Carter David: Taxation (Annual Rates and Urgent Measures) Bill — First Reading Instruction to Finance and Expenditure Committee 
Carter David: Taxation (Annual Rates and Urgent Measures) Bill — First Reading Instruction to Finance and Expenditure Committee 
[Volume:628;Page:224] 
Hon DAVID CARTER (National) 
: 
 I certainly join with my National Party colleagues in opposing the Taxation (Annual Rates and Urgent Measures) Bill. Is it any wonder that in the first few days of this Parliament the very first piece of legislation the Labour Government introduces is a taxation bill in order to grab more money off hard-working New Zealanders? Here we are debating a taxation bill within the first few days of Parliament because Dr Cullen wants not only to accept an $8 billion surplus but to see whether he can do better than that. 
First of all I will address the issue of the incorporation into this legislation of interest-free loans to students. I agree with what Lockwood Smith said. That policy was the most blatant election bribe I have ever seen in the time I have studied politics. I remember the pledge card of 1999—with Helen Clark’s dollied-up photograph—which stated that the Government would address the issue of student loans. At that stage student debt was $4 billion. In order to address the quantum of student debt in this country Dr Cullen and his cohorts came up with a mechanism to make loans to students interest-free while they study. Well surprise surprise student debt did not come down; it finished the last parliamentary term at over $6 billion. Helen Clark pledged to address student debt yet it has gone up by over 50 percent. Because the election was suddenly looking pretty tight and Labour needed to do something very very desperate it advanced a policy to make all student loans interest-free. We are told by Treasury that the quantum of student debt in the next few years will peak at $18 billion. That is because of Helen Clark and Michael Cullen who promised to address student debt. 
I also want to talk about the costings. Dr Cullen came into the House today and said that Treasury has re-costed the policy at $202 million. Yet I listened with interest to John Key who said that income from interest on student debt is currently around $360 million. In other words I have no faith at all in the figure of $202 million that Dr Cullen introduced into the House tonight. I suggest that if that is not a Treasury burp it is probably a Michael Cullen burp. The reason the costing will exceed that figure considerably is that Dr Cullen seems to fail to realise that students will now borrow to the max. Why would they not? If they have the intelligence to involve themselves in tertiary education they surely have the intelligence to take up a student loan to the absolute maximum quantum available to them. If they do not need it they can stick it in the bank and earn bank interest rates. That is another reason why under this policy student debt will extend extensively to at least $18 billion. 
The other thing in this legislation that I will talk about is Dr Cullen’s attempt tonight to confirm the annual taxation rates for the 2005-06 year. He has an $8 billion Budget surplus and is continuing to tax what he calls wealthy New Zealanders—those earning over $60000 per year—at a rate of 39c in the dollar. We know that Labour introduced that “envy tax” after the 1999 election and we know it will stick with it. But let us look at the parties that we think will support this legislation being referred to the select committee and following that through its readings in this Chamber. 
During the election campaign New Zealand First campaigned around the country for lower taxes. Somebody suggested today that New Zealand First campaigned for a company tax rate of 20c in the dollar. For a small bauble of power New Zealand First has sold its principles completely and will now vote for the continuation of a company tax rate of 33c in the dollar. New Zealand First is not the only party that will do that. United Future candidates argued all around the country that the country is overtaxed and that they would make sure they delivered lower taxes to New Zealanders. Do the United Future members look as though they will vote for this legislation to go to the select committee? Yes again they do. 
That is what happens when an election campaign becomes as tight as the last one was. Dr Cullen got into a situation that gave him a hell of a fright. If we go back to the start of this calendar year we see that the members of the press gallery one and all were saying that the election could not be lost by the Labour Party because the economy was so strong. But Dr Cullen personally underestimated the strength of ill feeling among New Zealanders who know that they are completely overtaxed. Suddenly as the polls became tighter and tighter the student loan policy came out. Then at the end of the day Labour could not form a Government without giving the bauble of power—only one bauble—to Winston Peters. Doug Woolerton missed out. Ron Mark would have been a superb Minister of Police. He deserved to have the title “Honourable” added to his name but he did not get anything. Winston Peters took the lot and sold the New Zealand First members down the drain. 
There is one small piece of this legislation that I want to agree with and acknowledge tonight. The matter is on Supplementary Order Paper 1 which Dr Cullen has put before the House very late in the piece. It will change the taxation laws in New Zealand in order to allow New Zealand wine producers to also collect the rebate that was announced by the Australian Government in a previous Budget. The Australian Government for reasons known only to itself determined that a tax rebate would be made available to wine producers in Australia for produce sold in Australia. That was a complete breach of CER and the Government was not prepared to do anything about it until the Wine Institute supported by the National Party raised it as a serious issue. Very belatedly the Minister for Trade Negotiations the Hon Jim Sutton—[ 
Interruption 
] He was the Minister at that stage and he still is the Minister for another month or two as he speeds around the country. Dr Cullen then managed to raise the issue sensibly with the Australian Government and what we see is the Supplementary Order Paper tonight. When enacted into law it will change the taxation law sufficiently so that the Inland Revenue Department can monitor that situation and make that rebate available to New Zealand wine producers who produce wine here in New Zealand and market it for consumption in Australia. 
Those are the only couple of pages in the whole of this legislation that are worth anything at all. The rest the fact that taxation rates delivering an $8 billion surplus continue to be raised in this country is an outrage. Well-qualified talented New Zealanders continue to leave this country in droves because suddenly it is a lot easier to make progress in Australia. Dr Cullen is going to continue that process unless he is prepared to investigate and reduce taxes. He can appear on television on  
Close Up 
 and waffle all he likes about the Treasury report; New Zealanders now know the truth about the taxation situation in New Zealand. They know that New Zealanders are heavily overtaxed and that we will continue to see qualified talented young people leave this country unless the Government is prepared to do something about that.