Shearer David: Budget Debate 
Shearer David: Budget Debate 
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DAVID SHEARER (Labour—Mt Albert) 
: 
 It is a pleasure to take a call in this debate. I want to start by commenting on Tau Henare’s presentation earlier on. It is always really really suspicious when we see a Government hiding behind a recession and using the recession as an excuse for a Budget that lacks aspiration and lacks any sense of a plan a strategy or a vision. Bill English started off by saying that his Budget is about the long-term objective of lifting New Zealand’s growth rate and New Zealanders’ living standards. I could not agree more. That is a wonderful aspirational statement. But when we start unpicking what this Budget contains we realise that underneath it it simply will not deliver that. As many of my colleagues have spoken about Mr English will deliver tax cuts to those most wealthy. The richest 5 percent will get one-third of the tax cuts. One-third will go to the very rich. John Key will get $218 extra a week and the minimum-wage earner will get $3 extra. For some reason the Minister of Finance seems to think that that will not increase inequality in this country. He thinks that somehow giving hundreds of dollars a week to those who earn the most and only a small amount to those who earn the least will not increase inequality. I do not get it. This is the first Budget I have been in Parliament for so maybe there is something I am missing but that increases inequality. It makes New Zealand a much more unequal place. 
The big sleight of hand is the tax breaks that were going to middle-income earners. Those middle-income earners might get $20 extra a week but they pay 2.5 percent more in GST. Of course that is only meant to be a temporary thing and just the one time but it stays up there does it not— 
Paul Quinn 
: Are you giving that to someone? Of course you’re not. 
DAVID SHEARER 
: I tell Mr Quinn that it stays up there because if GST goes up 2.5 percent prices do not come down the next year; they stay up there. People have to pay increased power prices. They have to pay increased tobacco prices. There is the increase in accident compensation costs and in early childhood costs. I have been to three or four early childhood education centres in my electorate in the last week and they all tell me exactly the same thing: the parents who are sending their kids to that centre will be paying more. Many of them will be dropping out and not sending their kids there any more. 
Also we will have an inflation rate of 5.9 percent. That inflation rate will push up interest rates. We are one of the only countries in the OECD that has had interest rate hikes in the last few years. 
David Bennett 
: What about Australia? 
DAVID SHEARER 
: We are one of the only countries with interest rate hikes. 
Craig Foss 
: Half of Europe has put it up. What are you talking about? 
DAVID SHEARER 
: In the US and Europe—all of those countries have not had interest rate hikes. Wages might be predicted to rise by 2.5 percent but they will be undercut by the little amount of money that people will get in their hands. Overwhelmingly they will be paying more taxes more costs more inflation more on their home loans and more on accident compensation and they will get 2.5 percent. If people happen to live in Auckland there is a bill of about $500 each that is coming for them to pay for a new Auckland super-city they do not want. The ratepayers in my electorate will be paying more. It will cost $200 million to pay for the super-city. If we divide that by the number of ratepayers out there it is about $500 each. We can ask anybody on the street whether they will be better or worse off and they will know really well that they will be worse off. That is what we hear and that is what is in the polling. I can guarantee that the Government’s polling is no different from our polling. Those members know that this is a huge swindle and we will be going backwards. 
This Budget is being touted as the thing that will stop people crossing the Tasman to live in Australia. As my colleague Grant Robertson said people do not cross the Tasman because the tax rate is marginally lower; they go for better jobs and better wages. What will we find on 1 October when we go to Australia? We will say: “My God it’s cheap here. It’s really cheap in Australia.” That will be because they are paying only 10 percent GST whereas we will be paying 15 percent. The average person will think to move to Australia because it is a whole lot cheaper. This will increase the flow across the Tasman not reduce it. 
As if we will not get closer to Australia! One day after the Budget the Minister of Finance said: “Let’s see what we can do with Kiwibank. Let’s flog off Kiwibank. Let’s sell off some shares in Kiwibank.” That man wants to rename Kiwibank “Koalabank”. That is what will happen. As soon as we put that bank on the sharemarket it will be Australian banks that will buy the shares because they want to dominate the New Zealand market. We will have “Koalabank” not Kiwibank. Kiwibank is the very pride and joy that people want to hold on to but the Minister of Finance is willing to flog it off. 
I ask what this Budget will do for the economy. According to Treasury this Budget package will improve GDP by an accumulative 0.9 percent over 7 years. That 0.9 percent over 7 years is pathetic. That is simply pathetic. What about the jobs? This Budget according to Treasury—this is not me this is according to Treasury—will generate 10000 jobs over the next 7 years; 7 years to generate 10000 jobs! 
Hon Parekura Horomia 
: What about the 300 who lost their jobs at Wairoa? 
DAVID SHEARER 
: I thank Mr Parekura Horomia— 
Hon Member 
: You need to eat more lamb because it’s not going through the works. 
DAVID SHEARER 
: Absolutely! We will need to borrow $1 billion to finance these tax cuts over the next few years. We have to borrow money to finance the tax cuts. When we were talking about putting money into the Cullen fund the idea of borrowing to put in the Cullen fund and investing was completely rejected out of hand by the Minister of Finance but we will borrow money to finance tax cuts for the 5 percent at the top of the scale. That is what we will do. 
But let us look at what will really generate growth in this economy: research and development. The increase in research and development is the big success story of this Budget. It was so headline-grabbing that it was announced a week before the Budget. The increase in spend in research and development is 7 percent we know that the inflation rate will be 6 percent so we have an effective increase now in research and development in science of about 1 percent. The $56 million a year is new money. Most of that new money is tied up in grants and vouchers. The 15 percent tax credit that Labour offered has been scrapped. We have had nothing for more than 18 months—actually we will have had nothing for 2 years by the time this comes into being. A bunch of businesses will have to go on their hands and knees to a bureaucrat to apply for a voucher or a grant. 
What an incredibly inefficient way of administering research and development! No other country in the world does this. Australia gives 40 percent tax credits to its most innovative companies and here we ask our companies to apply for a voucher or for a grant. Look at universities and tertiary education. What do we have there? Effectively their budgets have been cut for the last 2 years because they have not been keeping pace with inflation. So for research and development the Budget has absolutely no effect. We have a real generator of highly productive jobs and the best opportunities for New Zealand for the second year running— 
Mr DEPUTY SPEAKER 
: I am sorry to interrupt the honourable member but his time has expired. I understand the next call is a split call. I say to Melissa Lee that the bell will ring at 4 minutes.