Norman Russel: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — Second Reading 
Text is incorporated into the Bound Volume 
Norman Russel: Taxation (Annual Rates Returns Filing and Remedial Matters) Bill — Second Reading 
[Sitting date: 02 August 2012. Volume:682;Page:4275. Text is incorporated into the Bound Volume.] 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I rise to speak on behalf of the Green Party on the Taxation (Annual Rates Returns Filing and Remedial Matters) Bill. The first thing this bill does of course is set the annual tax rates for the 2012-13 tax year. The setting of those annual tax rates fixes in place the great so-called tax switcheroo that the Government introduced. If you remember the tax switcheroo the Government introduced was meant to pull the wool over people’s eyes. It was meant to trick people— 
David Bennett 
: Come on switcheroo! 
Dr RUSSEL NORMAN 
: It obviously tricked David Bennett. It would be a pretty easy job you would have to say. But the idea of the tax switch was that the Government would decrease the taxes on upper-income earners which it did and the exchange would be that it would increase GST. So what that would mean is that ordinary New Zealanders would pay by having an increase to the GST on their groceries. Every time you go to the supermarket you have to pay a little bit more GST. You pay a little more GST so that those who are the very upper end of the income scale can have tax cuts. It meant a 5 percent tax cut effectively for those at the top end. So if you earned $1 million a year then the National Government the John Key - John Banks Government gave you a 5 percent tax cut. So if you earned $1 million a year you were given an extra $50000 or about $1000 a week. Of course that money has to come from somewhere so the way that the John Key - John Banks Government organised this was that it said: “Oh well every time ordinary New Zealand mums and dads Kiwi mums and dads go to the supermarket to buy their groceries they can pay extra GST on those groceries.” And that is the heart of the tax switcheroo. What it meant was a big tax cut for upper-income earners which is very significant if you are on $1 million a year. That is a tax cut of $50000 a year or $1000 a week thank you very much John Key and John Banks. But if you were a middle-income earner then you have to pay increased GST to cover that cost. 
Aside from the sheer inequity of that tax switch the old tax switcheroo which was at the heart of this bill that we are considering in front of us—and aside from the sheer unfairness of a system that says we are going to give big tax cuts to those at the very top and we are going to pay for it by taxing ordinary New Zealanders more through their GST—the Government said it would be fiscally neutral or broadly fiscally neutral. That is what the Government told us. Of course it has been no such thing. It is not fiscally neutral. At no point was it fiscally neutral. In fact the revenue lost was probably something in the order—it is very hard to get the numbers out of the Government because the Government is very shifty on these issues; it is the John Key - John Banks Government after all. It is very hard to get the numbers but it is probably about $2 billion. That is the deficit. So instead of being fiscally neutral as we were told at the time it has in fact cost maybe $2 billion so far. If that is the case then that means an extra $2 billion has had to go on the Government credit card. We have had to borrow that money to cover the tax switch that is implicit in this bill. 
So the Government introduced changes that made our tax system much less fair on the one hand by taking money away from middle-income earners and giving it to upper-income earners and on the other hand it made the fiscal position of the Government much worse. It made the deficit worse. So that was the heart of the Government’s great tax shift policy that is put in place by this bill. For that reason the Green Party will not be voting for this bill. We think that this bill is fundamentally unjust and unfair because it sets tax rates that are fundamentally unjust and unfair. 
But most of all this bill is part of the Government’s overall economic package—the Government’s dumb dirty grey economic package. So instead of having smart Green economics which is the direction in which the world is heading—smart Green economics is the 21st century economics that we should be embracing as a country—this John Key - John Banks Government is giving us dumb grey dirty economics. It is the economics of the 19th century when we should be embracing the economics of the 21st century. That is what this tax package is part of. 
