Clark David: Public Finance (Fiscal Responsibility) Amendment Bill — Second ReadingText is incorporated into the Bound VolumeClark David: Public Finance (Fiscal Responsibility) Amendment Bill — Second Reading[Sitting date: 25 June 2013. Volume:691;Page:11252. Text is incorporated into the Bound Volume.]Dr DAVID CLARK (Labour—Dunedin North):It is always a pleasure to follow that member Paul Goldsmith. Despite several vacuous comments in that address to the House I will still be supporting his campaign for the chair of the Finance and Expenditure Committee the one that he has been running across Parliament. We think that he will have much to contribute from amongst the available talent on that side on the House. We look forward to his contributions.I must first address the issue of the capital gains tax. We do not understand why members of that party across the House are so opposed to it as they claim they want to grow the economy. We all know a capital gains tax has been recommended by the OECD by the IMF by most countries in the Western World by the former Treasury head and so on. Why would they on that side of the House not want to put in pro-growth tax reform? They seem so opposed to growth in our economy because it threatens the interests of those who are the very wealthiest those who are at the big end of town those who have the vehicles for avoiding paying their fair share of tax. We know that that is really why they oppose it. We know it has nothing to do with any other economic principles. It is actually about preserving the interests of a very privileged few. If you ask any New Zealander in the street—not you Mr Assistant Speaker; I do not mean to bring you into the debate—you will understand from that person that the economy is actually not working for all New Zealanders right now. It is working in theinterests of a privileged few. The party across the floor is seeking to continue that to make sure that it continues to work in the interests of those privileged few at the expense of the rest of New Zealand.The Public Finance (Fiscal Responsibility) Amendment Bill in its current form is arguably another attempt to do that. What happens when Government spending is restricted as my colleague David Parker has pointed out is often a terrible outcome. For example with the Canterbury earthquakes if there is no flexibility to address a natural crisis like that the Government is left in an awful hole the residents of the country are left in an awful hole and there is no obvious solution. There are states in the US that have gone down that path and have experienced terrible loss of infrastructure downgrading of education systems and the flow-on effects of that into future generations. So we know that in its current form this bill is a waste of Parliament’s time but it is something that we are forced to debate here. But we must make it very very clear from the start that Labour opposes this bill because it really does nothing—nothing—in the way of advancing the cause of fiscal responsibility.My colleague David Parker has also pointed to the advice received from officials that this would not force the Government to rethink the spending in the area of superannuation which we know is already more than the cost of all welfare benefits combined—all welfare benefits combined—and it is growing. The members opposite think it is no problem but the cost of superannuation going from $7.3 billion in 2008 to $10.2 billion in 2013 is a very real problem. The growing expenses in the Government sector must be addressed when we consider that the school sector within 2 years—the whole education sector from preschool primary intermediate and secondary through to tertiary—will be dwarfed by the amount spent on superannuation very soon. We see that across the House we have a party that is not really addressing the core drivers of Government spending. What it is concerned with here is trying to limit future Governments in their choices in a very specific way that protects the interests of the most wealthy with little regard for the wider population. So that is another example of why we would not support this bill.What we could see that would be more useful would be legislation that is more similar to what they have in Australia. If we look there at the equivalent legislation it is very revealing. In Australia the equivalent legislation makes express reference to achieving adequate national savings. We see that this Government has no real commitment to savings. It has brought KiwiSaver back and now it has pushed it forward but everything it has done has been incremental. Labour introduced KiwiSaver. It set up the Superannuation Fund. It is the party that has made a real effort to ensure that we are appropriately catered for in future generations. That is real fiscal responsibility. The thinking in this bill is not.We see the problem of the current account deficit which would be addressed by a higher savings rate. It is now the worst in the developed world—worse than Greece—and set to continue in that regard. That has flow-on implications for business in New Zealand. The cost of borrowing is greater because the ratings agencies understand that at the flick of a pen private debt can be converted into Government debt. They have seen it happen overseas as banks have been bailed out. That is why businesses in New Zealand are facing higher costs. It is because of the kinds of policies that this Government continues to carry on with. It means that the field is skewed against small businesses in New Zealand against the average citizen who works hard to get ahead. They face higher tax bills than they probably should. They face a whole lot of borrowing costs. They face headwinds more red tape. This Government has put through a lot of small-business red tape and all in the interests of the big end of town. Those who already have the real wealth are protected by this kind of legislation. It is the samereason that the Government opposes the capital gains tax that would catch the 75 percent of New Zealanders with net wealth over $50 million who declare income below $70000 below the top tax rate. They would be caught if we introduced a capital gains tax.We in Labour believe that everyone should pay their fair share and we should look seriously at the question of whether future generations’ interests are being preserved. That is the pretence in this bill but it is not what is delivered because the serious questions are not addressed in it. Instead it is poorly drafted legislation that will do nothing to improve fiscal responsibility and it is a waste of Parliament’s time.Let us have a look at who is putting this bill forward. We know that it has come out of the confidence and supply agreement between Mr Banks who is out there in his cabbage boat somewhere; his ACT Party which for all intents and purposes may be defunct in the public mind but still retains one seat here in Parliament; and the National Government. The National Government wanted to put a spending cap on but even Peter Dunne Independent MP saw that as part of an unnecessary right-wing agenda. And thank goodness—thank goodness—he had some sense. That is why that part of this bill has already failed. It is a failed part of a failed bill. Labour supported it going to the Finance and Expenditure Committee because we believe in the principle of having joint understanding around fiscal responsibility. But unfortunately this Government was not open to reaching any compromise not open to addressing the really long-term issues. It was simply set on its agenda of putting spending caps into place that would replicate the experiences of Colorado and California instead of actually addressing those real issues—like savings like pro-growth tax reform and like proper monetary reform—that can actually make sure that our economy works in the interests of hard-working New Zealanders exporters small businesses and the man and woman in the street who go out to do their best for themselves and their family.So we are stuck with this bill. We are stuck with this bill that has its genesis in the confidence and supply agreement between the National and ACT parties. That really is the only reason it is here in front of the House. It offers nothing of any use to New Zealand. It expands and amends the list of criteria to be taken into account by the Government when managing the country’s finances but it does not really get to the nub of the issues that we ought to be dealing with. What is worst of all is that it has the potential to make the imbalances in our economy even worse and those are those imbalances I spoke about earlier that mean that our current account deficit is now considered to be worse than that one in Greece.David Bennett: What was it under Labour?Dr DAVID CLARK: Mr Bennett asks what it was under Labour. It was not so fine under Labour either to be fair Mr Bennett but this Government has been in power now for 5 years—5 years—and the public of New Zealand are getting sick and tired of hearing excuses for not addressing the issues of the day. Those issues are becoming clearer and clearer and more entrenched. This Government is running away from them and running the economy in the interests of the wealthy few and running away from the effect that that has on real New Zealanders who want jobs who actually want the economy to grow who want to see wages rise rather than fall consistently like they have under this Government. They are the people whom we care about on this side of the House. They are the people who value education who value a future sustainable Government that can afford to spend money on education and the things that will give everyone the opportunity to get ahead rather than protecting the interests of the wealthy few. For all of those reasons and more the fact is that this is a waste of parliamentary time and the Labour Party opposes this bill.