Smith Lockwood: Taxation (Annual Rates GST Trans-Tasman Imputation and Miscellaneous Provisions) Bill — Instruction to CommitteeCWH In Committee 
Smith Lockwood: Taxation (Annual Rates GST Trans-Tasman Imputation and Miscellaneous Provisions) Bill — Instruction to CommitteeCWH In Committee 
[Volume:613;Page:10098] 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 What a bitter tirade from the Minister! The Minister said that the tax burden does not affect the economy and that putting up tax rates improves the performance of the economy. He said that Clinton put up tax rates and the economy went better. That shows the appalling economic ignorance of Dr Michael Cullen. He might have been a good academic historian but he sure ain’t an economist. All the research shows us that an economy carrying the total tax burden that New Zealand is currently carrying which is in the order of 40 percent of GDP has never succeeded in sustaining 4 percent GDP growth. Nowhere in the world has a developed economy carrying that tax burden ever succeeded in sustaining 4 percent growth which we must achieve if we are to close the gap with Australia. Dr Cullen thinks that he knows better than all the history of the last 50 years of the world. He thinks he knows better in saying that putting up tax rates improves the economy. 
First I endorse the comments made by my good colleague John Key about how there is a critical need to get down our corporate tax rate to make us competitive with Australia. The tax burden our economy is carrying is too high and the best research I have seen covering the last 50 years across the developed world shows an almost linear relationship between tax burden and economic growth. 
However I shall focus on another issue. Dr Cullen talks about the needs of the lower-income people of this country. I challenge him to do something about that instead of just blathering on about it. I want Dr Cullen to do that or his ministerial helper who I note is wearing an identical tie shirt and suit to Dr Cullen. I note that the Hon David Cunliffe so admires Dr Cullen that he is wearing an identical tie shirt and suit. I guess that crawling around the Minister like that may help with promotion but he has to wait a little bit of time yet. 
However the issue of substance I want to raise is this. If Dr Cullen and the Hon David Cunliffe are concerned about lower-income people what will they do about this issue? At the moment in New Zealand people with limited skills trying to get off benefits and improve their lives earning say $10 an hour as they seek to work under David Cunliffe’s taxation scheme in this country once those people have worked 8 hours a week at $10 an hour they earn a certain amount of money for their family. Does David Cunliffe know how many hours more than 8 they have to work to earn another dollar for their family? I want the Minister to indicate whether he knows the answer. 
Jill Pettis 
: He’s working on it. 
Dr the Hon LOCKWOOD SMITH 
: I shall help him. I would not mind betting that not one Government member knows. Does one think that if those people doubled their hours of work they might be a dollar better off? If they worked 16 hours a week instead of 8 might they be better off? Does any member know? I can tell members that they will not be better off. What if those people trebled their hours of work and went from 8 hours to 24 hours a week? Surely they would be better off. But I tell the Minister in the chair that they will not be. Under his taxation regime that family after trebling their hours of work will not have a dollar more in the pocket. Does that Minister know how many hours that family would have to work to be a dollar better off? They would have to work 50 hours a week to be a dollar better off in the pocket than they would be after they worked 8 hours a week. 
That is because of the way the benefit abatement system the tax credit system and the progressive tax system work that Rod Donald and the Greens like so much. If the Minister bothered to do the work instead of parroting nonsense he would see the way the poverty trap in this country works. I want the Minister in the chair to acknowledge that Labour is presiding over a huge poverty trap for our low-income lesser-skilled people. It is an indictment on this Government that after 4 years it has done nothing for the family I described—that is mum dad and two kids—trying to get off the benefit system working 8 hours a week to get a certain amount of income and as they seek to gain more income through work to try to improve their livelihoods they will have to work 50 hours a week before they get another dollar in their pocket. The Minister should be ashamed of what they are doing to our low-income people.