Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
[Volume:672;Page:18939] 
Thursday 19 May 2011 
( 
continued on Friday 20 May 2011 
) 
Taxation (Annual Rates and Budget Measures) Bill 
In Committee 
Debate resumed. 
Part 1 Annual rates of income tax ( 
continued 
)  
MICHAEL WOODHOUSE (National) 
: 
 I thought it was very important to come back and complete my call given the confused look on the face of Labour’s spokesman on revenue when I tried to explain the answer to the question that Mr Cunliffe posed in his last call in respect of why top tax rates are sacrosanct. Well I would not say that they are sacrosanct but they are certainly at the appropriate place. He simply could not believe that the total tax paid by a family earning $90000 a year with two children under the age of 13 was 676 percent more than the same family earning $60000. The journey from $60000 to $90000 under the present regime is steep. The effective marginal tax rates are somewhere in the region of 56 to 58 percent depending on the earning trajectory. But it is challenging and it is one of the reasons why many people faced with that hurdle choose to go somewhere else like Australia for low effective marginal tax rates. 
We heard yesterday an absolute admission that Mr Cunliffe’s party will campaign this year on increasing the top tax rate or creating a new top tax tier. Labour members denied that when I challenged them on it yesterday. It means that the top tax rate of $70000 will probably stay at $70000. Those really big income earners in that earnings bracket like senior nurses and policemen—you know the real uber-rich that Labour is calling the rich pricks—will suffer the extra tax that that party would put in place were it to attain the Treasury benches. 
I am very grateful to Deloitte for its Budget 2011 perspective report which was released yesterday afternoon. It firmly confirms that last year’s tax switch was indeed fiscally neutral according to the tax bands. I paraphrase from page 18 of that report. In 2008-09 earners of over $70000 a year contributed 46 percent of the income tax base. This year after the tax switch which Labour members bang on about those earners of over $70000 will according to Deloitte—on reliable information that is better than the information Mr Nash got I have to say—contribute 51 percent of the income tax base. So rather than tax cuts for the rich that group is contributing another 5 percent to the total tax base. 
About 12 or 13 percent of the earning population are paying more than 51 percent of the income tax in this country and Labour wants to punish that group further. It is punitive. It adds to the confused fiscal and monetary policy that that party is coming out with: raising tax rates loosening monetary policy so that interest rates go up and increasing spending which will plunge our children into more debt by about $45 billion. At some point the rot has to stop. This legislation is really sensible and sound. If we put those top tax rates back of course the sorts of things that the Minister in the chair the Minister of Revenue talked about yesterday will certainly come back. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 Clause 3 of the Taxation (Annual Rates and Budget Measures) Bill is a piece of law that says that tax rates are not going to change. This side of the Chamber asks why the hell not. When the global economic crisis struck we all became Keynesians around the world and we all did two things: we increased expenditure and we reduced taxes. This country increased expenditure and reduced taxes. The April 2009 tax cuts all went to rich people—that is a matter of fact. Now it is time to wind back from that Keynesian impulse and start to get our deficit of $17 billion under control. 
There are two ways of doing it: one is to reduce expenditure and one is to increase taxes. We did both the first time round but we are doing only one the second time round. We want to know why when tax cuts came they went to rich people but when costs are to be increased they are borne by low and middle income earners. That is what we want to know. It is the essence of this Budget and of the past 2 years. 
When David Cunliffe spoke he laid out the costs of the Labour tax cuts in October 2008 the tax cuts in April 2009 and the tax switch of last year. He laid it out and added up the millions. He told us where that money went and how much was lost to the Government accounts. He made it clear that the amount of tax that had been cut over the past 2½ years under successive Governments had reached the point where it ought to be partially reversed. But we are not doing that in clause 3—we are not doing it. We are leaving tax rates exactly where they were. The net result is that the rich have done better over the past 2 or 3 years and the low and middle income earners will do worse. 
Take me: I am on $130-something-thousand. [ 
Interruption 
] That seems to have caused a whole lot of interjection from a bunch of people on the other side of the Chamber all of whom are also on $130-something-thousand. My story is the same as theirs. Let us hear what that is. Roughly I am $100 or so a week better off as a result of the changes that this Government has made over the past 2 years. I am roughly $100 or so a week better off or a bit over. I have not been hurt by this Budget one iota. I have been asked to give back nothing. 
David Bennett 
: Put it in your KiwiSaver. 
Katrina Shanks 
: Give it to charity. 
Hon PETE HODGSON 
: People across the way are telling me to save it or give it to charity. They think they are being helpful. I am making a point: I am one of those well-off people who have had a significant increase in income under this Government and have not suffered one little bit from this Budget. That seems to have evoked quite a lot of emotional—almost visceral—reaction from my colleagues opposite. I simply say it as a matter of fact: I am and people like me are better off; people on half the income that I am on are worse off. That is not fair. It is not fair and it is to be found in the inaction of clause 3. 
Some interesting things have happened in the course of this debate. A couple of things have come from members on the other side of the Chamber that I think are revealing. One is that they all have notes that say something like this: 50 percent of tax is paid by 15 percent of the people or whatever it is. Those members have a research note and they have been parroting it. That means that the people on the other side of the Chamber think that the tax system as it is now is too progressive. That is what it means. Otherwise they would not bother to start parroting that stuff. 
They parrot something else. They say that they must take care of the wealth creators—they must take care of the wealth creators. That is an awful ugly right-wing argument. It basically says that low and middle income earners cannot succeed. That is what it means. It says that low and middle income earners cannot succeed; only the rich people can create more wealth so we must tax them in an ever-lighter way in order for that to happen. 
Then we get on to the silliness about dairy farmers and how much tax they pay. Let me just say that on this side of the Chamber we understand very well that taxes go up and down in business year by year. We know very well that the taxes paid by those farmers of only $1500 a year or whatever it was in that year were low because the milksolids price for the previous year was not very flash and that tends to carry over into the profits for the following year and the taxes that are paid. We know that the tax paid by dairy farmers the year before would have been higher and the year after will be higher. We know that. 
But when we look at the average tax paid by dairy farmers over years—I have been to DairyNZ to find out—we see that it is a little over $20000. If one has a business that is paying $20000 or $30000 in taxation but is using something like $2 million or $3 million worth of debt—and these days dairy farms in New Zealand are—then that is a very bad use of capital. It is a bad use of capital. Basically people are capitalising the gains and socialising the losses. We know that; it is known on both sides of the Chamber. 
That has been a pretty interesting debate but it got more interesting. Mr Dunne the Minister of Revenue—I do not want to upset him in any way—made a contribution stating that it was to do with classification. Stuart Nash received the answer that some dairy farmers had declared themselves as dairy farmers and were considered in a group and other people had not. Those others had called themselves Agribusiness or whatever so they were classified as “other”. Mr Dunne went on to make the point that the figure that the dairy farmers paid whatever it is—$2.5 million or $25 million— 
Hon Peter Dunne 
: $26 million. 
Hon PETE HODGSON 
: —$26 million—was too low. I agree with Mr Dunne on that. But the figure of $1500 per dairy farm did not change. That does not change. There is no way in the world that there will be any correlation where people who describe themselves as dairy farmers pay low tax as opposed to other dairy farmers who describe themselves as being in Agribusiness and pay high tax. That does not work. Do not run that argument around here; it will not work I say to Mr Dunne. The point is that there is an unfair incidence of burden in this Budget and it is not a good look. 
I will make another couple of points. We have one of the lowest top tax rates in the world—one of the lowest top tax rates in the world—but we never hear that from the other side. We have a whole thesis in this country that says that if there is a gap between a company rate of 28 percent and a trust rate of 33 percent then that 5 percent gap is tolerable but if there is a gap between a company rate of 33 percent and income tax rate of 39 percent then that is intolerable: 5 percent is OK; 6 percent is intolerable. I tell those members to look at other nations. They will see that their trust rates company rates and top personal tax rates do not align. Then these members should ask themselves why the growth of loss attributing qualifying companies is exploding in this country and why the growth of family trusts is exploding in this country. Those members should ask themselves whether it is because our tax law needs fixing or whether it is something to do with the accounting profession’s culture in this country. But they cannot say that we have to reduce taxation in order to avoid avoidance. That just will not work. It is just not logical by any international comparison. It will be true at the margins somewhere somehow—I absolutely acknowledge that—but I believe that it has been grossly overstated. 
We heard from the member who has just resumed his seat Michael Woodhouse an argument on the effective marginal tax rate. He was wrong on every count. 
CRAIG FOSS (National—Tukituki) 
: 
 There is an old adage in politics: “Explaining is losing”. I admire the more senior departing member Pete Hodgson for trying to go to the rescue of his colleague Mr Nash who found himself on the front page of the paper the other day discussing things related to taxation and promoting perhaps the Labour turnover tax or whatever it may be called. Other members have tried to come to Mr Nash’s rescue. Even his party leader tried to come to his rescue. The sad truth of it in terms of Mr Nash’s career is that he is the Labour Party spokesperson on revenue and because that is his portfolio I presume that one day he would like to sit where the Hon Peter Dunne sits as the Minister of Revenue. But Mr Nash is now for ever tainted in the sector that he wants to become the Minister in charge of if you will: the financial sector or at least part of it. Every time that he gets up to speak we will be asking him and the public will be asking him to tell us about the turnover tax he promoted on the front page of the  
Dominion Post 
. 
I am sure—and we know that explaining is losing—that in order for that kind of story to get out it would have gone from Mr Nash to Mr Cunliffe and then it would have gone to the inner sanctum of Mr Goff so it would have had the total approval of the Labour Party and its hierarchy. There is a fair bit of back-pedalling and re-explaining going on. That does not matter. Mr Nash got on to the front page but I think it was for all the wrong reasons. 
What is the obsession that Labour has about increasing taxes? What is the obsession about that? We can recall way back to when Labour brought in GST. It went from zero to 10 percent and there was no compensation although Labour had increased taxes. When GST went from 10 percent to 12.5 percent Labour increased taxes but there was no compensation. The only time that Labour did provide compensation was when Dr Cullen was looking at the polls in 2008 and decided even he could not trust himself so he legislated to provide for the first tax cuts in about 9 years under the Labour Government. I cannot understand that obsession. 
The previous speaker talked about fairness. What could be fairer? About 72 percent of New Zealand taxpayers face a highest marginal tax rate of no more than 17.5 percent. How could that be made fairer? That is what is confirmed in Part 1 of the Taxation (Annual Rates and Budget Measures) Bill. How could that rate be made fairer? Although GST is not income tax GST has been confirmed as staying at the current rate of 15 percent. What could be fairer than providing that those who spend more pay more tax? The gentleman talked about progressive tax. Well there we go. If someone is on a higher income that person spends more and pays more GST. I do not understand the Labour members’ obsession. They try to use the word “fairness” yet they really get it wrong. 
Interestingly to go back to the story on the front page of the  
Dominion Post 
 the allegation was that farmers do not pay or the rural sector does not pay their fair share of tax. That is an interesting argument and I will address it as I am sure others will. 
Yesterday there was a protest outside Parliament. I did not know about it until I read about it somewhere. Just like Mr Cunliffe’s polling on the Budget which was conducted 2 days before the Budget a protest against the Budget was apparently held 2 hours before the Budget was delivered. But most interestingly I believe that the protest was organised by the Unite union. If we are talking about fairness in terms of tax and about an organisation that supports the Labour Party and that owes the Inland Revenue Department $200000 to $300000 of PAYE from its employees then I say that is not fair. That was in the newspaper. Next time I will bring to the Chamber the article from Stuff; it was from about a year ago. That is not fair. If members on the other side of the Chamber want to talk about fairness or otherwise I suggest that they think a bit more carefully. 
Finally these income tax rates also have the effect of confirming lower interest rates for longer for New Zealand. The ability to meet the cost of living by lifting after-tax incomes which is confirmed by Part 1 is enhanced not only by this bill but by the actions of this Government over the past two Budgets and the Budget we are talking about today. Fairness is enhanced the ability to own a home is enhanced and the ability to fund a mortgage is enhanced by record low short-term interest rates. Floating mortgage rates are at a record low and in some instances are almost half what New Zealanders had to suffer under the previous regime when those rates hit 10 percent and higher. When Labour members talk about fairness let us hear them talk about the fairness of the double-digit mortgage rates that we had under the Labour Government versus the single-figure 5 and 6 percent mortgage rates that we have under this Government as confirmed by the tax rates in Part 1. 
STUART NASH (Labour) 
: 
 It is very kind of Craig Foss to be concerned about my career. He said that he is concerned about my career but I say to Mr Foss that he should perhaps worry about his own career. With that sort of attitude Mr Foss’s chances of holding the Tukituki electorate have just diminished let alone his chances of sitting in the same chair that the Minister of Revenue is sitting in at the moment. Mr Foss unfortunately may never realise his ambition of being a Cabinet Minister because with this sort of Budget with that sort of speech and with that sort of attitude I do not think that this Government has much longer to go. 
Mr Foss asked what Labour’s obsession was about raising taxes. I would turn that round: what is that Government’s obsession with cutting taxes for those who do not really need it? We are talking about Part 1 “Annual rates of income tax for 2011-12 tax year” and these are the very same tax rates for someone on a million dollars. The Inland Revenue Department told me that 650 New Zealanders had a declarable income of a million dollars. If a taxpayer earned a million dollars then that person last year received a tax cut of a thousand dollars a week—a thousand dollars a week—extra in the hand. A person on the median wage in Napier received about $5 a week extra. 
Mr Foss and other Government members have trumpeted the fact that 72 percent of New Zealanders are on one of our two lowest tax rates. But I have to ask whether it is really a fact to trumpet that we are such a low-wage economy that the vast majority of our taxpayers are on a low tax rate. I actually do not think that it is anything to be proud of at all. In fact I think that the fact that so many of our workers are on such a low rate of tax is quite shameful. Goodness me; I would have thought the aim of any Government was to drive wages up because through increased productivity increased wages and increased growth the economy would grow and people would be better off. But no; it is apparently a point of competitive advantage when we have a low-wage economy. 
Pete Hodgson nailed a further point and it was confirmed by John Hayes. Pete Hodgson said that he is better off under these tax cuts—under the rates we are debating in clause 3. But do members know what John Hayes said? He told Mr Hodgson to put the money in KiwiSaver or save it. Do members know the problem we have? The problem we have at the moment is that the tax cuts that were implemented last year the rates we are debating in clause 3 at the moment have had absolutely no positive effect on this economy. This is “Keynesian Economics 101”. It says that if tax cuts are given to the very wealthy in times of recession the very wealthy will save the money from those cuts; they will not spend it. But if tax cuts are given to those who really need it those who are really struggling then those people will spend the money from those cuts and that will help to drive economic growth in this country which is what we need at the moment. That is what we need—economic growth. We need incomes to rise and we need people to be spending money in this economy which is one of the problems we have with the cuts to KiwiSaver and the cuts to Working for Families. In Napier and in Hawke’s Bay Working for Families pumps about $120 million into the local economy. If we take that money out of the local economy it will have a huge impact on the people of Napier and a huge impact on the people of Hawke’s Bay. 
I would like Mr Dunne to take a call and I would like Mr Dunne to chastise the first speaker of the day Michael Woodhouse because Mr Woodhouse said he would trust the figures from Deloitte much more than he would trust my figures. Do members know where my figures came from? They came from the Inland Revenue Department. They came from that Minister’s department. I tell members I have much more faith in the figures provided by the Inland Revenue Department than I do in the figures provided by Deloitte. In the Finance and Expenditure Committee we hear a lot from the Inland Revenue Department because a lot of tax laws go through that committee and my experience of the Inland Revenue Department is that it does a very good job. The figures that the Inland Revenue Department provides are first class. The advice that the Inland Revenue Department gives is normally very very robust and very very sound. In fact I think the Minister presides over what I would say is one of the better ministries—one of the best ministries—of this Government. I congratulate the Inland Revenue Department and that is why I find it quite insulting that Michael Woodhouse would say that the figures from Deloitte are much better than the figures from the Inland Revenue Department. 
When I look at the figures from the Inland Revenue Department with regard to this Budget I have some grave concerns about the fundamental premise of the figures provided by Mr Key and Mr English yesterday. Why? There was a $4 billion discrepancy between the forecast from the Inland Revenue Department and the forecast from Treasury on which this Budget is based—a $4 billion discrepancy. As I said my dealings with the Inland Revenue Department through the Finance and Expenditure Committee have been very very good. I think it is a very professional organisation. In fact I was saying to the Minister the other day that of all the written questions I send to all ministries I think those from the Inland Revenue Department come back in the quickest time and provide the best data. So I ask why the Government would trust Treasury which has constantly got it wrong over the figures from the Inland Revenue Department. There is a grave concern when advice from the Government’s tax collectors is ignored. There is a grave concern there; of that there is no doubt. 
Mr Woodhouse and all the members on that side talk about Labour’s obsession with raising tax rates. They talk about our obsession with taxing the very wealthy. Well I say that our system is called a progressive tax system. How a progressive tax system works is that those who can pay the most tend to carry a little bit more of the burden because they can. It is exactly the same sort of system that citizens have in Australia and exactly the same sort of system they have in the United Kingdom and in the United States. In fact every single OECD and developed country in the world has a progressive tax system. As Pete Hodgson said our top tax rate is one of the lowest in the OECD; it is one of the lowest in the world. In fact Australia’s top tax rate is 45 percent and ours is 33 percent. The Australians have not given $1000 a week to someone who earns a million dollars; I think that is actually quite reprehensible. When John Key was asked about it he gave that classic very wealthy man’s response: “Well I earn so much so why should I have to pay so much?”. We asked him to pay only 39 percent; that is all he was paying. He was still getting 61 percent of everything he earned in his back pocket. Goodness me! Was 39 percent too much to ask? 
David Bennett 
: Is that what you want—61 percent? Can we quote you on it? 
STUART NASH 
: It is called a progressive tax system I tell Mr Bennett and it is the foundation of our tax system. 
But I must admit that when I read this Budget I wondered whether the Government was going to put up the business tax rate. The Fiscal Strategy Report on page 55 of the Budget documents states that the tax policy will be “consistent with a broad-base low-rate tax system that raises revenue in the most efficient manner to support the medium-term goal of reducing and aligning personal trust and company tax rates at a maximum rate of 30%”. Is the Government planning on raising the tax rate? One thing that Mr Cunliffe said was that Labour would not raise the company tax rate. Yet the Government’s Budget document says that it is planning to raise the company tax rate to 30 percent. I ask Mr Dunne whether there will be an announcement on that. Could the Minister perhaps stand up and say whether there is a plan to raise the company tax rate to 30 percent as it says in the Fiscal Strategy Report on page 55 of the Budget documents. If the Government is going to do that then I think businesses in New Zealand deserve to know. I must admit that if we look at the commentary from business on this Budget we see that the sector has come out very strongly against this Budget. In fact business has said that this is not a Budget that will promote growth and it is not a Budget that will promote efficiency. In fact Matthew Hooton—and we could hardly call him left-wing— 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I am happy to put Mr Nash out of his excitement over the status of the company tax rate. Legislated for in Part 1 of this Taxation (Annual Rates and Budget Measures) Bill is a company tax rate of 28c in the dollar. The Government has no intention of changing that. It is not in our forecast and it is not on our horizon. The reference the member makes if I recall it correctly actually relates to provisions in confidence and supply agreements written after the 2008 election. It is a commitment really about the alignment of rates. We have achieved two-thirds of that in terms of the trust and personal rates being aligned. The outlier is the company rate. Any alignment will be downwards not upwards. I assure the member of that point. 
Stuart Nash 
: I’m just quoting from the Budget documents. 
Hon PETER DUNNE 
: I am simply responding. The member asked a question; I am giving him a response that is accurate in the circumstances. 
I have listened to some of the discussion this morning about the ongoing argument about high tax versus low tax. I will say to the Committee that frankly our international competitiveness is important. It is a reality that a small isolated trading nation has to deal with every day of the week every week of the year. Therefore our tax rates however they are structured cannot afford to be too far out of line with those of major competitors. Having said that I am not particularly interested in international league tables because really we have to do what we see is best for our own interests in this country. 
If we turn it on its head the reality is that if we have a high tax-rate system such as the one that Mr Nash seemed to be advocating going back to a top tax rate of 39c in the dollar at a time when there is already an argument that people feel that the grass is greener on the other side of the Tasman all we will do is fuel that fire. Then the argument about who is the last person to turn out the light becomes that much stronger. 
I will reiterate the point that Mr Foss made because it is the key here. The Opposition argument about the unfair incidence of tax might have a sliver of merit were it not for the reality that as a result of the changes we made last year in reducing particularly the bottom two rates we now have a situation where nearly three-quarters of all taxpayers face a marginal tax rate of no more than 17.5c in the dollar. That is something we should be lauding extremely loudly because we are well placed in terms of any comparable society—notwithstanding my earlier comments—in terms of the low incidence of personal tax on the bulk of our population. 
Opposition members seem to be fixated but not on that. I would have thought given their concern they would be out there championing that tax rate because it is for the constituency they claim to represent. What they seem to be fixated on is not the 17.5c but the fact that a few people—and Mr Nash made the point that they are a few people—have a tax rate of just 33c in the dollar on their income. The reality is that if Opposition members actually looked at where New Zealand’s tax revenue comes from they would see that it falls unevenly on those people at the top. We do not have the wealthy middle class that the United States has for instance. We have a very long slow progression to a comparatively small group of people at the top of the income scale. 
The Opposition argument—and I am not sure whether they are talking about tax cuts for people down the scale—certainly seems to be for some sort of ideological reason and no other as far as I can see that the people at the top should pay more and should always be charged more. What we are saying here is that the tax rates in this bill are in balance with the country’s requirements. It is important—and it is great—that we have a marginal rate of 17.5c for three-quarters of our population. The fact that we have not gone into—I think Mr Woodhouse used the comment—uber-taxes for those at the top end of the scale demonstrates a fundamental sense of equity. If we go down the path the Opposition members are talking about we would be saying that if people earn to a certain point we will keep a relatively low tax structure in place but if people earn beyond that we will penalise them. That approach is not about celebrating achievement; it is about penalising success. That is the fundamental divide. Part 1 puts in place a tax regime that is fair and equitable and will last. 
DAVID SHEARER (Labour—Mt Albert) 
: 
 It is a bit rich for Peter Dunne to stand up and say what he said. The Taxation (Annual Rates and Budget Measures) Bill is not what he talked about. It is simply about ideology. It is about the ideology of bringing down tax rates and rewarding those people at the top of the tax pile. 
The reason we are here today talking about this bill is that we will be stripping out provisions on Working for Families and KiwiSaver and making changes that will affect the middle-income people we do not have enough of according to the Minister. We are doing that because we have a $16.7 billion deficit. This Government came in on a $5 billion surplus and we now have a $16.7 billion deficit—in 3 years. That is extraordinary. How can a Government fail so comprehensively in 3 years? The only comparable thing I can think of is when the man who is now the Minister of Finance took over the National Party when it was polling at 30 percent and drove it down to 21 percent in 3 years between 1999 and 2002. That is the only thing I can think of that is comparable to such a failure as taking a $5 billion surplus and turning it into a $16.7 billion deficit. 
Because the Government has restructured the tax rates so inequitably we are now sitting here debating how we will strip out the KiwiSaver provisions undermine people’s confidence in KiwiSaver and hit those people whom Mr Key calls “richer people” on Working for Families. My God those people are not rich. They are the people who come into my electorate office. 
The CHAIRPERSON (Lindsay Tisch) 
: Changes to KiwiSaver and Working for Families are in Part 2. Although you can mention them now we are actually on Part 1. If you tie your comments back to Part 1 that is fine but do not spend the rest of your time on KiwiSaver otherwise I will have to stand up and pull you up. 
DAVID SHEARER 
: The point is that a tax bill like this one is really looking to try to pull money back to fund a deficit that has blown out to $16.7 billion which is seven times higher than the projected deficit in 2008. 
Stuart Nash mentioned the projections. When we look at the projections from Treasury we see they have been consistently above the reality. The Inland Revenue Department probably has it much much closer to the truth. Here is what Standard and Poor’s said: “The budget foresees an operating deficit … of NZ$16.7 billion (8.4% of GDP) in fiscal 2010/11 compared to the $11.1 billion deficit (5.5% of GDP) foreshadowed in the Half Year Economic and Fiscal Update announced in December 2010.” Literally 5 months ago we were looking at an $11.1 billion deficit and now we have a $16.7 billion deficit. I do not understand how on earth Treasury can get it so wrong so consistently for so many years unless this Government is pushing Treasury to raise the forecast to make it more optimistic. 
People are starting to realise that. They are starting to realise that not only is this Budget gutting the many provisions that middle-class New Zealanders need but also it is based on a whole bunch of false promises and false projections—false promises and false projections. It means that as we struggle to curb this deficit that seems to be out of control—because those projections will not come true any more in the next 2 or 3 years than they have in the last 2 or 3—we are not funding the very things that are growing this economy. If one thing is absent from this Budget it is a plan to grow the economy. There is absolutely no plan to grow this economy. 
I looked at some of the provisions in research and development and in tertiary education. There is nothing that would give me any confidence that this Budget will try to grow our economy any more. 
PAUL QUINN (National) 
: 
 This is extraordinary: we are into the third year of this Government’s outstanding stewardship of this country and for the third year we hear the same rhetoric and the same arguments. I am intrigued as to when Labour members will work out that the arguments they have been running for the last 2½ years have got them only 20 percent—and falling—support from the populace. They need to change their story. If they are going to succeed— 
Hon Steve Chadwick 
: Point of order. 
The CHAIRPERSON (Lindsay Tisch) 
: We are on a tax bill. 
PAUL QUINN 
: In terms of the Taxation (Annual Rates and Budget Measures) Bill Labour members keep going on about the fact that we are hurting the middle-income earners the fact that we are hurting the low-income earners and the fact that all the benefits from the tax changes we have made have gone to the rich. They base that on percentages. Well in the same way that they can regurgitate the record I want to remind them of something I said last year and that was this: if my friend Parekura Horomia loses 10 percent of his weight and I lose 10 percent of my weight— 
Hon Steve Chadwick 
: I raise a point of order Mr Chairperson. This seems to be far off Part 1 of this taxation bill. 
The CHAIRPERSON (Lindsay Tisch) 
: Yes we are moving into dangerous territory with the comments you are making. Let us keep the focus on the tax bill. It is a very important bill and we should focus our efforts on Part 1 which is about taxation rates. 
PAUL QUINN 
: Point of order. 
The CHAIRPERSON (Lindsay Tisch) 
: No I have ruled. 
PAUL QUINN 
: I will give an example to the Committee about how percentages work. If I lose 10 percent of my weight then clearly in absolute terms I lose less in absolute terms than Parekura Horomia if he loses 10 percent of his weight. That is how the tax system works when we make percentage changes versus absolute terms. If the Opposition cannot understand that then I am afraid that is just another classic example like the one we had in terms of the headline and the Opposition not understanding the difference between revenue and net income—another classic example of the Opposition not understanding how calculations work and how systems work. 
Hon Pete Hodgson 
: Why are all your heads down? 
PAUL QUINN 
: Of course we heard earlier from the grand old man who is about to go out the back door who talked about the fact that we have the lowest—the lowest—tax rates in the Western World. Well so what—so what? When we had the emissions trading scheme debate the Opposition talked about wanting to be a world leader. Those members pick and choose; they want to be world leaders but when it does not suit them they want to be “fast followers”. Well I say from this side of the Chamber in terms of tax rates big deal. If we are the world leaders then so be it. We are an innovative country and we are an innovative party. We reward success. We do not penalise success; we reward it. If that means that we are world leaders in terms of our tax rates then so be it. That will attract more people. That will attract the innovators to come to this country because they know they will be rewarded for success. 
Hon Pete Hodgson 
: And are they coming? Where are they? 
PAUL QUINN 
: They are—they are on the way. The other thing I want to talk about is it would be nice if the members sitting opposite were to tell me what the appropriate tax rate is for middle-income earners. And what is middle income? Let us hear from those members as to what middle income is. In terms of the changes—and I stray into the phrase “Working for Families” only by way of example because I am tying it to the tax rate—I want to understand from the Opposition what middle income is. When we get to Part 2 I will point out to the Opposition that the 7000 people earning more than $100000 are actually coming off Working for Families. So are we penalising the people who earn $100000? Is that middle income? What is middle income? 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I start by expressing some disappointment in the Minister in the chair Peter Dunne because he has made it his hallmark to represent the middle classes of New Zealand. That has been his rallying cry. His political rhetoric has been built around assisting middle-income New Zealanders to get ahead. But this Budget in my view is doing nothing to assist middle-income New Zealanders to get ahead. 
I think he has bought into the rhetoric that was very much in prominence back in 2008. Basically the deal from National to the New Zealand electorate was that people could have their cake and eat it as well. The New Zealand electorate could have everything that the Labour Government had provided to it. They could have Working for Families and KiwiSaver and they would be given tax cuts as well as picked up by Part 1 of the Taxation (Annual Rates and Budget Measures) Bill which enshrines the tax cuts that have been put in place by this Government. 
But here is the reality: as we see in this bill those tax cuts as enshrined by Part 1 are only part of the equation. They are being eroded—they are being eroded—by all the other measures that are included in this bill and by other Government measures we have seen in the recent past such as the cuts in early childhood education and resulting increase in fees increases in accident compensation levies and the like. 
I also note that that set of tax cuts as implemented by Part 1 was affirmed as feasible and realistic by National when in Opposition in 2008 just as the world’s financial markets were falling apart. New Zealanders were told that those tax cuts as enshrined by Part 1 were affordable even after Goldman Sachs had collapsed and the US economy was in turmoil and even after Merrill Lynch had collapsed and had to be bailed out by the taxpayers of America to the tune of $3 billion. 
Where do we end up? Part 1 has the tax rates that will apply through part of this year as set out by this legislation. What is the legislation trying to deal with? It is trying to deal with a deficit of $16.7 billion—$16.7 billion. That is what the tax revenue is attempting to address. As my colleague David Shearer pointed out when this Government came into office there was a surplus of $5 billion so that is a turn-round of more than $20 billion. We now have 16 billion tonnes of debt upon our backs and this part of the bill is attempting to have tax revenues offset some of that debt. 
I ask the Minister in the chair how secure the revenue predictions are that underlie Part 1 and the tax rates that will apply in the financial year ahead. I ask that because already we are hearing through the media today that employers are saying that the other measures in this bill in respect of KiwiSaver will have to be met by their cutting back on the tax they pay and putting increases on to their employees. We have heard Alasdair Thompson of the Northern Employers and Manufacturers Association say that the employers’ KiwiSaver components in Part 2 will be coming out of the wage increases—the wage increases—of employees. How can we set any store by the tax-projected revenues incorporated in Part 1 of this bill when employers are saying that they will not be meeting the KiwiSaver ramifications included in Part 2? Instead they will be looking to their employees to meet those costs. I ask the Minister what revenue implications that will have. What revenue implications will it have for Part 1 of this bill? 
I also point out the difference between the Inland Revenue Department’s projections and Treasury’s projections as outlined in the Budget’s Economic and Fiscal Update. The difference is in the order of $3.5 billion over the next 4 years which is nearly $1 billion a year. That is a huge component as we know in respect of Part 1 of this bill. 
