Volume 654 Week 13 - Thursday 28 May 2009(continued on Friday 29 May 2009) 
Volume 654 Week 13 - Thursday 28 May 2009(continued on Friday 29 May 2009) 
[Volume:654;Page:4009] 
Thursday 28 May 2009 
( 
continued on Friday 29 May 2009 
) 
Taxation (Budget Tax Measures) Bill 
In Committee 
Debate resumed. 
Part 1 Personal tax cuts and independent earner tax credits: repeal of later years’ changes ( 
continued 
)  
AMY ADAMS (National—Selwyn) 
: 
 This morning we are discussing Part 1 of the Taxation (Budget Tax Measures) Bill as we were last night. Part 1 provides for the deferral of the tax cuts planned for 2010 and 2011. This Government does not want to have to do that but we understand that when one makes decisions in Government one has to make decisions— 
Hon Darren Hughes 
: When you started this speech last night you were proud! 
AMY ADAMS 
: —I am proud—based on what is best for New Zealand here and now. Let me tell members that right now New Zealanders need two things: security and a strong economy. This Budget gives them the beginnings of that. I can tell members that right now if the choice is to have the tax cuts or to build our economy for a strong recovery to create growth to create jobs to look to the future and to keep an extra 1.5 percent off interest rates the New Zealanders I have spoken to since the Budget was presented are all of the same view and that view is that it would be irresponsible to give the tax cuts now and irresponsible to let our debt balloon to 70 percent of GDP which Labour would have us do so that every family of four would have effectively a second mortgage of debt around their neck of $180000 per family. That is what that party wants; that party wants New Zealand to have $180000 of debt per family so that it can keep spending—never mind the consequences chuck it on the plastic and do not worry about the long term! 
That party does not care about stability; it would not know how to build a strong economy. That is why in November last year the New Zealand public made its choice and chose John Key and Bill English to lead us through these hard times. The New Zealand public did that because they knew that Labour was incapable of getting New Zealand through this recession. They knew that it was very good at spending money—that is not hard—but when it came to making hard decisions in turbulent ever-changing times they put their faith in a National Government. Yesterday with Bill English’s first Budget and with the Taxation (Budget Tax Measures) Bill giving effect to the first part of that we can see exactly why New Zealanders made that choice. We are not going to let debt cripple future generations of New Zealanders. I do not want my children growing up with a debt burden around their neck that is so massive that they have no chance of getting ahead and no chance of building a strong economy. This economy needs to have a minimum amount of debt. 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 On 8 October 2008 John Key delivered a speech. In that speech he said the following: “I am very conscious of the worsening international situation which is evolving on a daily basis. Together with my colleagues I have been closely monitoring the build-up in problems in the financial markets over the past several months and particularly in recent weeks”. This is the same speech in which Mr Key went on to say the following: “I will now turn to National’s tax plans in more detail. Following on from the tax cuts of 1 October 2008 National will be making further tax reductions on 1 April 2009 1 April 2010 and 1 April 2011.” On 8 October 2008 the day the IMF released a report telling the world about the depth of the recession John Key went to the New Zealand public and promised those tax cuts. 
Hon Dr Nick Smith 
: It’s got worse since then. 
GRANT ROBERTSON 
: Yes I say to Dr Smith it did get worse. On 9 December we stood in this House under urgency—when I made one of my first speeches in this House—to put in place those tax cuts for 1 April 2010 and 1 April 2011. We listened to Chris Tremain the junior Government whip who told us that Kiwis knew National had a big agenda and were proud to see a Government standing up and delivering on that agenda. That is what happened on 9 December. Dr Smith is right that more information then came to light: the recession was deeper and worse. So what was the reaction of John Key and the National Government? It was to continue down the path of the tax cuts that we are now repealing in Part 1. 
Labour at that time said those tax cuts were unaffordable and irresponsible. Our position has been consistent. We can support this legislation because we are being consistent. The inconsistency comes from the other side of the House. Members opposite knew when they put in place those tax cuts on 9 December that they were irresponsible and unaffordable. In the end going right back from 8 October to 9 December this was a cynical election bribe from the National Party. It knew it had to up the ante on tax cuts; it knew it had to raise the bar to try to convince the public of New Zealand to vote for them. It was a cynical election bribe. John Key knew the state of the world economy; he had the IMF report. But on 9 December National still wanted to get its 100-day agenda in and it did not care what the real state of the economy was. This is a cynical election bribe. Here we are today repealing what we did under urgency in the first place. 
When we debated the legislation on 9 December we heard David Bennett tell us that this bill was the first part of delivering a growth economy and that through personal tax cuts the bill would give the impetus needed for the New Zealand economy to grow and be successful. Let us bear in mind that this was meant to be the stimulus package. This was meant to stimulate the economy. David Bennett went on to say that the package was about giving some stimulation to the economy—well clearly not any more! Yesterday’s Budget gives about as much stimulus to the economy as a decaffeinated latte. That is the stimulus package we saw yesterday from the National Government. 
We also need to remember that Mr Key in his speech on 8 October was very clear that these tax cuts could be paid for through changes to KiwiSaver and changes to research and development tax credits. Mr Key said: “Taken together the removal of the R&D tax credits and the changes to KiwiSaver mean National will not have to borrow or cut public services to fund our personal tax cuts.” Well what we have discovered today is that National is not doing the tax cuts but it is cutting public services and it is borrowing. So there we go—it is a triple whammy: the public of New Zealand not only are not getting the tax cuts but also are getting cuts to public services and we are seeing potential cuts to superannuation. And we have it here: there are cuts everywhere but not on taxes. 
This is a Budget of broken promises and this is the biggest broken promise of them all. This is not a stimulus Budget. This Budget could have been about creating jobs this Budget could have been about protecting New Zealanders in work. But instead it is a return for National on the fact that it made a cynical election bribe. 
TIM MACINDOE (National—Hamilton West) 
: 
 I move  
That the question be now put 
. 
STUART NASH (Labour) 
: 
 It is with pleasure that I stand and speak in the Committee stage on the first part of the Taxation (Budget Tax Measures) Bill and I do support this bill. I support it because it removes a great inequity in New Zealand society. I am sure the people of Rotorua understand what the hell this Budget is about and what the tax cuts would have meant for them—absolutely nothing for 75 percent of them. 
I would like to talk about two things: clauses 3 and 4 which repeal National’s flagship tax policy and broken promises. I keep hearing that this Budget is about what is best for New Zealand. But this bill is not about the Budget; this bill is about repealing a promise I tell Ms Adams. Part 1 is about personal tax cuts and independent earner tax credits. We all know that these were the wonder measures that were going to stimulate the economy and that swept National to victory in 2008. Tax cuts had been the National Party’s mantra since 2005 and were so in 2008 when under urgency National passed legislation to cut taxes and held itself up as the Government of integrity. “Trust me” said Mr Key: “I promise. I promise. I promise.” But I say “Rubbish! Rubbish! Rubbish!”. What has happened after delivering on the first promise? Under urgency we have received another bill straight after Mr English’s Budget that—wait for it—repeals the first promise. The shining light of the National Government’s legislative programme which all New Zealanders have waited so long for will be gone before Queen’s Birthday. What a great holiday present for the working Kiwis of this country! 
It is actually quite religious. Tax cuts were here by Christmas but like a bunch of turkeys New Zealanders have been tricked: they have found that their precious tax cuts delivered by wonderful “Santa Claus” Key have been stolen by the “Grinch” Mr English not 6 months later. Is that fair I ask the Committee? Is that fair I ask Mr Tremain? What do the 75 percent of the constituents of Napier who earn under $40000 a year think? Considering they got nothing under National’s original tax cuts policy anyway I think they probably feel pretty aggrieved full stop. Not only has National alienated the 75 percent of people who got nothing under the tax cut in the original legislation but it has also probably annoyed the top 3 percent of earners who got 30 percent of the original tax cuts anyway. No friends will be made with this legislation I tell Mr Foss. I hate to think what the wonderful people of Tukituki are thinking right now. Actually I do know what they are thinking. They are thinking that this is not what they voted for. This is not what they voted for at all. 
Paul Quinn 
: At least he got in. 
STUART NASH 
: And they certainly did not vote for Mr Paul Quinn. Actually we want Louisa Wall back; we want a real rugby player back. Labour delivered Helen Clark and Michael Cullen delivered and Phil Goff will deliver once again because he is not a man who says one thing gets elected and then does not deliver to the people of New Zealand. Phil Goff is a man of principle. The vast majority of New Zealanders now say that they voted for tax cuts but National has taken those tax cuts away so they are asking how they can trust Mr Key. They know they can trust Mr Goff because he has always delivered for New Zealanders so it will be: “Dear John; goodbye.” 
This bill repeals National’s flagship election promise. This bill represents—no it epitomises—National’s broken promises. What am I talking about? Members know what I am talking about: the pledges made by Mr Key. What was one of those pledges? He said that by reducing personal tax cuts on 1 April 2009 1 April 2010 and 1 April 2011 he would ensure that New Zealanders could get ahead on their own steam. I ask Amy Adams whether that is right. It was a nice tune but now National members are singing out of key. It was a good tune but now the Government is out of key. National promised and promised but they delivered the bill that I am speaking to. Part 1 consists solely of the repeal of 18 sections of the Taxation (Urgent Measures and Annual Rates) Act 2008 and the repeal of three sections of the Taxation (Business Tax Measures) Act. There is nothing positive nothing inspirational and nothing at all except repeal repeal another repeal and another repeal. Do members know what Part 1 repeals? It repeals all the tax cuts and the independent tax earner credits promised to the people of New Zealand. 
Dr RAJEN PRASAD (Labour) 
: 
 I am pleased to take a call. It is interesting how we reflect in this Chamber the things we have been taught growing up. Certainly I was taught when growing up that when one makes a promise when one gives an undertaking one works really hard to deliver on it. If something happens and the promise cannot be kept then there is a particular way in which one can go about putting that right. I ask why members opposite cannot be gracious in admitting their mistake on tax cuts. They cannot be gracious in saying that they were wrong and that they made a promise but that something happened and they needed to change it. 
Labour supports this part of the Taxation (Budget Tax Measures) Bill. But that is not the question; the question is what lies behind the bill. One can only think that it must have been a well-thought-out election campaign. One must think about the kinds of things people want think about the promises one wants to make and think about the things that one considers important. Then one must construct that into an election strategy and go to the people and promise them that when in Government one will deliver on those promises. That is fair enough. That is a reasonable way to go. But then what happens? More information becomes available during the currency of that set of ideas. While those promises were being made day by day on the election campaign the world economic meltdown was occurring. The then Prime Minister was responsible and Labour wound back many of the promises and began to talk responsibly about the things that would need to be done. But during the campaign the National Party continued to make its promises. National continued to say day by day and night after night—and it gave a cast-iron guarantee—what it would do. 
New Zealanders are fair people. They actually fell for it. They understood that National would deliver on that promise when in Government. In its first sitting weeks under urgency National put its tax cuts in place. Now with its first Budget it has its first real chance to deliver. And what do we get? We get what we have seen from National on many many occasions. Members opposite might care to reflect on some of those things. We remember very well what happened with superannuation. The link between that and what is happening here in Part 1 of this bill is that National has again changed its mind. Under trying conditions people use those conditions as a smokescreen to push through their real agenda and their particular ideology. In this case the ideology is that brand of conservatism that comes from members opposite. Under the cloud of changed circumstances they are taking the licence to push their hidden agenda. 
What do we see in this particular Budget? What do we see being unveiled for us now? There is no real overall plan. The commentators have said since the Budget was announced that there is no real passion no real direction no real overall plan no investment in the future no investment in skills or any of those kinds of things and no investment in jobs. 
Hon Member 
: This is repetition. 
Dr RAJEN PRASAD 
: Members might care to follow this— 
Hon Trevor Mallard 
: It’s true. 
Dr RAJEN PRASAD 
: It is true. But what we do see is the one thing that National has always done: destroy the good things that Labour has put in place. Muldoon wrecked the superannuation scheme. Your then Prime Minister wrecked the superannuation scheme and you are doing it again. You are doing it now. 
The CHAIRPERSON (Eric Roy) 
: Order! 
Dr RAJEN PRASAD 
: My apologies Mr Chairman; thank you. I say to members opposite that their party wrecked it and they are doing it again. They are taking away the promises given. They are taking out 10 years of contributions and really destroying the Cullen fund. That is what the commentators are saying. I come back to the point I started with. We would have expected those members to say sorry. They should say very clearly and unequivocally that they made a mistake do it without the shouting that we have heard and do it honourably. 
MICHAEL WOODHOUSE (National) 
: 
 I move  
That the question be now put 
. 
Hon DARREN HUGHES (Labour) 
: 
 Of all the lies in the Budget Part 1 of the Taxation (Budget Tax Measures) Bill contains the biggest one because Part 1 sets the tax rates for the forward period. 
Hon Member 
: How come they’re not taking points of order? 
Hon DARREN HUGHES 
: Because members opposite know exactly the extent to which the Budget contains a lie. It is made most clear in Part 1. Part 1 actually increases taxes for working people in New Zealand. Part 1 increases taxes from what they would be if Part 1 was not here. That is the essence of this part. It puts taxes up for people; it does not put taxes down. Members opposite ought to reflect on that. I ask how many of them went campaigning around New Zealand saying that within 6 months of getting into Parliament they would be supporting a bill in Parliament to raise taxes because that is what they are doing. 
Members opposite should also realise that Labour has maintained a consistent position on taxes. We maintained that position before the election when we told National members that what they were promising could not be afforded. We said they would have to borrow for the tax cuts but they said that they would not borrow for them and that they would find a way of paying for them because they are so important to them. They went through the election campaign saying that. They got elected and said in the Speech from the Throne that they would introduce tax cuts. They brought in a bill in December ironically under urgency without the Opposition having seen the bill before it was debated—exactly like this bill. We did not see this bill until we started to debate Part 1 just a few calls ago. Once again National members asserted that tax cuts were affordable. But here they are today raising taxes for New Zealanders. 
In particular I want to focus on the independent earner tax credit because that is covered in Part 1 as well. It increases the tax burden for working New Zealanders who do not receive Working for Families. We were told during the election campaign that tens of thousands of workers had missed out on assistance from the Labour Government and that they needed a National Government in order to get a new category of relief called the independent earner tax credit. But the changes to it are being abolished in Part 1. Those working people will continue to miss out because of what National is doing. 
