Volume 647 Week 75 - Thursday 22 May 2008 
Volume 647 Week 75 - Thursday 22 May 2008 
[Volume:647;Page:16215] 
Thursday 22 May 2008 
Madam Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Appropriation (2007/08 Supplementary Estimates) Bill 
Procedure 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I hereby present the Supplementary Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2008 and supporting information (B.7). I move  
That that paper be published. 
Motion agreed to. 
Appropriation (2008/09 Estimates) Bill 
First Reading 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I move  
That the Appropriation (2008/09 Estimates) Bill be now read a first time. 
Bill read a first time. 
Budget Statement 
Budget Debate 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I move  
That the Appropriation (2008/09 Estimates) Bill be now read a second time 
. 
Budget 2008 is about continuing to build a fair society and a strong economy against an economic background which is the most challenging New Zealand has faced in over a decade. 
A very large part of this challenge is generated by international forces which are well outside of our control. 
The most obvious of these to the average Kiwi family is the continued increases in the prices of fuel and some foodstuffs. 
International oil prices have increased from $20 U.S. a barrel at the end of 2001 to $91 U.S. at the end of 2007 and over $125 U.S. a barrel recently. For us that has translated into a petrol price of $1.02 a litre at the end of 2001 $1.71 a litre at the end of last year and close to $2 a litre now. 
The fact that we have the fifth lowest petrol prices in the OECD is no comfort to the motorist at the petrol pump. 
Some foodstuffs have seen comparable price rises. Wheat rice sugar dairy and other products have seen unprecedented price rises internationally over the last couple of years or so. Global food prices have risen 83 per cent in the last three years. 
Some countries have seen major food riots. Extreme hunger because of unaffordable food is now a serious international issue. Even in the U.S. rationing of rice has occurred at Wal-Mart. 
We are not immune and cannot be to these international trends. Overall food prices in New Zealand have risen about six per cent over the last year but that masks much larger increases in some items. 
Families are looking for some relief from these twin pressures of food and fuel price increases. 
For some these pressures are made seriously worse by increases in mortgage interest rates. While fixed term mortgages have been a popular means of avoiding the effects of tightening monetary policy sooner or later they come up for renewal. 
Over the last year many Kiwi families have faced just such an experience. 
Tight monetary policy is not the only reason for this. The ongoing widening effects of the sub-prime mortgage crisis in the United States are now biting even in New Zealand. 
What has happened here is the coming together of two malign influences. The first was the increasing tendency over the last few years for the level of risk to become separated from the level of return. In New Zealand this has contributed to the collapse of a number of finance companies. 
The second malign influence was the increasingly complex creation by those in the U.S. financial markets of second third or more order derivatives from initially dodgy sub-prime mortgages. This has created a contagion effect which has spread far beyond the original source. 
The result is an international credit crunch – low availability of capital and even then at high prices – which is now affecting New Zealand homes and businesses. 
The three international influences of food prices fuel prices and the credit crunch have added to pressures on the domestic front. 
These in large part reflect the pressures which have built up over a long period of remarkable economic strength. 
Economic growth in New Zealand since 1999 has been stronger than that of many of our key trading partners including Australia the United States the United Kingdom Japan and the Euro area. 
Unemployment has been below four per cent for nearly four years a prospect once dismissed as a “cruel hoax” by some. 
Household incomes have risen by 25 per cent in real terms since 2000 – that is after allowing for inflation – as a result of stronger employment growth and real wage growth. 
This growth has led to and been sustained by substantial increases in the value of houses which overall has led to very strong growth in both gross and net average household wealth. 
But a tight labour market a strong housing market and strong net migration gains especially over the period 2002-2004 created internal inflation pressures. This has led to a long tightening of monetary settings including a high exchange rate which has disadvantaged exporters. 
On top of all of this 2008 has seen a serious drought in much of the country which has reduced dairy production in particular. 
The internal and external factors have combined to lead to a significant slowing of the economy in 2008. Economic growth to March 2009 is expected to bottom out at 1.5 per cent and then take off again to 2.3 per cent in 2010 and 3.2 per cent in 2011. 
Budget 2008 is delivered then at a time of considerable challenge and uncertainty. But it is also delivered from a position of strength by a Labour-Progressive Government that has managed the public purse responsibly and did not squander resources in times of greater optimism. 
And it is delivered by a Labour-Progressive Government whose focus continues to be on a fair deal for all New Zealanders and planning for the strong sustainable future we all deserve. 
Budget 2008 has therefore to balance five imperatives: 
responding to the needs of families for some early relief from price pressures 
a longer term tax reduction programme which reflects a fair deal for all 
the maintenance of social services 
sensible fiscal management to avoid worsening current pressures on the household budget and which is sustainable over the long term and 
an integrated programme to continue to build a stronger sustainable economy. 
The Government has been delivering a significant programme of tax reductions since 2004. The combination of Working for Families tax credits business tax cuts and cuts to taxes on savings will total some $4.6 billion a year excluding indexation. 
This has represented a considerable growth dividend to New Zealanders. 
Budget 2008 builds on that growth dividend with a substantial programme of personal and family tax cuts beginning on 1 October this year with second and third stages occurring on 1 April 2010 and 1 April 2011. 
This programme consists of a combination of a cut in the bottom rate of income tax threshold changes a simplification of the structure of the income tax system a bringing forward of indexation of Working for Families and a forecast second round of such indexation. 
In theory the current personal tax system has three rates: 19.5 per cent up to $38000 33 per cent from $38001 to $60000 and 39 per cent above $60000 a year. 
In practice the operation of the Low Income Rebate for earned income creates an effective four-step scale with the bottom step split into two: 15 per cent up to $9500 a year and 21 per cent from $9501 to $38000. 
This rebate penalises investment income where it is the sole source of income. In addition the bottom threshold of $9500 has not moved since 1988. 
At the completion of the Budget 2008 tax-cut programme the rates will be 12.5 per cent on the first $20000 of income 21 per cent from $20001 to $42500 33 per cent from $42501 to $80000 and 39 per cent above $80000. 
At full implementation this will mean for individuals on a full-time income tax cuts of between $1130 and $2870 a year or roughly $22 to $55 a week. 
The intermediate stages will see the new rate of 12.5 per cent on income up to $14000 from 1 October this year with the threshold lifting to $17500 on 1 April 2010. The threshold for the 33 per cent will increase to $40000 a year from 1 October. The top threshold will increase to $70000 on 1 October and then to $75000 from 1 April 2010. 
The tax cuts on 1 October for individuals on full-time incomes will range between $620 and $1460 a year or approximately $12 to $28 a week. 
These personal tax cuts will at full implementation cut personal tax by roughly one quarter at the current level of the full-time minimum wage one sixth at the current level of the full-time average wage and one eighth at $80000 a year. 
As a consequence of the tax changes on 1 October superannuitants will receive an increase of $45.88 per fortnight for a married couple and $23.84 per fortnight for a single person living alone. Combined with the regular annual adjustments to take effect in 2009 these are the largest increases in New Zealand Superannuation rates since the Labour-led Government restored the floor of New Zealand Superannuation after the National Government’s cuts. 
Benefits are set entirely in net inflation-adjusted terms. The importance of tax rates is therefore the tax paid on additional income. The cut in the bottom rate will assist many beneficiaries without dependent children who have or take up part-time employment. 
All families with children including beneficiary families will gain from the other main feature of the package. 
Treasury forecasts that the indexation of Family Tax Credits and thresholds will be triggered at 1 April next year with a 5.22 per cent increase. The Government has decided to bring the increase forward to 1 October to provide a further boost to family incomes to assist in coping with current pressures. 
The tax cut programme and the bringing forward of the Working for Families adjustments will be included in legislation to be introduced and passed later today. 
Furthermore a second round of adjustments to Working for Families is forecast to occur at 1 April 2011. 
A single income family on one income of $40000 with two young children will be better off by $1603 a year from 1 October rising to $2967 a year from 1 April 2011. 
To take one final example. A couple on the current average household income of $72000 (split say two thirds/one third) with two children aged 11 and 8 will be better off by $2223 a year from 1 October rising to $4397 a year from 1 April 2011. 
The effect of the changes to the tax scales and the increases in Working for Families is that a couple with two children of those ages would need to have a combined household income of $52700 a year before they are paying any income tax in net terms in the tax year 2009/10 and $57200 a year in 2011/12. 
Madam Speaker 
These tax cuts and Working for Families enhancements will help families meet the pressures of international food and oil prices. Further relief has already been announced with the proposal to defer for two years the entry of liquid fossil fuels into the Emissions Trading Scheme and to phase in any regional petrol tax with a maximum two cents a litre in 2009. 
For those with heavy mortgage obligations it is just as important to be reasonably well-assured that the impact of the tax cuts does not trigger a further round of interest rate rises which would more than wipe out the benefits of any tax cuts. 
The cost of this tax cut package is very substantial. In 2008/09 the net cost is $1.5 billion rising to $2.3 billion in 2009/10 $3.1 billion in 2010/11 and $3.8 billion in 2011/12. 
In addition the cost of the indexation of Working for Families is $146 million in 2008/09 rising to $438 million in 2011/12. 
The consequential fiscal impulse in 2008/09 is estimated at 2.3 per cent of Gross Domestic Product. 
However in the current climate of low growth with downside risks coming from international influences and an easing labour market I am reasonably well-satisfied that the package will not lead to further rises in interest rates. 
Clearly the package meets the test of fairness. Full analysis shows that the package does not add to inequality and that the standard measure of inequality is not affected by it. 
I now turn to the test of the maintenance of social services. 
Madam Speaker 
Over eight years the Labour-led Government has undertaken a major reinvestment in services and support for New Zealand families. 
The floor of New Zealand Superannuation has been raised. With the changes to tax rates on 1 October a married couple will be getting $57 a week more than would have been the case under the policies we inherited. 
We have thousands more doctors nurses teachers and social workers caring for educating and helping our families. We have lifted tens of thousands of children out of poverty. 
Budget 2008 contains major new investments to help further the Government’s support for strong social services. 
$750 million extra per annum is committed to the health sector or $3 billion over four years. 
The major initiatives in health are: 
$2 billion for District Health Boards to cover the increased cost of goods and services 
$172.3 million to improve the efficiency of DHB services and make progress towards their Health Targets 
$160 million to boost elective surgery and reduce waiting lists 
$164.2 million over five years for Human Papillomavirus vaccine to protect against cervical cancer 
$60 million to build a better health workforce 
$79 million to improve child and adolescent oral health services and 
$30 million to create healthier living environments. 
The Government has already announced that it is providing $446.5 million to improve our partnership with community-based social services. 
This will help deliver essential services to support children and families. 
The Budget includes significant new investment in affordable housing which reflects the Labour-led Government’s on-going commitment to helping more families buy their first homes and to improving the amount and quality of social housing. 
The major initiatives include the long term upgrade of Wellington City Council’s social housing the Hobsonville development and the shared equity scheme. 
Madam Speaker 
Budget 2008 commits further significant resources to improving our early childhood primary and secondary education systems. 
A total of $215.5 million will be dedicated to implementing our promise to reduce class sizes for new entrants to one teacher per 15 students. 
Schools’ operating funding is increased by 5 per cent or $171.6 million including $65.3 million for information and communication technology. 
Operating funding for the early childhood sector is increased by $63.6 million to increase funding rates to reflect cost increases. 
In addition to the increased level of New Zealand Superannuation payments consequent upon the tax cuts Budget 2008 provides for major enhancements to the SuperGold Card. 
$72 million will be provided to fund free off-peak travel on all forms of public transport for cardholders. 
A further $18 million is available over the next four years to boost the subsidy for hearing aids. 
It has also been agreed with New Zealand First that an electricity rebate for cardholders will be developed to be introduced at the time of electricity entering the Emissions Trading Scheme. 
Budget 2008 continues investment in the broader justice sector with a range of initiatives aimed at strengthening a modern justice system that recognises that New Zealanders deserve to live in safe and responsive communities. 
There must be a cohesive approach across the sector to continue to build the sort of fair and safe society we all want. That is why Budget 2008 enhances capability in policing in the prison system in courts in the probation service and in terms of legal aid provision and victims’ rights. The initiatives include: 
$180 million in operating funding for the third and final tranche of the extra 1000 sworn police and 250 non-sworn committed to in the Government’s confidence and supply agreement with New Zealand First 
$216.3 million capital for the replacement of the near obsolete Mt Eden Prison 
$91.7 million to recruit additional probation officers 
$6.3 million over two years to address the pressure on Auckland courts 
an extra $4.7 million in operating funding to meet the future requirements of the Independent Police Conduct Authority 
$5.8 million in operating funding over four years to establish the Sentencing Council 
$10 million to provide enhanced security infrastructure to maintain the integrity and credibility of Police data and 
$11.2 million in operating funding in 2008/09 for legal aid remuneration with an accompanying review of innovative ways of developing the legal aid system. 
Madam Speaker 
The development of New Zealand’s unique national identity has been a major objective for this Government. 
Some $754.9 million of new spending is dedicated to this area. 
The largest share goes to Foreign Affairs. 
New Zealand’s economic wellbeing is inextricably linked to our ability to remain internationally competitive. 
In order to increase New Zealand’s international presence the National Identity package provides $188.1 million to the Ministry of Foreign Affairs and Trade. This is part of the wider $621 million over the next five years for MFAT announced by Rt Hon Winston Peters last month. 
This money will allow us to take a major step forward in promoting our interests particularly in the priority areas of Asia the Pacific Latin America trade policy and negotiations and the environment. 
Madam Speaker 
An extra $23.8 million is provided to increase the services of the Maori Trustee while an extra $5.3 million will assist the Office of Treaty Settlements to meet the 2020 settlement target. 
The pace of Treaty settlements has recently accelerated. Excellent progress is being made on a wide range of settlements which will see further assets pass into or back to Maori ownership. 
This progress will be enhanced by Budget 2008 setting aside $40.5 million of capital funding into Maori Business Aotearoa New Zealand. 
This will be used to establish services for Maori including business support identifying opportunities for Maori economic development and some facility to provide loans for Maori business. 
When this Government took office the official Maori unemployment rate was 14.4 per cent. That has now fallen to 7.2 per cent. Budget 2008 seeks to lock in and further improve on these achievements.  
Pacific people have made great advances under the Labour-led Government. Pacific unemployment has reduced from 12.2 per cent in December 1999 to 4.8 per cent in December 2007 and education and income levels are improving. The Government is focused on establishing a skilled and versatile Pacific workforce ensuring that Pacific communities are fully equipped to contribute and share in the future success of New Zealand. 
Investing in the capability of the Ministry of Pacific Island Affairs ensures that they are able to provide leadership and improved outcomes for Pacific peoples. 
The major initiatives in arts culture and heritage include $4.4 million extra for the New Zealand Symphony Orchestra; $27.8 million for a Screen Production Incentive Fund; $7 million for a Wharewaka on the Wellington waterfront; and $10.9 million to maintain services at Radio New Zealand. 
Conservation initiatives include $13 million to maintain DoC’s capability; $5.3 million to control weeds and pests on Conservation and Crown land; and $5.6 million to fund an ocean survey in the Bay of Islands. 
Madam Speaker 
As I indicated earlier the New Zealand economy is facing considerable headwinds during 2008. Far from being an excuse to reduce our investment in the future it is a reason to continue to press ahead on the central elements of economic transformation: skills innovation infrastructure international connections and sustainability. Budget 2008 invests $1.3 billion operating and $948.1 million capital in transforming the New Zealand economy. 
Innovation and skills funding in Budget 2008 signals a step change towards a high wage – high skill future for New Zealand. 
A total investment of $1.1 billion operating and $747.3 million capital is designed to boost New Zealand’s productivity through innovation involving research and development a quality tertiary sector and practical support for globally competitive firms. 
This includes earlier announcements such as the $700 million New Zealand Fast Forward Fund R&D tax credits and export support. 
The New Zealand Fast Forward commitment is the largest ever boost to research development and innovation funding in New Zealand’s history and will help transform New Zealand’s pastoral and food sectors to meet future challenges. 
The Government’s upfront investment of $700 million is expected to grow to around $1 billion as it earns interest over the next ten to fifteen years. In addition industries will be expected to match the Government’s commitment on an annual basis resulting in an expected total fund of around $2 billion to be fully expended over the next ten to fifteen years. 
The 15 per cent tax credit for research and development began on the first of April. It is designed to materially assist the 2500 firms who undertake R&D. It is also designed to help address the single most important shortcoming in New Zealand R&D which is the relatively low level of private sector investment. 
This Budget takes the next step in research and development with investment totalling $205.4 million which includes the following initiatives: 
funding of high-tech research platforms of $24 million will lead to new industries over the long term in areas such as high-tech manufacturing ICT new materials and sophisticated engineering 
as we move to a sustainable energy future some new and some existing alternatives will need to be underpinned by research. $32.5 million is set aside for this purpose 
health research is increased by $16 million of which $4 million is dedicated to obesity research and the Marsden Fund is increased by $13 million and 
considerable science funding is earmarked for longer term environmental research including biosecurity research. 
New Zealand needs more globally competitive firms. This is of course one of the aims of New Zealand Fast Forward Fund. 
In addition the Government’s business tax package of over $1 billion per annum came into effect last month as did two new products from the Export Credit Office designed to assist New Zealand exporters who need extra temporary working capital to secure a large offshore contract. 
Today we build further on that. The venture investment fund has a seed capital investment fund which this Budget supports. The very successful programme called Better By Design is being expanded to help more firms increase their international competitiveness by integrating design into all aspects of their business. 
Our offshore support for exporters is strengthened with funding of $138.9 million including $8 million for the expansion of the Government’s Beachheads programme that is now starting to show its value in many different global markets. 
Quality tertiary education is one of the engines of innovation. This Budget provides universities and polytechnics with $591 million operating funding over five and $15.5 million capital. 
As part of the funding for universities and polytechnics above tertiary researchers will benefit by a $42.4 million boost (plus $4.3 million in 2007/08) to the tertiary education Performance Based Research Fund. The fund reaches $250 million per annum meeting Labour’s manifesto commitment. 
Budget 2008 strengthens the Government’s investment in tertiary students improving their lot with a student support package that totals $155 million.  
Initiatives are: 
a 10 percent increase in the parental income threshold for a full student allowance from 1 January 2009 
lowering the age limit for student allowances parental income testing to age 24 and lifting the maximum rate of student allowances for those aged 24 to the level for students aged 25 years and above to fulfil our obligations under the Labour-United Future confidence and supply agreement 
increasing the student loan living cost component from $150 per week to $155 per week from 1 January 2009 and then adjusting it annually for inflation and 
a 50 per cent expansion of the Bonded Merit Scholarship Scheme to 1500 scholarships per year. 
Our tertiary institutions foster our future potential; our workplaces produce our daily bread. Productivity increases are being supported with $168 million in new funds to provide workers with the right skills for the complexities of the modern workplace. 
The funding will be used to implement the Skills Strategy a partnership between Government Business New Zealand the New Zealand Council of Trade Unions and the Industry Training Federation. 
The New Zealand Skills Strategy discussion document was launched on 29 April 2008. 
The strategy will look across the entire skills spectrum – from increasing literacy and numeracy skills to how those skills are best used. 
Madam Speaker 
Budget 2008 continues this Government’s massive investment in rebuilding New Zealand’s transport infrastructure. New initiatives this year include: 
funding of $33.5 million for the first stages of the Canterbury Transport Regional Implementation Plan and 
$30 million over three years to continue transport funding for regional development initiatives in Northland and Tairawhiti. 
The Budget also contains a number of funding initiatives to strengthen transport regulatory agencies recognising their vital role in ensuring the safety and security of New Zealanders and overseas visitors. The initiatives include: 
$15 million in capital funding for aviation passenger safety and security infrastructure at airports 
$2 million operating funding for the Civil Aviation Authority to continue to meet international best practice obligations and 
$5.7 million between 2007/08 and 2009/10 to strengthen Transport Accident Investigation Commission capability and expand services. 
Total spending on land transport over the next four years is forecast to be over $10 billion. 
In addition Budget 2008 funds the purchase of the rail and ferry operations. 
Significant expenditure will be needed to invest in new rolling stock as well as further upgrades of the track stations and other infrastructure. 
Investment will also be needed to provide better integration of port and rail services notably in Auckland and Whangarei. 
Rail has made a big comeback as a preferred mode of transport in many developed countries over recent years. New Zealand now has the chance to catch up with the trend. 
Nowhere is this truer than in Auckland. If a slowly phased in regional petrol tax is available then the current plans for electrification can proceed. 
Beyond that there is a need for a longer term vision stretching out over the next twenty years to build the Britomart loop line to connect rail to the airport and to consider dedicated rail tunnels to cross the Harbour so as to create a true electrified rail network which can then link to other transport modes. 
Madam Speaker 
Roading and rail are crucial means of communication. So too and of growing importance in a modern economy is telecommunications. 
Following the privatisation of Telecom New Zealand’s performance in this respect has been mediocre not world-leading. Recent regulatory changes and subsequent agreements between the Government and Telecom provide a basis for shifting to a much higher level of performance especially with respect to high speed broadband connection. 
It is important that any further Government intervention in that respect bears in mind four criteria. 
The first is to ensure that the priority is on the extension of such services to the business and the farm so as to underpin increasing productivity. 
The second is to ensure that a stronger competitive environment is encouraged rather than entrenching an incumbent monopoly. 
The third is to lever the maximum private sector investment in relation to any taxpayer investment or subsidy. 
And the fourth is to ensure any programme does not lock us into particular technological solutions. 
Over recent months the Government has spent considerable time looking at various options to achieve the policy goals in a way which is consistent with those criteria. 
In particular the option was canvassed of a substantial capital investment. This was rejected as likely to lead to an inadequate level of private sector leverage and the chilling of competition. 
Instead the Government has opted for a total package of over $500 million over five years as the first stage of a ten year programme. 
The largest part is the new Broadband Investment Fund which will be used to accelerate broadband investment in three critical areas: 
facilitating high speed broadband to businesses and local authorities universities schools and hospitals in urban centres 
extending the reach of broadband into underserved regions and 
improving the resilience of New Zealand’s international connections. 
The fund will involve a contestable process designed to maximise competition in the sector. The criteria are based on open access and are neutral to technology. The fund should assist investor certainty and give the best possible leverage for the taxpayer's investment. 
The Government will also spend at least $160 million over the next five years on connectivity in the health sector the education sector through the KAREN network and through the Government Shared Network. We will aggregate demand to speed deployment and ensure efficient use of broadband. 
Labour’s vision is for a sustainable nation and Budget 2008 builds on work already underway to help New Zealanders use our resources wisely and protect our precious natural environment. Sustainability is at the heart of a range of policies including the Fast Forward Fund the water programme of action the Emissions Trading Scheme the renewal of rail and many others. 
Budget 2008 allocates $45.7 million towards energy efficiency investments to assist businesses households motorists and consumers. 
Well-insulated homes are healthier and more comfortable to live in. It is an investment that pays us back through fewer hospital admissions reduced respiratory illness and lower electricity and gas bills. 
An energy efficiency programme for our state houses is already underway. Budget 2008 provides a boost of $22.4 million capital to fund insulation and clean heating retrofits of even more Housing New Zealand homes built before modern insulation standards were in place. Within five years all our state housing stock will meet acceptable energy efficiency standards. 
In the private sector we have already funded the retrofitting of more than 30000 homes with the ENERGYWISE Home Grants scheme. Budget 2008 will provide $6 million over four years for a further 32000 low-income families in poorly heated older homes to receive grants for insulation retrofits. 
As part of Budget 2007 the Government provided $23 million between 2007/08 and 2008/09 towards our target of providing insulation and clean heating for 70000 households. In this Budget the Electricity Commission will contribute a further $5 million towards this programme. 
Budget 2008 will also help New Zealand respond to climate change in other ways. 
$43 million over five years goes towards delivering the Emissions Trading Scheme and linking it to international markets while $1 million will assist communities and local government to adapt to the physical impacts of climate change.  
Madam Speaker 
Apart from skills research and development and infrastructure many other factors underpin the development of a stronger economy. 
The development of a stronger savings culture is clearly one of those. New Zealand has spent too long focussing only on attracting investment from offshore. 
If we are to lift our international economic rankings we need also to lift the level of capital generated from within New Zealand. 
KiwiSaver is the Government’s flagship policy in that regard. The numbers enrolled are now well past the 600000 mark and continuing to climb. 
The stunning success of KiwiSaver has of course had fiscal consequences. The numbers enrolled by the end of this fiscal year are likely to be about two and a half times what was projected a year ago. 
While that means spending well above forecast it is one which is contributing to our future wellbeing as individuals as families and as a nation. 
The Government is moving on other fronts to strengthen the financial sector. 
Budget 2008 provides a funding boost for initiatives to better protect investors address barriers to economic growth and improve Government services to business. 
The Government will spend $9 million for the implementation of new laws to improve the supervision of financial advisers and institutions. Additional costs will be paid for by industry. 
Together the funding will allow financial service providers to be registered and set up dispute resolution schemes and will enable the Securities Commission to undertake a role in the licensing of financial advisers. 
Funding has also been allocated to a joint public/private sector initiative on how to remove impediments to the development of strong capital markets. 
$1 million is set aside for scoping the concept of a Trade Single Window which will enable parties involved in trade and transport to lodge standardised information and documents with a single entry point to fulfil all import export and transit-related regulatory requirements. 
The largest changes with respect to simplification are in the business tax area. 
Budget 2008 provides for substantial increases to a range of business tax thresholds. 
These threshold changes include: 
increasing the PAYE once a month filing and payment threshold from $100000 to $250000 
increasing the Fringe Benefit Tax annual return filing threshold from $100000 to $250000 
increasing the provisional tax use-of-money interest safe harbour threshold from $35000 to $50000 
increasing the low value trading stock threshold from $5000 to $10000 
increasing the GST registration threshold from $40000 to $50000 
increasing the GST six-monthly return filing threshold from $250000 to $500000 
allowing non-individuals subject to certain thresholds to return income tax for financial arrangements on a cash accounting basis and 
increasing the threshold for allowing financial arrangements to be accounted for on a straight line basis from $1.5 million to $1.85 million (based on the total level of financial arrangements). 
In addition work is underway on a second phase of initiatives that represent more significant departures from normal tax rules. 
These include simplified rules for deducting legal and entertainment expenditure; introducing a single category of restricted private-use motor vehicles for small and medium-sized enterprises; simplifying record-keeping requirements for private use of motor vehicles by businesses; simplifying GST invoice disclosure requirements; allowing the correction of minor errors in subsequent returns; and other measures. 
The biggest set of changes to business taxation that are being announced in this year’s budget relate to the final decisions on the international tax regime. 
Today the Government is announcing its final proposals in this area following on from the release of a discussion document in December 2006 and an update in May 2007. 
These announcements confirm the introduction of an active income exemption for tax on earnings by New Zealand-based companies operating off shore. 
The package will remove tax-based impediments to offshore investments while minimising compliance costs and maintaining a level of protection for the domestic tax base. 
The final decisions respond to the concerns raised about certain issues. 
It has been decided in effect to retain a grey list of one Australia. That is consistent with the offshore tax regime for individuals. It will largely answer concerns about complexity for SMEs. 
A much more limited set of base company rules will be introduced applying only to services performed in New Zealand. 
Finally offshore controlled foreign companies in the insurance business will be able to apply for a determination from the Commissioner of Inland Revenue qualifying them for the active income exemption. 
This new international tax regime will be a major support encouraging New Zealand firms to internationalise while retaining control ownership design and head office functions within New Zealand.  
Madam Speaker 
Sustainable fiscal settings are a key plank of our fiscal policy. 
Since 1999 the Government has made substantial progress towards strengthening the Crown’s fiscal position through debt reduction as a percentage of GDP and by accumulating financial assets. 
In 2006 the Crown moved into a net positive financial asset position for the first time in New Zealand history. 
Gross sovereign issued debt excluding Reserve Bank Settlement cash has fallen from above 30 per cent of GDP to reach 18.2 per cent of GDP at June 2007. 
The overall strengthening of the net financial position over the last eight years has been faster than planned due to economic and revenue growth consistently exceeding Treasury forecasts. 
The structural surplus has therefore been allowed to rise above the level required by our medium-term objectives as the Government has allowed the automatic stabilisers to operate. 
This has however placed New Zealand in a very strong position to cope with the long term challenges of an ageing population compared with almost any other developed nation. 
Moreover there are particular advantages to New Zealand maintaining a low level of debt because being a small open economy means we are more susceptible to shocks than other countries. 
Going forward we need to maintain this strong fiscal position. That means keeping Gross Sovereign Issued Debt around 20 per cent of GDP and continuing to build up the financial assets held by the New Zealand Superannuation Fund. 
In particular a balance needs to be struck between intergenerational funding through debt of long term infrastructure investment and intergenerational equity of long term social commitments such as universal New Zealand Superannuation and strong public health services. 
Having met our long term debt objective and continuing to accumulate financial assets means that we are able to accommodate Budget 2008’s substantial tax package without putting at risk our other priorities. 
Both the overall and structural operating balances are forecast to decline reflecting that some of the decline is due to a softening economy and some to new policy initiatives notably tax cuts. 
These reductions would be significantly larger if the Government had maintained its previous outyear spending allowance. This is lowered to $1.75 billion from Budget 2009. This will be a hard target to meet requiring significant reprioritisation efforts. 
The capital allowance moving forward will be maintained at $900 million. 
By staggering the tax reductions over three years we have spread the impact on demand to help minimise the impact on inflation. 
