Douglas Roger: Taxation (Budget Tax Measures) Bill — First Reading Second Reading In Committee 
Douglas Roger: Taxation (Budget Tax Measures) Bill — First Reading Second Reading In Committee 
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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.