Donnelly Brian: Taxation (Annual Rates and Urgent Measures) Bill — First Reading Instruction to Finance and Expenditure Committee 
Donnelly Brian: Taxation (Annual Rates and Urgent Measures) Bill — First Reading Instruction to Finance and Expenditure Committee 
[Volume:628;Page:211] 
Hon BRIAN DONNELLY (NZ First) 
: 
 To start with I wish to take the opportunity to express my sense of loss at the passing of Rod Donald. Having made my affirmation the previous three Parliaments alongside Rod I tangibly felt his absence last Monday. I also sat beside him for some time during the last Parliament and seeing his seat empty last week certainly was poignant. 
New Zealand First has some misgivings about this legislation. However I can say at this point that we will be supporting it through its first reading. There are two reasons for that. The first is an important thing called democracy. We recently had an election. Different parties put up their policy positions and the largest number of New Zealanders voted for the party that proposed the policy changes contained in this legislation. 
New Zealand First listens to the voice of the people—as we did back in 1997. We put to the people a proposal regarding a retirement savings scheme. We responded to the voice of the people even though it overwhelmingly rejected our very sensible proposal. In the same way the voice of the people on 17 September told us it was largely in favour of the policies that this legislation advances. 
The second reason we will support this legislation going to a select committee is much simpler: we agreed to do so in our confidence and supply agreement with the Government. I shall read the relevant passage—and also tell members about the bauble that came with it: “The government has identified the pledges on its commitment card along with their election policy to extend the working for families package as priorities for them and New Zealand First agrees to support the legislation if required to give effect to these policies.” New Zealand First is an honourable party and we will be honouring that pledge. Honouring that pledge in no way denies us the right to express our misgivings. 
This legislation deals with the Working for Families package. From New Zealand First’s point of view if there is redistribution of wealth it makes sense to target such redistribution to families with children. Some years ago economist Brian Easton did some research into this and revealed that four-fifths or 80 percent of the total cost of rearing a child falls to the family. One-fifth in fact is funded by the State. However the benefit of the educated healthy pro-social adult that the child becomes accrues to all members of society. Therefore New Zealand First supports the targeting of redistribution to families with children. 
However our misgivings lie in the potential of this proposal to lock in welfarism. Let me put it this way. My father was a shirt-cutter by trade. I do not think that the trade actually exists any more but it certainly was not a very highly paid job by any means. His tax code would have been M5—married with five kids. As a result of that he would not have paid very much tax at that time but he never brought home more than he earned—and that is the problem this legislation has. The thinking of the day was that if one was funding the upbringing of children directly as a parent must then one paid less in taxation. It was not welfarism. 
The problem we have now is that because we have become such a low-wage economy many people cannot earn enough in a normal week to fund the costs of catering for the physical health educational and social needs of their children. So we have the prospect of decent hard-working families being forced on to welfare for the mere basics of survival of the adults and children within those families. 
New Zealand First believes that the real challenge to our nation is to become a high-wage economy rather than the low-wage one that the forces of Rogernomics and “Ruthanomics” created. To that effect we believe that New Zealand First’s gain in the confidence and supply agreement—to raise the minimum wage to $12 per hour by 2008—is a bauble we are quite happy to accept. This policy will create a “trickle-up” effect and we well know that the trickledown theory just did not work. 
However we will continue through the period of this Parliament to work towards the other part of the quinella of New Zealand First policy which is to reduce the company tax rate. Business creates jobs and nothing but social good flows from the employment created by business. Government policy that maximises profitability of businesses needs to be devised. So New Zealand First supports the idea that we invest in our children by creating more disposable income within families; it is just that we see fish-hooks in the manner in which this legislation will achieve that. 
New Zealand First’s second area of misgiving is interest-free student loans. We believe that is a simplistic answer to a genuine problem of student debt. During New Zealand First’s short period in Government in 1997-98 it took steps to reduce student debt. For example we stopped the lump-sum loans that existed at the time and we introduced in 1998—people will remember that the Rt Hon Winston Peters was the Treasurer at the time—a partial interest write-off on student loans. What we would not do however was to wipe out the base rate which accommodates inflation so that the student pays back the real amount of the loan. 
This Government’s policy is in fact a giveaway because students will be paying back less than what they are borrowing and not the real amount. The worst feature of the policy is that rather than reducing student debt it will dramatically increase it. The Minister of Education has come up with some figures in the House today that are really quite unbelievable. When the Minister announced them to the House he told us that the calculations were based on a loan uptake of 70 percent of students. Well guess what—the current take-up rate is 70 percent. We are being asked to believe that this policy will not make any difference to the take-up rate of students and if I looked out of the window I would see pigs flying by if I were to believe that particular premise. 
However I also make the point that National needs to come clean with its policy which was based on treating education as a commodity. New Zealand First believes that education cannot be equated with a set of carpenter’s tools or a herd of cows but that is exactly what National’s policy was based upon. 
New Zealand First has long had a policy of a universal student allowance. Its rationale is based on a fundamental belief in the manner in which our society should operate. We believe—and in fact all the parties in the House with the possible exception of ACT believe—that one of the fundamental principles of our society is this: if for whatever reason a person is unable to earn the rudiments of survival which are food shelter and warmth then there is a collective responsibility to provide those rudiments. That principle is fundamental to the way our nation operates. Yet students as the only people in our society who are unable to provide for themselves because of their full-time study have to borrow purely and simply to live. There is already an opportunity cost in full-time study so why do we also burden our students with debt by making them take out loans purely and simply to live? This bill will not lead to reduced debt; it will lead to increased debt. 
The real problem that our society faces is the level of student debt and we believe that a universal student allowance would have cut into it in a manner that this bill will not. Nevertheless we will support its passage through to the Finance and Expenditure Committee. We believe that we have an obligation to do so because in doing those sorts of things we have enabled ourselves to achieve some of the other baubles such as the $12 per hour as a basic minimum wage. We are prepared to pay that price.