Groser Tim: Taxation (KiwiSaver and Company Tax Rate Amendments) Bill — First Reading 
Groser Tim: Taxation (KiwiSaver and Company Tax Rate Amendments) Bill — First Reading 
[Volume:639;Page:9393] 
TIM GROSER (National) 
: 
 The member Clayton Cosgrove has just challenged us to explain why we are not voting for the Taxation (KiwiSaver and Company Tax Rate) Amendment Bill. I will explain to the member exactly why. This country fundamentally needs a coherent approach to economic management. This bill by the Government’s own admission is the centrepiece of its Budget strategy. Here we have this centrepiece of a Budget that continues a direction taken by this Government over the preceding seven Budgets. That is what we are voting on and that is why we will not support it. We are not interested in a Budget where there is a titbit here or a titbit there in respect of John Key’s excellent charities policies that Labour has just simply taken wholesale; we are not interested in that. We want a coherent approach to the economic management of this country. That is why National will not support this bill. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
TIM GROSER 
: The Government has challenged us to explain why we are voting against the bill. As I explained just prior to the break we are not looking at just a bill we are looking at a bill that the Government itself has described as the centrepiece of its economic strategy—the centrepiece of its economic strategy. That is what we are voting against and I will tell members why. I do not know quite what lies behind the political thinking in this Budget. What I can see is that it is a political accommodation to certain political pressures by a Minister of Finance who for eight Budgets in a row now has had a deep and abiding reluctance to face the facts of a huge and growing Budget surplus. 
This is actually a nip and tuck operation. Michael Cullen the ultimate Budget surplus denier faced with unmistakable evidence that he could no longer torture the statistics until they confessed has had to own up to the reality that we have a Budget surplus. Essentially what the Minister of Finance has done is make a series of minimal concessions to those facts. What he has had to finally face up to is the fact that since he took the responsibility for economic management in this country the total tax take has gone up by $20 billion. The average wage or salary earner’s tax bill has gone up by a little less than $2500 and a little bit of nip and tuck has gone into this Budget bill. That is why we are opposed to it. What this country needs is a coherent strategy that addresses the fiscal realities of this country. 
This is as our party leader said a money-go-round. What the Government is trying to ask us to do tonight is to give approval to this churn factor that will cause more and more of the taxpayers’ own moneys to be recycled in various ways to very little positive effect. So instead of actually facing up to the underlying reality that has been building on the Minister of Finance over the course of the last eight Budgets for which he has had the awesome responsibility of managing this economy he has done some minimal adjustments to accommodate some overriding pressures from the minor parties on whose support his very survival depends. 
I do not know whether we are looking at the eighth and the last or the eighth and the penultimate Budget in this sorry series; I do not think anyone knows that. The answer to that lies not so much directly in the hands of the New Zealand electorate but inside the minds of perhaps four or five increasingly nervous people in some of the minor parties as they assess the relative long-term damage to themselves of staying on board this ship. 
So that is essentially the political calculation that has happened. I think that beyond that we can also see the internal political calculation. Here is a Minister of Finance with a long—and I would have to say very consistent—track record of opposing tax cuts and particularly a dislike of tax cuts for “the rich” and for companies. But he has actually been manoeuvred in a direction in which he does not really emotionally or psychologically want to go. So what has he done? He has given tax relief in the form of a reduction in the company tax rate with one hand and he has taken off with the other hand in order to finance the KiwiSaver subsidy scheme a net $672 million—$1.3 million gross $672 million net. So we have here yet another example of the money-go-round approach of this Minister. 
Why does he have this reluctance to face up to fundamentals? Well what we hear is not what I call a neo-Keynesian approach to economics it is a Palaeolithic approach to Keynesian economics—something that he learnt and perhaps I learnt 40 years ago but some of us have just added a little to the sum of knowledge in those years. Faced with this Budget surplus he seems to think that the only issue in terms of inflation is the overall fiscal surplus or deficit. What he has never accepted is that when the Government makes real claims on real assets it forces up prices and when it forces up prices it leads to inflation tendencies particularly in the non-tradable sector. That causes the Governor of the Reserve Bank to put up interest rates. That causes the exchange rate to rise. 
So when the Government bids up wages—and we know that for the last 5 years wage increases in this country have been led by the State sector—that is a claim on real resources. When the Government fills Wellington with more and more bureaucrats such that it is hard to find spare office rental accommodation in Wellington City that is putting pressure on real asset prices. When the Government expands its core spending often in poor-quality areas of spending there are very few demonstrable outcomes for this extra spending. Take the $4 billion spending on public health and look at the results of that. That is putting pressure on real asset prices. But he has failed to understand that that is his responsibility to deal with and now things are coming home to roost. 
Another Minister of Finance not too far removed from us across the ditch Mr Costello yet again using what is actually relatively more modest headroom for tax reform in Australia initiated yet another series of a continuing process of tax reform. The economists of the Commonwealth Bank of Australia in their analysis of that put out the following statement: “There have been 13 significant tax cuts since the late 1970s. But history shows no clear correlation between those cuts or the size of the cuts and ensuing trends in consumer spending.” If that was not enough the OECD said just a few weeks ago to the Government: “A clearer strategic direction for the tax system is needed to maximise living standards in the long term.” If that was not enough he should have listened at least to Tom Scott. 
Hon Trevor Mallard 
: How can you listen to a cartoon? 
TIM GROSER 
: Because there is some speaking inside the cartoon mate. I have the cartoon in front of me and it is a typical very clever Tom Scott cartoon. It has a picture of Michael Cullen in the sandpit guarding the toys in the sandpit against any encroachment from others. The teacher writes: “Michael is a very clever boy who needs to learn how to share. If not corrected soon it could affect his whole life.” Well ladies and gentlemen it has affected the whole macroeconomic settings of this country over the last 8 years. But Michael Cullen is not prepared to listen to the OECD. He is not prepared to look at the Australian experience. He will not even follow the implicit advice of a cartoon. He has convinced himself as a Budget surplus denier to the point at which the evidence has accumulated beyond any reasonable stretch of imagination to where he has had to make some minimal adjustments. This churn factor this money-go-round bill we are being asked to support is not a coherent approach to New Zealand problems and that is the reason the National Party will not be supporting this bill.