CHRIS TREMAIN (National—Napier) 
: 
 Just before I start my speech on the unfair incidence of taxes an issue that the Opposition has been raising today I want to put on the parliamentary record that those of us on this side of the Chamber have been enduring about 80 or 90 decibels—[ 
Interruption 
] in fact 95 decibels—from Mr Quinn. I was thinking we would quite possibly have to bring in the Occupational Safety and Health Service before I commence my speech. 
Hon Tau Henare 
: The decibel counter! 
CHRIS TREMAIN 
: The decibel counter—yes it was indeed up there. 
We are talking about Part 1 of the Taxation (Annual Rates and Budget Measures) Bill. In Part 1 we are talking about the taxation rates that will apply for the coming year. On this side of the Chamber we have been listening to Labour members talk about the unfair incidence of tax so I thought I would stand up and take a brief call on that. I will talk about the unfair incidence of tax that occurred through the 9 years of the previous Labour Government. If we are talking about people who should not be at the highest marginal tax rates then I am thinking about nurses police teachers wharfies and welders. I am thinking about highly qualified blue-collar workers. What happened over the 9 years of the Labour Government? Many many of those people ended up paying the highest rate of marginal tax. That party on the other side of the Chamber called teachers welders wharfies and nurses “rich”. Now that shows that a party is starting to lose it—Labour called those guys “rich pricks”. Well by no way or means were those workers rich. That was an unfair incidence of tax. 
When National became the Government we changed that so that on any level of the marginal or progressive tax rate people in New Zealand are paying lower tax rates on their income and earnings. That is a fact. Let me talk members through the particular rates. Right now people earning under $14000 based on this tax bill will pay no more than 10.5c in the dollar. That is down from 12.5c—a 2 percent drop in the tax rate. People earning between $14000 and $48000 will pay no more than 17.5c in the dollar. That is down from 21c. That is a big drop for those middle-income earners. On the other side of the Chamber members are arguing that middle-income New Zealanders did not receive decent tax cuts but in fact there has been a huge a massive drop. In fact if we take the 10.5 percent on income under $14000 and the 17.5 percent on income between $14000 and $48000 the average tax rate is even lower than 17.5 percent and that is absolutely fantastic. 
On income between $48000 and $70000 people now pay only 30c in the dollar and many people—the nurses the police the doctors—in this country sit within that range. We delivered them a lower tax rate. We do not believe they are rich. They are hard-working Kiwis who do not deserve to be on the top tax rate but they were put on the top tax rate by the Labour Government—not by this Government. But people on the higher tax rates people earning over $70000 still pay the highest progressive tax rate in this county. That is down from 38c to 33c. The top 13 percent of people in this country pay 51 percent of the tax. They should pay a higher tax rate—I have no problems with that. But those people are often the entrepreneurs the people who invest their own hard-earned capital into businesses that employ other people and create jobs. On this side of the Chamber we are not all about endless rinky-dink schemes created by the Government to create jobs. We believe that it is businesses that create jobs. It is people who are prepared to put their money on the line to mortgage their houses to invest in their businesses who create jobs and actually yes if they do that and they make a profit we believe they deserve to keep a fair bit of it—in fact a lot of it. 
Many years ago when my dad was working Muldoon had set the highest marginal tax rate at—I think it was—66c in the dollar. My dad came home one day and he said: “You know CJ it ain’t worth working any more. Every time I earn a dollar I get to keep only about 30c of it.” I rest my case. 
Hon Sir ROGER DOUGLAS (ACT) 
: 
 I think it is worth asking the Minister of Revenue to advise the Committee whether he is confident that Treasury has its predictions right. More particularly if Treasury’s predictions are wrong what does that do to the Budget and what does it do in terms of New Zealand’s credit rating etc.? 
I have had my staff look at recent predictions made by Treasury and those predictions do not give me a lot of confidence. If we look at Treasury’s predictions of GDP we see they are all in the band between slightly higher than 1 percent and 4 percent. I have here a graph showing the actual GDP line. We are being told in this Budget that growth will be up near 4 percent initially and then will tail off. That is one side of the ledger and one has to feel that Treasury predictions of growth and wage growth in particular are pretty high. But if we look at Treasury predictions of core Crown expenditure from 2005 through to 2010 we see that the one consistent factor is that every year the predicted expenditure is lower than the actual. It is lower by an average of 6.8 percent which is about $4 billion. So if the predictions are wrong again this year we will have a deficit of $20 billion. Treasury is actually saying that over the next 2 or 3 years Government expenditure will not go up by the $4 billion to $5 billion that it has been going up by each year; it will go up by only 1.4 percent. 
This graph shows us the difficulty we have. It shows the amount of growth consumed by Government spending. The green line shows the increase in nominal expenditure and another line shows the increase in Government expenditure over 3-year periods. We get to a stage where the Government— 
Hon Pete Hodgson 
: It is not a zero-based graph. 
Hon Sir ROGER DOUGLAS 
: It is the actual nominal. We are talking nominal. 
Hon Pete Hodgson 
: I am saying that the graph does not start at zero. 
Hon Sir ROGER DOUGLAS 
: It starts at 1999-2000 and it is in 3-year periods. But members should look at the next 3 years. We are led to believe that nominal GDP growth will be 23 percent but guess where we have been told Government expenditure will be? At 1 to 2 percent. If someone believes that I think that person will believe almost anything. 
If I look at the numbers in the back of the book I see that for example Vote Corrections expenditure went up over the last 4 years by $350 million. We are told that in the next 4 years it will actually go down by $3 million. Maybe that is right; maybe that is wrong. But some of these estimates seem to be fairly tough. It we look at primary education in the last 4 years we see that expenditure has gone up by $630 million and student numbers have gone down by 4000. In the next 4 years student numbers will go up by 25000 but expenditure will go up by only $100 million. 
So all I am asking is how confident the Minister is that he has it right both in terms of revenue and in terms of expenditure. I am not particularly confident given that if we look at every year from 2005 through to 2010 we see that Government expenditure every year has averaged 6.8 percent more than the estimate and that GDP growth has been lower than the estimate by a considerable amount. How confident are we? If we get it wrong both on lower revenue and on higher expenditure then we have some very real difficulty. 
Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) 
: 
 Kia ora. I am happy to speak to the Taxation (Annual Rates and Budget Measures) Bill and in particular focus on Part 1 “Annual rates of income tax”. I listened very carefully to contributions from members of the Government. I came out with three very clear points. First the member Craig Foss promoted the idea that if one talks about something long enough maybe people will believe it. He made the point that 13 percent of people pay 51 percent of tax. If we take that tag line alone it explains exactly why most of the tax cuts go to top income earners. But I do not think people are convinced by Mr Foss’s argument. In fact I think they are more perplexed with that rationale because it justifies the unfairness of the current tax system and the fact that the Government is prioritising investment that does not benefit a lot of people. 
Then I listened to Mr Paul Quinn. He operates by the standard that if he talks loud enough then maybe people will hear him. But we all know that once the decibels start to rise people turn off. In fact I could not quite figure out what point he was making with regard to Part 1 of the bill. Then I listened to the member Chris Tremain. He operates by the edict that if he says it often enough then maybe even he will believe it. One of the points he made was just how much middle-income earners are benefiting under this Government’s tax cuts. 
I present a response particularly in relation to Mr Tremain’s points about income tax for middle-income earners. He highlighted these groups specifically: nurses policemen teachers wharfies and builders. He made the point that under Labour they were paying a higher marginal tax rate and under National they are not. Let me say this: those same people are parents those same people have kids those same people utilize public services and those same people are saying—we are listening to them—that they did not bet on the rate of GST increasing on paying more over the counter for their kai or on rising petrol prices. They say that when they take their kids to the doctor the after-hours costs are as much for them as they are for anyone else and they are still paying the mortgage. Some of them are paying higher rents particularly in areas like Auckland. 
Those nurses policemen teachers wharfies and builders are making the same noises in terms of concerns about where this Government has got its priorities wrong. Even though they are middle-income earners and they have a lower marginal tax rate they have to pay exorbitant costs at the other end because this Government has its priorities in the wrong place. 
The Government has ripped out the guts of the public health sector. It says it is moving resources to the front line. It says it is moving resources to the front line but backroom functions cannot be absorbed by front-line staff. Those members might not like that but they know it is true. Those middle-income families are parents they have kids they are paying the same costs as low-income families and they have the same concerns: paying more for their kai paying more for petrol and paying more for after-hours general practitioner services—paying more and getting less. Their wage is worth less under this Government than it ever was before. Why? Because they are feeling the pay at the other end. 
Tim Macindoe 
: Rubbish. 
Hon NANAIA MAHUTA 
: The member for Hamilton West may say it is rubbish but we can find middle-income earners in the Hamilton West electorate who are making very clear complaints about after-hours health care because they have to pay more. If they go to Waikato Hospital albeit to a well-developed accident and emergency service they have to wait for 8 hours so rather than wait for 8 hours they pay $69 for after-hours health care. 
I go back to Part 1 of this bill. The Government’s members are saying it long enough loud enough and often enough but they are still not convincing middle and low income earners that their tax cuts are benefiting them in the long run. The concerns we hear day after day show that prices and the cost of living are higher for middle and low income families. 
Those members are very quiet now. Their heads are down now. They know that the cost of living—[ 
Interruption 
] They know that when they talk about middle-income earners and the tax cuts that have been promoted by this Government they are not talking about the costs at the other end. I challenge members of the National Government to talk about the costs at the other end. They talk about tax cuts at the front end but not the costs accrued by those same families at the other end. Policemen nurses teachers wharfies and builders are parents. They have kids and they have mortgages. All those costs are adding up. The price and the cost of living for those same families— 
Paul Quinn 
: 20000 more elective surgeries. 
Hon NANAIA MAHUTA 
: There we go again. That member operates by the edict that if he says it loud enough maybe people will hear him. They actually turn off. 
Those people are parents. They have children and they are paying at the other end. I see the Minister in the chair the Minister for Building and Construction smiling because he knows exactly what I am talking about. Government members might be able to promote the benefits of tax cuts at the one end but they cannot justify the increased pressure of costs on families at the other end. That is what we are saying. The tax promotion that this Government is making is creating an inherent imbalance and unfairness. National is creating greater inequality between middle and low income families. 
Government members say that the top 13 percent pay 51 percent of the taxes. They are trying to justify it so that that 13 percent get most of the benefits. People can see through that. It does not matter whether members opposite talk long enough loud enough or often enough; people can see through that. They do not believe that the proposals at one end offering tax cuts are offset by the cost of living pressures at the other end. 
Paul Quinn 
: You’re still prattling on about the same things you were in the previous 2 years. 
Hon NANAIA MAHUTA 
: I will say it again and again because members on this side of the Chamber are presenting those issues. We know that the cost of living pressures are not being alleviated by the solutions that the member Paul Quinn is promoting in this Chamber. 
I am happy to speak to Part 1 and to reject the proposition that it is promoting better opportunities for middle-income families. There is just no balance between tax cuts for middle and low income families at one end and the increasing pressure of costs at the other end. There is a greater imbalance greater unfairness and greater inequality in the treatment of those groups of people: nurses policemen teachers wharfies and builders. I am happy to speak to Part 1. 
TIM MACINDOE (National—Hamilton West) 
: 
 I am delighted to follow the Hon Nanaia Mahuta. Of course we represent the same area—her electorate is a little bigger than mine but we are in the same region. I particularly thank her for acknowledging that under this Government tax rates have come down and that this Government has been focusing particularly on the needs of vulnerable New Zealanders those on low and fixed incomes who have needed protection through the worst impacts of the current economic recession. 
Hon Steve Chadwick 
: Tell us about cuts to family violence. 
TIM MACINDOE 
: It is about focusing on the things that matter to New Zealanders I say to Ms Chadwick—things such as the huge improvements that Tony Ryall has secured in the health system or the fantastic work that Anne Tolley is doing in the education system. 
But I need to come back to tax because that is what this debate is about. Nanaia Mahuta reminded us of that old political principle that if one repeats a lie often enough people will start to believe it. That frankly is Labour members’ strategy at the moment. That is their entire plank in the current election year as they go towards 26 November. Those members have nothing positive to say they do not have a credible plan and they do not have any ideas of their own so they will keep misrepresenting what is actually being done in the hope that enough people will believe it to get them over the line. 
In fact Labour has taken one of the oldest political maxims of all time and slightly adapted it: no taxation without misrepresentation. That is the Labour mantra that we now have to put up with. The really fascinating thing when one listens to Labour members is that they never talk about the figures. They never actually get down to the detail. They hate that. It is always “cuts” here and “National’s rich mates” there but they never give an honest analysis of who pays the tax how it is used and what the overall impact of tax policy is on commercial activity encouraging savings and investment and Government spending. They love to do the spending but they just cannot get it right in terms of how to provide for that. 
The first thing to remember—and the Minister of Revenue reminded us of this when he took a call about half an hour ago—is that last year’s tax package was essentially fiscally neutral. It was about rebalancing the overall tax imposition on all New Zealanders to create fairness—I repeat that phrase for Ms Chadwick because she is pretty concerned about it; to create fairness—to give extra support to vulnerable New Zealanders and to stimulate investment in manufacturing primary production small and medium sized enterprises and so on because I say to Ms Chadwick those are the kinds of activities that protect and create jobs and generate wealth for this country. They generate wealth and Labour members cannot stand that word. Next I will be saying “profits” and I will be hounded out of the Chamber by the  
Hobbit 
 haters and the muppets and the envy brigade opposite. But actually profits are a pretty important thing to protect and to ensure we can get in an economy. 
The tax switch last year is already playing an important role in building the platform for economic growth and putting more money in the pockets of low and middle income New Zealanders. Labour members hate the fact that most of last year’s income tax reductions went to those on modest incomes whom they profess to represent in this House but when one listens to what those members are actually saying about this bill one can tell that they have abandoned that group completely. 
As the Minister of Revenue reminded us when he took a call Labour members never admit that the bottom two rates were reduced in last year’s Budget to the point where nearly three-quarters of the population pay a marginal tax rate of just 17.5 percent. So I can tell the Hon Nanaia Mahuta who challenged me a short time ago about how my constituents are faring in the current conditions that most of the electors in Hamilton West who are on middle incomes or lower incomes were absolutely delighted by that change and I was pleased to be part of a Government that delivered it for them. 
What a fantastic achievement that was especially in the challenging economic circumstances that we inherited from the outgoing Labour Government. That Government had the best global conditions of any Government for at least a generation and it squandered the lot—blew it spent irresponsibly and made no provision for the bad times that would inevitably come with economic cycles. It just blew the lot. Well I say that we should celebrate what this National Government and its support partners have been doing and are continuing to achieve. 
Labour avoids the figures but the figures are quite clear. Let me return to the Deloitte analysis which Mr Woodhouse talked about a short time ago. In terms of total Government revenue the 2011-12 forecast is for $64.1 billion. The large majority of this—$47.4 billion—will come from GST corporate tax and individual income tax. 
Hon SHANE JONES (Labour) 
: 
 Tena tatou. Greetings Mr Chairperson. It is a pleasure to stand and—unlike the previous speaker Tim Macindoe—to direct our attention to Part 1 of the Taxation (Annual Rates and Budget Measures) Bill which is to do with the tax rates. Mr Chairperson given that you have provided a level of latitude to the man who has put to sleep what will remain of the farming community unless it starts to pay its way in areas such as Matamata Morrinsville— 
John Hayes 
: Wairarapa. 
Hon SHANE JONES 
: Actually I must talk about Wairarapa at the moment. There will be a monumental change in Wairarapa and it is called the removal of the member. That is about to come as a consequence of our passing the discredited script that is otherwise known as the Budget. 
All societies need to contribute we know towards meeting the costs of the apparatus of Government. All societies need to contribute towards meeting the costs of any vision any aspiration etc. that a Government seeks to implement—although this Government is devoid despite its rhetoric of such aspiration or vision. But we have a concern and we will repeat it. John Key invited members on the Opposition side of the Chamber to meet him on the hustings and we cannot wait for that to begin. Actually it did begin yesterday because his speech was not a parliamentary speech but a hustings speech. He was entitled to make it but it is very difficult for us to be serious when he directs such belligerence to this side of the Chamber and forgets that the vast majority of women for example who heard his speech found it to be a very discreditable presentation. It overlooked the actual suffering discomfort and fear that many New Zealand families now feel and that will get worse as a consequence of this document. 
The tax rates at one level are a quantitative reality but the issue is about their burden. We on this side of the Chamber know that the burden must fall evenly but more important that we actually need the revenue. I am concerned that the tax rates may have been changed and that it will do damage to the conservation budget for endangered species. We know on this side of the Chamber that that member over there is an endangered species. He will not be back in 2012; he will not beat Trevor Mallard. As National gets to the end of its list the member will drop off. So I say to Paul: “UB40 for you.” 
The CHAIRPERSON (H V Ross Robertson) 
: The member must use the member’s full name. 
Hon SHANE JONES 
: Of course I must. Unfortunately I was borrowing from the biblical expression of robbing Peter to pay Paul; that is all that I was doing. I was not taking in vain either the name of this fearless champion of the vanquished. Unfortunately when he hopped in the limo he forgot about them. I was just talking about the new status for Paul Quinn which will be unemployment. 
But let me come back to the bill. I will talk about the burden that falls upon society. We genuinely believe that if tax relief is to be offered through the rates it ought to fall on those people who are under the most pressure. Our belief is based on a different vision that members on the Opposition side of the Chamber have from the vision of Government members in relation to who ought to pay. They have been telling us over the last 24 hours that there is a small slither of people in New Zealand who are the wealth generators. Those members believe unfortunately that they are a proxy for the wealth-generating community. But they are not. The reality is that every single New Zealander whom we know wants to do the right thing by their own family and their community. But if they are not treated fairly through the taxation system then whatever initiative they have is stifled. 
Of course we need tax revenue in order to overcome the mountain of debt. I personally think that all New Zealanders especially those who are living through the misfortune of having used their homes as ATM machines know at a personal level that we have to bring debt down. Mr Dunne is right in his press statements to challenge all members of Parliament to think seriously and to chart a course forward as to how we can do that. But when we manipulate the taxation system and the spread is grossly uneven we do not create a system whereby those who have the ability to contribute towards substantially reducing the burden of debt upon us are paying their full share. That is a reasonable debatable point. We will take it forward and debate it up and down the country during the latter part of November when as a consequence of Helen Clark’s having brought the Rugby World Cup competition to New Zealand we will celebrate the victory of the All Blacks. We will remind people that just as we look for fairness and for aggression in sport we were hoping to see something fair in the taxation system. OK we know the Government will not be bold. We know it is vacuous and that is why the philosophy underlying these rates etc. favours a narrow caste of economic players in the economy. 
STUART NASH (Labour) 
: 
 Mr Jones actually nailed it on the head. A Government can use the tax system in a number of ways. What the Labour Government fundamentally believes—it is one of Labour’s basic principles and what Phil Goff has said many many times— 
Craig Foss 
: There is no Labour Government. 
STUART NASH 
: Sorry I was looking in the crystal ball and I had a vision 6 months ahead; I apologise. The Labour Party believes that a Labour Government will be the next Government to deliver a Budget. I can promise members it will not have the same level of inequality as this Budget has. [ 
Interruption 
] There is no doubt about that I say to Mr Foss. What the Labour Party believes and has always believed and what Mr Goff has said time and time again and what he will continue to tell Mr Key when he meets him on the hustings is that the tax system should be used for good. The tax system should be used to promote equality. The tax system should be used to promote fairness. That is what the tax system should be used for. The tax system should not be used to reward those who do not need it. 
Let me give one example. When the chief executive officer of Westpac looked at these rates I think he probably would have been a little embarrassed. I think he would have been a little embarrassed when he received a tax cut of $5000 a week. I have to ask: is that fair? Is that equitable? Is that the sort of society we want—that there are some at the top who amass huge wealth? He has a salary of about $5.2 million; about $5.2 million. He has had an increase of about $5000 a week. 
Hon Maurice Williamson 
: What does he actually pay in tax already? 
STUART NASH 
: I tell the Minister to ask his Minister of Revenue and ask the Inland Revenue Department whose figures the Government does not trust. The Government does not trust the figures from the Inland Revenue Department. What the Government does is use Treasury’s figures. I think that Minister should ask the Inland Revenue Department what the chief executive officer of Westpac earns as a salary; ask how much he gets in his hand every week. I think even that Minister a Minister earning a Cabinet salary would be slightly disgusted. I do not know of any way to justify a tax cut of $5000 a week let alone the amount of money he is receiving in the hand every single month. In fact I have no doubt it is more than the vast majority of his employees receive in a year; I have no doubt about that. 
This is what Labour stands for: Labour stands for using the tax system to promote equality and fairness. With regard to the rates we are talking about I have heard from that bloke from Hamilton Mr Macindoe and Mr Woodhouse that the tax cuts have been fiscally neutral. What do they quote? They quote a Deloitte report. But I can inform this Committee that Dr Bollard for whom I have the utmost respect has sat in front of the Finance and Expenditure Committee and said well the tax cuts are not fiscally neutral. In fact it has cost us. This is what last year’s Budget told us that these tax cuts would cost the country about a billion dollars. But it has cost more than that and I will tell members why it has cost more than that: because Treasury got the figures wrong. Last year GST receipts were down by about $270 million dollars. That is what GST receipts were down by. That equates to a decrease of about $2 billion in spending on goods and services. This Committee was told that these rates were neutral that an increase in revenue from GST would easily match the amount of money—I think it is about $23 billion over the term of the Government—it would cost to implement these tax cuts. Well that is wrong because that has not been the case. In fact $2 billion has been taken out of the economy since this tax switch. That is shown by the drop in the GST receipts. That is why I have grave concerns when the Government uses the tax revenue forecasts put forward by Treasury and not the Inland Revenue Department. That is why I have grave concerns that it is the forecast—Mr Chair— 
The CHAIRPERSON (H V Ross Robertson) 
: I call the honourable member Stuart Nash. 
Jo Goodhew 
: I raise a point of order Mr Chairperson. I ask whether you could assure me that that member has not had more than his allowable number of calls in this debate. 
The CHAIRPERSON (H V Ross Robertson) 
: I will just check that for you. This is the fourth call now. 
STUART NASH 
: I know it seems like we have been talking about the inequality of the tax system for a long time but it is not just me. I think it is the whole of Labour. Everyone on this side of the Chamber has talked about the inequality of these tax rates for a long long time. 
John Hayes 
: It’s boring. 
STUART NASH 
: That member may say it is boring but I think the vast majority of New Zealanders do not find it boring. They find it a little bit shameful. 
As I was saying one of the major concerns I have about the Government using Treasury data and not the Inland Revenue Department data when it promotes its forecasts is the fact that Bill English stood up and said the Government will create 170000 new jobs. Bill English said the Government will create 170000 new jobs and this is what the revenue forecasts are based on. But when he was questioned on television this morning he was asked where the jobs would come from. Where will those 170000 new jobs come from? Do members know what he said? He said commodity prices will go up and he thought there would be a lot of jobs created in the commodity sector. That was a very enlightening comment. The reason I say that is that the opposite is happening. 
I will give members an example. In the forest industry we are exporting a record number of unprocessed logs. That is causing major stress for domestic processes mills are closing and people are losing jobs. The prediction of 170000 new jobs is actually a little bit of a fallacy. I think it is a “let’s hit it and hope” strategy in which those members close their eyes pick a figure out and hope like hell that if they say it long enough people will believe it. Government members believe that all they have to do is get to the election and if they get elected—which they will not—people will believe them. Well the people are not silly. I think this Government has treated the people of New Zealand with contempt for too long. I think the people of New Zealand deserve to know what the plan is for creating these 170000 new jobs. We admit there will be more jobs out of the reconstruction of Christchurch but there will not be 170000 new jobs. That is just a one-off sort of event; it is not sustainable long-term economic growth. That is why Michael Cullen delivered nine Budgets of surplus. 
Craig Foss 
: Based on Treasury forecasts. 
STUART NASH 
: That is a very good point that Mr Foss brings up because never before has there been such a discrepancy between Treasury figures and Inland Revenue Department figures. When the Budget document is being put together Treasury models it and the Inland Revenue Department models it. Those departments make similar sorts of assumptions as we would imagine but usually the models are pretty close. This time there is a discrepancy of $4 billion over 5 years. 
Hon Steve Chadwick 
: How much? 
STUART NASH 
: There is $4 billion over 5 years. The Government says there may be a little bit of risk in relation to that. That is the understatement of the century. There is huge risk in the Government’s figures because the Inland Revenue Department has said the Government will be $4 billion short over 5 years. That is a major concern. 
As I was saying Michael Cullen believed that a Government creates economic growth by creating jobs. When a Government creates jobs people pay tax. When the Government creates jobs the taxpayers pay tax. When taxpayers pay tax the Government gets revenue. When the Government gets revenue it can pay down debt. That is what Michael Cullen did. Michael Cullen left this country in such sound shape that when the global financial crisis hit the economy was doing OK. Despite the mismanagement of this Government—despite the gross economic mismanagement of this Government—the economy is in not too bad shape because Michael Cullen had 9 years of Budget surplus based on 3 percent unemployment. We now have double the unemployment thanks to this Government that we had when Michael Cullen read his last Budget. We have 150000 people who are not contributing. 
All we wanted to see was a plan—a plan for growth a plan for creating jobs because when there are jobs people pay their tax. That is my huge concern. Minister Dunne actually admitted that we do not have a great middle class like the United States has. He said we have a very few up the top but we do not have that great middle class like the United States has and this is a major problem. 
JO GOODHEW (Junior Whip—National) 
: 
 I move  
That the question be now put 
. 
CAROL BEAUMONT (Labour) 
: 
 I appreciate being able to speak on the Taxation (Annual Rates and Budget Measures) Bill. I am very pleased to follow my colleague Stuart Nash. He has been making outstanding contributions in this debate and has enlightened a lot of New Zealanders on issues to do with our tax system and that is very important. Part 1 is about our current tax system and I want to make some comments following on from Mr Nash’s comments. Perhaps I should seek leave of the Committee to allow Mr Nash to make some more comments. I think he has done an exceptional job in enlightening New Zealand on how unfair our current tax system is. 
It has been a deliberate decision of this National Government to create a less fair tax system. Let us be clear about what we are talking about here. We are talking about tax rates that were changed so that the top 10 percent of earners in New Zealand had significant tax cuts—tax cuts that they do not need and tax cuts that have not actually benefited our economy. On this side of the Chamber we do not believe in the trickle-down effect that members on the other side of the Chamber seem to be so reliant on. We do not believe that just because those at the top are given more money in their pockets they will spend it in a productive way that assists the economy. We believe that the people who need assistance from the Government are low and middle income New Zealanders. 
As Mr Nash pointed out to us the Government tried to sell those tax cuts as being fiscally neutral. It said that they were a tax switch. Members across the other side of the Chamber must think New Zealanders are very silly. I certainly do not but you must think they are— 
The CHAIRPERSON (H V Ross Robertson) 
: Order! 
CAROL BEAUMONT 
: I am sorry Mr Chair; you of course do not. Members across the other side of the Chamber however clearly do think the public are silly if they think the public believe this tax switch nonsense. Out there in the real world low and middle income New Zealanders know that things cost them more. They know that through the increase in GST they have effectively had to bear the cost of tax cuts being given to the wealthy. It has not been fiscally neutral. There is a hole in the Government finances. 
I find it bizarre that people across the other side of the Chamber can go out there and talk about the reason for the deficit being the Christchurch earthquake and the global economic crisis. Yes of course those are elements in it but some of it was a deliberate decision of the Government to cut its own revenue—to give tax cuts that were unfairly weighted in favour of those at the top. So take responsibility for the deficit and do not ensure that the costs are all borne by low and middle income New Zealand. That is our message to members opposite. Of course it is not going to be listened to. Members across the other side of the Chamber are out of touch if they think New Zealanders buy that the deficit is nothing to do with the Government. People do not buy that. They do not buy the tax switch notion. 
I really liked the description my colleague Stuart Nash gave of the importance of the tax system being about taxing to do good. Tax is effectively the income the Government gets to do things. Unfortunately for all of us this Budget is another do-nothing Budget in terms of rebuilding our economy. If members opposite—if we all—looked at what was needed to grow our economy we would not see things like cuts in investment in industry training and skills development. It is an absolute outrage that in this country we are not investing in our people so that they have the opportunity to get a job they have the opportunity to get a better-paid job and they have the opportunity to keep a job and have greater job security. It is an absolute outrage that we are not investing in our people so that they can be more productive at work and we can transform our workplaces into better more effective more productive workplaces that provide the goods and services this country needs. It is an absolute outrage that across the other side of the Chamber there is some view that the Government has no responsibility for growth for stimulus and for other things that will lead to jobs. 
JOHN HAYES (National—Wairarapa) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 68 
New Zealand National 58; ACT New Zealand 5; Maori Party 4; United Future 1. 
Noes 51 
New Zealand Labour 42; Green Party 8; Progressive 1. 
Motion agreed to. 
A party vote was called for on the question  
That Part 1 be agreed to. 
Ayes 68 
New Zealand National 58; ACT New Zealand 5; Maori Party 4; United Future 1. 
Noes 51 
New Zealand Labour 42; Green Party 8; Progressive 1. 
Part 1 agreed to. 
Part 2 Working for Families and KiwiSaver 
GRANT ROBERTSON (Labour—Wellington Central) 
: 
 This is my first opportunity to participate in the Committee stage of the debate on the Taxation (Annual Rates and Budget Measures) Bill and we come now to Part 2. It is worth noting that the discussion we were just having on Part 1 often impacted on both the specific changes to Working for Families and to KiwiSaver. As we begin the discussion of these changes in Part 2 we need to look at the wider context in which they are set in this Budget. Essentially these are the big changes for National. The big vision for National in this Budget is to cut Working for Families and to cut KiwiSaver. That is it. There is no big vision about growing the economy. There is no big vision about innovation in our economy. There is no attempt to say how we will create the jobs that will keep New Zealanders in New Zealand rather than going to Australia. Instead Part 2 of this bill which we debate under urgency cuts in to low and middle income earners’ income; it takes out income from 1.7 million KiwiSavers. That is what Part 2 does because this Budget has no vision and no plan; it is a defensive Budget. 
My colleagues on this side of the Chamber know that I am a fan of sport. For me this Budget from the Government’s point of view is all about the All Whites going out on the field to play a game of soccer and putting all of their players inside their own penalty area and having no one upfront trying to score any goals. That is what this Budget is about: it is a defensive Budget with no vision. We heard ambition for New Zealand a couple of years ago from John Key and Bill English. But instead as I sat and listened to the Budget speech yesterday I kept waiting for the plan for the things the Government was going to do. Yes there were going to be cuts. Yes we are living in tight financial times. Then we expect to hear the plan. But instead the plan is the cuts—that is it. There is nothing else. There is no vision for the future. There is as we see in Part 2 here simply cuts to Working for Families and to KiwiSaver. 
The promise that National delivered pre-Budget—and it is surprising that anyone would really believe promises that National delivers any longer after it increased GST when it said it would not—is that it wanted to get at those people on Working for Families who are earning high income levels. It wanted to get at those people earning over $100000 because they should not be on Working for Families. National says those people are on a kind of middle-class welfare that we do not need. But the reality of the changes in Part 2 is that it kicks in for people earning as little as $36000 a year. It kicks in for the security guards who work around this building and other places. The level of pay they are getting means they are too rich to be supported. They are the people who do not deserve support for raising children. That is what this Budget says. That is what Part 2 says. 
