Huo Raymond: Financial Review Debate — In Committee 
Huo Raymond: Financial Review Debate — In Committee 
[Volume:661;Page:9467] 
RAYMOND HUO (Labour) 
: 
 Debates like this are primarily about the Crown accounts. When we are talking about accounts the most effective way is to show the actual numbers or to show them by way of graphics. In that vein I would like to offer my contribution by showing two cartoons from the Auckland Chinese media to illustrate the point. The point that the artist and the ethnic media are trying to make is that although Prime Minister John Key has maintained his beaming smile since taking office his standing within the Kiwi Asian community has changed dramatically. Coincidentally these cartoons accurately illustrate the points I want to make in relation to this debate. 
This is cartoon No. 1 which was published shortly after the 2008 general election as members can tell from the scoreboard which shows National 1 Labour nil. This cartoon shows the approachable energetic and triumphant Mr John Key becoming New Zealand’s Prime Minister with an array of the promises that he will fulfil. Prime Minister John Key laps up the rounds of applause from the majority of the Kiwis—good on them! 
The second cartoon was published early in 2010. This cartoon shows the same approachable energetic and triumphant Prime Minister John Key. However the weight of his promises are becoming unbalanced. Tax cuts for the top income earners outweigh the gains made by lower-income earners. The rounds of applause now echo out only from the privileged few—as the cartoon shows—who can afford giant diamond rings. The title the artist gave to the cartoon was “Step forward for the super rich; or tiptoe for the low to middle income earners”. 
That explains why Labour’s “Axe the Tax” campaign has struck a chord with the general public. I was at the campaign’s launch in Auckland and also in Christchurch last week engaging with ordinary Kiwis. One cannot help but ask what on earth this National-led Government has been doing to help ordinary New Zealanders. More GST means higher prices and no one voted for an increase in GST. Increasing GST to 15 percent means 20 percent more tax on the basics. The cost of living is already an issue and having a higher rate of GST will just make it worse. 
The Governor of the Reserve Bank Dr Alan Bollard indicated to Parliament’s Finance and Expenditure Committee recently that he agreed that an increase in GST to 15 percent would add 2 percent to inflation and living costs. Based on the Reserve Bank’s own forecasts in the recent Monetary Policy Statement this means that with the introduction of an increase in GST inflation is likely to outstrip wage growth while the labour cost index currently looks to just remain steady without any additional inflationary pressures such as a rise in GST. It is not just the impact of GST and National’s money-go-round: most people get a rise in GST and small change while the big cuts go to a few at the top. This will certainly raise a huge issue of equity. 
The second issue I picked up while campaigning is the uncertainty in relation to the possible change to other aspects of the tax system. National has indicated that it may remove depreciation from buildings. This reduction in income to landlords will flow roughly as an increase in rent possibly as high as $45 a week. That is on top of GST increases inflation minimal wage growth job insecurity and rising power prices. 
With regard to another issue of how to catch up with Australia as I argued in the House before focusing on the bottom 50 percent not on the top 5 percent is more sensible. I borrowed the idea from my friend Keith Ng whose research shows that New Zealand’s tax system is less progressive than Australia’s. That is high-income earners in Australia pay more tax both proportionally and in absolute terms.