Taxation (Budget Tax Measures) Bill — First Reading Second Reading In Committee 
Taxation (Budget Tax Measures) Bill — First Reading Second Reading In Committee 
[Volume:654;Page:3959] 
Taxation (Budget Tax Measures) Bill 
First Reading 
Hon PETER DUNNE (Minister of Revenue) 
 on behalf of the  
Minister of Finance 
: 
 I move  
That the Taxation (Budget Tax Measures) Bill be now read a first time. 
 As announced in today’s Budget the second and third stages of the personal tax cuts that were to have taken effect on 1 April 2010 and 1 April 2011 respectively are being deferred to prevent further increases in Government debt. Large Budget deficits are already being forecast for 2010 and 2011 and these will clearly have an effect on gross debt that Treasury projects could have increased to above 70 percent of GDP by 2023 in the absence of any policy changes. 
The current and projected fiscal position therefore constrains policy choices and places greater emphasis on maintaining revenue flows. As Minister of Revenue I am acutely aware of the need to ensure that our tax revenue remains sufficient to finance Government spending on the essential services that New Zealanders expect—a point I was making in an earlier address a moment or two ago. By delaying the second and third tranches of personal tax cuts the Government estimates it will save around $900 million a year from 2011-12 and that has to be seen as prudent fiscal management for difficult times. 
Let me turn for a moment to the language of the bill. As drafted the bill speaks of “repealing” the further tax cuts rather than “delaying” them. That is merely because the date when these tax cuts can be reinstated is not yet known. If an undated delay were legislated for it would combine the repeal with a provision to allow the dates of the cuts to be restored by Order in Council which is not the most appropriate way to set tax rates. Tax rates are the province of Parliament and Parliaments historically in this country and elsewhere have fought quite properly to retain the right to set tax rates and have always resisted deferring those to an Order in Council or other mechanism outside the parliamentary process. 
This delay should not be interpreted as the end of further tax cuts. The Budget states clearly that the Government is committed to further reducing income tax rates as the economic and fiscal conditions allow and it clearly identifies further tax cuts as a fiscal risk meaning that the Government’s future reinstatement of the tax cuts has been explicitly taken into account. We have already made clear our medium-term commitment to aligning the top personal company and trust rates at 30c in a manner consistent with the broad-based low-rate approach. 
This bill also cancels the associated increase of $5 a week in the independent earner tax credit which was to take effect from 1 April 2010. At present that credit puts an extra $10 a week in the pockets of those earning between $24000 and $44000 a year who do not receive a benefit Working for Families tax credits or New Zealand superannuation. 
The second part of this bill relates to the KiwiSaver mortgage diversion facility which allows KiwiSaver members to divert up to half of their contributions to their mortgage repayments. That facility is to be closed to new applicants from 1 June 2009 although it will remain available to existing participants so long as their providers and their banks continue to offer it. Not all banks currently offer mortgage diversion and it appears that only about 600 people out of a KiwiSaver membership of more than 1 million have actually taken advantage of it. Now I acknowledge that this was the initiative of a former member of United Future—one whose name I dare not speak because it has become a byword for treachery—but in practice it has been demonstrated that this policy has not worked that any benefits of the facility are completely outweighed by its many disadvantages and I frankly see little reason to continue with it. 
Mortgage diversion imposes additional and unnecessary compliance costs on KiwiSaver providers and on the banks and these costs have been generally passed on to members who use it through increased fees. A further problem that has arisen with mortgage diversion from a policy perspective is that it goes against a basic principle of KiwiSaver which is to lock in savers’ funds until they are 65 thus helping them to save for their retirement. With mortgage diversion on the other hand it becomes possible to sell the house in question before the member is 65 and thus for the member to gain access to his or her funds. There is no easy way of preventing members from gaining early access to those funds through mortgage diversion so it is much simpler to close the facility altogether to help reduce the costs of running the KiwiSaver scheme and to leave things pretty much as they are for those who might currently be in the scheme. 
Let me conclude by saying this bill is a response to the difficult challenges that face the country today. It gives effect to measures that were announced in the Budget a couple of hours ago and I therefore commend it to the House. 
Hon CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 I say from the outset that Labour will be supporting the passage of the Taxation (Budget Tax Measures) Bill to cancel the tax cuts and we do so for a number of reasons. Firstly we have been consistent in our view that these tax cuts were unaffordable inequitable and wrong. That is why we will be voting to cancel them. But the great crime in this House today is not actually the fact that these tax cuts are going to be cancelled; it is the great deception created by a Government that before the election bribed the people of this country by saying over and over and over again that they would get their full tranche of tax cuts. 
I point to an article by Brian Rudman. The great alibi that Mr Dunne and the National Party have put forward is that times have changed and the economic environment has changed. They say that when they walked through the door of the Cabinet room for the first time the veil fell from their eyes and they realised that the world was in a global economic meltdown. They said they knew about that effectively only when they got into Government. Mr Rudman made some very interesting points in his article in the  
New Zealand Herald  
on 27 May. He said: “It seems we’re drifting back to those bad old days. Earlier this month Prime Minister John Key signalled to an audience of his friends at a Business New Zealand meeting the promised tax cuts would be delayed to some unspecific time in the future. He said New Zealand could not afford ‘a runaway balance sheet’.” Yet Mr Rudman goes on to say that on 30 September last year Bill English criticised Michael Cullen saying: “Dr Cullen cannot be trusted to deliver on any future tax promises.” and that he criticised Dr Cullen for being cautious. 
The alibi that National put up was a bribe. It won an election largely based on a bribe that said that everybody would get tax cuts. 
Hon Member 
: Except the poor! 
Hon CLAYTON COSGROVE 
: Except the poor. It put the first tranche of the tax cuts through. We know now that National’s version of economic stimulus was to give the top 3 percent of income earners in this country one-third of the tax cut package. Families earning $40000 or less a year—I know this will not affect Mr Boscawen of course—got absolutely nothing. That was National’s version of stimulating the economy. Who did President Obama pitch his tax cuts to? He pitched them at low-income earners. Who did Prime Minister Rudd pitch his tax cuts and his stimulus package to? He pitched them to low and middle income earners. Why? Because low and middle income earners will spend the money. Those at the top who have discretionary income will either retire debt or save and that is not stimulatory. 
Iain Lees-Galloway 
: Or take an overseas trip. 
Hon CLAYTON COSGROVE 
: My colleague is probably referring to somebody on the opposite side of the House. 
Then National tried to do what it has always done throughout its history. It came into Government and said it had not known about the economic conditions. It said that the rules had changed and the environment had changed and it said to the New Zealand people that it must pass this legislation to be responsible. I tell members that if the National members did not know back in October and September that the world was in an international and economic meltdown then they must have been the only people on the globe who did not know that. The Nats knew all right—I ask members to listen to more of Brian Rudman’s article: “The International Monetary Fund’s October 8 2008 World Economic Outlook … said the world economy is ‘entering a major downturn’ in the face of ‘the most dangerous shock’ to rich-country financial markets since the 1930s.” That is what the IMF said in October last year. Mr Rudman goes on to say: “That was about the time Mr Key was unveiling his ‘responsible’ and ‘appropriate for the current conditions’ catalogue of tax-cut bribes.” 
It is not good enough for Mr English and Mr Dunne who walks with National now to say that the world has changed and that that is why National must go back on its word. It is ironic that Mr Dunne got up to quote from Part 2 because as he said himself part of this bill expunges a part of United Future policy. How embarrassing is that? It is not good enough for National members to come down to this House and say in the traditional Tory slap-happy way that they are sorry but they have to go back on their word. Those members could not read what the rest of the world read in  
The Economist 
 in  
Time 
 and in material from the International Monetary Fund. The OECD said in October and September last year—well before the election—that we as a globe were heading into an economic hole. Yet what did National members do? They announced to use the same words a “responsible” “appropriate for the current conditions” tax package. They knew all along that these tax cuts were unaffordable. They knew all along that these tax cuts were inequitable but they announced them anyway. 
I like this part of the article. Mr Rudman referred to the Budget and Mr English 
. 
 He said: “Tomorrow the albatross comes home to roost on Mr English’s shoulder. We can’t sue our politicians for breaking their word. But we can at least enjoy seeing them squirm.” I tell members that the people who are squirming out there are the poor battling New Zealanders for whom this Budget did nothing and whom my leader Phil Goff talked about. Mr English squirms in this House because he broke his word. Mr Joyce broke his word. In fact all those members over there broke their word. 
Hon Trevor Mallard 
: Mr Joyce likes seeing Mr English squirm though. 
Hon CLAYTON COSGROVE 
: Well that may be so. But the truth is—and history will show it—that those members told the country that it would get tax cuts. They accused Labour of being mean. They criticised us for being cautious. They told us not to worry as it was a cast-iron guarantee. It was one of the guarantees that John Key signed. It was another case of “no ifs no buts no maybes”. I can hear the ghost of Christmas Past; I can hear Jim Bolger’s words emanating into the Chamber. National members did the old Tory trick. The lied to the people of New Zealand. They lied to them before an election. They said they would give people tax cuts come hell or high water. They read the IMF report and they still went on promising tax cuts even though the IMF said this is the worst shock we have had in a generation and possibly in our history economically. 
Hone Harawira 
: Hold it up again! 
Hon CLAYTON COSGROVE 
: Do you want to make a speech or do you want to sit down? The Maori Party might like to consider that because of course it voted for the first tranche of tax cuts— 
David Garrett 
: I raise a point of order Mr Speaker. It is about the use of the word “you” again. 
Hon CLAYTON COSGROVE 
: Speaking to the point of order— 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: No we do not need to debate this. The member makes a point. Technically the member was using the word “you”. The word “you” is not ruled out on every occasion. I think that on occasion members just hear the word “you” and automatically think there has been an infraction of the rules. There has not. For the rules to be broken the member must be directing the comments at the Speaker; I did not take the member’s comments to be directed at me. 
Hon CLAYTON COSGROVE 
: Is that is the best he can do over there as he shrivels up behind his desk? I say to that member of the ACT Party and that member of the Maori Party that every one of their constituents who earn under $40000 a year got nothing out of the first tranche of tax cuts. Yet those members line up in the stalls—like a bunch of sheep led by the nose—to vote for the National Party every time. I invite Mr Harawira—there is no point in talking to Mr Garrett because we know what his constituency is like—to stand up and finally explain to us why his party voted for a tax package in which 70 80 or 90 percent of their constituency get nothing. 
Hon Steven Joyce 
: Mr Assistant Speaker Barker— 
Hon CLAYTON COSGROVE 
: No it was a false start so the member should sit down. He will get his chance because in the words of the famous Paul Keating “I want to do you slowly.”—I do not mean you Mr Assistant Speaker Barker; I mean that member. I say to the Maori Party that maybe the Maori Party members can get up instead of being lambs led by the nose lining up in the stalls to vote for that lot and tell us why they sold out—and they did sell out—every member of their constituency. 
We will vote to get rid of these tax cuts. Our position has been vindicated; our position has been consistent. We knew they were unaffordable the IMF knew they were unaffordable and the OECD knew they were unaffordable yet Mr Key tried to treat people like idiots and said that the first he knew that there was an economic crisis and that his package of tax cuts would be unaffordable was when he whipped up to the tea-making machine in the Cabinet room and realised that there was an economic crisis and a meltdown. 
I say to Mr Joyce who will get up next—with all the spin of his radio network background and with his hair parted in the middle—that he will have to put his best spin on this situation for New Zealanders. I say to Mr Joyce that New Zealanders are not silly: they know a bribe when they see it they know dishonesty when they hear it and they knew there was a recession. But they got sucked in. They got bribed sadly because on and on Mr Joyce and his ilk promised the unpromisable promised the inequitable and promised the biggest tranche of tax cuts we have seen for many years knowing of course that they would have to pull the pin and knowing they would try to win an election and then go back on their word a couple of months after. 
Hon STEVEN JOYCE (Minister of Transport) 
: 
 One certainly knows it is a tough day in Opposition when one is down to quoting Brian Rudman in the first speech. Brian Rudman is that noted economist and right-wing Roger Douglas supporter. This Budget—I just need to comb my hair before I start—is a responsible Budget for difficult times. It has been titled a “Road to Recovery” which I think is an excellent name for it. I would probably prefer a “Multifunctional Multi-modal Low Benefit-cost Ratio Transport Corridor to Recovery” but I will settle for a “Road to Recovery”. 
This Budget makes some tough decisions and one of those decisions is on tax reductions. The National Party is the party that understands that paying too much tax stifles initiative and removes incentives to work hard and get ahead. We understand that one of the big reasons we have had record migration out of New Zealand over the last 9 years has been high marginal tax rates. That is why we campaigned on reducing taxes and we have done that. First we shamed Michael Cullen into doing it and then we did it ourselves at an average of $30 a week per full-time worker in an 8-month period. 
However we are a party of realists. That is not something we could accuse the Labour Party of being. So as the world economy continues to accelerate in the wrong direction we have made the tough call of postponing future tax cuts. Mr Cosgrove stood up before and said we knew the situation before the election. I need to acquaint him with some facts. The Budget 2008 forecast a surplus of GDP for 2009-10 as 0.5 percent of GDP. Prior to the election it was a deficit of 0.9 percent. The December forecast was a deficit of 2.2 percent. The Budget 2009 forecasts a deficit of 4.4 percent. The world economy fell off a cliff and Clayton Cosgrove—surprisingly enough—did not predict that. 
Postponing future tax cuts was not an easy decision to make. We work hard to keep our promises; we have kept nearly all of them. Tax reduction is important to grow the economy but we also cannot have New Zealanders burdened by higher than necessary interest rates because the Government cannot balance its books. I am pleased to report that this afternoon Moody’s upgraded New Zealand’s credit watch from negative to stable after the Budget was released today. The Labour Party thinks that is not important but I tell members that everybody who pays interest in this country thinks it is important. We made the right call. We fronted up and said we could not have tax cuts. But members should rest assured; reducing taxes will remain top of mind. 
There is only one party in this House that can keep tax rates under control and control spending and it is certainly not the party of the member for Waimakariri. It is certainly not that lot over there: the “Never-Never Land Party” which believes in the financial fairies at the bottom of the garden. It is a party that is now doing a very passable impression of the old Social Credit Political League. All that those Labour members need is the old Skodas and the crimplene suits. They say we should not cancel any spending. They do not want to control any costs. They do not want to run the ruler over expenditure. They do not want to suspend payments to the Superannuation Fund despite their own architect of the Superannuation Fund saying it is exactly what he would do if there were no surpluses. 
Back in 2000 Michael Cullen said any contributions had to be paid for out of a cash surplus into the fund. He also said back in 2000 that “The government will make contributions to the Fund from available surpluses. Where these are insufficient for making the required contribution a reduced contribution would be made.” That is what Labour’s architect of the Superannuation Fund said back in 2000. Not only do Labour members not want to stop spending but also they want spending increases. If they were allowed to be in Government today they would be proceeding with something called the deep tunnels for the Waterview Connection. They would have no changes to the Government policy statement on roading. They would have either $2.8 billion or $3.2 billion being spent depending on whether there would be two or three-lane tunnels. That would take the deficit this year from $7.7 billion up to $10.5 billion or $10.9 billion which is getting up towards 7 percent of GDP—just like that. They are not responsible. They are basically saying they do not believe in taking any responsibility for governance in this country. 
We need a responsible Government; a Government that preserves people’s entitlements gives people confidence and encourages jobs. What we do not need is a Government that guts the economy. I am sorry but I cannot agree with Sir Roger. The best accolade that could and has come out for the Budget today is that it is pretty boring and predictable. In New Zealand right now we do not need wild-eyed spending ideas from the current Labour Party. We also do not need the radical cuts to social expenditure that others propose. We need a steady conservative hand on the tiller and we have that with John Key and Bill English. New Zealand will be thankful for that tonight. 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I am pleased to take a call on the first reading of the Taxation (Budget Tax Measures) Bill which is being passed through all stages under urgency. I think the bill is wrongly named and has been brought to the House rather quickly today. National was able to table it only after the urgency motion was moved. I think what National meant to call the bill was the “Pre-election Promises (Post-election Breach of Faith) Bill”. That is what the bill should have been called because that is precisely what it is. We had pre-election promises that we were told would not be put on the chopping-block no matter what happened. 
I ask a question of the Prime Minister of New Zealand. I ask John Key what he means by the words “personal guarantee”. Is it not interesting that the words “personal guarantee” when one thinks about what they are intended to mean mean that a person will stand behind his or her assurance and personally guarantee the result of the outcome? 
Let us have a look at what John Key actually said in the letter he sent to every single household before the previous election. I am told that the covering note sent with the pledge card stated: “Well unlike Labour I’m going to be straight-up about my priorities. That’s why I’m sending a card to all of you. It’s called ‘My key commitments to you’ and it will be delivered to every household in New Zealand over the next 10 days.” I will read out the introductory clause and first key commitment on the card that John Key sent: “If National is elected to lead the next Government I personally guarantee that we will—strengthen the economy increase after-tax incomes and ensure Kiwis can get ahead under their own steam by reducing personal taxes on 1 April 2009 1 April 2010 and 1 April 2011.” 
Not only did John Key say that but he signed his personal guarantee as “National Party Leader”. That first commitment has a red cross through it. It is not the Red Cross Society as in who might save us in an emergency situation; it is a red cross for a failure to deliver on the personal guarantee. I think that is where Brian Rudman’s comments come into play. I do not really care what Steven Joyce the previous speaker thinks about Brian Rudman’s comments. Brian Rudman was simply making the point—and quite reasonably so—that people were very clear in September last year. I will quote from the article: “Yet back on September 30 last year Mr English was mocking then Finance Minister Michael Cullen for being over-cautious on the issue. He said: ‘Dr Cullen cannot be trusted to deliver on any future tax promises.’ ” He compared that with National which will—and I quote from Mr English—“have an ongoing programme of personal tax cuts. It will be a responsible programme and a transparent programme.” Mr English said he would treat Labour’s tax cuts which came into force the next day as the “first tranche in our tax-cut programme. That will be followed by another tranche of tax reductions on April 1 2009 and further tranches in 2010 and 2011.” 
I want to know whether Mr English advised John Key to sign a personal guarantee knowing full well that we were heading into a major economic recession. I suspect given the huge smile and the laughter on the lips of the Minister of Finance when he was reading out the announcement on the cycleway budget that there was not a personal commitment to that particular policy from the Minister of Finance. I wonder whether the Minister of Finance has set up the Prime Minister of New Zealand with this personal guarantee because it will come back to haunt him over and over again. 
