Woodhouse Michael: Debate on Prime Minister’s Statement 
Woodhouse Michael: Debate on Prime Minister’s Statement 
[Advance Copy - Subject to minor change before inclusion in Bound Volume.] 
MICHAEL WOODHOUSE (National) 
: 
 Happy New Year Mr Deputy Speaker. I just say how much the member for Palmerston North is looking more and more like my colleague Tim Macindoe with every passing day. Perhaps he wants to have a chat with his leader about some strategies to remedy that. 
Hon Members 
: Or Murray McCully. 
MICHAEL WOODHOUSE 
: Perhaps Murray as well—and many others in the House I have no doubt. 
As I was gathering my thoughts and myself to come from the office to the Chamber— 
Iain Lees-Galloway 
: Where do you get your Grecian from Michael? 
MICHAEL WOODHOUSE 
: Being such a young fella I do not have to worry about these things yet. I was thinking as I left my office to come to the Chamber that the last thing I wanted to do was to leave my speech notes behind which happened to be the last thing I did do before I came to the Chamber but there is just such fertile ground on which to build an election year speech. 
I really did think that I was parachuted into some parallel universe a couple of weeks ago when I heard— 
Sitting suspended from 6 p.m. to 7.30 p.m. 
MICHAEL WOODHOUSE 
: Mr Assistant Speaker Barker I know you have been waiting with bated breath through the adjournment to hear what happened to me a couple of weeks ago. 
I had the 
distinct feeling that I had transferred into some parallel universe following Labour’s announcement of tax cuts which it would borrow heavily to fund. That is right—a tax-free zone of $5000 for every single New Zealander including the very rich the spouses of the very rich who work part time and the middle-income earners whom Labour claims it wants to help. Labour will have to plunge New Zealand more deeply into debt to fund it. It will cost in the region of $1.55 billion to fund that and the dropping of GST on fruit and vegetables. 
Mr Goff said in his speech: “I won’t make any promises that I can’t keep or that the country can’t afford.” Then he mumbled something about loopholes and taxing the rich. He said that Labour would deal with the loophole in respect of the ability to offset unrelated income from salary through loss attributing qualifying companies I presume from rental property losses. I have news for the Labour Party. That loophole was closed in Budget 2010. The tax losses that were generated are largely from non-cash offsets through depreciation. What happened to depreciation? It has disappeared. So there is nearly no help there. 
The other so-called tax loophole that will be closed is in respect of high-income taxpayers who according to Labour are not paying their way. We will be returning to Labour taxing the rich but Labour members cannot have read the Tax Working Group report very closely. The report said the problem with the tax system was that it was distorted and misaligned—that the top rate of income tax of 39 percent and the trust rate of 33 percent created arbitrage. So National has fixed the loophole but Labour wants to bring back the loophole—an envy tax. 
But this time Labour says it will not tax the rich it will tax the really rich. Who the really rich are and what rate of tax Labour will charge them heaven only knows but it would have to be around 60c in the dollar or more. Last time Labour’s envy taxes hit the uber-rich like teachers the police doctors and nurses the really rich went to their tax accountants but the doctors and nurses went to travel agents and booked their tickets to Australia. It would happen again if Labour got the chance. At this rate the $1.5 billion tax cuts would be funded out of pie-in-the-sky loophole closures that do not bear up to close scrutiny and raise very little offset revenue to fund it. 
So if there are no cuts to spending there is only one other way to fund those cuts and that is to borrow. The Labour Party is promising to borrow to pay for tax cuts. Voters will have a choice at the end of this year—more envy taxes more spending on bureaucracy and more debt to be repaid by future generations or fiscal discipline less bureaucracy a plan for growth and a determination to reduce debt not to grow it. 
I will paraphrase from a recent speech where one leader said we need to “freeze annual domestic spending for the next five years … this would reduce the deficit … This freeze will require painful cuts. Already we’ve frozen the salaries of hardworking federal employees for the next two years. I’ve proposed cuts to things I care deeply about like community action programs.” Who said this? Was it some extreme right-wing leader hell-bent on destroying social policy? No. It was Barack Obama in his State of the Union message. So if Mr Obama gets it if countries with similar debt profiles like Ireland Greece Spain and Portugal get it—left-wing administrations proposing austerity measures far beyond anything this Government is proposing—what is up that the Labour Party completely failed to get it? The spending frenzy went on for the last 3 years of Labour’s administration and if Labour gets back on to the Treasury benches God forbid Labour proposes to continue it. But it simply cannot continue. 
Whatever the policy question is the answer cannot be to burden this country with more debt. When we are talking about how to improve the quality and volume of our health services the answer cannot be more debt. It is a lazy approach—a tax-and-spend approach that is past populist policy. We need to think smarter about it and that means looking at quality control looking at systems and processes looking at new technologies and avoiding waste and error. I know that is possible in our health services. They are actually doing it. The results of the last couple of years of excellent progress in elective surgery discharges and reductions in waiting times for emergency treatment and cancer treatment is evidence of it. But there is plenty of scope for more. It needs to be done because the answer to the question cannot be to burden this country with more debt. 
Our early childhood education funding changes are a very sensible example of not doing that. But Ms Moroney Labour and their union mates are running around like Chicken Little saying that the sky is going to fall in because of a small change to the staffing model that the Government is prepared to fund in these straitened times. At the same time they are ignoring those very positive contributions for our Maori and Pasifika kids—Mr Davis knows exactly what I am talking about—some of whom around the country have no more than about 60 percent access to early childhood education. He will sit by while his party promises to send about 1000 early childhood educators to the wall for the sake of an ideology that says an experienced parent or grandparent or an experienced teacher aide or caregiver cannot possibly look after a child under the age of 5. It absolutely beggars belief. They insult those parents and grandparents. It is stupid and it is ideological. 
But nowhere more does this ideology get in the way of doing the right thing than in the belief that the only way for a business to run is if the Government is the only one running it. The best example of that is ACC. We have waited nearly 2½ years for Labour to apologise for the $7.2 billion hole it left in the accident compensation scheme. But the public should not hold its breath. I am very proud of the scheme but it is not a sacred cow. It is not something that can be hermetically sealed for all time. Choice is a good thing. It will reduce costs and levy payers will have the choice to stay with ACC if they wish. 
On Monday night I attended a function in Hamilton when the city’s economic development agency launched the various TechNZ research and development investment programmes. It was a great night. 
Hon Darren Hughes 
: What were you doing there? 
MICHAEL WOODHOUSE 
: I happened to have been in Cambridge that day. The Government has invested more than $320 million in those programmes. They are a hell of a lot more effective than a lazy research and development tax credit programme that benefits tax accountants more than it benefits the economy. Mr Goff trumpeted the release of Labour’s action plan for jobs and growth and the only thing he could think of to announce was the return of the research and development tax credit. It was the one lazy lever that Labour could think of. 
But there is not just one lever to pull. Real meaningful growth comes from innovation funds. The 90-day probation period was recently found to have had a very positive impact on small businesses. We have kept  
Hobbit 
 jobs in New Zealand we have committed billions of dollars to infrastructure development we have reduced the barriers to doing business by unwinding red tape and we have built on the free-trade agreements we had already developed to drive the export-led recovery we need. We will campaign on competition and partial floats. There is a plan. It is a really good plan on many fronts and I will put up that plan against the tax spend and borrow promises of the Labour Opposition any day.