Goff Phil: Budget Statement — Budget Debate 
Goff Phil: Budget Statement — Budget Debate 
[Volume:663;Page:11047] 
Hon PHIL GOFF (Leader of the Opposition) 
: 
 I move  
That the words after “That” be omitted and the following substituted: “this House has no confidence in the National Government led by John Key which has blatantly broken its clear promise not to raise the Goods and Services Tax has pushed up prices when working people have had their lowest wage rises in more than a decade has failed to implement a plan for jobs lacks any vision for a smart high-skill high-tech and high-wage economy has cut services and assistance to the most needy in our community and has rewarded the most wealthy at the expense of middle and low income New Zealanders.” 
Today the National Government had the opportunity to deliver a Budget that was fair for all New Zealanders—a Budget for the many not the few. Today the National Government had the chance to produce a Budget that invested in the future a Budget that promoted a modern smart economy with more and better jobs and higher wages. This National-led Government has failed absolutely in those objectives. There were no new ideas to create jobs and the future that they need. Instead the Government has pushed up the price of just about every good or service that New Zealanders buy. It has borrowed extra to give a windfall to the most wealthy people in this country. It has broken its promises to senior citizens. It has created the highest level of inflation in decades—nearly a 6 percent rate of inflation. In the time that we have had our estimate is that average earners will be $30 a week worse off after inflation—$30 a week worse off after inflation. Those on the average wage will get a $15 a week tax cut. Goods and services will go up by $45 a week. That leaves them $30 a week worse off by Mr English’s own figures. The top 1 percent of income earners will get 12 times the cut in their income tax of the average earner—12 times the cut of the average earner. 
This Budget is a short-term plan that will look after the interests of the highest-income earners which this National Government represents but it is a Budget that comes with a huge cost. It was ironic to listen to the National backbenchers cheering the figures on health. Why would they cheer the figures on health when those figures left a $300 million gap in maintaining health services even at the current level? That is a $300 million hole in the health budget. 
When we look at the education budget we see that there is not the additional funding in education that will come even near to meeting the cost of extra inflation. If we take the critical area of education where the foundation is laid for our children to learn early childhood education we see a slashing of $400 million over 4 years—$400 million over 4 years. My challenge to the Prime Minister is to ask how that cut will be met. Will it be met with additional fees on all of those who are trying to get a quality early childhood education for their families or will it mean a cut to the quality of early childhood education? Either way that is a disastrous failure to invest in the future of our country—our children. 
Before the election Mr Key promised that the average wage earner would get a tax cut of $50 a week. That has not eventuated. There is no $50 a week tax cut for the average income earner. The Government promised tax cuts. Last year it cancelled the tax cuts and it talked about a tax switch. But this year they have actually delivered a tax swindle—a tax swindle. There is no $50 a week tax cut for those on the average wage. National has done what it never told New Zealanders it would do. It promised income tax cuts but it never told New Zealanders that they would be paying for those cuts themselves through the increase in GST. In fact 2 weeks before the election Mr Key stood up looked down the barrel of the camera and said that National would not increase GST. Every time he denies or tries to qualify that his credibility goes down. That is a broken promise by the National Government. 
This Budget will do nothing to create jobs or fix the problems that need to be fixed for New Zealand. 
Hon Bill English 
: Tell us your GST position. 
Hon PHIL GOFF 
: Bill English has given himself $240 extra a week not to mention doubling his housing allowance until he was caught out. I say to Mr English that this not a Budget that looks after the middle and low income earners; this is a Budget that looks after him and his mates on his level of income but it is unfair to ordinary New Zealanders. 
The cuts in income tax were designed to compensate for GST going up by 2.5 percent but they will not compensate for the rise in the cost of living. Bill English never told New Zealand that he would be pushing up inflation to 6 percent after his second Budget—6 percent. That is the highest rate of inflation that we have seen in decades in this country and it will eat into the living standards and the wellbeing of our people. 
National has increased consumption tax by 20 percent. I say to Mr Key that that consumption tax is regressive. Mr Key might have said that the wealthy will pay more GST in dollar terms but a far higher percentage of the income of low-income earners will be consumed by the GST increase than that of high-income earners. Make no mistake—that is a regressive tax and it is not being adequately compensated for by the cuts in income tax. The big cuts in income tax go to the wealthy; the big increases in income being spent on consumption taxes land on the lower and middle income earners. This country now has one of the highest rates of consumption tax in the world because there are no exemptions to GST. We have the fourth or fifth highest consumption tax in the OECD. Consumers never voted for GST to go up because John Key promised them that it would not go up. 
Businesses are not in favour of GST going up. In a recent survey of small businesses across New Zealand 8 percent supported an increase in GST—8 percent I say to Mr English. Businesses know that the increase will be bad for them and bad for New Zealand. In this Budget we were going to have a rebalancing of incentives to invest in the productive economy rather than the property speculation part of the economy. 
Hon David Cunliffe 
: Wimped out! 
Hon PHIL GOFF 
: This Government wimped out because so many of its supporters are the very property investors that that rebalancing would have hurt. 
Hon Gerry Brownlee 
: Not correct. 
