Nash Stuart: Taxation (Budget Measures) Bill — First Reading Second Reading In Committee 
Nash Stuart: Taxation (Budget Measures) Bill — First Reading Second Reading In Committee 
[Volume:663;Page:11085] 
STUART NASH (Labour) 
: 
 I want to deal with some facts. The Maori Party member Tariana Turia has sold Maori out. Seventy-three percent of the people in that member’s electorate earn under $40000 a year. If her support for the Budget is not regarded as selling Maori out then I do not know what would be. That party is about to vote in a Budget that will increase GST from 12.5 percent to 15 percent whilst it has a member’s bill which was just pulled out of the ballot that proposes removing GST from healthy food. Now that is hypocrisy if I have ever heard it. 
Mr DEPUTY SPEAKER 
: The member cannot use that word. I ask him to withdraw it. 
STUART NASH 
: I withdraw. 
Tariana Turia talked about high Maori unemployment. Well let me tell her about high Maori unemployment. When Labour took over in 1999 the Maori unemployment rate sat at just about 30 percent. The previous Labour Government took it down to a 32-year low of 12 percent. Does the member know what the Maori unemployment is at the moment? It sits at 20 percent—it sits at 20 percent. The previous Labour Government was the first Government to bring down the Maori unemployment rate to a level that was even close to becoming acceptable—in fact it was not acceptable at all. Does that member know what this Budget will do? This Budget will be the worst Budget for Maori since the “mother of all Budgets” in 1991. This Budget is a travesty and for that member to stand up and say it is a wonderful Budget is a complete sell-out of Maori. Seventy-three percent of the people in her electorate earn under $40000 a year. 
Mr Bennett over there talked about the downtrodden corporate property investor. The downtrodden corporate property investor—now that is a strange one. I do not know what sort of electorate he lives in or where his downtrodden people are but I can tell members that the really downtrodden people in this country will be sitting back and asking how this Budget will help them when all it delivers is an extra $16 a week or a mere $5 a week extra to those on the median wage after the GST hike has been taken into account. I ask members to remember that 50 percent of Kiwis still earn under the median wage. Those people will receive less than an extra $5 a week in the hand when the Prime Minister will receive $350 a week more in the hand. The chief executive officer of Telecom will receive $1600 a week more in the hand. That is 100 times more—100 times more—than the increase for a person on the median wage. That does not take into account the inflation rate of nearly 6 percent that this Budget creates. This is not a Labour Party figure; this is not scaremongering. This figure is in the Budget documents. It is the Minister of Finance’s figure this 6 percent inflation. That is the bogeyman that Mr English does not want to talk about because he knows that it not only erodes but eradicates the effect of the tax cuts. 
Phil Goff the next Labour Prime Minister and the next Prime Minister of this country has pointed that out. Mr English informed a horrified National caucus—[ 
Interruption 
] We can see them. He talked about inflation. The National members had their statements. The National members were ready to go out and tell people how much better off they were going to be but then Phil Goff told them what inflation would do to the tax cuts. I saw the reaction of the National members in the back row. Those members over there were saying “Oh goodness me. How will I counter this?”. I ask those members whether Mr English told them about the rise in inflation. No he did not tell them about it at all because those members were sitting back saying “Oh goodness me.” As Mr Cosgrove said those members should go to halls full of their constituents and tell them that their Prime Minister will be about $350 a week better off and that they will be worse off but that that is OK. I ask those members how they will sell that. How will they sell that? I would like to see them do that. 
