Burns Brendon: Taxation (Business Tax Measures) Bill — Second Reading 
Burns Brendon: Taxation (Business Tax Measures) Bill — Second Reading 
[Volume:652;Page:1950] 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I am very pleased to speak on the Taxation (Business Tax Measures) Bill and to follow the preceding speaker David Bennett whose rather screwball analysis suggested that National supports small business. Actually National was the party that voted against business tax cuts and axed the research and development tax cut which would have been very helpful to businesses particularly small and medium-scale ones. 
The Labour Opposition supports this bill. Indeed despite the previous speaker’s claims most of the measures contained within it were proposed by Labour. The bill eases tax pressures and compliance costs on business. Although we are supportive of this bill and what it does to assist business particularly small to medium sized enterprises it is simply not enough. That applies most especially at this time. I have to say as a new member of the Finance and Expenditure Committee that I was surprised and concerned that this is in fact the first bill that the committee has reported back to the House. Given the scope and scale of the world recession I had imagined that we would deal with some legislation and Government actions that were representative of big and bold ideas—a mini-Budget or a pre-Christmas economic summit and the major ideas and stimulus packages flowing from it. Instead we are at the second reading of a technical and modest bill that although we welcome it and acknowledge that it will be helpful to business is hardly a new deal. 
The adhockery of the Government is illustrated by this bill and it is also illustrated by some of the Government members’ responses—such as they have made. I note for instance in housing that the first commentary was that there would be no new State houses. That changed overnight after a TVNZ report showed people in South Auckland living in garages. Suddenly we were going to get new State houses. Then we learnt that the total number of new State houses was 69. On that basis I will be lucky to see one new State house in my electorate of Christchurch Central. 
So really this bill and the Government’s response in toto indicates that it is business as usual despite the world’s worst economic forecast in our lifetimes—in just about anybody’s lifetime. We are seeing another missed opportunity at a time when this country needs real leadership and a real response. What we are getting is a rolling maul and contained within it are Labour’s ideas repackaged and re-presented to the New Zealand public as a stimulus plan. The relief for small to medium sized enterprises is ours the tax cuts are ours and the proposals for infrastructure are a rehash of our proposals. There is regrettably no broad-based plan that gives New Zealand’s public confidence that this Government understands—really understands—the scale of the crisis and that it is taking the action that is truly necessary particularly to help vulnerable New Zealanders and also to reposition New Zealand so we are ready to take advantage of the upturn whenever it comes. 
Today the Governor of the Reserve Bank appeared before the Finance and Expenditure Committee. He recognises the scale of the issues that he faces. He today reduced the official cash rate to 3 percent. None of us in this House can remember when the official cash rate was last at that level. He recognises the scale of the issues. He also recognises that inflation is no longer public enemy No. 1 as far as the economy is concerned. Yet at the same time as the Governor of the Reserve Bank is saying that to the Reserve Bank and to the nation through the Monetary Policy Statement we learn that the Prime Minister is telling the  
Wall Street Journal 
 that his biggest fear is rising inflation on the back of rising money supplies. That fear is not shared by the Governor of the Reserve Bank nor by anybody else. The expectation in today’s Monetary Policy Statement is that inflation through to 2010 and beyond will be well contained within the targets as outlined by the Governor of the Reserve Bank. 
So we come back to the question of where the plan is. What stimulus from this Government can New Zealanders look towards? We look by way of contrast to the United States which has a NZ$1.5 trillion stimulus package. I look across the Tasman to our friends in Australia who have a NZ$67 billion stimulus package. Those responses are taking place because the Australians and the Americans acknowledge and recognise that we are facing the most severe financial crisis since the Great Depression. The International Monetary Fund chief economist is advising Governments around the world to commit to taking whatever steps they can to avoid a depression. The advice is to be bold and decisive; we are ignoring it. Today US President Barack Obama called for other nations to enact stimulus packages such as the one the United States has enacted. He obviously wants to see the world attempt to deal with these issues. We are an interdependent world yet New Zealand stands aside as indicated by the interview the Prime Minister gave this week to the  
Wall Street Journal 
. 
What is the National Government’s plan? Well it goes back to such things as scrapping the research and development tax credit to gutting KiwiSaver and to trashing the Fast Forward Fund which would have created $2 billion of expenditure for our primary sector as has now been represented by the Minister of Agriculture. We are seeing cuts to the contribution to the Superannuation Fund that will endanger future superannuation entitlements. We are seeing a crisis manufactured around the Accident Compensation Corporation so that a board can be sacked other people can be lined up and New Zealanders can be told that they can no longer have the accident compensation entitlements that they once relied on. In the area of broadcasting for which I have Opposition responsibilities the Minister of Broadcasting is demanding a dividend from Television New Zealand (TVNZ) at the very time that TVNZ is saying that it may need to shed as many as 150 staff. Within 1 week of the Job Summit TVNZ is being told to go ahead and cut the staff and to pay the dividend. 
Then we have a tax cut programme that simply will not deliver as it should to those most in need—to those who would have spent every last cent of their tax cuts if they had been implemented as they were to have been under Labour’s programme. We urge the Government to retarget those tax cuts. They are essential for New Zealand. We need to make sure tax cuts are focused on those who need them and that discretionary spenders get them. It is not just Labour that is advocating that; Air New Zealand’s chief executive Rob Fyfe got it right when he said that this crisis is so big that “all the bets are off … We need to stimulate this economy and there are more effective ways than broad-brushed tax cuts.” That is the big picture; that is the kind of approach we need. I say good on Rob Fyfe for those comments. 
Labour has been very clear to the select committee and to this Government that we are quite prepared to support this bill. It will provide some small measure of assistance to business. It will be supported by this Opposition party but we want to make sure that some changes are made and we will be recommending some amendments as the bill proceeds. The report from the select committee acknowledges that as a result of earlier initiatives some changes were taking place in the Inland Revenue Department that will assist. We will be proposing some technical amendments which my colleagues have already outlined in part. 
One thing I will touch on is the whole issue of tax deductibility of patent costs. A submission was made to the select committee by the Manufacturers and Exporters Association. At the moment New Zealand takes 20 years to wipe out the costs incurred in building a patent to protect intellectual property against world challenge. We would like to see that moved back to the world average of 10 years. It makes much more sense. 
In conclusion Labour will support the Taxation (Business Tax Measures) Bill. It was largely a Labour bill that was inherited by the new Government; it is not a key measure in National’s package. It is a modest technical bill that will take some of the pressure off businesses particularly small to medium sized enterprises. However as recently as this afternoon the Governor of the Reserve Bank appeared and it was clear that he was outlining at least a tough year ahead for this nation. His forecast for the period beyond next year was an optimistic one. He suggests that we could be out of the decline by about this time next year. We in Labour hope that Dr Bollard is right; we note that there are some gloomier prognoses. Dr Bollard correctly notes that stimulating the economy is the key factor in the United States Europe and New Zealand. I think that he is as mystified as anybody else as to why the Prime Minister continues to identify inflation as being of major concern. He should tell that to the thousands of New Zealanders a week who are losing their jobs because inflation is not an issue for them. Holding on to their jobs is what is important. They need a stimulus package. This bill is a very small step but it ain’t a stimulus package in any sense at all. Thank you.