English Bill: Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill — Second Reading 
English Bill: Taxation (Annual Rates Venture Capital and Miscellaneous Provisions) Bill — Second Reading 
[Volume:621;Page:16408] 
Hon BILL ENGLISH (National—Clutha-Southland) 
: 
 I will make just a brief comment on United Future. One of my colleagues described that party as having a bob each way; I would describe it as having a bob in every direction anyone can think of. United Future is going to vote for and against the main provisions of this bill—the main provisions being the ones by which New Zealand sets its tax rates. United Future will vote for those provisions when it votes for the Government but against them when it puts up its own Supplementary Order Paper. This is a pattern of behaviour. United Future members told Unitec that they opposed the Education (Establishment of Universities) Amendment Bill then went to a select committee yesterday and voted with the Government to make sure the bill will be jammed through before Christmas. 
Pansy Wong 
: It’s a decent party. 
Hon BILL ENGLISH 
: It is a very decent party and at least its definition of consistency aligns with Helen Clark’s definition of consistency. What United Future does not understand is that its promise to support the Government on confidence and supply guaranteed the passage of a whole series of social measures to which its voters are totally opposed. 
Gordon Copeland 
: I raise a point of order Mr Speaker. We are actually having a debate about taxation in terms of annual rates and venture capital. I do not understand what social engineering has to do with taxation. 
The ASSISTANT SPEAKER (Hon Clem Simich) 
: No no. That is not a point of order. 
Hon BILL ENGLISH 
: I think the United Future member’s reaction points to those members’ fundamental problem of how to stay relevant when they vote for a Government that does all the things they are opposed to. 
I have not been on the Finance and Expenditure Committee for some time but I see in this bill though that there is one matter on which I could have contributed some expertise—that is the section of the report that is on the use of the colon in tax legislation. I believe quite seriously that that section about the meaning of the colon in our tax legislation will have much greater impact on our tax law than all those other measures put together. I make that as a serious point. But I do struggle with the conclusion that the committee came to which raises doubts about whether its members understood the rest of the bill. We have now found out what the definition of the colon is. The reason for the use of the colon is that it is not “and” nor “or”. 
Lindsay Tisch 
: Can you explain that? 
Hon BILL ENGLISH 
: Well I will. It is an indication that the statements in the items are not linked conjunctively or disjunctively. That is what it means: it is not “and” and it is not “or”; it is a colon. Then we find that that is unique in the world. Well why do we not just get with it? Everybody else in the world uses a semicolon. We now have to follow world accounting standards and world other standards so why do we not just follow world tax law grammatical standards and settle for the semicolon? 
The only other thing in this legislation that is more important than the use of the colon is the way that it sets our tax rates. A simple phenomenon has occurred over the last 5 years. New Zealand has had a growing economy and it has also had rising inflation. A tax base is defined by the nominal size of the economy not the real size of it; as the simple number of dollars grows the tax base grows. What has happened is that Dr Cullen has kept more than his fair share of that growth in the Government bank accounts and working families and small businesses have had less than their fair share. I invite the Minister to go and look at the change in net wages over the last 5 years. I can tell the Government that its surplus and tax take have grown many times faster than net after-tax wages. How can Government members go out and say to the ordinary people of New Zealand the battlers struggling to pay their mortgages that we have had the best boom in a generation but the Government has got more than its fair share and they have got less? What should have happened is that people’s net incomes their net after-tax wages should have grown at least as fast as the Government surplus has done and they have not. 
 Now we have the ridiculous situation where the tax rates in this bill mean that when Dr Cullen wants to make a long-term investment he pays for it out of this year’s cash; when anyone else wants to make a long-term investment they have to do it the hard way because they are not allowed to keep the proceeds of their work. They have to get a mortgage—a long-term loan to match their long-term asset. That is a measure for ordinary people of how much cash Dr Cullen has. He has enough such that when he wants to make a long-term investment he pays for it out of this year’s income. While he is doing that working families are struggling to pay their interest rates and their mortgages and superannuitants are struggling to pay their rates. Working families are buying raffle tickets to pay teachers while Dr Cullen is using tax rates to collect money that he is wasting on a huge scale. 
I shall speak about my own portfolio of education in which the Government is wasting hundreds of millions of dollars. We heard an example today in the House. The Government spent $15 million on one computer course in Christchurch. Out of the 15000 people who enrolled in it 13000 never did it. There is no evidence that they did the course. That means the Government paid out $12 million for something that never happened. It told us today that it did not get 1c of the money back although it had promised the House that it would. Why does the Government believe that this House will support tax rates that allow the Government to behave in that way? It has kept much more than its fair share of the growth dividend and it is wasting it. 
It is also sitting on this cash and adopting the course of action that has come through in this debate today and that came through in the Finance and Expenditure Committee yesterday. Instead of having cuts in tax rates that treat everybody fairly and that are open transparent clear-cut and predictable it gets the cash in a pool and makes a series of targeted political decisions. For example the Minister has now decided that the centrist Labour Government should favour small business as it goes into an election year. But instead of reducing the tax rates of small business it will come up with a series of tax concessions. It will change the depreciation rates on technology. It might change the depreciation rates on other things. It might change other aspects of the tax system and the Minister has signalled some of those already. So he is turning the business of setting tax rates into a political auction. He will have a stream of people coming in and out of his office as he uses our money to dispense political favour. 
There are other detailed aspects of this bill some of which are positive but I will raise one in particular with which the Government is cleaning up another mess of its own making. I refer to the provisions that relate to the deductibility of costs for resource consents. That looks pretty desirable. This bill states that if a person spends money on a resource consent and does not get it the expense is deductible. Who is the biggest spender on a resource consent that never happened? Meridian Energy—a Government-owned company. By my estimate which is pretty rough Meridian Energy spent at least $40 million on getting a resource consent for Project Aqua which never happened. The biggest impact of this provision will be to affect the tax status of one of the Government’s biggest State-owned enterprises. That is what the provision is for. A few other little bottom-feeders out there will get some benefits as well but the Government is trying to cover up a massive waste of money by one of its own companies with an apparently obscure provision in this bill. I invite the next Government speaker to tell the House what effect this bill will have on Meridian Energy and the $40 million of expenses that it incurred for Project Aqua—a project that will never happen and for which consents were never gained. 
As my colleagues have said we will be voting against this bill because it locks in the current tax rates. Those rates have collected $34 billion in extra tax in the last 5 years and the Government has wasted a significant proportion of it.