The projected path of the operating surplus is consistent with our objective to run operating surpluses on average over the economic cycle sufficient to meet the requirements for contributions to the New Zealand Superannuation Fund and ensure consistency with the debt objective. 
Gross Sovereign Issued Debt remains below 20 per cent of GDP for the forecast period before a temporary rise in the early stages of the subsequent projection period. 
The Operating Balance Excluding Gains and Losses will decline over the forecast period before bottoming out at just above zero around 2014 during the projection period. 
These projections beyond 2012 depend substantially on assumptions which could well be overly conservative as they have already proven to be for many years. 
Madam Speaker 
I am conscious of the honour that I have in being the first Finance Minister since 1944 to present nine successive Budgets to Parliament. 
The connecting thread throughout those nine Budgets has been the twin themes of security and opportunity those ideals which lie at the heart of our national identity. 
Budget 2008 in building a fair economy and a strong future is no exception. 
We have delivered a tax cut package which is both substantial and fair. It consciously rewards the many for their contribution to New Zealand’s economic success not just the few. 
It helps the battlers in our society deal with the ill-winds blowing from offshore. 
Budget 2008 funds the continued expansion of the hugely successful KiwiSaver scheme. It continues to invest in the New Zealand Superannuation Fund so building security for the future for all New Zealanders. The Fund is expected to reach $29 billion by 30 June 2012. 
It continues our investment in quality early childhood education stronger compulsory education an integrated skills strategy and a strong quality tertiary education system. That means opportunities for all our young people. 
It intensifies the rebuilding of our infrastructure with support for high speed broadband roll-out public transport better roads and looks forward to a revitalisation of rail. That means a stronger economy. 
It keeps Government debt low while providing for the continuation of our social services investment in our future and a dividend for our families. 
It delivers on the coalition agreement between the Labour and Progressive parties and on the confidence and supply agreements with New Zealand First and United Future and the cooperation agreement with the Greens. 
It is a Budget which builds on our past achievements delivers real relief and helps us towards a stronger future. As we move through this year of challenges and uncertainty we can look forward to a fairer more prosperous sustainable New Zealand which is secure in its own place in the world. 
Debate interrupted. 
Procedure 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I hereby present the Budget 2008 Speech the Executive Summary the Fiscal Strategy Report 2008 the Economic and Fiscal Update 2008 (B.2 and B.3) the Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2009 (B.5) the compilations of information supporting the Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2009 (B.5A Volumes 1-10) and the departmental statements of intent. I move  
That those papers be published 
. 
Motion agreed to. 
Budget Debate 
Debate resumed on the Appropriation (2008/09 Estimates) Bill. 
JOHN KEY (Leader of the Opposition) 
: 
 I move  
That all the words after “That” be omitted and the following words inserted: “this House has no confidence in the Government led by Helen Clark because New Zealanders have had to wait far too long to see any changes to personal tax thresholds or any lowering of personal tax rates and over nine Budgets this Government has presided over a decline in New Zealand’s standard of living compared to the rest of the world.” 
So there we have it: Michael Cullen’s ninth and final Budget. It may have been his election-year Budget but it was also his valedictory. You see he read the Budget speech but he did not believe one word of it. He did not believe one word of it. And did it not just smell of desperation? After 9 years of putting off tax cuts it hurt him to read out the words. He did not believe them. But it was a giant acknowledgment of the failure of his Government’s leadership when it comes to the economy. 
When it came to the tax cuts it was far too little and it was far too late. It is pretty interesting that this is the finance Minister who has been telling New Zealanders for 9 years that they cannot have a tax cut. For 9 years he has been saying that they cannot have a tax cut. But guess what? In 4 or 5 months’ time there will be an election and 2 weeks beforehand Michael Cullen after 9 years will give a tax cut that he does not believe in. It will be the only chance of a tax cut. 
The sad bit about the whole speech—because it was pretty sad—is when people start to reflect not just on the tax cut but on the price that New Zealanders are paying for the economic leadership shown by the Labour Government—or lack of leadership as the case may be. You see they were led to believe by Michael Cullen that he would keep interest rates under control and he has not. Interest rates have doubled under a Labour Government. There was no apology in the Budget this afternoon to the hard-working couple who borrowed $200000 and now find themselves paying $150 a week more in interest—no apology to that family. There was no apology to the families and other New Zealanders to whom he said: “Don’t worry your wages will go up.” 
But he did not tell them that the cost of living under his leadership would rise faster than their wages. The same people reading his Budget tonight are the people who picked up the  
New Zealand Herald  
today and saw that cheese had gone up 112 percent who had just gone to fill up their car and paid over $2 a litre for petrol and who cannot afford to buy butter in the supermarkets of New Zealand because Michael Cullen has not managed to produce wages that can keep pace with those price rises. 
There was no apology to the 1700 people who have lost their jobs in the last 2 months and to whom Ruth Dyson said: “Don’t worry about it because we’re all doing OK.” There was no apology to those people and no apology to the thousands of New Zealanders who every day go to a hospital and ask why after 9 years in which spending on health has doubled they still cannot get their operations why they still have to go to Australia to get cancer drugs and why if they take Herceptin they are funded for 9 weeks and not for 52 weeks. There were no apologies for all of that. 
You see the interesting thing about this Budget is that it is ideologically opposed to everything that Michael Cullen believes in. He believes in taking people’s money off them and spending it at a faster rate than they can. That has been the strategy. But let us be honest: we have heard over the last 9 years a lot of talk from Labour but we do not hear so much of it these days. 
Gone is the talk about New Zealand getting into the top half of the OECD. That was where Labour started 9 years ago: “We will be in the top half of the OECD.” Michael Cullen does not tell New Zealanders that we are not 20th any more which was the placing out of 30 that we had when Labour came to office; we are 22nd. The only OECD rating where we have literally gone up is for being more heavily taxed—we have moved from 20th to 12th. So gone is that talk. 
And gone is the talk of closing the gaps. Do members remember that? That was in 2000 when the average Maori family earned an income equivalent to 82 percent of a Pakeha family’s income. Has that gap closed? No! It has widened; a Maori family earns only 73 percent of the income of a Pakeha family. So gone is the talk of closing the gaps. 
Then there was talk of the knowledge wave. There was no talk about the knowledge wave in this year’s Budget and no talk about the hundred information technology companies that would have a turnover of $100 million. That has gone—no talk of that. 
Does anyone remember the talk of economic transformation? I remember listening through speeches where we heard it about 30 times—economic transformation. We are still waiting—New Zealand is still waiting—for economic transformation. What about growth and innovation? That was the talk. 
And last but not least was carbon neutrality. Did we hear that mentioned in the speech? No. You see Helen Clark has finally worked out what carbon neutrality means and that is that if we lead the world in it we lead the world in costs we lose jobs we lose people and we lose opportunities and most of all all that we do is export carbon dioxide emissions around the world. 
So let us turn to the centrepiece of Michael Cullen’s Budget—tax cuts. Well it has finally happened. It has been a long long wait but it has finally happened. I can only say that I hope they last longer than the ones he announced in 2005. They may not be supported by Michael Cullen but that is OK—we will come back to the legislation that will lock them in in a minute. But do they not just reek of cynicism? They come in on 1 October. We can put a ring round the date for the election: 18 October. But do not worry Labour thinks it will have a revival before going to the polls having given the average worker of New Zealand a family-size block of cheese. That is what the tax cut is worth. After 9 years of waiting New Zealanders get a family-size block of cheese. They will get two blocks before the election and they are meant to be grateful. That is the message—they are meant to be grateful. 
While they are being grateful they should think about this: the next time they get a tax cut—theoretically under this Budget—will not be for 2 years. It is a long time between toasted sandwiches. It is a long time between servings of macaroni cheese. People will wait 2 years. They will not get tax cuts in 2009. Do any members know why? It is not an election year! Actually it is not within cooee of an election year so in 2009 people are not allowed tax cuts. 
There we go; that was Michael Cullen’s tax cuts Budget. It was motivated by one reason alone: not the belief of Michael Cullen in tax cuts but his belief in electoral survival. That is the reason those tax cuts are there. The reason they have taken so long to get there is that Dr Cullen never wants to deliver them. He does not want to deliver them. 
What will be interesting to New Zealanders as they go home tonight and reflect on Michael Cullen’s Budget is the thought that they have waited for over 3000 days under a Labour Government to get a tax cut—3000 days. If they are paying the top personal tax rate which kicks in at $60000 and will eventually move up under today’s Budget they have to wait for only 125 days from go to whoa for their tax rate to go up. You see under Labour one waits 125 days and one’s taxes go up and one waits for over 3000 days for one’s taxes to go down. 
Earlier this week Michael Cullen told us that tax cuts that delivered a reasonable amount to New Zealanders were reckless and unaffordable. Maybe Dr Cullen should have looked over the road over the Tasman to the Australians. 
Hon Dr Michael Cullen 
: These are bigger than the Australian tax cuts—miles bigger. 
JOHN KEY 
: Then the design is terrible I say to Dr Cullen. We will come back to that in a minute. Let us look at it. During the same period of time that Labour has been in office in New Zealand people in Australia earning $47000 a year have got a tax cut of $100 per week whereas under Labour people in New Zealand have got zero and 2 weeks before the election they will get their block of cheese. In Australia they get $100 a week and in New Zealand they get zero until they are within 150 paces of a polling booth when they will get $16. That is the difference. If anyone is wondering why 44000 people left New Zealand last year and went to Australia I can tell that person that it is because they were looking for economic leadership. It is coming but not under a Labour Government. 
What else did we learn when we heard what was in the Budget? There will be an urgency motion tonight. The House will go into urgency. Why? To legislate for the tax cuts that will come in on 1 October. Actually the real reason is that Michael Cullen—and he admitted it earlier in the week—does not trust himself to deliver his own tax cuts if he does not legislate for them. He is like a chocoholic who loves Caramello and has to hide it in a box on top of the wardrobe so that he cannot find it. He is legislating for his own tax cuts because he does not trust himself. What is actually worse than that is that his own colleagues do not trust him. They want the House to go into urgency. What do Governments do? They change legislation. That is what Governments do. Beyond 2009 if New Zealanders trust Labour to give them a tax cut Michael Cullen will be whipping it away. 
Well enough of Michael Cullen. [ 
Interruption 
] Well we will get to some policy actually. I want to talk about National’s plan. I tell the members opposite to listen up because they may well be beneficiaries of it. This is the message to New Zealanders: under National tax cuts are a priority; under National personal tax cuts are a priority. It is a pretty simple message: under National New Zealanders will do better. The plan will be better the structure will be better and the delivery will be better. Most of all New Zealanders will be able to believe our tax cuts they will be able to trust our tax cuts and they will not wait 3000 days to get them. They will not be doing that. Most of all our tax cuts will not be just about putting dollars into the pockets of hard-working New Zealanders; they will actually be about delivering the right incentives in the economy. [ 
Interruption 
] We know that Labour members do not believe in tax cuts and they are admitting that. They may not like to hear it but tax cuts deliver the right incentives. Tax cuts let New Zealanders get ahead in their lives. They encourage New Zealanders to work hard to get extra responsibilities to save and to get further education. 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. I will tell New Zealanders how we can afford to do it. This year the Government will spend $60 billion and not one of those dollars is being reviewed—not one. The Labour Government has for 9 years wasted money hand-over-fist and it does not care. One needs only to look at what is happening in Australia to know that tax cuts are possible. The Labor Government in Australia came in after 9 years of tax cuts and it still found savings and it still found the ability to do things. 
I want to make one last point about Michael Cullen. He has laboured on about interest rates but this is the simple point: if Labour and Michael Cullen care so much about interest rates why has he let them double under his watch? Let me say this very clearly: we have a plan for New Zealand. It involves tax it involves infrastructure it involves curbing the bureaucracy it involves having proper planning legislation and it involves having the right future. 
But most of all let us answer the real question. This is the difference between Labour and National: Labour is stuck in the past; it is the past. Helen Clark and Michael Cullen care more about the Viet Nam War and the Springbok Tour than they do about the big issues facing New Zealand today. They do not want to front up on a decent emissions trading scheme they do not want to front up on the big issues of globalisation they do not want to front up on the issue of why so many New Zealanders leave and they do not want to front up on how to lift economic growth in New Zealand. What they want to do is meander around in the past. 
National will not do that. National will take New Zealand forward on a high-growth environment where our young people know they have a future where they know that we as a Government will back them to succeed and where we will deliver them the tools they need. We will deliver fast broadband so that they can be connected to the world; a future-looking Government that knows where it is going; and a country that is not afraid of itself where winning is part of the national conversation where it is not just about participation but also about succeeding and where there is aspiration hope opportunity and ambition—most of all ambition. 
New Zealand deserves a lot better than what it has had in the last 9 years. New Zealanders deserve a National Government and in 5 months’ time and two blocks of cheese that is exactly what they will get. 
GERRY BROWNLEE (National—Ilam) 
: 
 I raise a point of order Madam Speaker. It was very noticeable on this side of the House that throughout the speech delivered by Michael Cullen there was orderly behaviour within the House and respect was shown to the Minister of Finance who was reading a prepared speech. Some of us were moved to think that the Labour backbench was so unenthusiastic that those members looked more like people on death row than cheerleaders for the Government. But during the Leader of the Opposition’s reply there was a considerable barrage and there was a considerable change for the worse in the standard of behaviour. We hope that the same courtesy if it is extended to the Prime Minister will not bring your wrath. 
Madam SPEAKER 
: I would point out to the member—who has been in the House for some considerable time and will actually know—that it is recognised in the Standing Orders and Speakers’ rulings that when there is a prepared speech the convention is that there is no interruption because there is no opportunity for the person giving the prepared speech to respond. After that the debate commences. I did listen and from all sides of the House from time to time there was robust and vigorous participation within the debate. That is what will continue. From my point of view the most important thing is that people can be heard and I thought that Mr Key could be heard. 
Rt Hon HELEN CLARK (Prime Minister) 
: 
 Madam Speaker—[ 
Interruption 
] 
Madam SPEAKER 
: I explained to members what the rule is. I understand the positioning here to get permission to be able to make sure that other speakers cannot be heard. But there is the right in this House for all members to be heard. There is also the recognition that there will be a robust and vigorous debate particularly on matters of this order. There is not permission to be given for not being heard otherwise members will be asked to leave the Chamber because they will be creating disorder. Of course there can be interjections and of course people can express their views but every member in this House has the right to be heard. 
Rt Hon HELEN CLARK 
: I think the problem was that the Leader of the Opposition’s notes ran out at least 15 minutes before the end of his 20-minute speech. I for one am not prepared to believe a single word he said—not a single word. I read on Monday morning in the  
Dominion Post  
that he was promising every worker $50 a week or north of $50 a week. By Wednesday morning when  
Breakfast 
 on Television One interrogated him for 10 minutes and asked time after time: “Mr Key will you confirm the $50?” he replied: “No I can’t confirm the $50.” That man’s promises cannot even last 48 hours. 
The only thing John Key confirmed today was that any tax cut he gives will be funded by cuts in public spending. A vote for John Key is a vote for fewer teachers not more; fewer nurses not more; and more problems not fewer. That is the man who in every speech complains about people leaving New Zealand. He was very happy to leave New Zealand himself under a National Government—very happy to leave his country. 
Can I say to the Leader of the Opposition that I did care about the Springbok Tour—and I remember where I stood on it as well—just as I cared about the war in Iraq and I remember where I stood on that as well. I care about climate change. I have never said it was a hoax. I have never denied it. I have never then tried to say “Well I never said that.” and then gone back full circle to saying again that it was a hoax. Over here we believe in having a bit of consistency in policy. 
The Minister of Finance today delivered his ninth successive Budget. The last time a National Minister of Finance got close to doing that it was Robert Muldoon. I sat here through his eight Budgets in the period of that National Government. He got in such a funk in 1984 that he could not write the Budget. He called an early election and ran away because he could not make the figures add up. That has been the story of the National Party year after year. 
Everybody knows that this Budget has been drawn up against a background of a slowing international economy. I remember the last time that happened as well. It was in 1998 and Jenny Shipley was there with Bill English Maurice Williamson Nick Smith Murray McCully Tony Ryall and Lockwood Smith. What was their response to a slowing economy? They cut New Zealand superannuation. They sold one of New Zealand’s prime State assets. Contact Energy was sold and they penny-pinched and under-invested across the board—health education and the rest of it. 
Let us look at the contrast. Yes the international economy is slowing. What is the Labour Government doing? Superannuitants are getting more money in their pockets not less. We have not sold a State asset; we have bought one back—New Zealand Rail—and I am proud of it. We are investing properly in the future of our people—in education in health and in other things. There is a stark difference between these two approaches. 
We all know that Kiwis are paying record prices at the petrol pump. We all know that key items of food like dairy products are way up in price. Those prices are doing well for our dairy farmers but they hurt back home at the supermarket checkout. Then there is the global credit crunch and that has affected our households with mortgages and it has affected our small to medium sized businesses. Alongside the slowing global growth there has also been a prolonged drought. Our farmers have had a very very difficult few months and that has affected our whole economy. 
None of those things are the fault of the New Zealand Government—not a single one. But it is our responsibility to manage through them and to keep the New Zealand economy well positioned for upturn when it comes. That means not doing what Jenny Shipley Bill English Tony Ryall Nick Smith Lockwood Smith Murray McCully and Maurice Williamson did last time there was a slow-down and slashing and burning. It means carrying on investing and giving our people some genuine relief. I believe that Kiwis want relief from the cost pressures. But ask Kiwis: “Do you want that relief to come at the cost of less health care and less investment in education?” and they reply that no they do not. They want things kept in balance and that is what this Government does. 
In this Budget married superannuitants get a 5.2 percent increase in their income on 1 October. That is over $45 a fortnight. Our single superannuitants get an increase. They are benefiting from the tax relief and so they should. Society is judged on how its older people are treated and this Labour-led Government with support from our confidence and supply partners New Zealand First and United Future and with the support of the working and abstention agreement of the Greens has managed to deliver to vulnerable people. We have managed to deliver to superannuitants and I am proud of that. On 1 April next year we can add next year’s projected increase of close to $30 a fortnight to the 1 October increase of $45.88 a fortnight for our married superannuitants. That means that over the course of a year our married superannuitants will have an increase in their pay of 8.6 percent. That is phenomenal. 
Let us not forget the other things that matter to our older people. Let us not forget that this Labour-led Government with support from its confidence and supply partners is providing in this Budget for another 5000 elective surgery operations on top of already record numbers. Let us remember also that with the support of our confidence and supply partners—and this is a New Zealand First initiative—those who require a hearing aid will see the subsidy go up from $198 to $500. Another New Zealand First initiative is that those with a SuperGold card can look forward to free travel on public transport at off-peak times. Is that not good for our older citizens as well? 
The tax cut that is pushing up our superannuitants’ pay forms part of the $10.6 billion tax package—the $10.6 billion tax package—that the Government is delivering over the next 4 years. That starts on 1 October with a cut for every taxpayer. Those cuts are fair because those who are the lowest earners benefit the most—and that is the way it should be under any Government—because the lowest tax rate falls to 12.5 percent. By 1 April 2011 that 12.5 percent rate will apply to the first $20000 of earnings. 
Hon Dr Nick Smith 
: What a cynical bill—just cynical! 
Rt Hon HELEN CLARK 
: I am starting to think that this must be a very good Budget because I think Dr Nick Smith will have a heart attack if he gets much more upset. And although one cannot comment on the absence of members I do note that some are very happy to shout at others and then when they get their comeuppance they are not around to hear the reply. 
So what do the tax cuts mean for our Kiwi families? They mean a lot especially because the Government is also bringing forward the adjustments for inflation into the Working for Families payments. 
Let us take our Kiwi family on the average household income of $72000. Let us assume that the income is split with two-thirds from one partner and one-third from the other. Let us assume that they have two children at primary school. The $45 extra they get in the pay packet on 1 October is equivalent to a 3.6 percent increase in their take-home pay. That is not bad. By the full implementation of the tax package on 1 April 2011 that Kiwi family will be $82 dollars a week better off. That is equivalent to a 7.5 percent increase in take-home pay on today’s money. The one-earner family on $45000 a year—which is very close to our average wage—again with two primary school - age children will see the equivalent of a 3.7 percent increase in their take-home pay and it will be 7.6 percent by 1 April 2011. 
The tax relief in this Budget is important. So is the fact that this Labour-led Government is maintaining investment in the critical areas of health education housing and infrastructure. We know that although people want tax relief—and we are delivering it—they do not want it at the expense of the basics and we have to balance these things. 
For our families that 5 percent increase in school operations grants means a lot because if we do not look after that the schools come back to families for money they do not have to put into the school system. It might be the Tory way to keep putting that cost on to families but it is not our way. Our parents and our schools have high expectations—as they should have—and we need to meet those expectations. This Budget also funds the teacher-pupil ratio of 1:15 for our new entrants in schools. What can be more important in the school system than looking after small children turning up at the age of 5 and needing to learn the basics? 
For our families the money that goes into heath care is absolutely critical. If any Government eases up on that then Kiwi families pay the cost. They pay higher doctors’ fees they pay more for their drugs and they wait longer for treatment. That may be the National Party way—we all heard John Key talk about reviewing every area of public spending to try to squeeze out the money for the tax cuts. That is what he said. That is National’s way not our way. 
 In this Budget we are funding new initiatives in health like the new vaccine against cervical cancer. Over the years that vaccine will save the lives of thousands of New Zealanders. If we have a way of preventing a deadly cancer from developing then we should take that way and we have funded it in this Budget. 
The investment the Budget makes in housing is also critical for our families. We have invested in retrofits for warm and healthy housing saving people money on their power bill and improving their health. It was only a few weeks ago that along with the Hon Mark Burton I visited a lady in her home in Tokoroa. That home was being retrofitted. It had a heating system that was unhealthy and caused breathing respiratory problems. That lady with the support of a Labour Government and others who work with us is getting a clean healthy heating system and I am proud of that. 
I am proud too that this Budget for the first time is coming up with investment for shared-equity loans for our first-home owners. That is a way for families on modest incomes to get into their own home in the big cities. 
Hon Dr Nick Smith 
: It’s a joke! Twenty for Nelson? Don’t make us laugh! 
Rt Hon HELEN CLARK 
: The city of Nelson is one that benefits but Nick Smith opposes it. It is absolutely unbelievable that the local member for Nelson would try to stop people in his city getting a shared-equity loan. 
There is a lot in this Budget that adds to New Zealand’s economic capacity. The increase in operational spending on research science and technology is close to 6 percent. There is the huge investment in the Fast Forward fund so that our agriculture and food industries can earn more for their producers and for our country. There is the major investment in broadband. It is not a subsidy to a Telecom monopoly which is the National Party way but contestable funding that gets the maximum investment from the private sector. Under Maurice Williamson and a National Government the National Party protected Telecom for years. It caused us all to pay a lot for poor services. That is its legacy to New Zealand and it is not something we want to be known for. 
Hon Maurice Williamson 
: If it was all so bad why did you wait 8 years? 
Rt Hon HELEN CLARK 
: I really am beginning to think this is a very good Budget because I am getting such hysterical resistance from some members opposite. I can only feel encouraged in my efforts. 
I come back to saying that we have all seen Governments take different approaches to managing their way through economic difficulties. Some Governments cut the pension. Some Governments sell State assets to try to manage the books. Some Governments penny-pinch on health and education. But this Labour Government is putting up superannuitants’ income. It is looking after our families. It is investing in health education and housing and never never never is it selling our State assets. It is buying them back because we believe in that for the future of our country. 
I believe that this is a fair Budget that gives timely relief to our taxpayers. I believe that it invests in our future and it is able to manage through this current international downturn because over the years when the international economy was in better shape we addressed the critical deficits—the years of underspending in health and education and on the police the prisons and the transport system. We are now in a position to give relief where it is needed to maintain investment and to position ourselves for the upturn that Treasury forecasts in these Budget papers. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 Budget 2008 contains some good elements and a few bad omissions but most important New Zealand First is promising something better. The moving of tax thresholds in October of this year will provide relief for New Zealand workers and New Zealand First will support these initiatives. But we make this point: much of the good in this Budget is found in the fine print and a lot of it flows on from New Zealand First’s confidence and supply agreement with the Government. New Zealand First’s gains include assistance to superannuitants such as free off-peak travel on public transport during the day—not at night as Television New Zealand said—for SuperGold card holders; subsidies for hearing aids of $500 or more; advantageous tax effects for those who receive New Zealand superannuation; increased funding for Maori wardens; an ongoing funding boost for the elder-care sector; and—more could have happened here—a significant injection into the shipping industry which has at last been rediscovered as being important for New Zealand. We have been saying it for years. Here comes climate change and all of a sudden we have this. There is nothing so true as the saying “We told you so.” but we damn well did and for a long long time. 
Hon Annette King 
: Yes well at least we listened. 
Rt Hon WINSTON PETERS 
: Well better late than never. Our gains also include a lift for premier racing stakes and if we add in the substantial Budget boost for foreign affairs that will ensure that this country for the first time for a long time has the resources to confront the great challenges for the 21st century of diplomacy and trade we can see that New Zealand First has delivered again. 
 I want to give this warning: I was just told by a National Party member that the Ministry of Foreign Affairs and Trade does not expect to get it. 
Hon Members 
: What? 
Rt Hon WINSTON PETERS 
: The Ministry of Foreign Affairs and Trade does not expect to get it. They can only be the only people who have talked to him and are foolish enough to think that National is going to win the next election because the ministry is going to get it and it is getting it now. 
But there are other critical elements missing. For example we are disappointed that the Budget does not include tax policies to promote export growth. Yes subsidies incentives the kinds of which one will see in Ireland in Singapore in Japan in Thailand throughout the Nordic countries and even in countries that used to be behind the Iron Curtain do work. We do not have to reinvent the wheel here. We need to learn what an export-dependent economy needs by way of critical policy. We are an export-dependent economy and our policies should reflect that. Nor has the Government or its predecessor addressed the elephant in the room—the Reserve Bank of New Zealand Act which is so loved by so many people in this Parliament. This is a failed economic experiment. It is inflation targeting. There is some belief in this Parliament that somehow we can deal to massive import inflation by damaging our domestic markets and our domestic consumers. Targeting import inflation using the blunt instrument of domestic interest rates can only create domestic pain and it is. We heard nothing from Mr Key today about that. We have been saying this for 20 years and only if we get back on track as an exporting nation can we grow our economy so that we can afford decent wages and social services. 
We think there is a programme in respect of affordability and the rapidly rising prices of household basics but it is still insufficient. Let us face it times are tough and a lot of people are finding it hard to make ends meet. But we have some questions for the National Party. Will it cut New Zealand superannuation? 
Hon Members 
: Yes! 
Rt Hon WINSTON PETERS 
: And the $45 windfall for married couples from this October? 
Hon Members 
: Yes! 
Rt Hon WINSTON PETERS 
: Give us an answer! 
Hon Dr Nick Smith 
: Of course not. 
Rt Hon WINSTON PETERS 
: I am not taking it from Nick Smith. Excuse me! Will it torpedo KiwiSaver? 
Hon Members 
: Yes! 
Rt Hon WINSTON PETERS 
: Will it cut the 1000 extra police that we are putting on the streets? 
Hon Members 
: Yes! 
Rt Hon WINSTON PETERS 
: Will it slash extra funding for the elder-care sector? 
Hon Members 
: Yes! 
Rt Hon WINSTON PETERS 
: Will it take hearing aids off the elderly? 
Hon Members 
: Yes! 
Rt Hon WINSTON PETERS 
: Will it take away their free transport? 
Hon Members 
: Yes! 
Rt Hon WINSTON PETERS 
: Will it make them pay more to go to the doctor? 
Hon Members 
: Yes! 
Rt Hon WINSTON PETERS 
: We could go on but unlike National New Zealand First has a solution. We are actually able to offer a real alternative with real policies that have been tried and tested in nearly every other growing economy. We want to see a tax-free threshold of $5200 introduced: a tax cut that everybody—everybody—benefits from. We also want GST reduced to 10 percent across the board. 
What was most noticeable about the theatre of Parliament today was that there in Parliament were Roger Douglas and Richard Prebble alongside National indicating their support. Remember them? They said that GST at 10 percent was written in stone—that it could not be changed. Then they changed it to 12.5 percent and they have never explained why. 
Those two steps I have outlined are not enough on their own. We want 68 percent of the net average wage for superannuitants—and we could afford it. So although we support this Budget we are looking forward to the real alternative of tax relief and greater affordability in Budget 2009. And we mean to be here. And those who are following the polls will know we will be here—just in case some people have some silly ideas. 
We know that with a package of tax incentives for exporters a rewrite of the Reserve Bank of New Zealand Act and a more equitable tax policy we could put New Zealand’s economy and its people back on the front foot. We are not going to go on with a Governor of the Reserve Bank unelected doing what he likes to the major part of the economy while those of us who are elected can do nothing because of our own legislative frustration. We offer an alternative; National does not. An old National Party would have Holyoake would have and people like Holland would have but not this crowd. Growth can come only through productive and non-consumptive wealth. Never has this been more urgent. 
There were no solutions from the National Party today. I was amazed that Mr Key got to his last 5 minutes and said: “Now to National’s plan.” I have just two questions: how much and when? Come on I say to Mr Smith tell us now. 
Hon Dr Nick Smith 
: We’ll tell you in the election campaign. 
Rt Hon WINSTON PETERS 
: Oh he will tell us in the election campaign!  
Hon Member 
: He doesn’t know. 