National members have proved that they were really prepared to say anything to get elected and then act surprised as if they had not noticed that there was an impending financial crisis. That is the issue I am deeply concerned about. I will comment further about what Mr Key went on to say about the tax cuts. He was contrasting what he believed to be the position the Labour Government would take if we had been re-elected at the previous election. He went on to say: “unlike Labour we won’t cancel our tax cuts”. Is there any leeway on that? Let me just read that statement and let us just see whether anyone can read any words of doubt into it. He said: “unlike Labour we won’t cancel our tax cuts”. I think that is pretty clear-cut. 
He went on further in his Budget speech last year and said that New Zealanders really could rely on and trust the National Party’s tax cuts. He said: “Most of all New Zealanders will be able to believe our tax cuts they will be able to trust our tax cuts … You see we believe in tax cuts we believe in the power of tax cuts and we will deliver them. What is more we can afford to do it.” Well I am afraid that every single statement that John Key has made and his personal guarantee have proved to be completely and utterly out of sync with the legislation we are now debating in this House. 
The Taxation (Budget Tax Measures) Bill undoes the second and third series of tax cuts scheduled for 1 April 2010 and 1 April 2011. We knew that the tax cuts National was promising were unaffordable and we said so. We took a responsible approach with our policies. We pulled back on policies that we wished to announce as part of Labour’s election campaign as we decided that we did not want to misrepresent the situation to the people of New Zealand. 
As my colleague Clayton Cosgrove said we will be supporting this bill because we never believed that National’s tax cuts were going to proceed. We knew they were unaffordable. More important we always knew that National’s tax cuts were inequitable. I remind the people of New Zealand—most of whom are probably tuned in as we speak listening to this important debate—that 30 percent of the last round of tax cuts on 1 April this year went to 3 percent of the top income earners. 
Stuart Nash 
: Disgraceful! 
Hon LIANNE DALZIEL 
: That is disgraceful. I totally agree with my colleague behind me who intervened; they are utterly and completely unaffordable. 
Hon Tau Henare 
: What’s his name? 
Hon LIANNE DALZIEL 
: That member knows perfectly well who he is. 
Hon Tau Henare 
: No we don’t nor does New Zealand. 
Hon LIANNE DALZIEL 
: Well if that member would like me to give Mr Nash a complete free hit here then that is fine. Clayton Cosgrove was making the point that it is shameful the National Party’s focus was always on delivering tax cuts to high earners but that would have the least impact on stimulating the economy something that National promised. We all know that it would be much better to focus those tax cuts at the bottom end where people are spending every cent they have. 
The other thing that is mentioned in this legislation is the reminder we have of the major changes that the previous Government made to our investment and savings environment with the Cullen superannuation fund and KiwiSaver. There is an absolute reneging on those and it is a reminder that the crucial research and development tax credits we had in place for investing in export industries have been completely gutted by this Government. 
It is really hard to give this Budget a name. One of the bloggers today came up with “Dark Grey Budget”. It is not really a “Black Budget” but it has not got very far. 
Iain Lees-Galloway 
: Looming. 
Hon LIANNE DALZIEL 
: The “Looming Clouds Budget”—but there ain’t no silver lining in this Budget and that is one of the problems. I personally think that this is a Budget that represents a complete waste of opportunity and this particular measure we are debating proves that. 
JOHN BOSCAWEN (ACT) 
: 
 The ACT Party will be supporting the Taxation (Budget Tax Measures) Bill but we are supporting it with a great deal of reluctance. In essence this is a bill to delay tax cuts. We heard from the Labour Opposition this afternoon that the National Party went out and campaigned on a programme of tax cuts and it has reneged. Yes we find the country in difficult circumstances and there are a number of reasons for that. One reason is the last 9 years of financial mismanagement that saw Government spending in real terms increase by $5500 per person in this country. That is $22000 for a family of four. Allowing for the effects of inflation the previous Labour Government went out on a spending spree over the last 9 years and took $22000 on average in real terms out of the income of an average family of four. 
Rather than face up to the issues or the need to go through and review Government expenditure National has taken the easy option. It is proposing to postpone tax cuts. It is interesting that the Minister of Revenue said earlier this afternoon that the date of the tax cuts is unknown. We cannot say when the tax cuts are going to take place. We are looking at tax cuts that next year would have cost the taxpayer $1 billion. Let us put that in context. That $1 billion is out of total Government expenditure of $65 billion which is $18 billion more in real terms than what it was 9 years ago. If Government expenditure had kept pace with inflation over the last 9 years we might have expected Government expenditure to be $47 billion. But no it is $65 billion. It is $18 billion higher as the result of 9 years of financial mismanagement. 
It was interesting to hear the Minister of Finance talk about what makes this country a richer country and how we raise our living standards. How do we raise the income of New Zealand vis-à-vis our nearest neighbour Australia? The reality is that incomes in New Zealand are some 20 to 25 percent lower than those in Australia. Our citizens are leaving for Australia and they are not coming back Our young people are going overseas and in years gone by they would come back to New Zealand but in increasing numbers they are not. 
One of the issues this country has to address is our productivity and our need to raise it. I will come back to productivity very shortly but there is a second thing: we also need to get right the incentives to work. We just heard the Hon Lianne Dalziel talking about people on lower incomes. Well it was the Labour Government that put in the Working for Families package. That was a badly designed scheme because it effectively puts the recipients of Working for Families support on a marginal tax rate of 54c to 59c. Where is the incentive to go out work hard get promotion work longer hours and work overtime to try to raise the living standards and income of one’s family when one knows that some 59c in the dollar is being taken away? 
Another key issue is productivity. We have to raise our productivity. Both the Minister of Finance and the Prime Minister spoke on that this afternoon and I commend them for it. We absolutely have to raise our productivity. The Minister of Finance referred to infrastructure. It is a theme that Mr Key came back to. I struggled to hear what Mr Key was saying; I literally could not hear him. The banter backwards and forwards between Labour and National members meant I could not hear what Mr Key was saying. 
I commend National for the decision to proceed with the Waterview Connection. Labour could have built that connection when it was in Government for 9 years. It was able to build a 4.5-kilometre motorway from Hillsborough to Mount Roskill. There was nothing to stop it from building from Mount Roskill to Waterview but it chose not to because its option of building a $3 billion tunnel was totally unrealistic. It was an expense and a folly. Rather than front up and complete the job as this National Government is proposing to do it did not; it postponed it. National is now required to deal with that issue. That project will cost $1.4 billion and I heard the Prime Minister say that 60 percent or just under two-thirds of that tunnel will be underground. People would not realise that on listening to the speech by Mr Norman this afternoon. Mr Norman the chief doom master talked about the bulldozers cutting a swath through Mount Albert. Of that motorway 1.5 kilometres is on the surface. It follows the railway designation and that is the same designation that Mr Norman would like to put a train set on. It is not a motorway that cuts through Mount Albert in the way that Mr Norman the chief doom merchant said. 
We need to raise our living standards and we need to raise our productivity but first and foremost we need to reduce waste. We need to provide an incentive for New Zealanders to go out and work and to contribute to this economy. We need to provide rewards. We need to provide incentives. Over the last 9 years we have had financial mismanagement on a scale that has never been seen before in this country. It has taken 100 years to get Government expenditure to $13500 per family—over 100 years. In 9 years the Labour Government was able to increase it from $13500 per family to just under $19000 per family. For a family of four—two parents and two children—that is $22000 taken out of the family budget. 
The ACT Party will be voting for this legislation. It will be doing this with disappointment and it will be doing this as part of ACT’s agreement to support the National Government on confidence and supply. Yes ACT members will be voting for the deferral of these tax cuts but we do so reluctantly. We only wish National had the courage to fulfil the promise it made to the electorate last year to provide those incentives and to create the environment where people want to go out to work and contribute to the economy. 
Hon Dr PITA SHARPLES (Co-Leader—Maori Party) 
: 
 Tena koe Mr Deputy Speaker. Tena tatou katoa e hui nei i tenei ahiahi. The first seven words of the explanatory note of the bill tell us all we need to know about Budget 2009. This day will for ever be recognised as a response to a “difficult fiscal climate”. The Minister of Finance has described this Budget as sitting within the context of a global economy that is experiencing the deepest most synchronised recession since the 1930s. What does this mean for us at home? We know that just in the last few weeks employers throughout the nation have had to lay off workers in the timber manufacturing telecommunications and textiles sectors. Just how dire this situation is can be seen in the numbers of unemployed benefit recipients. There are now 44000 New Zealanders actively seeking work with 14000 of these being Maori and with close to one-third of Maori job seekers in the 18-24 year age group. It is that group of some 5000 young people that has been on our minds as we have embarked on the road to recovery articulated in Budget 2009. These were not the lucky New Zealanders who benefited from the $1 billion allocated from the Government’s first round of tax cuts. These are New Zealanders all the same who deserve every opportunity— 
Hon Shane Jones 
: Welcome home! 
Hon Dr PITA SHARPLES 
: I did not bring the member a Happy Meal! But these are New Zealanders— 
Hon Shane Jones 
: Hoki mai ki te kainga! 
Hon Dr PITA SHARPLES 
: Hoki ki a McDonald’s! But these are New Zealanders all the same who deserve every opportunity for the light to shine in their eyes. They are New Zealanders who may well take up leadership positions in the future. They will be our scientists our entrepreneurs our teachers our sportspeople our tribal leaders and our parents. This Budget recognises that every New Zealander is entitled to enjoy the basic rights of citizenship to benefit from quality public services and to maintain a standard of living that we can defend despite the rigours of a global financial crisis. 
The Maori Party will support the Taxation (Budget Tax Measures) Bill on behalf of the young people and those to follow. We celebrate the fact that despite worsening economic and fiscal conditions the Maori affairs portfolio has been maintained intact. We believe that the decision to defer the second and third tranches of the personal tax cuts is a sign of responsible management thinking of the collective well-being of all New Zealanders and balancing the Budget in a way that will protect people from the sharpest edges of the recession. The Maori affairs budget has been rigorously scrutinised to ensure a careful yet secure footing from which whanau Maori can emerge from the recession. In many ways it mirrors the type of budgeting that we may see in Maori homes around the motu. [ 
Interruption 
] E kare koe i te whakarongo. It reflects a conservative approach to ensure bread and butter on the table while also enabling whanau to be opportunity-driven. We have given priority to whanau as the social structure that best provides protection and resilience during times of stress. Investing in whanau is not about what we will do to them; investing in whanau is about what they will do for each other. As Minister of Maori Affairs I have heard the call from whanau: “Let us create our own solutions.” So in early July I will be looking to announce a network of whanau advocates who can work closely with our— 
Hon Clayton Cosgrove 
: Eighty percent of your constituents got nothing out of the tax cuts. 
Hon Dr PITA SHARPLES 
: If you listen you might get educated. I will be looking to announce a network— 
Mr DEPUTY SPEAKER 
: The member is bringing the Chair into the debate; he cannot do that. 
Hon Dr PITA SHARPLES 
: I think another member did that the other day but never mind. This reflects the conservative approach to ensure that there is bread and butter on the table. We have given priority to whanau because it is the social structure that is best provided to protect resilience during stressed times. Investing in whanau is not about what we will do for them; it is about what they will do for each other. As Minister of Maori Affairs I have heard their call and on 1 July I will announce a network of whanau advocates who can work closely with our whanau to ensure they have all the assistance they need to be strong. Resilient whanau are those who can ride out the storm because they are supported to be the best they can be. Resilient whanau need jobs. They need a spirit of optimism. They need education. They need healthy homes. They need a strong economic base to build their future on. This Budget will help to make that happen. 
The fact that our whanau who are earning under $40000 a year will now not have to cope with extra taxation—up to something like an extra $8 a week—is something that we welcome. The previous approaches to taxation were based on a trickle-down economic theory which says that boosting the incomes of middle to high income earners through tax cuts will create economic benefits that will trickle down to the lower-income earners from the spending that creates jobs demand for services and the like. 
Hon Clayton Cosgrove 
: That’s why you voted for it. 
Hon Dr PITA SHARPLES 
: That is exactly right. If the member listens he might learn something. But we always had concerns that those who are already vulnerable might never gain from the trickle-down effect. 
Hon Trevor Mallard 
: Who wrote this rubbish? 
Hon Dr PITA SHARPLES 
: If members only listened until I finish they might get educated. The already vulnerable might never actually gain from the trickle-down effect because instead they will be watching the trickle-up effect which contributes to the growing income inequality with the well-off becoming wealthier and the lower-income families in their wake. Deferring tax cuts will instead save around $900 million a year which can be used to sustain— 
Hon Trevor Mallard 
: 836! 
Hon Dr PITA SHARPLES 
: —the member should check his figures—and support New Zealanders in the times ahead. We must look forward in order to ensure that when the recovery begins our people are ready to respond quickly. So one of my first priorities as Minister of Maori Affairs was to establish the Maori economic development task force to develop a Maori-led response to the recession. The task of that ropu is to advise me on how to protect existing jobs and businesses but also to think about the long-term vision a vision in which our young will benefit from increased education and training and investment will be made to maintain and build a skilled workforce ready to go when the economy is recovered. It would be great if the task force were able to directly create jobs but my challenge to it is to take a longer-term view of Maori economic development opportunities and look at systemic change across its own areas of expertise to ensure that Maori and Maori assets can take a role in leading Aotearoa out of the recession. 
Also encompassed by the journey towards economic self-determination is the commitment I have taken up to strengthen the Maori economy by establishing the Maori Trustee as a strong independent accountable and sustainable trustee for Maori landowners and beneficiaries. I remind the House that that was the first bill put through this Parliament by the independent Maori voice of Parliament the Maori Party. That is another important legacy of this time and members should not forget that. 
Hon Clayton Cosgrove 
: The sell-out party! 
Hon Dr PITA SHARPLES 
: Oh get a life! I want to point out just one more highlight in respect of the Maori affairs budget and that is the investment in whanau language development. 
This Budget initiates $4.5 million over 3 years for the retention and revitalisation of te reo Maori using te ataarangi kei roto i nga whare [ 
the Cuisenaire rods method in homes 
] 
  
and 
there is $1.2 million allocated to iwi Maori radio operating funding. 
All of these initiatives are ideas that are about creating opportunities for our people and for establishing a stable platform for growth to occur. But there are other opportunities right throughout the appropriations which I would like to point out in my closing remarks. 
In making the decision to defer further tax cuts the Government has acted responsibly. Such an approach is also reflected in the $22 million allocated to speeding up Treaty settlements. Settling past injustices is an important part of any future constitution reform for New Zealand as is restoring an economic base for iwi. I acknowledge my colleague Chris Finlayson for the constructive working relationship we enjoy. Similarly I am proud to have signed alongside my colleague Phil Heatley the fishing aquaculture settlement to which the Budget allocates $15.9 million for aquaculture. Kia ora ra Mr Deputy Speaker. 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 The one time that urgency is often seen to be justified is when on Budget day urgent financial legislation needs to be passed overnight so that people cannot take advantage of knowing the change is coming before it is law. This is not such an occasion. In this urgent legislation we are cancelling tax cuts that take effect in April next year. 
Hon Trevor Mallard 
: And the year after. 
JEANETTE FITZSIMONS 
: And the year after. It is very hard to see why anybody could claim that this legislation was urgent enough to bring Parliament together into the night on Thursday and again on Friday morning. The Green Party did not vote for the urgency motion. We believe urgency ought to be used quite cautiously if there is to be support across the House for urgency when it is actually justified. There are times when it is justified but this is not one of them. 
We will however vote for the Taxation (Budget Tax Measures) Bill. We are not voting for the Government’s Budget—we are not voting for this Government on confidence and supply—but we will vote for this bill because the obviously sensible thing to do in a recession is to cancel two rounds of tax cuts for which we would have to borrow billions of dollars. We are glad that the Government has chosen to do the sensible thing in that case. The Greens never supported the tax cuts in the first place. 
I have to say that when the Government took urgency to rush through tax cut legislation in December last year—some of which is already in force from 1 April this year and which is not being cancelled—it was already obvious that New Zealand was in a recession. It was already obvious in December that the tax cuts would put the Government into serious debt. But because National campaigned around the country on tax cuts I suppose National members felt obliged to put them into practice. Now National is coping with the consequences of a Budget that is very very hard to balance because so much was given in tax cuts. Tax cuts are something that we do when the economy is in surplus when we are having the good times and when we know that it is a structural surplus and that we will be able to keep on doing it. In December last year we were not in that situation economically and we are even less in that situation now. 
However it is better late than never and we are glad to support the common-sense approach of cancelling the next two slices of tax cuts. If the first slice had not gone ahead in April this year and if that December bill had not been passed the savings to the Government Budget would have funded our entire Green New Deal stimulus package which would create 43000 new jobs. Yes people like having $30 a week more in their pocket from their pay packet but I bet that if we asked most New Zealanders whether they would rather have a tax cut of $30 a week or 43000 more jobs in the economy they would choose the latter. They would know that their neighbours their kids and their friends would have employment and that there would be spin-off effects in the economy. They would know they would see all the other benefits of the Green New Deal package such as clean rivers better export returns from New Zealand being clean and green warm insulated homes better public transport more community development and 6000 new State houses to tackle homelessness. I bet that most Kiwis if they had been asked whether they wanted $30 a week or a better society for themselves and their children would opt for the Green New Deal package and all the benefits that it would bring. 
I will quote Jane Clifton whose comments in the  
Listener 
 I always enjoy. Back in April she had this to say: “But so much has changed since we first hankered after tax cuts that it’s all the most depressing let-down.” This was April when the tax cuts first came in. She continued: “Once again we can see the extra money will not compensate us for dairy product petrol power school-fee and mortgage-interest hikes. It will not supply a nest-egg for any redundancies set to hit our households.” She knew those would happen. “It will simply be sucked into the maw of our existing financial struggles and grateful as we are for it”—this is the interesting bit—“our central existential problems will continue unabated.” She is saying that tax cuts are not a recipe for happiness and greater well-being and that there are better ways that that money could have been spent. 
The part of this bill that we struggle to understand is the closure of the mortgage diversion facility in KiwiSaver. Apparently only 600 people so far have used the opportunity to divert savings from KiwiSaver to their mortgage payments. Those 600 people may well have faced mortgage foreclosures if they did not have that facility and it is very important that they were able to do that. It does not sound as if with 600 people participating this was a huge compliance cost for KiwiSaver. It is very hard to see where the problem is that this is trying to fix. So I look forward to hearing the Government explain that measure a little bit further. The Greens may well therefore not vote for Part 2 of the bill. However we will vote for Part 1 and we will vote for the bill overall. We are glad the Government has finally seen sense and realised that making tax cuts when the country is in a recession does not make sense. 
