Volume 651 Week 1 - Tuesday 9 December 2008(continued on Wednesday 10 December 2008) 
Volume 651 Week 1 - Tuesday 9 December 2008(continued on Wednesday 10 December 2008) 
[Volume:651;Page:109] 
Tuesday 9 December 2008 
( 
continued on Wednesday 10 December 2008 
) 
Points of Order 
Bills—Availability in Urgency 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 I raise a point of order Mr Speaker. I draw your attention to the fact that although the Government has taken urgency on a number of bills only the Taxation (Urgent Measures and Annual Rates) Bill is on the Table at this stage. You may recall Mr Deputy Speaker that when urgency was taken under the previous Government the bills for which any urgency had been taken were made available on the Table as soon as they had been printed. I listened this morning to an interview with the Minister of Labour Kate Wilkinson who made it clear that the details of the Employment Relations Amendment Bill had been finalised so I presume that it has been printed. I believe it is good practice for the Government to get those bills on the Table as soon as they are possibly available so that members of the House can actually be informed of those details before debate is entered into. 
Mr DEPUTY SPEAKER 
: Thank you Dr Cullen. We will look into that for you. 
Taxation (Urgent Measures and Annual Rates) Bill 
Second Reading 
Debate resumed. 
Hon BILL ENGLISH (Minister of Finance) 
: 
 When I rose last night and spoke very briefly I moved that this bill be read a second time and I pointed out that the one thing that was obvious from the first reading debate was that Labour still does not realise it has lost the election. With the attitudes on display I see that that is a realisation that will take some time to sink in but I will come back to that. 
I remind members of the context in which this legislation has come before the House. New Zealand has already been in recession for a year and of course there are questions about how we managed to get into recession before other countries did. The 2008 calendar year will show virtually zero growth—the much-vaunted legacy of the previous Government I presume. During this debate I expect that Labour members will be able to explain to us just why the economy was in such apparent great shape when it had zero growth. We have been in recession for longer than any comparable economy and that was before the international events that are now concerning us. So we are introducing this legislation in the context of an economy that already had quite significant problems because of 9 years of complacency about what it takes to grow an economy and allow people to have all the benefits that go with a growing economy. That is the first point. 
We are introducing this legislation in the context of a country that was already in recession well before the international events that have created so much uncertainty. Of course we have seen those events occur in the last couple of months and we are surprised that in its dying days the Labour Government did not make much of them. The reason is that Labour was doing all of its dirty tricks and that is a very obvious and high-profile legacy of this Government in the public mind; at a time when it should have been going through our proposals in detail which are embodied in this legislation and outlining its own ones in detail it was chasing dirt files in Australia on the current Prime Minister. 
If those members do not understand the detail of the legislation that is laid out now that is why. They were too busy being focused on continuing their legacy of personal denigration and continuous scandal and on issues that did not matter to the people who trusted them. That is why those members are on that side of the Chamber. Instead of looking at the detail of our economic policy and debating it in the election campaign in a way that would reflect the interests of the people who trusted them Labour members were too busy chasing their strategy of personal denigration. The dirty complacent Labour Party let its own people down because it did not focus on the issues that mattered to its own people. We did and that is one of the reasons why Labour lost the election. 
Looking ahead we see that the New Zealand economy faces very significant uncertainty and that uncertainty is—at the moment anyway—largely to do with the state of the economies of our trading partners. In the last couple of months the economies of our trading partners with the exception of China as a significant partner are almost all headed into recession. That has happened quite quickly even in Australia which as recently as 2 months ago was forecast to grow at 2 percent per annum but is now looking at a couple of quarters of negative growth despite the Government over there saying that it would not happen. So this legislation is part of a fiscal stimulus of around $7 billion over the next 2 years. That is not all of it; this will add to the stimulus created by a fairly big-spending Budget in 2008—well another big-spending Budget from a Government that has tried all sorts of tricks to hide some of the impacts of its worst decisions—then the tax cuts on 1 October 2008. Those tax cuts were made somewhat reluctantly by the previous Government. Having spent 9 years saying it would never do that it did. Having spent 9 years saying it would never borrow for tax cuts in its dying days it turned round and borrowed for tax cuts. That is another reason Labour lost the election: it ended up doing the opposite of what it said after 9 years which was “We will never cut personal taxes.” Then because National won that argument the Government was forced to cut them and it lost the election anyway. 
There is nothing worse than giving way on one’s principle and then regretting that one did it; that is what those members are sitting there doing. Would they not love to be able to say “We stood firm; we never gave in; we never cut personal taxes.”? They cannot; at the last moment along with the blowout in Treaty settlements endless promises on rail and the big hole in the Accident Compensation Corporation accounts they caved in and made tax cuts. Well we are happy to claim those tax cuts as part of our stimulus package because in Dr Cullen’s immortal words “He lost”—he lost the tax cut argument. 
When we add those three things together—the big-spending Budget in 2008 the 1 October tax cuts and this tax package—the economy over the next 2 years will benefit from $7 billion of stimulus. Why does that matter? Well it matters because it will put cash in people’s pockets. 
Hon Darren Hughes 
: Not all people. 
Hon BILL ENGLISH 
: Well actually just about everybody. I want to pay attention to one particular issue that has been raised and that is the issue around Working for Families. Over the last 3 or 4 years there have been substantial increases in the net incomes—the after-tax incomes—of people with children. 
Hon Darren Hughes 
: Opposed by the member. 
Hon BILL ENGLISH 
: Well no actually we support it. Many other New Zealanders who were not part of Labour’s political strategy got nothing so in this package people who got nothing for 9 years—loyal Labour voters who were meant to be looked after by the previous Government which spent all its time on a campaign of personal denigration and incompetent scandal—will get something. It is true that there are no increases in Working for Families here. That is simply for this reason: families with children have had big increases over the last 2 or 3 years; people without children have had nothing. This tax package will give them some cash in their pockets which will help to keep this economy ticking over and will protect people from the sharpest edge of recession. 
As it happens this is a decision consistent with our long-term goals which are to improve incentives in the economy to encourage people to get ahead and to let them make their own decisions with their own money instead of being told what to do by a Government that takes too much tax off them. So the decisions that will help the economy in the short term to cushion the effects of a recession will also help the economy in the long term to achieve our objectives of raising our long-term growth performance. Of course who would know where Opposition members start from? They are against tax cuts; they are for them. They are against borrowing; they did it. They think the economy matters but when it matters they never talk about it such as in an election campaign. They talked about everything else. I suspect that it will take probably another 12 months for Opposition members to figure out that Labour is no longer the Government. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 That has to be one of the singularly worst speeches I have heard from a Minister of Finance in my entire time in Parliament—it is the worst in fact. There is Bill English saying we do not realise we have lost the election; I do not think he realises he has won. That was one of the bitterest meanest most angry speeches I have heard. We are in a better mood than he is and we lost the election. I ask New Zealand what that was about. Was that the happy friendly face of the modern National Party or was that some warmed-over dipstick from Dipton? Look I do not know about his mana-enhancing Treaty blowouts and his carping and whining about the election campaign but can members just imagine the situation if National had lost? How bad would Bill English’s mood have been then? 
Hon Darren Hughes 
: Oh he’d be happy then. He’d be leader. 
Hon DAVID CUNLIFFE 
: Ha ha! That is terrific—that is terrific. He would have been happy then because he would be leader—“Et tu Bill!” It is a wonderful thing to watch the body language on the front bench of the Government—absolutely wonderful. Every time the poll ratings go up Bill English’s face goes down. 
Three things are wrong with this bill: it is bad process it is bad economics and it is bad for working Kiwis. The bad process stuff is obvious is it not? The Government did not even put the bill on the Table before the debate started. It is not sending it to a select committee. What has happened to the flowering of democracy the “Key spring” in New Zealand? We cannot see that today. All I can see is a bill the National members must be ashamed of because they are rushing it through all stages with no opportunity for affected New Zealanders to comment and no opportunity for the detail of the bill to be tested. 
You know this bill is so shoddy that even the commentary on it says it is rubbish. It does not meet the Government standards for a regulatory impact assessment according to page 10. The Government has not quantified the effects of the bill. It does not know whether the removal of the research and development tax credit will push innovation up or down. It does not know the net effect of the KiwiSaver changes but we established yesterday—thanks to Dr Cullen—that it is not allowing for any growth in enrolments. So that move to make it easier for New Zealanders to enrol—that minimum 2 percent—is something we know the truth about ladies and gentlemen: it is a cap. It is a maximum because that is the default level that people will enrol at. That is all an employer will be allowed to subsidise and that is bad for workers. It is bad for Kiwis who need to save. 
You know the macro effects of this legislation are rubbish. If there is a short-term recession problem and the pump needs to be primed the last thing to do is to have a long-term tax cut. Why is that? Well there are two things. Firstly any economist knows that the multiplier on Government spending is bigger than the multiplier on a tax cut. Why is that? Because if investment is directed well it flows through the economy. If there is a tax cut people spend part of it on stupid consumption items they spend some on investment goods and they save some away. That does not ricochet through the economy so the multiplier on a tax cut is lower than the multiplier on good investment. That is why this measure is bad economics. 
The second thing is that this is a long-term measure to address a short-term problem. It is a bill that does not work. The idea is to match a short-term problem with a short-term measure. So one does a temporary stimulus package and does not lock in a structural tax cut that will blow out the debt track. But hey if National is confident about that debt track I say it should show it to us. Why does it not tell New Zealanders the truth about where gross sovereign debt will get to in 20 years’ time? National has not told New Zealand that because it is deeply deeply ashamed about it. 
Even Treasury in its briefing to incoming Ministers—I tell Bill English that it is on about page 10 if he has not got that far—tells us that this fiscal stimulus is not required. That is because there is $13 billion of pump priming of which $9 billion came in October with Labour’s package. Two-thirds of it has already been done and we spent—as Dr Cullen said—right up to the maximum of where we felt that we could go based on the information that we had up to the point where we were borrowing to fund a tax cut which is bad policy and bad economics. Ignoring Treasury advice and like Rip Van Winkle ignoring the entire meltdown of the global financial market Mr English has done the politically populist thing. He says we should have a tax cut. 
A tax cut sounds wonderful until one works out who gets what. I say to members and to those who are listening that the answer is that if a person earns less than the average wage less than $44000 that person will lose because National will have taken off the KiwiSaver enrolment subsidy. National is to cut $3.5 billion from KiwiSaver funding. That has to come from somewhere and it will come from the workers—from the poor as usual. And who gets what? Well someone on $750000 a year a nice income for a good National Party supporter will get $200 a week in tax cuts which that person does not need. A person on the average wage of $45000 will get $1.92 a week. Whoopee! That will really help at Christmas will it not even if one has not lost one’s job because of the 90-day sacking bill. I thank Mr English very much for the kinder gentler National Party. 
The smiley face of National is hopping from cloud to cloud forgetting to tell people the truth about what was in its policy. What about that superannuation tax credit that National just forgot to mention—that it was cutting the net rate from 4 percent to 3.4 percent. That would not really have pleased the oldies if they had been told about it ahead of time so National did not tell them. The reason that we do not get to test these things is that there is no select committee process. This bill is being rammed through. National knows this bill is not well-thought-out. It is bad economics; it is bad for people. 
This bill will make a lot of our old structural problems worse. Those problems were that people were spending a bit too much because their house valuations were going up and they figured that they could take afford to take on a bit more debt. People did spend beyond their means; there is good evidence of that. But this bill makes that problem worse. It says National will cushion the effects of a short-term recession with a tax cut. The money will not go into investments; it will not do anything for productivity. That was National’s theme in the Speech from the Throne just yesterday when it said it would go for growth and productivity. Nothing in this bill will go into growth; it will go into wasteful spending and into things that will not help our innovators. The bill will not help our exporters will not help our dynamic companies and will not help families who are in need. 
I ask what the bill was supposed to be about. What was it supposed to do and what was the point of this bill? Was it to deliver on an election promise? What did National campaign on? It campaigned on the promise of good open Government and a fresh start for New Zealand. Do members remember those words? Well they lasted about a day into the business of the House. The fresh start for Government meant doing away with the select committee process. It meant doing away with giving the Opposition adequate notice in order for it to prepare a defence. It meant doing away with the constitutional safeguards that New Zealanders hold dear. If the process around this bill is anything to go by let alone the 90-day Employment Relations Act amendment bill outrage that is coming later this week New Zealanders are in for a very very tough time. 
Hey members should not feel sorry for us. We are professionals. We understand that we are here to serve the public. We know that when the public wants us to serve them we will be ready. Members should not feel sorry for us because we are in Opposition; that is another form of service. Members should feel sorry for New Zealanders who are going to suffer from the excesses of a Tory Government that is reverting to type on day one of holding office. They should feel sorry for New Zealanders who will suffer from the abuse of process and get bad economics delivered to them with proposals that are ill-defined and badly quantified do not meet regulatory impact standards have effects that have not been quantified and have loose and shoddy details. 
This bill is a nonsense. It is about who gets what—and those who get it are the rich and those who lose it are everyone with kids and an income of $44000 a year or less. That is the truth of it and that is why we strenuously oppose this bill. This Government has started the slide to 2011 on day one. This will be a one-term Government because New Zealanders hate people saying one thing and doing another. They do not mind hardship if they have voted for it but they really resent being sold something and getting something different from that. This bill is bad economics it is bad for New Zealand and it represents bad process. 
CRAIG FOSS (National—Tukituki) 
: 
 In speaking to the second reading of the Taxation (Urgent Measures and Annual Rates) Bill I want to say that given the speech of the previous speaker the Hon David Cunliffe he may well not last quite as long as the Hawke’s Bay District Health Board did. I think his colleagues were all murmuring as he spoke and what happened last night was very indicative of the support they have for him. Earlier speakers—[ 
Interruption 
]—and I think we are hearing them again—are still fighting the battles of yesterday. They are still fighting the battles of yesteryear. I half expect something about the Viet Nam War and the Springbok Tour to come out and maybe it will in speeches to come. 
The comments about process and select committees were interesting. I think almost every bill amendment bill and budgetary announcement on KiwiSaver was passed under urgency—all bar one the first bill. They were all passed under urgency. They did not go to a select committee etc. The difference between this bill not going to a select committee and the various changes Supplementary Order Papers and amendments that were rammed through under the previous administration without their going to a select committee is a thing called the general election. The thrust of this bill went to the select committee of New Zealand in the general election. Part of our 100-day plan part of our core philosophy and part of our ongoing plan for New Zealand is quite simply an ongoing programme of sustainable tax cuts leading to growth. 
The previous speech was very revealing. The member spoke about people reverting to their true colours or something along those lines. I could not believe my ears when he said that everybody knows that the multiplier on a tax gain is bigger than the multiplier on a tax cut. We now see the justification for Labour taking the top marginal rate from 33c to 39c. And I will concede that it was in its programme that it put before the public—fair enough. But if we take what the finance spokesman said to its logical extreme we find that he is saying basically that we should hike taxes. He spent about 3 minutes talking about the multiplier on tax cuts versus the multiplier on tax hikes. I ask whether Labour is revealing its hidden agenda now that the election is over. Is it revealing what would have been in the mini-Budget of the previous Minister of Finance? Presumably that would have been in December if Labour had got in. I ask whether Labour would have actually hiked taxes because the logic of the previous speaker’s speech was about increasing taxes. 
Hon Darren Hughes 
: Why are taxes going up for people in Flaxmere? 
CRAIG FOSS 
: The gentleman who was the previous electorate member for Otaki asks why taxes are going up. He should turn to his left and ask that question of the gentleman who over the last 9 years was responsible for the greatest tax increase in New Zealand’s history. If he wants to make some further comment he should take a call later on. 
I still cannot understand the logic. If the previous member had actually said something along the lines that conditions are such-and-such and we need to maintain the status quo perhaps I would have found it logical. But when that spokesperson talks about multipliers I ask whether he is talking about hiking taxes. I ask what his policy is. Is his policy to hike taxes now? The logic of what that member just said totally contradicts what the previous Minister of Finance who is sitting behind him said in his Budget of May 2008 when he announced his first series of tax cuts. Dr Cullen himself is on record talking about ongoing personal tax cuts and now you are contradicting him. The factions and splits within the defeated Labour Party are starting to come to the fore. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. I am sure you did not contradict Dr Cullen as this member has indicated. Mr Speaker the Hon Dr Lockwood Smith has indicated that he will be very strict on the incorrect use of “you” and I hope it will apply to the Government as well as the Opposition. 
CRAIG FOSS 
: I thank the member for bringing that to my attention. I apologise to you Mr Deputy Speaker. I will continue. 
We are starting to see some of the splits in the defeated Opposition come through. The Opposition members are contradicting each other on core policy contradicting each other on their vision of what may be needed to take New Zealand forward. This proposal the core policy in the Taxation (Urgent Measures and Annual Rates) Bill went before the public of New Zealand and 3 or 4 weeks ago over 1 million New Zealanders voted for it. 
I will make a couple of other points about something someone spoke about yesterday during the first reading. Opposition members talk about the debt to GDP ratio and someone made fair play of that yesterday. I would like to note that in the 1990s which the Opposition often talks about the previous Prime Minister Helen Clark would often talk about a debt to GDP ratio of 40 percent or even 45 percent at some stages as being prudent. Yes good global economic conditions took New Zealand’s debt to GDP ratio down to about 17 or 18 percent. In the Budget of 2008 it was around those levels. Of course as the skeletons started to come out of the closet and as the ticking time bomb started to tick louder we saw in the Pre-election Fiscal and Economic Update that it was forecast to nudge 30 percent I think with a decade of deficits. Of course those deficits have to be funded in some way. It is interesting that when I point that out the Opposition goes very quiet. 
I will raise two other points. Opposition members constantly talk about low-income earners. Well I will make just a couple of points. There are many low-income earners in New Zealand—the Opposition is quite right—and that is because of the last 9 years of a Labour Government. Incomes have come down somewhat compared with those of comparable economies around the world. That is why there are a lot more lower-income people in New Zealand than in comparable economies and that is why many of those people voted the National Party into Government and threw the Labour Party out. I would like the member opposite the Hon Darren Hughes who is interjecting to note that. 
Everyone needs a doctor at some stage. We all want police we all want chippies we all want plumbers and we all want good teachers. We want all those people and funnily enough all those people are on the highest marginal tax rate in New Zealand 39c. It is those people who have been leaving this country in droves for a brighter future elsewhere after the last 9 years of a Labour Government. That is why they have been going across to Australia. We all have friends family and whanau over there who are getting a higher after-tax income than they could get here after 9 years of the previous administration. Low-income earners in New Zealand have to pay more for their plumber chippie truckdriver—you name it—because they have all gone to Australia. We are trying to build an economy that is attractive enough to bring them home. 
I will make one other point. It has not been mentioned but it needs to be mentioned because there has been talk of debt funding etc. Somebody was talking about debt projections etc. Well I ask what the total quantum of the Accident Compensation Corporation (ACC) mess is. The people over there in Opposition must have a fair bit of knowledge of it. I ask them for the total quantum. I ask them to give it to us to the nearest $50 million. The Government accounts are not narrowed down to the nearest cent; they are approximate and there are contingent liabilities in there. You ask us for a debt projection; I ask you to put on the table all your knowledge about all the— 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. 
Mr DEPUTY SPEAKER 
: I know what the Hon Trevor Mallard is going to say. Members cannot use the word “you”. It brings the Speaker into the debate and that is not allowed. 
CRAIG FOSS 
: I apologise again Mr Deputy Speaker. 
I ask members opposite who have any knowledge of any other black holes of any other ticking time bombs to put them on the table. They should put them on the table so that we have full knowledge of them. Then and only then will you see the forward projections that you are demanding right now. I suspect that the reason you want those projections so badly is that you know there are more ticking time bombs to come. 
There are two questions left hanging. The ACC annual report did not have anything in it about this nonsense. Under the New Zealand International Financial Reporting Standards there is an obligation to put— 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. It is not your report. 
CRAIG FOSS 
: I did not say that. 
Hon Trevor Mallard 
: That’s exactly what you said. 
Mr DEPUTY SPEAKER 
: The member cannot use the word “you” or “your”. Please confine your debate to the subject and do not use those terms. 
CRAIG FOSS 
: Thank you Mr Deputy Speaker. I did not mean to use that word and if I did I apologise. I meant to say “the report”. 
Under New Zealand International Financial Reporting Standards which the ACC’s accounts and annual reports are prepared under this mess should have been noted. The Government accounts are prepared under those standards so the Pre-election Economic and Fiscal Update should have noted this mess—at least in the contingent liabilities. Where was any mention of the ACC mess? Where was anything about the Government Shared Network mess? What other messes have we got coming? 
New Zealanders should be very very fearful of the legacy of the previous administration. We are discovering more and more by the day and it is not a pretty picture. Members opposite are fighting old battles because they do not want to talk about the future and they do not want to talk about the appalling state they left the books in. 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 The reason we are fighting old battles all over again is that the National Party is fighting its old positions all over again. This is 1990 all over again. What was the key phrase in yesterday’s Speech from the Throne? It was “We’re going for growth.” Well who made that slogan up? Ruth Richardson said in 1990 “We’re going for growth.” and frightened the hell out of everybody as soon as she said it. What were the first two things that that Government did? It abolished employment equity and it started cutting the incomes of the poorest New Zealanders. What are this Government’s first two measures? It is introducing fire-at-will provisions and it is cutting the incomes of many of the lowest-paid New Zealanders. This is 1990 all over again from the National Government. 
But the most extraordinary thing today was that Mr English the Minister of Finance gave a second reading speech in which he failed to answer a single question that was raised in the first reading debate because he had no answers. All he did was say “Oh somebody in the Labour Party had some dirty tricks in the election campaign.” Well that is pretty rich coming from the man who organised the leak of emails about Don Brash in 2005. That is pretty rich coming from that particular member. 