I think the theme song for this Budget should be “(I Can’t Get No) Satisfaction”. That song was about a young man who no matter what he did could not get ahead. People kept telling him that everything was better; there were mixed messages but still there was no joy. That is what this Budget is about: mixed messages from Mr English and Mr Key. They told Kiwis that they would all be better off under this Budget—that this would be a Budget for all Kiwis. It does not matter to Mr English and Mr Key that there is to be $11 billion—$11 billion—in extra revenue from GST over 4 years. They are giving the lion’s share of the tax cuts to the very wealthy to the likes of Mr Key and the chief executive officer of Telecom who will receive $1600 in the hand every week. That money is coming from the 50 percent of Kiwis who earn under $30000 a year or the 75 percent of Kiwis who earn the average wage. But those members say that is OK because Mr Key will receive $350 a week in the hand! 
I do not think there will be feelings of envy from Kiwis about that as Mr Key suggested there would be. I think there will be feelings of anger. They will be thinking “Oh my God we’re being let down again”. Mr Key promised—he looked into the camera and promised—prior to the election that he would not raise GST but he has done that. He said he would not do that but he has done so. That is not nice. It is not fair and it certainly is not what people voted for. 
The first principle of tax legislation is that there should be equity. This is about who carries the burden of tax. I argue that those who are less well off will carry the significant burden of tax through the increase in GST. That is a regressive tax because it is a tax on petrol food electricity and all the items that people need in order to lead a decent life—a life with dignity. GST is increasing at a time when most people are struggling with rising costs and falling real wages. What we have not heard is that Mr English has said to Mr Brownlee that he wants to have increased dividends from the State-owned enterprises. Do members know what that means? 
Brendon Burns 
: Power prices. 
STUART NASH 
: Mr Burns is right. This will be a real winter of discontent. People will look at the Budget tomorrow and think that they have a bit of extra money but they will realise that their power bill will go up by 10 percent. Inflation will erode their tax cuts and their real wages will be eroded. This is not a Budget for the many at all; it is a Budget for the very very few. 
The Reserve Bank Governor Alan Bollard wrote a paper in 1992 entitled  
New Zealand’s Experience with Consumption Tax 
. It dealt with the implementation of GST in New Zealand. He wrote: “in 1989 when GST was increased to 12½% the effect on retail sales and subsequently on growth was marked; after experiencing signs of a pick-up the economy dropped back to recession the following year.” Let us remember that when GST was increased by 2.5 percent in 1998 Kiwis at the top end had received massive tax cuts in 1988. Less than 12 months beforehand the top marginal tax rate had dropped from 48 percent to 33 percent. I wonder whether anyone has asked Dr Bollard what he thinks about the idea of increasing GST. Just as he is managing the economy out of recession this increase comes along. He probably read through the history books and reread his paper with a sense of impending dread. We are borrowing $1.1 billion over 4 years in order to fund tax cuts for the very wealthy at the expense of the many and in all probability at the expense of the economy. It is a dreadful legacy for those who are at school at the moment. 
I would like to point out that last year’s Budget focused on three objectives. The first was to help Kiwis through the recession and support jobs. The Government had a Job Summit and what did that throw up? The cycleway. How many jobs came from that cycleway? Six. Let us forget about that objective because the jobs thing seems to have petered out with a whimper. The second objective was to lift productivity. I understand that a report released today says we have dropped five places in productivity down to 20 percent while Australia has increased its ranking. That one is a failure. The third objective was to keep future Government debt under control. I can tell members that Labour got rid of debt through 9 years of prudent fiscal management. Even Dr Bollard said in his latest statement that the reason that this recession was not as bad in New Zealand as it was overseas was due to the prudent management of the previous Government and the way that Labour left the finances. Dr Cullen’s legacy was set but it has been destroyed in 18 months by this Government. 
I will make one final point in which I will give the perspective of an entrepreneur. This is a case study—a real-world example. I spoke to a very good friend of mine who is one of New Zealand’s most successful entrepreneurs. He is worth $100 million give or take a little. He does not like those guys over there in National by the way. His comment was that the tax rates do not even come into the equation when he is considering a business venture. So Mr Key and Mr English should not tell me that the National Government is cutting taxes in order to stimulate economic growth because that is just not the case. This is a Budget for the very few not the many at all. Thank you.