Cunliffe David: Estimates Debate — In Committee 
Cunliffe David: Estimates Debate — In Committee 
[Volume:674;Page:20214] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Thank you once again for the opportunity to speak in the Committee stage of the Appropriation (2011/12 Estimates) Bill. 
Hon Craig Foss 
: Give us the Audit speech David. 
Hon DAVID CUNLIFFE 
: Thank you Mr Foss. It is an important debate and I want to raise for the Committee and with the public the issue of the finance estimates. Encapsulated in those estimates is the fiscal strategy that this Government has embarked upon—one that will lead the country down a dead-end street. 
The crossroads that the country faces are neatly summarised by the choice that has been put before us: on the one hand to sell down New Zealand’s precious State assets and on the other hand to rebalance the tax system in favour of taxing capital broadening the tax base filling in an amazing loophole and giving 98 percent of New Zealanders a net cut in income tax. We can do that under Labour’s plan while fully paying to keep New Zealand’s precious assets in public hands paying fiscal debt down to zero earlier than under the Government’s Budget and running a fiscal surplus in the same year as the Government. 
This election is a choice between Labour’s fair tax policy which will give every New Zealand family a tax cut of $1000 a year and will close the gaping hole in our tax system or National’s plan to sell off our profitable assets to foreigners. Labour has a credible responsible and bold plan for the economy and that is in stark contrast with National’s agenda of privatisation and stagnation. 
It is a wonder to me that the Minister in the chair the Minister of Finance after 9 years in Opposition when faced with one of the most serious financial crises since the Second World War in his first Budget managed to achieve precisely nothing other than to give a tax cut to the highest-income earners and to forestall contributions to New Zealand superannuation. In the second Budget equally lacking in imagination the lightning strike was to give an even bigger tax cut to upper-income earners put up GST on everybody else and do precisely nothing to address the underlying structural problems in the economy. 
In this 2011-12 Budget we have the third opportunity for the Minister of Finance to actually show New Zealanders where the economic strategy lies—and what did we get? Again we got a vacuum of ideas other than the tried and failed recipe of selling down New Zealand’s State assets as a short-term panacea to put some cash flow in the bank while they mortgage future generations. I say mortgage future generations because the numbers do not add up. The dividend yield on the energy assets is over 7 percent. The Crown cost of capital is only 6 percent. The total shareholder return on the package is 17 percent. Yet this Government proposes to sell them transferring the future value of those dividend streams to what will inevitably be major foreign corporate buyers. 
Some people will benefit—yes some people do benefit. The investment bankers the accountants and the lawyers who put the deals together stand to pocket more than a year’s worth of dividends from the assets that are being sold down. Over $350 million according to Treasury estimates could be lost in terms of ticket clipping and middlemen as the birthright of mums and dads is sold down the river. You know it is not just bad because it is bad policy; it is bad because it apparently represents the sum total of National’s thinking about how to guide this economy out of the difficult situation we find ourselves in because of the global financial crisis. 
Debt is a problem. All New Zealanders understand that. Most understand that it is not just fiscal debt but private debt as well. But they want to see fiscal debt—Government debt—responsibly managed. That is one reason why Labour’s plan for a capital gains tax has been so widely hailed by the commentators—because it achieves simultaneously a number of important objectives. It pays down our fiscal debt to zero faster than under the estimates being debated today. It allows us to fully pay for the assets to replace the dividends— 
Hon Bill English 
: That’s rubbish. 
Hon DAVID CUNLIFFE 
: Yes it does. I do not think that Mr English has yet seen a copy of the underlying spreadsheet so he is in no position to tell us what is in it. I give the Committee my undertaking as an honourable member of this House that our Budget plan fully replaces the capital that will be drawn down by this Government from State-owned enterprise sales. 
It does that while giving 98 percent of New Zealanders a tax cut on their income tax. Ninety-eight percent earn below $150000 the inflation-indexed threshold for the new top tax rate of 39c and 98 percent of New Zealanders will be net beneficiaries from the plan to make the first $5000 of all earned income tax-free. The first $5000 of all income will be tax-free. That is a very important measure at a time when New Zealand families are suffering when food prices are rocketing up 7.1 percent I think across general food prices the last time I looked and when wages are up 1.9 percent. But of course the rich list is up 20 percent in the last year. Does that not say it all? 