But he put up the most extraordinary argument and I want to go over it again. He said that the Labour Party lost the election because it failed to put the National Party’s policies under sufficient scrutiny. In other words Mr English said that his policies were so weak in detail that if we had debated those policies in detail National would have lost the election. That shows real confidence in what it went to the country on in 2008. That argument says “Our policies were rubbish and why didn’t you rubbish them and save me the Minister of Finance from having to move this rubbish policy through Parliament under urgency?”. That I think is the most extraordinary argument I have ever heard from a Minister of Finance. Indeed it went further. He said that because we did not do so that was a justification for passing this rubbish policy. Goodness knows what else is going to be “justified” by us in being passed. 
The attitude in Mr Foss’s argument was that if something were in the National Party manifesto it need not go to a select committee. Well that is going to leave select committees free from the rest of the work for the next year or two since presumably most of the work coming through is somewhere within the National Party manifesto. 
These questions were not answered by Mr English. Why is National increasing taxes on low-paid workers? Why is it increasing taxes on low and middle income families compared with what is now in the law—not some announced policy by the previous Government but in the law—to take place in 2010 and beyond? We have the ACT Party which stands for cutting taxes no matter what voting for increases in taxes in the House today. Why is the Government cutting research and development in the private sector? Why is it cutting savings? Why is it not costing its claim of an increased take-up with the lowering of 4 percent to 2 percent and has it considered the issue of portability with Australia? 
We are told that the whole point of National’s policy is to stop people going to Australia yet what is one of the main attractions of Australia for workers? Workers in Australia get a 9 percent payment into superannuation funds paid by their employers. Under KiwiSaver workers are still going to pay 4 percent but they can expect 9 or 10 percent to go into their superannuation fund. This bill will cut that back to 4 percent or 5 percent and the worker could end up paying the full 4 percent contribution thanks to other changes that will come through later this week or sometime on Saturday. That is the reality. That is a real disincentive. 
But it is worse than that. If as I believe is likely to be the case the Australian Government says the superannuation portability is off the table because there is no longer a match between KiwiSaver and that Government’s compulsory scheme then Kiwis in Australia now will be locked into Australia. They will not be able to come back to New Zealand because they will not be able to get portability from their Australian scheme into KiwiSaver. Under portability they were going to be able to transfer their Australian funds into KiwiSaver; they were going to have the option of moving back. High-quality Australian professionals and managers were going to be able to come to New Zealand and continue a scheme and be able to move back to Australia if they wanted to later in life and that option that choice was important to attract people over here from Australia. So what is the purpose of doing this? 
It is clear that National has never thought through that issue. It is clear that National members have not talked to the Australian Government. It is clear from the stunned mullet looks on their faces that their caucus has never discussed this issue. It is clear they still do not know what it is they are doing in that particular respect. The member Shane Ardern can drive his own personal tractor up the stairs of Parliament as often as he likes; that is not going to bring anybody back from Australia. But having a proper superannuation scheme with portability will bring people back from Australia despite a National Government within New Zealand. 
Of course the other thing we learnt from Mr English—and I tell Mr Flavell that I hope Maori Party members were listening—was that there has been a blow-out on Treaty settlements. Did Mr Flavell hear that? No he did not hear that. He as usual whenever the National Party is talking now puts his ear plugs in so he cannot hear what is being said because he does not want to know. He has been parading around the marae and at those huge hui with 10 or 12 people with Maori activists because the public was not supposed to know where the meetings were being held saying: “We’re going to deliver everything to you. We’re going to deliver the ownership of the foreshore and seabed. We’re going to deliver mana-enhancing measures all over the place.” 
Well let us go through the mana-enhancing measures in this bill. There are increases in tax for those earning $14000 to $24000 a year. Does that sound like a group that might have a disproportionate Maori content within it? There are increases in taxes on families—all families with kids—earning under $44000 a year. Does that sound disproportionately like Maori families? Has this member enhanced the mana of those families in voting for those increases in taxes? He voted for it yesterday. He will vote for it today and he will vote again and again and again. I tell Mr Flavell that the cock will not crow just three times; it will crow many times during this day today. He will not be such a big man on the marae now when he goes back. He is going to have to explain with Mita Ririnui present why he voted to increase taxes on his constituents. Why will he be voting for a measure that enables lower-income workers with very little bargaining power to have the employer contribution to KiwiSaver transferred to the employee? Does that sound like a group of workers who are disproportionately Maori? It sounds like it to me. 
The five Maori Party MPs have sold their souls for not even a mess of pottage—for not even a spoonful of pottage. They have sold their souls for an empty promise to enhance not the mana of Maori but their own mana. That is what that agreement was about and they are launching down the same track as the New Zealand First Maori MPs from 1996 to 1999. They will be dog tucker at the 2011 election because their mana is not going to be enhanced. Mrs Turia can drive up with the entire whanau in the VIP car to the 2011 election campaign and Mr Sharples can drive up to his marae in the VIP car in 2011 but they will find silence on the marae which is the bit that will tell them they are in the most trouble. That is what they will find in that particular regard. 
This bill cuts private sector research and development investment. It is a dumber economy. It increases taxes on low-paid individuals. and it increases taxes on superannuitants and beneficiaries who are earning a bit more and working a bit more trying to make their way in the world; it cuts taxes for the chief executive of Telecom. It produces a dumber society with slightly lower taxes lower growth rates lower productivity and greater inequality and more people will stay in Australia. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I rise to speak to the second reading of the Taxation (Urgent Measures and Annual Rates) Bill. The Green Party will be voting against this bill for a number of reasons. The first reason is that we think we can use the tax system to incentivise activities or to disincentivise and in the first instance this bill decreases incentives to save. Green Party members in general have supported the KiwiSaver scheme. The scheme has always had some problems; it was a far from perfect scheme. We were dubious about whether it would increase the overall savings rates or whether it would simply transfer them. We were worried about the impact on Government savings due to the cost of the scheme. We were also worried that we were using taxes to subsidise inequality in retirement income between those who could afford to save and those who could not. Nonetheless it seemed to us that the KiwiSaver scheme was a sensible approach to try to increase savings. We think that the good part of this bill is that it introduces the 2 percent option which the Green Party always supported and there was a lot of support in the select committee for that. We also think that allowing low-income earners to get the full $20 a week is a positive thing. But overall the bill decreases incentives to save. 
The Green Party supports tax shifting. We support taking taxes off incomes and putting it on resource use and pollution. However this bill does a different kind of tax shifting. It takes tax incentives off savings to give income tax cuts. In terms of a long-term strategy for a nation with a chronic current account deficit we think that it does not make any sense to reduce incentives to save. From our point of view we think that we need to increase incentives to save. Having a bill—one of the first bills that the Government has brought into the House—that actually decreases incentives to save does not make any sense to us. 
The second reason concerns the stimulus package. Is this the best way to deliver a stimulus package? When we pass on these income tax cuts they are going to be either spent or saved in one form or another. If they are spent then a good proportion of that spending will be on imported goods—that is the Government will borrow money from overseas in order to pass on income tax cuts so that people can then purchase goods from overseas. Effectively we are borrowing money from overseas in order to stimulate someone else’s economy. A large part of the income tax cuts will simply be used to stimulate someone else’s economy as people purchase goods and services from overseas. It seems to us that this is not the most sensible way to set up a stimulus package. 
The other thing that will happen is that if people save that will not have any stimulatory effect at all. That is not necessarily a bad thing in order to increase savings and to reduce household debt but it is certainly not a good way to stimulate economic activity. It seems to us that if we were to put together a sensible economic stimulus package to save New Zealanders’ jobs and to keep the economy ticking over at a time of recession then it would be much better to invest in infrastructure than to have tax cuts. 
We think that the infrastructure we should be focusing on should be infrastructure that does not produce demand for imported goods. One of the best ways to have that of course is to build houses and to have home insulation. This country desperately needs affordable housing. There is a tremendous shortage of affordable housing. If people could have affordable housing they would be far less in need of income tax cuts. What better way is there to build affordable housing than to build the kinds of houses that the Prime Minister grew up in? The Prime Minister got a hand up so that he could get ahead in the world because he had access to State housing. But now the Government has decided to cap State housing so that other people cannot get a hand up. It seems to me that we should give a hand up to people so that they can have affordable housing. Building infrastructure is a much better way to have a stimulus package than simply giving out income tax cuts. It is a much better way to stimulate an economy and it means we get something that is worthwhile as well. 
Building sustainable infrastructure not only is a much more sensible stimulus package but means we get long-term investment in our society and our economy. If we invest in public transport for example we can prepare ourselves for the future in which climate emissions will be constrained because unlike the ACT Party the world has understood science. The world is getting its head around climate change and we need to invest in public transport. In the long term also oil prices will continue to go up and we need a world in which we have the capacity to get around. With public transport we would be producing fewer greenhouse emissions and using less oil so actually having a stimulus package that invests in sustainable transport is a much better option. 
A much better option also is to invest in sewerage schemes. It is a disgrace that right around this country we have very poor-quality sewerage schemes that are pouring sewage into our harbours and people are unwilling or ashamed to eat the food from those harbours because it is contaminated. It is not very good for our tourism industry either. If I were the Minister of Tourism I would be very interested in a stimulus package that improved the sewerage schemes around our country so that tourists would not come here and discover that the beaches make them sick. That seems to me a much better stimulus package than giving income tax cuts which will simply result in a very short-term stimulus to someone else’s economy. 
We should also be investing in trees. Planting trees on eroding land would be a much better stimulus package than these tax cuts. We have a major problem across this country of eroding land and land eroding into rivers and the best thing to do about it is to plant trees which is good for our greenhouse emissions. One of the problems we will have is that our greenhouse emissions will go through the roof and that will be incredibly expensive for us as a nation and it will be a major problem for our taxpayers. Taxpayers will have to foot the bill because this Government wants to weaken the emissions trading scheme so that taxpayers pick up more of the debt. If we plant trees on eroding lands not only will we reduce erosion into our rivers and lakes but we will also sequester carbon which will mean that we have fewer greenhouse emissions less debt and less of an impact on the taxpayer. It seems to me that a much more sensible stimulus package is to employ people to plant trees on eroding land. We should be focused on the long-term future of our economy. Making the investments in infrastructure that we will need for the long term is a much more sensible way to deliver a stimulus package than having a set of tax cuts. 
Then we come to the process issue about this bill. It is with sadness really that I see that the explanatory note says “However due to the time frames involved the RIA consultation requirements have not been met.” 
Hon Darren Hughes 
: Who’s the Minister in charge of that? 
Dr RUSSEL NORMAN 
: I think the Minister in charge the new regulatory responsibility Minister or whatever he is called is of course the ACT member the Hon Rodney Hide. 
It seems to me extraordinary that the very first bill that this new Government brings in does not have a proper regulatory impact assessment. There has not been sufficient time for the very first bill to have a regulatory impact assessment. So all that talk was bunkum—it does not mean anything. When it comes down to it it is a case of just ramming the bill through. Who cares about a proper regulatory impact assessment? After all the Government members will just ram the bill through so they can deliver tax cuts to their mates. So that is an incredible act of hypocrisy. 
Then we come to the idea of a broad-based tax rate. This bill talks a lot about how we need low tax rates and a broad-based tax system. One of the ways to do that—and it says this in the notes on the bill—is to tax investment gains. I notice that even though there is support for a low-rate broad-based tax bill what we are really getting are just lower rates that are not broad-based. There is no move within this bill to actually broaden the tax base to cover capital gains which is something that is missing in the New Zealand tax system—unlike the systems of pretty much every other OECD country. The Green Party supports a capital gains tax—excluding the primary family home—to broaden the tax base which is supposedly one of the objectives of this bill. But the bill does not actually broaden the tax base. We also think it should broaden the tax base by taxing resources. We would like to see some of those elements in the bill but unfortunately they are not there. 
I will not touch on the issue of research and development because I think that has been covered extensively in this discussion but I will note the inequity of all this. I asked the Parliamentary Library to do some work about it. I asked how much less in tax someone earning $30000 a year will pay after 1 April 2011. They say that under this bill that person will pay $160 less per year. Someone earning $250000 will pay $5160 less income tax per year. So that does not seem to me to be a very fair or progressive way to run the tax system and it looks as if the Government is just passing a bill that will benefit rich people at the expense of poor people. Why would it support a system whereby someone on $30000 gets only $160 less tax while someone earning a quarter of a million dollars pays $5000 less tax? That does not seem to me to be a very fair system. 
This bill has not been well thought out. It is being rammed through. It is not a good bill. It gives bad incentives. Why does the Government not go and have a think about it and come up with a better bill? 
Debate interrupted. 
Points of Order 
Bills—Availability in Urgency 
Hon DARREN HUGHES (Senior Whip—Labour) 
: 
 I raise a point of order Mr Speaker. Over three-quarters of an hour ago the Opposition raised with you the point that subsequent bills in the urgency motion were not on the Table of the House and the Opposition was not being given the opportunity to read the bills before we were due to debate them. You undertook to get that situation resolved for us Mr Deputy Speaker but I see that the bills are still not present for us to look at. We have some substantial pieces of legislation coming before us that we have not had a chance to read before the debate on them. I would like to know what progress you have made since you undertook to do that for the House. 
Mr DEPUTY SPEAKER 
: I have sought advice. Standing Order 263 sets out the general rule but it does not deal specifically with bills introduced under urgency. There is no requirement to table a bill prior to its introduction but bills must be tabled at their introduction. 
Hon DARREN HUGHES (Senior Whip—Labour) 
: 
 I raise a point of order Mr Speaker. I know you said that under urgency the situation is a little less clear than what it would normally be. In the normal course of events a bill is introduced and it sits on the Table for 3 days before it is available for a first reading thereby giving everybody the chance to read it before the debate. Urgency does change those rules slightly and you have informed the House of that. But I wonder whether the junior Government whip could give the House an indication as to when members of Parliament might have the chance to look over legislation that we are soon to be debating. We had an understanding from the Government that it will make that information available but nothing seems to be happening. We need to get some sense of clarity on that because we— 
Hon Annette King 
: He’s on the phone. 
Hon DARREN HUGHES 
: I see he is on the phone now. He may well be on the phone to the Leader of the House to get that information. But it has now been quite some time since the House took urgency and in terms of decency and fairness we need the chance to be able to read bills that will be coming up for debate directly after this one. It is just not right to be doing things in this way. 
Mr DEPUTY SPEAKER 
: I understand the point you raise. There is however no requirement for a bill to be tabled prior to its introduction but it must be tabled at the time of its introduction. 
Taxation (Urgent Measures and Annual Rates) Bill 
Second Reading 
Debate resumed. 
Mr DEPUTY SPEAKER 
: The House is resumed. 
John Boscawen 
: Mr Speaker— 
Mr DEPUTY SPEAKER 
: Is the member seeking the call? 
John Boscawen 
: Yes. 
Mr DEPUTY SPEAKER 
: You have not given your maiden speech. If you were to speak now it would be deemed to be your maiden speech. 
John Boscawen 
: Yes it is. 
Mr DEPUTY SPEAKER 
: Yes it is? I take it that the member is seeking the call. If the member speaks now his speech will be regarded as his maiden speech. He will not get another chance to make a maiden speech if he speaks now. 
John Boscawen 
: I pass the call then. 
CHRIS TREMAIN (National—Napier) 
: 
 Kiwis are breathing a sign of relief at the speed with which this new Government is addressing the work order that we took to the electorate over the election period. We have put our new bill on the Table and we are making progress already. You know this is what New Zealanders have been wanting for the last 9 years—a Government that is focused on its agenda focused on the issues that matter and making progress. Even just in the last few weeks I have been out in my electorate of Napier talking to my constituents. Do members know what they are saying? They are saying “Thank God we have a Government in there now that is focused on the issues and on taking this country forward.” That is what they have seen have they not? 
Our constituents have seen a Government put together within 7 or 8 days—quick-smart action. They then saw a Cabinet put together within a couple of weeks—action again. Then our Prime Minister—an aspirational Prime Minister—quickly went to APEC then to London to get a feel for the world financial crisis and an understanding of what global leaders were doing with that crisis. Then he came back here and made sure that the promises we took to the electorate were being delivered today. So here we are in the second reading of the Taxation (Urgent Measures and Annual Rates) Bill which delivers on that agenda. That is why constituents out there are saying “Thank goodness we are seeing a Government that is focused on the issues and taking the game forward for us.” 
The second reading of this bill includes changes to personal tax rates and thresholds and I will talk to that in some detail as we go through it. It also includes the introduction of a new independent earner credit for middle-income New Zealanders. Those are the Kiwis out there the battlers who have continued to be pushed into higher tax brackets—the teachers the policemen and the wharfies. They have been the traditional constituency of the Labour Party but they have been forgotten about by that party over there and they have been pushed into continually higher and higher brackets. That is why those members are sitting on that side of the House today and we are sitting on this side. We are focused on the issues and on addressing those tax thresholds. We are bringing those hard-working Kiwis back to a level of taxation that is affordable for them and where they can ensure they can put bread on the table for their families. Those families do not have access to the support that has been delivered over the last 3 years. They have continued to be pushed into higher and higher tax brackets and that has hurt them so we are unashamedly focused on those taxpayers in this bill. 
The third area I will focus on is the changes being made to KiwiSaver making it more affordable and sustainable. I will also touch on the repeal of the research and development tax credit. 
It is important that this bill be passed into law and passed into law quickly. We made that commitment to the New Zealand electorate. Today we have heard speeches from the other side of the House saying that there is no regulatory statement or that the bill is not going to a select committee. But we made it clear to the electorate that we had a 100-day agenda. There is no confusion out there among the public about that. We told them on countless occasions in every newspaper in the country—except for the Melbourne 
 Age  
newspaper which was where as my leader pointed out the other day many members of the Labour Party were flicking around in the underground and trying to dig up dirt on our leader. No it was not in the headlines of that paper so they probably missed it. But our 100-day agenda was in the  
Dominion Post 
 and the  
New Zealand Herald 
 and 
in 
just about every major daily so Kiwis knew we had a big agenda and they are proud to see a Government standing up there now and delivering on that agenda. I think it is absolutely fantastic; I am proud of that and it is great to see us taking this forward. 
I will also talk about the repeal of the research and development tax credit which is a tough decision we had to make when we laid out our tax cut agenda. We knew that that would cost some money and we had to make some hard calls going into the election. Again we stood on the platform and said that these were the things we would address. When Labour rolled out their one or two policies that had any innovation at the election there was no costing around those. There was no “Oh we’ll actually change this and pull that back.”. There was absolutely no costing whatsoever above the pre-election fiscal update; it was an absolute joke. 
Anyway I will focus on the tax changes we are talking about and look at the provisions of the bill. As members have heard there are reductions to personal tax rates and particularly to thresholds. As I said earlier the hard workers of our community—the social workers the teachers the wharfies—who have got into higher and higher tax brackets will actually have those thresholds brought backwards. That will not increase tax. I do not know what papers the Government is looking at but if we look at tables for 1 April 2009 we see that that middle-income tax threshold is coming back to $48000 so people will pay only 21c in the dollar on an income of under $48000. By 1 April 2010 that threshold will increase to $50000 so again we are focusing on those in that middle-income bracket and they will still pay only 21c in the dollar. Then from 1 April 2011 the rate for that threshold will actually move down to 20 percent. 
Moana Mackey 
: Why are you putting taxes up for poor people? 
CHRIS TREMAIN 
: So I say to Moana Mackey that everybody benefits from that: if they are earning anything between $14000 and $50000 they will benefit from a reduction from 21 percent to 20 percent. I ask Moana Mackey to tell me how they would not benefit from that. How would they not benefit from that? That is a reduction from 21 percent to 20 percent. Those lower-income earners—we are not talking only about middle-income earners here; we are talking about lower-income earners—will benefit not only from the increase in the threshold level but also from the reduction of the rate from 21 percent to 20 percent. Hold on I will say that again: we are taking the tax level from 21 percent to 20 percent. 
Hon Phil Heatley 
: Is that up or down? 
CHRIS TREMAIN 
: Hold on—that is down! That is for a threshold of between $14000 and $50000. I would have thought that that covered a fair chunk of middle-income New Zealand and probably an even bigger chunk of lower-income New Zealand. I ask those members to tell me how people will not benefit from that. Oh it has all gone quiet over there now! This tax bill will actually deliver the changes we need and I think it is fantastic. The cuts will be delivered through the PAYE system which will be good for employees and if someone is an independent contractor that person will be able to have that delivered through his or her tax return at the end of the year. There will be no immediate changes to the tax rate structure that applies to portfolio investments but that will be addressed by 1 April 2010. 
I just want to talk about the independent earner tax credit. This tax credit really hits those battlers out there who have had no benefit from the Working for Families tax credits. There are 600000 people who qualify for this—600000 of the hardest-working New Zealanders who go out there day in day out paying tax and allowing our Government to make tough decisions about how we allocate that money. Let us understand that it is not our money; it is theirs and 600000 Kiwis have totally missed out on that. They have been part of threshold rises the whole way and they have just been taxed and taxed more and more. It is time we were dealing with that through the independent earner tax credit which will ensure that we start to deliver—and I say “start” to deliver—some rebate back to those middle-income earners. So from next year the credit will be worth $10 a week rising to $15 per week from 2010. It will be abated at 13c for every dollar of income earned over $44000 and as I have said 630000 people will qualify. Again I ask how that is not addressing a big chunk of the electorate. That 630000 is a huge proportion of our workforce being addressed. They have not had even one iota of tax reduction in 9 long years. 
I think this bill is a massive step in the right direction. We have gone out to the electorate and told them that we will deliver tax cuts and here we are within 32 days out there actually doing that—delivering on our promises building trust and delivering on what John Key said he would do. This is a good bill and in the second reading I recommend it to the House. Thank you. 
