Clark David: Taxation (Budget Measures) Bill Student Loan Scheme (Budget Measures) Amendment Bill — Third Readings 
Text is incorporated into the Bound Volume 
Clark David: Taxation (Budget Measures) Bill Student Loan Scheme (Budget Measures) Amendment Bill — Third Readings 
[Sitting date: 24 May 2012. Volume:680;Page:2484. Text is incorporated into the Bound Volume.] 
Dr DAVID CLARK (Labour—Dunedin North) 
: 
 I rise to speak to the third readings of the Taxation (Budget Measures) Bill and Student Loan Scheme (Budget Measures) Amendment Bill which Labour will oppose. We have had this legislation characterised correctly as picking the pockets of the paper boys and paper girls around the country. I think that has resonated with the wider public. They are realising that this Budget offers very little for ordinary New Zealanders who are feeling the squeeze. And now we have this kind of legislation going through which really is plugging the odd gap here and there—and that is at best. We certainly have seen that in the case of the changes to the student loan repayment scheme where the Government is swallowing a rat. Far from being a flip-flop the change is so fast that it has been described simply as a flop. 
The Taxation (Budget Measures) Bill as Mr Dunne has said takes the money from low-earning children. It also makes some changes to the herd valuation election scheme and that is a good change. That is a positive change that the Labour Party first mooted and it is good to see National following through on that. I am afraid though there is little else to say about this legislation that is not a criticism because it really is tinkering. It is tinkering at the edges. After a very short time into its second term this National Government is reduced to that. 
There is no bright vision in these particular tax bills. The Minister of Finance said this morning that he believes that spending is under control on the Government side but that the revenue side is uncertain. This is an attempt to get that under control. We know that revenue has dropped from 35 percent of GDP down to 31 percent in the last couple of years as a result of changes that the Government has made. A good deal of that can be pinned back to the changes in the 2010 Budget which saw the wealthiest 10 percent of New Zealanders get 44 percent of the value of those tax changes and the bottom 20 percent get just 2 percent of the value of those tax changes. That was designed we are told to stimulate the economy. Well we know now that it was not revenue-neutral because the economy has not been stimulated by that. When the wealthiest people get their tax rebate their tax back they tend to go on holidays or put it into savings. It does not stimulate the economy in the way that tax cuts for lower-income earners do. What we see here is a broadening of that. The Government is taking the money off low-income children who are perhaps working after school as cleaners paper boys paper girls or pamphlet deliverers. These are not the people we should be pursuing. This is the not the Budget of pro-growth free enterprise; this is the Budget of tinkering and this bill backs up that particular agenda. 
I have spoken about the regulatory impact statement in previous debates on this legislation. We learn in the regulatory impact statement that in terms of the 68000 children affected by the changes that will see money taken out of the pockets of paper boys paper girls couriers and cleaners businesses are likely to have an extra overhead. I think that is a point that just underscores the hopelessness of this measure. This particular legislation not only goes around chasing those who are earning below $2340 a year but it then puts an extra overhead on the businesses having to collect that. This is ridiculous. This increase in compliance costs just shows where the National Government has got to. It is now making businesses pick the pockets of boys and girls around the country. It is a tragedy.  
The other thing that I noted in the regulatory impact statement which I just have not had an opportunity to mention until now is that it also has not been consulted on yet. Because this is such an urgent measure for the Government to get through we have put it under urgency. It cannot even estimate the additional compliance on business and I just do not think this can be best practice. The businesses carry this extra overhead and they do not even have an opportunity to express their discontent or suggest a more sensible way of doing it. 
There is another point that falls out of this which is that it effectively encourages the grey economy. Those employers who collect pay-as-you-earn tax will be encouraged to do so—they will be encouraged to tax those low-income kids around the country. Those ones who do not do pay-as-you-earn tax—the people mowing lawns next door or babysitting and so on who receive cash—are not taxed. For a Government that talks about going after those areas of the grey economy this is actually just completely the opposite. It is just unbelievable. So we have in front of us legislation that is not only ludicrous in its intent but it also imposes an extra cost on business. This is so far from a pro-growth policy and we could not get much further. 
I will touch briefly on the effect on students. We heard Ms Upston crying out in protest— 
Louise Upston 
: It is Mrs actually—Mrs Upston. 
Dr DAVID CLARK 
: Mrs Upston—my apologies Mrs Upston. I must get her name right because we have got a quote coming up from her. Three years ago she described the changes being made in this legislation and she said: “This bill is a significant step to encourage student loan repayment and more important to reduce the overall repayment times. The message very clearly is that our young people will be debt-free sooner”. 
Andrew Little 
: Who said that? 
Dr DAVID CLARK 
: Who said that? It was Mrs Upston. Mrs Upston said that just 3 years ago. And now this legislation is repealing exactly that action that she was saying 3 years ago was a good idea. 
This is the other thing we are doing with this legislation. We are repairing the mistakes of this Government. It is kind of crazy. So here we have not only extra costs to employers and picking the pockets of our children but we also have flip-flops—we have flip-flops. The only thing we can say apart from this is that this is wider tinkering and it fits with the wider Government tax programme. We have a tax programme that was announced at the beginning of the year which shows a tightening up of loopholes and trying to make sure that there are no exemptions here or there. This in fact encourages employers in some ways as I have noted. 
The goals of that tax programme are worthy. There is no doubt that we need a robust tax system. Every country needs one and every Western country has one. But we need pro-growth tax policies. We actually need big changes if we are going to change the way our economy is structured. If we are going to support our exporters if we are going to grow the economy if we are going to afford to give our people the skills and training that will take New Zealand ahead we need proper pro-growth tax policies. This Government instead of doing that is tinkering. It is urgently putting through measures to pick the pockets of the boys and girls of this country. That is not proper base-broadening. That is not vision. That is a backward step. 
If we are wishing to see the brighter future that has been promised us we are going to need to change the Government. That is becoming more and more apparent because there is no plan—there is no plan—there is only tinkering. At the moment we know that 50000 people a year are leaving for Australia. This bill is not going to help that. If the paper boys and paper girls can save up enough of their money after tax they might be able to buy a ticket to get out of here. But maybe this measure will slow them down because they are the only ones the Government can slow down from leaving the country. If these policies are light at the end of the tunnel as perhaps they have been described by some—I heard some saying this—I think it is not really light at the end of the tunnel; it is in fact a train coming in the opposite direction.