This is not about high-income earners; this is about people who are currently struggling to meet the cost of living and they are being told that they are the people who have to bear the burden of the financial problems facing New Zealand. It is middle-income earners who have to bear that burden with the cuts to Working for Families. One of the things that are frustrating for people on this side of the House is that when Working for Families is presented it is presented as being about somebody who is on an income of $70000. Let us be absolutely clear—this is about family and household income. If a household has an income of $70000 that can be two earners each earning $35000 a year. If they are raising two children in that environment that is difficult at the moment. They are the people who are struggling to put healthy food on their table. They are the people who need support to ensure that those children get the kinds of opportunities in life that everyone in this House would want them to have. 
In Part 2 of this bill Working for Families has been cut for those people. It has been cut so the opportunities are simply not there for those people in the future. The problem is that the whole Budget is based upon fiction figment and this notion that there will be 170000 jobs. From where? From where will those jobs come? There are not 170000 jobs in rebuilding Christchurch. There are some jobs in that but there are not 170000. 
The Rugby World Cup gets a good play in the Budget in terms of economic growth. I hate to tell Mr Key and Mr English but the Rugby World Cup finishes in October. It will not be there in the future. The Rugby World Cup ends in October and that is it. That is the end of the plan for the growing of jobs. It is a figment. What is more is that jobs and growth projections in this Budget are based on nothing. Not only do we think so but the Inland Revenue Department thinks so and the Ministry of Social Development thinks so. As my colleague Stuart Nash said in the Part 1 debate there is a $4 billion gap between the forecast of what the people who actually collect the tax think they will get and Treasury which is making these bold heroic projections about growth. What is more the Ministry of Social Development is projecting that it will be paying out more and more in benefits at exactly the same time as Treasury thinks the number of people employed will be going up. There is a problem there. If Treasury’s projections and forecasts were accepted across the Public Service then the Ministry of Social Development would be forecasting the main benefit costs to go down. It is not forecasting that; it is forecasting benefit costs to go up. 
We have the Inland Revenue Department and the Ministry of Social Development saying that Treasury’s forecasts do not stand up. They are a figment. They are not real jobs because there is no plan to create those jobs in this Budget. There is nothing about skills nothing about increased research and development nothing about innovation and nothing about supporting exporters. This Budget is built on a fallacy of hope that there will be jobs in the future and no plan to get there. 
When we get to Part 2 we see that the big plan is based on cuts. Here is a message for National: cuts do not amount to a plan for the economy. It is a defensive attitude and not one that will help grow the economy. Why is it that time and time again with this Government when the belts have to be tightened it is those at the low and middle-income end who have to do the tightening? In the end that is about—and Part 2 is about—the fact that nothing has changed for National. It is still about trickle-down economics. It is amazing. The idea has been around for 30 years but it has not worked. It is not working yet we have another Budget presented to this House that is about a belief and a faith in trickle-down economics rather than a Government that will do something to help create jobs and to grow the economy. 
Part 2 tells us that Working for Families needs to be adjusted because it is not affordable at the moment. I say to National that those people on those low and middle incomes are being affected—for example the couple I was talking to last night. The husband is a security guard who works full time and the wife is an early childhood education teacher who works part time. They are trying to raise their children. They are losing as a result of these Working for Families changes. They are also KiwiSavers and they are losing out there as well. They are being hit twice. Their incomes are being hit while the people on the top tax rate continue to enjoy the benefits of tax cuts that were unaffordable which is part of the reason we have the deficit in front of us today. Make no mistake; this deficit in this Budget is National’s deficit. It is a deficit that it has created by its lack of an ability to help grow this country and by its short-sighted policies that are not about the long-term future and innovation of the country and that are not about skills. 
This Budget is based on a fallacy. It is based on a hope and a faith that jobs will be created. It is not based on a plan. In Part 2 the core of the Government’s policy is to cut Working for Families and KiwiSaver and to look tough. Where is the gain that goes with the pain? I do not see it. New Zealanders know we are in tight financial times. They all want to pull together and work but New Zealanders also fundamentally believe in fairness. They believe in fairness and they believe that it is important that we look after each other in times of need. When people are trying to bring up children who will be the future of this country they deserve support for that. Instead Part 2 of this bill delivers cuts to those very people in Working for Families and KiwiSaver. KiwiSaver is one of the things that we on this side of the House are proudest of because it put in place a regime that got New Zealanders saving. That is compromised by Part 2 of this bill. 
JACINDA ARDERN (Labour) 
: 
 It is a pleasure to rise and give a contribution on Part 2 of the Taxation (Annual Rates and Budget Measures) Bill which as my colleague Grant Robertson has pointed out focuses on the changes to Working for Families and KiwiSaver. I will home in specifically on KiwiSaver. 
In light of the fact that members on both sides of House acknowledge that we have a significant issue when it comes to Kiwis’ own personal savings rates it seems phenomenal to me that this is the third change I have seen in this House relating to superannuation schemes and our preparedness for future generations’ retirement. Members will remember that the first change was to the New Zealand Superannuation Fund. For my first Budget I sat in this Chamber and watched as the Government claimed that out of necessity it would suspend payments to the Superannuation Fund. Our preparation for my generation’s retirement would be suspended not for 1 year or 2 years but for 10 years. For 10 years we were going to look entirely past the issue of our superannuation preparedness despite knowing that we would be paying for the baby boomers in the very near future. Those on this side of the House have watched as there have been changes to the one thing in the Government books that looked quite good which was the Superannuation Fund. Members will note that I am no longer calling it the Cullen fund. Michael Cullen has specifically requested that if the Government will not fulfil its obligations to pay into that fund then it should hereby be known as the English fund. The Cullen fund was about being prepared; the English fund is about suspending responsibilities. 
The second change we have seen to our preparedness for superannuation is a cut to KiwiSaver contributions. Members on this side of the Chamber will remember that Labour specifically legislated that contributions by members of KiwiSaver and by employers would sit at 4 percent. In its first Budget the National Government immediately slashed that to 2 percent and we protested because we knew New Zealanders needed a high rate of savings if we were to be prepared for our retirement. 
Now we come to the third set of changes. I do not know whether the Government thinks it is a sneaky change and perhaps the public will be duped by it but almost in an attempt to cover up the fact that it has made changes to the Government contributions the Government has now lifted employer and member contributions by 1 percent. They are now back at 3 percent but that is still lower than it was when National was elected. 
Grant Robertson 
: A half-reversal. 
JACINDA ARDERN 
: That is absolutely right I say to Grant Robertson. I know that New Zealanders will not be tricked by that. They are much smarter than that and they will immediately see through it. Why has the Government lifted that rate again despite saying in the beginning that it needed to be halved? Because it wants to place an extra burden on employers and individual members in lieu of the Government picking up its responsibilities. That is exactly what has happened. In Part 2 the Government contributions have been halved. They have also been capped. The $1042 Government contribution amount of the potential tax credit has been replaced by $521. Why does that matter? We know that the three factors we need most if we are to have a stable personal savings scheme for Kiwis are incentive stability and income. We have seen three changes from this Government. That is not stability. 
Craig Foss 
: There was a change every year under the Labour Government. 
JACINDA ARDERN 
: I will point out that KiwiSaver was created by a Labour Government and it is one of the things we did that we are most proud of I say to Mr Foss. Labour acknowledged that my generation was about to be left high and dry and all the Government has done I say to Mr Foss is to prove that it has a short-term view when it comes to politics and electoral cycles. This measure is about the next election. It is not about my generation. If it was about my generation— 
The CHAIRPERSON (H V Ross Robertson) 
: I refer members of the Committee who do not have the call and are interjecting on each other to Speaker’s ruling 63/7. 
JACINDA ARDERN 
: Speaker’s ruling 63/7 is one of my personal favourites so thank you Mr Chairperson. I have already covered the incentive element. I will acknowledge that the Government has kept the $1000 kick-start and that was an important element of the scheme in terms of drawing people in to join KiwiSaver as 1.7 million people have done. I will highlight one extra statistic that has not been shared much in this Chamber and it is that 500000 of those members are under-24-year-olds. 
Hon Ruth Dyson 
: 500000? 
JACINDA ARDERN 
: Five hundred thousand—it is a significant amount. Whether some parents are enrolling their children very young is an interesting point and we may need to look into that but I applaud that figure. Ultimately this scheme was about making sure that young people in this country are preparing for their retirement so that incentive was important. 
We have covered the stability issue and the fact that there has been a real lack of acknowledgment on the other side of the Chamber of the importance of stability. I think members would be interested in an interview with a man who is an ex - All Black I believe and a national voter from Eltham. I understand that he said on the radio this morning that in his view the contract he had signed with the Government when he gave his vote to National had been broken. It was his view that the agreement that had existed on what would happen with his superannuation fund which he had signed up to because he believed that the Government would not honour its promise and ensure that a universal pension scheme would be available when he retired—so he had bought into KiwiSaver—had been broken. I would like to know how many other Kiwis feel exactly the same way. I wager that it will be many. The stability issue is a significant one and that is obviously what we are addressing in Part 2. 
But Part 2 specifically acknowledges the role of the employer’s superannuation cash contributions so I will talk about the third element of importance to a savings scheme and that is income. Of course an individual having an income stream is by default one of the most important parts of being able to ensure that we have some personal savings. I am sure that all of us in this Committee would acknowledge that if someone is in a state of unemployment even if they are drawing down Government support it is nigh on impossible to survive let alone save for their retirement. So income is important. That means that Part 2 is directly affected by the wider stimulus plan that the Government has presented. I use that term loosely because I am yet to see any wider stimulus package in this Budget yet the Government has estimated—it has forecasted—that we will see 170000 jobs as a consequence of this Budget. 
I wanted to give the Government the benefit of the doubt so I searched through the Budget documents including the Economic and Fiscal Outlook to try to find the source of those 170000 jobs—a fair quest I thought. I came across roughly three things. Higher growth in consumer spending was the first: “Higher growth in consumer spending is expected as households become more comfortable with the state of their own balance sheets …”. I would like to hear a little more background on that. I am not entirely sure how people will become more comfortable with the state of their balance sheets because I do not hear a lot of comfort now. If we are talking about consumer spending as a proportion of a household’s income that certainly is increasing as a percentage because the cost of living is increasing at a ridiculous rate in this country. Beyond that I really have very little other explanation for how people will be finding that extra comfort. 
Secondly the Economic and Fiscal Outlook states that we will see a boost in export volumes particularly service exports such as tourism. So the Rugby World Cup is one of the answers but I would have to say that it is unfortunate that it finishes in October. I also point out that that event is in the low-wage sector. I would say that putting all the eggs in the low-wage sector basket again is ill-advised. 
Then we come to what I think the Government is pinning all its hopes on which is the growth coming out of the Christchurch earthquake. It states: “We have assumed nationwide employment is around 15000 lower by mid-2011 as a result of the earthquake.” So 15000 fewer people will be in work. How many jobs has the Government predicted we will see out of the residential rebuild? 
Grant Robertson 
: 12500. 
JACINDA ARDERN 
: It has predicted 12500 so we will not even come back to the point at which we have been left as a consequence of the earthquake. In fact that is a deficit of around 500 jobs. I grant that that is only the residential rebuild. If we chuck on an extra couple of thousand jobs as a result of the wider rebuild we still are left with I predict a 168000 job deficit. 
Hon DAMIEN O’CONNOR (Labour) 
: 
 This is the first opportunity I have had to speak in this debate. Part 2 deals with KiwiSaver and savings. I point to the regulatory impact statement where I believe a mistake has been made. It states: “The Government has signalled its desire to focus Budget 2011 on measures which will boost national savings …”. No it should read: “measures which should boost saving National.” because that is what the Budget is about. 
National claims that this is a savings Budget. I ask what savings are being made. First will this Budget save opportunities for adults who lost the opportunity to upskill retrain and get jobs? In the 2009 Budget the Government slashed adult and community education and in this Budget it has chopped the opportunity for people aged over 55 to get a student loan. Has the Government saved opportunities for older people in retraining? I say no. Has the Government saved opportunities for middle-income New Zealanders to save with security? I say no again. What it has done like Rob Muldoon is destroy the confidence of middle New Zealanders in the need to save for their retirement—absolutely destroyed it. No it has not saved the opportunity for those people. Has this Budget saved the opportunity for young families to get affordable early childhood education? No there are no savings there. 
So where has National made savings? Well the regulatory impact statement is incorrect—this is a “saving National Budget”. I asked where the Government saved. Does this Budget save the $1000 a week tax cut that John Key got? It did yes so maybe that is the saving that National refers to. Did it save access to BMWs with heated seats? Yes it did. This is the “savings Budget” that we are hearing about. Finally is this “savings Budget” about whether we can save NZX and the stock market? Well I say that the answer is yes because that is about all it does. The sell off or the mixed-ownership—or the mixed-up ownership—model that the Government proposes for State-owned enterprises is just outrageous. It is about savings; it is about saving the New Zealand Stock Exchange which has been a poor performer. It is about saving opportunities for the people who got tax cuts in the first National Budget. It is about saving opportunities for them to invest and to make nice healthy profits through the buy-up of State-owned enterprises. Those are the only savings we are dealing with in this Budget. 
Part 2 changes KiwiSaver and undermines people’s security into the future unless those people had a big tax cut in 2009. The people who got that saving will now have the opportunity to invest in blue-chip Kiwi investments that will deliver them a healthy dividend while the rest of the owners—the present owners those on lower incomes—will lose ownership to those people. That is an outrage. I say it is immoral. This Budget should be totally rejected. Part 2 is a classic case of injustice and savings for National not the national savings that this country could enjoy. It is an outrage and we should all vote down this bill. 
I will do my very best to ensure that the savings we are trying to achieve which Labour advocates for are for the people who need them not for the people who do not. This Budget is about saving National it is not about saving the nation. That is a huge difference. As people go through the figures—try as the Government might to hide them in these lengthy documents—and as we investigate this Budget more and more New Zealanders will work out that the regulatory impact statement is worded incorrectly and should read that the Government is determined to have a Budget that will save National. 
CRAIG FOSS (National—Tukituki) 
: 
 I thought the previous speaker Damien O’Connor was going to speak on behalf of farmers about the proposed Labour turnover tax his having a farming background but I guess we will have to wait for another day. 
I will make a couple of points in respect of Part 2 which addresses some changes and enhancements to KiwiSaver. I will note a fact that members may be interested in. There are about 1.7 million New Zealanders I think in KiwiSaver right now. It actually begs the question why every New Zealander is not in KiwiSaver because of the $1000 upfront signage fee. It is interesting that when KiwiSaver was first announced the predictions were for about 500000 to 600000 sign-ups. It has been a roaring success; no one denies that and it has been acknowledged that KiwiSaver was brought in by the previous administration and good on it. 
Chris Hipkins 
: Well done Michael Cullen. 
CRAIG FOSS 
: I say to the younger member over there who was talking about it earlier— 
Hon Clayton Cosgrove 
: Oh you old thing you—you old tumbleweed. 
CRAIG FOSS 
: Well I am feeling a bit like that at the moment. KiwiSaver has been changed in every single Budget—and probably in between Budgets actually—under every Government since it was implemented. About half of those who are in KiwiSaver are locked into the 4 percent rate; half of them are locked into paying 4 percent. Even when the employer contribution went down to 2 percent they stayed at 4 percent. If members opposite go to the data instead of starting down the conspiracy route or something they would note that not as many people may be impacted by this change as they fear. Those who are on 2 percent now will in about a year and a half’s time go up to “3 plus 3” but those on 4 percent will not I am quite sure go down to 3 percent. When we start to look at the data we see that the numbers that members opposite are raising over there do not really stand the test of the true facts. 
Let me talk about KiwiSaver and what some of these changes are all about and in fact how they link into other changes in the Budget. Here is a very sad but quite brutal fact. Under the Labour administration who could members of the public in KiwiSaver invest their long-term savings in? Where did their money go? It went to finance companies. It went to failed finance companies. Under Labour they could invest in now failed finance companies and lose their capital. Under National via KiwiSaver they have the opportunity to invest in New Zealand infrastructure New Zealand energy companies and a further stake in Air New Zealand which are solid secure and long-term investments. 
Hon Members 
: Good grief! 
CRAIG FOSS 
: They do not like that. The mixed-ownership model is also addressed in the Budget and it is all linked into changes in and around KiwiSaver. In fact another fund that has not been mentioned on the other side of the Chamber that KiwiSaver funds will have access to is the Canterbury Earthquake Recovery Fund. Those members do not seem to be talking about that. Some of these changes will help enhance the ability of New Zealanders to invest in the reconstruction of Christchurch quite directly. I think members on the whole think that is a good thing and I ask members on the other side of the Chamber to excuse me if I am misrepresenting them on that one—I certainly do not mean to. I look forward to their speeches on that during the debate on the Taxation (Canterbury Earthquake Measures) Bill which is coming up next. 
There is another way in which this Budget and this bill enhance New Zealanders’ savings. Inflation kills financial assets. Under this Government and under this Budget inflation has been well inside the Reserve Bank’s band enhancing the real value of financial assets and savings. Actually savings also face a 28 percent tax rate; it no longer is the 33 percent or 39 percent rate that there was under the previous administration. Under the previous administration inflation ran north of 5 percent eroding and attacking the long-term superannuation savings of New Zealanders. 
So I do not understand how members opposite can get up and talk about what their views on savings are without addressing and acknowledging what this Budget does to improve maintain and enhance savings for retirement and the general savings of all New Zealanders. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 The member who has just resumed his seat is the chair of the all-powerful Finance and Expenditure Committee. He said that he is very proud because inflation is low. He also said that under the previous Government inflation ran north of 5 percent. Well in which year—in which year I ask the chairperson of the Finance and Expenditure Committee? The only year inflation has been at 5 percent is the year we are in now—under his Government. That is the truth of the matter. I could pick on any part of that member’s speech but the last part of it will do. It was full of factual inaccuracies as has been the case commonly in this debate. 
This country went into deficit 3 years ago. On the change of Government 2½ years ago the big deal a few months later in April 2009 was tax cuts for the rich. Let me say that again: our nation our official books started running at a loss and the big public policy response was to cut tax for the rich—not smart. That is the first point. Therefore we had to borrow more to pay for those tax cuts than we would have had we not made those tax cuts. That is just arithmetic. 
We are borrowing to pay for tax cuts for rich people. That is irresponsible it is ideological it is very expensive and in Part 1 of the Taxation (Annual Rates and Budget Measures) Bill we had a chance to revisit it. We argued it for hours but the Government said: “No tax cuts for rich people will stay where they are we are not going to reverse them.” Governments are reversing tax cuts in many other jurisdictions but not here. The Government will not reverse tax cuts for the rich. So the Government will have to find money from somewhere else. Therefore we go to Part 2 of this legislation and find that that money is coming out of Working for Families and we find that it is coming out of KiwiSaver. 
Remember that the Government says that it does not like the idea of having to borrow to then put money into KiwiSaver accounts. I will quote the Minister of Finance from his speech. It is a very short quote: “it means the Government is borrowing … to contribute to private savings. This does not lift national savings.” That is what the finance Minister said and he is correct. If the Government borrows a dollar from offshore and puts it into Clayton Cosgrove’s KiwiSaver account the national savings are not improved. But nor are they worsened. However if the Government borrows money and gives it to Clayton Cosgrove as a tax cut dissaving gets worse. We have a Government whose members say they do not want to borrow to sustain KiwiSaver in Part 2 of this legislation but they are really happy to borrow until their eyes water to pay for tax cuts for rich people. That is not fair that is not just and that is not right. And I am angry about it. 
I will tell members something about KiwiSaver. KiwiSaver is not the preserve of rich people; KiwiSaver is something that everyone uses. Labour members when we got started were surprised at how popular KiwiSaver was amongst low-income earners and middle-income earners as well as high-income earners. I agree with Craig Foss when he says that it is not rational not to have a KiwiSaver account because one gets a thousand bucks for nothing just to get started. I agree with that. So it stands to reason that KiwiSaver is something that can be found across all parts of society yet all parts of society will now get it in the neck twice. Less money from the Government will go into KiwiSaver—because the Government cannot bear to borrow for that; it will borrow for tax cuts but it will not borrow for that—and then there will be a requirement for half of the contributors to KiwiSaver to lift their savings from 2 percent to 3 percent because National members are concerned about savings. 
If National members are so concerned about savings the way to fix that is to lift the minimum contribution rate from 2 percent to 3 percent or from 2 percent to 4 percent if they wish and to retain the Government contribution and pay for that by reversing the tax cuts for the rich. It is easy. At that point two things would happen. Our savings would get even better—and boy do we know that our savings in this country need to get better especially in the private sector; we know that. The second thing that would happen the second leg of the double is that if the tax cuts for the rich were reversed the current account and the balance of payments would improve because rich people spend disproportionately on imports. Why? Because they can—the classic example is an overseas trip. 
So if we wanted to look at what this country needs most of all we would see that overall it is to reduce our debt by improving our savings—savings not in the Government’s accounts but across the entire economy so we can own more and more of our own country instead of less and less of it—and to improve our exports. Part 1 of this legislation by not reversing tax cuts for the rich therefore makes the current account worse. Part 2 of this legislation by not backing Kiwis to save makes our savings record worse. It is not OK to take a scheme as popular as KiwiSaver and make changes as large as these twice in 2½ years. That destroys confidence. KiwiSaver is an opt-out scheme so that is a saving grace. It may be that people will just continue to fall into it. But my goodness this is an economically reckless Budget for those reasons. 
Let us leave aside the effect the Budget will have on an imagined family with so many kids on so many dollars and what will happen to the family’s amount of money per week. Leave aside all that and sticking only with macro-economics only with what is good for the nation I ask why we in this Chamber are under urgency deciding that we will not reverse tax cuts for rich people thereby not improving our current account and further damaging our savings record which is appalling. Why has this Government when faced with the choices of needing to get money from somewhere—we earnestly agree with that; the deficit must come down—chosen that way to do it? What is good about it apart from the fact that it is ideologically suitable for the Government? 
It is ideologically suitable for the Government to use the sophistry that tax cuts are fine because they cause people to somehow create jobs instead of spending money on overseas trips—but who believes that—and that cutting the Crown’s contribution to KiwiSaver is also fine because it is mandated that everyone on a 2 percent contribution rate will lose 1 percent of their income because they will have to go to a 3 percent rate because that is what the Government says. That is not very bright. It is not very fair—but that is another speech. It is economically dumb and the Government needs to be told off roundly for its economic stupidity. 
Let us have Government members get up and defend the Budget. Let us have them get up instead of lowering their heads—every one of them. Look at them. Not one of them is looking me in the eye. Oh one or two of them are pretending to now. [ 
Interruption 
] Well they are now awakened. Even Rodney Hide is awake. Let one of them take the call now and refute my analysis that this country needs to save more that this country needs to export more and that both parts of this bill damage both of those goals. That is the essential thesis. 
Hon Tau Henare 
: I saw  
Clash of the Titans 
 and he looks like Hades. 
Hon PETE HODGSON 
: I wonder whether Tau Henare would like to get up and refute my analysis. It would be an interesting bit of analysis from him. Let us just hear what he has to say or what Rodney Hide has to say—or what anyone else would have to say—about that analysis. It would be far better given we have a $17 billion deficit to pay attention to reversing the tax cuts and to retain attention on maintaining savings. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 That superficially plausible analysis from the member who has just resumed his seat Pete Hodgson does not actually stack up when we start to look at it. I will go through the arguments that he raised. 
Firstly he said that we should reverse the tax cuts for the rich so that we can pay for what is effectively being reclaimed through KiwiSaver to reduce the deficit. It sounds good on the surface but it does not work in practice for this reason: the bulk of the tax cut package was delivered to those who were on the bottom two tax rates. So in terms of the dollars spent if his argument has credibility—that that money should not have been spent—in fact the people who would bear the brunt of his policy being implemented would be the very people he is seeking to protect because in relation to income they benefited most from that tax package in terms of the level of expenditure. He also overlooked the fact that the tax package was revenue-neutral. It was funded by the increase in GST. There was an element between the period from October 2010 to April this year that was covered by some very short-term borrowing but fundamentally it was a revenue-neutral package. 
He then turned to KiwiSaver and talked about—well I do not think he used the word “destruction” but that was the clear implication of what he said. Let me go through what the situation is prior to the passage of this Taxation (Annual Rates and Budget Measures) Bill and what it will be after this bill is enacted. As of today right now someone joining KiwiSaver joins on the basis of a “2 plus 2” contribution rate—2 percent from the employee and 2 percent from the employer. They qualify for a $1000 kick-start for their savings. They qualify for a member tax credit of $1040 on an annual basis. There will be no tax on the employer’s contribution to that superannuation contribution. That is the status quo. The destruction that the member talks about sees the person who starts today still starting on “2 plus 2”. When that was brought in as the default position 2 years ago the Opposition claimed that it was a cut because it should have stayed at “4 plus 4”. Well we get the chance in 2013 when we go back to “3 plus 3” and I do not think those members are really opposed to that. So the person who starts today still starts on “2 plus 2” and still gets the $1000 kick-start. That has not changed. The only thing that has changed in terms of the impact on the saver is the change to $521 per annum in the member tax credit. Taken over the life of a KiwiSaver contribution that has minimal impact on their savings. They still get the same benefit at the point that they get their payout at the age of 65. They also will be satisfied I think with the fact that the employer will now be paying tax on the contributions they make. 
So the point I am making in response to the member who has just resumed his seat Pete Hodgson—and he normally is someone who gives considered analysis and I respect him for that—is that his case is factually incorrect for the reasons I have stated. What the Government is faced with—and I think it is the one point that everyone seems to agree on—is that a deficit of this size in the unusual circumstances we are in is too high. We need to bring it down. We need to look at introducing what the Leader of the Opposition said were “bold measures” to bring the deficit down. That is what this Budget seeks to do. We have not heard any “bold measures” from the Opposition other than to raise taxes on the rich. But the point I make is that given where the balance of the expenditure in the tax cut package last year went if raising taxes on the rich was to be a “bold measure” we would actually be raising taxes on everyone and that is not what the Opposition seems to be arguing for. The KiwiSaver changes have a very small impact on the individual saver but taken collectively they save us about $2.6 billion which is a significant contribution to reduction of the deficit. 
If we look at the changes to Working for Families we see that in fact the picture becomes even more obscure as far as the Opposition’s position is concerned. The changes in the threshold take 4 years to implement at the rate of $450 of income per year. The changes in the abatement rate in some cases will take as long as 8 years to implement and in most cases about 4 years. So these are very modest adjustments. There will still be provision for an increase in the rate of payment according to the existing formula and that will take place next on 1 April next year. 
But overall both these sets of changes secure these social policy initiatives for the future. I go back to the point that Jacinda Ardern made a little earlier—and I cannot remember whether it was during the debate on the previous part of the bill or on this part—about her generation. This bill is really about her generation because one of the great tragedies is that New Zealand for so long has had very short-term selfish thinking. What these measures are designed to do is protect and enhance KiwiSaver long into the future and make sure that the basis of Working for Families remains and is beneficial to the families that need it. The tax package that if you like lies behind all of that is ensuring a fairer and better system. I come back to the point I made during the debate on Part 1. A situation where 75 percent of New Zealand taxpayers—about 2 million people—pay a top tax rate of just 17.5c in the dollar has got to be good. It is certainly the lowest tax rate paid by those households in the lifetime of anyone in this House and that is something we should be celebrating not criticising. 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 I start by complimenting the Minister in the chair the Minister of Revenue who has just resumed his seat on the very polished way he seamlessly transitioned from defending a previous Labour Government to defending the current National Government. I think I will leave my comments simply at that. 
However I want to pick up a point made by Craig Foss. It was ironic for Craig Foss a National member of Parliament to stand up in this debate on Part 2 of the Taxation (Annual Rates and Budget Measures) Bill and talk about the failed finance companies and the people who have lost their savings given that National has had 2½ years to do something about that and has done absolutely nothing. But then that could have something to do with the fact that half of them used to work for the failed finance companies. It is a bit rich for National members to say they will deal with the failed finance companies by hocking off the State-owned enterprises—that is effectively what Craig Foss argued in this Chamber. 
I want to pick up the issues around KiwiSaver and in particular the changes to the member tax credit. This Government will be effectively cutting it in half. But before I do that I want to pick up a comment from the speech made by the Minister of Finance in the House yesterday. People will find the comment on page 27 in the Budget speech—and it also relates to KiwiSaver. He states: “The Government will require agencies to fund the cost of KiwiSaver and some State sector retirement schemes for their employees. This will generate savings of $650 million.” We should think very carefully about what that actually means. It means that those State sector agencies that will have to pay their share of the cost of KiwiSaver are effectively having their funding cut by $650 million. So if somebody is working in a large social policy area where the salary costs are high—for example education or health—their funding in real terms will be cut because they will now have to meet the cost of the employer contribution to KiwiSaver. That is a real-terms funding cut. So when the Government talks about increasing funding for areas like health and education I point out that a big chunk of it is already taken up by the other changes it is making in the area of superannuation and it is not being upfront and transparent about that. It is a sort of a triple whammy. 
I come back to the issue of the tax credit. Let us take the example of someone in the education field a teacher for example who signed up for KiwiSaver. They will find that their member tax credit gets cut in half by the Government. Clause 7 addresses this issue. The tax credit will go down from $1042.86 to $521.43. Basically the member tax credit is cut in half. Then they find that the funding of the employer’s contribution means that other parts of their work are being cut—suddenly the money to fund the employer contribution has to be found from somewhere else because the Government has hacked away at that as well. So they are getting a double whammy. If the Government is taking $650 million out of the employer side of the contributions to KiwiSaver that has to come from somewhere else. I see the Minister of Revenue shaking his head. I simply turn his attention to the Budget statement on page 27 of the Budget documents. If I have interpreted that wrongly I would welcome him standing up and clarifying it. I think that is the only way it can be clarified. If the Government is requiring agencies to fund the cost of KiwiSaver saving $650 million that money has to come from somewhere else so that money has to be a cut in real terms. If I have interpreted it wrongly I look forward to the Minister of Revenue’s clarification of it in his contribution to this debate. 
National went into the last election promising New Zealanders that it could afford tax cuts and that nothing else would change. There would be no changes to KiwiSaver other than the changes National foreshadowed in its election manifesto. National said it would not cut Working for Families and it would not cut interest-free student loans. National has broken those promises in this year’s Budget. Here we go again particularly when it comes to retirement savings. National has a very proud history of taking very good savings schemes introduced under a Labour Government and ripping the guts out of them. That is exactly what Rob Muldoon did in the 1970s after a very good savings scheme was put in place by the Norm Kirk Labour Government. Rob Muldoon bribed New Zealanders with their own money in order to win the 1975 election and sabotaged New Zealand’s savings for over two decades after that. The last Labour Government started to deal with that by introducing KiwiSaver and once again we are seeing the National Government ripping the guts out of it. This is National’s pattern when it comes to savings. 
It is a bit rich for Bill English to stand up in this House and bemoan our poor savings record when as the Minister of Finance he has consistently undermined it. The first thing he did was to cut the minimum contribution to KiwiSaver in half from 4 percent to 2 percent. He cut funding for the New Zealand Superannuation Fund. He stopped putting away the funding to pay for the baby boomers’ retirement. Then he turned round and said we had a terrible record of saving for retirement. The Government is not leading by example—but then this Government never leads by example. It tells everybody else that they have to stomach cuts but it is never willing to cut the money it spends on itself. The Government is happy to have new BMWs new carpet and so on. The Government is not willing to lead by example particularly when it comes to savings. The Labour Government led by example when it came to savings. We set up the KiwiSaver scheme and we put the member tax credits and the kickstart in it. We led by example when it came to savings by setting up the Cullen fund the New Zealand Superannuation Fund to pay for the baby boomers’ retirement. They are both things that this Government is kicking the guts out of and hacking into. 