I want to take up a point that Simon Power raised last night. He said that the Opposition should be opposing this bill simply because we are the Opposition. He said that we needed to learn a lesson about how to be an Opposition. Well I think we have taught the Leader of the House many many lessons about how to be an Opposition. I signal today that there are many many more tutorials to come for that member in the 2½ years ahead. 
Hon Gerry Brownlee 
: I raise a point of order Mr Chairperson. I think it is worth noting that those members are still in Opposition. 
The CHAIRPERSON (Eric Roy) 
: That is not a point of order. 
Hon DARREN HUGHES 
: I do not want to comment on the point of order but it is a wonderful segue into my very next point. 
The CHAIRPERSON (Eric Roy) 
: The member will not comment on the point of order. 
Hon DARREN HUGHES 
: Gerry Brownlee’s comment is exactly the kind of arrogance from the Government that will cause those members so much trouble. If Simon Power wants to tell us about being an Opposition let us teach those members a lesson about being a Government. They should tell the truth. They should campaign on something and then deliver on what they campaign on. That is the lesson of being a Government. They cannot deliver a Budget that contains a lie like Part 1 does. It contains a direct lie to the people of New Zealand. 
I know that the brat pack runs this Government and I know that they wanted to be so different from the last National Government which broke all its promises within 6 weeks of taking office. So with the strategic genius of Gerry Brownlee they have decided to wait 6 months before they break their promises to the people of this country! They campaigned on the decade of deficits saying how terrible the books were under Labour that there was a decade of deficits and that—hint hint boys—things might not have been so good. But they still budgeted for their tax cuts which have now been replaced with a decade of deferrals by way of contribution to the Cullen fund which we will come to in Part 2. 
Part 1 lifts taxes for working people. It takes away the independent earner tax credit that we were told just 6 months ago under urgency was such an important new feature of the tax system. They knew that this was the situation and they campaigned on something they knew could not be delivered. What a surprise to see the media headlines this morning about the tax cuts! All those hundreds of thousands of people who switched their votes between 2002 when National did not offer tax cuts and 2008 when it did offer them have been ripped off badly. The  
New Zealand Herald  
has got it right. It writes about the IOU from Bill English the man who campaigned on tax reductions but who now brings a bill before the Parliament that in Part 1 lifts taxes for people in this country. That is the effect that this bill has. 
The one thing I have always admired about the National Party is the ability of its members to stick to the party line. Whatever line they are given whatever line they are fed they use religiously. During the election campaign they said that tax cuts were needed. After the election they said they would stick to their word but today they have broken their promise. Members opposite so smugly and arrogantly ask to be rewarded for the fact that the No. 1 promise on their pledge card has now been broken. It is a disgrace. 
DAVID BENNETT (National—Hamilton East) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 64 
New Zealand National 58; ACT New Zealand 5; United Future 1. 
Noes 49 
New Zealand Labour 42; Green Party 6; Progressive 1. 
Motion agreed to. 
Part 1 agreed to. 
Part 2 KiwiSaver: closing mortgage diversion facility participation 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 This is the part of the bill about closing the mortgage diversion facility for KiwiSaver and I ask members opposite which ones of them campaigned on that provision. Which ones of those members went around the electorates last year saying: “Here is an opportunity and we’re going to close it.”? There is not a whisper not a murmur not a word from members opposite. What they did on this provision as on the rest of the legislation was go around the electorates telling lies. They made absolute promises to leave KiwiSaver alone—apart from a couple of minor changes they said. They were very detailed in their promises on KiwiSaver. Did they promise this? No they did not. It is just like the rest of it. Those members say one thing in the electorate and when they come into the House they do something else. 
Hon Darren Hughes 
: After the election. 
Hon TREVOR MALLARD 
: They did it after the election with no notice and under urgency. What the hell is urgent about this? What is urgent about closing off this scheme? Oh a couple of hundred people might buy a house. It will take a month or two and a couple of hundred people might buy a house. What a terrible thing to happen. And we are here. The calendar in the Chamber says that today is Thursday but it is Friday morning. We were here until late last night and we are back here this morning to do something that is supposedly urgent. We know that it is not urgent at all. It is doubtful whether it should happen. Frankly in the end if there was a proper debate if the bill went to a select committee the Labour Party could have come to the point of view that it is a good thing. I think it is fair to say that I agree with the Minister in the chair the Hon Peter Dunne that it was not a core part of KiwiSaver. It was a bit of an add-on to an add-on if he will excuse the relationship with the member. 
Hon Peter Dunne 
: There’s a long story to be told at some point. 
Hon TREVOR MALLARD 
: There is a long story to be told and it would have been good if the bill had gone to a select committee. The member is one who has defended generally the processes of this Parliament and generally opposed urgency on important matters so it is somewhat incongruous that he is the person who is sitting in the chair on behalf of the Government. I do not feel too sorry for him. If we sup with the devil we end up with this sort of thing. But that is the position that he is in. [ 
Interruption 
] 
There is a member over there who keeps on chipping in. I came down to the Chamber after watching her on television to try to work out whether what she was saying would make any more sense when I was here. And it does not. At that point after listening to that member I was tempted to move the closure myself. It was such a poor contribution. [ 
Interruption 
] Hang on! We have both members going at once. We have the one who knows how to beat Peters and the one who was beaten by Peters. 
The CHAIRPERSON (Eric Roy) 
: We are debating Part 2. 
Hon TREVOR MALLARD 
: The member was beaten by both of them. In Part 1 he was beaten by me and in Part 2 he was beaten by Peters. He should get advice from “Cougar Bait” about how to beat Peters. 
The CHAIRPERSON (Eric Roy) 
: There are several points I think I should I reacquaint the Committee with. The first is the use of appropriate titles and names in the Chamber; that is one. The second one is that Part 2 is quite a tight debate. Members who stray from the debate and want to bring in extraneous matters may be tempting the Chair to take an early closure. The member has about a minute to go but this is a timely warning. This is quite a precise and tight debate. 
Hon TREVOR MALLARD 
: It is and I am sorry I was diverted. It was such an opportunity to have the two members interjecting at once. 
This is a very narrow debate. It is one that I would not put as one of the most important debates the House will have this year. But it is certainly a debate that should not be held under urgency. Because this bill is not going to a select committee it needs the full attention of the House over an extended period in order to make sure that we all fully understand both this part and the implications of it especially for people who are trying to buy their first house. The urgency process will stop that from happening. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I am delighted to take a call in response to the very searing speech made by the member who has just resumed his seat and to put on record some of the history behind this issue. 
Chris Hipkins 
: Take your time. 
Hon PETER DUNNE 
: I may well. When the KiwiSaver scheme was first being put through Parliament the issue of mortgage diversion was raised. Then it was withdrawn. Then it came through again very late in the bill at the insistence of someone whose name temporarily—hopefully permanently—escapes me and it found its way into the legislation. 
Hon Trevor Mallard 
: I hope he’s escaped here too permanently. 
Hon PETER DUNNE 
: I have not heard from him and frankly I have no desire to. Be that as it may it was promoted as being a way in which people who were getting into their first home could set aside some of their KiwiSaver contributions as a contribution towards the payment of their mortgage. In fact what transpired once the scheme was put in place was that a number of the banks took the view that any diversion had to be over and above the original mortgage repayments. In other words the notion that lay behind the original concept of diversion was overtaken already. To some extent that counted against the intent of the original policy. 
I looked at this issue again earlier this year because I was curious to know what the uptake had been and in the light of the changes to KiwiSaver that were made last December I thought it was timely to look at just where this particular proposal stood. In fact we discovered that fewer than 600 people had taken up the advantage. That was at a time when KiwiSaver membership had soared to 1 million. I say to members opposite—it is worth reminding them when they talk about KiwiSaver being gutted—that in fact what has happened is that this year when membership of KiwiSaver passed 1 million we surpassed our 2015 target. We got there about 6 years earlier. It is hardly a suggestion that KiwiSaver is being run down. So 600 people max out of about 1 million - plus members suggests that this is not a particularly prudent investment. 
I say to the Green members who last night voiced some concern about this proposal during the second reading debate that the reason why we are closing off this scheme is simply that the numbers do not justify its retention. We are saying to the people who are currently in the scheme that their entitlement will remain and it will be a matter for their particular fund provider to determine whether it wishes to offer the facility. But for new entrants we needed to make a closure date and we selected 1 June as being the most convenient in order to give certainty to people and to give some sense of clarity. 
The member who spoke before me questioned why this is being done at this time when a maximum of 200 people—that was his figure—may be adversely affected. I suspect that that is an optimistically high figure actually. The number of people expressing interest in this scheme continues to diminish. 
Hon Trevor Mallard 
: It depends on whether it went to a select committee for a proper period. 
Hon PETER DUNNE 
: Well frankly I do not think the outcome would have been much different. This is a comparatively small measure. It affects very few people in New Zealand. No one will lose from it— 
Hon Trevor Mallard 
: You can’t say you know how many. 
Hon PETER DUNNE 
: I know how many are in the scheme at the moment. There is no great evidence of a huge well of people expressing interest in mortgage diversion. I would make the point that one— 
Hon Trevor Mallard 
: But if someone was just about to go into the scheme in the next few days— 
Hon PETER DUNNE 
: Hang on; I think the member is— 
Paul Quinn 
: Is this a conversation or a debate? 
Hon Trevor Mallard 
: It’s the Committee stage. Grow up and learn how it works. 
Hon PETER DUNNE 
: If the Hutt South battle could go somewhere else I will answer the member’s question. 
The point that Mr Mallard makes is actually the core of this issue and I want to if I may take a moment to go through it. What he is saying in effect is that there will be people out there at the moment potentially considering the purchase of their first home and worrying about whether the absence of this diversion will affect that purchase. The point I am making is that when the scheme was originally conceived the notion was that people would be able to divert their KiwiSaver contributions to their mortgage repayments. What has transpired subsequently is that the financial institutions have said: “No not quite. What we will do is take your normal mortgage repayment and then treat any KiwiSaver diversion over and above that. In other words you can’t do it first up. You have to be meeting your primary set of responsibilities and then we’ll look at any additional payments being diverted.” 
In other words the new-home buyer who is wondering at the moment whether he or she is being disadvantaged is not being disadvantaged because he or she would still have to meet the primary mortgage repayments before he or she would— 
Hon Trevor Mallard 
: Because the banks didn’t trust Governments on KiwiSaver. 
Hon PETER DUNNE 
: That of course was during the time of the previous Government. The member may not want to go too far down that path. But that is the background to why this provision is being removed. It was a good idea but it has not worked. 
MOANA MACKEY (Labour) 
: 
 I am happy to stand to take a call on Part 2 and I thank the Minister in the chair Peter Dunne for taking a call to explain why this measure is happening. It is unusual to have a Minister in the chair who is happy to answer questions from the Opposition. It is quite a breath of fresh air. Long may it continue! 
Labour members believe that this part should have been referred to a select committee. It may well not impact on many people right now but the fact is there are people already in the scheme; there are people who have taken up this option. And there may well be people who want to take it up especially as times get tougher and they are facing saving for their retirement which has become all the more urgent now that superannuation will not be fully funded in the future given that the Budget stops the Government’s contributions to the New Zealand Superannuation Fund. In that respect KiwiSaver becomes even more important as a tool for saving for one’s retirement. It is a shame that KiwiSaver itself was gutted right before Christmas. I had hoped that in this Budget we would see a reversal of that given that we will not be able to afford New Zealand superannuation in the future and given that many of us on this side of the Chamber will pay taxes— 
The CHAIRPERSON (Eric Roy) 
: Please speak to Part 2. 
MOANA MACKEY 
: I am talking about Part 2 which is about KiwiSaver. It is a very broad area Mr Chairman. It is very important because a number of people who at this time might be looking to keep up their retirement savings would also have a mortgage. At a select committee we would have been able to tease that out. At a select committee we would have been able to discuss whether the balance is right and what impact it will have. As times get tougher was there likely to be more uptake of this measure? If so and if there were administrative problems with how it was run how could we fix them? Labour members think that this change is significant enough to go to a select committee and it should have. It does not have to be made right now. It does not need to be done today under urgency. Given that New Zealand superannuation is not guaranteed in the future and given that we do not know how it will be paid for it is a fact that— 
Hon Ruth Dyson 
: Didn’t John Key give a personal guarantee? 
MOANA MACKEY 
: He did give a personal guarantee but it is all very well to say that New Zealand superannuation will be there and then cut the funding for it. He cannot have it both ways. Last time Bill English was the Minister of Finance he cut New Zealand superannuation. This time he has found a sneakier way of doing it coming round the back and saying it will be fine. 
The CHAIRPERSON (Eric Roy) 
: I did preface this debate by saying it is narrow. It is about mortgage diversion. Members can make references to other matters but they cannot base their speeches on KiwiSaver per se. This debate is about mortgage diversion. 
MOANA MACKEY 
: Thank you Mr Chair. I think I was misled by the mention of the word “KiwiSaver” in this part but I will keep my comments to mortgage diversion. However it is not possible to talk about the mortgage diversion part of KiwiSaver without making reference to superannuation and KiwiSaver. I guess I was also responding to interjections about superannuation from the other side of the Chamber. I believe that it is within the Standing Orders for me to do so. I was not responding to those from Mr McClay because I could not understand what he was saying but certainly those from Mr Woodhouse. 
Hon Dr Jonathan Coleman 
: You’re getting personal and nasty. 
MOANA MACKEY 
: Mr Coleman should calm down. I am not getting personal and nasty. Jonathan Coleman accusing me of being personal and nasty is like Jack the Ripper criticising domestic violence as Bill English likes to say. This part of the bill should have been referred to a select committee because a mortgage diversion process— 
Hon Trevor Mallard 
: I raise a point of order Mr Chairperson. I am reluctant to do it especially when no Government member does— 
The CHAIRPERSON (Eric Roy) 
: Points of order will be heard in silence. Thank you. 
Hon Trevor Mallard 
: I have been here a long time and I think that doing— 
Hon Member 
: Too long! 
Hon Trevor Mallard 
: Are you going to deal with him or— 
The CHAIRPERSON (Eric Roy) 
: I will hear your point first. 
Hon Trevor Mallard 
: OK. Comparing a member with Jack the Ripper and his relationship to domestic violence goes beyond a line. Although I do not want the member to apologise I think the remark should be withdrawn. Even I do not think we should go as far as that. 
