English Bill: Taxation (Annual Rates and Urgent Measures) Bill — In Committee 
English Bill: Taxation (Annual Rates and Urgent Measures) Bill — In Committee 
[Volume:628;Page:781] 
Hon BILL ENGLISH (National—Clutha-Southland) 
: 
 It is probably a fitting way for the Government to end its legislative year virtually by passing the Taxation (Annual Rates and Urgent Measures) Bill. I get the feeling that when Parliament meets again next year it will not be quite so much the taxation that is controversial as the spending. Government members have pointed out that as is often the case people pay the tax. They do not like it and National members oppose this legislation because the tax rates do not need to be this high. They absolutely do not. 
The public are very much focused on how the money is being spent. We saw today one way in which Labour is spending this money that shows that the tax rates in this legislation are not justified. I have a little graph here of the Labour Cost Index since it began in 1992. [ 
Interruption 
] Yes that one. I know the Minister in the Chair Dr Cullen will not like it because it shows as a fact what he regards as ideological burping. It shows that up to December 1998 the private sector wage rates grew faster or at about the same rate as the public sector wage rates. Since December 1999 the two lines head in different directions. Without fail the public sector has grown consistently faster than the private since December 1999 and the rate of difference is growing. The public sector is now growing faster; for December 2003 and 2004 it just about goes off the end of the graph. The gap between the two is opening. 
So when Dr Cullen wonders why people are worried about their tax rates he needs to think about the way he is spending the money. His own department has said there is pretty much no evidence to believe that public sector productivity reflects the growth in public sector pay. The index excludes teachers and nurses so the Minister should not stand up and say he wants to cut the pay for teachers and nurses and sack a whole lot of them. That is not the point. What is happening here is that Labour’s interest groups in the public sector are being over-rewarded. They are getting more than their fair share of the growth dividend. 
Of course the spending pattern within which this is all happening is putting pressure on interest rates. As my colleagues have pointed out to the Minister there have been nine increases in interest rates in the time that he has been the Minister of Finance. They keep going up and the New Zealand Council of Trade Unions membership is starting to feel the pressure of it so they will be trying to bring pressure to bear on the Minister to do something about tax rates. He did not answer the question that the Council of Trade Unions I think quite reasonably asked. Why cannot the Minister bring forward the inflation adjustment in the tax rates which he himself proposed? I do sympathise with the Minister in that he has found it very hard to find anyone who thought it was a good idea. Now the Council of Trade Unions and its membership have figured out that it is the only option on the table for reducing taxes—and bringing some discipline to Government spending because that is the other benefit of lower taxes—they want to know why they have to wait until 2008. The Minister has the opportunity to get up and explain that to us. 
I cannot see why they should wait until 2008. They are facing higher interest rates driven by low-quality Government spending. They see in the newspaper every day examples of wasteful Government spending. They are going to hear about the Labour Cost Index which shows that public sector wages are going up a lot faster than theirs. The members of the Council of Trade Unions are not public sector employees; they are private sector employees. They are out there in the nasty real world. Their wages are not going up as fast as public sector wages. They think quite reasonably that the Government should act sooner than is proposed in order to transfer some of that excess surplus from the pockets of civil servants who do not need it to their pockets.