This Budget has no real vision for the future and no real plan to get New Zealand moving. It has no real plan to make sure New Zealanders can live a comfortable and safe retirement. It is not there; I have read it. I spent the evening last night sitting in the Chamber reading through the documentation. There is no plan. This must be one of the blandest Budgets; all the Government is doing is cutting: cut here cut there cut here cut there. There are lots of cuts and lots of pain but no real gain. New Zealanders at home will be asking about the gain and the plan. The Government is asking New Zealanders to stomach all these cuts but New Zealanders are not seeing any light at the end of the tunnel. This Government has mismanaged the economy. It has taken it from a surplus of $5 billion to $7 billion every year to one of the biggest deficits ever recorded in New Zealand’s history. That is what we get with Bill English as the Minister of Finance. He failed when he was the Minister of Finance the first time round in the last National Government and he has failed again in the tenure of this Government. That is one of the reasons why New Zealanders are going to vote out this Government at the coming election. I tell members that the feedback that has been coming overwhelmingly in the last couple of days is that people have changed their minds about National because of what it is doing to KiwiSaver. New Zealanders know how important KiwiSaver is to the future of this country and this Government is kicking the guts out of it. This Government is kicking the guts out of KiwiSaver and I think that is totally wrong. It is short-sighted and that pretty much sums up the Government’s approach. 
The Government is also getting into Working for Families. What was National’s promise before the last election? What was the absolute promise of John Key? He told New Zealanders that National would not touch Working for Families. Hang on a minute I think there is even a pledge card with the promise on it not to touch Working for Families. It was on a pledge card but it is not even worth the paper it was written on. It was headed up with the words “My key commitments to you”. I think that National after this Budget has broken just about every one of those promises. I do not think there is a single commitment left on that pledge card with John Key’s signature on it that he has not broken. He has broken almost every one of them and I think that is absolutely outrageous. That is one of the things New Zealanders will be keeping in mind when it comes to voting at the next election. They can vote for Labour which keeps its promises and makes promises we know we can afford or they can vote for National which promises before an election whatever it needs to in order to get elected and then does whatever it wants once it gets the Treasury benches. Nothing sums that up more than the two major changes being made in this part of the bill. There are the cuts to KiwiSaver which kick the guts out of the Government’s contribution to KiwiSaver. The Government says to New Zealanders that it wants them to save but it is not willing to do its bit. And the Government is cutting Working for Families even though it promised it would not do that. Working for Families was another initiative introduced during the term of the last Labour Government. That initiative lifted hundreds of thousands of New Zealand children out of poverty which is something we on this side of the Chamber are incredibly proud of and will continue to defend right the way to the very bitter end. Working for Families is a good policy. It recognises the fact that those families raising kids face higher costs and that we as a society should help with them. 
SUE MORONEY (Labour) 
: 
 The Taxation (Annual Rates and Budget Measures) Bill which we have in front of us and Part 2 in particular show just how much of a failure yesterday’s Budget was. We always expect to be debating taxation after a Budget and this bill allows for that debate. But if yesterday’s Budget was a fair Budget then we would be debating the $9.1 billion that was given away in tax cuts in the last Budget to the top 10 percent of wage earners in this country. I think everyone believes and knows that yes we are in tough fiscal times. The Government has not been able to grow the economy—it has not risen to that challenge—and we have very difficult fiscal times in New Zealand because of the economic mismanagement of the current Government. But we all accept that that is where we are. If that is the case and we all have to tighten our belts then why is it that this bill asks only hard-working New Zealand families to tighten their belts while the top 10 percent of wage earners continue to have $9.1 billion worth of tax cuts untouched even in these tough economic times. 
That goes to the basic unfairness of what this Government is doing. It means that the Prime Minister John Key gets to keep the additional $1000 a week that he got in last year’s tax cuts. That figure is more than some people earn a week but that is how much extra he got in tax cuts from last year’s Budget. He gets to keep that but hard-working New Zealanders get to pay for that Government’s folly by having their money for KiwiSaver cut in this Budget. Hard-working wage earners are the people who will suffer through this part of this bill because this part attacks KiwiSaver and Working for Families. 
It is absolutely clear by now that only a Labour-led Government can save KiwiSaver. This Government is not interested in saving KiwiSaver. Ever since this Government took office it has diminished KiwiSaver from every single angle it possibly can. The Government started off diminishing KiwiSaver by cutting its contributions in half from a 4 percent contribution down to a 2 percent contribution. Immediately on taking office this Government cut KiwiSaver in half. 
But not content with that the very next thing the Government did with regard to superannuation and the future of savings in this country was to immediately suspend payments and contributions from the taxpayer into the New Zealand Superannuation Fund which is the fund on which there was a multiparty agreement that we would continue to put money in in order to make sure that when we the baby boomers got to the age of receiving superannuation there would be enough money in the Government coffers to pay for that. Forward thinking by Michael Cullen had led to a multiparty accord to forward-fund the scheme so that there would be money in the scheme for all of us when as baby boomers we needed that money for superannuation. But this Government took the knife to that accord as soon as it took office. In respect of the multiparty agreement the ink was hardly dry when the new Government came into place and it broke that accord straight away. 
The Government’s record on superannuation is terrible and it continues with Part 2. The Government is saying that times are tough that it has not been able to get its act together that it has not been able to grow the economy and that it does not have the lift it has been promising now for 2½ years. The lift in the economy is still not with us so the Government has had to start taking the knife to Government spending. 
Where are the areas that the Government has chosen to cut? They have not chosen the area of tax cuts for very very high earners in this country—tax cuts for the wealthy. We will not hear any member of the Government any member on that side of the Chamber even mention the word. It is like not mentioning the war when those members pretend that people did not get those huge tax cuts in the last Budget. Although the Government pretends that everyone has to tighten their belts that certainly is not the case for all New Zealanders. For the vast majority New Zealanders are finding the current economic situation very very tough indeed. 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I hope that I might get a chance later in this debate to talk about the Working for Families components of Part 2 of the Taxation (Annual Rates and Budget Measures) Bill. 
Hon Member 
: That’ll be a good call. 
BRENDON BURNS 
: I hope so too. I will focus my first comments on the changes to KiwiSaver. I note the press release from the Minister of Finance and the Minister in the chair the Minister of Revenue about how changes to KiwiSaver “will encourage a higher level of private savings.” That is the opening line of the media statement accompanying the Budget yesterday but I will refer to the regulatory impact statement prepared by Treasury and the Inland Revenue Department that analyses this bill. I note this comment on the opening page of the regulatory impact statement: “Our analysis of the options is therefore dependent on behavioural assumptions for which there is minimal empirical evidence about individuals’ and employers’ responses to changes in saving incentives and other regulatory requirements.” In other words Treasury and the Inland Revenue Department say there is no empirical evidence about the changes made in this bill or the impact the bill will provide in terms of the overall savings of New Zealanders. I note further their comments that “KiwiSaver is less than five years old. Since its launch … there have been several significant changes to contribution requirements”—and I tell members that most of them have been made by this Government—and KiwiSaver has not had the time or “any period of stability in which to establish its core products and this uncertainty and unpredictability is not helpful to either the industry or savers.” That was Treasury and the Inland Revenue Department commenting on this bill and officials never highlight their comments. They do not put them in strong language but we can read the tone of those comments. They are saying that they have severe doubts about this bill and its impact on national savings. 
I will quote further from the regulatory impact statement. On page 5 it is stated: “The objectives for any changes to KiwiSaver are: to help return the Crown to surplus sooner by reducing the fiscal costs of KiwiSaver and; to continue to encourage increased levels of private household savings … Each of the options for change … was assessed against a matrix of criteria:”. But then the regulatory impact statement states: “In making this assessment the strongest weight was given to measures which reduced fiscal costs”. So the Government has really put to one side the questions about what impact the cuts to KiwiSaver will have both to KiwiSaver and to overall savings by New Zealanders—not the Crown’s savings but the savings regime of New Zealanders. 
Treasury and the Inland Revenue Department go further. They have analysed the impact of the halving of the minimum tax credit which until next year New Zealanders enjoy under KiwiSaver. They say that it “Will make KiwiSaver less attractive”. They say it “May mean fewer savings directed from other forms of savings”. They say in respect of increasing the employer contribution upwards to 3 percent that an “Increase in employer costs [is] likely to lead to reduced business profitability in [the] short term and lower wages over the longer term.” 
If we want evidence of that we should look at  
One News 
 from last night. Alasdair Thompson from the Northern Employers and Manufacturers Association said that employees will meet that increase out of any wage increases. When employees are already facing 5 percent inflation at the moment they are going to be told: “Sorry the Government has told us that we have to contribute more to KiwiSaver. You are going to pay the cost.” What does that say to people who are living on the margins? What does that say to them about encouraging them to invest in their future by putting something aside? The whole damn basis of this Budget was supposed to be to stimulate savings but Treasury and the Inland Revenue Department are saying that we will see that come only at the cost of lower wages. Where is the gain in that? 
I will make a final comment from the regulatory impact statement. Treasury and the Inland Revenue Department say that the increase in employee contribution rates to 3 percent may make some people “stop contributing”. That is Treasury’s and the Inland Revenue Department’s analysis of this bill. They say in essence that there are some high risks the bill will discourage people from saving. We know and this Government puts at the centre—[ 
Interruption 
]—Mr Chair Mr Chair— 
The CHAIRPERSON (Eric Roy) 
: Look do not yell at me. I am allowed to ponder to make sure I get it right. 
BRENDON BURNS 
: Thank you Mr Chair. I promise Mr Chair I will never shout at you again because you are a Chair who makes excellent judgments—almost all of the time. 
The CHAIRPERSON (Eric Roy) 
: Careful! 
BRENDON BURNS 
: I make reference to another aspect of this Budget. Supposedly we are trying to get to a position of better national savings but the Budget figures show that instead of seeing a decrease in the growth of national debt—that is the money borrowed by New Zealanders overseas and repatriated by companies making investments here and repatriating profits—this Budget’s figures show an increase from this year’s minus 78 percent of GDP to minus 85 percent of GDP in 2015. So where is the gain for us? 
I note the comments of Ganesh Nana from Business and Economic Research Ltd this morning. He analysed the Budget. He looked at the fact that in its text there were 19 references to “debt” and 2 references to “exports”—19 references to “debt” and 2 references to “exports”. The whole focus of this Budget is on cutting not growing. It is on cutting not growing. I refer to the comments just received from the Manufacturers and Exporters Association: “The Budget has targeted balancing the books but missed out on balancing the economy by sparking growth in the tradables sector. The Budget focused on cutting costs through to cuts to KiwiSaver and Working for Families.” That is what the national organisation said; it is based in Christchurch but represents manufacturers and exporters nationally. It said there are cuts to the costs of KiwiSaver and Working for Families but little detail on how to increase growth or shift the balance of the economy towards savings and exports as the Government has talked about. 
We are getting the rhetoric about growing the productive sector and growing the economy but in fact the Government is coming back to the traditional Tory method of cutting and cutting back on those who are least able to contribute. It is cutting back on working families on people who have been encouraged supported and told they needed to save. They have been encouraged to do that through KiwiSaver yet there is nothing in the Budget to encourage them; in fact it is absolutely the opposite. We will see I am sure a downturn in people joining and contributing to KiwiSaver which will be to our net cost as a nation. 
I will comment further and on the sale of State-owned enterprises. I say that not only do I believe that we will see asset sales of State-owned enterprises if a National Government is re-elected but also I note that in the Canterbury Earthquake Recovery Act there is a capacity for the sale of assets that are held currently by the Christchurch City Council. The issue has been aerated publicly over the last couple of weeks. Minister Brownlee confirmed that the capacity is there; it is included in the powers of that Act for the sale of Christchurch’s $2.2 billion worth of assets including our power company Orion our port and our airport. But I say to the Government that if it starts to look to those assets in terms of sales it will be doing a disservice that will completely undermine the efforts made on the other side of the ledger in terms of the recovery of Christchurch. 
We acknowledge that the Government has stepped up and is putting in place a regime to rebuild Christchurch. That is welcome. But I put this rider on it: if a re-elected National Government starts to use the powers in the Canterbury Earthquake Recovery Act to start selling off the assets of Christchurch it will have a civil outbreak on its hands that it would not believe. The people of Christchurch know that those assets have delivered over the long term. One of them alone Orion has delivered $980 million in dividends—nearly $1 billion in dividends—to the ratepayers of Christchurch over the last 20 years. We know through this Budget explicitly that a National Government if re-elected will embark on an asset-sales programme next year. It is there in black and white. If members think it is bad enough putting into hock State-owned enterprises like Meridian Energy Might River Power and Genesis they will see nothing in comparison in terms of public revolt if the Government tries to sell the assets of Christchurch. 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
: 
 It is a real privilege to speak on Part 2 of the Taxation (Annual Rates and Budget Measures) Bill. We have heard this morning from a number of contributors across the aisle. We have heard the type of negativity that pervades the Labour Party at the moment. We have heard speeches that have not set out any vision for this country but speeches that appeal to the rabid left—anarchists communists socialists and the lazy. 
This Budget has confirmed the competent management that Bill English has displayed in the 2½ years since National took power. We know that the Budget is about setting a credible path to a surplus and helping to lift national savings. We have heard about the changes to KiwiSaver and how they will increase private savings through contributions that are we might add from employers and employees. What has not been mentioned by members opposite has been the context in which we find ourselves in May 2011. When we took power 2½ years ago there was a global economic recession. It has bitten many countries. 
We heard from the Leader of the Opposition yesterday that this recession is over. Yet we look at countries like the United Kingdom that are going through massive changes and upheaval to their social services and their budgets and we see that this Government has taken a very firm but very fair and balanced approach to our Budget. Although we hear complaints about the types of policies that aim at the fringes what we really have is a Government committed to boosting investment in our health and education services. That is something we will not resile from. 
We have heard questioning regarding facts. The Opposition continues to advocate taxation of revenue and sales it advocates increasing taxes on high-income earners and it seems to be focused on those who earn $1 million but it has not presented any of the facts. The facts are that in the year to March 2009 only 597 people earned over $1 million—597. Labour members stand here whining and moaning about 597 people who earn over $1 million a year. Of those people only 120 are salary and wage earners—120. There is all that energy over 120 people. 
What Labour members do not realise is that there are people who earn high incomes who provide jobs and provide opportunities. Those people are entrepreneurs who are investing in productive assets. Yes it is about investing in the productive assets that will earn the export dollars that will push this economy forward. We have not heard anything from that party opposite which governed during the best years of our economy yet exports decreased for 5 consecutive years. We have not heard anyone from that party come up with any answers as to why that happened. 
Grant Robertson 
: Because it didn’t. 
PESETA SAM LOTU-IIGA 
: It did happen. The biggest business in town under the Labour Government was Government services—sad but true. Mr Hodgson who spoke earlier this morning asked where the innovation is. I am a little bit disappointed in Mr Hodgson because when he was the Minister for Economic Development he was the biggest cheerleader for exporters for productive businesses and for innovators. Now he sits there and asks where the innovation is. I will tell members where it is. If any member opposite wants to see innovation I ask them to come to Maungakiekie to visit some of the success stories. I ask them to please come and visit Rakon and Compac Sorting Equipment—businesses that are growing into export markets. Grant Robertson would not know that because the biggest business in his electorate is what? It is Government services. That is right it is Government services. When we went to the innovation awards with Mr Hodgson what did we see? We saw the best in innovation from New Zealanders. We saw Phil Keoghan of the creative industries. We saw Bruce Farr of Farr Yacht Design. We saw diabetes researchers. 
Members opposite sit there and ask where the innovation is. I tell them it is out there. I encourage them to leave their electorate offices visit some businesses and see what makes this economy really grow see the people who hire others and see where the jobs are. I encourage members opposite to get their facts straight and stop advocating taxing overseas trips stop advocating the taxing of sales of businesses stop advocating a capital gains tax and actually present something with a vision. Thank you. 
Hon MARYAN STREET (Labour) 
: 
 It is my pleasure to participate for the first time in this debate in looking at Part 2 of the Taxation (Annual Rates and Budget Measures) Bill. There are a couple of points that I will make but with reference to the member who has just resumed his seat Peseta Sam Lotu-Iiga and some of the other National members who spoke yesterday I will just remind them that the 9 years of the Labour Government were spent in improving New Zealand’s export opportunities. I ask what those members call the Free Trade Agreement between the Government of New Zealand and the Government of the People’s Republic of China an agreement that although some members opposite wish to contest the fact was signed by the Hon Phil Goff as Minister of Trade. The agreement has resulted in its first year—no thanks to this Government—in a 62 percent increase in dairy exports alone not to mention forestry as well. That member opposite needs to get some facts straight about who laid the groundwork for growth. 
This Budget goes in exactly the opposite direction. This is a stifling Budget. It is a stifling Budget that does not promote growth. Members opposite had 9 long years in Opposition—9 long years as they like to say—to come up with a plan for economic growth and for some new fresh ideas about how to pull this country out of the financial crisis and into growth and recovery. But what did we get? We got the same tired old recipe that we got in the 1990s. We got asset sales and tax cuts. Those members have done the tax cuts and now in this Budget they are promising to do the asset sales. 
In this Budget and in the part of the bill that is under consideration at the moment we have the technical bits about cutting KiwiSaver and Working for Families. In 2008 John Key went around this country saying to the people of New Zealand: “You like KiwiSaver; we will keep KiwiSaver. You like Working for Families; we will keep Working for Families. You like New Zealand superannuation; we will keep New Zealand superannuation.” But what did the National Government do? From day one it began to gut all three of those great innovations of the previous Labour Government. 
The talk about needing to change our culture to a savings culture with this bill in front of us is simply that—it is talk. The cuts to KiwiSaver provide disincentives for people to join the scheme and disincentives for people to continue their savings. They do not create the kinds of growth and savings that are required if we are to have the investment in jobs and people that is sorely needed for the productive economy in New Zealand. 
I will turn now to something to do with the context in which this bill is set. Towards the back of one of the documents we were issued yesterday the one that contains the speech made by the Minister of Finance there are assumptions that underpin his speech and this Budget. They are included in upside and downside scenarios. I would like to accentuate the positive and talk about the upside scenario but draw to the Committee’s attention how deeply deeply flawed that scenario is. If the upside scenario is flawed what hope is there for anything good to be done by this Government for our economy? The upside scenario states that it “incorporates a stronger economic recovery led by domestic drivers … with commodity exporters anticipating permanently higher returns and households more confident in house price rises.” It goes on to state: “At the same time house prices are slightly stronger growing 5% by mid-2012 rather than 1.8% as in the main forecasts. Higher house prices in the near term reflect current low interest rates and developing housing …”— 
The CHAIRPERSON (Eric Roy) 
: I will give the member another call but I just want to make a comment. Part 2 is about Working for Families and KiwiSaver but each member has just got a little broader and a little broader again. Although it is very interesting some of it does not have a lot to do with Part 2. I am not directing these comments specifically at the member who was speaking although she is perpetrating that as much as some other members have done. I just caution the Committee that I think the debate should be crisply around those issues. Members can make their comparisons but the issue is Working for Families and KiwiSaver. 
Hon MARYAN STREET 
: Thank you Mr Chair and I intend absolutely to abide by your advice. The point about referring to this upside scenario is that it is to do with household income and Working for Families and KiwiSaver are directly related to household incomes. Let me just make the point. The upside scenario states: “Higher house prices in the near term reflect current low interest rates and developing housing shortages lifting household wealth.” Excuse me! Does anybody else here hear echoes of a couple of old names like Fannie Mae or Freddie Mac? Does anybody else hear echoes of the 2000s when household wealth was predicated on the high value of houses which in turn produced its own credit bubble and which was then the precipitator of the global financial crisis? My point is that if this is the upside scenario then God protect us from the downside one! This is going back to the future and the way it relates to this bill is that for many people—and I think of many families in the Nelson electorate—household income has been dependent upon the supplement of Working for Families. When that is eroded household income is eroded. The chance to buy the first home is whittled away even further and escapes further from the grasp of first-home owners. So we have a Budget and a tax bill that are predicated on scenarios that are just not sustainable. 
The other thing I want to say about Working for Families and KiwiSaver is that the cuts to the public sector that are represented in the Budget by KiwiSaver contributions having to be found out of baseline in the public service represent for the foreseeable future no wage increase in the public sector. That pertains to household income. Not only will there be a reduction in household income because State sector bosses will have to find the KiwiSaver contribution from baseline and make $630 million - odd of savings but also there will be cuts to services in order to find the other $320 million—$330 million or whatever it is—that makes up the nearly $1 billion worth of cuts. This is where KiwiSaver changes impact absolutely on household income. There will have to be trade-offs for no wage increases. If those savings are to be extracted—one might say extorted—from the public sector then that will make a dramatic impact on what families can earn and can expect to earn in the near future. 
This is a Budget and this is a bill that cuts at the heart of how people in New Zealand make ends meet. It cuts to the heart of family budgets. It cuts to the heart of services that families might legitimately expect in a country such as ours. One cannot pretend by any stretch of the imagination that this Budget and this bill represent a plan for growth or a plan for recovery. This is the same old tired stuff that National trawled out in the 1990s. It is doctored up because there are some better programmes in place now than there were in the 1990s but it has the same tired old failed policies. These cuts will not produce growth. These cuts will not do what that member opposite said was one of the aims—to stimulate the productive economy. Limiting KiwiSaver does not incentivise people to save. It does not provide us with the capital market and the investment potential that we so need to put into our productive enterprises in this country. This is a cutting Budget. It is not a plan for growth. Any plan for growth has completely escaped this Government. 
CLARE CURRAN (Labour—Dunedin South) 
: 
 I am pleased to speak on Part 2 of the Taxation (Annual Rates and Budget Measures) Bill as it relates to the cuts to KiwiSaver and Working for Families. This Government makes stuff up and that is what this Budget is based on. We have heard so much stuff that has been made up. In the time I have been sitting in the Chamber this morning I have heard a lot of it. Before the Budget was released a few days ago a headline in one of the newspapers said this Budget would be about higher wages and more jobs. What a load of rubbish; absolutely. We have heard today that this Budget is about protecting the next generation. What a load of rubbish that is. Where are the jobs for that generation? Where are the decent wages? What is to stop them from going overseas? That is one of the major issues this Budget should have addressed. We have heard also from another member who claims that there is so much innovation happening in New Zealand right now as a result of his Government. What a load of rubbish that is. There is nothing in this Budget that promotes innovation will promote jobs and will promote strong export-led industries which is what this country needs. Instead we have cuts to KiwiSaver and cuts to Working for Families which is what Part 2 is about instead of the Budget providing the things we need most. John Key was on Radio Dunedin this morning just a few minutes before I was. He was asked where these 170000 jobs would be coming from. He fudged it. He did not have an answer because there is no answer from this Government in this Budget. 
This Budget should have been about hope. It should have given people hope for the future that things will get better that they will be able to pay their bills that they are not going backwards and worse still that they will not end up in financial strife. They should have been given hope that their kids will get jobs when they leave school and that they will not go to Australia. Unfortunately the Budget is about cuts—cuts to KiwiSaver. KiwiSaver is growing and is actually giving people an incentive to save. It will provide certainty for people’s futures. But instead we are seeing cuts we are seeing the burden placed on employees and employers and we are not as members have heard from previous speakers on this side of the Chamber going to see wage growth. Government members are making stuff up. It is not too much to ask for a Budget to provide hope for a Budget that gives us hope as nation. A Budget that will set a course for the future will show us where those jobs of the future will come from. 
Peter Dunne earlier in this debate talked about equity. Equity for whom I thought to myself—equity for whom? It is not equity for all those hundreds of thousands of families across the country who are struggling with their budgets every week—every week. The do not know whether they will be able to afford pay their bills: their telephone bills and electricity bills their rent or mortgages—the bills they have to pay—let alone petrol and their food bills. They are not bills just for buying new clothes or going on a holiday but the bills they have to pay to get through the week and through the month. Where does this Budget address that issue? Nowhere; instead it is a Budget that just makes stuff up. It forecast 170000 jobs—170000 jobs. Where will they come from? I heard what Stuart Nash said earlier on today about the forestry sector and that jobs are going in that sector. We heard that John Key talked about commodity prices strengthening and therefore jobs will come from that. Where will the jobs come from? They will not come from the manufacturing industry let me tell members. If this Government actually invested some money instead of cutting KiwiSaver and cutting Working for Families if this Government invested some money in this economy in a way that actually stimulated the economy and stimulated skills in the economy— 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I am glad the member who has just resumed her seat Clare Curran talked about making up stuff because there has been a lot of that going on from that side of the Chamber during this morning’s debate. Earlier we heard from Sue Moroney who talked about reversing the $9.1 billion of tax cuts to top-income earners. 
Sue Moroney 
: That’s right. 
Hon PETER DUNNE 
: She says that is right: $9.1 billion of tax cuts to top earners. Somehow if we reverse that cut we can pay off our $17 billion deficit. I was somewhat taken aback by her claims because having been intimately involved with the design of the tax package over the last couple of years the $9.1 billion figure came as a considerable surprise to me. I had never heard it before let alone in respect of high-income earners. I went back and checked with officials exactly what the cost would be of reversing the tax decrease for those high-income earners because I thought I might find out where the $9.1 billion figure came from. If the member was right then maybe there was merit in her argument. But I have to tell her she is slightly wrong. She is wrong by about 1300 percent. 
Amy Adams 
: That’s quite a lot wrong. 
Hon PETER DUNNE 
: It is a slight error I know. It is within the margin of error perhaps. But the fact is that contrary to her claim of $9.1 billion of tax cuts to the top 10 percent the total cost is $725 million per annum for those people. 
Sue Moroney 
: Oh no it’s not. 
Hon PETER DUNNE 
: Yes it is. The member talked about a $9.1 billion tax windfall for high-income earners but it is $725 million. So when her colleague talks about making up stuff I agree with her. That is the whole basis on which the Opposition’s case has been based this morning. We should roll over the top tax cuts and therefore we would not need to make the changes to Working for Families or KiwiSaver. The only problem is that those members cannot add up. They are 1300 percent out in their calculation. I worry what the state of a Budget might be drawn up with that type of arithmetic. One of the members I think Mr Hodgson earlier on actually said it was just a case of plain arithmetic. It is pretty plain arithmetic if it is 1300 percent out at least. The member is still sticking to the claim of $9.1 billion. No one can find it. 
Sue Moroney 
: Over how many years? 
Hon PETER DUNNE 
: Well if we took it over something like 13 years at least she might be right. But that is not the context the member claimed it in. She talked about a $9.1 billion tax windfall for the top 10 percent. 
Sue Moroney 
: That’s right. 
Hon PETER DUNNE 
: She still believes it even though she is 1300 percent out. When Opposition members want to talk about Part 2 and the changes it makes they should get the basic facts right. 
Sue Moroney 
: Oh we have. 
Hon PETER DUNNE 
: She has she says! If the claim is that Part 2 is required only because of the windfall tax gain by top-income earners then the figures should at least match up. They should not be 1300 percent out as under the member’s claims because that simply destroys any shred of credibility for her argument and to the worthy cases mounted by all her colleagues this morning. 
KRIS FAAFOI (Labour—Mana) 
: 
 I thank Mr Chair for the opportunity to speak to Part 2 of the Taxation (Annual Rates and Budget Measures) Bill. This is my first contribution. Part 2 deals directly with the major changes the National Government is making to both Working for Families and KiwiSaver. Yesterday when John Key finished his Budget speech and as the members on the opposite side of the House got up and followed the script and started smiling and clapping—as opposed to smiling and waving—we could tell we could guarantee that a lot of them were doing it through gritted teeth because they were worried. They were worried because they knew people at home were thinking: “Hang on a minute.” The 1.7 million Kiwis who have signed up to KiwiSaver were thinking: “Hang on a minute. That is not what I signed up to. Those are not the terms I signed up to. Hang on a minute. John Key said he wouldn’t touch KiwiSaver. What’s going on here? What is going on here with KiwiSaver? I thought this plan was solid. This was a plan to make sure we can save for our retirement and make sure that people can afford their first homes. But what is going on here? We were told it was safe and wouldn’t be touched. Hang on a minute. What about Working for Families? Hang on a minute. John Key wasn’t going to touch Working for Families. What is going on here?”. 
Those are two pretty major broken promises in Part 2. A lot of lower and middle income Kiwis will be saying that in their homes. We have seen plenty in the  
Dominion Post  
today; I think pages 5 and 6 are dedicated to families who will be no better off from this Budget. We heard on  
Morning Report  
this morning an example as Jacinda Ardern pointed out earlier of a person who said that this was not what they signed up to with KiwiSaver. The last thing the Prime Minister said was that he would see us out on the hustings. I say to the Prime Minister to bring it on—bring it on. If members opposite want to go to the people and say they are cutting Working for Families and cutting KiwiSaver then they can bring it on. I am looking forward to going to Cannons Creek and saying that this Government will cut KiwiSaver and cut Working for Families but it will keep the 40 percent tax cut for the top 10 percent of tax earners. People in Cannons Creek will love it and people in Waitangirua will love it. Do members know who else will love it? People in Papakowhai will love it because they signed up to KiwiSaver. They think it is a great scheme. People in Papakowhai will love it and they will say: “Hang on a minute. Hang on a minute what is happening here? That is a tax credit I thought I would get from this Government.” But no the Government is slashing it in half. 
This is a Government that promised it would take the sharp edges off the recession. The only sharp edge we have is the one the Government is using to make cuts. That is all we have received from this Government. I am looking forward to going to some of the more marginal areas in my electorate and taking votes from National members because of what they are doing in this Budget. They are taking money from hard-working families who are struggling to make ends meet. A lot of my colleagues have been talking about the cost of living and how many families are struggling to make ends meet. With the changes this Government is making to Working for Families I look forward to getting out on the hustings. 
I tell Government members to bring it on because many families in Mana are struggling to make ends meet. Just last week I went to the St Vincent de Paul food bank and for the first time in 9 years Kerry the lovely Australian lady who runs the shop there said they have run out of food. Even the emergency cupboard is bare. For the first time in her 9 years she has been forced to put a sign on the front of the shop saying: “Can we please have food.” because not only has the demand increased but the supply has run out. There is real hurt in this community especially in Mana and this Budget does nothing for people there. I say to members opposite to bring it on. If they want to take this to the people they should bring it on. We are going to make 50 percent of the families who have signed up for Working for Families worse off so bring it on. I am looking forward to getting out there and talking about what you are doing and how you are hurting Kiwi families— 
Craig Foss 
: I raise a point of order Mr Chairperson. I do not think you are hurting Kiwi families. Members have been pulled up for bringing you into the discussions quite often during this debate— 
The CHAIRPERSON (Lindsay Tisch) 
: I thank the member. Do not bring the Chair into the debate. 
KRIS FAAFOI 
: —I should rephrase that—and how you are adversely affecting Kiwi families and making life harder for them. You are making life a lot harder— 
The CHAIRPERSON (Lindsay Tisch) 
: No I am not. 