The CHAIRPERSON (Eric Roy) 
: I did not actually hear the comment; there was too much noise. Has the member to whom it was made taken offence? Because I missed it I am not even sure whom it referred to. If the member did take offence it should be withdrawn. The member could perhaps facilitate things by withdrawing—I do not know.  
Hon Dr Jonathan Coleman 
: I would like to speak to the point of order. 
The CHAIRPERSON (Eric Roy) 
: Well I guess I have opened it up by saying that I could not hear it. I will hear only the member. 
Hon Dr Jonathan Coleman 
: The fact is that we have just conferred on this side of the Chamber and no member here to our knowledge made any such comment. Trevor Mallard is being deliberately malicious by inventing comments— 
The CHAIRPERSON (Eric Roy) 
: Look when we raise points of order we should not cast aspersions upon the character of individuals. A point of order should refer precisely to the Committee. That is a general warning. I did not hear the comment; the member does not seem to have taken offence. Let us just park it. The second thing is that the Committee seems to be in a particularly fractious mood this morning. 
Hon Steve Chadwick 
: I wonder why. 
The CHAIRPERSON (Eric Roy) 
: Look here I am about to chastise someone on the Government side—do members see what I mean? I am trying to do my best here. Let us just continue. 
Hon Trevor Mallard 
: I raise a point of order Mr Chairperson. I want to make it clear to members opposite that I was not suggesting— 
The CHAIRPERSON (Eric Roy) 
: Order! 
Hon Trevor Mallard 
: No it is important. My colleague made the comment; no member opposite did. I just make it clear that I was not accusing any of the members opposite of making the comment. It was a comment made by my colleague about Jonathan Coleman that I heard— 
The CHAIRPERSON (Eric Roy) 
: Enough enough. 
Hon Trevor Mallard 
: —and thought was offensive. 
The CHAIRPERSON (Eric Roy) 
: Stop! Halt! Moana Mackey has about a minute to go on mortgage diversion. 
MOANA MACKEY 
: Thank you Mr Chair. It is really hard to make the jokes work when the National members just do not get them. In any case I thank my colleague— 
Hon Trevor Mallard 
: They are the jokes. 
MOANA MACKEY 
: —that is right—Trevor Mallard. I am so pleased that he is my moral compass in this Chamber. I have completely lost my train of thought now! 
Part 2 is about mortgage diversion and it should have gone to a select committee. I look forward to a National member taking a call to explain why it could not have gone to a select committee. Those members may say that it is unimportant. Well it might be unimportant for them but it is probably not unimportant for the people already in the scheme and it is probably not unimportant for the people who are looking at their bank balances and at last night’s Budget realising there is nothing in the Budget for them and asking themselves how they are going to save for their retirement which they now have to do as well as make mortgage repayments. The mortgage diversion scheme may well have been an answer for them. But we will never know how many people are in that position because we do not have the opportunity to ask the public what they think. That has become a little bit of a hallmark of this Government. 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 As one of the original signatories to the default providers on the KiwiSaver scheme along with my former colleague the Hon Dr Michael Cullen and as co-signatory to thousands of Cabinet papers that came through our offices along with the then Minister of Revenue—who is also the current Minister of Revenue—and Dr Michael Cullen we went through quite a number of iterations of the KiwiSaver scheme leading up to what I believe was a significant turning point in this country’s history. I think we should all take some pride in what we have achieved with KiwiSaver and the fact that a million people are enrolled— 
Hon Peter Dunne 
: Over a million. 
Hon LIANNE DALZIEL 
: —over a million people are enrolled—is a fantastic achievement. It shows that the right decision was taken at the outset which was to try to turn round the lack of a savings culture in this country. We specifically designed KiwiSaver with the Kiwi saver in mind—that is to use the inertia that would inevitably exist from having compulsory enrolment by not having a provision for people to remain compulsorily within the scheme. It would not apply across the board. People would automatically be enrolled in the scheme and they would have to take steps to pull themselves out of the scheme which I think is a very sensible way to go. It took advantage of that good old Kiwi mentality of inertia: “I can’t be bothered to do anything about it.” Anyway it has been a fantastic success in that regard. 
Paul Quinn 
: Why aren’t you in it? 
Hon LIANNE DALZIEL 
: The reason I am not in it is that unlike a lot of New Zealanders I exercised my right to pull out of the scheme when I was automatically enrolled in it because I am covered by the parliamentary superannuation scheme that existed at the time I became— 
Paul Quinn 
: Oh—so free! 
Hon LIANNE DALZIEL 
: That is right; I am one of the very lucky people who belongs to that. 
Hon Members 
: Greater perks! Free chits! 
Hon LIANNE DALZIEL 
: To be honest and given that the members have chipped me because somehow they think that this is a lack of faith in KiwiSaver I tell them that it is quite the contrary. I thought it was immoral to take money from the public purse for the contribution that I already have for my superannuation scheme. Actually very few MPs in this Parliament are covered by the superannuation scheme that I have the privilege to belong to. I know that Trevor is not in it either because— 
The CHAIRPERSON (Eric Roy) 
: Proper names. 
Hon LIANNE DALZIEL 
: —sorry—the Hon Trevor Mallard was out of Parliament between 1990 and 1993 when a wonderful Minister of the Crown a guy called the Rt Hon Bill Birch destroyed the very very good scheme that was in place at the time. So there you go! I was chipped by members opposite but I believe that my decision not to be in KiwiSaver merely to get the $1000 contribution was an honourable position to take. 
I was not aware that this provision covering mortgage diversion was to be repealed so my issue is about process. As I have said we went through a number of iterations before we arrived at the KiwiSaver proposal. It was interesting to listen to the Minister talk about a man—whose name is apparently not going to be mentioned in this debate—who sat on the select committee. I think it was Gordon Copeland; I will hazard a guess there. 
Hon Peter Dunne 
: I am suddenly feeling unwell. 
Grant Robertson 
: He dare not speak the name. 
Hon LIANNE DALZIEL 
: He dare not speak the name—that is right. 
Hon Trevor Mallard 
: He was “GC” but he thought he was “JC”. 
Hon LIANNE DALZIEL 
: Well that is right; I think his direct line of communication outside this place was somewhat greater than others of us might experience. 
But leaving all that aside the point is that I was very interested to hear the Minister say that in fact the banks had responded to the introduction of this provision in what I think is quite a sensible way—by saying that it is not a mortgage diversion facility available for people’s ordinary KiwiSaver contributions; it is actually a mortgage diversion facility available for people who want to pay off their mortgage a little bit more quickly. When we think of the intention of KiwiSaver and of people improving their equity in their homes we know that that is the way most New Zealanders have saved over many generations. I think that a lot of people have taken the approach of paying off their mortgage in order to ensure their future so it is a similar process to KiwiSaver in that regard. 
Given that banks have adopted this process of not taking it off the actual contribution to people’s normal mortgage repayments I am left asking the question: why are we repealing this? It seems as though the banks have adopted a relatively sensible approach to it and if that is the case why then does it need to be repealed? As the Minister said a relatively small number of people are affected. If that is the only reason is that a good enough reason? That is why I would have preferred this part of the bill to go to a select committee. 
The debate on Part 1 was pretty cut and dried; it was black and white. But I am wondering whether the debate on Part 2 will be so cut and dried and whether this is the right thing to do. Was it the banks that came to the Government to ask it to repeal this provision or is this simply Gordon Copeland payback? Now that he has gone we can get rid of it. 
Brendon Burns 
: Divine retribution! 
Hon LIANNE DALZIEL 
: As that member has said it could be divine retribution. I think these are the issues that we could explore. 
I probably would have felt totally comfortable about this provision if it was a straight mortgage diversion for the ordinary mortgage payments. But the fact that the banks and the other KiwiSaver providers have not interpreted it in that way and have actually applied it in a way that I think is quite sensible makes me wonder why we should take this out. It seems to be quite a useful alternative that is available to those who want to increase their equity in their own homes rather than making a contribution to KiwiSaver at a particular time. I personally think that the legislation as it was finally drafted in that regard in relation to the very powerful advocacy of one Gordon Copeland was intended by him to be a mortgage diversion so one could pay off one’s ordinary mortgage rates. It sounds from what the Minister has said that the banks and others have responded in a way that in my way of thinking is more in keeping with the original design of the scheme than perhaps an open mortgage diversion facility would be. I am quite keen to hear a little bit more about it; I think we should tease the debate out. It has not gone to select committee and I would be grateful if the Minister could respond to those issues. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 Let me take a couple of minutes to respond to the quite useful contribution from the member who has just preceded me. I am aware that as I do so a bolt of lightning may well strike me. Be that as it may the member’s analysis of what has happened is quite correct in terms of the way in which the banks have proceeded. As I said earlier the net uptake is somewhat fewer than 600 across the entire scheme. If that is taken across the number of registered providers we are down to a handful of numbers per provider and in some cases probably fewer than 100 per provider. So the economics of those providers’ provision of this particular facility start to mitigate against it. 
The second point that I make which I should have made earlier concerns my reference to the fact that I looked at this in the light of the changes that were made to KiwiSaver late last year. As the previous speaker said when mortgage diversion was provisionally proposed I think that the original concept was that people could divert money directly from their KiwiSaver payment to their existing mortgage payment. In fact we know now that that has not been the way it has worked in practice. It was seen as an advantage for first or new homeowners for couples with young families and presumably for those at the lower end of the income scale etc. One of the consequences of the shift to the “2 plus 2” contributions last year has been that the maximum net benefit obtained from mortgage diversion has been applied to people earning $104000 and above per year. Clearly then the social consequences of mortgage diversion—even if the scheme is working as designed—have been changed by the change to that contributions regime. 
We have the most perverse of outcomes now—and let us forget for a moment the total numbers of people who might have taken up mortgage diversion. We have in place a mortgage diversion scheme that was conceived to allow people to divert their KiwiSaver payments to pay off their mortgages but that has in fact ended up being a mortgage diversion scheme that means that people must meet their primary mortgage requirements and then they can use diversion for any additional payments. But really they have to be earning over $100000 for that to be worthwhile. I will make a partly political point: when members opposite talk about 3 percent of taxpayers getting 30 percent of the benefit from the tax cut package—we can debate that separately; and we will—the reality is that this would be exactly that type of instance. The number of people earning over $100000 in New Zealand is not great and the number of people earning over $100000 who are taking advantage of mortgage diversion is minimal. Frankly to address the provision seemed to be not worth the candle hence the decision simply to can it. 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 I want to address Part 2 of the bill which closes the KiwiSaver mortgage diversion facility. In particular I want to talk about the extent to which the public of New Zealand were aware of the fact that Part 2 would be coming before the House in this term. 
We can refer to what the National Party said about KiwiSaver in this interesting document that I hold in my hand which some members may be familiar with. This document lists the personal commitments of John Key to the public. We have already heard about the signed tax cut commitments. So what was said about KiwiSaver? I am checking whether closing the mortgage diversion facility was included within these commitments. The document states: “Encourage people to save for their retirement while making it fairer and more affordable for everyone in these tighter economic times by retaining KiwiSaver with contributions at the 2% plus 2% level.” Well leaving aside the generous interpretation of what the commitment states National would actually do with KiwiSaver—because it did not indicate that National would gut it would cut it in half which was what was done under urgency before Christmas—it does not talk about closing mortgage diversion. It does not talk about what is in Part 2. 
It would be interesting to know—perhaps from the Minister in the chair Peter Dunne or from a member on the other side of the Chamber—what promotion was done of the mortgage diversion scheme. We can see that it was not in one of John Key’s personal commitments. I have not seen a great deal of promotion of the mortgage diversion part of the KiwiSaver scheme. I acknowledge that it was brought in under our Government but I think members opposite may want to consider that and take a call to tell us how they thought the New Zealand public would find out about it. 
I think it is important to set mortgage diversion in the wider context of KiwiSaver. KiwiSaver is as the Minister in the chair noted a very popular scheme. It is a scheme that many New Zealanders have wanted to be part of. They have joined up and over a million New Zealanders belong to the scheme now and that is a good thing. But what are New Zealanders to make of what will happen to them in their retirement? Part 2 takes out mortgage diversion and overall there is the delay in Government contributions to the New Zealand Superannuation Fund. That is part of the context of mortgage diversion of KiwiSaver. New Zealanders need to know what they will be entitled to in the future in terms of remuneration in their retirement. 
On Budget day yesterday we saw New Zealanders provided with an enormous amount of uncertainty about the future. The Government contributions will now be delayed for up to 11 years. What will happen then? The baby boomers will have retired. What will happen to the next generation of people? What kind of money is being put aside to ensure that future generations in New Zealand will have a secure retirement? KiwiSaver is an important part of that and both sides of the House now acknowledge that. The previous Labour Government was proud to bring KiwiSaver in and the Minister in the chair being part of that Government was part of that. The mortgage diversion scheme was an aspect of it. Perhaps now from the arguments we have heard here there is some justification for what is being done in Part 2 but there is no justification for removing the Government contributions to the New Zealand Superannuation Fund because that fundamentally undermines the security of retirement of New Zealanders. We know that the New Zealand public have once again been misled by the National Party. 
In respect of Part 2 we are not sure whether closing mortgage diversion was put before the public previously. Certainly in none of the pre-election meetings I was at did I hear about mortgage diversion. It was not even mentioned. I heard a lot about tax cuts. I heard a lot about the fact that taxes would be cut in 2010 and in 2011. I even heard about KiwiSaver generally and the fact that it would be reduced because that was going to pay for the tax cuts. Unfortunately that is not happening today. KiwiSaver has been cut in half public services have been cut and the tax cuts have gone. It is the triple whammy. Closing the mortgage diversion element probably is the right thing to do on balance given what we have heard from Mr Dunne today but I am extremely sure that the public of New Zealand did not know about it and that the National Party did not put it before the country. 
Here we are sitting in urgency once again going through changes that the National Government feels need to be done—undoing what it has already done in urgency. In December we along with the entire planet were aware of the extent of the global recession and the National Government put in place tax cuts that it knew were unaffordable. It knew they were unaffordable it knew they were an election bribe yet it put them in front of the country in urgency. We are sitting again in urgency repealing what was put in place in urgency and removing the mortgage diversion scheme without actually going to the public about it. 
