I will arrange an appointment for you to go and see him. 
It gets worse. The overseas merchandise trade statistics were released today and I wonder whether the Minister from Christchurch knows what the figures were that were released today. Does the Minister know? 
Hon Gerry Brownlee 
: They’re all good out of Christchurch.  
ANDREW WILLIAMS 
: They were not good. Today the overseas merchandise trade statistics show that exports are down 17 percent on April last year. They are down 17 percent on April last year. That is appalling. This country is dependent on trading our way out of the recession—which keeps getting referred to by the Government—and if we do not export more this country will continue to slide. To have a 17 percent drop compared with 12 months ago means this Government is not performing. But it is not surprising because the future growth that the Government sees is in the likes of a conference centre in Auckland—all looking inwards; not looking at the harbour and not looking at the beauty of Mount Eden or the beauty of the Waitemata but looking inwards at its pokie machines looking inwards at its 500 pokie machines. That is the Government’s vision for New Zealand—a conference centre. People fly from all over the world to come to beautiful New Zealand to see what is being provided by our Minister of Tourism. Who is he again? Who is our Minister of Tourism? Does anyone know who our Minister of Tourism is?  
Le’aufa’amulia Asenati Lole-Taylor 
: “Spray and Walk Away”. 
ANDREW WILLIAMS 
: Oh “Mr Spray and Walk Away”. I had forgotten. That is right. “Mr Spray and Walk Away” is our Minister of Tourism. People come all the way here and what do they get? Our economic development package for this country is 500 more pokie machines—500 more. Is it not ironic that those 500 pokie machines are going to be in the very same building that the National Party had its election night party in the very same building that the National Party had its national conference in and the very same building that it launched its 2011 election campaign and its 2008 election campaign in? They were launched in the very same building where there are going to be 500 more pokie machines. It is interesting is it not that National’s economic development seems to go hand in hand with where it has its conferences. It seems to go very much hand in hand with where it has its conferences. You do just wonder where the strategy is. 
So when we see figures today and we are told today that the future hopes are out of Christchurch and it is all going to start we ask when it is starting. We were down there last month and it all seems to still be coming down. There is not a lot going up—not a lot going up. There seems to be an awful lot of tradesmen and an awful lot of builders heading off to Australia and other places where they can get work. There is not a lot happening down there—not a lot happening down there. 
New Zealand First certainly does not support this Budget. We think this is again just like the “mother of all Budgets” in 1991. This is another absolutely hopeless Budget for the New Zealand economy. The New Zealand economy is not going to gain from this. This is not addressing issues such as where the New Zealand dollar is what we are going to do about the New Zealand dollar being overinflated in terms of its value how we are going to stimulate exports how we are going to help grow the export sector and how we are going to create jobs. This Budget is all about nickel-and-diming. This is all about taking money off the young people of New Zealand. This is about attacking middle-class and poor New Zealand families and keeping the money in the hands of the rich and the wealthy—keeping the money in the hands of the mates of the National Party basically. This Budget is about protecting National’s mates and keeping its mates in good pasture particularly those who go to the likes of gambling halls who can use the pokie machines and who have disposable income to go and get involved in all that sort of thing. 
What we need to do is have a rethink. We need to have a rethink. At the next election I am sure this country will elect a Government that will start to stimulate the economy stimulate exports get alongside the likes of the New Zealand Manufacturers and Exporters Association and get this economy moving not one that attacks the children of New Zealand to nickel-and-dime the Budget. 
MARK MITCHELL (National—Rodney) 
: 
 It is with great pleasure that I stand in support of the Taxation (Budget Measures) Bill. I would just like to say that as a 12-year-old I actually did have a paper run.  
Hon Simon Bridges 
: Don’t tell me you were paid under the table. 
MARK MITCHELL 
: Well I have to say that I cannot ever remember submitting a tax return as a 12-year-old paper boy. It never happened and I cannot remember any of my mates rushing home to fill out their tax returns and get them in either.  
This is an old piece of legislation. It is about time we cleaned it up and we are cleaning it up. I watched something today in the House as a new member of Parliament that I really could not believe. I could not believe the fact that when the co-leader of the Green Party Russel Norman got up and made a speech I actually agreed with something he said. 
Hon Members 
: No! 
MARK MITCHELL 
: Yes I did—I did. When he came out—[ 
Interruption 
] I know I know. But when he came out he made a bold statement by saying that National inherited a mess in 2008—National inherited a mess. I looked down at the Labour benches and there was just stony-faced silence. But it was all too good to be true. Mr Norman just came back into the House and I think the leader of the Labour Party Mr Shearer must have called him and said: “Russel we’re putting strain on the bromance here. You’re going to have get back in there and correct this.” He came back into the House and I listened to him for 5 minutes trying to retract and trying to step away from what he said in his earlier speech. 
Catherine Delahunty 
: You don’t know Russel very well. 
MARK MITCHELL 
: I know him well enough to see what I saw. Anyway I am very happy to stand in support of this bill. It is time that we updated a lot of this old legislation and this is a very good step in the right direction. Thank you. 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 This bill the Taxation (Budget Measures) Bill carries some real fish-hooks. It is a terrible shame and it is a waste of opportunity as this whole Budget that we have witnessed today also is. We are spending a couple of million dollars’ worth of parliamentary time tinkering—tinkering—and it is a shocking waste of taxpayers’ money when we are picking the pockets of paper boys and girls around the country because there are no other bright ideas it seems. This comes from a Government that has already delivered tax cuts 44 percent of the value of which went to the top 10 percent and just 2 percent of the value of which went to the bottom 20 percent. That was those 2010 tax cuts. The GST has been cutting in for those on low incomes as well and we know there are a lot of people around this country who are hurting right now. This Budget brings them no hope—no hope whatsoever. It is tinkering.  
We have in this bill the proposal to abolish three tax credits. It is a miserly proposal—a miserly proposal—picking the pockets of the paper boys and paper girls around the country. I too like the last speaker Mark Mitchell was a paper boy in my younger years. I got paid I think $2.86 or $3.16 for my deliveries of my first paper and that was on a contract. On my next delivery round I delivered the  
Auckland Star 
 and finally I was promoted to delivering the  
New Zealand Herald 
. Those little bits of money enabled me to appreciate the value of earning money and like many members of this House I have enjoyed many many jobs since. It also gave me pride in being able to earn that money. I know that National members do not think that is much and they do not care particularly for the little bits of money that those paper boys and paper girls earn around the country. But to take from them the money that they were getting in a tax credit that they looked forward to seems to be nothing but miserly. There is no other word for it.  
The next thing we see in this bill is the abolition of elections to leave a herd valuation scheme and that is a sensible move. It was proposed by the Labour Party and it is delightful to see that it has been taken up. But again that we need to go into urgency to achieve this change shows how limited the range of options for the Government is in terms of bills to debate.  
The final part of that bill deals with punishing students who have worked hard to pay off their loans. The rebate—the encouragement to pay off their loans more quickly—has been removed from these students. We know that lots of students are struggling. I see them in Dunedin all the time. Those students work hard. They study hard. They are eating noodles from bowls. They are making ends meet and they are doing their best. But this Government seems determined to make it harder for them and it seems determined to shut more and more students out of education. The Government has frozen the level of the incomes that the parent threshold relates to in order to make sure that fewer and fewer students will qualify for student allowances. Many of these students also go out to work to support themselves through their studies and they will have to work longer and harder under this Government and will have less time to work hard on their studies to ensure that they are good contributing taxpayers in the future. This Government seems to have no vision for educating its citizens for making sure they get the best skills for encouraging them to do that and for making sure they can make the most of their opportunities.  
We will hear more about the way in which the years of allowance have been taken from these students so they cannot get the longer degrees so they cannot add the value that they might add to this country. It is going to eliminate a group of students—those who are middle and low-income earners. It is not going to affect the really wealthy ones. It will affect only the low and middle-income earners. It is wasteful—it is wasteful of our talent. We have also seen that the real value of student support is going down. It has been going down. It has been trending down for a long time. The last thing we need is more punishment for students. But that is what we have got here in this bill—that is what we have got.  
If I can return to the matter of— 
Andrew Little 
: The kids. 
Dr DAVID CLARK 
: —the kids that is right—the paper boys and girls. What we find when we look at the regulatory impact statement is something quite astonishing. This attempt to broaden the tax base of New Zealand through pinching money from the kids not only perhaps is a little bit of a strange idea to members on this side of the House but also we can see that it is an inefficient idea. I read from the regulatory impact statement: “Generally speaking the proposed option should not impose any new compliance costs on business.” That is how these things regularly start. But wait. It says further: “However businesses that employ only school children on very low wages (below $2340 p.a.) may have to begin withholding PAYE from these employees from 1 April 2013.” This is increasing compliance so that we can take money from kids who earn under $3000 a year. That is outrageous. If this is the Government’s big idea it is embarrassing. This is a zero idea. Businesses employing schoolkids earning below $2340 per annum those very low wages may have to begin withholding pay as you earn. That means increased compliance.  
