Wong Pansy: Taxation (Annual Rates and Urgent Measures) Bill — Second Reading 
Wong Pansy: Taxation (Annual Rates and Urgent Measures) Bill — Second Reading 
[Volume:628;Page:717] 
PANSY WONG (National) 
: 
 It is quite sad because I used to enjoy Georgina Beyer’s speeches; she was an outspoken MP who exercised her own independent mind but now it is so sad to have to sit here and listen to her read out some prepared speech notes which were no doubt dictated by the Hon Dr Michael Cullen. 
In the House this week the Hon David Benson-Pope is not the only one who by selectively leaking the police investigation results to the media has been economical with the truth. This truth deficiency syndrome is now becoming a hallmark of the minority Labour Government. One week out from the election the Hon Dr Michael Cullen had to be ordered by the Ombudsman to release the true costing detail of the interest-free student loan policy which is the subject of this legislation. The abuse of the parliamentary process is equally breathtaking in this instance. This legislation in effect will commit more than $2 billion worth of taxpayers’ money. Can people guess how long the Finance and Expenditure Committee had to spend on examining this legislation which will cost the country $2 billion? It had 2 hours—and the Government is not even inviting public submissions. 
We were told by Labour MPs like Clayton Cosgrove who was so confident that these measures are popular with the public. But that begs the question of why the Government would not open up this legislation so all those supporters could swarm and crowd to the select committee to tell it how much they will support the Labour Government. 
Hon Clayton Cosgrove 
: Read the bill. 
PANSY WONG 
: Clayton Cosgrove is still in denial. I think the only reason that Labour members are trying to rush this legislation through is that they want to help the Hon Dr Michael Cullen to be Father Christmas to the tertiary students and the so-called working families but he will be Scrooge to the rest of New Zealanders. 
Well it did not work because we have very sensible and intelligent university students. The New Zealand University Students Association co-president Andrew Kirton said that the interest-free student loan policy will make it easier for students to borrow more and that the Government has made it easier for institutions to charge more. So Clayton Cosgrove should listen: it is not just the National Party that is saying that students will be borrowing more; the co-president of the University Students Association concurs with that opinion. Mr Kirton reckoned that universities in particular appeared to be setting fees on the perceived ability of students to pay not on the true cost of those courses. Mr Kirton went on to say that there was an element of sour grapes because the policy was at the universities’ expense and there was retaliation by the universities in their fee setting. 
His concern is very valid because four out of the seven universities that have set fees have adopted the maximum increase allowed. In fact Canterbury University set its fees and has now forecast a surplus of $11.4 million. Massey University the New Zealand College of Education in Christchurch and the Dunedin College of Teachers Education have applied to the Tertiary Education Commission to increase their fees by up to 10 percent. So we can see the irony of this policy. On the one hand it will initially cost taxpayers $2 billion and then about $400 million a year will go towards the policy. On the other hand it will drive up student fees so that students will borrow more and then the taxpayer will front up further. The policy is simply an election bribe; there is no other way to describe it. 
One of the biggest problems that the Labour Government refuses to address regarding student loans is the lowering of the means-testing threshold. The number of students receiving a student allowance is fast decreasing and that is one of the reasons why students find it more necessary to borrow. So if Labour MPs are serious about helping those students they should address the issue of the student allowance. 
The second issue this legislation is trying to address is extending the benefit for working families which in effect would drive up the marginal tax rate of those families to 60 percent. That is a real disincentive for people to earn more income. Labour is fast leading the country backwards because in the 1970s New Zealand had the highest marginal tax rate of 66 percent and a two-digit mortgage interest rate. After the Reserve Bank’s increase in the cash rate today we can see that Labour is fast leading New Zealand backwards to those “good old days” with double-digit mortgage interest rates and high marginal tax rates. 
The last issue I want to address is about this legislation reconfirming the existing income tax rate where the Government wants to punish 20 percent of New Zealand’s income earners with a tax rate of 39c in the dollar. We can think about where that tax money is going and I will use just one Government department to illustrate that. This morning the Commerce Committee examined last year’s financial results of the Ministry of Economic Development. That is a Government department together with New Zealand Trade and Enterprise that would have been allocated over $100 million of taxpayers’ money. But a senior manager who appeared in front of the committee this morning admitted that there is little that the Government can do to actually transform New Zealand’s economy into the so-called high-value economy about which this Labour Government has been banging the drums for the last 6 years. 
We were told in a report that came out from the New Zealand Institute that sadly New Zealand has not kept pace with transforming its economy into one of so-called high-value exports. Exports are relatively low tech and while there has been rapid growth in some sectors it has been from a low base like information technology. Since 1990 New Zealand has lost market share in categories including meat which makes up 57 percent of exports. Indeed 42 percent of New Zealand’s exports are in slow-growing categories. 
The solution is obvious. All members of the business community and all the thinkers of this nation know that cutting tax to encourage people cutting red tape and changing the attitude of envy are the way to go. I conclude by saying that this week while we are celebrating Peter Jackson’s success let us not forget he is not just an artist—he is an entrepreneur and a successful business person. So let us celebrate business success by giving businesses the tax cuts they so deserve.