Budget Debate 
Budget Debate 
[Volume:663;Page:11385] 
Budget Debate 
Debate resumed from 26 May on the Appropriation (2010/11 Estimates) Bill. 
Hon JOHN CARTER (Minister of Civil Defence) 
: 
 I join with the majority of New Zealanders in congratulating the Minister of Finance Bill English on what in my view is the finest Budget of the 23 Budgets that have been presented by a Minister of Finance during my time in this House. It was worth the wait I have to say. New Zealanders across the country are saying “Thank goodness this Government and this Minister of Finance have produced this Budget.” 
The ASSISTANT SPEAKER (Hon Rick Barker) 
: There is an enormous amount of noise around the Chamber from every member. The member cannot be heard. Those members who wish to have a conversation should pack up their bags go out into the lobbies and continue their conversations there. 
Hon JOHN CARTER 
: Thank you Mr Assistant Speaker. Of course I am pleased because people will want to listen to this speech; I am well aware of that. 
What is disappointing is the way that Opposition members have decided that the only way they can fight against this Budget is to bring in the envy language. They are out there saying that some people will get more than others. Some people will get more money and some will get less. The fact is that when we have a Budget such as this one of course there will be people who end up with more dollars in the hand; it is a fact of life. 
I will read out a little story that was sent to me which explains exactly what the Labour Opposition members do not seem to have understood. Let us just suppose we explain the tax system by way of buying beer which we all drink from time to time. Suppose that every day 10 men go out for a beer and the bill for the 10 of them comes to $100. If they paid the bill in the way that we pay our taxes it would go something like this: the first four men—the poorest—would pay nothing the fifth man would pay $1 the sixth man would pay $3 the seventh man would pay $7 the eighth man would pay $12 the ninth man would pay $18 and the 10th man—the richest—would pay $59. That seems to be what our tax system says. That is what they decided to do. They drank their beer every day and they paid for it in that ratio. 
One day the pub owner said: “Well look as you are such good beer drinkers we will reduce the cost of your beer by $20.” So now the 10 drinks cost only $80. 
Hon Member 
: Didn’t anybody drink wine? 
Hon JOHN CARTER 
: No the group drank only beer. But the point is this. The men said: “What are we going to do about this? We will have to split up the bill. We should pay the bill so that we can divide the $20 windfall and everyone will get their fair share.” They realised that $20 divided by six comes to $3.33. But if they subtracted that amount from everybody’s share then the fifth man and the sixth man would end up being paid to drink their beer. That did not seem to work. 
The bar owner suggested that they reduce every man’s bill by roughly the same amount and he proceeded to work out the amounts they should pay. The fifth man like the fourth man would pay nothing. In other words he would make a 100 percent saving. The sixth man would now pay $2 instead of $3 which is a 33 percent saving. The seventh man would now pay $5 instead of $7 which is a 28 percent saving. The eighth man would now pay $9 instead of $12 which is a 25 percent saving. The ninth man would now pay $14 instead of $18 which is a 22 percent saving. The 10th man would now pay $49 instead of $59 which is a 16 percent saving. Six of the men would be better off than before and the first four men would continue to drink for free. 
However once the men were outside the restaurant they began to compare their savings. The sixth man declared that he had got only $1 out of the $20. He pointed to the 10th man and said that he had got $10. The fifth man said that that was right. He said that he saved only $1 as well and that it was unfair the 10th man had got 10 times more than him. “That is true” shouted the seventh man “why should he get $10 back when I get only $2? The wealthy always get the breaks.” “Wait a minute” yelled the first four men in unison “we didn’t get anything at all. The system exploits the poor.” The first nine men surrounded the 10th man and they beat him up. 
The next night the 10th man did not show up for drinks so the other nine men sat down and had their beers without him. But when it was time to pay the bill they discovered that they did not have enough money to pay it. They did not have enough money between the nine of them. 
That I say to the Opposition is how the tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. If we tax them too much and attack them for being wealthy then they might not show up anymore. That is the problem with what the Labour Opposition is saying to New Zealanders. The Opposition is saying that as far as it is concerned those in the highest tax bracket should pay more until they are driven off the shores of our nation. We need people who generate wealth in this country. 
What really disappoints me about the Labour Opposition is that its whole philosophy is about tying people down to being poor so they have to vote for Labour. That is Labour’s philosophy now and it always has been. It is a philosophy of envy a philosophy of suppressing people and a philosophy of not trying to help people at all. 
I admire a number of members in this House but one whom I really do admire is Tariana Turia. She does not like seeing people being oppressed. She does not like seeing people being demeaned. She is out there speaking up for people who stand on their own two feet just like I do and just like this Government does. We want people to make a go of things. We want people to have meaningful participation in our country. We want good individual outcomes we want good family outcomes and we want good outcomes for this country. 