Hon RODNEY HIDE (Leader—ACT) 
: 
 I raise a point of order Mr Speaker. I have looked through the Standing Orders and the Speakers’ rulings and I can find no rule that precludes a new MP from speaking under urgency because if he or she did so then he or she would have to forgo his or her maiden speech. The ACT Party agreed to the Address in Reply debate being broken into to do this urgency on the basis that we would be able to contribute to the debate. Mr Deputy Speaker what you have done I think is make a new ruling—which is your right as Deputy Speaker—which essentially precludes the ACT Party from contributing to this important debate. I have two MPs here who are willing and ready to contribute and I would like you either to point out to me the Standing Order or Speaker’s ruling that says that if John Boscawen or David Garrett speaks under urgency he therefore cannot give a maiden speech in the Address in Reply debate when Parliament resumes it or to tell the House that you are making a new ruling. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 It might seem somewhat unusual for me to come to the aid of Mr Hide but I think the position that he has outlined is correct. There is an expectation that maiden speeches are made as part of the Address in Reply debate. That does not necessarily have to be the case but as far as the Standing Orders are concerned and given the times available and the approach we are taking there is certainly that expectation. I am going a long way back in my memory but I have vague memories of members back in the 1980s speaking on Committee stages of bills or in fact on estimates before they made their maiden speeches. They certainly asked questions before they made their maiden speeches. So the idea that people cannot get on their feet before their maiden speech or that by getting on their feet they lose their right to a maiden speech I think is incorrect. Mr Deputy Speaker if it would help you I indicate that the Labour Opposition would not object to a leave-type arrangement in order to protect you but I think your ruling was wrong. 
Mr DEPUTY SPEAKER 
: Thank you Mr Mallard. The Standing Orders allow maiden speeches to be made during the Address in Reply debate—that is Standing Order 350—and provide for additional time to be made available for members to make maiden statements. The Address in Reply debate takes precedence over other business and therefore in normal circumstances new members would make their maiden speeches before speaking in any other debate. One of the consequences of our adjourning the Address in Reply debate is that the opportunity for maiden speeches has been delayed. I take on board the point that Mr Mallard just made and I am prepared to allow the member John Boscawen to seek leave to speak if that is the wish of the House. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I raise a point of order Mr Speaker. I think I would prefer you to go further than that to start with and to rule that the speech he shall give is not a maiden speech because it is not part of the Address in Reply debate. I think we should not have to seek leave to deviate from a ruling that appears to be wrong. 
Mr DEPUTY SPEAKER 
: Thank you. I will seek some advice from the Clerk. I am prepared to allow John Boscawen to take the call. I make it clear that his speech is not his maiden speech. He will speak for 10 minutes with a warning bell at 8 minutes. 
CHRIS TREMAIN (Junior Whip—National) 
: 
 I raise a point of order Mr Speaker. I have a question: if this speech is allowed to occur what precedent does that set for the rest of the debate on the items in the urgency motion in terms of allowing new members to take calls in the Committee stage and other stages of debate? I need to have that question answered first. 
Hon RODNEY HIDE (Leader—ACT) 
: 
 The point is that it is not a precedent. The point that Mr Mallard and I are making is that it is perfectly within an MP’s right to stand up and take a call to speak in Parliament and then when we go back into the Address in Reply debate to give his or her maiden speech. The Deputy Speaker is not making a precedent with this ruling; the precedent would be to say that new MPs cannot speak under urgency unless they forgo making their maiden speeches. This is not a precedent ruling; it is simply the Standing Orders. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I would go one step further than Rodney Hide has gone. It is not a precedent because it is not new in my understanding. But to answer the question the junior Government whip asked I say that it is clear that other new members will also be able to speak in the first readings of bills the Committee stages and the second and third readings and not lose their maiden status. 
CHRIS TREMAIN (Junior Whip—National) 
: 
 I want to indicate to ACT that if that is the case then there is not a clear ruling and that we would deny leave for that request. 
Mr DEPUTY SPEAKER 
: We do not need to ask for leave. There is no precedent being set. I shall seek further advice if members will wait for just one moment. Yes I can confirm that allowing a new member to speak now does not curtail his or her opportunity to make a maiden speech of 15 minutes during the Address in Reply debate. 
JOHN BOSCAWEN (ACT) 
: 
 I thank the Deputy Speaker and I thank Mr Mallard— 
Hon Darren Hughes 
: The Labour Opposition is here to help. 
JOHN BOSCAWEN 
: I thank the Labour Opposition and I say long may it remain the Labour Opposition. I am proud to be part of the new National - ACT - Maori Party Government and to speak in support— 
Hon Members 
: Say it again! 
JOHN BOSCAWEN 
: I will say it again. I am proud to be part of the new National - Maori Party - ACT Government and to speak in support of the Taxation (Urgent Measures and Annual Rates) Bill. 
I will start by referring back to yesterday’s Speech from the Throne. I quote: “The driving goal of the new Government will be to grow the New Zealand economy in order to deliver greater prosperity security and opportunities to all New Zealanders.” The driving goal will be to grow the New Zealand economy in order to deliver greater prosperity security and opportunities for all New Zealanders and nothing is more fundamental to driving prosperity than a taxation system that encourages thrift enterprise and hard work. How appropriate it is that one of the first moves by the new National - ACT - Maori Party Government is the introduction of this tax bill which makes a number of significant changes to our taxation system. 
First of all the bill introduces a regime where by 1 April 2011 80 percent of taxpayers will be paying 20c or less in every dollar in tax. Secondly it introduces a reduction in the top marginal tax rate—initially from 39 percent to 38 percent and then to 37 percent. I say that that is the first step because I believe that the top marginal tax rate should be a lot lower than 37 percent. I thought it was very appropriate that the Hon Michael Cullen asked a question of the House a few minutes ago when he asked what the main attraction was of going to Australia. What is the main attraction of going to Australia? Let me tell Dr Cullen that the main attraction of going to Australia is the standard of living in Australia where net wages after tax are a full 25 percent higher than in New Zealand. 
What a contrast there has been between the first move of the National Government and the first move of the previous Labour Government. When the Labour Government first came to power in 1999 it moved to increase the top marginal tax rate from 33c in the dollar to 39c in the dollar. Since that time we have had the Labour Government’s 2001 McLeod Tax Review which recommended that the top marginal tax rate should drop back from 39c in the dollar to 33c in the dollar. Did the previous Labour Government listen to the advice of its own advisers on the McLeod Tax Review? No it did not. I say that this is the first move of the National Government in this area because we in the ACT Party believe that the top marginal tax rate should be a lot lower than 37c in the dollar. 
When Dr Cullen introduced the bill in 1999 to increase the top marginal tax rate he said that 95 percent of people would not be asked to pay more tax; instead only the top 5 percent of income earners would pay more. That has never been the case and over the last 9 years more and more New Zealanders have moved into the top income threshold of $60000. More and more New Zealanders have been penalised for working hard and making sacrifices in order to get on and improve their lives. They have been penalised for doing that with the “envy tax” of 39c in the dollar. That overtaxation has cost New Zealand families hundreds of millions of dollars. It has cost New Zealanders jobs growth and lost opportunities. Why is that the case? It is because the taxation system has sent a message to all New Zealanders that we do not recognise hard work. It tells them we do not recognise hard work thrift and enterprise. It says we want to have a regime in New Zealand that penalises people who want to study go into higher paying jobs work hard and try to provide a higher standard of living for their families. 
My colleague the Hon Sir Roger Douglas commented on Government expenditure in his speech to the House yesterday. He talked about how the rate of Government expenditure had increased over and above the rate of inflation by $18 billion over the term of the last Labour Government—by $1000 a month or $12000 a year per capita. In order to have lower taxes one has to first get Government expenditure under control. By allowing Government expenditure to grow by more than the rate of inflation on a per capita basis Labour has cost the average income earner in New Zealand over $12000 a year. 
I say to Mr Cullen—who asked what the main attraction was for people to go to Australia—that the main attraction is for people to enjoy a higher standard of living with a top marginal tax rate that does not cut well into incomes in excess of $100000. What has the regime been under Mr Cullen’s Government? It has been a top marginal tax rate of 39c in the dollar on income over $60000 a year. 
The ACT Party as the party that encourages individual responsibility enterprise and thrift has always opposed Labour’s tax hikes. ACT has been the only party in this House that has been consistent in its approach to tax. We have advocated tax cuts since the party’s inception in the mid-1990s. 
Hon Darren Hughes 
: Why is the member voting for increases? 
JOHN BOSCAWEN 
: I am voting for a reduction in the top marginal tax rate from 39c in the dollar to 37c in the dollar and I am saying that it is far too high at 37c in the dollar. I say to the member that if his Government had managed to control Government expenditure and keep increases to the rate of inflation the average New Zealander on the average income in this country would be $1000 a month or $12000 a year better off. I campaigned at the last election on a policy that would hold increases in Government expenditure going forward from 2009 at no more than the rate of inflation. We are five MPs and by 2011 we expect to be a lot more than five MPS. Our forecasts show that if we can maintain increases in Government expenditure at a rate of no more than the rate of inflation by 2018 we can have a flat marginal tax rate of 20c in the dollar. 
In 2005 the Labour Party had the opportunity to reduce the tax burden on hard-working New Zealanders. If the Labour Government had implemented the tax rates that the ACT Party suggested at that time the previous Government could have added 1 to 1.5 percent growth in the economy which would have put New Zealand in a much better position to cope with the recession that we are now in. We have now led the OECD countries into the recession. 
This bill talks about tax rates changes to KiwiSaver and a number of other tax-related issues. Let us talk about KiwiSaver. 
Hon Darren Hughes 
: Yeah let’s— 
JOHN BOSCAWEN 
: Let’s talk about KiwiSaver and let us talk about the people that you purport to represent. 
Mr DEPUTY SPEAKER 
: The member cannot use the word “you”. That word brings the Speaker into the debate. 
JOHN BOSCAWEN 
: I am sorry Mr Deputy Speaker. We have 800000 people enrolled with KiwiSaver and without doubt KiwiSaver has been a tremendous success—far in excess of what the Labour Government expected. But we have to look at who those 800000 people are. Are they ordinary working men and women on the average ordinary wage? Can those people afford 4 percent or are they people who have been attracted by the massive incentives and particularly parents who have encouraged their children—and infant children in some instances—to take advantage of the very generous incentives? As the Hon Bill English said when introducing this bill the recession is now upon us and we have reached the stage where we can no longer afford those incentives. 
If we are to improve the livelihoods and living standards of ordinary New Zealanders we have to increase productivity in this country. There is more to it than reducing taxes. There is more to it than the changes to the KiwiSaver scheme. There is a need to reform the Resource Management Act. There is a need to build infrastructure. There is a need to improve the roading system and to complete the roading system in Auckland. 
Thank you for the opportunity to speak. I say the ACT Party will be supporting this bill. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I congratulate the previous speaker John Boscawen on taking the opportunity to make a speech on this occasion and I say that that is about all I agree with him on. 
I repeat one of the comments I made to Sir Roger Douglas last night—that is that I am very very surprised that the ACT Party is supporting a bill that increases tax for quite a large group of people. More than that it introduces a big area of inefficiency and bureaucracy in the sense that the credits involved will require an army of bureaucrats to implement. It complicates the tax system much more than is necessary and it increases the top marginal tax rate for a very large group of people. 
The very thing that Sir Roger Douglas told us was most important as far as tax rates are concerned was the top marginal tax rate and here we have ACT making the top marginal rate higher for a large group of New Zealanders. ACT members are removing or reducing the very incentives that they tell us are so important. 
I will also make a comment or two to the Maori Party. I thank those members for not taking their call and for giving the Labour Party an extra call again. I say to Mr Flavell that we remember. We remember seeing Maori Party MPs going around the country and saying that they wanted a tax-free area up to $25000. That was their policy: nil tax to $25000. You know one would think that if that was their policy then their minimum position would be that every tax change heads in that direction. But what do they do? They vote for a bill that puts tax up for low-income people. And who are those people? They are much much more likely to be Maori proportionately than Pakeha. 
The Maori Party members are putting tax up especially for people who have families people who have a couple of low incomes and have kids and people who are struggling on incomes in the $20000s and the low $30000s. They are the group of people whom the Maori Party was kind enough to support in terms of Working for Families and now they are the ones who are being punished by the Maori Party because it is following blindly behind National. 
What is Mr Flavell going to say to that family whose dad earns $33000 and whose mum earns $22000 in a bit more than a part-time job who have a couple of kids and who are in KiwiSaver? Does the member know how much their net income will go down? Between $60 and $70 a week. Those people will have $60 or $70 a week less under the National-Act-Maori Government as it was described. 
I say to Mr Flavell that I want to come on to the marae with him as well. Not only does Mr Ririnui want to do that but I want to be there as well. I want to hear him explain how it is mana-enhancing to take $60 or $70 a week off some of the poorest Maori families in New Zealand—$60 or $70 a week from some of the poorer families compared with what the law says they would get now in 2011. [ 
Interruption 
] What is now clear is that the junior Government whip also does not understand the difference between what is in the law now and what is being worked through. 
Chris Tremain 
: You detail it for me then. 
Hon TREVOR MALLARD 
: We will. We will work throughout today we will work throughout tomorrow and for the next 3 years we will work our way around the poorer communities of New Zealand. We will show them what will happen because of the rise in the thresholds between the package that has already been legislated for by the previous Labour Government and this Government’s legislation. Although some of the marginal rates are coming down the lift in the threshold hits the poorest people in New Zealand. It hits the poorest workers in New Zealand and it hits not only those who are working. 
I give members the example of the older family—a couple on superannuation. They have done the right thing they have saved up and they have a small income that is coming in as a result of their savings. What happens to them? Their tax goes up. Their tax goes up under the National Government. 
I know that National appealed heavily to superannuitants but what will happen under this legislation is that the tax on people who have an income of $20000 as a result of the amounts they have saved over and above their superannuation will go up. They might have that income coming from another superannuation plan but as a result of this legislation their tax will go up. Notwithstanding the small increase those people will get in their national superannuation their total income will go down. And the National members sound like they are proud of it. 
I will tell members something—Paul Quinn did not go and tell people at the Grey Power meetings that if they had some savings then their net income would go down. He did not tell them that. I am not sure whether he knew. He did know; he is putting up his hand to indicate that he did know. Well in that case it is very very sad that he misled the Grey Power people at the meetings he went to in Lower Hutt and Wainuiomata. 
I will get back to the Maori Party in particular and to something that those members and John Key had in common during the election campaign. That was around the relative attractiveness of New Zealand and Australia. One of the very good things that the previous Government negotiated was an arrangement for portability of superannuation back and forth. One of the reasons for that I say to Mr Flavell was so that whanau could bring their superannuation from Australia back to New Zealand and so that some of the higher-income earners who were living in Australia and wanted to come back to New Zealand would not lose their superannuation as a result of coming back. It was something to bring families together to bring whanau back to bring leadership back into communities in New Zealand and to allow some of the older people to get a piece of the pie by keeping the superannuation that they had earned in Australia. What has Mr Flavell has done? He is voting for the gutting of the KiwiSaver arrangements which will result in that portability being lost. 
Were Government members polite enough to ring the Australian Government to get on the phone to Mr Rudd—John to Kevin—and tell the Australian Government that they were walking away from the superannuation portability? Did they do that? No. They did not even think of it. So what do we have here? We have legislation that removes the incentives to do research and wrecks the portability of superannuation. We have legislation that increases the marginal tax rate for some poor and middle-income people and increases the taxes paid by a significant group of people who have kids and have joined KiwiSaver. It is just not fair and we are going to fight it right through. 
DAVID BENNETT (National—Hamilton East) 
: 
 I congratulate you Mr Deputy Speaker on your election to your new role. It is great to see somebody from the Waikato in such an esteemed role and I say well done. I am sure you will follow in the footsteps of other great people in that role such as Margaret Wilson before you who also had Waikato links. I say well done and congratulations. 
When we look at what we are passing today we see that the Taxation (Urgent Measures and Annual Rates) Bill is very important legislation. It is legislation that goes to the heart of many New Zealand individuals and families who are struggling who know there is a world economy out there that is very tight who know they need some help from their Government in their time of need and who want to see a Government that listens and is aware of the issues that are involved in the way they have to live their lives at the moment. They want a country and a Government that will deliver something to help them through this tough time. 
The National Party has listened to the people. The National Party went out to the people during the election campaign and said we understand the dilemma they are in we understand they want a better future and we understand they need a Government that will understand and work in their best interests. 
This is what we are seeing here today. This bill is the first step in building a better future for New Zealanders and building a stronger economy that will actually deliver that future for our people. Our people know it is going to be tough out there. They know there are going to be some major economic issues that we have to deal with as a country. They also know they want a Government that will make decisions; a Government that will go out there and not just look around the world and try to say we are leading on social and environmental issues but not actually do anything. They want a Government that will do things and that is what they will get from the National Party. 
The National Party will deliver constructive solutions and we will deliver them now to the people of New Zealand. We have a 100-day plan we have a plan of action and we know what is needed for the New Zealand economy to turn it around. The New Zealand economy is in recession. I invite anyone who does not believe that to look at what is happening around the world. The US and the Australian economies are teetering on the edge of recession and those countries are looking at ways of avoiding going into that situation. New Zealand has been in recession under the Labour Government that was in power before the election and now it is time to turn that around. Now it is time for the Government to make some constructive changes that will deliver a stronger economy. 
This bill is the first step. It is the first legislation the National Party has put through in Government and it will deliver some relief for hard-working New Zealanders. Hard-working New Zealanders want to see a reduction in the taxes they pay to the Government. They need to see a reduction in taxes because they are struggling out there. They are struggling to pay their bills and meet their mortgage payments at the high interest rates that have been inflicted on them for many years under the previous Labour Government. They are struggling to pay the high expenses that have been inflicted upon them by the previous Government through the high inflation it controlled in this economy. 
It is time now for a change of approach. It is time now for relief for hard-working New Zealanders. It is time now for these tax cut packages to come forward and for New Zealanders to see a Government that cares acts and delivers something constructive to hard-working Kiwis. That is what they are going to get under the National Party. They will get a Government that delivers that looks forward and that promotes solutions. That is what this bill is about today. 
Let us look at the personal tax cuts. They are significant tax cuts. They are the first step but they are significant. When we look at those percentage and rate decreases we see it is in the best interests of New Zealanders to give them that money so they can deliver to their families the future they want. Those cuts will deliver the right signals and incentives for New Zealanders to go out there and get a good education take risks and progress their lives and the lives of their families. That is the whole point of a tax regime. It is to provide those signals and incentives at the same time as providing the Government with the revenue to deliver its social services. 
This is a robust tax regime that takes into account the need for New Zealand families and individuals to have some tax relief at this point in time and the National Party will deliver that tax relief over the next week or so. The independent earner tax credit is an initiative for many New Zealanders who have missed out who want to get into the home ownership market who are struggling through getting an education and into the workforce and who want to build up a future for themselves so they can have a family and deliver what we need in New Zealand—strong and sustained growth for our economy. It is good to see the National Party coming out and delivering for those people and giving them the independent earner tax credit an initiative that will deliver much-needed finances to individuals who are working hard doing the right things making the right decisions and need to get that support from the Government as they make those investments in their future and the future of this country. 
Let us look at other parts of this bill which are very important for New Zealanders. The KiwiSaver changes enable a lot more New Zealanders to get into the KiwiSaver regime. At the moment it is a regime that is dominated by people who are putting their families into it and taking advantage of a system. We need to let more New Zealanders have the ability to get into KiwiSaver and into the savings regime. The Labour Party’s attitude is that it knows what is best for New Zealanders. That is not the case. New Zealanders can make their own decisions. They need to have the opportunity to make those decisions and by lowering that percentage this bill gives more New Zealanders the chance to get into a regime where they can save for their future and deliver what they need to deliver for themselves and their families. 
The research and development tax credit is another important part of this legislation. We have to look at what is important for the research and development industry and that tax credit was not delivering what was needed. That was never going to be what was needed. Let us look at what was happening. The Labour Government members just sat there while AgResearch laid off staff. They were not interested in research and development. It was all about the mantra of what they thought sounded good and the reality is we need to do constructive work in the research and development industry and deliver real solutions. The biggest solution we can deliver for research and development in New Zealand is to have a stronger economy. Without a stronger economy companies will not engage in research and development and if we are in a recession like the Labour Party has delivered us then it does not matter how many tax credits are given people will not go into research and development. If they do they will be using it only to project something that is different from what they are doing in their business. 
The National Party understands what is good for the New Zealand economy. We understand what would benefit research and development. It is to give a strong vibrant economy. That is what this tax cut package is part of. It is part of delivering that strong economy. We need the economy to function and grow and in order to deliver that we must take some important steps. This is the first step in that process and a very good step it is. We are looking at an approach that is constructive well meaning and in the best interests of New Zealand. We will not take the approach the Labour Party is taking this morning of coming to the House and trying to use fear and scare tactics and saying that this is not in the best interests of hard-working New Zealanders. No we will actually go out there and deliver constructive solutions for New Zealand. 
People in the street have come up to us and said that they are confident and very supportive of the National Government because they see a Government that is making decisions a Government that is actually willing to go out there and build a better future for New Zealanders a Government that is not trying to project fear to put people down and to say that it knows best which is what the Labour Party does in this House time after time. It is time for a different direction in New Zealand. It is time for a direction that actually delivers solutions. It is time for a direction that looks at what economic fundamentals are required in the country to deliver the growth we need. That is what we will get under the National Government. We see the previous Minister over there laughing away. He does not care about growth; he never has. He never delivered it. He just waited for somebody or for some other world economies to deliver him economic growth. He was not taking the steps but National through this bill has taken the first steps towards delivering that stronger growth economy. 
Hon CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 I seek leave to table a report in the  
Waikato Times 
 of 28 October in which one Mr David Bennett stated: “I don’t think that our”—that is the National Party’s—“(R & D) policy is as good as it could be but we need to invest in our infrastructure to boost the economy.” 
Mr DEPUTY SPEAKER 
: Leave has been sought to table that document. Is there any objection? 
