Street Maryan: Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
Street Maryan: Taxation (Annual Rates and Budget Measures) Bill — In Committee Third Reading 
[Volume:672;Page:18975] 
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.