Donald Rod: Taxation (Venture Capital and Miscellaneous Provisions) Bill Taxation (Annual Rates of Income Tax 2004-05) Bill — Third Readings 
Text is incorporated into the Bound Volume 
Donald Rod: Taxation (Venture Capital and Miscellaneous Provisions) Bill Taxation (Annual Rates of Income Tax 2004-05) Bill — Third Readings 
[Sitting date: 14 December 2004. Volume:622;Page:17831. Text is incorporated into the Bound Volume.] 
ROD DONALD (Co-Leader—Green) 
: 
 On the one hand I thank Mark Burton for such a brutally short speech because it enables me to give mine now then do some more preparation for the next legislation which we are just as concerned about as we are about these bills. On the other hand I criticise the Government for not standing up and defending its own tax policies. I think it is extraordinary that the Government is actually doing some good things when it comes to income tax with targeted tax policies that will start to take effect next April and will give some significant benefits to families but its members are not actually prepared to get on their feet and promote those policies. Every party in this House is talking about tax cuts except for the Government yet ironically the Government is about to deliver the most significant tax cuts for quite some time and what is more the cuts are targeted towards the people who need them most—poor families. 
Our issue with those policies is that they are not being brought in quickly enough and the cuts are not large enough. We have made that clear during the debates on those tax policies. With the December Economic and Fiscal Update that came out yesterday showing an absolutely massive Government surplus—whichever way we look at that surplus whether in paper terms or in cash terms—I think it is a major embarrassment for the Labour Government that it not only is waiting until April to deliver the first tax cuts for struggling families but also is going to keep people waiting for another year for the second tranche of those tax cuts. Meanwhile kids in this country are growing up in poverty. I challenge Dr Cullen to bring the full package forward to 2005 instead of waiting until the out-years for those policies to take effect. 
The second point I would like to make—it is not the reason why we are opposing this legislation but I think the point needs to be made—is that annual taxation rates legislation should not be forced through under urgency. The original bill was 212 pages long. Not only was it 212 pages long; it was also amended during the Committee stage but we do not have a bar 3 version of it in front of us for this third reading debate. I think that is bad parliamentary process for legislation that is not genuinely urgent. I criticise the Government for that. 
On the other hand I congratulate the Government on some of the features of this legislation. It is good to see for example the changes to provisional tax. It is good to see the sale and leaseback provisions on intangibles. It is good to see disputes resolution coming in. Those are all positive features. But our big sticking point with the legislation and the reason why we are voting against it is the changes to venture capital. We do not believe that foreign venture capitalists should get a tax advantage on their investments in New Zealand—an advantage that is not extended to New Zealand venture capitalists. I know that the excuse has been that we should have a regime equivalent to Australia’s and that somehow we are short of venture capital. Well Dr Cullen is actually the biggest venture capitalist in the country. He gambles $2 billion a year through his beloved New Zealand Superannuation Fund and in turn the New Zealand Superannuation Fund puts over 60 percent of that on foreign share markets. So I say to Dr Cullen and his Government that if there is a shortage of venture capital in New Zealand—and there clearly is—then let us bring home the money that is going on foreign share markets and boosting other people’s economies so that they can compete more effectively against New Zealand and let us see that money invested in New Zealand. 
I hasten to add in case some people think the Greens support the New Zealand Superannuation Fund taking a greater stake in the New Zealand share market that we do not support that. We simply say that that money belongs to the Government because it is the people’s money and that on behalf of the people the Government should be putting it into strategic infrastructure in New Zealand. We could give the Government a very long list of what that strategic infrastructure consists of but let us start with double-tracking the North Island’s main trunk line and electrifying it. Let us put a solar water heater on every home in this country. Let us build some more wind farms. I could run through a whole raft of sustainable infrastructure that New Zealand will need in very short order. 
But before I leave this part of the legislation let us also look at the most important capital base that we need to be building and that is our human capital. We say to the Government that it does not really have a massive surplus or a high net worth because our young people are paying the price. Our young people are paying the price in having to borrow to fund their tertiary education. That tertiary education should be taxpayer funded and that is the main investment the Government is ignoring. That is what the Government should be spending more of its surplus on—ensuring that our young people get a universal student allowance for their studies and ensuring that student debt is progressively written off over a period of time for those young people who remain committed to New Zealand. That is one challenge we put to the Government. 
The next challenge we put to the Government is to get on with introducing the carbon tax. I hear Dr Cullen talking about it more and more of late. That is a good thing; it means that it is not too far off. We also agree with the Government’s position that the carbon tax should be revenue neutral. In that context I say to Mr Hide that that is why the Green Party does support tax cuts—we want to cut tax on personal incomes and on companies because we want to encourage work and enterprise. But the balance point there—because we are fiscally responsible—is that we would bring in a suite of eco-taxes. Those eco-taxes are not only about collecting revenue but also of course about discouraging resource depletion waste and pollution. We are happy to talk with the Government any day about bringing those tax plans forward because we believe that there needs to be a fundamental shift in the way we tax both companies that operate in New Zealand and individuals so that we encourage work and enterprise and discourage waste pollution and resource depletion. 
In relation to cutting tax I say for Mr Carter’s benefit—because I think it was a figment of his imagination that we would cut the top tax rate—that we certainly would not cut the top rate; we would cut the bottom tax rate by making the first $5000 of income tax-free. That would put $750 into the pocket of every worker and every beneficiary in this country. That is significantly different from what the so-called family-friendly party is offering. United Future claims that it is family-friendly but the families who are most in need of a friend would get the cold shoulder from United Future because its policy to lift tax thresholds would deliver only $75 a year to people earning less than $38000. That is far less than they need and far less than what the Government is already planning to deliver with its Working for Families package. 
But people need more than that; they need some incentive to save for their retirement. That remains the big hole. I keep pestering the Government about the 6 percent differential that only we in this House get on our retirement savings. At least the Government has got rid of the penalties but that 6 percent differential should be spread to everyone saving for his or her retirement. It might help to reverse the extraordinarily bad trend we see of fewer and fewer people saving for their retirement through registered superannuation funds. But I think it is time for the Government to go further than that and to look at shifting the “t’s” and the “e’s”. I hope the Minister is thoroughly investigating making contributions to registered superannuation funds tax-free—in other words coming off gross income—and is looking at a grandparenting strategy which would need to be phased in over a period of time to make the payments taxable. That would give the Government the income when it most needs it which is in 20 to 50 years’ time. 
Meanwhile the Government does need to sort out the issue that was raised in the Monetary Policy Statement that next year the Reserve Bank is projecting minus 11 percent household savings. That suggests to me that we have a bubble and that bubble if it does not burst at the very best will deflate. When the property bubble does start to deflate then I think this economy is in for a very rough ride. It is time for the Government to face up to that fact and shift the tax base in the right direction by looking at our eco-tax policies by not getting rid of capital gains tax on superannuation funds but instead looking at implementing a capital gains tax right across the board. It will need that revenue in the years to come to address the structural problems with our economy—problems that the National Party is not even prepared to acknowledge. 
I hope Mr Key has read page 30 of the December Economic and Fiscal Update because it at least acknowledges that the equilibrium price of petrol will be $35. I think it will be higher than that but it will certainly be a lot higher than the $19 that the Minister said it would be back on 27 May when his Budget came out. Let us face some reality about petrol: petrol will only increase in price the demand is only growing and the reserves will only become more scarce. Until this Labour Government faces up to that fact and until National acknowledges that the problem even exists we are in for a rough ride.