Woodhouse Michael: Appropriation (2011/12 Estimates) Bill — Third Reading Imprest Supply Debate 
Woodhouse Michael: Appropriation (2011/12 Estimates) Bill — Third Reading Imprest Supply Debate 
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MICHAEL WOODHOUSE (National) 
: 
 It is often said that imitation is the sincerest form of flattery and I must say that Labour members have flattered the Government with their imitation of what they say is now important to grow the New Zealand economy after 2½ years of railing against Government policy. They have had something of a road to Damascus experience. Do members remember in the 2009 Budget debate when Messrs Cunliffe and Goff both decried the Budget because it was pandering to the ratings agencies? They did not think that maintaining New Zealand’s credit rating was important. Well they are not saying that now. I think there is some mimicry in their campaigning on a fairer tax system the controlling of Government expenditure and reducing debt. I will come back to Labour’s policies and the merits of some of its policies soon but I want to touch on some of the highlights of National’s 2011 Budget. 
It is quite remarkable—certainly to my friends on the other side of the Chamber—that in an election year the Government would campaign on a zero Budget. But what is less remarkable is the fact that there has been such little negative feedback on it from members of the public. Fundamentally they understand the need to have spending discipline given the very challenging economic conditions we face and the need to rebuild Canterbury after the earthquakes. That spending discipline will ensure that the country returns to meaningful surplus by 2013-14. 
Stuart Nash 
: Exactly the same as Labour’s plan. 
MICHAEL WOODHOUSE 
: Well we will come to a comparison with Labour’s plan in a minute. Notwithstanding that zero Budget I am particularly pleased with a couple of the spending initiatives and Budget initiatives where we have managed to maintain what by the standards of this Budget is an extremely generous increase. 
The first one is in Vote Health which reflects the importance the Government and the public place on this area of spending. Not only is that the case but the messages of productivity are certainly getting through to those working in the health sector and there have been excellent improvements in throughput and reductions in waiting times. It is worth comparing that response with other jurisdictions around the world and what they are doing in their health budgets. In Britain they are planning a reduction of 50000 staff in the National Health Service. In Ireland they are slashing 5 percent off their health budget. The Italians are planning health budget cuts of between €2.5 billion and €5 billion over the next couple of years. In Ontario Canada they are reporting that 2500 nurses will lose their jobs in the next couple of years. So I am very proud of the fact that we have maintained spending in Vote Health. 
The other area in the Budget that I think is very good is Vote ACC and that is for a couple of reasons. Obviously Vote ACC funds the non-earners account but the scheme generally is such an important part of the Crown accounts because even small movements in rehabilitation performance can have quite dramatic impacts on the Government’s balance sheet. One of the most disappointing aspects of Labour is that after 2½ years in opposition Labour members simply cannot bring themselves to apologise for the mess they left ACC in. Not only is that the case but they are now accusing the Government of somehow cooking the books to create a crisis. I think that insults the hard-working members of ACC its auditors its actuaries and the Office of the Auditor-General. 
It was not Nick Smith’s signature on the 2008 ACC financial report which oversaw a $2.4 billion deficit. And it was not Nick Smith who presided over half of the following year. When National came to power 5 minutes later ACC had its hands out for $305 million in the non-earners account. The Labour Cabinet brushed that crisis under the carpet which was in breach of the Public Finance Act. Labour can certainly not take the credit for the half a billion dollars of cash that this Government is putting back into the pockets of hard-working New Zealanders thanks to the turn-round efforts of ACC. 
It is worth reflecting on the comments made by members on the other side of the House about the health of the economy when Labour left office and the impression that everything was well in the economy at the end of 2008. Here is what Labour left behind. 
Hon Steve Chadwick 
: The lines. Feed them out. 
MICHAEL WOODHOUSE 
: Well it is worth repeating them because they are very important context to this Budget. Labour left behind dramatically falling economic growth a country in recession 9 months earlier than the rest of the world a rising current account deficit annual productivity growth in the 8 or 9 years of the Labour Government of just 1.1 percent sharply rising Crown debt business-based lending rates that were through the roof an economy on negative credit watch and—here is the kicker—10 years of projected deficits. So far Labour’s plan for the economy is to take $800 million out of the pockets of hard-working farmers and pay it to tax accountants in the form of research and development tax credits. It does not work. It did not work then; it will not work in the future. 
