Foss Craig: Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill — In Committee Third Reading 
Foss Craig: Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill — In Committee Third Reading 
[Volume:647;Page:16346] 
CRAIG FOSS (National—Tukituki) 
: 
 It is a pleasure to follow the previous speaker Moana Mackey who is well known for singing “The Gambler” at the Labour Party conference. Perhaps she will rewrite the song because the headline on the front page of today’s  
Dominion Post  
is “I bet the bank” and the gambler is Dr Cullen. I thought I should note that. 
One thing seems to be lost on members opposite. In the last half-hour or so Government members have started to speak on the third reading of this bill and on the Budget in general. I do not think any Government member spoke in the Committee stage of this bill and Government speakers were few and far between during its other stages—except for the Ministers of course. The key speakers Dr Cullen and Mr Mallard have implied that it is all locked in that it is about absolute power and that the numbers are so tight that there is no room for any movement—no room for John Key no room for Bill English and no room for the Nats to improve upon it. I will let members into a secret: there is a lot of room. But they seem to have missed the obvious. If we are to believe those speeches from Dr Cullen and Mr Mallard they have poll-axed Mr Goff. If it is true that this Budget leaves the next Minister of Finance with no room to do anything then if by some absolute tragedy Labour wins the next election—a tragic tragic event—the next Labour Minister of Finance whoever that might be will have absolutely no room to move. Dr Cullen has poll-axed Mr Goff or Mr Cunliffe who we know has ambitions or Mr Jones who is lining up quietly amongst the undergrowth. He has poll-axed his own caucus. 
Obviously his caucus colleagues are sick and tired of being bullied by him year after year about tax cuts etc. Now he has finally caved into them. Talk about swallowing rats! These tax cuts have to be the biggest spikiest dirtiest ugliest rat that a Minister of Finance has ever swallowed. The rat that Dr Cullen has swallowed to produce this particular bill is of elephantine proportions. 
I note that the name of this bill—Labour does not miss an opportunity; I have to give its communications unit credit for that—is the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill. Was the 1999 bill that hiked taxes called the “Taxation (Personal Tax Hikes) Bill”? Have any of the measures introduced by Labour all the way through its terms been called the “Interest Rate Increase Bill” because of the effect of the prolific and unproductive spending of Labour and its taxation grab? Labour does not miss a trick. One has to give it the nod there—although I wonder whether this bill has been referred to the Electoral Commission because of its blatant advertising. 
As I have said in every single speech on this bill it is an absolute pleasure to be voting finally for a personal tax cut bill. It is a bit of a road to Damascus Budget from Dr Cullen in view of the big big rat he is swallowing. But it is all about trust. Quite simply if I do a quick search of  
Hansard 
 and have a quick look at the old pamphlets and brochures from the 2005 election and at previous Labour Budgets then contrast them with the Minister’s Budget speech I realise that he did not write it. He read it out and he read it well but I do not think he wrote it. Someone else wrote it. Perhaps it was Mike Williams or perhaps it was Helen Clark. At least she is reading the political tea leaves in public. 
The previous speaker talked about the railways. A member from New Zealand First—the party of contradictions—also spoke about assets and railways. I will give members yet another reason why National will be voting against the Budget—the Budget not this bill. I refer them to page 153 of the main Budget document under the heading “Purchase of Rail and Ferry Network from Toll Holding Limited”. I will read out the last paragraph and members should remember that the Government has put $690 million of taxpayers’ funds into the railways: “There is a risk that if any differential in the purchase price and the value of Toll New Zealand’s rail and ferry assets and liabilities cannot be recovered through rail operations a write-down in the Government Financial Statements will be required.” We should remember that this Budget is supposed to be produced under New Zealand International Financial Reporting Standards so everything is supposed to be market to market. Translated that paragraph means we paid about $290 million too much and we have seen that reflected in the share price of Toll Holdings. 
This part is blatant. I cannot recall it being mentioned in the Minister’s speech yesterday. The paragraph quoted refers to a “write-down”. It does not state “write-up”. That is an admission right there that we paid too much and the taxpayers have been gouged. At what value will the railways etc. that have been bought from Toll Holdings go on the books? What contingent liabilities are about to hit the books? We know all about the subsidisation of the trucking firm the leases etc. and the $50 million that taxpayers have granted essentially so that Toll Holdings can buy another trucking company. The document states right there—and this is not a Treasury ideological burp; it has stopped burping now; its Minister has taken on board tax cuts apparently—that Dr Cullen paid too much. 
I will tell members another reason for not supporting the Budget. Between the Budget and today the 3-year interest rate has gone up 50 basis points. In the Budget speech time after time the Government tried to show its heartfelt feelings for people suffering because of high mortgage rates. It blamed it on the subprime issue. The previous speaker tried to do that as well. It is more than the subprime issue because the starting point for New Zealand interest rates is higher than that of interest rates anywhere else. What a change! From before the Budget to after the Budget 3-year interest rates went up 50 points the Kiwi dollar went up 1c and short-term interest rates went up again. 
What else is going on? How is this Budget going to be funded? Well page 102 of the main Budget document talks about $6.4 billion of additional borrowing—additional borrowing. Dr Cullen is failing miserably his third test in respect of tax cuts. Also the assets that the Debt Management Office has been looking after—basically the cash stash; where the Minister has been keeping it all—will be sold or matured. What will the effect of that be? Billions of dollars of assets coming on to the short-term market will hold at the very least interest rates or send them up—that is 90-day rates 60-day rates 12-month mortgages rolling mortgages etc. will stay up and stay up for longer. 
If colleagues still do not believe me they should look at the forecast in the Budget itself and at the numbers that are relied upon to produce those forecasts. The Budget Economic and Fiscal Update refers on page 70 to the 90-day bank bill rate. It was guesstimated at the last update to be 8.6 percent on average this year; it is now 8.8 percent. It is expected that it will plummet post this Budget to 8.6 percent. That is miles above that of any other OECD country. And those members shed crocodile tears on TV. It is absolutely absurd. The 10-year rate is staying up. It is not even moving around. 
Members should look at the current account and the CPI—the cancer on the future of our economy. It is the result of unproductive spending by this crowd for the last 8 years. The CPI is nudging the top of 3 percent. What does that mean? It means that short-term interest rates will be higher for longer. It means that the New Zealand dollar will be higher for longer—higher than necessary. The Labour Government premium—the Cullen premium on New Zealand interest rates—and the discount on our future growth have been embedded in this Budget. Thank you Mr Assistant Speaker.