Swain Paul: Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill — First Reading Second Reading In Committee 
Swain Paul: Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill — First Reading Second Reading In Committee 
[Volume:647;Page:16285] 
Hon PAUL SWAIN (Labour—Rimutaka) 
: 
 There are a number of key debates in a parliamentary life and there are probably three major ones. The first one is the Speech from the Throne which is the one at the start of every parliamentary term that sees the Government outlining its programme for the next 3 years. Another important speech is the Prime Minister’s statement which is given at the start of every year of a new Parliament and outlines what the priorities will be for the year and usually gives a bit of a hint about what might happen in the Budget. But the critical debate in a parliamentary term and in the life of a Parliament is the Budget debate. 
People might be wondering what all this is about when they are watching it at home—mind you they have probably turned over to something on TV2 by now—but the critical point is that a Government has the same issues to face as a family in the sense that a Government receives money by taxation and has to work out by Budget time how it is going to spend that money. Just like the family receiving an income the Government also needs to set its priorities and try to live within its means. For a Labour-led Government the absolute “must do’s” are the important ones like health and education and things like that. 
There are lots of things that families would like to do with their money but cannot afford to and so it is with Governments. In the end it is a process of trying to work out what is in the best interests of the nation compared with the other things that everybody would like the Government to do. I have listened to 18 Budgets in my time in Parliament— 
Simon Power 
: You are so young! 
Hon PAUL SWAIN 
: —yes so young but behind ticks a very old and tired brain—and nine of them from National. Unfortunately the first one in 1991 was the rudest one—the “mother of all Budgets”. Ruth Richardson was running around Evans Bay in a pink tracksuit as I remember going on about how this was going to be a “spine-tingling Budget”. It certainly was spine-tingling for the people who were at the other end of it. There were benefit cuts the asset sale programme and the Employment Contracts Act. All those things happened at the start of that Budget period. Then we went into what one would call the drift Budgets and none of them particularly memorable in the 9 years of the National Government. 
We come then to 9 years of Dr Cullen’s Budgets. I think it is fair to say that as Dr Cullen delivers more Budgets the better they get. He is probably like an old good red wine—the older he gets the better he gets. 
Hon Dr Michael Cullen 
: Hear hear! 
Hon PAUL SWAIN 
: Dr Cullen says “Hear hear!” and why would he not say that? 
Tim Barnett 
: More like a single malt. 
Hon PAUL SWAIN 
: I see. I see him more as a good pinot noir or a shiraz personally. 
But I do not want to be distracted; I always get distracted by interruptions from the Hon Dr Cullen. I want to box on and say that after 18 Budgets this is the only one I can remember being supported by all parties. All parties in this House are voting for it. After 18 Budgets I can remember only one such occasion and this is the one. So one would think that after 9 years Dr Cullen has got it about right. Finally people have recognised that what Dr Cullen did in the first few Budgets was to get New Zealand back on track again by trying to sort out the mess that was left by the previous Government in education health housing defence superannuation and all those matters. The Government squirrelled some funds away in the good times in order to deal with the times we knew were coming which were when things were going to get tough. As Dr Cullen outlined in the first part of his Budget speech we are heading into those times now. What a good thing it is that some funds are available in order to help people and give them some relief. I congratulate Dr Cullen because he has delivered in a very very difficult time in New Zealand’s history. 
Although I want to talk about the tax cuts I think it is important to recognise that this Budget is not only about tax cuts. That has somehow been the fixation of everybody. There are a lot of things in here that— 
R Doug Woolerton 
: They have probably got a fixation on talking about the bill; that is probably the problem. 
Hon PAUL SWAIN 
: Possibly yes but I think one has to give some context to the bill which is what I am attempting to do. Dr Cullen has always said that tax cuts have to be measured against four criteria. The first criterion is that tax cuts will not lead to greater inequality. A number of speakers have said that yes the bill will not lead to greater inequality—the tax cuts are across the board—and by the way there is also a top-up for Working for Families. Secondly tax cuts will not require cuts to public services and we have already heard that that will not happen as a result of these tax cuts. The tax cuts have been designed not to exacerbate inflationary pressure—and the Governor of the Reserve Bank will be watching this Budget very very carefully—and I note for those who have not quite got the point that this is a three-step process. The final criterion is that the tax cuts will not require borrowing to fund them. So there are four criteria. In the little box that I have which was given to me by Dr Cullen those boxes are all ticked—surprise surprise! 
What would have happened if that measure had been applied to the National Party? Well in respect of the first criterion about tax cuts not leading to greater inequality in our society we know that John Key and all his mates would have done extraordinarily well out of their Budget and that the person at the lowest level would have got sod all. So inequality in New Zealand would have been exacerbated and that is not the way to run a tax cuts programme. 
In respect of the criterion about tax cuts not requiring cuts to public services we heard John Key say that a ruler would be run over every Government department and every Government agency. So every Government agency must be quivering thinking about what that means. We know that the only way a National Government will be able to do this is with some big cuts. One does not try to fund billions of dollars of tax cuts by removing the odd adviser in a Government department. John Key could make quite a lot of headway by reducing the 36 people employed in his office. 
R Doug Woolerton 
: That would be a start. 
Hon PAUL SWAIN 
: That would be a start I suppose. 
But the point is that one does not get the billions of dollars that are required at the margins by fiddling around with the odd policy adviser. There is no doubt that public services will be cut. Why? Because we know that a National Government has done it before. Do people remember that under National people started to pay to go to hospital? It was called the bed-night charge. It sounded like people were going to a motel. It was the motel people went to that they did not want to go to but had to go to and as they left they had to pay a bill. This was a most bizarre way to run a health system. 
The third criterion is that tax cuts should be designed not to exacerbate inflationary pressure. If a National Government dumped its 50-plus tax cuts in one hit what would happen? People would get them on the one hand and on the other hand the Reserve Bank would have to adjust the interest rate regime and money would be taken back through increased costs on people’s mortgage charges. So National’s tax cuts cannot possibly be sensible and sound as far as inflation is concerned. As far as not being required to borrow for tax cuts is concerned well of course Mr Key has already said National will be borrowing for tax cuts. As I recall one of National’s members said that National would not borrow but just get the money from overseas. We are still scratching our heads on this side of the Chamber trying to work that out. 
Of course there are lots of other things in the Budget. There are lots and lots of things in the Budget about transport health education defence skills training and innovation. So this is not just about tax cuts. We are talking about tax cuts because this is what the bill is about but it is important for people at home to remember that this Budget is not just about tax cuts; it is about a whole lot of things. I congratulate Dr Cullen. This is a Budget for this particular time for this particular year and it does two important things. It gives a tax break to those who need it at a time when the cost of living is rising. It does so without putting on extra inflationary pressure which means that people will not lose it back through their mortgage while at the same time it continues the programme of continuing to fund the things that New Zealanders actually want us to fund—health education superannuation housing transport police and defence. This is another fabulous Budget from Dr Cullen. I applaud him for it and I certainly support the second reading of this bill.