Hon PHIL GOFF 
: That is correct and I say to Mr Brownlee that it would have included a lot on that side of the House. The Minister should know that nothing in this Budget will be effective in rebalancing investment from the property investment sector to the productive economy. This Budget fails absolutely on that count. 
The income tax cuts such as they were were designed to compensate for GST but I ask what the Minister of Finance has done for the lower and middle income earners of this country to compensate for all the other taxes that have been imposed. There is the tax on business and innovation in Mr Brownlee’s portfolio. They cut the 15 percent research and development credit and a year later put 39 percent of that money back into research and development. It is too little too late and an embarrassing acknowledgment that they got it wrong in the first place. 
There is the $200 million windfall in tobacco tax. I would have thought that a Government introducing that for reasons other than simply gaining the windfall revenue might put some of that money back into tobacco-use prevention programmes or addiction treatment programmes. But no that money is being taken as a windfall the cost will fall disproportionately on some in the community and there is nothing in a positive sense that will lead people to break that addiction with the assistance of at least some of that $200 million. 
National promised that it would cut taxes and not increase them. It has not delivered on that; the net position of average New Zealanders will be worse as a result of the costs imposed on New Zealanders compared with the so-called cut-the-tax swindle. The costs facing New Zealanders will go up dramatically in the next year and this Government has done nothing to protect middle and low income earners against that. Homeowners will face three or four hikes in the interest rate they pay as the official cash rate goes up in the next 18 months. Inflation at 6 percent is higher than even the banks estimated would be the result of the impact of National’s actions. The only people who come out of this Budget better off in net terms are the wealthy. Mr Key as Prime Minister will get $350 a week the average Cabinet Minister will get over $200 a week and the average New Zealander will be struggling to get $13 a week—and that will be totally consumed by the additional inflation. 
We heard a lot earlier in the week about closing the loopholes where the wealthy were escaping their obligations to pay even their share of the tax. I ask Mr English where the evidence is that that Minister has made any difference at all to those loopholes. Options were put up by the Tax Working Group and that Government has lacked the courage of its convictions to implement the recommendations that were made. The wealthy will not be paying more tax as a result of this Budget but the 40 percent of New Zealanders at the bottom who Mr Key said were not pulling their weight will be paying more because they will be paying more GST on everything they buy. 
Mr Key said earlier in the week that New Zealanders should not be jealous of the fact that the wealthy were getting the biggest share. They are not jealous I say to Mr Key but they are angry that this Budget does not give ordinary New Zealanders on low and middle incomes a fair go. Some of those New Zealanders who will be angry are people like Henry Lindsay and Vicky Drew and the thousands of other elderly frail New Zealanders who have paid taxes all of their life only to find that when they are elderly and in need and need some help—a very small amount of help $30 a week in home care—that has been cut. Mr English should explain to those people why that small amount of assistance to enable them to maintain their independence is regarded as low-quality expenditure while $700 a week extra in tax cuts to chief executives is regarded as high-quality expenditure. The people who were given a wage rise or a salary rise last year of $1000 a week who were given the big tax cuts last year have again benefited from the big tax cuts this year. I ask Mr English where the fairness is where the equity is in hammering people who are the most needy to reward those who are the most privileged. 
This Budget is not just a Budget of broken promises; it is a Budget of lost opportunities. We need an export-led recovery but where is the evidence in this Budget of anything that will stop the continuation of the cycle of higher interest rates and inflated exchange rates that stop the export sector being able to do as well as it should? Where is the evidence of assistance to savings? The Government cut KiwiSaver contributions from 4 percent to 2 percent while Australia increased its superannuation contributions from 9 percent to 12 percent. Then Mr English wonders why he does not have the investment capital to invest in growth so New Zealanders can have ownership of their own future. 
The Minister of Finance has not put back the additional payments into the superannuation fund. In the last year since Mr English gave his last Budget the superannuation fund increased in value by $3.5 billion. We are losing a million dollars a week in forgone interest alone because of the short-sightedness of that Minister. 
Where is the evidence in this Budget of increasing skills? What is being done about the 70000 young New Zealanders who are not in work not in training and not in education? That is a social and economic disaster for the future. Where are the additional apprenticeships when we know that once the economy recovers there will be a major skills shortage this year? Where is the help for the thousands of young New Zealanders who are being turned away from polytechnics and universities because the Minister of Education has capped entry to those institutions? Where is the investment in research and development to get the smart economy so that New Zealand can be innovative and create jobs? This Government has cut research and development. It cut 2 billion from the Fast Forward fund and the 15 percent research and development tax credit. This Government has failed to put in place a vision and a plan to build a stronger New Zealand for tomorrow. Where is the evidence that this Government has responded to the Top 100 business people in the country who have talked about a cleantech added-value economy? Their pleas have been ignored. 
This is a Budget of missed opportunities. This is a Budget that promotes inequality in a way that no Budget has since 1991—the “mother of all Budgets”. This is a Budget of unfairness. This is a Budget of more new taxes. This is a Budget that will damage hard-pressed New Zealand families to reward the few instead of looking after the many. This Government has failed in its obligation to the people of this country.