Cunliffe David: Taxation (Budget Tax Measures) Bill — In Committee Third Reading 
Cunliffe David: Taxation (Budget Tax Measures) Bill — In Committee Third Reading 
[Volume:654;Page:4032] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 The third reading debate is traditionally an opportunity to take stock of where the debate has come to and we should use it to see the measures contained in the Taxation (Budget Tax Measures) Bill in the context of the Budget in which they were brought down. I am reminded of the taxi driver test which is to ask what ordinary New Zealanders talk about when sitting in a cab. There are two clear messages around these tax cuts. The first reflects the previous speaker Peter Dunne: there is pretty much unanimous agreement in the community and in this House that these tax cuts should be repealed and that they were never good economic sense or good equity sense. Everybody agrees that to proceed with them now would be fiscally irresponsible. The House is divided on what the taxi drivers know and what their fares are telling them: that these tax cuts were always unaffordable and that therefore their repeal makes transparent what was always the case which is that this was one of the great electoral cons of New Zealand’s political history. The Government got elected on an untruth which was that New Zealanders could have everything they valued from the previous era—KiwiSaver smaller class sizes good primary health care whanau development and a future with high-tech new skills—and 3 years of tax cuts in 2009 2010 and 2011. 
John Key knew the tax cuts could not happen. That is the point from this side of the House. The evidence on that point has been traversed in the second reading debate and it is pretty incontrovertible. The Prime Minister used to sit on the Federal Reserve Board of New York which is a pretty august body. He would not have got there if he could not read the markets—and good on him. Someone cannot be on the Federal Reserve Board of New York and not notice that Lehman Brothers—probably Wall Street’s leading merchant bank—has hit the wall and gone bankrupt nor that John Key’s old firm Merrill Lynch had been broken up and sold for scrap to the Bank of America. That happened 2 months before our general election. That is the proof if anybody needed proof that John Key knew that those tax cuts would not and could not ever happen. 
The world economy was freezing. We had to issue overnight wholesale and retail bank guarantees. There was real uncertainty as to whether global credit would move at all. Interbank lending margins ballooned from 30 points to 230 points almost overnight. People around the world were worried about financing existing loans. That is the backdrop to this bill. We are not arguing about whether tax cuts should be cancelled because everybody knows they should be. The Labour Party and the Green Party have been absolutely consistent right throughout saying these tax cuts should never and could never have happened. What is more is that National knew that. 
The context matters here. This is our opportunity to reflect on the part these tax cuts have played in the overall Budget strategy. What strategy? As Peter Conway of the New Zealand Council of Trade Unions said this morning this is the “Road to Nowhere Budget”. I would say it is the “Swap One Great Con for Another Con Budget”. The other con is that payments to the New Zealand Superannuation Fund can be suspended for 10 years yet one can still put a prime ministerial guarantee on the payout levels and the age of entitlement. What is that guarantee worth now when the Prime Minister’s signature was on the piece of paper that has been ripped up in this debate? It is worth exactly what it seems to be worth: nothing. It is worth nothing to the baby boomers. 
I woke up this morning feeling like I had a hangover not because I had anything to drink last night but because I was starting to worry about my family. What am I going to do when I turn 65? My parliamentary superannuation is worth half what it was a year ago and that was not much anyway. But ordinary New Zealanders are far worse off than I am; I am on a good wicket. What about the people on $50000 $40000 $35000 or even $90000 who if they are 40 or 50 cannot count any more on 65 percent of the average wage when they are 65? Do members know why they cannot? Because as of yesterday there is a $30 billion hole. At the moment one retired person—a superannuitant—is supported by five taxpayers. By the time these guys start paying back into the scheme that will be down to three taxpayers. Has anybody calculated the cost to those three taxpayers supporting the retired person if they have to make up the difference of 10 years of no contributions? No. The Budget is a great swindle. It is a huge con. Superannuation is dead. It is dead and our old people will be shivering in cold dark flats wondering how to pay for the roast beef they will now never see. 
Members opposite may laugh. They have taken a politically expedient step because they do not want to cut into today’s spending and they do not want to put down markers for a pathway to growth. The chairman of the Finance and Expenditure Committee might be having a wee laugh but where were his bright ideas? When I read the Budget documents in the lock-up and got to the end of the Executive Summary I thought I must have missed something. Here is this bright shiny new Government. It has Graham Scott and the purchase advisers working from home on $2000 a day to come up with earth-shattering bright ideas. Where are they? Where are the bright ideas in this Budget? Let us think about it like this: let us imagine—[ 
Interruption 
] 
I raise a point of order Mr Speaker. I usually enjoy interjections but there is hubbub that is not even related to members interjecting on the speaker. I think this matter is too important to New Zealanders to have that at this time. I ask that members be quiet. 
The ASSISTANT SPEAKER (Eric Roy) 
: Members that is a fair point. The noise level was getting up and there was a lot of side talk. If people want to have discussions there is a door on either side of the Chamber and at the back for members to go out of in order for them to conduct those conversations. 
Hon DAVID CUNLIFFE 
: Let us imagine the analogy of a doctor’s surgery. Let us imagine Bill English is a doctor and he has said that the patient is critical and on life support. The New Zealand economy is in a critical condition. Let us see what the diagnosis was and the solution—the medicine—that has been proposed. One rating agency said we had a short-term debt management issue but that the fundamental issue was that we did not have enough innovation. If that was the disease what was the cure? It was cutting Fast Forward cutting the research and development tax credits and cutting tertiary education spending. Let us take the classic example of Fisher and Paykel Appliances Ltd—that iconic company that Bill English overruled John Key on when John Key wanted to bail it out. The company is very intensive on research and development. It might not have had to go cap in hand to China if the Government had not canned those research and development tax credits. That is the truth of the matter. 
This Budget is selling us short: it is not just a road to nowhere; it is a road to serfdom. Too much of our economy is owned by other people. That is why we have the second problem which is the current account deficit. The biggest part of that deficit is the outflow of invisibles—that is the rent we pay to the foreign investors who own too much of our economy. If that is the disease what is the cure? I will take 2 minutes to sum up the situation and it is a biggie. If the disease is the invisibles deficit and the savings gap the cure was KiwiSaver. KiwiSaver filled in that gap yet the Government gutted it by half as part of this Budget. Absolute shame on the Government. This Budget is a road to nowhere. It is a road to serfdom. It is a “Road to Nowhere Budget”. 
The third thing was that the Minister of Finance said— 
Paul Quinn 
: What was the current account deficit under the last Government? 
Hon DAVID CUNLIFFE 
: That member would do better at a time like this to contribute some positive ideas to the future of this country rather than heckle. 
If the disease was a lack of growth the solution should have been to build growth with an economic development strategy not to gut the ability of our small farm to develop new industries and new markets by taking the stuffing out of the Ministry of Economic Development and New Zealand Trade and Enterprise. That was the wrong cure for the wrong disease. That means that ordinary decent hard-working New Zealanders will be on the dole queue when they do not need to be. Hundreds of thousands of baby boomers out there will be worrying about their superannuation and their retirement—quite rightly as they know they have been conned. They know that the National Party has swapped one great lie for another great lie. The lie was that we could afford tax cuts when it knew we could not. Today’s legislation nails that coffin shut and the new lie is that the few remaining taxpayers will be able to make up the difference in the Superannuation Fund.