Parker David: Advanced Technology Institute Bill — First Reading 
Text is incorporated into the Bound Volume 
Parker David: Advanced Technology Institute Bill — First Reading 
[Sitting date: 13 September 2012. Volume:683;Page:5230. Text is incorporated into the Bound Volume.] 
Hon DAVID PARKER (Labour) 
: 
 As earlier speakers have said the Labour Party supports the Advanced Technology Institute Bill. Indeed when our leader David Shearer spoke at the time of the Budget and identified this measure and some other related science initiatives in schools that related to encouraging more science graduates in tertiary education they were probably the only two parts of the Budget that we in the Labour Party agreed with. So we will be supporting this bill but we would note that this really is not enough. 
National pretends that it is in the business of increasing New Zealand’s exports. It says that it recognises a need to rebalance the New Zealand economy away from consumption and towards export-led growth. Yet here we are 4 years after National came into power and that is not being achieved. Indeed the biggest decrease in the current account deficit was occasioned by money coming in from the earthquake in Christchurch following insurance claims made on overseas reinsurers. If you strip that out of the decrease in the current account deficit which dipped down quite sharply for 2 years it was only half of what it appeared in the statistics department figures. 
From here on our current account deficit grows. It grows to over 5 percent per annum. We are already one of the most indebted countries in the world—and it is not Government indebtedness. We have low levels of Government indebtedness in New Zealand largely because the last Labour Government ran nine consecutive surpluses and left New Zealand with very low levels of Government debt. Gross debt had gone down from 48 percent to 18 percent of GDP and net debt was down at zero or thereabouts. 
Of course that has turned round following the global financial crisis and there has been an increase in Government debt but even when the Government gets back into surplus next year or thereabouts—and it ought to; the Labour Party agrees that that is an appropriate ambition and says that we would have done so too—even at that point New Zealand’s Government debt is very low by international standards but our private debt is high. This shows up in our net international liabilities which are amongst the highest in the developed world and our net international liabilities—and a lot of people might be surprised to know this—are actually down there with Greece and Spain. 
So that is New Zealand’s vulnerability and the only way out of it is to export more so that in the future our exports are valuable enough to cover the cost of our imports and interests. That is where the settings that the Government changes in the economy to improve that outcome are absolutely fundamentally important. This is a good thing to do but it is a small thing to do relative to the things the National Government says no to. It has put off the agenda all of the major levers that business needs it to pull in order to lead to export growth becoming a reality and overcoming our prolonged current account deficit. Instead the Government’s own forecasts show the current account deficit rising. 
What has the Government said no to that would be more effective than this bill to improve our export performance? It has said no to pro-growth tax reform. Two major parts of that that the Labour Party thinks are absolutely essential are firstly a research and development tax credit to encourage businesses to invest in research and development. 
Colin King 
: To restructure their accounts. 
Hon DAVID PARKER 
: “To restructure their accounts.” the member from National says. That is not correct. When a tax credit is introduced there is always some recategorisation of expenditure at the margins. 
Colin King 
 A change of behaviour. 
Hon DAVID PARKER 
: There is always some recategorisation of expenditure at the margin but the reason why every other country in the Western World bar one or two does it including Australia is that apart from that recategorisation at the margin it stimulates a lot more expenditure in research and development and that is why other countries do it. Yes it is true that there is a wiggle at the margin by some people recategorising expenditure but the vast majority of it is new and additional research and development expenditure. Treasury supported that reform. Treasury opposed the National Government that took over from Labour when we had recently introduced a research and development tax credit and criticised its abolition. 
What is the next big measure in respect of pro-growth tax reform that is far far more important than that? It is actually a capital gains tax. At the moment New Zealanders invest because of tax biases in the economy. 
Hon Maryan Street 
: Make the hard decisions National. Make the hard decisions. 
Hon DAVID PARKER 
: It is a hard decision—thank you Ms Street. Maryan Street makes a very good point that because it is hard the National Government avoids it. But it has— 
Colin King 
: It’s not hard. 
Hon DAVID PARKER 
: From its point of view it is hard because it attacks its base who will have to pay it. 
Colin King 
: No it’s the economic base. 
Hon DAVID PARKER 
: It does not attack the economic base. It improves the economic base. 
Hon Member 
: That’s rubbish. 
Hon DAVID PARKER 
: That sort of Luddite view of the world is why our export performance is going backwards. [ 
Interruption 
] They are flat-earthers on the other side. There is a capital gains tax in Australia in the United States and throughout Europe and the voodoo economists on the other side say no to that economic theory which very simply stated is that people should be encouraged to invest in enterprises for export on the basis of the profitability of those businesses or for import substitution instead of on the basis of a tax bias that favours over-investment in speculative land and building assets. It is that simple and National members still do not get it. They ignore the advice of virtually every overseas country. They ignore the advice of the OECD they ignore the advice of the IMF they ignore the advice of the Reserve Bank of New Zealand and they ignore the advice of Treasury and they say they are right. They are wrong. It is far more significant than what is being done here. 
What is the next thing that the “Party of No” National put off the agenda? It says it admits that there is a problem with overvaluation of the currency. It sees other countries around the world manipulating their currencies and competitively devaluing their currencies and what does it do? It does nothing. The “Party of No” says it cannot do anything to fix it and it watches our export sector. The receipts have gone down. We are losing jobs in things like our timber industry and manufacturing has been going backwards for the last two quarters. What does National say can be done? Nothing. That is National’s response. It is the “Party of No”. It will not pull these big levers. 
We need to address our currency. We need to broaden the Reserve Bank of New Zealand Act so we do not give primacy to inflation over other factors like employment manufacturing and export earnings. But no National the “Party of No” says no. It has put off the agenda the big levers that business and people who want jobs in New Zealand need it to pull. As a consequence we have record numbers of New Zealanders giving up and going to Australia. As a consequence our own unemployment rate is lower than it would have otherwise been. The Government suppresses unemployment figures by waving goodbye to those New Zealanders who are going to Australia despite the fact that it was National that made the promise when it was elected that it would be saying to wave goodbye to higher taxes not to your loved ones. We do not hear National being willing to be held to account for that failed promise. 
This bill is all well and good but New Zealanders are disappointed in the Government that showed promise in their view. They elected National into Government because they believed John Key and Bill English when they said that they would lead them to a brighter future. They are disappointed that that has not happened. They know they are seeing that this Government is not willing to pull the levers that the people of New Zealand need the people who need jobs and prospects for themselves and their families. It is not willing to do this to pull the levers in relation to taxation and pro-growth tax reform. 
Let us turn briefly to savings. They say the big difference between Australia and New Zealand is mining. That is rubbish. Australians cleared out on New Zealanders when it came to earnings in their industries at a time in the 1980s when their mining industry was in the doldrums. The reason they get ahead is they save properly and they invest in their industries which improves labour productivity and total factor productivity. These are expensive machines that require technical operators to supply them and run them and they are paid good wages. That is the reason why Australia does better and another reason why New Zealand should follow in its steps but of course the “Party of No” National says no.