Rt Hon WINSTON PETERS 
: He does not know. You know there was a time when New Zealanders could expect to hear something uplifting and memorable from the National Party. I know; I used to belong to it. Frequently I was the cause of it; its members could expect that. We used to hear speeches about leadership vision ideas answers and solutions. Instead all we got today were the words “the National plan” and no detail whatsoever. And when we look across at the inglorious line of wannabes never-have-beens and political seat-warmers we realise the old saying is right: “You can’t make a silk purse out of a sow’s ear.” 
Look at that party’s line-up. Mr David Carter is here only because he has some preference on selection even though it has been to court three times. Mr Williamson believes in four private companies to run New Zealand roads. The next man? Need I mention Mr Smith? I do not think so. He is the top-up man—Harpic. The next guy—very inexperienced. The next one well frankly he was the deputy leader and he got demoted. He jumped before he was pushed. Then we come to Mr Key. You know I can recall the National Party leadership of recent times. One came out of a kindergarten and wanted to be the Prime Minister. It lasted 5 minutes and she delivered the worst result in National’s history. Then the next one turned up. He came out of Treasury. He delivered the worst result upon that. Then they got a guy who walked out of the Reserve Bank and thought “I am qualified by this background to run the whole of New Zealand.” And he lost the unloseable election. Then National got somebody from the stock markets of England—no memory of this country whatsoever. And National members are telling us with all their puffery that he can do the job. 
Bob Clarkson 
: You’ve still got me. 
Rt Hon WINSTON PETERS 
: Oh here comes “Bob the Quitter”. That really tells us a massive amount about the National Party. When his stadium much-vaunted was in trouble he socialised his losses. He got the people of Tauranga to buy it and they will be paying for it forever. Typical! And he even made himself sound magnanimous when he did it. But when anybody inquired into the due diligence the council would not release the information—his council. We know that is true do we not I say to Bob? We will hear more about this. This guy was going to stand against me and he was going to do this and he was going to do that. He was full of puffery and bovine scatology. He is all talk; he is the Blue Chip member. Tens of thousands of old people in Tauranga have lost all their money and he is off—going finished. He did not jump. He was pushed. I say to him “You were pushed sunshine weren’t you?”. One cannot make a silk purse out of a sow’s ear. 
By the way the National Party was talking about the cost of bureaucracy. National is going to pay for all the tax cuts by having a review of everything—of every department. National has been talking about cutting the cost of bureaucracy. That is fair enough: National likes slash-and-burn policies. National did it in the 1990s when it slashed benefits and pensions. National cut police numbers and social services. National calls it market forces. 
Most of the culprits are still there on the front bench. Their DNA and fingerprints are all over everything that went wrong. They even sent the economy into a recession in 1991. I was here. I saw them do it. And now we are being told that the soft face of capitalism from a State house in Christchurch is the answer. Like some of us do not know about poverty? Like some of us do not know what it smells tastes and feels like? Is there something special about that? But what we are not being shown is the cost of National putting its best bland face forward. We are not being told about the gravy train that National is creating in the process. Do members know that John Key himself in his Wellington parliamentary office employs 36 people?  
Hon Members 
: How many? 
Rt Hon WINSTON PETERS 
: He employs 36 people just in his office and that does not count the staff for MPs. Look at the pages. It is all here. There they are; they are all here—36 people at great expense. Every year they cost the taxpayer over $7 million for their parliamentary operations. [ 
Interruption 
] Yes they do. That is what they do and I am not even counting his secretary in the 36. There is someone called a web manager. 
Hon Member 
: A what? 
Rt Hon WINSTON PETERS 
: A web manager. Maybe it is a duck—or Charlotte the spider. There is an IT manager and there is a graphic designer. What would a graphic designer do? Maybe he or she would try to dress up Nick Smith—I do not know. Members will like this one. There is a programme and stakeholder relations manager. What would that person do? And of course there are teams of public relations people spin doctors and policy advisers. And what for? There is no policy. They are all feverishly out there creating the image of leadership saying “You’ve got to walk this way. You’ve got to have your whole crowd around you.” Look John Key cannot get his advisers into one bus; he has to have an articulated bus to take his entourage with him! The John Key image that members see over there and on TV is one shaped by many hands and spun by many spin doctors. That is only the lot within Parliament. What about the blogsters the webmasters the David FarrahRumplestiltskinites the consultants the ad agencies and the even more public relations people outside of Parliament? Do members remember the so-called freedom fighting organisation called the Free Speech Coalition? It was going to give us all of the changes that we need to have for our electoral system but in that time—since 1993—it has not given us one idea at all. It just so happens though that its front man also works out of the National Party’s headquarters. Are members beginning to smell a rat? I am. 
The biggest increase in taxpayer spending in New Zealand today is going to the National Party. Why is the National Party not a separate item in the Budget? What about the people who are financed by big business on the outside? How can John Key go around the country and tell everyone that he is fiscally prudent when he needs a fleet of buses to carry his entourage? You know National has a bureaucracy that would boggle the minds of commissars in the old Kremlin. Even Joseph Stalin did not have 36 people in his own office. Even Joseph Stalin could not do that. 
I actually worked out that National is bigger than some Pacific Island economies. It is actually bigger than some Government departments and ministries. But that may be what it is all about—the creation of a new big-spending freeloading free-lunching perk-gathering “Ministry of National Affairs”. 
Hon Dr Nick Smith 
: If this is your best it’s time you retired. 
Rt Hon WINSTON PETERS 
: Oh really? That member should have never come here. He got in here only because I actually campaigned for him one night and it brought us an audience wall to wall. Philip Burdon asked me to and like a fool I went down and did it. Now despite the efforts of all these people assisted by a sympathetic overseas-owned media we still do not know what National stands for. So far all we have had is a succession of “Me too!”. The National Party has a duty to tell the public what it is that it intends to do. 
I remember it was Keith Holyoake a real National Party leader—one whom I was proud to work under—who said: “Tell the people. Trust the people.” That is National’s problem: its members do not trust the people so they will not tell them what National intends to do. There are all sorts of parties in this Parliament. We do not always agree with a lot of the things that they say but at least they tell the public what they intend to do and we respect that. But there is something about National that is not quite right. It seems to be a party with secrets kept under wraps like a boil covered over by a sticking plaster. 
What has National tried to do since the election in 2005? What initiatives and policies has it launched since that election? Where does it stand on all of the big burning issues of the day? What policies has it sought to support? National has spent 2½ years waiting for a snap election that was never going to happen. I say “bad luck!”. But that is no excuse for doing nothing. 
There is only one real alternative to this year’s Budget and it is being put forward by a party that is not afraid to tell the public its policies on the economy socialism social welfare or capitalism in this country. New Zealand First is the party that has answers to questions that have been around for a long time. The answers are not something experimental or chosen by the paper-shufflers of Queen Street or of Main Street Wellington; they are something to do with this country’s long-running economic structure. There is still hope that we can get to the promised land but we have to change our direction and head down the right path. That means creating a tax-free threshold reducing GST to 10 percent creating a tax regime for exporters rewriting the Reserve Bank of New Zealand Act to relieve interest rates and creating a better deal for senior citizens. 
We were once God’s own country controlling our own destiny built by generations of hard-working and innovative people. We have seen what this country and its people can achieve. We in New Zealand First still believe in them and we believe that we have the policies the priorities and the persistence to rebuild this country along lines that will work; not along lines of economic experimentation of the type that sadly we have seen over the last 23 years. In short my message to New Zealanders in the next 4 months if they have any idea that they want change is that they should vote for change that they can believe in. In that respect my message to them is to hang on because as before help is on its way. 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 We are living in a moment in history and in a generation where the people who have the power have a clear choice: either they face inconvenient truths that are very obviously around us or they leave it to their grandchildren to face those truths when it may be too late. But the one thing that gets this Parliament excited is tax cuts. 
We are bumping up against the limits of growth. The atmosphere will absorb only so much carbon. There is a finite number of fish in the sea. The planet has only so much fresh water and only so much oil. Unless we recognise all of this we will only create problems from Budget to Budget for our grandchildren and for the world. Those environmental limits are already feeding inflation in a way that just playing with the official cash rate is not able to control. We have to recognise that the environment is the economy and that resource limits are driving our spiral of high inflation high interest costs and high exchange rates which again raise the cost of imported resources. Oil water and climate limits are driving food prices up—up 28 percent in a year for a basket of staples the  
New Zealand Herald  
tells us—which in turn are driving poverty. 
Addressing the problem at its cause will enable us to get monetary policy under control but Parliament can see only tax cuts. Some days—and this is one of them—I feel like I am surrounded in this Chamber by people who have their heads in the sand. There is the opportunity here to propose an answer to the defining challenges of our time—and I say to Winston it is not trade and diplomacy—to unite us collectively as a people sharing the costs of our carbon footprint equitably and sharing both the effort and the resources. There is an opportunity to future-proof the quality of our lives in an uncertain world. But our Parliament is talking about tax cuts. 
This is not a Budget in total that will be remembered and celebrated by my grandchildren’s generation or even in a couple of years from now. What this week will be remembered for is not this Budget but a turning point in the economic history of the world. The financial markets have finally recognised that we live in a time of diminishing resources bumping up against the limits of the planet. Yesterday for the first time in history the futures markets for oil put their money on continuous price increases from here on out. It is the first time in history that that has happened. I do not want to frighten members but the bubble of limitless mindless and unfair economic expansion has burst. As I said yesterday for the first time in history the futures market for oil put its money on continuous price increases from here on out. To ordinary common-sense people that might seem a no-brainer. Is that not what oil prices have been doing for years now? Well the futures market does not think like that. Until now the market has been in a state known in the trade as backwardation. It means one looks in the rear-vision mirror to predict the future. I have shown the House the results of that before. Repeated oil price forecasts by Treasury the Ministry of Economic Development and the Reserve Bank of New Zealand start each time from a higher real price and predict it will fall; it never happens and they never learn. But Parliament argues about tax cuts. 
Now that the futures market on which Treasury says it bases its predictions has moved out of backwardation can we expect Treasury and the Government to stop backwardising too? Is it not about time they used a windscreen instead of a rear-vision mirror got out of their backwardisation and contangoed with the Greens? Contango is the other state where the futures markets put their money on oil prices rising continuously. That is where we Greens would put our money if we were speculators. It is where we have been for years now ever since I pointed out in my 2004 Budget speech that as Dr Cullen was delivering his speech the price of oil was just over double Treasury’s predictions on which that Budget was based. 
So at this defining moment in history what forecasts has Treasury used today to underpin this Budget? Well it has forecast a drop to US$100 a barrel which is higher than it has ever said before; it has forecast US$100 right out to 2012 but today it is US$133. It has forecast US$100 a barrel in defiance of the futures market. I am sorry but this fiction has gone on long enough. It borders on negligence. True leadership requires that we admit that the economy is still and always has been subject to the laws of physics. True leadership requires that we acknowledge the challenges ahead and that we take steps to safeguard our families and the planet that supports them. True leadership requires that we face facts and make hard decisions even when the information at hand is incomplete and even when there is an election pending. It requires courage and I do not see a lot of it here. 
So we can agree as a starting point then that this Budget is not based on reality. We cannot trust its numbers. It is planning for the past not for the future. That is the same lack of urgency that we see in climate change policy: “Lord make me carbon neutral but not just yet; in fact not for a very long time please and don’t make me take serious steps towards it for ages.” Last week I quoted in the House Dr RajendraPachauri head of the Intergovernmental Panel on Climate Change who said of the world’s climate change efforts: “If there is no action before 2012 that’s too late. What we do in the next 2 to 3 years will determine our future. This is the defining moment.” Half our greenhouse emissions are not planned to face any price on carbon even at the margin till the year after Dr Pachauri says it is too late. But the New Zealand Parliament is arguing about tax cuts. 
We have a small window of opportunity perhaps 3 to 5 years to make New Zealand a more resilient nation that is able to withstand the shocks that lie ahead in oil food and climate. We have a small window to invest in the economic transition to reduce our dependence on oil with much more efficient transport options—but we see again six times as much funding for motorways as for public transport—with more energy-efficient self-reliant homes; with businesses that make their money from resource-conserving activities; and with food supplies grown sustainably and locally. I have been calling for years for sector-based peak oil task forces of industry and Government leaders to analyse our vulnerability and develop strategies for each sector to overcome it. Since I first called for that other countries have been doing it but New Zealand has not moved yet. Queensland’s task force has just reported after a couple of years’ work. It was set up in alarm when oil prices were predicted to reach—wait for it—US$115 by 2050. That was enough to trigger emergency action by the Queensland government. Today it is US$133. But the New Zealand Parliament is arguing about tax cuts. 
The Greens welcome the fairness with which the tax cuts have been delivered through the economy—provided that one is in work. For those on benefits who are some of the most vulnerable in our communities this Budget offers nothing except maybe an incentive to have more children in order to qualify for Working for Families. It is a national shame that beneficiaries are worse off economically today than they were after the 1991 “mother of all Budgets”—and that is reported in the Government’s own reports. This Budget does not help them. 
The Government seems to have totally ignored the 61 percent of people who said just last month they would rather not have tax cuts if it meant cuts to spending on health education and benefits. Failing to fund those services to keep up with needs is a cut even if the amount of money does not go down. Michael Cullen acknowledged that when he said that Budget 2009 will have lower spending and require “significant reprioritisation efforts”. “Significant reprioritisation efforts” means things that should be funded will not be funded. 
On the limited evidence available this Budget is probably better than the alternative. It does not deny that climate change exists and it does not drastically cut and privatise health and education services so as to provide more money for the wealthy. It does make some effort to ensure that tax cuts reach lower wage earners. We welcome the recognition of the need for investment in rail. We have been banging on about this for years with campaigns to buy back the tracks and to save the Overlander and we note that Dr Cullen now recognises its importance in the future. But we are concerned that there are no numbers in the Budget speech. The Budget speech is full of numbers but we do not know what this investment in rail is going to amount to. We are glad to see $13 million to restore the Department of Conservation’s capacity after the huge expenses it had with firefighting. We are glad to see an increase in research and development and in funding for tertiary education providers although students are likely to be rather less than overwhelmed by getting another $5 a week. I guess it equals a can of beer a week if one is a student—if one gets it at all. The increase in the accessibility of the living allowance is not very great either. We are glad to see the investment in broadband. We are glad to see shared-equity housing. It is very good small-picture stuff but it misses the big picture. 
The 2008 Budget might not make a huge impact overall but it will make a difference in some specific important areas that the Green Party has targeted and negotiated hard for. If this Budget is to be remembered for anything it is for how much the Green Party—six MPs and not part of the governing coalition—has managed to achieve. We have added some $95 million of value to an otherwise lacklustre Budget. One would never know of course because there was not a single acknowledgment in Dr Cullen’s speech of the things we have worked hard to achieve in this Budget. That shows the lack of value that he puts on the initiatives we have put forward. 
The Budget targets the much-neglected community sector—that vital third sector of the economy where civil society organises in not-for-profit organisations to work for the common good. It promotes better health not by waiting until people are sick and then treating them but by keeping them healthy by preventing illness from cold damp houses antibiotic-resistant infections and contaminated food. It promotes democracy by opening up the decision-making process to ordinary people outside of politics and Parliament. And it links key Green concerns about climate change and biodiversity conservation. 
Let us look a little more closely at some of what we have achieved. For a total of $53 million we will ensure that in 5 years’ time no State house tenant lives in a cold damp home. I acknowledge the support of two Ministers on this issue particularly. It will mean that 21000 homes have a package of renovations including insulation draft-proofing of windows and doors wraps for hot-water cylinders efficient showerheads lagging of pipes low-energy lights and in some cases energy-efficient home heating. This of course helps with our climate change efforts in a small way because insulated homes use about one-fifth less energy. But for the people who live in State houses who are among our most needy it is a huge move. Children who live in insulated houses have half the number of days off school from asthma and respiratory disease. Their education is improved and their families save money on their power bills. This was the only Green initiative mentioned by Dr Cullen in his speech and there was not a single word to acknowledge that it would not have happened unless the Green Party had fought very hard for it. 
We have gained more than $4 million for a citizens’ jury to consider funding of elections and political parties. This important achievement lays to rest uninformed criticism of the Greens for supporting a less than perfect Electoral Finance Bill. We are passionate about everyone having a say in election campaigns not just those with deep pockets who can back up their lobbying with big donations. We are equally passionate about allowing ordinary people not just National and Labour to have a say on how the whole election campaign system should be funded. 
I want to look also at the more than $10 million extra that my colleague Sue Bradford has secured over 4 years for the Community Organisations Grants Scheme. This will help provide essential support for non-profit voluntary and community organisations to help meet real needs. The Community Organisations Grants Scheme is the most devolved and accountable of all Government funding schemes and it has been chronically underfunded since its inception. In my home area of Coromandel for example amounts of money went to groups like the Waihi and Paeroa resource centres the Restorative Justice Services Hauraki Trust the Thames Budget Service the Mercury Bay St John Ambulance and the Coastguard Northern Region. 
Earlier I said that the Budget does nowhere near enough to address our Kyoto obligations. But Green MP Metiria Turei has at least convinced the Government to do more on climate change research. Funding of $8 million over 4 years will go to five major research projects on climate change on conservation land. Study will also be made of how increasing carbon storage can maximise biodiversity values and of the impact of extreme weather events such as floods slippage wind storms tidal surges avalanches and rockfalls on the management of huts tracks and campsites on Department of Conservation land. Meanwhile in the conservation area $4 million over 2 years will go to the new National Community Biodiversity Fund to support restoration projects on public and Maori land that protect indigenous biodiversity. 
Through the efforts of Sue Kedgley the Green Party has secured $4 million of funding over 4 years to establish a new and comprehensive antibiotic-resistant surveillance system to be administered by the Ministry of Health in conjunction with the Food Safety Authority. The aim is to monitor not only prescriptions of antibiotics but also the levels of antibiotic resistance in our hospitals our communities our environment and food-producing animals. Sue has also initiated $2.4 million to look much more closely at the safety of the food we import which totals 2.5 million tonnes a year. At a time when this Government has decided on a preferential trade deal with China and when there are numerous media stories about occasional pollutants in Chinese exports we need to be much more vigilant at our borders. 
Nandor Tanczos has secured $800000 over 4 years for environment centres. These centres provide environmental information and education for communities and promote recycling alternative power sources and energy efficiency. I have visited a number of these centres over the years and they do a host of things such as running seminars and training courses on environmental issues helping people to understand how to use the Resource Management Act and taking part in practical projects such as cleaning up waterways and restoring the biodiversity of bush reserves and wetlands. 
 Last but not least of the things I have time to talk about today we have funding for people in our country who are among the most marginalised and the most needy—refugees. The Green Party does not attack refugees as some parties do because they are unlucky enough to find themselves without a safe home. Keith Locke has instead secured $1 million of funding over 4 years to help them set up homes and jobs here. New Zealand has a proud record of doing its bit by accepting refugees but in our view it does not do enough to help them settle once they are here. We will help them put the horrors that they have experienced behind them live a quality lifestyle and contribute in positive ways to our country. In looking at one of the causes of refugee suffering we again promote the cause of preventing rather than fighting wars. Keith has secured $200000 for a peacemaking feasibility study to look at the possibility of New Zealand furthering our work in resolving conflicts around the world beyond what we are already doing in places like Bougainville. 
I said earlier that this Budget is not based in reality. It is backwardising in that it expects the future to be like the past. It is ignoring the urgent need to respond to climate change peak oil and resource depletion. It is a long long way behind and the tragedy is that National is even further behind. I would like to devote the last little bit of my time to silence in order to recognise the dead hopes and perishing people who will be—and in some countries already are—the victims of Governments around the world that refuse to get serious about climate change the end of cheap oil and abundant food and the need to plan a different kind of future. 
Dr PITA SHARPLES (Co-Leader—Maori Party) 
: 
Tena koe Mr Deputy Speaker. Budget day is the day when the members of one side of the House rise to their feet and applaud while the other side throws brickbats and dissects the dollars. The meaning of life does not feature much in that classic piece of political theatre. But for over 4 million New Zealanders the meaning of life is the quintessential conversation point of every significant discussion. It is the motivation that separates out those who live by their dreams from those who live in regret. It is the question not about whether we will die but about how we will live. So how will the great New Zealand public assess the difference this Budget will make to their lives? A $4 billion tax cut package is all well and good but there is so much more to do to address inequalities and need. The tax cuts will relieve pressures on many families but we really wanted to see a much greater emphasis on eliminating poverty. This Budget does not do that. 
How does this Budget affect the 1.8 million people on incomes under $25000 whose hope is being extinguished by a Government that seems to ignore them? There are 1.8 million people who are struggling to make ends meet. We need to recall that it is not just the unemployed who need help with feeding their families but those in part-time work and those on low pay scales. Of these 1.8 million people 10 percent are children who the Child Poverty Action Group has revealed are living in severe and significant hardship. The Public Health Association describes these children as an underclass with poverty and poor housing making them sick. And what is the meaning of life for the people who inhabit our dormitory suburbs—those communities like Titahi Bay Otara Mangere and Flaxmere—where people may sleep but their working life is elsewhere? The meaning of life must be about a qualitative difference that brings our aspirations within reach. 
The Minister referred to a vision for a sustainable nation. The trouble is that if we do what we have always done we will get what we have always got. We need to be bold and to make statements of faith to lift the quality of life for all. Some of that policy courage has been demonstrated in this Budget amongst the loads of lollies designed to reward lobby groups. We welcome the investment in rail and ferry infrastructure to deliver a better service to reduce the number of cars on the roads and to decrease our greenhouse gas emissions. We commend the initiative of the Greens in their work in achieving a State house insulation programme—a programme that will improve the health of tenants and achieve energy cost savings. Of course we are pleased at the investment of $450 million to improve partnerships with community-based social services $80 million for child and adolescent oral health and $30 million to create healthier environments. All are elements of progress but are they enough? 
We cannot be blind to the newsflash from Statistics New Zealand that the number of New Zealanders leaving for overseas in the past year—some 48000 of us—has never been larger. It is even more shattering to learn that quality of life has displaced pay as the biggest single influence on finance professionals weighing up whether to leave New Zealand. Ironically the factor that most attracts immigrants to our shores—our quality of life—is pushing us on to the first plane out of here. When we talk of quality of life we think of traffic congestion poor air quality the management of waste poor beach and stream quality and the need to protect our biodiversity. We think about crime violence child abuse white-collar corruption and poverty. We think about the 29000 workers who have lost their jobs and we think about the fact that the unemployment rate for Maori has shot up to 8.6 percent and for Pacific peoples to 8.2 percent compared with 3 percent for Europeans. It would seem that our pursuit of wealth as our saviour has sacrificed sustainability in Aotearoa as a place people want to live in. 
The Maori Party has constantly raised the need for a genuine progress index to ensure we measure progress on all levels. If we do not set a baseline standard for what is acceptable the nation will end up with a quality of life that is far below what we deserve. We need to pledge to end child poverty in terms of all poverty measures by 2020. One part of this is to designate an official poverty line at 60 percent of the median household disposable income after housing costs. How else will we know we have made the difference if we do not have a benchmark to begin with? The need to bring relief to the poor is urgent. Although the bringing forward of the Working for Families adjustments related to family tax credits is welcomed we still believe there is much more to do to respond to what the Minister described as the twin pressures of food and fuel price increases. We need to adjust income support levels to maintain and improve their relativity with what the New Zealand Council of Trade Unions has recommended to be required—a new minimum wage of $15 per hour. If we were to increase benefits by wage movements rather than by the CPI that would equate to an annual increase of little more than 1.1 percent on average. Based on the current forecast for benefits in 2007-08 at $16.4 billion the extra cost would be about $180 million—not a great deal in the scale of things. 
Although the business tax regime has been simplified we would have supported the introduction of business tax incentives for businesses to move to limited employment zone areas—those regions that are economically underdeveloped. We want to turn our dormitory suburbs back into communities of hope and promise where we know our neighbours we enjoy sport and recreation together and we rebuild our communities as sites of safety. 
We want to see our world being a clean green haven once more. We know that that means facing the costs of greenhouse gas emissions including carbon dioxide which someone has to pay—the polluter the taxpayer or future generations. We need a savings culture that is not just about living within our means but is about investing in our future. For tangata whenua our quality of life is associated with our cultural values and customs our responsibilities for our traditional lands water sites wahi tapu and other taonga and our capacity to live as Maori. Although the Government has announced that $750 million will go into developing our unique national identity it appears to be focused on developing that identity only in Asia the Pacific and Latin America—in fact anywhere but Aotearoa. No matter how important it is national identity is more than a wharewaka on the Wellington waterfront or the re-appropriation of funding to pay for waka umanga. When will we learn that our greatest opportunity for success is in upholding our indigenous values to ensure that our country maintains its natural beauty and is home for all New Zealanders? 
We want to see an investment in diversity. Diversity should not be redefined as a way in which we understand the persistent disparities of the social and economic disadvantages associated with low levels of educational participation and attainment and of those who are preyed upon by gambling lords and loan sharks. Diversity is about the strength of all our peoples in Aotearoa the added value our nation achieves through valuing the importance of working together and living together and our shared heritage—our home. And most important of all our quality of life is about happiness which is what we might call “wairua tau” “mauri tau”—that general sense of well-being. 
If there is one thing that New Zealanders want now it is to know that leadership is being provided by people with a purpose by people who have the knowledge about what one needs and by people with a burning desire to achieve that success. That leadership is being provided already in whanau hapu and iwi. It is being provided in families of the working poor families in hardship families in business and enterprise and families enjoying success. The Maori Party respects that leadership and our biggest job now is to ensure that the qualities displayed by that leadership are not hindered by structures and systems designed to undermine them. 
The Maori Party is committed to working together with those who are committed to staying in this country to make Aotearoa great once again. This Budget is but one reason that demands we do so. 
Hon PETER DUNNE (Leader—United Future) 
: 
 For many New Zealanders this Budget was all about tax cuts. That was partly brought on by media hype that that was going to be the central theme of the Budget and partly also brought on by the fact that New Zealanders have had to wait 12 years since they last had a cut in their personal taxes. In the event the calculation they will be making right now is whether those cuts have measured up to their expectations. I think that the moves announced this afternoon are a step in the right direction. They are a logical flow-on from the moves we made last year with the  
Business Tax Review 
. But with petrol having hit $2 a litre early this morning and with the dollar having gone up this afternoon in the wake of the Budget—thus suggesting that early relief from rising mortgage rates is unlikely—it is more than likely that those many New Zealanders who are hanging out for this afternoon’s tax cuts announcement will conclude that they are just a step in the right direction but that they have not over the 3-year period given them the type of relief they were expecting. And when they factor in on top of that that we still have the impact of the emissions trading scheme to come and the likely boost to household living costs that that will bring on without any clear indication in this Budget of compensation to households they will be even more concerned. 
It is interesting that when the emissions trading scheme was first postulated last year the talk was that households would be compensated for the increase in costs. Over ensuing months that has become refined to “vulnerable” households would be compensated for “some” of the ensuing costs. And in this afternoon’s Budget we heard that the SuperGold card provisions for the elderly in respect of electricity charges will take effect at the time that electricity enters the emissions trading scheme. I have no problem with that aspect but I have a huge problem with the fact that those New Zealanders who have got a tax cut this afternoon may now be forced to view that not as the dividend for the economic good years but as the down payment on the cost of the emissions trading scheme to come. I do not think that New Zealanders will tolerate that for one moment. 
We take this Budget; United Future welcomes the positive steps in it towards addressing tax issues. They are a start but there is a long way to go yet. We still have a tax system that requires fundamental adjustment to its basic integrity. We have long argued for and will continue to support the alignment of the top personal business and trust rates at 30c in the dollar. We have long argued for and will continue to support couples with dependent children having the right to split their incomes for tax purposes to make it that little bit easier for them to get around their daily circumstances. The changes in this Budget do not go that far but they enable us to hold on to the possibility of achieving those goals in the future and we will certainly push all we can for that—and we will get there. I am reminded of this fact. 
We were part of the Government the last time personal taxes went down and it is no coincidence that we are supporting the Government this time when they go down. We just want to make sure that they go down that much further and we will. But beyond that there is a fundamental lesson that is implicit in this Budget and implicit in any debate about New Zealand’s economic performance in future—that is we have to boost incomes to boost our national prosperity and to boost our opportunity. That can come only through policies designed to boost productivity to make it easier for New Zealanders to go about their business and for their businesses to prosper and succeed. In that respect there are some good things in this Budget. 
We welcome the improvements in terms of the investment in physical and intellectual infrastructure—I will come back to that in a moment. We also welcome the significant moves made in terms of softening business compliance making it much easier for those in our small to medium sized enterprise sector to get on with the job they want to do rather than being unemployed tax collectors as so many of them feel they are these days. Those are good steps. The international tax review foreshadowed in 2006 which was announced in preliminary detail last year and is now to be introduced in legislation in the next month or so is an extremely positive step forward. It aligns us with many of our trading partners. It makes it possible for New Zealand businesses to expand overseas but to retain their operating base in New Zealand. The introduction of the active/passive distinction in terms of investment and manufacturing income will be extremely positive and beneficial and it will be welcomed by many. 
I spoke before about physical and intellectual infrastructure. It is good to see the investment that is going into our transport system—into road into rail into shipping and into all modes—because that is as much about helping us to be competitive economically as it is about meeting our obligations in terms of the Kyoto Protocol and other international commitments. We welcome particularly the adoption of United Future’s policy regarding the reduction in the age at which the parental income test applies for student allowances. The reduction in age from 25 to 24 is a good step forward. As far as we are concerned it is the first step along the way towards having a universal allowance system. That is something we will continue to push for and we welcome the fact that we have been able to take that step in this year’s Budget. 
