Hide Rodney: Budget Debate 
Hide Rodney: Budget Debate 
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RODNEY HIDE (Leader—ACT) 
: 
 The Budget 2005 is a sick joke on hard-working New Zealanders. I move  
That the amendment to the amendment be amended by omitting all the words after the words “Labour Minority Government” and inserting the following words: “that has provided no vision or ambition for New Zealand no 10-year plan for making New Zealand a freer more prosperous and proud nation and no policy for dropping the excessive tax burden on hardworking New Zealanders 
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This Budget has no vision for New Zealand. There is no view of New Zealand looking 10 years ahead and asking where we could be as a nation. This nation is rich in resources rich in people and entrepreneurial effort and rich in care for our neighbours and our loved ones. Where is the vision for New Zealand in this Budget? There is no vision. We look at the Budget 2005 and we ask where the ambition for our country is. Where is the ambition of getting into the top half of the OECD and once we are there of steadily rising up the league of nations in terms of output wealth and riches? There is no ambition in this Budget for New Zealand. We look at this Budget and ask where the plan is for the next 10 years. We do not see even a plan for tomorrow in this Budget. 
I have never seen a Budget in my time with so little in it. It is clear to us that this Government has run out of ideas has run out of energy and—with the election upon us—has run out of time. We saw it did we not? We heard it in the applause from the Labour Party caucus. Michael Cullen gave an election year Budget speech with historic surpluses. He managed to get only two and a half claps out of his caucus and each one of those claps including the half had to be orchestrated. The caucus members could not be even bothered to clap and cheer when urged to by Jill Pettis the whip. They could not be bothered—and why would they be? 
What a wasted opportunity we have seen with 5 years of this Labour Government. The best economic conditions in my lifetime have been frittered away. The best opportunities for providing a base for New Zealand to grow its economy and to succeed as a nation have been frittered away. What is the forecast growth rate now? It is a piddling 2.3 percent for next year. For the year after that it is a piddling 2.5 percent. That is what Michael Cullen is predicting. 
Why would we expect to get more growth than that when we have a Government that views our economy simply as a cake to be carved up and redistributed? It does not see our economy as being real Kiwis going about their business—driving trucks running small businesses working on farms and working in our factories—creating the wealth that with this Budget the Government will take from them and spend. How much does it spend? Core Government spending is $45 billion. That is the amount we are debating in this Budget. Where did each and every one of those dollars come from? They came out of the pockets of hard-working Kiwis who worked for each and every one of those dollars and Michael Cullen Helen Clark and the Labour Government have come along and taken that money from them. 
Do members know what $45 billion would look like if it were stacked up? A bundle of $100 bills is about 1 centimetre high. That is $10000. Three bundles stacked up is $30000—that is Jonathan Hunt’s taxi bill for a year. That is a lot of money. To reach $1 million the stack would need to be 1 metre high. A stack of $1 billion would need to be 1 kilometre high and of course to get to $45 billion the stack of $100 bills would need to be 45 kilometres high. 
What did we hear about this Budget? We heard that there was “a deep dark tax secret in this Budget”. Well I went into the Budget lock-up and got all the documents. I went through them hunting for that deep dark tax secret but I have to say that it must be so deep and so dark that I still have not found it. I was expecting Dr Cullen to stand up in this House and tell us what the deep dark tax secret was—but we still did not hear it. 
The Government takes that $45 billion from hard-working Kiwis and then it talks about “tax cuts”. I can tell New Zealanders that there are no tax cuts in this Budget. For business all we see is an adjustment to the depreciation schedules. That actually says the Government is overtaxing business now because the depreciation schedules are wrong. That adjustment is done in order to correct the schedules so that business is not so overtaxed and then the Government comes along and says: “Oh by the way this is going to be paid for with the carbon tax.” When we project out 3 years do people know what the total sum of the “tax cuts” for business will be a year? In 3 years’ time it will be less than $100 million—1 percent of the total tax paid that year by business. So it is definitely not a tax cut. 
Then we come to United Future’s great contribution to this Budget. Now we have learnt this about the Prime Minister—have we not—that we cannot trust her that she is dishonest and that we cannot trust her Ministers in this Parliament to give truthful answers. And now we learn that we cannot trust Michael Cullen when he delivers a Budget because we learnt that about the tax cut United Future delivered. 
The Government is to adjust the tax thresholds for inflation. What happens is that as inflation occurs taxpayers are bumped up the tax rates. So the average worker who started out paying a top tax rate of 21c in the dollar in 1999 has been bumped up to paying 33c in the dollar simply because of inflation. There will be adjustment for that but people should realise this: the adjustment will not happen for 3 years. The adjustment is 6 years too late! Then if we project out 3 years where does the Government take the base year from? It is actually taken from 1 July this year. 
When I picked up this Budget and looked for that deep dark tax secret I came to a table in the executive summary on page 10 which showed that most taxpayers on the marginal tax rate of 21c in the dollar would get a tax cut of $35. I thought: “Wow! That is pretty good—$35.” I thought that it was $35 a week that $35 a week was not too bad and that the ACT party would support a tax cut like that—because that is our policy. But then I read a bit further and discovered that it is $35 a year. The great tax cut that has been put into that table is for $35 per year—which is not even 70c a week. A person could not buy a packet of chewing gum for the cost of the tax cut Michael Cullen is giving hard-working Kiwis. 
