Groser Tim: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — Second Reading 
Groser Tim: Taxation (Annual Rates Business Taxation KiwiSaver and Remedial Matters) Bill — Second Reading 
[Volume:644;Page:13446] 
TIM GROSER (National) 
: 
 The member who has just spoken the Hon Mr Swain is of course far too experienced a parliamentarian to believe a word of what he has just said. If that had come from certain other members of the Government whom I will not mention we might accuse them of naivety but we will not accuse Mr Swain of that. Mr Swain has been around here long enough to know that what he said is completely and totally implausible. It would be hard to write up a bill of these dimensions that did not contain individual bits that every single party in this House would support—and this bill is no exception to that. But we are talking about the centrepiece of this Government’s economic strategy—the single most important aspect of being in Government and the single most important responsibility of being on the Treasury benches. The National Party is looking for some policy coherence in the last three terms of this Government; this bill does not give that policy coherence. That is why the National Party opposes this bill. Mr Swain knows that perfectly well. Amidst the barrage of adjectives from him about being outraged amazed and whatever you will he knows that that is the central reality. 
When I got hold of this massive bill the old saying “Brevity is the soul of wit.” came to my mind. Members who remember the Shakespearean origins of that saying which is from  
Hamlet 
 will know that the word “wit” in Old English means wisdom. If it was translated into modern English that well-known saying would be “Brevity is the essence of wisdom.” I will confine my comments to one small passage in this entire bill that I think personifies the very saying “Brevity is the soul of wit.” and it is the minority view of the National Party. It is only 26 words long and I will quote the minority view of the National Party: “The National Party recognises that the company tax rates will be dropping to 30 percent”—exactly the point I made before I say to Mr Swain—“but we believe that personal income tax rates should also be lowered.” I do not think in the 2 years that I have been here that I have ever seen a minority report that does these two things: first express itself in the briefest possible form and second nail the essence of the reason why the National Party is opposing a taxation bill. 
We know perfectly well as we have been told this by the Prime Minister that next year after the Government has built up the kitty there will be some political manipulation of the very issue addressed by the National Party in its minority report. My best bet is that the Government will make some adjustment to the brackets in order to take some account of bracket creep after having failed to recognise the essence of the problem for 7 or 8 years to this date. But that will not represent a road to Damascus conversion on the part of Dr Cullen. Dr Cullen the great surplus denier has had no conversion on this particular road. Dr Cullen has recognised the need to manipulate the taxation regime of this country which is central to the functioning of a market economy for political ends. 
I imagine that few New Zealanders will be interested in listening to a parliamentary debate on this taxation bill but I suspect many New Zealanders are probably now starting to turn up their dials in order to listen to the debate on the next bill that will follow this one which is on a bill of vital constitutional importance to this country. To those New Zealanders who are starting to tune in let me just make this point: in a sense the two bills are linked. After 8 years of failed economic stewardship of this country the next move by this Labour-led Government is to shift the goalposts politically and to cover up the failure of its economic stewardship. We know that the chickens are finally coming home to roost. 
There was so much wind in the sails of the New Zealand economy when this Government took over in the year 2000. In the previous calendar year the growth rate had been 4.3 percent. The growth rate in labour productivity in the 3 years prior to the Government coming into office averaged 3.5 percent— 
Moana Mackey 
: You had 21 percent unemployment! 
TIM GROSER 
: I am very glad that the member over there mentions unemployment because unemployment fell from 11.6 percent in 1991 to 6 percent in 1999. That rate powered by the productivity growth has continued to fall in the subsequent years. Maori unemployment had fallen from 23 percent in 1991 to around 10 percent by the time this Government took office. So strong was the wind in the sails of the New Zealand economy that the death by a thousand cuts took essentially 5 years to show up. That is what the next bill is intended to address. In that sense these two bills are linked. 
What has happened since then is that the growth rate has slumped and productivity has tanked from a high of 3.5 percent. That growth rate was stellar by the way; it was slightly higher than Australia’s labour productivity which is powering a 5 percent underlying growth rate in Australia as we have gone down to 2 percent. It is no wonder that Paul Krugman has said “Productivity growth isn’t everything but in the long run it’s almost everything.” That is the whole key to the economic failure of this Government and its failure to put in place a coherent taxation policy is absolutely central to those chickens coming home to roost. It is no wonder David Skilling said nearly 3 years ago: “New Zealand is not facing a crisis in the literal sense. Failure to act is unlikely to lead to terrible outcomes in the short term but New Zealand’s economic platform is gradually subsiding.” How right he was even though at the time of his saying that nearly 3 years ago the evidence was not really there. 
We have seen a massive massive explosion in the tax take. In the first 5 to 6 years of this Government we have seen a $20 billion increase in total tax. This morning I downloaded OECD statistics from October 2007 that counted all taxes—that is State provincial and local taxes. In Australia the figure was 30.9 percent of GDP in 2005 and in New Zealand the figure was 37.8 percent. This bill does nothing to address the lack of a coherent strategy that is behind that problem—that crisis—facing this country. 
Unfortunately for New Zealand there is worse to come. The people of Australia have just elected Kevin Rudd as their Prime Minister. We know that the Australian Labor Party in contrast with today’s New Zealand Labour Party is a much more politically mature outfit. When we look at the first statements of Prime Minister Rudd and contrast them with the first statements of Prime Minister Clark we see a remarkable difference in tone in rhetoric and in intent. Prime Minister Kevin Rudd has in the last few days talked extensively about continuing the process of microeconomic reform. Has he dumped on his predecessors by referring to their policies—the Keating/Hawke policies—as failed policies of the past as Prime Minister Clark did with regard to her predecessors in 2000? Oh no; quite contrary to that he has absolutely endorsed those policies. Three or 4 days ago on the ABC programme  
AM 
 one of the prime current affairs programmes in Australia Prime Minister Rudd said: “I think there’s a lot of enthusiasm there for us embracing a reform agenda because if you cease reforming this economy you start to strangle long-term productivity growth.” That is a very interesting statement. First of all politically he is not talking about the failed policies of the past; he is accepting economic reality. He describes himself as an economic conservative. 
I say to Mr Swain that if we had had some more mature leadership from this Government over the last 6 years then perhaps today we would indeed see a bill that we could support.