We note that the Budget will provide for 5000 more elective surgery procedures to be funded. That sounds good and to those people who will benefit I say “Good luck and well done.” But it is a drop in the bucket. It is about 3 percent of the number of elective surgical procedures currently performed in the private sector. We need to do much much more than that if we are to make a significant impact on waiting lists in New Zealand. The only way we can achieve that is by effectively utilising all of our resources public and private to best advantage. Five thousand is a drop in the bucket; a drop in the bucket that is beneficial but it is not nearly enough to turn around the mounting waiting lists in New Zealand. 
We also welcome the fact that the Budget makes provision for about $22 million of expenditure towards the implementation of various aspects of  
Medicines New Zealand 
 the national medicine strategy that we announced at the end of last year. As a result of this we will now move towards the establishment of a national formulary for medicines in New Zealand. We will have a much more effective system for making sure that patients in hospital actually get the medicines that they are properly prescribed to be getting. Believe it or not we have a big problem at the moment of patients not always getting the medicines that they are prescribed for various reasons. We have put in place programmes that will ensure that happens and that in turn is part of leading to a much healthier much better and much fitter society. That has to be a good and positive step and it is also one of the critical goals of the  
Medicines New Zealand  
programme. 
Overall this Budget continues a trend that I think has been apparent through the life of this Government of a series of quite significant building block changes that have been made and often not noticed because although the Government has been good in my view at putting the building blocks in place it has fallen short in terms of its ability to articulate a vision for the future of New Zealand. I think that as we look back on this Budget and at the eight previous Budgets introduced by this Minister of Finance we can see what has been his underlying objective: an economic transformation of New Zealand. But one has to go sifting through all the bits of the jigsaw to find it. I think that where New Zealanders are at today—and maybe this is why the approach of the Leader of the Opposition which is all fluff and no substance has some appeal—is that they are looking for that vision that sense of hope and that sense of optimism. 
This Budget is full of detail. There are a lot of positive steps within it. The challenge that the Minister and his colleagues face over the next little while is to go out and sell that to New Zealanders as being a coherent consistent rational and positive programme for the future. I think that in many steps it is a step in the right direction. But in so many other steps more work needs to be done and that will be the preoccupation of whoever occupies the Treasury benches next year. 
RODNEY HIDE (Leader—ACT) 
: 
 Let me say that the ACT party will be putting two votes behind Dr Cullen’s tax cuts so we will be voting for the legislation but sadly we cannot bring ourselves to vote for the Budget. We view the tax cuts as a baby’s steps some faltering steps in the right direction but the Budget falls short. In fact it is like every one of Dr Cullen’s Budgets. It is all about carving up the cake rather than enabling Kiwis to bake a bigger one. We see the result of those policies today. 
The forecast for economic growth next year is 1.5 percent. I remember that when Michael Cullen became the Minister of Finance he said—I know that Michael does not remember this—he would be judged by whether he achieved a 4 percent growth rate. Well the judgment is in I say to Dr Cullen and the rate is 1.5 percent. We look at the forecast for inflation and we see it is knocking the top of the target band. It is over the target band for the entire forecast period. We look at interest rates and we see that they are high and are staying high. In fact for any taxpayers with a mortgage—a reasonable mortgage—the high interest rates knock out everything they have received in terms of tax cuts. I have to say that that is a bit sad. 
It was great to see Sir Roger Douglas and Richard Prebble were here earlier. I was reminded that when they read a Budget everyone would tune in and I was aware that when Dr Michael Cullen was giving his Budget speech everyone had tuned out. It is a bit tough when Dr Cullen starts to get down to reading out that the Government is to grant $4 million to obesity research and that Budget item is deemed to be worthy of mention. 
Hon Dr Michael Cullen 
: Well you’ve done all right. 
RODNEY HIDE 
: Well I agree with Dr Cullen. He could save his $4 million by having the Minister of Health come and talk to me. Dr Cullen could have come across here. He said in his Budget that he would spend $2 million—imagine that announcement in a Budget speech—on funding the Civil Aviation Authority to get the best practice. That shows how “Think Small” Michael Cullen has become in his ninth Budget. He has famously announced $1 million for local government to deal with climate change. 
I have to say that I actually sympathise with Michael Cullen. He has put a Budget together he has put it out there and he has made the trade-offs. We hear everyone—New Zealand First Peter Dunne the Greens and the Maori Party—complain about what is not in the Budget but nowhere did I hear of an alternative plan. I heard John Key say that National had a plan and I thought that was great. The National Party has 48 MPs plus Taito Phillip Field so I thought it was going to be great. I heard the House go quiet because we were going to hear the economic plan but all I heard was silence. 
I tell the House not to worry because the ACT party with just two MPs has come up with an economic plan which I am proud to present. 
Gerry Brownlee 
: This won’t take long. 
RODNEY HIDE 
: I am happy to take Gerry Brownlee’s slot and go right through the plan. First we need to set a goal for New Zealand. I ask Mr Brownlee why we do not set the goal of beating Australia by 2020. Why is it that every political party in this House is content to be second-rate behind Australia? Why is it that we were content to have 70000 people leave New Zealand last year? Let us set the goal of beating Australia. We would not accept being second-rate in rugby so why would we in respect of the economy? 
Hon Dr Michael Cullen 
: We are! 
RODNEY HIDE 
: Michael Cullen accepts that we are. But I can tell members that over here in the ACT party we do not accept that. We do not like being second-best. ACT asks having set that goal—and this is the difference between this goal and the successive goals that Michael Cullen and Helen Clark have set—what then needs to be done to achieve it? I was actually surprised by the amount of agreement about what is needed. Everyone we spoke to—and it was quite a diverse range of business leaders community leaders economists and policy advisers—was in rough agreement about what is needed. But what is lacking is the guts to do it. 
Ron Mark 
: Hear hear! 
RODNEY HIDE 
: That is what is lacking. That is what Ron Mark agrees with. We actually lack the guts in this Parliament to do what is needed to get this economy going to get New Zealand moving forward. 
But I tell members not to worry because the ACT party has come up with a plan. We thought we would copy Helen Clark and put it on a pledge card. The card is not paid for by the taxpayer I have to say; we rushed down and paid for it ourselves. We also found that when one puts an economic plan together for New Zealand in order to beat Australia it cannot fit in a wallet. It requires some detail and it requires some substance. No one can say the ACT party does not have an economic plan for New Zealand no one can say the ACT party has not set a big goal for New Zealand and no one can say the ACT party lacks policies. At present we lack the MPs but we are planning to change that too. 
I want to show members what we have done with this plan. We have had help from John Ansell and it has been rather good. We have set the policies down here on the right-hand side. 
Gerry Brownlee 
: On the left. 
RODNEY HIDE 
: On the left if one is looking at it. We have set down in the next column what the benefits are—we are all good at doing that in politics. We have set down in the next column the other countries where it is done—and we were amazed at how many countries around the world are following good practice policies. We have in this column the benefits and we have along here what at the best estimate it would mean for economic growth. At present that is one thing we do not allow for. Sure we can talk about money for things such as buying back the trains having the emissions trading scheme doing this and doing that but it all adds up to a smaller economy to a smaller pay packet and to more New Zealanders working creating and producing in Australia. So we have in this column here the best estimates we could get of what it would mean for economic growth the trade-offs that we get for not having this policy and what that would mean— 
Ron Mark 
: Watch out that National doesn’t steal it. 
RODNEY HIDE 
: Well I would love National to steal it. That is fine. I would like New Zealand First to steal it too. I would like Dr Cullen to steal it—I say to Dr Cullen that it is not too late. 
So in this column we ask New Zealanders to say whether they agree with the plan. This is what this election will be about. It will be about which party people vote for. Will it be Labour National the Greens or the Maori Party? But then there is the ACT party which is the only party with the plan and with the big goal to grow the cake. We are sick of politicians just carving up an ever-dwindling cake. Thank you very much. 
Hon DARREN HUGHES (Deputy Leader of the House) 
: 
 I move  
That this debate be now adjourned 
. 
Motion agreed to. 
Urgency 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I move  
That urgency be accorded the introduction and passing of the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill 
. 
This motion is moved so that the Government’s planned tax reductions can be put into law as quickly as possible so that there is certainty for all involved. 
Motion agreed to. 
Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill 
First Reading 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I move  
That the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill be now read a first time. 
 This bill has three essential elements and I will deal with them in ascending order of importance. One element is a series of relatively minor corrections to current tax laws—largely corrections to the Income Tax Act. Since that large expansive omnibus legislation was passed a few errors have been found that need correcting quickly. The second element of somewhat greater importance relates to the issue of charities. Two things are done in that respect. The first is to clarify that certain kinds of bodies are charities. This includes for example State schools and integrated schools. The second is to provide a transition element because—sadly I think—the Charities Commission has been much slower than the Government anticipated in dealing with the applications for charitable status and a number of charities would lose their tax-exempt status on 1 July if no remedial action were taken. This provides for any body that currently has a tax-exempt status and that has applied for that status under the new legislation to continue to exercise that status until the Charities Commission has made a ruling in that regard. 
Thirdly of course the most important part of the legislation is to implement the new tax rates announced in the Budget. This bill therefore provides for the implementation of a complete new tax scale system which has within it the following elements. Firstly there is the abolition of the low-income earner rebate which has become more and more out of date in terms of the size of that rebate and which simply adds complexity to the tax system. It therefore replaces the current effective bottom tax rate of 15 percent up to $9500 with a new bottom rate of 12.5 percent which on 1 April 2011 will reach $20000 with the initial move on 1 October this year being $14000 a year. The effective 21c rate will then move to a new threshold of $40000 on 1 October eventually rising to $42500 on 1 April 2011 and the 33c rate will extend out to $70000 on 1 October going to $75000 on 1 April 2010 and $80000 in 2011. 
These changes deliver significant tax cuts across the board. In the first stage they deliver tax cuts of $12 to $20 a week per individual taxpayer rising to $22 to $55 a week for an individual taxpayer by 1 April 2011. These are the largest changes to individual taxes for a very long time within New Zealand. We are bringing forward the Working for Families adjustment to much longer than 1 October in terms of actual tax rates particularly at the bottom end because the $9500 threshold has not been moved since 1988. Therefore for people—[ 
Interruption 
] Yes indeed. National never moved the $9500 threshold. It never gave tax cuts to the lowest-income earners in the country—never. National never gave tax cuts to the lowest-income earners in the country—never ever. It never lowered the company tax rate—never ever. It never lowered the tax on savings—never ever. Only the Labour Government has done that. What we want to know is whether National will today vote for tax cuts for individuals. 
Hon Member 
: No they won’t. 
Hon Dr MICHAEL CULLEN 
: Well they cannot make up their minds indeed. We heard this afternoon from Mr Key and I watched Mr English’s mouth drop as he thought “My God! He’s about to announce a much bigger tax cut.” I could see him getting ready to grab his coat and pull him down at any moment. Bill English has read the Budget. He knows we are forecasting cash deficits of $3.5 billion a year. He knows therefore that the National Party cannot promise billions of dollars a year in additional tax cuts over and above this Budget. 
The second time when he looked terrified even more worried was when Mr Key said: “We’ll have to cut Government spending to fund any additional tax cuts.” Bill almost grabbed him and said: “Don’t say that. That’s not the game plan. That’s not what we’re saying. What we’re saying is we’ll cut out bureaucracy and we will save all this money in cutting out bureaucracy so we can have these huge tax cuts so that every individual can buy an extra 20 large blocks of cheese a week.” Why an individual would want an extra 20 large blocks of cheese a week is not apparent but that is what the National Party was promising this afternoon in Mr Key’s speech. Indeed the whole speech of Mr Key was: “I have a plan. I just can’t remember what it is. I just hope that sometime between now and the election I will find that plan somewhere in Bill’s back pocket because Bill is responsible for writing the plan for the National Party.” 
These tax cuts are spread across the board. Proportionately people on modest incomes around the minimum full-time average wage get a bigger proportion of the tax cuts than people on an MP’s salary or people on a Deputy Prime Minister’s salary. I do not have to go back to Napier at the weekend and explain to people why I am getting proportionately a much bigger tax cut than people who often work at rotten jobs. Those are jobs where they work hard jobs that are often dirty jobs where they are not treated well and the National Party has always said to those people: “You should get a measly tax cut if anything because we’re all about giving tax cuts to those at the very top.” Somehow or other to quote Mr Key “We ‘belieeve’ in tax cuts.” He sounded like the Rev. Wright in Washington. “We ‘belieeve’ in tax cuts. ‘Halleluuja’ brother!” In America every politician has to believe in God and has to mention God after every three sentences unless of course he or she really believes in God in which case he or she does not have to keep saying it. But in New Zealand we have to “belieeve” in tax cuts—halleluja brother! It is a religious belief. 
What we are about is helping families. We are about helping people who are facing pressures on the family budget. Does anybody really believe that anybody in this House is facing the pressure of higher petrol prices and the price of a bigger block of cheese? Really? Anybody in this House? No not at all. The people who need relief from that are the people on below-average incomes average incomes and a bit above. We need to do something about that top tax threshold because we have people paying that rate now who were never intended to be in that top tax bracket. Senior teachers nurses and people like them are now finding themselves in the top tax threshold. 
But let us get real. They are not going to work harder. I know a few teachers—I know some quite intimately to coin a phrase; well one anyway. I know they are not going to work harder just because they are paying 33c in the dollar instead of 39c in the dollar. They already work hard on behalf of the children of this country. We do not need these religious beliefs. We need a belief in fairness and in social justice and that is what this tax reduction does. It says that all Kiwis should share in the dividend of growth to which they have been contributing over the last 8½ years. We have grown faster than Australia Britain the US Japan and the European area and it is time to stop condemning ourselves because of that success. Everybody should share in it. 
If there is one thing I do not apologise for—and it is no chip on the shoulder because I am a highly paid person—it is that people who work hard at low-paying jobs deserve as much respect as those who work hard at jobs that are highly fulfilling. The notion that we have to reward those who work in highly fulfilling jobs miles more than those who work in the jobs we cannot do without who work hard in our society is simply not right and not fair. I believe in social justice. I believe in every Kiwi having a fair go. I am moving a bill today that is doing that in the tax cut area and we on this side of the House are proud of that fact. 
Hon BILL ENGLISH (Deputy Leader—National) 
: 
 I think we all know why we are here putting this bill through now. 
Gerry Brownlee 
: Why? 
Hon BILL ENGLISH 
: It is because Dr Cullen does not trust himself nor do his colleagues trust him to execute tax cuts unless there is a law that compels him to do it. Why does he not trust himself? It is because the last time he promised tax cuts before an election he cancelled them once he was re-elected. The reason why he cancelled them once he was re-elected was that Labour had big spending ideas and did not have enough money to pay for them. Well I have to say that the forecasts past the 2005 election were much more promising and generous than the forecasts published today for past the 2008 election. That means there is a much greater probability that if Dr Cullen and Helen Clark are re-elected they will do what they did before which is to say as they said in 2007 “We have other priorities so we are going to cancel the tax cuts.” 
It is all very well for Dr Cullen to shed crocodile tears for hard-working New Zealanders; what happened to hard-working New Zealanders before the 2005 election? They were promised tax cuts with the same crocodile tears that are being exhibited today. What happened to those people on the average wage paying tax of 33c in the dollar? After the election their tax cut was cancelled so that Labour could create a lot more hundred-thousand-dollar jobs doing nice fulfilling things around Wellington like liaising coordinating going to workshops launching strategies and putting out miles of publications with fawning prose about a fantastic Minister on behalf of a Government department. 
So Dr Cullen’s new-found interest in people on the average wage is new-found but it is not surprising. Why is it not surprising? Because it is election year. The tax cut will turn up 2 weeks before polling day apparently. It will be enough to top up the gas tank so that people can get to the polling booth. I have to tell Dr Cullen that when they get there they will vote against cynicism against mistrust against limited ambition against misuse of taxpayers’ money and against the arrogance that says the tax system is there for Labour politicians to take money off people so that they can spend it on what they want so that they can stay in power. 
National will support this piece of tax legislation and I will tell members why. 
Hon Darren Hughes 
: Cos you’re too scared. 
Hon BILL ENGLISH 
: No. That member should be pretty worried about his seat and his place on the list. 
Hon Darren Hughes 
: No no the pension increase is pretty good. 
Hon BILL ENGLISH 
: The member may not know it but the pension increase in compulsory. One cannot get around it without changing the law. If taxes on the average wage and on the lower tax brackets are cut pensioners have to get an increase. We heard the Prime Minister carrying on as if the increase was the gracious gift of the most popular and competent Prime Minister we have ever had. The truth is that she has been forced to give pensioners an increase; she has been forced by the National Party campaigning on tax cuts and by a public who have had enough and have said: “If you don’t give it to us none us will vote for you.” That is what has happened and the member for Otaki needs to know it. Labour has been forced to give superannuitants an increase. The increase today is their due right according to the law of New Zealand. That is what it is about. It is not about gifts and generosity. 
The reason we are supporting this legislation is to keep faith with all those hard-working New Zealanders who have waited 9 long years through the squandered opportunities of a growing economy to get some recognition that they should have some of the benefits of a growing economy. And they have waited a long time. How many of them are there? Well 1.6 million taxpayers at any one time do not qualify for the Working for Families package. Only 370000 taxpayers qualify for Working for Families and Labour tries to make it sound as though everyone has got a tax cut because of Working for Families. Well I tell those members that the resentment among New Zealanders who are sick of being lectured about getting tax cuts when they did not get any is growing by the day. National has to keep faith with them because they have waited for so long. 
This legislation is an admission of failure by Dr Cullen. He has tried to hold the line—and he has done so up until now. He almost lost an election over it in 2005. He still did not get the message mind you. Having almost lost an election on tax cuts that were pathetic he then stuck it to the New Zealand public by cancelling those tax cuts. He is today doing everything he has argued against for the last 8 years—everything. Whenever we said we would reduce the growth of Government spending Dr Cullen every Labour member and Helen Clark said that that meant sacking teachers and doctors. What is Dr Cullen doing today? He is reducing the growth of Government spending. He also said that any kind of tax cut would require a Government to run cash deficits that it would have to borrow to cover them and that is bad. What is he doing today? He is running biggish cash deficits and he will have to do some borrowing to cover them. And he will run down the little cash windfalls he has had sitting on the balance sheet to help finance them. That is what he is doing today. 
He always said tax cuts meant spending cuts. He is giving tax cuts and he is cutting spending. He always said giving tax cuts would mean the Government would have to borrow some money and he is giving tax cuts and he is borrowing some money. 
Gerry Brownlee 
: But it’s OK cos it’s him. 
Hon BILL ENGLISH 
: Well no. He is not totally self-obsessed about it. It is election year—that is the other reason. It is not OK just because he is doing it; it is OK because it is election year. A lot of this bill is unsatisfactory. People get a tax cut 2 weeks before the election then they have to wait 18 months. They get nothing in 2009. Why is that? 
Simon Power 
: Now that’s a programme! 
Hon BILL ENGLISH 
: That is the programme. 
Simon Power 
: Why? 
Hon BILL ENGLISH 
: Well it probably falls within the regulated period in the run-up to the election. Is it the Electoral Finance Act or something that is stopping the Government from giving people the next tranche in 2009? 
Nathan Guy 
: What sort of vision is that? 
Hon BILL ENGLISH 
: What sort of vision is that? This bill is an admission of failure by Dr Cullen. It is not the best that New Zealand can do. We can do much better. It is cynical because it is trying to buy people’s votes 2 weeks before an election. But New Zealanders have waited for so long and are so deserving and this Government is so undeserving that National will support this bill in order to keep faith with those people whose concerns have been dismissed year after year with contempt until election year when they vote. In every other year Labour has said to New Zealanders concerned that their after-tax wages are not enough: “Too bad! You’re greedy—in fact most of you are rich pricks—and we want the money to spend on our little projects because we know better.” Well finally they will get some money but do members know what the real tragedy is? Dr Cullen and Helen Clark still think they know better. All week Dr Cullen has been giving us long speeches about what an anguished and tortured process it is for him. He spat it out today through the Budget speech because he cannot stand the taste of tax cuts. 
Hon TREVOR MALLARD (Minister for the Environment) 
: 
 Those of us who were listening and watching noticed something really interesting today. It took Bill English 5½ minutes of his 10-minute speech—actually it was an 11-minute speech—to tell us whether National members were for or against this Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill. What did he do during that entire period? He looked up to the gallery. He looked to the members of the Exclusive Brethren up there asking for his instructions. “Do I vote for it or against it?” he was asking. The Brethren were there. They were overseeing their investment in the National Party and they will be very very disappointed with that speech. 
One of the reasons the Exclusive Brethren invested in that man is that he is the pension cutter. It was Bill English who as the Minister of Finance oversaw the last cut in the pension for the oldest and most vulnerable New Zealanders. He is a person without a heart. He is the person who was shaking when he thought that John Key might promise not to do it. He was worried that John Key might make a commitment not to cut the pension and he knows that is part of his plan. He criticised Labour for putting pensions up. He said it was inevitable and that we did not want to do it. Well I tell that member that our party has a proud history in this area whereas the National Party has a history of wrecking the lives of older people. It has a record of abolishing superannuation schemes that could have made this country rich and of attacking the most vulnerable through both Ruth Richardson—whom Bill English supported—and Bill English himself when he was the Minister of Finance. 
It is also I think somewhat ironic that that member starts criticising public servants and their numbers. What was that member before he came into Parliament? He was a Treasury official. 
Eric Roy 
: A farmer. 
Hon TREVOR MALLARD 
: Oh no he wandered back to the family farm occasionally but he spent his time in Wellington as a Treasury official. I know what Eric Roy thinks of Bill English and he knows that he is not a farmer’s backside. Eric Roy knows that and he has told people all over the place what a useless farmer Bill English was. It was for show that Bill English went down to Dipton when he was running for Clutha-Southland not because he was ever a proper farmer and we all know that. He was a public servant and he is a person who not only hates the old and the young but does not like family tax credits and he hates his former workmates. Everyone around Wellington knows that that is where he wants to attack. But I tell the member that that is not good enough. 
When one is in Government one has a look around at the relative cost of things. There is not a chance of getting the extra $2.5 billion over these tax cuts that was promised as recently as Sunday and Monday by his leader John Key without cutting the pension without cutting health services and without cutting into the education budget. We know that and Bill English knows that and that is why he was shaking as John Key was speaking. He was scared about what John Key was going to say—not that anyone would expect John Key to say the same thing 2 days in a row or even 2 hours in a row or sometimes within an interview even 2 minutes in a row. Bill English was worried that in this debate John Key would commit National to something. But of course the investment worked the speech was vacuous he said nothing and it was absolutely hopeless. John Key could not even say in his speech—after dozens of briefing notes after being on the phone for ages during the debate after reading the speech and the Budget documents and after having I think about a dozen of his officials involved in lock-ups—whether he supported these tax cuts. Half an hour after the Minister of Finance had finished his speech and an hour after he started it—and an hour after he had all the information—John Key could not say whether he supported the tax cuts. When one is running for Prime Minister one needs to have more brains than that. One needs to have more instinct than that and to be able to react in a way that is proper and consistent— 
Hon Maryan Street 
: You actually need some backbone. 
Hon TREVOR MALLARD 
: One does need backbone but John Key does not have that. He has a flip-flop instead of a backbone. The approach that John Key has given us has been of a rubber-backed man. 
I will give one more example of a family. It fits fairly well with a family that I know—a couple both of whom are in their early 40s with two children. The couple are called JJ and Kiri and they have Maria who is 19 and Jade who is 12. JJ works as an electrician and he earns $65000 a year Kiri is not in paid employment and Maria still lives at home while she is studying full-time at university. From October this year JJ will start paying $1160 less per year in tax and the family will receive an additional $588 per year of Working for Families tax credits. In year 1 JJ and Kiri are $1748 a year better off as a result of the October changes. The family will continue to benefit as the credits are rolled out. In year 2 JJ will pay $1438 less in tax; in year 3 the savings will reach nearly $2000 a year and the additional tax credits will be $1260. As well as this the 19-year-old Maria will get her student allowance increased by $22 to $52 a week. That is another $880 over the year for that family. National members say “So what?”. 
Chester Borrows 
: It was our idea! 
Hon TREVOR MALLARD 
: It just shows how out of touch with ordinary Kiwis National is when members like Chester Borrows are saying “So what?”. He should knock on a few doors in Wanganui and work out that $4114 a year to a family will make an enormous difference. If he knew Wanganui better he would know that $4114 a year makes an enormous difference. It means $80 a week to a family but National members say “So what?”. It might be that they are all as out of touch as John Key is. It might well be that they all roll out of a Manhattan bar instead of going to the Anzac Day celebrations in their electorates; it might be that they are out of touch and do not wander home often and do not knock on doors. But I know that a family—a not unusual family—in Hutt South that is getting an extra $80 a week will say that that is great. 
GERRY BROWNLEE (National—Ilam) 
: 
 I am quite confident that the family in Hutt South said this Budget is great. I am quite confident that when Trevor Mallard rolled up in the 7-series BMW and got out of the car in his flash suit and his shiny shoes and said “We’re giving you tuppence-ha’penny after 9 years.” they said it was great. The word on the street already after a very short time is that Michael Cullen must be joking. After 9 years of claiming that the economy was under brilliant management after 9 years of claiming that he knew what he was doing that everything was going well and it has never been better all he can do is to deliver $16 a week to the average worker in this country and hold out the hope that if people are silly enough to buy into his scheme then in 18 months’ time he will give them a little bit more. What can the family that Trevor Mallard was talking about buy for $16? They could perhaps buy a block of cheese. They cannot buy a kilogram of steak. They could barely buy some sausages. That amount of money will not fill up a quarter of a tank of petrol. It will not meet much of the increased cost of the mortgage. It will not pay the average increase on the monthly electricity bill. 
When the Prime Minister spoke after the Budget today she said the Labour Government knows that dairy prices have gone up that petrol prices have gone up that other food prices have gone up that the cost of mortgages has gone up and that the credit squeeze is making things harder for families but she said none of that is the Government’s fault. 
Hon Darren Hughes 
: Oh petrol prices are the Government’s fault are they? 
GERRY BROWNLEE 
: The puzzled little fellow on the other side of the House Daren Hughes says it is not. I can tell him that it is the Government’s fault that people cannot afford to meet the increase in prices. It is directly the Government’s fault. Why is it that those prices are rising? It is because other countries can afford those prices. They can afford to pay the prices of dairy products. They can afford to pay for petrol. They can afford to pay for rising food prices but that is not so here in New Zealand— 
Hon Darren Hughes 
: And crude oil prices are set in New Zealand? 
GERRY BROWNLEE 
: —and I say to Darren Hughes that is the Government’s fault. It is why people in the member’s electorate think this Budget is a joke. It is why they are saying Michael Cullen must be joking. 
Hon Darren Hughes 
: The beneficiaries think it’s great. 
GERRY BROWNLEE 
: Darren Hughes says he will survive the next election because of the pensioners. The pensioners will save the young white hope of the Labour Party because he will be able to go back to the pensioners of Otaki and ask them whether they have read the Budget. He will ask the pensioners of Otaki whether they read the Budget and noticed that there was extra money for them in it. When he has to explain that it is six lousy dollars for every year his Government has been in office they will join the other people and tell Darren Hughes he has to be joking. His time like that of the rest of those members is nearly over because people will not tolerate this. 
There is general anger in the community. 
Hon Darren Hughes 
: You’re thicker than I thought. 
GERRY BROWNLEE 
: He has just yelled out: “Oh but you’re going to vote for him.” I tell Darren Hughes we are like the rest of the country. We have woken up. We are not stupid and we are not going to stop people from getting the 6 months or so of this tax cut that they deserve. I want to tell him one other thing: I hope that all the resources of the Government worked out that just those 2 weeks actually do line up with the pay cycles so that enough of the voters will go along to the cash-flow machine and find that they are a little less down on the overdraft than they usually are. If they do then one or two of them might say: “Oh that’s Helen Clark’s gift to me! Where’s the polling booth? Get me there fast! I’ve got to tick Darren Hughes.” 
Hon Darren Hughes 
: That’s right. They will. 
GERRY BROWNLEE 
: Well I do not think that is going to happen. I think this measure will exacerbate the anger that New Zealanders have with this Government. It will make it a lot lot worse. 
The thing that really is galling is to have Michael Cullen come in here today and say he believes in social justice—that somehow he has a calling to do this work and that his principles of social justice have finally allowed him to give this tax cut. Well people should get this straight: a tax cut is not giving anybody anything. A tax cut is not taking as much in the first place because the money belongs to the worker. Michael Cullen talks about those people who do rough jobs tough jobs and dirty jobs working long hours. Well we care about them but we are not so darned arrogant as to say that we are going to tax the hell out of them for 9 years and then give them a lousy $16 back at the last minute just in the hope that they will vote for us. 
I think the decision that we have reached that we should vote for this tax cut is pretty obvious. We believe that New Zealanders—and we have said so for at least the last 9 years—should be keeping more of the money they earn in their pockets. That is a subtle difference from Labour’s position because Michael Cullen seems to think that he is keeping more of the money he should have and was making a case over all those years that he could spend it better than they could. 
Hon Darren Hughes 
: No wonder he hates English. 