We can see that that is not going to be all. There will be other employers in the same situation. We will see it is not only schools that have to go through with this measure. We will find small delivery companies around the country with other low-paid workers that will have to ensure that those kids who are doing jobs for them go out there and pay as you earn and get robbed of their little tax credit.  
This is not base-broadening. This is certainly not visionary stuff. We have got an economy that is struggling. There is no doubt about that. We have been buying more than we sell for too long and this Government seems to have no plan to address it. It is very focused on Government debt. That is a problem that we agree is not too difficult to solve. Labour would have got there in the same time the National Government is planning to get there. But there are bigger issues. We have got this issue with buying more than we are selling. Our exporters need support. We need pro-growth tax policies not pinching money from paper boys and paper girls.  
We have had the idea of pinching money from the paper boys and the paper girls. We have got this tinkering. It resembles the wider Government tax programme which I am sure we will hear a little bit more of as the year goes through. It is very much in the same line. There is no attempt to wrestle with the bigger issues such as the capital gains tax that would push money towards the productive sector and the monetary policy that would support our export businesses. If we do not change anything in this area of taxation nothing will change. New Zealand will continue to limp along 50000 people a year will continue to leave for Australia 50000 more people a year will end up on the unemployment benefit and 50000 more people a year will end up out of work. This is not good enough; it is simply not good enough.  
In some of the publicity put out with these changes regarding the tax credits we see that the childcare and housekeeper tax credit is being removed also. The reason given is that it affects mainly high-decile people. That may be true and if the data presented in the publicity material which we have had a very short time to look over is correct then there may be some very good reason for amending that. But we also see that at least 20 percent—and by the look of it closer to 30 percent—of those families who receive this tax credit are actually from lower-income households. We are going to remove that tax credit from them because it is too hard to do anything different it seems. It is all about making sure that things are simple in one sense yet we are going to increase compliance on schoolkids in the other sense. It makes no sense.  
As I draw to a close I want to state again that if we do not change things greater than this in our tax system we will continue to see those same trends that we have seen up until now. We will continue to see our country borrowing. We will continue to see private debt growing. We will continue to see our citizens buying more than our exporters sell and we will continue to see exporters struggling in the face of unhelpful policies that the current Government is putting forward. Fifty thousand more people will end up going to Australia every year 50000 more people will end up unemployed and 50000 more people will end up on benefits. It is not good enough. We need bolder tax policy. This policy is not going to do it. 
MAGGIE BARRY (National—North Shore) 
: 
 I rise to speak to the Taxation (Budget Measures) Bill which is part of a Budget that I absolutely believe is the correct and right Budget for these times. It is our second zero Budget and it is an effort to lift our economic performance increase the amount of jobs and grow this economy. This is something that we understand very well on this side of the House but is something that does not seem to be at all appreciated by our opponents. The job growth of course will be occurring in a place like Christchurch. We have 17000 alone that are needed quite soon. That is an excellent thing. Also what is excellent about this bill is that Peter Dunne as the Minister of Revenue has meticulously as is his wont gone through all the obsolete old legislation looked at our tax carefully and started to cull and prune to get rid of a whole lot of rubbish. We have heard a whole lot of rubbish from our opponents who seem to be preoccupied with pick-pocketing with the strange things—I seem to think that the man who burst into song from New Zealand First was actually admitting to petty larceny in his early days. 
Hon Gerry Brownlee 
:  
X Factor 
 failure. 
MAGGIE BARRY 
: Yes well indeed that too. They all seem to sing their way through life. But it is an unedifying spectacle to see this issue taken so lightly.  
Much has been made of paper delivery. I myself was a paper delivery person as was my colleague Mark Mitchell and many others including David Clark. Who amongst us ever filed a tax claim? Nobody—because it is not what kids do. So what the Government is doing is carefully looking at getting rid of the nonsense. We cannot get rid of all the nonsense but what we can do is get rid of the obsolete outrageous and silly things so that our tax system becomes modernised and ensures that tax deductions and tax credits for that matter are being targeted at the areas where they are needed and intended. So that is something we are approaching with rigour.  
Unlike the Opposition we acknowledge that times have changed and with those changes wider Government policies have also changed. So when we look at things like paper delivery boys we look at the fact that the children will certainly not be able to claim that refund of tax that is already being correctly deducted and paid by an employer. So the claim is not needed. These tax credit changes will also be helping to make the Inland Revenue Department much more efficient. I think a lot of people are filing tax returns simply to get these outdated tax credits. This is not needed and is not necessary. Unlike the Opposition we want to get rid of a lot of this chaff and nonsense and concentrate on getting the economy back on track where it belongs.  
The student loan scheme is something that has been talked about quite a bit. By repealing the voluntary repayment bonus we will be saving about $12 million a year. It is well known that we have one of the most generous student loan support systems in the world and we are committed to interest-free student loans but we are determined to reduce that write-off. Since we came into Government we have reduced it from 49c in each dollar down to 45c and we do intend to get it down over time to 40c in the dollar. This Budget the 2012 Budget the right Budget for the times will help in that goal.  
We are going to require graduates and ex-students to pay off their student loans a little earlier. We are doing them a favour—“Get the monkey off your back early before you get into mortgages and kids and all the rest of it.” We are encouraging them to do the right thing. That is what this Government does all the time and that is what previous Governments have failed to do—absolutely woefully.  
So I commend Peter Dunne for his meticulous work. There were a lot of obsolete elements. We are closing the loopholes regarding livestock. Even the farmers admit that they have been getting away with that one for a long time. So unlike the Opposition we do understand that we need moderate growth in this economy and that we do need to reform the tax system and this is an important part of it. Thank you. 
Mr DEPUTY SPEAKER 
: The 11th call is a split call. 
Dr MEGAN WOODS (Labour—Wigram) 
: 
 It is my pleasure to join the great tax debate of 2012 following the Budget. Are we here today to debate the re-gearing of the New Zealand economy to turn it into a productive economy that will deliver jobs growth and a decent income for New Zealanders? No we are not. Instead we are here to literally raid the piggy banks of the nation’s youth. We have been told by members opposite that this is just petty cash. Well this just shows that this is a Government that is out of touch and does not realise what this money means to these kids. The Government is closing the loopholes and we have got the great euphemism in terms of it trying to crib back this $117 million—it is that the Government is “tightening these tax credits including the active income from children.” I love the language. So here we have it: part 3 of the great economic strategy; the one that started with a cycleway then moved on to the “Holiday Highway” and part 3 ladies and gentlemen is the paper route. Is this the brighter future that we were promised?  
One can only imagine the policy discussion that took place: “It’s time to crack down on these little bludgers. They’re getting away with far too much. They’re not paying their fair share. Get more out of them!”. So there we have it—$117 million clawed back pinched from the pockets of our kids. The Government needs the income the members opposite tell us and what do they need the income for? Well it is our children who are being pick-pocketed to pay the $120 million tag of flogging off our assets. The Government is clawing back $117 million from the pockets of the children of our nation but we could be saving that by simply not paying the bill to sell our assets.  
Labour opposes this Taxation (Budget Measures) Bill because it is mean-spirited. We oppose it because it just shows that this is a Government that is out of ideas. It is a Government that has no plan to fix the economy. It has no plan to create jobs and it has no plan to deliver higher incomes. Instead what it is doing is targeting young people. The Budget is targeting young people and it is disincentivising them from going on and achieving their potential in tertiary studies and post-graduate studies. The most mean-spirited part of it all is that it is taking back a little bit of an incentive for kids to work. These are the hard-working children of our nation who are eventually going to get on a jet plane and leave our country because we are not sending messages of hope and we are not sending messages that there is a future in New Zealand.  
This is a Government that is certainly not delivering a brighter future for any child in New Zealand. This pernicious piece of legislation which has come before the House this afternoon is showing the very little value that this Government puts on our nation’s youth. It is not a laughing matter. We have been accused by members opposite of not taking it seriously. We take the abandonment of the children of this nation by members opposite very seriously and I am proud to stand here and oppose another part of the abandonment of the children of New Zealand in this legislation. 
GARETH HUGHES (Green) 
: 
 Kia ora Mr Speaker. Nga mihi nui ki a koutou. Kia ora. The Budget delivered today has been called all sorts of names: a zero Budget the nickel-and-dime Budget the “black” Budget the boring Budget and the tinkering Budget. What is clear is that in National’s Budget there is a clear deficit: we have over $8 billion of deficit. But more important this Budget has a deficit of vision a deficit of compassion for our kids—those 200000 kids growing up in poverty—and a deficit of ideas. I think you can most graphically see that deficit of ideas in the first Budget bill this Government has put to this House to pass through all stages under urgency: the Taxation (Budget Measures) Bill. All the bill does is pinch the pockets of those hard-working kids as Megan Woods put it by removing the $240 tax credit. The bill also removes the failing 10 percent student loan repayment bonus. A deficit of ideas is exactly what we are seeing in this bill.  