IAIN LEES-GALLOWAY (Labour—Palmerston North) 
: 
 Part 2 of the Taxation (Budget Tax Measures) Bill refers to the closing of mortgage diversion for KiwiSaver. When mortgage diversion was first mooted by the man whose name we dare not speak it was couched in terms of trying to encourage people into KiwiSaver. For people with mortgages especially young people looking at buying their first homes mortgage diversion was to encourage them to get involved in KiwiSaver when they were weighing up their saving options against having to pay off a substantial mortgage over a number of years. Mortgage diversion was an option to try to get them into KiwiSaver and encourage that savings habit; Lianne Dalziel talked about the inertia that many young Kiwis feel when thinking about their retirement savings. 
Within those terms of encouraging people to get into KiwiSaver Bill English tried to sell the gutting of KiwiSaver when we were in urgency before Christmas. Bill English said that the Government had made some changes to KiwiSaver that preserved the incentives that are paid into the savers’ accounts and a number of other changes such as the abolition of the employer tax credit and the member fee subsidy. He said that the main change had been to reduce the member contribution to 2 percent and that the Government believed that change would allow a good deal more New Zealanders to stay in the scheme when times are tough and for many others to enter the scheme at a lower contribution rate. None of that indicated any suggestion that the mortgage diversion facility was going to be cut. There was absolutely no indication during the election campaign or in the urgency before Christmas that this change was on the agenda. We are supposed to be repealing tax cuts. This provision has been slipped in for some reason—because of retribution or utu; I do not know what the reason is. 
Hon Peter Dunne 
: All of the above. 
IAIN LEES-GALLOWAY 
: There we go; we finally get to the heart of it. The system works and it is about retribution! 
We heard a lot from the other side of the Chamber about Labour not being prepared to deliver tax credits. But through KiwiSaver those tax credits were delivered and they were targeted. It was just like the research and development tax credits. It was about targeting them to where they were most valuable and where they would serve the best purpose unlike this broad-brush blunt-instrument approach to personal tax credits that the Government is so fixated with. 
Just before Bill English started trying to sell the cuts to KiwiSaver he said: “The reality is that over the next 5 years or so the fiscal capacity of the Government will be significantly less.” The Minister of Finance was able to predict the constraints that the Government would come under when it came to slashing and burning KiwiSaver but for some reason back in December he was not able to predict that the fiscal situation the Government was facing would mean that tax cuts would not be delivered. He has told us time and time again that things are worse since December and that the decision on tax cuts was made in a different environment yet he was able to predict the cut and burn to KiwiSaver. I wonder why he was not able to predict the lack of tax cuts back then. That is a very good question; it is just another flip-flop. 
KiwiSaver is about giving people certainty in their retirement. The reason it is not compulsory is so that there is a capacity to maintain universal superannuation. As good as KiwiSaver is the amount that people can save for their retirement is still entirely dependent on their income throughout their lives. We need to maintain a universal level of superannuation to make sure that there is a baseline level of superannuation that will take care of our elderly. When people have worked hard all their lives we need to take care of them. This Government is tweaking KiwiSaver cutting it back and mucking around with it. 
AARON GILMORE (National) 
: 
 I move  
That the question be now put 
. 
Hon PAREKURA HOROMIA (Labour—Ikaroa-Rawhiti) 
: 
 It was very interesting listening to Mr Dunne’s analysis in relation to KiwiSaver’s mortgage diversion facility. My learned friend the co-leader of the Maori Party Pita Sharples said that I would be lost for words when I saw the Budget come out; I am lost all right because there was nothing in there for Maori. I want to talk about the diversion facility. If members understood what Maori people have been through for the last 150 years they would understand that there has never really been a time apart from when a Labour Government was in office when Maori were able to take up mortgages to ensure a better lot for their families. 
It is interesting that National members could knock out the 2 percent contribution. They perceived that going forward it would impinge on the financial pressures of this country and they removed it. We get to this stage and the only separate thing that is being rushed through that is being tailed on to this tax bill the day after the Budget is getting rid of mortgage diversion. I appreciate that only 600 out of 1 million people have taken it up but Maori people are now tracking up in the unemployment stakes—37000 people—and they are losing everything. 
Paul Quinn 
: In what way? 
Hon PAREKURA HOROMIA 
: There is a new thing going on that is relevant: it is not only the manual labourers but also people like Mr Quinn who are losing their employment. 
The last time that Maori had an opportunity to ensure that they could get mortgages and extend mortgages was when the Labour Government put through benefit capitalisation. This facility was another chance. Michael Cullen said we should not have tax cuts because they would not work and the Labour Government was consistent about that. National has done the biggest flip-flop ever. One minute National was saying tax cuts had to be put through under urgency and now it is taking them away. Taking out mortgage diversion is the same thing. You see KiwiSaver gave Maori workers hope. For once they could start to save like a lot of working Pakehas and Asians in this country. It gave them hope. Then we said we would have a bit of a rest and we pulled the 2 percent contribution. 
A lot of what is going on like the Maori distribution is projected out 10 years or out to 2020. But it is not; it is a purposeful removal to stymie. When 18 jobs are lost in Pahiatua and mortgages are affected this measure certainly affects those people. I appreciated the Minister’s analysis. He said the maximum benefit has been gained by people earning more than $104000. Let me tell him how the Indians bought all the dairies in this country. They clustered together they put their mortgages together and they ensured that they looked after the whanau. What is wrong with that? Why does that not beat the $104000 benchmark? This is about helping people who have and putting aside the Maori people. 
Paul Quinn 
: Another “Parekura-ism”. 
Hon PAREKURA HOROMIA 
: No it is not another “Parekura-ism”. This is about Mr Quinn’s people the people he does not care about. He should sit there and be quiet. He makes believe that this was a Maori Budget but it gave them nothing. We settled Mr Quinn’s Treaty claim He was greasing up in our office. We restructured his trust. We made sure that he could go off and do that. He knows that a lot of his Whakatohea people are being put at a wicked disadvantage. 
Paul Quinn 
: Up a bit—Tuhoe. 
Hon PAREKURA HOROMIA 
: Tuhoe or wherever. Mr Quinn who sits there smugly with his mates knows as well as I do that the Budget has broken a lot of promises. In terms of KiwiSaver and mortgage diversion I plead with Mr Dunne that when this bill goes to a select committee— 
Hon Ruth Dyson 
: If it does. 
Hon PAREKURA HOROMIA 
: —if it does—he flip-flops back the other way. A lot of Maori are relying on him. The thing that is missing from Mr Dunne’s analysis is that these things have to be given time. What would happen in 5 or 6 years’ time when people have built up their KiwiSaver funds? 
The CHAIRPERSON (Hon Rick Barker) 
: Before I take the next call I say to members that the Chair is not part of the debate: “you did this” “you did that” “what did you do”—[ 
Interruption 
] Excuse me I am on my feet. I say to members that the Chair is not part of the debate. [ 
Interruption 
] Are we listening here? The Chair is not part of the debate and I want members to desist from constant barrages of “you”. I want members who are speaking to address the Chair as “the Chair” and not “you”. 
Charles Chauvel 
: Mr Chairperson— 
The CHAIRPERSON (Hon Rick Barker) 
: Point of order Charles Chauvel. 
H V Ross Robertson 
: I raise a point of order Mr Chairperson. While— 
The CHAIRPERSON (Hon Rick Barker) 
: Excuse me a point of order was called by Charles Chauvel. 
Charles Chauvel 
: I am sorry Mr Chair; I was seeking a call and then Mr Robertson was— 
The CHAIRPERSON (Hon Rick Barker) 
: I call Ross Robertson for a point of order. 
H V ROSS ROBERTSON (Labour—Manukau East) 
: 
 I raise a point of order Mr Chairperson. While we are on the subject members might like to look at Speakers’ rulings 63/3 and 63/1. They will note that it is incorrect to move to facilitate interjection. A number of members on the Government side of the Chamber are not sitting in their seats and are using their position to interject on members who are speaking. That is out of order. 
The CHAIRPERSON (Hon Rick Barker) 
: I do not need any assistance with this. The member is quite right: it is well ruled and it is well informed. I have been quite liberal about this rule because if everybody was required to sit in their seats the group would be scattered around the Chamber. I am quite tolerant of people moving forward so that this part of the Chamber is engaged when we are having a debate because I want it to be a debate. But having said that to sit in a position directly opposite the speaker and make a constant barrage of interjections that are not humorous or witty—and lack a whole range of things—stymies things. We are always open to humour and wit and a cutting remark adds to the flavour of the debate but the point that Mr Robertson has made is absolutely correct. I am not going to enforce the rule vigorously or rigorously if people do not take advantage of it. 
Hon PAREKURA HOROMIA (Labour—Ikaroa-Rawhiti) 
: 
 I raise a point of order Mr Chairperson. I feel really wounded by those callous remarks from the member directly across the Chamber. I demand that he apologise. I have never taken so much insult since I have been in this House. 
The CHAIRPERSON (Hon Rick Barker) 
: I say to the member that I am not going to require that. If the member felt that he should have made a point of order at the time; he did not. I think this is a draw. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Chairperson. Consequent to your ruling about appropriate interjections is it in order for a member to come into a battle of wits unarmed as Mr Quinn has? 
The CHAIRPERSON (Hon Rick Barker) 
: That is not a point of order; that is an abuse of the process. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I raise a point of order Mr Chairperson. This is a serious debate and coming as it does—[ 
Interruption 
] 
The CHAIRPERSON (Hon Rick Barker) 
: Members can we just get to the gist of the point of order without prevaricating. 
Hon DAVID CUNLIFFE 
: I am speaking in support of your ruling. [ 
Interruption 
] 
The CHAIRPERSON (Hon Rick Barker) 
: The next person who interjects on this point of order will leave the Chamber OK? This is a team warning. 
Hon DAVID CUNLIFFE 
: I am speaking in support of your ruling. I suspect that for people who are watching and listening this morning members are not doing credit to themselves or the subject matter. As you have said it is one thing to make witty and sometimes robust interjections—and I do so myself—but it is another for us to just drone on and drown out speakers. I think we have crossed the line this morning as a Committee. 
The CHAIRPERSON (Hon Rick Barker) 
: With respect to the member I have dealt with that matter. I have done so already in respect of points of order. That was not a point of order; you were relitigating the point that I had raised. If you had wanted to reaffirm it you should have said so but it is not a point of order. I have dealt with the matter. 
CHARLES CHAUVEL (Labour) 
: 
 I think the reflection that has just been made by the Hon David Cunliffe is a good one: we need to remember what this debate is about. This particular part of the Taxation (Budget Tax Measures) Bill Part 2 is about housing affordability. I see Mr Heatley is in the Chamber. I remember that back in 2007 when he was the Opposition spokesperson on housing he welcomed the fact that a select committee of this Parliament the Commerce Committee was conducting an inquiry into housing affordability in New Zealand because it is a real problem for ordinary people in this country. The reason that the mortgage diversion mechanism was originally set was to try to create yet another weapon in the armoury; it was one of the arrows to be used to deal with the problem of housing affordability in this country. 
Housing affordability is an issue that has not got any better. If members look at the  
5th Annual Demographia International Housing Affordability Survey 
 they will see that 60 severely unaffordable housing markets are listed in that survey. The 23rd most unaffordable is in Tauranga the 26th in Auckland the 30th in Christchurch the 34th in Wellington the 47th in Dunedin and the 55th equally in Hamilton and in Napier and Hastings. Members in this Chamber ought to be very concerned about any measures that diminish housing affordability and ought to be debating this issue very seriously. 
I take the point that was made by the Minister of Revenue in response to the Hon Lianne Dalziel earlier that because of the changes to the KiwiSaver scheme there is an issue about accessing the mortgage diversion scheme: it has become accessible only to a particular earning demographic. But surely that is not a reason to cut the mechanism off at the knees and do away with it completely; surely it is a reason to refer a proposal to modify the mortgage diversion scheme to a select committee have proper submissions on it and talk openly about how it can be improved so that we actually have yet another way of dealing with the serious problem of being able to afford a house in this country. Instead what do we have? We are debating under urgency this proposal to cut off the mortgage diversion scheme because of the reason that was enunciated earlier by the Minister in the chair. I make a plea to the Minister and to the Government: for goodness’ sake this is a serious social problem. Just because only 600 people are accessing the mortgage diversion scheme at the moment is not a reason to destroy it; it is a reason to look at how it could be modified to make it open to more New Zealanders so they can use the scheme properly and afford to buy a house. 
On the subject of process I note that the Minister has been the Minister of Revenue now for two terms of Parliament. Too much revenue-related legislation simply gets put through under urgency—I think the Minister would agree with that proposition. There is not enough scrutiny of revenue-related legislation. I would remind him of his own words just 2 weeks ago at the Institute of Chartered Accountants conference where he made some observations about how legislation ought to be amended in this area. He said: “The correct process”—in respect of tax legislation—“is for the select committee that is considering the bill to make recommendations to Parliament about changes it believes should be made and Parliament then decides.” Then he talked about some actions that he took in respect of the bill that was being discussed at the conference. That is the right way to do things. 
Tax legislation can be complex. This bill is not particularly complex as far as the merits of the proposal are concerned but as I said it is an important issue. Why on earth is this legislation being rushed through under urgency? Why on earth is it not getting select committee scrutiny? Why on earth are the public not having the opportunity to come along and tell a select committee some of the things that they think could be done to make the mortgage diversion scheme a better scheme to make it more broadly accessible to the public and to make it truly one of the tools that can be used to allow ordinary Kiwis to be able to buy a house and enter into house ownership—something that we have always encouraged in this country? We have not really had a proper answer to that question and I encourage the Minister to tell us why we cannot have an inquiry into this matter why the mortgage diversion scheme cannot be improved and why the Finance and Expenditure Committee—or another competent select committee—cannot consider that matter. 
JO GOODHEW (National—Rangitata) 
: 
 I move  
That the question be now put 
. 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 I have been listening carefully but I still have not heard anything—from the Minister of Revenue or anybody else—to explain why Part 2 of the Taxation (Budget Tax Measures) Bill is necessary and justifiable. I was on the Finance and Expenditure Committee which put through the KiwiSaver legislation and it had a lot of debate about the mortgage diversion facility. I was a strong supporter of this measure going into the legislation in the first place. Given that we have not heard convincing reasons this morning or last night not to let this bill go to a select committee to have some proper scrutiny and discussion it seems obvious that we should do so. There is absolutely nothing urgent about this bill. There is absolutely no reason why 31 May should see the end of this provision rather than 2 months down the track just as there is no urgency for Part 1 either. Only 600 people— 
Simon Bridges 
: We’ve got a lot of bills coming up. 