MOANA MACKEY (Labour) 
: 
 The one thing clear from that speech from David Bennett is that he has not read the legislation before him because it does none of the things he says it does. It does not deliver for all hard-working New Zealanders. In fact it penalises some of the poorest families in this country and it comes off the back of a campaign during which National members went around the electorates smiling at everyone saying: “It’s OK. We’ve changed. We’re different. We know that people don’t want cuts. We know that people want support for their families. We know that people don’t want the same old tired policies and failed arguments of the 1990s all over again.” And what do we see? On this first day of business in this new Parliament with this new National - ACT - Maori Party Government what do we see? We see the putting up of taxes on the poorest New Zealand families compared with the tax cuts they would have got—and were already legislated for—under the previous Labour-led Government’s tax policy. I say to the National Government “Shame!”. 
If the Government thinks for a second that this Labour Opposition will roll over and let it destroy the economy and destroy the finances of some of our poorest families then it has another think coming. Its members think that we do not know we have lost the election. We know it when we stand here and see legislation that once again attacks some of our most vulnerable families. The difference is that—unlike that party—it will not take us 6 years in Opposition to get stuck in. We are getting stuck in from day one. We will be here today tomorrow and—as Mr Mallard said—for the next 3 years holding this Government to account on every promise to the electorate that it breaks. 
Hon Dr Wayne Mapp 
: This is actually delivering the promise. 
MOANA MACKEY 
: Mr Mapp need not worry; I will get to him soon. 
Let us remember the context in which this bill comes to the House. The outgoing Labour Government left the economy in a very good position for the incoming Government. We had halved debt from 35 percent to 17 percent of GDP. We left this National Government with a very good position in which to move. The previous National Party leader Don Brash agrees. He said New Zealand is in a very good position to weather this storm. We have seen international credit agencies agree. New Zealand is in a very good position to weather this storm because of the fiscal prudence shown by the previous Minister of Finance the Hon Dr Michael Cullen. And what is the first thing we see on day one of this Government? We see legislation—if those members opposite will ever show it to us—that puts us on a track back to the 35 percent debt we inherited when we became Government in 1999. 
I refer to the Speech from the Throne in relation to this bill. There were lots of nice words in that speech. We heard that the Government is going to look after people we heard about turbocharging about protecting about enforcing about innovation about aspiration and about individual responsibility but nothing in this bill will assist vulnerable New Zealand families through the recession nothing in this bill will help our most innovative businesses bring us through the recession and nothing in this bill will help bring liquidity into our capital markets through our savings in this country. In fact not only does this bill not do those things; it destroys them. It undermines the gains we have made as a country over the last 9 years. 
I want to talk a little about the research and development tax credit. I am very glad that the Minister of Research Science and Technology the Hon Dr Wayne Mapp is in the House now because he has made a big deal about how great he will be for research and development. I wonder whether Mr Mapp is aware that with this bill New Zealand will go straight to the bottom of the OECD when it comes to research and development. In one go this legislation puts New Zealand straight to the bottom of the OECD when it comes to research and development and this is at a time when one would think it would be sensible prudent and common sense to provide incentives for our most innovative companies—those that are most likely to bring New Zealand through the recession faster those that are most likely to be exporters and those that are most likely to employ people on higher salaries and therefore provide higher take-home incomes for families. One would think that a Government would want to provide incentives for those companies to invest in more research and development. [ 
Interruption 
] 
Dr Mapp says it is a tax rort. The Australian Government thought that. A year later it had to bring the research and development tax credit back because it realised that getting rid of it did much more damage than these kinds of tax rorts that people talk about and never prove. Of course Australia is meant to be the nirvana that we are following so why with one stroke of a pen in this legislation are we putting ourselves at a competitive disadvantage to Australia? 
I want a guarantee from Dr Wayne Mapp. He promised that a third of the money that would have gone towards this research and development tax credit would go to our Crown research institutes. He promised. Will that continue? 
Hon Dr Wayne Mapp 
: It’s broader than that. 
MOANA MACKEY 
: Oh it is broader than that. No Dr Mapp promised in the election campaign as did Dr Hutchison that a third of the money saved by scrapping the research and development tax credit would go straight to funding science directly. I think that is what he called it; he said it would be a third. Will they get that money? Will the Crown research institutes get that money? 
Hon Dr Wayne Mapp 
: You haven’t read the policy. 
MOANA MACKEY 
: Well I say to Dr Mapp that we will be getting out the policy; he need not worry. The policy was very clearly that the Crown research institutes would be directly funded with a third of this money. 
Hon Dr Wayne Mapp 
: I didn’t say that at all. 
MOANA MACKEY 
: Oh no what a great day for science! Not only are we scrapping the research and development tax credit but we have just heard here on the floor of the House that the $330 million promised to the Crown research institutes by Dr Paul Hutchison and by the new Minister Wayne Mapp will not be given to them—they will not get it. What is it going towards? It is going towards paying for tax cuts that disadvantage some of our most vulnerable families and do nothing for our economy. 
Research and development tax credits are a common tool around the world for lifting rates of private sector research and development investment. Just about every country has them. All the countries the National Party compares us with have them yet we are getting rid of them at the one time in history when we need them more than anything else. Well I am sure the scientists and the manufacturers around New Zealand are saying: “Thank you for a very merry Christmas the National - ACT - Maori Party Government. Thank you for a very merry Christmas Dr Wayne Mapp our new Minister.” 
We know that the research and development tax credit was supported by all of National’s mates. Business New Zealand’s Phil O’Reilly pointed out that many companies had made long-term investment plans based on that research and development tax credit and they will be out of pocket now that the National - ACT - Maori Party Government is getting rid of it. They are going to be out of pocket. We know that when National announced its tax policy different groups such as manufacturers’ organisations flew all over the country to meet with Bill English to try to convince him to back down on the research and development tax credit abolition because they knew how important that single policy was for our economy especially going into a recession. 
So I say to Mr David Bennett who said before that the National Party does not want to lead on anything in the world—he does not think it is important to be a world leader on anything—that his mission is accomplished. We are now with one stroke of the pen on this legislation last in the OECD on research and development. The member might not think that that is particularly important. He thought it was important during the election campaign when he was in his own home area because of course there are lots of manufacturers in the Waikato. There are Crown research institutes and lots of scientists. It is a fabulous area for science innovation—it is a hub. He got up during the election campaign and said that he did not agree with abolishing the research and development tax credit. He has obviously realised that that has got him seated somewhere further back in the Chamber than he was during the last term so he has come down here with a mea culpa road to Damascus speech. He has suddenly realised the error of his ways and that getting rid of the tax credits is a really fabulous idea. 
We have just heard from Wayne Mapp that the money he was promising the Crown research institutes was kind of so that they would not feel so bad about his getting rid of the research and development tax credit—which they may have got money from through contracts they have in the private sector—because he will give them $330 million to tide them over. Of course they were very happy with that. Well that has gone. That has gone out the window as well and what for? To pay for cuts to KiwiSaver that will limit the level of liquidity we have in our venture capital markets which is important for our research and development. National will cut KiwiSaver. It will cut taxes for the people who need it the least. It will raise taxes on some of our most vulnerable families. 
I genuinely want the Maori Party to think very seriously about its support for that legislation which raises taxes on some of our most vulnerable families. Thirty-five percent of families in the East Coast electorate earn under $40000 and they will get nothing—they will get absolutely nothing. In fact for some of them their taxes will go up. Well I say merry merry Christmas from a National Government which from day one is showing its true colours—a National Government that campaigned on being softer campaigned on being friendlier and campaigned on being smiley—their smiley selves. Well once again we are seeing the cold face of reality behind the friendly mask of John Key and this National - ACT - Maori Party Government. 
Hon Dr WAYNE MAPP (Minister of Defence) 
: 
 Congratulations Mr Deputy Speaker on your elevation. One of the disappointing things when listening to Opposition members is that apparently they cannot read. If they had read our policies they would know that the statements they are making are simply not correct. I could actually say something else but I will not because it would be unparliamentary. But I remind members that if they are going to make assertions about another party’s policy they at least should take the trouble to read it before doing so. 
Extraordinary things we have been finding in Government are all the problems the previous Government left for us. For instance one of the very first briefings I received related to the issues around AgResearch—all its redundancies. Did the previous Government tell the public that—did it tell the scientists that? No it did not. It was actually a great relief—and I know that my colleague Mr Bennett knows this particularly well because he comes from the area—that that in fact has been ameliorated quite substantially. I know that that has been a substantial relief to the people in AgResearch. One would not hear that from Labour members would one? One would not hear that Labour’s legacy was going to be redundancies rolling out for ever. That was Labour’s policy when it was in Government. That is what it was going to do about protecting New Zealand’s science research and technology bases. So it was a good result to see that the effects of that were being ameliorated substantially. I know that that was appreciated within AgResearch itself and within that community. So let us not hear from the other side about all the work it did for science research and technology. When one measures the facts against Labour’s rhetoric—actually that was a feature of the previous Government: rhetoric on the one hand was always noble grand and highfalutin; reality on the other hand well that was a bit different was it not? 
Hon Darren Hughes 
: How about the whales Wayne? How are the whales getting on? 
Hon Dr WAYNE MAPP 
: Let me just remind the senior whip on the other side to look at the Defence Force. 
Hon Darren Hughes 
: How’s the frigate? 
Hon Dr WAYNE MAPP 
: That member should ask the former Minister of Defence about all the problems in defence that he has left with the current Minister of Defence. I tell that person that he had better be quiet on that particular issue. 
I just want to bring the Opposition to a reality check. We explicitly campaigned on this bill. The public knew exactly the nature of the tax programme that National is offering not just in terms of personal income taxes but also in terms of KiwiSaver itself. The public made a judgment on Labour’s programme and made a judgment on National’s programme. That is why we are on this side of the House today and that is why we are moving this bill. We told the public that this was part of our 100-day programme and that is why we are implementing it in this way. 
Hon Clayton Cosgrove 
: You don’t want it to go to select committee? 
Hon Dr WAYNE MAPP 
: The former Minister knows full well that tax rate issues never go to select committees. They are always dealt with by this House. I remind that member that that is what happened in December 1999. There is a good reason for that in fact. It is because the public have actually made a judgment. They voted for specific tax rates. We have a specific promise and there is no point putting that specific promise to a select committee because the issue has already been judged and that is why we are implementing it in the way we are doing. 
I just want to go through some aspects of the detail. Labour always goes on about its tax package being better than ours. Well the first point of which I need to remind Labour is that the public has made that judgment already and Labour was not on the winning side of that. But the second point I make to the Opposition is this: the major difference is that we put our priority into middle New Zealand families and their aspirations. So our focus was shifting the 21 percent rate up from $40000 through ultimately to $50000. That is where the vast majority of hard-working aspirational New Zealand families actually fit. We are not talking obviously about people who have just entered the workforce we are talking about people who have built experience and are going into careers and looking at opportunities for the future and looking at opportunities in other countries. 
This is the key point in the New Zealand tax system. One only has to look at the whole group of people that Labour often talks about—teachers nurses and so forth. This tax rate affects them more than any other tax rate. So we have aimed this package right at aspirational New Zealanders who are building skills and building careers. We are saying to them that our tax package will make it easier for them and their families. Our tax package will make it easier for them to decide that “Yes perhaps I should stay in New Zealand.” I also remind the Opposition of this: at this point in time with the economy in the situation that it is right now stimulus is exactly what is needed on 1 April 2009. What would the public have got from the other side? Zero! Actually zero was Labour’s tax package for 1 April 2009. That is one of the reasons Labour lost the election. The public understood that in this difficult financial situation which not just New Zealand but much of the rest of the world is involved in as well stimulus is what is required. Every country in fact is undergoing that process and this bill is part of the National Government package to deliver stimulus to the economy. 
Labour members might talk about savings and all of that. That is not the core issue right now in the New Zealand economy. The core issue is getting money into the economy by 1 April next year to keep demand up keep aspirations up keep jobs going and keep hope going. That is the difference between us and them. Their package for 1 April next year was zero. Our package will stimulate the New Zealand economy at a time when it will count. 
Dovetailed to that is that it is pitched at those New Zealanders who have been crying out for some relief in the tax system. In 9 years under Labour they got zero. National is delivering. That really sums it up. National in Government is delivering we are honouring our promises and we will deliver this in the next day or so when the bill comes into effect. That fundamentally pitches the difference between this side a Government of action and that side an Opposition of failure. 
Hon CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 As I reflect on the debate of the last 24 hours a question comes to mind and it is simply this: in that speech Mr Tremain’s speech Mr Bennett’s speech and all the speeches we have heard from the Government in defence of this bill which increases taxes for the bottom end why have we not heard any rebuttal of the allegations the Opposition has put on front of them? 
When Phil Goff used the example of a family on $50000 with one child and investing in KiwiSaver losing $70 a week—that is seven-zero for Mr Bennett’s benefit—as a result of this package did we hear one denial from Bill English or Mr Tremain or Mr Bennett or that tax expert Mr Foss? Did they deny it? I remember that last night Mr English grinned as if he had been caught like a kid with his hand in the cookie jar. Did any of them get up deny it and say: “No that is not true. The facts are other than what is being put forward by the Opposition.”? No they did not deny it because they cannot deny it. 
Last night we saw the Maori Party members look as if they could have leapt into the desks in front of their seats as they stuck their hands up and gave their party vote in support of this bill. Every one of their constituents earning under $40000 will be getting either zip from this or an increase in tax. A couple on $55000 a year with three kids will have to pay $14 extra a week because in effect they get a tax increase. If Hone Harawira could have shrunk himself and dived into his desk or under it to get away from this debate he would have. Mr Flavell is piling the computer and the boxes higher and higher on his desk because he knows he has to answer his constituents probably in a couple of months when they rock into his office and say: “Mr Flavell we voted for you. Why are we paying more? You never told us about this.” 
Here comes the man himself Bill English. He is the architect of this bill. Not once in any of his contributions in the last 24 hours did he say: “No the Opposition is wrong. As the National Party promised in the campaign everybody will do better out of our tax policy.” That is what National said. They talk about aspiration. I ask Mr Bennett that learned gentleman on the other side of the House how it is aspirational if a family that is on $50000 is in KiwiSaver and has one child loses $70 a week. 
The only National Party response last night was from that genius Nick Smith who when he decided to stop holding his breath said that that is the politics of envy. That is what he said. I have the  
Hansard 
 and I am going to blow it up. I along with Maryan Street and the troops on this side will come to Nelson and find all the families on $50000 a year who are in KiwiSaver who have one child and who lose $70 a week. We will line them up in front of that genius’ electorate office and let him say on behalf of National: “Oh you $50000 parents with one child losing $70 a week—that is the politics of envy.” 
As I said last night to Mr Bennett and Mr Tremain that is the politics of betrayal not envy. Where is the aspiration when dad is on $35000 and mum is on $22000 they have three kids and they have to pay $14 a week extra in tax? Where is the aspiration in that? Or does aspiration and the so-called choosing a brighter future apply only if one is at the top end? We know that Mr Bennett and Mr Foss wherever he is and Mr Mapp—and I now know the anatomical impact of peroxide on the cranium—will get a big tax rebate of around $100 a week. Apparently aspiration applies only to those who are pretty far north of $40000. 
I looked at the  
Dominion Post 
 this morning. It said that those on $42000 a year will get $4.62. Those members criticised us for the so-called block of cheese tax cuts. Well that is one slice of Chesdale without the plastic wrapping. Apparently aspiration and choosing a brighter future applies only to their mates at the top end. I do not think it is the politics of envy to stand up as we are in this House do our duty and point out that this bill was not signalled in its entirety before the election campaign. 
Dr Mapp got up and said: “You don’t need to send this bill to a select committee. You don’t send tax bills to a select committee.” I say to Dr Mapp: “Wake up!” I used to chair the Finance and Expenditure Committee and we did tax bills—we did a lot of them. We can send this bill to a select committee and why? Because it comes into effect in April. That is plenty of time to send it to a select committee for a week or a couple of weeks. But oh no Dr Mapp does not want to do that because then the tax experts and the venerable social services agencies such as the Salvation Army and others would come in and point out the things that we are pointing out today. 
Moana Mackey 
: And the manufacturers. 
Hon CLAYTON COSGROVE 
: And the manufacturers of course. 
My colleague Moana Mackey talked about the research and development tax credit. She made reference to a meeting that happened with Mr English. I know for a fact that manufacturers flew from all around the country to have a meeting with that member in Auckland and they worked him over. They got the blowtorch out and did the rotisserie on him. Do members know what he said to them? He said: “Ah look do not worry we will fix it some other way.” They did not believe him and they do not believe him now. 
The justification for doing away with the research and development tax credit was this which appeared in the  
New Zealand Herald 
: “National leader John Key in announcing the move to drop the scheme yesterday as part of the party’s tax policy said…‘It’s clear that the tax credit has created a lot of business for tax accountants and tax advisers but evidence of real increases in R and D is harder to find.’ ” Hang on; there is a problem with that. That sound business person and good guy the chief executive officer of the Canterbury Manufacturers Association in my area John Walley said that Mr Key’s comment was “daft”. Another member of the House was called daft—the electorate chairman of the National Party for Gisborne called Anne Tolley daft I think. 
Hon Darren Hughes 
: No Nick Smith. 
Hon CLAYTON COSGROVE 
: Oh Nick Smith. 
So Mr Walley of the Canterbury Manufacturers Association said that Mr Key was daft because the research and development tax credit applied for the first time in the 2008 income tax year. Unless Mr Key is a clairvoyant—and he portrays that he has the powers of a miracle worker—or unless Mr English is a clairvoyant and can see into the future and into the mists of time they cannot predict what will happen. Of course the Aussies do not agree with Mr Key. He said it all has to be a rort but it is a rort that has not happened. So National will get rid of it although it actually has no evidence. That is the truth. 
Then we had the great betrayal of Dr Mapp. As my colleague pointed out $330 million was to be the compensatory factor to go to the Crown research institutes. That is up in the air. That is disappearing really quickly. One would think that members of a new Government would be so proud of their tax policy the benchmark document that they say they campaigned on that they would get up and say: “No the Opposition is wrong. Dr Cullen is wrong Mr Cosgrove is wrong Ms Mackey is wrong. You and all the examples you have used are all wrong.” But that has not happened once. Even the great guru Mr English has not once got up and admitted it. Even the  
Dominion Post 
 worked it out on the front page today. A large number of people in our community will get nothing from this or worse still they will be grossly disadvantaged. 
I again say to the Maori Party members that there is still time for them to get themselves out of the pickle they have got themselves into. There is still time to come down to the House and oppose this bill as there are a lot of votes to go and a lot of water to go under the bridge. I would love the Maori Party to do that. We know that National Party does not care what its constituents think when they rock up and ask why they are paying more when National said during the campaign that people would gain out of this measure. But there is still time before the Maori Party constituents rock up and ask: “Why are you supporting the National Party in this?”. 
On every marae and at every kohanga reo when the parents come to pick up their kids the explanations will have to be given. I do not think the Maori Party members will have their research people write them a word for word speech as they do and then come down to the House and read out an explanation and a justification for supporting the National Party in this. Even the research unit will not be able to come up with that one. The Maori Party members did not campaign on it. They were against it. They should be against it because they represent some of the poorest people in the community who will be hit hard by this. 
I invite one of the geniuses over there to get up and negate what the  
Dominion Post  
has said what Dr Cullen has said and the examples that I Phil Goff and others have given. There are large groups in our community that are disadvantaged. [ 
Interruption 
] Mr Bennett can shake his head but why in that great oratory he gave us did he not say “That is wrong and here is why.” and give us the proof? It is because the member does not have the proof. Well there could be another explanation—it was not in big print. But the member does not have the proof nor does he have the evidence. It is now apparent to us that it is aspirational if one is at the top end. If one is the chief executive officer of Telecom my word that person is brimming with aspiration. It is just pouring out of every pore. But if someone is at the bottom end that person is in trouble. 
A party vote was called for on the question  
That the Taxation (Urgent Measures and Annual Rates) Bill be now read a second time. 
Ayes 68 
New Zealand National 57; Maori Party 5; ACT New Zealand 5; United Future 1. 
Noes 52 
New Zealand Labour 43; Green Party 8; Progressive 1. 
Bill read a second time. 
In Committee 
Part 1 Personal tax cuts 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 It is good to have an opportunity to discuss some of the detail of this bill after what has been a very rushed process to date. I hope that some of the political rhetoric may subside for a while and that we and New Zealanders can get our heads around some of the measures that are embedded in the bill. 
Let us start if we can by going through exactly what will change for average New Zealanders with regard to the KiwiSaver component of this bill. Firstly they will not get the $40-odd down payment for their registration fee. Secondly although National has tried to fill in part of the gap if someone is a low-income earner—by which we mean anyone earning less than around the average income of about $44000 a year—and that person has kids he or she will be worse off despite the fact that National has late in the piece restored some of the Government’s contribution. 
Chris Tremain 
: I raise a point of order Mr Chairperson. We are considering Part 1 which deals with personal tax rates. The speaker who is a learned member of the House is talking about KiwiSaver. I ask you to bring him closer to the part please. 
The CHAIRPERSON (Eric Roy) 
: I think that is a fair call. Members can refer to something else but they need to draw what is said back to the part for comparative purposes or whatever other purpose. 
Hon DAVID CUNLIFFE 
: Of course the tax rates are funded largely by the changes to KiwiSaver and I had thought it was appropriate to cover both the funding and the expenditure side of this bill. 
However let us go directly to the tax component. The principal difference here is twofold. The first difference concerns where the rates and thresholds are set and the second is in the top rate. Let us turn first to the thresholds. Under Labour’s package some $8 billion has already been invested in the changes that came through on 1 October. They were designed to lift the thresholds thereby providing all New Zealanders with approximately equal improvements in the tax actually paid. It was a very very fair set of tax changes and it would have carried on in that way. By 1 April 2011 people earning up to $20000 a year would have been paying 12.5 percent those earning $20000 to $42500 a year would have been paying 21 percent those earning $42000 to $80000 a year would have been paying 33 percent and those earning above $80000 a year would have been paying 39 percent in tax. What has happened of course under this bill from National is that people who are earning between $14000 and $20000 a year will now pay 21 percent not 12.5 percent. That is a very very significant difference. It means that many below average income earners second earners and families will face a higher tax threshold a higher tax rate at that level. 