Then I discovered another shocking thing: to receive that miserable 70c a week people have to wait 3 years for the tax cut. So Michael Cullen is going to the election on a promise of: “Vote for me and I will give you a tax cut. You will get it in 3 years’ time and it will be 70c a week. So in 3 year’s time you can buy an extra packet of gum because that’s how generous I am as Minister of Finance.” 
The ACT party is the only party in this House that stands up for free enterprise for private enterprise for the market economy for freedom and for limited Government. We know what we need to do to make this economy grow and to provide for a prosperous and free nation—that is limited Government getting taxes down and realising that every dollar we spend in this Budget is a dollar taken from a hard-working Kiwi. 
It is not the money of the politicians in this House that we are spending. It is not Michael Cullen’s money. It is not Helen Clark’s money. It is the money of hard-working Kiwis taken from them through tax. We should recognise that and spend that money wisely. It should not be spent on hip-hop tours on wananga courses that do not deliver or on every PC cause that comes wafting through a Cabinet Minister’s office. No we should spend that money wisely and well on the things that New Zealanders want and need from their Government—like the police. People should be able to expect that when they ring 111 the police will come. That money should be spent on basic infrastructure—roads—and on a proper defence force. So many of the things that this Government is spending money on we could do for ourselves so much better. 
Back in 1997 the Inland Revenue Department did a study of our tax system and found that we are massively overtaxed in New Zealand. Michael Cullen spent a million dollars of taxpayers’ money on the McLeod Tax Review the results of which came out in 2001 and horror of horrors—having used a million dollars of taxpayers’ money—the McLeod report came up with ACT’s tax policy and Michael Cullen promptly rejected it. Michael Cullen thought that he could be smart and send ACT’s policy across to Treasury to be costed. We were overjoyed at that move and we readily agreed. I have to say that the National Party did not agree to it—the problem was that it did not have any tax policy to send across. But the ACT party put its tax policy to Treasury and what did we find? Treasury said that with our tax policy the economy would grow by an extra 1 percent a year. So instead of looking at 2.3 percent or 2.5 percent we would be looking at 3.3 percent and 3.5 percent—and that is just with ACT’s tax policy let alone our policy of reducing red tape. Treasury said that contrary to what Michael Cullen keeps claiming in this House the ACT party policy was entirely affordable. It said that the surpluses were so large that the policy could be paid for out of those surpluses. 
We see that in this year’s Budget that is also true because the surplus is forecast to be sufficient to pay for the ACT party’s tax cuts. We know that in a recent  
National Business Review 
 63 percent of New Zealanders said they wanted tax cuts. That is not bad when we consider that only 62 percent of New Zealanders pay tax. Sixty-three percent of New Zealanders want a tax cut and 1 percent of New Zealanders who pay taxes said they are happy to pay them but the rest of them said they want tax cuts. 
What could have been done with tax in this Budget? Michael Cullen could have said: “Yes I understand where wealth is generated. It is generated by hard-working Kiwi families by small business and big business and by investors and entrepreneurs. It is not created by the Government.” He could have said that he would therefore adopt ACT’s policy and allow entrepreneurs investors and workers to reap the rewards of their efforts. All he needed to do was to return that surplus to hard-working Kiwis and let them keep it and our tax rate would be not a top rate of 39c in the dollar nor a second rate of 33c in the dollar but would go down to 25c in the dollar at the top rate immediately. We could have started doing that on 1 July in this Budget—easily. We could have had a top rate of tax of 25c in the dollar for every New Zealander. 
What could we have done for business? Well we could have done more that just tweak with depreciation schedules. We could have taken the company rate of tax the business rate of tax and the penalty we put on business in this House from 33c in the dollar down to 25c in the dollar. We can imagine what that would do for investment jobs wage growth and entrepreneurialism in this country. Then we could have taken that middle rate of 21c in the dollar and dropped it to 15c in the dollar. That is the opportunity that lies in this Budget with the surplus. We could have had two tax rates: 25c in the dollar at the top and 15c in the dollar all the way up to $38000 a year. That is what we could have done with this Budget. 
For the average worker that would be an increase in net take-home pay of 7 percent. That is what Michael Cullen could have given to the workers of New Zealand in this Budget. That is more than the unions are demanding and more than they are trying to get through industrial disruption. He could simply return the surplus to hard-working New Zealanders and there would be a 7 percent pay rise for every New Zealander. 
In the ACT party we were a bit worried about this Budget. We thought that Michael Cullen would move to have a tax cut for every worker as the surpluses were so large. But what we see here is a sick joke for every worker in New Zealand—70c a week in 3 years’ time. We know that Michael Cullen has delivered his last Budget not with a bang but with a whimper; a whimper that his own caucus could not even rouse themselves to applaud. 
There is one party in this House that does stand up for free enterprise and for hard-working families and believes that they should keep more of the money they earn. That party is the ACT party.