In the ideal world there would be no underclass. There would be no uneducated people no dysfunctional families and no drugs and crime because people were left out of society. In the ideal world all people would be standing on their own two feet. They would be contributing they would be participating and they would be there for themselves their families and their communities. Unfortunately—and especially because of what has happened in this country over the last 9 years—we do not live in an ideal world but this Budget is about aspiration. This Budget is about getting people back on their feet. This Budget is about giving people the path to opportunity. This Budget is about allowing New Zealanders to have the right to participate. This Budget is about allowing people to develop for themselves. This Budget is about allowing people to contribute to themselves to their family and to society. 
This Budget is about something that everybody should be happy to have and that we can all be proud of and aspire to. This Budget is about what this Government is about: aspiration. It is about making sure that people can have the opportunity to participate in our society. It is about giving people the opportunity to be well-educated. It is about making sure that people can participate in their families and that families can participate in their communities. It is about addressing those things that will remove the barriers to allow people to be themselves and to make the contribution that each and every person in this country can make given the opportunity. It is about removing barriers—particularly Government barriers—from people’s hopes aspirations and opportunities. 
I commend this Budget to this House and to the people of New Zealand. It is a great Budget. As I have said of the 23 Budgets that have been presented during my time in this House it is the most outstanding Budget no matter which way one measures it. I am proud of this Budget. I am proud of this country. I am proud of this Government and I am proud of the Minister of Finance Bill English who brought this Budget to this House. 
STUART NASH (Labour) 
: 
 The previous speaker John Carter stood up and spent 5 minutes telling a joke about beer. I challenge that member to go out and organise a public meeting in a pub in his electorate and explain to all his constituents that his Government has just increased the price of beer for everyone by raising GST. All the hard-working people of that member’s constituency will be paying more for their beer because GST is going up. That member also told us that this is the best Budget he has seen in 23 years. Did he have his ears closed when Dr Michael Cullen delivered a Budget with full employment low debt and zero net debt? He called this Budget aspirational. I call zero Crown debt and low unemployment aspirational. Goodness me! If this is the best Budget that member has heard in 23 years I think it is about time he went back and looked at  
Hansard 
 or perhaps opened his ears. 
Supply-side economics sometimes referred to as the trickle-down theory states that if we give big tax cuts to the wealthy they will spend the extra money on investing in businesses that will grow the economy and create jobs. That is supply-side economics. Paul Krugman is a Princeton professor who won the Nobel Memorial Prize in Economic Sciences in 2008. He said this about the economic theory that the National Government is operating under: “ ‘supply-side economics’ is a crank doctrine that would have had little influence if it did not appeal to the prejudices of editors and wealthy men. It has been disproved because what happens in reality is in times of uncertainty the wealthy tend to pay down debt or save money.” Very rarely will they be investing in the so-called productive economy that will drive this country forward. Once again let me remind members that one of the world’s top economists said that the National Government’s guiding economic theory—supply-side economics—is “a crank doctrine that would have little influence if it did not appeal to the prejudices of editors and wealthy men.” 
Why would wealthy men love this Budget? Let us see why. Under the Budget’s tax cuts the chief executive of Telecom Paul Reynolds will get over $350000 extra in the hand per year; the chief executive of Fonterra Andrew Ferrier will get a cool $197000 extra a year; the chief executive officer of Air New Zealand Rob Fyfe will get about $120000 extra per year; and the chief executive of Contact Energy David Baldwin will get only about $73000 extra per year. I could go on but my point is not that those men are overpaid. Their tax cuts are not their fault because they did not set the Government’s tax strategy; they are just lucky beneficiaries. But I bet members that if they asked Rob Fyfe he would say that he did not need another $120000 per year. It would be nice to have but for Rob Fyfe it is not the difference between making ends meet and not making ends meet. That is the dilemma facing many New Zealanders at this point in time—simply how to make ends meet. My point is that this Budget delivers massive tax cuts for those earning significant salaries. While Paul Reynolds gets over $300000 per year Joe Citizen on the medium wage in Napier gets about $3 a week or $150 per year after increases in GST have been taken into account. 
Gerry Brownlee has told us that the emissions trading scheme will cost the average family about $365 per year. That amount alone is about $215 more than the Napier medium wage earner gets in his so-called tax cuts. The opposite of supply-side economic theory is demand side. It states that if we give money to those who need it the most they will spend it on the necessities of life. They buy food they purchase petrol they pay power bills and they put clothes on the backs of their children. But with this Budget things just got tougher. The GST increase from 12.5 percent to 15 percent will hurt a great many New Zealanders. Inflation at 5.9 percent will mean that the meagre tax cuts given to those on the medium wage will be gone quick smart. When he was electioneering in 2008 Mr Key looked down the camera and told New Zealand: “National is not going to raise GST.” and he did. He also told New Zealand that he would not borrow for tax cuts and he did. 
