Rich Katherine: Taxation (Annual Rates of income Tax 2005-06) Bill Taxation (Urgent Measures) Bill Student Loan Scheme Amendment Bill — Third Readings 
Rich Katherine: Taxation (Annual Rates of income Tax 2005-06) Bill Taxation (Urgent Measures) Bill Student Loan Scheme Amendment Bill — Third Readings 
[Volume:628;Page:804] 
KATHERINE RICH (National) 
: 
 I think that in politics it is always important to know one’s limitations. Following the Rodney Hide and Winston Peters show it would be very difficult for any member to be half as entertaining. 
The New Zealand First member’s speech was very thought-provoking. But I would like to go back to what I thought was a stellar contribution from another New Zealand First member earlier in the night—the contribution of one Mr Doug Woolerton. I thought it was a very brave contribution but in some ways it was a very sad contribution. As Mr Woolerton knows he had the chance to play Santa this Christmas to many of his constituents; to be part of a Government that would put through tax cuts for all New Zealanders. I know that it is very sad for Mr Woolerton to be in a party where the only fun is the passing round of one bauble which on occasion he might get to polish. But he had the chance to be part of a Government that would have passed tax cuts before Christmas for all New Zealanders. Those tax cuts would have offered 85 percent of all wage earners and salary earners in this country a tax rate of 19c in the dollar. New Zealand First members had the opportunity but they did not take it up. They had the opportunity to pass such legislation rather than this miserly legislation arising from the Taxation (Annual Rates and Urgent Measures) Bill which I note the New Zealand First member who spoke before made no reference to whatsoever. In fact if we had asked him the name of the bills I doubt whether he would even have had an answer. 
The bills arising from the Taxation (Annual Rates and Urgent Measures) Bill put in place this Government’s visionless plan for this country. Where is the vision in that legislation? I will say what the vision for this country is. It is a vision where the middle classes become entrapped within the welfare system. It is a vision of greater amounts of debt for students and slower repayments. The legislation does little to make better the lives of a lot of Kiwis who are currently struggling and paying more tax than they have to to a Government that is intent on spending more than it has to in order to provide basic services. 
 There was an opportunity in this legislation to give something back to those hard-working Kiwis those Kiwis who get up every day go to work every morning pay their taxes and pay for the services within this country that they draw on. There was an opportunity to give something back to those families pre-Christmas but one of the first things the original bill did was to confirm the tax rates for next year. So there will be no relief for the electricians the plumbers and the gasfitters who came before the Commerce Committee to present their concerns on another bill that at the moment we are looking at. There is nothing for them in this legislation nothing for those families who are struggling to pay for some of the basics. Although discussions of tax often focus on the wealthy our concern is for those middle-income New Zealanders. If we look at the Working for Families package in particular we see nothing more than income churning—the Government taking more than it needs to from some families only to hand it back. 
One of the concerning things that I found about the Labour Party website was that when one taps in an MP’s salary and the number of kids he or she has one sees that some MPs will be eligible for assistance from the Working for Families package. What kind of message does that send to our country—putting some members of Parliament on welfare on some kind of system where taxpayers’ money is handed back? 
Hon Damien O'Connor 
: You were giving the tax cuts. 
KATHERINE RICH 
: One of the things about tax cuts that that member seems to forget is that a tax cut hands back an individual’s own money that he or she earned in the first place. It is not the Government’s money; it is the money of the worker who earned it in the first place. Therein lies the difference I think between Labour and National. National always understands that the money belongs to the person who earned it in the first place and that if the Government is taking more money than it needs then it should give it back because it is not the Government’s money. Members opposite seem to think that it is their money and that they can put their hands in workers’ pockets and take out more than they need in order to fund a myriad of useless programmes grants and schemes. 
The Government would be better off getting rid of those and offering New Zealanders some of their own money back. If people are given a tax cut they know that it was their money in the first place. This Government likes to extract the money from people only to hand it back so that the people who get those handouts will be grateful and pleased with the generosity of their Government. That is all a have because particularly for middle-income New Zealanders it was their money in the first place and it should never have been taken out of their pockets. 
If we look at the 39 percent tax rate which this side of the House thinks should be flattened we see that the only people happy with it are the nation’s lawyers and accountants who have done very well out of the 39 percent tax rate. They have brought in more fees than they can deal with by setting up trusts and all sorts of devices so that those who have the ability to have trusts and different kinds of set-ups do not have to pay tax in the first place. 
National members think this legislation does not provide a vision for this country. Where is the vision in making more middle-income New Zealanders dependent on the State? Where is the vision in making more Kiwis take out bigger student loans than they need in the first place? This side of the House has made some good points about the fact that the legislation will encourage more students to take out greater loans than they need and all parents with half a brain will say to their kids: “I’ll pay for your fees. You take the money from your student loan and put it into an interest-bearing account at a minimum. You take out your loan and put it into some kind of investment.” When interest costs are removed from a deal there is every incentive to take out more money than is needed and to repay the loan at a slower rate than one has to. Why would students be motivated to pay back their student loans in a shorter space of time than they needed to? It is not just the National Party that says that; Treasury has said it. In fact every single paper that has been done on the subject has said it. 
Tonight we have heard many members on the opposite side of the House paint a rather rosy picture of New Zealand in the future. If that is the case why does almost every single analyst economist or person who has studied the New Zealand economy say that next year things will get tough? Why did Treasury in its briefing paper to Ministers say that the Government needed to be careful with its expenditure because we are in for a rocky ride? Michael Cullen has an unusual approach to economics in that he thinks it would be inflationary if tax cuts were given to Kiwis so that they could spend their own money but if the Government takes their money and spends it on their behalf—on anything from hip-hop tours to overseas trips that are not warranted or sending the Minister of Foreign Affairs away so that he does not have to spend time in the House—then that is not inflationary. 
Well National has better ideas as to how that money should be spent and one of the things we need to do is to cut spending in a wide range of areas. If one is looking at a difference between parties the difference that is seen tonight is the extent of the faith that different members of this House have in New Zealanders—whether they are able to make spending decisions on their own or whether the Government needs to do that for them; whether people should pay for their education; and whether making loans free will actually change behaviour. 
Labour seems to think that taking off the interest on student loans will not change behaviour in the slightest. On this side of the House we know that all parents with half a brain as I mentioned before will encourage their kids to take out a loan because they would be financially stupid not to do so. Free money is free money and certainly if people are going to borrow elsewhere they should make use of a loan that does not incur any interest rate. It is just nuts. On this side of the House we are predicting two things: student loan amounts will go up dramatically and the repayment time will increase dramatically as well. That is just basic Economics 101. In fact it is not even that: some of our primary schools teach it in basic mathematics. 
This legislation is not a vision for this country. Making more middle-income New Zealanders dependent on the State is no vision for this country and certainly will not make us a country that can foot it with the rest of the OECD.