JEANETTE FITZSIMONS 
: Well it is a very active Government. The Government had a lot of bills coming up before Christmas. It put those bills through under urgency then it found that they were wrong. We have now used a lot of Parliament’s time repealing those bills with this legislation. Maybe a bit less haste and more speed would be a good idea. 
The argument seems to be that only 600 people are using mortgage diversion at the moment. That may well be because mortgage rates have dropped over the last year but the worst of the economic recession has not yet hit people. I foresee a time when cancelling this provision would lead to more people losing their homes because they cannot afford mortgage payments. Let us imagine a situation whereby one partner in a couple loses his or her job and the other partner is still working and paying into KiwiSaver. They desperately need that money to keep up their mortgage payments and that is where mortgage diversion can stop people from losing their homes. Maybe there is an argument against that. Maybe I have got something wrong but how would we know when we are debating a bill that came into the House just as the first reading started and there has been no proper explanation and no proper scrutiny? That is why the bill needs to be thrashed out properly in a select committee. 
The question of housing affordability is a crucial one as more and more families suffer from the recession. That is why the Green New Deal package that the Greens have been proposing builds 6000 more State houses over the next 3 years—2000 a year—for families who cannot afford mortgages and cannot even afford private rentals. The housing market generally will be eased if we have more homes—if we have more houses. Government members seem to be extremely exercised and loud about this issue because they know that they are wrong; they know that it is not a sensible thing to do. 
The Greens support Part 1. We will support the bill overall but we strongly urge the Government to rethink Part 2. Part 2 is not necessary it is not urgent and it could leave a number of families in serious strife when the recession bites further. Treasury tells us that unemployment will be 8 percent next year. That is a huge number of extra families in serious strife. There will be a lot of stress and hardship in our society. We need provisions like the mortgage diversion facility to help ease people through. After all if it is OK for the Government to stop contributing for a while to the Superannuation Fund because it would have to borrow to do so—and we support that pause at this stage; we do not think it is sensible to borrow to do so—why does it not pay for ordinary individuals to stop their saving for a while in order to keep their homes and pay their mortgages? I strongly urge everybody to vote against Part 2. 
SUE MORONEY (Labour) 
: 
 I take this opportunity to speak on Part 2 of the Taxation (Budget Tax Measures) Bill. Labour supports this bill but we do so with a great sense of irony. Part 2 is especially ironic because it is another attack on KiwiSaver. Closing down the mortgage diversion facility and the ability for new participants in KiwiSaver to participate in the mortgage diversion process is another way in which this National Government having already gutted KiwiSaver late last year is trying to attack KiwiSaver and water it down even more. It is just another attack on the ability of New Zealanders to save. We saw in the Budget that was issued yesterday that the Government is saying to people that it does not care about saving for the future so it is going to stop the payments for superannuation. The Government’s attack on savings for the future of this country is relentless. It continues and Part 2 is just another example of that attack. 
Of course National members are grinning from ear to ear and why might that be? They should not have any sense of pride at all in going back on the promises they were elected on which are at the heart of the bill we are debating this morning. National members know that they have got away with a heist. The 1 April tax cuts are the ones that have delivered to National’s people. A third of the taxpayer money from the 1 April tax cuts went back into the pockets of the top 3 percent of earners in this country—the top 3 percent got a third of that money. So in yesterday’s Budget when Bill English was crying his crocodile tears on the inside he was smiling from ear to ear. He knows that the money that should be going into our social services and into those community and voluntary organisations that have been stripped of their partnership funding money is already in the back pockets of the top 3 percent of earners in this country. National has already done the damage with the 1 April tax cuts and it does not need to go any further. So guess what? The tax cuts for the rest of New Zealand—the tax cuts that might have made a difference for ordinary New Zealanders—have been canned. 
I wonder what John Key’s signature is worth these days. I feel really sorry for those people who out of the goodness of their heart have bought at charity auctions things signed by John Key. That signature is now completely worthless because it is on the bottom of a document in which he promised tax cuts that this bill is now putting to rest. His signature is not worth the paper it is written on—that is now very clear. He has not been able to deliver on his personal commitment. His signature on the bottom of the document that says he gives his personal commitment that tax cuts will go ahead in 2010 and 2011 is completely and utterly worthless and that is what we are debating here. 
The National Government is going back on its promises and it is putting our country in a very bad position going forward because of the way in which it has attacked personal savings. Part 2 is yet another attack on the ability of ordinary hard-working everyday New Zealanders to commit to personal savings. Government members are launching yet another attack on KiwiSaver. It is clear that in their hearts they felt that they could not ditch KiwiSaver because they knew it would be unpalatable to the electorate. They went into the election saying that they would not ditch KiwiSaver but they are making it as ineffective as they possibly can. This is plan B: when it is unpalatable to ditch the things that they really wanted to ditch—like KiwiSaver Working for Families and the Ministry of Women’s Affairs—plan B is to make those things as ineffective as possible to completely undermine them and to gut them so that they do not work. Part 2 is yet another example of that approach. 
In Part 2 the Government is attacking New Zealanders who are finding it difficult to make ends meet and to keep up their mortgage payments. How many New Zealanders are in that position today? Has the Government looked to see how many people that will affect in the future? 
Paul Quinn 
: 600. 
SUE MORONEY 
: Clearly Paul Quinn does not care about those 600 people. He does not understand that those 600 people have families and that people rely on them. So those 600 people multiply out and out again. And what about the people who might want to use the mortgage diversion facility going forward? 
Dr PAUL HUTCHISON (National—Hunua) 
: 
 I move  
That the question be now put 
. 
The CHAIRPERSON (Hon Rick Barker) 
: The previous Chairperson Eric Roy wanted the debate to be relevant and to the point. We are getting very close to being off the subject. I will take one more speech from Mr Hipkins and I hope that he is on target. 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 I intend to talk about the cancellation of the mortgage diversion component of the KiwiSaver scheme which is what Part 2 does. I think it is relevant to consider why Kiwis are not taking up mortgage diversion because it has been the key justification for Part 2. 
Paul Quinn 
: Go and check his Twitter site. He admits no one comes to his office to see him. 
CHRIS HIPKINS 
: I say to Paul Quinn that sometimes it is better to remain silent and be thought a fool than to open one’s mouth and remove all doubt. Perhaps he might like to learn from that. 
Coming back to the mortgage diversion scheme I want to take up a couple of reasons that the Minister of Revenue Peter Dunne gave as to why people have not taken up the mortgage diversion scheme. The first one he talked about was the shift in contribution from 4 percent to 2 percent. He said that was one of the key justifications for people not taking up the mortgage diversion component of the KiwiSaver scheme. Of course that shift was something that Labour opposed; we opposed the cutting in half of the KiwiSaver scheme. We see KiwiSaver as being part of New Zealand’s long-term savings future and as helping to address some of the significant financial issues that this country has particularly our savings problem. National said that it would be fine that cutting the contribution down to 2 percent would not have a detrimental impact yet we are now debating an amendment that has been caused in part according to the Minister’s own words by the KiwiSaver scheme being cut in half. 
The other thing I want to talk about is that part of the justification for mortgage diversion of KiwiSaver in the first place was that it gave people some certainty when they entered the KiwiSaver scheme that if they found themselves in financial hardship at some point they might be able to divert their KiwiSaver payments to repay their mortgages. The fact that not many people have taken it up is a good sign because it probably means that not many people in KiwiSaver are facing financial hardship. But we are now going into some very tough economic times; in fact they are getting tougher. We have been going through tough times. Why take away mortgage diversion at a time when people may be reaching the point where they want to take it up? 
Sue Moroney 
: What’s the harm? 
CHRIS HIPKINS 
: What is the harm in leaving it there? What is the real harm? 
We would have been able to debate these issues quite robustly if the bill had been sent to a select committee but because it was not sent to a select committee the only opportunity we have to discuss it is in the Committee stage. So yes there has been a certain amount of wide-ranging contributions on this particular change but that is because this debate is the only opportunity we get to debate it. The public of New Zealand have not had a chance to have their say. Nobody has had a chance to come to a select committee and say he or she would have taken up the mortgage repayment option but for whatever his or her reason was. Rather than giving people an opportunity to have their say the Government is pushing this bill through the House under urgency. We would think that it would have learnt from its tax cuts experience that pushing things through under urgency generally tends to create problems. It means that it gets things wrong. Five months after National had pushed tax cuts through the House under urgency it took urgency again to take them away. So urgency is clearly not the optimal way to pass legislation and it is not the optimal way to deal with this particular issue of mortgage diversion. 
Another reason why people are not taking up the mortgage diversion scheme is that they want to maximise their retirement savings. They want as much money as possible to go into their actual retirement savings rather than into their mortgage because they know—particularly young New Zealanders—that there is no guarantee that by the time they retire National would have made any provision to help with their retirement. The National Government has suspended the Government’s contribution to the New Zealand Superannuation Fund for the next decade. So in 15 years’ time when the next generation goes to the cupboard to see what is there for its retirement savings the cupboard will be bare. John Key’s promise that he will resign if superannuation is cut will be very hollow by then because John Key will have been long gone. So that could well be one of the reasons why New Zealanders are not taking up the mortgage diversion scheme; they want their savings to go into KiwiSaver because they know they will need their retirement savings when they get to the age of 65 or 67 or 68 which may well be the retirement age by the time the National Government is done because it is not committed to putting aside money now to meet the significant costs of superannuation in the future. It is more short-term thinking from National. 
The Budget is all about broken promises and hidden agendas. This measure was not in the National Party’s election manifesto. It was not on its pledge card. National made specific commitments about KiwiSaver on its pledge card. This was not one of them. 
SIMON BRIDGES (National—Tauranga) 
: 
 I move  
That the question be now put 
. 
Motion agreed to. 
The CHAIRPERSON (Hon Rick Barker) 
: The question is that Part 2 stand— 
Hon Trevor Mallard 
: Noes have it. 
The CHAIRPERSON (Hon Rick Barker) 
: I have declared the result. I am now on to the next question. 
Hon Trevor Mallard 
: No. You said the Ayes have it and I said the Noes have it. 
The CHAIRPERSON (Hon Rick Barker) 
: With all due respect the question had been put the vote had been cast and I had declared the result. There was no challenge to the question being agreed to. 
A party vote was called for on the question  
That Part 2 be agreed to. 
Ayes 112 
New Zealand National 58; New Zealand Labour 42; ACT New Zealand 5; Maori Party 5; Progressive 1; United Future 1. 
Noes 6 
Green Party 6. 
Part 2 agreed to. 
Clauses 1 and 2 agreed to.  
Bill reported without amendment. 
Report adopted. 
Third Reading 
Hon PETER DUNNE (Minister of Revenue) 
 on behalf of the  
Minister of Finance 
: I move  
That the Taxation (Budget Tax Measures) Bill be now read a third time 
. This bill has two prime components. Part 1 changes the Government’s tax reduction plans in light of the Budget announcement yesterday and introduces the deferral of those plans until economic conditions improve. The debate during the Committee stage focused on the state of the New Zealand economy whether those cuts were affordable in the current context and what the alternatives might be. The reality is that the Committee of the whole House overwhelmingly—in fact I think unanimously—endorsed the proposition that these tax cuts should be deferred at this time even though a number of members made it clear that this was not their preferred course of action but that it was an inevitable response to the current global economic crisis. Most members noted that in the current framework where the Government is facing significant additional fiscal pressures it would have been fiscally irresponsible to proceed with the tax cuts at this time. 
Part 2 deals with a very specific issue which is the closing off of the current mortgage diversion scheme within KiwiSaver. The reasons that were advanced for that change were quite simple. First the uptake of the scheme has been particularly slow. In fact somewhat less than 600 people out of over a million KiwiSavers have availed themselves of the mortgage diversion facility. One of the largest fund managers in New Zealand BT Funds Management which acts as the agent for Westpac says it has fewer than 30 members enrolled in its particular scheme to give effect to this facility. The consequence of the facility is that the complexities it gives rise to are causing pressures amongst fund providers on continuing to offer the option. 
The second point is that changes to KiwiSaver particularly the introduction of the “2 plus 2” percent contribution regime meant that the maximum income where benefit starts to accrue from mortgage diversion is $104000. That is because of the additional 2 percent being retained in earners’ own pockets and also because of the way in which the mortgage diversion scheme has worked—it has essentially become a top-up over and above the basic mortgage repayments. So for those reasons it was the Government’s view that the scheme had not worked and ought to be repealed. There was a good discussion in the Committee of the whole House about whether the scheme ought to be repealed but the conclusion of virtually all parties bar one at the end of the day was that repealing it was probably the correct course of action to take. 
At this stage I simply thank members who have contributed to the various debates as this bill has proceeded. I acknowledge the work of the officials who have attended throughout and as usual have proffered their advice as appropriate from time to time but who have sat here in wonderment watching the ensuing debate. On that basis I am happy to commend this bill to the consideration of the House. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 The third reading debate is traditionally an opportunity to take stock of where the debate has come to and we should use it to see the measures contained in the Taxation (Budget Tax Measures) Bill in the context of the Budget in which they were brought down. I am reminded of the taxi driver test which is to ask what ordinary New Zealanders talk about when sitting in a cab. There are two clear messages around these tax cuts. The first reflects the previous speaker Peter Dunne: there is pretty much unanimous agreement in the community and in this House that these tax cuts should be repealed and that they were never good economic sense or good equity sense. Everybody agrees that to proceed with them now would be fiscally irresponsible. The House is divided on what the taxi drivers know and what their fares are telling them: that these tax cuts were always unaffordable and that therefore their repeal makes transparent what was always the case which is that this was one of the great electoral cons of New Zealand’s political history. The Government got elected on an untruth which was that New Zealanders could have everything they valued from the previous era—KiwiSaver smaller class sizes good primary health care whanau development and a future with high-tech new skills—and 3 years of tax cuts in 2009 2010 and 2011. 
John Key knew the tax cuts could not happen. That is the point from this side of the House. The evidence on that point has been traversed in the second reading debate and it is pretty incontrovertible. The Prime Minister used to sit on the Federal Reserve Board of New York which is a pretty august body. He would not have got there if he could not read the markets—and good on him. Someone cannot be on the Federal Reserve Board of New York and not notice that Lehman Brothers—probably Wall Street’s leading merchant bank—has hit the wall and gone bankrupt nor that John Key’s old firm Merrill Lynch had been broken up and sold for scrap to the Bank of America. That happened 2 months before our general election. That is the proof if anybody needed proof that John Key knew that those tax cuts would not and could not ever happen. 