This country has a huge number of challenges and many of them were elucidated by the Minister of Finance. We have an $8 billion deficit. We have $75 billion in foreign debt. We have the lowest growth in 50 years. We have huge structural problems and we have concerning global economic conditions. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
PAUL GOLDSMITH (National) 
: 
 It is my pleasure to take a call on the Taxation (Budget Measures) Bill. We have had a lot of overblown rhetoric on the other side about what it will or will not do but really it is more a sensible tidying up of the tax system. It is an omnibus bill that deals with three mains areas: the livestock valuation rules three tax credits that are no longer fit for purpose—removing those—and cancelling the student loan repayment incentive. All up we estimate that it could bring in an extra $300 million of revenue over 4 years and that is not an inconsiderable sum. It is not going to change the world but it will build on the important tax changes that were made in the 2010 Budget and that have formed a basis for a lot of the economic growth that we have had in the last while. It will build on the strong economic performances in the 2010 Budget. 
It has been hard to figure out what the Opposition has been saying on this bill. First we had Mr Mallard saying it would be crazy for people to pay back their loans then we had David Clark saying we should be keeping this 10 percent student loan repayment incentive. I was not quite sure where we had got to there. It is worth thinking just quickly on this bill where we might have been if things had gone awry and Labour had control of the place. We would have been looking at a capital gains tax coming in. I just wonder how you tax your way to growth. How would New Zealand have been saved by Labour taxing every small business every shareholder and every farm? I do not know how that would have developed growth in this country. 
We talk about vision. The only vision we seem to see on the other side of the House is one that is about expanding the size of the State and expanding the size of the tax system. Our vision is to set people free to be as enterprising as they desire and that is what this Budget is all about. I am very pleased to speak in favour of this bill and I commend it to the House. Thank you very much. 
A party vote was called for on the question  
That the Taxation (Budget Measures) Bill be now read a first time. 
Ayes 64 
New Zealand National 59; Maori Party 3; ACT New Zealand 1; United Future 1. 
Noes 57 
New Zealand Labour 34; Green Party 14; New Zealand First 8; Mana 1. 
Bill read a first time. 
Second Reading 
Hon PETER DUNNE (Minister of Revenue) 
 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 $9880. 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! 
Hon PETER DUNNE 
: Well there is a long night ahead of us I am told. 
Hon David Cunliffe 
: You’ll need all your flair. 
Hon PETER DUNNE 
: 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. 
Hon PETER DUNNE 
: 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! 
Hon PETER DUNNE 
: 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. 
Hon PETER DUNNE 
: 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 $2340 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. 
Hon PETER DUNNE 
: Probably. At that time— 
Paul Goldsmith 
: That was later—1982. 
Hon PETER DUNNE 
: 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. 
Hon PETER DUNNE 
: 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 $2340 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? 
Hon PETER DUNNE 
: 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. 
Hon PETER DUNNE 
: 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. 
Hon PETER DUNNE 
: 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. 
GRANT ROBERTSON (Deputy Leader—Labour) 
: 
 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 68600 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 68600 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? 
GRANT ROBERTSON 
: 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 68600 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 68600 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? 
GRANT ROBERTSON 
: 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. 
GRANT ROBERTSON 
: 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 68600 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. 
GRANT ROBERTSON 
: 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. 
GRANT ROBERTSON 
: 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 68600 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—68600 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. 
TODD McCLAY (National—Rotorua) 
: 
 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 Taupo 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. 
TODD McCLAY 
: 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. 
TODD McCLAY 
: 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. 
TODD McCLAY 
: 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. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Is the member calling? 
Dr David Clark 
: Yes. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I call the honourable member David Clark. 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 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. 
Dr DAVID CLARK 
: 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 68000 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 $2340 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 50000 more people leaving the country for Australia every year there will be 50000 more people unemployed—this is the record of this Government—and there will be 50000 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. 
Dr KENNEDY GRAHAM (Green) 
: 
 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 100000 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 1000 buildings that require demolition some 13000 repair jobs have been generated and 5000 of the 7000 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. 
PAUL GOLDSMITH (National) 
: 
 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. 
ANDREW WILLIAMS (NZ First) 
: 
 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 50000 more unemployed. John Key when he was Leader of the Opposition promised that the exodus to Australia which was only at 35000 people a year would stop. We heard today that he said that the 35000 people sitting in Westpac Stadium represented those who left for Australia a year. Now we are heading towards 50000 or 60000 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. 
DAVID BENNETT (National—Hamilton East) 
: 
 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. 
DAVID BENNETT 
: 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. 
ANDREW LITTLE (Labour) 
: 
 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 68000 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. 
ANDREW LITTLE 
: 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.  
The ASSISTANT SPEAKER (H V Ross Robertson) 
: 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.  
MAGGIE BARRY (National—North Shore) 
: 
 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? 
MAGGIE BARRY 
: 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.  
The ASSISTANT SPEAKER (H V Ross Robertson) 
: 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.  
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 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: 68000 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 50000 New Zealanders a year 1000 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 70000 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.  
JAN LOGIE (Green) 
: 
 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 $9880 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.  
Peseta SAM LOTU-IIGA (National—Maungakiekie) 
: 
 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. 
A party vote was called for on the question  
That the Taxation (Budget Measures) Bill be now read a second time. 
Ayes 64 
New Zealand National 59; Maori Party 3; ACT New Zealand 1; United Future 1. 
Noes 57 
New Zealand Labour 34; Green Party 14; New Zealand First 8; Mana 1. 
Bill read a second time. 
In Committee 
Part 1Amendments to Income Tax Act 2007  
JACINDA ARDERN (Labour) 
: 
 It is my pleasure to stand and give a contribution during the Committee stage of the Taxation (Budget Measures) Bill. I do so with a strange sense of irony. I started this afternoon at a protest on the forecourt that was led by people who were protesting on behalf of children in New Zealand. At that time they were protesting on their behalf to try to keep those children’s assets. By “assets” at that point in time they of course meant a majority share in our power companies probably not realising that actually the attack on their assets was a little more direct than that. In fact it was going directly to their back pockets.  
I want to explore that because we are debating Part 1 of the Taxation (Budget Measures) Bill which goes directly to the issue of exemptions that relate to minors and in fact to slightly above minors. I want to discuss that in a little more detail also.  
Part of me also wonders whether or not this is part of the Government’s attempt to try to educate children in the area of financial literacy because any under-18-year-old is now going to need to be aware of where their earnings sit to see whether or not they are eligible for exemptions. But let us get into that in a little more detail.  
Part 1 relates to the children’s active income tax credit. I wonder whether most New Zealanders knew such a thing existed. The Government is stating in its general policy statement that these tax credits along with others which we will discuss with my other colleagues are being abolished as “they are fiscally expensive but have long since ceased to have a strong policy justification.” It goes on to state that “a new exemption is created for children using the same eligibility criteria as for the abolished credit.” I find that there is a slight contradiction in the general policy statement because it goes on to state: “This new rule aligns more closely with the original objective of the children’s active income tax credit: reducing compliance costs for children by not forcing them to file income tax returns for small amounts of income.”  
First of all I would not mind the Minister in the chair the Minister of Revenue sharing with us how many tax returns are involved in this particular area. How many children are affected who would have been filing these income tax credits for such small amounts of money? Secondly if it really was about saving them compliance costs why would this change alone be generating revenue for the Government of $14 million? This is not about trying to reduce bureaucracy for children. This is about trying to increase revenue for the Government from our most vulnerable—from our most vulnerable. This is truly a “paper boy Budget” and it is an absolute disgrace that we have got to that level of desperation.  
But let us dig into this a little bit more deeply because I want to explore where the exemption level now lies as set out in Part 1. Basically it says that a child earning over $2340 of such income is required to pay tax on every dollar of that income. So $2340—what does that mean if we were to distil it down for a paper run for instance? I am sure the members on that side of the Chamber have not done this level of research in their break so I am very happy to share this with you. 
Peseta Sam Lotu-Iiga 
: Share it. 
JACINDA ARDERN 
: Mr Lotu-Iiga I can see you listening intently. From the brief research I have had an opportunity to conduct I can tell you that one paper run for a child of say 100 houses will generate an income for that child of roughly $16 per week. If you increase that to delivering to say 300 houses for your poor paper-run boy or girl you would immediately be over $45 a week which is where the threshold the Government has now set for them lies. So basically if a paper boy or girl delivers to 300 houses or more they are going to now be “required to pay tax on every dollar of that income” and that is how this Government is generating $14 million in revenue in its desperate “paper boy Budget”. It is an absolute disgrace that this aspirational Government is digging— 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I think it would be helpful at the outset just to go through what actually is happening here in Part 1 of the Taxation (Budget Measures) Bill. It is very simple and straightforward and it does not necessitate the type of hype that is being generated on the other side. The tax credit for the active income of children was introduced as I said earlier in 1978 and it was done so to reduce the compliance costs of employing children on a part-time basis. What it meant then was that employers with low annual salaries did not need to withhold PAYE in respect of those children. The credit now serves that purpose very rarely because most employers prefer to apply their normal payroll systems including deducting PAYE to all of their employees. The credit is now mostly claimed by a child who files a tax return at the end of the year which means that because the original credit was designed to reduce compliance costs it is no longer achieving that goal and it is actually adding to the compliance costs of those people because they are required to now file a return.  