Labour’s plan to reintroduce a punitive top tax rate of 39c in the dollar would completely undo the good work this Government has done following the recommendations of the Tax Working Group which said we had gone from the least distortionary tax framework in the OECD to the most distortionary. Labour’s plan is to remove GST from fruit and vegetables leaving people better off by probably a maximum of a dollar a week. I was absolutely amazed at the audacity of the member Lianne Dalziel criticising the Government for an apparent turn-round on GST—a criticism I certainly do not agree with—when her party spent $30000 worth of taxpayers’ money jumping on a bus that said “Axe the Tax” but it is not prepared to campaign on axing the tax. Labour members talk big but they are not prepared to go out and say they would want to take the money that was put in the pockets of low and middle income New Zealanders in order to return GST to 12.5 percent. There is lots of noise but no action. 
It is certainly well known that Labour wants to return to what it calls a fairer tax system and that it says higher-income earners need to pay more. Mr Goff talks about them paying their fair share but I questioned the Minister of Finance a couple of weeks ago about the fairness of our tax system and the answer revealed some interesting facts. When the redistributive policies of Working for Families and accommodation supplements are taken into account 44 percent of New Zealand households—the lowest-income New Zealand households—pay no tax. In fact they are net tax recipients. But 17 percent of the highest-income households after redistribution pay net 97 percent of New Zealand’s tax base. Mr English said in answer to my question that the system is highly redistributive and that it was believed to be fair. I agree with him but I do not believe it is fair to continue to punish hard-working and high-income New Zealanders by taking more than net 97 percent of the tax base out of the pockets of 17 percent of households. 
Labour members talk about the policies of fairer tax spending control and debt reduction but what Labour would deliver is more punitive income and capital gains taxes more Government spending and higher debt—that is right; actually billions of dollars worth of extra debt in the first couple of years on Labour’s numbers. Even if the capital gains tax policy is as effective as Labour claims it will be it would require Labour to borrow to fund the spending policies that will kick in straight away because the capital gains tax will take several years to take effect if at all. 
Labour members talk about spending control but they cannot bring themselves to deliver it. Mr Grant Robertson talks about big increases in health spending and Miss Moroney wants to spend another half a billion dollars on early childhood education. It will go on and on. 
Hon Tony Ryall 
: Ruth Dyson has promised half a billion dollars to the— 
MICHAEL WOODHOUSE 
: Let us add another half a billion dollars thanks to Miss Dyson. Mr Cunliffe wants to borrow in the name of the taxpayer on a financial crapshoot that would have investment in equity markets around the world through the New Zealand Superannuation Fund and more debt. If he was really good at picking the markets he would have been telling this House what was going to happen. In fact 3 years ago he would have strolled down the corridor to Mr Cullen’s office and said: “You know what? I think these equity markets are going to tank. The New Zealand Superannuation Fund and ACC should put their money into fixed interest.” He did not do that. He is no better at picking the markets now than he was then. It would be a complete financial crapshoot. 
And with a capital gains tax the distortionary effect on the capital markets would be huge because many of our largest companies that are listed on the stock exchange fund their capital growth through tax-paid retained earnings. If Labour was in Government it would tax capital gains twice. 
Hon Steve Chadwick 
: It’s very flattering; the whole speech has been about Labour. That’s lovely. 
MICHAEL WOODHOUSE 
: Well it is worth talking about is it not? We have talked about spending constraints. We have had 3 months of talking about a zero Budget which is very prudent in the circumstances. We will return this country to surplus within 2 or 3 years and it will leave our debt at below 30 percent and then drop to zero by 2024. I challenge Labour members— 
Hon Steve Chadwick 
: A pity about the figures; they’re all wrong. 
MICHAEL WOODHOUSE 
: Ah they are all wrong. OK. Well I challenge Labour members to go out on to the hustings and put their numbers against ours and we will see whose party is to be believed.