Why has that been done? This is a very artificially constructed tax cut. It appears to be built around the promise that National made during the election campaign to try to engineer a $50-a-week cut for the average income earner. So in fact the tax remission spikes around that part of the band and then on either side of that it drops down. The real change occurs for those in the top bracket—over $70000 a year. Why this Government thinks that people who earn over $70000 a year deserve to be the biggest beneficiaries from this tax cut escapes me. Someone who is earning three-quarters of a million dollars gets $200 a week and someone who is on the average wage gets $2 a week. Why is that? There is no economic justification for that. People who are very wealthy of course do not spend the tax cut that they get. They can afford to save it or invest it and therefore it is taken out of circulation. 
Chris Tremain 
: So you admit that some people actually save it. Some actually save their tax cuts. That’s good to hear from you. 
Hon DAVID CUNLIFFE 
: I say to Mr Tremain that that can be useful but one has to be very careful about why one is doing it. The Government has said that the principal reason for this tax cut is to restore demand in an economy that is facing recession. It simply will not do that if the money is saved away. We have to start with $3.5 billion more in savings because that has just been sucked out of KiwiSaver. Then we have to offset the $1.5 billion of innovation that we are not going to get—or more; probably $3 billion or $4 billion—because the research and development tax credit has been axed. I think we need to be very clear about the arguments for this tax change. 
To summarise we know we have a threshold problem for people who are on lower and middle incomes. We know we have a skew of benefits to people who are at the upper end of the income range and we know that we have some perverse effects in terms of whether this tax change will help to offset the recession as a result. There is a lower multiplier on tax cuts than on Government spending if it is well directed and a very low multiplier on high-income individuals who are squirrelling the money away because frankly they do not need the tax cuts. Those are some of the economic arguments. 
The next questions that we come to around the tax rates are what the actual fiscal impacts be will be and what the outlying debt track will be. Most New Zealanders by now understand that under the previous Labour-led Government under Dr Cullen’s leadership the gross debt to GDP ratio the amount of Government debt that we owe other countries was cut in half from 35 percent to 17 percent. With the recession it is up to about 18 percent but it is still very low by world standards. Why does that matter? It matters hugely because it means the incoming Government has the wiggle room to spend and invest in infrastructure or take other measures to offset the recession. The Government has the fiscal headroom. 
The question is what has happened to that headroom as a result of this package. Treasury’s briefing to incoming Ministers made clear that in Treasury’s view it was unnecessary to pursue further tax cuts on top of the close to $9 billion of stimulus that came in on 1 October. The reason for that was that it considered that stimulus to be sufficient and that there were real risks about driving us deeper into debt. 
How deep into debt are we getting as a result of this tax cut? The answer is that we do not know. We do not know because the new Government is not telling us. It has taken the unprecedented step of ramming a major piece of tax legislation through the House under urgency with no select committee process with no ability to interrogate it on the detail and with no reliable statement of the macroeconomic implications of what it has done. This bill is a balancing act. Of course we would all like to give tax cuts—and we want to give fair tax cuts—but we have to be constrained by the ability of the Government’s books to support them. There is no information provided to the public let alone to the Opposition about the state of those books as a result of this bill. 
Let us now turn to some of the anomalies that arise. Some of those are deliberate; others may be unwitting. As Dr Cullen has said there is an anomaly around pension portability. Australia has a 9 percent robust employer-funded superannuation savings scheme. We had a roughly equivalent scheme under Labour’s KiwiSaver scheme and the previous Government had sought and received the approval of the Australian Government to allow people to move backwards and forwards between the two countries—something that was especially important one would have thought from a National Party point of view because National members spent most of the election campaign grousing about people who cross the Ditch. So what is the implication? The implication now that our tax package has resulted in a change to the KiwiSaver benefits is that that portability could be eroded. 
Regarding superannuation savings the employer contribution for those who were seeking part-time work or who were close to superannuation age was at 4 percent on a net basis after tax credits. Now that comes down to I believe about 3.2 or 3.4 percent net under this bill undermining further the ability of New Zealanders to save for their superannuation especially if they are doing so from a secondary income. 
So a number of technical anomalies alongside the headline rate and threshold changes are built into this bill and they deserve very significant consideration. 
On the question of process we have already discussed the lack of a select committee hearing. We have not really gone into the fact that the commentary on the bill admits up front—and I have never seen this before—that due to the haste with which the bill has been prepared the Government has not been able to do a regulatory impact statement. 
Hon Member 
: Amazing. 
Hon DAVID CUNLIFFE 
: That is amazing given that the new Government campaigned on regulatory integrity and has a confidence and supply agreement with the ACT Party. 
Hon Darren Hughes 
: They’ve got a new Minister for it. 
Hon DAVID CUNLIFFE 
: Yes the Government even has a Minister and on its first bill— 
Chris Tremain 
: I raise a point of order Mr Chairperson. Once again we are straying right off the subject. That is a matter for a speech on the title of the bill and this debate is about Part 1. We are dealing with personal tax cuts and the thresholds. 
Hon DAVID CUNLIFFE 
: I certainly respected the member’s earlier point of order but I think respectfully Mr Chairman that on this one he is mistaken. The regulatory impact statement applies to the whole bill including the rate changes which are the subject of this part. 
The CHAIRPERSON (Eric Roy) 
: I am not going to uphold the point of order. 
Hon DAVID CUNLIFFE 
: Thank you very much. So we know that the proper processes for regulatory scrutiny have not been gone through on this bill. 
The next problem is that the economic effects of this bill as the commentary on the bill states have not been fully analysed. We do not know those effects not only because the Government has failed to publish the debt track but also because according to the commentary on the bill the analysis has not been done even by the Government’s officials. We do not know what the flow-on effects of the funding mechanisms of this tax change will be. We do not know the net impact on innovation. We do not know the net impact on savings. We do not even know the net impact of the spending multipliers from the tax change. I say to those who have not been in Government for a while that one normally does the work before one puts a bill on the Table. Otherwise there might be an unintended consequence. 
One of the unintended consequences of this bill from a Government point of view is that a whole lot of New Zealanders are waking up and realising that this is not what they voted for. What they voted for they thought was a kinder gentler kind of National Party that would leave in place the good things that Labour had done and maybe offer a fresh face such as it was. But that is not what they got on day one. Besides this bill they have a very harsh piece of industrial relations law which we will come to shortly and they can see that some people have joined the flat earth society. 
CRAIG FOSS (National—Tukituki) 
: 
 I will take the liberties that the previous speaker took around a wide range of topics although he did eventually come back to Part 1. In speaking to Part 1 which is clauses 3 to 17 inclusive I draw the Committee’s attention to the title of Part 1 which is “Personal tax cuts”. Does that not sound great? Personal tax cuts—right here in this bill. 
Hon Dr Michael Cullen 
: Oh God! Don’t slobber. 
CRAIG FOSS 
: I will say it again for the member over there—personal tax cuts. I imagine that his first taxation bill said “personal tax hikes”. Is that what the member’s first tax bill said? Actually all the way through the last 9 years the member’s bills have probably said various things about threshold and fiscal drag etc. 
There are a couple of points in this part. OK the micro staff which members on the other side of the Chamber keep talking about—$2 here and $3 there—is relevant but what they keep missing and do not talk about which says much about the head space they are still in is the macro the vision the investment that this makes in New Zealand. The threshold changes in Part 1 actually are all about the biggest investment in the infrastructure of New Zealand—the people. It is saying to them: “We value your hard work. We value your staying hopefully in New Zealand and we value your investment in your education with your student loan and these tax threshold changes will enable you to pay your student loan off earlier and will offer you a higher more viable after-tax income.” I am yet to hear anything of that nature from members opposite rather the myopic vision they have of trying to justify things to each other in spite of their somewhat diminished majorities. 
Part 1 contains a pro-rata provision and explanations of it. As all members will acknowledge there are many complicated issues around all things related to taxation and this policy that the Government has introduced here was flagged very very early on. So there is much certainty out there and in fact members will see as they go through some of the detail in the bill how with the top marginal rate going down to 37 percent the banks can start to use resident withholding tax at 38c from 1 April next year because over the year the pro-rata will catch up. Most things will come out in the wash. 
Previous speakers have mentioned that these changes will mean that 80 percent of New Zealand taxpayers will be at or under the 20 percent rate. That is not too bad but why stop there? I was very interested in the speech made by the previous speaker who this morning was basically arguing for higher taxes. He started to refrain a bit and tried to justify that a bit further but his multiplier arguments were all over the show this morning. I guess he has gone out and googled the stuff in between speeches and realised what he was saying. What he was saying was that if this was his bill the rates would all be going up and the bill would be called the “Personal Tax Hikes Bill”—or at least this part of it would be. I look forward to debating and discussing further points in this bill. There will be some good and robust questions I am sure and the Minister in the chair is more than prepared to push further National’s vision and our ambition for personal tax cuts. 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 The various parts of this bill are either unfair incompetent dishonest or stupid. Part 1 is the unfair and incompetent and dishonest part. Part 1 is entitled “Personal tax cuts”. 
Chris Tremain 
: Yes! 
Hon Dr MICHAEL CULLEN 
: Well the member may be able to afford a brand-new four-wheel drive to park out at Napier airport even further into the future because he actually is not in the electorate; he needs the four-wheel drive at the airport to give the impression he is somewhere around. But in fact for many New Zealanders Part 1 is a personal tax rate increase. For many people it is a personal tax rate increase. 
In the debate on Part 3 I will move an amendment—and I foreshadow this now because it relates to this part—that will provide an opportunity for the Maori Party in particular and the National Government. In the case of the Maori Party the amendment will give it the chance to put its mana where its mouth is and in the case of National to put its money where its mouth is—that is to move for a new tax credit that will apply where anybody under this legislation will be paying more tax than he or she would have done under the personal tax cuts legislation of 2008. Those taxpayers will be able to apply for a compensatory tax credit to make up the difference between what they would have received under the existing legislation and what they will get under this new legislation. It is very simple—they will be able to apply at the end of the tax year for that compensatory tax credit. That will show whether National believes that nobody is worse off under this bill. If nobody is worse off under this bill that amendment will cost it nothing. If the Minister in the chair the Hon Bill English then issues a financial veto saying that it will have more than a significant impact on the fiscal balance we will know that it will cost money. In other words people will be worse off under this bill. 
Who is worse off under these personal tax cuts? The answer is anybody earning $14000 to $24000 a year of taxable income. Why? Because the $14000 threshold does not go up to $20000 as it does under the existing legislation. The difference of $6000 will be at a different marginal tax rate by 2011 of 7.5c in the dollar. That is $450 a year. That is nearly $9 a week. For a person on $20000 a year $9 a week is quite a lot of money. It is peanuts for the members of this Committee. It means nothing to Jackie Blue who is looking bored over there. It means a lot to a person on $20000 a year. Who is such a person? It is a second-income earner in the family. Maybe it is the wife going out on a part-time job. It is a cleaner—a beneficiary who is putting in some effort and earning some money himself or herself. And now these people will be paying a higher tax rate on that than they otherwise would have done. It is a superannuitant with a bit of investment income or a superannuitant who has a small part-time job maybe delivering pamphlets. Would it not be ironic if that superannuitant had been delivering National Party pamphlets at the last election and ended up paying a higher tax on those deliveries than he or she otherwise would? So I invite members to consider this very simple amendment; let us just see what they will do with it. The amendment protects the low-income earners. 
The second group who will lose under this bill are all families with kids who earn under $44000 a year. There are quite a lot of those people—that is nearly the average wage. So by 2011 a single-income family on nearly the average wage will be worse off under this bill than they will be under the current Act. But even people earning a good deal more than that are worse off because they lose their entitlement to the new independent tax credit if they are receiving Working for Families and that is a cunning means of trying to stop them applying for Working for Families if they get only a little bit at the end of the day. They will all be worse off. 
Surprisingly Mr English has developed an antipathy towards modest-income families on small incomes. Why that is I do not know. Maybe he supports only large families on large incomes; he does not seem to support small families on small incomes. They will be penalised as a result of National’s taxation changes. So I say to Mr English that a family on 40000 bucks a year struggling to pay the rent and the mortgage—we have heard about them for the last 3 years from the National Party—will face a higher rate of tax and a lower net income as a consequence of this bill. How does that fit in with a Catholic social justice perspective? I remember asking Mr Bolger the same question in late 1990 when the National Government legislated to provide that a widow had to go to the Department of Social Welfare to apply for a widow’s benefit within a week or she would lose money. How did that fit in with those kinds of precepts? It does not fit in with those kinds of precepts at all. 
You see we used to attack the National Party for the trickle-down theory—the notion that as long as the people at the top got more eventually it would trickle down to those at the bottom. What was proposed for those at the bottom was not even a 6-litre shower but a half-a-litre shower as the margin eventually trickled down to those people. Well this is “trickle up”; it is a new theory from National whereby the taxes on low incomes are increased and that trickles up to those at the top. And why? In one of his previous speeches Mr English gave away that it is more expensive to give tax cuts to people on low incomes because as he said people on high incomes get that tax cut as well—as if somehow that was wrong. That was a very interesting little slip there as if to increase the bottom threshold or lower the bottom rate was somehow wrong because everybody got it because the rich also got it. 
That was Mr English doing his usual strange reverse logic in trying to look equitable by saying that it is awful that rich people get the tax cut that poor people get. Of course the point is that it is the other way around: poor people get the tax cut that rich people get whereas if one does it the other way and simply lowers the top rate poor people do not get the tax cut that rich people get. But of course we were told that the important thing was the threshold. Under this bill the threshold that the top rate cuts in at is lower than under the existing legislation because under the existing legislation it rises to $80000 a year. Under this bill it goes up to only $70000 a year. Do members remember when we were told that there was some kind of envy tax whereby the top tax rate would cut in at $60000? That was in 1999 and 2000 which was 8 years ago. It is perfectly all right now to cut in at $70000 a year some way down the track from here and that is not some kind of envy tax! But of course the theory underlying this is that if marginal tax rates are lowered people work harder. This is the capitalist version of the Stakhanovite worker—much beloved of the Soviet Union. This approach says that if we kept an extra 1c or 2c in the dollar we would all work miles harder. 
Well Mr Bridges will not do so. He will get paid the same anyway; it does not matter how hard he works. Members should look at National members; most of them have not done a stroke of work for the last 3 years. That is becoming very obvious in the way they have carried on in the House in the last day or two. They have not done a stroke of work. They are pretty well paid. They received a personal tax cut on 1 October and did not even say thank you for that; it just was not big enough—they want more please! In fact the marginal tax rate goes up on those people who earn between $14000 and $20000 a year—the people we want to encourage into work who are on benefits to earn a bit and to help themselves get started and move along. The superannuitants want to keep a little bit of work to earn a bit so their marginal tax rate goes up from $70000 to $80000 a year. That is a lot of senior teachers and nurses and other people who will be paying a higher marginal tax rate than they would have done under the current legislation. It goes down to Mr Foss who does not believe in work. He is the poor man’s John Key. He went overseas and did not make a fortune then came back to New Zealand. 
We have one area where there is a big cut in the marginal tax rate. Where is it? Between $42500 and $44000 a year the marginal tax rate goes down 13c. So we will see an extraordinary country a country where people earning low incomes will work less because that must be the theory—the marginal tax rate goes up. People in the next range will work exactly the same amount because their marginal tax rate has not changed. Then there will be this extraordinary group of heroes of the new sort of capitalist Soviet Union earning from $42500 to $44000—the turbocharged people of New Zealand—who will be working incredibly hard until they get to $44000 a year. Then suddenly they will stop working harder as there is no point because their marginal tax rate would now be back to where it was going to be before in any case. Of course if the taxpayers are independent credit earners then their marginal tax rate would not be 20c in the dollar but 32c in the dollar. So there is basically no change at all. So from an economist’s perspective there are no real incentives in this at all that make any difference to people working harder. So the theory then became—because they have kept trying to invent new theories—that the whole purpose was a stimulus for an economy in recession which many countries have been in for some time. But in fact if one wants to stimulate an economy in a recession one does something temporary to increase demand in the short term but one does not in a country with a chronic current account deficit and a chronic savings problem have a structural change. 
DAVID BENNETT (National—Hamilton East) 
: 
 I am following on from the man who lost about $5 billion or $6 billion in the last couple of months from the New Zealand economy so those words were rich coming from Michael Cullen. The so-called promised tax cuts for New Zealand workers were in legislation that was never going to be delivered because Michael Cullen would have delivered a post-election Budget that took away those tax cuts. That was Labour’s real plan. Michael Cullen should be honest and tell the Committee what he really wanted to do. 
Today National is delivering on its promises. We are giving tax cuts to those hard-working New Zealanders who have been out there slaving away for 9 years working hard making all the right choices and taking the right directions in their lives. They needed some support from the Government. They needed a Government that would stand up and deliver for them and give them the right signals and incentives to keep on that track—the signals and incentives that build a strong country—and that is what National is doing here today. National will give people tax cuts. We will make sure they have that reward for their hard work. We are giving them that reward for making the right decisions and we are making them successful in the world economy. We will give them the money to help them actually go out there and survive in an economy that is difficult an economy that is in recession as a result of the failed policies of the previous Labour Government and we will actually give them an economy that will deliver a future for New Zealand. 
This bill is the first part of delivering a growth economy. Through the personal tax cuts this bill will give the impetus needed for the New Zealand economy to grow and be successful. With a growing economy we can deliver in all the other areas of social spending of research and development and also of growth in our infrastructural investment which New Zealand desperately needs and has not had in the last 9 years. The National Government with its coalition partners will deliver a tax cut programme. We will not just talk about it; we will not just put legislation out that is about some time in the future. We will actually deliver that tax cut programme and that is what we as a Government are about. 
We will deliver for the people of New Zealand. That is what the people on the street have been saying. They like what they see. They see a Government that says what it will do and then actually delivers it. That is what members are seeing here today. We will not muck around trying to tell people there is a better future sometime around the corner; we will deliver that better future now. We will give it to people in the first 100 days in Government; we will give them some constructive changes that deliver to hard-working New Zealanders. We will not lead them on a path and say we know best and they do not have choices in their lives; we will give them those choices. We will give them money in their hands so that they can make those choices; we will give them the personal tax cuts that are in this legislation. The tax cuts enable people as individuals and as families to make the right decisions about what they want to spend their money on so that they can actually deliver for their families in these hard economic times. 
These personal tax cuts are the first stage of delivering a brighter future for New Zealand. They are the first stage of delivering a situation where people can go out there and actually live the lifestyle that they expect to live in the First World. We need to give that impetus to the New Zealand economy and we need to give that strength to our people who are experiencing hard-working days and reward them for their work. That is what National is about. We are here to deliver for New Zealanders—to deliver for the working people of this country. That is what this legislation is here for and we will deliver to New Zealanders through personal tax cuts as part of that process. 
If we look at the personal tax cut regime we see that a big part of it is the independent earner tax credit which is a great initiative. It is good for those young people who are making a start out there. They want to actually get some reward for their hard work. They do not want to be just looked down on; they want to be told they are doing the right things for themselves and for their country. Through the independent earner tax credit we are giving them that support. We are going out there and saying they are doing the right thing and we are going to help them and make them more successful and give them the opportunities that they desire in their lives. 
That is what this legislation is about. It is about giving the right start for New Zealanders in a tough time because it is tough out there and the world economy will get tougher. We need to give New Zealanders the ability to get through this tough time and in order to get through it we have to give them some money in their hand which is what this tax cut programme is about. It is about giving some stimulation to the economy. 
Hon PHIL GOFF (Leader of the Opposition) 
: 
 I want to know what David Bennett will say when he goes back to Hamilton East and talks to the folk who come into his constituency clinic—presumably he has one—who are earning between $14000 and $24000 a year. What will the member say when they say: “Mr Bennett you promised us a tax cut but under your tax changes we are paying more tax.”? What answer will Mr Bennett give to the people in Hamilton East? What about when the hard-working family that Mr Bennett has just told the Committee he is representing comes in? They are earning less than $44000 and they will come in and say: “Mr Bennett you said you were going to look after the hard-working battlers in your electorate but under your tax changes—the National Government’s tax changes—we’re paying more tax.” What will Mr Bennett say to those people? 
The title of this part of the bill—“Personal tax cuts”—is a lie. It is a lie for many New Zealanders because for lower-income people the hard-working battlers of this country these so-called tax cuts are not tax cuts at all; they are tax increases for those people. The Labour Party will vote against this legislation because of the unfairness of it. We know that people at the bottom of the heap—the people who struggle to pay the bills the people who struggle to get their kids to school and to meet the cost of living—get nothing from the National Government. But if we turn up at a decile 10 school where the children’s parents are earning big money we see that they will be getting hundreds of dollars of tax cuts. 
The ordinary New Zealander has a sense of fairness. The ordinary New Zealander believes that people need to be given a fair go. Sixty-six percent of Mr Bennett’s electorate is earning less than $44000— 
Hon Parekura Horomia 
: How many? 
Hon PHIL GOFF 
: Sixty-six percent. I ask Mr Bennett what he will say to the battlers to explain why they are paying more tax while those on a good income such as Mr Bennett himself will probably get $100-plus in tax cuts. I ask Mr Bennett where the fairness is there. There is no fairness and that is why we are opposed to this bill. 
The rhetoric that we heard in the Speech from the Throne was about how this National Government was not going to tolerate an underclass and how it was going to stand up for the rights of the everyday New Zealander. What about the everyday New Zealander who was promised a tax cut by the National Party in Opposition and now finds that in fact he or she will be worse off than if there had been a Labour Government and they were receiving the tax cuts that had already been legislated for? What about a couple where the man is earning $35000 a year? Many people in Mr Bennett’s electorate are in that situation: the man is earning $35000 a year and probably is working in a factory; the wife may be earning somewhat less—say $22000 a year—because she is looking after the kids. They will actually be $14 a week worse off because of the so-called tax cuts that Mr Bennett has just got up in front of this Committee to defend. What will Mr Bennett say to those people? I would like to know the answer to that. 
