Mallard Trevor: Appropriation (2011/12 Estimates) Bill — Third Reading Imprest Supply Debate 
Mallard Trevor: Appropriation (2011/12 Estimates) Bill — Third Reading Imprest Supply Debate 
[Volume:674;Page:20492] 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I will deal first of all with the Imprest Supply (Second for 2011/12) Bill and I say that there appears to be nothing unusual about this bill. It is a pretty standard arrangement for the Government to incur both capital and operational expenditure in front of appropriation basically just to have a backstop to make sure that the laws in relation to the Public Finance Act are not broken and this bill appears to be unexceptional. 
I will focus more though on the Appropriation (2011/12 Estimates) Bill and the comments that the Minister of Finance has made on that. I think that he just slipped in one of the things when he was commenting on the tax changes or the “switch” he referred to from the previous year’s Budget. He said that the switch had no particular impact on the distribution of income. Well nothing could be further from the truth. This was a tax switch that went from the poor to the rich. It increased GST and cut the top tax rate such that people like the Prime Minister had a tax cut of $1000 a week. While my constituents who are struggling with their kids and struggling to pay the costs of power transport and rent had a GST increase a number of people like the Prime Minister had a tax cut of $1000 a week. 
There also seemed to be an element of surprise in the comments from the Minister of Finance on the deficit. It was almost as though he could not quite work out why we have a deficit. I think the Minister could do well to study such renowned economists as Ronald Reagan to see exactly how countries get the sort of deficit that this country now has. Clearly there are some external factors in the deficit and Christchurch is one factor in it but the way to compound a deficit is to give enormous tax cuts to people who do not consume the rich people; to make cuts to the income and services that are available to poorer people and thereby increase unemployment—which was increasing anyway—to reduce the tax take from middle-income people; and to require payments to go to a new increasingly larger group of beneficiaries. And that is what the Government has done. So we have less tax coming in from middle-income people less tax coming in from the rich because of the tax cuts a requirement for increased services because of poverty and increased payments in unemployment benefits. 
As we have heard over the last 24 hours because of its activities the Government has managed to make a massive shift of people from the unemployment benefit to the domestic purposes benefit which it has trumpeted as being some sort of major success but the increased numbers of the unemployed and other beneficiaries means there is a massive deficit. The Minister of Finance who has been around this place for a while should not be surprised that if we have less tax and more spending on benefits we will end up with a bigger deficit. It is a pretty standard arrangement and the Minister should not be surprised. 
What has surprised me has been the lack of any suggestion of any plan whatsoever on the part of the National Government to get out of this problem. In fact what the Government has done is to pretty actively work against the plan. It has made massive cuts to science and research as they pertain to agriculture. Funds that were attracting massive private sector matching have been eliminated and overall business after business in my own electorate now needs funds. Probably because we are close to Industrial Research Ltd the old Department of Industrial and Scientific Research there are a lot of businesses that although they would not be described as spin-offs have a lot of the people who either previously worked in the Government science area or have worked closely with people who have. Within the Hutt Valley within Wainuiomata there are quite a few pockets of good research and in particular there is probably more development. Jobs are being created sometimes in twos and threes but sometimes in 50s 60s and 100s. 
That job creation was given a boost by Labour’s tax credits for research and development which have been so cruelly whipped away by this Government because as one of the managing directors of a local company has said “There appears to be no wish on the part of the Government to have development occur in New Zealand.” That company is facing a couple of choices and one of them is to go to Australia where the culture is closer and the Government research arrangements are much better and the other is to keep a very small intellectual property group here and to do a lot of the development and a lot of the other work in China. That is the story of far too many of our businesses at the moment. 
We can contrast that with Labour’s policy and plan that is developing and becoming clear. I was at a meeting of Grey Power relatively recently and its members are very very keen on the $10 a week tax cut that each of them will get under Labour’s policy. Couples will get $20 a week. They think that is fair; they think that it somewhat balances the redistribution that occurred—from them because they pay GST to people on the $1000 a week tax cut like the Prime Minister and his friends. 
Grey Power members also think that moving to a capital gains tax is a fair approach too because clearly once we get to the point where we know that it will not be retrospective and where we know that it will not apply to the family home people will say that essentially a buck is a buck. It does not matter how it is earned. It does not matter whether it is earned through capital gain or through income; it should be taxable. It is unfair for people like Sam Morgan—and in fact he says himself that it is unfair for his company—to sell for $700 million and not to have any taxation put on that. Of course if he stayed in the company and drew the money out as salary or dividends then he would have to pay the tax. But in this particular case and in the many many more like it that tax is not paid. 
I will now turn to reaction to the Budget and say that Standard and Poor’s I think got it about right. They have put New Zealand on negative credit watch. I have to say we were not in such a flash position to start with. I think it is fair to say that some of the expected upgrades that should have occurred have not occurred and I think we are now just about past the point of believability as far as the Minister of Finance is concerned. That massive decrease in unemployment that increase in productivity and that increase in wages which for each of the last 3 years he has promoted as being just around the corner I think most of us understand are not coming at all. 
I will finish on what I think is the most dishonest part of this Budget. It is the suggestion that we can sell assets and be better off in the way that John Key has promoted. We all know as 90 percent of New Zealanders know that we do not sell our house to then rent it back. That is a sign of desperation. That is a sign of people who are distressed. 
Chris Tremain 
: You sell it to buy another one. You sell it to upgrade your house. 
Hon TREVOR MALLARD 
: Well if people are selling their house to upgrade it then they are buying more assets. But that member wants to sell the most profitable assets in New Zealand—to sell the assets that my grandparents and lots of the grandparents of people here spent their lives paying for and building. What that member wants to do and what Bill English went to China to do is to ask who wants to buy our power companies. Bill English went to China and said “Who wants to buy our power companies?” That is a disgrace and that is the low point of this Budget.