CRAIG FOSS (National—Tukituki) 
: 
 First of all I take this opportunity to congratulate our Minister of Finance the Hon Bill English on an absolutely fantastic Budget for these strained times. It is a Budget for the future. It is a Budget that builds the platform for a much more aspirational realistic transparent New Zealand. It is not a Budget for the next headline. It is not a political Budget. It is realistic it is transparent it is robust and it is fair. Some may even call it a boring Budget but I say to members opposite that this Budget should probably have been in place about 4 years ago. 
This is the Taxation (Budget Tax Measures) Bill. It is part of the “road to recovery Budget”. I just note this point after hearing the Hon Phil Goff’s Budget speech. Is Labour not missing the Rt Hon Helen Clark and the Hon Dr Michael Cullen? We know that Labour members are missing them because Phil Goff’s speech was a total shocker. It was as if he had turned up and could not deliver the speech he had written earlier. I think he had talked himself into thinking that entitlements would be cut that superannuation would be cut— 
Hon Members 
: It was. 
CRAIG FOSS 
: —and that Working for Families would be cut. To that I say no no and no. I could pose the question to anybody as to how much his or her superannuation was changed by this Budget. How much? Actually the answer is it was changed by zero. Superannuation is unchanged and it is committed to. All entitlements are unchanged and the commitments that were made were held because so many New Zealanders need to have some certainty to get through these unfortunate times this one-in-60-year event. 
I would like just to take issue with the foresight that Mr Cosgrove has suddenly developed. He told us that apparently 2 years or so ago when the IMF issued a report—I think I remember the one the member was talking about—that the current global economic conditions were all known. He alleges that Mr Key and Mr English should have foreseen these conditions. I will turn that question round. Did Mr Cullen the finance Minister at that time foresee it? I recall a quote from Mr Cullen talking about how the subprime crisis in the US would not hit the shores of New Zealand. I think that was said in about April last year 2 or 3 months before his 2008 Budget. 
I point out that so far this National Government has delivered over $1 billion in tax cuts which will assist over 1.5 million New Zealanders. That is in addition to the $500 million or more of tax compliance improvements that we have made for small businesses. I come back to the foresight that Mr Cosgrove developed. I will point out some figures. In the operating balance before gains and losses in Budget 2008—we remember that New Zealand went into the recession under the previous Government about a year before the rest of the world—a 0.5 percent surplus was forecast. In the Pre-election Economic and Fiscal Update on 6 October 2008—members will remember that prior to the election—a 0.9 percent almost 1 percent deficit was forecast. Remember that that is when we started to get into the decade of deficits which was basically if the policies of the previous administration had continued in their current shape and form we would be in awful shape worse than today because this Budget is starting to put us on the road back to recovery. In the December Economic and Fiscal Update on 18 December 2008 the surplus was minus 2.2 percent. We can see that the numbers have shown a marked deterioration until this point today. In Budget 2009 we are at negative 4.4 percent. That is unfortunate and none of us like to be in that position but I am so pleased that a National Government is in place to start to bring some accountability some transparency some robustness and some prioritisation into the Government’s accounts. 
I will go back to Mr Goff’s speech. He seemed to totally ignore the fact that $50 billion less will be coming in revenue to the Crown over the next 3 years. That is $50 billion less to allocate to entitlements or whatever. He has totally ignored that point. Mr Goff Mr Cunliffe and Mr Cosgrove have all been talking about what a great time it is to buy assets. That implies the question: why did they buy so many in the last 5 years? They are saying assets are now cheap. I say to these financial gurus of forecasting which they have suddenly turned into that actually hindsight is a great thing. But I say to them not to go down that track because they will be caught out—somewhat tragically for their personal standing. Thank you Mr Speaker. 
STUART NASH (Labour) 
: 
 I find myself in the unique situation of standing to support the Taxation (Budget Tax Measures) Bill under urgency after standing to oppose the original bill the Taxation (Urgent Measures and Annual Rates) Bill under urgency less than 6 months ago. It is a strange situation which anyone with half an eye on the global economic situation could have predicted 8 months ago. But first of all I say to Dr Pita Sharples that 80 percent of his constituents got nothing out of the tax cuts. Pita Sharples sold his people out. Is that fair? No not at all. 
I would like to talk about one thing in my 10 minutes’ speaking time: the fact that Mr Key and Mr English knew of the impending economic crisis and its potential impact upon the New Zealand economy yet they never pulled back from their tax cut package during the last days of the election campaign. This is not right and it is simply not fair. I think it is quite interesting to note that today ANZ and the National Bank upped their interest rates on the day that we were given a jobs Budget. Will those two major banks upping their interest rates help the ordinary Kiwi bloke? Of course it will not. 
I know that Mr Key and Mr English are smart men. Let us give credit where credit is due. 
Hon Trevor Mallard 
: Why? 
STUART NASH 
: I will tell the member. Someone like Mr Key who made significant money in international finance knows about risk management and the fundamentals behind assessing financial risk. Mr Key knows how to read economic forecasts and future financial trends probably better than anyone in this House except for David Cunliffe Mr Mallard and Mr Horomia. That is how our Prime Minister made his fortune—by trading. It is all about assessing risk then putting in place strategies to mitigate and beat the odds. A lot of it is about bluff and big balls because if they get it wrong it can go spectacularly wrong and many in this game do not succeed. We have ample evidence of this in the collapse of Mr Key’s old firm Merrill Lynch. 
The fact that Mr Key made so much money analysing and then beating the odds means he was probably pretty good at it—in fact pretty damn good at it. Good on him! He was a good money market trader. He knew how to play the odds. But did he play us? Were the voters of New Zealand simply lines of data on a spreadsheet to be manipulated in the same way that was used in an attempt to manipulate data on the international currency movements? Were the voters of New Zealand who ticked National on election day taken for a ride on the promise of tax cuts? That is an interesting question and now it appears we have our answer. 
Let us look at Mr English. Sure he is as machiavellian as they come. He would have to be to become leader of the National Party after previously being the Minister of Finance in charge when fiscal management mistakes were made over the handling of the last recession suffered by this country in the late 1990s. Luckily that recession was cyclical and not structural which basically means that our export markets held up and we could trade our way out of it. This recession is structural which basically means that the fundamental way we do business both in New Zealand and globally has changed. It has to change. But Mr English was not quite machiavellian enough. He got rolled for the leadership by the right-wing ideologue Ruth Richardson masquerading as Don Brash after being trounced in the 2002 election by a Prime Minister who knew the country wanted substance and vision. Mr English could provide neither nor can he today. 
When Don Brash’s time was up Mr English got rolled again by another very smart odds and numbers man in John Key. That must have hurt. [ 
Interruption 
] I ask Dr Coleman what we the people of New Zealand have ended up with today. We have a money market trader who understands risk management and therefore is an expert manipulator as Prime Minister and a machiavellian man who has not quite the grasp of political or economic philosophy or numbers as Minister of Finance. Let us face it. If he knew the numbers he would be Prime Minister now and he would not have been rolled by Brash and then passed over by his colleagues for Key. Ouch! 
Hon Dr Jonathan Coleman 
: He’s just read the Budget today. I think it’s a lot more fun than the Opposition. 
STUART NASH 
: In October of last year when Dr Coleman was out there telling his constituents that under National they would get tax cuts these two puppet masters—let us call them “M and M”: the manipulator and the machiavellian the then Leader of the Opposition and the then deputy leader of the National Party—were reading  
The 
Economist 
 magazine. It was commenting at the time on the state of the global and the New Zealand economy. “M and M” would have no doubt read the following from  
The Economist 
. On 29 October last year a little over a week before New Zealand’s general election it stated: “After the most eventful and creative six weeks in the history of central banking a half-point interest rate cut by the Federal Reserve on Wednesday October 29th was almost anti-climactic. Nonetheless it was an important strike at the deepening recessionary forces surrounding the American economy … Within America the financial crisis is showing signs of easing but the economic crisis is only just starting as the Fed broadly acknowledged. ‘The pace of economic activity appears to have slowed markedly … Moreover the intensification of financial market turmoil is likely to exert additional restraint.’ ” 
Let us go over that again: “the economic crisis is only just starting” “The pace of economic activity appears to have slowed markedly” and “the intensification of financial market turmoil is likely to exert additional restraint.” This is all in the world’s largest economy—the global engine room. I can picture how this went. “M and M” would have sat down over a coffee in the manipulator’s office. Key says to English: “This is bad Bill. The world is going to hell in a handbasket and we are promising tax cuts that will be totally unaffordable. I have done the numbers and it won’t work.” English says to Key: “For God’s sake John. It’s about winning this election at all costs. Let’s promise them the world and when we get in we can tell them whatever we want. Key then says to English: “So if we fool them all can I become Prime Minister Bill?”. English says to Key: “In name yes John. Now go out there and tell the people what they want to hear. And that stuff about the ides of March is just a story; we all love you John.” 
I tell members that “ 
The M and M Show 
” knew exactly what it was doing and rushing the original tax bill through Parliament was all part of the plan. In my humble but educated opinion the voters of New Zealand were hoodwinked in a way that only the National leadership can do. I say to Dr Coleman that National would do anything to get elected. It is cynical politics. The people of New Zealand need to know this and today they have found it out. 
I am rapt about this bill because it means that Napier will return to Labour. I am sorry for Mr Tremain but there is nothing wrong with being a list MP. This bill is not what the people of New Zealand voted for. 
Craig Foss 
: Come on what odds? 
STUART NASH 
: If I win Napier I will give Mr Foss my tax cut next year and the year after. Oh hold on a second they have just been cancelled! 
I remember sitting opposite Mr English at the Finance and Expenditure Committee and asking him whether in light of the fast-deteriorating global economic crisis National was still going to push through its tax cut legislation. Mr English’s response was that it would because it is what the voters voted for. Well Mr English has now taken away what the voters voted for and hence has taken away the reason he thinks National won. What will he tell the people of New Zealand who put him there on the promise of a tax cut? 
“M and M”—the manipulator and the machiavellian—are now in a spot of bother. They are in a catch-22 as they are shown to be either the master manipulator and the machiavellian who misled the majority of the masses or slightly slow. What would they rather be—sneaky or simple standard or poor? It is not for me to decide but I can tell members that my mates have called me and texted me about this situation and they are not particularly happy. When I said to them that they knew this was going to happen and that tax cuts were not affordable most said that they knew that but they did not really think—they trusted Key. But no more. They say that the honeymoon is over and the love is gone. To “ 
The M and M Show 
” I say that 2011 cannot come quick enough to get rid of the show of broken promises. The people of New Zealand know that this is simply not fair. Thank you. 
CHRIS TREMAIN (National—Napier) 
: 
 On one of the most important days for New Zealand this year we hear a fictional play written by Mr Stuart Nash. If he thinks he will win back Napier he can dream on. 
We should be focusing on the facts and I want to tell members about a fact that will appear in the headlines tonight in the Television One and TV3 news. It is the Standard and Poor’s announcement: “International credit rating agency Standard and Poor’s has cast a favourable verdict”—not a negative verdict but a favourable verdict—“on the Budget upgrading New Zealand’s outlook from negative to [positive].” That is a fact. Standard and Poor’s one of the most important credit rating agencies in the world has said that it is putting a positive outlook on our Budget as a result of what was delivered today. There is nothing fictional about that. No fictional playwriting is going on in that regard. 
Craig Foss 
: It was negative when Labour was in; it’s positive now. 
CHRIS TREMAIN 
: Exactly. When Labour was in office we had a negative outlook. Now that National is in office we have a positive outlook and that has to be good for New Zealand. What does it mean? Let me make just a couple of quick points. It means $600 million in savings on interest rates alone. As a result of that improvement in our rating we have delivered $600 million into the back pockets of Kiwis through not having increased interest rates. That is a fantastic outcome. What is even better though if we put that aside for a moment is that it will allow the arteries of finance to stay open. The veins of finance will continue— 
Stuart Nash 
: I raise a point of order Mr Speaker. On Mr Tremain’s facts he knows that 75 percent of people in Napier earn under— 
Mr DEPUTY SPEAKER 
: The member will sit down. That is not a point of order; it is a debating point. The member cannot bring in that sort of material on a point of order. 
CHRIS TREMAIN 
: It will keep the arteries of finance open and it will allow businesses to stay operational. They will be able to continue to borrow and we will be able to get on the path to recovery. That is what has happened. 
Another fact from Standard and Poor’s will end up on the news tonight. It said today that the Budget delivered a sound outlook. That is high praise. Just a few minutes after Bill English had delivered his Budget we received the following high praise from Standard and Poor’s: “The change in the outlook on the … rating reflects our view that the measures announced in today’s budget will support stabilisation in the government’s fiscal position over the medium term.” If that is not positive I do not know what is. Here we are in one of the biggest recessions of the last 60 years and the Government has delivered a Budget that has put us on a pathway to a strong recovery. It is absolutely fantastic. 
What did we see from the Opposition today apart from the fictional play that we had before? We saw “Visa-nomics”. We saw Mr Phil Goff—“Whack-it-on-the-bill-Phil”—recklessly say in the House today that we should keep on spending. He said that we should keep on increasing our debt and putting ourselves in a position whereby our kids will have to pick up that debt down the track. It was absolutely crazy. Delivering that sort of Budget would burden Kiwis with an immediate downgrade. But it is not that we heard anything of any note from Phil Goff apart from increasing expenditure. Did we hear anything about what he would change in order to deliver that? No we did not. He just talked about more debt—“Whack-it-on-the-bill-Phil”. It was all about putting more on the Visa card and burdening Kiwis with more debt. 
What we heard from National was a reflection of where the real economy is. The really important thing is that out there in New Zealand businesses are doing it tough. They are going through their profit and loss statements line by line looking to see how they can take expenses out of their budget so that they can remain in business. It is not so that they can make a profit; many businesses out there are trying to keep afloat and they are going through their budgets line by line to do that. There are people out there who have recently lost their jobs or who are facing the prospect of losing their jobs. They are not faced with a situation where they can be fiscally prudent; they have to be tough and go through their budgets line by line. That is what this Government has done. It has gone through the Budget line by line and taken out as many expenses as it can. It has provided a Budget that will take us forward which is fantastic. 
On the other hand “Whack-it-on-the-bill-Phil” thinks we can just keep on spending and racking up debt—spend spend spend and the debt grows. National members understand the position the economy is in and we have had to make some tough calls. Whether or not members opposite like it when New Zealand is in a situation like this the Government has to make tough calls and we have done that. At the time of the election when we made our initial call about tax cuts we made some tough calls in order to afford tax cuts based on the Pre-election Economic and Fiscal Update delivered to us at that point in time. At that time we made some calls about research and development tax credits and KiwiSaver. Once again in this Budget we have made some tough calls about what we have to do and one of those tough calls has been to stop the second and third tranches of the tax cuts. That is something we have to do in this economic environment. 
Mr Ross Robertson asked us before about what the future was under this Budget. It has given us a debt track that is rising but will then go down. It has given our kids a strong outlook for the future. Today we are in the position of having to hit the tax cuts on the nose with this tax bill so that we can go forward and Standard and Poor’s has delivered us a fantastic result because of it. 
IAIN LEES-GALLOWAY (Labour—Palmerston North) 
: 
 Before Christmas we were in this House late at night day after day ramming through tax-cut legislation under urgency. National could not get it done fast enough. Why? It was because the Government wanted to stick to Mr Joyce’s mantra: “Find out what they want; give them what they want; then tell them that you’ve given it to them.” The Government wanted to be able to say before Christmas “We’ve given it to you.” It wanted to put on the façade of a hard-working Government that was getting on with it but it was all smoke and mirrors. National knew before the election that those tax cuts were completely unaffordable. Now a mere 6 months later—not even that—we find ourselves under urgency with the Government running as fast as it can away from the broken promises that it knew it could not keep. The Government knew full well that there was not a chance that these tax cuts would go ahead—not this year not next year not the year after. Bill English was not talking about the tax cuts when he used those words but he may as well have been. There is no doubt that this Government cannot be trusted on anything. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
IAIN LEES-GALLOWAY 
: Before we headed off for the dinner break I was reflecting on the bizarre symmetry that has been created by this situation. Before Christmas there was a need for urgency to rush through some incredibly important policies that the Government needed passed by Christmas so that it would look like it was doing something. We forced through tax cuts under urgency yet tonight we find the Government under urgency running as far away as it can get from those tax cuts. The Government has done a handbrake turn so sudden and so violent that its members should have their cars crushed. It is just incredible how quickly the Government has turned around on this policy. 
When Bill English talked about not this year not next year not the year after he was talking about the cycleway but John Key crushed him on that did he not? Mr English was actually talking about the tax cuts—they will not happen next year or the year after. 
Before the election when all these promises were being made John Key liked to compare himself to Barack Obama. He knew that Barack Obama was on to a winner so he thought he would try to ride that wave and compare himself to Barack Obama. One could write a thesis on the differences between John Key and Barack Obama but I would like to focus on one difference in particular. Obama’s campaign phrase was: “Change You Can Believe In”. He was upfront he was honest and he delivered the tax cuts that he said he would deliver. He costed them out made his pledge and delivered on every single one of his promises. He promised to cut taxes for low and middle-income earners. Why? Because it was fair and it was the best way to stimulate the American economy. That is unlike what we have seen in this country where tax cuts have been delivered to the rich who will save them or spend them on overseas trips and where poor low-income families have been shafted by the Government and have received absolutely nothing. Obama delivered but this Government we cannot believe in. 
The one thing that this Government has not done a U-turn on is research and development tax credits. They were gone before Christmas and they are still gone. In my hometown Palmerston North research and development tax credits—Mr Power knows this—were welcomed with open arms. Palmerston North is an innovative city and so much of its economy is based on research innovation and scientific development. Those credits were something that this country could have seen as a way out of this recession. Recently Moana Mackey came up to Palmerston North and we spoke to the science sector there. Those people said that they wanted to be taken seriously as a sector that can lead New Zealand out of the recession. But what has this Government done? It has slashed those research and development tax credits and taken the Fast Forward Fund with them. What have we seen today? We have seen an attempt at an about-turn but it is not even half of what the Fast Forward Fund had and not even half of what Labour pledged. It has nothing like the security that that innovation fund offered to the science and research community. Those in the science sector want to know that their funding is secure and this Government cannot deliver them that level of security. 
