Prebble Richard: Budget Debate 
Prebble Richard: Budget Debate 
[Volume:608;Page:5785] 
Hon RICHARD PREBBLE (Leader—ACT NZ) 
: 
 I did not catch the member’s amendment in his contribution but I thought he made an interesting contribution and if this were a charity debate he would have no doubt won. Given the fact that there is nothing in the Budget one might as well make it up which is exactly what Mr Peters did. 
The ACT party will oppose the Budget fundamentally because of what is not in the Budget rather than what is. This reminds me of a Sherlock Holmes story—the significance of the dog was that it did not bark. The significance of this Budget is what is not in it. If members look at the major issues facing New Zealand such as the energy crisis they may ask what is in the Budget about that? Not a thing. Now that we know that Dr Cullen is in charge of tackling the energy crisis it makes the situation more serious. There is nothing in the Budget about matters like crime and health and there is nothing in the Budget to tackle the real issues facing this country. 
Dr Cullen has conceded in the Budget that growth in the New Zealand economy will almost halve. Can we see anything to tackle that problem? On 10 April I wrote Dr Cullen a letter on behalf of the ACT Party and said: “When you can see what’s facing the nation with the uncertain economic environment and the fact that we have lost the America’s Cup Fonterra’s payout is going to be down there has been a drought and now we have the Sars epidemic it is clear that the economy needs a boost. We would be prepared to vote for a Budget that had a well-designed tax cut in it.” We did not ask for any ministerial positions in return we just said that the ACT party would vote for a well-designed tax cut. We put that in writing and signed it. It is a matter of disappointment to me—and I think a matter of great regret to the nation—that Dr Cullen has ignored that possibility. We need to have a tax cut. We need it first for the economy because the best way to give the economy a boost is to cut taxes. We also need it because when we read through the Budget we see the surplus is going to be $3.8 billion. 
As the Leader of the Opposition accurately pointed out the thing that is wrong with a surplus of $3.8 billion is that it is too much. That is a huge amount of money and it is overtaxation. The Government is going to tax ordinary New Zealanders $4 billion more than it needs to because the Government is uncertain about the environment and says: “We need it.” I say to Dr Cullen: “What do you mean ‘we’?”. That money comes from New Zealanders. Then he says he wants to keep his balance sheet looking good. What about the balance sheet of small New Zealand businesses? What about the balance sheet of the average household? I say to Dr Cullen that the average household balance sheet has never been in worse shape. New Zealanders have never owed more money on mortgages and credit cards any way we like to measure it—as a total amount or as a percentage of their income. Why is that? It is because they are having to pay an extra $4 billion. 
I will give the House an idea of how much that is. It is a mind-boggling figure. 
Hon Member 
: Have you got the solution to that? 
Hon RICHARD PREBBLE 
: I have actually. I am glad the member has now realised it is a problem and I say to him that it works out at $50 per worker per week. That is the amount of extra taxation. 
In the letter I wrote to Dr Cullen I said: “Look if you want to be a Labour Government and put it across the board to everyone then we’ll vote for that because that would still be better than the Government taking extra taxation.” I then said: “A much better idea would be to implement the McLeod tax report.” Members opposite might have forgotten but the Government commissioned a tax review. Indeed in his first Budget Dr Cullen pledged that we would have a fairer tax system. The Government set up the McLeod tax review which made it clear that the preference would be a flatter tax system. 
 For $4 billion we could have a company tax rate below Australia’s. We could give every worker in New Zealand a tax cut. Indeed the ACT party has put forward a 5-point tax plan. The first thing we should do is balance the Budget and give back the surpluses. The second thing we should do is abolish the risky Cullen superannuation scheme—heck the Government has already lost over $300 million out of the Government superannuation scheme and I now see that that has been subject to some sort of insider trader fraud. It is very risky. The third thing we should do is cut company tax rates to 25 percent. 
Gordon Copeland 
: How are we going to pay for future pensions? 
Hon RICHARD PREBBLE 
: I will help the member. The fundamental way we can pay for future pensions to the United Future party is to have a strong economy. We will not pay for future pensions by investing our money in overseas equities in a gamble. If the Government is in charge one can absolutely guarantee that it will lose it. How do we know? Because it has done it already and it will do it again. It learns nothing from its experiences. 
