Key John: Customs and Excise (Motor Spirits) Amendment Bill — Third Reading 
Key John: Customs and Excise (Motor Spirits) Amendment Bill — Third Reading 
[Volume:623;Page:18689] 
JOHN KEY (National—Helensville) 
: 
 The great tragedy about the speech from the Hon Rick Barker we just heard is that he actually believes it. 
Peter Brown 
: I don’t think he did. 
JOHN KEY 
: I am sorry but I say to Mr Brown that the Minister actually believes it. That is the tragedy. 
I have two pieces of very pertinent advice for the Minister: firstly he should get a new speech writer and secondly before he comes down to the House to give a speech he should read it first. Then he will be able to work out the bits he should delete so that he does not make a fool of himself in the House as he just did. 
National believes in fixing New Zealand’s roads. In fact National members have been out front talking about this issue and about its impact on the infrastructure and the growth of our economy for months and months. So I will put a few facts on the table correctly. 
The first of them is that that was a speech by a Minister whose Government brought to the House the Land Transport Management Bill. What was that legislation? Oh that is right: it was a coalition agreement between the Green Party and the Government. It was all about cycleways walkways and ways to make sure that the private sector cannot be involved in building one single road in New Zealand. Lo and behold it has been an Act for a number of years now and we have not seen a private-sector road built—and nor will we. That is how much the Government really cares. 
There should not be any confusion on this issue at all. National believes in building roads; we believe in building lots of roads. I do not think one could find a New Zealander who has met me or who knows me who would criticise me for saying that I do not believe in building roads. 
Darren Hughes 
: That’s true. 
JOHN KEY 
: They will not accuse me of saying that I do not believe in building roads I say to Mr Hughes. We believe in building roads and in building them effectively. 
But what we do not believe in is the Customs and Excise (Motor Spirits) Amendment Bill we are debating in the House today. We do not believe in it for some very very sound reasons. 
I want to run through what the bill for a large part will do. The first thing it will do is add a 5.6c a litre petrol tax to the current motor spirits excise that is levied on people as they fill up their cars at the service station. The amount is not 5c; it is 5.6c because it is 5c plus GST—a tax on top of yet another tax. 
This is happening at a time when the Government is running the biggest surplus in New Zealand’s history. According to Michael Cullen the Government is out of cash and unable to do anything. On the other hand it is running the largest surplus in New Zealand’s history. Dr Cullen has been very quick in the House to berate journalists up and down the country about the fact that they do not understand accrual accounting—that they cannot understand that a $7.4 billion surplus is not a cash surplus. I actually agree with Dr Cullen. It is not a cash surplus and the Crown will have a borrowing requirement going forward at some stage. 
But what I also know about accrual accounting is that if the Government wants to go out and spend $200 million on roads—the equivalent of what will happen through this petrol tax if it ever comes in—it could do that by borrowing the money and making an investment in our economy. That would cost approximately $12 million a year as a hit on the operating balance and the financing costs of those borrowings. Or it could take the $500 million that it puts into the Reserve Bank—in my view another capital item that it does not need for an intervention programme that will never take place—and put that money into New Zealand’s roads. Or it could look at a number of other capital items it is making and put those into our roads. That is the first point. 
The second point is that lo and behold last year the Minister told the House that he would not introduce the petrol tax right at that moment although this bill allowed him to do that because he was concerned about the price of oil. When I asked him what the price was in New Zealand dollars that he as the Minister was targeting—because we have to consider the actual underlying oil price and the exchange rate—he could not give me an answer. He did not have an answer. 
Well of course he has an answer. It is not an economic answer but an election-date answer because he knows as I know and as the other 4 million New Zealanders know that when a party goes to the polls having increased a petrol tax while running the biggest surplus in New Zealand’s history that party is not very popular. 
Darren Hughes 
: It’s all cash. 
JOHN KEY 
: I say to Mr Hughes that no it is not all cash and I wish he would wake up from that sleepy little hollow that he is obviously occupying and listen to my speech. The Minister could well and truly finance roading out of capital requirements and it would cost $12 million a year. A $200 million petrol tax would not be needed. 
Darren Hughes 
: To build all the roads the member wants? 
JOHN KEY 
: Absolutely—it would build all that the Government will fund. I suggest that Mr Hughes should wake up from that sleepy little hollow and pull out an economics book—or go and ask the Minister of Finance when he next sits behind the Minister to explain accrual accounting to him. The Minister would do that in a breeze; he understands it very well so that would work well. 
We do not know when the petrol tax will be introduced. The only sort of fly in the ointment came in a story last week in the  
Dominion Post 
. It stated that contractors were very worried because they had geared up on the back of the new roads to be built. 
But of course when the increase in the petrol tax does not come because the oil price is too high those roads will not be built. How do we know that? How do we know that the roads will not be built? We know that because at the Finance and Expenditure Committee the very diligent National spokesperson on finance—my good self—asked the Minister whether the roads would be built if the tax were not introduced and he said “No.” That is right. It might come as a shock to Labour members but he said “No.” 
Jill Pettis 
: But we are putting the tax on. 
JOHN KEY 
: That is right. Labour will impose the tax—after the election if it wins. I know that that is a very big “if”. 
In the meantime legislation has been introduced to the House that gives any future Minister of Finance carte blanche to impose that tax any time he or she wants. And we do not actually know what rate will be targeted. Michael Cullen does not know because a rate is not something that can be measured within 31 days of a calendar event. That is not the way one looks at oil prices. 
So I think the Minister of Finance owes it to the country to be honest with us. He should tell us the truth; we are all grown-ups. He should come and tell us that he does not want to impose the tax because it is really unpopular because he is running a whopping huge surplus and because he knows that if he does impose it he might not get re-elected. He should say that he really cares about being elected so that he is not going to impose it until after the election—if his party wins. That would be the honest answer. At least we could all live with it and at least we would know we were being treated like grown-ups. I for one would thank the Minister of Finance for his honesty in coming to me and telling me exactly the way it is. But instead we have to weasel our way through the information. 
The second point I want to touch on is the issue of indexation. This is a very interesting Government. Not only does it not quite understand accrual accounting but equally it thinks it is absolutely fine to index its revenue stream. The Government has no problem at all with applying indexation to the excise on motor spirits tobacco and cigarettes and no problem at all in saying that the cost of inflation is having an impact therefore it needs to inflation-proof its income stream. But when it comes to the income of New Zealanders when it comes to the workers out there and their earnings being inflation-proofed this Government does not want a bar of it. We have had 5 years of the biggest surpluses and of inflation gnawing away at people’s after-tax earnings but there is not one skerrick of movement towards inflation-proofing incomes. 
Peter Costello did that for the Australian people but Michael Cullen did not do it and when his own support partner the United Future party came to the House with a Supplementary Order Paper on a tax bill and said it wanted to suggest the indexation of income bands the Minister of Finance vetoed the suggestion. So it is OK according to the Minister of Finance to veto inflation-proofing when it is somebody else’s money but when it is the Government’s money coming in the Government has its hand out and is very happy to index it. That is the message from the Labour Party. 
This is a Government that frankly I do not think has its head at all around the issue of roading. I do not think it has a plan. It does not want to see the private sector involved. For all the numbers that Government members quote like the $18 billion the real truth is that real spending on new roading as a percentage of GDP has been falling over the last 20 or 30 years not rising and that the private sector has no involvement in New Zealand roading. This is a very very unfortunate piece of legislation that National is very proud to oppose.