Hon David Parker 
: “Sorry.” 
Hon PHIL GOFF 
: “Sorry.” That is what he will have to say. “Sorry. Oh you didn’t read the fine print?”—as Mr English said—“It was all there. We didn’t say it—we put it in the fine print.” That couple did not read the fine print so I am sorry but caveat emptor they have ended up with a National Government cutting their living standards not raising them as they had been promised. 
The truth is the National Government does not give a damn about the Kiwi battler. Those members do not even pay lip-service to the decent society that Jim Bolger once talked about. What happened to the decent society? What happened to that sense of fairness? The truth is that the people who will be paying more tax are the same people who are most vulnerable to job loss. As we saw again from the Speech from the Throne there is no plan and there is no vision from this National Government about how it will protect people’s jobs. It can talk about tax cuts till the cows come home but if one does not have a job then a tax cut is no use. There was a lack of planning by National. It wasted 9 years in Opposition. It had no plan to deal with a situation where jobs might be threatened. 
The people whom we heard about yesterday are the same people who will be denied protection against unfair dismissal. In the first 3 months of their working life they can be sacked for being pregnant sacked for their eyes being the wrong colour and sacked for standing up for their rights and there is no right for them to get redress for the unfairness of those actions. 
I tell Mr Flavell that I have a question for the Maori Party. This legislation is the first test for the Maori Party in this House. This legislation whose first reading was voted for by the Maori Party will damage the economic interests of almost all of that member’s constituents. The Maori Party members are collaborating with the National-ACT Government in doing that. This legislation is the first test for the Maori Party members as to whether they would stand up for the interests of their electorates and they have been found wanting. They have been found wanting because they are supporting this legislation which undermines the rights the income and the living standards of ordinary Maori working families who will be punished by this legislation. Those families will say to you Mr Flavell that you will go the same way as other Maori electorate members who made promises then joined with a National Government—Maori electorate members collaborated with the last National Government—and failed to deliver and to stand up for the rights of your people. You should hang your head in shame at what you are doing in the Chamber today. 
Hon Bill English 
: I raise a point of order Mr Chairperson. This member seems to be unaware of the Standing Order that we cannot address members of Parliament in that fashion—quite apart from the very distasteful language he is using. He was told yesterday by the Speaker not to use that terminology. He is doing it again today and I suggest that the Chairperson advise him to become aware of the Standing Order and to practise applying it in the Committee. 
Hon Darren Hughes 
: The Deputy Prime Minister has a habit of taking this point of order when Labour members are speaking. The speaker before Mr Goff Mr Bennett repeated exactly the same phrase all through his speech but we did not pull him up on it. We let the debate flow. The Deputy Prime Minister has decided he will raise this point whenever a Labour member is speaking. I thought we had one standard of citizenship in New Zealand. 
Hon Trevor Mallard 
: I think it is also important that when the Deputy Prime Minister opines on these matters he is accurate. There are Speakers’ rulings on this matter; I think he will find that there is not a Standing Order. I think he should have a bit of a look at the Standing Orders and the next time he goes to break up a speech at least get it right. 
Chris Tremain 
: I will speak to the senior Opposition whip’s comment about our being the only ones today to bring up the point about incorrect use of “you”. The Hon Trevor Mallard over there has brought it up on numerous occasions. In fact throughout the second reading debate he brought up that point. 
The CHAIRPERSON (Eric Roy) 
: Let me make a quick ruling. Firstly members know that they must raise a point of order at the time—that is important. Members cannot say that because they did not raise a point it should not be raised. It is a matter of whether the institutional understanding and rules of the House are being broken 
. 
 That is the first point. With regard to the point of order I think the Committee needs to bear in mind that when it moves away from a certain standard of decorum that does bring a degree of unrest within the Committee which is not helpful to the debate. I ask the member to continue and to bear in mind the points I have made. Thank you. 
Hon PHIL GOFF 
: Thank you very much Mr Chairperson. The first reason we have opposed this legislation is its inherent unfairness. The second reason is just as legitimate. It concerns how these tax cuts will be paid for. The first way in which they will be paid for is through cutting $1.5 billion out of research and development. At the time when New Zealand needs to be smarter than its competitors this National Government is paying for short-term tax cuts by undermining the ability of our economy to be smart to be innovative to be creative and to be competitive. One award-winning exporting company Endace Ltd made the comment through its chief executive Mike Riley that this cut flies in the face of the knowledge economy. We know that New Zealand as a small and geographically isolated country needs to be smarter than its competitors. That cut to research and development undermines our ability to be smarter and undermines the ability of our industry to create the jobs we need to move forward in the world. 
The second thing that is cut of course is KiwiSaver. Every economist for decades has told New Zealand that New Zealanders need to be greater savers. 
Chris Tremain 
: I raise a point of order Mr Chairperson. We are on Part 1 which deals with tax cuts but the member is talking about KiwiSaver and research and development tax credits which have nothing to do with Part 1 at all. 
The CHAIRPERSON (Eric Roy) 
: There is a certain degree of flexibility. Members can raise issues for purposes of comparison. I do not think the Minister—no the Hon Phil Goff—had strayed too far away from that. Thank you. 
Hon PHIL GOFF 
: Your form of address is 2 years and 10 months premature Mr Chairman! 
The second way in which the tax cuts are being paid for is by gutting KiwiSaver—taking $3.5 billion out of the savings accounts of New Zealanders who for the first time in our history have been given the opportunity and the motivation to save. This bill is a disaster from that point of view as well. 
JOHN HAYES (National—Wairarapa) 
: 
 I rise to speak to Part 1 but first I congratulate you Mr Chairperson on your appointment as Assistant Speaker of this Parliament. Secondly I want to address a couple of the comments made by the Leader of the Opposition who will be ankle-tapped by Shane Jones before he gets to 2 years and 11 months from now. 
The difficulty we face in this debate as politicians is that the community wants more police to be on the streets. It wants better health services it wants lots of big roads it wants excellent welfare benefits and it wants to pay lower taxes. People want to pay lower taxes and that is why they voted against the last Labour Government. They knew that too many taxes were being collected which were being spent inefficiently. We on this side of the Chamber want to avoid inefficiency because if we did not we would pass up the opportunity to make somebody better off at no cost to anybody else. That is what we do by increasing efficiency. 
But taxes by their very nature cause some inefficiency and most of us think we need to pay less tax. Most of us think—and this is the essence of the Labour Party’s argument—that taxes are about only the redistribution of income to a lesser or greater extent from the rich to the poor. 
Hon Trevor Mallard 
: This is redistribution from the poor to the rich. 
JOHN HAYES 
: Well we have two contradictory imperatives I tell Mr Mallard. The first is to avoid needless waste—and he wasted plenty particularly through Sport and Recreation New Zealand—and the second thing is that we want to decrease inefficiency and increase efficiency while making sure that wealth is at least somewhat evenly distributed. 
This legislation aims to make the New Zealand economy both efficient and fair—both efficient and fair. If we look at the actual cuts that are being made we see there is no change for people at the bottom of the income levels. Those who earn less than $14000 a year will pay 12.5 percent in tax. The next step to increase efficiency and put more money in the pockets of individual taxpayers applies to those who earn $14000 to $48000 a year who will have a 21 percent tax rate. The maximum income for that group will be moved to $48000 a year so those earners will be significantly better off. 
We want to put more money in people’s pockets. We want to stop them leaving at a rate of 80000 people a year and going to Australia. People deserted Labour but National is interested in keeping those people in this country. 
I will address the comments made by the Leader of the Opposition when he said we were cutting research and development payments. That is completely untrue. He was arguing that there will be a huge drop in research and development in this country. That is not the case at all. Labour’s policy involved borrowing $700 million and in year 1—this next financial year—paying out $20 million for research and development in year 2 paying out $30 million and in year 3 paying out $40 million. That is not what we are doing. We are paying out $75 million a year over each of the next 3 years. That is significantly more than what Labour was going to pay for research and development but we are doing it in a different way from Labour. We did not have to borrow $700 million in order to kick off that fund and that is why we are able to start from lower base borrowing than the Labour Government did. 
This is not a 1-year programme; Mr English has been extremely ingenious in constructing this tax package. In the year from 1 April 2010 for the earners group of $14001 to $48000 a year we will lift the limit to $50000 a year and give those people a tax cut. We will increase the tax cut available to people earning from $50000 to $70000 a year. Again in year 3—in 2011—people in the $14000 to $50000 a year earners group will get a significant reduction in tax. That will be the pattern in every year. Why will we do that? We need to put money into people’s pockets. When I go to Kuripuni in Masterton in my electorate I see people who are on an average wage of $12 to $15 per hour. We need to help those people because they have children to bring up holidays to take and transport to pay for. Tax cuts will pay for that. 
Hon TREVOR MALLARD (Labour—Hutt South) 
: 
 I think that John Hayes who I understand comes from Wairarapa has an incredible cheek to speak on the Taxation (Urgent Measures and Annual Rates) Bill because Wairarapa other than the electorate of Dunedin North which mainly consists of students is the electorate in the country with the most people aged 15 years and over who earn $40000 or less. This is the very group that has been most attacked by this legislation. I do not know whether John Hayes is thick whether he has not read it or whether he is being a hypocrite. I do not know which of those things he is doing but I will leave one out and just say that he is silly. It is one or two of the other words. 
Hon Member 
: Why don’t you just come across and punch him. That’s a good idea. 
Hon TREVOR MALLARD 
: No no. Next time he tries to throttle me I will. 
Getting back to the legislation I say that John Hayes did not understand the way that thresholds interplay with rates. As a result of this he did not understand what was in the legislation that is now being taken out. The tax changes previously legislated for the threshold rate currently at $14000 going to $20000. The effect of this change means a loss of almost $500 a year to some of the poorest income earners. That is without doing some other things as well that impact on them in the KiwiSaver and other changes. 
I ask John Hay whether when he goes to Masterton East to the poorer areas and to some of those schools he will explain to people that he is putting his hand into their pockets taking their wallets and taking out $9 or $10—not a year but every week. I wonder whether John Hay is prepared to act as a personal tax collector for the chief executive of Telecom whether he is prepared to wander around 50 Maori families to take $10 a week from out of each of their pockets and hand it over to the chief executive of Telecom who gets the extra $500. Is John Hayes prepared to work his way around? 
Craig Foss 
: His true colours are being shown right there. 
Hon TREVOR MALLARD 
: No no. I am making it very very clear that the Maori Party is collaborating with this change which will result in John Hay going around Maori families and getting the tax collector to put his hand into the pocket of those Maori families—not all of them only the poor ones—and taking out from their pockets $9 or $10 a week and handing it over to the chief executive of Telecom and his like. How many Maori families will John Hay have to go around in Masterton East? He will have to go around about 50 or 60 families to collect up the tax cut which is being handed over to people on the highest incomes in New Zealand. As well as that will he be prepared to tell the people in Masterton that the taxation bureaucracy in Wellington will climb enormously to handle the provisions of clause 12 which is within this part of the bill? 
The CHAIRPERSON (Eric Roy) 
: Speakers’ ruling 26/7 is quite specific about the use of the correct name. The member of Wairarapa whom you were referring to as Mr Hay is actually Mr Hayes. It is a small point but if we do not use correct names names can be used in a way that is inappropriate. 
Hon TREVOR MALLARD 
: Which one is the correct one? 
The CHAIRPERSON (Eric Roy) 
: Hayes. 
Hon TREVOR MALLARD 
: Thank you Mr Chairman and I apologise to the member. He is one of a number of the back benchers who have not quite made an impression over the 6 years that they been in Parliament. 
Hon Member 
: Only for 3 years! 
Hon TREVOR MALLARD 
: No wonder I did not notice him in the first 3 years. 
Returning to the bill I ask the Minister in the chair Bill English who I understand will take a call what the extra budget is for the Inland Revenue Department to implement schedule 1 in clause 12 of this bill. Clearly this will involve a lot of extra work for the Inland Revenue Department. It will require extra staff and I want to know whether these extra staff have been provided and what the costs of those extra staff are to implement the schedules of the bill. I want to know from the Minister of Finance whether these staff will be regarded as front-line staff or not. Are the people who are working out these credits and it might be a very cunning job creation scheme on the part of the National Party— 
Chris Tremain 
: I raise a point of order Mr Chairperson. We are wandering way off Part 1. Tax credits are in Part 3 of the bill. This is Part 1. Can you bring the member back to the part please. 
Hon TREVOR MALLARD 
: Speaking to the point of order I point out that clause 12 is in Part 1 and it is the clause that puts in the schedule that implements the employers’ superannuation contribution tax. 
The CHAIRPERSON (Eric Roy) 
: I will not uphold the point of order. 
Hon TREVOR MALLARD 
: The point I was getting to is that the bureaucracy that will be involved in this could well be a cunning job creation scheme to make sure that the unemployment in the electorate of Wellington Central—the electorate of Grant Robertson—does not fall. I want to know whether that is a deliberate policy. And I want to know from Sir Roger Douglas whether he regards clause 12 as something that is efficient that is pure and that works towards a fair tax system or whether he regards it as something that pushes up the marginal tax rate—the effective tax rate—for a lot of lower and middle income earners. Because that is what it does. It pushes up the marginal tax rate and at the same time it requires a bureaucracy of tax officials in order to check probably tens of thousands—and maybe hundreds of thousands—of returns to make sure that people are eligible. In fact it puts a whole new group of people into the group who have to file returns in order to get changes in tax rates. 
We have had quite a good system over the past few years in New Zealand where fewer and fewer people have had to file tax returns because it is all done as part of the wash-up and if people consider they have been fairly treated then they do not have to file a return. One of the effects of this bill will be that a whole new group of people probably hundreds of thousands of people will have to file a return which then has to be processed. And we have to employ people to process it. Rather than moving towards being efficient towards being proactive and towards chasing some of the delinquents in the way that has been done under the previous Minister of Finance—and that has had I think it is fair to say very good effects on the revenue—we will have as a result of clause 12 in Part 1 a new army of people who look at the forms being sent in load them into the computer and then check them at the end of the year— 
Hon Annette King 
: Is it definite it’s a wash-up yearly or— 
Hon TREVOR MALLARD 
: No no; it can be in the wash-up yearly or it can be the other way. It does not matter; whichever approach is taken there needs to be either bureaucrats at the front end or bureaucrats at the back end if it is to be done as a wash-up. As a member of the Labour Party and somebody who has had a lot to do with the Public Service Association (PSA) I welcome the approach of the Minister of Finance in building PSA membership. Building up PSA numbers is I think a good thing to do. 
Hon BILL ENGLISH (Minister of Finance) 
: 
 It is interesting hearing from a Leader of the Opposition who cannot tell the difference between a decile 1 and a decile 10 school and I expect that reflects the kinds of dilemmas that the Labour members will have to deal with over the next few years as they try to decide who they are. Let us just—[ 
Interruption 
] Well the public is not listening either to be quite frank. I think that is the difference. 
Let me make a couple of points clear. This is a different tax package from the previous Labour Government’s tax package. There has been ample opportunity over the last 12 months for everyone to poke and prod and discuss the details of it and the public did that. Then there was a general election. The only reason we have this bill with the National Party’s tax package in it is that the public of New Zealand voted in a different Government. If the public wanted the former Labour Government’s tax package they had the opportunity to vote for it and they did not. 
One of the reasons they did not is the spin and crocodile tears that the nasty dirty previous Labour Government had got into the habit of using. Let us just look at some of the stories Labour members are telling. The member from Hutt South—I do not know how he managed to win the seat actually—talked about taking cash out of people’s pockets. 
That is actually just wrong. No one is going to be worse off as a result of our passing this legislation. 
Hon Darren Hughes 
: Oh yes they are. 
Hon BILL ENGLISH 
: No they are not. The Labour Party keeps putting up some cases where if Labour had been re-elected and if it had kept its promises about taxes which it never did before then some people would have got more. That is bound to be the case when this is a different tax package. The thresholds and rates are different. But let us talk about some of the people— 
Hon Darren Hughes 
: That’s intellectually dishonest and the member knows it. 
Hon BILL ENGLISH 
: Well it is just a different tax package. I know the Labour members find it very difficult to understand that if one gets elected into Government it is to execute one’s policy and that when one gets thrown out of Government it is because people did not want one’s policy. 
Hon Darren Hughes 
: Arrogant! 
Hon BILL ENGLISH 
: Well no; that is what the voters think. I just accept their verdict. 
Let us take some of the people whom Labour members say they are crying about—the 630000 low-income New Zealanders who will get the independent earner rebate. They got nothing under Labour in 9 years of low incomes in the best economic period of a generation and they know that. Every person without children who was earning under $44000 got nothing—nothing. Full-time earners earning $24000 to $44000 got zero. The reason families do not get a big benefit out of this package is that in the last 2 or 3 years they have had big benefits. Their after-tax incomes have gone up very substantially. National has locked in the Working for Families package in its entirety and now it is the turn of the 630000 people for whom those members now cry crocodile tears but for whom for a decade they did nothing to help. Now it is their turn and National is delivering a tax package that will give 630000 low and middle income earners—yes; members of unions who voted for us because they thought Labour would give them something—some benefits. 
Those people waited loyally for a decade and they got nothing and Labour is telling us today that we are making a mistake in giving it to them. Well that is what we will say when we go back to our electorates to people earning $35000 who got nothing from Labour in 10 years. We will say that we promised them something and here it is and that Phil Goff is trying to stop it—630000 people. The Labour caucus thinks that Mr “Phil-in” is the answer. Well the reason he is not the answer is that he has not understood that fundamental political problem for Labour. 
These personal tax cuts deliver substantial weekly gains to the 630000 people who were ignored by Labour despite the fact that in three elections in a row a good proportion of them voted Labour. That is why those Labour members are out of touch and out of Government. Those people got tired of being told that it was the students it was the people with families or it was the bureaucrats who would get the next $300 million but those hard-working battling Kiwis who do not happen to have children would get nothing. 
This is a balanced package because we are locking in the gains families made which were considerable and we are keeping them in their entirety— 
Hon Dr Michael Cullen 
: Oh what a generous man. 
Hon BILL ENGLISH 
: —we cannot have everything I say to Dr Cullen as he used to tell everybody—and we have added to that a mechanism that provides increasing weekly incomes for 630000 people who earn under $44000. These are not the higher-income high fliers. These are Mr Cosgrove’s heartland voters which is why he lost the party vote in his electorate. I ask when Labour members are going to figure that out and when they are going to figure out that some people hearing the crocodile tears today from Labour just will not believe it because they know it is wrong. 
What about other people who earn under $20000? Well 300000 of them are beneficiaries. I ask what the Labour Government did for those people through a decade of the best economic times we will see in a generation. Mr Goff did not mention them but I bet he will now he is in Opposition. He will go on and on about what National is doing to beneficiaries when he did nothing for them. When Labour members go on about who is affected by the changes in these tax rates I say that a big part of that group under $20000 are beneficiaries. The other group are superannuitants. Superannuitants are the biggest single group who earn under $20000 and they are considerably better off as a result of these tax cuts. In our constituent clinics we are going to say to them: “We promised you more super through lower taxes and we have delivered you more super through lower taxes. It’s that simple.” They’ll go: “Well that’s a fair cop. I didn’t vote for you but next time I will because you kept your word.” That is the other big group under $20000. 
The Labour Party will cry crocodile tears. There will be some people where the rates and thresholds mean that compared with what Labour would have done if it had been elected— 
Hon Dr Michael Cullen 
: No it’s the current law. 
Hon BILL ENGLISH 
: Well the 2005 “chewing gum tax cuts” were the law and we remember what happened to that. Broken promises on tax cuts meant half the people did not believe Labour would keep its promises on these tax cuts. 
Hon Darren Hughes 
: That’s not true. 
Hon BILL ENGLISH 
: Well I ask why Labour members are in Opposition if they had such a magnificent tax package. It has to be because people did not believe them and they were right not to believe them because the last time Labour made promises about tax cuts it broke those promises. 
This bill is a step in a direction of a broad based - low rate tax system. It delivers benefits for many people who missed out on the benefits of economic growth in the last 10 years and we are very pleased to support it. 
Hon ANNETTE KING (Deputy Leader—Labour) 
: 
 What a collection of blatherskite we have just heard from the Minister in the chair the Minister of Finance!. He was trying to put the Tory spin on policy that is going to hurt the most vulnerable in our society. It does not matter how Mr English cuts up the Taxation (Urgent Measures and Annual Rates) Bill package here in this House: we know the truth about what is happening to vulnerable New Zealanders today. 
He had the cheek to tell this House and New Zealanders listening that if we had wanted to discuss the National Party’s tax policy we had had a whole year to do so. That is what he told us. Well I have to say to Mr English that his nose grew an inch because the National Party released its tax policy in October this year and New Zealanders and this House had no opportunity to debate it. People on the hustings had to get what information they could from a website. They had to scrounge for information in order to be able to debate that policy. That is the truth of the matter. The National Party released its policy in October this year. 
I ask why it would release it so late. It was because National did not want scrutiny of its tax policy. It did not want New Zealanders to know that it was going to pull the biggest Christmas hoax on New Zealanders that anyone has pulled since Ruth Richardson in 1991. That is what National was doing. Mr English backed up Ruth Richardson then and he is doing it now. She was the mistress who taught him the tricks he is using now when he has the opportunity. 
