Copeland Gordon: Debate on Budget Policy Statement 
Copeland Gordon: Debate on Budget Policy Statement 
[Volume:615;Page:11531] 
GORDON COPELAND (United Future) 
: 
 I am delighted that the Budget Policy Statement signals that financial assistance for low and middle-income families to enhance their living standards and improve opportunities and security for their children will be the centrepiece of this year’s Budget. I was both surprised and delighted that when presenting evidence to the Finance and Expenditure Committee the Minister of Finance Dr Cullen advised that once it is fully rolled out and implemented this assistance would total more than $1 billion per annum. 
Assistance at that level if skilfully delivered has the potential to make an enormously positive contribution to the income and therefore to the welfare of hundreds of thousands of New Zealand families. United Future is 1000 percent behind the initiative. We cannot afford as a nation to continue blindly down a pathway that sees an estimated 20 to 25 percent of our children living in relative poverty. In my view it should remain a central goal of our nation to put our children first. We need to ensure that each and every child in this country—regardless of ethnicity the level of parental income or even the source of that income—is provided with the opportunity to receive world-class health-care and educational opportunities during the transition from infancy to adulthood. 
That goal should be at the top of the list because it represents the cumulative aspiration of all of those who have come to New Zealand over the centuries—namely that of a brighter future for their children. I see no reason why the total elimination of child poverty should not be achievable in New Zealand and the Future Directions package will hopefully have that outcome. In addition to the benefits to children themselves the package also represents an investment in the future of our country. 
The Future Directions package may appear in the Budget as Government expenditure but in reality it is a social and economic investment. I am hopeful that the package will take into account the number of children who are dependent on each family’s income provide clear incentives to favour paid employment over welfare and iron out the appalling mess that we inherited from the 1991 benefit cuts in relation to effective marginal tax rates arising from a very badly-thought-through abatements regime. 
The 1991 benefit cuts adopted a slash-and-burn approach which has produced some woefully perverse outcomes. For example in some circumstances the optimal income point for a family arises when the breadwinner works 20 hours a week. A worker is not a single cent better off until he or she works 50 hours a week. Likewise people re-entering the workforce find that in net terms—particularly when account is taken of costs arising from transport and clothing etc.—they are worse off than if they had stayed on the benefit. Such anomalies and disincentives must not be allowed to continue. 
I hope also that the package will include those people who are caring for children but who are not for one reason or another actively involved in the paid workforce. For example a group that has hitherto been neglected is grandparents raising grandchildren. If they are superannuitants then even though they have taken on that responsibility for the sake of their grandchildren they are ineligible for support from the Government. That needs to change. 
I want to make a statement about why I believe it is important that we look at this Future Directions package and give additional support to low and middle-income families in this country. The package is based on a fundamental principle of social justice—that people should be able to fittingly support themselves and their dependants from the wages they earn. That is a goal of social justice. We all know that people are paid as individuals—and that is right because they are paid for the work they do. But it is also true that having earned a pay packet some people look after just themselves while others are faced with the necessity of supporting perhaps a spouse and one or more dependent children. Therefore it is very important that we look at ways and means of ensuring that they also can achieve that goal of care for their dependants. 
There was a speech earlier from the Hon Richard Prebble—and I think John Key mentioned it too—about the need to cut income tax rates. Consistent with the principle I have outlined I would like once again to commend to the House United Future’s policy concerning income splitting for families. That would reduce tax rates dramatically for people in the middle and higher-income brackets of New Zealand but would do so based on the criterion they are in a partnership with another human being—a man and a woman raising children which is the most important job that we can do on this earth. 
New Zealand’s exporting capacity has now reached a most critical point. Our trade deficit for 2003 was three times higher than in 2002. Our trade deficit for January was the highest monthly total since 1986. The Budget Policy Statement forecasts an increase in the current account deficit from 3.9 percent of gross domestic product in 2003 to 6 percent by 2005. 
A lot of print and airwave space has been so far taken up in discussing the rapid appreciation of the New Zealand dollar against the US dollar and there has been an almost ad nauseam debate about whether there is anything either the Minister of Finance or the Governor of the Reserve Bank can do about it. A lot of this represents huff and puff. The reality is that the value of the US dollar reflects events in the USA and any action the Government takes is unlikely to alter that reality. 
Why do we not all accept that and concentrate on doing something constructive to rescue our perilous exporting situation? I believe there are a number of things that the Government can and therefore should do as a matter of urgency. These include abandoning the idea of recovering some $12 million in border security costs from exporters providing accelerated depreciation allowances for tax purposes on all plant and machinery that is used principally to produce exports and using a Buy New Zealand Made campaign to reduce imports. I am amazed that New Zealanders buy imported pet food biscuits barbeque fuel cheese coal and even timber. Let us appeal to their patriotism and ask them to buy New Zealand made. 
We need to continue our efforts to add value prior to export particularly in products such as timber; to upskill and train people in international marketing; to end policy blockages that are unnecessarily forcing up the cost of electricity—and I particularly refer to the urgent need to overhaul the Conservation Act so that hydroelectricity schemes can go ahead—and to widen the scope of infrastructure bonds to fund such initiatives as irrigation on the Canterbury plains. 
The Government also needs to continue to pursue vigorously the Doha round of trade liberalisation negotiations in agricultural products and to conclude free-trade agreements with China the USA and others as quickly as possible. Dr Michael Cullen has signalled that the Budget will address a number of these and similar issues. I urge the Government to make that a matter of priority. We must never overlook the fact that the continuance of our essential health and educational services—a point the Hon Richard Prebble has also made—is dependent on strong productive vigorous and growing farming and business communities and especially on the private sector’s exporting capacity. 
Finally I will say a few words about general taxation. United Future continues in complete harmony with the business sector of this country to argue for a reduction in the company tax rate from the present 33 percent to 30 percent—the rate that presently applies in Australia. Comparability with Australia is however only part of the equation. A more important goal in my mind is to encourage capital investment in productive enterprises within New Zealand. Our nation’s savings such as they are are still concentrated in owner-occupied and rental housing. People do need somewhere to live but we have gone a long way beyond that basic requirement in New Zealand and have made housing a preferred investment for many New Zealanders. 
However priority needs to be given to the productive part of our economy and a reduction in the corporate tax rate would I believe attract more investment and capital accumulation into our all-important productive sector. It would immediately lower the cost of capital for our companies by raising the after-tax return to investors. I continue to hope that the Government might yet begin to listen to United Future’s advocacy in that regard.