So instead of seeing a tax shift that would be progressive such as moving tax on to capital gains which is highly progressive what we are seeing is actually increasing taxes on the poor and cutting taxes on the wealthy. Instead of seeing a tax shift that would reduce the taxation pressure on ordinary people and actually put a carbon charge in place what this Government is doing is spending about $1.5 billion a year to subsidise greenhouse gas pollution via the emissions trading scheme. And instead of this Government introducing some kind of resource rental—for example around water which is one of our most important resources—which could then take some of the pressure off the tax system so that we would not see the kind of tax rates that we are seeing in this bill the Government is doing nothing about water. In fact what it is doing is giving away the rights to water for free. So irrigators who use water and make billions of dollars out of water literally do not have to pay anything for the use of that water. 
Instead of having a smart Green economic future where we would actually increase savings and would support KiwiSaver—and an automatic enrolment system would be part of that in order to increase the number of people who are getting into KiwiSaver thereby increasing our savings—the Government backed away from automatic enrolment in KiwiSaver because it said it cost too much. And of course the reason why the Government could not afford it was that it gave away so much money in tax cuts to upper-income earners that it could not afford to make the kind of structural change that we need to make in the economy to actually increase the amount that we are putting into savings through KiwiSaver. So auto-enrolment did not happen. 
The other part of it of course that is missing in terms of a taxation policy is the Government’s decision to borrow to pay for the rebuild and of course to put a levy on just the people of Christchurch. So it is Government policy now that the people of Christchurch will pay an earthquake levy through their rates and the Government will borrow to pay for some of the rebuilding costs but there will not be across the country a temporary targeted earthquake levy—or a tax as the Minister for Canterbury Earthquake Recovery Gerry Brownlee quite rightly identified which is fair enough. A temporary targeted earthquake levy could have been used to take some of the pressure off the Government’s fiscal position to pay for the rebuild which would have been fair and would have been spread across the whole country. Everybody would put in a few bucks it would take the pressure off the people of Christchurch and it would reduce Government debt. Instead of that being part of this tax package which it is not what we are seeing is that the Government has actually put a levy through its rates on the people of Christchurch—the very people who do not need extra burden at the moment. The John Key - John Banks Government has put an extra levy on the people of Christchurch to pay for the rebuild but the rest of the country has not worn it. Instead of having that levy as part of this package it has not had it there at all. 
In terms of dealing with the structural imbalances that underpin the poor economic performance of New Zealand since the new-right economic revolution of the 1980s and 1990s which has been an economic catastrophe for New Zealand we have not seen anything to address the overvaluation of the currency. So whether it is part of this bill or whether it is part of monetary policy we have not seen any attempt by this Government to deal with the problem of the overvalued Kiwi dollar. In the middle of the currency war this Government just says: “Oh well whatever is whatever.” Even though the Reserve Bank says we have got an overvalued currency which is destroying the productive sector and even though all of the leading economists say we have got an overvalued New Zealand dollar this Government is doing nothing on it and sitting on its hands. 
Instead the Government has gone on a spending splurge. The spending splurge is really amazing: $12 billion or thereabouts on new motorways which have never been through Treasury’s infrastructure criteria. Treasury has a special thing. It has a special set of rules. If you are going to invest in infrastructure you are supposed to put it through Treasury’s infrastructure rules. The roads of national significance project a $12 billion project has never gone through Treasury’s process. And then we have the $1.5 billion on greenhouse gas subsidies. We have the $120 million to $500 million cost of the assets privatisation programme—still unquantified. The Government will not say how much it is planning to spend on that. Of course the permanent impact of the privatisation of the assets is that it means that the Government’s deficit is worse by $100 million a year according to Treasury’s Budget Policy Statement 2012. 
So that is the reality of this fiscally imprudent Government. It has many many hundreds of millions and billions of dollars to give away in tax cuts for upper-income earners to subsidise pollution to spend on new motorways and to subsidise its assets sale programme and that has put the Government books into a terrible hole. So instead of getting the kind of smart Green economic transformation that we need as a country what we are getting is very poor economic management from a Government that does not know how to manage the books. What we are getting is a tax bill in front of us here that basically cements in place the old tax switcheroo which simply gave away large amounts of money to upper-income earners and made middle-income earners pay for it. The Green Party will not be supporting this bill.