Hodgson Pete: Taxation (Urgent Measures and Annual Rates) Bill — In Committee Third Reading 
Hodgson Pete: Taxation (Urgent Measures and Annual Rates) Bill — In Committee Third Reading 
[Volume:651;Page:260] 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I just want to respond to some of the comments made by the Minister of Finance when he said at the outset that what Labour could not get used to was the fact that the National Party had gone into the public arena with its tax policy had made it clear to the public of New Zealand and had won the election. 
Hon Gerry Brownlee 
: Title debate. 
Hon PETE HODGSON 
: Well let me just ask the Minister of Finance whether when he went into the public arena to take part in an election campaign he was in a position to spell out that those people earning under $20000 or under $44000 if they had children were going to get a tax cut decrease compared with what was already in New Zealand statute? Did he tell the public of New Zealand that? I do not think so. Do we think he told the public of New Zealand who are earning between $44000 and $50000 that the $10 a week these people who have been missing out all this time were going to get is not coming after all? Did he say that to the people in the— 
Craig Foss 
: Between $24000 and $44000. 
Hon PETE HODGSON 
: No those on $24000 to $44000 are getting it. But National members campaigned that those on $24000 to $50000 would get it and then they broke the promise. Mr English did not— 
Hon Bill English 
: That’s not right. 
Hon PETE HODGSON 
: That is not a broken promise? Well should we go back into Part 3 with the leave of the Committee of course and change the law so that we can have an amendment to make sure that the promises that the National Party made in the election will be kept? At the moment unless we go back into Part 3 that is the case. The abatement starts to occur well before $50000 and the measly $10 in Annette King’s words is much less than that. Did he say to the people of New Zealand that any dollar above 2 percent paid by the employer would have to go and visit the taxman first? Did he say that? No he did not say that before the election. In fact he did not say it before yesterday. Yesterday the announcement came in the form of Mr English saying that it should not come as a surprise to anyone. Well if it was no surprise then why did he not just say so? He did not point that out so National has gone into the election with one tax package and come into the House with another. 
But the other thing I would like to say about Mr English’s remarks is that ridiculous comment about how Dr Cullen had hoped that KiwiSaver would replace New Zealand superannuation. This is what is ridiculous about it. If the previous Government had wanted that to be the case we would not have made KiwiSaver opt-out; we would have made it compulsory. 
You see the whole point of making it an opt-out system was to give a bit of choice to the public of New Zealand but also to protect New Zealand superannuation from right-wing Tories in future generations. This was in addition to New Zealand superannuation which the Minister was generous enough to point out has now become a universal entitlement and is now being pre-funded thanks to the Cullen fund—there is $14 million in that fund and I tell Mr English not to go near it. 
So let us just see whether the logic of Mr English’s comments about Dr Cullen’s intentions is true. It is palpably false. A few things about the New Zealand economy are in good shape and a few things about the New Zealand economy are not in good shape. Generally speaking we can say that our net or gross debt to GDP levels are in good shape and have been in good shape for a few years. We can say that we have a high— 
Craig Foss 
: Is 45 percent prudent? That is what Helen Clark said in the 1990s. 
Hon PETE HODGSON 
: I do not know the member’s name and I do not know where he comes from but he would be very hard-pressed to back that assertion up with any record in  
Hansard 
. He should go and look; he will not find it. The member is just making it up. 
But let us take a look at some of the good things about the New Zealand economy. We would probably agree that we have a relatively good credit rating internationally—in fact we have a very good credit rating internationally. I think we could agree that the business regulatory environment is in good shape. The World Bank keeps telling us that and other surveys keep telling us that we are near the top for setting up or pulling down a business and near the top for regulatory regimes for businesses. We have low or very low levels of corruption and we are all pleased and proud about that. We have low unemployment though we know that that will go up in due course. But we know that some things about our economy are not good. We are a low-wage economy even though in 9 years the Labour Government managed to lift the minimum wage from $7 an hour for an adult to $12 an hour for an adult. In the 9 years prior to that it had been lifted by somewhat less than $1 an hour. 
Hon David Cunliffe 
: In 9 years? 
Hon PETE HODGSON 
: In 9 years—less than a dollar an hour; $5 an hour over the 9 years of our Government. But we are still a low-wage economy. We are an economy that does not save and we are an economy that does not do research and development. And we are passing legislation today that increases taxation on the low paid that cuts research and development and that causes dissaving. What is sensible about that? What is reasonable about that? 
What is more this change is structural. This is not a short-term stimulus. The Greens suggested that we might retrofit a few more houses or build a few more State houses—that would be a short-term stimulus. Or we could do what they did in Australia and say married superannuitants would get $2100 and a single superannuitant would get $1100—or whatever the figures are. It is a short-term stimulus. People on the equivalent of Working for Families in Australia would get $1000 a child or whatever it was—I am sorry I do not recall the details. That is what a short-term stimulus is like. This is not a short-term stimulus; it is medium-term wealth redistribution. It is a structural fiscal change that will cause deficits. 
Hon Dr Michael Cullen 
: Social engineering. 
Hon PETE HODGSON 
: It is social engineering at its worst. I cannot believe that National would use the offices of this House to ensure that its own social engineering predilections would come to pass. But that is what it is. 
Hon Annette King 
: It is putting the rich back on the dummy. 
Hon PETE HODGSON 
: Yes it is putting the rich back on the dummy. That is exactly what it is—a wealth redistribution in the medium term. The whole idea of fiscal restraint went out the door when the Speech from the Throne was read on Tuesday this week and we heard that there would be fiscal deficits foreseeably. That is not acceptable. That is not prudent. That is something resembling shadows of Muldoon. 
Hon Gerry Brownlee 
: Ha ha! No it is a legacy of Labour actually! 
Hon PETE HODGSON 
: It is not a joke. 
This country has come into a fiscally positive position in recent years under successive Governments. It has certainly stayed there for 9 years of the Labour Government and here within days we are moving into fiscal deficit. A fiscal deficit for a short period would be a good thing. You see that is what a short-term stimulus would deliver; it would help to pull us through. But no the Government has not done that; it has eschewed the idea of a short-term stimulus and instead gone for a medium-term structural change which is the redistribution of wealth. That is Tory behaviour at its worst. It is bad for our economy it is bad for the rich-poor gap it is bad for innovation it is bad for saving it is bad for exports it is bad for high wages and it is bad for our competition with Australia. I cannot think of a thing that is good about it and the shame of it is that we had this opportunity and we blew it. That is the shame of it. We had the opportunity to do something that was going to be clever and nothing clever came before this House. That is a shocking shocking shame and I am very very sad that we will end the Committee stage of this legislation in due course which shifts us in the wrong direction at the wrong time for all of the wrong reasons.