Does the United Future party not think that New Zealand businesses would grow if we had a 25 percent tax rate? It seems very silent. The United Future party used to be in favour of lower company taxes but that was before it went to bed with the Labour Party in return for a family commission with some sort of “PR-UN” family whereby it will advocate on behalf of homosexual couples. It comes as a great shock to United Future supporters to discover that that is what a family commission will mean on behalf of the United Future party. 
The next thing we could do with our $4 billion would be to lower the top tax rate to 25c lower the bottom rate to 18c and give every New Zealand worker a tax cut. I ask members opposite what is wrong with that. The Government would not have to cut a single thing. It could have its Maori Television Service spend $34 million on America’s Cup races— 
Hon Ken Shirley 
: I’d rather it didn’t. 
Hon RICHARD PREBBLE 
: Of course we would rather it did not and so would the country. However if that is what the Government wanted to do it could still do that and have a tax cut and one reason for that is fairness. 
But if that does not move it I have this card. I know that the Government thought it had collected up all of them but does this card ring a bell with anyone? It is a little credit card. 
Rodney Hide 
: Who’s that woman on it? 
Hon RICHARD PREBBLE 
: I do not know who it is. I cannot recognise it. The computer-created picture is named Helen Clark and the card states: “My commitment to you. We will deliver.” It is signed but I realise the Prime Minister might not have been conscious when she signed this and it might be sort of like the paintings she is into or the prediction that we will be in the top half of the OECD. However pledge No. 7 is “No rise in income tax for 95 percent of taxpayers.” I shall read that again. “No rise in income tax for 95 percent of taxpayers.” That is interesting. When one looks at this Budget for what is not in it one sees that in fact the Government has got it round the wrong way. Now 95 percent of all taxpayers in New Zealand are paying higher income tax and why is that? The reason is that when there is inflation the Minister of Finance does not have to change the tax rates he can just let inflation do it for him. 
Hon Ken Shirley 
: Fiscal drag. 
Hon RICHARD PREBBLE 
: That is right. I remember when Sir Robert Muldoon introduced us all to fiscal drag. Well it has been brought to us again by Michael Cullen. 
I asked the parliamentary library economic unit—which is a very good unit and if its staff are listening I congratulate them on the excellent quality of their work—what rates we would have to change the thresholds to in order for them to be the way they were when they were first set up. The bottom threshold is $9500. In order to have that in the same and real terms and in order for the Government to honour its pledge of no rise in income tax for 95 percent of all taxpayers that threshold should have been lifted to $13200 in this year’s Budget which is a 38 percent increase. The next threshold is at $38000 and that should have been lifted to $41800 which is a 10 percent increase. The Government’s new maximum tax rate above $60000—which shows one how much inflation has moved—has to be lifted to $65000. 
To give members an idea of the implications of that I point out that the number of New Zealanders who are now paying the 39c tax rate—we were given a promise that it was to be no more than 5 percent—is 270000 full-time workers. That means that 18 percent of the total full-time workforce is now paying the top tax rate yet even after the Labour Government was elected it repeated its pledge that that would not happen.. Well it most certainly has happened; perhaps Helen Clark just was not conscious at the time. 
I believe that the reason the Government allows the increase in taxes is that it thinks that people do not care about tax. I can tell the House that we know that that is wrong too. The ACT party decided to do a survey of businesses. We surveyed 110000 businesses and asked them whether they thought they were being overtaxed. Ninety-seven percent said that they thought they were. We then asked them which tax rate proposal they would prefer. They came back overwhelmingly in favour of the McLeod tax report. I was stunned by the number of people who replied to our tax survey and I thought it was interesting that 85 percent said they wanted to see a McLeod tax report. They wrote to us asking what the point was of working under this Government and commented that if they were paying a lower rate of tax they could grow invest and employ more New Zealanders. We decided to survey households and I started in west Auckland which is a Labour stronghold. I live in west Auckland in the good Labour suburb of New Lynn. I know that the local member does not like to live there but I am happy to. [ 
Interruption 
] David Cunliffe lives in St Mary’s Bay but he comes to visit us occasionally. He drives through and waves out of the window. I decided to put out some surveys in the Labour Party electorate of west Auckland and we got a staggering reply from ordinary New Zealanders. Ninety-three percent said they felt they were being overtaxed. Although a higher percentage would have preferred a $50-a-week increase the majority said they thought we should follow the McLeod tax report which shows that the New Zealand electorate is much smarter than Dr Cullen thinks. 