This is not the sort of Budget that a Labour Government would have delivered. As a party Labour understands the message about equality of opportunity. We understand that everyone in our society needs the same opportunities to be as good as they possibly can be and that is what the previous Labour Government delivered over 9 years. We absolutely value businessmen and businesswomen. We think that the contributions of our top scientists engineers doctors entrepreneurs bankers lawyers farmers and foresters are invaluable in driving economic growth. But we also know that if hard-working Kiwi families—and we must remember that 800000 families in this country survive on a household income of $60000 or less—lose the opportunity to engage in education lose access to first-class medical facilities and struggle to put food on the table and put clothes on their children’s backs then we as a country will never be as good as we can be. 
The National Government increased the minimum wage by 25c per hour last year—25c per hour—and Treasury has said in the Budget documents that wage growth will not keep pace with inflation over the short to medium term. If that Government really wanted to drive productivity and growth it would treat workers with dignity and with respect. It would instigate ways to really increase productivity through driving up wages and salaries not by crowing in a condescending way about how lucky the poor are to get a tax cut as well. Sure the Australians cut their company tax rate down to 28c—like New Zealand did—but the Australians also increased employer contributions to the Australian version of KiwiSaver from 9 percent to 12 percent. This Government has left employer contributions to KiwiSaver at 2 percent. How will that build a savings culture and drive economic growth? Well it will not. 
This Budget and that Government are stealing the dreams of hard-working Kiwis as more and more people become sick and tired of broken promises from their leaders such as that the National Government will not raise GST and that National will not borrow for tax cuts. Then we have news that the Government is to mine the high-value conservation estate. What is schedule 4? I describe it as one of the very few globally competitive advantages we have. It is the picture on the cover of the glossy brochure sitting on the travel agent’s desk in London that sells this wonderful country to those who want to get away from the maddening rush and spend a few pounds somewhere exotic. I say to the Government that if it ruins that it will damage New Zealand’s image and reputation internationally. Even the most cynical businessmen and businesswomen I have met understand that doing that would be madness. 
Then there is the talk about selling Kiwibank. Eight hundred thousand Kiwis have invested personally in Kiwibank and that Government wants to sell it. George Bush Snr’s legacy as US President was his quote: “Read my lips: no new taxes.” That cost him the election. John Key’s legacy as Prime Minister could well be his quote: “National will not raise GST.” I will raise a glass of “PM Pinot Noir” to that. Bring on election 2011 because ringing in the ears of the public will be John Key standing in front of a camera telling the people of New Zealand: “National will not raise GST.” and that Government did. This is a Budget of broken dreams and broken promises. Thank you. 
CARMEL SEPULONI (Labour) 
: 
 I commend my colleague Stuart Nash for the great speech that he gave. It was particularly excellent considering that he followed on from John Carter. Before Mr Nash spoke we had to listen to Mr Carter spend 7 of his 10 minutes telling us a story about the price of beer. That indicates to this side of the House how far removed the National Government is from reality. The reality is that most everyday New Zealanders are more concerned about the price of bread and being able to put that on the table than they are about the price of a case or a keg of beer. I thank Mr Carter for those 7 minutes of his speech. I am sure that even though we go away none the wiser it was satisfying for him to give that speech. 
Many people are saying that there has never been a one-term National Government and Labour has a really hard job in trying to make this Government a one-term Government. After the announcement of the Budget many people are saying to Labour that they think we can actually win the next election. Why do they think that? Because National has shown its true colours with regards to its priorities its lack of empathy for the ordinary Kiwi family and its lack of understanding for New Zealanders who are struggling. Their priorities are towards those who already earn large sums of money. I thank the National Government for showing New Zealanders what it is all about. 
The other day I was listening to a Pacific radio station and I heard a caller being interviewed about the fact that his mother earns $32000 a year. I thought it was interesting that he thought it was so unfair that his mother who works her butt off as a cleaner at Middlemore Hospital—my sister also works there doing the same job—has come away none the better with this Budget. National has put out statements and the Minister of Pacific Island Affairs has put out statements saying that the Pacific Island community will be so much better off with these tax cuts. But the reality is that—once we take into consideration the rises in accident compensation levies the anticipated rise in inflation and the increase in GST—the average worker or someone on the minimum wage will be much worse off. 
