Clendon David: Taxation (Annual Rates and Budget Measures) Bill — First Reading Second Reading In Committee 
Clendon David: Taxation (Annual Rates and Budget Measures) Bill — First Reading Second Reading In Committee 
[Volume:672;Page:18912] 
DAVID CLENDON (Green) 
: 
 Kia ora Mr Assistant Speaker Robertson. Kia ora koutou. I am pleased to take this first opportunity to speak to the Taxation (Annual Rates and Budget Measures) Bill and to the Budget generally. Today we heard the opening salvos in what will be a long debate. We welcome that debate and the opportunity to put up some of our ideas beliefs and alternative approaches to this very critical issue of where the money comes from where we spend it and in whose interests we undertake those transactions. 
A lot can be said—and no doubt will be said—about this bill and about the Budget more generally but a great deal more can be said about what has been left out of these documents. We can talk about doing a gap analysis of the series of propositions we heard from the Government today but we can more properly talk about a chasm. There is a great white space where there could be something resembling a vision. There is a complete absence where we might have hoped to see something that would suggest there is a long-term strategy or plan to establish and create a long-term socially and environmentally sustainable economy in this country that has an absolute and clear capacity to achieve that goal and that state. 
Instead we are offered nothing more innovative or visionary than some quite mean-spirited cuts to public spending cuts to income support and cuts to the Government’s contribution to individuals’ and families’ long-term savings. These cuts will hurt families and households because they come at a time when incomes are at best flat and in many cases reducing and when people are struggling to pay their day-to-day expenses and costs and to meet their bills. We see nothing in here that will give those people much hope or much confidence that they are in good hands that their future is being well regarded or that they should have some hope of a better future. 
We see the cuts to the Government’s contributions to KiwiSaver. That in itself is a breach of an assurance that this Government gave to the general public to participants and to contributors that KiwiSaver would not be meddled with. This has been a remarkably successful mechanism. KiwiSaver has been a success. It has almost been a victim of its own success to the extent that the take-up has caused some difficulties. 
An investment scheme of this sort is one of the last things that Governments should play politics with. Like superannuation funds people need to have confidence in long-term savings schemes. They need to know there is some security and that the rules will not change arbitrarily year by year Budget by Budget or political term by political term. It is not helpful for the investors who in time will utilise the sums of money that are available to them through these funding programmes and savings programmes. It diminishes the confidence of the saver and the investor and that is not helpful. 
The Government insists that it will seek a mandate for its changes at the next election which I must say is one of the few innovative aspects of this Budget—to suggest that somehow retrospectively the Government can get a mandate for taking away something that it assured voters it would not take away. 
Something like 110000 parents will be affected by the cuts to Working for Families as unveiled in the Budget. More than 23000—about one-quarter of those parents—will be earning less than $60000 in their combined household incomes. Families with a combined income of some $60000 are not well-to-do particularly if they are still supporting mortgages that they may have taken on in happier times or if they are paying rent on homes that are increasingly poorly maintained and often sub-standard. 
We see a lowering of the abatement threshold to $35000. We can look at what this means in practical terms for a two-parent family with one partner working full-time for the very meagre minimum wage that this Government allows them even given the generous 25c per hour increase. Where one partner works full-time on the minimum wage and the other is working 12 hours a week on the minimum wage the abatement will apply to them. Raising the abatement rate to 25c in the dollar results in an effective marginal tax rate of some 58 percent which is simply untenable. Where is the incentive for people to improve their position or to try harder? We are constantly hearing from the Government side of the House that people simply need to work harder to better their position. Where is the incentive to do that when we take away the level of support that people have come to expect and are still reliant on to a large extent? 
Much of what we have seen in this Budget and in the tax bill we are debating here tonight is an assumption—which can at best be termed an optimistic hope—that the economy will come right. The growth forecasts here are extremely optimistic and already financial commentators are shining a light on what have been termed “heroic assumptions” about growth in the economy over the next few years. The Government is relying on Treasury estimates but there is an unfortunate history to that. Treasury in the last several years—particularly since 2008—has routinely overestimated growth by some 2 to 3 percentage points of GDP. Why would we depend on forecasts that have historically proved to be at best optimistic and often plain wrong? 
Perhaps it is a reflection of the Prime Minister’s former profession as a currency trader— 
Hon Clayton Cosgrove 
: A speculator. 
DAVID CLENDON 
: —a speculator. Essentially that is an activity and a sector that require people to be very good at gambling. We are seeing essentially a gamble—gambling on growth. It is not even gambling on solid productive sustainable growth. There seems to be an inbuilt assumption that this meddling—this fiddling around the margins of taxes spending and cuts in Government—will somehow return us sooner rather than later to economic growth: increased confidence; more consumption particularly of imported goods; more borrowing; and more debt related to property. In short we are back on the good old treadmill. It is the treadmill of increased debt—debt-fuelled inflation which will inevitably lead to the next bubble. 
We have heard a lot from the Government tonight that nobody has put up much in the way of an alternative. [ 
Interruption 
] Some suggestions? I am very happy to do it. If members go to our website they will find a more comprehensive set. We have a small paper here the  
Green Budget Paper 2011 
. We are putting it out there for people to see what the Green Party thinks the future should look like. This is what we think are the solutions. There are some practical propositions to get us out of the unfortunate situation that there is no doubt we are in. You are most welcome to read it and I hope you do. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! 
DAVID CLENDON 
: Excuse me Mr Assistant Speaker. One hopes that members of the Government will undertake to read that document. 
We are told that one of the reasons for spending cuts is to fund the repairs of Christchurch—the very necessary investment in rebuilding that very fine city. We have an alternative proposition. It is of course a levy—a fixed-term probably 5-year very modest levy—that would provide over 5 years some $5 billion which would remove the necessity of borrowing. The Government’s proposition of borrowing that $5 billion will lead us to an interest bill per annum of some $250 million. I struggled to comprehend this afternoon. We heard the Minister of Finance and the Prime Minister speak of the problem of rebuilding Christchurch as having been somehow solved because they are going to borrow money to fund it. In what world is borrowing to the hilt a long-term sustainable solution to a natural disaster when we have a viable option right here? 
We propose a levy of 1.5 percent on incomes from $48000 to $70000 a 3 percent levy for those on incomes above $70000 and reversing the 2 percent cut to corporate tax. That would raise $1.1 billion a year. For the taxpayer earning about $50000 a year that levy would amount to the princely sum of some 50c per week—not dollars but 50c per week. It would not be visible to the average person on $50000 a year. Those on $70000 and above would pay about $6 a week—again not an extravagant figure. People earning above $100000 would pay about $23 a week and most of those could well afford it. That levy would enable us to rebuild that city without resort to the unfortunate propositions put forward by the Government. Kia ora. Thank you.