Smith Lockwood: Taxation (Annual Rates and Urgent Measures) Bill — Second Reading 
Smith Lockwood: Taxation (Annual Rates and Urgent Measures) Bill — Second Reading 
[Volume:628;Page:705] 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 Today the interest rates in New Zealand went up. Tomorrow the mortgage rates paid by people working up and down this country will go up. They will go up tomorrow and do members know what the Reserve Bank says is one of the reasons for that? It is what this Government is spending. It is what Michael Cullen is spending. 
The Reserve Bank report released today talks about the issues in the bill we debate this afternoon. The Reserve Bank specifically mentions the Working for Families package. What this Labour-led this “Helen Clark - Winston Peters - led” Government rams through this House today thehard-working people of New Zealand will pay for tomorrow when their mortgage rates go up. 
The Reserve Bank report also said that people’s house prices—their equity—will come down. The Reserve Bank report says that not only will mortgage rates go up but that people will also lose their equity and that one of the reasons for it is this bill. This Labour Government the “Clark-Peters Government” just cannot help itself—it has to spend spend and spend hard-working New Zealanders’ money. 
With regard to the member who just resumed his seat—Clayton Cosgrove was it?—I do not think I have ever heard anything quite so arrogant. If I wrote it down correctly he said that the public submissions on this bill were the submissions people made during the election campaign. He seemed to forget that 60 percent of New Zealanders did not vote for this policy. What arrogance to think that that constitutes public submissions on legislation! That arrogance is why Clayton Cosgrove will not go any further than he has gone already. His predecessor the Rt Hon Mike Moore was a much much wiser member of Parliament than Clayton Cosgrove is. 
National opposes this bill for several reasons. The first is that it confirms our current tax rates which are unacceptably high. Again massive numbers of New Zealanders voted to see a reduction in those tax rates. 
Secondly the bill puts in place this Labour Government’s massive election bribe—the interest-free student loan. Clayton Cosgrove tried to attack me over the original construction of the student loan scheme. I just remind Clayton Cosgrove and his colleagues that before the student loan scheme was put in place when Labour left office in 1990 New Zealand’s participation rate in tertiary education was about the lowest in the OECD. It was a disaster for New Zealand’s future. 
By the time I left the role of Minister of Education almost 6 years later when the student loan scheme had been in place for about 4 years we had gone to the top of the OECD. We did not have the squandering of taxpayers’ money at Te Wananga o Aotearoa; we had a decent tertiary sector. We did not have COOL IT courses that were just squandering taxpayers’ money in the way that Labour has. We had decent tertiary courses and we went to the top of the OECD and only the student loan scheme made that possible. 
For the little twerp Clayton Cosgrove to stand in this House and say that it was a disaster— 
Hon David Cunliffe 
: I raise a point of order Madam Speaker. The member clearly has nothing of substance to say but perhaps he could restrain himself from calling people names. 
The ASSISTANT SPEAKER (Ann Hartley) 
: That is not a point of order. 
Dr the Hon LOCKWOOD SMITH 
: Let me come to the part of this bill that I think is the most destructive of hope. [ 
Interruption 
] I ask David Cunliffe who has been interjecting what he thinks about this. This bill once it has been implemented—and it will be rammed through this House—will increase from 1000 to 4600 the number of families in New Zealand who will lose more in tax for every extra dollar of income they earn. According to Inland Revenue Department figures given to the select committee the number of families affected will increase from 1000 to 4600 once this measure is in place. 
I see Doug Woolerton from New Zealand First—the former president of Winston Peters’ party—is sitting opposite. He will vote for this. I see Gordon Copeland from United Future is sitting behind him. I want Gordon Copeland to tell this Parliament why he thinks this bill is implementing good policy. The number of families that it will affect will increase from 1000 to 4600. When those families earn another $1 they will lose $1.02 in tax. Maybe if those families were all millionaires it would not be the end of the world. If they were high-income families earning $50 an hour or $100 an hour which some people can maybe it would not be the end of the world because the income to which this tax rate applies is $10000. 
On that $10000 these 4600 families lose for every extra $100 $100.20. It would not be so bad if these families were earning $100 an hour but these are our lowest-income families who are independent of the benefit system. They are not families at the public trough on benefits. 
I want Doug Woolerton to explain why he supports this bill. I want Gordon Copeland to explain why he will go into the lobbies and vote for this. I want David Cunliffe to explain to the House why it is good policy for our lowest-income families in the range of annual income from $10000 to $20000 to face an effective marginal tax rate of 101.2 percent. This bill will increase the number of New Zealand families in that trap from 1000 to 4600—five times as many families. Where is the hope? 
This bill means that at $10 an hour if the dads or mums in families who are not on a benefit want to earn an extra $1 for their family and they work an extra 10 hours a week to try to earn a bit more money they do not get an extra cent in their pockets they lose some. This bill affects people on our lowest wages of say $10 an hour who are not on a benefit but who are trying to stand on their own feet. I would not mind betting that the Maori Party has something to say about that because I know it does not want people trapped on benefits. It supports people standing on their own feet. 
Yet once this bill goes through in order for people from those 4600 families to get an extra dollar they would have to work an extra 20 hours a week first. I acknowledge that this problem is not new but this bill which Doug Woolerton is going to vote for and which Gordon Copeland is going to vote for—although I do not think he would if he thought about it more—will increase by five times the number of families trapped in this hopelessness. 
I want David Cunliffe to tell me why he thinks some of our lowest-income families should face a marginal tax rate of 101.2 percent. I would like him to tell us why even families on higher incomes than that face the same thing. For those earning under $100000 with three children the only income range where they keep more than the Government takes from them is the brief income range from $25000 to $35000. Outside that range the Government under this package takes more from them than they can keep when they earn an extra dollar. 
This is dopey policy. What makes anyone think that our hard-working families are better off when they lose more to the Government when they try to work a bit harder and earn a bit more money? This is a disgrace.