Let me go through the limited exemption that is being introduced in this particular provision. I want to say this very clearly to members because it is quite important and it is being misrepresented. Children do not need to pay tax on up to $2340 of income that is not taxed at source. So that is money for mowing the neighbour’s lawns babysitting and those sorts of things. The tax exemption does not apply to income on which tax has already been paid such as salary and wages or interest. Well that is unlikely to be a major calculation in this respect. If the child earns more than $2340 from income that is not taxed at source then the exemption does not apply to any of the income because they would have to pay tax on the full amount. So we are dealing with a very specific issue here. It does not amount to taxing the paper boys. Previous speakers have raised the question of the 68600 people or children really who are allegedly affected. They are the people who are in the category of being able to make the claim. We do not have information on the actual numbers of people involved. We know that the average amount of the credit paid is $240.  
Dr Clark earlier in the second reading debate quoted from the regulatory impact statement. Unfortunately his quote was selective. He talked about—[ 
Interruption 
] I think it was on page 3. He spoke about the fact that there could be compliance cost implications for a number of employers. But what he failed to point out was the following sentence which is on page 1 the fifth paragraph: “We expect that very few employers would be in this situation” So here is Dr Clark getting up and saying that this is an outrage because we are now going to have a number of employers having to deduct income from children working for them on very low wages but he did not go on to read the next bit of the same statement: “We expect that very few employers would be in this situation”. 
What this measure is about and the other measures in this part are about is changing and getting rid of a number of small tax credits that have long outlived their usefulness. What members of the Opposition are really saying tonight in opposing this is that they actually think we should keep these things on the books even if they are being misrepresented and distorted. If we are giving up around $350 million to $400 million in revenue over a 4-year period to do so their attitude is “so be it”. What does it matter? It is only money. It comes and goes. It is on the tree that they have the tree that they get it from. This is about responsible Government. It is about making the tax system work the way it was intended and there should not be any more debate about it. 
Tracey Martin 
: Mr Chair— 
The CHAIRPERSON (Lindsay Tisch) 
: Order! Members I actually would like to hear the member calling and I would like to hear what members are saying. So keep the interjections down please. I am calling Tracey Martin. 
TRACEY MARTIN (NZ First) 
: 
 Again as with my learned colleague from the Green Party this is my first Budget and I found it fascinating—fascinating for what is not in it; fascinating for how small it is and how little vision there is in this Budget. What an opportunity lost is all I can say to those on the Government benches—what an opportunity lost. You had an opportunity to actually grow the pie.  
But my main question here is for the Minister in the chair the Minister of Revenue and I wonder if you can clarify something for me. Nobody has mentioned it and I can find no regulatory impact statement on the removal of the housekeeper tax credit. Again if I had had this earlier I agree I would have been able to do further research on it. But can you clarify for us please Minister whether the removal of this tax credit has any effect at all and whether anybody has gone to find out whether it has any effect at all on working women today who employ other women to do housekeeping for them. This is an income that some women use. So again I would be interested if the Minister could address that because there is as I say no regulatory impact statement on it. It is almost as if the women whom this may or may not affect do not count. We have regulatory impact statements on animals. We have a regulatory impact statement on a few of the other small little movements inside these taxation bills but there is nothing here that could possibly give me or any other woman here in New Zealand a deeper understanding of how this might affect them. And that is unfortunate Minister. So I do hope that once I have finished we can actually clear that up.  
I do also think that it is a shame Minister that just because times have moved on an Act must be dismissed because it does not serve the purpose of the 1960s and the reason the bill was originally put in place without considering it carefully inside the values that we have here in the 21st century. I think that it is very interesting that the explanatory note of the bill says: “The present approach does not achieve this goal”—the goal of the 1960s which was an administrative goal—“as many children file tax returns solely to gain access to the tax credit—”.  
I noticed that my colleague Mark Mitchell said that he used to do a paper run but he never filed a tax credit. Well that is fine for you Mr Mitchell and I appreciate that but some of us actually have acumen in this sort of area. Some of us who did do these sorts of jobs went through that process and put in our own effort. There was no administrative cost for us and we gained those tax credits. It was part of that understanding that I believe we are asking from our 21st century students around commerce. I believe that is what we are asking when we want our 21st century students to understand about working about taxation and about filling out these forms so that they can fully participate inside government and inside our society. So I think it is a shame that those young people who did go to effort of filing for tax credits—and I think the figure was $240 or something that you mentioned Minister; that was often the return—will no longer get them because apparently what it was set up for in the 1960s does not apply any more. That is it and we will do away with it.  
I also think that the lack of encouragement to earn over $2340 is interesting. I think that is an interesting way to write it into the bill. I do appreciate that the Minister has addressed to a certain extent the reasons for that. But I thought that the National Government was actually about encouraging innovation encouraging people to work and encouraging them to raise their incomes. But if these children earn more than $2340 a new step is suddenly put into place.  
So I appreciate Minister that you have tried to give an explanation for that. I would appreciate an explanation around the housekeeping and I do also appreciate the whip now providing me with the well-hidden regulatory impact statement. Thank you.  
Hon CLAYTON COSGROVE (Labour) 
: 
 Part 1 is a very sad part of this bill the Taxation (Budget Measures) Bill. What we now know is that the National Government aided and abetted by the Minister in the chair Mr Dunne is going to raise revenue of approximately $14 million out of the pockets out of the piggy banks and out of the wallets of approximately 68600 children according to the regulatory impact statement—14 million bucks from 68600 children. These are kids who are doing paper runs and things like that— 
Hon Member 
: Cleaning. 
Hon CLAYTON COSGROVE 
: —cleaning—and delivering the community papers. They will be delivering “Do not vote National” pamphlets at the next election I am sure in the back of the little— 
Hon Trevor Mallard 
: They will be volunteers. 
Hon CLAYTON COSGROVE 
: They will be volunteers. And you know I just wonder for instance whether Gerry Brownlee ever had a paper run. No sorry; that would be an oxymoron. That would be completely absurd—a paper run! I am told though that Gerry Brownlee had a milk run you know back in the old days when there was full-cream and double-cream milk. But I think very little actually ever got delivered to the front gate.  
Maggie Barry talked about the fact that she believed in recycling. Well I have got to say if ever there was a member who has come into this House who has been recycled with the odd scent of compost swirling around her then my word it is that member. It is the member who sits in select committees and intimidates submitters by asking them how they voted. Well I wonder whether Maggie Barry— 
The CHAIRPERSON (Lindsay Tisch) 
: Order! Pull it back. [ 
Interruption 
] I was not a paper boy—we had courier pigeons. Come back to the bill. 
Hon CLAYTON COSGROVE 
: I am sure Mr Chair that you aspired to the sort of pizza delivery type of deal rather than a paper round.  
I just say this to this Government. This is the big idea in the Budget. Take 14 million bucks off a bunch of kids. This is the big strategy lined up alongside flogging assets off and National is trying to hoodwink people by saying “Oh if we buy non - revenue-generating assets that is a good thing is it not?”—until the money runs out of course. So the big idea in the Budget is not to deal with the big issues of taxation. National fails to remind us that it is borrowing $300 million a week so that the top 5 or 10 percent can get the vast majority of the tax cuts. But it is awake enough to take 14 million bucks out of the piggy banks of 68600 young people. 
Hon Trevor Mallard 
: Retrospectively.  
Hon CLAYTON COSGROVE 
: Retrospectively. Well I say that Mr Dunne is the man who will go down in history as the biggest auctioneer in our history if he votes for asset sales—going going gone. He is now of course the “Uncle Scrooge” of the Parliament”—the “Uncle Scrooge” of the Parliament. What a great legacy Mr Dunne will deliver as he has flip-flopped from party to party. He is as I think the record will show the longest serving revenue Minister in the history of the parliamentary Commonwealth. He has been in more parties and in more coalitions that I have had hot dinners and more than Gerry Brownlee has had hot dinners. 
The CHAIRPERSON (Lindsay Tisch) 
: Order! 
Hon CLAYTON COSGROVE 
: No; sorry that would be silly. But I say this. I ask Mr Dunne to reflect on the provision in Part 1. Does he really want to go down in history as the man who took 14 million bucks out of the piggy banks of 68600 paper boys delivery people cleaners— 
Maggie Barry 
: More trivia. 