How can we move towards being a high-wage high-earner economy? How can we catch up with Australia as this Government keeps insisting we can? Government members said over and over again when they were in Opposition that we were far behind Australia and they pledged that our wages would catch up to Australia’s. But how will we do that if we insist on focusing on being a low-wage no-innovation dumb economy with moves like scrapping research and development tax credits and the Fast Forward Fund? The talk is all about productivity. Well research and development is all about productivity. John Boscowen from the ACT Party said earlier on in this debate that it is all about developing productivity. But then he got into what he really wanted to talk about— 
Hon Darren Hughes 
: Himself! 
IAIN LEES-GALLOWAY 
: No no there was not a lamington in sight. What he really wanted to talk about was how awful Working for Families was. He absolutely slated it. In fact he was in good company because John Key called it “communism by stealth”. But not today! John Key was crowing today about the fact that the Government was able to maintain Working for Families and interest-free student loans. He even crowed about the tax credits that were delivered on 1 October. I know that John Key wanted to lead a Labour Government—he said so himself—but he is taking the flattery just a little bit too far. He should watch out for Bill English. The knives will be out and he will be in trouble soon if he keeps flattering the Labour Party with that sort of rhetoric. 
But the dark grey clouds are looming. There are ominous references throughout these Budget documents and they say that New Zealanders have to prepare for changes. There will be shifts in funding from low-priority unproductive areas to more productive areas. We know what they on the other side of the House do not like. We know what dead rats they had to swallow: Working for Families interest-free student loans universal superannuation—which is in a whole world of trouble now and will not be around by the time I retire that is for sure—and KiwiSaver. The Government has already put a dent in KiwiSaver and I tell you what it is lining it up. KiwiSaver is even referred to in this bill in the provision allowing mortgage diversion. I understand—although I was not in the House at the time—that that policy came from United Future. But that is OK it does not matter it does not mean anything to Peter Dunne. He has jumped ship before and he will do so again. He has jumped ship on the provision to allow mortgage diversion. 
The Government members are having a drag race to see who can get the furthest from tax cuts. They want to try to position themselves far away from the promise they made before the election. They want to get as far away from it as possible. The promise that John Key made at the National Party campaign launch was: “We all know what will be the first to go under Labour whether they want to admit it or not and that is the rest of their tax-cut package. Well unlike Labour I’m going to be straight-up about my priorities. That’s why I’m sending a card to all of you. It’s called My Key Commitments to You and it will be delivered to every household in New Zealand over the next 10 days.” His very first commitment read: “strengthen the economy increase after-tax incomes and ensure Kiwis can get ahead under their own steam by reducing personal taxes on 1 April 2009 1 April 2010 and 1 April 2011.” In other words next year the year after and the year after that. Mr Key went on to say: “And unlike Labour we won’t cancel our tax cuts.” He also said: “Most of all New Zealanders will be able to believe our tax cuts they will be able to trust our tax cuts … What is more we can afford to do it.” 
This bill is dastardly deceptive and dishonest. That is how this Budget has been and that is how this one-term National Government will be remembered. 
NATHAN GUY (National—Otaki) 
: 
 The previous speaker was Iain Lees-Galloway from Palmerston North. He failed to tell the people of Palmerston North that he will be voting for the Taxation (Budget Tax Measures) Bill. He has been whipped into line and will support this bill. 
I need to make a few introductory remarks. The Labour caucus is all over the place on this bill. Tonight on  
Close Up 
 I heard the Labour leader the Hon Phil Goff say that we should have more tax cuts yet in the House tonight Labour is supporting this bill. I also heard the Hon Phil Goff say this afternoon that the National Government was lucky enough to inherit an economy that was in good shape. Well what a misnomer that is! How could Phil Goff possibly stand up in the House today and say that with any credibility when the books were open at the Pre-election Economic and Fiscal Update and there was a decade of red ink and deficit? That member is an absolute embarrassment. 
He also said that this Budget was a Budget of missed opportunities. I need to bring to the House’s attention that this is a very tough economy. It is the toughest since 1930 and indeed we are in our sixth quarter of negative growth. A member who has recently departed the House—Michael Cullen the former Minister of Finance—said on 20 March 2008 that a recession was unlikely. The following day he said that he expected a technical recession. He squandered the good years—the magnificent years—that we had which were nothing to do with what the former Labour Government did. All those years were squandered. We came into Government opened up the cupboard and found that—whoopsie—the cupboard was bare. 
If we want to set the record straight I say that the now dumped president of the Labour Party Mike Williams said there was a deep dark secret in the 2005 Budget. Wait for it! Then in 2005 the Minister of Finance said that Labour was moving the income thresholds and that the average worker would benefit by 68c—just half the cost of a packet of chewing gum. Then lo and behold the Labour Government had to cancel the tax cut. 
This Government is going about its job in particularly difficult times. We have already rolled out our tax package—$13 a week to the average hard worker—and we are actually moving on and supporting entitlements. All the constituents in the Otaki electorate particularly those over 65 will be pleased to know that we are supporting them in superannuation. Those who are reliant on Working for Families in particularly hard times will be very pleased to hear that we are supporting their entitlements. This bill has the support I believe of those members across the other side of the House as well which is surprising because when we hear their speeches we wonder whether they are supporting it. 
I think Labour members owe it to the public of New Zealand to give them a bit of an indication on this two-part bill which is only a couple of pages long as to whether they will filibuster this bill like they did with the Local Government (Auckland Reorganisation) Bill to the tune of 8000 amendments in this House. The next speaker from the Opposition should stand up in the second reading and say where Labour stands in terms of the Committee stage and whether it will support this bill in its current form. 
Bill read a first time. 
Second Reading 
Hon PETER DUNNE (Minister of Revenue) 
 on behalf of the  
Minister of Finance 
: I move  
That the Taxation (Budget Tax Measures) Bill be now read a second time 
. As I said in the previous debate this bill is necessary to ensure the Government can deliver its explicit medium tax policy goal of a broad based - low rate system that raises revenue in the most efficient manner to support the objective of aligning the top personal the trust and the corporate rates at 30c in the dollar. It is something that I have long advocated. I think it is a necessary solution to the problems we currently have within the system of people using companies and trusts to shelter personal income because the current misalignment of the rates provides scope for people to use those entities to structure their affairs in a way that benefits and reduces their liabilities. 
Hon David Cunliffe 
: Just stop progress to that end. 
Hon PETER DUNNE 
: I should say to the member that we have in place the tax policy work group under the aegis of Victoria University and it will be putting forward a wide range of options for public debate in an open environment over the next few months. The Government will then make some calls early next year on where it wants to go in terms of those options and the pursuit of that objective. One of the things that we have lacked in this country for a long time— 
Hon David Cunliffe 
: You can’t make money out of thin air. 
Hon PETER DUNNE 
: I would have thought that the member opposite would be keen to have an open wide-ranging debate about tax policy and about the future structure of tax policy. 
Hon David Cunliffe 
: We’ll be there. 
Hon PETER DUNNE 
: The member says that they will be there. I welcome that. I look forward to his input and I look forward to the outcome being one that will see us better placed to achieve the objective that I have just stated. Let me come back to the bill. 
Hon David Cunliffe 
: Roger Douglas wants 20c. 
Hon PETER DUNNE 
: Well I am not Roger Douglas. 
Hon David Cunliffe 
: But you are heading in that direction day by day. You should be very afraid! 
Hon PETER DUNNE 
: Let me say to the member that he might like to speculate upon many things but I think both Sir Roger and I would be horrified if we ever ended up in common company. 
Hon David Cunliffe 
: You both used to be in the Labour Party. 
Hon PETER DUNNE 
: The Labour Party was a very— 
Hon David Cunliffe 
: It was a very broad church in those days. 
Hon PETER DUNNE 
: That is dead right. In fact I do not think there are many people in New Zealand who were not in the Labour Party at some stage; the trouble is that most of them grow up. Let me move on. When the Government’s tax cuts in April this year—[ 
Interruption 
] Well there is one over there. The problem with the Labour Party is that it is a great launching ground for political careers; most people however grow up and move on to other things. 
Let me come back to the bill. Delivery of the first round of personal tax cuts in April this year was a critical part of this Government’s policy. It followed on from the legislation introduced before Christmas and it put an extra billion dollars into the pockets of about 1.5 million New Zealand workers. That round of tax cuts and the tax cuts introduced by the previous Government in October last year were affordable. The April tax cuts this year were funded by concurrent changes to the KiwiSaver programme the abolition of the research and development tax credit and the replacement of the out-stages of the previous Government’s tax cuts. So those changes currently in place are not affected by the bill before the House today but the future tax cuts for 2010 and 2011 have become unaffordable in the meantime for the reasons outlined in the Budget. If we look at the Budget tables we see a revenue decline that shows that the 2008 revenue levels are unlikely to be reached for another 3 or 4 years. There is a question of how one pays for those costs. 
To go ahead with tax cuts in this environment would simply add to Government debt at a time when we are already in deficit and when we need to reduce the debt burden not just on the Government and the economy but on households which bear the burden. 
Hon David Cunliffe 
: That’s right. 
Hon PETER DUNNE 
: I am glad the member opposite agrees. 
Hon David Cunliffe 
: You knew before the election. You did. 
Hon PETER DUNNE 
: At the time of the election a lot of things were going on in the international economy and they were changing day by day. To suggest that there was a crystal ball out there that made all of what has happened this year and all of the changes that the Americans the Australians and the British have had to cope with predictable in October or earlier last year is simply fanciful. No one actually knows what the depth of the international recession is except perhaps for Mr Cunliffe who is now sharing his knowledge with us. I think it is wonderful to have his omniscient presence in our midst and I am sure that when he does speak he will share some more wisdom with us about the state of the international economy when New Zealand will recover and all of the things that we need to be doing by way of economic policy. 
In the meantime let me come back to a bill that has to be passed now to put on hold those tax cuts for the future to make clear to New Zealanders where they stand and also to give some certainty and direction which has already been positively welcomed by the rating agencies since this Budget was brought down. 
Part 2 has effect more urgently. It closes off the KiwiSaver mortgage diversion option. The member who spoke at the end of the first reading debate Nathan Guy said it was a United Future initiative and he was absolutely right. It was put forward by a former colleague of mine; it has not worked. I was the Minister who recommended it— 
Hon David Cunliffe 
: There are a lot of those. 
Hon PETER DUNNE 
: Yes of his particular initiatives. I dare not mention his name because it causes me grief—the member will know why. But the fact of the matter is that it was my proposal to get rid of it because it is simply not working. We have more than 1 million people in KiwiSaver but fewer than 600 have taken up the mortgage diversion arrangement which is spread over a number of funds and in a number of cases there probably are fewer than 100 people per fund. It is simply unworkable. We therefore are saying that those people who are currently in the system can stay in it as long as their fund providers wish to retain the option but for new entrants we are closing it off with effect from 1 June this year. It was potentially a good idea but it has not worked. I am sure the member opposite who is nodding his head would agree with me that if there are good ideas that do not work we should get rid of them. This is one of those and I do not think anyone will greatly mourn its passing. 
With those few comments I am very happy to commend the second reading of this bill to the House this evening. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Before the election the only thing National was going to cut was taxes. After the election that is about the only thing it is not going to cut. Today is Budget day. The kimono has been opened and we find that there is not a lot there. This bill makes a liar of the Prime Minister. The man who signed the personal guarantee to say that there would be tax cuts— 
Chris Tremain 
: I raise a point of order Mr Speaker. 
The ASSISTANT SPEAKER (Eric Roy) 
: I do not think you need to explain what your point of order is. All members are honourable members. I think the way in which the member phrased that was beyond—I will ask him to withdraw the comment. 
Hon DAVID CUNLIFFE 
: Speaking to the point of order— 
The ASSISTANT SPEAKER (Eric Roy) 
: No I have ruled that the member will withdraw the comment. That is all I require. 
Hon DAVID CUNLIFFE 
: I withdraw the comment. 
I raise a point of order Mr Speaker. Respecting your wisdom in this matter it none the less leaves me on the horns of a rather uncomfortable dilemma. As you will see from the speech that follows I can find no other explanation for the course of events than that the leader of the National Party knew before the 2008 general election—or should have known—that these tax cuts could never be affordable. 
The ASSISTANT SPEAKER (Eric Roy) 
: I have the gist of what the member is saying and that argument has been tried many times in the House. There is no way that the member can imply that about a member or use the word that he did. All members are honourable members. The member has to exercise his brain to express himself in another way. The member will continue. 
Hon DAVID CUNLIFFE 
: The key point here is that the Hon John Key knew before the election that these tax cuts could never be afforded. There are only two logical possibilities: either he knew or he should have known. 
As a matter of evidence let us look at the historical record. The International Monetary Fund issued a warning in October 2008 in its  
World Economic Outlook 
. It said: “The financial turmoil that began in the summer of 2007 has mutated into a full-blown crisis”. 
Craig Foss 
: What did you do at that time when you knew that? 
Hon DAVID CUNLIFFE 
: I am coming to that if the member will just wait patiently. On 14 September 2008 Mr Key’s old firm Merrill Lynch was gobbled up by the Bank of America. On the next day Lehman Brothers went bankrupt—nearly 8 weeks before the election. Mr Key likes to remind us that he was a member of the foreign exchange committee of the Federal Reserve Board of New York—a very august body. He would have been patently unqualified for that role if he had been unable to take the hint that two major investment banks on Wall Street had bitten the dust and there was a tad of trouble. One cannot have it both ways. One cannot be qualified to serve on the Federal Reserve Board of New York yet miss the hint—Lehman Brothers hitting the wall is a bit of a giveaway right? If he knew yet promised to continue with tax cuts the Assistant Speaker has better wisdom than me of how one might describe that. The word I wanted to use I cannot use but I cannot think of another. There was a deception an untruth a very long stretch of the imagination. But either way the public of New Zealand were conned. They were conned that they could have everything that they had liked under Labour—they could have Working for Families smaller class sizes and cheaper doctors’ visits—and they could have 3 years of tax cuts as well. 
You know the tax cuts were always economic lunacy. The first one took three-quarters of a billion dollars from people below the average wage who really needed the help and would have spent it straight away and by the Minister’s own admission transferred it to upper income earners. But worse than that it gave 30 percent of it— 
Hon Simon Power 
: Just keep walking. 
Hon DAVID CUNLIFFE 
: Mr Power may laugh but Mr Power unfortunately will not be in the top group that got one-third of the money. Three percent of income earners got 30 percent of those tax cuts—3 percent of income earners. I do not know who would call that fair but certainly not the taxi drivers I have been using. They are gobsmacked by that; they talk to everybody. So let us assume that ordinary New Zealanders think that was a rort. It was a political payback to the people who bankrolled the National Party to deliver for them—and it did. That was the 1 April tax cut. We are all good-humoured in this House but sometimes one just has to call it like one sees it. It seemed to me to be political payback. 
The key point—and it is a Key point—is that the Prime Minister then the Leader of the Opposition must have known before the election that this tax cut could not be afforded. Before Christmas this House was thrown into urgency to pass the tax bills in the dead of the weekend to get them through. And here we are in the dead of the night un-passing them because the penny has finally dropped in the National Party that they were ridiculous. I ask colleagues to contrast that with the responsible actions of the New Zealand Labour Party which canned a whole lot of election campaign promises—I did in health and there were whole portfolio manifestos we did not even release—because we did not want to promise more than we could afford. We did not want to promise more than we could afford because the public of New Zealand have had a gutsful of being conned. 
Today is Budget day. Today is the day National cannot hide any more. It has to open the books and the public has to see. It is no surprise therefore that on Budget day the charade was finally dropped. The argument in this House is not whether the tax cuts were a good idea—finally National has come round to our way of thinking which is that they were always bollocks. Now that National is voting them down we are happy to support that. There is no confusion in the Labour position because it has not changed. The senior whip on the Government side should be reminded that it is his party that has done the U-turn. It passed the tax cuts and it is repealing them and good on them for having finally mustered the courage and the wisdom to do so. 
Nathan Guy 
: You’re voting for it. 
Hon DAVID CUNLIFFE 
: We are for it—that is what I am saying. You did not used to be; you have changed your mind—not you Mr Assistant Speaker Roy. He changed his mind. You Mr Assistant Speaker are known for your consistency and wisdom. 
Hon Members 
: Oh! 
Hon DAVID CUNLIFFE 
: Look a man has to take his chances when he can get them. He is such a good Assistant Speaker is he not? Labour today stands alongside the hundreds probably thousands of decent hard-working New Zealanders who will be joining the unemployment lines. We are disappointed and we are angry that certain decisions have been taken that mean that some of them actually need not be there. 
On Budget day we are faced with a Budget that is remarkable for what it does not do. As I think Vernon Small from the  
Dominion Post 
 said it does nothing for the short term. There is no new stimulus. There is some reprioritisation of old money and dressing up of old programmes. There is no new stimulus and these tax cuts remove part of the stimulus that was there—it was not a very good stimulus. Those unemployment lines will grow. And it does nothing for the long term. There is no plan. There is no growth strategy. Heck there is not even an Economic Development vote of much meaning left. There is no research and development to give tax cuts for. There is no Foundation for Research Science and Technology to speak of; there is no Fast Forward. There is no Skills Strategy. There is a doughnut with a gaping great hole in the middle that is New Zealanders’ future. 
The punchline of this Budget has been the decade of deficits in superannuation. It is one thing to suspend contributions for a year; it is another thing to suspend them for 10 years. Our children will have to pay $30 billion out of their taxes because this Government did not have the fortitude to buy assets when assets where cheap and maintain the consistency of that purchasing fund. Not only that but if that Government really had to take a holiday what would have been wrong with doing that for a year or two and then telling the people of New Zealand how it was going to catch up again? But no those members could not do that; they had to have a 10-year holiday. It is like people not going to the gym for a decade and then thinking they will still be fit. 
Maybe Mr Key does not mind his second great con—the con that he would personally guarantee to maintain superannuation—because he knows that he will not be the Prime Minister when those chickens come home to roost. So his personal guarantee is as useful on superannuation as it was on tax cuts: “I personally guarantee 3 years of tax cuts—this year next year the year after—oh sorry is that what Lehman Brothers going bankrupt really means? You mean there is no growth? There is a deficit? We can’t afford them after all? Sorry we put you into urgency before Christmas. Sorry I told you in the House that these could be afforded. I guess I was wrong. Gee whizz how silly of me; I’ve been saying that for 6 months. I know I was a merchant banker I know I should have known I guess I just got it wrong.” Nobody believes that. The taxi driver does not believe it ordinary New Zealanders do not believe it and they will have their returns in 2011 when we win the next general election and restore integrity in New Zealand politics. 
