Cunliffe David: Taxation (Urgent Measures and Annual Rates) Bill — Second Reading 
Cunliffe David: Taxation (Urgent Measures and Annual Rates) Bill — Second Reading 
[Volume:651;Page:111] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 That has to be one of the singularly worst speeches I have heard from a Minister of Finance in my entire time in Parliament—it is the worst in fact. There is Bill English saying we do not realise we have lost the election; I do not think he realises he has won. That was one of the bitterest meanest most angry speeches I have heard. We are in a better mood than he is and we lost the election. I ask New Zealand what that was about. Was that the happy friendly face of the modern National Party or was that some warmed-over dipstick from Dipton? Look I do not know about his mana-enhancing Treaty blowouts and his carping and whining about the election campaign but can members just imagine the situation if National had lost? How bad would Bill English’s mood have been then? 
Hon Darren Hughes 
: Oh he’d be happy then. He’d be leader. 
Hon DAVID CUNLIFFE 
: Ha ha! That is terrific—that is terrific. He would have been happy then because he would be leader—“Et tu Bill!” It is a wonderful thing to watch the body language on the front bench of the Government—absolutely wonderful. Every time the poll ratings go up Bill English’s face goes down. 
Three things are wrong with this bill: it is bad process it is bad economics and it is bad for working Kiwis. The bad process stuff is obvious is it not? The Government did not even put the bill on the Table before the debate started. It is not sending it to a select committee. What has happened to the flowering of democracy the “Key spring” in New Zealand? We cannot see that today. All I can see is a bill the National members must be ashamed of because they are rushing it through all stages with no opportunity for affected New Zealanders to comment and no opportunity for the detail of the bill to be tested. 
You know this bill is so shoddy that even the commentary on it says it is rubbish. It does not meet the Government standards for a regulatory impact assessment according to page 10. The Government has not quantified the effects of the bill. It does not know whether the removal of the research and development tax credit will push innovation up or down. It does not know the net effect of the KiwiSaver changes but we established yesterday—thanks to Dr Cullen—that it is not allowing for any growth in enrolments. So that move to make it easier for New Zealanders to enrol—that minimum 2 percent—is something we know the truth about ladies and gentlemen: it is a cap. It is a maximum because that is the default level that people will enrol at. That is all an employer will be allowed to subsidise and that is bad for workers. It is bad for Kiwis who need to save. 
You know the macro effects of this legislation are rubbish. If there is a short-term recession problem and the pump needs to be primed the last thing to do is to have a long-term tax cut. Why is that? Well there are two things. Firstly any economist knows that the multiplier on Government spending is bigger than the multiplier on a tax cut. Why is that? Because if investment is directed well it flows through the economy. If there is a tax cut people spend part of it on stupid consumption items they spend some on investment goods and they save some away. That does not ricochet through the economy so the multiplier on a tax cut is lower than the multiplier on good investment. That is why this measure is bad economics. 
The second thing is that this is a long-term measure to address a short-term problem. It is a bill that does not work. The idea is to match a short-term problem with a short-term measure. So one does a temporary stimulus package and does not lock in a structural tax cut that will blow out the debt track. But hey if National is confident about that debt track I say it should show it to us. Why does it not tell New Zealanders the truth about where gross sovereign debt will get to in 20 years’ time? National has not told New Zealand that because it is deeply deeply ashamed about it. 
Even Treasury in its briefing to incoming Ministers—I tell Bill English that it is on about page 10 if he has not got that far—tells us that this fiscal stimulus is not required. That is because there is $13 billion of pump priming of which $9 billion came in October with Labour’s package. Two-thirds of it has already been done and we spent—as Dr Cullen said—right up to the maximum of where we felt that we could go based on the information that we had up to the point where we were borrowing to fund a tax cut which is bad policy and bad economics. Ignoring Treasury advice and like Rip Van Winkle ignoring the entire meltdown of the global financial market Mr English has done the politically populist thing. He says we should have a tax cut. 
A tax cut sounds wonderful until one works out who gets what. I say to members and to those who are listening that the answer is that if a person earns less than the average wage less than $44000 that person will lose because National will have taken off the KiwiSaver enrolment subsidy. National is to cut $3.5 billion from KiwiSaver funding. That has to come from somewhere and it will come from the workers—from the poor as usual. And who gets what? Well someone on $750000 a year a nice income for a good National Party supporter will get $200 a week in tax cuts which that person does not need. A person on the average wage of $45000 will get $1.92 a week. Whoopee! That will really help at Christmas will it not even if one has not lost one’s job because of the 90-day sacking bill. I thank Mr English very much for the kinder gentler National Party. 
The smiley face of National is hopping from cloud to cloud forgetting to tell people the truth about what was in its policy. What about that superannuation tax credit that National just forgot to mention—that it was cutting the net rate from 4 percent to 3.4 percent. That would not really have pleased the oldies if they had been told about it ahead of time so National did not tell them. The reason that we do not get to test these things is that there is no select committee process. This bill is being rammed through. National knows this bill is not well-thought-out. It is bad economics; it is bad for people. 
This bill will make a lot of our old structural problems worse. Those problems were that people were spending a bit too much because their house valuations were going up and they figured that they could take afford to take on a bit more debt. People did spend beyond their means; there is good evidence of that. But this bill makes that problem worse. It says National will cushion the effects of a short-term recession with a tax cut. The money will not go into investments; it will not do anything for productivity. That was National’s theme in the Speech from the Throne just yesterday when it said it would go for growth and productivity. Nothing in this bill will go into growth; it will go into wasteful spending and into things that will not help our innovators. The bill will not help our exporters will not help our dynamic companies and will not help families who are in need. 
I ask what the bill was supposed to be about. What was it supposed to do and what was the point of this bill? Was it to deliver on an election promise? What did National campaign on? It campaigned on the promise of good open Government and a fresh start for New Zealand. Do members remember those words? Well they lasted about a day into the business of the House. The fresh start for Government meant doing away with the select committee process. It meant doing away with giving the Opposition adequate notice in order for it to prepare a defence. It meant doing away with the constitutional safeguards that New Zealanders hold dear. If the process around this bill is anything to go by let alone the 90-day Employment Relations Act amendment bill outrage that is coming later this week New Zealanders are in for a very very tough time. 
Hey members should not feel sorry for us. We are professionals. We understand that we are here to serve the public. We know that when the public wants us to serve them we will be ready. Members should not feel sorry for us because we are in Opposition; that is another form of service. Members should feel sorry for New Zealanders who are going to suffer from the excesses of a Tory Government that is reverting to type on day one of holding office. They should feel sorry for New Zealanders who will suffer from the abuse of process and get bad economics delivered to them with proposals that are ill-defined and badly quantified do not meet regulatory impact standards have effects that have not been quantified and have loose and shoddy details. 
This bill is a nonsense. It is about who gets what—and those who get it are the rich and those who lose it are everyone with kids and an income of $44000 a year or less. That is the truth of it and that is why we strenuously oppose this bill. This Government has started the slide to 2011 on day one. This will be a one-term Government because New Zealanders hate people saying one thing and doing another. They do not mind hardship if they have voted for it but they really resent being sold something and getting something different from that. This bill is bad economics it is bad for New Zealand and it represents bad process.