Foss Craig: Taxation (Annual Rates and Budget Measures) Bill — First Reading Second Reading In Committee 
Foss Craig: Taxation (Annual Rates and Budget Measures) Bill — First Reading Second Reading In Committee 
[Volume:672;Page:18908] 
CRAIG FOSS (National—Tukituki) 
: 
 I find myself in the very awkward position of agreeing with members on the other side of the House on something. Before the dinner break Mr Cunliffe and one of his colleagues who spoke earlier said that Dr Cullen would have never delivered a Budget like this one. That is so true. Let us look at some of the differences in this Budget. It is transparent it has a path to lower debt and a surplus it is open and its numbers have integrity. Wherever possible things have been front-loaded such as putting into this year this Government’s full commitment to the reconstruction of Canterbury which is all up about $8.8 billion going on to the accounts this year. The previous member started by worrying about why this bill was being debated tonight because some of the changes do not come in until next year. I think he was asking why it was counted. I say to members that there is a little thing called the forecast period. In the Public Finance Act I think members will find that for 3 or 4 years the Minister of Finance has to forecast anything and everything that he or she knows will affect the accounts of this country. Anything that the Minister of Finance knows is happening has happened or probably will happen is in this Budget. If there is something a bit further that he or she is unsure of then it is in the various contingencies at the back. It provides certainty in very uncertain times. 
We note how the Leader of the Opposition said earlier that he had signed the free-trade agreement with China all on his own or something like that. After he said that he also told us that the global financial crisis ended some time in 2009. Our Prime Minister invited him to go around the PIGS—Portugal Ireland Greece and Spain—to suggest to them that the global financial crisis is over and see what they say. 
This Budget and this bill will keep interest rates lower for longer. It is as simple as that. Mortgage interest rates and working capital interest rates will stay lower for longer. They have been at record lows under this Government. They will continue to stay low under this Government. Why might that be? There are a couple of reasons. One is that this Government is getting its books and its house in order after inheriting ongoing spending increases from the previous Government which had no corresponding revenue increases attached to it. 
The second is that under this Government real inflation is around 2.5 percent. Everyone has been compensated for the GST increase unlike with the previous administration. Under the previous administration inflation was running at 5-plus percent in spite of the Reserve Bank of New Zealand Act which Labour members now seem so keen to want to change. Yet for at least 3 or 4 years of Labour’s last period in Government inflation well exceeded the 3 percent cap as defined in the Reserve Bank of New Zealand Act. 
This Budget and this bill pass four solid good tests. They put New Zealand and New Zealand enterprises in a better frame to grow their exports because this recovery has to be export led. There is only upside since the last 4 or 5 years prior to the National administration coming through because there was no real growth. In fact export—the real tradable sector—went backwards after 2004. The Budget and this bill pass the test of an export growth - led economy. They will grow savings. KiwiSaver contributions are going up. Household savings rates are on the increase. Dr Bollard from the Reserve Bank noted the other day for the first time in living memory that bank deposits are growing. New Zealanders are saving more borrowing less and moving from the debt-laden property boom we had in the previous administration. 
The Budget and this bill pass the test of reducing a deficit and of showing a lower debt track. We will have surplus sooner than was predicted even in last year’s Budget and much much sooner than was in the papers to the incoming administration after the election of this National Government when the decade of deficits was forecast and when the real numbers started to hit home. Members may recall a minor problem with Budget 2008. It did not include all those things around KiwiRail and ACC but that is for another day. 
This Budget and this bill also pass the test of higher real after-tax incomes for New Zealanders New Zealand families and New Zealand households. Part 1 of this particular bill sets the annual rates of income tax. Therefore they define the after-tax incomes of New Zealanders which have grown at 6 percent after only 2½ years of this National Government. After 9 years of the previous administration and the best economic times possible real incomes grew only 3 percent—after 9 years. There is a bit of a problem there. 
Finally I will make just one more point. Members opposite are starting to point to page 81 of the Budget and are talking about some conspiracy theory or something. As they are wont they are reading half the page. They talked about a discrepancy between the Inland Revenue Department forecasts and Treasury forecasts on tax take. If members read the page they will see that it is all about corporate tax. I will read the first couple of sentences of paragraph 2 which the members opposite seem to keep forgetting. Paragraph 2 states—as the members opposite point out—“The lower forecasts of tax revenue from Inland Revenue indicate there may be some downside risk to our tax forecasts.” That is fair enough. It is open and honest. 
The second sentence is the bit the Opposition members keep forgetting to mention: “At the same time there are also upside risks.” Basically that says that on the downside the tax forecasts from the Inland Revenue Department possibly could be wrong but on the upside they possibly could be right. If Treasury is at one level and the Inland Revenue Department is at another level they will tend to merge along the way. In fact I recall Dr Cullen having ongoing problems with this issue which from memory started an inquiry as to why his various forecasts were so discrepant from those of the Inland Revenue Department in many of his Budgets. 
As we move through talking about this Budget and the taxation bill in front of us I agree with members who interestingly are starting to justify previous Budgets at least over 2 years and maybe even 11 years on from Dr Cullen. They are trying somehow to justify what they are saying today but totally forgetting to offer their own alternative plan for this Budget. Going into an election Labour members are still stuck in the past and talking about Dr Cullen. Interestingly I find myself agreeing with members on the other side. Dr Cullen would never have delivered a Budget like this one because quite simply this Budget is attempting to fix the problems that the previous administration under the stewardship of Clark and Cullen put upon this country. They were quite devastating problems but this administration this Minister of Finance and this Budget will arrest and fix those problems and put New Zealand on a solid and good path for growth and prosperity. Thank you.