KRIS FAAFOI 
: I am sorry. Excuse me Mr Chair. This Government is making life a lot harder for Kiwi families. I was straight on to it this morning. I was waving signs out on State Highway 1 saying “Save KiwiSaver”. There were plenty of beeps so bring on the election campaign because I know that the 1.7 million Kiwis who have signed up to KiwiSaver will not be happy with what the Government has done. We have had speeches from many members on the opposite side of the Chamber saying that this is a visionary Budget. I think they should go and get their eyes checked. 
CHRIS TREMAIN (Senior Whip—National) 
: 
 I move  
That the question be now put 
. 
CATHERINE DELAHUNTY (Green) 
: 
 I am pleased to take a call on what some of us are calling the “Ken Ring Budget” Part 2 because it is based on some fairly interesting random predictions on the future economy. The Government may need advice from Ken Ring. He makes a lot of mistakes but at least he is a colourful character. 
I would like to talk about Part 2 of the Taxation (Annual Rates and Budget Measures) Bill. This morning some of us attended the Child Poverty Action Group breakfast where the issues we are discussing in Part 2 “KiwiSaver and Working for Families” were identified as worthy of key analysis in terms of who is ignored. There has been a consistent ability to ignore two crucial parts of our community and Part 2 continues that trend. 
One is beneficiaries. Beneficiaries are recognised in this Budget only as non-people—non-workers and their children who do not receive Working for Families now. As the Child Poverty Action Group pointed out this morning we have had increasing poverty for those families for more than two decades. Roger Douglas and the “mother of all Budgets” is when it started. We do not see that Part 2 does anything for those people. 
I heard members of the Government say last week that they are a Government for the vulnerable. I think their definition of “vulnerable” is the 13 percent of people who got richer but that is not my idea of the vulnerable. The vulnerable are people who are having trouble surviving right now. There was good discussion at the Child Poverty Action Group breakfast about the vulnerable and about Part 2. We are very concerned that despite the Government trying to pitch this as not a serious attack on KiwiSaver I have already in the last 24 hours met people who are saying they think they will pull out. These are people who have never ever saved before. 
Hon Member 
: Why? 
CATHERINE DELAHUNTY 
: Because they find that $500 is not enough. The Government’s $1000 a year was an incredible incentive to save. But in hard times they might as well keep the money. They are struggling so hard with the basic costs that without that Government incentive it is just not worth it to them any more. I think that is tragic but it tells us how many people are living in that space where the difference between $500 and $1000 in terms of the Government contribution is critical to them. Now they are going to give up saving for their future. I think that is because they are forced into survival mode in a time when costs are increasing by Part 2. 
It is a shame about KiwiSaver which has been one of the most breakthrough initiatives in this country for getting ordinary people who do not have the capacity to join fancy schemes who do not have reliable employment and who do not have a lot of money—some of them are on benefits—to start saving so they can have some self-sufficiency in old age. That is a really sad thing to hear and it is an indictment because we actually believed the Government’s promise that it would not cut KiwiSaver. 
I agree with the previous speaker Kris Faafoi that KiwiSaver will be an interesting issue during the election. KiwiSaver will be debated hotly. People are not stupid. They will do the maths and look at whether they are better off going into a scheme like KiwiSaver any more. I think that one media person called it paying more to stay the same. That is a really sad thing because people who struggle to pay all their bills cannot afford to pay more to stay the same in terms of savings. They cannot afford to do that. 
We are so buffered in this Chamber. We are so privileged by our own superannuation schemes by our own protective devices to make sure we have a pleasant retirement and we forget at our peril the really vulnerable people. The Budget is supposed to be about them not us the already insulated and protected well-off people sitting in this Chamber. 
I return to Part 2 in terms of Working for Families. Reducing the abatement threshold down to $35000 means that abatement applies to a two-parent family with one partner working full time at the minimum wage and the other working 12 hours a week at the minimum wage. Raising the abatement rate to 25c in the dollar results in an effective marginal tax rate of 58 percent. Losing almost three-fifths of any extra income in tax and in Working for Families abatement is far from an incentive for parents who are earning just around $35000 or over to—to quote the Government—work harder to better themselves which is what the Government says they should be doing. 
We are very disappointed that Working for Families is being undermined at that level for those people who are in that marginal area and who really needed Working for Families to stay the same. I think it was Child Poverty Action Group members who said this morning that they do not have a problem with the richest people losing Working for Families because it was never intended for them anyway. It is actually quite appropriate that the Government should cut back on their access to that but it is not appropriate to cut that down for the people earning about $35000. It is not an appropriate thing to do. We think Part 2 is carefully calculated— 
AMY ADAMS (National—Selwyn) 
: 
 I move  
That the question be now put 
. 
Dr RAJEN PRASAD (Labour) 
: 
 I am happy to take a call on Part 2 of this Taxation (Annual Rates and Budget Measures) Bill. Part 2 is really about KiwiSaver and Working for Families—two of the most successful programmes around. They are two programmes where the majority of New Zealanders actually believe that whoever designed them—and of course it was the last Government—actually did a good job. KiwiSaver has proved itself by the number of people taking it up. This was a huge surprise when it was first introduced. The belief was that few would take it up but many many have. It was a very highly successful programme. Working for Families is the other one. This is really a subsidy for workers provided by the State because we have a low-wage economy. It is another successful programme. So here we have two successful programmes and this bill is cutting them. This Government is a cut-and-hope Government. This is a cut-and-hope Budget. There is plenty of evidence. The papers are full of it today and there is something about this part of the bill that demonstrates this Government’s real hate—if you like; it is probably not too strong a word—for those successful programmes developed and put in place by the last Government. 
Peseta Sam Lotu-Iiga 
: Which ones? 
Dr RAJEN PRASAD 
: The two I have just mentioned I say to Mr Lotu-Iiga. KiwiSaver and Working for Families are the most successful programmes. That member talks about the companies in Maungakiekie that are doing very well. I tell that member that those companies were there before. Those companies are doing very well under policies of the last 9 years of Labour not ones that have been developed since that member took on responsibility for that particular electorate. It is all very well to say what the member is saying but it is not consistent with what has happened. They were policies of the last Government. 
This National Government is cutting very very successful programmes and the irony is this: National Governments of any hue have always destroyed good programmes. In 1972 there was the very successful national superannuation programme. Who cut that programme? Do members remember who cut that programme? A National Government came in and destroyed it overnight. There was the Cullen fund designed to put national superannuation in place. After the Cullen fund started what did the National Government do with it? Who played around with the Cullen fund? It was that particular Government; because the policy was successful the National Government’s stock contribution was to play around with it. Again now KiwiSaver is a successful programme for savings for this country. Members on that side of the Chamber say they support savings but they do everything to confound that and to cut back savings. And here we are again. 
Then there is the little thing about keeping one’s word. The Prime Minister gave his word that this would not be cut and that this would not happen and with this bill the Government is doing that. The Government has broken its promises at every step of the way. Why would anybody want to trust whatever it is that that Government brings out as policies? All it does is cut the successful programmes and promise something else. It is a matter of trust. When KiwiSaver is being changed in Part 2 it is a betrayal of trust given by the electorate at the last election. There is no way that members opposite cannot resile from that. It is a betrayal of trust. 
National members now say that it is not a breach of trust at all because the cuts will not come in for some time yet. Why are we debating this bill now? We are debating a cut to KiwiSaver and members on the other side said they would not do it. Therefore it is a breach of trust. Let us not play with words here. Let us not make things up. We are discussing it now. It is the Government’s intention to do it. Where are the ethics in this? Where are the ethics of keeping one’s word? National members said they would not do something then they come here change it and pretend they are not changing it. It continues in this Budget as well which this part of the bill is trying to put into place. It is really about making it up. There is a huge dispute about the figures that this bill is predicated on. 
NICKY WAGNER (National) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 68 
New Zealand National 58; ACT New Zealand 5; Maori Party 4; United Future 1. 
Noes 54 
New Zealand Labour 42; Green Party 9; Progressive 1; Independents: Carter C Harawira. 
Motion agreed to. 
A party vote was called for on the question  
That Part 2 be agreed to. 
Ayes 68 
New Zealand National 58; ACT New Zealand 5; Maori Party 4; United Future 1. 
Noes 54 
New Zealand Labour 42; Green Party 9; Progressive 1; Independents: Carter C Harawira. 
Part 2 agreed to. 
Clauses 1 and 2 
MOANA MACKEY (Labour) 
: 
 I am happy to take a call on the title and commencement clauses of this legislation. The legislation is called the Taxation (Annual Rates and Budget Measures) Bill. I would submit that that name is not a particularly good one for this legislation. It makes it seem like something fairly innocuous when in fact the bill breaks even more election promises that were made by National before the last election. It is dismantling KiwiSaver. It is making life harder for middle and lower income families because of changes to Working for Families. I do not think the title of the Taxation (Annual Rates and Budget Measures) Bill really accurately sums up exactly how damaging this legislation is. The word “Budget” in the title of the bill may lead people to believe that the measures in the bill are something that will happen after the Budget but the reality is that we have another 6 months with no plan and another 6 months of treading water while the Government does absolutely nothing to address the dire economic circumstances it has put this country in. 
I think an accurate name for this legislation would be the “Taxation (Lower and Middle Income Families Will Pay for the Tax Cuts That Went to High-income Families That National Gave in the Last Two Budgets) Bill”. That is what this legislation does. We have to pass legislation that cuts entitlements to KiwiSaver and Working for Families both of which National promised it would not cut because National gave 2 years’ worth of completely unaffordable tax cuts the overwhelming amount of which went to the top income earners. The tax cuts went to National members’ mates and to them. Cabinet Ministers and MPs did very very well out of the tax cuts given by the National Government over the last two Budgets. Labour said the tax cuts were unaffordable at the time. Labour said they were unaffordable National knew they were unaffordable but it went ahead with them anyway and guess who is paying for them? Guess who is paying for those tax cuts? Guess who is paying for the economic mismanagement of this Government? It is low and middle income families in New Zealand. 
Another potential title for this legislation could be the “Taxation (This Will Be Incredibly Bad for Local Economies) Bill”. In my home town of Gisborne Working for Families puts approximately $40 million into the pockets of those families. In the Bay of Plenty it is approximately $160 million. When we start to cut into that it is money that these families will not have to spend in local businesses on local services or in the local economy. Provincial economies in New Zealand are already doing it tough because this Government has no plan. It has no plan. 
Sandra Goudie 
: No. They get it wrong again! 
MOANA MACKEY 
: I am sure Sandra Goudie has a plan. I am sure she does. The reality is that provincial New Zealand is finding it incredibly hard at the moment and these changes will only make it harder. These changes to Working for Families will take money directly out of provincial economies. I remind the Committee again what these changes are for. They are to pay for completely unaffordable tax cuts 40 percent of which went to the top 10 percent of New Zealanders. Another name for this bill could be the “Taxation (These Taxation Changes are Simply Not Fair) Bill” because they are not fair when the overwhelming majority of tax cuts go to the people who needed them the least and to the people who were not asking for them. Tax cuts are not fair when we have to cut public services back to the bone and we have to cut KiwiSaver Working for Families and student loans to pay for them. Nothing in this Budget or this legislation will do anything to promote growth or reduce unemployment. In fact it will only contract regional economies further and make the existing problems worse—all to pay for tax cuts for National’s rich mates who did not need them and who still do not need them. National members stand up in this Chamber and defend that. I do not think it is defendable. 
Another title of the bill could be the “KiwiSaver (Forget About It If You Are Self-employed) Bill” because the self-employed will really suffer under these KiwiSaver changes. The self-employed relied on that Government tax credit. They are their own employer so with the Government stripping away that Government tax credit self-employed people’s savings will go down by 25 percent. A gentleman was reported in the  
New Zealand Herald  
today as saying that saving was just not worth it any more. It was the Government’s input into KiwiSaver that made it worthwhile saving whereas the Government would now have us— 
Chris Tremain 
: Oh come on Moana. 
MOANA MACKEY 
: Is Mr Tremain saying he is wrong? Is that man not telling the truth? Chris Tremain and National say the self-employed man in the  
New Zealand Herald 
 today is wrong. He said his savings would go down by 25 percent. They are not offset by an employer contribution. Let us be realistic even the employer contribution will be offset by wages so we will see wages decrease as a result of these changes made here. This is the great grand plan apparently. This is the bright new future of National. 
I put it to the Minister in the chair the Minister of Revenue that this Budget is bad for regional economies. It is absolutely bad and that is why I think it should be reflected in the title of the bill. Those economies will also suffer from cuts that were announced in the Budget yesterday to public services. There was $1 billion worth of cuts and guess what? The Government has spent that money already in the Budget. It does not know where those cuts are coming from. It has not told us or the New Zealand public. Those cuts will come from health and education. That means extra costs on families who are receiving Working for Families and have had their entitlements cut so that will make their lives even harder when it comes to making ends meet. It will mean that even less money will go into local economies which will make unemployment worse and make that backwards move in growth in provincial New Zealand even worse. I would welcome the next National member to tell us where that $1 billion worth of cuts will come from in the public sector because the money has been spent already. That money has already been spent in the Budget so the Government better hope it can find the money otherwise it will find itself in a whole lot of trouble. The point is that it makes it so much harder for those families on Working for Families to make ends meet and it will mean less money going into provincial economies and the economy in its entirety. 
Perhaps another name for this legislation could be—and I take this from the suggestion of my colleague Damien O’Connor earlier—the “Taxation (Saving National not National Savings) Bill”. Essentially that is what this is about. 
Hon Steve Chadwick 
: What a gamble. 
MOANA MACKEY 
: It is a gamble. National gave away unaffordable tax cuts which everyone said it could not afford. The Government has done nothing for 2½ years—nothing to stimulate growth nothing to bring New Zealand aggressively out of recession as we were told we would be 2 years ago. What have we had? We have had a Job Summit that created no jobs a cycleway to nowhere and that is it. The Government has cut back industry training cut investment in science and innovation and cut all the areas that normally create jobs and now Government members sit there and wonder why unemployment continues to rise. They wonder why more than 25 percent of young people in New Zealand are unemployed. That is a social disaster waiting to happen. Those young people are sitting there not in training not learning and not in employment. Nothing in this bill will do anything to change that; in fact it will only make it worse. 
I suggest again that maybe this could be the “Taxation (Finally Everyone Can See the Government has No Plan the Emperor has No Clothes and this Legislation is Nothing More than a Political Smokescreen) Bill”. If members opposite say this is a savings Budget why would the first piece of legislation introduced under urgency be cutting KiwiSaver? A savings Budget that cuts KiwiSaver! Even the  
New Zealand Herald  
has seen through that piece of spin. Even the  
New Zealand Herald 
 
which is normally very friendly to National has seen through that piece of spin. 
Sandra Goudie 
: They didn’t even understand the way in which dairy farmers do accounting. 
MOANA MACKEY 
: Sandra Goudie says the  
New Zealand Herald  
does not understand how the economy works. I am sorry that Sandra Goudie is retiring from Parliament because that woman was heading straight for the front bench I tell members. Mr Hutchison thought that was funny. I can tell Miss Goudie that the reality is that Labour left this National Government with an economy that the IMF and Bill English said was in an excellent position to weather the recession. We had one of the lowest Government debts in the world. We were in a net positive position. We had one of the lowest unemployment rates in the world. What has this Government done? It has frittered it away because it has had no plan and because it gave away all the money in tax cuts to people who did not need it who did not spend it in our economy and who did not use it in a way that was productive for New Zealand. That is why we are in the position we are in. 
Dr PAUL HUTCHISON (National—Hunua) 
: 
 Thank you Mr Chairperson for the opportunity to speak on clauses 1 and 2 of the Taxation (Annual Rates and Budget Measures) Bill which deal with the title and commencement. Firstly the title is totally appropriate to ensure the viability of the KiwiSaver and Working for Families schemes. Secondly the commencement is also totally appropriate and well signalled to the people of New Zealand who will have their opportunity to vote on these measures on 26 November and I am sure they will do so resoundingly. 
I noted that Moana Mackey asked why the first bill we are considering in the Budget legislation is about adjusting KiwiSaver. I just happen to have here a graph that shows the extrapolation of what would happen if the spending that happened under a Labour Government continued in the same way it had done pre-2008. It shows that Government spending as a percentage of GDP would balloon to 60 percent by 2023. That is the reason why this legislation is part of the Government’s wise pragmatic and prudential agenda to ensure the long-term sustainability of the KiwiSaver scheme and the Working for Families scheme both of which are adjusted in a fair sensible and intelligent way particularly Working for Families. 
Heather Roy made the point the other day when she asked why she should as a mother of five be eligible for significant tax credits when she was on a salary of $125000. If one looks at the Working for Families adjustments one sees that they do favour those who are less well-off and they curb the generosity to those earning over the $100000 mark. 
I noted that Kris Faafoi talked about the campaign to save KiwiSaver but little does he realise or have insight into where the New Zealand economy has gone under the auspices of the failure of the previous Government to be prepared to save at the appropriate time. I was fascinated to read in the  
New Zealand Herald  
this morning that people like Owen Glenn who is a friend of the Labour Party say that it is about time that Kiwis started to show individual responsibility. Owen Glenn said that adult Kiwis are given opportunities through generous health and education systems and that they must learn to spontaneously look after themselves for their retirement. Here we have a scheme that despite these minor adjustments will still allow the Government to assist with billions of dollars per year providing generous incentives to help Kiwis save. 
Clare Curran and Dr Rajen Prasad said that the Government was making it up. Well the Government certainly did not make it up when we realised that under Labour the number of Public Service staff increased from 26000 to 39000 with a decrease in productivity. We saw a doubling of spending in health from $6 billion to $12 billion with a decrease in productivity; up to 130000 people were on waiting lists and those lists were being culled. Of course in the last 3 years we have seen an enormous increase in productivity and an increase of up to 400 extra elective surgeries per week. The Government did not make up the fact that when Labour increased the top tax rate to 39c in the dollar the number of loss-attributing qualifying companies flourished throughout New Zealand and totally distorted our tax system. 
SU’A WILLIAM SIO (Labour—Mangere) 
: 
 Thank you Mr Chairman. I have been here since 11 o’clock fighting tooth and nail for an opportunity to speak. I have seen off two other Chairs and you are the first one who has given me the opportunity to speak in such an important debate. 
The CHAIRPERSON (Lindsay Tisch) 
: Here to help. 
SU’A WILLIAM SIO 
: I am happy to make my contribution on clauses 1 and 2 now. The first clause is the title clause of this legislation and the second clause refers to the commencement date of the legislation. Clause 2(2) refers to when the family tax credit and family tax abatement changes will take place. Clause 2(6) refers to the tax credit being cut in half and I will make detailed references to that in the course of my contribution. But I will reflect a bit before I get into the detail. 
Some years ago I met a gentleman from Africa. He worked in the national parks saving animals—very beautiful animals including elephants and rhinoceroses. He valued the protection of these particularly large animals. The problem was that there was a lot of poaching. I asked him how people could destroy one of these beautiful animals. He said the poachers used one bullet or one slash but generally a bullet to the head or a bullet to the heart and they allowed the animal to bleed to death—they allowed the animal to bleed to death. I will use that analogy in terms of what is happening now with KiwiSaver and the Working for Families tax credits. What we are seeing from this Government in the introduction of its Budget is that instead of giving confidence to those who are in KiwiSaver and to those who are not in KiwiSaver and instead of giving confidence to families who have children and who are struggling to make ends meet this legislation destroys every shred of confidence that those families have now and will have in the future. 
I draw members’ attention to this cartoon from the  
New Zealand Herald 
 a couple of days ago. I do not know whether they have seen it. It is a caricature of Bill English and John Key both of them half-naked in a pool of what looks like dirty water. Mr English is saying “This is by far my favourite economic stimulus policy”. Mr Key responds “Mine too” and then—this is the quote I want to draw members’ attention to—he says “You can look awful busy doing bugger-all”. That is what this Government is doing: it is looking busy doing bugger all for the economy and doing bugger all for the families of our nation. I would suggest that instead of being called the Taxation (Annual Rates and Budget Measures) Bill the bill should be called “National’s (Bugger All Budget) Bill”. 
Dr Paul Hutchison 
: I raise a point of order Mr Chairperson. I just seek your help in terms of describing whether that emanation from the member for Mangere which was repeated on many occasions was actually parliamentary. 
The CHAIRPERSON (Lindsay Tisch) 
: I thank the member for his intervention. To use the word that the member used in describing the title of a bill is unacceptable so I tell him not do it again. 
SU’A WILLIAM SIO 
: Thank you Mr Chairperson. I was merely quoting from the  
New Zealand Herald  
article here. 
Let me take members back a bit. For 9 years when Labour was in Government we operated in surplus. Why? Because we had a Minister of Finance who knew how to manage the economy and who had a plan. He was not fixated on one particular part of the economy but had an overall plan. We had a fair tax system. We had a fair tax system in which everybody from those on low incomes to those on high incomes paid their fair share—from 19.5 percent for those on low incomes to 33 percent for those earning between $40000 and $60000 and to 39 percent beyond that. We had a targeted approach to ensure that we invested in education to ensure that we invested in early childhood centres and to ensure that we invested in health. When the overall high cost of food began to loom we introduced Working for Families because that was a way to help working families through the difficult times. When we recognised that there was a need for savings we introduced KiwiSaver. The point I am making is that both Working for Families and KiwiSaver are so important to this nation. The evidence is the $1.7 million people who have signed up to KiwiSaver. 
The CHAIRPERSON (Lindsay Tisch) 
: I just remind members that we are on clauses 1 and 2 and this is a peroration about what has happened in the debate. It is not an opportunity to bring new material into the debate. We are talking specifically about a summary of clauses 1 and 2 in relation to the title and the commencement. 
DAVID SHEARER (Labour—Mt Albert) 
: 
 I will start by responding to what the Minister in the chair the Minister of Revenue was talking about in relation to his response to us saying that we were making it up. I will point out a couple of figures that of course we all agree on in this Chamber and that is that in a matter of 3 years we have gone from a $5 billion surplus to a $16.7 billion deficit. Nobody would disagree with that. The only thing that people would have difficulty with I think is understanding how on earth that actually happened. How did we go from a $5 billion surplus to a $16.7 billion deficit in the space of 3 years? People on the other side will say “Well actually it’s all about the earthquake.” Well actually even by Treasury estimates less than 10 percent of that deficit is made up by the Christchurch earthquake. The deficit will also be described as being because of the global financial crisis but that cannot in any way account for the degree of difference between $5 billion and $16.7 billion. 
A lot of the deficit can be attributed to mismanagement and the changes that this Government has brought in and that includes the changes to the taxation system. The changes to the taxation system included borrowing for the latest tax cuts. I would like to hear the Minister comment on that because that is one of the things that Treasury came up with in the Budget statement last year. That is another point: a lot of the discussion today has been about the Government’s future projections. I wonder when we talk about making up figures whether we can actually believe some of those projections. It has been commented on before that the difference between for example the forecasts of the Minister’s ministry which is the Inland Revenue Department and Treasury forecasts are grossly different. Who do we believe here? I would be more tempted to believe the Inland Revenue Department’s forecasts simply because its forecasts seem to be founded on a greater degree of certainty than Treasury’s. 
I have looked at the Treasury figures that Standard and Poor’s talked about. Why Standard and Poor’s goes along with it I do not know. Certainly the Prime Minister has led us to believe that this Budget is all about satisfying Standard and Poor’s. But Standard and Poor’s also said that the Budget foresees an operating deficit of $16.7 billion or 8.4 percent of GDP yet only 6 months ago the Half Year Economic and Fiscal Update was forecasting an operating deficit of $11 billion or 5.5 percent of GDP. Yet Treasury forecasts looking out for the next 3 years are extraordinarily rosy. My question asks why on earth we are prepared to accept those forecasts on which this Budget is founded. Why are we prepared to accept those figures? 
The other thing that I will bring up goes directly to the purpose of this bill and that is KiwiSaver. We have had many many speakers talking about KiwiSaver and saying that it has been halved or gutted yet the Minister in the chair said just a week or two ago on  
Q+A 
 that he needed to make sure that “KiwiSaver survives and is sustainable and is politician-proof in the future”. And he is right. 
Sitting suspended from 1 p.m. to 2 p.m. 
DAVID SHEARER 
: Before the lunch break we were discussing the certainty of KiwiSaver. On the assumption that at least the return would be equal or better over a period of time 1.7 million people put their money into KiwiSaver. I made the point that on Television New Zealand’s  
Q+A 
 programme last week the Minister of Revenue Peter Dunne said that making sure that KiwiSaver survives is sustainable and is “politician-proof” in the future is necessary but we have to make some changes now. It seems a bit of a contradiction. 
I would like to conclude this point because I think it cuts to the heart of what we are trying to say in the Taxation (Annual Rates and Budget Measures) Bill. In the course of the short history of KiwiSaver we have gone from a situation in which one regime brought it in to one in which the National Government cut the employer contribution. Now that employer contribution has been brought up slightly but the tax rebate has been slashed by the Government. If that is not political tinkering and meddling then I am not quite sure what is. I believe it really does make us think and contemplate the future of KiwiSaver and the confidence New Zealanders should have in putting their money into an account an investment or a system of savings when it will be meddled with by politicians for political reasons. 
I look at Mr Dunne’s statement on  
Q+A 
 and I wonder—I would like to hear from him on exactly this matter—how he can square that statement that KiwiSaver survives is sustainable and is politician proof but we will have to make some changes now. That seems to be a contradiction because we have tampered with it twice already in the course of this Government. The Minister I would imagine as a member of the previous Government as well probably had something to say on the formation of KiwiSaver what it should deliver and how it would impact on savings for New Zealanders. Perhaps he could relate to this Government something of the advice he gave the last Government on the establishment of KiwiSaver and whether he thought that it would need meddling with and changing at that point in order for it to persist throughout its life. 
We are looking at a real problem with retirement and a baby-boom section of the population who are coming to a period when they will be collecting record amounts of superannuation and impacting on the economy in terms of their health and welfare. Other speakers have mentioned other means but KiwiSaver is one way of ensuring that there will be some security in the economy. For it to now be meddled with means that it will erode the confidence many New Zealanders have in KiwiSaver in the future. I would not be surprised if as a result of this Budget we had fewer New Zealanders taking up KiwiSaver fewer people being involved in it because their confidence in it and the confidence that politicians will not simply meddle and play around with it has been shattered. They do not have confidence any more that that will not happen. They would rather do the thing we are trying to get away from and that is put their money if they have any spare into the property market because at least there they can see bricks and mortar—that sort of thing. That is exactly the situation we do not want but in effect it is exactly what we are incentivising those people to do to put their money into less productive areas of our economy rather than putting it into KiwiSaver. 
If we look at this trend in the long term I sincerely hope this does not happen because—if members can believe it—the projections out over the next 20 years will put about $60 billion of savings into our economy that could be used for productive enterprises. For the political expediency of the short term we are undermining the ability of KiwiSaver to persist and have the confidence of New Zealanders through time. It is so fundamental. When I look at my kids I would like to think they have an opportunity to save early and reap the rewards later on not to have those rewards undermined by the political whims of the day. Frankly this bill is a political whim. It is politicians playing around with our future and it should not happen. 
STUART NASH (Labour) 
: 
 We are debating the title and commencement clauses of the Taxation (Annual Rates and Budget Measures) Bill. I will talk a little about the commencement date. Of course Mr Key said he would not change KiwiSaver. That was one of the platforms he campaigned on in 2008. He also said he would not increase GST but he did. At least with this change he said he will go to the public to seek a mandate. He has made that absolutely clear and he has put his plan for growth on the table. Mr Key has said that his plan for growth includes cutting KiwiSaver. I suppose the thing that annoys me a little bit about that— 
Hon Member 
: A lot. 
STUART NASH 
: Actually it annoys me a lot. There are 1.7 million people in KiwiSaver and the reason they invested in KiwiSaver is that we suggested they do so. When I say “we” I mean members of Parliament: Michael Cullen; members of the National Government actually; and the honourable Minister of Revenue himself. We went out and told New Zealanders that they needed to save more that this country was in trouble because we have huge net debt. We have pumped a lot of money into housing into the non-productive sector so we need to save more. We told New Zealanders that we do not know what will happen with superannuation in time. We told New Zealanders that if they really wanted to make sure they could retire with dignity and live with respect in their older years then they needed to put some money away for a rainy day for their retirement. 
This is what New Zealanders were told. This is what we advised them. We set up a scheme that would allow this to happen. It was quite generous. If people invested they were given a carrot of $1000 which is not an insignificant amount of money. Most New Zealanders realised this was a good deal. We figured that most New Zealanders needed a sweetener so we gave them $1000—there were some nice incentives there—and they took this up because New Zealanders by and large are pretty well-engaged people. They are intelligent and they know a good deal when they see it but they also know that their future is important so 1.7 million New Zealanders invested in KiwiSaver. 
The really disappointing thing with this bill which we are debating under urgency is that part of the incentive to invest in KiwiSaver has been taken away. I cannot understand the rationale behind that change because New Zealanders are doing what we told them to do which was to save and we are taking away some of the incentive. In fact there was a bloke on the television this morning an ex - All Black who felt aggrieved by this. He said he was an ex-National voter; he voted for National in 2008 but he felt that John Key and the National Government had broken a contract they had signed with voters. 
There are a lot of New Zealanders out there who get this—it was a simple message to stop investing in houses and to stop spending on plasma TVs and other consumables because that of course drove up international debt increased interest rates and was not good for our economy. It is one of the reasons we are so indebted. 
The Labour Party recognises that New Zealand has issues in terms of debt. We know that the Government—any Government—cannot simply keep borrowing $380 million a week. We accept that but I tell members that this legislation is not a plan. This legislation does not set out a plan for how to address that. If a plan is cutting KiwiSaver then God help me. This is not a positive move to drive economic growth; it is a negative move. This is not a positive way forward for this country. It is taking us backwards. 
Another point we said was so important about driving economic growth in New Zealand was the depth in our capital markets. KiwiSaver was beginning to achieve that. What we absolutely need—I thought the Prime Minister understood this and I thought the Minister of Finance understood this—is a pool of money that can be invested in New Zealand on behalf of New Zealanders to grow the pie. 
Someone was talking before about the scheme that was put in under Norman Kirk. It was put in by Sir Roger Douglas. Sir Roger Douglas understands the need to save and it does not come more right wing in this Parliament than Roger Douglas—well it did; Don Brash sits there every now and again. Sir Roger understood the need to save. Even Sir Roger put in a scheme and if that scheme was still going now our economy would be completely different. But that scheme was axed by National. 
I look at the state of our economy at the moment with $16 billion worth of debt and I cannot help but wonder what it would look like if 40 years worth of saving had accrued. As sure as eggs we would not be facing a $16 billion deficit. I tell members another thing. Mr Key laid it out—he said: “OK we will see you on the campaign trail.” This legislation is about a mandate for asset sales and a mandate for KiwiSaver. This election will be about a mandate for this bill. So this is quite important legislation—it is a small piece of legislation but it is very important legislation. The fact that it is being rushed through under urgency makes no sense to me because there is still enough time to take this through before the election. 
As I said all we have to do is look at the commencement date. There is no urgency with this but the consequences are huge for all New Zealanders. Perhaps we could call it the “Taxation (Stealing Kiwis’ Dreams) Bill”. In a way that is what is happening. The Government is taking away the dreams that members of Parliament handed out to people. We painted a vision to all New Zealanders that if they invested in KiwiSaver there would be a nest egg there for them. In a way we are taking that away. I admit that we are not taking all of that away but let us be honest. If we take an extra $10 a week for 52 weeks a year for the next 20 to 30 years that adds up to a significant amount of money. To take it away is in a way taking away the dream stealing a little bit of that dream that New Zealanders thought we had laid out for them. 