Hon SIMON POWER (Minister of Justice) 
: 
 That was David Cunliffe the man who cannot decide whether he is an attack dog a statesman a policy wonk a poet an orator or a leader-in-waiting. You see the strange thing about his contribution is that while sitting through the Budget and watching closely the reactions of members on the front bench of Labour I picked up three interesting facts: the majority of those members had their heads down and did not look up during the entire speech given by the Hon Phil Goff; Trevor Mallard at the conclusion of the speech clapped between six and nine times and sat down before anybody else—a long period before anybody else—and the only other person who strayed from either of those models was the Hon David Cunliffe. There was a grin on his face as broad as a picket fence. He was pleased with how badly the Hon Phil Goff did because his numbers person Moana Mackey was back there with the clipboard doing the numbers working out that she alone had the key to his popularity and tipping him on the numbers required to shift him across one seat. 
We could see in David Cunliffe’s contribution to this second reading debate how he was edging towards Phil Goff’s seat as he was speaking. He was positioning himself just at the point where he could comfortably drop into the seat knowing that Ms Mackey was quietly ticking away there in the background. She has been beavering away with Ruth Dyson and Darren Hughes to get the numbers together for David Cunliffe in order to make sure he has sufficient numbers to get him over the line. 
I came down to the Chamber for the end of the first reading thinking to myself that this second reading debate could be interesting. I came down to listen carefully to some of the contributions being made and my colleague from the Manawatu Iain Lees-Galloway gave a spirited contribution. I sat and waited the vote was taken but the only sound I heard was that of a tumbleweed. There was no vote. After all the protestations from the other side and all the clicking of pens from Moana Mackey as she did the numbers for the Hon David Cunliffe what did we get? There was not one vote opposed. 
The interesting thing about all of this is that when I came to Parliament in 1999—and this is my tenth Budget—I learnt that— 
Hon David Cunliffe 
: What is the point of this? 
Hon SIMON POWER 
: This is the point: the first lesson of Opposition is to oppose. We have come down to the Chamber for the new Government’s first Budget and for the first bill under urgency after the first Budget to find that Opposition members are for it. 
What an unusual arrangement we have here. I would not have picked Moana Mackey as David Cunliffe’s numbers person and I would not have picked that for the first bill under urgency after the Budget when we are down here ready for a spirited fight we would have a big pause the sound of tumbleweed and a vote that Labour members are for the bill. That is unbelievable. 
We heard today that fiscal conditions have changed dramatically in recent months. The Hon Bill English gave a speech this country can be proud of. He delivered a Budget this country can be proud of. What is more the first bill to come to this House after the Budget has the unanimous support of every party here. That has not happened before in my 10 years here. 
I also say that we learnt very soon after the delivery of the Budget that Standard and Poor’s has removed the negative outlook from New Zealand’s AA+ foreign currency rating. Moody’s Investors Service says that New Zealand’s triple A rating which is on a stable outlook is not immediately affected. Not only did we maintain entitlements and not only have we set the course for a difficult but achievable task ahead but the ratings agencies have backed the Budget today. For the first bill in urgency after the Budget has been delivered they are not the only ones backing this Budget; that party across the Chamber is voting for the first bill following the Budget. 
Let us just cut to the chase here: nobody in this House believes that this bill is anything but sensible necessary legislation to keep this country on course on what we know is a crucial path to ensuring productivity and improvement to this economy and our way of life. That member opposite David Cunliffe talked about the children of future generations. If it were not for this legislation and this Budget their plight would be far more difficult. 
Today we are seeing a Government prepared to make the hard decisions. They are not easy decisions to make but they have to be made to ensure that this economy has the capacity to drive growth in the way that is necessary—that is a credible and balanced approach to dealing with a major recession. Those Labour members opposite left few choices—aside from those that were unfunded—for the new Government to come in and deal with. So I say to Labour members that if they are serious about contributing to this debate on this bill and on this Budget then they should come up with some alternatives and get on with it. 
MOANA MACKEY (Labour) 
: 
 It is always nice to see Mr Power in the House dealing out his own special brand of fantasy in the way that only he can do. He said that it was amazing that Labour was supporting this first piece of Budget legislation but that is because the legislation is repealing National policy. The first piece of Budget legislation we have in this House is repealing National’s election promises. That is why Labour is supporting this bill so for National members to claim that they find it surprising that we would do that just shows that they have no idea what it means to be consistent. Labour has been consistent on this issue. We said during the election campaign that National’s tax promises were unaffordable. National members told us that we were scaremongering. When we went through urgency just before Christmas—and the legislation was rushed through with no select committee process—we said that the tax cuts could not be afforded and National said that that was scaremongering. Well less than half a year later members should look at where we are. We have a bill repealing the very tax cuts that we said were unaffordable—the very tax cuts that those members said could be afforded—yet they are calling us inconsistent for supporting this legislation. 
I have one prediction: even though Labour is supporting this legislation so that it has widespread support across the House Gerry Brownlee will still stuff up the management of the House. Even though Labour is supporting the bill Gerry Brownlee will still struggle to get it through under urgency. 
Mr Simon Power went on to talk about Standard and Poor’s and the fantastic announcement that we had today. Well of course Standard and Poor’s would say that because that agency effectively wrote this Budget. Standard and Poor’s got to see the Budget before the National caucus saw it. It got to see it before the people of New Zealand did. National stands up and acts surprised that Standard and Poor’s liked it but when they were the only people who were allowed to see it before it was delivered that should hardly be surprising. Mr Key said it was great that the Budget got such a high rating from Standard and Poor’s and that is not a bad thing of course. But so did Enron as Mr Goff pointed out in his speech. So what we have from Standard and Poor’s is a triple A rating for Enron for subprime mortgages and for Budget 2009. I can see why Mr Power would be very very excited about that. 
Here we are; it is déjà vu in this House. I remember the 1990 election. I was at high school. I went out delivering pamphlets locally. I remember the election promises made by the National Party at that time and all the things it was going to do. Basically it adopted Labour Party policy and then added a whole lot of stuff on just like it did in 2008. Then National got into power and it claimed that it never saw the recession that everyone else saw coming. National members said they never knew it was going to be as bad as this and they used that as an excuse to back down on their election promises. 
When it comes to Tory Governments the more things change the more they stay the same. Here we are again. Mr Key was either the only person in the entire world who did not see the global recession the financial crisis that was coming which would be unusual given his background or—and this is the more likely scenario—he did see it coming and knew how bad it was going to be but he made those election promises anyway because he wanted to buy the election just like National did in 1990. It has done so again in 2008. When we in Labour stood up on the campaign trail to point this out and said we would have to shelve a whole lot of election promises that we were going to make because we knew that we were not likely to be able to afford them— 
Craig Foss 
: You didn’t say that! 
MOANA MACKEY 
: I say to Mr Foss that we did. We also said that we would do a mini-Budget before Christmas. Because things were changing so quickly we needed to introduce a stimulus package. National told us that we were wrong. National chose to coast and wait until May this year as was its prerogative. It did not have to do a Budget before Christmas. Now National expects the people of New Zealand to seriously believe that it did not know that its tax cuts were unaffordable when it promised them. Labour knew that this legislation was coming. We knew that it was coming when we were forced under urgency before Christmas to pass those tax cuts—a full third of which by the way went to the top 3 percent of income earners. 
Hon Ruth Dyson 
: What? 
MOANA MACKEY 
: A full third went to the top 3 percent of income earners. How is that a stimulus for our economy? How is that a stimulus? Not only does it not help the low and middle income New Zealanders who need that extra money right now but those earners were the people who were going to go out and spend it. They were the people who were going to spend that money and stimulate our economy. But no National members had some favours to repay from the election campaign so they rejigged the tax cuts that Labour gave to low and middle income New Zealanders and gave them to the top 3 percent of income earners. Then for the rest of New Zealanders we are here now debating this legislation just like Labour said during the election campaign we would be doing and just as Labour said when National was passing its tax cuts under urgency before Christmas. National called it scaremongering but the truth has been shown here today. This legislation repeals National’s tax cuts. 
What did John Key say about this when he was desperate to get elected? He said that his very first commitment—his personal guarantee—was to strengthen the economy increase after-tax incomes and ensure that Kiwis could get ahead under their own steam by reducing personal taxes on 1 April 2009 1 April 2010 and 1 April 2011. He then went on to say that unlike Labour National would not cancel its tax cuts. So what is this from the party that stood up on the election campaign trail and said that it would not cancel tax cuts unlike Labour? Let us remember that Labour gave significant tax cuts during our term in Government. We are the only party that ever gives business tax cuts ironically. We have given tax cuts for research and development and we have given tax rebates for families through the Working for Families package. What has National done when the rubber hits the road what is it doing in its first Budget? It is cutting the tax cuts. Labour is supporting this legislation because we are consistent. We said that it should not be done when the legislation was passed before Christmas. We opposed the legislation for the tax cuts that we are now repealing. So not even 6 months later after rushing through tax cuts under urgency here we are in urgency again cancelling those tax cuts. How efficient! 
Given John Key’s position on the election trail perhaps instead of being called the Prime Minister he could now be called the “Prime Misleader”. He knew very well that we would be here today. He is a nice guy he smiles a lot and yesterday he quoted “On the Good Ship Lollipop”. As Bill English said he bounces from cloud to cloud. I think he thought his personality would pull him through this. The fact is that this is a rort; this is an absolute rort. The people of New Zealand were absolutely conned at the last election again—just like they were in 1990. It is really tragic because we should be here tonight discussing legislation that creates jobs. We should be here— 
Amy Adams 
: We are! 
MOANA MACKEY 
: Cancelling tax cuts that were lied about during the election campaign does not create jobs. I am sorry; it does not. We should be here passing a package that creates jobs and supports jobs. We should be here passing legislation that will increase wages not decrease wages. We should be here reinstating the research and development tax credits that National foolishly cancelled last year. These are tax credits that help our most innovative companies tax credits that will help our exporters and tax credits that everyone in New Zealand agreed with apart from the National Party. 
David Bennett 
: How can you afford tax cuts? Tell us how you’re going to pay for them! 
MOANA MACKEY 
: Those are the policies that will grow this economy I say to Mr Bennett. Mr Bennett went out on the campaign trail and said that his party’s policy on the Fast Forward Fund Ltd was stupid and that the Fast Forward Fund Ltd should stay and he was right in that respect. The Fast Forward Fund Ltd has been replaced by a sickly and insipid replacement. This is from the party that said that the replacement would be as good as or better than Labour’s. That was another con; another broken promise. This is a shameful shameful night for the National Party and a very sad night for New Zealand. 
KEVIN HAGUE (Green) 
: 
 My colleague Jeanette Fitzsimons spoke in the first reading debate of the Taxation (Budget Tax Measures) Bill. She indicated that the Green Party intended to support it but that we had not yet made up our minds about Part 2 of the bill. That is still the case: I rise to support the bill but to express reservations on Part 2. 
It is a pleasure to be able to support this bill in an environment where apparently everyone in the House including our colleagues from the ACT Party are now opposed to these future tax cuts and will be voting in favour of the bill. I intend to speak not to beat up the Government for changing its mind but to praise the Government for changing its mind. It takes a certain amount of maturity and bravery to indicate that one was wrong in the first place so I think the Government deserves the House’s praise for saying that it was wrong to introduce the legislation to provide for the tax cuts the Taxation (Urgent Measures and Annual Rates) Bill and that is why it is repealing them today. 
This legislation is not the only area in which the Government has shown bravery in its performance today. In the House prior to Christmas one of the lines of questioning that the Green Party had for the Minister of Finance was in relation to the number of green-collar jobs that the rolling maul of measures to deal with the recession would create. I think it is fair to say that the response we had indicated a fair amount of ridicule towards the idea of green-collar jobs. There was a sense that they did not really matter because a job was a job and a green-collar job was no better than any other kind of job. It was with a sense of pleasure that I heard the Minister of Finance in his Budget speech today refer to green jobs being created by one of the Budget measures. 
The third area the Government has today fessed up to having been wrong on prior to Christmas is the Green Homes Fund. The Green Homes Fund was a $1 billion fund over 15 years that had been created through the Green Party liaising with the then Labour Government. One of the first actions of this National Government was to scrap the Green Homes Fund. We said at the time that that was the wrong thing to do and it is with an enormous sense of pride that I am able to stand here today and acknowledge the particular contribution of the outgoing co-leader of the Green Party Jeanette Fitzsimons who has championed the issue of home insulation and energy efficiency over more than a decade in this House. She has the single greatest responsibility for having wrought the multilateral consensus that home insulation and energy efficiency are sensible and prudent measures for any New Zealand Government to take. I salute Jeanette Fitzsimons and I also thank the Government. I thank the Government for admitting that it was wrong to scrap the measure before Christmas and I thank the Government for having the courage to come back to the measure and to reinstate home insulation. 
That particular new policy has been brought about through the Green Party’s memorandum of understanding with National. I note that our two parties will be working together on further areas of energy efficiency in the future. I look forward to further gains we can make because all of this learning the Government has done over the past several months moving on from decisions made before Christmas that turned out to be wrong has the potential to be transferred to other areas. 
I have just returned from the Green New Deal listening tour on which I spoke at five public meetings over the last week about the Green Party’s Green Stimulus Package. Home insulation is certainly one of the measures we advocated. We were saying it is possible to address simultaneously the economic crisis facing this country and the environmental crisis that also besets us. If it is possible to address both crises simultaneously then why on earth would we not do so? We advocated measures not only in home insulation and energy efficiency but also in transport efficiency. It is possible to create 40 percent more jobs by investing in public transport walking and cycling initiatives and traffic demand management than by investing in motorways which is this Government’s choice. We advocated measures to protect waterways in rural areas and thereby protect New Zealand’s “clean green” “100% Pure New Zealand” brand which is at severe risk but has huge economic benefit to this country. We advocated building 6000 State houses to a high energy-efficiency standard. We also advocated a variety of community-based employment opportunities including more housing and waste minimisation schemes. 
All those schemes would have created assets and jobs for New Zealand. It is $3.3 billion worth of spending and at least 43000 green-collar jobs. The Green Party’s fervent hope is that it will be possible for us to take the learning the Government has done over these three measures—repealing the tax measures understanding the importance of green-collar jobs and the Government’s new commitment to home insulation and energy efficiency—and transfer it to some of those other areas. This is the kind of green new deal that New Zealand so desperately needs. It is a green new deal that solves our economic problems and addresses our environmental problems at the same time. The Green New Deal should include taking some effective action on climate change. I look forward to the day when it is possible for all members of this House to support effective measures on climate change just as we are all supporting the repeal of these taxation measures today. 
I also note that one of the other causes we have been championing on the Green New Deal listening tour is innovation. The answer to New Zealand’s need to increase productivity is not everyone working harder; it is actually using innovation and thinking about how to do things in different ways—changing the goalposts and changing the ways we reach them. This Government can also do some learning around innovation. Research and development tax credits have been scrapped. The Fast Forward fund has been scrapped and replaced by an anaemic copy. I spent a day this week with the Sustainable Business Network. It is a fantastic organisation that actually has the answers to improving New Zealand’s productivity and has just had its funding slashed by this Government. So there is an awful lot of potential for transfer of learning. 
I will conclude with a couple of comments about urgency. When the Government took urgency for its 2 weeks of shock and awe before Christmas the Green Party objected to urgency at that time. We said it was not necessary and would lead to bad decision-making. We were right on both counts. As Jeanette Fitzsimons said in her first reading speech today we are also right in saying that urgency is not required at this time. Urgency has been taken today because the Government is embarrassed about changing its mind. We say that the Government does not need to be embarrassed because it is doing the right thing and it should be proud of the fact that it is prepared to learn from its mistakes. In respect of Part 2 of the bill we see the exact reason why urgency is a bad idea. We have yet to hear an argument in favour of Part 2 of the bill. If the bill had been referred to a select committee then maybe we would have heard an argument in favour of Part 2 and we would be able to vote for it. We will support the bill but oppose Part 2. 
Hon Sir ROGER DOUGLAS (ACT) 
: 
 I was interested in Kevin Hague’s comments about green initiatives. The Taxation (Budget Tax Measures) Bill includes a major green initiative which the member referred to—home insulation. But the thing that distinguishes my approach from the approach of the member who believes that only the Government can do these things is that I believe that we need to think about the issue in other ways. Can we get a market mechanism to do this so that the Government does not have to spend this sort of money? The decision to spend the $323 billion is based on research that is quite suspect. I will not go into that but I will make one suggestion of what we might have done to achieve the same thing. For example we could have made it compulsory to state on a land information memorandum whether a home was insulated. Currently a land information memorandum report does not have to state whether a house bears insulation. If it is stated on the report then people who are about to buy a house would haggle on the price and there would be a done deal. Similarly if a rental property is advertised as being uninsulated and the rent drops landlords then receive an incentive to insulate it. Sometimes one can do these things in ways that do not involve a huge Government expenditure. But that is not really what I stood up to talk about. 
Let us understand what this bill does why the Government believes that it is necessary and what are the consequences of the bill along with other measures that are being taken by both Labour and National. This bill defers—if we believe that—or gets rid of the tax cuts for 2010 and 2011. Those tax cuts would have reduced Government revenue by somewhere between $900 million and $1000 million in a full year. National had a choice. Let us understand that. National had a choice of whether to cut expenditure by $1000 million to not introduce new initiatives of $1000 million and have the tax cuts or to refuse to cut expenditure and refuse to defer new expenditure initiatives. National decided to get rid of the tax reductions breaking—as Labour members have pointed out—its election promise. I think that choice has the support of virtually everyone in this House. If the expenditure reduction is not made then the tax reduction cannot happen. 
My personal preference would have been to reduce expenditure and as a result of that have the tax cuts. I say this because we are in a recession and this country will have to make an adjustment. This House is deciding who will feel the pain. People will feel the pain of adjustment and this House is deciding that the people in the private sector will feel the pain. The farmers and their workers that National represents will feel the pain. The unionists on the Labour side and their members in the private sector will lose their jobs and feel the pain. There is a choice and there is no free lunch. Let us understand that. For example an across-the-board 2 percent cut in Government expenditure—and it is a blunt instrument—would have enabled us to have these tax cuts. 
Let us look at what has happened. If we go to the core Crown expense tables on page 176 of the Budget Economic and Fiscal Update we see that from 2008 to 2010 core Crown expenses as a percentage of GDP have increased by 5.5 percent. We need to understand what that means. That 5.5 percent increase in core Crown expenditure is equivalent to $10 billion. So in this bill and in other ways we are taking $10 billion out of the private sector and giving it to the public sector. That period includes 1 year of Labour and 1 year of National Government. We are making a deliberate decision in this House that all the costs of adjustment all the pain and all the unemployment will be out there in the private sector. When there are jobs lost in members’ constituencies members should remember that they decided that that is what they wanted and what they voted for. 
