Bradford Sue: Budget Debate 
Bradford Sue: Budget Debate 
[Volume:639;Page:9545] 
SUE BRADFORD (Green) 
: 
 As I think has become fairly apparent by now the Green Party is not entirely delighted with the entirety of the 2007 Budget despite some of its more worthy aspects. We are not only unhappy about the Government’s failure to seriously face up to our country’s obligations in the face of the coming impacts of climate change we are also disturbed by aspects of KiwiSaver and the corporate tax changes. We acknowledge that for many workers the KiwiSaver scheme will mark the first time they have ever been able even to dream of saving towards their retirement or towards a deposit on a house. However at the same time the fact that those who are on the top 39c tax rate can take advantage of the corporate tax cut divert money into portfolio investment entities and gain a considerable tax advantage at 30c in the dollar is but one feature of the scheme that epitomises yet again a certain basic unfairness in what Labour is doing despite its good intentions. 
Yes KiwiSaver will be of benefit to hundreds of thousands of families and individuals and I welcome that. But at the same time like the Working for Families Budget package that was introduced several years ago this scheme also serves to embed even further the gap between rich and poor in this country and will do even more to entrench structural discrimination against beneficiaries. Anyone who spends a substantial part of his or her life outside of the workforce on income support or on a low wage will—as usual—in old age not ever be able to catch up on what he or she has lost. Existing discrepancies over lifetime earnings will continue and in many cases increase. The people who are still paying the heaviest price now for the restructuring of our economy in the 80s and 90s will continue to pay the price while others get a boost. The children of the poor—a large proportion of whom are in beneficiary households—will miss out once again. 
Just as beneficiary families are not eligible now for the in-work payment provided by Working for Families beneficiaries will find it very hard to get anything from KiwiSaver. Although they are theoretically entitled to join the programme there will be of course no employer subsidy. For most beneficiaries their income is usually so low compared to what they need to survive that putting aside even 2 percent—much less 4 percent—of their income is just not a realistic possibility. The most serious issue with KiwiSaver is that the people who most need assistance from it—those on very low wages or on benefits—will never be able to afford to contribute to their savings. At the same time the scheme is a disincentive to wage increases and it locks in low wages because employers will attempt to offset their KiwiSaver contribution against wages. 
There are already reports of union negotiations with employers in which wage rises are being traded off more or less exactly against the employer contribution. This may be fine for people on medium to high salaries but for those at the bottom end it is potentially disastrous. They are sacrificing a much-needed wage rise now for what are much-needed savings in the future. Perhaps one way round this would be that if the scheme is to permit low-income earners to save and at the same time is not to act as a disincentive to raising low wages the employer contribution could be doubled in cases where employees are earning less than say three-quarters of the average wage which is currently around $16.50 an hour. That is just an idea. 
Ideally the KiwiSaver scheme should also be put alongside other measures to urgently reduce inflation in the housing market; for example through a capital gains tax on all but the family home by addressing the tax avoidance that takes place through the use of loss attributing qualifying companies and by legislating to control foreign ownership of land and houses. Dr Cullen’s cutting of the corporate tax rate will in the end place more of the revenue burden on to wage and salary earners and on to consumers who pay GST. 
Now that medium to large businesses have the tax cuts they have been after for so long the Green Party believes there is an onus on them to invest productively. Our major listed companies need to take advantage of the tax breaks offered in this Budget for research and development rather than paying out such a huge percentage of their profits in dividends to shareholders. We would also like to see a review process put in place to check out whether in fact research and development has actually happened. Otherwise this risks being just another tax rort. 
This Labour Government has just given business a $1 billion tax cut. It has given people who are in work and can afford it a useful savings scheme. But what has it done for those who have missed out so many times already—even under the last 7½ years of a Labour Government? What of the risk that the KiwiSaver scheme will open the way for a future right-wing Government to lower superannuation rates and raise the age of entitlement or even heaven forbid get rid of national superannuation altogether? 
We do not wish to be totally negative about the boost to savings that this will be for many. But the Green Party believes that the Government should also be raising the minimum wage immediately to at least $13 an hour and that the even lower youth rate should be abolished forthwith. The Government should be raising benefits to levels that are at least equivalent to those pre-May 1991 so that people dependent on income support do not live in an endless cycle of debt and desperation. Working for Families should be amended so that it does not discriminate against beneficiary families. All children deserve a fair start in life not just some. A whole package of measures including those I have already mentioned should be introduced to address the crisis in housing affordability which is not only locking out an ever-increasing number of people from the chance of ever owning their own home but is also driving our high dollar which is so negatively impacting on our manufacturing base. 
The second area of the Budget I would like to address today relates to some of its implications for the community and voluntary sector. The most significant announcement of course was Dr Cullen’s lifting of the cap on rebates for donations to charities made by individuals and companies. This means that for each dollar people give to a registered charity they will get 33c back. Although the Green Party has always supported lifting the very low cap on the rebate that has existed up until now and although we also recognise the hugely significant boost this measure will give to the encouragement of philanthropy in this country we still have a number of reservations about where this dramatic policy shift will take us. 
Our first concern is that this total removal of the cap could also fuel a future right-wing shift towards tax cuts and to parallel cuts to health education welfare and the social wage overall. The United States is a prime example of a country where private philanthropy is encouraged and maximised but where at the same time there is widespread privatisation of health and welfare and a huge and growing poverty-stricken often homeless population of the disenfranchised and dispossessed. It is not a good example to follow. 
Secondly it is the better-off who will benefit most from the new rebate regime and of course they will want to put their charitable giving into the type of voluntary sector organisations with which they feel comfortable. With a few exceptions it is likely that on the whole the recipients of this new generation of munificence are likely to be organisations that do not in any real way threaten the interests of these donors and that therefore maintain and succour the status quo socially economically and environmentally. A virtuous circle of deserving charities will be propped up by the Charities Commission definition of charitable purpose by the political inclinations of the comparatively well-off donors and by the preferences of the private pokie trusts that are still pouring their billions into their preferred organisations. Groups that challenge the status quo and that do not hesitate to stick their heads above the parapets to advocate for social or environmental change or that represent the interests of the dispossessed or radical are the most likely to miss out—if they can even get charitable status in the first place. This risk will be exacerbated even further should a future Government decide that because of the influx of private philanthropic giving it should withdraw the support it currently provides through grant funding like the Community Organisations Grants Scheme and other sector-specific grants and contracts perhaps as the converse of massive tax cuts to individuals. 
Thirdly as many people in the community sector are aware poorer people actually proportionately give the most and the most often. However such giving is usually informal and does not leave a paper trail. Those on low incomes or benefits are also the least likely to claim anything back from the Inland Revenue Department as they do not usually make an annual tax return and it is not a simple business to claim the rebate without doing one. Thus once again the better off people are the more they gain from every charitable dollar spent. The more impoverished people are the less likely they are to accrue any financial benefit whatsoever. 
In saying all this however I do not want to disrespect the enthusiastic hope with which the not-for-profit sector has greeted the news of the removal of the cap on rebates for charitable giving. I know it will bring good news for many organisations. It is just that I think there are a few things people active in this sector need to keep in the backs of their minds as they eagerly await the inrush of those first large cheques.