That is why I come back to the bloke in Eltham who said the Government had broken a contract with him. I would also like to remark on the words that Mary Holm said. I very much doubt that Mary is a Labour supporter. She might be; she is certainly sensible. She understands economics and finance. She said that the Government has taken an excellent scheme and made it only very good. This scheme has gone backwards. In fact I think the vast majority of political commentators who understand the woe that this economy is in have said that this is a step backwards. It not a step forward. It is not a plan for growing this economy. This legislation is not a plan. 
Mr Key said to Phil Goff “I will see you on the hustings Mr Goff.” I cannot wait for that. I cannot wait to stand in a public meeting with Mr Tremain in Napier as he explains to the people of Napier why this legislation is good and why it was necessary to take $10 a week off the people of Napier. I am also keen to hear Mr Tremain explain in a public meeting why the Government has taken $120 million out of the Hawke’s Bay economy in terms of Working for Families because that is what this bill does—it takes $120 million. 
We have to remember that Working for Families did not go to the wealthy. It went to the people who had been identified as needing a little bit of a hand up—not a hand out but a hand up. They were people who worked and had children and the Government has taken away a portion of that from the Hawke’s Bay economy. That will hurt one of our most depressed regions. I would argue—and I would argue with my colleagues on this—that Napier is the best city in the best country in the world but this steals a little bit out of us because the people of Napier will lose some money. 
There are more shops closed in Napier now than there have been for 10 years. This bill takes money out of the Napier economy. Working for Families gave money to people who would spend money. That is one of the reasons why the Labour Government instigated Working for Families. It realised that people who were working and bringing up children needed a little bit of a hand up so they could continue to live a decent lifestyle which we demand for all New Zealanders. 
This is why I am so disappointed with this legislation and this is why it is such a shame that it could not go to the Finance and Expenditure Committee. I am on that committee and Mr Foss is the chair. We could have heard all the arguments for and against this bill and made a reasoned rational decision then presented it back to the House. I suspect the reason why it has not gone to the select committee and why we are passing it under urgency is that the Government knows the response. The Government knows that every single Kiwi would say no—every single one of the 1.7 million New Zealanders who have invested in KiwiSaver. 
Hon RICK BARKER (Labour) 
: 
 I will take a call in this debate and say that the National Government should hang its head in shame over this legislation the Taxation (Annual Rates and Budget Measures) Bill and that the bill is entirely consistent with the philosophy the practice and the orthodoxy of National which is to cut chop and gut. As Mr Nash has reminded us National chopped into the superannuation savings scheme that was put in place by Labour in the 1970s. National railed then against that national superannuation scheme put in place by Norman Kirk on the grounds that it would buy up New Zealand. That is what National said. National said we could not have Kiwis owning New Zealand. National said that such superannuation schemes would get so big their funds could buy up New Zealand—New Zealanders would own their own history and we could not have that! So Muldoon got rid of it. He got rid of it on the basis of a canard. The canard was that New Zealand could continue to afford out of taxation to pay people 80 percent of the ordinary average wage from the age of 60 until they passed on. Every newspaper editor in New Zealand knew that was a lie. Everybody knew that it was a lie but Muldoon sold it on the basis that he would give back to every person their personal contributions and their employer’s contributions. 
I was a worker in those days; I was in the scheme. People at the place I worked at figured out that if they got back their contributions and the boss’s contributions they could buy a new stove a new fridge or a new something else. They all spent the money. When National was elected in 1975 Muldoon through his own motion stopped contributions. Muldoon was taken to the High Court and the Court of Appeal and he was found to be the only person who as a Prime Minister had acted ultra vires. It was a landmark decision that is now read all over the world. Muldoon of his own hand both took away and exercised the power of this Parliament. The court found him wrong. The court did not make him change the legislation because it knew he had the power to change it but the court said he was wrong. Muldoon was not wrong only constitutionally and legally; he was wrong morally. 
If that superannuation scheme had stood we would not have had to sell the Bank of New Zealand because the superannuation scheme itself could have bought it. We would not have had to have sold many other assets. because the superannuation scheme could have bought them and owned them. More important the New Zealand superannuation scheme could have bought assets all over the world to make New Zealand a richer country. Instead we have the legacy of Sir Robert Muldoon and National— 
Michael Woodhouse 
: I raise a point of order Mr Chairperson. This is all very interesting but it certainly does not go to the title of the bill. I wonder whether the member could be brought back to the title. 
The CHAIRPERSON (H V Ross Robertson) 
: I thank the member for drawing that to my attention but the member who was speaking has a right to refute in debate. I am sure he will come back to the title very shortly. 
Hon RICK BARKER 
: That is a sign that National members feel very uncomfortable to hear their history told to them. National’s history on superannuation is dismal and grim and a legacy of shame. 
What happened because we did not have the superannuation scheme? Australian superannuation schemes came to New Zealand instead. They bought up our banks and bought up all the rest of it because we did not save. But National having made such a travesty out of it then went on and committed a further one on superannuation. National went to the election and said “No ifs no buts no maybes …”—it would not put a surcharge on superannuation funds. What happened? The National Government not only put on a surcharge; it put up taxes. So people said there was a complete and utter disincentive to save for their retirement because even if they did the Government would tax if off them. That caused a proliferation of trusts in order for people to hide and shelter their income and get it away from taxation. That is what happened. The third travesty that will be inflicted upon— 
Jo Goodhew 
: Mr Barker the Chair is saying to you— 
Hon RICK BARKER 
: If the Chair wants to speak to me the Chair will speak to me directly by getting to his feet and taking the call. 
I was just about to say that in the Taxation (Annual Rates and Budget Measures) Bill we see the third crime by the National Party against superannuation in New Zealand. National is following its philosophy of cut gut and chop. Whatever it gets holds of it says: “Cut it chop it get rid of it.” That is what it is going to do with the legacy from our grandparents. Our grandparents built dams all over this country as a gift to the next generation. National is going to sell them off so it can go and spend the proceeds. That is what it is going to do. That is a part of National’s plan. It is also going to chop into superannuation again. 
JO GOODHEW (Junior Whip—National) 
: 
 I move  
That the question be now put 
. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 It is incumbent on us at this stage of the debate as we review the title and commencement of the bill to try to find a phrase or a word that most aptly encompasses the real meaning of the bill for New Zealanders. Though I am never a believer that politicians should be driven by the media it just so happens that the media have been helpful to us on this occasion so I thought I might bring forward to the Committee some titles that have been suggested by the ladies and gentlemen of the press. How about the “Taxation (Fairytale of High Hopes on a Frayed Thread) Bill” courtesy of the  
New Zealand Herald 
? 
That is not a bad start. How about the “Annual Rates (Budget Lacks Job Creation Plan) Bill” courtesy of the  
National Business Review 
 I believe? How about the “Annual Rates (Budget Hopes Rest on Shaky Foundations) Bill” from the editorial in the  
New Zealand Herald 
? 
Sue Moroney 
: Ouch! 
Hon DAVID CUNLIFFE 
: Ouch! Or from the  
Dominion Post 
 we have 
“Budget 2011: Battlers Asked to Give Back Bill”. Or again from the  
New Zealand Herald 
 how about 
the 
“Shaky Quakey Budget Bill”? 
Sue Moroney 
: Ouch! 
Hon DAVID CUNLIFFE 
: The “Shaky Quakey Budget Bill”. It seems that the ladies and gentlemen of the press might have cottoned on to the fact that a few of the assumptions or a few of the fiscals upon which these tax rates stand might be just a little bit exaggerated. That might have something to do with the fact that Standard and Poor’s no less today announced to the world that they are not removing New Zealand from negative credit watch. Why? It is because they do not believe the numbers either. They do not believe the numbers any more than the editorial writer of the  
New Zealand Herald  
who said: “This is a bunch of old codswallop.” Now everyone is scratching their head and wondering what happened at No. 1 The Terrace that this pile of rubbish got printed. 
But there is more. How about these headlines in respect of the KiwiSaver components: the “Taxation (Pay More to Save the Same) Bill” or the “Tax Credit Reduction Takes all the Gloss off Savings Bill” or the “Experts Label KiwiSaver Move a Tax Grab Bill”? Those are a few of the headlines on KiwiSaver. How about these ones for education: the “Student Loans Cuts Discriminatory Bill” the “Loans Cuts for Older Students Attack Bill” the “Booster Doesn’t Cover Inflation Bill” or the “Dog Ate My Early Childhood Education Bill”? They all make a very good set of headlines. 
Kris Faafoi 
: Even the dogs are hungry! 
Hon DAVID CUNLIFFE 
: No it is not all bad news colleagues. It would be unfair of us to portray that this is all bad news. There are certain very deserving constituencies that have done extremely well out of the Budget. How about the “Tax Breaks for Rugby Bodies Bill”? That is an excellent cause if ever there was one. We could have the “Do your Bit with the Quake Bond Bill” or how about the “Middle Income Families Pushed Over the Edge Bill” from Stuff’s editorial? This is one of my favourite ones: “The Lack of Courage and Vision Bill” which is something that is of course not a contravention of the Standing Orders because it is not my own opinion; I am merely quoting from a newspaper headline. I will say it again from the  
Dominion Post 
 
the “Lack of Courage and Vision Bill”. Ouch! What about the “Economists Say Surplus Contingent on Recovery Bill”? That was a headline in the  
National Business Review 
 which casts certain aspersions in that direction. 
Sue Moroney 
: Ouch! 
Hon DAVID CUNLIFFE 
: Ouch! 
Dr Rajen Prasad 
: That must hurt. 
Hon DAVID CUNLIFFE 
: It does hurt. When even the  
National Business Review 
 starts kicking holes in a Budget big enough to drive a super-tanker through one knows one has problems. I ask my colleagues why it might be that certain august denizens of the financial sector are themselves beating the crap out of the Government over this bill. Well there may be certain assumptions built into these financials that could be just as they say a little bit shaky quakey. Here are a few of the shaky quakey assumptions. There is a $3.8 billion difference between the revenue forecast from the esteemed gentlemen at No. 1 The Terrace in Treasury and the equally esteemed gentlemen at the Inland Revenue Department who are saying: “No no we do not believe your growth numbers either. We could not possibly collect that much tax. How about $4 billion less?”. 
Dr Rajen Prasad 
: Which one did they take? 
Hon DAVID CUNLIFFE 
: Which one does the member think the Government took? Does he think the Government took the more prudent the more fiscally responsible lower numbers? No it took the higher more exaggerated pie-in-the-sky numbers from Treasury. 
What about the “Missing Billion (Dog Ate the Department Concerned) Bill”? There is a billion dollars of supposed savings here—$980 million to be precise—that nobody has the faintest idea where they are coming from. The Government has not even narrowed it down to which department. Is it health is it education or is it superannuation? It has stopped pre-funding that; maybe it will dig back out of it. We do not know because they have not ascribed it. For the first time in New Zealand’s history a Government has been able to get away with an unallocated saving. Do members know what Trevor Mallard a former Associate Minister of Finance in days gone by would have done to a junior Minister who proffered up savings without saying what output class they came from? 
Dr Rajen Prasad 
: Not pretty. 
Hon DAVID CUNLIFFE 
: It would not have been pretty. Mr Mallard’s jaws would have been locked around their ankles and they would have been sent scampering to their office to have another think. But this is worse than that; the Government does not even know which Minister it is. Might it be coming out of Mrs Collins’ next prison? A small dent in the supply of sow crates for prisoners perhaps? Who knows. Might it be the Minister of Agriculture? Might there perhaps be a small reduction in the tax breaks for farmers in future Budgets? Who can tell because we simply do not know. 
There is a billion dollars missing but why did Treasury sign off on this rubbish? That is what is what Standard and Poor’s wants to know. Kyran is going to be back on the hunt for the ladies and gentlemen of Treasury— 
Stuart Nash 
: Is that why Whitehead is leaving do you think? 
Hon DAVID CUNLIFFE 
: I do not think that would be the reason; I think it is more likely to be a gutsful of the National Government. But anyway here is the doozy. Here is what the commentators are all really concerned about and it is not the missing billion dollars; it is not the $3.8 billion. A taxi driver said to me on the way to a meeting this morning: “Are they really going to create 177000 new jobs? How?”. I said: “No and no one knows.” They have no idea because there has been a misprint in this book the Executive Summary for the Budget documents. There is a whole chapter missing in every one of the ones that has been printed sadly. It is the chapter on growth strategy. It is the economic development chapter. It has just gone mysteriously from every single volume. There is no growth plan.  
But 177000 new jobs are magically produced by the same Hollywood pixies. Do members know what members on this side of the Chamber think it is? We think that perhaps this title should be the “Warner Bros Wrote the Budget Bill” because it might be a little fringe benefit for the Hobbit-helpers over there. The Hobbit-helpers got Warner Bros to write the Budget because it is a work that belongs in the fiction department of the library not the non-fiction department. 
I will return to the title of the bill. The title could be any one of the headlines in editorials that we have read out for the delight of you Mr Chairperson and for the public’s delight this morning. When the bubbly from the seventh floor of the Beehive ran out late last night and the hangover set in this morning one could see that the Budget was a bit like the “beer-goggles Budget”: she looked great last night but when one wakes up in the morning one sees that all it is is a blue hump of cardboard with rubber numbers in it. Go figure. 
Michael Woodhouse 
: Just add a little bit more detail to that. 
Hon DAVID CUNLIFFE 
: I thank Mr Woodhouse. How long did the member stay at the Minister of Finance’s party last night? That is what we want to know. 
I can tell members that when I was doing the rounds of the press gallery this morning as part of my constitutional duty to spread the good word the journalists were none too impressed because they had started reading the document and like us they were wondering how the numbers add up. I say to the Government that whatever it calls the Budget and perhaps it should be called the “Lipstick on the Pig Bill” it does not matter what colour of lipstick the Government puts on it at the end of the day it is still a pig. 
MICHAEL WOODHOUSE (National) 
: 
 I move  
That the question be now put 
. 
SUE MORONEY (Labour) 
: 
 Here we are on a Friday in Parliament under urgency debating the title and commencement clauses of the Taxation (Annual Rates and Budget Measures) Bill. I know the Government is ashamed of what it is doing in this bill. How do I know that? Because Government members have not even been brave enough to say in the title of the bill what it is doing. The title of the bill does not make any reference to KiwiSaver. Who will save KiwiSaver? It will not be that Government; it could be only a Labour-led Government. The title of the bill does not mention Working for Families. Government members are ashamed of what this bill does. The two things this bill does is cut and gut KiwiSaver and Working for Families yet would Government members dare mention the name of those two schemes in the title of this bill? No they have not been able to bring themselves to do that. They have hidden the cuts to those schemes in a title that could mean 101 different things. 
It will be if passed by this Parliament the Taxation (Annual Rates and Budget Measures) Act 2011. I challenge members opposite to take a call to explain why they would not even mention KiwiSaver or Working for Families in the title of the bill because that is what it is all about. It is all about taking the knife to those two initiatives that came from this side of the Chamber. They came from Labour and they have made huge differences in the day-to-day lives of hard-working New Zealanders. Government members are sitting on the other side of the Chamber knowing that the Prime Minister is getting an extra $1000 every week in his back pocket from the tax cuts in last year’s Budget and they will not contemplate looking at that yet here they are having a go at hard-working New Zealand families. Those families have a day-to-day week-to-week struggle just to make ends meet. This Government comes along with this Budget and the only thing it can think to do is disadvantage those people even more by moving up thresholds for Working for Families payments meaning fewer families are eligible for those payments. The Government is also giving people a disincentive to save for their retirement. How mean is that? 
I will talk about the commencement date of this bill. Much of the bill—in fact five parts of the bill—does not come into force until 1 April 2012. That will be a pretty interesting day: April Fool’s Day. It is another April fool’s joke from this Government. We should note that the date is next year—2012. So what is the urgency for? Why is it that we are in Parliament today pushing through taxation legislation that will not even hit the ground running until 1 April 2012? It is not as if we have to do it quickly so that people cannot adjust the way they have their money structured in order to take advantage of the changes as they were announced just yesterday in the Budget. None of those things matter when it comes to this bill so I ask why we are debating it under urgency. The commencement clause makes it quite clear that there is no need for urgency to debate this. 
I think my colleague Stuart Nash was onto it. I think the only reason there could be urgency for this bill was so there could be no select committee process. We are in urgency so that there could be no select committee process and Government members would not have to listen to the response they knew would come from hard-working New Zealanders. The Government did not want to hear from ordinary hard-working New Zealanders about the impacts on them of cuts to Working for Families. Government members do not want to hear—and they are not listening—the impact on people who really do want to save for their retirement. Those people had a helping hand in that from the Labour Government but they have had it stripped away from them by the National Government. The Government did not want to hear the stories from those people of how this bill will hurt them and their ability to save. 
That is the only reason I can think of in terms of why we are in urgency to consider this bill when it does not come into being until 1 April 2012 on April Fool’s Day. Here we are on a Friday in Parliament with the Government thinking that it is urgent to strip away people’s rights without first even listening to what those impacts will be. So there will be no select committee process. There will be no opportunity for New Zealanders to tell that Government about the week-to-week struggle they have and how this Budget will continue to hurt them. 
CHESTER BORROWS (National—Whanganui) 
: 
 I move  
That the question be now put 
. 
SU’A WILLIAM SIO (Labour—Mangere) 
: 
 We have noticed that this Government called this session of urgency but has spent all its speaking opportunities trying to close down the debate on the Taxation (Annual Rates and Budget Measures) Bill. That makes no sense whatsoever. 
I follow on from my colleague Sue Moroney by saying this debate is about cuts and the removal of opportunities for our country to save. It is about gutting KiwiSaver and gutting Working for Families. I say to members on the other side of the Chamber that I hope they are prepared to stay overnight because they called this urgency and we will keep holding them to account today. 
We are talking about clauses 1 and 2. The bill should be called the “Families Who Are Struggling Are Still Struggling Bill” because despite the Government’s rhetoric that the Budget is helpful to the general public the fact remains that those who were struggling are still struggling today. Cuts to KiwiSaver and cuts to Working for Families will not help those people at all. 
We could call the bill the “Families Who Want to Save Will Now Have Second Thoughts Bill”. KiwiSaver was designed to encourage people to save. Incentives were there to promote and encourage people to save. What did we have? We had 1.7 million people saving under the scheme. But what will this legislation do? It will discourage those people because instead of receiving what they were entitled to under the previous legislation we are now asking them to have their support cut in half. We could also call this bill as my colleague David Cunliffe said the “Making It Harder for Kiwis to Save Bill”. Is that not what the Government is doing here? It is cutting support for people to save so the “Making It Harder for Kiwis to Save Bill” is probably a better name. It could also be called the “Pay More to Save the Same Bill”. Is that not what the  
New Zealand Herald 
 called it? That is a good name for it. 
It could be called the “Broken Promises Bill” because many of the public would recall that prior to the 2008 election Mr Key made promises that no cuts would be made to KiwiSaver and Working for Families. What did we get after National won the election in 2008? Tinkering. What did we get in 2009? More tinkering. What did we get in 2010? Another tinkering. What do we now get in 2011? Two major tinkerings. That is what I meant. The way to destroy something good is to allow it to bleed. This Government is allowing things to bleed by tinkering here tinkering there sitting on its hands and doing nothing about the overall economic plan except focusing people’s attention on the debt we have. 
The other issue is that according to its plan we are supposed to come out of debt a year earlier. Instead of a $16 billion deficit somehow miraculously we will have an $8 billion deficit one year before the previous estimates. If the estimates were wrong in 2009 and 2010 how the heck can we expect the Government to have it right this time? How the heck can we expect the Government to miraculously create 177000 jobs? We have 155000 people still unemployed and the Government’s own projections show there will be a 4.5 percent unemployment rate right until the year 2025. 
Where is the support the Government keeps talking about while it cuts money from initiatives that are there for the sake of this country? I want the Minister of Revenue to answer. Could he please answer yes or no whether there is a cut of $2.6 million from KiwiSaver— 
Sue Moroney 
: Billion. 
SU’A WILLIAM SIO 
: Billion. Can he also tell us whether there is a cut of $448 million from Working for Families? The Minister is not saying anything so we can assume ladies and gentlemen that the whole purpose of this bill is to cut chop and gut Working for Families and cut chop and gut KiwiSaver which are there for the benefit of this country of ours. That information gives people a little view about what this debate is all about. I note a remark made by one of the other members of the Opposition earlier this week: when we consider this Budget on the whole it seems that it is a gambler’s Budget. Gamblers do not care whose money they use. 
AMY ADAMS (National—Selwyn) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 67 
New Zealand National 58; ACT New Zealand 5; Maori Party 3; United Future 1. 
Noes 53 
New Zealand Labour 42; Green Party 8; Progressive 1; Independents: Carter C Harawira. 
Motion agreed to. 
A party vote was called for on the question  
That clause 1 be agreed to. 
Ayes 67 
New Zealand National 58; ACT New Zealand 5; Maori Party 3; United Future 1. 
Noes 53 
New Zealand Labour 42; Green Party 8; Progressive 1; Independents: Carter C Harawira. 
Clause 1 agreed to. 
A party vote was called for on the question that clause 2 be agreed to. 
JO GOODHEW (Junior Whip—National) 
: 
 I raise a point of order Mr Chairperson. I regret that I am raising this point of order in the middle of what is happening but I refer you to Speaker’s ruling 67/6 and I ask for your clarification. It is my understanding that in fact it is up to the dissenting voice to call for a party vote rather than the presiding officer to offer a party vote. Therefore I ask that you direct the senior Opposition whip if he is a dissenting voice to request the party vote rather than to wait for it to be offered to him. 
Hon RICK BARKER (Senior Whip—Labour) 
: 
 The honourable member Jo Goodhew makes a very good point that it is always the dissenting voice that calls for a party vote. But there is sometimes some conjecture about who has won and who has lost it. I am entitled to contest the vote in several ways. I just say that as the honourable member Jo Goodhew knows I have said to you on a couple of occasions that the “Noes” had it because I sincerely believed that if we took it on voices the voices of the “Noes” were much louder than the voices of the “Ayes”. What normally happens in the Chair is for the Chairperson to listen to where the weight of the sound and the voices is. Clearly on voices for that vote there were more “Noes” being recorded than there were “Ayes”. And not only was that so but the voices raised in opposition were both louder than the “Ayes”— 
The CHAIRPERSON (H V Ross Robertson) 
: Thank you. 
Hon RICK BARKER 
: At that point Mr Chairman if you were going to proceed then I would be perfectly entitled to ask for a party vote which I know very well. I just took your suggesting a party vote as an act of human kindness and generosity. 
The CHAIRPERSON (H V Ross Robertson) 
: Thank you the member will be seated. We have all been here long enough and we know the procedure. The vote has been called and we will abide by that. I advise the Clerk to take the vote please. 
STUART NASH (Labour) 
: 
 I raise a point of order Mr Chairperson. After the honourable member Jo Goodhew’s point of order I am wondering whether she wants the call nullified or taken again. 
The CHAIRPERSON (H V Ross Robertson) 
: That is a frivolous point of order. The member will be seated. We will take the vote Clerk please. 
A party vote was called for on the question  
That clause 2 be agreed to. 
Ayes 67 
New Zealand National 58; ACT New Zealand 5; Maori Party 3; United Future 1. 
Noes 53 
New Zealand Labour 42; Green Party 8; Progressive 1; Independents: Carter C Harawira. 
Clause 2 agreed to. 
Hon RICK BARKER (Senior Whip—Labour) 
: 
 I raise a point of order Mr Chairperson. I want it to be clear on the record that there was an interchange across the Chamber between the Hon David Carter and myself. I do not want in any way to leave the implication that I was intimidated by his conversations with me. 
The CHAIRPERSON (H V Ross Robertson) 
: I know that it is getting late on a Friday afternoon colleagues and we have all had our fun but members will be aware that it can be seen as intimidation. In fact it can actually lead to a breach of privilege. 
Bill reported without amendment. 
Report adopted. 
Third Reading 
Hon PETER DUNNE (Minister of Revenue)  
on behalf of the  
Minister of Finance 
: I move  
That the Taxation (Annual Rates and Budget Measures) Bill be now read a third time 
. I need to report to the House that this bill which gives effect to the Budget’s provisions relating to some of the changes to KiwiSaver and Working for Families has been thoroughly considered by the Committee and has emerged without amendment. During the Committee stage of the bill there was a very rigorous set of debates but in many senses not a great deal of light was shed particularly from the Opposition on an alternative package. 
It is worth noting in respect of KiwiSaver that even after the changes that members opposite have so decried it is still anticipated that KiwiSaver membership will strike 2 million during the 2012-13 year. One of the points that is relevant to the reason the changes are being made—and I will respond to a point made by Mr Shearer late in the Committee stage—relates to the cost of KiwiSaver’s success. When KiwiSaver was introduced in 2007 the projection was that it would hit 700000 members by 2015. It now has 1.7 million members and that number is projected to be 2 million during the 2012-13 year. That is well over twice or nearly three times the original projection. Because of both the member kick-start—which is not being touched—and the member tax credit there is a significant fiscal cost to the Government associated with KiwiSaver and in order to sustain the scheme into the future these changes have been necessary given the extraordinary and unprecedented success of the scheme to date. The changes amount to about $2.6 billion in savings. 
The changes being made to Working for Families which will kick in from 1 April next year in some cases will take 4 years to be fully implemented and in other cases will take nearer to 8 years to be implemented. The changes represent a cost saving of approximately $447 million to the Crown over that time. 
The legislation gives effect to the Budget measures. The Budget was really about setting a path for returning New Zealand to surplus after some unprecedented experiences in recent years—the global financial crisis and now the Christchurch earthquakes—yet we are still predicting a return to surplus in 2014-15. The changes contained in this bill are part of achieving those policy objectives. 
I thank the officials who have served the House during the hours of the Committee stage. I thank those members who have participated in the debate. I commend the bill to the House. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I rise to take a call but I was engrossed in this incredibly exciting  
Dominion Post  
article which aptly sums up the Budget as “A big fat zero”. Moving on this speech is about the Taxation (Annual Rates and Budget Measures) Bill. This bill vests part of the Budget in legislation. As we have discussed earlier and throughout this debate the first question that must be asked again in the House is why we are being forced to do this under urgency today. Fundamentally there is a deep paradox at play. The Government has said it will seek a mandate from the public on the changes proposed in this bill. It said it will go to the 2011 election in which case these changes should have gone into Budget 2012 once a mandate had been obtained. As the Government has not done so it is either the case that the Government has unmandated legislation and therefore fiscal consequences or it has broken an election promise. It can logically be only one of those alternatives. Treasury has signed off on this bill so I assume that means Treasury’s view is that this is not unconstitutional and not unmandated. It must therefore logically be the case that Treasury believes that the Government has broken a major election promise; if not one then several. 
The Government said it would not cut KiwiSaver and this bill cuts it. It said it would not cut Working for Families and this bill cuts it. Most people I talk to are struggling. They are struggling as prices rise faster than wages. They are working hard they are doing everything right but they just cannot seem to get ahead. Every week I hear stories in my electorate of people who week after week are cutting back just to put food on the table or to pay the power bill. National’s third Budget should have addressed this but unfortunately it makes the struggle that much tougher. It does not help but it does hurt. It is a tinkering Budget that does not have a plan to get the economy going again. It does not address the problems that are at the core of this moribund economy and that have undermined our chances of putting people back to work. 
The best way to get a deficit down is to get the economy growing again. We in Labour will be continuing to outline our plan to get the economy going over the next few months. We will present a credible strategy for rebuilding the New Zealand economy with a fully costed package of measures. There is no doubt that we need to be saving more as a country. There is no doubt that the intention of building up national savings is worthy but there is also no doubt that reducing the incentives available to New Zealanders to get them into the programme while simultaneously taxing the employer contribution before it benefits the employee is not the best way to do that. One can expect that the Labour Opposition will be bringing to the public a better plan for increasing national savings for the benefit not only of those saving but also of all New Zealanders. 
Selling assets is just as short-sighted. This bill contains the tax rates which are predicated on a fiscal balance. That fiscal balance is supported by the illusion of capital flows that should not yet exist. There is no mandate for asset sales. All the polling tells us that New Zealanders hate the idea of the so-called mixed-ownership model which makes people pay twice for things they already own. Every New Zealander owns Mighty River Power Meridian Energy Genesis Energy and 80 percent of Air New Zealand. New Zealanders own them already. They do not need to buy them twice and of course what will happen is that most of those shareholdings will pass to the control of foreign multinational corporations thereby undermining the economic sovereignty of this country. 
That might be less awful if it solved the problem but it does not. It is like taking a teacup full of water and throwing it on a raging bushfire except in this case there is nothing raging about the New Zealand economy; it is raging nowhere. Just as importantly this does not therefore solve our debt problem. What will the Government do when debt increases further and there are no assets left to sell? This is not a plan that will grow our economy. There is nothing in this bill nothing in the regulatory impact statement and nothing in the Budget that shows a plan to create jobs and growth. 
A rosy glow is forecast of 4 percent growth in 2012-13 which nobody believes. Nobody believes it. The rating agencies patently do not believe it because this Government has just got a C- or a D from Standard and Poor’s which means: “We will believe it when we see it.” Increasingly that is now the view of the mainstream media which are questioning the flimsy thread of credibility upon which this Budget hangs. They do not believe that it is right that there should be $1 billion of unspecified cuts. They do not believe that it is right that there should be $4 billion of difference in cash flow between the Inland Revenue Department and Treasury. They do not believe that it is right to raid the piggy bank of public servants by taking $650 million from their retirement fund. They do not believe that it is right to take more out of the KiwiSaver of teachers than we are putting back into early childhood education. None of that is right none of it shows any vision none of it shows any boldness and none of it shows any plan. 
New Zealanders are hungering and thirsting for a way out of the economic wilderness and they have been waiting for three Budgets now for a credible plan to get them there. It was not the Job Summit. It was not the cycleway. It was not the rolling maul of tinkerers. It was not suspending payments to the Superannuation Fund. It was not huge tax breaks for upper-income earners and it is not cutting KiwiSaver and Working for Families and flogging off assets because that is all this Budget does. 
The crime of this Budget is not only what it does do. It is not only the measures that attack KiwiSaver and Working for Families that are in this bill but it is what it does not do. This Budget does not provide hope it does not provide vision it does not provide a plan and it does not provide a way out of the fiscal nightmare that this conservative Government has wrought upon New Zealand. Government members will say that it is Labour’s fault when it is not. Labour left the country in surplus to the tune of 7.6 percent of GDP. They will tell us that it is the earthquake’s fault but it is not. The earthquake is responsible for only 10 percent of the accumulated debt and their economic mismanagement is 90 percent along with the global financial crisis. 
They will tell us that they are being fiscally responsible and they are not. There is nothing fiscally responsible about making up numbers. There is nothing responsible about a billion dollars of cuts when we do not know where they are coming from. There is nothing responsible about imagining 170000 jobs that do not exist and will not exist or Standard and Poor’s would have taken them at their word. 
I have given up waiting for Bill English to have a new idea. I have given up waiting for Bill English to get a vision for this economy. New Zealanders are giving up on this tired listless useless National Government. National will be a one-term Government. How do I know that? Because the polling is telling us—wait for it—that 48 percent of New Zealanders believe the country’s economic management is on the wrong track and 32 percent believe it is on the right track. I have been here for four terms and I can tell members opposite that when the economic right track / wrong track numbers cross over the Government’s popularity is sure to follow—and they are sure to follow. As quickly and as surely as night follows day they will be making the pilgrimage to this side of the Chamber after 26 November when the public is called to vote upon this rubbish Budget and throw it out. 
