Cullen Michael: Taxation (Urgent Measures and Annual Rates) Bill — Third Reading 
Cullen Michael: Taxation (Urgent Measures and Annual Rates) Bill — Third Reading 
[Volume:651;Page:274] 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 I pick up a point that Mr English made in his speech. He said the big issues around the details of the taxation changes have been thoroughly debated over the last year or two in the debate on the various Labour and National proposals in the public arena. That is fundamentally wrong and fundamentally misleading. The National Party did not publish the details of its tax policy until early October some few weeks before the election. From then on National never mentioned the details of that policy at all. Its only reference to tax cuts was in the context of everybody getting them. 
That was because National’s polling showed exactly the same results as our tracking polling did. The announcement of that policy caused a sharp dip in National Party support because it was so unpopular. People did not want KiwiSaver interfered with. People did not want the research and development tax credit to go. People were suspicious about the shape of those tax cuts. It was only when National got back on to its underwear motto—“It’s time for a change.”—that its tracking polling picked up again. That was all the election was fought on actually. It was fought and won on that one simple motto: “Time for a change. You’re bored with the old so in with the new. They cannot be any worse and if they are you can chuck them out again after 3 years.”—which is no doubt what the public will do. So let us not pretend that the National Government has got some kind of detailed mandate from the country for the details of this bill. It has no such thing at all not in any shape or form. 
In any bill dealing with taxation and related matters it is useful to summarise who the winners and losers are because there tends to be winners and losers. The big winners are clear: very high income earners. People on hundreds of thousands of dollars a year or more get a pretty significant tax cut. Once the top rate is cut it really starts to bite when one gets into those big incomes. But there are modest winners. Let us be fair: there are some modest winners. Non-saving single people on middle incomes are winners. They get about 10 bucks a week in the first year and 15 bucks a week in the second year which is less than the amount in the 2008 Budget—which was derided I might say. The second set of winners is bureaucrats. About 100 or so new ones will be required to administer the complex independent earner tax credit and other aspects of the bill. With a cap on the total bureaucracy and with 100 more people going into the Inland Revenue Department 100 other people will be going from somewhere else—no doubt bureaucrats who deliver services that affect a different group of the population. 
So those are the winners. Who are the losers? They are low-income individuals earning $14000 to $24000. We can say people earning up to $24000 because people in that income bracket either get less or get nothing—everybody in that income bracket 90 percent of whom Sir Roger Douglas thinks are wealthy. That is what happens when one sits round the Business Roundtable for too long. Other losers are many modest-income families all families with kids that earn under $44000 but also many families with kids that earn quite a lot more than that. Families with three kids that earn $80000 a year will be worse off under this package compared with the current law. It is not a lot—10 bucks a week—but then that is all that middle-income single earners will get. They will get 10 bucks a week in 2009— 
Hon Member 
: 10 bucks a week? 
Hon Dr MICHAEL CULLEN 
: Yes about 10 bucks a week. They will be worse off because they do not qualify for the independent earner tax credit; for them it will all get sort of washed away. Going back to the families with three kids that is assuming that the couple are on $40000 a year each. Beneficiaries and superannuitants who have the temerity to work part time or have some additional investment income will also be losers. They have saved all their lives and have got some income and now they will be taxed more on it because they do not qualify for the independent earner tax rebate. They will therefore be paying more because the National Government is not going to raise that $14000 threshold to $20000 a year. 
Those are just the losers. The big losers are the savers the innovators and the New Zealand economy. On the one hand very high-income earners are winners there is a little bit for middle-income single people who are not saving and there will be about 100 new bureaucrats. They are on that side. On the other side we have low-income individuals modest-income families some middle-income families savers innovators and the New Zealand economy. How does one see those scales moving? How does it look to you in the Chair Mr Deputy Speaker? Does it look as though the winners outweigh the losers? Well we know from the figures that the Government has used that 80 percent of taxpayers do not gain anything. It all right to quote the 630000 who gain something; there are 3 million taxpayers in New Zealand. Eighty percent of taxpayers get nothing out of this change. Taxpayers were led to believe that they all got something out of it. Well they do not. 
But the real loser is the New Zealand economy and that is the sad thing. We are living in the middle of the worst international financial crisis for getting on for 80 years and in part that crisis is driven by a growing gap between saving nations and borrowing nations. We are right at the far end of the borrowing nations. This policy this bill says “Let’s borrow more.”—borrow more by the Government and borrow more by individuals. Why? Because then we might spend a bit more and keep the economy moving along over the short term. As long as we are going into Briscoes the Warehouse Farmers etc. all will be well with the world. We do not need to produce anything. 
You see the Government’s coalition partner is ACT which is the Association of Consumers and Taxpayers. What is sickeningly missing in that description is producers wealth creators innovators researchers and anybody who is actually creating a stronger economy. We are all just consumers and taxpayers according to the ACT Party. The National Party believes the same. It does not believe any longer in the rural sector being the backbone of the nation. It does not believe in a backbone of the nation; it believes in the shopping bag of the nation. If somewhere or other somebody trundles a shopping bag around we do not need a spine to hang it on. That is National approach to the New Zealand economy. And we do not need research and development; we just live off other people’s research and development. We do not need it. 
And we do not need to change our savings culture—our appalling savings culture in New Zealand. A Government all of whose members qualify for an 8 percent or a 20 percent employer subsidy on their own superannuation is cutting the employer subsidy for ordinary earners from 4 percent to 2 percent. Those members try to claim that all KiwiSavers are wealthy. Actually the median income of KiwiSavers is about $36000 a year. If one takes out the kids the median income is about $40000 a year which is well below the average wage. Indeed that median income has been moving down since the first rush of transferees out of existing superannuation schemes into KiwiSaver as new people are signing up and new savers are appearing. We are actually getting 18 to 40-year-olds to regularly save. Mr English says there are only 830000 people in the scheme. That is after 16 months by which time we expected to have about 350000 people in KiwiSaver. At this rate particularly once the financial markets pick up and stop scaring people so much we will pass 1 million easily and we will be pushing on to 1.5 million to 2 million people in KiwiSaver. Within 5 to 10 years most people in the workforce will be in KiwiSaver and they will be people on modest incomes because for those on high incomes there are better options than KiwiSaver. But for those on modest incomes KiwiSaver is an absolute boon because it is structured to give a stronger benefit to those on lower incomes than to those on high incomes. 
We learnt today why KiwiSaver is being changed. Mr English finally let the mask drop. He finally showed what a little man with a little mind he is when he described KiwiSaver as Labour’s latest bribe to the voters. So it had to be punished and the previous Government had to be punished. And of course I had to be punished because I was the author of KiwiSaver and I suspect there is a bit of personal silly stuff in all of this. Well actually KiwiSaver was not about him nor about me; it was actually about New Zealand and changing our savings behaviour. For the second time in the last 40 years a National Government has destroyed our best chance to change our savings habits in New Zealand to turn us into a capital-rich country to emulate Australia to provide reasons why people should stay here and to provide a basis for a stronger financial sector within New Zealand—because the Australian scheme has been a massive boon to the Australian financial sector over the last 25 years. All of those things are being given away in the hope that somehow or other some people having 10 bucks extra a week will transform the New Zealand economy. That is not a brighter future; that is a dumber future. It is a dumber future from a dumber Government.