Hon CLAYTON COSGROVE 
: —oh sorry; there is one over there the old turnip in the corner—and paper girls? Does he really want to go down in history—[ 
Interruption 
] Go on gardening leave I say to Ms Barry—go on gardening leave. You will be better at it. It is a better occupation for you I think than intimidating submitters to select committees.  
So Mr Dunne will go down in history as a person who took the money out of the mouths of babes. That will be his legacy to the Parliament—that and helping the Government flog off assets. What does Mr Dunne say to his grandkids? Has he had a conversation with his grandkids and said: “Sorry guys. You know how you were going to do that after-school job? Sorry I’m the revenue Minister and I’m going to sneak around the back and as you get your 45 bucks I’m going to whip out the tax from you before you can slip it into the piggy bank at home.”?  
National is the party of aspiration. Was not this the party that was encouraging entrepreneurship? Well should we not be doing that with our young people? Is it not Miss Bennett who says: “You should get off your backside and get a job.” even though of course the unemployment rate has gone up by 50000 under her wonderful legacy? So National is saying on the one hand “Get a job.” We have 68600 young people working in jobs and for many of them I say in all seriousness it is no longer an after-school job for a bit of pocket money. No—if you are out on Struggle Street battling away thanks to this mob paying higher GST paying the higher charges having lost your job and having been absolutely gutted as a family then the paper boy’s or paper girl’s job or the little bit of cleaning around at the butchers shop is no longer about pocket money. It is actually about helping mum and dad try to make ends meet.  
To the geniuses over there one of whom has poddled off to the back of the vege patch in the garden I say this. Forty-five bucks to some of those people over there may not be a big chunk of dough. Oh no—not to some of them of course.  
Andrew Williams 
: A bottle of wine. 
Hon CLAYTON COSGROVE 
: Yes a bottle of wine. Yes and I think a few of them over there have been imbibing tonight. But to a child earning 45 bucks—and every dollar they earn they will have to pay tax on—that is their contribution in many poor families to the family food budget the power bill the rates the rent and all those things. I wonder whether in her sort of blasé way Miss Bennett has actually considered that as she leaves a legacy of 50000-plus people unemployed. How does she balance that against the call for aspiration? Oh do not look at me with dagger eyes Miss Bennett—I know it hurts but they are the facts. There are 50000 people unemployed thanks to that Minister and her inaction. She says: “Get off your backside and get a job.” Of course she has not provided any jobs. In fact she has presided over an administration that has gutted jobs from this country—gutted them. Yet she is prepared to sit there—I do not think she is talking to herself. I presume that might be an unintelligible conversation. She talks to herself. I wonder if she will go out and talk to the young people in her electorate and tell them why she is aiding and abetting this and tell them why they should not believe what she said about aspiration because of course she is going to take their dollars.  
Oh hang on: the balloon has burst. I say this: is she going to go out to her electorate and actually talk about that? Is she actually going to go and talk to her constituents and explain to their mothers and fathers why this is happening? Because as Trevor Mallard said a little while ago those 68600 young people will not want to get paid to deliver pamphlets at the next election—they will volunteer. They will volunteer to deliver “Don’t vote for National” cards into every letterbox in this country. Of course Paula Bennett tries every trick to divert us away from the fact that her legacy is 50000 people on the scrap heap—the lost and lonely—and now you add to that a dash for cash for $14 million.  
Well I just say that she can squawk all she likes and talk about all sorts of things but the problem Paula Bennett has is she cannot walk away from facts and history. She cannot walk away from her own legacy. She cannot walk away from 50000 people on the scrap heap. I just wonder as members go out this weekend to their constituencies in Whanganui and a few other places around there—I wonder if Mr Borrows will front up to the parents whip down to the primary school and see the teachers and tell the kids that their paper round is over and they may as well go home and sit on their backsides because the Government is playing “Uncle Scrooge”.  
Let us come back to it in context. This is not the biggest issue of moment for this economy; nor is it the biggest issue of moment that should be addressed in this Budget. We were looking for a strategy for a plan for anything as are businesses in Auckland and Christchurch and other places. The best they could do in Canterbury—the best Budget announcement down there—is for Mr Brownlee to announce he has spent half the dough— 
The CHAIRPERSON (Lindsay Tisch) 
: We are on Part 1. It has got nothing to do with Canterbury. 
Hon CLAYTON COSGROVE 
: Oh yes it has. Oh that is my next speech. Part 1 has a heck of a lot to do with Canterbury because we do have young people down there who do after-school jobs. We do have young people down there who are scraping for it. We do have families down there who are destitute. I beg to differ without challenging your ruling that this has everything to do with Canterbury and the rest of New Zealand. It is a bill that has no ideas in it and no strategy in it. The whole Budget is encapsulated around the odd nickel-and-dime tweak and a bit of spin. It has everything I say to you Mr Chairperson—try visiting there sometime—to do with Canterbury. There are 10000 families down there who will not have the means to carry on for much longer if this Government does not come up with some ideas on how to employ people how to engage people and how to support people and ditch silly little mean-spirited ideas like this in this bill. It is a mean-spirited bill from a mean-spirited Government wrapping it up in austerity. No one believes it. 
TODD McCLAY (National—Rotorua) 
: 
 The last speaker in this debate Clayton Cosgrove used to be a man of vision. He used to have passion for New Zealanders. He wanted to do the right thing for New Zealanders. I would for a moment say before I talk about Part 1 of the Taxation (Budget Measures) Bill and how concerned I am about that last speech that in as far as Canterbury is concerned he has worked extremely hard over the years for Kate Wilkinson’s constituents to make sure that they have a better lifestyle down there. So what I would say to you is that— 
Hon Clayton Cosgrove 
: Is that the best you can do? 
TODD McCLAY 
: No there is some more coming Clayton—just wait. There is certainly some more coming. In 2008 he and his party opposite were out of touch and out of time. What has happened this year? They are still out of touch but they have got all the time in the world. He has had lots of time this afternoon to read Part 1 of this bill but that was all we got: the same old rhetoric that always comes from the Labour Party. New Zealanders were sick of it only 6 months ago and of course 3 years before that and it keeps on coming. Well can I ask one thing of the members opposite: please keep it coming because on this side of the House we want to get out there and talk about the issues that are important to New Zealanders. 
So what is important to New Zealanders? Important to New Zealanders and it is in Part 1 of this bill is balancing the books investing more in education and making things fairer for all New Zealanders—not the things we have heard from members opposite. 
I want to come to clause 5 in Part 1. I want to say to members opposite—only those in the Labour Party—do not be worried any more; this clause does not apply to you. There will be no restrictions on the use of the herd scheme when it comes to the way you get together and work out what it is that we must do for New Zealanders. This is about livestock not members opposite in the Labour Party. The reason that that is important—[ 
Interruption 
] What was that? 
I am going to yield in a moment because I am keen to hear from the Minister in the chair the Minister of Revenue but I am keen to know in terms of clause 5 which is restricting the use of the herd scheme whether there are farmers who use this scheme who take a cow from one of their neighbours—maybe a neighbour gives them a cow—and decide to go on TradeMe and sell it to somebody else for more money than it was given to them for or they bought it for. Could this part of this bill be used to sell on TradeMe something that had been given to you or maybe something that you had bought? Let us say you buy a cow from your neighbour for $500; could you go and sell it on TradeMe the next day for $1000? Or if he gave it to you could you sell it on TradeMe for an amount more than it is worth? I would be interested to hear from the Minister on that. I would hope no member on this side of the House would do that. What about tickets to go and view that cow singing or dancing? Could you sell them on TradeMe—tickets to see that cow—under this part of the bill? I think not. 
I want as all of my colleagues on this side of the House want to get back to my electorate. Many of us are electorate MPs and we want to talk to New Zealanders about the important parts of this Budget. This is an important bill and we must move forward with this. This is an important bill because it helps rebalance our economy helps us focus on what is important for New Zealanders and helps us spend money in areas where New Zealanders want us to spend it—to be more productive and on education for our children. 
As most people are watching television I say to them that a Labour MP will get up in a moment. Do not adjust your TV. The sound you hear is meant to come from them; there is not a problem with your television. Thank you. 
SUE MORONEY (Labour) 
: 
 Yes if people are still tuned in that was the big idea brains trust from National about what will fix these economic woes that this country has: Todd McClay talking about cows on TradeMe. That is the big idea that they have! Part 1 of the Taxation (Budget Measures) Bill— 
David Bennett 
: You didn’t get the joke! 