We really are saying that the public sector is immune to a downturn; we will just lift the percentage of expenditure to GDP to make it immune. Worse than that we are saying that the Government will expand it during a downturn. That means that ordinary people in the private sector will have to make the adjustment. They will have to absorb the shock. The collective decrease in GDP over 2 years will be around 5 percent but if the public sector does not shrink then it means the private sector—60 percent of our economy—is forced to bear the full effects of that reduction in GDP. In other words the private sector has to contract or reduce by $10 billion. That is what we are deciding. There is no free lunch. There is opportunity cost. We can kid ourselves but that is the reality. We have decided that we will put a lot of people in the private sector out of work. Unless that $10 billion is spent as effectively in the public sector as it would be in the private sector we will lose by a lot more as well. When the local restaurant closes down when the local petrol station closes down or when 100 people are laid off from a plant remember that it was a result of these sorts of decisions we made in this House. Per week $200 million will be taken out of spending in the private sector and unemployment is likely to increase as well. 
The only way that we can get through this and for this country to prosper is to start to increase productivity. If we as a nation continue to throw money at health as we did under Labour and see the productivity of doctors continue to decline by 15 percent and that of nurses by 11 percent we are going nowhere. When we look at the health sector we see that the only part of that sector where productivity increased was where the work was contracted out—for cleaning staff and orderlies. We had better learn. 
Hon Ruth Dyson 
: Where they pay low wages. 
Hon Sir ROGER DOUGLAS 
: It is not about wages. 
CRAIG FOSS (National—Tukituki) 
: 
 It is a shame that the previous Minister of Finance the Hon Dr Michael Cullen was not here during the Budget speech to listen and read—second-hand of course—the Budget that had to be put in place to repair the damage from the last 9 years and in particular from the last 3 years of the previous Government. I will point to some of the numbers in a moment but I am sure he has picked it up on the radio wherever he might be. The last 3 years were something of a travesty for the New Zealand economy and we are paying the price right now. I commend the new Minister of Finance for making the hard call. 
I again note that so far under this National Government over $1 billion has been put back into the pockets of over 1.5 million New Zealanders. They are enjoying over $1 billion due to tax cuts that were marked in October last year and came into effect on 1 April this year. That is in addition to the $500 million in the pockets of small businesses around the country—the engine room of the economy—given by the Taxation (Business Tax Measures) Bill which was passed in February this year. 
Part 1 of the Taxation (Budget Tax Measures) Bill is about delaying changes in tax cuts that were previously flagged. There are no secrets about that; we have been quite upfront. The key is why it is necessary that this happen. Part of the consideration which I alluded to is the last 3 years of the last Labour Government. One reason why the accounts of the New Zealand Government that we inherited are in such an appalling state—contrary to the opinion of the Hon Phil Goff who thought we inherited a great set of accounts; perhaps he was looking at them upside down through the wrong end of a telescope or something—is that in the last 3 years there was an ongoing compounding 50 percent structural increase in spending. OK some might like that—the Keynesians over there might like that—but the problem with it was there was only a 25-odd percent average structural increase in revenue. Hopefully someone sees the problem there. When expenses go up 50 percent and revenue goes up only 25 percent—half of the increase in expenses—there is a major problem. It is a compounding problem. 
The impact of the shambles of economic management we had in the last 3 years is nowhere better demonstrated than on page 1 of the Minister’s Executive Summary at the front of the Budget. The graph shows “Gross debt with and without Budget 2009 policy changes”. Quite simply that could also read “Gross debt track with a National Government or without a National Government”. This graph shows us that without any changes gross debt was going to peak at something like 70 percent of GDP. However with the changes the Minister of Finance has made the courage and leadership he has shown and the Budget that we have before us tonight the gross debt will peak at just over 40 percent then track down to an average of about 37 or 36.5 percent. The reason that graph is so important is that it represents New Zealand’s future. If the gap were not addressed and the blue line—the line showing gross debt without the Budget 2009 policy changes—kept going up that would mean our youngest leaving for brighter shores and a further slide down the OECD rankings. 
I heard previous speakers from the Opposition talking about what a wonderful thing it was that they had delivered on their commitments or something like that. I seem to recall that one of Labour’s commitments was to have New Zealand in the top half of the OECD within 10 years. I recall that that promise was made in 2001 at the Knowledge Wave conference; I have not heard about that promise in a while. We are almost in 2011 and I ask members whether we heard anything from Mr Goff or Mr Cunliffe about getting New Zealand up to the top half of the OECD. In fact I think we were No. 22 and sliding when Labour left office. 
Why is this legislation necessary? International conditions that have been unheard of and unseen since the Depression years of the 1930s are forcing some very hard decisions on this Government but it is prepared to make them. This Government is prepared to do what is right for New Zealand for New Zealand’s future for our children and for our great country. 
I note that Opposition speakers—and I will come back to this point in a minute—seemed to imply that they knew everything was coming and they knew that global economic conditions were going to be where they are today. Labour knew that the subprime mortgage situation was going to go all the way and wash on to these shores. They knew all these things! Actually as I noted in a first reading speech Dr Cullen the previous finance Minister is on record as denying that. It is very interesting. I do not quite know the angle that the Opposition is trying to go for. It keeps on alluding to an IMF report from midway through last year. As I said I recall that report and it begs the question: given that Labour knew in July last year when it was in Government the conditions that were going to be thrust upon us now what did it do about it? In July last year according to Mr Cosgrove and Dr Cullen the Labour Government knew. They are accusing Mr Key of not doing enough about it in Opposition but Labour was in Government in July last year—with all the knowledge of being in Government with all the forecasts and with the information—and it did nothing. The accusation that members opposite have been making is somewhat misleading and very very generous with the truth. It is perhaps revisionist of their final months in office. 
Mr Cunliffe keeps talking about the Superannuation Fund and what a great time it is to buy assets. If he knows that and if he knew the market was going down why did Mr Cunliffe not sell assets when he was in Government when the assets were priced higher? Why did the previous Government buy so many assets when they were so expensive? Why did it not sell them? Mr Cunliffe knew that we were going have these incredible conditions that have not been seen since the 1930s—according to his speech it was obvious! Well the central bankers did not know. Heads wiser than many in this room did not know. Treasuries around the world did not know. President Obama did not know. The Bank of England did not know. The General Motors Corporation did not know. Prime Minister Brown in the UK did not know. But the members opposite—Mr Cosgrove Mr Cunliffe and the Hon Phil Goff—did. They somehow knew! 
Since then about a trillion dollars worth of assets across the globe have been wiped out. The Labour members say they knew but they cannot have it both ways. If they knew about the recession back then what did they do about it? They did nothing. They alluded to a mini-Budget but they were not going to tell us about it. I recall that when Dr Cullen was asked about it he was a bit smug. It was more of a one-off comment of his I think. Labour did nothing. I ask Labour to show us the information and to show us what it was going to do because if those members say that they were not going to tell us then they went to the electorate under some kind of untruth. The Labour Government was going to have a mini-Budget because it knew with its lovely IMF report what the economic conditions were and the fact that things were going to deteriorate somewhat badly. Yet back then Labour did not do anything even though it had a mini-Budget that was going to solve it all but which it is not going to tell us anything about. 
I think we need to hear a bit more from the members opposite. I note the sagacity of these people; I keep asking them what the Lotto numbers will be next week given that they know everything else. I will give members a quote because we will be hearing about the Superannuation Fund: superannuation entitlements are exactly the same now—today and tomorrow—as they were yesterday. They are exactly the same. The entitlements are “66 at 65”. The entitlements were “65 at 65” but with the agreement of the Rt Hon Winston Peters they went up to 66 percent. National has taken those rates up. I recall an offhand comment that I believe Dr Cullen made about the Superannuation Fund. His words were along the lines of: “Well we’re going to have these surpluses. I’ve got to stash away $2 billion a year because I can’t let those nutters get hold of them.” I bet he was talking about his colleagues. To be fair that was a somewhat off-the-cuff comment from Dr Cullen. 
I will round up by talking about Part 2 of the bill which makes changes to the mortgage diversion facility. I acknowledge the Hon Mr Dunne for his confession if you like that it was a policy brought in by United Future. I recall one of his party’s members speaking at the time about the nuttiness of the Government trying to have the KiwiSaver savings scheme at the same time as it was trying to encourage debt. Lo and behold the policy has not worked. Only about 600 people out of over a million have taken it up. I look forward to working with this bill as it goes through the House. Thank you Mr Deputy Speaker. 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I am very pleased to follow the thrusting and hands-on chair of the Finance and Expenditure Committee Craig Foss who is marked for better things in this Government. Yet— 
Chris Hipkins 
: No he’s not. 
BRENDON BURNS 
: —supposedly—he has the temerity to say to the House that the previous Labour Government in its Budget of last year should have known what was coming. He is part of a Government that introduced the tax measures that this Taxation (Budget Tax Measures) Bill is repealing tonight and he stood up to defend that. 
There were to be three rounds of tax cuts and none of them were affordable or fair. Here we are on a Budget night under urgency. It is not unusual to have urgency on Budget night but normally it has something to do with a compelling initiative or change that introduces important and relevant measures. That is not the case tonight from this Government and this Minister of Finance. After the “doughnut” Budget—all hole and missed opportunities with just a bit of recycled dough—the Government introduces this bill. It is not a bill that truly requires urgency. Its main provision does not take effect for another 10 months and the rest 1 year after that. I say to members that yes this Labour Opposition supports the bill. We acknowledge that we are in a recession. We knew that last September-October when we as a party revised our pledges to the electorate in the face of what we knew was a gathering storm. But the National Party the then Leader of the Opposition and the then Opposition spokesperson on finance did not. They maintained the facade as the Crosby/Textor manual requires and told people that they could have their cake and eat it too. 
That facade told people that they could have most of what the Labour Government had given to them including Working for Families secure superannuation—although we know that that is now under some question—interest-free student loans and the whole package and that they could also have three rounds of tax cuts as well. That facade was maintained throughout September throughout October throughout the election campaign and throughout the introduction in this House of those tax cuts in legislation which was debated under urgency last December. We knew it was dubious we knew the fundamentals were simply not there to support it and now that is being acknowledged with this bill tonight. 
Those promises were made so the Government had to construct an escape route. It had to soften up the voters and tell them that the economic conditions known to most people by the end of last year were such that the second and third round of tax cuts could not now be afforded. Yet the Government still proceeded with round one of the tax cuts and it introduced those tax cuts in a way that gave a third of the money to just 3 percent of taxpayers. Those tax cuts ignored people who were on below the minimum wage. The Government refused to acknowledge that the first fundamental imperative of a recession is the need to put the money where it is most needed and to put it in the direction of people on the average wage or below who will spend every dollar they get—people who will not save it or use it to go on overseas holidays or to pay debt. That is why Labour accepts the need for this bill and why we support it. 
We knew that those tax cuts were a false premise and a false promise. We knew that last September last October and last December. The Minister of Finance knew that in December with Treasury’s financial update. He knew it in February when he spoke to the departmental chief executives and said there would be no new money. This bill now before the House is no surprise to anyone. It is part of a “cut and hope” Budget a Budget that took a line from Dickens’  
A Tale of Two Cities 
. It was described as a “worst of times” Budget. It could have also been to quote Dickens a “best of times” Budget that projected to the future and provided some investment for training. It could have done that but there is barely a word about training and investment in this Budget. 
It is also a Budget that had only one reference to the environment. That was in the context of water management and the need to allow for quick and efficient decisions for productive investment. I acknowledge the funding for insulation in the Budget an issue I have long championed; it has not been an exclusive issue for the Greens. We want to ensure as we look through the detail of the announcement on insulation that the legislation will extend to rented properties where many of the poor housing stock exists. One suspects that the Government’s motivation in respect of this issue is that this initiative will deliver quick results and that is great for people who live in cold uninsulated homes. There are 900000 homes across New Zealand that either do not have proper insulation or lack any insulation at all. But in terms of where the Government is coming from one suspects that it is part of that equation that asks whether there will be a quick return in the electoral cycle. We have seen that in the area of health. We have seen that with money spent on hospitals rather than on primary or public health initiatives which do not deliver the quick returns. We have seen it in transport where roading infrastructure gets funded but not rail or cycling. So much of the Budget is built around getting those sorts of early results. 
I will comment briefly on the Budget’s supposed focus on productivity and export-led growth which is an issue that some members opposite have touched on. I note comments tonight from the Manufacturers and Exporters Association saying that this Budget contains little in terms of changes to support any real economic development. It says that although some attempt at— 
Paul Quinn 
: What did Business New Zealand say? 
BRENDON BURNS 
: I say to Mr Quinn that the Manufacturers and Exporters Association represents the productive sector of this economy. The association said that incentives to invest in research and development of productive assets such as equipment and machinery are lacking. 
The research and development tax credit was cancelled to fund tax cuts elsewhere. Here we are with a bill in front of us that wipes the second and third tranche of tax cuts in part funded by the abolition of the 15 percent tax credit for research and development. What a travesty! This bill takes away the incentive for productive New Zealand for manufacturers and exporters to do well and grow the economy. To give it away in tax cuts of which one-third was taken by the top 3 percent of income earners is trickle-down economics if ever we saw it. It is an absolute travesty. Here we are axing rounds two and three. It is no real surprise. Most hard-working New Zealanders will be very disappointed by this Budget. They know they have been diddled. They know that this Budget should have focused on jobs but it did not. It is not a Budget that delivers for them. There is no mention of investment in training or of creating jobs. 
This is a Budget that had its focus on having an eye on the 2011 election. Those members opposite should be shamefaced. Two weeks ago we were in this House debating other legislation and members opposite were crying down at every opportunity the use of urgency to defend the rights of Aucklanders to have a say in the future of their city. Members opposite cried down that use of urgency but at least it was appropriate. It had a strong connection to a relevant issue. Here we are tonight under urgency debating a bill that takes effect in 10 months’ time and then 1 year on from that. It is not a matter that truly deserves urgency. We should be debating real initiatives to help New Zealanders to create jobs and to take the nation forward and not simply be debating a tax measure that was a failure in its inception—which should have been known and was known certainly by members opposite. It was pledged to this nation and now the National Government is backtracking using urgency to do so. Shame on it! 
DAVID BENNETT (National—Hamilton East) 
: 
 Today is a fine day for the leader of the National Government John Key; it is a fine day for the Minister of Finance Bill English; and it is a fine day for the National Party. It is a fine day for our colleagues in the Maori Party United Future the ACT Party and the Green Party and it is a fine day for New Zealanders. They have got a Government that has listened to what is needed and has delivered what is required. This Budget will go down in history as one of the most successful Budgets because if I ask members to show me anyone out there who is against this Budget there is no one—there is no one. All the emails we have been getting all afternoon have said that this is a great Budget a perfect Budget and the best Budget that can be made in these situations. That is what political commentators have been saying that is what interested parties have been saying that is what even political parties have been saying and that is what the people of New Zealand have been saying. 
New Zealanders are out there struggling and they know how difficult the times are. They know what it is to have the possibility of losing their job on Monday. They know what it means to have a high mortgage on which they do not want to see interest rates go up on Monday. They know what it is to struggle out there so they have wanted a Government that has commitment that has decency and that has made the right decisions. And they have got it—they have got it today. They have a Government that is showing leadership direction and smart ability to deal with the situation. That is what the National Government has delivered and that is what we will deliver for many years to come in this Parliament. The voters out there understand the dilemma of this world this economy and this country. They have wanted one thing: they have wanted a steady ship. In these uncertain times they have wanted certainty and that is what they have got. They have got leadership that has delivered a certain future for New Zealanders. 
And what did people have within an hour of that leadership being shown? They had international commentators people who determine the cost of credit for this country saying that it was a great Budget and one that would turn us round and put us on the right path. That is the support we had from the international community within an hour of this Budget’s announcement. It took only an hour and we delivered what the international community had not seen. 
The other parties that are supporting us today have had big paybacks in the areas where they were looking for them. The Maori Party has done exceptionally well in this Budget and the Green Party has done well in this Budget. Let us look at the Opposition. Labour members have sat in Government for 9 years but what did they give the Green Party or the Maori Party? What did they give those small parties in 9 years—9 long hard years? They gave them what? 
Hon Members 
: Nothing! 
DAVID BENNETT 
: They gave them nothing. The National Government has given them something. It has given them pride it has given them respect and it has given them a role in this Parliament. That is what we have given to New Zealanders today. We have given them a role pride respect direction and leadership. That leadership has been given the big tick and that tick will go down in history as the first one for many successful Budgets for this country and this Government. 
SU’A WILLIAM SIO (Labour—Mangere) 
: 
 Thank you for the opportunity to take a call on the Taxation (Budget Tax Measures) Bill. Mr Bennett said that this is a fine day for National and for the Government. I say it should have been a fine day but it was not. It was a disappointing day. Many of the people who have been listening to this debate are now looking towards a long dark and cold winter. This Budget was about broken promises about no jobs whatsoever and about continuing unemployment for many hard-working communities throughout New Zealand. This Budget means that a lot of ordinary families will be reduced to receiving lower incomes for the next 5 years. That is what has been forecast in the Budget by this Government. 
Earlier I listened to the Hon Roger Douglas conveying his philosophy to this House. I felt that it was a cruel philosophy. It is a philosophy based on the law of the jungle whereby the strong survive. That is not the kind of New Zealand that I am prepared to create. At least one thing is that I can appreciate that the Hon Roger Douglas was making things clear for the rest of the nation about that kind of philosophy. It is not the kind of philosophy that I support but at least he has been up front about it. But I cannot say that about the National Government and Mr Key. 
The bill that we are debating repeals the National Government’s tax cut promises. This Government made promises at the beginning of its becoming Government and rammed through legislation to give tax cuts to 3 percent of the population. National members campaigned hard that a National Government would give tax cuts and now we are having to debate this matter again under urgency to repeal it. Yes the Labour Party is supporting the bill because tax cuts was the wrong thing to promise in the first place and it continues to be wrong. 
