Nash Stuart: Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
Nash Stuart: Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
[Volume:672;Page:18955] 
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.