SUE MORONEY 
: It was hard to understand what he said but it was about cows on TradeMe. That is the big issue that is going to fix the economic woes of this country. Part 1 I think shows how out of touch this Government is with the economic woes of this country and the issues faced by ordinary families in New Zealand. They have found in Part 1 the culprits to our economic woes. They have gone looking for them and they found them: the culprits are the paper boys and paper girls of this country not paying tax. That is what they are going to fix up to bring this country into economic growth. Well that just goes to show how devoid of ideas and how devoid of an actual plan for the brighter future they promised this country that Government actually is. Part 1 of this bill says what we are going to do—and why we suspended the Budget debate to fix the economic woes and the absolute bottoming out of the economy in this country on that Government’s watch—is we are going to start taxing children who are doing paper rounds. They are children in fact who come from probably some of the poorest families in this country. They are the children who are out there earning more than $2340 a year not because it is fun not because they feel like doing it but because that contributes to their family’s income. Those are the very families that that Government is going after. The Government is making them the culprits for its lack of having a plan its lack of having any ambition of bringing this country out of the economic doldrums that it got us into.  
I go on to also let people know about another part that goes after children in Part 1. This Government going after children all the time as it is has taken away the tax credit for childcare. That is right. It has not been spoken about much but it is saying that it does not want working families to be able to have a tax credit for the childcare payments that they pay. But it is about actually joining the dots together because not only are they taking the tax credit away but they have frozen the subsidies to early childhood education in this Budget today. That means that fees are going to go up for parents. That will even further stretch the family budget that is already stretched to breaking point. That is how out of touch that Government is with working families because it does not understand how bad their budgets are.  
Part 1 actually makes it worse. Not only are fees going to go up for early childhood education but now they are taking away the tax credits that parents can currently claim for childcare expenses and that is being done through Part 1 of this bill. It is a mean-spirited bill because it does not fix any of the economic woes of this country. We are flatlining economically. We are in an economic rut thanks to that Government and its lack of any plan.  
What is the Government doing to fix that? Well it is pickpocketing the pocket money of our children and it is also saying that families can no longer claim a small but important tax credit for childcare expenses. This is on the back of delivering a Budget today that increases childcare expenses for all of those families as well. That Government is showing by Part 1 of the bill that it is completely out of touch with the struggles that working families face. It is completely out of touch with that. Not only does the Government’s saying that it will put a financial veto against extending paid parental leave show how out of touch it is with the everyday struggles of working families but it is using Part 1 of this bill to attack working families all over again and to say that they can no longer claim a tax credit for childcare expenses.  
Those childcare expenses are going to go up as a result of other measures that the Government has taken in the Budget today. This is just a double whammy for working families with young children. Is it not interesting that the Government wants us to think that it is interested in vulnerable children? Paula Bennett wants us to believe that but here she is in Part 1 of this bill attacking those very children. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 That contribution reminds me that I ought to reply to the New Zealand First member Tracey Martin who spoke earlier about the housekeeper and childcare rebate. For the benefit of the member in the Chamber—I gather she may now have the regulatory impact statement and will have read paragraphs 7 8 and 9 which set out the background fairly clearly—can I simply say this. The rebate was first put in place in 1933 in quite different social circumstances from today. The average claim on that rebate is now $263 per annum so it is not a huge money-spinner for the families who might have been making that claim. It is about $5 a week. The member who has just resumed her seat spoke about the cost of childcare. The $5-a-week subsidy has been in place in an environment where since 1933 a huge number of changes have been made with regard to the provision of childcare. For instance we now have 20 hours free we have $1.4 billion being expended in the childcare area by the Government each year. The rationale for the policy has long since ceased to be.  
With regard to the housekeeper claim it is worth making the point—for the benefit of the member—that there are a number of families with disabled children who currently use the housekeeper claim in respect of their circumstances. In fact when you look at the range of disability support services currently provided and the money that is provided for in this Budget and last year’s Budget when you also look at the Ministry of Social Development’s child disability allowance and the disability allowance generally the rationale for then saying that on top of that you can claim a claim that has a maximum of $310 a year really ceases to be. What this particular provision is about like the earlier provision we discussed regarding the child allowance and like the transitional allowance is removing a provision that no longer serves the purpose for which it was established. We have a different way of dealing with these issues now.  
At the time when this particular credit was established in 1933 there was certainly nothing like comprehensive childcare there was certainly nothing like comprehensive funding or support for that childcare and I doubt that there was care for those with disabilities in anything like the way we have today. The circumstances over the intervening just under 80 years have substantially changed. The Government’s view is that a credit of this nature which ties up a fair amount of resource is poorly targeted is not even being claimed by significant numbers of the lowest-income groups in the group and has outlived its usefulness. That is why I say to the member we are removing it. 
ANDREW WILLIAMS (NZ First) 
: 
 I rise to take another call on behalf of New Zealand First in regard to what I call the “Fagin Budget”. We are very fortunate that it is after 8.30 at night now because people who might be watching Parliament out there in New Zealand television land would not probably be able to conjure up the same images before 8.30 because it would almost have to be censored—the thoughts of Fagin from the famous movie  
Oliver 
. If you can imagine Fagin and what Fagin looked like then put into your minds what Bill English and John Key look like and then go back to what Fagin looked like there is an incredibly close comparison of the three. They are all as miserable as sin. 
The CHAIRPERSON (Lindsay Tisch) 
: Order! Come back to Part 1. 
ANDREW WILLIAMS 
: When I look at this regulatory impact statement all I can think of is that it is a “Faginistic” regulatory statement. When you read a sentence such as: “Generally speaking the proposed option should not impose any new compliance costs on businesses. However”—and this is the however—“businesses that employ only school children on very low wages (below $2340 p.a.) may have to begin withholding PAYE from these employees from 1 April.” Is that not appalling? And you wonder how this all gets through the process. It is all done by smoke and mirrors by this Government. Further down and this is written by the Inland Revenue Department it states: “Due to the need for Budget secrecy”—this is the Budget secrecy around children’s pocket money—“and the short time frames involved there was no opportunity to consult in the usual manner” with affected parties. There was no opportunity to consult in the usual manner with affected parties. “The Treasury and Inland Revenue were the only agencies involved in developing the proposals and carrying out the analysis.” 
I am quite shocked by that and the fact that this will impact on over 56000 young people in this country who basically are going to have their pocket money robbed from them in terms of tax taken off from 1 April 2013. Employers will have to start deducting PAYE tax from a very small wage that each individual child might be receiving. It is appalling. 
When I look over the page I can see the housekeeper and childcare tax credit. I can remember as a young father with my wife and our family when we needed after-school care for the children from time to time. I can recall as a young earning family that we greatly valued the fact that at the end of the year we did get some tax credits for getting childcare after school and things like that. You look at this now—a miserable $310 per year for young families needing after-school care needing assistance to take care of children for maybe a couple of hours who up until now could claim up to $310 to help pay for that after-school care and cannot get it any more. Is that not miserable? Is that not absolutely miserable? Is it not— 
The CHAIRPERSON (Lindsay Tisch) 
: Order! I sorry to interpret the member but can I ask members to be a little bit more succinct with the interjections. 
ANDREW WILLIAMS 
: We have seen from this National Government tax rebates and tax deductions and reductions in tax for its wealthy mates for several billion dollars in the last year or two. We have seen several billion dollars of reduction in tax for its friends and its mates—high income earners. We have seen $1000 a week for the Prime Minister—$1000 a week less tax he pays as the Prime Minister. But the same National Government 2 years later after giving all those tax cuts to its mates— 
The CHAIRPERSON (Lindsay Tisch) 
: Order! Part 1. 
ANDREW WILLIAMS 
: —will take it out on the poor young children of this country the young families who might get a bit of a tax credit for their child-minding the students who maybe were— 
JACINDA ARDERN (Labour) 
: 
 I am pleased to take a call because I have been reading the regulatory impact statement that relates to Part 1 of the Taxation (Budget Measures) Bill and I was looking for something quite particular. I was looking to see whether or not the Inland Revenue Department in particular had done any costings around how much it would impact on the department for it to have to redo its communications and in particular its website. Why you might ask. Well quite simply because the Inland Revenue Department’s website currently features what I would call a paper girl poster child. I am not sure whether you can see this but currently on the Inland Revenue Department website you have got a child of probably I would say roughly the age of what 13 with the title above her of “Not sure how to go about your tax?”. I have to say to the Minister in the chair Minister Dunne that now I guess that child is no longer going— 
Todd McClay 
: I raise a point of order Mr Chairperson. Could the member table that iPad? I would like to have a look at it. 
JACINDA ARDERN 
: If Todd McClay would like to see this online it is on the Inland Revenue Department website on its home page. That is the first thing that will come up when you go on to the website if you would like to see that. But I could suggest if the Minister would like to save some money that you could keep this as is leave the words “Not sure how to go about your tax?” and just add “Now you don’t have to.” Or perhaps we could just leave it and have it say: “It doesn’t matter how old you are or where you are we will find you.” That is essentially the change that we are seeing today.  
In lieu of the regulatory impact statement featuring the changes that the Inland Revenue Department will no doubt have to add to its communications I was interested to see that there were several options considered by the department in considering the changes to this particular tax credit. It is interesting that the first option was to replace the tax credit with a limited tax exemption and that is essentially obviously what the Minister has opted for. But I wonder how much the exemptions in his mind are going to equate to. Of the $14 million we are going to save does he have some kind of estimation as to what amount those exemptions will equate to of the $14 million the Government intends to save from making this change? And would the tax exemption apply to child modelling? I am just interested as an aside.  
