Cunliffe David: Taxation (Budget Measures) Bill — First Reading Second Reading In Committee 
Cunliffe David: Taxation (Budget Measures) Bill — First Reading Second Reading In Committee 
[Volume:663;Page:11112] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Sometimes people watching Parliament wonder why we appear to disagree all the time. It is certainly true that there are some things in the Tax (Budget Measures) Bill that we agree on. For example I think both sides of the Committee agree on the need to improve New Zealand’s parlous savings rate. The debate on the savings and tax interface is about whether the measures in the bill will get us there or whether some alternative measures would be better. Likewise both sides of the Committee agree very strongly on the need to rebalance our economy away from the tax privileges of the property sector towards a more neutral tax playing field. Again the question is whether the measures in the bill get us to that objective. 
Hon David Parker 
: They say they want that. 
Hon DAVID CUNLIFFE 
: They say they want that but in fact the measures do not get us very far and we will come to that. 
The previous speaker the member for Tukituki said that three-quarters of taxpayers will be on the 17.5c tax rate. I wonder whether the taxpayers who go to the Government’s online calculator to see whether they will be better off or worse off have factored in what that calculator rather sneakily leaves out: that next year they will face 6 percent inflation. That means that everybody has to take 6 percent off his or her gross income before working out whether he or she is better off or worse off. For example by the time a family earning as much as $78000 with two kids in preschool gets their great tax benefit they face higher GST paying more for childcare and inflation and they will be 55 bucks a week worse off. So Labour members will be working with the public—the listeners and the viewers—over the next week or so during this debate to uncover some of the hidden traps the fine print and the places where the gloss is not as good as people were led to believe it would be. 
There has been some discussion of whether GST should be on or off fruit and vegetables. Labour has not taken a position on it but we think it is worth having the debate. The reason it is worth having the debate is that it is easier to have a comprehensive GST programme when GST is at a low rate but the higher we raise the rate the stronger we make the case for a possible—note “possible”—exemption. At the moment prior to the increase in GST New Zealand has—wait for it—the fifth-highest level of indirect tax in the developed world. And that is before the increase in GST. The arguments against taking GST off fruit and vegetables are partly based on compliance and partly on definition. But I do not believe that New Zealanders in their hearts would actually find it very difficult to say what a vegetable was. They might look at the members opposite. They might look at say the member for Maungakiekie and ask what he has done since he got to Parliament and whether he would qualify. But that is not very nice so I will back right off it. 
Mr Foss made another point about how fair this measure is. The word “fair” keeps coming up almost as often as Craig Foss saying “Mr Chairman”. What does he say? He says: “Mr Chair Mr Chair.” The word “fair” keeps coming up but here is something that is not fair in this bill: 14 percent of the tax refund goes to the top 1 percent of the population. Trevor Mallard is absolutely right: if you are earning a million bucks you will get $1000 a week extra in your hand. If you are earning a million bucks do you need anything extra in your hand? I am not asking you Mr Chair; I am sure you earn much more than that—I am sure you do. But if a person in the real world the member Mr Foss for example earned $1 million he would get $1000 in his hand. That is not a matter of need. If the Government is to be believed that the country needs to move forward and to address the structural challenges then the country’s needs should be put ahead of the need of millionaires to get another $1000 a week in the hand especially when a family with two kids on $78000 is $55 a week in the red. That is not fair. 
On the question of rebalancing both sides of the Committee—I think all sides of the Committee—agree with the need to rebalance. What we are wondering is why the Government has lost its nerve. It has taken away only a part of the building depreciation tax allowance. The Tax Working Group said that $1.1 billion a year was sitting there; the Government has taken about $600 million. But it did not touch ring-fencing which is worth $2.5 billion—it did not touch that. What it did do rather stupidly is take $200 million off the depreciation of short-lived assets which is technology which is needed for innovation and growth. It is running against the growth objective in order to raise funds because it did not have the bottle to really take some parts of the property industry to task. So the Government has not achieved the goal. It has not achieved the goal of comprehensive reform to achieve rebalancing. 
Let us sum up. In this Committee stage Labour members will be going through the detail of the “how”—not so much the “why” which we will get back to in the third reading debate but the “how”. Are the measures in the bill going to deliver on the stated objectives of the bill? Will they encourage savings? Frankly the Government has got a nerve to ask the question. 
Hon Clayton Cosgrove 
: Gutted KiwiSaver. 
Hon DAVID CUNLIFFE 
: It is the same Government that gutted KiwiSaver as Mr Cosgrove said. Its members said they will return to pre-funding New Zealand superannuation when the country is back in surplus except they have changed their mind done a Tuhoe call it what one likes— 
Hon Clayton Cosgrove 
: Broken their promise. 
Hon DAVID CUNLIFFE 
: They have broken another promise. The country will be back in surplus in 2016 but pre-funding does not resume until 2019. When will the Government have the courage to say to senior citizens that it is sorry but superannuation as they know it is for a limited time? Do they have the bottle to do that? I do not know. And if they do not why not resume pre-funding? 
Hon Gerry Brownlee 
: I raise a point of order Mr Chairperson. I am surprised that you did not pick up on the unparliamentary comment from the Hon David Cunliffe. Perhaps it is because his rhetoric is normally so filled with unparliamentary comments— 
The CHAIRPERSON (Lindsay Tisch) 
: I want the member to state exactly what the point of order is and not make a speech. 
Hon Gerry Brownlee 
: To refer to another member or to any number of members as lacking courage is completely unparliamentary. 
The CHAIRPERSON (Lindsay Tisch) 
: I say sorry to the member. I did not hear that comment. If David Cunliffe did say that I say to him that in future he must not say that someone lacks courage. 
Hon DAVID CUNLIFFE 
: Thank you Mr Chairperson. It is certainly good to have Gerry Brownlee back early from his dinner break at a quarter to 10. We are summing up this part of the debate by showing that there is some common ground between the parties. We agree on the need to encourage savings; we are rather surprised that National has come late to that but it is good that it has. We agree on the need to rebalance the economy but we have serious doubts that this bill will get us there. What we disagree with is the “Robin Hood in reverse” of this Budget which takes from the poor takes from the forgotten middle class and gives $1000 a week to millionaires who do not need it and probably did not ask for it—and it is being done at the expense of the country. 
To make matters worse this Government is borrowing extra to give millionaires a handout. Next year it will borrow $450 million extra for the millionaire handouts and that is $1.1 billion extra borrowing over 4 years for the millionaire handouts. Gross debt goes up and interest payments double and do not come down till 2021. This is not a Government that has got its priorities right. This Budget neither is fair nor fixes the problems. 
As this debate continues Labour members will be showing for each of the portfolios represented by members of our team where the sneaky cuts have come where the loopholes are where the rules are wrong and the better way that we could have achieved those objectives that are sensible and that are agreed across the House. We challenge the Government to be open-minded. It is not too late for it to accept sensible amendments. There is a very sensible Minister in the chair. The Hon Peter Dunne looks great on TV without his tie on. We hope that he will accept the odd amendment as the Committee stage goes on. Thank you.