Boscawen John: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — Second Reading 
Boscawen John: Taxation (International Taxation Life Insurance and Remedial Matters) Bill — Second Reading 
[Volume:656;Page:5432] 
JOHN BOSCAWEN (ACT) 
: 
 It is also my pleasure to speak this evening on the Taxation (International Taxation Life Insurance and Remedial Matters) Bill. Like the speakers before me I would like first of all to acknowledge my colleagues on the Finance and Expenditure Committee the chairmanship of Craig Foss and the officials. Earlier this evening Robin Oliver was present. Robin and his colleagues marched many times into the select committee room during the months I was sitting on the committee—February March April May and June—along with our own advisers who were recruited directly to the committee. 
I also acknowledge the many submitters. Reference has been made this evening to the fact that there were 60 submitters on this bill. I acknowledge the philanthropic work that so many of these submitters do. I can recall sitting in on the submission of Minter Ellison which was 150 pages long and was presented by David Patterson. It was followed soon after by the submission of Bell Gully which was also 150-odd pages long. I was impressed with the professionalism that went into preparing those submissions. 
As the Minister of Revenue said this bill is a very large and technically complicated bill. As speakers have said the bill is over 800 pages long and it makes many amendments to various tax Acts. It makes extensive amendments to the Income Tax Act 2004 the Goods and Services Tax Act 1985 and the KiwiSaver Act 2006. 
In listening to this debate this evening the speech that most attracted my attention was the speech by Mr Nash. He talked about the reforming nature of the previous Labour Government. He talked about the Labour Government being a party of reform a party of tax reform. Mr Nash told us that the Labour Government had been aspirational transformational and bold. I find that very interesting. I would like to remind Mr Nash of recent Labour history and to reflect on the Labour Government of 1984-90. At that time there was a Labour Government that was indeed aspirational transformational and bold. It is quite interesting that one of the tax Acts that we are amending with this document—this tome—is the Goods and Services Tax Act. It would be interesting to explain to Mr Nash that when GST was introduced to New Zealand we halved the top rate of tax. In this country we used to have—in my lifetime 25-odd years ago—a punitive top tax rate of 66c. 
With the introduction of GST—Mr Deputy Speaker I can see you nodding—the tax rate was halved from 66c to 33c. At that time my father was the principal of Otahuhu College. I did his tax returns for him and two-thirds of the marginal dollars he earned as a school principal was paid to the Government—two-thirds! With the introduction of GST we halved that top rate of tax. We said to people like my father and hundreds of thousands of other New Zealanders that if they worked hard sought promotion and contributed to this country they would not be penalised. What happened when we dropped the top rate of tax from 66c to 33c and made other consequential adjustments to the tax rates? Did our tax take halve? No it did not; it stayed the same. This country earned as much from tax and income tax when the top rate was 33c as it did when it was 66c. Why was that? Because people who were paying 66c were not motivated to work. They were motivated to hide their income to suppress their income; they paid no tax if they were able to hide it. By applying a top tax rate of 33c the bold transformational aspirational Labour Government of the 1980s provided an incentive for people to work to earn income and not to cheat on their taxes. 
What did the previous Labour Government do? What did it do when it got into power? What did the aspirational transformational fifth Labour Government which Mr Nash referred to do? It increased the marginal rate of tax. It increased the top rate of 33c to 39c. It said to people that they would be punished. It was the “envy tax”. I find it very interesting that Mr Nash talked about the fact that when National came to power at the end of last year one of the first things it did was reduce that top rate of tax. I should add that it was reduced from 39c to 38c not to 33c or 34c—from 39c to a miserable 38c. 
Mr Nash talked about only the top third of taxpayers benefiting from those tax cuts. I think he talked about 70 percent of New Zealanders being on an income of below $40000 and he criticised the fact that a large proportion of people were earning less than $40000. Well I say that Mr Nash needs to look no further than his own party. Why do I say that? When I see Mr Nash next I intend to give him a copy of the book  
No Second Class Citizens  
which has been recently published by my colleague Sir Roger Douglas. If Mr Nash turns to page 70 he will see average Government spending per person and how those statistics have changed over the last 50 years. 
In 1984 when the fourth Labour Government came to power average Government spending per individual New Zealander was $12000. In 1996 average Government spending per person was $12000. It had not changed in those years between 1984 and 1996. Government expenditure per person held firm at $12000. Twelve years later—after 3 years of a Bolger administration and 9 years of a Dr Michael Cullen administration—Government spending has gone from $12000 per person to $18000 which is a 50 percent increase in real terms. That is $6000 per person and $15000 per household. The reason that 70 percent of New Zealanders are on incomes of less than $40000— 
Hon Darren Hughes 
: What book is that in? 
JOHN BOSCAWEN 
: I will give that member a copy. We have a second copy. We have one for Mr Nash and I am happy to give him one too. 
The reason that 70 percent of our population is earning less than $40000 is the massive increase in Government expenditure per person from $12000 to $18000—$15000 for an average household—in the space of 13 years. 
I come to Mr Norman’s comments. Mr Norman criticised this bill. He said we are debasing our own manufacturing industry and we are encouraging New Zealand manufacturers to move overseas. He said that we are incentivising New Zealand companies to set up and do business in China rather than manufacture in New Zealand. He talked about ideology. That is interesting because Mr Norman and the Green Party are proposing that we should set a Kyoto target of a 40 percent reduction in emissions from the 1990 level—a 40 percent reduction from the 1990 level—by 2020. That would be something like a two-thirds reduction from the current level. It has been calculated that that would add $3000 per household per annum to living costs. If anything would drive New Zealand manufacturers overseas to China that would be it. Do we hear the Chinese manufacturers offering to tax their industry? We do not. The Green Party and sadly a lot of other political parties in this Parliament would tax New Zealanders at a time when the scientific evidence shows that the world has actually cooled over the last 9 years. 
I say to Mr Nash and his aspirational transformational and bold Labour Party that he should go back to the roots of the 1984 Labour Government and promote tax cuts. He proudly talked about the two reductions in the corporate tax rate during the course of the previous Labour Government. It is a pity he did not refer to the fact that the top marginal tax rate for individuals went from 33c to 39c. I have to say that the response so far from National is a rather pathetic tax reduction of 1c. 
If we want to provide incentives for New Zealanders to work to get ahead and to be aspirational we need significant reform of our tax structure and of our tax rates. Thank you Mr Deputy Speaker.