Mr English said this bill is going to help hard-working Kiwis who had got nothing under a Labour Government for 9 long years. He referred to people who did not have families. He said the Labour Government had looked after those with families. Of course that was “communism by stealth” a few months ago and National voted against it at the time; now it has adopted it. But he did say that we had looked after families. What National has bravely and courageously done is to look after people who have not got families—hard-working poor New Zealanders. Mr Bennett is shaking his head. I hope he realises that hard-working poor New Zealanders must have a net income of $24000 before they can access National’s independent earner tax credit. So the lowest-paid New Zealanders who do not have children the most vulnerable who probably have a gross income of around say $30000 do not get anything. I ask Mr English why they are not included. I ask why they do not get the tax credit which he said was for the battlers the hard-working Kiwis of New Zealand. They do not count. They do not count because they do not vote National. That is how cynical it is. This policy is not about giving something to those who have not got children; it was a smart little manoeuvre during an election campaign to try to garner a few more votes. 
Perhaps Mr English will tell us what happens to the hard-working battling Kiwi families who earn $23500 net—the husband and wife both earning $23500—and whether they get this tax credit. No they do not qualify. They have a very low income they are working hard but they get diddly-squat. The words about caring about New Zealanders the low paid the vulnerable and the underclass of New Zealand are nothing more than a hoax on the people of New Zealand. I ask why this tax credit does not cover all of those people if caring about New Zealanders was the genuine intent of the National Party. We have seen through the tricks. 
I just have been in a taxi. We all know that taxi drivers know everything. They are already starting to wonder what this is all about. National has been in this House for 3 days and its first attacks are on the vulnerable New Zealanders. Its first attacks are on women children the low paid and the people who do not have children—the very ones National said it was going to support. I can tell members that in my own constituency of Rongotai almost 30000 people earn less than $40000. In some way or other they will be affected. 
Dr PAUL HUTCHISON (National—Hunua) 
: 
 Thank you Mr Chair for the opportunity to speak on the Taxation (Urgent Measures and Annual Rates) Bill Part 1 “Personal tax cuts”. It is absolutely extraordinary that the Opposition— 
Hon Dr Michael Cullen 
: Speak up for the common man. 
Dr PAUL HUTCHISON 
: I missed that. Would Dr Cullen like to say it again? 
Hon Dr Michael Cullen 
: Speak up for the common man. 
Dr PAUL HUTCHISON 
: Absolutely because that is what Dr Cullen did not do back in 1999 when he said he would raise New Zealand to the top half of the OECD. I ask members what happened. We went down two slots and that affected the common man very very deeply. 
Mr Chairman I personally congratulate you on your appointment as Assistant Speaker. I am sure you will do an absolutely superb job. 
What I think is extraordinary is that this tawdry Opposition has not made any mention of the fact that we are in urgency over this bill. It is absolutely right and proper that this is going through under urgency because after all it has taken 9 long years of a very tawdry Labour Government before finally the New Zealand people are going to receive this well-deserved tax break. It is also quite extraordinary and ironical that when the Labour Government came into power back in 1999 the very first thing it did was to raise personal tax from 33c to 39c and that was very ably pointed out by the new ACT member John Boscawen an hour or two ago this morning. 
The very thing they did was to curb personal freedom and to curb incentives and signals for thrift enterprise and reward for effort. And it is no wonder that record numbers—tens of thousands—of New Zealanders have left this country for Australia. They left because the Labour Government had no understanding of the fact that New Zealanders wanted to have incentives to ensure they were indeed rewarded for effort. In the last year 80000 people left. New Zealanders left in huge numbers because they realised that the Labour Government was mediocre and had already caused New Zealand to go down two places on the OECD ladder. That of course very much affects the common person and affects his or her standard of living. 
After all it was Dr Cullen who mentioned Labour’s legacy of 1990. Dr Cullen should remember that in 1990 New Zealand was technically bankrupt. Unemployment was at its highest level inflation was about 7 percent and interest rates were 22 percent. But let us shift on to 2008 after 9 years of Dr Cullen’s regime. His Government came into office with a growth rate of 4.6 percent and ever since it has gone down and down. His Government came in with a growth rate in the last quarter of 4.6 percent and ever since then it has gone down. 
Look at it now. Look at the dire predictions of Treasury and the Pre-election Economic and Fiscal Update of 10 years of deficits. [ 
Interruption 
] Well I say to Dr Cullen that he is part of the fault; there is no doubt about that. That is the legacy left by Labour and that indeed is part of the reason that so many New Zealanders have been leaving for Australia over the last 9 years. 
The other point of course is that these personal tax cuts outlined in Part 1 are absolutely central to the concept of personal freedom and to the concept of reward for effort. This is something espoused by the National Party since 1936 as fundamental to getting an enterprise economy and resisted year after year Government after Government by the Labour Party. That I say to Dr Cullen is why he is over there. 
Hon PAREKURA HOROMIA (Labour—Ikaroa-Rawhiti) 
: 
 I think Treasury was quite clear on the platform that has been left by the well-managed Labour Government of the last 9 years. It has been quite specific about the performance and the free way forward for the Minister of Finance. The last speaker talked about 1990. I remind him about 1999 when in relation to Maori people the unemployment rate was tracking at 28 to 32 percent. When our term in Government finished it was tracking at 5 percent. At the end of the 9 years—during the last 3 years—Maori were going into the workforce at the rate of 4 to 1. That represents the very very important effort that went not only into Maori but into all people in this country. 
It was really interesting to hear Mr Bennett talk about redistribution. He was quite right: it is redistribution of money from the poor and those who need it to the wealthy. He is revelling in those who are milking the till in his dairy-sodden area of Hamilton. And it is important to understand what Mr Hayes was trying to say. The National members opposite are making sure they are making hay over there but this budget hints at what is to come in their period in office. One does not need to be a rocket scientist to understand that this is one of the worst starts—one of the most overrated starts—by a financial manager in relation to a parliamentary session. This measure is disgraceful. It punishes the people who need the money and it is being done with an attitude of arrogance. Mr Hayes will remember that in the time of the last National Government all the State houses in the Wairarapa were sold. A whole lot of hinting is going on by this Government’s financial manager. There are hints that no more State houses will be built and that landlords will have the right to manage housing issues in this country. 
This measure is about redistributing money that is not National’s—$3.5 billion out of KiwiSaver. That is outrageous. My plea to the Maori Party is not to support this bill because it will hurt Maori people. It will hurt them badly. In terms of incomes of up to $40000 a year 73 percent of Maori will not get anything in this budget— 
David Bennett 
: Budget? 
Hon PAREKURA HOROMIA 
: In this allocation. Last night Nick Smith said that this was the politics of envy. That was said in relation to the example we brought up of someone who was benefiting from Working for Families and KiwiSaver and who has one child and earns $50000 a year. He or she would lose $80 a week. What is the answer to that? It is outrageous. Bill English is pitching up the macro and making out that research and development funding is something this country does not need when the unions the Business Roundtable and the Government agreed that would be the best injection to go forward on. 
I ask the Maori Party what it is going to tell the 73 percent of our people who are working and who will get nothing in this budget. What are we going to do about that? Where is the improvement for our people that was promised by the National Party? Maori were hoodwinked going forward in relation to this financial statement. Mr English goes on about giving a fair go to earners who do not have children. It is fascinating when we line that up alongside the entry on KiwiSaver. He is going to take a fair bit out of research and development but there is no mention of how much people will lose in relation to knocking KiwiSaver down. 
This measure is a disgrace. This is one of the most hurting entries in a parliamentary session for our Maori people and the Maori Party is going to vote for it. Hone Harawira knows it is wrong. The members of that party are going to vote for this measure. They are going to support something that undermines the rights of their people and they want to talk about other issues. But in relation to income—[ 
Interruption 
] What will they tell people in Flaxmere? What will Chris Tremain tell people when I see him wandering around there? What will he tell people in Camberley? He has nothing to tell them and he knows that this issue is right on his doorstep. He knows that the people sitting in his electorate will be hard done by under this legislation. This bill is not fair and the member knows that full well. 
At the end of the day this measure is not an improvement. It is bad for Maori people and the Maori Party should vote against it. It still has time to do that. 
CHRIS TREMAIN (Junior Whip—National) 
: 
 I move  
That the question be now put 
. 
Hon CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 I rise to speak to Part 1 in relation to the thresholds and it is interesting that the Government moves so quickly to close the debate down. Again I want to comment on a point made by Mr English. He made great play when he got up to speak to Part 1 about the level these so-called tax cuts had dropped to. He alleged that the Labour Government had done nothing for low-income people. He talked about beneficiaries and said that the Labour Government had done nothing for these people. Of course the Labour Government did do a lot for beneficiaries. The primary thing it did was to give most of them a job. It created 350000-plus jobs through its 9 years of Government. 
But I just raise this point with Mr English and I would be indebted if he would answer it. It is Mrs King’s point in relation to the thresholds abating at the lowest level and the independent earner tax credit. I think he quoted the fact that 600000 low-income people were going to be helped by this tax package. But I again put this scenario to him and I would be grateful to hear his answer. A person on $23999—someone who does not breach the $24000 threshold—gets nothing. So let us say that we have a person on one side of the fence who earns $23999 and gets nothing and has a neighbour on the other side of the fence who earns $24000 and kicks in and gets the tax credit. Well what is fair about that? The so-called low-income people that Mr English—late in life in his career in politics—says he has decided to actually think about and maybe do something about will get nothing from this package. I invite Mr English to deal with that point. We are debating the tax thresholds kicking in and abating whereby if I am on $23999 I get nothing but my neighbour across the fence once this kicks in at $24000 will get something. I am addressing the Minister’s point in rebuttal which is valid because he got to his feet and raised that point. 
I would like to know where that person will acquire the aspiration that National kept talking about during the election. How will that person choose a brighter future? Does a brighter future even exist for that person? Where would that person go hunting for it? That was the aspirational rhetoric used by Mr English during the campaign. One would think that everybody was sucking up aspiration through every pore. Well a person on $23000 who does not breach $24000 ain’t getting a lot of aspiration ain’t getting a lot of help and ain’t getting any assistance at all. These single people with no kids the quartile that Mr English says his Government will help will get nothing. 
National members did not campaign on this package but Mr English says they went around the country and line by line every person went through it with a microscope. He said they were all told exactly what they would get. Well this huge group of people I referred to must have been told they would get nothing. 
John Hayes 
: No. 
Hon CLAYTON COSGROVE 
: In fact they were not told. It was never announced. There is a word for that behaviour. If members look at page 2 of the  
New Zealand Herald 
 they will see that people earning less than 40K will get zip. That fact was never canvassed with the electorate at all. I invite Mr Hayes to go and find 10 or 20 of his constituents on $23999 singles and say to them: “You knew that we the National Party in Government were going to give you nothing.” I invite him to find five people or even two people. 
Hon Annette King 
: Did he tell them that? 
Hon CLAYTON COSGROVE 
: Did Mr Hayes tell that to his constituents? Oh no. I bet he could not find one person. He should take out an advertisement in his local paper inviting all those people on $23999 with no kids who will get nothing from this package to write to him and confirm that they knew all about this before they voted at the election. I doubt he would get one reply. 
John Hayes 
: 12.5 percent is just brilliant. 
Hon CLAYTON COSGROVE 
: I put a question through the Chair to Mr Hayes: “Can you name a person in your electorate who knew about this? Did people know about this?”. I bet they did not say that to the Sir Les Patterson of this Parliament. They did not know about this at all. 
DAVID BENNETT (National—Hamilton East) 
: 
 It is with great consideration that I move that the question be now put. 
The CHAIRPERSON (Eric Roy) 
: No the member is out of order. 
Hon DAVID PARKER (Labour) 
: 
 We have heard Government members extolling the affordability of these tax cuts and then in the same breath saying that they have inherited a difficult set of financial cards from the Labour Government. I want to put on record the nonsense that has already been written into history by the previous National Government. It left the prior Labour Government with debt that was 35 percent of GDP. 
Hon Parekura Horomia 
: How much? 
Hon DAVID PARKER 
: It was 35 percent of GDP. Not as bad as the National Government before that which left the Labour Government with debt at 60 percent of GDP but still too high. We inherited debt equal to 35 percent of GDP. We reduced it during the 9 years of wise stewardship under the Labour Government to 17 percent of GDP. The fiscal position of the Government is very very good. We are hearing exaggerated rhetoric from the National-led Government that is now complaining that there are all sorts of hidden expenses. It is overstating things in respect of accident compensation. National members are saying that they have all sorts of problems and a difficult set of cards to play from here on. But the reality is that they have had a very good set of fiscal settings left to them—debt at 17 percent of GDP and low unemployment amongst the lowest unemployment in the world—and they still complain that they have a difficult set of cards. Over the next 3 years we will hear National members say they cannot do this they cannot do that and that it was the Labour Government’s fault. 
But the reality is different. National has inherited an almost unparalleled position compared with most developed countries in the world. We are in a position to help people in New Zealand get through this recession but this bill does not do it. It does not help the people who need it most. Low-income people do not get help under this bill. In fact money comes out of their pockets not just out of the pockets of those in KiwiSaver although all of those in KiwiSaver are worse off no matter what their income is. All those who are on lower incomes even if they are not in KiwiSaver are worse off under Part 1 of this legislation. It is disgraceful. National is saying that Labour did not do enough for low-income people who did not have children. Yet this bill ignores the lowest-income group without children and does not give them any help. The National Government is set to increase New Zealand’s debt in a way that is unnecessary by giving greater tax cuts to those who are already well off nothing to those who are worst off and not changing the position of those families with children who have rising costs to meet and increasing debt. We will see increasing unemployment. 
At the same time the Government is gutting the research and development effort that we need to fund our growing economy. Research and development expenditure in New Zealand is quite good at the Government level and it is poor at a private sector level. The research and development tax credit which this part of the bill abolishes through the schedule matches New Zealand’s position to Australia and indeed in some ways betters it. But this bill tears out that research and development tax credit in order to fund tax cuts for those who need those tax cuts less than the lowest-income people who do not get anything under this legislation. 
The other anomaly here is that we have had 3 years preceded by 3 years and preceded by 3 years before that of the National Government saying that the threshold at which the highest marginal tax rate cut in was too low. It complained that the $69000-income level at which the highest tax rate cut in was too low a threshold. The Labour Party in its tax package increased the threshold for the highest marginal tax rate to cut in at $80000. What does this bill do? It does exactly the opposite of what the National Party said should happen. It actually drags back the threshold so that the highest tax rate cuts in at $70000. That is the exact opposite of what National said for 9 long years in Opposition should be done. Nine years in planning what National should do with tax and it dishes up this irrational piece of legislation. 
CRAIG FOSS (National—Tukituki) 
: 
 I move  
That the question be now put 
. 
Hon NANAIA MAHUTA (Labour—Hauraki-Waikato) 
: 
 The Maori Party members must be hanging their heads in shame on this bill right now. They must be shaking their heads because I am absolutely sure that when they walked into their mana-enhancing relationship they did not realise they were delivering hardship to vulnerable families—or maybe they did realise that. At no point during the election campaign when they were championing the rights of vulnerable people of Maori families of young people of poor people and of people without work did they think that they would be supporting a measure like this which delivers tax cuts to those who really do not need them at the expense of the poor the vulnerable and the children in many of our communities. They must be hanging their heads down in shame. 
We know that 74 percent of the people in Te Ururoa Flavell’s electorate of Waiariki earn less than $40000. Yes 74 percent of families in Waiariki earn less than $40000. So when we look at who will really benefit from this measure we see that not many families in Waiariki will benefit. Clayton Cosgrove raised the point that people earning around $23999 will get absolutely nothing. The Maori Party members must be hanging their heads in shame. They must be thinking again about the implications of a mana-enhancing relationship that puts at the centre-front of the stage a measure benefiting those who do not need it at the expense of the vulnerable the poor children and families in many communities around Aotearoa New Zealand. Let us see that one being explained to the Maori electorates. It is no wonder that the people in those electorates voted to have the Labour Government continue its policies; they knew that at least we do what we say we are going to do. We do not say one thing so that people will support us then deliver something totally different. 
As I said that mana-enhancing relationship had better be explained very carefully to the 74 percent of Maori in Waiariki who earn less than $40000 because they will be very concerned about what they are hearing today in this Chamber. They will be very concerned that the things they thought they were voting for in supporting members of the Maori Party are not being delivered. They have not been told about it. We are putting this legislation through in urgency. We are addressing the very issues that people really want to hear about in urgency. 
People have to ask themselves why at a time of economic hardship when there is a financial crisis when many families just before Christmas are wondering how they are going to pull it all together over the next 2 years the Government is doing that. What is the National Government—supported by ACT and the Maori Party—doing? It is delivering tax cuts at the expense of poor vulnerable families in our community and it needs to be accountable for that. That level of accountability has to ensure that people are not duped by the types of changes that will be bulldozed through the House over the next few days. People need to know about them. I can see Paul Hutchison looking at me quite carefully; the people of Tuakau in his electorate need to know the cost of this tax cut to those families in Tuakau whom Mr Hutchison knows I represent who will be negatively affected. They will not see a dime. They will not see any benefits from this policy. Mr Hutchison knows that and I know that. When we are at our next community meeting I look forward to his explaining this policy to many members of my constituency. 
Let us recap. At a time when the most vulnerable in our society need more support not less we have tax cuts that are not delivering to them at all. People should be very concerned. Annette King the previous Minister of Justice raised very good points about the implications in terms of lifting about 220000 children out of poverty. How will this measure benefit those families? There is no explanation from the other side of the Chamber. The Maori Party must be very very concerned at this time. Those members should be hanging their heads in shame. As I said 74 percent of the people in the Waiariki electorate earn less than $40000 very few of whom will see any benefit from this measure today. 
Dr PAUL HUTCHISON (National—Hunua) 
: 
 I move  
That the question be now put 
. 
The CHAIRPERSON (Lindsay Tisch) 
: The Hon Ruth Dyson. 
CHRIS TREMAIN (Junior Whip—National) 
: 
 I raise a point of order Mr Chairperson. We have had 19 speeches on this part of the bill today. That is a significant number of speeches. 
The CHAIRPERSON (Lindsay Tisch) 
: I am the sole arbiter of the time allowed for the debate. I call the Hon Ruth Dyson. 
Hon RUTH DYSON (Labour—Port Hills) 
: 
 Mr Chairman thank you for the opportunity to give my first contribution in this part of the debate. I am very keen to ask the Minister of Finance some questions and I am even keener for him to answer them. That is because I have been watching his National colleagues respond to our contribution on this Taxation (Urgent Measures and Annual Rates) Bill and it is very clear to me that National Party members and in particular Chris Tremain and John Hayes do not understand what is in the bill. Either they have not read it or had it explained to them or the printed version is different from the draft they were given. We know that the taxation policy of the National Party was released in October. That was not very long ago. I would have thought that before a bill came before this Committee the members of the party that is supporting it would have it explained to them. 
First of all I ask the Minister whether he has explained the bill to his colleagues. Do they know what is in it? Are they prepared to put their names to it fully aware that they are increasing taxes for the lowest-paid and most vulnerable people in our community? [ 
Interruption 
] The constituents of the Wairarapa should know that their member of Parliament John Hayes has confirmed that yes he is prepared to put his name to a bill that increases the marginal tax rate for the lowest-income earners in our country. 
I ask Mr English as the Minister to respond to this next question. Under existing law what is the 2011 marginal tax rate for a person who is earning between $14000 and $20000 a year? Mr English does not know the answer to that but the Hon Dr Michael Cullen has indicated he does so if he interjects— 
Hon Dr Michael Cullen 
: 12.5 percent. 
Hon RUTH DYSON 
: It is 12.5 percent. That is the answer to that question. That is currently the 2011 marginal tax rate in the existing law. Under the legislation that we are now debating in urgency which is a matter of critical importance because it increases the tax rate for the lowest-income earners in our country what will be the marginal tax rate for those same people? What—and it will be in force immediately upon the implementation of this legislation—is it proposed to be? 
One would think that the proposed rate might be lower than 12.5 percent because those people are the lowest-income earners in New Zealand. Well the answer is 21 percent. The current law is for the 2011 marginal tax rate to be 12.5 percent and the proposal is to put it up to 21 percent. I ask Mr Hayes which is higher: 12.5 or 21? The answer is that Bill English is proposing to this Parliament that the marginal tax rate for the lowest-income earners in New Zealand be increased from 12.5 percent to 21 percent and all the National Party backbench members should know that before they put their names to this legislation. ACT probably thinks that that rate is getting close to being about right. 
The Maori Party should know that its most vulnerable constituents the people who make the most effort to work fewer hours than the full-time cut-in for the amazing new independent earner tax credit are going to be penalised so that the chief executive of Telecom and the Prime Minister of New Zealand can get a lofty great tax cut. What is fair about that? What is progressive about that? How does that help any single individual or family let alone the New Zealand economy? The answer is that it does not. It takes us back to the division the poverty and the disempowerment that we saw Bill English preside over as chair of the Finance and Expenditure Committee during the bad old days with Ruth Richardson as Minister of Finance. During the election campaign people up and down the country said that National had said it would not go back to those days and it would not penalise the most vulnerable people in New Zealand. Less than 24 hours into the start of this Parliament we see promise after promise being broken by the incoming National Government. The most vulnerable people in our country are paying for that and we will make sure that they know exactly what the National members are doing. 
JOHN HAYES (National—Wairarapa) 
: 
 I move  
That the question be now put 
. 
LYNNE PILLAY (Labour) 
: 
 Thank you Mr Chair for recognising the importance of debating this horrible Taxation (Urgent Measures and Annual Rates) Bill. I think that this bill should be renamed the “Personal Interest Tax Cut Bill”. It is for the personal interest of the National Party and its wealthy supporters who will benefit the most from this bill. It is the redistribution of wealth from the poor the working families and the modest-income earners in New Zealand to the wealthy. It is from a party that campaigned on a brighter future. 
Sitting suspended from 1 p.m. to 2 p.m. 
Debate interrupted. 
Points of Order 
Bills—Availability in Urgency 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 I raise a point of order Mr Chairperson. Before we resume can I raise again the issue of the absence from the Table of the House of those bills for which urgency has been taken. There is now some public concern as well as concern from members of the House. 
Hon GERRY BROWNLEE (Leader of the House) 
: 
 I think that is a legitimate concern and I will make every effort to ensure that those bills are available as the afternoon progresses. 
