Burns Brendon: Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
Burns Brendon: Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
[Volume:672;Page:18948] 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I start by expressing some disappointment in the Minister in the chair Peter Dunne because he has made it his hallmark to represent the middle classes of New Zealand. That has been his rallying cry. His political rhetoric has been built around assisting middle-income New Zealanders to get ahead. But this Budget in my view is doing nothing to assist middle-income New Zealanders to get ahead. 
I think he has bought into the rhetoric that was very much in prominence back in 2008. Basically the deal from National to the New Zealand electorate was that people could have their cake and eat it as well. The New Zealand electorate could have everything that the Labour Government had provided to it. They could have Working for Families and KiwiSaver and they would be given tax cuts as well as picked up by Part 1 of the Taxation (Annual Rates and Budget Measures) Bill which enshrines the tax cuts that have been put in place by this Government. 
But here is the reality: as we see in this bill those tax cuts as enshrined by Part 1 are only part of the equation. They are being eroded—they are being eroded—by all the other measures that are included in this bill and by other Government measures we have seen in the recent past such as the cuts in early childhood education and resulting increase in fees increases in accident compensation levies and the like. 
I also note that that set of tax cuts as implemented by Part 1 was affirmed as feasible and realistic by National when in Opposition in 2008 just as the world’s financial markets were falling apart. New Zealanders were told that those tax cuts as enshrined by Part 1 were affordable even after Goldman Sachs had collapsed and the US economy was in turmoil and even after Merrill Lynch had collapsed and had to be bailed out by the taxpayers of America to the tune of $3 billion. 
Where do we end up? Part 1 has the tax rates that will apply through part of this year as set out by this legislation. What is the legislation trying to deal with? It is trying to deal with a deficit of $16.7 billion—$16.7 billion. That is what the tax revenue is attempting to address. As my colleague David Shearer pointed out when this Government came into office there was a surplus of $5 billion so that is a turn-round of more than $20 billion. We now have 16 billion tonnes of debt upon our backs and this part of the bill is attempting to have tax revenues offset some of that debt. 
I ask the Minister in the chair how secure the revenue predictions are that underlie Part 1 and the tax rates that will apply in the financial year ahead. I ask that because already we are hearing through the media today that employers are saying that the other measures in this bill in respect of KiwiSaver will have to be met by their cutting back on the tax they pay and putting increases on to their employees. We have heard Alasdair Thompson of the Northern Employers and Manufacturers Association say that the employers’ KiwiSaver components in Part 2 will be coming out of the wage increases—the wage increases—of employees. How can we set any store by the tax-projected revenues incorporated in Part 1 of this bill when employers are saying that they will not be meeting the KiwiSaver ramifications included in Part 2? Instead they will be looking to their employees to meet those costs. I ask the Minister what revenue implications that will have. What revenue implications will it have for Part 1 of this bill? 
I also point out the difference between the Inland Revenue Department’s projections and Treasury’s projections as outlined in the Budget’s Economic and Fiscal Update. The difference is in the order of $3.5 billion over the next 4 years which is nearly $1 billion a year. That is a huge component as we know in respect of Part 1 of this bill.