Boscawen John: Taxation (Budget Measures) Bill — First Reading Second Reading In Committee 
Boscawen John: Taxation (Budget Measures) Bill — First Reading Second Reading In Committee 
[Volume:663;Page:11096] 
JOHN BOSCAWEN (ACT) 
: 
 There is much to commend in the Budget. In particular the tax changes that are incorporated into the Taxation (Budget Measures) Bill which we are discussing this evening are to be commended. 
Let us start with the reduction in the marginal tax rates. There is a significant reduction in marginal tax rates. Those whose annual income is $14000 or less will see their marginal tax rate drop from 12.5c in the dollar to 10.5c in the dollar those earning from $14000 to $48000 will see a reduction from 21c to 17.5c those earning from $48000 to $70000 will see a reduction from 33c to 30c and finally those on incomes above $70000 will see their marginal tax rate go down to 33c. Much more was possible in terms of reduction in marginal tax rates but at least that is a good first start by the Government. 
The Government has also moved to close loopholes—in particular loopholes in relation to qualifying companies and the tax advantages available through investment in residential and commercial property. The restriction on depreciation claims on properties is a move to see a rebalancing of the economy and that has to be commended. 
We also have a reduction in company tax rates from 30 percent to 28 percent from the beginning of the 2011 tax year. Finally there are moves to incentivise savings with the setting of a new maximum tax rate of 28c in the dollar for portfolio investment entities or PIEs. 
One can look at the impact of the tax changes contained in this bill on page 9 of the Minister’s executive summary in the Budget documents. Those members who have that document might be interested to look at page 9. It shows the effect of the various changes whether they be the reductions in personal income tax the increases in GST or the changes to benefits for people on various incomes. In particular it shows that those households earning an annual income of $40000 or less will have a net impact from these tax changes of 0.7 percent—0.7 of 1 percent. Those earning between $40000 and $85000 will have a net benefit of 0.4 percent. I suspect that this bracket includes the great bulk of working households in New Zealand. Those earning in excess of $85000 will have a net impact of 0.7 percent. The Minister of Finance—I guess—summarises that very nicely when he states at the bottom of page 25 of the Budget speech: “On average most New Zealanders receive roughly a half to one per cent average increase in real disposable income.” That is not much but one could say that it is better than nothing. 
I wish that were the full story but it is not. What both the Government and the Labour Opposition are ignoring is that starting on 1 July we will have an emissions trading scheme tax. We will have a tax on energy a tax on electricity— 
Hon Members 
: Oh! 
JOHN BOSCAWEN 
: I am interested in the barracking from the Government members because they should be ashamed. The reason they should be ashamed is that New Zealand’s Treasury estimates that the impact of the emissions trading scheme will be to add 5 percent to the price of electricity and 4c per litre to the price of petrol from 1 July. Those costs will flow throughout the whole economy. They will flow into food prices and into everything that New Zealanders purchase. The Reserve Bank has calculated that the annual effect in the first year of the emissions trading scheme will be to add 0.4 percent to the CPI. 
Where does that leave this Budget? Where does that leave the Budget that Mr English and Mr Key are so very proud of—the Budget that says that on average most New Zealanders will receive roughly “a half to one per cent”? Well the people on incomes from $40000 to $85000 which the Budget document “B2 and B3” shows on page 9 will get a benefit of 0.4 percent will be left with absolutely nothing—zero. National members— 
Nicky Wagner 
: Whose side are you on? 
JOHN BOSCAWEN 
: Do I hear a comment asking whose side I am on? 
Nicky Wagner 
: Yes. 
JOHN BOSCAWEN 
: That is interesting. I am very pleased that the member has asked that question because I find myself more and more having to stand up and represent her constituents. Overwhelmingly National Party members are opposed to the emissions trading scheme. They tell me that at the meetings I have conducted up and down the country. I read with a great deal of interest that at the National Party’s central North Island regional conference in the weekend a subset of National Party members moved a resolution unanimously that the National Government should be delaying the introduction of the emissions trading scheme. 
How interesting it is also to hear Labour members talk about the impact of this Budget on working people’s incomes and their expenditure. I have heard Mr Goff and Mr Cunliffe talk about the increase in GST and of how inflation is going up. Well National members can be proud of one thing. They can be proud of the fact that they are putting electricity up by only 5 percent because the previous Labour Government would have put it up by 10 percent. That is right; that is the one thing and the only thing that the emissions trading scheme has to commend it. If there had not been a change of Government then from 1 January we would have had an emissions trading scheme that Treasury has said would have increased electricity prices by 10 percent. 
The National Government is confident and relaxed about the fact that it is increasing electricity and petrol prices and increasing the flow-on effect of those things by 5 percent from 1 July. The impact of that is there for all New Zealanders to see on page 9 of the Budget document. Households earning between $40000 and $85000 will get a net impact of 0.4 percent and the Reserve Bank tells us that the impact of the emissions trading scheme will be 0.4 percent. So everything that this Budget purports to give to those people will be taken away from 1 July which is 3 months before the tax changes we are debating in this bill will come into effect. 
It is actually worse than that. We can look at the position of superannuitants. The Minister of Finance goes on to state very generously on page 22: “the package will provide from 1 October 2010 an immediate lift in the levels of New Zealand Superannuation all main benefits student allowances and Working for Families payments. This will be sufficient to offset the estimated impact on prices due to the rise in GST.” Well is that not generous of the Minister of Finance and the National Government to be making adjustments to superannuation that will be sufficient to compensate for the increase in GST? 
I ask about the increase in the price of electricity. What about the 5 percent increase in electricity? I ask about the flow-on effects throughout the whole New Zealand economy. I ask about the 0.4 percent increase in costs that the Reserve Bank of New Zealand said the emissions trading scheme will cause. What about that? There is no reference to compensation in the Budget speech. One thing I will say is that beneficiaries and those who have their benefits adjusted in line with the CPI will receive an adjustment which will be carried forward because those benefits are adjusted in line with the CPI. But superannuitants those people over 65 who rely substantially on New Zealand Superannuation—and who may be listening to this debate tonight—will receive no permanent compensation for those increases in electricity and petrol prices. 
Let us turn to page 15 of the Minister’s executive summary. We see that in 2011 the cost of the emissions trading scheme will be about $907 million. In the following year it will cost $275 million. I have heard the Minister for Climate Change Issues tell this Parliament that we have to proceed with those electricity increases because we have the massive cost of the emissions trading scheme. We heard Metiria Turei the co-leader of the Green Party talking tonight about subsidies for polluters. But this is not a subsidy for polluters. That $1.3 billion over 2011-12 is not a payment to polluters. I am sure that she is referring to the emitters of carbon dioxide and carbon dioxide is not a pollutant. But that is a totally separate argument. 
What is this sum? It is $1.3 billion that will be paid to the people who planted trees in the 1980s and 1990s. That is right. There were 70000 60000 70000 and 80000 hectares planted in trees every year through the 1990s. The people who planted those trees had no expectation of receiving a subsidy but that is what they are getting. They are getting it courtesy of the taxpayer so every single New Zealander will have to pay for that. It is a disgrace. If National’s politicians will not represent their members then the ACT Party certainly will. Thank you.