GERRY BROWNLEE 
: I do not normally respond to hecklers right? Normally I cannot see that particular heckler but because he is so excited and red in the face he has suddenly become visible. I just want to say to him that all of the protestations he might make all of the little jokes he might make and all of the screaming yelling laughing waving and everything else he does will not make a blind bit of difference to the vote that goes to the Labour Party because what we will see out there is people doing exactly as I predicted. They will be saying: “Too little too late. Not on your nelly are we voting for you again.” I know Madam Assistant Speaker that I have just breached the Standing Orders by referring to you. I apologise. You fortunately are not up for re-election so you will not suffer the ignominy that the likes of poor old Darren here will suffer. 
I wanted to make a few comments about the extraordinary remarks from Winston Peters this afternoon but unfortunately his remarks were so forgettable I am not able to respond to them. 
Hon Darren Hughes 
: Get back to the policy Gerry. 
GERRY BROWNLEE 
: I just want to say again to the member across the way that he has distracted me rather more than he might normally be able to do only by the breathtaking arrogance demonstrated by him and his ilk thinking they can build an entire Budget around this pathetic tax cut and expect that New Zealanders will re-elect them. 
Hon Darren Hughes 
: Read the whole thing. 
GERRY BROWNLEE 
: Look it is a book full of tables. But there is quite a bit of space around the edges for the member to work his colour pencils on later on tonight. 
The arrogance of coming into this House before an election with a Budget that is so blatantly determined to try to buy the way back into Government is a total disgrace. The National Party as Bill English said will support this measure because we want New Zealanders to know that we are serious about tax cuts. But we also want them to know that this measure should be considered to be a bit of a start. Dr Cullen’s 18-month gap in his multi-year promise—which we believe is all about hoping firstly that $16 will be enough to get him back and secondly that 18 months will be enough time for everybody to forget about the next bit—is just a start. 
The ASSISTANT SPEAKER (Hon Marian Hobbs) 
: Before I call the next speaker Doug Woolerton I remind the two major parties that we are now to have speakers from the other parties in the Chamber and I would appreciate it if the level of noise came down. I may have to apply for a hearing aid under the new provisions in the Budget. 
GERRY BROWNLEE (National—Ilam) 
: 
 I raise a point of order Madam Speaker. Are you suggesting that Mr Woolerton should give his speech in silence? 
The ASSISTANT SPEAKER (Hon Marian Hobbs) 
: No I am not suggesting that; I am suggesting that the barrage that goes on between the two major parties can at least lower in volume so that the other parties can have a say. 
R DOUG WOOLERTON (NZ First) 
: 
 I am pleased Madam Assistant Speaker that you did not use the words you were going to use when you were talking about the other parties. I knew you were going to say “those other fantastic parties” which would have been humiliating to National and Labour. 
Today we saw the start of the tax wars. We have heard a lot about them and we have had skirmishing for months. But today was the start of the tax wars and we now know what the Labour-led Government is going to deliver. We know in detail because we have the tables to support it and we have thresholds and all of the tax credits lined up for Working for Families. But what we did not hear today was what the other side of the House would deliver how much it would deliver and when. On Monday we saw John Key resiling from the $50 per worker statement he had made but at this point we do not know what National is offering in the tax cut debate. 
It is all very well for National members opposite to get up and go on about the tax changes in this bill and I am surprised and delighted that they are supporting them but it is the first time they have supported a tax cut in the 9 years of this Government. They have voted against every tax cut that has been put up by the Labour Government and now they say they are going to support one. If that does not tell us that an election is coming up nothing will. But we do not know how much National will put up. 
I do not for one minute think that National will win the next election but I want to put this scenario out there for people to ponder. I want to look at what would happen the day and the week after the election if National were to win. 
Hon Member 
: Horrible thought. 
R DOUG WOOLERTON 
: Yes it is a horrible thought. It would go like this— 
David Bennett 
: Don’t worry about it. 
R DOUG WOOLERTON 
: David Bennett would not even be asked God bless his soul. An interviewer would say to Mr Key: “You promised at one stage before the election that you were going to deliver a $50-a-week reduction in tax for every worker in New Zealand. What’s the story?”. He would reply: “Oh well Mr Interviewer it’s different now because the books are not what we thought they were. There have been changes we have to look to the future and we have other things happening. We have some prime problems in America and we have a tightening economy. We can no longer deliver on those $50-a-week promises we made earlier.” 
Actually I am wrong. That actually happened on Monday so after the election it would be: “No we can’t deliver on $25 a week. No we cannot agree on $16 a week.” They would give nothing in tax cuts after the election if they were to win it. We know that because of the history of the National Party. 
There was one thing that I was very very pleased with today as the Budget was read out. New Zealand First was afraid because we lived through the last hiccup in the international economy and had to stand by and see pensioners’ pensions cut. I listened for that in this Budget and pensions were increased—as they should be. Even in America they understand that when an economy is starting to look at a recession they need to prime the pumps to a degree. National does not believe that. That is what happened when Jenny Shipley was Prime Minister and forced us into more of a recession than we should have had at the time. 
I have read with interest the comments of the Federal Reserve chairman in America who said on several occasions that they have learnt something from 1929. That guy studied it; that is his bag of chips if you like. He said that they cannot leave it just up to the financial markets in a recessionary situation. And they have primed the pumps big time. They have done everything they can to support the financial institutions in America and by goodness they needed to because they have surely done some stupid things. That is where John Key came from interestingly enough. I do not know whether he has learnt anything but this is definitely not the time to be cutting pensioners’ incomes. I am pleased to see and New Zealand First is delighted to see that that has not happened. 
New Zealand First would like to have seen the first $5200 of people’s incomes to be tax free. We would like to have seen that threshold put in there and we will fight in subsequent years for that to happen. We think it would have made sense to reduce GST to 10 percent. That is easy to do and is something that would help people during this period and we would like to have seen that happen as well. 
We would also like to see incentives in the taxation system in order to help exporters and we will keep pursuing this issue. Mr David Carter can get up shortly to confirm this. We were in the Primary Production Committee this morning as it happened and— 
Hon David Carter 
: I’m going to get up now Doug. 
R DOUG WOOLERTON 
: The member will get up in a minute to confirm this. We were in the Primary Production Committee meeting and were told that since 1990 productivity on farms has increased by 100 percent while the rest of society’s productivity has increased by only 50 percent. So farmers are facing a hard time right now. We believe quite clearly that farmers should have incentives to write down their plants and machinery and all of those sorts of things more quickly because that is what is needed at this time. National does not believe in priming the pump in tough times. It believes in cutting and worsening the situation. One would hope that in the future National members will take some lessons from the Federal Reserve in America and do something about it. 
People may wonder why New Zealand First goes on about superannuitants and why it is so important that their position—particularly their financial situation—in society is protected. We go on about it because we know—and other people in this Parliament should know—that it is the pensioners the people who are retired nowadays who in many cases are paying for school uniforms for school fees and for children to go away on school programmes. It is the grandparents who in many cases are paying those fees for their children and grandchildren. We believe that money that is put into that sector of the economy has an immediate return and therefore it is good for the whole economy not just for superannuitants. 
So as well as for reasons of dignity we believe that there is a real and sensible reason for putting money into the hands of superannuitants and that is that in most cases it goes right down two generations. Madam Assistant Speaker you like me would know that not every parent thinks that their daughter-in-law or son-in-law is the greatest thing since sliced bread—in fact there has been many a television programme made about such things—but there is no grandparent I know who does not love unconditionally his or her grandchildren. That is what superannuitants spend their money on that is why their position in society should be protected and that is why we fight for them. 
JEANETTE FITZSIMONS (Co-Leader—Green) 
: 
 There is one fair way to give tax cuts if we have a surplus in the economy and we want to redistribute it to people and that is by having a tax-free income band at the bottom of the income scale—and the higher the income is the better. That means that all taxpayers get the same tax rebate whether they are beneficiaries low-income earners waged workers or the super wealthy. That has been the Green Party’s policy since some time in the mid-1990s. 
I was very pleased tonight to hear that Winston Peters has now picked up a Green idea despite saying in the same sentence that he does not much agree with us. He has picked up our policy on tax and I say good on him. 
When we fiddle with tax thresholds even if we do it as fairly as we possibly can we still always end up giving those on higher incomes a lot more in actual dollars than we give to those on low incomes and that increases the poverty gap in society. Michael Cullen has been quite clever in the way that he has devised this new taxation system. He has combined it with Working for Families and he has ensured that those workers on the lowest incomes will get a quarter that those on the medium wage will get a sixth and that those on $80000 and above will get an eighth. But those on $80000 are still getting more than twice as much in the hand each week than those on $10000—$28 a week as distinct from $12 in the first round. That shows that we have to be careful when we play with tax rates because after these tax cuts in terms of cash and real dollars there will in fact be a bigger gap between those on the lowest wages and those on the highest incomes than there is at the moment. 
But the biggest anomaly here is what happens to invalids the sick those who can only work part-time because they are caring for elderly parents and those who are trying to develop a career in the arts—for which they do not get paid at the moment—who are holding down a small part-time job to keep body and soul together because they are trying to do other creative things in their time. Those people will come off worst because they will get the least. Beneficiaries will in fact get nothing out of the tax cut system. They will get only a very very small amount out of Working for Families because it has always discriminated against the children of beneficiaries because they do not get the in-work tax credit. 
This tax legislation is probably not as bad as what National would have done which sounds like it would have been to remove the 39c tax rate altogether benefiting only those who earn over $60000—or as is shortly to be the case over $70000—but the fact is that this legislation will still not improve equity within our society. It still will not help the poorest and most vulnerable people in our society. Invalids without children will be particularly hard hit. They do not get any Working for Families benefits as one would expect. They do not get any tax cuts either and their benefits go up only in relation to CPI while their costs go up in relation to the increased prices of food housing transport and energy all of which move much faster than the CPI. 
The Green Party in accordance with its cooperation agreement with the Government will be abstaining on this Budget and on the tax legislation that flows from it. But I have to say that we are not overwhelmed at the beneficence of these tax cuts particularly when—as I outlined in my speech on the Budget a short time ago—there are some very major problems facing us as a society and as an economy that are not being addressed. 
In relation to the Budget speech it is very obvious that the word “sustainability” has been dropped like a hot brick. We had a speech last year in which the Prime Minister used it 33 times. She did not use that word once today and I think that Michael Cullen used it once. But more particularly when one looks at the money in the Budget one sees that the only initiatives that take us in the direction of sustainability really are the ones that the Green Party has put up. “Carbon neutral” does not appear anywhere in the Budget speeches or in the rhetoric around it. There is an emissions trading scheme but we do not know whether it will go through; it keeps getting weakened and delayed. 
The Budget does not show a great sense of urgency in dealing with the big matters that will have the biggest effect on our economy in the future—that is oil depletion and continuous oil-price rises climate change and resources that are limited. We are bumping up against those limits in everything we do at the moment. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 I want to speak as one would expect in support of this legislation. I want to put a few facts on the table that arise particularly in response to the last couple of speeches and I also want to make some comments about the charities changes that are contained in the bill. 
The total cost of the tax package in its third year that is set out in this bill is just under $3.9 billion. One can debate whether that is good bad or indifferent but that is a fact. I have heard suggestions from the two previous speakers that we should have some level of tax-free threshold. I want to tell the House that Dr Cullen and I looked at that very seriously in the early stages of the design of this package. To give a tax-free threshold for the first $10000 would effectively cost $3.9 billion not over 3 years but over 1 year. So when one starts to talk about relative priorities one now has the cost of this package split if one likes three ways if a tax-free threshold is to be delivered. My colleague to my right from New Zealand First says that they would go one step further and put GST down to 10 percent. On the figures contained in the Budget that 2.5 percent reduction is another $2 billion each year not over 3 years. 
What one has in effect is the contrast between a package that is about $3.9 billion in 3 years versus some alternative policies that would be that amount and more and in some cases almost double that in 1 year and certainly up to around an additional $12 billion over the 3-year period. So when we start to debate these things let us put those figures on the table and let us have some debate about how sustainable that is. Would New Zealanders tolerate a tax-free threshold and no other tax reform? Would New Zealanders tolerate a reduction in the GST rate and other very minimal tax reform? Because that is what it comes down to in that particular debate. It is not a question as some might suggest of having one’s cake and eating it as well because the cake simply is not big enough. It is the perennial story in that regard. 
I want to make some remarks about what is contained in Part 3 of the bill the matters that relate to charities. Dr Cullen in his introductory speech made some overall reference to the situation that is being resolved. I want to put on record in just a little bit more detail precisely what the issues are and why it is important that we act at this time. The bill brings in tax changes to resolve tax uncertainties in the law relating to the continuing tax-exempt status of certain organisations. These uncertainties have emerged over recent months in the lead-up to the 1 July deadline for charities to register with the Charities Commission. From that date charitable entities will have to be registered with the Charities Commission to be entitled to the charity-related income tax exemption and for gifts to those charities to be exempt from gift duty. There is no particular problem with that. But the uncertainties arise when entities such as universities and schools ask whether they must also register with the Charities Commission in order to remain tax-exempt and it is here that we find that some associated legislation in several differing pieces of legislation contains a number of grey areas. That is why the Minister of Finance and I announced a week or so ago that we would via the earliest available vehicle make changes to provide tax certainty for a range of those entities in these circumstances. That is why they have been included in the bill before the House at the moment. 
The Income Tax Act and the Estate and Gift Duties Act are being amended to confirm that tertiary education institutions as defined in the Education Act are exempt from income tax and gift duty. That means they will not have to register with the Charities Commission to retain their tax-exempt status although they may still chose to register if they want to if they want to have access to other benefits that they perceive to come from registration. Further changes will ensure that tertiary education institutions automatically have Inland Revenue Department - approved donee status. That means that people who donate money to them will continue to qualify for tax rebates for their donations. 
Further amendments to the same Acts will ensure that gifts to State and State-integrated schools are exempt from gift duty and that they have automatic Inland Revenue Department - approved donee status as well. State and State-integrated schools do not need to register with the Charities Commission to be exempt from income tax because they already have an explicit exemption in the Education Act. 
A further amendment in this group of changes relates to non-resident charities that cannot register with the Charities Commission because they are not established in New Zealand although they may have investments here and be registered as a charity in their own country. An example of this would be an international charity that invests New Zealand donations in a New Zealand bank account. This bill protects their current tax-exempt status subject to Inland Revenue Department approval for both income tax and gift duty. 
The bill also introduces transitional measures to provide greater tax certainty to organisations that encounter difficulty in completing their application for registration with the Charities Commission within the deadline owing to circumstances that may be beyond their control. Under the bill’s provisions the Commissioner of Inland Revenue is being given a limited discretion to protect their tax status in the meantime provided they can prove that they started the application process before 1 July and that they intend to complete it. I want to emphasise that these transitional measures are intended to be used on a limited basis. They are not intended for organisations that are merely late in applying for registration. We do not want to see a situation where organisations that have submitted their applications in good faith and that for reasons beyond their control find that the registration process has not been completed by 1 July then discover that their tax-exempt status is at risk. 
This legislative provision follows on from various announcements that the commissioner the Minister of Finance and I have made over recent months in the hope that the rate of registration would accelerate so that the backlog we were likely to face would be of a relatively small nature. Sadly that has not been the case and we now face the potential of significant problems unless a provision of this type is passed. I emphasise to the House that both the measures relating to educational institutions and those relating to charities that have their registrations within the system do not in any way change the status quo. What they effectively do is reassure those bodies that the status quo that they thought applied will continue to apply. It would be the ultimate of ironies surely to suddenly discover at a time when we were registering charities that our educational institutions which for a hundred and something years have been tax exempt were now to be taxable. Once we became aware that that possibility existed even before $1 of tax was assessed or sought we have sought as quickly as possible to eliminate that and to return via legislative fiat to the status quo that everyone understood they were under. 
So I wanted to put those points on the record because in the rarefied atmosphere of the debate about tax rates—it is perfectly understandable and of huge interest to people—it is also important to note that some other significant changes are being made in this legislation that will be beneficial to another significant group of New Zealanders. In fact when people benefit from the tax cuts they might find that they want to spend some of their money by donating to the charities that we are protecting by this legislation. 
HONE HARAWIRA (Maori Party—Te Tai Tokerau) 
: 
 Kia ora Madam Assistant Speaker. Kia ora tatou e te Whare. I do not often support the Employers and Manufacturers Association in this House but when it comes up with the comment “Was that it?” about these tax cuts I absolutely support that comment. The difference is that I am talking on behalf of the poorer people in this country. I am talking on behalf of organisations like the Child Poverty Action Group. I am talking on behalf of the Salvation Army. I am talking on behalf of all of those social service agencies that have been calling for some real basic relief for people in need. 
The fact that both ends of the scale can be screaming out for assistance and getting nothing suggests that this Budget is going nowhere for anyone. I am talking about food for example and the call for GST to be taken off food. The response of the Prime Minister is that it would be an administrative nightmare. Hello—an administrative nightmare? We would be happier to have people starve than to bother to do the paperwork to take GST off food. That is insulting to the population of this country. I am surprised that the so-called Labour Party—the so-called party of the working class the party that is supposed to represent the interests of those in need—could talk about an issue as important as reducing the price of food and say that the Government is not going to take GST off food simply because it will be an administrative nightmare. Then on top of that we find out that Australia has done it—it is not too hard for Australia. Canada has done it—it is not too hard for Canada. Why can we not do it? At a time when this Government admits that there is not a lot else that it can do for the poor a simple step would have been to take GST off food. Sure there are all kinds of arguments that we should be looking at non-processed food etc. but let us get there eventually. The simple call to take GST off food would have lifted a weight off the families in greatest need in this country. This Government had the opportunity to do it in this Budget and it chose not to because that would have meant more paperwork. For anybody to assume we cannot do it because of too much paperwork is an insult to the people who have voted Labour for so long an insult to the people most in need in this country and an insult to the intelligence of New Zealanders. 
I am not a great fan of Labour but I saw something from John Tamihere—a former Labour Minister apparently. He made a comment in the paper that if the Government wanted to connect with the voter it could start with something as simple as saying that the first $5000 of people’s incomes would be tax-free. The Maori Party thinks it should actually be $10000 but $5000 is a start—if the first $10000 were tax-free it would be great. That does not mean anything to people in Parliament. I am probably the lowest-paid guy in Parliament and I am getting $125000. That is bucket loads of money where I come from. That is more money than I could ever contemplate making; it is more than twice as much as I ever made before. Taking the tax off the first $10000 is kind of meaningless to me. But for a family whose total income is $15000 it is a hell of a change. It is a huge change. 
It is an opportunity for them to actually do things for their kids at school to buy their child a pair of pants instead of having their child come to the school—I have seen this—wearing pants that he or she must have had handed down from his or her grandad. It is really saddening when that child stops coming to school. When we track down that child’s parents we find out that the reason the child cannot come is that he or she loves doing kapa haka but cannot afford to go away on the kapa haka trip and the parents are embarrassed about it so they do not let their child go to school. It is simple stuff; it is not rocket science. If we take tax off the first $10000 earned by every New Zealander we will create the opportunity for everybody to benefit and most of all those in most need—those at the bottom of the ladder. 
At the moment those at the bottom of the ladder are in desperate need not because I am saying so or because the Maori Party is saying so but because everybody is saying so. Every economic commentator in the country is talking about how dear the basics of life are and for example how costly milk is. I do the shopping in my family and I have watched it rocket up. When I came into Parliament milk cost $2.05 at our local Pak ‘N Save; now it is $4.15. It has gone up by more than 100 percent. Those are the basics of life that we should have been trying to address in this Budget but they have been completely ignored. What happens to the people at the bottom? They will get $12 in their hands. Well that is 2 litres of milk a little tub of butter and one loaf of bread. That will make a difference at the end of the week—not! This Government had the opportunity to signal that even in times of genuine stress for the whole country it would make a genuine commitment to those at the bottom but it has chosen not to do so. 
I congratulate the Green Party on winning that $50 million retrofit for all of the State houses. I know that heaps and heaps of my whanau will benefit from that and I congratulate the Greens on pushing that and on the fact that it has come up in the Budget. I also thank Labour for going ahead with that. That is a really cool one. I would also like to thank Labour for putting up that $12 million for the Maori nurses. I think that is amazing. That is awesome. That is fantastic. 
I was also going to congratulate Labour on putting $17 million into Maori wardens until I did a bit of a check and found out that it stole $7 million from Te Puni Kokiri to pay for it. The other $10 million ain’t coming next year; it is spread out over the next 4 years. Folks Budgets should be based only on 1 year. We can have a projection but let us be honest: will this Government be around to spend the rest of it? No it will not. It is $2.5 million and that is all it will be—that is all that the Maori wardens will get. When I talk about kohanga I am talking about Maori-specific money here. How much will kohanga get? Nothing. How much will kura kaupapa get? Nothing. How much will wharekura get? Nothing. How much will wananga get? Nothing. I am a member of the Maori Party. It is our role to defend Maori rights and advance Maori interests for the benefit of the whole nation. This Budget destroys all of the things that we have wanted to achieve over a period of I do not know how many years. There is not a heck of a lot going on. 
We support absolutely a bottom-line philosophy of ending child poverty. We had the opportunity here to do it. This Labour Government had the opportunity here to do it. It chose not to do so and at a time when it has been running surpluses of more than $6 billion for the last 5 or so years. The total tax cut is $1.5 billion. We could have done a lot better than that. This Labour Government has chosen not to do so and I think this will rebound on it in the polls when Maori people start looking at those issues. Maori wardens received only $2.5 million nurses received $3 million kura kaupapa received nothing kohanga received nothing wharekura received nothing wananga received nothing—Maori have received nothing. We are disgusted with what is being presented here and we will be taking this back to our people because we do not accept that this Government at any time—neither this Government nor the next one—should ever again be allowed to treat Maori so badly. Tena koe. Huri rauna kia ora tatou katoa. 
RODNEY HIDE (Leader—ACT) 
: 
 I have listened to the speeches on this tax legislation with some interest and I should tell Mr Harawira that although I am no fan of this Budget either and will not be voting for it—it is not as good as Labour says it is—I have to say I do not think that it is as bad as he paints it. But let us talk particularly about tax legislation and reiterate that the ACT party will be supporting this tax cut. We see it as a faltering baby step in the right direction. But I will pick up on the discussion that has been around the traps here and just warn us as parliamentarians about a trap we are falling into. I am thinking of Mr Harawira in particular when thinking of tax design as to who gets what. That is how we are thinking about the Budget. If we are thinking about our country and our young ones we should actually be thinking about where we will be in 5 years’ time in 10 years’ time in 15 years’ time and in 20 years’ time. That is what matters. Actually a few dollars this week and a few dollars in October sort of pale into insignificance compared with what we can achieve over the next 5 10 or 15 years. By that in particular I am focusing on economic growth because that is what will provide the jobs the incomes the housing the environment the health service and the educational service we all want. 
Listening to the speech I heard about everyone wanting the good things but not talking about how we build an economy to provide for them. I think that is how we should be thinking about tax cuts too—that we should be thinking about whether there is a way we can cut taxes that will make a bigger cake rather than just carve up the one we have. 
I also want to pick up on a point that the Greens made about what is fair. You know fairness is in the eyes of the beholder I guess and let me just illustrate that with two points. Jeanette Fitzsimons’ point was that the fairest tax cut we could have—and I think Mr Harawira was saying this too—is a tax cut that gives the same amount to everyone and that is “fair”. But I am not so sure that their policies would do that. Let me give members an example. I think we have created this with this tax policy too. For example the first $10000 or the first $5000 is tax-free. And one thinks “Well that’s great because everyone gets the same amount.”—but I can promise members that they will not. The people who overwhelmingly will benefit from that tax policy are the wealthy. Why? Because anyone with a business that is doing well will employ his or her children spouse mother and mother-in-law and pay them all $10000. They will pay them $10000 and that $10000 they pay them will no longer be taxed at 39c in the dollar; it will not be taxed at all. And enormous income-splitting will be seen as a consequence. What is fair about that? 
In a funny way we have added to that problem with Mr Cullen’s Budget by going to 12½ percent and 39 percent so there is a greater incentive. We have already seen it happening. We will see a greater employment of business people’s family members in order to minimise those people’s tax liabilities and that is quite a significant thing. 
The other reason why I question fairness from Jeanette Fitsimons’ point of view is that she says: “Well it should be the same so that somehow the way we are taxing people now is fair and we should not adjust that process in any way shape or form.” But how can that be? We set the tax policy basically back in December 1999 and it came into effect in the year 2000. Since then we have had inflation and bracket creep. So instead of say 5 percent of people being taxed at the top rate we actually have say 12 percent. So all those relativities have changed. But somehow Jeanette Fitsimons is saying: “OK what we are doing now should be the measure of whether it is fair.” but that would mean that what we were doing back in 2000 was not fair because what we were doing back in 2000 was different. 
I also think that when we think about tax cuts we should be realistic. And here I want to chide New Zealand First members because I think they want to make the first $5200 tax-free. Well we heard from the Minister of Revenue and the Minister of Finance that to take the amount to $10000 would cost—I think from memory—$3.9 billion. It is a flat rate up to $9500 so if we are to make $5200 tax-free it will cost exactly half of that. So we are talking of just on $2 billion for the tax cut to make $5200 tax-free—$2 billion a year. I think New Zealand First also said that it would take the rate of GST from 12½ percent to 10 percent. I would vote for that—absolutely. It was promised to be 10 percent and it should be 10 percent. But I think I heard the Minister of Revenue—and I am looking across at officials to see whether I have the numbers right—say that on the current Budget that is about $2 billion $2.5 billion or something like that. So New Zealand First would actually have to cut Government spending by $4.5 billion. But all I heard from New Zealand First in its Budget speech was how much extra spending it had through its good initiatives and that it was disappointed in the Budget that there was not more spending. Well we cannot have it both ways. We cannot cut $4 billion a year out of the Budget and spend more money without cutting a huge amount. 
Sue Moroney 
: National thinks they can. 
RODNEY HIDE 
: Well to be fair to National it has not said what its tax cut plan is. It might be that Ron Mark’s numbers do not add up but at least he has put the numbers out. We have to be realistic. But the point I would make—and this is probably why ACT is so low in the polls—is different from everyone else’s. I think that before we talk about fairness we should think about where we want to be in 5 years’ time or in 10 years’ time in terms of the economic pie. So instead of arguing about $10 $16 or $20 a week we should ask whether we want to continue to be say $450 a week behind Australia in wages on average. Do we want to be poorer than Tasmania? I do not think so but I think that on the present course we will sink further behind. I think everyone including the Government is concerned about the number of New Zealanders who are leaving for Australia and further afield and why they are doing that. A lot of Maori are going I tell Mr Harawira—probably an entire electorate. They are doing that because it is more creative and more entrepreneurial it makes more money and it gives more opportunities. 
Is that going to get better or worse? I think it will get worse. We can imagine hitting—to coin a new phrase—a tipping point where so many of our young people will have left that it will actually become a cumulative flood of more and more people going. We have to ask ourselves whether these tax changes we are having will bring our kids home. Will they reverse the trend of young Maori and other young New Zealanders to head overseas? I do not think so. If we start thinking like that—and I know that this might be offensive to people’s ears—we should say “Let us have a tax policy that delivers growth.” and then we are actually talking about getting the top rates down. 
It is absolutely true I tell Mr Harawira that if we go to a flat tax rate of 20c in the dollar or of 15c in the dollar that those on high incomes will pay proportionately less tax than they do now. But that is because they pay such a lot now. So those people on $80000 compared with those on $20000 do not pay four times as much tax; they pay 50 times as much tax depending on where they fall with children and whatever. So they are paying a lot of tax. It is true that people might say “Oh well this is what an MP gets.” If people are worried about what MPs get then let us cut MPs’ salaries. But let us not drive tax policy by what the Leader of the Opposition or the Deputy Prime Minister might get; let us drive tax policy by what is good for the country. I ask Mr Harawira to imagine us getting the tax rate down to 20c in the dollar. Then we would start growing the economy. Would that not be the best thing we could do for the young people of New Zealand! Thank you. 
Hon RUTH DYSON (Minister for Social Development and Employment) 
: 
 At peak viewing time it gives me great pleasure to contribute to this the first reading of the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill 2008. This bill primarily deals with two issues: tax rates and changes to the charities regime in relation to ensuring that the charities registration process and the tax process are better aligned. But most important this bill delivers a fair deal to New Zealanders. All those in paid work will benefit as will those on a benefit with children and superannuitants. 
Sitting suspended from 6 p.m. to 7.30 p.m. 
Hon RUTH DYSON 
: As I was saying the Budget and the subsequent tax legislation deliver a fair economy and a strong future. I commend the Hon Dr Michael Cullen for the ninth Budget in a row in which he has made progress on both those fronts. I look forward to the next nine Budgets to be delivered by the Hon Dr Michael Cullen. Over the last 8 years the Labour-led Government has delivered major reinvestment in public services and infrastructure—public services that were run down by National and infrastructure that was neglected by National. We have delivered substantial tax relief to businesses savers and families with children. On every occasion when tax legislation has been before this House the National Party has voted against tax relief. National members voted against tax relief for New Zealand businesses for New Zealand savers and for New Zealand families with children. The personal tax cuts in this legislation are the next step in our Government’s programme to build a fair and strong economy and society in which all New Zealanders have a strong stake. 
Our Government through the leadership of our Minister of Finance Michael Cullen has managed our public purse responsibly. We have not squandered resources in times of great optimism; nowhere is that more obvious than in New Zealand and at no better time than now as we watch what is happening internationally. We see that even in these times New Zealand can deliver a $10.6 billion personal tax package. 
Over the last 8½ years we have seen 377000 more jobs created in our economy giving more families a stake in our future. The unemployment rate has fallen by more than half and it has stayed below 4 percent for over 4 years. We are the only country in the OECD that has been able to achieve that record. We have had less than 4 percent unemployment for 15 straight quarters. We now have 140000 fewer people on a benefit. 
