English Bill: Taxation (Annual Rates and Urgent Measures) Bill — In Committee 
English Bill: Taxation (Annual Rates and Urgent Measures) Bill — In Committee 
[Volume:628;Page:747] 
Hon BILL ENGLISH (National—Clutha-Southland) 
: 
 This part sets the tax rates for the 2005-06 year. Dr Cullen will no doubt be reflecting deeply through the debate on this part because in it is the very small piece of policy that almost cost him the Government. But for the student loan bribe—as he explained to the vice-chancellors the other day—he probably would have lost the election. I do not think there is much doubt about that. 
The problem for the Committee is that it needs the opportunity to consider other points of view about the tax rates for this tax year. I would like the Minister in the chair Dr Michael Cullen to give us a considered opinion on what the Council of Trade Unions had to say about what tax rates he should be setting. In its post-election briefing to the incoming Minister the Council of Trade Unions stated: “We have been concerned that many workers now believe that the fiscal surplus is larger than it needs to be and this has given impetus to the case for tax cuts.” Well I am sure it has. I would be keen for the Minister to tell us how he will respond to the Council of Trade Unions which to be fair has not put the case aggressively in its briefing but does I think represent the views of many workers fairly. Every time workers see the fiscal surplus reported they think the Government has too much money and every time they look at their monthly overdraft they think they have too little money. Of course Dr Cullen will explain that the fiscal surplus is not really the fiscal surplus. That is one of his interesting little games for now but I can assure him that it amounts to a fiscal dead end to try to shift the goalposts right over to the side of the paddock instead of leaving them where everyone knows they have always been. 
So I would be interested in what Dr Cullen’s reaction is to that information from the Council of Trade Unions. When Treasury said something similar he christened its considerations as an ideological burp. Well I would ask what this one is. Is it an ideological reflux or an ideological cough? Is it a malapropism—something the Council of Trade Unions should not have actually said but did? The Council of Trade Unions then went on to be more specific. It did not lay out a particular set of tax scales that its members would be interested in but it did focus on Dr Cullen’s own proposal which was that the tax brackets be inflation-adjusted. It said that the first inflation adjustment of tax brackets should be moved forward from 2008 to 2006. 
I have gone back and looked at the fiscal situation when Dr Cullen proposed that inflation adjustment and I found that the surplus being projected then was much smaller—significantly smaller—than the surplus being projected now. If Dr Cullen is denying that I would be happy to hear from him on it. In my view and in the view of the National Party there absolutely is room on the books for him to bring forward the adjustment as the Council of Trade Unions believes he should. I do not think it is saying that for ideological reasons; I think it is saying it for political reasons. The reason is that when its workers look at where interest rates are going they know they will be significantly worse off under a re-elected Labour Government. Workers having voted Labour in have figured out in the last couple of weeks that because Labour policies are pushing up interest rates they will end up being worse off. Many of those who have benefited from campaigns like the “5 in 05” campaign run by the New Zealand Amalgamated Engineering Printing and Manufacturing Union will be no better off. They are starting to signal that to their elders and betters in the union movement who have been brave enough to put a specific proposal to Dr Cullen in their post-election briefing. 
If Dr Cullen expects this Committee to support Part 1 then he should give members an explanation as to why he cannot bring forward that inflation adjustment. He needs to explain that move to the Council of Trade Unions to the Committee and to United Future.