Shirley Ken: Taxation (Annual Rates GST Trans-Tasman Imputation and Miscellaneous Provisions) Bill — Second Reading 
Shirley Ken: Taxation (Annual Rates GST Trans-Tasman Imputation and Miscellaneous Provisions) Bill — Second Reading 
[Volume:613;Page:10051] 
Hon KEN SHIRLEY (Deputy Leader—ACT) 
: 
 I feel that Mr Donald was trying to give my speech for me. He was certainly trying to anticipate what I might be about to say. ACT will be supporting this bill at the second reading. I note in particular that it confirms annual income tax rates for the 2003-04 year. I would just like to comment on that; other speakers particularly Mr Key have already done so. 
We must remind ourselves that one of the first things this Labour-led Government did upon coming to power was to increase the top tax rate in this country. It created a massive distortion in doing so. The tax rate went from 33c to 39c. Do members remember Labour’s promise? It promised that no increase in tax would affect more than 5 percent of the population. Its calculation at the time was that indeed 5 percent of the population was affected by that increase—that is the 5 percent earning over $60000. But we now know that through fiscal drag 19 percent of the population is in that category. Labour has broken its promise—19 percent is now affected by that top tax rate not the 5 percent that it promised. That is one of its most basic breaches of promise. What is almost worse is the way that it has done it. It has done it through fiscal drag—that old fiscal drag. One does not see it; it is out of sight sneaky and very very bad indeed. 
What is also extraordinary is Labour’s lack of understanding. It does not understand the difference between taxation and revenue. What we certainly appreciate in ACT and certainly what most enlightened economists and economies around the world now appreciate is that once one’s taxation rates are up above 20 percent one is actually damaging the economy. A Government does not have any money. The only money that a Government has is the money it takes off people off families out of communities and out of business. What is the assumption behind a Government taking that money? That it needs it because it can spend it more wisely and do more good for the community and the population than would be done if it were left in the pockets of families and communities. Who really believes that bureaucrats and big government spenders like the Labour Government here in Wellington are better stewards of one’s money than one would be? Does anyone actually believe that when we look at the appalling waste of expenditure that Governments get involved with? 
In relation to this bill the point is this: one can actually reduce taxation and because one then has a more efficient economy have more people working and therefore more people paying tax. A Government can get more revenue off a lower tax rate than will happen under the ideology of this Government which increasingly just wants to put up taxes. That is why ACT has consistently campaigned for lower taxes for all workers: because it provides the incentive for able-bodied people to get off benefits and work. It provides the incentive for them to earn and they then spend and pay more GST and income tax. Lower income tax can actually give Governments more revenue. 
But no this Government just wants more control; it puts up taxation because it believes that it can spend the money more wisely and demonstrably it cannot. It wastes so much money. This Government is a big-spending Government and a big waster. All of that waste carries an opportunity cost that reduces the prosperity and wealth of this country. It is not Governments that generate wealth; it is business people through their own initiative running businesses earning income producing goods and providing services. That is what produces wealth. [ 
Interruption 
] Mr Benson-Pope from Dunedin who is trying to interject does not understand that. He has been a bureaucrat all his life. All he knows is tax and spend. All he understands is tax and spend. Certainly the people of Dunedin have very little respect for that member. 
We had an extraordinary speech from Rod Donald of the Greens. I would like to remind the House of the lack of logic in his speech. He said it is very good that the top marginal tax rate is 39c and that the rate that the superannuation funds pay is only 33c because that actually provides an incentive to save and to put money in superannuation. But what he is really saying is that people make those decisions only when they are forced by the State. Surely if we left the tax rate at 33c people would make those decisions of their own accord. The biggest problem for people saving in this country is that they are paying too much money in tax to this Labour-led Government which wastes their money and throws it away on all manner of spurious appalling expenditures that are not properly audited or accounted for. The Government just throws away taxpayer’s hard-earned money when that money could be generating wealth creating more jobs and creating prosperity for the country. 
Mr Donald totally contradicted himself. He thought it was great that we should have lower taxes to enable people to pay into superannuation funds. I agree with him but the same principle applies and that is why we should have tax rates at about 20c in the dollar. That is why ACT says we should have a tax cut for every worker; the workers will then be able to save more afford health-care and afford all manner of other things instead of the Government taking the money taking the choice away from them and promising that the Government will provide only to have the Government fail to provide or provide a very inferior service. 
We actually experienced something quite significant here. I think Mr Donald revealed today that he is almost at the level of Economics 101. He is almost on that first step of understanding. That has to be tremendous. Instead of his voodoo economics of tax and spend of the more one taxes people the better it is and of the more control the State has the better it is through his speech today he has finally revealed that he is beginning to understand that it is not Governments that create wealth but individuals through their own efforts and communities creating services providing services and creating goods and products. That is what creates wealth not Government spending. 
Let us hope that this Labour-led Government in the limited time it has left in office will come to that realisation and will finally reduce the top tax rate from 39c in the dollar. There is no reason for it. It has destroyed the New Zealand economy it destroys proper incentives and even the Government’s own policies are revealing that it cannot sustain it.