Our child poverty rates have also fallen dramatically. Earlier today I heard National members talking about our OECD ratings. It is very interesting that they focus only on the areas that are of interest to them. The level of child poverty was a disgrace in New Zealand a decade ago. We were in the bottom quarter of the OECD in relation to child poverty and by the middle of this year we will be in the top half. We have a way to go; we still have children living in comparative poverty in our country and our goal is to work towards the elimination of that. 
Of particular interest to me as Minister for Senior Citizens is the fact that we have ensured that those people who are dependent on superannuation are included in the benefits of this tax package. Superannuitants in New Zealand have had substantial financial support from the Labour-led Government. We restored the relative rate of superannuation for a married couple to 65 percent of the average weekly wage; it was 60 percent under the previous National Government. If National had continued in power after 1999 with the same level of superannuation a married couple would be $34 a week worse off. 
Hon Member 
: How much? 
Hon RUTH DYSON 
: They would be $34 a week worse off under National—and that is before this tax package not after it. We know that this package delivers substantially for superannuitants. 
We have also been able to reduce the cost of visiting a doctor by on average $22 a visit. We have reduced the cost of prescription medicines from $15 an item to $3 an item. We have expanded access to health services screening and immunisation. These are the areas that make a difference to the most vulnerable people in our community—those who are dependent on a benefit or superannuation or who are on a low income. They are able to access those services that are critical to their health. 
We have also provided 20 hours’ free early childhood education. Again the National Party opposed that policy day in and day out when it was debated in this House. National opposed access to free early childhood education for thousands and thousands of New Zealand children many of whom would not have been able to access early childhood education had it not been made free for those 20 hours. We have also kept the cost of tertiary education under control. Every year we have improved access to tertiary education and there has been another step forward in the Budget today. We have also built thousands of State houses while restoring income-related rents for those on the lowest incomes. Those substantial gains have been made in the last 8 years under a Labour-led Government and I am looking forward to another decade so that we can continue on this path toward improving the lives of ordinary New Zealanders. We have begun a major assault on income inequality in retirement through KiwiSaver. Over 600000 people are now part of the KiwiSaver regime. 
The tax package to be delivered through this legislation is part of the overall contribution we have been able to make. I mention one other aspect of the tax legislation—a point the Hon Peter Dunne referred to earlier. I refer to the provisions that deal with charities and tax. We have uncovered uncertainties in the law with regard to the continuing tax-exempt status of some organisations. It is really important that this be clarified because the deadline for charities to register with the new Charities Commission is 1 July. From that date charitable entities have to be registered with the Charities Commission to be entitled to the charity-related income tax exemption and for gifts to charities to be exempt from gift duty. Obviously there are no difficulties with those principles but uncertainties between the tax legislation and the charities legislation have arisen. 
It has been unclear whether entities such as universities and schools also have to register with the Charities Commission in order to maintain their tax-exempt status. It is clear there has been uncertainty in the legislation and it is better for us to use this opportunity to resolve that uncertainty. Legislative changes are being made to provide tax certainty for a range of entities in those circumstances. These involve changes to the Income Tax Act and the Estate and Gift Duties Act. Those Acts will be amended to confirm that tertiary education institutions as defined in the Education Act are exempt from income tax and gift duty. They will not have to register with the Charities Commission to remain tax-exempt. Of course if they want to register in order to gain access to other benefits they will be entitled to do so. However they will not be required to register in order to retain their tax-exempt status. 
Another provision in this legislation relates to a discretion given to the Commissioner of Inland Revenue. It is a very limited discretion and it is very important that charitable organisations that are considering registering or are in the process of registering with the commission recognise that the discretion is very limited. The provision gives the Commissioner of Inland Revenue discretion to ensure that an organisation that has started the application process to register as a charitable organisation before 1 July and that intends to complete the application but for reasons beyond its control has not been able to do so will not have its tax-exempt status nullified. So it is a very limited discretion. It will be of assistance to organisations but I repeat that it is a very limited discretion and should be applied only when there are exceptional circumstances and a charitable organisation has not been able to progress its registration to fruition. 
In conclusion it is a privilege for me to speak in this debate on the Budget which was released this afternoon. The Budget makes a huge $10.6 billion personal tax cut contribution but more important— 
Simon Power 
: That’s the first time she has said it. 
Hon RUTH DYSON 
: That is the third time I have said it. But more important the Budget contributes to a fair economy and a strong future. 
SIMON POWER (National—Rangitikei) 
: 
 Well that speech just says it all! There is a Minister of the Crown who wants to protect her own personal legacy in not standing up and endorsing tax cuts. There is a Minister from the left of the Labour Party who wants no record in  
Hansard 
 whatsoever that she supports tax cuts. I have to say there must be a huge amount of tension in the Labour caucus at the moment. When Michael Cullen introduced this bill prior to the dinner break he essentially gave a speech about all the reasons why tax cuts were a bad idea and how he was having his arm wound right up his back to have to do this. Yet the Hon Ruth Dyson somebody who would be regarded as one of the leaders of the left wing of the Labour Party although probably not likely to vote for Phil Goff when the leadership spill comes none the less could not get the words out—“tax cut”! Ms Dyson could not say “tax cut”. That is what her Government is proposing; that is what is before the House at the moment. 
If only I had a dollar for every single “meet the candidates” meeting I have been to with Labour candidates and Labour MPs over the last 10 years. I have sat on the stage with those people and I have heard them stand up and say year after year: “Tax cuts are not on the agenda for the Labour Party and never will be.” They said at those “meet the candidates” meetings: “We’re a party that will not cut tax because we’re too concerned about social services.” Well what has changed from those 10 15 20 meetings a year that National Party members fronted up to with Labour candidates where they said that no tax cuts would come from Labour? What has changed? What has changed is that this is election year. Not only has that changed but Michael Cullen is so reluctant to drive this package through the House that he has even decided to do a bit before the election reluctantly—and then do nothing for 2 years after that. That is purely because he knows in his heart of hearts that he did not want to do this. He was interested in protecting his own legacy by doing as little as possible to initiate what all New Zealanders have known for a long time—that is that they deserve some of their own money back. It is not the Government’s money to sort of wave about and hand down to the working folk of New Zealand. It is their money. 
What I found most interesting about the Budget debate today was when we sat here reading through the Budget speech and I waited for the applause after the paragraph where Michael Cullen announced the tax cuts and do you know what? It did not come. There was not a whisper not a clap not even a “Hmm!” or any sort of approval at all. The first clap from the Labour Party came when Dr Cullen talked about superannuitants receiving a bit more as a result of this legislation and the Budget today. But when the actual tax cut package was announced in the Budget there was not a clap. Not one single Labour member of Parliament put his or her hands together to say that that was a job well done. Does that not just say it all! This is too little too late; and the public will not fall for it. 
Was it not interesting that when the Prime Minister stood to speak following John Key she talked about the Springbok Tour the Viet Nam War and Rob Muldoon’s Budget in 1984. Well sorry Prime Minister but a whole lot of us out there in voter land are not having those debates any more. In fact we have not had those debates for 24 years. So if the Labour Party wants to keep having those debates wants to keep looking backwards then that is where it will end up. Out there in voter land they are not having a discussion about the Viet Nam War. They are not having a discussion about the Springbok Tour. They are not having a discussion about Rob Muldoon’s Budget in 1984. They are talking about the fact that under this Government interest rates have doubled. They are talking about how under this Government where petrol prices are $2 a litre and where cheese is $16 a kilogram we do not want to have a discussion about the Springbok Tour in 1981 or the Viet Nam War in the 1960s or 1970s; we want to know after 9 years what those people on the other side of the House are going to do about relieving the pressure on household incomes. It has taken far too long for those people to realise that. People out there in voter land have had a gutsful of reliving those debates which are 25 years old. 
I want to talk about squeezing social services if tax cuts were introduced as Labour candidates and MPs have been saying on the platform for the last 8 or 9 years. Well how about we not overspend half a billion dollars building four prisons. Maybe that sort of dollar amount could have been put to better use in tax cuts over the last 7 or 8 years. Instead what do we get? We get $16 a week for the average household wage earner—enough to go out and buy that elusive block of cheese! The Prime Minister stands in this House on Budget day and says: “I know where I stood on the Springbok Tour.” Well we do not care! We want relief to household incomes and we want to have a debate about where New Zealand is going not where New Zealand has been. Too many Labour MPs are way way back in history where Labour has been. 
What we are seeing today is legislation being rushed through this House for those tax cuts to be introduced for one reason and one reason only—that is the Prime Minister does not trust the Minister of Finance to do the business. After 2005’s broken promise on the “chewing gum tax cuts” the Prime Minister has said to the Minister of Finance: “You will legislate for those tax cuts to avoid us getting into a situation we got into in 2005.” Back-downs are no longer acceptable and that is why the National Party is here to keep them honest. 
The pressure this Government is feeling is in economic households. The problem is being solved only because that Government is feeling political pressure. That is the only reason this tax cut legislation has finally made it to the floor of the House. As Bill English and Gerry Brownlee have said tonight we will vote for the tax cuts because we have consistently said that that is what New Zealand needs. We have not just turned on our tail in introducing those things 2 weeks before an election to try to save our own skins at the polls. We are going to keep talking about the future while that party keeps talking about the past. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Before I call the next speaker I advise the House that this 10-minute call will be divided between Labour and National with 5 minutes each. 
CHARLES CHAUVEL (Labour) 
: 
 Thank you Mr Assistant Speaker and may I begin by wishing you a happy birthday. 
I am really proud to speak in support of the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill and I am very sad to have heard the previous speech. Let me tell the previous speaker Mr Power that one of the reasons why history matters one of the reasons why it is important to know where one’s country one’s party and the economy have been in the past and what positions were taken in the past is so one does not relive any mistakes. I point that out to Mr Burrows who is trying to interject. The problem with the speech we just heard from Mr Power is that it explains exactly why that member gave a speech some years ago saying: “Where Britain goes we go. Where America goes we go.” He is the Young Fogey of the National Party. With speeches and positions like that it is clear that he does not know his history; it is clear from the speeches on this side of the House that we do. We have learnt from our history and we make sure it informs our future actions. 
I want to praise Dr Cullen for the Budget that has been delivered today. It is no wonder that he is the longest-serving Minister of Finance since Walter Nash in the 1940s because he has delivered a successful economic record to this country and he continued to do exactly that today. I am very proud of the tax cuts that were announced in the Budget. I am very proud that they followed the four tests that Dr Cullen has been articulating consistently over the last year as part of the only coherent tax policy that is being articulated in this country at the moment. I am very proud that they are Labour policies. It is good just to measure these tax reductions against those four tests. 
The first test is that the tax reductions will not lead to greater inequality in our society and there are three reasons for that: they will be applied across the board they will be proportionate to income and they will benefit all households regardless of whether they have children. Also they will apply to all taxpayers—including superannuitants—regardless of whether they are in paid employment. 
The second test is that these tax cuts will not require cuts to public services. Having managed New Zealand’s finances responsibly throughout its term in office this Government can now afford both to offer tax relief to New Zealanders in need and to make new investments in the health education justice public transport roading science and technology and social services sectors. Those are great things and these are balanced tax cuts for that reason. 
The third test is that the reductions should not exacerbate inflationary pressures—and they will not. Labour has been careful to introduce these tax reductions over 3 years to avoid extra pressure on mortgage interest rates. This cautious approach is particularly important in difficult economic times and it is a tribute I think to this Government that in an election year when any other Government might have been tempted to offer full tax relief immediately this Government put New Zealand’s economic interest first with a phased-in tax reduction. 
The final test is that the Government will not need to borrow to fund these cuts. New Zealand is currently in a net positive financial asset position. This is thanks to the Government having reduced the country’s national debt significantly from over 30 percent of GDP at the commencement of its term in office to its current level of around 20 percent. Also having conserved resources the Government can now afford to offer tax reductions to recognise the contribution that hard-working New Zealanders have made to our economy and continue to do so. 
The bill’s tax reductions build on existing tax relief which this Government has not received a lot of credit for frankly and which is worth billions of dollars. Mr Carter over the way sneers in the way that he does in that little “born to rule” way; that will be National’s downfall. Let me remind the House that the tax cuts delivered already by this Government via a systematic programme since 2004 amount to many billions of dollars—[ 
Interruption 
] They stand at $4.6 billion as Mr Mallard points out. They stand in stark contrast to the policies of the National Party which as we have seen are just to promise tax cuts at any cost no matter what the consequences—that is a return to run-down public services higher debt and runaway inflation. Anyone who compares the two approaches will see which one is better for New Zealand. 
Hon DAVID CARTER (National) 
: 
 National will vote enthusiastically for this legislation because National like the rest of New Zealand has waited 9 long years for the chance to vote for personal tax cuts. If we listen to the contributions from the Labour members starting with Dr Cullen’s we realise Dr Cullen could hardly bring himself to support his own legislation. He spent 10 minutes in the House giving every reason possible why he should not be delivering tax cuts and acknowledged in his own contribution that we have moved into urgency tonight to pass the legislation before he wakes up tomorrow morning and changes his mind as he did in 2005. He said himself he could not be trusted to deliver these tax cuts unless they were enshrined in legislation immediately after the Budget that was read earlier. 
The Labour members fundamentally do not want to do this tonight; they do not believe in these tax cuts. They have spent 9 years being philosophically opposed to tax cuts and they are bringing them in for only one reason: it is a cynical arrogant attempt to buy the votes they will need at the next election in order to get back to the Treasury benches. Tim Barnett nods his head and agrees. It will not work because $16 is not enough; $16 is not enough to address the suffering that most New Zealand households are under. 
The pressure that households are under may not be recognised by the Labour members as they drive their BMWs around and as they hand over their credit cards supplied by the taxpayer to the fuel attendant when they fill up their cars—they probably do not even realise that petrol has reached $2 a litre tonight. Coupled with that sort of pressure is the fact that every time any mum goes into the supermarket to fill up the shopping basket the price of food goes up—it goes up every week. In addition to that interest rates have doubled because of the reckless inflationary spending we have had from the Labour Government. That is why people are under pressure and that is why tonight on TV every commentary I have seen is saying that the tax cuts are too little too late. 
The Government has had 9 years to do something about the tax rates and as Mr Mallard the Associate Minister of Finance knows it is with the greatest amount of reluctance that it has brought in a tax package today that has delivered on average $16 a week—the price of two blocks of cheese. But let us wait for it; people will get the tax cut 2 weeks before the election. And then Mr Cullen talks about a programme of tax cuts! When is the next one? There is nothing for another 18 months. That is not a credible tax reduction policy and it will not wash with the electors as we move towards the election. Media commentary has summed the situation up tonight. Commentators have consistently said that Mr Cullen has now delivered his last Budget; it has been called his “valedictory Budget” on TV tonight and that is a fact. He had every opportunity to address the tax package issue in this country and he has not taken the opportunity to do that. 
I want to conclude by saying I was pleased to see one very good thing in this Budget. It is the fact that superannuitants have been recognised as a group that is under extreme pressure; they will benefit from the tax cuts. But for Helen Clark to go on TV tonight and to say in the House today that the Government has increased superannuation in recognition of that pressure is a con. Superannuitants would do better simply because of tax cuts. If we had had a tax cut programme over the last 8 or 9 years which the surpluses would have allowed we would have been able to deliver substantial payments to superannuitants now. Superannuitants will not buy it I say to Mr Mallard. They will not buy it that they have been generously given a break tonight which they will receive 2 weeks before the election because they know that that opportunity was denied to them for years. Mr Mallard you had your chance to deliver tax cuts— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! 
Hon DAVID CARTER 
: You are philosophically opposed to them. You have had your chance. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! 
Hon DAVID CARTER 
: Mr Mallard and the Government are doing it tonight for one thing and that is to try to get hold of the next election. It will not wash with New Zealanders; they are wide awake to what his Government is up to I say to Mr Mallard. It will not wash and it will not help him in the polls. 
Bill read a first time.  
Second Reading 
Hon TREVOR MALLARD (Associate Minister of Finance) 
 on behalf of the  
Minister of Finance 
: I move  
That the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill be now read a second time 
. I would like to refer to some comments that were made in the House earlier today. I refer in particular to the comments made by the Rt Hon Winston Peters on what I counted to be I think 16 image consultants or related people who are working in the office of John Key. The Prime Minister has three media staff whereas John Key apparently has 16 image consultants. 
I do not challenge the right of the National Party to put its money into trying to build up John Key’s image—it is a challenge. But I have never seen such a spectacular failure as I saw on  
Campbell Live 
 tonight when John Key was quite rightly described by the host as being “as slippery as a snake in wet grass”. 
Dail Jones 
: What did he say? 
Hon TREVOR MALLARD 
: “As slippery as a snake in wet grass” was the description of John Key. I do not think John Campbell went far enough. 
Hon Shane Jones 
: He was too kind. 
Hon TREVOR MALLARD 
: He was particularly kind. I would suggest that the consultants be fired. Clearly they have not been doing their job. 
I want an absolute assurance in the House tonight from John Key that taxpayers are not paying for that. I want an assurance that the 16 image consultants who are being paid to build John Key up are not being paid for by the taxpayers of New Zealand. 
Dr the Hon Lockwood Smith 
: When is the Speaker going to bring him back to the bill? 
Hon TREVOR MALLARD 
: Clearly if we were not paying 36 people in John Key’s office we would be able to reduce taxes further than we are doing. If we were not doing that then the tax cuts could be bigger than they are now. If the member is so slow that he does not understand the links between Government expenditure and taxation then Mr what’s-his-name Mr “Auchin-something” from the West Coast is even sillier than I thought. He is even sillier than I thought if he does not understand— 
Chris Auchinvole 
: I didn’t say anything! 
Hon TREVOR MALLARD 
: What? Dr Lockwood Smith would not have said that. He would not have said my speech is unrelated to the bill; he is much brighter than the member who sits next to him. Is Mr Auchinvole blaming Dr Smith? I do not really mind which of them it was; one of them interjected in that way. The point I am making is that if those image consultants are being paid by the taxpayer it is a scandal and if they are being paid by the taxpayer and doing a really bad job it is a waste of taxpayers’ funds. The tax cuts could have been bigger than they are if John Key were not wasting money in that way. 
But do members know what is worse than that? 
Hon Parekura Horomia 
: What? 
Hon TREVOR MALLARD 
: When asked John Key could not tell us what he would do. It is actually a matter of relatively simple arithmetic. John Key tells us that National has a plan. He has a tax cut plan. He has one; he told us that on TV tonight. All that had to be done was a bit of basic simple subtraction—or perhaps addition; it might be the other way round. The National Party plan minus the Labour tax cuts—that is the difference and that is what National is promising. Could John Key do that on television tonight? He could not. One would think that with 36 advisers on this sort of matter one of them could have got out a calculator. In fact they probably could have done it with their fingers and toes. They could have worked out what the difference is and John Key could have said what it is. 
I think I know what John Key’s problem is. 
Hon David Cunliffe 
: Spin doctors. 
Hon TREVOR MALLARD 
: Well no not spin doctors. I think he has a factual problem. I think National has a problem with its plan. The problem with its plan is that low-income people and people with families would get less from National’s plan than they are to receive under Labour. John Key does not have the backbone to come into the House or to go on television and to tell the public— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Members cannot refer to someone’s lack of courage or use the words that the member did. The member will desist from doing that. 
Nathan Guy 
: I raise a point of order Mr Speaker. I ask you please to rule that the member should be asked to withdraw and apologise for those remarks. 
Hon TREVOR MALLARD 
: Speaking to the point of order Mr Assistant Speaker I point out that you have ruled and as you are aware that is the end of the matter. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Thank you. I have ruled. I have asked the member to desist and I will be listening to him with a great deal of attention. 
Hon TREVOR MALLARD 
: Any other former leader of the National Party would have been able to come to this House and tell us what his or her policy was. My memory does not go as far back as the 1950s on these matters but I can remember Keith Holyoake. I can remember talking to Keith and I can remember him living in Pipitea Street and seeing him wander back and forth. Keith Holyoake would have been able to come into this House whether he was in Government or in Opposition and say what his policy was. Robert Muldoon would have been able to come into this House and tell us what National’s policy was. Jim Bolger would have stridden in and ruled the place. If he were here now he would be saying what the policy was. I think even Jenny Shipley would have been able to do that. Don Brash certainly would have been able to. The current deputy leader who was at one stage the leader of the National Party would be able to tell the House what the policy is. Why cannot John Key? Why cannot the National Party have a leader in the tradition of National Party leaders—a leader who can tell the people what he is thinking rather than what the 36 spin doctors tell him to say. That is a problem when one is a leader. 
What did John Key say when he was asked where the money would come from? He said it would come from attrition in the Ministry of Foreign Affairs and Trade. 
Dail Jones 
: What? 
Hon TREVOR MALLARD 
: Yes that is where the money would come from—from attrition in the staffing of the Ministry of Foreign Affairs and Trade. Do members know that the current spending is $307 million? Let us suppose that attrition in the ministry which I think is a relatively stable ministry is at 10 percent a year and that it happens evenly across the year. That amounts to $15 million. Well I tell John Key that he needs $2.5 billion or $3 billion to do what he told us earlier in the week he would do. So far he has shown us where he would get $15 million. One could probably fire his 36 spin doctors or rather the 16 who are the image consultants and get another million or two of taxpayers’ dollars. But that is a long way short of what would be needed. 
This is a good Budget; these are fair tax cuts. I like to see the National Party squirming and I agree with John Campbell that John Key is “as slippery as a snake in wet grass”. I am sure Geoff Braybrooke would have had even more appropriate words to say but with the prissy standards here these days we are probably not allowed to use them. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 Any New Zealanders listening to this debate tonight would be disgusted at what they have just heard. When a New Zealand family has to spend more than 100 bucks to fill up the family car when the cost goes up every time they get groceries to feed the children and when they hear a senior Cabinet Minister make a speech like that it is little wonder that New Zealanders are disgusted with this Labour Government. All they need to remember is that that member Trevor Mallard is the Labour Minister who thinks the way to solve problems is to punch someone. New Zealanders remember seeing him standing in the dock in disgrace. That is the standard of Labour Ministers today. They think the way to solve differences is to punch people. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. The member to whom that member refers is not currently able to defend himself but I take exception to the personal nature of those attacks by that member. He should know better. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Members must be here and do that themselves. 
Dr the Hon LOCKWOOD SMITH 
: Thank you Mr Assistant Speaker. I am only reciting the facts. Let me say to the member who has just intervened David Cunliffe that it is time he told this Parliament what Graham Fortune told him about the immigration scandals. We know what Graham Fortune told him and we know he is not being forthcoming about the briefings he received and it is time that New Zealanders know he is not being upfront about them. 
Hon David Cunliffe 
: Absolutely upfront. 
Dr the Hon LOCKWOOD SMITH 
: We will get it out. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. That member is clearly a slow learner if his response to a comment about his not being allowed to pass personal reflections on one member is then to pass personal reflections on the integrity of another. In this case I take offence. I value my integrity and I tell nothing but the truth. 
Rodney Hide 
: With due respect to the Minister I say that he cannot possibly take exception to that. Well he can but it is certainly not something for the Speaker to rule on. To suggest that a Minister’s integrity is not all that it should be or that he may not have been entirely upfront with the House is entirely within the Standing Orders and is a debatable point. If the Minister wants to debate it that is fine but I do not know what we would end up debating if it were ruled out of order. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Can I just refer members to Standing Order 116 which is about personal reflections. It refers to “an imputation of improper motives” or “an offensive reference to a member’s private affairs”. The member is getting fairly close to that so I would just ask the member to be careful in the way in which he addresses the House. 
Rodney Hide 
: I raise a point of order Mr Speaker. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I have made a ruling Mr Hide. 
Rodney Hide 
: Yes I know. I just want to ask for your clarification. It is a mystery to me—and I know that you know the Standing Orders very well—as to how what Dr Lockwood Smith was saying in any way got close to offending against Standing Order 116. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I can only repeat my comment about the imputation of an improper motive under Standing Order 116. I have asked Dr Smith to be careful; I have not ruled it out. 
Dr the Hon LOCKWOOD SMITH 
: Thank you Mr Assistant Speaker. Let me come back to this tax bill. Just a few years ago we had the “chewing gum” tax cuts which were such an insult to New Zealanders but worst of all Labour then reneged on them. It broke its promise. Now today we have the “block of cheese” tax cuts. For the bill we are debating tonight the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill to deliver to New Zealanders 2 weeks before the election $16 a week after 9 years of this Labour Government is frankly an insult to New Zealanders. It is too little too late and it will not save this Labour Government. New Zealanders are sick of the kind of behaviour we have seen in this House tonight by the “Honourable” Trevor Mallard. They are also sick of the kinds of cover-ups we have had to witness recently by the “Honourable” David Cunliffe. 
I ask this Government why it is necessary to pass this legislation under urgency. Nothing in this bill has to be passed under urgency. National is voting for this bill so it is not that we are troubled by it because we disagree with it. That is not the problem. But I invite the “Honourable” Minister David Cunliffe to have a look at for example clause 33. Clause 33 deals with the family tax credit legislation. I would suggest to that member that the family tax credit legislation is some of the more complex legislation in our Income Tax Act. It is hugely complex legislation. The risk of clause 33 being not quite right is huge. Already in this bill we are amending matters that were passed through this House only a few weeks ago and the bits of previous tax legislation that we are amending tonight actually went through the select committee process yet we still got them wrong. Tonight we are passing this bill without it having been referred to a select committee. We do not get the chance to question officials about the accuracy of all the measures in this bill and we run the risk of this legislation having to come back again to be fixed up. 
The only reason we can conclude for Labour to push this bill through the House under urgency is that Dr Cullen’s own colleagues do not trust him. His colleagues are frightened that if these measures are not pushed through when the Budget is being debated he will renege on his promise straight after the election—if Labour gets the chance to run Treasury again. He reneged last time and his colleagues are frightened he would renege again. 
What troubles me the most about this tax bill as I look at it is that nothing in it actually improves the dynamics of the New Zealand economy. Nothing in it improves our tax system. I think Rodney Hide mentioned in his Budget debate contribution that nothing in this bill improves the incentives for New Zealanders to be more productive and I want to mention that before I finish tonight. Under this Labour Government of the last 9 years New Zealand’s productivity has collapsed. That is a serious issue. Productivity is one of the central issues to New Zealanders being able to achieve higher standards of living without inflation. I have searched this Budget document for anything that indicates that the Government has thought about how its measures might improve productivity. I would appreciate it if officials could tell me where this Budget 2008 document which contains the Budget Speech the Fiscal Strategy Report and the Economic and Fiscal Update shows how this Government’s Budget measures will improve productivity. 
Even if we put aside the issue of labour productivity—because the Government has said that labour productivity has declined because employment has grown and there are fewer unemployed people; it says that that is why labour productivity has collapsed—and look at multi-factor productivity we see that during the 1990s it averaged 2 percent growth a year and under Labour it is down to less than a third of that. It is down to a fifth of that for the 9 years that Labour has been in Government. And we wonder why the economy is screwed! It cannot grow without inflation. It cannot grow without inflation because Labour’s policies have destroyed the productivity growth of our economy. 
Taxation measures to improve productivity would have been hugely valuable but the taxation measures in this bill do not do that. They do not deal with the high marginal tax rates that people face. After all the changes to the Working for Families package and the change to the tax threshold from $42500 to $100000 of earned income the lowest marginal tax rate that people with dependent children face is 50 percent. This bill does not change that. Sure for people trying to work their way off a benefit the reduction down to a 12.5 percent rate for the first $20000 of income will eventually bring the effective marginal tax rate that some families face down from 91 percent to 82 percent or thereabouts. This bill has not solved the problem. 
So I put to the Labour members in the House tonight that this tax bill fails totally to improve the incentives the dynamic impacts of our tax system. It does nothing. Sadly it could have done something to improve the productivity of our economy but it does not. I simply say again to the Labour members: let whoever takes the next call for Labour explain seriously how concerned those members are about ordinary men and women families and their children in this country today who are struggling to make ends meet instead of giving another of the pathetic political speeches we have heard in this House this evening. They should be ashamed of themselves. 
Hon SHANE JONES (Minister for Building and Construction) 
: 
 Kia ora anotatou Mr Assistant Speaker. In contrast to what we have just heard let me issue a mihi of best birthday health to you as you sit in the adversity of silliness rudeness boredom and frustration coming from the other side of the House. 
There is constant carping from my whanaunga Tau Henare who is a variant of the prodigal son. He is too ashamed to go back to his real home in New Zealand First and he is too ashamed to go back to “Matua Winston”. I am actually glad that the Maori wardens are getting a new grant because if there is anyone in this House in need of the protection of the Maori wardens it is that whanaunga of ours Tau Henare. Every time he opens his mouth he demonstrates that his rhetoric is inversely related to his intellect. Engari kei te pai Tau tena koe. 
Now with $10.6 billion and despite the best efforts from members on the Opposition side of the House the grand old man of Parliament the greatest Minister of Finance we have had for many a year has delivered the goods. Today he stripped John Key of anything worthwhile to say. In fact a number of people who sat in the gallery today commented on what a contrast John Key represented compared with Dr Cullen. 
Chris Auchinvole 
: Too right he did! It was an excellent contrast. 
Hon SHANE JONES 
: OK we hear from the man dreamt up by Kenneth Grahame in  
The Wind in the Willows 
—Chris Auchinvole. If he is not reflecting the mannerisms of the toad he reminds us of the relevance of the mole in  
The Wind in the Willows 
 so we will put him back to sleep. We heard a brilliant contribution from Dr Cullen today. 