Finally paragraph 25 of the regulatory impact statement says: “The second option repealing the credit with no replacement would mean large numbers of children earning small amounts of income would be pulled into the tax system.” That is why I am interested in that question Minister because if we are actually still talking about large numbers of children being pulled into the tax system because not enough are exempt then essentially you will not have achieved your intended outcome. I would be interested in the evidence that the Inland Revenue Department has generated for you on that.  
I want to come back to Part 1 and in particular new section CW 55BB in clause 4(1) which sets out the age groups that this exemption applies to. Although of course we have been leaning back on the paper boy and paper girl we are in fact talking about young people younger than 15 who could be in full-time work. I know that we assume in this country that that should not be happening and that a child should be in school but there are a significant number of 15-year-olds who get exemptions from secondary education and who are entering into work. Now obviously this will impact upon them. Of course those younger than 18—not exactly the child tax credit we were thinking of—who are in fact impacted on by all of the Minister’s welfare reforms are in many ways for all intents and purposes often treated as adults in our system rightly or wrongly. So if you are younger than 18 you are now also going to lose out on this tax credit.  
I imagine that good hard-working National members would at some point in their aspirational childhood careers have had at least one job if not multiple jobs and that they themselves have benefited from this provision previously. No doubt as the good taxpaying children that they would have been I am sure they would have paid tax and filed their tax return just like the child on the Inland Revenue Department home page Mr McClay. So in that sense we are essentially seeing yet another change that this Government’s members themselves have directly benefited from.  
How much are we saving per person in this? A couple of hundred dollars. But it is still amounting to $14 million for this Government and that is what demonstrates that we are scraping the bottom of the barrel— 
Hon DAVID PARKER (Labour) 
: 
 I want the Minister in the chair the Minister of Revenue to tell me what analysis of the long-term effects of undermining the work ethic of our youngest people as they first enter the workforce lay behind this measure. We are told by the National Party people that prices always matter that the amount that people get paid in real terms is what matters. Whenever we remind Government members of the fact that it is having a larger and larger wage gap with Australia they always say “Oh it’s the after-tax number that matters.” But here for the youngest people in society—for the youngest people in society—no it is not. It is a different rule for them. It is not the after-tax amount that matters; it is the pre-tax amount. What is wrong with having young people a little bit more incentivised to work by making sure that they do not have to pay as much tax as they will when they are older? What is wrong with that? What is wrong with that? 
Hon Member 
: When you’re earning under 45 bucks. 
Hon DAVID PARKER 
: Yes limited to $45 a week. I ask the Minister whether he is aware that his Government blocked measures to protect some of these very vulnerable young workers from being not paid not just a youth minimum wage which is what the National Government wants to pay them but the minimum wage. A lot of these people who work delivering pamphlets do not get the minimum wage. They do not even get the equivalent of a youth minimum wage. They get a contract rate that is so low that I am surprised that some of them are motivated enough to do the work but they are—they are. We ought to be celebrating the fact that these people do it despite the pittance that they get for delivering pamphlets. They do not even get the minimum wage because the National Party would not back our legislation to extend the minimum wage to contract workers. And now the Government is saying that it is going— 
Mike Sabin 
: It’s a bit rich to be accusing people of not backing things. Do you vote for anything? No. 
Hon DAVID PARKER 
: What was that? I did not hear that. 
Mike Sabin 
: No I didn’t say anything. 
Hon DAVID PARKER 
: Oh OK you did not say that. Actually—[ 
Interruption 
] Thank you thank you. I think the Hansard staff got that. “I did not say that.” he said and acknowledged his own comment. We will look to see what Hansard caught of that. I did not catch it but he is obviously embarrassed because he would not repeat it. 
This is short-sighted. This is mean-spirited. I thought Megan Woods’ contribution earlier was interesting: first we had the cycleways then we had the motorways and then they went after the paper round. 
Hon Trevor Mallard 
: Paper routes. 
Hon DAVID PARKER 
: What was that? 
Hon Trevor Mallard 
: Paper routes. 
Hon DAVID PARKER 
: The paper routes—that is right. She put it far better than I did. They were standing around the Cabinet table and they thought: “Who can we get? Who is not paying their fair share? Who is not paying their fair share?”. And who did they not look at? They did not look at the top 10 percent who got 40 percent of the income tax cuts in the tax rounds; they went for the lowest paid for people not even on the minimum wage and delivering pamphlets for sometimes $2 an hour. It really is sometimes $2 an hour. Now not only will the employer be required to deduct income tax from that amount—compliance costs for the employer compliance costs for the Inland Revenue Department—but the people who are being paid a miserly amount and it is sometimes only $2 an hour will not be able to get a tax refund. They will not be able to get a refund of the tax that they have paid. Some of these kids are poor. Some of them are not but some of them are. This is the only money they have got perhaps— 
Hon Trevor Mallard 
: Averages $5 a week. 
Hon DAVID PARKER 
: The average is $5 a week. The average is $5 a week and to some of these kids that $5 a week is the difference between their being able to occasionally go to a movie— 
Hon Trevor Mallard 
: Oh no no. It’s half their school uniform. 
Hon DAVID PARKER 
: I agree; I was going to come to that. For some of them it is actually what they get to go down to the op shop and buy a few clothes. You know I think this is pretty mean-spirited. If there were not other things that the Government could have done if this issue was the last bit that was going to tip this country over the edge then you know maybe. But it is not. It had lots of choices other than this. I want the Minister to stand up and say why the Government picked this choice rather than other choices. Why is it undermining the work ethic of these kids who are already working for sometimes a piddling $2 an hour? They are being taxed on it and they cannot get a break from the Government. It is being taken off them. I hope the Minister stands and takes a call. 
Dr MEGAN WOODS (Labour—Wigram) 
: 
 I am pleased to take a call on this bill the Taxation (Budget Measures) Bill. What we are seeing here today is that we are picking the pockets of our kids to fund an ideas deficit from the members opposite. They have delivered a Budget today that offers zero hope zero ideas and a zero future for young people in New Zealand.  
Only 6 months after re-election this Government has completely given up on its brighter future. It is quietly slinking away from any idea of aspiration and all it can do is tinker around the edges as it stumbles towards being thrown out of office in 2014. But all I can say to the members opposite is wait until the kids whose pockets you started picking today come of voting age. They are going to be angry and we have got a sure source of voters there. This Government is spent. It is out of ideas and it knows that its 2010 tax switch was a failure. Now all it can do is tinker round the edges and try to fix things up and this is just a straight-out revenue grab.  
I talked in an earlier contribution on this bill about the stunning economic policy we are seeing from the National Government being rolled out in this term and in its previous term. David Parker mentioned this in his contribution tonight. It started with its cycleway. Failure—no jobs. Then there was the “Holiday Highway”. That stimulated the economy but hang on. That is right: not all of the jobs that were promised in the last Budget eventuated. And then today we have this stunner—the third part in the trilogy—the paper route. This Government is taking it to the kids and taking the money off them.  
These are not the taxation issues that we should be talking about tonight. We should be talking about taxation and about how that can be used to stimulate our economy. We are told by members opposite that they do not want to be talking about the things that are not important to our nation. Well put something in the Budget that is instead of taking money out of the pockets of our children. For 4 years Labour has been imploring National to put children at the centre of its policy and to do something about the 270000 Kiwi kids who live in poverty. That is one in four or 25 percent of them. But we did not mean this in terms of putting children at the centre of your policy. We did not mean for you to go away and come up with a taxation policy that seeks to put your hands into their pockets and take away their pocket money. We did not mean this.  
As I have also talked about one can only imagine the thinking that got the National Government and its coalition partners to here. They were thinking: “Fourteen million dollars—we really need $14 million. There are those bludging kids. We need to go after them again. For too long they have had it too easy. They don’t pay for their own accommodation. They are on the take. They are demanding an education and do you know what? When they get a bit older they might even want to go on and do postgraduate training. We cannot let that happen. So we need to make sure that they know they don’t have a future in this country.” What are those members thinking? That there are too many grubby little hands looking for a hand up? 
 National is the party that talks of aspiration and this is a joke. These are just kids who are working hard and what the members opposite do not understand is the income that these kids are receiving. It is being chortled about what a small pittance this money is but this income is important to these kids and it is important to their families. Frighteningly increasingly this money is becoming part of household budgets in this country and becoming an important part of household budgets in making ends meet. One of the things that I think is interesting in the regulatory impact statements is that we see that the credit is received by approximately 68600 children averaging $240. But the regulatory impact statements do not go on to note that the tax credit does not apply to income from interest or dividends—meaning a child must pay tax on the first dollar of income from these sources. So for the members opposite is this about equality? Is this about thinking working children are just getting a bit of a break and you need to bring them into line? This is just not fair. 
