Parker David: Taxation (Business Tax Measures) Bill — First Reading 
Parker David: Taxation (Business Tax Measures) Bill — First Reading 
[Volume:652;Page:1082] 
Hon DAVID PARKER (Labour) 
: 
 The Labour Party will be supporting the Taxation (Business Tax Measures) Bill. I take issue though with some of the comments made by the Minister of Finance who has just resumed his seat which were trying to redraw history. He was trying to say to the electorate that the National Government inherited a very poor set of accounts that it inherited problems with unemployment and that the country was heading in the wrong direction—all of those are fictions. 
Let us deal firstly with the question of unemployment. The Labour Party places a high value on employment growth and a high value on low unemployment. Keeping people employed is always at the centre of a Labour Party policy agenda. Employment is the best way to share income and wealth. Reliance on a benefit is very much a poor relation to having a regular income from a job particularly in a country where the minimum wage was raised by Labour from around $7 an hour to $12 an hour under our watch. During the time of the previous Labour Government unemployment dropped sharply. In fact it dropped so sharply that for the last couple of years New Zealand regularly traded places with South Korea as to whether we had the lowest unemployment rate in the world or the second-lowest unemployment rate in the world. That is what this current Government inherited: a legacy of low unemployment built through sound economic management and prudent fiscal policy on the part of the Labour Government—not high unemployment. 
This Opposition will hold the National Government responsible for unnecessary rises in unemployment. There is no doubt that unemployment is on the rise around the world. Although we in Labour do not hold the National Government responsible for all rises in employment we will hold it responsible for the excessive rises of unemployment that it has already occasioned in some small industries in New Zealand. 
For example we saw hundreds of millions of dollars in direct inward foreign investment in the forest sector lost as a consequence of the National Government’s ill-considered talk of suspension of the emissions trading scheme. We have seen losses of jobs in the biofuel industry through the injustices that were caused to that industry via the legislation that Mr Brownlee forced through the House under urgency just prior to Christmas. Those are but two instances of already increasing unemployment that could have been easily avoided by the National-led Government. It inherited low unemployment; it did not inherit high unemployment. 
I think one of the policy challenges of the next decade internationally will be how we deal with the unemployment that will be a consequence of the global recession. I say with some confidence that that will be more central to the policy agenda of any Labour Party than it will be to that of the National Party. 
The second indicator of the state of affairs that the National Government inherited from the Labour Government which again it says was a poor set of cards is Government debt. Government debt was reduced from 38 percent of GDP when the Labour Government took office to under 20 percent of GDP when it left office. People who are regular listeners to Parliament on the radio or regular readers of the newspaper will remember that virtually every year when the Labour Government reduced debt through running Budget surpluses at a time of plenty the National Party claimed that we were not returning money to taxpayers that should have been returned to taxpayers in the form of tax cuts. Year after year it said that tax cuts were the preferred way to deal with those surpluses not retirement of Government debt. 
Chris Tremain 
: So how much did you actually retire? 
Hon DAVID PARKER 
: We retired enough to reduce Government debt from 38 percent of GDP to 20 percent of GDP. Chris Tremain says that is not good enough. If the state of affairs had been as had been proposed then by National Government debt would still be a far higher proportion of GDP and New Zealand would be in the position of some other countries like Great Britain for example and many other developed OECD countries that approached this recession not having reduced their debt as a percentage of GDP in recent years. They are in the invidious position of having rising Government expenditure as a consequence of rising numbers of people reliant on unemployment benefits and at the same time they already have high Government debt. 
The UK Government is in danger of going down the route the last but one National Government—Muldoon’s National Government—left New Zealand in which was with high levels of Government debt and rising unemployment. It was a very very difficult state of affairs to overcome. Indeed it took this country 20 years to recover from that and there was a period—I admit—of good stewardship of the fiscal position of the Government by the previous National Government. But then the previous Labour Government under Dr Cullen did even better and should be congratulated on recognising that in boom times we must retire Government debt if we are to have a strong enough balance sheet to help people through a recession by maintaining levels of decent social provision as this country is now able to afford as a consequence of the previous Government’s management of the fiscal position of the State. We must not let the National Government try to rewrite that history and say that National has somehow inherited a terrible state of affairs and such a difficult position and that therefore the bad job it does is all that can be expected because that is not based on fact. It inherited low Government debt and low unemployment. 
 Turning to what the Government should be doing in this bill but is not it should be looking to the future and restoring the research and development tax credit which it abolished prior to Christmas. That was a ridiculous thing to do. The Government had tax cuts that gave an extra three-quarters of a billion dollars to people who were already better off so do not need the extra money to pay for the groceries every week. The Government funded those tax cuts in part by taking money out of the business sector but that is the very sector that this bill is intended to affect. But more important it took it out of the part of the sector that will be responsible for the development of high-value products. New Zealand needs the development of those products in order to earn export revenues to grow the economy. 
I do not criticise this bill as far as it goes and I think it is a good idea to reduce the default income assessment for provisional taxpayers from 105 percent to 100 percent of current year earnings. That is a good measure. Some of the other measures like changing the thresholds for GST etc. are also good moves. I do not deny that but the Government has not yet undone the damage it caused by abolishing the research and development tax credit and it has not done much to improve the productivity of our industrial output. 
The Government has said much about its changes to the Resource Management Act. I have read the changes proposed. I agree with most of them but not all of them. The Government is kidding itself if it thinks that changes to the Act will significantly improve the GDP growth of New Zealand. It will not do that. The changes to the Act are much less significant— 
Chris Tremain 
: No one said it’s a silver bullet. 
Hon DAVID PARKER 
: Mr Tremain says that no one claims it is a silver bullet but I have heard National members ranting on for years claiming that the Resource Management Act is the big obstacle to growth and productivity. I say it is not the big obstacle to growth and productivity; it is far less significant than the research and development tax credit which National abolished prior to Christmas. The research and development tax credit would have had a far greater effect on improving New Zealand’s economic growth and the wealth of New Zealanders and on improving our ability to afford the things we all want. 
This bill will not do much to reduce the growth of unemployment. I repeat the National Government ought not to get away with the myth that it is trying to portray—that it has inherited a poor state of affairs. New Zealand is in better shape in terms of the Crown’s financial position and unemployment than just about any other country in the world. Thank you.