What was it that John Key did not like? He disliked the fact that he has had both his ideas and his own ballast stripped from him. He was reduced to talking about electoral finance and treating the debate as if it were just another ordinary general debate. His speech lacked content and contained no vision no ideas and no grand narrative as to where he as potentially the next Prime Minister would take the country. He showed that he has no intellectual home. In fact he is of no fixed abode intellectually. He will catch any tide and paddle his waka in any direction where he thinks he can capture lazy votes. 
But voters will not be fooled. New Zealanders heard today that firstly there will be tax cuts. They will be beyond the $1.5 billion of tax cuts that we have delivered through business. They will be in excess of the $1 billion in terms of the Inland Revenue Department tax subsidy for savers. They will be beyond the $1.67 billion in rough terms in respect of our family tax and child tax policy. Cuts will be $10.6 billion with the lowest personal tax rate down to 12.5 percent. The only way that John Key can match that Tau is by doing one of three things. He can sell assets— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! 
Hon SHANE JONES 
: —Mr Henare; I apologise Mr Assistant Speaker. But I must say to you Mr Assistant Speaker that the word “Tau” is spelt t a u and I ask you to please consult a Maori dictionary as to what it means when it is delivered in that fashion. It refers to a part of the anatomy that it would be too impolite for me to— 
Hon Tau Henare 
: I raise a point of order Mr Speaker. I have a reasonably thick hide and I can usually— 
Hon David Cunliffe 
: Point of order— 
Hon Tau Henare 
: Hang on it is a point of order. Goodness gracious me! 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The Minister will please be seated. 
Hon Tau Henare 
: I can usually take the barbs but I take great offence at anybody pouring scorn on my great-grandfather’s name and using that name in the way in which my whanaunga from the north Shane Jones has. I ask for him to withdraw and apologise not to me but to my great-grandfather. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I refer the Minister to Standing Order 116 “Personal reflections”. He will withdraw and apologise. 
Hon SHANE JONES 
: I apologise for and withdraw any offence caused. 
We have heard from Nathan Guy who showed what happens to the farming community when there is a shortage of veterinarians. Farmers get too close to the rear end of a cow and they end up resembling the habits of the senior National whip. 
However I come back to the economic transformation brought about by nigh on $1 billion. It is regrettable that I should remind Dr Lockwood Smith that occasionally when I encounter many of our people in Northland they are wont to refer to him as the Vince Martin of the National Party. He has that reputation. 
Hon Parekura Horomia 
: He’s a bull breeder. 
Hon SHANE JONES 
: I know that he is a bull breeder and that the word “bull” can be construed in a multiple number of ways but on occasions he is said to give added meaning to the term “retread”. 
However let me come back to my contribution—an economic transformation and $700 million: I tell Dr Smith that that is where we will get our productivity. That is what comes through clever financial stewardship whereby we are able to offer relief to taxpayers and put investments deep in the well and reservoir of human capital through the entire scientific and technological infrastructure area. 
Let us not forget about community organisations. Of course Mr Clarkson’s conception of the facts about community organisations makes them an enemy of the truth so the less we hear from him the better. There is $400 million - odd to enhance the ability of community organisations to deal firstly with families and secondly with youth sport and culture which is something that was completely stripped under the ideas of our friends in the Opposition. 
Let us refer to the purchase of railways. Despite the idle gossip from Mr Key the purchase of the railways has been widely accepted by people and there will be another smile. It will not be the cheesy grin that we see from Mr Key when he talks about railway costings. Railways is a winner; people do not want to see our roads constantly clogged up. People are happy that the railways will be run professionally and will serve a public good. People are also happy that coastal freighters will be bobbing around the coastline moving very efficiently and enhancing productivity in the goods and services of the country. 
In addition to that of course we are throwing in a fishing line. I must not miss this opportunity to mihi to Mr Anderton for turning down the application for a marine reserve at Great Barrier Island. The man has started to redeem himself in the eyes of Ngati Wai. Of course that may relate to the fact that Ngati Wai is in charge of the party that Tau Henare refuses to go back to—kei te pai he take anotera. Once again it is a further variation on the very sad story of the prodigal son. 
Productivity has been raised by $700 million and the only way in which the tax cuts can be bettered is through profligacy the sale of assets or the stripping of public services so I say “Bring on the campaign.” What exactly is John Key proposing to do? Does he propose to strip money from the social welfare budget or the health budget or to privatise schools through some sort of voucher system? No all we can see and hear are insults in the face of a great Budget. Kia ora tatou katoa. 
TIM GROSER (National) 
: 
 If there are New Zealanders who are actually listening to the so-called contributions of the last two Government speakers both of whom are Ministers of the Crown they must be wondering what is going on. They must be wondering why it is that in debating what is intended to be a central political event in the political calendar of this country at a time when New Zealanders are in a very real sense under real pressure from real problems facing them and their families two Ministers of the Crown can get up and make a series of jocular irrelevant points as if this is some high school debating society that they represent. I think New Zealanders would say that if this Budget and the tax bill we are actually meant to be debating which is the central part of the Budget strategy were intended to be a circuit-breaker for this Government then right around the country the political lights have just gone out for Labour. That is what I think they will conclude if they have had the misfortunate of listening to the last two Government Ministers speaking on this very important political day on this very important political matter that faces New Zealand families. And when reflecting on the fact that this is the ninth Budget they will see that this is not like reading the final chapter in a book. They will see that this has to be looked at in relationship to the whole story of this Labour three-term Government. 
I just want to take members back to a central point. I have always held the belief—I think many New Zealanders hold the belief—that it is a privilege to be the Government that it is a privilege to be voted in democratically by one’s fellow countrymen and countrywomen and that that implies a great duty of care. It implies overriding all of this a responsibility to take New Zealand forward. I think the test—a fair test but a brutal test—is to ask that if we look at this Budget in relationship to the last 9 years has this Government taken this country forward on its watch? Has this Government addressed fundamental problems facing New Zealand? Has this Government actually addressed the real-world concerns? Or are Government members opposite completely lost as were the last two Ministers of the Crown in making clever irrelevant and essentially high school debating speeches? Is that what their view of their responsibilities really is? 
Let us just look at the tax bill and what it is intended to do in terms of the opportunity at the start of this saga. We had a Government coming in after 8 years of economic growth at an average rate of about 3.5 percent. The rate in the last year of that period 1999 was over 4 percent in real terms. We had had stellar productivity growth in the previous 3 years. We had falling inflation and falling unemployment all set to continue during the new Government’s first 4 or 5 years. The phrase “the end of the golden weather” is the phrase that keeps on coming back to mind and I am sure it is coming back to the minds of many New Zealanders as they stare at this “big cheese Budget”—the $16 a week tax cut! The Government has had the most favourable terms of trade for a generation or more. All of this was fuelling the largest Budget surpluses that any Government has had the unique fortune to inherit—all of it allowing Government members the opportunity to build on wealth creation to make New Zealand a place where people could base their future on to build on the productivity growth of the past and to take this country forward which is their ultimate responsibility. 
This is not just about dollars in the pocket as John Key has pointed out. For the most part we live in a market economy and that means that incentives actually matter. It is not just a matter of dollars in one’s pocket—whether one can go out and pay the bills or whether one can go out and fill the car up important though those are to anyone’s normal daily life—it is also a matter of constructing an economy that can incentivise middle New Zealand to take this country forward. Members opposite have had 9 years to come to terms with this and just as in the case of the emissions trading scheme where they have rushed through an ill-considered response—after doing absolutely nothing in their last 9 years other than spouting rhetoric—so it is exactly the same when it comes to Budget strategy and tax strategy. They have had 9 years of doing nothing on income tax. Oh I am sorry I have forgotten one very important exception to that. 
Chris Auchinvole 
: What was that? 
TIM GROSER 
: Well the first action Dr Cullen took was to raise the marginal tax rate to 39c—a completely futile and meaningless gesture later revealed by his extremely impolite and inappropriate comment to John Key which indicated his contempt for anyone with wealth; but we will not go there. So after all that we get this $16 a week. If we divide that by 9 years we get $1.75 a year for all that Government’s time with the stewardship of this country. New Zealanders I think have a right to expect a little more and they will get more from a National Government. First of all they can be guaranteed under a National Government to actually see the second tranche of these tax cuts. We know what the history of this is. We know what the phrase the “chewing gum Budget” was all about. There is an old cynical phrase: “You mislead me once shame on you”— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Order! 
TIM GROSER 
: No no I am referring Mr Assistant Speaker to “you” in the general sense not to you as Speaker here or any member here. It is a quote. “If you mislead me once shame on you but if you mislead me twice shame on me.”—shame on me for being so gullible. That is what that old cynical phrase means and I do not think New Zealanders are going to fall for it. I think New Zealanders know what the story is and I think New Zealanders know that actually the only way they can be guaranteed these tax cuts as a minimum is by the election of a National Government. 
But they will not just get a National Government that will validate this minimal movement forward; they will get a Government that understands what the real problem facing New Zealand is which is that we are not on a sustainable trajectory. We suffer from a growth deficit. We need to invest in our future. We need a concerted programme of building up the country’s infrastructure. We need a concerted programme that puts standards back at the back-end of our education system at the primary and intermediate level—standards for numeracy and for literacy. We need a Government that is not committed to a “once every 9 years” process of re-incentivising middle New Zealanders but one that will look for opportunities wherever they arise. 
R DOUG WOOLERTON (NZ First) 
: 
 In my Budget debate speech I mentioned that New Zealand First supports this Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill. I also mentioned that we would like to see some incentives in it for exporting so I will not go over that matter again. 
It is pretty rich for the previous speaker on his feet Tim Groser to be talking about cynicism because I have to say that I have never heard a more cynical speech than the one he gave. The man who was speaking voted against Working for Families and against any other attempts at tax cuts brought in by this Government in the last 9 years. Now he talks about incentivising the system. He knows that National has no intentions to incentivise the system in the way he describes it. 
What National would have done in this Budget—so its members tell us—is to give a percentage decrease in tax right across the board. It would not have attempted to attend to people who are worse off to people who are suffering pain due to the economy right now; it would have given a 1 percentage tax cut right across the board. That is what National members opposite said and that is what they would have done. We have no reason to disbelieve them. That is not incentivising the tax scheme; that is giving a tax cut to the wealthiest in society disproportionate to what others in society would get. It sounds simple but that is the net effect of a scheme such as they are proposing. And I am sure middle-income New Zealanders understand that. I am sure they understand it absolutely. 
We in New Zealand First were pleased to see in this Budget—in fact the Prime Minister made an issue of it—that the Labour Government has come to the view that State assets should not be sold. We welcome that and applaud Labour for it because we have been on about that issue for many many years. We believe that operations essential to the infrastructure of this country should stay in the hands of the taxpayers and be administered as the Government sees fit. 
Much criticism has come from the Opposition about the buy back of the railways business. We believe that if rail is run as Air New Zealand is run then it will be a huge advantage to this country. We believe quite simply that it is wrong to give money to foreign owners so that they can carry on business in this country. We do not believe that we should be giving subsidies to people who own our infrastructure. 
Likewise we do not believe that $1.5 billion should be given to Telecom to upgrade broadband as proposed by the National Party. If Telecom was doing the business as it promised this country it would then it would have invested in broadband in this country because it is its responsibility to do so. But no it has chosen to pay its shareholders who are mostly overseas huge dividends running into many many millions of dollars—hundreds of millions—over reinvesting. I do not think it is in anybody’s interests for National to say it would give Telecom $1.5 billion to upgrade the broadband service. At least under Labour’s proposal which we heard today in the Budget statement we are seeing a similar amount of money but it is contestable. 
I would have thought that that proposal would come from the National members quite frankly. They are the ones who go on about private enterprise. That money is contestable so we can have other people bidding for it. I applaud the Minister who is in the House now on that move because I think it is the right one. I could not believe my ears when I heard that the National Party stated publicly—[ 
Interruption 
]; it is not in the past—that it would just give $1.5 billion to Telecom to upgrade the broadband system. That is outrageous and it should not happen. That is not the free market at work at all. 
We are also happy to see in this Budget the tax credits for Working for Families coming forward into this year instead of waiting until April of next year because we believe that they are needed now by people who are under pressure for a number of reasons. In many cases it is because of a slight downturn in the economy which we are seeing as a flow-on effect from the United States economy. I say that anybody who would oppose such a move has simply not been out and about in the community and does not understand what is happening out there right now. 
As I said New Zealand First would have liked to see some tax incentives to correct what I believe are inequities in the market when it comes to our export sector. Exporters are suffering right now with the high dollar. They are suffering with internal costs that are not of their making and I believe that it behoves the Government of the day whichever Government it may be—and right now it is a Labour-led Government—to make those things right for exporters. We cannot lose these people. We cannot lose the manufacturing capacity and we cannot lose the capacity of our pastoral and agricultural industries be they forestry fisheries or whatever. 
So with those qualifications we support this tax bill. We support the reductions in taxation not only because they are good for individuals but also because they are good for the economy. 
CRAIG FOSS (National—Tukituki) 
: 
 It is an absolute pleasure to be speaking on and voting for the Taxation (Personal Cuts Annual Rates and Remedial Matters) Bill—an absolute pleasure. It feels good. I thought we would have to wait another 6 months or so to be voting for one of these bills or to have a bill that cuts personal taxes before the House. Thank you Mr Assistant Speaker for the opportunity to vote on this particular bill.  
As many speeches before mine have crossed into the Budget itself and this bill I will follow suit. We are in urgency tonight. Maybe it is because Dr Cullen could not trust himself but more likely it is because Mr Goff did not trust Dr Cullen. We are in urgency because it is urgent that there are personal tax cuts in New Zealand. It is as simple as that. It is desperate that there are personal tax cuts in New Zealand. It is overdue that there are personal tax cuts in New Zealand—9 years overdue or to be precise and quote John Key from his earlier speech 3000-odd days overdue. 
In the second reading of this particular bill and in the Budget there is no apology whatsoever from the Government for doing nothing about personal tax rates and thresholds for 9 years of the best economic conditions that New Zealand has ever faced. There is no apology whatsoever in the Budget for the doubling of interest rates under the current regime. There is a commentary within the Budget itself where there are some very interesting graphs of the behaviour of Dr Cullen’s spend-up over the last 9 years and they basically go straight up as interest rates have increased under his watch. There is no apology in this Budget or this bill for inflation being north of 3 percent and eating away at our wealth. Members on the other side of the Chamber go on and on and talk about public assets etc. but inflation eats away at our wealth and our future. There is no apology in this Budget or in this bill for the lack of productivity growth in New Zealand—the only way out of the current bind that we are in. There is absolutely no apology to family friends and whanau who have all given up and moved to Australia for brighter futures and better income streams. There is absolutely no apology whatsoever. 
Earlier speakers have spoken about borrowing. Mr Chauvel over there was saying there was no borrowing for tax cuts. Well in this bill it is quantified at about $10 billion over 4 years. I refer members to page 104 of the Budget which states there is net bond issuance over the next 4 years of $6.4 billion; $6.4 billion will be borrowed to help fund this Budget and it is signed off by the Minister of Finance who has raved on ad nauseam over the last 9 years about not borrowing for tax cuts. He does not explain how he will fund his tax cuts other than with bonds as it says here. He has been denying that for many years. Not only that but in the same Budget there is a $12.8 billion cash deficit forecast for 4 years down the track. How does one fund a cash deficit? The Minister says right here that this will be met by an increase in borrowing—oh please excuse me I meant by domestic bond issuance. Bonds are borrowing. To fund $10 billion worth of tax cuts there is $6.4 billion of bond issuance. Hello! To quote a certain Minister of Finance from what I think was his last Budget: “What is the connection?”. 
The news is not good. New Zealanders—and we saw it on TV tonight—are suffering double interest rates suffering mortgage rates and suffering fixed-rate rollovers to double figures for their 2 and 3-year mortgages. Right here on page 70 of the same Budget the news is not good. In the Budget fiscal update the prediction is that the 90-day bill average rate for this coming year is 8.8 percent. That is predicted to plummet to 8.6 percent next year. So I ask Government members to show where the relief is in that. In his speech the Minister kept talking about relief from interest rates. Well I have some ideas for the Minister of Finance about how we can start to attack those interest rates and it is not just subprime. Subprime is a credit issue; it is all about where New Zealand’s credit margin starts and the next Government will be doing an awful lot to bring the base Government curve right down. The news is not good in this particular Budget. We have unemployment forecast to blow out to 4.5 percent at the same time that the Minister of Finance is borrowing. The current account is blowing out to 7.2 percent to 7.3 percent. It is not good news. There is one piece of good news: this particular bill. It is a pleasure to vote for a personal tax cut bill. 
I will make another couple of quick points about things that are in the bill. I recall us being in urgency about KiwiSaver the fair dividend rate and the specified superannuation contribution withholding tax changes etc. Right here in this bill—once again sadly I need to say it—there are further changes and amendments to the KiwiSaver legislation to fix up some of the calculations that were not put into it correctly in the first instance when the bill was rushed through. Had a bit more time been spent on that bill it would not even have had to be here under urgency. There is also another fix up in here about the change to registered charities which we will speak to during Committee stage but again that was part of a bill rushed through. The process of this Parliament is about consideration—let the people submit to a select committee—and these mistakes will not have to reappear. The only difference this time is there is no Supplementary Order Paper. Normally there is a Supplementary Order Paper the Government races in under urgency to fix these things up. I will end my speech right there but just again it is a pleasure to finally be voting for a personal tax cut bill. 
Hon PETER DUNNE (Minister of Revenue) 
: 
 Can I say to the member who has just resumed his seat that the changes on charities were hardly rushed. They began with a working party that was convened as long ago as 1988. That party then reported to the Government early in the new decade. The legislation setting up the Charities Commission was passed shortly thereafter after full select committee consideration. 
The problem that has emerged has been with the process taken to register the charities and a subsequent determination along the way that there was a potential gap in the law in so far as tertiary institutions were concerned that could have rendered them liable for taxation in a way that no one right back to the 1860s or 1870s had ever intended. So I debunk the member’s argument that these things were rushed through. These are consequences of changes and perhaps one could argue that in the implementation of those changes not all was done that should have been done. But it was not the fault of the original legislation. 
I was not going to take a call in this debate but I have been listening to it with some interest because an ironic sense of déjà vu is emerging through all of the speeches we have heard this evening. Essentially what we are hearing is a two-way argument about who is better at tax cuts than the other. The reality is that neither of the major parties has a particularly proud record in this area. I have been in this House long enough to see three rounds of personal tax cuts—that is in more than 2 decades and that is the core of the problem—the changes around the introduction of the goods and services tax in 1986 the changes that the National-United Government made in 1996 and now these changes. The ironic thing about them is that the 1996 changes were made in two stages and today’s bill is a three-stage bill. 
In 1997 the Government of the day to fund some of the commitments it made to New Zealand First repealed stage two of the tax bill it passed in 1996. Here we are today passing a bill that implements a three-phase tax cut. One side guarantees the sanctity of those cuts and the other is raising doubts. The irony is that that is the reverse position that both took in the 1996-97 debate which I guess goes to prove that no matter what happens the one certainty in life is that the tax debate is an on-going one. 
I think that there is a much more fundamental issue. Every decade we run up to the top of the cliff and have a huge cathartic experience about whether the country can afford personal tax cuts. The argument is always that the cost far outweighs the level of deliverable public expectation. The problem is not so much the size and timing of cuts themselves but the rarity with which they occur. If in fact we had a programme that saw more modest cuts being made on a more regular basis a lot of the pent-up pressure that we are now seeking to deal with and that we sought to deal with on the occasions of the 1996 and the 1986 cuts could have been avoided. 
The lesson surely has to be once this programme is put in place that firstly we should let it remain and secondly that it should not be 10 years hence that a further programme of tax reductions is considered because at that point all we will be doing is repeating the folly of the last 2-plus decades. That is what causes the debate the dilemma the argument and the sense that no matter what amount is delivered it will never be enough. It is simply because the expectation gap goes far beyond what is able to be delivered. 
So rather than throw these brickbats back and forward about who did what to whom and when we ought to be focusing on how can we move to a programme that sees tax cuts as a normal part of economic management and not as something on which one builds oneself up to a peak and delivers once every now and then. That will never prove to be sustainable. That will never prove to be a position where we can say “a reasonable measure of public expectation has been met.” We need to change our thinking. 
We need to redesign our tax system in such a way that it does lend itself to smaller more regular adjustments that are more affordable and that do enable Governments of whatever complexion to plan with some certainty and some integrity about the way they approach these issues in the future. Until we do that the debate we are having this evening will continue at periodic intervals. The role players will simply reverse their roles depending on their political circumstances. We will not be that much better off. We may feel short-term enthusiasm but nothing much will change. 
So I think that this Budget this bill does provide us with an opportunity to lock down a process of ongoing change and that is important. The worst thing we can do now is introduce more uncertainty into a system that already has more than its fair measure. So I support this bill. I support its passage and I support too the 1 October implementation date. New Zealanders should not have to wait for tax relief that is experienced once in a decade; probably two or three times in their working lives. We need to do much better than that. 
Hon PAUL SWAIN (Labour—Rimutaka) 
: 
 There are a number of key debates in a parliamentary life and there are probably three major ones. The first one is the Speech from the Throne which is the one at the start of every parliamentary term that sees the Government outlining its programme for the next 3 years. Another important speech is the Prime Minister’s statement which is given at the start of every year of a new Parliament and outlines what the priorities will be for the year and usually gives a bit of a hint about what might happen in the Budget. But the critical debate in a parliamentary term and in the life of a Parliament is the Budget debate. 
People might be wondering what all this is about when they are watching it at home—mind you they have probably turned over to something on TV2 by now—but the critical point is that a Government has the same issues to face as a family in the sense that a Government receives money by taxation and has to work out by Budget time how it is going to spend that money. Just like the family receiving an income the Government also needs to set its priorities and try to live within its means. For a Labour-led Government the absolute “must do’s” are the important ones like health and education and things like that. 
There are lots of things that families would like to do with their money but cannot afford to and so it is with Governments. In the end it is a process of trying to work out what is in the best interests of the nation compared with the other things that everybody would like the Government to do. I have listened to 18 Budgets in my time in Parliament— 
Simon Power 
: You are so young! 
Hon PAUL SWAIN 
: —yes so young but behind ticks a very old and tired brain—and nine of them from National. Unfortunately the first one in 1991 was the rudest one—the “mother of all Budgets”. Ruth Richardson was running around Evans Bay in a pink tracksuit as I remember going on about how this was going to be a “spine-tingling Budget”. It certainly was spine-tingling for the people who were at the other end of it. There were benefit cuts the asset sale programme and the Employment Contracts Act. All those things happened at the start of that Budget period. Then we went into what one would call the drift Budgets and none of them particularly memorable in the 9 years of the National Government. 
We come then to 9 years of Dr Cullen’s Budgets. I think it is fair to say that as Dr Cullen delivers more Budgets the better they get. He is probably like an old good red wine—the older he gets the better he gets. 
Hon Dr Michael Cullen 
: Hear hear! 
Hon PAUL SWAIN 
: Dr Cullen says “Hear hear!” and why would he not say that? 
Tim Barnett 
: More like a single malt. 
Hon PAUL SWAIN 
: I see. I see him more as a good pinot noir or a shiraz personally. 
But I do not want to be distracted; I always get distracted by interruptions from the Hon Dr Cullen. I want to box on and say that after 18 Budgets this is the only one I can remember being supported by all parties. All parties in this House are voting for it. After 18 Budgets I can remember only one such occasion and this is the one. So one would think that after 9 years Dr Cullen has got it about right. Finally people have recognised that what Dr Cullen did in the first few Budgets was to get New Zealand back on track again by trying to sort out the mess that was left by the previous Government in education health housing defence superannuation and all those matters. The Government squirrelled some funds away in the good times in order to deal with the times we knew were coming which were when things were going to get tough. As Dr Cullen outlined in the first part of his Budget speech we are heading into those times now. What a good thing it is that some funds are available in order to help people and give them some relief. I congratulate Dr Cullen because he has delivered in a very very difficult time in New Zealand’s history. 
Although I want to talk about the tax cuts I think it is important to recognise that this Budget is not only about tax cuts. That has somehow been the fixation of everybody. There are a lot of things in here that— 
R Doug Woolerton 
: They have probably got a fixation on talking about the bill; that is probably the problem. 
Hon PAUL SWAIN 
: Possibly yes but I think one has to give some context to the bill which is what I am attempting to do. Dr Cullen has always said that tax cuts have to be measured against four criteria. The first criterion is that tax cuts will not lead to greater inequality. A number of speakers have said that yes the bill will not lead to greater inequality—the tax cuts are across the board—and by the way there is also a top-up for Working for Families. Secondly tax cuts will not require cuts to public services and we have already heard that that will not happen as a result of these tax cuts. The tax cuts have been designed not to exacerbate inflationary pressure—and the Governor of the Reserve Bank will be watching this Budget very very carefully—and I note for those who have not quite got the point that this is a three-step process. The final criterion is that the tax cuts will not require borrowing to fund them. So there are four criteria. In the little box that I have which was given to me by Dr Cullen those boxes are all ticked—surprise surprise! 
What would have happened if that measure had been applied to the National Party? Well in respect of the first criterion about tax cuts not leading to greater inequality in our society we know that John Key and all his mates would have done extraordinarily well out of their Budget and that the person at the lowest level would have got sod all. So inequality in New Zealand would have been exacerbated and that is not the way to run a tax cuts programme. 
In respect of the criterion about tax cuts not requiring cuts to public services we heard John Key say that a ruler would be run over every Government department and every Government agency. So every Government agency must be quivering thinking about what that means. We know that the only way a National Government will be able to do this is with some big cuts. One does not try to fund billions of dollars of tax cuts by removing the odd adviser in a Government department. John Key could make quite a lot of headway by reducing the 36 people employed in his office. 
R Doug Woolerton 
: That would be a start. 
Hon PAUL SWAIN 
: That would be a start I suppose. 
But the point is that one does not get the billions of dollars that are required at the margins by fiddling around with the odd policy adviser. There is no doubt that public services will be cut. Why? Because we know that a National Government has done it before. Do people remember that under National people started to pay to go to hospital? It was called the bed-night charge. It sounded like people were going to a motel. It was the motel people went to that they did not want to go to but had to go to and as they left they had to pay a bill. This was a most bizarre way to run a health system. 
The third criterion is that tax cuts should be designed not to exacerbate inflationary pressure. If a National Government dumped its 50-plus tax cuts in one hit what would happen? People would get them on the one hand and on the other hand the Reserve Bank would have to adjust the interest rate regime and money would be taken back through increased costs on people’s mortgage charges. So National’s tax cuts cannot possibly be sensible and sound as far as inflation is concerned. As far as not being required to borrow for tax cuts is concerned well of course Mr Key has already said National will be borrowing for tax cuts. As I recall one of National’s members said that National would not borrow but just get the money from overseas. We are still scratching our heads on this side of the Chamber trying to work that out. 
Of course there are lots of other things in the Budget. There are lots and lots of things in the Budget about transport health education defence skills training and innovation. So this is not just about tax cuts. We are talking about tax cuts because this is what the bill is about but it is important for people at home to remember that this Budget is not just about tax cuts; it is about a whole lot of things. I congratulate Dr Cullen. This is a Budget for this particular time for this particular year and it does two important things. It gives a tax break to those who need it at a time when the cost of living is rising. It does so without putting on extra inflationary pressure which means that people will not lose it back through their mortgage while at the same time it continues the programme of continuing to fund the things that New Zealanders actually want us to fund—health education superannuation housing transport police and defence. This is another fabulous Budget from Dr Cullen. I applaud him for it and I certainly support the second reading of this bill. 
CHRIS TREMAIN (National—Napier) 
: 
 It is always a pleasure to follow the Hon Paul Swain in any debate in this House. As he quite rightly points out he has been here for 18 years— 
Simon Power 
: He’s a cheerful member. 
CHRIS TREMAIN 
: He is a cheerful member. I have enjoyed his company on the Finance and Expenditure Committee and he has taught me more than a thing or two in my time there. But I have to say that after 18 years he has fallen into the same trap as his leader fell in today of regurgitating the memories the policies and the issues of the past. Once again we heard him drag up the asset sales of the past. I might add that Michael Cullen was an Associate Minister of Finance at the time of a number of asset sales. Paul Swain dragged up the bed-night charge which I think goes back to the days of Florence Nightingale. Like his leader he slipped into the habit of bringing up the past in respect of a whole lot of issues. Quite frankly they are issues of a bygone era. They are issues of another century. For members of this House who were aged 10 12 or 13 then those days are history. 
This Budget this Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill is too little too late. That is the phrase that is ringing out around the country. That phrase is ringing out from Doug Woolerton’s part of the country up north from Mark Gosche’s area of Auckland from Mr Swain’s electorate of Rimutaka and even from Dr Cullen’s home area of Napier in Hawke’s Bay. That is what people are saying around the country—that it is too little too late. That is the phrase that is ringing out from over 1.6 million hard-working Kiwis from Napier Taradale Hastings Puketapu—from all around the country. Those 1.6 million hard-working taxpayers have not had a tax break in over 9 years under this Labour Government. We have had 9 years of the best economic conditions that any Treasurer of any nation in the OECD could expect. We have had 9 long years when the tax take has risen from $32 billion to nearly $60 billion. We have had 9 years when hard-working Kiwis have been taxed harder and longer than people in most other countries in the OECD. 
