Clendon David: Taxation (Budget Measures) Bill — In Committee 
Text is incorporated into the Bound Volume 
Clendon David: Taxation (Budget Measures) Bill — In Committee 
[Sitting date: 20 May 2010. Volume:663;Page:11161. Text is incorporated into the Bound Volume.] 
DAVID CLENDON (Green) 
: 
 The Budget release is one of the big political events of the year. It is a time when the public pay a bit of attention to what goes on in this place and of course the media get excited. I think one of the best media commentaries one of the most astute and also one of the most succinct is on the front page of today’s  
Dominion Post.  
The headline reads simply: “Lollies for all”. I think that brief phrase captures the essence of this Budget. After all what are lollies? They give us a momentary sense of sweetness and they give us a bit of a sugar rush but there is not a lot of long-term value in them. There is not much nutrition in lollies. There is nothing to build strength or over time to add value. I think that sums up this Budget quite nicely. We all get a nice wee sugar rush; we get a tax cut. The difference between the gross income figure and the net income figure is reduced momentarily or it will be in a few months’ time but the apparent benefit that sugar rush will not last for very long. Inevitably people will get over it and what will be left is quite a sour taste. 
Already people have lost some of the benefits of the tax cut through such things as accident compensation levy increases. When families need to re-register their cars they will discover it will cost them a great deal more than it did last year. The accident compensation employers’ levy has also gone up. Electricity prices have been mentioned; they are on the up. That is because the Government is not adopting a progressive system such as the one the Greens are proposing in our Mind the Gap package which is a system whereby people would get affordable electricity and would pay extra for excess use only. No the Government chooses to stay with a much less progressive policy. People will be paying more for their public transport because of the insistence on dumping massive amounts of cash into roads which is a subsidy for road transport albeit that is denied. People using public transport are being forced to pay more because apparently some ideological purity demands that public transport must pay its way. So in many ways people are being cheated by this Budget. The little sugar rush is all they are getting. There is no long-term value in it for the average family. 
GST clearly is where the rubber hits the road immediately. In a few months’ time every time people purchase an item they will be paying more. GST is a highly regressive form of taxation because those who earn the least will pay the most in terms of their overall expenditure. People will pay more for food petrol and accommodation—all of those things that people must have. The people who have the least choice will have even fewer choices than they had before. 
What has been missing from some of this debate is the effect on retailers when people spend their money. The retailers will be the ones in the front line bearing—literally in many ways—the cost of the increase in GST. We know that when the Government proposed to raise the level of GST it did not talk to small-business owners and it did not talk to small to medium sized enterprises. We know this because some weeks ago we asked the Minister of Finance what consultation there had been with small to medium sized enterprises over the probable impact the cost to that sector of raising the level of GST. The answer from the Minister was that there had been no consultation. Despite the fact that 85 percent of New Zealanders earn their living in the small to medium sized enterprise sector that sector was not consulted about the cost to it and to the wider community of GST being put up in this way. 
That is a remarkable reflection and it says something about the priorities of this Government and its blindness to what happens in the real economy in the real world. We know that there will be a cost to retailers in particular and that cost inevitably will be passed on to consumers. There will be the one-off cost of rejigging the way in which they charge—the technology change effectively—and repricing everything on their shelves. There will be an inbuilt cost. What do retailers do when they are running near a sensitive price point on a given product? Do they simply add the GST which puts the product into another pricing point which creates consumer resistance? They then have to either cut their margin or face consumer resistance to purchasing the product. 
Four months is a very short time for small-business people without the resources of large companies and large organisations to try to get their heads round how they will actually manage the transition. They have not been consulted by this Government. I fail to see anywhere any measure with which this Government will assist them with that transition and that cost will come back to hit consumers to hit the families who are already struggling. Suddenly their tax cut will be seen for the illusion it really is. Again the  
Dominion Post 
 headline showed that very well. Kia ora.