Nash Stuart: Debate on Prime Minister’s Statement 
Nash Stuart: Debate on Prime Minister’s Statement 
[Volume:660;Page:8691] 
STUART NASH (Labour) 
: 
 I can confirm for the people of New Zealand that Craig Foss does not speak on behalf of the Labour Party in terms of tax policy at all so everything they have just heard they can completely discount. Mind you that seems to be the theme on the National benches today. I must admit it was amusing when all the troops on the other side of the House all stood to attention for the Prime Minister after he finished his speech. As Lianne Dalziel has just mentioned the members on that side are all like the penguins on the movie  
Madagascar 
. They watch Key and they do not understand what he says because he actually does not say anything but it does not matter as long as they just stand up and “Smile and wave boys. Smile and wave.” 
The Prime Minister’s speech is a statement that bodes well for the future. It bodes well for the future of Labour and Phil Goff that is because it really contained nothing of substance nothing that one could really get one’s teeth into chew and digest. In fact what little substance there was completely bypassed the digestive tract and immediately came out the other end and was recognised for what it is and boy does it smell like right-wing offal! 
Sitting suspended from 6 p.m. to 7.30 p.m. 
STUART NASH 
: I was in the process of saying that the Prime Minister’s statement to Parliament was a little bit like a wine tasting when expectation is built up and the bottle promises much— 
Hon Dr Jonathan Coleman 
: Oh that’s not very Labour language mate. 
STUART NASH 
: —only for the taster to take a first taste and spit it out in disgust at the foul taste I tell Dr Coleman. It is the sort of taste that I can imagine many hard-working Kiwis will be experiencing when they do the sums on realising that the National Government is planning on increasing GST by 16 percent. That contradicts a statement made by John Key on 20 October 2008 when he said that if National did a half-decent job of growing the economy then increasing GST would not be necessary—enough said. 
Yes the Prime Minister was right when he said in his speech that the tax system changes people’s behaviour—voting behaviour I believe in this case especially when it comes to a tax like GST. Lange might have said that even drug pushers have to pay GST but so do the 78 percent of hard-working New Zealanders who earn less than the average wage who are not drug pushers but who are the backbone of this wonderful country. They are working like hell to get ahead and once again as with the tax cuts of last year when anyone earning under $40000 did not get even a bone National has pulled the rug out from underneath their feet. What about them I ask Mr Key? 
The main reason I find increasing GST so difficult to stomach is that it is regressive. It means that the less one earns the greater the percentage of one’s wages or salary that must be paid in GST. The Government’s Tax Working Group says that it is not regressive because “people tend to base their current spending decisions on not simply their current income but also their expected life-time income.” Well maybe they do that when they are purchasing a house but there is no GST on houses and I suspect that the 78 percent of hard-working Kiwis who earn under the average wage tend to base their current spending decisions on what they can afford at the supermarket to feed their family how much the school donation will be how much it will cost to feed their children how the hell they can afford to pay the power bill this month when the city council’s rates are due and how they will find the dollars to fill the car to get to work to earn the money so they can pay the increased GST in order for the top few to have a tax cut. Even Bill English has admitted that a rise in GST is unfair on families already struggling with the effects of a recession. 
I would like to relate something of interest published in the Tax Working Group’s report. It is a graph that shows the effects on growth of tax in public spending. The No. 1 form of public spending identified by Treasury officials to promote economic growth and included in the Tax Working Group’s report is infrastructure. For example in Hawke’s Bay the local residents paid a 6c per litre tax that was levied only in the Bay on petrol sold in the Bay. The $81 million collected from that levy was to be spent on Hawke’s Bay roads in order to drive Hawke’s Bay infrastructure and economic growth. But this Government stole—yes it stole—that money from Hawke’s Bay and put it into the consolidated roading fund. So who knows where it has been spent? 
Hon Pete Hodgson 
: It’s outrageous. 
STUART NASH 
: I agree: it is outrageous. I tell the people of Napier and Hastings that it is not being spent on roads considered vital to Hawke’s Bay’s economic growth and that is disgraceful. 
The second major item of public expenditure to increase economic growth according to Treasury and the Tax Working Group is education. But in Hawke’s Bay as around the country there are no more night classes because this National Government has cut adult and community education spending. So in the Bay the 6000 people who were taking adult and community education courses and the 350 people who were employed as tutors are now no longer pumping an estimated $10 million into the Hawke’s Bay economy. The Bay is going backwards under National and it is not what its people voted for. 
I am assuming that Mr Key has signalled a tax cut to the top marginal tax rates because he was informed by the Tax Working Group that “In 1989 New Zealand’s tax system was regarded as one of the least distortionary in the OECD. Its tax rates were comparatively low: the corporate and top personal tax rates were 33%”. But the report does not go on to say that in the 1990s New Zealand had 26 percent unemployment amongst its Pasifika population and 21 percent unemployment amongst the Maori population. But oh we had one of the least distortionary tax systems in the OECD. 
I tell the Tax Working Group and Mr Key that sometimes it is not just about the money. Sometimes we have to ask what the human cost of having one of the least distortionary tax systems in the OECD is. The cost last time was horrendous I tell Sir Roger Douglas. I would support 100 percent the findings of the Tax Working Group around tax alignment to the company trust and top marginal rates if with one of the least distortionary tax systems in the OECD companies and jobs came flooding into this country resulting in massive employment opportunities for those who were struggling. But this was not the case. Our deregulated economy with one of the least regulated tax systems nearly destroyed the fabric of our community. 
At the Tax Working Group conference there was a lone voice amongst the wilderness. Many were there talking about radical changes that would improve the viability of our broken system—flat taxes capital taxes land taxes increases in GST the dreadful effect of Working for Families and the heavy burden borne by those in the top 10 percent of taxpayers etc. But then a woman stood up a very well-qualified and incredibly able woman and she spoke for those who were not represented at the conference. Dr Susan St John asked the question: what will these proposed changes mean for the disadvantaged in our society? In fact 350000 hard-working Kiwi families receive the Working for Families hand-up. The percentage of children in poverty has dropped from 26 percent in 2004 to 19 percent in 2008. That is still far too many but we are making progress. Why were so many children in poverty? It was because of the economic changes of the 1980s and 1990s. 
Those wealthy well-educated and extremely articulate tax practitioners were talking about Working for Families as if it were just a series of numbers on a spreadsheet to be tossed around and manipulated. Well I say to Mr Key with the greatest of respect that I can assure him that for many of those 350000 families the hand-up provided by Working for Families is the difference between survival and something more insidious. By all means the Government should close down the loophole that about 2000 people are taking advantage of but it should not dare tinker with the livelihoods of 350000 hard-working Kiwi families. 
Susan St John’s presentation for me was the most uplifting because she was the only one who spoke up about the social implications of changes to the tax system. She spoke for the many not for the few as Phil Goff did today for the 78 percent of Kiwis who earn below the average wage. People listened to her rather uncomfortably because what she said they did not want to hear. She asked: “Is the focus on the company tax rate actually the right focus?”. Susan St John finished and the next chap gave a talk on the benefits of increasing GST: how much money could be raised if the Government raised GST to 15 percent 17.5 percent or 20 percent. It was as if Dr St John had not even spoken and the very strong impression I got from listening to Mr Key’s speech today is that she has not been heard. This is a great shame because she makes a lot of sense. 
I suppose we dared to believe that the speech today would be radical. At least Mr Key could have had the courage of his convictions but he really is the new “hollow man” of New Zealand politics. As for his team I say to them: “Just smile and wave; boys. Just smile and wave.” Thank you.