Earlier today we heard from the Prime Minister. He cracked a few jokes at the expense of the Labour Party and all the National MPs laughed and took great joy and relish in making fun of us. As usual the public would have been watching that and would have noted that Mr Key uses jokes and laughter to hide the truth. What is the truth? I will quote it. John Key in his speech at the National Party election campaign launch on 12 October 2008 stated: “In laying out our economic plan National has been very clear about our priorities. We all know what will be the first to go under Labour whether they want to admit it or not and that is the rest of their tax-cut package. Well unlike Labour I’m going to be straight-up about my priorities. That’s why I’m sending a card to all of you. It’s called My Key commitments to You and it will be delivered to every household in New Zealand over the next 10 days. In it are 11 commitments that I make to you.” 
The very first commitment on “My key commitments to you” reads: “Strengthen the economy increase after-tax incomes and ensure Kiwis can get ahead under their own steam by reducing personal taxes on 1 April 2009 1 April 2010 and 1 April 2011.” Mr Key then stated “unlike Labour we won’t cancel our tax cuts.” What does this bill do? It proposes that the final two tranches of personal tax cuts in the 2010-11 and 2011-12 income years be repealed. That is what this bill is about. The tax cuts are being repealed. 
This is a Budget of broken promises. Mr Key promised the nation that he would give tax cuts he was laughing about it making fun of it and now we are having to repeal them in urgency. Mr Key and the National Party should never have promised to have tax cuts. They knew it was wrong. They were warned. The Labour Party protested about them. The Government should never have implemented the tax cuts particularly when they favoured higher-income earners. What about the ordinary New Zealanders who not only are working day and night to make their families better off and trying to support their families but also are moving the engine of New Zealand ahead? 
When the tax cuts were introduced they created greed and individualism amongst many people who probably would not have ever considered tax cuts. It was probably the wrong thing to do because in these times and in the circumstances that we find ourselves in we should be working together. We should be helping the weak those who need help the most. But the Government did not give tax cuts to that group of people. 
John Key in my view owes New Zealanders across this nation an apology for the Government’s turn-round. We know because before the election he made those promises and to now renege on them is wrong. It should never have happened. I call on Mr Key to be up front and go out to the public and apologise. He should not smile about it. He should be serious. These are serious times and people want real solutions that will help them to overcome the recession that we are currently in. 
It is a shame that the bill makes a liar of the Prime Minister and voids his personal signed guarantee to the people of New Zealand. 
Mr DEPUTY SPEAKER 
: The member cannot use that term. He should withdraw that comment and carry on. 
SU’A WILLIAM SIO 
: I withdraw that comment. The bill shows up the Prime Minister as somebody who did not tell the truth. He gave a personal guarantee to the people of New Zealand that they would receive personal tax cuts for each of the next 3 years. People would have made plans based on that statement and now what happens? What will happen to those plans? 
The only way that tax cuts were ever going to provide an economic stimulus was if the people receiving the tax cuts spent them and the only way the tax cuts were ever going to provide any meaningful relief to New Zealanders in an economic downturn was if they were directed at those who need them the most. National’s tax cut promise was completely misguided on both of those counts. Either John Key was oblivious to the catastrophic recession when he promised tax cuts or he did know and chose to continue anyway. 
That is why I say that the Prime Minister Mr Key was not telling the truth. There are harsher words that ought to be used but I know that you Mr Deputy Speaker would pull me up again and ask that I withdraw them. The Prime Minister did not tell the truth. He knew that what he was doing would not eventuate. He went ahead anyway rushed things through this Parliament in the beginning and now we are having to rush through a bill to repeal the tax cuts. He is using I believe the recession to be able to repeal them. 
Listen to what Colin Espiner said about the Budget in his blog today. He stated “there’s no real vision or big new ideas.” The Government has already raided KiwiSaver and now it has stopped contributions to the New Zealand Superannuation Fund. How will the more than $20 million lost to the Superannuation Fund be paid back sometime in the future? Mr Colin Espiner asked what we got for this recklessness. We got nothing; not even new training not even new investment to ensure that this economy will grow. 
A lot of fancy words are being used when I listen to this debate but they are all hollow words. There has been no substance. I know that families out there who are listening to this debate will see the hollowness of this Government’s words. 
AMY ADAMS (National—Selwyn) 
: 
 Today I am so proud to be a member of this National Government. I am so proud to be a member of this Government because today we have seen the Minister of Finance deliver a Budget that is solid that is sensible that is prudent that is responsible and that is what this country needs right now. This Budget is putting us on the road to recovery. It is the first Budget that will take New Zealand through these hard times and it will bring us out of them the stronger for it. 
This is the worst recession in more than 70 years. Business as usual is not an option. We cannot carry on as though the recession does not exist. Today the Hon Bill English had some very difficult choices to make. He could have followed along in the mode of the previous Labour Government; he could have followed Michael Cullen’s lead and carried on the massive explosion in Crown expenditure and not worried about burdening every single New Zealander with $45000 worth of debt. The Labour Party would have every man woman and child carry $45000 in debt not to mention another 1.5 percent being added on to the interest rate on every mortgage of every family in this country. We could have carried on in that way as Labour would have done but we were not prepared to see debt blow out to 70 percent of GDP. That is not acceptable to us. National was not going to sit back and cripple future generations so that it could buy its way back on to the Treasury benches. 
Bill English has not only stopped that path to destruction; he has done it while protecting the entitlements of all New Zealanders. He has protected superannuation he has protected Working for Families he has protected interest-free student loans and he has not cut any entitlements. He has protected New Zealanders. But in order to do that hard decisions had to be made. We cannot achieve the wonderful outcomes that our Minister of Finance has achieved without making some choices. 
Today the Labour Party has demonstrated why it is incapable of managing an economy in times like this. It does not understand the seriousness of the debt situation. Labour members clearly have no grasp of the impact of credit downgrades. They do not understand that without our protecting that position this country would be spending more on debt servicing than it does on health. A Labour Government would have spent more on debt servicing than it did on health. Labour members want us to know that they saw the recession coming. I find that hard to believe when they could not even see the billion-dollar hole in the accident compensation scheme books. Labour members are financially illiterate. They want us to borrow another $2 billion. They want us to rack up an extra $2 billion in debt every year to pay 5 percent interest on that money and to put it into the Superannuation Fund which has lost 4 percent a month over the last 10 months. In the time that the Superannuation Fund has been going it has achieved half of what one could have got from putting the money in Government bonds. But Labour says that we should not let that stop us that we should rack up another $2 million of debt on the credit card and chuck it into a poor-performing investment. That is great business! 
It is no wonder the people said that they do not want that crowd leading them through the recession and that they want John Key and Bill English.” Today they have delivered a Budget that I am proud of and that New Zealand needs. I congratulate them on it. 
Bill read a second time. 
In Committee 
Part 1 Personal tax cuts and independent earner tax credits: repeal of later years’ changes 
CHRIS HIPKINS (Labour—Rimutaka) 
: 
 It was a slightly surreal feeling to sit through the first and second readings of the Taxation (Budget Tax Measures) Bill under urgency and hear National members rant and rave about how important it is to cancel the tax cuts that they passed under urgency just 5 months ago. How things have changed in 5 months! I thought it might be quite good fun to go back to the  
Hansard 
 of 9 December 2008 and hear what National members had to say about why tax cuts were so vitally important. I go back to the speech made by David Bennett who spoke not long before me tonight. I have a very good quotation from him from 9 December 2008 and I think it is quite a reliable one: “One cannot say yes to tax cuts before an election and then say no to them after an election”. I have here the National Party’s pledge card from before the election in which it promises tax cuts every year—in 2009 2010 and 2011—yet here we are sitting under urgency and National is taking those tax cuts away only 5 months after dishing them out. 
There is even better stuff from David Bennett. He said: “The National Government with its coalition partners will deliver a tax cut programme. We will not just talk about it; we will not just put legislation out that is about some time in the future. We will actually deliver that tax cut programme and that is what we as a Government are about.” In December 2008 that is what National was all about. It was the core part of what National came here to do but 5 months later it is already backing down and going back on its key election promises. 
John Hayes talked about it not being a 1-year programme. Here is the really honest thing he said: “Mr English has been extremely ingenious in constructing this tax cut package.” It turns out he was a lot more ingenious than National members realised at the time because he never intended to go through with it; he was going to abolish the tax cuts anyway. John Hayes talked about the fact that it would be a pattern every year. Yet here we are not even a year in we are only 5 months in and National members are doing away with tax cuts already. 
Bill English talked about his tax cuts being prudent and responsible but he said they would give New Zealanders the kind of hand-up they need when they face the most challenging economic outlook in a generation. The economic outlook has become more and more challenging yet somehow we now do not need the tax cuts any more so they will be taken away. Clearly the Minister of Finance Bill English can have no credibility when it comes to any promises that National made prior to the election. We know that. 
Chris Tremain is sitting there. He talked about building trust. He said the National Government was delivering on its promises and it would continue to build that trust. I ask Mr Tremain to stand up and say how cancelling the tax cuts only 5 months after the Government legislated for them is building trust with New Zealanders. National members have not lived up to the trust they were given by New Zealanders on 8 November 2008. Helen Clark and Michael Cullen were dead right when they said that the National Party could not be trusted to deliver on its promises. Five months later John Key and Bill English are already backing down on the core centrepiece of their entire election manifesto. 
I notice that National members have suddenly gone very quiet. They are very embarrassed about being hauled up on their pre-election rhetoric. Every New Zealander will now know that the pledge card that National put out before the election is not worth the paper it was written on because there are 11 promises on it and the big red crosses here show that three of them have already been broken. We are not surprised about that because this is the party that promises whatever it needs to in order to get elected then does whatever it wants to once it gets into Government. If we look back to 1990 and the superannuation surcharge we remember it was going to go “no ifs no buts no maybes” but National increased it. At the last election National promised that it would deliver tax cuts every single year. National members said that unlike Michael Cullen’s tax cuts they would actually deliver them. It took them 5 months to break that promise. 
I go back to the book  
The Hollow Men 
 and to the advice those men received from a former Minister of Finance the Hon Ruth Richardson who said one must say whatever is required to get elected because in her own words “being in Government is everything.” Members can then do whatever they like to the people who voted to put them there and they do not have to worry about keeping any of their promises. Ruth Richardson said that. 
Today has been Crosby/Textor’s day has it not? Crosby/Textor practically could have written the Budget speech today—it probably did write the Budget speech today. It just goes to show that this Government has no principles. It had no intention of keeping its pre-election promises; it was always going to do whatever it felt like once it got into Government. 
National’s tax cuts were never affordable and Labour said that prior to the election. Yet John Key and Bill English ran up and down the country saying we were scaremongering when we said tax cuts were not affordable. They were going around the country telling everyone that they could have all the things they had under Labour but with tax cuts as the cherry on top. They said that everything would go on hunky-dory despite the fact that we were already in recession prior to the election. The world financial crisis had already started prior to the election. In fact let us go back and read the  
Hansard 
—I have it here in front of me. We can see from the  
Hansard 
 that the National Government used the world financial crisis as the justification for its tax cuts when it passed them on 8 December last year only 5 months ago. Yet suddenly here we are back under urgency repealing them again. National members’ arguments have gone completely full circle. They are now saying the world financial crisis is the reason for not delivering tax cuts. Five months ago it was the reason for delivering tax cuts and 5 months later it is the reason for taking the tax cuts away again. 
This Government has absolutely no credibility when it comes to keeping its promises. Effectively the last general election can be summed up in three words: the Key con. That is what it was; that is what all of the National Party’s manifesto promises amounted to. They were nothing more than a con that the National Party had absolutely no intention of sticking to. It was an absolute fraud on the New Zealand people. The National Party had no intention of keeping any of its promises and the tax cut situation absolutely sums that up. New Zealanders were promised tax cuts each year. As Darren Hughes said the pledge card with John Key’s name on the front and his signature underlining his commitments to the people went to every letterbox in the country. The pledge card said: “If National is elected to lead the next Government I personally guarantee that we will:”—pledge No. 1—“Strengthen the economy increase after-tax incomes and ensure Kiwis can get ahead under their own steam by reducing personal taxes on 1 April 2009 1 April 2010 and 1 April 2011.” Yet the tax cuts are gone; National has delivered on only one-third of that promise and the rest of it is gone. It just goes to show that none of the National Party’s pledges are worth the paper they are written on. 
The Hollow Men 
 theory prevailed during the election campaign with National members promising whatever they liked. I am reminded of one of the emails I read about in  
The Hollow Men 
. It was from one of Don Brash’s advisers and it talked about splashing the cash around before the election. It said that he had to throw some cash around to get people to vote for him. He would not need to worry about keeping promises after the election because by then he would be firmly ensconced on the Treasury benches. He would be able to do whatever he liked to Kiwis and they would not be able to do anything about it. It has taken only 5 months and boy oh boy are those members looking smug and arrogant already! It has been done in record short time. They are laughing about the fact that they are taking away the centrepiece of their pre-election manifesto—the centrepiece of their promises to New Zealanders—which was to give tax cuts every year under a National Government. John Key signed his name to that and said he personally guaranteed it. 
Hon Lianne Dalziel 
: I think Bill English told him to do that. 
CHRIS HIPKINS 
: Oh Bill English probably told him to do that because he is the one who is pulling all of the strings here. Maybe Steven Joyce is pulling a few of the strings as well. It is a battle royal between Steven Joyce and Bill English as to who should be the Minister of Finance. They do not want John Key to have any credibility. 
HEKIA PARATA (National) 
: 
 Tena koe e te Heamana. Huri noa i te Whare tena tatou katoa. I rise to support the Taxation (Budget Tax Measures) Bill. I do so along with my colleague the member for Selwyn who spoke so fluidly and flawlessly about the pride we each have in supporting this Government. The Opposition has spent the last couple of hours haranguing this Government about all the values and principles it lacks itself. 
We recognise that these are difficult times. We have all been made aware that this is the most difficult time in two or possibly three generations. So it takes courage leadership fortitude and realism to know that the mix of requirements at this time has to be different in order to meet what confronts us now. We do not blindly fling ourselves at the wall of ideology as our opponents do. We take the measure of what is required for this country and we are prepared to take the hard decisions. That is why so many New Zealanders have put their faith in us and we honour that faith. 
Tonight we are debating this bill because it is necessary in the mix of ingredients required to get this country back on the road to recovery to make savings. We must not burden all New Zealanders today and into the future with debt that will cripple them. We are realistic about what is possible. We understand that it is not possible to deliver the tax measures for 2010—this is where Labour members will start singing—and 2011 because they will add too much to the burden of debt. Instead we are able to save New Zealanders $900 million in the out-years of 2011 and 2012. 
The Government remains committed to lowering personal income taxes. It has deferred not cancelled the second and third tranches of tax cuts that were due to take effect in 2010 and 2011 respectively. It has been a difficult decision but making difficult decisions is what good Governments are put in charge to do. We make the hard calls. This Government is prepared to do that and all we get are vituperative attacks from scaremongering opponents at a time when the citizens of this country are entitled to expect good leadership from the top. They are certainly getting good leadership from this side of the Committee and it would be appropriate at this time for those opposite to question the tactics they are employing at a time of deep concern and challenge for many New Zealanders around this country. 
It would be a failure of leadership not to recognise when change is required. It would be a failure of leadership not to be prepared to take the direction that circumstances call for. Those on this side of the Committee are not prepared to fail that leadership challenge. We go forward with New Zealand’s support recognising that we have to soften the hard edges of this recession and that we have to make decisions—for the short medium and long term—to ensure that this country is in the best possible position to emerge into a recovery. 
That is what New Zealanders are looking for from this Government and that is what the Budget today has delivered to each and every one of them. It is a Budget that is committed to recognising the need for sustainable long-term recovery of this country. We care about that recovery. The Government is not made up of expedient cynical and scaremongering people— 
Hon Members 
: Yes you are. 
HEKIA PARATA 
: No members opposite misunderstand the English language if they do not understand that making courageous leadership decisions about what is and is not possible is a test of leadership that this Government has fronted up to. On the basis of commentary including our rating we are passing that leadership test—and we are passing that test with the support of New Zealanders. Members opposite can wave their pieces of paper around and feel good as they do it but we are not here to see comedy acts; we are here to help New Zealanders face the challenges that confront them and to help lead the way to the recovery that this country deserves. 
The mix of ingredients in this Budget consists of the kinds of things New Zealanders want to see held up to them. The Budget is a mix of very sensible measures and of what is possible. We need to balance both the spending and the burden of debt that this country is encountering and as part of that we are prepared to make the very difficult decision to defer tax cuts. I am proud to be a part of this Government. 
Hon CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 I have to say that the Taxation (Budget Tax Measures) Bill is based on one premise: a lie. It is an absolute lie. In fact we could rename this bill the “Taxation (Lie) Bill”. It is based on a deception—and it does not matter how high Mrs Parata raises her voice. 
She said this Government is not expedient. [ 
Interruption 
] I know that the Cheshire cat sitting in the Government’s front row might want to grin about her Budget bid. Members opposite say this Government is not expedient. An International Monetary Fund report that came out on 8 October said that the world economy was entering a major downturn in the face of “the most dangerous shock” to rich-country financial markets since the 1930s. It came out at the same time as John Key came out with what Brian Rudman called a “catalogue of tax-cut bribes”; on 8 October John Key said he was unveiling a tax package that was “responsible” and “appropriate for the current conditions”. That was how he characterised his tax package although he knew about that International Monetary Fund report. We had only to turn on the radio or the TV to work out that the world was imploding in a financial crisis. 
And Mrs Parata says National is not expedient. She says that it shows courage and leadership. Well what shows courage and leadership? To say one thing before an election knowing that that member and her Government cannot deliver on it? She characterises that as some sort of standard of courage some sort of standard of leadership. We now have a new definition of leadership and courage in this Parliament and that definition is to deceive. That is what National members did and that is why they are hoist with their own petard. 
I say to Mr Dunne whom I differentiate slightly from National members as being a more honourable person that I suspect that in the deepest dark of the night he squirms a little at the thought of having to front this bill. Mrs Parata puffs her chest out raises her voice and tries to convince the New Zealand people that she did not deceive them when as she and her ilk climbed and clawed their way up the political greasy pole of the National Party list to get to where they are. They said anything that they could; they were the archetypal definition of expedience before an election. I invite her to go out on the stump to go to the constituency she purports to represent and try to convince people. 