CRAIG FOSS (National—Tukituki) 
: 
 Hopefully there are still a few people listening to the radio. The third reading of the Taxation (Annual Rates and Budget Measures) Bill is associated with the Budget and the reconfirmation of the income tax rates PAYE rates changes to KiwiSaver and some changes to Working for Families. They have been well canvassed by some members of the House and extrapolated upon and fantasised upon by others. 
The Budget announced yesterday by the Minister of Finance is about savings. It is about building savings. It is about the integrity of savings. It is not about borrowing to save. 
Regardless of what we have heard from the previous speaker David Cunliffe and other speakers we have yet to hear where Labour’s $45 billion - odd of various promises over the forecast period will come from. We have no idea. But one thing I can say to the previous speaker is that if things were so rosy if the books were so good in the last year of the last Labour Government then why did New Zealand vote Labour out of office so convincingly? Perhaps it is because New Zealand also looked at the pre-election update which showed the decade of deficits and showed all those numbers that affected the fiscals as opposed to the 2008 Budget that members on the other side of the House keep referring to. The key document is the pre-election Budget and the travesty of the decade of deficits that it revealed to the public after 9 years of the previous Government. But the good news is that the decade of deficits is no longer upon us. This Budget showed us we will come very close hopefully to surplus in 2015. That is not too bad. 
I note a very interesting and good point that the Hon Peter Dunne made in his third reading speech. If the bill that is before us is so bad if Opposition members dislike the income tax rates in it so badly and think they should be altered if they do not like the Working for Families changes if they truly do not like the KiwiSaver changes and if they have a plan—maybe a decent spreadsheet as the member opposite apparently has; fully costed allegedly—then why did they not table an amendment to any part of the bill? During the Committee stage not one amendment not their tax tables or suggestions or an amendment to the KiwiSaver changes was tabled. This is the bill that would enable that. It points to the fact that perhaps Labour members do not have a plan costed or otherwise. Mr Cunliffe has his spreadsheet I am quite sure but I do not think Labour members actually have a plan. We might see it at the Labour congress over the weekend. That may come before or after the singing. Will members opposite be singing at this year’s election-year congress? We are looking forward to it because we so enjoyed it 3-odd years ago. What did they sing? 
Michael Woodhouse 
:  
The Gambler. 
CRAIG FOSS 
: That is right. Funnily enough that one might get rolled out. 
This Budget passes the four tests outlined by Mr Cunliffe in his article in the paper the other day. It creates and helps the export economy; it pulls back the State economy to allow room for the private sector to at least grow and at least start to create and hold jobs the tradable sector having essentially been in recession since 2005; and it shows a true and direct path back to surplus. It passes another one of Mr Cunliffe’s tests. I am interested that he keeps showing the test but we passed it with flying colours. I enjoyed his piece in the paper. I saw it and thought: “This is great. We will pass those ones.” Mr English’s Budget the National Government Budget passes all of those tests with flying colours. I am surprised that the member still keeps repeating it. 
Mr Cunliffe talked about the export market. In 9 years the Labour Government had the chance. Yes Labour is in Opposition now but as far as increasing exports goes the only thing that Labour did to try to compensate for double-digit interest rates for hyperinflation if you will for a 50 percent expansion in the State and a 50 percent expansion in the tax take was to declare 2007 as Export Year. That was it. Exports plummeted and New Zealand went straight into recession a year before the rest of the world. So it is interesting that there have been no amendments to this bill from other members during the Committee stage. I was quite surprised about that. 
I am also interested to see that 2 million people are still forecast to go into KiwiSaver up from 1.7 million currently. I think all members in this House hope that is the case. That will be an interesting judgment upon the changes within this Budget. 
The mixed-ownership model has been addressed. Even though it has been discussed a lot in the debate on this bill it is not in the bill but perhaps the KiwiSaver changes will help facilitate investments in the mixed-ownership model. Members opposite have positioned themselves so diametrically opposed to that. That is fair enough; that is their policy position. It has moved somewhat since Mr Cunliffe’s speech at Victoria University on 8 November last year. The Labour Party policy was to unleash the balance sheets of the State-owned enterprises and their associates to leverage up their balance sheets etc. I notice that in one of Mr Cunliffe’s speeches—I admit that I do read his speeches although I do not know whether anyone else does—he gave the other day that phrase was interestingly taken out. I do not know whether Labour members want to unleash the power of State-owned enterprises any more. But if they do not like it then why did they do it with Air New Zealand? 
Hon David Cunliffe 
: Why don’t we own it while we do it? 
CRAIG FOSS 
: We inherited from the previous Labour Government a mixed-ownership model for Air New Zealand. Air New Zealand diluted it down when it had to go and get some more capital. Did the Crown stump up? No. It was happy for it to be diluted down. It is very interesting. Actually that same Government at the time allowed Air New Zealand to issue a credit note which essentially meant that if it defaulted then the ownership of that entity would have gone offshore. It is very interesting. 
I must pull up the previous speaker on his comments about Standard and Poor’s. It was the member’s judgment of a C or D rating. Fair enough. He can pass those judgments. The key point to New Zealand mortgage holders is that after the Budget was released Standard and Poor’s confirmed reaffirmed New Zealand’s credit rating. That is worth one huge amount of money to the households of New Zealand to indebted New Zealand. We all acknowledge we are too indebted as a nation so each and every one of us be it via the Crown accounts or via our personal accounts have benefited instantly from this Budget as our mortgage rates and interest rates have stayed lower for longer as they have under this great Government. 
I make one final point. Why has the Opposition lost all faith in democracy? Why do those members not like democracy any more? At the election this year the public of New Zealand who are so wise that they threw out the previous administration will pass their judgment not only on this bill and this Budget but also on the three Budgets of this Government. They will pass their judgment and we will accept that judgment. They may keep us in; they may give us further seats or they may throw us out. Let us wait and see. But I have faith that opening the books and putting everything possible before the public of New Zealand shows that we trust them that we believe in democracy and that we have faith in their ability to make the right decision. That is why this bill is before us now taking effect in 18 months’ time. If—horror horror horror of all horrors—there was to be a change of Government and if members opposite were take these benches they would be totally free to change this policy in this Budget and it would be interesting to see their firm position on these exact points. 
I invite other members if they are talking much as they seem to be opposed to this bill and much as they seem to be opposed to this Budget to tell us which parts of it they will put before New Zealand to vote upon on 26 November. All we can see right now the only bits of firm information we have from Labour is that it will increase the top income tax rate. It may increase middle-income tax rates; we are not quite sure. Some Labour members were nodding and some were shaking their heads last night. They will not be changing GST except on cabbages. Mr Nash started to fly something about a turnover tax. I think Labour confirmed that it will not change the business tax. Of those members’ $7 billion or so of committed promises so far I ask how they will be funded. Will it be done through a capital gains tax? It is a credit to Russel Norman that at least he has a solid policy position absolutely clouding out the direction of the alternative supposed Opposition over there. I say good on him because Labour talks about painting Premier House as its solution—or not painting it—and about not having BMWs for Ministers and former Ministers and those members want to take these benches. I commend this fine bill based upon this fine Budget to the House. 
Hon CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 I noted that speech from Craig Foss with interest and I took a number of things out of it. The member concluded by giving us a lecture on parliamentary democracy. He gave us a lecture and said members on this side of the House are somehow against democracy. Then he paraded an argument that basically said those members trust the people and the judgment will be on 26 November. 
I make this point to the member: if he has so much faith respect and trust in the people of New Zealand then why today do we sit in urgency without the bill going to a select committee? The people who are smart whom he takes for granted could come before a select committee and give us a view on how they see this bill. They could tell us whether they are in favour of “integrity in savings” which was the other phrase that that member used. “Integrity in savings” is an interesting phrase. That must have whipped out of the National public relations unit because it is an interesting phrase. At the same time as that member talked about integrity in savings his Government’s legislation before us cuts KiwiSaver—a family with two KiwiSavers loses $20 a week in cuts. Is that integrity in savings? Hang on the empty tin has not rattled; there is no sound. 
I ask the member again whether that is integrity in savings. No; I suggest he crawls under the desk. I ask that member whether he believes we should have a select committee hearing so that—to use his words—we can trust the people treat the people with respect and ask them their view. Oh he is mute or deaf; his tongue has gone—somebody has cut it out. I say to that member that there is a word for the speech he gave. On the one hand the member preened and preached to us about democracy but he does not show the intestinal fortitude in this place to say we should have a select committee hearing. I ask him again whether he believes people should have the right to come to this Parliament before an election and test this legislation with a select committee hearing. Silence! 
The silence is deafening. What a plonker I say. The people will see that member for what he is standing up a lion in this Chamber—an absolute lion. But he does not have the intestinal fortitude to call a Finance and Expenditure Committee meeting and ask the people in the gallery and throughout our towns and cities to come forward and make submissions and listen to their opinions because he does not want the answer. He knows what the answer would be. He knows that many of the 200000 people affected by the cut in Working for Families would rock up to the select committee and say they did not vote in a National Government for this. He knows that many many thousands of people whom he respects—so he says—would rock up to the select committee and say: “Didn’t John Key say he would not touch KiwiSaver?”. Did John Key say that? Yes he did. Has John Key broken his word? Yes he has. Those are the responses Mr Foss and his ilk and Mr Henare do not want people to have the opportunity to come in and express. 
People would come to a select committee if there was one and they would say: “By the way we do not want our assets sold. By the way we the people of New Zealand already own those assets.” So why is the Government pretending it is so benevolent in offering those assets back to the people of New Zealand offering them the opportunity to buy them given that they already own them? 
People might also come to a select committee and say that we as a community are not awash with cash to be first in the queue which the Government cannot guarantee to purchase back assets that we already own. They would say to Mr Foss chair of the Finance and Expenditure Committee that we as a community do not have the money because of the cost of living because of the great tax switch that gave those on the bottom of the heap—72 percent of my electorate earn under 40 grand a year—very very little. But it gave his leader a thousand bucks a week. That is what those people might say if they were given the respect and the opportunity to come before a select committee and express their view. But that has been denied to them and that member had the audacity to get up and preach to this House and say he respects the views of his community. 
If the member has that much guts—and I am sure he has—he will stand up and say or the next speaker will take a call and say: “Hang on. Taihoa. Let’s seek leave to have a Finance and Expenditure Committee and give the people their say.” There is no reason we would not. The member himself said these measures will come in after an election. Therefore we have months to deal with this legislation. But oh no he sits there looking into his fictitious papers pretending not willing to look up at anybody with a guilty look on his face because he knows he has just put his foot in his mouth in respect of that last speech. It is easy to get up here in the Chamber be very lofty and high and mighty say one respects democracy and lecture every other MP. But he has the power as the chairman of the Finance and Expenditure Committee to call people in and show some real respect. But no he keeps staring at the crossword or whatever it is down there because he cannot look people on this side of the Chamber in the eye he cannot look the Speaker in the eye and he will not be able to look his constituents in the eye and explain to them on Saturday or Sunday when he has his clinic why he denied them their democratic right to have a go and have their view heard in the select committee. 
When we look at the historic record of the last Government members opposite talk about the decade of deficits. That member wanted some facts. I suggest maybe he rolls up these facts and chews on a few of them in the next couple of days. I will give members a quote from Bill English that I have used in every speech. Of course those members do not like it when we quote their own finance Minister. They are all very quiet now. That member keeps doing his crossword or whatever it is he is doing down there. He will not look us in the eye; we know it is difficult. Here is what Bill English said on 19 December 2008 about the legacy of the last Government. This is a cracker and I take Bill English at his word. He said this: “I want to stress”— 
Hon Tau Henare 
: You keep going mate. 
Hon CLAYTON COSGROVE 
: That member is under a bit of stress by the sound of it. He said: “I want to stress that New Zealand starts from a reasonable position in dealing with the uncertainty of our economic outlook.” That is what he said within days of taking office. That was his economic assessment of the legacy of the Labour Government that had preceded him. However much shellac they put on their line over there no matter how much whitewash they try to spin through this place they cannot alter history. 
Let us have a look at history. I will read out a couple of other facts for that member who shows a tonne of intestinal fortitude when he is on his feet. I will say this. We had 9 years of surpluses—9 long years of surpluses—beginning in 2000 with $594 million. In 2001 there was a surplus of $1.4 billion in 2002 there was $2.4 billion in 2003 there was $5.5 billion in 2005 there was $7 billion in 2006 there was $7 billion in 2007 there was $5.8 billion in 2008 there was $5.6 billion worth of surpluses— 
Shane Ardern 
: And the best times we had in a generation! 
Hon CLAYTON COSGROVE 
: They were the best times absolutely as that member said. That member’s finance spokesperson at the time Bill English day after day month after month challenged criticised and berated the then Labour Government saying it should flog the lot—spend the lot. National for the historical record was criticising a Labour Government for not spending the surplus and for squirreling it away for the rainy day. The rainy day came when this Government took over and even Bill English was generous enough on 19 December to admit that the legacy the previous Government had left was in good shape. 
What we have in this legislation what is served up to the public is a cut in KiwiSaver and a cut in Working for Families. The only plan—if we can call it that—is to flog off the family silver which does not actually solve the debt problem because if we look at the debt track we see that it goes up. Then the Government uses the earthquake as an alibi even though it knows in terms of accumulated deficit that the earthquake in Canterbury contributes only 10 percent. 
Hon Tau Henare 
: Remember David Lange? He sold the Crown jewels. 
Hon CLAYTON COSGROVE 
: I think the member is going to blow Mr Assistant Speaker Roy. You might want to call the men in white coats or those with the stretchers. I think he is going to blow something. It could get messy in here I say to colleagues. 
I say to Mr Foss that the people of New Zealand are not silly. His constituents deserve respect. They are intelligent and they will unpick the hem of this Budget inch by inch and they will render a verdict on him. I look forward to the next Government speaker being totally respectful to the people and telling us that they are going to have a select committee. I suggest that if there is any medication available or cold water we direct it over to that side of the House real quick. 
GARETH HUGHES (Green) 
: 
 Kia ora Mr Assistant Speaker Roy. Na mihi nui ki a koutou. Kia ora. I feel somewhat that I should not be taking this call because I would like to hear National’s reply to the Hon Clayton Cosgrove who was building up quite a slanging match. But I want to take a call on this important bill the Taxation (Annual Rates and Budget Measures) Bill at an important time because we are at a turning point in our nation’s history. We are at a turning point where we are facing huge economic challenges as a nation. At the moment it is only those high international commodity prices that are keeping our heads above water as we continue our slide down the OECD rankings as we have for the last several decades. This has real impacts on Kiwi families and real impacts on Kiwi jobs. [ 
Interruption 
] 
The ASSISTANT SPEAKER (Eric Roy) 
: There are too many conversations going across the House. 
GARETH HUGHES 
: Essentially we are a nation addicted to growing grass. Most of our income is from tourists coming over here to look at our natural landscape and the other part of that is selling grass in the form of dehydrated milk powder. We are addicted to high commodity prices; we are not masters of our own fortunes in this nation. 
We are facing huge environmental challenges. Just this week at the time of the Budget we had esteemed National Aeronautics and Space Administration (NASA) astrophysicist Dr James Hansen in New Zealand saying that climate change and coal were the single greatest threat to our civilisation on this planet. It is also a week of immense personal challenges and worker challenges. Just before the Budget I was privileged to stand with a number of other MPs from the Labour and Green Parties at the Council of Trade Unions rally about how people were really feeling the pinch of these Government changes in the Budget and those it had made before. We are facing huge economic challenges huge environmental challenges and huge challenges to our workers and our whanau in New Zealand. But what did we see in the Budget? Quite frankly it was a damp squib—an absolute failure. We saw a bit of tinkering. We have seen some hilarious names issued for the Budget. Probably my favourite name was the one given by the member Stuart Nash in the Committee stage: the “Steal-the-Dream Budget”. We have heard the “Shaky Quaky Budget” and the “Zero Budget”. There has been a whole bunch of names. The journalists have been busy trying to come up with names because there is not a great deal of substance and definitely no positive substance in the Budget for the country. 
We are debating this now on a Friday afternoon under urgency. There is absolutely no reason for this to be the case. We have plenty of time for this to go through the proper process which involves the public having a say in select committee and it is a disappointment that we have to see this bill under urgency today. The Green Party will be voting against this bill which basically does only two things. Firstly it halves the Government rate of matching contributions to KiwiSaver and removes the tax exemption on the contribution by employers. It also makes some significant changes to Working for Families. Let us look at the balance of contributions to KiwiSaver. The Government says this is intended to move public funding towards private saving. It says this will generate fiscal savings by reducing the public cost of the Government’s contribution. Cutting both the Government’s and employers’ contributions to KiwiSaver and saying that that will increase the incentive for personal saving really borders on the disingenuous. Why would anyone be more encouraged to save when the matching contributions are cut? 
Let us look at the Working for Families changes. The bill amends Working for Families by reducing the fiscal costs of the scheme while protecting the tax credits for lower-income earners. The threshold is to reduce from $36827 down to $35000 and the abatement rate is also rising from 20c to 25c in the dollar. Tax credits for children aged 13 to 16 will be aligned and a two-child family on $61000 will now receive the same amount. Generally speaking those earning anything above this will receive less than that. Below it they will receive more though the extra amount is tiny. Our analysis suggests that this is less than altruistic despite what is claimed by the Government benches. Essentially 110000 Kiwi homes will be affected by these cuts to Working for Families. With more than 23000 families earning less than $60000 a year in combined annual income reducing the abatement threshold to $35000 means that the abatement now applies to two-parent families with one partner working at a minimum wage and the other partner working 12 hours at a minimum wage too. So raising that abatement rate to 25c in the dollar—and this is the rub of the changes—results in an effective marginal tax rate of 58 percent. This is put on the people of New Zealand who can least afford to be paying a marginal tax rate of 58 percent. 
The KiwiSaver changes come at a terrible time in New Zealand’s history. We have very low rates of household savings compared with other OECD countries. I have to admit that I have been wrong on one thing. We have heard over the years that this Government has a vision of taking us back to the 1990s. That is definitely the case when it comes to industrial relations legislation. For some environmental legislation the vision is to go back to the 1990s. When it comes to household saving the vision is for us to go back to the 1970s—back to the days of Muldoon and scrapping national superannuation. Apparently the Government has dusted off the old play books on how to reduce our nation’s savings. 
Two things this bill deals with are the KiwiSaver changes and the Working for Families changes. The third big element of this bill is the student loan changes and I am surprised we do not see the changes in legislation in this Chamber today for the entitlement to student loan access for students aged over 55. Clearly that is discriminatory. At 54 one can get a student loan; at 55 one is not allowed to under this Government’s change. It is clear blatant ageism. It is distinctly unfair and I believe unlawful. The Human Rights Act says it is illegal to discriminate based on age when providing services. Obviously the Government can get around this by legislating it but the Government has not legislated this. The student loan scheme was established in 1992 under a Cabinet minute. One cannot break the law in a Cabinet minute. Cleary this change is discriminatory and I believe it is unlawful if the Government intends to continue this crazy policy. It is crazy when we consider that Kiwis are working longer—many past 65. It is crazy when many of us have a number of careers in our lifetime. It is crazy because in a recessionary environment people who have lost their jobs want to get trained up and they want to get skilled. That is a good thing for the economy but this Government is saying no. I am surprised we do not have legislation in front of us to deal with that. 
Lastly I want to touch on the context of this bill which is the Budget. The Budget lays out National’s grand plan which is essentially that it will sell State assets. It is like an analogy of ordinary Kiwi cafe owners selling their espresso machines to get a little bit of upfront cash. It is like shearers selling their clippers to pay off the monthly bills. It is like hairdressers selling their scissors to pay off some bills. Ultimately we will see bad long-term effects. I have just discovered in the Budget that it allows the Government to set up a new account of $750 million to help borrow for its roads of significance to National. This is in the context of the nation borrowing more than $300 million a week and of the biggest Budget deficit in our country’s history. Yet somehow Steven Joyce has managed to ring-fence his $11 billion for just seven roads of significance to National. And now because we are seeing declining road usage across our country as a result of those high oil prices that the Government refuses to prepare us for and plan for it has to set up a whole separate budget line of $750 million to fund the roads of significance to National. 
We are seeing in this Budget subsidises to polluters of between $800 million and $1 billion. At a time when our country can least afford it we are subsidising polluters. For me that sums up the Budget but it also sums up the failure of imagination from both the two big parties in our Parliament. There is still no vision. From the National benches we hear that we will have severe cuts possibly leading to another recession and from the Labour benches we hear that it would borrow more potentially risking a credit downgrade. No other party in this Parliament has the courage to look at the revenue side of the ledger. For any household budget if the household is facing a pinch then it has to look at revenue. The Green Party has put serious credible well-costed proposals on the table that would not impact the economic growth currently projected but would make a serious difference to the Government’s books. 
Lastly I say that there is no vision from either party of how we transform in order to deal with these significant economic environmental and social challenges facing the nation. We have such advantages and such strategic assets in this country. We have this “clean green” brand that will be called into doubt as seen in the BBC  
HARDtalk 
interview. We will have 80000 people coming to New Zealand to watch the Rugby World Cup and maybe a billion people watching it on television and when they are not watching the rugby they will be asking the question: what is the deal with New Zealand? What is the country’s story? They will find we are on the world stage selling ourselves as being clean and green yet it is simply a marketing slogan and a marketing line. Instead we need to be cutting those subsidies to polluters rebalancing some of that transport budget to sustainable options and leveraging that “clean green” brand into a prosperous future for all of our kids. Kia ora. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
 Tena koe Mr Assistant Speaker Roy. E te Whare kia ora tatou katoa. I reckon the Taxation (Annual Rates and Budget Measures) Bill is the difference between mince on toast and a gourmet feast. It fills the spot and it sustains us but it is hardly going to excite the masses. I reckon it is the difference between sensible and sensational. It is a slow and steady approach to lifting the national savings rather than a slash-and-burn approach or at the other end of the scale a shop-‘til-you-drop approach. These days when virtual social networks thrive and instant gratification is the only game in town it sometimes appears as if there is no end to the levels of sensationalism we have come to expect with any event including the annual Budget. An economic analyst on  
AMP Business 
 this morning described it aptly. He said that New Zealand is used to Budgets that are one of three gears: fifth gear neutral or in reverse. Simply moving forward at a moderate pace never quite seems to hit the spot. 
The latest phenomenon I tell members who do not know is a game or activity called planking. Planking is a particularly good example of the trend to be just a bit more shocking and dramatic than the next person in line. Planking is a new obsession. It requires that the subject lies flat and face down—which is what some of these people in the House should do—in an innovative location. The pose is photographed and the photo is uploaded on to the social networking site. Members might have seen it on TV recently. Earlier this week the game took on a bit of a sinister edge. A 20-year-old Brisbane man fell to his death while planking from the seventh floor of his dwelling. It is a classic case of a world where people hunger for excitement and a sense of adventure regardless of the risk. 
In such a context the prospects of people welcoming a Budget that emphasises balancing the books and being responsible affordable and measured was always going to be pretty low. Let us face it: steady as she goes will hardly raise an eyebrow let alone get a standing ovation. But then again building a solid platform for growth will not see us catapulting down into the death trap either. 
The taxation legislation epitomises a “business as usual” approach to the economy. That is what we say. It is about enacting various strategies that support and sustain core programmes while at the same time making changes that deliver better value for taxpayers. Of course no one has ever wanted to reduce any funding to families. Ideally they should be the first place to look at in terms of investment. How do we respond to exceptional extenuating circumstances of two massive earthquakes and an ongoing series of shocks to the economy without some changes that have the potential to create savings? 
If one looks at this bill one sees some answers. Slowly but surely the Government intends to reduce the amount of money it has to borrow from overseas in order to subsidise KiwiSaver and instead increase the amount of genuine savings from the public sector. The Maori Party supports this approach on two grounds. Firstly we are pleased we are lessening reliance on foreign funds to prop up our own local economy. Part of our policy approach has been that we look at our opportunities internally for suitable investors. Opposition members are quiet now; it must have been a good idea. I am mindful of the excitement that was evident at the Maori economic summit conference held earlier this month. 
Hon Clayton Cosgrove 
: I’d go back to planking if I were you. 
TE URUROA FLAVELL 
: The member has already been on the plank. That is why he looks so bad. One of the breaking news reports from the day was from a study from Business and Economic Research that revealed that the value of assets held by Maori has more than doubled since 2006. Maori now have a significant asset base worth $36.9 billion compared with $16.5 billion 5 years ago. That is what we learnt at the Maori economic summit conference. At the summit the thriving momentum and buying power of Maori organisations businesses and individuals was clear for all to see. The point that the Ngai Tahu leader Mark Solomon made in the context of that summit is just as relevant to this taxation debate as it was then. Mark Solomon spoke about the recent meeting he had attended where he challenged an influential Auckland business audience to retarget their approach to iwi. The forum was a meeting hosted— 
Hon Clayton Cosgrove 
: Was Don Brash there? Was Don Brash in the audience? 
TE URUROA FLAVELL 
: I tell Mr Cosgrove that it was probably at his meeting. The forum was a meeting hosted by Sir Ron Carter at which 40 major banks and companies were present. On the wall of that hui was a banner that asked “Are iwi ready to invest?”. Mr Solomon said the question should be “Are you ready to invest with iwi as we have stood in front of you for 150 years and been absolutely invisible?”. It is certainly a good question to consider. Is the Government prepared to consider trusting in the asset base including Maori trusts and incorporations Maori employers and self-employed Maori? That is the question. 
I will focus on this last group for just a minute. The Government’s contribution to KiwiSaver has been the only incentive for the self-employed to participate in this scheme. As over 90 percent of New Zealand businesses employ fewer than 10 people having small employers involved in KiwiSaver is very important. They would not divert funds from their business for retirement savings if it was not worth more than $1000 to do so. We are pleased the $1000 incentive for new entrants to the scheme has been retained. My colleague Tariana Turia spoke yesterday about the fact that there was not a huge uptake of KiwiSaver by Maori. For those Maori who are in the scheme we understand that it can provide higher relative payouts for lower-paid workers whereas they do not get any value from taxes paid in respect of New Zealand superannuation. 
The other reason we support the changes to KiwiSaver is that the increased contributions from both individuals and businesses will happen only over time helping to give the country time to adjust. The biggest risk of course is that any dilution of the current benefits of the scheme may undermine the public’s confidence in the complex financial product. Currently KiwiSaver has 1.7 million New Zealanders saving for their retirement. This provides a stabilised savings vehicle which is helping to rebuild individual and household balance sheets and the challenge is on all of us to ensure we maintain future long-term benefits to the country while the adjustment is in place. 
The other big set of changes in this bill is around Working for Families. In terms of the broad parameters of the policy change we support the concept of better targeting Working for Families for lower-income families who need more help. That fits in with the advocacy role we have played in Government fighting to protect the rights of and opportunities for the most vulnerable. We acknowledge that it will hurt higher-income families in terms of the greater good for the nation but we believe that that is a change we can support in the interests of the longer haul. The Maori Party will support the third reading of the Taxation (Annual Rates and Budget Measures) Bill. 
SHANE ARDERN (National—Taranaki - King Country) 
: 
 It is a pleasure to rise in support of the Government’s Taxation (Annual Rates and Budget Measures) Bill. I stand here today representing the Taranaki - King Country electorate an electorate that starts near Hamilton and finishes in South Taranaki. It is a rural electorate a farming electorate with a large number of dairy farmers. It is not a rich electorate. It is made up of 17 small towns up and down the electorate. They support the rural electorate and we support them as part of the farming sector. 
I stand here as a dairy farmer and I say to Labour members over there that I know what my tax is I know what we pay and I despise the way that issue has been misrepresented over the last few days. If there is one thing that the rural electorates know how to do it is to hunker down when there are tough times look at what works pay the bills on the areas that are essential not pay the bills for things that are not essential and look to where cuts can be made. That is why I am proud to be part of the National Government. I am proud of a Government led by John Key which has looked at the circumstances New Zealand faces at the moment and what we can do to bring about an increase in economic activity and growth. I will tell members on the other side of the House what does not increase economic activity and growth: taxing the productive sector—that is taking taxes from the productive sector and spending them on non-productive activity. That is Labour’s answer that is its solution to the way forward and that is what the Labour Opposition puts up. 
I have one question to put to the Labour Opposition and it relates to the fact that I have heard in many speeches in this House that the agriculture sector and particularly the dairy industry is supposedly the backbone of this country. What does that mean? What does the word “supposedly” mean? Does it mean that it may be or it could be or it might be? If it is not what is? I ask members on the other side of the House whether it is the black market that the trade unions support—openly and regularly. Maybe it is the underground non-taxable income that is so often supported—and turned a blind eye to—by those members on the other side of the House. Maybe it is not; maybe it is something else. Maybe it is the activity of the trade unions or maybe it is the activity of the Labour Party. If the agriculture sector is not the backbone of this economy what is? There is no “supposedly”; it is in black and white the backbone of the economy and there is no doubt about it. Why then would those members use such distorted figures? The only reason I can suggest is that Labour intends to attack the very productive base that this economy depends on. I am a dairy farmer and I will never back away from that and I am a shareholder of Fonterra a small cooperative—a small farmers’ cooperative. It is small by international standards but big in New Zealand. 
When the Christchurch earthquake struck who was the first one there? Who was the first one there with a tanker load of water? Who was the first one there? And I ask this question: who put the money in? How much money did Mr Little write out for the earthquake? What was the cheque from the trade union movement? Righty-o they cannot afford it. They will say that they cannot afford it. Where were they when they needed the soldiers on the street cleaning up? Who turned up for that? It was the Farmy Army and the students—not the trade union movement no. They were the ones sitting in their houses and looking out at the workers. This is a childish shallow and vindictive attack on the farming sector the very sector— 
Hon Clayton Cosgrove 
: I raise a point of order Mr Chairperson. I respect the member and I do not wish to interrupt him but I simply ask for your advice. I know this is a very wide-ranging debate and we have roved reasonably wide but the member speaks of the Farmy Army the student army and the earthquake. This is a tax bill and the member might want to come back to it. I do not think it is healthy to throw accusations about black markets and people being involved in that. 
The ASSISTANT SPEAKER (Eric Roy) 
: I take the member’s point but I think that if I was going to be overly critical on this point then I would have raised this matter at other times during the succession of debates on this matter. It is probably stretching things a bit but has he gone further than other members? I am not sure. My preference certainly would be for members to debate specifically. 
SHANE ARDERN 
: Thank you for that Mr Assistant Speaker because the member has given me such a wonderful opportunity that I do not know where to start. In the Budget there is $5.5 billion going to the Christchurch earthquake repair. The member would have missed that I am sure—he would not have seen that. It is on the second or third page and he would not have read past the front page that the Labour research unit gave him. The National Government is investing $5.5 billion into a town that was devastated and so it should. But here is the irony: most of the Christchurch seats are held by Labour. It is a Labour town and the National Government is putting $5.5 billion into it—so we should—and we do not resent a single cent of it. 
