Key John: Taxation (Annual Rates and Urgent Measures) Bill — Second Reading 
Key John: Taxation (Annual Rates and Urgent Measures) Bill — Second Reading 
[Volume:628;Page:701] 
JOHN KEY (National—Helensville) 
: 
 Next week the House will be in urgency so that the Government under the cover of darkness can call on every part of its confidence and supply arrangements in order to pass this Taxation (Annual Rates and Urgent Measures) Bill. That is what will happen under urgency next week; we are debating the same legislation here today. It happens to be exactly the same legislation for which there were no public submissions—not one. Labour did not want to know what the public thought of this bill and it did not care about that even if people wrote to the Government independently anyway. So there were no public submissions. The second point is that a number of Government agencies looked at this bill and its side effects. Although their work has not been done yet the preliminary work that Treasury the Reserve Bank and others have done indicates that there will be bad news for the Government. But that advice will not be on the Table next week when this bill is passed under urgency. 
Next week a bill will be brought back to the House and rammed through that just covers off the election bribes that the Labour Government had to roll out in order to get itself in power for a third term. The Labour members on the Finance and Expenditure Committee were worried about one thing only. They were not worried about the implications of the bill for borrowers the impact on New Zealand society or the messages the bill was sending to young New Zealanders and they did not care that it reaffirms some of the highest tax rates internationally which will lock New Zealand into an uncompetitive environment. All those things did not matter. Only one thing mattered to the Labour members on the committee when this bill was considered last week. It was this: there were no drafting errors in the bill. That is what those members were worried about—no drafting errors so they would not be embarrassed. Paul Swain has had a couple of those errors come down to the House in the past. They were such absolute shockers that he had to have amendments made hours days or weeks afterwards. The bill is very nice is it not? It looks great. That was the only thing that Paul Swain was worried about. So under the cover of darkness that is what is to happen. 
The really interesting thing about this bill is that it involves something this Government is extraordinarily good at. [ 
Interruption 
] That is right; I do not normally heap praise on the Labour Government. However the one thing it is really good at is spending and it is exceptionally good at spending other people’s money. Clayton Cosgrove used to be a fiscal conservative when he was the chairman of the select committee but now he is just another big-spending Minister with his hand in the air passing out the dollars. 
Something happened today that will really affect Christmas for New Zealanders who are out there working hard and toiling away: interest rates went up. They went up for the ninth time since 2004—the ninth time. The Reserve Bank came out and said that we now have an official cash rate of 7.25 percent. Dr Cullen said in answer to my question today that our interest rates are the highest interest rates in the OECD and the official cash rate is the highest it has been since it was brought in. 
Dr Cullen came into office when interest rates were at 4.5 percent and we had a current account deficit of 2 percent of GDP and he used to go up and down the country moaning about that. Today the same Dr Cullen had the audacity to tell me that I do not understand it when a Japanese housewife buys $20000 worth of an Uridashi issue which was sold to her on the basis that if it all turns to custard and the exchange rate goes down she can just come to New Zealand and have a good holiday—that is he told me that I did not understand the international bond markets. That is a really interesting statement to have come from the history professor but we will not go there. 
But that is what Michael Cullen thought of today’s ninth increase in interest rates which comes on the back of the sort of legislation that is going through as the “Taxation (Annual Rates and Let Us Spend Up Large) Bill” which the Government is debating today. Michael Cullen said that the increased interest rates were not his fault and that he was actually offended that the Opposition spokesperson on finance cared enough about mortgages and the fact that exporters in this country were going to the wall to question him about that. He said it was a disgrace that the Opposition spokesperson on finance cared about the hundreds of thousands of New Zealanders who will have a rough Christmas. Their mortgage rates are going up because Michael Cullen does not care about that. 
But then Michael Cullen does not think that many things are his fault and he does not think that this bill will do much. We had to point out to Michael Cullen that when we offer an interest rate of zero percent it becomes quite attractive. Then Michael Cullen in another breath—and on the other TV channel when he announced this policy he was telling off New Zealand consumers for borrowing more when somehow interest rates were lower because the banks were in a price war—came out with the granddaddy of all low-interest loans: zero percent forever. He said that that would not be a problem for him. He said there would be no behavioural changes no one would react to that policy by borrowing more and they would repay their loans at the same rate as previously. 
Two weeks ago a young chap called Thomas Banfield worked out— 
Ron Mark 
: Young Nat? 
JOHN KEY 
: He was not a Young Nat—I said a young man. Ron Mark has a big future ahead of him because his current party leader is not doing very well. Mr Mark has a big future so the member should worry about his future and I will worry about the young man Thomas Banfield. Mr Banfield worked out something that the Minister of Finance of this country does not understand. Thomas Banfield knows that if we get money and put it in the bank risk-fee we will earn interest and that it is more valuable to do that than to pay off a student loan where we would earn no interest. So Michael Cullen as members heard in his speech just a few moments ago said that he did not like that and that next week the Government under the cover of darkness when it is ramming through this legislation—legislation that no one has been allowed to discuss or have any input into at all except to make sure there are no drafting errors from Paul Swain—will pass a Supplementary Order Paper. It will change the legislation so that after next week Thomas Banfield will not be able to do what he did a week earlier. 
The real kicker of this is though that Thomas Banfield represents the people who made voluntary loan repayments in the last 6 months and when this Taxation (Annual Rates and Urgent Measures) Bill is passed I have bad news for Michael Cullen. What will happen is that student loan holders will not make their voluntary payments. They will not need his adjustment to the legislation. They will not need to go and ask for their money back saying: “ Please can I have my money back so that I can put it on deposit?”. They will cut out the middleman—Michael Cullen—and go straight to the bank themselves. Michael Cullen knows that but if he did not believe that it was a problem—because nothing is going to change after we have passed this legislation—can someone anyone explain to me why he has to close the loophole down now? 
I tell members this: Michael Cullen may be closing the stable doors next week for those people who have made voluntary payments in the last 6 months but he is about to get a shotgun out and blow those doors off their hinges when he passes this legislation. But he does not care about that. Thomas Banfield knew more about interest rates than the Minister of Finance and actually for the record he knew more about the law than Michael Cullen who used to be the Attorney-General. That is the kind of leadership that the Labour Party is giving this country; it is completely and utterly wrong. 
Michael Cullen mentioned that the Working for Families package will be extended. What he actually did was quite nifty I suppose. By passing that measure Michael Cullen will achieve his and the Labour Party’s lifelong ambition. They will allow every New Zealander to become a welfare beneficiary; every New Zealander will be on a welfare benefit. 
Hon Clayton Cosgrove 
: Oh you lost the election! 
JOHN KEY 
: There is Clayton Cosgrove. I have a message for him to take back to Waimakariri: he can become a Cabinet Minister earn hundreds of thousands of dollars and if he has enough children he too can be on the Working for Families package. Even he can get something back. He should not worry about the fact that he pays the top personal taxation rate. He should not worry about the fact that in the Budget lock-up in 2004 Michael Cullen said that the No. 1 thing he was worried about was effective marginal tax rates. Now he is rolling out that package to people who earn over $60000 a year. Well this is the message from people who earn over $60000 a year: “No thanks very much! We don’t want your welfare payment; what we want is a lower tax rate. And then we’ll tell you what: we’ll go about our business and you Labour can go about yours.” 
I cannot wait for the Committee stage on this bill next week; I just simply cannot wait for it.