Nash Stuart: Taxation (Business Tax Measures) Bill — Third Reading 
Nash Stuart: Taxation (Business Tax Measures) Bill — Third Reading 
[Volume:653;Page:2164] 
STUART NASH (Labour) 
: 
 I rise to speak in support of the Taxation (Business Tax Measures) Bill— 
Hon Members 
: Hear hear! 
STUART NASH 
: —I thank members very much—because it is important legislation that fights against the economic evil of the global recession and the resulting environment of economic uncertainty. 
I quote from  
The Economist 
 magazine of 24 March 2009 to show the extent of this recession on a country like New Zealand which is highly dependent on international trade not only for our economic health and well-being but also for our growth and prosperity. I do not think anyone will doubt that: “World trade the engine of growth is sinking at a pace not seen since the second world war. In projections released on Monday March 23rd the WTO predicts that the volume of global trade which grew by 6% in 2007 and 2% last year will fall by a dramatic 9% this year.” I repeat that the volume of global trade will fall by 9% this year. “The drop will be worst for rich countries whose exports will contract by 10% but even emerging and developing ones whose exports grew by an average of 15% each year between 2000 and 2008 will see export volumes shrink by 2-3% this year. Before the release of these latest predictions economists had already expected global trade to fall by more than it did in 1982 the last time that it contracted albeit slightly. Now matters look much worse than they did just a few months ago.” 
The Economist 
 goes on to say: “The contrast with the recent past could not be sharper. In the boom years between 1998 and 2008”—which coincide with the boom years in the last Labour Government—”trade volumes grew at 5.7% per year” thanks to Dr Cullen and Prime Minister Clark. They are “easily outstripping the growth rate of world output which was around 3% over the same period. Now the world is seeing falls in exports that are dizzying and close to universal and which exceed declines in output.” This is a real concern. “Among the 45 countries for which the World Bank has January trade data the average fall in exports from a year ago was a staggering 32% and 37 countries saw exports decline by more than a quarter. The drops cut a wide swathe across the world with exports plummeting in rich and poor countries alike. Exports from Argentina”—for example—”… were 36% lower than a year before. The corresponding drop for Canada was 35%. Chile’s exports fell by 41% Japan’s fell by 35%. 
The immediate reasons are clear enough. The worst recession in living memory means a dramatic collapse in demand for goods everywhere. An estimated shortfall of $100 billion”—that is $100 billion—”in trade finance which is behind roughly 90% of world trade is also making matters worse. Yet the synchronisation and speed with which exports from countries across the world have plummeted is striking.” 
This a bit of background for this bill and it is very important: “More troubling protectionism is rising and risks making an already severe slump even more catastrophic. When leaders of the G20 countries meet in London on April 2nd they are likely to reiterate a pledge made in November to avoid the mistakes of the 1930s. They are expected to promise to restrain themselves from raising the trade barriers that have been whittled away over decades of tortuous multilateral negotiations.” in which former Labour Prime Minister Mike Moore played an integral part. “But almost none have kept the promise they made at that last meeting. The World Bank has counted 47 trade-restricting steps taken by 17 of the G20 members. Tariffs have risen in several developing countries including India”—and we are in the developing stage of a free-trade agreement with India—”Russia and Ecuador. European ones and America have resorted increasingly to subsidies for failing industries with implicit pressure on firms to create jobs ‘at home’ possibly at the cost of shutting down more efficient facilities abroad.” 
 Why is this bad for New Zealand? I will tell members why. We managed to trade our way out of the last major recession this country faced in the 1990s. The reason was that our export volumes into markets were not affected to a huge extent because our major markets did not suffer or contract in the way they are doing at the moment. If we remember back to the early 1990s we recall that unemployment for Maori and Pasifika people reached close to 26 percent during those times. Of course that was not helped by the Draconian and socially destructive policies of the then National Government. 
Our ability now to trade our way out of this hole is hugely diminished because our trading partners’ economies have also collapsed. As mentioned Japan’s exports have fallen by 35 percent from what they were a year ago. I remember when the cries from members opposite were for New Zealand to emulate Ireland and its so-called economic miracle and to slash taxes. Luckily Dr Cullen resisted. Where is Ireland now? It is looking for a miracle because nothing else will save it. And where is New Zealand? It has one of the soundest balance sheets of any country in the OECD thanks to the man who resisted the call to cut taxes during the boom times. He at least knew that stimulating an economy that is already over-stimulated is no way to fiscally manage a country. 
That brings me to my next point: economic philosophy. What is going on at the moment with the National Government? My favourite quote is: “The first thing we learn from history is that we do not learn from history.” and how apt that quote is! During the last mini-recession this country went through at the end of last century Mr English was the Minister of Finance and it took the restoration of a Labour Government to repair the enormous damage done by the Bolger-Shipley Government. This time the Clark-Cullen Government has left this National Government with full employment and money in the bank. But who is the Minister of Finance? It is Mr English again. It is like a bad dream—déjà vu. Heaven help us! Mr English is still following the economic philosophies of the 1980s. 
The Reagan doctrines of trickle-down or supply-side economics—or whatever one wants to call it—have been discredited and proven to be wrong. The theory asserts that we give tax cuts to the rich under the assumption that the wealthy will spend extra money and therefore will create demand for jobs and services. This theory has been disproved because in times of recession the wealthy tend to pay down debt. Therefore they do not create any wealth in the economy at all. I know that Mr Bennett agrees with this; he must have done fifth form economics. 
Hon Member 
: Um? 
STUART NASH 
: Well maybe not. Sorry; I do not want to make assumptions. 
Keynesian economic theory which is the predominant economic philosophy of the social democrat centre-left parties asserts that we should give tax cuts to those who really need the money in order to meet the basic necessities of life. The tax cuts allow them to buy food clothes books and shelter—all those necessities that the wealthy who are getting the tax cuts take for granted. Mr Obama has filled his Cabinet with Keynesians yet the Key-English team are still tied to trickle-down economics. What a shame for all New Zealanders that is! 
Mr Robert Reich is a former Secretary of Labor under President Clinton. He wrote a book that Mr Peachey is actually reading at the moment; he is going around the place telling everybody what a wonderful book it is. Mr Reich commented on Obama’s Budget. He stated: “It is the boldest budget we have seen since the Reagan administration and drives a nail in the coffin of Reaganomics. We can basically say goodbye to the philosophy espoused by Ronald Reagan and Margaret Thatcher.” Reich also stated that Obama’s Budget is “the biggest redistribution of income from the wealthy to the middle class and the poor this nation has seen in 40 years”. If only we could stand up here and say the same thing at the moment. But hold on a second—has not Mr Key compared himself with Mr Obama? In fact sometimes I look across the House and I could swear that I am seeing the new President but then I realise that it is just Mr Key. 
Hon Darren Hughes 
: Who’s your choice for Dick Cheney over there? 
STUART NASH 
: Well it is hard to know is it not? 
Hon Darren Hughes 
: There are two Dick Cheneys over there. 
STUART NASH 
: No they are just a pale imitation but unfortunately not in the area of economic philosophy. At a time when the situation has demanded great leadership and leaders New Zealand has missed out. 
I support this bill. It takes fundamentally a bipartisan approach because it of course is a Labour bill—it is in essence a Labour bill. But I must give credit to Mr Foss whose chairmanship of the Finance and Expenditure Committee has been responsible for the review of this bill and for allowing all parties to come up with the substance of the bill which we agree is the first step towards helping out those for whom this recession is real and is beginning to bite.