Norman Russel William: Taxation (Urgent Measures and Annual Rates) Bill — Second Reading 
Norman Russel William: Taxation (Urgent Measures and Annual Rates) Bill — Second Reading 
[Volume:651;Page:118] 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I rise to speak to the second reading of the Taxation (Urgent Measures and Annual Rates) Bill. The Green Party will be voting against this bill for a number of reasons. The first reason is that we think we can use the tax system to incentivise activities or to disincentivise and in the first instance this bill decreases incentives to save. Green Party members in general have supported the KiwiSaver scheme. The scheme has always had some problems; it was a far from perfect scheme. We were dubious about whether it would increase the overall savings rates or whether it would simply transfer them. We were worried about the impact on Government savings due to the cost of the scheme. We were also worried that we were using taxes to subsidise inequality in retirement income between those who could afford to save and those who could not. Nonetheless it seemed to us that the KiwiSaver scheme was a sensible approach to try to increase savings. We think that the good part of this bill is that it introduces the 2 percent option which the Green Party always supported and there was a lot of support in the select committee for that. We also think that allowing low-income earners to get the full $20 a week is a positive thing. But overall the bill decreases incentives to save. 
The Green Party supports tax shifting. We support taking taxes off incomes and putting it on resource use and pollution. However this bill does a different kind of tax shifting. It takes tax incentives off savings to give income tax cuts. In terms of a long-term strategy for a nation with a chronic current account deficit we think that it does not make any sense to reduce incentives to save. From our point of view we think that we need to increase incentives to save. Having a bill—one of the first bills that the Government has brought into the House—that actually decreases incentives to save does not make any sense to us. 
The second reason concerns the stimulus package. Is this the best way to deliver a stimulus package? When we pass on these income tax cuts they are going to be either spent or saved in one form or another. If they are spent then a good proportion of that spending will be on imported goods—that is the Government will borrow money from overseas in order to pass on income tax cuts so that people can then purchase goods from overseas. Effectively we are borrowing money from overseas in order to stimulate someone else’s economy. A large part of the income tax cuts will simply be used to stimulate someone else’s economy as people purchase goods and services from overseas. It seems to us that this is not the most sensible way to set up a stimulus package. 
The other thing that will happen is that if people save that will not have any stimulatory effect at all. That is not necessarily a bad thing in order to increase savings and to reduce household debt but it is certainly not a good way to stimulate economic activity. It seems to us that if we were to put together a sensible economic stimulus package to save New Zealanders’ jobs and to keep the economy ticking over at a time of recession then it would be much better to invest in infrastructure than to have tax cuts. 
We think that the infrastructure we should be focusing on should be infrastructure that does not produce demand for imported goods. One of the best ways to have that of course is to build houses and to have home insulation. This country desperately needs affordable housing. There is a tremendous shortage of affordable housing. If people could have affordable housing they would be far less in need of income tax cuts. What better way is there to build affordable housing than to build the kinds of houses that the Prime Minister grew up in? The Prime Minister got a hand up so that he could get ahead in the world because he had access to State housing. But now the Government has decided to cap State housing so that other people cannot get a hand up. It seems to me that we should give a hand up to people so that they can have affordable housing. Building infrastructure is a much better way to have a stimulus package than simply giving out income tax cuts. It is a much better way to stimulate an economy and it means we get something that is worthwhile as well. 
Building sustainable infrastructure not only is a much more sensible stimulus package but means we get long-term investment in our society and our economy. If we invest in public transport for example we can prepare ourselves for the future in which climate emissions will be constrained because unlike the ACT Party the world has understood science. The world is getting its head around climate change and we need to invest in public transport. In the long term also oil prices will continue to go up and we need a world in which we have the capacity to get around. With public transport we would be producing fewer greenhouse emissions and using less oil so actually having a stimulus package that invests in sustainable transport is a much better option. 
A much better option also is to invest in sewerage schemes. It is a disgrace that right around this country we have very poor-quality sewerage schemes that are pouring sewage into our harbours and people are unwilling or ashamed to eat the food from those harbours because it is contaminated. It is not very good for our tourism industry either. If I were the Minister of Tourism I would be very interested in a stimulus package that improved the sewerage schemes around our country so that tourists would not come here and discover that the beaches make them sick. That seems to me a much better stimulus package than giving income tax cuts which will simply result in a very short-term stimulus to someone else’s economy. 
We should also be investing in trees. Planting trees on eroding land would be a much better stimulus package than these tax cuts. We have a major problem across this country of eroding land and land eroding into rivers and the best thing to do about it is to plant trees which is good for our greenhouse emissions. One of the problems we will have is that our greenhouse emissions will go through the roof and that will be incredibly expensive for us as a nation and it will be a major problem for our taxpayers. Taxpayers will have to foot the bill because this Government wants to weaken the emissions trading scheme so that taxpayers pick up more of the debt. If we plant trees on eroding lands not only will we reduce erosion into our rivers and lakes but we will also sequester carbon which will mean that we have fewer greenhouse emissions less debt and less of an impact on the taxpayer. It seems to me that a much more sensible stimulus package is to employ people to plant trees on eroding land. We should be focused on the long-term future of our economy. Making the investments in infrastructure that we will need for the long term is a much more sensible way to deliver a stimulus package than having a set of tax cuts. 
Then we come to the process issue about this bill. It is with sadness really that I see that the explanatory note says “However due to the time frames involved the RIA consultation requirements have not been met.” 
Hon Darren Hughes 
: Who’s the Minister in charge of that? 
Dr RUSSEL NORMAN 
: I think the Minister in charge the new regulatory responsibility Minister or whatever he is called is of course the ACT member the Hon Rodney Hide. 
It seems to me extraordinary that the very first bill that this new Government brings in does not have a proper regulatory impact assessment. There has not been sufficient time for the very first bill to have a regulatory impact assessment. So all that talk was bunkum—it does not mean anything. When it comes down to it it is a case of just ramming the bill through. Who cares about a proper regulatory impact assessment? After all the Government members will just ram the bill through so they can deliver tax cuts to their mates. So that is an incredible act of hypocrisy. 
Then we come to the idea of a broad-based tax rate. This bill talks a lot about how we need low tax rates and a broad-based tax system. One of the ways to do that—and it says this in the notes on the bill—is to tax investment gains. I notice that even though there is support for a low-rate broad-based tax bill what we are really getting are just lower rates that are not broad-based. There is no move within this bill to actually broaden the tax base to cover capital gains which is something that is missing in the New Zealand tax system—unlike the systems of pretty much every other OECD country. The Green Party supports a capital gains tax—excluding the primary family home—to broaden the tax base which is supposedly one of the objectives of this bill. But the bill does not actually broaden the tax base. We also think it should broaden the tax base by taxing resources. We would like to see some of those elements in the bill but unfortunately they are not there. 
I will not touch on the issue of research and development because I think that has been covered extensively in this discussion but I will note the inequity of all this. I asked the Parliamentary Library to do some work about it. I asked how much less in tax someone earning $30000 a year will pay after 1 April 2011. They say that under this bill that person will pay $160 less per year. Someone earning $250000 will pay $5160 less income tax per year. So that does not seem to me to be a very fair or progressive way to run the tax system and it looks as if the Government is just passing a bill that will benefit rich people at the expense of poor people. Why would it support a system whereby someone on $30000 gets only $160 less tax while someone earning a quarter of a million dollars pays $5000 less tax? That does not seem to me to be a very fair system. 
This bill has not been well thought out. It is being rammed through. It is not a good bill. It gives bad incentives. Why does the Government not go and have a think about it and come up with a better bill? 
Debate interrupted.