Parker David: Financial Review Debate — In CommitteeText is incorporated into the Bound VolumeParker David: Financial Review Debate — In Committee[Sitting date: 04 March 2014. Volume:696;Page:16260. Text is incorporated into the Bound Volume.]Hon DAVID PARKER (Deputy Leader—Labour): I want to respond to a couple of issues that Paul Goldsmith raised. He tackled the Greens for criticising the poor distribution of income and wealth in New Zealand. What he did not mention was that the OECD in its most recent report into New Zealand said that New Zealand’s tax system is less redistributive than is normal in the West. So although he might say that there are some protections in the likes of Working for Families he seems to forget that those sorts of improvements on the division of income—and therefore over time wealth—were Labour Government policies that were opposed by National. He forgets that New Zealand is one of the few countries in the world not to tax capital gains and then in respect of his alluding to growth rates he claims that we are some sort of rock star economy because growth is a bit over 3 percent per annum. When the effects of the Christchurch rebuild are excluded New Zealand’s growth rate is a paltry 2 percent per annum. It is nothing that the Government can claim credit for. The earthquakes in Christchurch were of course a terrible event that adds to GDP because the rebuild costs a lot of money.In respect of the external deficit that he referred to now in New Zealand we have the highest terms of trade in more than a generation and despite that despite record dairy prices and despite raging success in trade with China under the free-trade agreement—which the Labour Government under Phil Goff negotiated—we still have a current account deficit that is over 4 percent and is projected to get worse. So with the best terms of trade and with record commodity prices we still are not achieving that need to improve our export balance or our total exports. The Government seems to have given up on its objective of increasing exports significantly as a percentage of GDP. It has made virtually no progress in that regard in the last 5 years. The export base of New Zealand has narrowed towards a decreasing bundle of goods and not only is more reliant on dairy it is more reliant on milk powder going into China.Against all that background we have got the Government being tricky on these statistics. Before I sat down last time I was saying that we not only now know that the statistics it was using in respect of income inequality exclude capital gains it also overstated the incomes of those who are less well off by counting the accommodation supplement twice and by making mistakes around Working for Families. In the broader measures such as those used in the census we know that the income gap between South Auckland and wealthy suburbs in Auckland grew by 19 percent between the two censuses—a 19 percent increase in the gap between family incomes of South Auckland families compared with those in wealthier suburbs.So there is no doubt that inequality is getting worse in New Zealand and that is one of the reasons why New Zealand is underperforming educationally. There are some problems that we have in our education system. Not all of them can be put down to inequality but a substantial proportion of them according to the OECD can be tied back to the fact that people are so poor that they cannot take advantage of the educational opportunities that our State system provides to them.This country needs a Government that is willing to improve the depth of capital markets. KiwiSaver which was opposed by National when it was one of ours is now held up as one of its successful policies. We think that we need to follow the Australians in having a universal work-based savings system. We need tax changes—both research and development tax credits as well as a capital gains tax excluding the family home so as to direct that capital more efficiently to the parts of the economy that need it most. Through that we will get higher wages and more jobs with career structures rather than committing too many of our young people into low-paid service jobs with irregular hours of work no career prospects and lower rates of homeownership which is the pattern that we see under the current Government.So I do not think that the Government has achieved what its objective was which was to rebalance the economy. If the Minister of Finance does get to his feet and take a call in this debate I want him to start by apologising for misleading the country in respect of the income inequality figures that he knew were wrong from December last year. In the middle of the inequality debate including in this Chamber he did not fess up to the fact that his Government had made a billion-dollar bungle that overstated the incomes of low and middle income New Zealanders.