Burns Brendon: Third Readings — 
Text is incorporated into the Bound Volume 
Burns Brendon: Third Readings — 
[Sitting date: 20 May 2010. Volume:663;Page:11196. Text is incorporated into the Bound Volume.] 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 It is interesting to follow the previous speaker Hekia Parata and her comments about this being a transformational Budget. A transformational Budget it will be all right; it will transform the wealthy into the super-wealthy—that is what this Budget is about. This is a shiny Budget but it is a hollow Budget. It is a Budget that has been designed to repay the shiny but hollow men. It has some sizzle in it but there is not much meat in the sausage. It is a cappuccino Budget with a lot of froth. 
What it exercises and what it shows is that the National Party in Government has only one raison d’être it has only one real tool in the economic toolbox and that is tax cuts. There is nothing new in that because the National Party promised tax cuts as the main plank of its election platform in 1999. It promised them as the main plank of its election platform in 2002. It promised them as the main plank of its election platform in 2005. It promised them as the main plank of its election platform in 2008. Here we are in 2010 and those at the top end of town are getting their third tax cut in 3 years and all the time we are being told that somehow cutting taxes will lead us out of the economic woods. Well where have we heard that before? I wonder whether that is a philosophy that Greece followed. Effectively it had tax cuts because nobody paid tax and now it is in economic meltdown. 
We are in a world that is still so precarious that somebody entering a wrong figure on to a Wall Street screen can take billions of dollars off the value of Wall Street. We are somehow meant to believe that all is well we have gone through the recession we are absolutely out of the woods and it is time to deliver the third set of tax cuts for the top end of town when we have just got through supposedly the worst economic situation the world has faced since the 1930s. I say to the National Party members opposite that you are supposed to be the conservatives. Where is the fiscal prudence in this Budget? Where is the party that was once the introducer of fiscal responsibility? You are supposed to be a conservative party; that means conserving. You accuse the Labour Party of being— 
Mr DEPUTY SPEAKER 
: You know what I am going to say. 
BRENDON BURNS 
: My apologies Mr Deputy Speaker; you are quite right. The National Party is supposed to be a conservative party. It accuses the Labour Party at times of being a tax-and-spend party yet this Budget represents a cut tax borrow-and-hope approach. The member opposite referred to hope; that is what is encapsulated in this bill. It is all about hope. This is a Budget that is all shine and no substance. 
At first glance the tax cuts—modest though they are—for low to middle income earners may look good. But people will soon work out the not so hidden costs in this Budget. They will take time to work them out. Once the tax cuts take effect people will rapidly see an inflationary tsunami. Nearly 6 percent is the Treasury prediction of what will engulf households budget as a result of this Budget—a 6 percent increase in inflation which is more than twice the rate we have had over previous years. We will see GST go up to 15 percent with this legislation. Well 76 percent of people in my electorate of Christchurch Central earn below $40000 a year. A poll in the  
Press 
 this morning indicated that the majority do not believe that that increase is appropriate no matter what promises this Government makes about compensating them because they are suspicious. They can see the writing on the wall. They know especially those on lower incomes who spend every dollar they get that a one-off compensatory move will not compensate them for the long-term inflationary impacts of this legislation and what it introduces. 
What about the people who will lose some of the funding they currently enjoy in terms of early childhood education support? The estimation is that that could mean adding $1.50 an hour on to the costs that some parents are meeting to place their children in early childhood facilities. If parents who have one child in early childhood education pay $1.50 extra an hour— 
Hekia Parata 
: What about the $91 million for those who aren’t participating at all? 
BRENDON BURNS 
: —I say that Hekia Parata should tell that to her constituents if she has any—that is $60 extra a week for one child. That is twice what the average income tax cut will be even before the GST increase takes effect. 
I understand that projections today from the Property Investors Federation show that the changes will mean a 6.5 percent increase in rents. A 6.5 percent increase in rents plus 15 percent GST will engulf any prospect people have of being better off as a result of this Budget. And that is before we start talking about rising interest rates which will be fed by this Budget as well. The inflationary boom that will follow this Budget will very very much erode the incomes of those on middle and low incomes. It will not worry Paul Reynolds a jot whether he rents or owns his own home because he will be getting $1650 a week extra as a result of this Budget as will many many others. 
The message if the Government would only listen to it is that tax cuts do not actually deliver prosperity. The Government should have taken account of the fact that the top Australian tax rate remains at 45c in the dollar which is 12c or 13c above the rate that we will see in this country from October if this legislation is passed. 
What this Budget should be about is higher productivity higher wages and higher skills. What is in this Budget to deliver any of those? Well we see that there is reference to a Productivity Commission being formed. I wonder whether it will pick up on the work of the task force led by Don Brash. He produced a wonderful report on productivity for this Government. 
David Garrett 
: It’s wonderful. 
BRENDON BURNS 
: It was absolutely wonderful said the member David Garrett from ACT; of course the Government took on board all the recommendations of that previous look at productivity! 
What is this Budget doing about savings? We have heard reference time and time again to Australia in comparison with New Zealand. Well the most recent Australian Budget moved to increase the employers’ contribution to superannuation to 12 percent. Where is the remedy in this Budget to the vicious venal cut to the KiwiSaver scheme introduced under Michael Cullen? He was a prudent Minister of Finance a Minister who paid off debt and a Minister who established savings regimes in terms of KiwiSaver and the Cullen fund. Where is the move in this Budget if we are to feed economic growth to use some of the supposed new surpluses that will be emerging to fund superannuation and savings? There is nothing in it about restoring the employer contribution to KiwiSaver to a very modest 4 percent while the Aussies go to a 12 percent contribution to their superannuation schemes—nothing whatsoever. 
The National Government has only one tool in its tool box and that is tax cuts. There will be huge gains for those earning over $100000 but in effect there is nothing in this Budget once we have taken into account all of the inflationary and other impacts for students low-income workers and battling families. 
I will comment on the matter of economic growth which supposedly is at the heart of this Budget. I am reading from page 78 of the volume containing the Minister’s Executive Summary and the Economic and Fiscal Update. I note that exports are this year supposed to increase by 2.8 percent but what are imports doing in the same period? Well they are increasing by 9.9 percent. Next year there will be a 2.4 percent increase in exports but what will imports do? There will be a 10.8 increase. That is the measure of this Budget. It will feed into import growth because some at the top end will be spending their money. There may be some modest increase in internal economic growth as a result but I ask where the productive sector will gain from this Budget. Where is the benefit for the productive sector? There is nothing for that sector. No wonder Business and Economic Research has commented—and has quoted the Minister in fact—that our single largest vulnerability as an economy and a nation is our net external liabilities and has said that we owe the world around 90 percent of our current GDP. What is this Budget doing? Well we will see the percentage of our Budget as a measure of our external liabilities grow over the next 3 to 4 years to 99 percent of GDP. So we are actually going backwards at the very time that we become increasingly vulnerable as a nation; our balance of payments goes further and further into debt. 
There is nothing in this Budget. It is framed around trying to ensure that the National Party is re-elected next term. It does nothing to improve the state of our economy. It does very little to improve the household incomes of moderate and low income New Zealanders. It is a payback Budget for the hollow men. It is a payback Budget for those who are in business class. It moves them up to first class and it means that those at the back end back in economy class are now paying for their lunch. It is a Budget that is shallow. It is hollow. It will not deliver for New Zealand. It will not make New Zealanders wealthier. It is actually illusionary and very very much a shallow shiny-but-hollow Budget.