The world economy was freezing. We had to issue overnight wholesale and retail bank guarantees. There was real uncertainty as to whether global credit would move at all. Interbank lending margins ballooned from 30 points to 230 points almost overnight. People around the world were worried about financing existing loans. That is the backdrop to this bill. We are not arguing about whether tax cuts should be cancelled because everybody knows they should be. The Labour Party and the Green Party have been absolutely consistent right throughout saying these tax cuts should never and could never have happened. What is more is that National knew that. 
The context matters here. This is our opportunity to reflect on the part these tax cuts have played in the overall Budget strategy. What strategy? As Peter Conway of the New Zealand Council of Trade Unions said this morning this is the “Road to Nowhere Budget”. I would say it is the “Swap One Great Con for Another Con Budget”. The other con is that payments to the New Zealand Superannuation Fund can be suspended for 10 years yet one can still put a prime ministerial guarantee on the payout levels and the age of entitlement. What is that guarantee worth now when the Prime Minister’s signature was on the piece of paper that has been ripped up in this debate? It is worth exactly what it seems to be worth: nothing. It is worth nothing to the baby boomers. 
I woke up this morning feeling like I had a hangover not because I had anything to drink last night but because I was starting to worry about my family. What am I going to do when I turn 65? My parliamentary superannuation is worth half what it was a year ago and that was not much anyway. But ordinary New Zealanders are far worse off than I am; I am on a good wicket. What about the people on $50000 $40000 $35000 or even $90000 who if they are 40 or 50 cannot count any more on 65 percent of the average wage when they are 65? Do members know why they cannot? Because as of yesterday there is a $30 billion hole. At the moment one retired person—a superannuitant—is supported by five taxpayers. By the time these guys start paying back into the scheme that will be down to three taxpayers. Has anybody calculated the cost to those three taxpayers supporting the retired person if they have to make up the difference of 10 years of no contributions? No. The Budget is a great swindle. It is a huge con. Superannuation is dead. It is dead and our old people will be shivering in cold dark flats wondering how to pay for the roast beef they will now never see. 
Members opposite may laugh. They have taken a politically expedient step because they do not want to cut into today’s spending and they do not want to put down markers for a pathway to growth. The chairman of the Finance and Expenditure Committee might be having a wee laugh but where were his bright ideas? When I read the Budget documents in the lock-up and got to the end of the Executive Summary I thought I must have missed something. Here is this bright shiny new Government. It has Graham Scott and the purchase advisers working from home on $2000 a day to come up with earth-shattering bright ideas. Where are they? Where are the bright ideas in this Budget? Let us think about it like this: let us imagine—[ 
Interruption 
] 
I raise a point of order Mr Speaker. I usually enjoy interjections but there is hubbub that is not even related to members interjecting on the speaker. I think this matter is too important to New Zealanders to have that at this time. I ask that members be quiet. 
The ASSISTANT SPEAKER (Eric Roy) 
: Members that is a fair point. The noise level was getting up and there was a lot of side talk. If people want to have discussions there is a door on either side of the Chamber and at the back for members to go out of in order for them to conduct those conversations. 
Hon DAVID CUNLIFFE 
: Let us imagine the analogy of a doctor’s surgery. Let us imagine Bill English is a doctor and he has said that the patient is critical and on life support. The New Zealand economy is in a critical condition. Let us see what the diagnosis was and the solution—the medicine—that has been proposed. One rating agency said we had a short-term debt management issue but that the fundamental issue was that we did not have enough innovation. If that was the disease what was the cure? It was cutting Fast Forward cutting the research and development tax credits and cutting tertiary education spending. Let us take the classic example of Fisher and Paykel Appliances Ltd—that iconic company that Bill English overruled John Key on when John Key wanted to bail it out. The company is very intensive on research and development. It might not have had to go cap in hand to China if the Government had not canned those research and development tax credits. That is the truth of the matter. 
This Budget is selling us short: it is not just a road to nowhere; it is a road to serfdom. Too much of our economy is owned by other people. That is why we have the second problem which is the current account deficit. The biggest part of that deficit is the outflow of invisibles—that is the rent we pay to the foreign investors who own too much of our economy. If that is the disease what is the cure? I will take 2 minutes to sum up the situation and it is a biggie. If the disease is the invisibles deficit and the savings gap the cure was KiwiSaver. KiwiSaver filled in that gap yet the Government gutted it by half as part of this Budget. Absolute shame on the Government. This Budget is a road to nowhere. It is a road to serfdom. It is a “Road to Nowhere Budget”. 
The third thing was that the Minister of Finance said— 
Paul Quinn 
: What was the current account deficit under the last Government? 
Hon DAVID CUNLIFFE 
: That member would do better at a time like this to contribute some positive ideas to the future of this country rather than heckle. 
If the disease was a lack of growth the solution should have been to build growth with an economic development strategy not to gut the ability of our small farm to develop new industries and new markets by taking the stuffing out of the Ministry of Economic Development and New Zealand Trade and Enterprise. That was the wrong cure for the wrong disease. That means that ordinary decent hard-working New Zealanders will be on the dole queue when they do not need to be. Hundreds of thousands of baby boomers out there will be worrying about their superannuation and their retirement—quite rightly as they know they have been conned. They know that the National Party has swapped one great lie for another great lie. The lie was that we could afford tax cuts when it knew we could not. Today’s legislation nails that coffin shut and the new lie is that the few remaining taxpayers will be able to make up the difference in the Superannuation Fund. 
Hon JUDITH COLLINS (Minister of Police) 
: 
 I will take just a few moments to reply to some of the most outrageous comments from the member opposite David Cunliffe. It is amazing to hear him talk about lies and cons because he is a member of a party that offered us the infamous “chewing gum tax cuts” in 2005 but straight after that election what happened to those tax cuts? The Labour Government of the day said they were unaffordable. And at that time that Government had the biggest surpluses this country had ever seen! 
This country is going through the toughest economic times that the world has seen in 70 years. Bill English has pulled together a magnificent Budget. The previous speaker who is now leaving the Chamber has never once told us what he would cut. Would he have cut the entitlements of the most vulnerable New Zealanders? Would he have done that? The answer is yes. That is exactly what he wanted us to do but we will not do that. We do not think it is fair to punish the most vulnerable New Zealanders for being the most vulnerable New Zealanders. 
The previous Labour Government took 9 years to deliver one personal tax cut after all the surpluses and all the opportunities. And it left the books in an utter mess. They have been rescued by this Budget. The Labour Party would rather we had borrowed on the credit card and invested the money in the bank at 5 percent interest. That is the sort of “Visa-nomics” being displayed by the Labour Party. That is why members opposite are so angry. They have no answers. That is why they were voted out and I hope they will continue to be voted out because that is what they deserve. It is an utter disgrace. 
Hon CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 That speech was from the member Judith Collins who thinks she has a monopoly on sympathy and empathy with vulnerable people. She appears to be a very generous member who oozes sincerity and sympathy for the downtrodden—yeah right! That will be the next Tui billboard. 
I say to that member that during her speech my colleague Maryan Street interjected a number of times that the difference between us and them is that we did not promise the unaffordable. We did not promise the inequitable. That member says that in 9 years we did not deliver any money back to the folks in the street; well she conveniently forgets about the tax credit for Working for Families. As she slopes off now back to the crypt where she belongs she conveniently forgets about that. 
The great crime in this debate today is not the cancelling of the tax cuts; the great crime is the grand deception that every member on the other side of the House perpetrated against the New Zealand people. It comes down to a simple word: “lies”. Those people opposite went into the election saying that there would be tax cuts. John Key signed a pledge card saying that. 
It was even said by the ghost-like figure sitting in the Government front row at the moment Kate Wilkinson who stood against me at the election. On the stump she attacked me and called me a liar when I said that National would not deliver the tax cuts. And I was called a liar by that member on the stump in Waimakariri when I said that National would hack into superannuation. Today it has done that. I ask who the liar is. Whom will the people of Waimakariri see as a liar? That member and her ilk pledged almost in blood that the tax cuts would go ahead. 
National members’ only alibi now is to perpetrate the typical Tory trick that those folk have perpetrated yea unto the generations and that is to say every time they come into office: “Oh we didn’t know.” They say that they did not know what the economic conditions were and that they inherited a global meltdown. Well I say to the ghost-like figure in the front row who pops up in Waimakariri and who purports to be a lawyer and someone of intelligence that she should have known of the conditions. Could she not read  
Time 
 magazine? Could she not read  
The Economist 
? Could she not read the IMF report of September last year that Brian Rudman referred to? Did she not know that the previous Labour Government and our Australian counterpart had instituted bank guarantees before our respective elections because the global economic climate was very rough and we wanted to ensure that there was not a run on the banks and that depositors’ funds in Australasia were not put in jeopardy? Did John Key that self-made man who worships his creator—a great saying; it is not my saying—not know that even though he was a foreign exchange dealer? Did Bill English not know that? Could he not read those international reports? Maurice Williamson that loyal member of the National Party is trying to interject; could he not read the newspapers either domestic or international? 
It is not credible for that crew in Government to say that after they had been sworn in they suddenly realised at that point that their tax cuts were unaffordable. 
Craig Foss 
: That member is the only man in the world who knew the conditions! 
Hon CLAYTON COSGROVE 
: Even that alibi is not credible because a month after they had been elected after they had opened the books— 
Aaron Gilmore 
: The only one who knew was that member. 
Hon CLAYTON COSGROVE 
: That genius in the back row interjects on me as does that other member the chair of the Finance and Expenditure Committee. He knows about tax; he knows about personal tax returns of course but we will not go there. If he would like us to work him over on the barbecue spit we will have a go. 
Even a month after National members had been elected even a month after they had opened the books and had cruised through them line by line they still said that the tax cuts were cast in stone. The great lie the great crime is not the cancelling of the tax cuts; it is the deception. Labour supports cancelling them. We consistently said they were unaffordable and were inequitable. The proof of that is in the first tranche of tax cuts that those great empathisers with the community delivered whereby the top 3 percent of income earners in this country got a tax cut of a third and families on $40000 a year or less in Waimakariri in every Maori seat in every seat in this country got nothing! 
Hon Darren Hughes 
: Is that fair? 
Hon CLAYTON COSGROVE 
: I do not think it was fair. My colleague knows that it was not fair. We knew that it was not fair. That is why we did not support that tax cut. And we have been consistent. 
Then we come of course to superannuation. Well I say that National has pulled it off again. The ironic thing is that when that crew were in Government last time Mr English cut the pension three times. When I kept reminding the ghost-like figure in the front row of that in the election campaign she called me a liar. When I said to her that she would do what her Government had done last time—tinker with superannuation—she said I was a liar. Well we are racking them up; the notches are being racked up. 
Members opposite come into the House almost in a self-congratulatory mood demanding that the people congratulate them on holding the pension at the same level of entitlement. They believe they deserve congratulations from Grey Power and Age Concern. Well yes they have held the pension at the same level of entitlement but the great debate that we thought had been put to bed and that Grey Power thought there was consensus on has now re-erupted. It goes like this: if this Government suspends payments to the Cullen fund for 10 years I predict that if National is still in office at the next election its members will say: “Look after 3 years of deferred payments in order to put that huge amount of money—billions of dollars—back into the New Zealand Superannuation Fund we have to raise your taxes.” National will try to sell it to people in that way. 
People in their 50s now will remember the spectre of Don Brash. It was said that this would never happen. More specifically people who have 15 years to go before retirement will now be in the situation they were in before Labour became the Government in 1999. They will be uncertain they will be worried about their superannuation they will not know what they should do about their retirement and worse still they will have only 15 years in which to recalibrate their arrangements. We know that that is not enough time for a mum or a dad who at 50 years of age has paid the mortgage off done all the right things and looked after the family. The Government told those people what the rules would be told them what the entitlement would be and by the way it said it would guarantee it because it had put money aside. 
That is what all Kiwis do when they do their household budget. When they know they have a big expense coming up they put money aside because they are smart people. We know when everybody is going to retire we know when that will happen and there is absolute certainty about that—we know the age of everybody. We know what the bill is going to be henceforth. So what did Dr Cullen do? He was as smart as New Zealanders are every day in respect of their household budgets. He put money aside. The great betrayal will not occur today; the great betrayal will happen tomorrow as we go forward because every New Zealander now is worried and does not know whether he or she will have a superannuation entitlement. 
I will be 40 this year. Maybe I have time on my side—I am sure I have. Someone in his or her 40s has a few more years to go and is able to recalibrate his or her arrangements. But people in their 50s will not have time to do that. They have set their course they have set their savings and they have set their plan for their retirement and now the spectre of uncertainty comes forth. As my colleague has said when it gets really tough in a few years’ time in 10 years’ time when the money will have been carved out of the Superannuation Fund if ever the Tories are in Government again they will say: “Oh well maybe we have to move on the age of entitlement”—as they did before—“or maybe we have to cut the rate of superannuation.” 
What National has done is the typical Tory trick that the ghost in the front row was adamant would never happen under a National Government. But National has not only tinkered with superannuation; it has taken an axe to it. Six months ago when Labour was in office people were certain of the retirement age certain of the entitlement and certain that when they retired they would get superannuation that they could live on because Labour had said we would put money aside for it. As one of my colleagues said an economic downturn when shares and investments go down is the time when we can use our money to buy good-quality investments on the cheap—we can do it on the cheap—so that we can gain from them when they appreciate. We know that the Superannuation Fund actually made money last month as one of my colleagues alluded to. I look forward to the genius in the back row opposite going to the constituents going to the Grey Power meetings and telling them why National has pulled the rug out from under them. 
This measure is a traditional National trick; it did it 20 years ago it is doing it today and it will pay a price for it. 
CATHERINE DELAHUNTY (Green) 
: 
 Tena koe Mr Assistant Speaker Barker The Green Party is voting for the Taxation (Budget Tax Measures) Bill because Part 1 is obviously necessary. Part 2 is highly dubious and both parts should have been debated in a select committee. It is very peculiar that the Green Party was the only party to vote against Part 2. I do not actually understand that. 
