English Bill: Taxation (Annual Rates of Income Tax 2007-08) Bill Taxation (Business Taxation and Remedial Matters) Bill Taxation (KiwiSaver) Bill — Third Readings 
English Bill: Taxation (Annual Rates of Income Tax 2007-08) Bill Taxation (Business Taxation and Remedial Matters) Bill Taxation (KiwiSaver) Bill — Third Readings 
[Volume:644;Page:13774] 
Hon BILL ENGLISH (Deputy Leader—National) 
: 
 Well Mr Peters might want to explain just where he got the $158000 from. 
Rt Hon Winston Peters 
: I raise a point of order Mr Speaker. I did not get it from abroad as the member’s party did. 
Mr DEPUTY SPEAKER 
: Enough points of order have been raised this afternoon. Members will settle down please particularly Mr Peters. 
Hon BILL ENGLISH 
: What we do know about New Zealand First’s repayment is that those members did not get it from the taxpayer which is where Dr Cullen got the money he used to break the cap on electoral expenses in the 2005 election in a manner that was unprecedented. That is directly relevant to this legislation which sets our tax rates because that particular incident helps explain some of Dr Cullen’s ambivalence about tax policy and where it is headed. I will just pick up on some of the statements Dr Cullen made in his speech to the House. He is falling back on the mechanism that Labour uses when it is in electoral trouble—that is the making of loud and vigorous statements of principle. 
Dr Cullen made a couple of statements that I think bear some scrutiny. In relation to the first one would think that Labour had invented the idea of compensating families for the cost of raising children. Well it did not. Working for Families is simply an extension of the child tax credits that were brought in by National in 1996 and 1997. Those child tax credits which were much criticised by Labour at the time were simply an extension of the rationalisation of family assistance through family support that was carried out by the Labour Government in 1987 under Roger Douglas when he brought in the family support system. So for Dr Cullen to claim that only Labour has ever recognised the cost of raising children and that it is some kind of radical new statement of equity is rubbish. It is just rubbish. He updated a model brought in 10 years ago under National a tax package that cost I think about $3 billion which was the largest personal income and family support tax package the country has ever seen even including those in the 10 years since then—even since then. 
The point my colleague Dr the Hon Lockwood Smith was making was simply that taxing people at 39c in the dollar when they earn under $40000 and then recycling all of that money back to them as child tax credits is a system that bears some scrutiny because we may be able to simplify it. We have had quite a lot of discussion about how that could happen but Dr Cullen is going far too far—in the manner he has become accustomed to—by saying that Dr the Hon Lockwood Smith is opposed to Working for Families and tax credits for families. Of course the system can be simplified. 
The other statement Dr Cullen made in respect of equity for taxpayers leaves me absolutely puzzled. You see as Dr the Hon Lockwood Smith pointed out tax policy has become a hotchpotch of ad hoc arrangements. One of the reasons is that Dr Cullen is now implementing policies he has opposed for almost all of the time he has been the finance spokesman for Labour going back I think to 1994 or 1995. So he has had to change his mind under political pressure— 
Hon Paul Swain 
: What an outrage. 
Hon BILL ENGLISH 
: Well that is not an outrage but there is clearly no principle in what he is doing. I will just use the examples that have come through the debate. The way the Government will handle the tax on redundancies will effectively reduce the tax rate on redundancy payments compared with the tax rate people are due to pay on their income. So someone on the tax rate of 39c in the dollar which cuts in at well under the income levels that anyone would consider wealthy will be paying 39c in the dollar on their income tax and they will pay 33c on their redundancy payment. People who earn $400000 can use tax and company structures that mean effectively they pay the same tax rate as a person who earns $40000. They can pay 33c in the dollar. Under Labour people who earn less than the average wage—who earn $39000—pay tax at the rate of 33c in the dollar. Again the tax regime on savings now provides through the portfolio investment entity regime the opportunity for people who pay 39c in the dollar on their personal income to pay 30c in the dollar on the income they earn on savings. 
What is actually happening is that Dr Cullen is gradually flattening the tax rates on everything except personal income. Why is he doing that? Well one can only assume that it is some kind of obsession as expressed the other day when he referred to the leader of the National Party not just as a “scumbag” but also as a “rich”—and then a four-letter word that I think is probably unparliamentary. 
Rodney Hide 
: Five letters. 
Hon BILL ENGLISH 
: It was a five-letter word that we cannot repeat. Dr Cullen and Labour have this fixed view that anyone who earns $60000 is rich and therefore that they should be punished. So he has reduced the tax on companies reduced the tax on savings and today he has reduced the tax on redundancy payments. He has done everything except reduce the tax that people pay on their personal incomes. What is it with Dr Cullen that although he claims to be the guardian of equity the first $2 billion worth of tax cuts he has made have gone to companies? How does he explain that to the Council of Trade Unions conference—to the person on $39000 who has had no tax breaks for 8 years under Labour but who knows that $2 billion worth of taxes a year have been reduced for companies. What did Dr Cullen used to say about company tax cuts? He used to say that they were mindlessly stupid. He used to say that the only beneficiaries of company tax cuts were overseas investors who owned businesses in New Zealand. 
Hon Darren Hughes 
: Disproportionately that’s true. Disproportionately that’s right. 
Hon BILL ENGLISH 
: Well I ask whether that is right. Why is it that Labour all fired up about equity and fairness has given the first $2 billion worth of tax cuts to the overseas owners of New Zealand businesses? That is apparently what Labour has done according to its own logic. Of course there is a logic to what Labour has done which is that the lower company tax rate means that companies will retain their profits and reinvest them. There is some logic to that but what has happened to the equity argument? How will Labour MPs explain to middle-income New Zealanders on the factory floor why those people have not had a single tax break in 8 years? Labour members cannot explain it. They cannot explain it and that is why they have lost the argument. 
Hon Darren Hughes 
: Oh no. 
Hon BILL ENGLISH 
: Well they have lost the argument. That is why Helen Clark suddenly announced her new-found understanding of fiscal surpluses and said that they are big enough for tax cuts. The reality is that middle New Zealand should have had a dividend from economic growth over the last 8 years. People are looking increasingly to Australia where workers have had a dividend from economic growth. New Zealand workers can feel doubly aggrieved that the dividend from economic growth has gone to people who can afford to save to people who run companies and to Kiwis who live in Australia. So Kiwis have had tax breaks but they have had to go to Australia to get them. 
Dr Cullen cannot have it both ways. One argument he makes is that National is a bunch of mad tax-cutters who cannot be trusted. Today he made the opposite argument: that people cannot trust National to cut taxes because it never has. He is actually wrong about that. But he cannot have it both ways. 
Labour members will have to make up their own minds about tax cuts. They need to own their record and their record is that they have given tax breaks to those who are better off to people who own companies and to those who can afford to save but Labour’s own supporters have gone wanting for 8 years for a single dime for a single cent. Dr Cullen promised them in 2005 the “chewing gum tax cuts”—as the leader of the ACT party so grandly called them. Then he took those cuts away. So the only thing Labour members promised workers it took away. That is why next year workers will not trust them. Labour members had the chance with the passage of this bill this year to give some tax reductions to low and middle income New Zealanders yet for the eighth year in a row they have refused to do it. But magically in election year the workers out there who have had to pay more and more tax are meant to believe that now Labour members are giving tax cuts out of the goodness of their hearts. What a load of rubbish! Dr Cullen has spent 8 years ruining his credibility on tax; it will not come right next year.