Smith Nick: Goods and Services Tax (Exclusion of Rates) Amendment Bill — First Reading 
Smith Nick: Goods and Services Tax (Exclusion of Rates) Amendment Bill — First Reading 
[Volume:619;Page:14634] 
Hon Dr NICK SMITH (National—Nelson) 
: 
 Members on this side of the House totally sympathise with the bill in the respect that rate increases and rate costs for communities have become too high. That is absolutely true. We note for instance that in the last 12 months rates have gone up by an average of 10.4 percent across New Zealand according to Statistics New Zealand—that is four times the increase in the consumer price index. We also note that since Labour has been in office rates have increased by 30 percent and that is as a direct consequence of some of the dopey legislation that Labour has passed particularly in respect of the new Local Government Act. In the last 12 months—the very first full financial year of that Local Government Act—rates have increased more than in any other year in the preceding 10 years and responsibility for that can be sheeted right back to this Government which ignored the quite legitimate concerns that were raised by farmers homeowners ratepayers associations and business at the time it rammed through in a great rush that local government legislation of 2002. 
I want to challenge United Future. The only reason that Local Government Act was passed was that United Future provided the Government with the numbers. That is the only reason and for United Future members to come to the House now and cry crocodile tears about the poor old ratepayer when they passed the exact law that has led to such huge increases in the rates bill—well there is a word for that and I will not use it. If we are to get local government costs down we do not need to mess around with the goods and services tax but we do need a Government that is committed to reducing the compliance costs for local government. The first thing to do in order to start reducing compliance costs would be to have a substantive review of the Local Government Act the Dog Control Act the gaming legislation the prostitution legislation and amendments to the Building Act etc which have added so much to the costs that the ratepayers of New Zealand have to pick up. 
I confirm and concur with the comments that have been made by Pansy Wong which are so sensible in this regard. The argument that is left out by United Future in promoting this bill is the idea that if one takes GST off rates that will save all of the 12 percent to the ratepayer. That is not true. 
Mike Ward 
: It will. 
Hon Dr NICK SMITH 
: No it will not. Mr Copeland ignores the fact that local government is able to substantially offset the costs of that GST it receives in rates by reclaiming the GST on all the services it purchases—the pipes it buys for our sewerage and water schemes and the people it contracts with to provide lawnmowing services. All that is part of the equation. The real question is of course that local government provides goods and services. Of course the collecting of rubbish is a service. Of course providing a swimming pool is a service. Of course providing sewerage libraries and all those things are services. What Pansy Wong expressed so accurately is this: where do the exceptions stop? Today it is rates. Tomorrow it may be doctors’ fees. Next week it may be school fees. The truth is that the most sensible way in which to have GST is to provide it across the board. We in the National Party stand for lower taxes—not for piecemeal legislation but for getting the overall tax and rate burden down for New Zealanders. It is about reducing the tax level and the company tax rate. It is about reducing income tax rates. It is about controlling expenditure in the area of local government that has led to such huge increases in rates. 
Again I emphasise that we on this side of the House do not believe it is acceptable to have a 30 percent increase in rates which is what has occurred since 1999 under this Government. That is the real issue that needs to be tackled. This Government continues to dump extra responsibilities on to local government in areas like gaming prostitution building and dogs without providing any funding for local government. That is the principal concern that this Parliament needs to focus on and we need to at the very beginning review that Local Government Act which is at the core of the huge rate increases that ordinary New Zealanders are being confronted with.