As our co-leader Jeanette Fitzsimons stated clearly in the Committee stage less haste and more speed would have been a good idea in respect of both parts of this bill. But at the risk of being almost repetitive—as some of the speeches in the Committee stage were—I say that we do not accept the need for urgency as used by this Government. As a new member of this House I am amazed and bewildered by the use of urgency as a tool. The definitions of “urgency” include one that says it means “pressing necessity”. Every single bill forced through this House under urgency since I have been here has not met that test and now some of them are being repealed. Each one may have been seen as a pressing necessity by the Government but I am not sure whether anyone else feels that way either in this House or on the planet. 
The Green Party is very surprised that United Future which has campaigned on transparency and common sense agreed to Part 2 without the bill going to a select committee and without the issues about the mortgage diversion scheme being properly debated particularly as the recession bites. We urge the Government to take serious stock of Part 2 and to abandon it. After all just because only 600 people were supposedly involved so far is not a good reason to close the mortgage diversion facility. If 600 people are on a heart surgery list we do not abandon the heart surgery team. It is short-sighted thinking. 
Urgency is also a bad idea in that it seems to make people even more petty fractious righteous and abusive—at the same time—than Parliament normally is and that is quite an achievement. It does absolutely nothing for our reputation with the public of Aotearoa New Zealand. 
The absolute worst thing about this bill is not the bill as it looks; it is the context of it. The cynical populism that characterised an election campaign based on tax cuts has led us to this highly predictable moment. Numerous extremely conservative economic commentators have been predicting a serious downturn in the global economy for the last year if not for 5 years. No one can tell the Green Party that it was news to the Minister of Finance. On that cynical basis the election was won and now the promise is being broken. The voters have a great opportunity to reflect on questions of honesty in politics and questions of what is fiscally responsible economic policy in terms of tax. The repeal of the tax cuts is necessary but tax cuts were always the peddling of an unhealthy and irresistible fast-food solution to this failing economy. 
What amazes me about this House is that we hear all about who ate McDonald’s on Monday but we do not have any acknowledgment that the Government has just banned the healthy food scheme in schools. So it has no leg to stand on on either issue. 
To go back to the issue of tax cuts I say they are irresistible to people but they are a failed solution. The really sad thing—and I want to finish on this point because the Green Party is realistic about what is happening and the inevitability of getting rid of the tax cuts—about the Budget yesterday and the bill today is that they ignore the substantive economic and ecological crisis that is facing this country and the world. Lester Brown said that economy is what we borrow from each other and ecology is what we steal from future generations. But anyone sitting in this House would not think that the Government had ever heard of such concepts as ecology or future generations. 
Although Green members will vote for the bill we do so with a sad realisation that we are in a situation that will probably continue throughout this term and it does this House no good at all. Let us be really really clear: we cannot have tax cuts National never should have offered them it was always a dumb idea and now we have to tidy up the mess. Kia ora koutou katoa. 
DAVID GARRETT (ACT) 
: 
 I rise to support the Taxation (Budget Tax Measures) Bill in accordance with ACT’s confidence and supply agreement with the National Party. The tax cuts should not have been cancelled but it is certainly correct that to borrow to pay for them would be an even worse idea. Our major criticism of this Budget is not the cancellation of the tax cuts but the failure to fund tax cuts by a reduction in Government spending. 
The Government has missed the opportunity to cut Government waste by scrapping some Government departments altogether and by scrapping some Government functions. I do not think this speech will be very popular in some quarters but I ask why we need a Ministry of Women’s Affairs. We have a female Chief Justice and we have thus far had not one but two female Prime Ministers. We recently saw the back of the first female Speaker. The “Girls Can Do Anything” campaign—by its very language it shows just how long ago it was—was a resounding success. At the end of the Second World War the Special Operations Executive—those chaps we saw dropping into France in movies—was disbanded because the war had been won. So why do we need a Ministry of Women’s Affairs in 2009? 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. I think there might be a little bit of confusion in the House. Yesterday afternoon we adjourned the Budget debate and we are now on the third reading of the Taxation (Budget Tax Measures) Bill which is quite a narrow tax bill. I think the member might have his notes for the two debates mixed up. 
Mr DEPUTY SPEAKER 
: I ask the member to—[ 
Interruption 
]—I am on my feet. We are debating a bill that is quite small in its content. The member must bring the factors he is mentioning into the bill that we are talking about. I ask the member to continue. 
DAVID GARRETT 
: Thank you Mr Speaker. As I said the tax cuts should have gone ahead. They could have been funded in a different way. Having said all that the ACT Party will support this bill. 
RAHUI KATENE (Maori Party—Te Tai Tonga) 
: 
 In the hustle of post-Budget commentary the comments of a humble crane operator from Porirua probably summed up for many the reaction to this Taxation (Budget Tax Measures) Bill. Koro Moon told local papers: “I was hoping for more money but I’m not surprised there were no tax cuts. I am not affected by the recession. It doesn’t bother me because we’ve just got to live the way it is. I mean what more can we do?” What can we do? Exactly. We face the worst economic downturn in 30 years. It was always expected that we would all need to tighten the belt and nail down the hatches if we are to get through this time unhindered. I suspect that the nonchalance and possibly fatalism expressed by Koro Moon would not be too different from the response of many New Zealanders as the Budget hit the bookshelves and the analysts plotted their storyline. Quite frankly the repeal of the personal tax cuts and independent earner tax credit will not register with many of our constituents who are far more focused on ensuring that the whanau survives the tough times. 
I bring another angle to this debate. Yesterday as our Budget hit the news-stands the United Nations released a statement warning that “Economic development activities whether government infrastructure projects or mineral extractions by corporations must not infringe on the rights of indigenous peoples”. The United Nations Permanent Forum on Indigenous Issues stated that these issues are extremely complex because so often we understand the need to make economies survive— 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. 
Mr DEPUTY SPEAKER 
: I know what the point of order is. We are debating a tax bill that relates to doing away with tax cuts and to KiwiSaver. The member must confine her comments to that. We are dealing with pretty narrow content in the third reading not with other peripheral issues that may be of interest but certainly do not relate to this bill. I ask the member to continue. 
RAHUI KATENE 
: Certainly. If the member had waited I would have pulled the matters together for him. 
As we looked through this bill we have been weighing up in our minds whether the decision to kill the tax cuts comes at the expense of the lives of indigenous peoples. I have to say that the balance is favourable. As Koro Moon pointed out tax cuts never meant a great deal in comparison with some of the other issues affecting indigenous peoples. There has been a lot of rhetoric in this debate around broken promises. All I can say is that for tangata whenua a fairly significant promise weighs heavy in our collective soul—that is around Te Tiriti o Waitangi. So we should get a bit of perspective here. 
The evidence provided to us has told us that tax cuts to middle to high income earners contribute to growing income inequality. They do not create the economic benefits that will trickle down to lower-income earners. Indeed the latest OECD report on income distribution  
Growing unequal? Income Distribution and Poverty in OECD Countries 
 shows this as a particular and perverse effect of globalisation. It is well known that the Maori Party was a reluctant signatory to the first tranche of tax cuts. We were always nervous that the new tax regime had created new and unnecessary layers of complexity. It was our thinking in the Maori Party that low-income earners would be better served by blanket tax cuts as had been provided to higher-income earners and by raising the minimum wage. Administrative simplicity is one of the benefits of a broad based - low rate tax framework. Yet the cuts introduced last December failed to provide this benefit. 
We are pleased to support this new bill to cancel further tax cuts in the context of ongoing spending restraint. This is the time for a fresh look. No additional tax relief has been provided for the nation’s most vulnerable families in this time of global economic recession. This tax relief must be an urgent priority for us. In this bill with its effective freeze on tax cuts we hope that the Maori Party will have another opportunity to influence further tax policy. We are pleased that people earning under $40000 a year and who received no tax cuts on 1 April 2009 will no longer be subjected to the higher taxes that were due to come in on 1 April 2010 and 1 April 2011—up to $8.65 per week for some low-income earners. 
The positive in all of this is that the increase in the inequality in disposable income is somewhat halted because of this bill today. But now we must turn to the task at hand. We must think about creating ways to provide tax relief to low-income earners and families such as through tax cuts through taking GST off food and through an increase in the minimum wage. In line with that vision we will support this bill as an opportunity to move forward. 
CRAIG FOSS (National—Tukituki) 
: 
 I rise quickly in the third reading of the Taxation (Budget Tax Measures) Bill. This is a bill that comes from necessity from the Budget yesterday that came from necessity itself. That necessity is driven by the ongoing increase in spending of the previous administration which was increasing by 50 percent per annum yet its revenue was increasing by only 25 percent per annum. There is a fairly obvious hole that even those members opposite with their various master’s degrees in business should comprehend. That is a disaster waiting to happen that is why this bill comes out of necessity and that is why it is so urgent that this legislation comes into place as soon as possible. 
Members around the Chamber talked about the mortgage diversion provision. It is very interesting to hear members opposite questioning that because I was on the Finance and Expenditure Committee when the mortgage diversion was pulled into the KiwiSaver Bill at the last minute as a bit of a trade-off. The Labour members on the committee the Hon Paul Swain and company were not in favour of it at all and the discussion and debate revolved around the points that the Hon Peter Dunne has made in this House. So for members opposite to say that it should go back to a select committee for some reason does not make sense particularly in light of the fact that only 600-odd people have picked it up. 
I will make a couple of other points. One thing is that everyone talks about tax. This Budget and this Taxation (Budget Tax Measures) Bill is actually avoiding a tax—that is the tax of a lower credit rating for New Zealand. That tax would be about 1.5 percent on everyone’s mortgage and credit card and that is if we still maintained the ability to raise funds. We are an indebted nation unfortunately. We owe $130 billion - odd. Our debt increased massively to the tune of about $40 billion to $50 billion under the previous administration. The measures we are taking in the Budget and in this bill which is part of that Budget will save New Zealand an incredibly large amount. For the life of me I cannot understand the scoffing we heard from the Hon Phil Goff about the importance of a credit rating to New Zealand. 
It may seem distant to the taxi driver; that is fair enough. But there is an implication on New Zealand. For those who have to borrow to survive who have been struggling through the last 9 years—and particularly through the last 3 years when spending was out of control—this is their reward. It will save them an extra margin on their borrowing costs. 
I will make just one further point. I cannot go without mentioning the incredible foresight that Mr Cosgrove has discovered in hindsight. Mr Cunliffe has the same disease. I notice that other members and colleagues who have perhaps more business nous than they do tell us that now is the time to buy anything. It raises the question as to why things were bought back when they were more expensive. Again I ask why then those members did not sell things back in June 2008 when the IMF report they keep alluding to came out. Why did they not sell some superannuation assets? Because their value has lost 30 percent. They moan on about the Superannuation Fund but under their governance that fund lost 40 percent of its value. I cannot for the life of me understand the revisionist theory that those members suddenly have and I really do not think that they believe it themselves. They are just trying to look for some headlines because they are trying to find their way through this Budget and there is very very little for them to criticise. Interestingly on top of all those members’ speeches they are voting for the bill. On that note I commend the bill to the House. Thank you. 
RAYMOND HUO (Labour) 
: 
 On the fifth day of the fifth month of the Chinese lunar calendar which fell yesterday Budget day Chinese people worldwide celebrated the Duanwu Festival or dragon boat festival. The dragon boat festival was also celebrated in Japan Viet Nam Korea and other east Asian nations. 
Mr DEPUTY SPEAKER 
: We have brought up other colleagues for straying well off the track. I ask the member to bring his comments back to the content of this very narrow bill. 
RAYMOND HUO 
: The reason why I cited the dragon boat festival is that it is very relevant to the Taxation (Budget Tax Measures) Bill. According to legend in 278 BC the Chinese statesman and great poet Qu Yuan drowned himself in the Miluo River to protest against the corrupt regime of the Chu Dynasty whose king had constantly broken his promises. To save the legendary statesman who had thrown himself in the river— 
Mr DEPUTY SPEAKER 
: I have asked the member to come back to the bill. We are on a current bill. History is quite fine and I learn a lot from it but I ask the member to come back to the bill. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. I think the point that the member had just come to was that this was an ancient and very important case of breach of promise as this bill is. 
Mr DEPUTY SPEAKER 
: I thank the member for the history lesson. We have had a minute and a half so far of his speech and as I said we are on a very narrow debate on the content of the bill. I would ask the member to continue in that vein. 
RAYMOND HUO 
: I will come back to the bill. I had two interviews yesterday afternoon with the Auckland-based World TV network and Chinese Voice Broadcasting before heading to the Finance and Expenditure Committee meeting—[ 
Interruption 
] 
I raise a point of order Mr Speaker. As a new member I am starting to enjoy the interjections but if Mr Paul Quinn— 
Mr DEPUTY SPEAKER 
: That is not a point of order. Interjections are allowed. I ask the member to continue. That is not a point of order. Could he please carry on. 
RAYMOND HUO 
: I raise a point of order Mr Speaker. This is a new point of order. 
Mr DEPUTY SPEAKER 
: I hope the member is not trifling with the Chair. 
RAYMOND HUO 
: If Mr Paul Quinn wants to exercise his opera-singing skills he should return to his own seat. 
Mr DEPUTY SPEAKER 
: That is not a point of order. I ask the member to continue his speech. That is not a point of order. 
Hon Darren Hughes 
: I raise a point of order Mr Speaker. This is a new point of order. You might have missed what my colleague was saying. He was saying that if the member opposite is going to interject on him in the way that he has been doing he should resume his own seat. That was the point Mr Huo just made. 
Mr DEPUTY SPEAKER 
: I do not need any help. The slate is clean. We will start again. The member has 8 minutes left. 
RAYMOND HUO 
: Before heading to the Finance and Expenditure Committee meeting to discuss the allocation of the 2009-10 estimates I had interviews with the Auckland-based World TV network and with Chinese Voice Broadcasting. Inevitably we talked about the dragon boat festival its origins and yesterday’s Budget. According to legend local fishermen raced out in their boats to save the legendary statesman but it was too late. To prevent his body from being eaten by fish they beat their paddles furiously on the water and threw zong-zi which are large rice wrappers as a sacrifice to his spirit. One viewer called me during the dinner break last night and said he felt he was eating humble rice wraps. He meant to say he was eating humble pie because he had voted for National because of its tax cuts promises and he now felt let down and regretted doing that. 
