Cullen Michael: Taxation (KiwiSaver and Company Tax Rate Amendments) Bill — First Reading 
Cullen Michael: Taxation (KiwiSaver and Company Tax Rate Amendments) Bill — First Reading 
[Volume:639;Page:9382] 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 That speech showed why that man led National to its worst ever election defeat in 2002—21 percent of the vote. That speech made Social Credit members look like orthodox economists. Let me take just a few things. 
Bill English said we had the worst growth outlook in 15 years. This economy went into negative growth in 1998-99 when National was in power and unemployment was rising. He said we want a growing economy but we should not be trying to increase saving and investing. We have a 9 percent current account deficit an 11 percent negative household saving rate and we have a National Party finance spokesperson who says we should not be trying to cut the rate of growth and consumption but increasing it. 
Where did this mickey mouse man come from? Which bit of Nightcaps did he suddenly emerge out of without realising that at the end of the day people have to earn what they are spending? If people want to grow they have to save and if they want to grow they have to invest—and people’s behaviour has to be changed to achieve those things. But no the man who only 2 weeks ago said large-scale tax cuts at this point would be out of the question has now dropped into his leader’s trap of saying it is the only thing that should be on the agenda. 
He also told us that the workers—the “werkers” sorry—will pay for their own tax incentive. But his leader said in his speech that it would cost the employers $2 billion a year. Well which is it? 
Hon Member 
: Both. 
Hon Dr MICHAEL CULLEN 
: Oh both. That was Lockwood Smith who has it both ways at everything in life. He can actually have the tax incentive costing employers $2 billion a year but somehow it is the workers paying for it. This is mickey mouse economics at its worst. 
Hon Bill English 
: No it isn’t. 
Hon Dr MICHAEL CULLEN 
: No it isn’t? It is what goes down well in Nightcaps—it is the kind of economics they run down there for the poor old member from Southland! When will he front up with some solutions around savings and investing? 
Let me take his leader’s numbers—$2 billion a year. That figure is actually completely impossible. He thought that everybody who is employed is in full-time employment. There are actually 1.35 million full-time equivalents in employment and if 50 percent signed up as Mr Key said that would actually cost the employers $1.35 billion a year. But half of that is paid back straight away in the tax credits—$670 million. One-third of what— 
Hon Bill English 
: What’s the point of that? 
Hon Dr MICHAEL CULLEN 
: The point of that is that John Key cannot add up for a start and his finance spokesperson is even worse: he was out by a factor of three. When one is a shoddy money trader that stuff may do but it does not do when one is trying to run a country and when people’s success in life depends on what one does. Borrow and hope went out of fashion 25 years ago and Mr Key said today that he wanted to borrow more money—that is what he actually said in this afternoon’s speech. Then if there was only a 0.5 percent moderation of wage demand in total over the next 4 years—in total not each year—that $670 million would come down to a bit over $300 million a year. That is actually— 
Hon Bill English 
: Cut the workers’ pay! 
Hon Dr MICHAEL CULLEN 
: No a 0.5 percent moderation in wage demands for a 4 percent contribution into superannuation is actually a pretty good deal. 
Bill English’s problem is that he has been on the parliamentary superannuation scheme for too long. He does not realise how it works out there in the real world for the average person who actually expects to save in order to increase his or her savings. The average person does not think there is a magic tap that gets turned on and savings come out of it. We have a finance spokesperson who thinks that with a current account deficit we should be increasing the rate of growth in consumption. What on earth is that supposed to be? It will not even sell out there in mickey mouse land which he tries to appeal to. 
What do people say? Standard and Poor’s says that this will maintain our triple A foreign currency rating and importantly that the Budget includes measures to boost contributions to KiwiSaver to promote high savings. What does the New Zealand Exchange say? It says: “There’s no doubt we’re swimming in a global talent pool. Now employers will be able to contribute to their employees’ savings in a low-cost tax-efficient way adding a degree of flexibility to structuring pay packages that will help them to attract and keep the best people”. This will actually help to keep the best people in New Zealand. He does not want to do that; he thinks that if people are given a five-bucks-a-week tax cut then they will stay in New Zealand rather than go to Australia. That is what he is saying. No wonder his leader ripped up every page of the speech as he went along—screwed it up and threw it away. That is all it was worth this afternoon as a speech in the House; it was so shallow that it was unbelievable given the challenges facing this country. 
The fact is that the member has fallen through the trapdoor I talked about a week or so ago. He is voting against a company tax rate reduction; the biggest—and only—tax rate change since 1988 under a Labour Government. For 9 long years National did not reduce the company tax rate and we now find out why: it is opposed to it. The National Party the party of business opposes a cut in the company tax rate. 
Hon Bill English 
: We said it was a lower priority. 
Hon Dr MICHAEL CULLEN 
: That sound members just heard was the sound of Bill English’s neck being stretched as he fell through the trapdoor. No wonder his leader will not allow him to go on  
Close Up 
 in order to debate with me tonight. His leader is going to go on instead because he thinks that he is prettier and better than Bill English is. Well he is half right in that respect. 
He is going to vote against a tax credit that will add to KiwiSaver contributions and that will help lower-income people make the decision to save because proportionately it is worth more to somebody on $25000 per year than to someone on $50000 per year or $100000 per year. It is worth basically four times as much to somebody on $25000 per year compared with somebody on $100000 per year. It is a very good tax credit because it will increase people’s savings proportionately over the long term. 
Of course the National Party does not want to see a more equal distribution of wealth over the long term. It does not want to see people more independent in retirement. It does not want to see people building up their own savings just as Australians are building up their savings. No wonder it has got no answers to New Zealand’s economic and social future. No wonder National members sat there like stunned mullets as they came in at 2 o’clock wondering what to do about this Budget. It swept the ground out completely from under their feet. All they could do was come back and say that there should have been a personal tax cut. 
Mr English rejected a personal tax cut publicly on more than one occasion over the last few weeks; he knows it would make no sense at all. He knows that in a country with our savings and investment problems and with our current account deficit it would be madness to be feeding more demand into the New Zealand economy. He knows that it would keep interest rates higher for longer. He knows that it would keep the exchange rate higher for longer as well. 
Ron Mark 
: They’re silent now. 
Hon Dr MICHAEL CULLEN 
: They are very very silent now. He knows that it is economic nonsense but for the sake of trying to make a cheap speech in the House this afternoon he got up and somehow suggested that is what should be done. 
We are going to have the National Party voting against a corporate tax rate cut and voting against a tax credit for savers that helps those on modest incomes more. I say to National members: make my day; please do it. I ask them to please carry on opposing it for as long as they can all the way through tomorrow.