Parker David: Taxation (Urgent Measures and Annual Rates) Bill — Second Reading In Committee 
Parker David: Taxation (Urgent Measures and Annual Rates) Bill — Second Reading In Committee 
[Volume:651;Page:157] 
Hon DAVID PARKER (Labour) 
: 
 We have heard Government members extolling the affordability of these tax cuts and then in the same breath saying that they have inherited a difficult set of financial cards from the Labour Government. I want to put on record the nonsense that has already been written into history by the previous National Government. It left the prior Labour Government with debt that was 35 percent of GDP. 
Hon Parekura Horomia 
: How much? 
Hon DAVID PARKER 
: It was 35 percent of GDP. Not as bad as the National Government before that which left the Labour Government with debt at 60 percent of GDP but still too high. We inherited debt equal to 35 percent of GDP. We reduced it during the 9 years of wise stewardship under the Labour Government to 17 percent of GDP. The fiscal position of the Government is very very good. We are hearing exaggerated rhetoric from the National-led Government that is now complaining that there are all sorts of hidden expenses. It is overstating things in respect of accident compensation. National members are saying that they have all sorts of problems and a difficult set of cards to play from here on. But the reality is that they have had a very good set of fiscal settings left to them—debt at 17 percent of GDP and low unemployment amongst the lowest unemployment in the world—and they still complain that they have a difficult set of cards. Over the next 3 years we will hear National members say they cannot do this they cannot do that and that it was the Labour Government’s fault. 
But the reality is different. National has inherited an almost unparalleled position compared with most developed countries in the world. We are in a position to help people in New Zealand get through this recession but this bill does not do it. It does not help the people who need it most. Low-income people do not get help under this bill. In fact money comes out of their pockets not just out of the pockets of those in KiwiSaver although all of those in KiwiSaver are worse off no matter what their income is. All those who are on lower incomes even if they are not in KiwiSaver are worse off under Part 1 of this legislation. It is disgraceful. National is saying that Labour did not do enough for low-income people who did not have children. Yet this bill ignores the lowest-income group without children and does not give them any help. The National Government is set to increase New Zealand’s debt in a way that is unnecessary by giving greater tax cuts to those who are already well off nothing to those who are worst off and not changing the position of those families with children who have rising costs to meet and increasing debt. We will see increasing unemployment. 
At the same time the Government is gutting the research and development effort that we need to fund our growing economy. Research and development expenditure in New Zealand is quite good at the Government level and it is poor at a private sector level. The research and development tax credit which this part of the bill abolishes through the schedule matches New Zealand’s position to Australia and indeed in some ways betters it. But this bill tears out that research and development tax credit in order to fund tax cuts for those who need those tax cuts less than the lowest-income people who do not get anything under this legislation. 
The other anomaly here is that we have had 3 years preceded by 3 years and preceded by 3 years before that of the National Government saying that the threshold at which the highest marginal tax rate cut in was too low. It complained that the $69000-income level at which the highest tax rate cut in was too low a threshold. The Labour Party in its tax package increased the threshold for the highest marginal tax rate to cut in at $80000. What does this bill do? It does exactly the opposite of what the National Party said should happen. It actually drags back the threshold so that the highest tax rate cuts in at $70000. That is the exact opposite of what National said for 9 long years in Opposition should be done. Nine years in planning what National should do with tax and it dishes up this irrational piece of legislation.