Today in the House Mr Key leapt to his feet and wielded a social development report that said that inequality was getting smaller. What he forgot to mention was the conclusion that it was Labour’s policies of Working for Families that had started to turn that boat round. It was very nice of the Prime Minister to hail the success of Labour’s policies when last in Government. It was very kind of him but it would have been a trifle more honest if he had said that in fact our policies not the current Government’s had led to that result. 
So here we have it. On the one hand there is a Government that is devoid of vision and devoid of strategy. It has fallen back on the old mantra of cutting one’s way out of a hole and selling the future of our children down the river to realise some cash and to pay the piper for the next 6 months or year. New Zealanders are not that stupid. They know that selling the family silver is a recipe for disaster and that is why the polls show that an overwhelming majority prefer Labour’s capital gains tax plan to asset sales as a means of getting through these tough times. 
Hon Members 
: Oh! 
Hon DAVID CUNLIFFE 
: They may not like it but that is the truth—that is the truth. Present New Zealanders with a choice between asset sales and tax reform and they will choose tax reform. They want to fill in the loophole that lets the rich list get a 20 percent income increase while the poor get a 1.9 percent increase. They do not think that is fair and we do not think that is fair. We know the Government has no recipe for lifting this economy out of the doldrums. 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Usually the member David Cunliffe says something I can agree with because it is correct but in almost 10 minutes he actually did not say anything that was correct. The reason we know Labour’s numbers do not add up is that we have looked at Labour’s numbers. Actually there is no such thing as a choice between capital gains and the proceeds of asset sales because when we look at Labour’s published table which it put together by itself we see that all the capital gains revenue—if we were to believe it would collect any—is used up to pay for its other extravagant promises. That is not because we say so but because the table that Labour has published says so. 
When we go through the booklet we see that it does not show an offset to asset sales at all. It leaves a $7 billion hole. So Labour has to explain how it will pay for new schools because a capital gains tax is not there. It is being used—if it raises any revenue and that is a different argument altogether—as part of a silly little tax package that achieves not much in spite of a lot of pain and effort. That is what it does. There is a $7 billion hole at least. If Labour claims that it will reduce debt at the speed these estimates show then where will it get the money from to do that? It will not get the money from the capital gains tax; it will have to borrow more. I do not know if that is what Huey and Dewey have told Labour’s caucus but that is the case. If there is a secret spreadsheet then we had better see it because it is not in the published numbers. The published numbers simply do not add up because the capital gains tax revenue would be used to pay for the other extravagant promises. 
But of course none of that matters because no one is taking any notice. Most New Zealanders know what we know: if we want to grow this economy we need controlled Government spending and sensible taxes that incentivise investment and exports and we need less debt. The other package is higher Government spending more new taxes and a lot more debt. Well that will grow something; it will grow the Government. That is what it will do—it will grow the Government. That is what Labour always does. That is what Labour did the whole time it was in Government. But you see the New Zealand public knows that that was the problem not the solution. The solution to our economy is not a bigger Government taxing more spending more and borrowing more for the kind of useless projects that Labour specialised in. The solution is about the Government taxing less spending less borrowing less and helping the rest of the country to grow the economy rather than using the rest of the country to grow the Government. Until Labour members get up and apologise to the public for those policies and until they agree that the public was right to throw them out no one will listen. 
Peseta Sam Lotu-Iiga 
: Shane agrees. 
Hon BILL ENGLISH 
: Shane agrees—of course he agrees! He is just waiting until the Labour front bench fails yet again to grasp the basic political truths that until Labour apologises and until it figures out how to reconnect with the new aspirational New Zealand and not an old dependent New Zealand then Labour will not get anywhere. 
That is what is so sensible about these estimates. The Opposition might not understand what they are about but New Zealand does. Rob Muldoon once said that New Zealanders would not understand a deficit if they tripped over it. He was wrong—and not just on that I might say. He was wrong because New Zealanders do understand what is needed in this economy and they will get an opportunity in a few months to make a choice about whether to vote for the fact that they are right or that they are wrong and the Opposition is right. I am picking that they will probably back themselves.