Dr JIAN YANG (National) 
: 
 I move  
That the question be now put 
. 
Su’a WILLIAM SIO (Labour—Mangere) 
: 
 I want to begin by quoting a text that has been sent to me. It is a text that was sent to Peseta Sam Lotu-Iiga and this mother has forwarded it on to me: “My son delivers a paper. He makes $5 a run that takes him about 1½ to 2 hours to do. How can your Government tax him on the pittance he makes? You should be encouraging kids to work hard. Shame on you.” 
This mother is obviously listening to this debate and is saying to this Government: “Shame on you. Shame on you for trying to take money out of young kids who are trying to make ends meet.” I quote that because the people listening to this debate have children delivering papers earning as she says a pittance and this Government is now ready to put its hands in the pockets of those young kids. I do not think that this Government here understands the struggles of hard-working communities struggling to make ends meet. They will remember that the first Budget of this Government was mana-enhancing. Those were the words. Well there was no mana-enhancing for the community. The second Budget I understand was “the road to recovery”—[ 
Interruption 
] 
The CHAIRPERSON (Lindsay Tisch) 
: Order! The member cannot say “Tell the truth.” In future— 
Hon Member 
: Withdraw and apologise. 
The CHAIRPERSON (Lindsay Tisch) 
: I am ruling. I do not know where it came from but whoever said it you cannot say “Tell the truth.” 
Todd McClay 
: Tell another lie. 
The CHAIRPERSON (Lindsay Tisch) 
: Who said that? The member will stand and apologise for that comment. 
Todd McClay 
: I apologise. 
Su’a WILLIAM SIO 
: That speaks loud does it not? 
The CHAIRPERSON (Lindsay Tisch) 
: I have ruled and that is the end of the matter. Proceed with the debate. 
Su’a WILLIAM SIO 
: So their first Budget was supposed to be mana-enhancing. There was no such mana-enhancing in working-class communities. Their second Budget was called “the road to recovery”. All we got to see was the dead-end. All we got to see was the dead-end because what they did was they fixed the tax rate so those on the highest income got the biggest chunk of the tax cut while the rest of working-class New Zealanders got GST increases. That is what we get from this Government.  
We also heard last year about a brighter future. Where is the brighter future for 160000 people unemployed? Where is the brighter future for people who are jobless and who would work—and I am referring to the changes in the Taxation (Budget Measures) Bill here in clause 3—where are the changes? Where is the brighter future for the people who are jobless want to work but cannot find a job? This Government says it is on the road to recovery. Well the recovery continues. There is no such recovery for working communities who are struggling to make ends meet. The only recovery that many of the community are experiencing at the moment is coming from Australia—the 50000 people who are going there 1000 every week is what we are seeing. 
The CHAIRPERSON (Lindsay Tisch) 
: Part 1 is a very succinct part and I bring the member back to it. Just concentrate on Part 1. 
Su’a WILLIAM SIO 
: Part 1 amends the Income Tax Act. The 50000 people travelling to Australia do not see a future because this Government keeps taking from them the very little money they have. So there is no brighter future. When we read clause 4 in Part 1 “Amendment to Income Tax Act 2007” what future is there for this mother who is saying that her young son is earning money trying to scrape by and saving? Perhaps this money goes towards the cost of the uniform but all they are hearing from this Government is that it will take away the very little money they are earning.  
I do not think this Government has any understanding of the struggles that our communities are going through. I suppose it is because the Government does not understand that $3 $5 or $10 to a low-income family is worth so much more than it is to those who earn quite significant amounts of money. I suppose that Ministers who earn over $200000 probably have no idea of the struggles of a young boy who in this case is earning $5 a day on average. They do not understand what this young man is going through.  
So I am saying to this Government that we should have been debating ways of ensuring that families who are struggling do get money in their pockets. Families having money in their pockets and being paid decent wages are the sorts of debates that we should have been having tonight. But no all we have is a Budget that does not provide any hope to young people who want to get an education. It does not provide any hope for people who are unemployed at the moment and who want to be able to find jobs. It does not provide hope to people who want to see New Zealand grow.  
A party vote was called for on the question  
That Part 1 be agreed to. 
Ayes 64 
New Zealand National 59; Maori Party 3; ACT New Zealand 1; United Future 1. 
Noes 57 
New Zealand Labour 34; Green Party 14; New Zealand First 8; Mana 1. 
Part 1 agreed to. 
Part 2Amendments to Tax Administration Act 1994  
A party vote was called for on the question  
That Part 2 be agreed to. 
Ayes 64 
New Zealand National 59; Maori Party 3; ACT New Zealand 1; United Future 1. 
Noes 57 
New Zealand Labour 34; Green Party 14; New Zealand First 8; Mana 1. 
Part 2 agreed to. 
Part 3Student loan scheme: Repeal of 10% voluntary repayment bonus  
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 I remember not long after I became a member of Parliament participating in a debate that introduced this very provision that we are now deleting as set out in Part 3 of the Taxation (Budget Measures) Bill. I have to say that I welcome the National Party’s about-face on this. It has actually got it right at long last because this repayment bonus was a total rort of the system when the Government introduced it and it has finally worked that out. But is it not interesting what a difference a couple of years make? What were Government members saying when they introduced this piece of legislation? Well we will start with the Minister in the chair Peter Dunne who said: “I say to the House that this is a significant incentive for students to pay their loans earlier.” And it gets better; it gets better: “I cannot fathom why anyone would oppose the introduction of such an incentive.” This is the Minister who is now in the chair deleting the very incentive that he could not possibly fathom how anybody would be opposed to and now he is in the chair doing away with that very same incentive.  
Well the Labour Party was right because this is a rort. It is a total rort and now the Government has got the officials’ advice to say that it is a total rort. What has the Ministry of Education said? It said: “In 2011”—last year—“2611 borrowers repaid their student loans in the same year they borrowed receiving $1.8 million in bonuses … This resulted in a cost to the Government.” In other words what the Ministry of Education is claiming is that people who did not need to take out the loans were taking out the loans in order to get the repayment bonus. It was a little kickback so I am actually surprised that the National Party is doing away with this because it is normally quite good on that sort of stuff—rewarding people and creating all these loopholes in the system. The National Party is normally quite good at that. That is normally what it quite enjoys doing but thankfully in this particular case it has finally realised that it made an awful mistake when it introduced this ridiculous repayment bonus which was only ever going to encourage people who did not need to take out student loans to take out student loans.  
People have always been able to repay their loans faster. In fact the National Government—the National Party I should say because it was not the Government at the time—opposed the very thing that halved the repayment times for student loans which was making them interest-free. That halved the repayment times for student loans and what did John Key call that? He called it a hoax and he said that he was going to fight it with every bone in his body. Well I am not sure how many bones he has left but interest-free student loans are still here and John Key did not put up much of a fight and now he says that he is going to keep the interest-free student loans. So it was not really much of a fight. That was the thing that halved the repayment times for student loans.  
Unfortunately the National Party keeps trimming around the edges of the student loan scheme but we know that eventually it will get to the point where it will say “Oh we just can’t afford it any more.” It is softening people up for it. It is trimming all around the edges of student support with its trimming of student allowance eligibility and with its trimming of who is eligible to get a student loan in the first place. Let us bear in mind the fact that the student loan scheme was set up in the first place to ensure that nobody was prevented from entering tertiary education because of financial barriers. That is why the loan scheme was set up. Of course the loan scheme was set up as a result of a broken promise by the then National Government back in 1990—or 1991 I think it was when it technically did it— 
Hon Clayton Cosgrove 
: Who was that? Who was the Minister?  
CHRIS HIPKINS 
: I am not going to get into that but I do recall that the Minister at the time had campaigned up and down the country pledging to do away with university and polytechnic tuition fees and that he would resign if he had not done so. So what did the Government do? It did away with the Government-established tuition fees and instead introduced institutional tuition fees which were higher than the ones that the Government had put in place. [ 
Interruption 
] That is right. It introduced the student loan scheme to allow the students to pay for those because the criticism at the time was—and it was a legitimate criticism—that those new fees introduced by the then National Government as another one of its broken promises were going to act as a barrier to participation. So it set up the student loan scheme in order to overcome some of those barriers.  
The student loan scheme I think has improved remarkably since the then Labour Government back in 2005 removed the interest on student loans. That halved—more or less halved give or take—the repayment times for student loans. I think that was a very positive thing. Those are the sorts of bold initiatives that a bold Government takes when it wants to change something. This Government would not know a bold initiative if it tripped over it in the street. We have not seen any bold initiatives in this Budget. This most certainly is not a bold initiative— 
The CHAIRPERSON (Lindsay Tisch) 
: I am sorry to interrupt the honourable member. The time has come for me to leave the Chair.  
Debate interrupted. 
Sitting suspended from 10 p.m. to 9 a.m. (Friday)