Copeland Gordon: Budget Debate 
Copeland Gordon: Budget Debate 
[Volume:608;Page:5812] 
GORDON COPELAND (United Future) 
: 
 I welcome the announcement in today’s Budget that family support and child support tax credits will be adjusted for inflation from 1 April 2004. However I want to mention that the present rates were set in 1998 and United Future would have preferred to see a movement for inflation from that time but I welcome the announcement confirmed today that those questions will be addressed very seriously by the Government in next year’s Budget. I also welcome the reduction in tax rates on employer-funded superannuation schemes. 
I revert for a moment to families. There are a couple of comments I would like to make about what is in the Budget. Firstly I welcome the $11 million that has been set aside for a safe and positive parenting programme but I question the method of that programme’s delivery. The Budget states that it will be done via a media campaign. I would very much prefer the Government to issue vouchers to parents so that they could go along and attend positive parenting courses which would be provided by the great number of community and voluntary organisations in this country that already have very good programmes in place and indeed would encourage other organisations to develop new and innovative programmes because it is a very important area. 
One of the key parts of United Future policy which I am sure we will not see advanced in the term of this Government but which nevertheless we want to keep on the radar screen is income-splitting for couples who are raising children. Wherever I go in this country I find people coming to me and saying that they voted for United Future because of our income-splitting policy. There are many many families in this country where one of the parents has taken time out from the workforce—sometimes for just a short time—to raise his or her children. In those cases the other parent is paying quite a high rate of tax. It would be much fairer and more beneficial if they were able to split that single income fairly and pay reduced tax rates. 
I also say that while I welcome the reduction in tax rates on employer contributions to superannuation funds we need to go much further in that area. At the present time we are actually discouraging private superannuation savings. There is a maxim of public policy that says if one discourages something there will be less of it and if one encourages something there will be more of it. We need to do more to encourage private savings for superannuation purposes. I believe we should do that by providing a front-end incentive which would be a tax rebate on the first $2000 saved by a person each year. We also need as the Budget has signalled to straighten out the anomaly we have at the moment whereby the income earned by a superannuation fund is taxed at a rate that is much higher than the marginal tax rate of many of its members. 
 I must say too that I would have preferred to see the Government take this opportunity to make some fundamental changes to the tax system. Earlier this week we saw the Australian Government reduce taxes for the average Australian and as far as I know the sky has not fallen in across the Tasman. 
With the surpluses this Budget has delivered—and I applaud those—we could have helped ease the tax burden on families and businesses. Changes that I will continue to push for include an adjustment to the present tax bands for inflation since 1 April 2000. This would have given all taxpayers a reduction of somewhere between $1.16 and $16 per week. Failure to make that adjustment amounts to an increase in taxation something that the Government specifically pledged it would not do. In the longer term I would also like to see the tax bands shifted in the direction of a flatter set of tax rates. 
I also want to continue to advocate that the company tax rate be lowered immediately from 33c to 30c. This would give immediate benefit to the approximately 65000 companies in New Zealand that form the bedrock of our economy. Tax reduction at that level would be an immediate spur to new investment and the creation of new jobs. It would make New Zealand business competitive internationally and attract overseas investment to this country. At the moment New Zealand businesses are hampered by the fact that their capital costs are higher than in many overseas jurisdictions including our nearest neighbour Australia where interest rates are currently 0.75 percent less and have been 1 percent less for most of the last 10 months or so. 
The major difference though between what United Future perhaps would have done in this Budget and what the Government is doing is to do with the ideology that governs Government expenditure. Were we the Government we would want to encourage the private provision of tertiary education health services prisons and roading so that we had a mixture of private and public provision in those areas. I believe that would mean that all New Zealand taxpayers would get more bang for their buck. We would have better outcomes it would save the taxpayer money and I believe that the resulting competition would be healthy for all concerned. It is a pity in my view that the State provision of those things is core Labour Party policy because I think common sense would say that we could achieve a lot better outcomes by shifting the base a little. 
I would also like to talk specifically if I may about some balance sheet issues tonight. The Budget indicates that Government debt is well inside the target the Government has set for itself and of course I applaud that. But it does mean that there is capacity to borrow money specifically for roading and other transport infrastructure developments. New Zealand has a triple A rating at Government level and roads typically have a 60-year life. For example the road between here and the Hutt Valley is well over 60 years old. This is the perfect situation whereby the Crown using its high credit rating which would give it a very very competitive interest rate should be planning to borrow so that we can get ahead and build the roads we need particularly in Auckland where gridlocking is costing the country $1 billion. 
I also want to comment on the Land Transport Management Bill. I believe that in that bill we should leave open all the possible options and scenarios for funding roading. It makes no sense to me that we should hamstring ourselves and say yes it can be done one way but no it cannot be done another way. We have given local government in this country a power of general competency yet for some reason this House does not seem to be prepared to give Parliament itself if one likes a power of general competency—in other words that we can look at common-sense solutions and innovative funding solutions for getting on with roading and infrastructure development and we badly need to do that. 
The other thing about this Budget that troubles me is that it forecasts an increase in our already quite large balance of payments deficit of $26 billion over the next 4 years. That is an average of $6.5 billion per annum. That is a worry because New Zealand is already an indebted country. We are indebted at this stage to the tune of about $70 billion—not of course from Government borrowing which is very low but through private borrowing. 
 If we look at the balance sheet of the nation we see that it is like having a massive mortgage on a house and we need to address that because far too much of the income we earn here has to go off shore to service that very very high level of overseas debt. In that situation too it is wrong for the New Zealand Superannuation Fund to contemplate investing so much of its money overseas. I go back to the analogy. If one has a mortgage on one’s house most investment advisers will say that the first thing one should do is pay down the mortgage. We have a big mortgage on this nation’s balance sheet and we should be paying it down. My specific suggestion is that the Government should lend the New Zealand Superannuation Fund guardians the money that is going into the fund at the 10-year Government stock rate then let them use their investment expertise to try to cap that—to try to make something more for the Government. But it is fundamental that we look at reducing our debt. [ 
Interruption 
] It would just change the whole way in which they invest those funds. 
The last thing I would like to mention has to do with population growth. United Future believes that we should be deliberately growing the population of this country to add at least 0.5 percent per annum to gross domestic product growth. More people means more productivity. It means that there will be people around to actually pay pensions. When I hear people railing against immigration I think to myself sometimes: “Well who do you expect to pay your pensions?”. We have a real problem in New Zealand—that is that many of our young bright people go and live in Australia. That will have a great effect on New Zealand’s demographics in terms of the number of elderly as we move forward. Therefore in United Future’s view we have no option but to offset that with positive net immigration aimed at a target figure and against some policy settings. 
Debate interrupted.