Labour members have this notion that we can get this economy back on track by once again identifying entrepreneurs and successful people—not the losers on the other side of the House not the vindictive haters and wreckers on the other side of the House but people who are successful work hard and strive to achieve—and attacking them. Labour’s alternative budget is to tax farmers more and that will solve the problem. That is the next Tui billboard: “Tax farmers more and that will fix the economy!” That is what Labour members have said in the last few days. It is the next Tui billboard. What will they say to that? “Yeah right!” Shame on the Labour colleagues who have decided to shift the limelight from the fact that they have no alternatives that they have nothing to offer that they are shallow and completely without any substance at all on to a group of hard-working dedicated individuals who are paying their taxes are good citizens and are good community people. Those members should be ashamed of themselves and that is all I can say. 
The Green Party has also put up no credible alternative. Dr Russel Norman sails up and down rivers all over the country talking about the state of pollution and blaming a particular industry. I invite him actually to row his canoe down the Avon River—row it down the Avon. 
Hon Clayton Cosgrove 
: Oh a bit difficult. 
SHANE ARDERN 
: OK OK of course it’s different. There are no cows anywhere around the Avon; it cannot be polluted because there are no cows there. It is the most toxic waterway in the country next to the Viaduct Basin in Auckland of course where again one would have to go a long way to find some cows. Never let the facts get in the way of a good story. The Hon David Carter and the Hon Nick Smith have done more to correct the situation in terms of cleaning up waterways with the recent announcements that this Government has made than any Labour Government has ever done. Labour and the Greens talk about the environment but they do not do anything about it. 
In closing I say that this is a good Budget and it is the right position to go to. I am a farmer and I live in an electorate that is made up of farmers. I share the highs and lows. I know when they are hurting and when they are not paying tax because they have not made any money and have made a loss. I know that when they make a good profit they pay their share of tax. I say to members opposite that I know what their vision for the future is. One need go no further than the small community I live in where there used to be a small school that produced four duxes in four different high schools in the electorate but now it looks like a Third World derelict. That is the Opposition’s future for the rural community. It closed that school despite the fact that 75 percent of the operational grant went into the curriculum. When one looks at it now we see that it is a disgrace. That is the legacy and the vision that Labour has for New Zealand. The vision is bankrupt Labour members are bankrupt. They are losers haters wreckers and muppets. 
Hon Clayton Cosgrove 
: I raise a point of order Mr Speaker. Last night you made a series of rulings and I was quite rightly a victim of one of them. Given the last set of comments by that member I invite you to be consistent. You were right last night you should be right today and I invite you to be consistent in your rulings in respect of that last salvo from the member. 
The ASSISTANT SPEAKER (Eric Roy) 
: I think the member Shane Ardern used some invective that certainly was not necessary. Probably the appropriate thing for me to do would be to ask the member to withdraw and apologise for that. 
SHANE ARDERN 
: I withdraw and apologise. 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I am a little bemused by the preceding speech by the member from the struggling poor electorate of Taranaki - King Country and by his description of the union movement which obviously has not done anything to help the poor people of my electorate Christchurch Central! I just remind him that firstly generous donations were made by various unions to the Christchurch earthquake appeal and secondly as he asked who was there first I can tell him that people like police firefighters nurses and emergency service workers were there first most of whom are proud members of unions and some of whom were outside Parliament yesterday to say they did not want to see a Budget that took the axe to the benefits they have enjoyed from good sound policies that the Labour Government introduced like KiwiSaver and others. 
I will start by putting on the record how pleased I am to see that this Budget provides for Canterbury. I am probably the member whose electorate will benefit the most from that provision the $5.5 billion put into the Canterbury Earthquake Recovery Fund. I am also particularly pleased to see that the Government has picked up the idea of an earthquake bond. I have been working on that myself with a group that I chair Interests in Conserving the Identity of Christchurch which brings together building owners and heritage advocates. Jim Anderton has done some work on that and we have done some work on it. I would hope that as the earthquake bond comes through after the announcement yesterday we will see that there is some potential for it to at least in part support things like heritage retention in Christchurch. It is important to the rebuild of our city along with other elements. I would also hope that some of the money might be directed to further support for skills training which is of course essential for our rebuild as well. There it is on the record—we are in support of that measure. 
There are now no excuses from here on in terms of how the rebuild proceeds. The Government has the power through the Canterbury Earthquake Recovery Act it has the money as provided by the Budget and it has the department in place. We are looking for an acceleration of the recovery from here on. There should be no more of the delays with things like heating where there has been acknowledgment of the installation of 4000 new heaters when there are 25000 people who have asked for them. Let us hit the fast-forward button now in terms of this Budget funding the recovery of Christchurch. 
However there is for me a deep and fundamental concern about how the quake is portrayed in the Budget. I say to members that yes the quake should be the centrepiece of the Budget because it is the nation’s biggest ever natural disaster and this Government or any Government would have had to respond to that situation. But that is no reason whatsoever in my view to provide for the sale of assets be they State assets or Christchurch City assets. I remind members opposite that the basis of the Budget is that the quake accounts for only 10 percent of the accumulated deficit nearly $17 billion. Let us not see the quake used as some sort of carte blanche for asset sales. 
I will talk first about the assets of my city Christchurch where $2.2 billion in assets is held by ratepayers. These assets are essential to the financial integrity of the city. They keep rates down by about 15 percent. They have contributed to many other important projects such as the building of the Christchurch Art Gallery which became the base for civil defence and more latterly the Canterbury Earthquake Recovery Authority operation. That was the building that stood up and it was funded in large part by assets such as Orion. Orion has returned nearly $1 billion to the Christchurch City Council and its ratepayers over 20 years. That is nearly $1 billion from one of the assets alone. I challenge the next Government speaker who might be Amy Adams to stand up and add to my voice in saying that we will not tolerate any sale of Christchurch City Council Selwyn or Waimakariri assets as part of the funding of the recovery. 
I ask members why we should be concerned about that. We are concerned because firstly the Canterbury Earthquake Recovery Act provides the capacity for that to happen and secondly the Budget provides for the sell-down of half of some of the major assets currently held by the Crown. We look at Mighty River Power Meridian Energy Genesis Solid Energy and Air New Zealand as being the principal assets that we hold and we say it is absolutely essential that those stay in public ownership because of the dividend stream they provide. 
I ask the next member to speak to comment on the issues created by the Supplement to the 2010 Investment Statement of the Government of New Zealand. On page 3 in the Executive Summary it states that proceeds from asset sales— 
The ASSISTANT SPEAKER (Eric Roy) 
: Just a short while ago I was asked to rule on relevance. This debate is on the Taxation (Annual Rates and Budget Measures) Bill— 
Hon Phil Heatley 
: That’s right. 
The ASSISTANT SPEAKER (Eric Roy) 
: Who said that? I ask the member to leave. I am on my feet. You are out. 
Hon Phil Heatley withdrew from the Chamber. 
The ASSISTANT SPEAKER (Eric Roy) 
: I ask the member Brendon Burns to contain his comments to matters that are in the bill. 
Hon Clayton Cosgrove 
: I raise a point of order Mr Speaker. 
The ASSISTANT SPEAKER (Eric Roy) 
: I have ruled on the matter. 
Hon Clayton Cosgrove 
: I raise a point of order Mr Speaker. 
The ASSISTANT SPEAKER (Eric Roy) 
: Only if you have a separate point of order. 
Hon Clayton Cosgrove 
: I was the person who at one point during Mr Ardern’s speech raised an issue with you. You were generous and correct in your ruling. You stated that the debate had stretched pretty wide of the mark and that others had stretched it possibly even further or to the same level as Mr Ardern. I argue that in terms of being consistent what is good for the goose is good for the gander as it were. I invite you to perhaps have a wee think about the instruction you have given my colleague. 
The ASSISTANT SPEAKER (Eric Roy) 
: The member has made a fair point but I was responding because I had been asked to make a ruling earlier. Maybe I did not make the point as firmly as I should have. I will restate what I said then. We have strayed wide and I alert the member Brendon Burns to the fact that it is my desire that he approach the debate in the direction of the bill. 
BRENDON BURNS 
: Thank you Mr Assistant Speaker. I pledge I will not refer to Farmy Armies unions or any other matters from here on. I will talk about the Budget and the fact that in Part 1 of the Taxation (Annual Rates and Budget Measures) Bill it provides for the taxes to be paid this year and in Part 2 it provides for cuts to Working for Families and KiwiSaver. I am making the point that part of the whole integrity of the Budget is actually including partial asset sales so how can we have that included as part of the Budget its papers and its assessment of forecasts when in fact the Government has said it will not take those issues to the electorate until 26 November and they will not come into play until next year? But here in the Budget papers we have a provision for a stream of income from asset sales of the order of $5 billion to $7 billion. 
I come to a point on KiwiSaver and the changes made to it in Part 2 of the bill. To me this just continues what has been an appalling record by National in office that dates back to the time of our colleague Sir Roger Douglas who in 1974 brought in a contributory superannuation scheme—a predecessor if you like of KiwiSaver. If it had been left in place it would have seen us a very wealthy nation today—would have. Unfortunately the then National leader Rob Muldoon campaigned on disembowelling that scheme and we have paid a price for that ever since. That is not the only legacy of National in respect of superannuation which has been most recently manifested by yesterday’s announcements on KiwiSaver. In the 1990s there was a cut to the base rate for married couples from 65 percent of the average wage to 60 percent. It was a swingeing cut for those people. Around 70 percent of people are reliant on national superannuation as their base income. We had that change perpetrated on New Zealanders in the 1990s under the Shipley administration. 
Now we have KiwiSaver in about its third permutation—because National came into office saying it would cut back the employer contribution to 2 percent—and now we are seeing under this measure a return to a 3 percent payment from employers. The signals from employers are that that will simply come out of the wage increases of employees. That is certainly not contributing in my view to the focus on savings that this Budget is supposed to have at its heart. If we are going to encourage people to save then we need as Treasury’s and the Inland Revenue Department’s own regulatory impact statements say explicitly stability and predictability. People will not put money into schemes if they think Governments will play around with them. 
Here we have a National Government that should hang its head in shame at its past history on superannuation and on encouraging New Zealanders to save. Yet again National is playing tricks with a superannuation scheme that was picked up by thousands and thousands of New Zealanders every week—1.7 million New Zealanders have come on board. Instead of enhancing the scheme adding to it or building it into a scheme that all New Zealanders can rely on into their future retirement we are seeing the axe taken to it. We are seeing cuts being made to it. We are seeing its value being undermined. New Zealanders will take those signals and ask why they should stay on board and contribute to KiwiSaver if the Government is not staying on board. We are already seeing comments like that in the public domain. 
My final comment is that although this Budget is supposedly about growth we saw two references to exports and 19 references to debt in the text of the Minister of Finance’s speech to the House yesterday—19:2. That is the focus of this Budget. It is about debt and it is about cutting; it is not about growing. It is a very poor shabby and shameful Budget. 
AMY ADAMS (National—Selwyn) 
: 
 I will take a call in the third reading of the Taxation (Annual Rates and Budget Measures) Bill. Before I talk about some of the specific measures in the bill I want to make a few introductory comments to set the context within which those changes are being made. As this has been a wide-ranging debate I am sure I will be indulged for a few moments. I think where we have to start with this stuff is to say that anybody can stand here and talk about perfect-world scenarios. It is very easy to stand here and say that this should be happening we could do this and would it not be great if we could do that. But the reality is that the last few years have presented an unprecedented set of challenges. There have been economic challenges personal challenges and social challenges that this Government has had to deal with. That has meant we have to make changes to the way things have been if we are going to get this country back on a path to sustainable growth. If we are starting from a position of saying that everything is good let us just carry on and keep spending money we are not accepting the fact that we have to do things differently to deal with what has gone before so that we can get this country on a path back to growth. 
This Budget charts a remarkable turn-round from a record deficit of over $16 billion to almost balance in 3 years and in the year following that a surplus of $1.3 billion. That is a turn-round in those 4 years of nearly $18 billion. That is a stunning achievement and it is an absolute prerequisite to getting this country into the sustainable strong prosperous position it deserves to be in. Mr Burns was right about one thing in his contribution: a big part of getting that situation right is about controlling debt. We are not making any excuses about that. We have to get on top of this debt. If we are going to keep borrowing and borrowing we will never get back to the position of surplus. Surplus means choices and the ability to withstand the sort of shocks we have had in the last few years. We have to control debt. At the moment we are borrowing $380 million every single week. With the changes in this Budget we can get that down to $100 million a week next year. That is absolutely critical to getting this right. Yes we are making changes and yes those changes take money out of the Government spend. That is a good thing because it is what is needed right now in this climate with the issues we are facing. 
I want to have a look at some of the specific changes this bill delivers to KiwiSaver and Working for Families. Let us have a look at those. I have sat here all day today and the debate has been wide ranging but few people have actually talked about the specifics of the changes and how small and gradual they are. Let us have a look at them. KiwiSaver costs this Government $1.2 billion every year. It is costing this Government $1.2 billion in subsidies and tax breaks. That money comes from hard-working New Zealanders. What is worse it is money that is adding to what has to be borrowed from overseas. It all has to be funded and paid for. Yes we are reducing the tax credits to 50c in the dollar but we are keeping the kick-start subsidy. That means we will still be committing $650 million as a Government to KiwiSaver in the next year. That is a significant contribution. We will be committing $2.5 billion to KiwiSaver over the next 4 years. That is absolutely important to emphasise. We are committed to it. We will see it remain viable and successful and all the projections tell us it will continue to grow. But yes we are reducing those tax credits to help pay the bills from the years we have had it. 
Let us look at Working for Families. We are talking about gradual changes over 8 years. Let us get this on the record very clearly. Three-quarters of families on Working for Families will not see a reduction; in fact they may see more. Twenty-five percent of families will see a reduction and that reduction is an average of $4 a week—$4 a week. For all the histrionics about gutting slashing burning and everything else and all the vitriol and hyperbole we have seen a quarter of families on Working for Families will notice a reduction gradually introduced over 8 years of an average of $4 a week. It is not a lot but it is an important step in getting this country back to surplus. We have to put that on the record. 
Let us have a look at student loans as well. Although the student loans scheme is not part of this bill it is an important part of this. Here are a couple of interesting things. The cost of student loans has gone up 50 percent in 5 years—50 percent. There is $12 billion outstanding in student loans. Of that money the Government collects an average of 55c in the dollar. It is staggering to find out that 50 borrowers are responsible for $11 million in debt between them. We have to start asking the hard questions about these schemes; we cannot put them in the sacred cow category. That is what this Budget has done and it has done it in a balanced and responsible way. That is what this bill delivers in respect of KiwiSaver and Working for Families and I am very pleased to commend it to the House. 
JOHN BOSCAWEN (Leader—ACT) 
: 
 I have been listening to this debate with a great deal of interest over the last hour or so. I particularly want to comment on the contributions of Gareth Hughes Shane Ardern David Cunliffe and more recently Brendon Burns. 
Let me start with Gareth Hughes. I always find it very interesting when members of this House refer to the pronouncements of the Human Rights Commission and particularly when those members come from both Labour and the Green Party. I have a real respect for the Human Rights Commission and in particular its Chief Human Rights Commissioner Rosslyn Noonan. I listen to what the Human Rights Commission has to say and particularly so in view of the courage shown by Rosslyn Noonan Judy McGregor and Sylvia Bell in the commission’s submission on the Electoral Finance Bill which came before the Justice and Electoral Committee in the last Parliament. I remind Mr Gareth Hughes of what the Human Rights Commission said in respect of that bill. The commission said: “The bill in its current form represents a dramatic assault on two fundamental human rights that New Zealanders cherish”— 
Mr DEPUTY SPEAKER 
: This has nothing to do with the taxation bill and I ask the member to come back to what this bill is about. We are speaking on the third reading and on the report back from the Committee stage. Those are the points that need to be canvassed in this speech. 
JOHN BOSCAWEN 
: Thank you Mr Deputy Speaker and I understand that. The reason I thought it was important to put Mr Gareth Hughes’ criticism in context is that the Human Rights Commission has come out and spoken out against the proposal to restrict the ability of those over the age of 55 to borrow for living costs when they are studying. Those students will not be restricted to borrow money for their fees but restrictions will be placed on their ability to borrow for living costs. 
I say that although the Human Rights Commission has come out against that proposal I would say to the members of the commission that there is a cost for everything. There is no free lunch. As contained in this Budget some $15 million a year is borrowed for living costs for those over the age of 55 which has to be paid for by someone. As I will point out it will be paid for by the people who will get the least from this Budget—the most disadvantaged. The people at the bottom of society the people who actually do not have the money to contribute to KiwiSaver are required to pay taxes—if not income tax then certainly GST on the food and the clothes they purchase—to subsidise those who can go to university. In the same way those same people on low incomes those same disadvantaged people have to subsidise those who will enjoy unlimited superannuation into their 80s whereas those who are not as well off usually have a lower life expectancy. 
Gareth Hughes also continually refers to the paying of subsidies to polluters. We hear the Green members’ constant refrain about paying subsidies to polluters. They seem to think that the more times they say it the more it will be true. But the tragedy is that it is not true and I suspect that most members of this House do not understand that. I would like to explain because the emissions trading scheme which is an item in this Budget— 
Mr DEPUTY SPEAKER 
: No. 
JOHN BOSCAWEN 
: The emissions trading scheme is in the Budget and Brendon Burns— 
Mr DEPUTY SPEAKER 
: No we are talking about taxation matters which are in the bill. The bill is not about an emissions trading scheme. I ask the member to confine his comments to the contents of the bill. 
JOHN BOSCAWEN 
: I suggest to the House that the Government has had to make reductions in the subsidies on KiwiSaver because of what the Government is spending in other areas. Maybe we would not need to be legislating for these cuts in subsidies if the Government was not wasting money in so many other areas. I note that on page 179 of the Budget documents buried under “Heritage culture and recreation expenses”—and a previous speaker Brendon Burns would have us believe that heritage culture and recreation are about the rebuilding of Christchurch—we find mention of the Kyoto Protocol and the emissions trading scheme. What a great place for the Government to bury the fact that we are spending over $1.2 billion on that scheme and that we have to cut other Government services. 
I refer now to the comments of Shane Ardern when he was speaking on this Budget. Mr Ardern said that he was very proud to represent a farming electorate that had a very large number of dairy farmers. He said he himself was a dairy farmer. Given that he is a dairy farmer he will know that dairy farmers pay about $3000 a year on the emissions trading scheme. I thought it was particularly interesting when Mr Ardern said that the solution was to tax the productive sector and that to tax farmers more would fix the economy. National seems to think that is true because that is exactly what the emissions trading scheme does. That is why we are discussing the cuts to KiwiSaver contained in this Budget. 
Let us look at the contribution made by David Cunliffe. That member like so many in this House thinks that this is a debate between National and Labour. There is no alternative they think so the member waxed lyrical about the fact that some pollster is showing that 48 percent of people believe that this Government is going down the wrong track and only 32 percent believe that it is going down the right track. 
Hon Clayton Cosgrove 
: Relevance? 
JOHN BOSCAWEN 
: That is what he said. He said that as sure as night followed day when a greater number of people believed that this Government was going down the wrong track—and he said that more people believed that it was going down the wrong track than the right track—there would be a change of Government. Well the ACT Party believes that this Government is going down the wrong track. The ACT Party although it will be supporting the changes in this bill—the changes in the KiwiSaver subsidies and the other taxation changes in this bill—is supporting it because we have a confidence and supply agreement with the Government. But we do not believe that these changes go far enough. We absolutely do not. We think this is a lost opportunity. Mr Cunliffe said he had been waiting 3 years for a Budget from National that would give some vision and some courage. But the members of the ACT Party have not been waiting 3 years; they have been waiting 18 years. We have been waiting 18 years for a Budget that can lay down some foundations for making some significant increases in the productivity of New Zealand. 
There are a number of things to commend in this Budget. Yes we are returning to surplus by 2014 or should I say we are projected to return to surplus. Those projections of course are based on— 
Hon Rick Barker 
: Hope. 
JOHN BOSCAWEN 
: Hope is exactly what it is. Those projections are based on rising incomes and growth of some 3 or 4 percent in that 2014 year. Media commentators have said this morning that Treasury has been forecasting growth of much higher levels than we currently have. It is forecasting growth at a time when there is massive world uncertainty; the US dollar has massively devalued. So this is very much a “hope” Budget in the same way that it is another lost opportunity just like the previous 17 Budgets that have been brought down by both Labour and National Governments since the ACT Party was formed in 1994. 
We have been talking about the cuts in the subsidies to KiwiSaver. One of the fundamental points of this bill—and Amy Adams made the point—is that the cuts are gradual. Certainly the changes in Working for Families are gradual changes. But who can actually save the money? Who are the people who can put together and save currently the 2 percent contribution which is now to be 3 percent? Are many people on low incomes or working for the minimum wage in a position to save 2 or 3 percent? I suspect not but they are the people who will be paying the taxes to subsidise those who can. One of the reasons that ACT opposes the bill is that we do not think we need to have those incentives. We do not think that those earning low incomes and paying GST should be subsidising those in a position to save. 
I find it very interesting that Brendon Burns referred to the fact that Sir Roger Douglas as Minister of Finance back in the then Labour Government of 1975 introduced the Labour superannuation scheme in that year and Brendon Burns waxed lyrical about how big that pot of money could have been. Mr Burns is absolutely right: that would have been a big pot of money 35 years ago. But Mr Burns did not say that there was actually no subsidy for it. It was based on a 4 percent employer contribution and a 4 percent employee contribution. There was no $1040 one-off payment. There were no ongoing subsidies that the poor had to pay for. 
We are supporting this bill. But it is a lost opportunity and we look forward to playing a much bigger role in Government following the election. 
STUART NASH (Labour) 
: 
 Is it not interesting—John Boscawen said the ACT Party was formed 18 years ago. Well it held its breath for 18 years and it turned blue. That is what happened; it turned blue. The party has given up on everything it once stood for and John Boscawen even admitted that he does not agree with anything in the Taxation (Annual Rates and Budget Measures) Bill but he will vote for it. What does that say? Well maybe I should say that blue is the wrong colour. Maybe yellow is the right colour. After 15 years of not even getting close to power ACT had to pull back Sir Roger Douglas. He had to come out of retirement to save the ACT Party. I feel a little bit sorry for Sir Roger. He was enjoying his retirement. He had put the old version of KiwiSaver in place. It would have been a fantastic scheme. 
But I must admit there are a couple of points—and members will not hear me say this very often in this House—on which I agree with John Boscawen. The first point is that this Budget is a hope Budget. The figures behind this Budget do not stack up. Why do I say that? Because I am the Labour spokesperson on revenue. I have dealt with the Inland Revenue Department on a number of issues and I have found it to be absolutely brilliant in its statistics and its advice. The advice the Inland Revenue Department gave to the Government on tax in this Budget differed by $4 billion less from the advice the Government received from Treasury. The Inland Revenue Department advice differed from the advice from Treasury by $4 billion over 5 years. That is a lot of money in anyone’s language. 
I do not know what the Treasury figures were based on but goodness me we should be very concerned. Amy Adams stood up and I agreed with her on one thing: things need to be done differently. Labour agrees with that. Labour knows that the country cannot afford to keep borrowing $380 million a week. That is not sustainable. A $16 billion deficit is simply not sustainable and something has to be done about that. Amy Adams said that it is about giving choices. This Government had choices but it spent $25 billion on tax cuts. That was the wrong choice. This Government also cut KiwiSaver. 
I will give the House a quote from John Key. He refused to rule out further cuts to KiwiSaver. When he was asked whether it was the end of the cuts to KiwiSaver he would not rule out further cuts. In Auckland today after addressing a business audience he said “You learn in life I guess to rule nothing out.” When he was asked whether he could rule out further cuts to KiwiSaver he said that he would not rule them out. He said “You learn in life I guess to rule nothing out.” Well I think Mr Key needs to come straight. He needs to tell the people of New Zealand exactly what he wants to do with KiwiSaver. At the moment he has cut $10. How much more? He says he will not rule anything out. Well how much more? What is not ruled out? Will it be $20? Will he take away the $1000 head start? What will he do? 
There are a couple of points I would like to make in rebuttal to a couple of Government members. Craig Foss stood up in this House and had the nerve to tell New Zealanders that they were better off because of low interest rates. Well I can inform him and this House that New Zealand has the highest business lending rates of any country in the OECD. How is that helping business? Those figures are from the IMF; those are not Labour figures. New Zealand has the highest figures for business lending in the OECD. What has that Government done about it? Absolutely nothing. There is absolutely no plan whatsoever. 
I will tell the House where the Treasury forecasts came from—that is the forecasts that differed from the advice of the Inland Revenue Department by $4 billion. They were based on the creation of 170000 new jobs. That is what that forecast was based on. When Mr English was asked today where the jobs were going to come from he could not tell the people of New Zealand— 
Hon Clayton Cosgrove 
: Cycleway? 
STUART NASH 
: What did that create? Was it 60 or 100 jobs? It was certainly not 170000. The tax revenues based in this Budget based on these rates are not achievable. They are simply not achievable. Mr English said that commodity prices are booming—they are going to come in the sectors that sell commodities. Well I can tell this House that the opposite happens and I will give members an example. In the forest industry there are record commodity prices. What is happening? We are selling unprocessed logs offshore. Domestic processors simply could not afford to buy those logs. They are closing down. Jobs are lost. Let us talk about the farming sector. It is crippled under $42 billion worth of debt. Thank goodness for record payouts! We may see a little bit of tax coming from that. 
No one wants to see a more profitable farming sector than I do. Mr Ardern stood up in this House and he told us the boundaries of his electorate. He said that he came from a poor electorate a rural electorate. That is true. That was our point. The fact is that the industry that describes itself as the backbone of this country is in serious financial trouble to the point where the dairy industry pays only $26 million in tax and where 75 percent of dry stock farms earned $20000 or less. Over half of those farms made a loss. That is a debate that we need to have as a country. It is also a very very powerful argument for investing in the productive economy. Do we see any of that in this Budget? No. Was there any investment or tax incentives for research and development? No none whatsoever. The plan is in this bill and what is that plan? Cutting KiwiSaver. That is the plan to drive this country out of economic woes. Well it does not work. 
The other plan is to cut the Working for Families entitlements for about 110000 Kiwis—no not Kiwis 110000 New Zealand families. Those families are struggling and that is why Working for Families gave them a little bit of a lift-up. In the Hawke’s Bay economy $120 million worth of Working for Families entitlements goes towards helping those who need a lift-up. Mr Dunne was the Minister of Revenue when the Working for Families scheme was put in place. Mr Dunne knows how important it is to New Zealand families that they can have a little bit of a lift-up a little bit of a hand. Those are the families that will spend money in our communities in our shops but now that money will not be spent because it is being cut. Amy Adams has the nerve to stand up in this House and say that the average reduction in Working for Families entitlements is only $4 a week and that it is not much. It may not be much to Amy Adams but $4 a week—I know this is dreadful—is actually a bit of money to a lot of New Zealand families. It buys bread. It can buy some milk. It buys the necessities. For someone like Amy Adams who is out of touch $4 does not matter. But it does matter to a lot of Kiwi families. To say that it does not matter shows just how out of touch she is. I find that quite insulting. 
I will give a quote from Bill English about Michael Cullen. Bill English said: “I want to stress that New Zealand starts from a reasonable position in dealing with the uncertainty of our economic outlook.” Dr Cullen left this country in fantastic shape—nine Budgets all in surplus. This bill is not good for New Zealanders. 
Hon TAU HENARE (National) 
: 
 The Taxation (Annual Rates and Budget Measures) Bill gives effect to some of the changes set out in the Budget yesterday. We heard a lot of noise from Labour. What we did not hear was an alternative plan. There was not a word not a whisper of an alternative plan. There was nothing—naught zilch—in any of those speeches right from when the Hon Clayton Cosgrove came in here with his bully-boy tactics. He stood up and tried to stand over everybody but no it did not work. [ 
Interruption 
] It did not work. 
The Prime Minister the other day laid out for everybody what the plan is. Come 26 November we will see who supports the plan and we will see who supports Labour’s plan—apparently Labour’s support is only 27.3 percent. The taxation measures set out in this bill are about one thing and one thing only: back in black by 2014. 
Hon Clayton Cosgrove 
: Ha ha! 
Hon TAU HENARE 
: I know the member for one of the areas in Canterbury thinks that “back in black” is an AC/DC song—and it is a good song—but this is about being back in the black by 2014. As Amy Adams said that will be an absolutely remarkable turn-round. 
I will tell members across the way a funny thing. Back in 1993 I was a young lad with four children. I had a mortgage. I was paid before tax $28900. I did not get Working for Families and I did not get the accommodation supplement. I am damn proud of the fact that I was able to work my way to having a home and a family without the help of the Government. 
Here is the other thing: I am also glad that a person on $100000 today should not get any assistance whatsoever. That is my personal belief. When we put into perspective what this Budget has done we see that Amy Adams was absolutely right. Amy Adams was absolutely right that there are families that do not need Working for Families or the accommodation supplement. But yes on the other hand some families do need assistance through the accommodation supplement Working for Families and tax credits. 
I absolutely commend this bill to the House. It is a step in the right direction. It is the only thing that we can do. Opposition members hold up the front page of the  
Dominion Post  
with a big zero on it. I am proud that in an election year the Minister of Finance and the Government have brought to this House a Budget that will see us back in the black by 2014. 
The other thing that I must say I really love about this Budget is that we are not putting this measure in place for the next 3 years. We are saying to the electorate that on 26 November people have a choice: go with a Government that is a good manager of the economy or pick the other guys who squandered away billions and billions of dollars— 
Shane Ardern 
: In the best times. 
Hon TAU HENARE 
:—in the best times that this country has ever seen. They did not put anything away for a rainy day. 
Hon David Cunliffe 
: Yes we did. 
Hon TAU HENARE 
: Oh no they did not. It was all gone. It was all gone by the time we got here. That is the real story of this Budget and the real story of the economy. 
How did we end up where we are? I can tell members that we ended up where we are because of the likes of Parekura Horomia David Cunliffe Phil Goff and Annette King. They have been around for too long in the days where we had the best of times and they squandered the surplus every year. That is where they left us. 
In the debate on this bill Opposition members have also had a go at Sir Roger Douglas. I bring the honourable member into the debate because I want to say that if it had not been for Sir Roger Douglas and the Labour Government of the mid and late 1980s we would have been in the you-know-where. That Government’s programme was kept by the National Government of the 1990s. I have something to say to the Labour members who get up and rail against selling State assets. I had a look at the old register the other day and out of the 27 State assets that this country owned half of them were sold by those who say that they do not like the sale of State assets. 
Hon Clayton Cosgrove 
: We learnt; you didn’t. 
Hon TAU HENARE 
: Oh that is all right! Now they say that they are opposed to any State asset sales. I am proud of the fact that our Prime Minister and our Minister of Finance have both said that we will put up for sale 49 percent of certain State assets. We will see a return on that. 
Hon Rick Barker 
: How about the member’s house? 
Hon TAU HENARE 
: How about my house? Why would the member want my nice little weatherboard house up in Te Atatu? Why would he want to do that? I tell him that what we should do is sell the assets of Stuart Nash. That would get us quite a few dollars. But I digress. This bill is about putting in place some measures so that we can get back in the black by 2014. That will be the catchcry of the election this year: “Back in black by 2014.” 
A party vote was called for on the question  
That the Taxation (Annual Rates and Budget Measures) Bill be now read a third time. 
Ayes 67 
New Zealand National 58; ACT New Zealand 5; Maori Party 3; United Future 1. 
Noes 51 
New Zealand Labour 42; Green Party 6; Progressive 1; Independents: Carter C Harawira. 
Bill read a third time.