And after 9 long years we have achieved the remarkable feat—and it is a remarkable feat—of having 79000 Kiwis leave our country per annum for a brighter future with 40000 of them going to Australia alone. Just this week Helen Clark said that that is not a problem because we have got net positive migration. She does not care that 79000 hard-working Kiwis are leaving this nation because they are being replaced with people from overseas. But she forgets that we have invested millions and millions of dollars in those Kiwis over the years in their education and in all sorts of things to get them to a level where they can contribute back to New Zealand. 
Under this bill we see a change in personal tax rates. National has been calling for that for years and it is a step in the right direction but it is a timid step. National will support the legislation because we believe that we need to return dollars to hard-working Kiwis’ pockets regardless of the size of the tax cut offered under this Budget—regardless of its size. We believe that Kiwis know better than the Government how to spend their money and any acknowledgment of that should be welcomed and that is why we are supporting this bill. But I should remind Mr Swain that it is this bill that we are supporting not the Budget. We are supporting this bill not the Budget—which is not what he pointed out to members tonight. You see these tax cuts will deliver between $12 and $28 per week to hard-working Kiwis and in 3 years’ time in April 2011 they will deliver a total of between $22 and $55 per week. That is an increase of between $5 and $13.50 per week in 2010 and in 2011. What are Kiwis around the country saying about that? They are saying it is too little too late. 
I am a relatively new boy to this House. I am from a generation of people who are not interested in the political battles of the 1980s and 1990s—the debates over the Viet Nam War or the Springbok Tour. I think I was 12 at the time of the Springbok Tour and I watched a couple of the All Black games with my family which was part of the rugby community at that time. But who cares about those debates of the 1980s and 1990s? We are here to look to the future to where we are taking this country. As members know not just Generation X and Generation Y but most Kiwis want to look forward. Only the tired old Labour Party members sitting across the House want to continue to dwell in the cellar of the past. 
Our generation is interested in the future. We are interested in putting Treaty settlements behind us and that is why Kiwis support National’s policy of settling all Treaty settlements by 2014. We are interested in getting our kids educated and improving the tail end—the 25 percent of kids at National Certificate of Educational Achievement level 1 who cannot read properly. We know that we are in an increasingly global community and that educational skills are gold. That is why Kiwis are listening to National’s policy about introducing national education standards and focusing on trade training at schools. They are good policies that we have rolled out. We are interested in how we can connect with the world and that is why National’s policy of a $1.5 billion investment in broadband has got Kiwis excited about the future under a National Government. It is another policy that takes us forward into the future. We are interested in ensuring that the rate of violent crime comes down and that New Zealand is a safe place to live. That is why Kiwis are listening to National’s policy to strengthen the bail laws and to make it illegal to be a member of a criminal organisation. That is why Kiwis support the stand taken recently by Judge Tony Adeane in Napier. 
Many of my generation are living overseas where they have great-paying jobs but quite seriously they want to come home and they want to come home to different cities around New Zealand to the places where they were born. They are actually looking for excuses to come home. That is why my generation believes in a programme of ongoing personal tax cuts. We want a Government that is serious about curbing its spending that will rein in the burgeoning bureaucracy and that will invest in our infrastructure. We want to know where this nation is heading over the next 10 years not just the next 2 or 3 years with a $6 tax break in 2 years’ time. We are looking for a leader who is not immersed in the ideology of the 1980s who has a strong vision for New Zealand and who has the capacity to deliver that vision. That is why New Zealanders are looking to John Key for the future and that is why they are looking to a National Government. 
RODNEY HIDE (Leader—ACT) 
: 
 I have been reflecting on the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill that we are debating which is a bill to cut taxes and I was thinking how marvellous it is that a bill to cut taxes in New Zealand is passing through the House with no dissent. It is quite extraordinary if we think about it that such is the overwhelming support for people to keep more of the money they earn that the parties in Opposition or sitting on the cross benches are joining with the Government to vote for a tax cut and indeed that Labour members one after another are standing up and praising a tax cut measure. 
I remember first coming to Parliament and calling on parties to see the need for tax cuts and ACT was the only party to do that. I do not think that we are responsible for Dr Cullen’s tax cuts but I do recall calling for tax cuts in the 1990s and being shut down by every political party in the House as if it was nonsense and we could not have tax cuts. But now we fast forward a few years and find that every political party here today is voting for Dr Cullen’s tax cuts. I cannot really count the Greens because they are not voting for a tax cut but to give them their due they are not voting against it. The only thing that is a bit disappointing is the fact that the tax cuts are a bit small but it is a long way for Dr Cullen to come in order to give us a tax cut. 
I will pick up on a point that Dr Cullen made and that the Prime Minister referred to. It was that when times were getting tough the previous National Government sold assets but now this Labour Government—apparently this is a good thing—has bought back assets. That is to say it has taken assets held in private hands and brought them in to be owned by the Government. The example that we have here is rail. We heard Dr Cullen say that buying back rail was great because Kiwis wanted to use rail. Well the interesting thing is that if that is the test of what the Government should buy back then what would we leave to be run by the private sector? If the fact that people wanted to use a service is the justification for State ownership then we should perhaps buy McDonald’s Woolworths and Foodstuffs. 
Of course if Kiwis want to use rail and pay the price then how come the Government has had to step in and buy it? I ask Dr Cullen how smart it is to take—what was it—$665 million of taxpayers’ money and give it to Australians. How does that make New Zealand richer? By taking $665 million from Kiwis and giving it to Australians the only thing that has changed is that the railway now supposedly belongs to the Government. 
Michael Cullen’s answer will be that we have the advantage that the Government will be able to operate the rail more efficiently. Well when has that ever been the case? When has the Government ever run anything more efficiently than the private sector? Even when the private sector is losing money it does not actually run things badly. But what we know about having the Government sector running a business is that it runs it poorly whether it is making money losing money or doing nothing. 
Then Dr Cullen said that we have to pour more money into rail so the poor taxpayer will be hit year after year and he is telling us we need to do that because “Kiwis want to use rail”. But clearly we are not prepared to use rail for what it costs so that is a loss of resources. Clearly we are backing a loser. We actually had the Australians owning a loser. They are now $665 million better off and the economic wizard is saying that this is somehow a victory for New Zealand. I do not get it. 
I will tell members another thing. If I were an old-style Labour Minister or MP I could understand the Government’s wanting to own and run things because that is the ideology of the Labour Party—the ownership of the means of production. But people around the world can see everywhere they look that any country that is half decent is divesting itself of enterprises. Why? Because those countries find that the private sector does the better job. Why? Because there is competition and choice. But we in New Zealand cannot even mention the word “privatisation”. 
I put it on record that ACT believes wholeheartedly in privatisation and private enterprise. We believe that we need more privatisation and that New Zealand is out of step. Governments around the world are all privatising except as far as I can tell for these countries: North Korea Cuba Burma and New Zealand under either a Labour or a National Government. Why is that? Do we not believe in private enterprise? Do we not believe in competition and choice? Have we not learnt the lessons of Government ownership and control? 
How is it such a great victory for New Zealand taxpayers to have given $665 million to Australian investors and in the process to have given them for free the largest trucking company in New Zealand? We have given them rent-free all the depots in the railway yards and given them preferential pricing on rail. I thought that Mr Woolerton cared about provincial New Zealand. Provincial trucking companies owned and built by Kiwis are now competing against an Australian company that has $665 million of taxpayers’ money. It has obtained the trucking company for free with something like 430 trucks. 
Chris Auchinvole 
: Biggest in the country. 
RODNEY HIDE 
: It is the biggest in the country. The company has access to the depots for free for 6 years and has preferential pricing on New Zealand Rail—which the New Zealand taxpayer will prop up from now until eternity—and New Zealand First is saying that it is a good idea for New Zealand. 
R Doug Woolerton 
: Yeah it is. 
RODNEY HIDE 
: Well I would love it to be explained because the Australians are laughing all the way to the bank. Look at their share price! New Zealand First and the Labour-led Government stopped Canadians from buying into an airport—which is already privately owned because Mr Peters sold it—but it is OK to give to Australians the largest trucking company in New Zealand. I am sorry; it does not compute. 
Hon MARK GOSCHE (Labour—Maungakiekie) 
: 
 I watched the Budget debate and the debate on the first reading of this Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill and it was interesting to see the look of horror upon National members’ faces. They had to sit with Roger Douglas and Richard Prebble who were like a couple of old crows beside them. Their presence reminded New Zealanders of the bad times. Rodney Hide can rewrite history all he likes but the ACT party if it had had its way on policy would have seen no railway system in New Zealand. It would have allowed the system to collapse. So I tell Mr Hide not to rewrite history. Rail was under threat of utter collapse—so was Air New Zealand—but this Government stepped in. We had the prudent financial management of Dr Michael Cullen who was able to rescue New Zealand from a fate that ACT would have supported—no international airline and no railway. Can members tell me of any modern economy in the world that could sustain that particularly one at the bottom of the South Pacific? We are completely dependent on having an airline owned by this country. 
Coming to this bill and looking at the personal tax package I can relate a very interesting example I was given about what this means to real people. Let us call this couple Lisa and Paul. They are in their late 30s and have one child who is 4 years of age. This is a pretty typical sort of family in my electorate of Maungakiekie. Let us say that Lisa works as a hospital cleaner. What will she get out of this Budget and this bill in terms of changes to her tax? First of all let us look at what she might earn—$29640 a year. For a start how is she earning that? It just so happens that this year the Government put a significant amount of money into the public health system which allowed Lisa the hospital cleaner to earn $29000. Under the 9 long years of the previous National Government her wages had gone backwards. First of all she is now earning $29000 up from the pitiful amount she would have earned under a National Government. In those days she would have earned a minimum wage if she were lucky. She will be better off by $620 per year from 1 October. As well she will receive $588 from Working for Families. 
Her husband—let us call him Paul—is a labourer on the minimum wage. Let us remember that the minimum wage was $7 an hour when Labour came into power just over 8½ years ago because National had not moved the minimum wage for such a long time. It moved about 60-odd cents in 9 years so nobody noticed. Let us say that Paul is on the minimum wage which is now $12 an hour not $7. He will get a tax cut as well so the family will be $1800 a year better off on 1 October because of this bill and the changes to Working for Families. In fact by the time this process is completed in 2011 that family just from this tax package and the Working for Families package will be $3500 a year or 68 bucks a week better off. 
National members scoff at that. Some people out there say that that amount is nothing. Well I tell them that when people are earning $12 an hour—or $14.25 as these people would be—that is a lot of money. National members scoff at that and say that it will not make any real difference. Well I tell them that people in my electorate on that sort of money—often people in the normal family situation—will thank us very much and say that it is of great use to them and they appreciate it. National members and members of other parties like ACT denigrate this package but to real people who earn real wages and do real work it is significant. It will make a significant difference to them when they go to the supermarket pay the rent or mortgage fill up the petrol tank and do all the other things they have to cope with in an economy that is changing because the world is changing. Oil prices are going up through the roof in a way we have not seen in our lifetime. When the products we sell overseas like cheese butter milk and those sorts of things are suddenly in huge demand in growing economies like China we have to pay those prices in the supermarkets. It is getting tough for people but this Government listens to them. 
I also think about the 4-year-old child in my sample family. The child will go off next year to a school in my electorate. When Labour came into Government and did away with bulk funding Maungakiekie schools received an extra $2 million in their operations grants in 1 year. We took money that National had sat on and refused to give out because it could not get its way on bulk funding and we put it into schools in my electorate. We put in an extra $2 million. In this Budget as well as Paul and Lisa getting an individual tax cut and extra money through Working for Families their kid will go to a school next year that has an extra 5 percent in its operations grant. Extra money has been given to primary and secondary schools and it will pay for teacher aides people who work in schools computers and all of the things that local schools now take for granted but that were not there in the 1990s. Those things were cut. In my electorate the schools did not have the money to do the sorts of things they do in their schools now. 
Of course expectations have gone up. I chaired a board of trustees. We were always looking to improve the school—looking for more computers better property and more people to work with the teachers to cover the extra duties that are now expected in schools. They will also be able to take that child to the doctor for free. They will be able to pay for the prescription and not wait till pay day before they can fill it as so many families had to do under National—when they had to get a mortgage to fill the prescription even if they could actually get to the doctor in the first place. Our memories are not short and our working-class people understand that this is real money that it sits alongside an improvement in the public health system and an improvement in the education system and in their local schools. My local schools do not have a big pile of international students coming in to prop up the budget; they rely on the Government and the operations grant and some money from the community. This tax cut will actually give the people in our community a chance to be able to buy things that have gone up in price to be able to make sure their local schools get donations when they ask for them and to be able to send their kids to school with lunch and all those sorts of things. 
I shall look at a few other examples—that is of real money going to real people who are in our electorates and who earn this sort of money. I will just grab another couple of examples. First a one-earner couple with two children under the age of 13 are earning 45 grand which is a pretty normal wage for a lot of people in the ordinary sorts of jobs where they work hard and struggle along. What will they be better off by come 1 October as a result of this bill? They will be better off by $30.83 as a result of the personal tax cut and the Working for Families package. They will not turn their noses up at that and say that it is meaningless. They know how much milk costs. They know how much bread costs. They go and do the shopping every week as I do in Countdown at Mount Wellington. I have seen the prices go up. I can afford them on my wage; I am an MP. People on 45 grand need this sort of money. That is why they will get a real tax cut and the wealthiest people will get one too but they will not get the sort of tax cut that National would give them. National would give them big fat tax cuts but leave the people in my electorate scrabbling about on a few cents. That is what National has done in the past when it has tried to redistribute through the taxation system. 
I will finish off by talking about a part of the speech from the Prime Minister. We are in tough times economically in the world but this is not a Government that has said: “Aw! We have to cut back so who do we hit first?”. If it were National it would be the pensioners. That is what National did last time and that is what it would do again. Look at what the pensioners in our electorates are getting; the people who actually live on the pension. 
Hon Steve Chadwick 
: Hearing aids. 
Hon MARK GOSCHE 
: Yes they will be able to get hearing aids. Yes they will be able to get that money—the rates rebate and all of those things—in this Budget. They will be helped by the fact that we have sensible affordable sustainable tax cuts in this bill plus spending on things like hearing aids and increases in the pension. 
We did not do the National Party trick of saying: “Oh well we’ve got to save money somewhere. Whack those old people over. Damn them—we couldn’t care less.” We actually put the pension up. We look back at National and see that it sold the family silver to pay for its tax cuts. National hocked off rail to their mates who completely wrecked it. Talk about the private sector doing things better! They were selling off the rails the sleepers the trains and anything they could lay their hands on. And then they shifted off to Switzerland. 
Hon David Cunliffe 
: Who sold it to them? 
Hon MARK GOSCHE 
: The National Government sold it to them. That is how it paid for tax cuts. We do not do that. We have had sound economic management. That is why we can have this bill and we can spend more on health education and the elderly. 
Mr DEPUTY SPEAKER 
: This is the last call. There will be a bell at 4 minutes. 
SU’A WILLIAM SIO (Labour) 
: 
 I rise to take this short call to speak in support of the Budget. Being the newest MP in the House I am proud to be associated with the ninth Budget by Dr Michael Cullen. It has been a privilege to listen to Dr Michael Cullen present this Budget. It has seen quite a bit of expectation and quite a bit of anticipation from the wider community. 
This Budget provides more than just tax cuts. It continues the work of this Government with regard to providing the health care services that many people throughout this nation of ours really really need. There is a young man in his 60s going on 70 by the name of Bill Wiki of Ngapuhi descent lying in Middlemore Hospital where he has undergone surgery on his hip. He texted me recently in support of this Labour Government and congratulated it on the way that it continues to provide investment in the health sector. 
This Budget reminds me of the biblical story of Joseph which some members of this House may be familiar with. Joseph had been sold into slavery in Egypt where he was eventually put in charge of the wealth of Egypt because he was able to interpret a dream that the Pharaoh had had. The dream showed 7 years of boom and wealth followed by 7 years of famine. In those 7 years of boom and wealth Egypt collected food in preparation for the bad times. After 8 years of boom wealth and high employment and in the face of rising global food and petrol prices this Budget recognises the need not only to provide tax relief that helps buffer the assault of global events but also to continue to provide essential health services and to invest in our schools. 
That is significant because if we truly care about increasing the skill level of our community and developing the skills of our young people to prepare them for the future and to prepare them for leadership roles then the investment that this Government is making in our schools the investment that this Government is making in tertiary education and the investment that this Government is making with its skills package are things that people ought to sit up and recognise. 
It is sad that I earlier heard members on the other side of this House criticising this Budget yet all the time they were not able to present anything else. They talk about tax cuts being the priority but they have not been able to reveal their policy on that. When ordinary people who listened to their speeches earlier and who are listening to this particular debate hear National members they will surely hold up the Tui sign that says “Yeah right!”. 
MARTIN GALLAGHER (Labour—Hamilton West) 
: 
 I rise with great pleasure to support and speak to this Budget. I want to make just two observations. Rodney Hide talked about buying back the rail in typical cynical terms. The real cost to this country— 
Hon Member 
: What a dork! 
MARTIN GALLAGHER 
: The dorks are on the other side of the House. It has taken 9 long years for them to support any tax relief for the people of this country. They are the ones who opposed corporate tax cuts. They are the ones who opposed KiwiSaver. They are the ones who opposed the Working for Families package. It has taken them 9 long years to support tax relief. If I were to use that vulgar and rather lowlife term “dork”—it is beneath my dignity—then I would apply it to members on the other side of the House. 
Let me talk about rail. I am proud this Government has bought back rail. Shame on those members opposite who sold it off in the first place! Shame! Shame! Shame! Thank goodness we have a Government that has reinvested and will continue to reinvest in our infrastructure. 
I want to make mention just briefly of Simon Power who actually believe it or not in spite of his politics is quite a nice man. He is a genuine man. He said earlier that no one cares about the debates of 25 and 30 years ago in terms of the Springbok Tour. I give a more recent example. One of the issues we do care about—and we will deal with it in another debate—is Iraq. When Simon Power was National’s spokesperson on defence or foreign affairs he said that where America goes we should go. The implication was that he was criticising us because we did not join the great mission in Iraq. A more recent debate and something we care about was about the body bags that would by implication come back from that country. That is a far more recent debate that many New Zealanders do actually give a damn about. 
Let us look at the record of this Government. There has been a 25 percent real increase in household income from 2000 to 2007. Debt is down from 30 percent to 20 percent of GDP under our Government. Labour has delivered $4.6 billion in effect in tax relief so far. It has done so through Working for Families KiwiSaver and corporate tax reductions—all things that members opposite voted against. It has taken them 9 long years to support tax relief for the people of this country. One wonders about the genuineness of their support at this particular moment. 
Over the next 4 years this Government will deliver $10 billion of extra relief to working families and older people in this country. Indeed by 2011 half of all households will be $50 better off. Who said his party’s tax cuts would be “north of $50”? Actually now it is more than $50. It is changing. Is it going backwards or forwards? I do not know. But if members had looked at Bill English on  
Agenda 
 they would have seen a “hum” and a “ha” and an “um” and a “we don’t know”. What is the real straight answer? 
From 1 October this year superannuation is effectively up $45 a fortnight for a couple. We talk about these economically challenging times but 1000 new jobs have been created per week since 1999. That is not bad. I want to look at the record and the context of this Budget in relation to very difficult international times economically. Members have only to turn on Fox Television CNN or BBC World Service to know that these are very challenging times. When we see reports about rice farmers in Thailand guarding the rice crop we know some of the pressure on the world in terms of food prices. We certainly know the pressures in terms of international oil prices. 
Here are the figures. I can tell members that 377000 more jobs have been created giving more families a stake in our economy. Unemployment has fallen by more than half and it has stayed below 4 percent for 4 years. A thousand jobs a week have been created and fewer people are relying on a working-age benefit. Child poverty rates are falling dramatically and inequalities in health outcomes are finally starting to narrow. I am proud of a Government that did not take 9 long years to vote for tax relief for the people of this country. 
Bill read a second time. 
In Committee 
Part 1 Personal tax cuts and Working for Families tax credit increase: 2008-09 start 
Hon TONY RYALL (National—Bay of Plenty) 
: 
 What an incredible day! After 9 long years of endless reasons why the people of New Zealand did not deserve a tax cut the Labour Government in its last dying moments brings forward legislation to provide tax cuts for New Zealanders. Sure the tax cuts will not make the difference that those of a National Government would offer but they are still tax cuts. 
I am not afraid to say the phrase “tax cuts” unlike the people opposite. Did members notice how quickly Michael Cullen spoke when giving the Budget speech earlier today? As Bill English said he spat out his speech because he could not stand the taste of tax cuts. He did not want to give those tax cuts. This Budget should not be called the 2008 Budget; it should be called the 2008 “Begrudge It” because Cullen and Clark did not want to give a tax cut to the hard-working people of New Zealand. Neither do the lefties in the Labour Party who in the debate earlier could not bring themselves to say “tax cuts”. 
Hon Bill English 
: Because they believed Dr Cullen. 
Hon TONY RYALL 
: Ruth Dyson believed Dr Cullen yes. She spoke for 9¾ minutes without saying “tax cuts” and it was only when National chipped in that she in the last few seconds actually said it very quickly. That is what Ruth Dyson did and we have seen it from leftie member after leftie member opposite. They do not believe in these tax cuts. They are a cynical political ploy from a Government that told the country for 9 years that it could not afford tax cuts. But when the Government saw the oblivion that comes from ignoring the people for 9 years all of a sudden there were tax cuts. The Government did not want to give those tax cuts; it is giving them grudgingly. This is the 2008 “Begrudge It” from Michael Cullen. 
What an incredible speech from Michael Cullen. Did members hear it? He talked about the fact that he was the longest-serving Minister of Finance that he has been the Minister of Finance for 9 years and that no one else has given as many Budgets as he has except for Peter Fraser. I say to Mr Cullen that when he starts talking about his place in history he is history. I will tell members what Michael Cullen’s history will show. He is the guy who mucked up the rescue of Air New Zealand and actually had to have the Government buy it back. He is the guy who almost lost Labour the 2005 election. He is such a good political strategist that he almost lost Labour the 2005 election. He is such a good Minister of Finance that every time he goes on television the Labour Party dips in the polls. Every time he goes on television Labour dips in the polls because he has become the symbol of Labour’s arrogance and disregard for the needs of New Zealanders. 
Did Michael Cullen front one television talk show on the Budget tonight? He did not front one. Labour knows that Michael Cullen is now the most disliked politician in this country. Every time he is on television Labour’s poll rating drops. Every time he is on television its support drops. Michael Cullen has spent 9 years taxing the life out of New Zealanders and telling them that this country cannot afford tax cuts. He said that if there were tax cuts of $1 billion or $2 billion doctors and nurses would have to be sacked. 
Chris Tremain 
: Police. 
Hon TONY RYALL 
: The police—everything. Well I ask Dr Cullen who is getting the chop tomorrow. None of those doctors nurses or police officers are getting the chop because what he was saying was rubbish. New Zealanders knew that Michael Cullen was talking a whole lot of rubbish when he said they could not have tax cuts. That is what New Zealanders around New Zealand are saying tonight about this Labour Party opposite. 
CHARLES CHAUVEL (Labour) 
: 
 It is a delight to rise to speak on Part 1 of the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill which makes the necessary amendments to the Income Tax Act 2007. The bill implements tax cuts which everybody on this side of the House is delighted about. The important thing to note is that this Budget and the bill are in two major parts. 
The first major part is Part 1 which deals with the tax cuts and I will speak to those in a moment. But secondly a major programme of investment is carried on by this Budget. That is the important thing to stress to members opposite. It is not about just tax cuts. New Zealanders do not want just tax cuts. They want a Government that delivers social services of high quality. They want continued investment in public services. They want us to continue doing what we have been doing since we were elected; things such as increasing investment in public transport by 1000 percent over the figures we inherited in 1999. That is a huge level of investment. It is a doubling of spending every year on average. That is what we delivered to New Zealanders tonight; that is what is delivered through this Budget. It is all very well to go on about tax cuts—and I am very proud of the tax cuts that are delivered by this Budget—but they are only half the story. There is responsible investment going on here too and that is what distinguishes Labour from the party of the members opposite. 
Part 1 introduces the tax cuts I foreshadowed by amending the relevant income brackets in the legislation so that there will be a new low tax rate of 12.5 percent for the first $20000 of income. The 33 percent threshold is lifted by $4500 to $42500 and the 39 percent threshold is lifted by $20000 to $80000. That is a major achievement. The legislation establishes a staged implementation process. It is very responsible. It has regard to the need not to spike inflation so the proposed tax relief comes into effect over a 4-year period from 2008 to 2012. Part 1 also introduces the Working for Families tax credit increase by amending the relevant figures in the legislation to allow for inflation. That targeted policy that programme of delivering to families who need a bit of a hand up continues and is enhanced by this legislation. So again it is not just a tax cut that we are talking about even though the tax cuts are a very good thing. A responsible enhancement of targeted assistance is provided by this legislation recognising the particular strains experienced by low and medium-income families with young children at the moment. 
Part 1 goes on to make consequential amendments to the Tax Administration Act 1994 to adjust the requirement to file income tax returns to reflect the new income thresholds. As I said in my first reading speech this bill’s tax reductions build on an existing tax relief programme that—since 2004—is already worth billions of dollars. They stand in stark contrast to the policies of members opposite and I look forward to the debate on them. 
Hon DAVID CARTER (National) 
: 
 After 9 long years we finally get a chance to vote in this Parliament for tax cuts for hard-working New Zealanders. We have just listened to another contribution from another Labour member who will begrudgingly vote for this legislation—because Mr Chauvel like Dr Cullen does not actually want to do that. He does not actually want to deliver tax cuts. As Helen Clark said in her contribution it is case of the Government giving something back to people. Never mind that Helen Clark does not realise that it is the workers’ money in the first place and it has been taken off them at a time when it did not need to be. The issue is not about the Government giving back taxpayers’ money; it is about leaving taxpayers with some of their own hard-earned cash. Charles Chauvel does not believe in tax cuts. Mark Gosche does not believe in tax cuts. Michael Cullen does not believe in tax cuts. 
When was the last time that a Budget was presented in this House and we did not see the Minister of Finance on television that night trying to sell it? But Dr Cullen does not believe in his Budget. He was not prepared to go on  
Campbell Live 
 or  
Close Up 
 tonight because he did not want to have to talk about tax cuts. Dr Cullen went so far as to say that the only way he could be sure he would deliver them was for the House to be put into urgency so they can be enshrined in legislation. He knows that otherwise when he woke up in the morning he would do what he did in 2005: have second thoughts and take the promise away. So that is why we are in urgency. It is because there is no Labour member who fundamentally believes in what Labour is doing. 
It would be interesting to know what Mr Goff says. Mr Goff has not taken a call in this debate. He might well be on the right side of the debate. He might be the only one in Labour who actually supports a tax cut. In fact we should challenge Mr Goff to take a call and to come out and say whether the cuts are enough. 
Charles Chauvel 
: We thought you were better than this David. 
Hon DAVID CARTER 
: Charles Chauvel is not backing Mr Goff; he is still in Helen Clark’s camp. 
Tonight we are seeing Dr Cullen’s last Budget. His legacy will be one of failure because he is the man who developed the Working for Families package. At the time he sold it as being social assistance for those who needed it. As times have changed New Zealanders have become more demanding of tax cuts. Dr Cullen Helen Clark and every other Labour member now talk about Working for Families as being tax relief. That is the euphemism for social assistance—it has become tax relief. Yet at times Labour members have the audacity to claim in the House that it is a tax cut. I say to Mr Chauvel that Working for Families has never been a tax cut. 
Tonight is the first time in 9 long years that Parliament has actually had the chance to debate tax cuts and that is why National has no difficulty in supporting this measure. National is in tune with New Zealanders. We know how much they are hurting out there. It is all right for someone like Mr Chauvel to jump into a Government-funded car. He probably does not know that petrol has gone up to $2 a litre tonight but his constituents do. If he got in touch with his own constituents he would know they are hurting. Mortgage rates have doubled. The cost of food goes up every time one goes into a supermarket. Petrol costs $2 a litre and the Labour members laugh. That shows their arrogance. They have completely lost touch with their constituency. 
Hon Mark Gosche 
: The only one in the race and he lost. 
Hon DAVID CARTER 
: It is not surprising that a guy like Mark Gosche is so out of touch. I say to Mr Gosche that when urgency is finished and we finally lock in these tax cuts so that Michael Cullen cannot change his mind he should get back to South Auckland get in touch with his people and find out how much they are hurting. 
All the talk about building a programme of tax cuts and delivering $16 a week 2 weeks’ out from an election will not be enough to win the Labour members the game. I ask members to mark my words; it will not be enough. People know that they have been grossly overtaxed for years. There have been significant Budget surpluses—more than were needed—yet Dr Cullen has always argued against tax cuts and said it was not the right time to deliver them. In actual fact with the economy contracting his argument has more validity today than it did the last time he refused to deliver tax cuts. 
But at last after 9 long years National has its first chance to vote for tax cuts. We do it with pleasure. It is a small step in the right direction. As the media summed up things tonight it is just too little too late. New Zealanders deserve to have their own money put back in their pockets because they will spend it far more wisely than Dr Cullen would. They will not rush out and buy train sets and other wasted operations such as that. They will not buy liabilities. They will spend their money wisely and as everybody knows they need the opportunity to do so and they need it now. 
Debate interrupted. 
Sitting suspended from 10 p.m. to 9 a.m. (Friday)