Cunliffe David: Taxation (Annual Rates and Budget Measures) Bill — First Reading Second Reading In Committee 
Cunliffe David: Taxation (Annual Rates and Budget Measures) Bill — First Reading Second Reading In Committee 
[Volume:672;Page:18906] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 The Labour Opposition completely and thoroughly disagrees with and objects to this sham of a bill the Taxation (Annual Rates and Budget Measures) Bill. The first point we make is to ask why we are here in urgency debating a bill that does not take effect for 18 months. If it took effect earlier it would be proof positive that the Government had broken its promises not to cut KiwiSaver and not to touch Working for Families in this term of Government and its promise to go back to New Zealanders to seek a mandate—just like with asset sales. But the Government has thrown all that aside and is pushing through this bill in urgency on a sham. Those members should be ashamed. The whole Budget is a sham. It is built on flimsy foundations of unspecified cuts and divergent forecasts between different departments. It is built on a very very flimsy foundation to the risk and cost of all New Zealanders. 
I tell the Government to talk to New Zealand families who are losing up to $50 a week because of the Working for Families cuts or couples losing $20 a week because of the KiwiSaver cuts and tell them why they are bearing the brunt while farmers and high-income individuals keep their tax dodges and keep their 2010 tax cuts. Working New Zealanders are picking up the tab. This bill is unfair it is ill-timed and it is unconstitutional because there is no mandate to do it. It is a sham like the whole Budget is a sham. The Minister of Finance should be ashamed the Government should be ashamed and the public should throw them out. That is what they deserve. The public has a final last chance on 26 November this year to stop these cuts dead in their tracks but they will have to stop this nasty greedy Tory Government dead in its tracks to do so. It is the only way to protect KiwiSaver it is the only way to protect Working for Families and frankly it is the only way to restore rigour to the Budget process after the pathetic excuse of a sham that has been presented to the New Zealand people today. 
Sitting suspended from 6 p.m. to 7 p.m. 
Hon DAVID CUNLIFFE 
: Before we broke for the dinner break we were asking ourselves why the Taxation (Annual Rates and Budget Measures) Bill is being debated under urgency because the changes it incorporates apparently do not come into effect until 2012. That is hardly urgent. What is more Government members have argued that that is an entirely good thing because it shows that they are keeping faith with the electorate which still has the chance to throw them out on their ears. However as a matter of fiscal prudence that argument does not square well with the fact that the proceeds of these cuts are already incorporated into the Budget baseline as of now. They are in Budget 2011 not Budget 2012. That means that next year if members opposite find themselves rather fewer in number and sitting on the Opposition side of the House the Government of the day will have to either unpick these changes or find other means of filling in the baseline hole. In other words the constitutionality of going to the electorate for a change that was already booked in the Budget 6 months before is dubious. It is a sham it is spin and it is a victory for the political spin doctors in the Beehive over the substance of good government. 
How would members opposite know—some Labour members here remember what it is like being a backbencher on the Government side of the House—when no one tells them anything. They know less about what is in the Budget than we do. They get dragged in at lunchtime by the Ministers and told “This is when you have to clap” and they all bark like seals. That is how it works and they are still doing it. But I ask why the Government members are doing that because I have been debating with myself and colleagues as to whether this Budget is a zero or a one on a scale to 10 depending on where one starts. I will stick with Bill English’s definition. He called it a “Zero Budget” and I think he was right; it really is a zero. Phil Goff called it sub-zero. He might have been a bit harsh and that is our job but I think zero is a fair balance point—zero out of 10. I ask members why that is. It is because it had to do three big things. It had to credibly reduce the deficit and I will go into why that has not occurred and it had to make structural changes to the economy to lift our growth rate lower debt increase savings and improve the balance between the export sector and the domestic non-tradable sector. It has done none of those things. 
There is not even the pretence the sham or a shadow of an economic development plan anywhere in this Budget. I thumbed through the  
Budget Economic and Fiscal Update 
 in the lock-up. I thought I had missed a chapter or maybe there was another volume but there was not. There is no plan in this Budget for growth. That might be why the Inland Revenue Department does not believe Treasury’s growth projections and has run out a revenue track on pages 81 and 82 that is $3.8 billion lower than Treasury’s revenue track over 4 years. Even the Inland Revenue Department does not believe the rosy glow of the growth forecasts that are in this Budget. It about as solid as a tissue. 
I turn to the third criterion that a good Budget needs to satisfy: it has to be fair to all New Zealanders. We on this side of the House actually agree with the Government that the deficit and the debt mountain are too big. People need to draw in their belts and savings need to be found. That is all true but the fact remains that there are choices. If there are to be savings then they had better be fair. They have to be fairly spread around the community so that those who can afford it most pay a little more and those who can afford it least are given a little bit of a hand up. We as Kiwis do what we do well. We look after each other and we try to get through bringing everyone along. But oh no the Budget does not do that. It does not say “These are tough times. We’re short of money and we gave away too much with those upper income tax cuts as $23 billion of tax revenue forgone was a bit excessive in light of the way the world has turned. Let’s claw some of that money back and ask upper-income earners to give back a little of the 6-cent tax cut they had on the original rate of 39 cents in the dollar.” The Budget does not do that. It does not close down loopholes for the people writing off income on their businesses or farms or creating a trust. It does not do any of that tax-avoidance work. It does none of that. There is nothing about broadening the tax base in this Budget. There is none of that. 
Through the changes in this bill the Budget claws back KiwiSaver investments at the rate of $10 per week for each KiwiSaver and the employer tax credit will partly be offset against the employee’s accumulated funds. In that way each KiwiSaver is about $10 to $12 per week worse off. That is not as bad as what is happening with Working for Families. By 2015 a middle-income family with two children and two parents earning $80000 per year between them will be $50 per week worse off according to our analysis—$50 per week worse off on Working for Families. That is why we said to members opposite earlier on that Ruatoria will be “Rua-poor-ia” by the time those changes feed through. Te Ururoa Flavell will have to explain to the good people of Waiariki why he supports a Government that is cutting their putea and what will go on the table for their whanau. He will have to explain why he is backing a conservative Government that makes life harder for ordinary working families in New Zealand. That is what this Budget does. It tightens the belts of those who are already wearing them tight whereas the belts of the fat cats are loosened even more. That is wrong. 
There are three things wrong with this Budget. Firstly it is built on flimsy foundations. There is too much smoke and mirrors. Even the Inland Revenue Department does not believe the numbers. Secondly there is not a shadow of a plan for growth in jobs. Thirdly there is no equity. Some belts go out some come in and we end up with a divided society that is no better off by the end of the forecast period.