I asked some other questions. I asked people whether they supported the Cullen superannuation scheme and 75 percent said they did not. We have to ask ourselves why there is a difference between what people are saying in the survey we have done and in the Labour Party’s overall poll. I guess there are a couple of reasons. I suspect that some people who are on the taxpayer’s tit are quite happy to go on seeing higher taxes. The people who are writing back to me are the ordinary New Zealanders who are earning the money that Helen Clark spends every time she goes off in “Air Force One” to see her European friends as she does every year. 
But there is a second reason. I asked a couple of other questions which are not in this Budget. For instance there is very little in here about health. We asked people whether they thought that health had been fixed and there is some good news for Government. The good news is that 3 percent of the people who replied thought that it had been fixed. I asked people whether they thought that education had been fixed and the same 3 percent were confident there too which might show a certain connection. Of the people who were surveyed 88 percent were also very concerned about the levels of violent crime. 
However we went further than that we asked people what they thought about certain types of expenditure. We asked them how they felt about the Government financing the America’s Cup and 73 percent thought that it was not a good use of expenditure—and that was when we thought it was $5 million. We got a similar answer to Maori Television. I say to the Government that if it thinks that this sort of Budget in which it goes on spending money on behalf of New Zealanders gives it the God-given right to spray out money on America’s Cup campaigns financing that by increases in pensioners’ sherry then it is sadly mistaken. 
This Budget is fundamentally unfair. It is unfair to working New Zealanders who are paying that tax and it is dangerous because it does nothing about the fact that the economy is slowing down. 
Hon David Carter 
: It’s halving. 
Hon RICHARD PREBBLE 
: That is interesting. When we look at the growth projection of 2.5 percent and look at what the growth rate was in the last decade after the failed policies of Roger Douglas and Ruth Richardson we find that it was 3.6 percent. I like some of those failed policies. I say to my friends in the National Party that I was pleased to see Dr Brash’s statement. I would like to think that he would go a bit further. The idea that say just a 30-percent cut in company tax will solve it is not right. Company tax is just a withholding tax. We have to lower individual tax. 
We also have to do something about issues that are not tackled in this Budget. There is nothing in this Budget about the Resource Management Act accident compensation or the Occupational Safety and Health Service. This Government has done nothing in the Budget about the issue of transport. The transport issue in Auckland is costing $1 billion a year. When we go through the Government’s transport figures we see that although it has increased the price of petrol and road-user charges the Government itself has taken the bulk of that extra money—that is the money needed to get Auckland moving again. The money that is needed to have a decent infrastructure for the whole country has not been spent. 
What we really have is a re-announcement of the health tax. When Mr Peters was giving out the prizes I wanted to say to him that he should have given a prize to Annette King. She is a sort of Pavlova—the one who retired repeatedly. She has announced the $400 million extra spending in health 400 million times. It is still the same amount of money and indeed half of it is the catch-up for the amount that she did not have in the previous 2 years. We then find out that $165 million is going to primary health. We can guarantee that hospital waiting lists will increase but actually they do not because people get taken off the hospital waiting lists and go on to the active review list. Any bureaucrat who counts that list will be fired. It is the best-kept State secret in this country’s history. No one knows how many people are on the active review hospital waiting list but we know that the real number must run to tens of thousands of New Zealanders. Were they referred to in this Budget? No they were not. 
As I said the real significance of Michael Cullen’s Budget is not what is in it but what is not in it. There are no tax cuts nothing to get the economy moving and nothing to tackle the real problems facing New Zealand such as the fact that our traffic is snarled up our lights are going out and our growth rate is being halved in the next year. Instead we have a Government that is on autopilot and which thinks that with the help of United Future it will be able to solve problems. 
I failed to mention earlier that the Government has taken out benefit numbers but I have a copy. I know that it is a State secret but I would like United Future to look at these figures. They show the number of domestic purposes beneficiaries the number of invalid beneficiaries the number of sickness beneficiaries and the number of unemployment beneficiaries and as a result of this Budget according to the Treasury’s predictions those numbers will increase. I would like to hear from Peter Dunne as to how his party could vote for a Budget that will increase the number of people on benefits. That is not what he said during the last election.