Smith StuartAPPROPRIATION (2017/18 ESTIMATES) BILLThird ReadingIMPREST SUPPLY DEBATEDebate resumed.STUART SMITH (National—Kaikōura): It is great to be back in Wellington tonight. I have been down in Kaikōura today for the reconnection of the rail back up today; the last weld in the rail track to connect the rails between Picton and Christchurch. But I will talk a bit more about that later on. I think this imprest supply and appropriations debate is a fantastic opportunity to revisit some of the initiatives in our Budget which has gone a long way to make a really big difference for my electorate in particular with $17.5 million going to earthquake support for 862 businesses which was really fantastic support. That has rolled over into business grants now and is really well received by the businesses helping them get back on their feet. It has been a big task for businesses to grapple with the changing environment that they are now working under. A lot of those tourism businesses that would normally be going through a really quiet time now anyway a lot of their staff are out working on the road doing traffic management and earning very good money and being part of a rebuild which is fantastic.There was also $5.7 million to reinstate the harbour. I was down there the other day when we have made a major step forward. They will be finished in October; the last bits of that will continue on. That money that has gone forward to help—even things like the coastguard whose ramp did not go all the way down into the water after the earthquake; that has been deepened and the ramp has been extended so the coastguard can actually get out and do their job. So that is phenomenal support for the local community in that.But I want to talk about the $812 million that was set aside for the rail and the road. It was only last month that they spent $47 million in that month on the rebuild and that is $10 million more than was spent on the Waterview tunnel at its peak. So there is a phenomenal amount of activity going on there now. And today there is a stack of rolls of mesh in the forward operating base for the helicopters sitting there and they were taking one roll at a time underneath the helicopter to bolt on to the top third of Ōhau Point to stop the rock that has been fractured in the earthquake from coming down on to the road. When they get that finally completed they will be able to work safely underneath it and it is a massive task.You can imagine the work that the abseillers are doing there; it is phenomenal. You wonder what these people do for the rest of the time—not you necessarily Mr Deputy Speaker; we all wonder what those people do in between disasters but they must be doing something because they are very good at their jobs. They are hanging off a rope drilling holes into the rock and bolting that net and working with a helicopter dangling a heavy piece of net underneath the helicopter and putting it in place. It is phenomenal work to see that happening.But today I had the pleasure of being there to see with Peter Reidy the chief executive of KiwiRail where the workers actually did that weld. I have never seen one of those welds done before. I thought they might let me have a bit of a go with the electric welder but it was not electric welding; it was athermic welding I think it is. But it was amazing to see that last bit put together. I understand it will be a few weeks now; the rail line is actually connected. They have to go through and tamp it down—get a tamping machine in there. Effectively they have got a rail line that is equivalent to a muddy farm track and they have to bring it up to the level of a highway to take the freight trains down there that will start running hopefully in a month's time. But it does take quite a bit of work to get it up there.But this is a major step forward with a track that will run two freight trains a night in either direction and during the day there is still more work to be done in some of the tunnels to bring them up to standard. It is all about safety of course but it also gives them room on the road to continue with the construction during daytime. They are working at night as well. It is amazing the progress that they have made. That money and that very quick action that came out once the decision had been made that we needed to reinstate the road and the rail it needed fast action and they have stepped up. I really want to take this opportunity to thank those people who are working on that road. The work that they are doing is making a tremendous difference for New Zealanders. It is a great fillip for the people who live on and around that road to see that that progress is being made.From the outside you cannot see what is happening. I can tell the House that pictures do not do it justice; to actually get on the road and see the scale of it is phenomenal. They are now getting access to Ōhau Point. That slip has been nicknamed Granddaddy"; it is the biggest one of the lot. It is three times larger than the one through the Manawatū Gorge that kept it closed for 18 months I think. So it gives you some idea of the scale. So it is phenomenal and great news that that is moving on.But let us go back to the Budget. I would like to talk a little bit about what is really the heart of the Budget which is the Family Incomes Package. That was made up of tax thresholds which I will come back to in a minute Working for Families and the accommodation supplement. Now there has been some debate about tax thresholds saying it was a tax cut. It will effectively lower tax but it is about a much-needed shift in those brackets those thresholds. It has been quite insidious; it creeps up on you over time. Even though we are in a low-inflation environment wages are going up much faster than inflation and it is phenomenal. Even though the numbers are small—Andrew Little: Not for two-thirds of wage and salary earners. Two-thirds are going backwards.STUART SMITH: —it is actually larger—it is a shame there was not a bit more economics studied on the other side of the House.Anyway I will come back now to those tax cuts because I was quite curious about what had happened when the last tax cuts occurred in 2010. There is a thing called the Laffer Curve which is quite an interesting concept. This is Arthur Laffer who was an economist who came up with the theory of the relationship between tax rates and the overall amount taken in in tax which is really important when you are starting to talk about tax cuts. If you want to talk about it people should really understand what they are talking about.Andrew Little: You have not had the Laffer Curve since 1985. How embarrassing.STUART SMITH: I think there is a bit of a grumpy person on the other side of the House. I wonder why they are grumpy?I had a look at this. So the top 1 percent of taxpayers—what do they pay in tax? If we were to believe the rhetoric coming from the other side you would expect when tax levels were lowered that the amount of tax that the top 1 percent would pay would go down; in fact the opposite occurred. So tax take from the top 1 percent went up so that sort of puts the lie to that theory. So then I thought I had better look a wee bit wider than that so I thought I would see what percentage of taxpayers actually pay half the tax in New Zealand; half the income tax.So looking at that you would expect the reverse to occur. You would expect that actually more taxpayers would pay half the income tax if in fact lowering the tax rates actually was bad for low-income earners. But in fact again the reverse occurred: 2 percent more. It went down from 14 percent to 12 percent; so 12 percent are now paying half the income tax. It is a phenomenal number. I think most New Zealanders do not understand that. It is really interesting to think about that. So income taxes are the key to our prosperity. I think it is quite interesting. I would like to have a conversation with someone who could actually understand economics but that is another question. I think this a phenomenal step forward to do that.Also I think one of the key things that we also need to remember is that if anyone were to reverse that decision then can anyone guess who is going to be most impacted? Actually it is superannuitants because then their increase in their superannuation is dependent on the average after-tax income which will in fact go up. So it is a phenomenal outcome for New Zealanders a great tax package and a great Budget that has actually helped deliver for the people who have been affected by the earthquake and I commend it to the House. Thank you."