Cunliffe David: Income Tax Bill — Third Reading 
Cunliffe David: Income Tax Bill — Third Reading 
[Volume:643;Page:12749] 
Hon DAVID CUNLIFFE (Minister of Immigration) 
: 
 We are debating the Income Tax Bill at its third reading and it is an appropriate opportunity to reflect upon the hard work of the Finance and Expenditure Committee its advisers and the Inland Revenue Department over a very long period of time doing a mammoth task of cleaning up a bill that had been sequentially amended with sticking plasters in patches and had become very very difficult legislation for both practitioners and members of the general public—like Craig Foss—to interpret. The advantages of the rewrite are that it is a comprehensive rewrite that it is in plain English and importantly that the rewrite itself does not change tax policy. 
Some time ago when I was a member of the Finance and Expenditure Committee working on earlier stages of this bill—which probably shows how long it is that it has been in the pipeline—it was very clear and it has remained clear since that this is not a vehicle for changing tax policy. There is a generic tax-policy process that we follow to do that involving extensive consultation with the industry and with the public and this is not that. This is a tidy-up it is a rewrite it is a once-in-a-generation clean slate for legal draftspeople which will leave both the practitioners and the public better off. In that regard it is something that really no reasonable person anywhere in this House would disagree with. It makes sense to have good plain English law. It makes good sense to have a rewrite of legislation—mammoth task as it was—that helps everybody to understand his or her obligations. 
So what then has the Opposition done with this debate? Rather than looking like a Government-in-waiting—which would imply that it had a certain seriousness about its approach to Government governance and policy; that it had done the hard yards in the back rooms; and actually had some ideas to contribute that would help grow our country and make us more productive—the Opposition has used this serious opportunity to repeat some old saws of economic “Billiteracy”. In the House today the Minister of Finance again drew attention to some of the rubber numbers that Mr Bill English the Opposition finance spokesman has used in regard to the hypothetical “Joanna Average”. The only good thing about that example is that it was nice to see the National Party departing from its historical sexism and actually calling the person “Joanna”—we give it some compliments for that. 
But the issue is that National members got the numbers wrong; they got the numbers way wrong. The situation of the sole income worker without children on the average wage was calculated on the basis of using gross income instead of net income and that error meant that Mr English understated the net increase in income by a factor of three—that is the $500 increase according to Mr English was in reality according to Treasury figures a $1751 increase. We cannot have a shadow Treasurer who cannot do maths— 
Hon Harry Duynhoven 
: Let alone work out GST. 
Hon DAVID CUNLIFFE 
: —let alone work out GST and let alone tell the difference between gross and net income. We in Labour can tell the difference between gross and net income and we can tell the difference between gross and net debt which is why we know that under Dr Cullen’s prudent stewardship we have gross debt down to around 20 percent of GDP and we have net debt down to below 0 percent. 
The New Zealand Government’s books are in credit for the first time since we built the railway tracks in the 19th century. That is how good we are in terms of prudent governance and it is a very very important thing to remind members opposite—like Mr Foss who sees the Finance and Expenditure Committee as a private tax consultant—that New Zealand’s fiscal strength is the foundation of all other growth. 
It is the core business of a Minister of Finance to mind the cheque book without which our accounts would slide into disarray. Why is that? There are three key reasons. Firstly we must maintain the debt anchor at prudent levels and as I have described we have more than achieved that. Secondly—and members opposite may not have twigged to this fact—New Zealand has a very significant savings gap. New Zealanders spend about $111—this was the figure last time I looked—for every $100 they earn. That gap is reflected in our national accounts and in our external accounts. The Government has to maintain a surplus because Kiwis maintain a deficit. If the Government did not do that there would be the giant sucking sound of foreign capital leaving the country as our credit rating took a nosedive. The Government is encouraging better private savings habits. That is why we have the Superannuation Fund that is why we have KiwiSaver and that is why we have KiwiSaver Plus all of which will make an immense strategic difference to New Zealand. But there is a third reason—which is extremely important as well—which is that we are an economy running at full speed at the moment or as near to our non-inflationary maximum as we can sustainably go. The Governor of the Reserve Bank is warning that any further fiscal pressure would have an upward impact in interest rates. 
It may not have dawned on members opposite that Government spending and tax cuts are both inflationary. It is one thing to have a strong balance sheet it is one thing to have a strong fiscal position but it is quite another to be able to spend that money without encouraging inflation. What does that mean for mum and pop Kiwis? It is very simple. There is no point in giving them a $20 a week tax cut if their mortgage goes up by 100 bucks a week. They would be 80 bucks a week worse off. That is the kind of maths that the Opposition—soon to be Opposition again for another 3 years—just cannot get its head around. Prudent fiscal management means looking at the Government’s accounts and it also means looking at the macroeconomic balance and the two have to be handled in tandem. 
So how does the Opposition resolve this conundrum? Quite simply it does it by flip-flopping. Bill English is contradicting himself virtually weekly and John Key just does not know how to put a sock in it. He is so desperate to be liked by everybody he talks to that he just keeps talking. He keeps talking to the point where he keeps contradicting not only himself but also his finance spokesman. Take the example of broadband. Mr Key said: “We’re going to invest big in broadband.” Mr English said: “No we’re not.” then Mr Williamson said: “Yes we are.” and Mr English had to say: “No we’re not.” Who knows what the National Party position is; it would just be better if it formed it in private rather than in public debate. In the last week Mr English has said that the Government keeps too much of its surplus. Then he said that the Government spends too much of the surplus. The National Party says it will not spend any more. Bill English said: “We are going to bring some discipline to Government spending.” That sounds fantastic but at the same time it is criticising the Government for having too much discipline! Come on National Party! Give us a clue; what is National’s policy? What would it do if it were in Government? Here is a hint: if it does not give the public the impression that it could actually govern it will never get the chance. Goodness me the Greens have more chance of finding their way to the Treasury benches as prudent fiscal managers than the current Opposition does because at least the Greens are consistent. 
Craig Foss 
: They know their numbers. 
Hon DAVID CUNLIFFE 
: They know their numbers. They want to run an expansionary fiscal policy in virtually any circumstance. But at least they are consistent. Bill English cannot tell the difference between expansion and contraction; he revolves the two weekly like a revolving exit door. 
I think the National Party needs to put Tau Henare in charge of its Treasury portfolio. There is a man with clear views. There is a man with clear opinions who has the almost universal respect of his party. He is a paragon of virtue a paragon of consistency and would never fall into Bill English’s trap of contradicting himself and his leader on an almost weekly basis. Maybe a great brown hope is soon to emerge from west Auckland and I do not mean John Tamihere—nor do the people of Waitakere. But that is another matter. 
To sum up this is not a tax policy debate. It is not—nor should not be—a fiscal policy debate. This bill is a once-in-a-generation tidy-up of legislation that has had layers of amendments laid down on it like sediment on the seafloor. It was time to give it a good dredging and clean it up. That is what has happened. 
If I can end as I began it is a matter of enormous credit to the Finance and Expenditure Committee over many years enormous credit to its professional advisers and enormous credit to the members who have worked long and hard on this bill that it is here in the House for its third reading. Mostly I want to pay due respect to the Minister of Finance Dr Michael Cullen who has led this process over the last few years determined as he is to match good law with sound and prudent fiscal management. That has been the foundation for the longest sustained expansion in New Zealand’s post-war history.