Copeland Gordon: Debate on Budget Policy Statement 
Copeland Gordon: Debate on Budget Policy Statement 
[Volume:637;Page:7769] 
GORDON COPELAND (United Future) 
: 
 The best news by far in the Budget Policy Statement is that in this year’s Budget there will be tax cuts for New Zealanders of $1000 million—commonly known as $1 billion. The plain fact is that these tax cuts would not be occurring at this time were it not for the fact that United Future won three vital seats in the 2005 election which eventually led to our being able to negotiate in exchange for support on confidence and supply matters that there would be tax cuts in this term of Parliament. 
I will set this in some sort of context because it is a red-letter day in that we will at last be announcing tax cuts of that magnitude. One of the incidents that happened in the last Parliament that will endure for me for the rest of my life was the time when Kenneth Wang arrived here as a new member of the ACT party to replace Donna Awatere Huata. On the first occasion that he got to ask a question in the House he addressed it to the Minister of Finance. His question asked the Minister of Finance if the Minister could please advise the House how many “taxes levies or duties” he had reduced since he had been the Minister of Finance and for the first and only time the Minister of Finance was speechless. He eventually told Mr Wang that he the new member had a point: “I cannot think of a single one …”. That was still Dr Cullen’s attitude during the 2005 election campaign whenever the question of tax reduction for business was raised. It was not on the Government’s agenda in any debate. Yet here we have in this Budget Policy Statement a commitment to $1000 million worth of tax cuts—and that is good news. 
One other thing in the Budget Policy Statement objectives is also good news—that is personal tax cuts. There are personal tax cuts through the adjustment of the thresholds which were announced by Dr Cullen in Budget 2005 of $360 million. When Dr Cullen announced that what did he say? He said he had decided to do that because he had to accept the logic which United Future—and he specifically mentioned myself Gordon Copland—had been advancing to him since we came into Parliament that it was blatantly unfair to leave the thresholds unadjusted for inflation. So if we put the two moves together we can see that United Future will be delivering at or about the time of this Budget tax reductions for New Zealanders of $1360 million—and it is indisputable that these things would not be happening without our presence here in Parliament. 
I say too that when I talk about business tax cuts a lot of people think that they are just for businesses and that they will not receive them if they have not formed themselves into companies. But I tell members that New Zealand is officially the easiest country in the world in which to form a new company. Self-employed people who are not incorporated can incorporate for a few bucks and then they can enjoy these tax cuts. Every business in New Zealand really can get in on the act. Tax cuts will mean that those businesses will have more scope to reinvest and to increase productivity and they will also have more scope to be a little more generous in terms of pay settlements for their staff. So I have no doubt whatever that this $1000 million we will see in the Budget will filter down into the pockets and purses of many many hundreds of thousands—if not millions—of Kiwis and that is really great news. 
I go back to the question of the adjustment of the threshold for inflation which I have argued for since I came into Parliament in 2000. I have a long history in this area which I will not go into but I tell members that we asked for the thresholds to be adjusted for the movement in the cost of living since 2000. The current thresholds were established by Dr Michael Cullen on 1 April 2000 and from that day to this—which is now 7 years—they have not been adjusted. They should have been adjusted not by the amount that Dr Cullen is promising in the forecast but by the actual cumulative movement in inflation since that date which is now around 19 percent. That would mean under United Future policy that the $38000 tax band would now be lifted up to $45220. So the 19.5c in the dollar rate would continue for people right up to $45220 at which point it would go to 33c in the dollar. The current level of $60000 would be moved up to $71400 at which people would move on to the top tax rate of 39c in the dollar. We continue to advocate that those adjustments should be made. 
From our point of view it is not a question just of affordability; it is also a question of doing the right thing of doing the fair thing and of doing the just thing. As Michael Cullen pointed out all the other things—excise duty on tobacco cigarettes alcohol and gambling; the whole list of levies—are all automatically indexed upwards every year for inflation. But when it comes to income tax rates there has been no movement since 1 April 2000. That is blatantly unfair. It means that in real terms most Kiwis have been paying increased taxes since that time because the value of the dollar has been eroded by cumulative inflation at 19 percent. So we will continue to press for that policy. 
But wait it gets better. In addition— 
Rodney Hide 
: There’s more? 
GORDON COPELAND 
: —yes there is—United Future has a policy of income splitting for couples with dependent children. There are 250000 couples with dependent children in New Zealand. We are saying that they deserve a tax cut as well. As is known the Hon Peter Dunne who is now the Minister of Revenue thanks to those important three seats United Future won in the election will bring out a discussion document next year about income splitting for couples with dependent children. This is something that also needs to happen as a matter of equity and fairness. It will not be grossly expensive for the Government because it will actually dovetail with and cut out to some degree payments that are being made under the Working for Families package. Some affected couples will not get income splitting on top of Working for Families but they will get it instead of—in part. So the fiscal cost will not be very great but again it should happen just to recognise the simple reality that when people have dependent children they are not in the same position as a single individual looking after himself or herself. At the moment a father for example supporting a wife and three children is paying exactly the same amount of tax as a single person and that situation needs to come to an end. 
Before I come to an end I want to mention that our policy is also to call on the Government to increase expenditure in relation to Official Development Assistance which is mentioned in the report for the Finance and Expenditure Committee. United Future would like to see the rate of that assistance shifted up to 0.5 percent of gross national income forthwith. The target of Dr Cullen and the Government is much more modest—0.35 percent by 2010. But here is the rub: in 1970 this nation agreed that that rate should go up to 0.7 percent by 2015. In 1970 we had 45 years to get there; we now have only 8 years left. Our amount of Official Development Assistance as a percentage of gross national income is now way way below what it was when Norman Kirk was the Prime Minister of New Zealand. That was the best it ever got. We are saying that we need to get back to that because it is important in terms of generosity to the poor and needy of this world. Thank you.