The caller not only talked of his mother but also pointed out that he had watched the Prime Minister give his speech after the Budget had been announced. That caller felt insulted by the fact that the Prime Minister thought it was one big joke. The caller talked about the Budget putting a nail in the coffin of those who are struggling yet John Key got up and did a big comedian routine. That is exactly what we were thinking. How can we take the Prime Minister seriously when he cannot even take seriously the struggles of Kiwis and rather than speak to the issues or express any level of compassion he stands up and spends 10 minutes cracking jokes and attacking the Leader of the Opposition? 
The Leader of the Opposition the Hon Phil Goff had just expressed the sentiment of many Kiwis who are asking how they will cope given that the Government has done absolutely nothing to create opportunities for jobs. Those Kiwis are asking how they will cope given that this Government has just increased GST making it more expensive to live. How will they cope when our Prime Minister thinks that is a joke and cannot take anything seriously? He sits there happy as Larry because he is the “Fifty Million Dollar Man” and he has just gifted all his mates an incredible tax cut. I think that is offensive and I think that the person who rang in to the radio station was right to state that it was insulting. To everyone who sits in the National seats the ACT Party seats and also to some extent—I have to say this but I wish I did not have to say it—the Maori Party seats I say on behalf of most Kiwis out there that it is offensive. 
We have looked at the amount of money that has been given in tax cuts and my colleagues including Stuart Nash have pointed out that it is a broken promise. We heard from the Prime Minister before the election that there would be no increase in GST. Unfortunately it follows on from many of the broken promises that we have experienced over the last 18 months. It is another broken promise. It is worrying that it is also at the expense of other services that are necessary when we need to move this country forward. 
As a Pacific person and as a person with a role in Labour’s education caucus I am concerned about the fact that tax cuts have been given to the rich. At the same time $400 million has been cut from early childhood education. For 9 years the previous Labour Government took education overall and early childhood education seriously. We knew that with a young demographic in order to curb the inequality that exists it is really important that all of our children get the same start in education. There were increases despite what the other side of the House has to say in the number of Maori and Pacific undertaking early childhood education. There were increases in the number of qualified Maori and Pacific staff in early childhood education. That increase came out of a concerted effort to make it happen. It did not come out of a sense of charity towards the Maori and Pacific communities which is a charity that we often hear National talk about but never ever demonstrate; it came out of an understanding that it would be good not only for those communities but also for New Zealand as a whole. Yet the National Government thinks that cutting $400 million from early childhood education will somehow be good for this country and that early childhood education is not a priority. 
We have also seen other cuts. We have seen cuts overall to education regardless of what the Minister of Education has said in this House. We have seen reductions a 14.4 percent cut in Maori and Polynesian scholarships—14.4 percent. We have seen the end of the $2.15 million Skill Enhancement programme. We have seen further restrictions on students loans which will affect Maori and Pasifika more than anyone else; I know this having worked at the University of Auckland. We are also seeing the student loan eligibility for new permanent residents being tampered with. That will disproportionately affect Pacific people. 
All of those things do not make for a very bright future for New Zealand. I think a lot of New Zealanders out there are thinking that they voted for National but that they made a mistake. Someone said to me the other day that we should create a bumper sticker that says: “Don’t blame us we voted Labour.” I think that would be a really good idea. A lot of New Zealanders who voted for National for the first time are quite embarrassed because they now see that National members have not changed their colours. They forgot what those members were like but now they see that those members are exactly the same as what they were before. 
The main message that we have to put out there is that the National Government may say that this is a tax switch but the reality is that it is a tax swindle and New Zealanders have been done over by the National Government. I think that it may still be going through its honeymoon period with regard to the Budget but it will not last. 
Paul Quinn 
: Long honeymoon. 
CARMEL SEPULONI 
: I tell Mr Quinn that it will not last. We will see further dissatisfaction with what that Government is able to provide further anger for the fact that it has no level of compassion for people who are struggling that its leadership is flawed and that the Prime Minister thinks that everything is a big joke. The Prime Minister would rather stand up in the House and go through a comic routine than talk about the issues that are real for the everyday Kiwi. The reality is that it will not get much better. We have seen some of the things that the Government is planning on doing in the future. New Zealanders have woken up. That Government has a very short term with regard to how much longer it will serve this country. 
Hon PANSY WONG (Minister for Ethnic Affairs) 
: 
 I move  
That this debate be now adjourned 
. 
A party vote was called for on the question  
That the motion be agreed to. 
Ayes 67 
New Zealand National 58; ACT New Zealand 5; Maori Party 3; United Future 1. 
Noes 52 
New Zealand Labour 43; Green Party 9. 
Motion agreed to.