National was ambitious for New Zealand. National said if people voted for it it would deliver tax cuts. National members criticised Michael Cullen because Michael Cullen was cautious. They said it was an outrage that he was cautious it was an outrage that he squirreled away the surpluses. I say to Mrs Parata that she has raised to a new height the standard of gall in this House. She stood up and tried to persuade us that National had shown leadership by deceiving—knowingly not by accident—every member of the New Zealand public. Does that member really think it is credible for her to tell the New Zealand people that miraculously when she and her ilk entered the Cabinet room somebody passed a note to the Prime Minister that said by the way there is a global recession—in fact the worst we have seen in the history of the globe—and by the way his tax cuts probably will not work? Does anybody think the New Zealand people are so stupid that they would accept that thesis from that member? Even that member Crosby/Textor Mr Joyce and the myriad spin doctors that National has over there cannot now deceive the New Zealand people because they know that they were deceived knowingly and with intent. 
It should not surprise us because it is a typical Tory trick. National has done it for decades. It goes to the people and says that shock horror it has opened the books everything is terrible and it has to break its promises. 
Hon Darren Hughes 
: No ifs no buts no maybes. 
Hon CLAYTON COSGROVE 
: Exactly. What all of them have done—and old “Sooty” in the front row in the pink shirt ought to remember because he— 
TODD McCLAY (National—Rotorua) 
: 
 After the previous speaker all I can say is “Thank goodness for platform shoes.” My mother could see that member speaking from where she was but without his shoes she would not have seen him. 
This is a great debate on the Taxation (Budget Tax Measures) Bill in the Committee stage. I have been sitting here quietly listening to the debate and I say to the members opposite that they are whingers whiners and woolly left-wing liberals. They are socialists dressed up and pretending to be liberals. They are excuse makers they are complainers and they are better off over there on the other side of this Chamber. They are like a group of 4-year-old girls who are crying and looking for their comforters because they are not big enough to handle the deepest recession New Zealand has faced in 60 years. New Zealand is better off because those members are over there. They were a fair-weather Government and now the storm is here they are sadly absent. They have no ideas; they are all excuses. New Zealanders are glad to see the back of them and absolutely so is this Parliament. The pretence that those members are worried about New Zealanders has been too little too late. 
This Government is about delivering for New Zealanders and today with Bill English a great Minister of Finance we have delivered 600 more police and at least 200 more correction officers to make New Zealand and New Zealanders safer. 
The CHAIRPERSON (Lindsay Tisch) 
: Part 1. 
TODD McCLAY 
: This is all about Part 1. 
The CHAIRPERSON (Lindsay Tisch) 
: Part 1 is about tax cuts. 
Hon Darren Hughes 
: Mr Chairman how do you know what he’s saying? 
The CHAIRPERSON (Lindsay Tisch) 
: Thank you for that comment. Look I invite the member to concentrate. This debate is limited to parts and this part is about personal tax cuts. I ask the member to continue in that vein. Thank you. 
TODD McCLAY 
: Thank you very much Mr Chairperson. I still have time left so I am happy to speak more slowly for the sake of my great friend the former member for Otaki—the defeated and failed member for Otaki. I thank the former Minister. 
This bill is about tax cuts. In a very difficult economic time why have we not been able to deliver tax cuts in following years? It is so that we can deliver 600 more police for New Zealanders and more than 200 corrections staff to make New Zealand safer. It is so that our police can have Tasers on the streets—again to make New Zealand safer. These are all funded promises that have been delivered today. That is why this bill is saying tax cuts in the coming years will be more difficult. 
What about health—doctors nurses operations and aged-care services? There will be $3 billion extra over the next 4 years to deliver for front-line health service in New Zealand. Where is that piece of paper members had before? I ask members to hold it up for me again; I want to see it. It has gone now. Oh there it is. Could the member move that a little further to the left as the voice of that member is too much—at least the people of New Zealand watching TV will not then see the member’s face as the voice and the face together are far too much. 
Hon Damien O’Connor 
: I raise a point of order Mr Chairperson. Sorry but as the newest member in the Chamber I would just like a clarification of the Standing Orders. I was of the understanding that there is a Standing Order relating to the reading of speeches in the Chamber. I would just like to check that that member is not reading. 
The CHAIRPERSON (Lindsay Tisch) 
: No there is no such Standing Order. 
TODD McCLAY 
: I raise a point of order Mr Chairperson. The member is right in that I am one of the members on this side of the Chamber who compared with members on that side can actually read. But I was not reading— 
The CHAIRPERSON (Lindsay Tisch) 
: No no that is not a point of order. The member will continue; he has 1 minute and 35 seconds to go. 
TODD McCLAY 
: Thank you Mr Chairman. As I have a few moments left I confirm that yes on this side of the Chamber we can read; I am sure that on the other side members cannot. 
I will come to a conclusion—well I do not have to but I will none the less. This is the deepest recession in 60 years. That is why tax cuts are not going ahead. This is a Budget to get New Zealand through a downturn. That is why tax cuts cannot go ahead. It is about improving growth and productivity. That is why those tax cuts cannot go ahead. The Budget is to keep New Zealand on the front foot. Standard and Poor’s recognised that today. New Zealand recognised it today. I say to members opposite that they should wake up give up get ready for more tomorrow and recognise it today as well. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 This story began last year when National members went on to the hustings and said we do not have a debt problem but we have a growth problem and therefore we have to have some tax cuts. As the election campaign unfolded and as the clouds of economic gloom gathered they said that we do not have a debt problem. They maintained that mantra right up until 8 November; we did not. We said in the course of the election campaign there would be no more spending promises. We said we did not believe that there was an opportunity for large expenditure be it in the form of tax cuts or in the form of new Government programmes. And that is how both parties went into the election. 
But wait! There is more! After 8 November all of a sudden the advice to Michael Cullen and therefore to the Labour side stopped and the advice to Bill English and therefore to the National Government started. That advice grew gloomier by the day. Even after the election the news got worse. By the time we came to the second week of December these Government members having been in receipt of 6 full weeks of Treasury advice said we could still afford tax cuts. They said they were part of the Government’s 100 days of action. I guess we are now in 100 days of U-turns. They said we could afford those tax cuts so they went ahead. 
We opposed the tax cuts which I presume means we have to support this legislation today. But we will do more than say “We told you so.” We will say “You misled us.” That was never better explained than yesterday in Brian Rudman’s article in the  
New Zealand Herald 
 where he talked about the need for the National Government to squirm. He pointed out in words of one syllable that by the second week of December the National Government knew very well the circumstances that this little country was in. 
Do members know what happened yesterday? The Prime Minister of this land rang the editor of the largest newspaper in this land and tore a strip off him for running that article. What is prime ministerial about that? Why did John Key say to the editor of the  
New Zealand Herald 
 he did not want to see that sort of stuff run in his newspaper? Who does the Prime Minister think he is? Does he think somehow that we have a democracy in which the Government should not be challenged for breaking promises? Does he think somehow that this Government is able to get away with broken promises without there being some sort of public spat? The Prime Minister has a habit of doing this. Remember when he did it to that Northland agency before he became the Prime Minister? The nice man appears to— 
Craig Foss 
: I raise a point of order Mr Chairperson. We are in the Committee stage. We have had about 2½ or 3 minutes of this gentleman’s speech and we are yet to hear anything about what is in the bill. 
The CHAIRPERSON (Lindsay Tisch) 
: I do not need any help. I ask the member to continue. We are on Part 1. I know that some of your comments have strayed a bit. 
Hon PETE HODGSON 
: Mr Chairperson my speech has been entirely about tax cuts—their passage under urgency their reversal under urgency and now the Prime Minister getting up and ripping into the editor of the  
New Zealand Herald 
 because he did not like a bit of criticism. You see Brian Rudman made the mistake apparently of pointing out that in the second week of December the Government must have known the circumstances the country was in. That is what he said. In other words the urgency before Christmas was known to be a fake and that is an outrage. 
Government members were so full of themselves so big on their 100 days of action and so triumphalist that they were prepared to fool themselves and the rest of the nation with legislation and that was only 5 months ago. They have made a U-turn in 5 months: from tax cuts to no tax cuts. When someone gets up and says that is a broken promise and the National Government had better get ready to squirm which is what Mr Rudman said the Prime Minister rings up the editor of the  
New Zealand Herald  
and does his nana. He cannot take the criticism. He is happy to break the promise happy to do the U-turn happy to do the deceit and happy to fool everyone that in December the tax cuts were real— 
PAUL QUINN (National) 
: 
 Thank you—[ 
Interruption 
] 
The CHAIRPERSON (Lindsay Tisch) 
: The member has not even started to speak and there is a barrage of noise from the cross benches. 
Hon Clayton Cosgrove 
: I raise a point of order Mr Chairperson. I accept that but you should know that we were just so pleased you had called him to speak. 
The CHAIRPERSON (Lindsay Tisch) 
: I thank the member. Well I am calling him again. 
PAUL QUINN 
: Thank you Mr Chairman and I do intend to address Part 1 in my short stint. But in so doing I want to comment on the rather gutless performance of the previous Labour speaker Pete Hodgson who lambasted a high-quality Maori leader— 
Hon Clayton Cosgrove 
: I raise a point of order Mr Chairperson. I think you can anticipate my point of order. That was totally unparliamentary language. That was offensive and it has been ruled out many times. We cannot say that of other members of Parliament. 
The CHAIRPERSON (Lindsay Tisch) 
: I ask the member to desist from making those sorts of comments— 
Hon Clayton Cosgrove 
: He should withdraw and apologise. 
The CHAIRPERSON (Lindsay Tisch) 
: —withdraw that comment and then continue. 
PAUL QUINN 
: I withdraw the comment and I say that that member— 
The CHAIRPERSON (Lindsay Tisch) 
: No the member cannot qualify the ruling I have made. I am asking him to just continue with his speech. 
PAUL QUINN 
: Thank you Mr Chairman. Can I say then that the member lacked the intestinal fortitude to face that woman one of New Zealand’s leading Maori women and look her in the eye while he lambasted her. He spent the whole time with his back to her looking at the monkeys behind him and looking for applause. He did not have the fortitude to look her in the eye and front up to her. That is the sort of person we have in Opposition. 
Hon Luamanuvao Winnie Laban 
: I raise a point of order Mr Chairperson. I would like you to ask the member to withdraw and apologise. I really feel truly insulted that we have all been identified as monkeys. 
The CHAIRPERSON (Lindsay Tisch) 
: The member has taken exception to the comments the member has made. I ask him to withdraw and apologise for those comments because a member has taken exception. That ruling is under Standing Order 116. I ask the member to withdraw and apologise for those comments and to then continue. 
PAUL QUINN 
: I withdraw and apologise. Now having said all that I will refer to Part 1 which relates to personal tax cuts. [ 
Interruption 
] Of course I see the so-called Opposition Leader of the House who cannot decide whether he is a young Trevor Mallard or an older Chris Hipkins because he does not have the ability to stand up against Trevor Mallard every time he gets up. He does not know how to act as the Opposition Leader of the House. 
Turning to Part 1 I say in terms of these tax cuts that this Government has changed its mind—right? I see that Darren Hughes got three black marks in school today. Oh the teacher has given him three bad marks on the chart he is holding up—not very good. Anyway we are prepared to front up which is a lot more than the members of the previous Government now on the Opposition benches were prepared to do in the pre-election fiscal update. They hid the accident compensation figures from the public and when the true costs were known they ran a mile. 
The CHAIRPERSON (Lindsay Tisch) 
: We have under 2½ minutes left. I would actually like to hear a little about the words “tax cuts” under Part 1 because the heading states: “Personal tax cuts and independent earner tax credits:”. So I ask the member—[ 
Interruption 
]—I am on my feet. I ask the member to seriously consider Part 1; otherwise I will terminate the speech. 
PAUL QUINN 
: Mr Chairman I can explain: my speech is focused on why we are prepared to front up to reverse these tax changes. It is because we have to meet a heavy burden of Government expenditure: a decade of deficits left behind by the previous Government. It would not front up to the truth which came out only after the election. That is why we are prepared to front up unlike the Labour Opposition. When Labour was in Government it hid everything to try to get another term in office. But National fronts up because we are honest and we have integrity and when the situation changes we are prepared to accept it and be honest with the public. 
We are not prepared to have a level of Government expenditure of $1 billion a week. If that level of spending was left unchanged it would leave a structural deficit in this country of $135 billion by the year 2023. The interest alone on that figure is $13.8 billion. We are not prepared to do that because $13.8 billion could go towards supporting hospitals. That is why we have changed the tax cuts. We are realists and we front up to the situation as it presents to us. As part of that process we will examine Government expenditure line item by line item so that the time before those tax cut changes are reversed can be kept to a minimum. We get rid of things like hip-hop tours. We get rid of wasteful expenditure in order to deal with the fact that the tax cuts are for the moment not as much. 
The CHAIRPERSON (Lindsay Tisch) 
: I ask for some decorum from Moana Mackey. 
MOANA MACKEY (Labour) 
: 
 What you will get Mr Chair is a speech that is about the bill for a start. I say to “Lady Parata” that we are very very sorry if we have offended “your royal highness” in any way. 
Hekia Parata 
: I raise a point of order Mr Chairperson. I do not have a title other than Ms Parata or Hekia Parata. I would prefer that I was addressed respectfully in those terms. Thank you. 
The CHAIRPERSON (Lindsay Tisch) 
: I ask the member to respect that request. 
MOANA MACKEY 
: I withdraw and apologise if that is what happened. But I say to Mr Paul Quinn that he does not need to patronise Hekia Parata— 
Craig Foss 
: I raise a point of order Mr Chairperson. That was not a withdrawal and an apology. The member said “if that is what happened”. 
The CHAIRPERSON (Lindsay Tisch) 
: She withdrew and apologised. [ 
Interruption 
] The member took exception; I will ask her to clarify. 
MOANA MACKEY 
: I withdraw and apologise. 
The CHAIRPERSON (Lindsay Tisch) 
: I ask the member to please continue. 
MOANA MACKEY 
: Paul Quinn does not need to jump up and protect Hekia Parata. She is perfectly capable of defending herself in the Chamber. 
What an extraordinary contribution from Mr Paul Quinn. He did not speak at all about Part 1 because he is ashamed of what National has done here—if indeed he understands what it has done. What has struck me about National members’ speeches is that those members have all jumped up to say how proud they are of the fact that they are now reneging on their election promises how brave they are that they have broken the promises that they made during the election campaign and how much courage it takes to deceive the people of New Zealand and then stand up and cancel the tax cuts that won National the election. 
Hon Darren Hughes 
: It’s so tiring! 
MOANA MACKEY 
: Democracy is very tiring as we found out during the last sitting week with the super-city legislation. 
Part 1 cancels the personal tax cuts that National promised during the election campaign—it was National’s No. 1 promise. John Key said there would be tax cuts on 1 April 2009 1 April 2010 and 1 April 2011. He said unlike Labour National would not cancel its tax cuts. That deceit has been shown up for what it is in today’s Budget. It is galling in the extreme that Government members have been getting up and acting as though they are really proud of what they are doing here having deceived the people of New Zealand during the election campaign and as though they are proud of the fact that they bought an election with promises that they knew they could not afford. It is galling in the extreme. Apparently they expect us to believe that John Key and Bill English were the only people in the world who did not see the financial crisis coming. 
Hon Darren Hughes 
: And Paul Quinn. 
MOANA MACKEY 
: I can believe that Paul Quinn did not see it coming. He probably thought Lehman Brothers just had a little run of bad luck. He probably thought that Enron just did not dot the i’s and cross the t’s. I can understand that Mr Quinn might not have seen the financial crisis coming but for John Key to seriously expect the people of New Zealand to believe he did not know he could not afford to keep the promises he was making when everyone was telling him that things were getting worse and when Labour members stopped making campaign pledges because we knew we would not be able to afford them is utterly ridiculous. John Key did know. 
Paul Quinn 
: I raise a point of order Mr Chairperson. I was interrupted at least three times I think in respect of staying within the ambit of the part— 
The CHAIRPERSON (Lindsay Tisch) 
: That is not a point of order. I will decide. It is not a point of order. 
MOANA MACKEY 
: Now I understand Paul Quinn’s speech. He does not realise that Part 1 cancels the tax cuts. He thought it did something completely different from that. Now I understand why he did not refer to the bill at all in his speech; it is because he does not know what it does. I will tell Mr Quinn what Part 1 does. Part 1 cancels the tax cuts and breaks the election promise—the No. 1 election promise—that National made during the election campaign. Part 1 shows up the con of the National Party at the last election. 
I said in my second reading speech that maybe instead of calling John Key the Prime Minister from now on we should call him the “Prime Misleader” because that is what he is. He is the “Prime Misleader” because he knew during the election campaign that the tax cuts could not be afforded. We said they could not be afforded and National said we were scaremongering. Six weeks after the election—after National had had all the Government books and had seen the state of the finances—the House took urgency to ram through these tax cuts. Labour in that debate said the tax cuts could not be afforded and National said we were scaremongering. Less than 5 months later we are repealing under urgency the tax cuts we passed under urgency. Why? Because we cannot afford them. 
The only thing that is consistent about the National Government is its inconsistency. Labour said before Christmas that the tax cuts could not be afforded. We voted against the tax cuts. But we are voting for this bill because it repeals the tax cuts that we said could not be afforded—and we were right. National would have us believe that no one could possibly have foreseen the economic conditions worsening. 
AMY ADAMS (National—Selwyn) 
: 
 Finally we might get some sense in this debate. The previous speech was another five wasted minutes of droning moaning hand-wringing and histrionics based on a whole lot of nothing. Today is about this document in my hand. Today is about a Budget that will put this country on the road to recovery. 
Iain Lees-Galloway 
: No it’s about this. 
AMY ADAMS 
: I know about that. Mr Lees-Galloway should not worry about it. Today is about making the hard decisions that it will take for this country to undo 9 years of disastrous Labour leadership from a Government that would not have known how to manage its way through a recession if its life depended on it. Unfortunately the Labour Government’s life did depend on it. Labour can spend money but it does not know how to manage in a recession which is why New Zealand voted out Labour and why those members are over there and why New Zealand put its faith in this National Government. Part 1 of the Taxation (Business Tax Measures) Bill defers the tax cuts—[ 
Interruption 
] 
The CHAIRPERSON (Lindsay Tisch) 
: There is not much time to go. I ask members to give the member speaking a fair go. 
AMY ADAMS 
: Part 1 defers the tax cuts because we understand and we know that right now it is more important to New Zealand families for them not to have to pay another 1.5 percent on their mortgages. New Zealanders do not want to be paying that. They do not want to be saddled with a second mortgage for every family of four because that party on the other side of the Chamber could not contain its Government spending and does not know how to manage anything. This Government is making the decisions that need to be made. It is looking after the people of New Zealand. Right now at this time in this climate and with the information in front of us today we know that what is important is getting our debt under control looking after New Zealanders protecting their entitlements and getting this country ready for recovery. 
Debate interrupted.