Copeland Gordon: Appropriation (2002/03 Supplementary Estimates) Bill — Second Reading Imprest Supply Debate 
Copeland Gordon: Appropriation (2002/03 Supplementary Estimates) Bill — Second Reading Imprest Supply Debate 
[Volume:609;Page:6372] 
GORDON COPELAND (United Future) 
: 
 One aspect of the supplementary estimates for the year ending 30 June 2003 swamps all else. I refer to the overall increase of $1.5 billion in the tax collected over and above the forecast included in the original estimates at the time of the 2002 Budget. The main components of that increase comprise GST of $282 million company tax of $358 million income tax from self-employed people of $118 million income tax from salary earners and wage earners of around $441 million and withholding tax increases—a category that includes companies wage earners and salary earners and self-employed people in relation to things like interest earnings on bank deposits and the like—of $146 million. Treasury which prepares the forecast tells us that the major contributor to that spectacular windfall of tax riches to the Crown bank account is the strong growth of the New Zealand economy during the 12 months ended 30 April 2003—a growth I might add that has now slackened considerably to the point where we may find that growth in gross domestic product (GDP) is in minus territory for the quarter to 30 June 2003. 
I of course rejoice that our economy grew so quickly from late 2001 through until just a couple of months ago. A number of favourable factors came together for us during that period. But if I want to single out the most important factor it would have to be the strong net migration that we experienced both from Kiwis coming home after 11 September 2001 and the economic slow-down in Europe and the USA and from people from a wide variety of other nations choosing New Zealand as their preferred long-term place of residence for work family and retirement reasons. I note in passing that United Future appears to be the only party in this Parliament that has formally adopted a policy of ongoing population growth by an increase in the fertility rate by creating conditions to limit the continued loss of our best and brightest people to greener pasture overseas and by net inward migration from the rest of the world. 
We need more people in New Zealand not fewer. I find sometimes that that policy is questioned by people in the older age group—and I can include myself in that group since I am approaching 60—who have such fond memories of the prosperous crime-free and egalitarian society that existed in New Zealand during the 1950s 1960s and the first couple of years in the 1970s. What is overlooked however is that our national demographics are now remarkably different from those we had then. In those days it was the post - World War II economic expansion the Korean War and the baby boom that provided the fundamental underpinning for a fast-growing economy. Whole suburbs throughout New Zealand were created as people rushed to capitalise on the family benefit pick up their 30-year fixed 3 percent State Advances Corporation loan construct their three-bedroom one-bathroom home on their quarter acre plot of land and get on with raising the kids. Indeed it was a kind of half-gallon quarter acre paradise—the very stuff of nostalgia. 
Today’s New Zealand is very different. Our population growth has slowed significantly and the baby boomers are now in the eventide of their working life with their eyes fixed towards retirement. Those realities raise the all-important question of who will pay the pensions to support them. The New Zealand Superannuation Fund established by Michael Cullen is part of the answer provided it is not used by the National Party for roading. However the rest necessitates strong ongoing population growth. 
That brings me back to the supplementary estimates for Vote Immigration where a further $23 million has been appropriated to cover costs associated with services provided to increase the capacity of New Zealand through immigration. United Future fully accepts that we must select potential immigrants to New Zealand with care. Ideally if we are to address our demographic problem of an ageing population immigrants need to be young. They also need to be English-speaking. I note in passing that I find for example immigrants from both the Philippines and India are able to assimilate themselves relatively quickly into New Zealand culture precisely because they have learnt English at school and have been speaking it as a second language for many years. 
But I believe that we need to do a better job in terms of the assimilation of immigrants into mainstream New Zealand culture. I believe that all immigrants should be required to attend say during the first couple of months that they are in New Zealand—and presuming that they have good English skills—classes in the basics of New Zealand’s culture manners and way of life. Likewise we should require all our secondary schools and tertiary institutions to run a class of that kind for international students. The courses could cover some fairly basic things that all of us take for granted. For example in this country we walk on the left-hand side of the footpath but that is not the custom in many countries overseas. The courses could cover our habits of not pushing people—in some countries overseas the custom is that one pushes people out of the road—of holding doors open for other people and of not shouting at one another in supermarkets. Driving habits are frequently a bone of contention so that area would also need to be addressed. 
Then there are such important matters as the bilingual but multicultural aspect of our society—the special place of Maori in New Zealand—freedom of religion including very importantly freedom to change one’s religion or to have no religion and dating and marriage customs and the like. In all those areas the experience of many of us is that we are sometimes involved in great cultural misunderstanding that leads to tension and puts pressures on families whether those are immigrant families or families that have lived in New Zealand for some time. I believe that courses of that kind could go a long way towards smoothing those people’s integration into mainstream New Zealand society and we should always stress that our goal is to make immigrants feel at home and to become fully active citizens of the nation they have chosen. I think we could see a lot of niggles dissipate in that way to the benefit of all New Zealanders. 
Let me return briefly to the huge above-forecast tax gain included in the supplementary estimates. As I mentioned for companies it was at least $358 million—probably more. By my calculations that would be enough to fund a 2 percent reduction in the tax rate for companies. The Minister of Revenue would no doubt counter immediately that that would be imprudent given the halving of the GDP growth forecast for the next year. That may be fair enough but what about a 1 percent reduction? I think that would meet the test of prudence but at the same time clearly signal how valuable companies are to New Zealand society. We need to do a lot more to support companies and small businesses in this country—particularly start-up companies. 
I make a similar comment in relation to taxes for individuals. I accept that the Labour - Progressive Coalition Government has a strong preference for a progressive tax system but why do we not at least adjust the bands every year for inflation? It is fair to do that and therefore it is unfair not to do so. In real terms we are increasing the tax on all New Zealand workers be they low middle or high-income earners and I think that that saps incentive and innovation gives the wrong signal and—at least at the margin—means that a few more of our best and brightest people will decide to pack their bags and leave for greener pastures overseas. Being prudent is one thing; being unduly tight is another. Given our current weak economic outlook a little fiscal stimulus—prudently using say $500 million of that $1.5 billion tax windfall—in the current financial year would in my view have been good for New Zealand its people its families and its economy. I think that alongside monetary policy there is a place for counter-cyclical fiscal expansion or contraction and that the Minister of Finance may rue not moving now if as the New Zealand Institute of Economic Research forecasts our economy contracts not just in 2003-04 but also in 2004-05. 
I conclude by saying that United Future very much welcomes the commitment of the Government to review family support tax credits in next year’s Budget.