In terms of the tax cuts for which National’s leader Mr John Key signed his personal guarantee we the members remember that in December this honourable House was rushed into urgency in order to have the tax cuts put into law. [ 
Interruption 
] I thank members for that. Now nearly 6 months later this honourable House has been rushed into urgency again for the introduction and passing of this bill which has the effect of cancelling those tax cuts. It was a key election promise—$4 billion of personal tax cuts over a 3-year programme. The  
Dominion Post  
correctly predicted before Budget day “Budget to break election promise” and today’s  
Dominion Post 
 has correctly described the Budget as giving “Cuts everywhere but not on taxes”. Gone are the tax cuts that National promised to deliver in 2010 and 2011. 
Gone too are the automatic Government contributions to the New Zealand Superannuation Fund established by the Hon Dr Michael Cullen. I feel sorry for the baby boomers. I feel sorry for ordinary New Zealanders. Ongoing Government contributions to the Superannuation Fund are essential to guarantee future superannuation payments to New Zealanders. New Zealand’s baby boomer generation should be very afraid of what retirement holds for them. The future of superannuation has been thrown into doubt by Mr English’s 10-year freeze on New Zealand Superannuation Fund contributions. Brian Rudman said in the  
New Zealand Herald 
: “In the commercial world such an obvious breach of promise would be actionable in the courts. Unsurprisingly the legislators that draw up the laws to protect us from the business wide-boys carefully exempt themselves from similar sanctions.” Actionable in the courts? Probably not. Sanctions? Yes. We will see in 2½ years’ time. 
The biggest challenge facing New Zealand’s economy is worsening unemployment. Last week more than 1250 Kiwis joined the dole queues. National’s Budget will not stem the dramatic increases in job losses happening right now in New Zealand cities and towns. This Budget does not set out a coherent plan to keep Kiwis in work. It fails to take action for vulnerable New Zealanders who are on the brink of losing their jobs. It fails to adequately invest in skills training and investment to create new jobs and it fails to set out a clear path that will lift New Zealand out of the current economic downturn. 
Labour’s finance spokesperson the Hon David Cunliffe wrote in yesterday morning’s  
Dominion Post  
that “unemployment is a scourge that destroys people’s livelihoods homes and families. The real human cost of another 60000 Kiwis on the dole is appalling. … The fiscal cost is also huge. The unemployment benefit for 7 per cent of the workforce costs $800 million per year; for 9 per cent it is over $1 billion per year …”. A total of 24000 jobs have been lost in the last quarter but this Budget will not stem the dramatic increase in job losses that is happening right now in New Zealand. This is not a Budget for Kiwi battlers. It simply makes their struggle harder. 
On this occasion when the dragon boat festival is being celebrated another broken promise of the National-led Government is remembered. Thank you. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I seek the leave of the House to move the members’ motion in the name of Lindsay Tisch forthwith. 
Mr DEPUTY SPEAKER 
: Leave has been sought for that purpose. Is there any objection? There is objection. 
Hon Members 
: What! 
Mr DEPUTY SPEAKER 
: If members look at the Order Paper they will see that I congratulated the Chiefs on their win. 
CHRIS TREMAIN (National—Napier) 
: 
 I am looking forward to Hawke’s Bay climbing the ladder once again and getting to the top of the Air New Zealand Cup competition. I know that is something that Mr Nash on the other side of the House will take on and we will be in that top four. I am looking forward to that. 
The pervious speech from Raymond Huo was a leadership bid in the making. We learnt that Mr Huo had two interviews about the Budget and that is probably two more than the Leader of the Opposition had on the Budget. No it was an excellent speech and we are all a lot further forward than we otherwise would be. 
I want to get to the essence of this debate and keep it very simple. First I want to take out the hyperbole the hysterics and the crocodile tears that the Opposition has laid out before us over the last few hours. The fact of the matter is quite simple: we are in the worst recession in 60 years. The impact of that recession has become hugely more relevant as we have got further down the track; nothing is simpler. My second point concerns the period before last election when we lined up on the stump—and the Labour Party members have created a lot of hyperbole about this. If we look at the Budget promises at that point in time we see that they are almost identical. In fact the National Party’s total tax cut package after we had made the tough decisions on KiwiSaver and the research and development tax credits was $200 million less than the Labour Party’s. 
So here we stand with those facts before us. There have been crocodile tears and hyperbole but in respect of the tough decisions in this bill I ask members which decisions a Labour Government would have made. I would love to stand here and say yes let us roll out the research and development tax credits and expand KiwiSaver to be as wonderful as it can be. I would love to say we were rolling out the tax cut package we talked about before the election. The reality is that we cannot do it. We are in a recessionary environment that does not allow it to happen. We have had to make some tough calls. We have had to cut our cloth to the state of the economy right now. Taxpayers our children and our mokopuna will thank us in years to come as our debt track starts to come down. 
By making these tough calls we have been able to deliver a whole lot of other things. There would be many many more problems if we had not delivered them. The entitlements to our superannuitants ensuring that 66 percent of the average wage would be delivered to them are being delivered. Ensuring that Working for Families stays in place is something we have delivered on. There is a raft of other things we have been able to deliver on including an insulation package. There is a raft of things we are doing as a Government and they are absolutely excellent. I stand today to acknowledge the Taxation (Budget Tax Measures) Bill and to commend it to the House. 
STUART NASH (Labour) 
: 
 I stand in support of this Taxation (Budget Tax Measures) Bill. I support it because it removes an insidious promise which was hawked to the people of New Zealand that the Nats always knew they could never implement. I contend that there was so much information in the market before the election that Mr Key Mr English Mr Tremain Mr Foss Mr Williamson and anyone who read the newspaper knew exactly what they were doing when those members promised tax cuts to their electorates and the people of New Zealand. The unsuspecting people of New Zealand did not know that this was one big lie but they know now. Mr Foss asked who knew that this was the state of the economy. Well I knew. I read the newspaper I watched the television and I read  
The Economist 
. We all knew that the economy was going to hell in a handbasket but those members stood up and promised tax cuts. All the members on that side of the House promised tax cuts. All the newspapers were full of news of the recession— 
Hon Maurice Williamson 
: Michael Cullen said the worst of the recession was over. 
STUART NASH 
: That member was fully aware that the recession was not over at all. If National members did not know that before the election then certainly they would have known when they convened after the election and rammed legislation through the House under urgency. The National Government would have known when the tax cuts were rammed through the House under urgency before Christmas that they were totally unaffordable. I ask Mr Foss what that was about. It was about a facade of hard work in the first 100 days. What happened? It was a fraud. It took National 100 days to put them there and 150 days to get rid of them. That is real action but it is not what was promised. 
What did National promise? Let me tell members what Mr Key said to the people of New Zealand. He said: “unlike Labour I’m going to be straight-up about my priorities. That’s why I’m sending a card to all of you. It’s called My Key Commitments to You and it will be delivered to every household in New Zealand … In it are 11 commitments that I make to you.” Those commitments were to “strengthen the economy increase after-tax incomes and ensure Kiwis can get ahead under their own steam by reducing personal taxes on 1 April 2009 1 April 2010 and 1 April 2011.” The unfortunate thing was that it was music to the ears of New Zealanders but now National is singing out of tune. The tune has changed the song is tired and it is off key. 
Paul Quinn 
: More opera! Move on from the opera! 
STUART NASH 
: Mr Quinn might like his opera but goodness me this message is tired old and sad and it was a lie. Mr Key went on to say: “unlike Labour we won’t cancel our tax cuts.” Is that clear—“unlike Labour we won’t cancel our tax cuts.”? What are we debating at the moment? We are debating the repeal of the tax cuts that were put in place by last Christmas. National members gave New Zealanders a Christmas present and they took it away by Queen’s Birthday. 
Let us look at our Labour leader Phil Goff. He has been delivering for the working people of New Zealand for over 20 years. Mr Goff knows what New Zealanders want because he has been out there talking to ordinary New Zealanders out in the markets. He knows what they want because he has been out there on the streets. What has Mr Key been doing? While Mr Goff was talking to ordinary New Zealanders Mr Key was manipulating the money markets of the global world. He was making honey from the New Zealand currency. Mr Goff negotiated the New Zealand free-trade agreement with China which as businesses big and small understand was the most important measure of growth strategy ever negotiated in New Zealand’s history. Mr Goff is a man of his word. When Mr Goff says there will be tax cuts he will deliver on them. He never promises New Zealanders something that Labour cannot deliver. Mr Goff is a man of integrity and honesty and he has never engaged in the politics of cynicism and deceit. 
That is the difference between Mr Key—“Mr I-will-not-cancel-tax-cuts”—and Mr Goff. We have just heard what Mr Key promised and then reneged on within 150 days. Let me tell members what Mr Goff said: “One of the things about the fifth Labour Government of which I am the most proud is that we honoured the promises on which we were elected. We not only honoured those promises but we in fact after each election over-delivered on the promises that were made. We under-promised and over-delivered. The challenge to this new National Government is to do likewise.” 
Mr Goff threw out that challenge to the Government. It has taken only 250 days for it to fail miserably. In fact the people of New Zealand issued that challenge. “I say to Mr Key”—and these are Phil Goff’s words—“that he will be judged on his ability to do that.” Mr Key and Mr English with this bill have been judged and found guilty of deceiving the people of New Zealand. As a member of the jury which also consists of every single New Zealand voter I say that the sentence is to have a one-term Government only. That will be the verdict of ordinary New Zealanders up and down this country once they understand that the promises of tax cuts were nothing but empty rhetoric designed to deceive. 
The politics of cynicism and negativity—I hate that and according to my e-mails and texts so do the people of Napier the businessmen and businesswomen of New Zealand and the Kiwis all around the country who are struggling to survive and to make ends meet. This bill removes one of the biggest deceits imposed upon New Zealand since Muldoon cut the New Zealand superannuation scheme set up by the Kirk Government. Can members imagine the Budget and the state of the economy now if Mr Muldoon had not axed that superannuation scheme? But wait a minute—Bill English has also cut payments to the Superannuation Fund and the Government has said that it will not be starting them up again. Well it will start them up but not until Mr Tremain turns 65—great! This bill is about cancelling the tax cuts. It is about cancelling a promise to New Zealanders. As it has been debated I have looked across at the Government benches and seen some pretty angry people. I saw John Hayes—it is pretty hard to miss him actually—and he looked as if he was about to explode. 
Hon Darren Hughes 
: Or fall asleep—it’s hard to tell. 
STUART NASH 
: Ha ha! He was an angry man; he was a very angry man. But it was only because he knows that by cancelling those tax cuts the seat of Wairarapa will be coming back to Labour—as will the seat of Napier. Mr Hayes knows it. He went out to the people of Masterton and promised them tax cuts for 3 years in a row. So the people voted for him but they voted for a lie. Not only did he do that but when Mr Hayes realised that the tax cuts were not going to be delivered he turned as white as a cream puff. Why? He knew that 75 percent of the people of Wairarapa earn under $40000 a year. Therefore they would get nothing. That is right: they got nothing out of the promised tax cuts. Then he probably thought that he could get away with that—that the Government had cancelled the tax cuts but that he could get away with that because the Government would deliver them in 2010-11. But this bill has taken away even that. It has taken away any promise on which he could go back to the people of Wairarapa and say “We delivered for you.”; this bill just takes away that ability to deliver. 
Carol Beaumont 
: Tax cuts for the rich only. 
STUART NASH 
: Tax cuts for the rich! But that is the story throughout the country. Mr Tremain wrote in the paper in Napier that tax cuts would help the hard-working people of Napier. But I ask him how that will work. How will that work when over 75 percent of the people in Napier earn under $40000 a year? Therefore they will receive nothing. How much will they receive? 
Carol Beaumont 
: Zero. 
STUART NASH 
: Zero—75 percent of the people in Napier will receive nothing and that member has just cancelled any hope they might have had that at least they might receive something in the next couple of years. Paul Quinn was almost in tears when the member realised that this bill was forever removing tax cuts and forever consigning him to Opposition in the future. He was angry— 
Paul Quinn 
: What? 
STUART NASH 
: I tell the member that he was an angry man and I was worried. I was pleased to see Mr Coleman in the Chamber because I thought that he was going to have to administer CPR. This bill is not about the Budget; this bill is about broken promises to the people of New Zealand—the people of Wairarapa the people of Napier and the people of Tukituki. But that is not what politics is about. It is no wonder that people are cynical when the Prime Minister stands up and starts promising things. Mr Goff understands that the promised tax cuts—now gone—were not and never would be stimulatory because 30 percent of the original tax cuts went to only 3 percent of the people of New Zealand. What is that about? Is that stimulatory? Absolutely not! If members knew anything about first-grade economics they would know that that was economic vandalism—absolutely. 
KATRINA SHANKS (National) 
: 
 It is my pleasure to speak on the third reading of the Taxation (Budget Tax Measures) Bill this morning. It has been very interesting listening to the debate on this taxation bill over the last couple of days. It is not very often that we see most of the House voting the same way on a bill and that is what we are seeing today in the support of this bill. 
National is very very committed to reducing personal income taxes; over time we want to see them come down to 30 percent. But the time has to be right. The time is not right when we are in the middle of a recession when debt is increasing and when there are no surpluses. That is not the time to borrow money to give tax cuts. This Government has recognised that. We have had 9 long years of a Labour Government when we were in surplus and it was the ideal time to give many tax cuts to many New Zealanders to help keep them in New Zealand and to stimulate our economy. But the Labour Government did not take advantage of that. Now we are faced with a recession which we have known about for most probably a year. A recession is not a time to give personal tax cuts and it is not a time to borrow to do so; it is a time to be a responsible Government and make responsible decisions. 
The major pressures around some of these decisions on our debt were about New Zealand’s credit rating. As everybody knows it is important to keep a good solid credit rating if we want to keep our interest rates low. That is what this Government has been committed to doing. In fact we have saved New Zealanders nearly $600 million by keeping our credit rating at its current rate. It has been a hard decision for this Government to make but it has made it based on prioritising safeguarding entitlements improving public services and reducing our debt. That is how we have come to this decision. 
The Government believes in making the right decisions even though it may be hard to do it. We do not believe in “Visa-nomics”. We do not believe in putting it on the bill like “Whack-it-on-the-bill-Phil” does. We are a responsible Government that is making responsible decisions for all New Zealanders and we are trying to make the best out of the situation that we are in now. It is my pleasure to stand here and support this bill today. Thank you Mr Deputy Speaker. 
Bill read a third time. 
The House adjourned at 11.47 a.m. (Friday)