Foss Craig: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — First Reading 
Foss Craig: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — First Reading 
[Volume:639;Page:9420] 
CRAIG FOSS (National—Tukituki) 
: 
 It is a pleasure to finally stand up to speak to the Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill tonight. 
Earlier Mr Shane Jones the chairman of the Finance and Expenditure Committee made a couple of points. It was an outstanding example of why we need more productivity in the public sector. But he also showed he was quite ready to fill the shoes of Parekura Horomia because like Parekura every time he sits down after getting up and speaking—he speaks very powerfully; he is a great orator—one has no idea what he said. One actually has no idea what they said but one knows they got up and said something out loud. 
 I will pick up on a couple of points that Dr Cullen mentioned in his speech to this bill and the earlier bill the Taxation (KiwiSaver and. Company Tax Rate Amendments) Bill and I have to take issue with one point. He claimed the KiwiSaver scheme is one of the keys to today’s Budget and he talked about the amount of savings that will be built up and will be invested in New Zealand. Well that is totally untrue. He has absolutely no idea where the savings in these KiwiSaver accounts will be invested. He has absolutely no idea of the risks that are entailed once these funds are invested from default providers or wherever. So for him to get up and say there are billions of dollars on the plate tonight to be invested in the future of New Zealand is totally wrong. 
Another term Dr Cullen kept using was “paid for by the Government”. That is partially true but the Government is only a conduit. Money is taken by the Government in the first instance and is then transferred out by the Government in the second instance. Today’s Budget has been christened the “money-go-round Budget” and it is hot on the heels of last year’s “chewing gum Budget”. At that time the 67c a week indexation in the “chewing gum Budget” was supposed to be the highlight. Well it was appalling but in contrast with today’s effort where there is zero cash until a person is 65 the “chewing gum Budget” does not actually look too bad in comparison. 
The linchpin of the Budget today and what all the talk has been about is the KiwiSaver scheme. I do not think there has ever been a programme of any Government that has had such a terrible start to its life—a stuttering start with so many changes and amendments. We are here under urgency. Why are we here under urgency when we speak of anything to do with the KiwiSaver scheme? When the specified superannuation contribution withholding tax was announced as the bill was introduced into Parliament for its second reading or perhaps the Committee stage we flew into urgency and Parliament was informed about that about an hour before. The mortgage diversion part of the KiwiSaver scheme was hot on its heels and again had to be pushed through urgency. Why on earth cannot the New Zealand public present to a select committee on these points? The same applies to the specified superannuation contribution withholding tax extensions which were announced in December and were basically an admission of failure in the original design. But I would congratulate the Government on that extension which at least tries to bring private schemes under the same umbrella. 
I feel sorry for the officials who will be dealing with the legislation tonight. There are another 188-odd pages of KiwiSaver legislation with amendments and Supplementary Order Papers to come no doubt. Why can we not just get KiwiSaver right in the first instance? The select committee spent 6 months on the original bill and lo and behold the major changes—things that fundamentally change this bill—were introduced rushed through and bulldozed into the House under urgency. 
It was interesting to watch the Labour backbenchers as Dr Cullen read what is possibly his last or second to last Budget. They were cringing. The good old spontaneous applause was not all that spontaneous; it was less spontaneous than last year which perhaps is a reflection on the polls they had all seen particularly TV3’s polling around tax cuts and Dr Cullen. I think Government members were also cringing because they know—particularly the backbenchers and those who once had electorate seats—that they are going to have to go around the country this week to explain to people who are struggling to get by where the money is. Those people will say: “Show me the money.” Sure Government members can draw wonderful diagrams of money compounding to $200000 $300000 and $400000 in 30 or 40 years’ time; that is what insurance agents do right now when they try to sell funds to people. But when their bill from the State-owned electricity company has gone up another 10 or 15 percent when people have to pay another 10 percent for petrol when their rates go up another 10 percent per annum that is what counts. That will be the shameful legacy of this Budget once the honeymoon is over. 
I heard an earlier speaker talk about how many phone calls are coming through to members opposite about the Budget. They are probably just asking where the money is and asking members to show them the cash. What is Grey Power saying about this Budget? What is in this Budget for the over-65s? What is in this Budget for the 20 to 25-year-olds? Where is the cash for them? What is in this Budget for those people whom the Labour Party members have a propensity to say they care so much about? Actually they do not care for them whatsoever. There is absolutely nothing—no cash—in this Budget for those who have done the hard yards have already retired and will continue to struggle. 
The stinginess of confiscating the “chewing gum tax cut” is outrageous. A lot of New Zealanders have suffered fiscal drag. Fiscal drag is when inflation drags people up into higher and higher tax brackets. There are two ways out of that. The tax brackets can be moved up with inflation or productivity in the economy can be grown to get more bang for our bucks. Inflation in New Zealand has been underpinned by the overtaxation and unproductive spend-up of the current regime. This Budget is not about a snapshot of just today; it is about the series of Budgets of the last 7 or so years. The difficulty that Dr Cullen is facing right now is because of the failure of those seven previous Budgets; it is not about just this one right here today. 
Fourteen percent of New Zealanders are now in the highest tax bracket of 39c. When Labour came into Government one of its pledge card promises was that 5 percent of New Zealanders would be in that sector. There is now a 200-odd percent increase; it is absolutely absurd. Once this Budget’s honeymoon is over once the hundreds and thousands of dollars have been talked about on TV and on the chat shows etc. New Zealanders will start to wonder why on earth they are struggling to make ends meet and how on earth they will find the cash to pay the bills to pay the increasing floating interest rate on their mortgage which is now near double figures and to pay for some of the items I mentioned before—quite simply how they will get by to live and perhaps to put a little bit together to save. Apparently saving is so important. 
They will finally realise after about 6 months of this policy that Labour has cut their real wages. It has cut their real wages and cut their purchasing power. As my colleague Bill English said earlier that is exactly what this Budget is about—Labour is essentially announcing a wage cut to New Zealanders tonight. That is an absolute disgrace. It will start to hit home once those bills start to be paid in a few weeks’ time. Under this scheme Labour will take cash off workers now today instead of giving them a pay rise and will put it at risk in a fund perhaps until those workers are 65. Well what happened to the party that used to talk about a decent wage for a decent job for a decent living to get by? 
What will be the result of this Budget? Quite simply it will result in the battlers and those who are unfortunately at the bottom of the socio-economic heap having more debt. They will be stuck with more debt. They cannot afford to participate in this programme as it is announced. Because someone would have enrolled them in the KiwiSaver scheme and they would have forgotten about it they will be down at the dodgy shop of the guy on the corner borrowing at interest of 20-odd percent. 
What will happen to the over-65s—the retired people? They will do more reverse mortgages because they will have no more cash to pay the bills. They will start to eat their equity which is exactly the opposite of what Dr Cullen presumably was intending. 
Finally Dr Cullen also spoke about the current account deficit and what a big deal that is. Well I just took a moment to look up the 2000 Budget and in that Budget Dr Cullen was particularly concerned about the current account deficit and the impact it was having on New Zealand’s economy—this was at about the time that the New Zealand dollar was at about 54-odd US cents. At the time Dr Cullen said the current account deficit of 5 percent was much too high and that it would be heading to 2 percent over the next 2 years—oh really? In 2007 the current account deficit is at 9 percent—about $14 billion—and that is the core of the problem. There has been a series of failed Budgets which is why we have these problems today. No Finance and Expenditure Committee inquiries will get Dr Cullen out of the hole he has been digging for himself for 7 years.