Cunliffe David: Taxation (Consequential Rate Alignment and Remedial Matters) Bill — Second Reading 
Cunliffe David: Taxation (Consequential Rate Alignment and Remedial Matters) Bill — Second Reading 
[Volume:659;Page:7862] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I thank the Minister of Revenue for his remarks and confirm to the House that Labour will be supporting the Taxation (Consequential Rate Alignment and Remedial Matters) Bill much of which transcends the election and carries on work streams of a remedial nature that were in place under the previous Government. 
The Finance and Expenditure Committee spent considerable time on a number of aspects of this bill and both I and our tax and revenue spokesperson Stuart Nash MP will mention those in some detail. I will also take the opportunity to address some contextual matters in relation to other aspects of tax reform to which this legislation bears. 
Let me first touch upon some of the core issues that were the substance of the select committee’s debate. Principal amongst those was the default rate of resident withholding tax. The issue is quite simple. The default rate is currently set at the 19.5 percent tax rate. That tax rate is going out of business. It will be replaced by a new low tax rate of 12.5 percent. Government members’ position going into the select committee reflection was that it would not be appropriate to use that rate as a default rate so they wanted to go to the other end of the spectrum and set it at 38 percent the highest tax rate on the grounds that that would maximise the incentives for people to specify what their actual rate was rather than face such a punitive marginal rate if they did not need to. 
That was an assumption of position that the select committee questioned very heavily. We received advice from officials that had that rate been implemented many hundreds of thousands of New Zealanders would have been knowingly forced into the position of paying too much tax. I think that offended members of the select committee right around the table and I commend the chair Craig Foss MP and other Government members who worked constructively with the Opposition with officials and with submitters to find an alternative to what we felt would have been a prejudicial and unjust default position. 
The Bankers’ Association made a proposal which was taken up by the select committee and worked around the table to set the new default rate in the middle of the bell curve at 21 percent which was the modal rate where most taxpayers were likely to sit and the rate that would minimise the numbers who were positioned either too high or too low. That was the basis of the select committee’s consideration and it is reflected in the amendments to the bill; we support that. However we have a reservation that the default rate has still been set at 38 percent for new accounts. We are relying on the good offices and undertaking of the officials that they will work rapidly and decisively with the banks to inform individual customers who may be in the wrong position and to ensure that they are advised of their options and how to correct their personal resident withholding tax rate. 
On that basis we are prepared to support the bill but we do caution against any future moves that build in the same assumption that it is somehow OK for a Government to knowingly pass law that puts hundreds and thousands of hard-working Kiwi families on a tax rate that is obviously and deliberately higher than the one that they are bound to pay. That is not a proper precedent and it is one that we objected strongly to. 
I will touch on another substantive amendment in the bill which is in relation to the Permanent Forest Sink Initiative. This amendment concerns the provisions for the climate change initiative under which a person who owns land that has been reforested or that he or she intends to reforest can enter into a covenant with the Government and receive emissions units. 
It is timely that we are debating this bill today. I do not know whether by design the Government has put this before us because it wants an opportunity to showcase the deal that it has been doing with the Maori Party in order to desperately save the Government’s deeply flawed emissions trading legislation but the Permanent Forest Sink Initiative contained in this bill is just one aspect of what has now been shown to be a much bigger deal. The Maori Party campaigned on some of the highest ideals of Maoridom including the idea that Maori people should aspire not only to tino rangatiratanga but to every commercial advantage available to other New Zealanders. Those are ideals with which we broadly agree and for which Labour’s Maori MPs have long and tirelessly worked. But the Maori Party has sold out. It has sold out to do a deal that will simply cut an advantage to certain iwi-based owners of forests and fisheries. It is different from that which is available to other New Zealanders and makes a mockery of the Maori Party’s commitment to Maoridom and more broadly so because for example a group of Maori doctors came to Parliament today with evidence that Maori people—ordinary flaxroots Maori people—would be amongst some of the worst affected by climate change if this bill goes through. They called climate change the No. 1 health problem facing Maori New Zealanders today. 
I hold that the Maori Party has not honoured those people’s interests in doing a shabby deal for certain members of the “Browntable” to benefit from the pollution subsidies that this Government is handing out. The sooner that the Climate Change Response (Moderated Emissions Trading) Bill which looms large above Parliament’s proceedings next week is stopped in its tracks the better. We are talking about tax and that bill will put a $110 billion tax liability equal to 17 percent of GDP on to young New Zealanders cumulatively by 2050. I say “Shame!”. 
Hon Members 
: Shame! 
Hon DAVID CUNLIFFE 
: I say “Shame!”. How big is that? I will put it this way. This Government inherited gross debt to GDP of around 17.7 percent at its lowest the year before the election. New Zealand had only 17 percent gross debt to GDP— 
The ASSISTANT SPEAKER (Eric Roy) 
: Just to interrupt the member we are on the second reading but it is of a different bill. The member can make comparisons where they are relevant but he cannot launch into an attack on something that is quite separate. 
Hon DAVID CUNLIFFE 
: This is of course germane because this bill is a revenue bill and goes to the ability of the Government to meet its debt obligations. This bill specifically refers to the Permanent Forest Sink Initiative under which foresters—including Maori foresters—can receive free emissions units. I will close off presently but I do need to finally say on that matter that 17 percent of GDP is equal to the entire Government debt that the National Government inherited from the outgoing Labour Government. In other words the Government is proposing to double it in one hit by doing shabby deals with polluters and binding our children to an unbearable tax burden in the future. 
That brings me to another aspect that young New Zealanders will regret in terms of tax policy. Because this Government has so far refused to address the howling imbalances in the property market and prevent a resurgence of the property bubble Generation Y young New Zealanders are likely to be locked out of their dream to own their own home. It is bad enough to load them up with carbon charges and lock them out of the housing market but the third leg of that treble is to load them up with the superannuation obligations that this Government is not prepared to pay for by way of pre-funding. The Government has just put it on our children and I think that is ethically and morally wrong. I cannot look my children in the eye and say that this Government’s tax programme— 
Hon Steven Joyce 
: Do the superannuation but not the accident compensation cuts. 
Hon DAVID CUNLIFFE 
: There is the “Minister for Dithering” Steven Joyce. It has taken him a year to find out where his navel is when contemplating broadband. He had a broadband roll-out plan ready to go a year ago but he sat on his fat behind contemplating his navel wondering what to do with the plan and industry is still waiting. I think he should spend his time thinking about that and not chipping at the Opposition because that would be time much better spent. 
The bottom line is that this is a Government that has already run out of ideas. When I was reviewing Budget 2009 I thought I had missed a chapter but I had not. It just had not been written. That was the chapter about growth and jobs and how to support hard-working Kiwis through this recession. Because the Government is out of ideas and this bill does nothing to add to that it has had to outsource the brains trust.