Taxation (Urgent Measures and Annual Rates) Bill 
In Committee 
Debate resumed. 
Part 1 Personal tax cuts ( 
continued 
)  
LYNNE PILLAY (Labour) 
: 
 As I was saying before the lunch break the personal tax cut part of this bill is actually a redistribution of wealth; a redistribution from working New Zealand families from modest-income earners and from beneficiaries to the wealthiest who are the biggest beneficiaries of this bill. Every worker earning under $44000 and particularly those who have families will be worse off yet those are the people who need tax cuts the most. Over 2 million New Zealanders—65 percent of New Zealanders—will not benefit and some will be disadvantaged by this bill. That shows how out of touch the National Government is. 
Let us look at the 800000 people who have signed up to KiwiSaver. They have committed to saving 4 percent of their incomes with fair employer contributions—and 4 percent is a fair employer contribution—[ 
Interruption 
] Yes this change is on top of the tax cuts. Now the employer contribution will be slashed to 2 percent and that will have a dramatic impact on those people’s ability to save for their future on their children whom they have signed up to KiwiSaver and also on their dream of having a sizable deposit for a new home. National members have said they will maintain Working for Families; after their calling it “communism by stealth” and pouring vitriol over us for introducing that policy they are going to maintain it. But indeed working families are going to be much worse off under National’s tax policy. 
I think many many Kiwis have been conned. They are expecting a sizable tax break. When Kiwi battlers get their first pay cheque in April they will realise that oh my goodness the future is not very bright for them and they will wonder what they are going to do. They are on a low income and they have not had a tax cut. Their income has been cut—not their taxes. They may think that State housing can help them get ahead but guess what? Building new State housing has ceased under the National Government as well. They may think about compensating for the cut in their income that effectively the tax increases have given them. They may try to get a better-paid job so that they can break even and be where they were before. If they get a new job they may get an extra 50c an hour but guess what? They will have no security of tenure in that job. Under National’s policy in the future they can be sacked any time within 3 months after being hired. That will be a big risk for them to take if they want to better their income to get ahead and to get back to where they were before. Kiwis have been conned. They believed that there was going to be a brighter future. I say that if this is a brighter future I would hate to see a gloomy future for Kiwis. 
Another implication of the tax cuts is that we will have less money in the tax take. There will be a big drain of money from the tax take because of the big tax cuts for those on high incomes. People such as members of this House will benefit tremendously at the cost of low and modest income earners and Kiwi families. The implications of the tax cuts will affect us all. They will affect health spending. They will affect education. They will probably affect early childhood education tertiary education and apprenticeships—all the trade training that started under this Labour Government. 
NATHAN GUY (Senior Whip—National) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 68 
New Zealand National 57; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 52 
New Zealand Labour 43; Green Party 8; Progressive 1. 
Motion agreed to. 
A party vote was called for on the question  
That Part 1 be agreed to. 
Ayes 68 
New Zealand National 57; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 52 
New Zealand Labour 43; Green Party 8; Progressive 1. 
Part 1 agreed to. 
Part 2 Research and development tax credits repeal 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 Now we come to the heart of this bill. How is it funded? The goodies that are being handed out apparently willy-nilly have got to come from somewhere. They come from two substantial sources. The first is $3.5 billion from KiwiSaver which we will be talking about in the debate on a subsequent part. The second is the cancellation of the 115 percent research and development tax credit. Through that measure $1.5 billion will be saved. We believe that the Government will come to regret the day that it moved this part. 
It is very interesting to begin with the analysis set out in the explanatory note of the bill. It recognises that there are significant externalities associated with research and development. The company undertaking the research and development can never capture all of the benefits. Innovation benefits the whole of society the whole of our economy. It lifts the game it improves productivity and it drives us all forward. The data we have shows that companies that invest intensively in research and development tend on average to employ more people to grow more quickly to register more patents to have higher productivity and to export more products and services. Why would the Government not want to encourage such companies? Moreover how could it begin its year with the commitment that it will do everything it can to focus on productivity and growth then cancel one of the better growth tools in the innovation tool box—the research and development tax credit? 
The second issue we have is one of trans-Tasman equivalence or business diversion. It is accepted that our colleagues in Australia give their Government a much more proactive role in boosting research and development both directly—historically—through the magnitude of its subsidies to the Commonwealth Scientific and Industrial Research Organisation and many other organisations and indirectly through significant subsidies and tax concessions for innovative firms. One of the principal reasons why New Zealand’s research and development tax credit was brought in in the first place was to ensure equivalence between New Zealand’s innovative firms and those of their colleagues across the Tasman—to make sure that the Government’s footprint was not accentuating any trend towards trans-Tasman business migration. That theme was picked up by the current Government—then Opposition—during the election campaign. The bogey of New Zealanders moving across the Tasman was repeated at every opportunity like a mantra. So what has happened? On the first business day of the House the National Government attempts to repeal the research and development tax credit which has been one of the sources of guaranteed trans-Tasman equivalence. 
The reaction has been completely predictable. Selwyn Pellet the chief executive of one of the Deloitte/Unlimited Fast50 fastest-growing companies—Imarda—said: “We are right this minute deciding where we do R&D whether it’s New Zealand or Australia and the removal of the tax credit here negatively incentivises the decision to bring it back to New Zealand.” The Manufacturers and Exporters Association has been highly critical of this bill. It has been highly critical of the removal of the research and development tax credit—which was to be fair signalled before the election. It has been highly critical of the environment that New Zealand manufacturers exporters and innovators have to cope with. This move makes it worse. 
When we look at the ledger of what is being done and what is being undone we have to ask why. On the one hand we have the removal of something we know is generating sound returns; on the other hand it is going in order to fund a consumption tax cut that is both highly inequitable and badly designed. It is so badly designed that the explanatory note of the bill states that neither the proper consultation nor the regulatory impact assessment has been completed and the impacts have not been quantified. 
Some of the key issues as we debated in the debate on Part 1—[ 
Interruption 
]—9 years to do it—are first that this is a long-term fix for a short-term problem. It is a structural tax change to address a recession trend. Second we are putting in place a consumption tax cut—funded largely by borrowing and these productivity tools—whereas what we need is something that will lift productivity itself. In that respect this cut is in extremely stark relief. 
I think the reaction of general commentators is instructive at this point. John Armstrong from the  
New Zealand Herald  
said the winners from this package taken on balance are easy to identify: working singles and couples without children. The comparative losers are families or those on below the average wage. Jenny McManus from the  
Independent 
 said: “Voters awaiting National’s grand plan for managing the effects of the global financial crisis will be disappointed at the tax and economic package …”. Jo Doolan from Ernst and Young said that she is “gutted” at the package: “The whole thing is hurried and ill-conceived. … We need to develop a savings culture and this sort of thing doesn’t help.” Gordon Campbell said: “Putting tax cuts ahead of science and research neatly underlines the lack of vision or sensible strategy for growth in the National package—”. 
I know from walking around the press gallery that journalists—and no doubt soon the public—know what is going on. They know that despite the rhetoric of the election campaign on this first business week of the House certain things are being done that deliver certain benefits to constituencies that have it “owing to them”. Surprisingly enough it is not our innovative exporting businesses that are getting the nod here; it is the financial sector and top-income earners who will be the general beneficiaries of the package. It is our poorest Kiwis our struggling families and oddly our innovative businesses that will pay for it. 
Leaving aside the equity arguments that we discussed in the debate on Part 1 the lack of logic between the negative productivity impacts of this move and Government members’ stated aim—even if we take them at their word—is extraordinary and compelling. Mr English in speaking to Part 1 said: “Well we poked and prodded at your plan. We campaigned on ours. Our having been elected there is no need for our plan to be scrutinised.” So there is no need for it to be scrutinised no need for the select committee process and no need for bills to be tabled? The bills to be debated in the rest of the week are still not on the Table. That one has gone through an election campaign is justification apparently for setting aside the normal process of Parliament. Of course we have seen the lie to the proposition that “No one is worse off because certain changes have not happened yet.” This bill undermines measures that have already been passed into law and therefore the Opposition is fully justified in showing that people are worse off. 
In summing up taken as a whole the retrenchment of this research and development tax credit will be bad for our best businesses and bad for New Zealand. It will be bad because it is a poor source of funding for a misguided bill. But even if one takes the Government at its word and swore for a moment that these tax changes are necessary funding them by removing the research and development tax incentive does not serve even this Government’s stated ambition of lifting productivity and growth. 
Dr PAUL HUTCHISON (National—Hunua) 
: 
 I am grateful for the opportunity to speak on Part 2 “Research and development tax credits repeal”. This is a very sobering part and it has been undertaken with great thought over a period of time— 
Hon David Cunliffe 
: Minutes! 
Dr PAUL HUTCHISON 
: That is quite wrong. This move was indicated quite clearly in National’s pre-election policy and the great concern was about the quality of the investment. If we look around the world we see one of the points made in Australia’s innovation policy of 2002 is that unless the basic business environment is optimal it is very hard for research and development and innovation to thrive. This is underlined in the foreword to the policy where the point is made that it is very important to have a low broad-based simple tax system that it is important to have a flexible labour market and that it is important to have an optimal regulatory regime. 
All these things will be carried out by the National Government and the direct opposite happened unfortunately under the Labour Government. Nevertheless there was a question at one stage of events of whether 10 percent of this tax credit would remain. However due to the extraordinary circumstances—the legacy of the Labour Government—that were established in the pre-election fiscal update whereby the seriousness of the international crisis was beginning at last to be felt and certainly was ignored very largely by the Labour Government the realisation was that it was inappropriate to continue with this tax credit. 
It is important to remind the Committee that in the select committee prior to this tax credit coming into being it was opposed by the major accountancy firms it was opposed by Treasury and it was opposed by Business New Zealand. However once it did come in the major accountancy firms set up a travelling roadshow around the country to give people an opportunity to use the tax credit. The great danger was that it would not be a quality investment research that was going to be carried out anyway would be carried out there would be new business activities that were inappropriate to research and development and on balance it was felt that in these dire economic times—times left as a legacy of the poor management of the Labour Government—it was appropriate to repeal the tax credits. 
I for one am absolutely committed to championing the evolution of research and development in New Zealand into the future. But we want to ensure that the spend is a quality spend and I am quite sure that over time the National Government will achieve exactly that. I remind the Committee that in the Hon Bill English’s media release of 9 December he stated: “We firmly believe in the importance of research and development to keep New Zealand internationally competitive but the tax credits aren’t the most effective way to ensure that. We will work with business to better target government expenditure on innovation.” 
I am sure that Mr Hodgson must feel very disappointed given the fact that he worked on this matter for about 9 years. I think it was back in 1988—or maybe 1998—when he proposed that such a thing should happen. Once again it took 9 long years and more. It was almost equivalent— 
Hon JIM ANDERTON (Leader—Progressive) 
: 
 The really scary thing about that speech is that the member said that it had taken a long time and a lot of thought to come up with this policy. I would have been much more comforted if Government members told me they gave it no thought and had no time to spend on it. The fact that they spent a lot of time and thought on it and came up with a dog of a policy like this is almost beyond belief. But the incredible thing is that we are told that we cannot afford to have research and development tax credits at a critical time for the New Zealand—let alone the world—economy but we can have and we can afford in the face of this enormous financial crisis around the world personal tax cuts that deliver 132 times more for the most affluent New Zealanders compared with the poorest. We can afford that but because of the world crisis we cannot afford to have research and development in New Zealand. 
Then we are told that we really want a quality spend. Well there is one thing that is slightly worse than that and that is no spend at all which is what this bill proposes. Part 2 is about destroying research and development capability in New Zealand. This part is an example of a Government that has put class warfare ahead of the need to grow our economy. We heard a lot about growing the economy yesterday—going for growth! The Government is going for growth one day but the next day it is cancelling all of the research and development credits proposed in previous legislation. On day one it is going for growth; on day two it is cancelling the possibility of growth by having no research and development credits. 
The most incredible thing of all is that it is not about punishing all businesses in New Zealand it is about punishing the most innovative and creative businesses in New Zealand—the businesses we depend on for our economic growth and development. Those are the very businesses the Government is targeting with this bill. It will target those companies in a way that is almost beyond belief in that at the same time someone who is earning say $750000 a year will be 132 times better off than someone who earns $25000 a year. So even if the Government is going to target the most innovative businesses in the community one would think it would help those who are the poorest but no it is doing the reverse. 
The National Government is clearly opposed to innovation. It can say what it likes but it is opposed to it. The Government is opposed to business success because the very businesses we want to succeed are the ones this bill punishes. The National Government is opposed to the agricultural backbone of our economy. I never thought I would have all the evidence to say that in this Chamber but this bill is clear evidence of it. The bill is what it looks like when we have a Government run by sneering city financiers instead of people who understand the real productive economy. 
Allan Peachey 
: Oh ha ha! 
Hon JIM ANDERTON 
: I will prove it to the member then. Can Government members answer three questions? How many times in the Speech from the Throne was the word “agriculture” used? None. There was not one mention of it in the Speech from the Throne. Where was the Minister of Agriculture in having any input into that? How many times in the Speech from the Throne was the word “exports” on which the First World standard of living of this country depends mentioned? 
Hon Ruth Dyson 
: How many? 
Hon JIM ANDERTON 
: None. There was not one mention of exports. How many times were the words “scientific research” mentioned in the Speech from the Throne? Scientific research is what our First World standard of living will depend on for the future in terms of the quality of the processed goods we produce and export to the world. 
Hon David Cunliffe 
: Twice? 
Hon JIM ANDERTON 
: No. 
Hon David Cunliffe 
: Once? 
Hon JIM ANDERTON 
: No none. In the Speech from the Throne there was no mention of scientific research which will set up this ambitious visionary Government for New Zealand. There was no mention of the most important backbone of the economy of New Zealand—our agricultural production—which members opposite suggest they represent. There was not a mention. I wonder what I will hear from Federated Farmers tomorrow. I got a framed certificate for putting agriculture at the top. Government members are not even putting it at the bottom. It does not get any mention whatsoever. Despite all the cant we had from Dr Hutchison scientific research could not even get a mention in the Speech from the Throne. 
CRAIG FOSS (National—Tukituki) 
: 
 I will totally ignore the previous speech as will most of New Zealand probably because it was not particularly relevant. [ 
Interruption 
] That has woken the Opposition members up. I am sure those members had a very good lunch. Part 2 “Research and development tax credits repeal”— 
Hon Dr Michael Cullen 
: Tukituki—farming horticulture viticulture? 
CRAIG FOSS 
: If members opposite want to have a bit of a go I can tell them that there is an interesting provision in clause 20(2) that makes a change to the Income Tax Act 2007 which came before the Finance and Expenditure Committee. The current Opposition spokesman on finance may have further advice on that because clause 20(2) states: “The definition of district health board is repealed.” He may want to speak on various other ways of doing that later on. 
Hon David Cunliffe 
: I think you need to focus on finance. 
CRAIG FOSS 
: Yes I will focus on finance because this is a financial bill. 
When the 2007 bill came before the Finance and Expenditure Committee there were many many submissions on the research and development tax credits. From memory most of the submissions were along the lines that the tax credits would create tax arbitrage and accounting arbitrage. Of course everyone argued that he or she should be included and that perhaps someone else should not be included. In fact I remember that an organisation that is partially funded by the Crown came before the Finance and Expenditure Committee and told us the truth. It told us what was really going on. Then I subsequently found out that the organisation had a very interesting phone call from a Minister’s office not long after that telling it that it should never appear before a committee like that without the Minister knowing and that he did not like what it had said. But anyway I digress a wee bit. 
Hon David Cunliffe 
: A wee bit? How about coming back to the bill? 
CRAIG FOSS 
: I mentioned the words “accounting arbitrage” before and I will explain that term to the member later. What is going on here is that the higher the tax burden is and the more imposing the tax structure is on an economy the greater the incentive is to find ways around it through it to plead for a credit and to take something from someone else and get a credit for oneself. That is what happens and it is what is going on with regard to the research and development tax credit. 
Some members have argued that the tax credit has only just started so how can we say all these things? Very simply as my colleague Mr Hutchison noted earlier there were roadshows going around the place. Companies were going to them and they were being told: “Show us your expenditure sheet show us your models and we will try to make them fit the new definition of research and development in order to get you a tax credit. We will try to do that. Of course we cannot do it straight away but we will go through your books and try to find what we can to get you some benefit out of this.” So the roadshows were being entrepreneurial if one likes but it was to the detriment of the New Zealand economy because it did not add to the quantum of research and development in New Zealand. 
About 3 months before the election I had a very interesting meeting with a company that had started to set up some research and development under the model in the existing legislation. It was looking to invest the money and to take some benefits from it with its 15 percent. That was OK but then the company told me about the problem. The problem was that it could neither attract to New Zealand nor keep the people here to do the research and development because of New Zealand’s high personal tax structure. It was quite simply because of that. 
The finance spokesperson on the other side of the Chamber David Cunliffe alluded at the start of this debate to the fact that these research and development tax credits have been—or at least will be—repealed in order to help fund the personal tax cuts that we announced long before the election and that were resoundingly endorsed by New Zealand. The point is that we can have all the credits we like but if we do not have the people who are attracted to New Zealand stay here who can be rewarded for the risk they take in being here and being involved in research and development in New Zealand it actually does not matter. Unless we have those people here adding to our economy we can have all the research and development tax credits we like and it will not matter. Some of the stuff I saw going on was stuff that was being structured in New Zealand to utilise Australian people to whip over here and do the research and development so that local companies could enjoy the research and development tax credit and of course the individuals concerned were located in a lower tax environment—that is in Australia. 
The research and development tax credit part of the bill—the clauses here—is about priority because there are some hard choices to be made. Once the books were opened—or at least partially opened—in the pre-election fiscal update and when they continued to be opened a bit more recently with all the other shenanigans going on it actually made it even more pertinent that we repeal these credits right now. 
MOANA MACKEY (Labour) 
: 
 Well we just learnt from Mr Foss in that extraordinary speech that he does not want highly qualified skilled educated people coming from other countries to work in New Zealand because of the research and development tax credit to help grow our economy to grow our tax base and to pay for all the things that New Zealanders want paid for. The research and development tax credit has apparently been keeping people away from New Zealand and if we get rid of it—dumbing down our economy—as this legislation does that would be good for New Zealand. Well that kind of falls in line with the Speech from the Throne from the Prime Minister that we heard yesterday. We can gather from that that the only turbocharging we will get is a turbocharging of empty slogans and empty rhetoric. For all their talk about innovation for all their talk about turbocharging everything nothing in this bill does that—nothing. In fact it does the complete opposite. 
I wish the Minister for Research Science and Technology were in the Chamber so that he could speak to this issue. We asked him questions earlier because we wanted to confirm that the third of this money that is being saved from cutting this research and development tax credit will still go to Crown research institutes and universities to fund research; he refused to answer earlier on. He refused to answer but I think that the scientific community deserves to know whether that money will still go there. I am sure if Dr Paul Hutchison were in Cabinet he would have an answer like that because that is the kind of man he is. I am very sad that he did not get that portfolio; he worked very hard in it when he was in Opposition but no it was whisked away from him and given to someone else. 
Hon Pete Hodgson 
: What’s his name? 
MOANA MACKEY 
: Oh I cannot remember. He has a lovely new haircut though. I say to Mr Foss that it is appalling that he stands up in this Chamber and says that he will not respond to the speech made by the Hon Jim Anderton. He deliberately said he would ignore his speech. Why? That is because he has no answers to that speech. He has no answers to answer why when we are going into a global crisis and when liquidity in the capital venture market will become more restricted we will be penalising and raising taxes on our most innovative companies. These are the companies that we should be putting front and centre and the companies that we should be saying are the ones that will help lift us out of this global recession and that on average export more pay more highly and grow our economy more. 
What is the National Party’s answer to that? The National-ACT - Maori Party Government will raise the taxes paid by those companies by getting rid of a research and development tax credit which is supported—for all that Mr Foss may say—by all their friends. We know that when National announced their tax policy people were flying all over the country to meet with Mr English to say: “Don’t do this. This is a huge mistake.” It is a mistake for the economy it is a mistake for our exporters it is a mistake for our manufacturers and it will be a mistake for New Zealand when it comes to growth and coming through this recession in a positive way. 
What Dr Hutchison says is that they just rort it—scientists just rort it. This is a member who went around the country campaigning on how we need to trust scientists we need to let them do their own thing and that there is far too much management of what they do. Then in the Chamber today he stands here and says that the scientists just rort it—it is not new stuff they just write down stuff they are already doing as new stuff so they are just rorting it. He also by the way wants to get rid of the $700 million Fast Forward Fund and direct the way that that goes as well and direct that solely to try to get out of the mess National has got itself into on the emissions trading scheme. 
I refer to Jacqueline Rowarth who is the Massey University director of agriculture. She said that she is incredibly concerned about the ramification of the removal of the research and development tax credit and she says: “Australia removed its R and D tax credit because it thought people were fiddling the books.”—as Dr Hutchison thinks—“Then it reinstated it within a year because the downturn was worse than that fiddling.” 
So when Dr Hutchison gets up and talks about how this is the way the world is going he is actually not telling New Zealanders the truth. The fact is that the Labour Government brought in this tax credit to make New Zealand internationally competitive. Members on this side of the Chamber understood that these kinds of policies will assist our small and innovative businesses our businesses that are going to lift our economy and our businesses that do a significant amount of exporting. Even Business New Zealand chief executive Phil O’Reilly who has been quoted by Dr Hutchison as saying he was opposed to it has said that we need to give this research and development tax credit time. John Key said that no one has taken it up yet. 
Then we heard from the Manufacturers and Exporters Association’s Mr Walley who said that that was a daft statement as the tax year has not even finished yet. How would John Key know unless he had the power of clairvoyance—and I am not saying that he does not claim to have the power of clairvoyance—how many people will take it up? 
DAVID BENNETT (National—Hamilton East) 
: 
 When we talk about the research and development tax credit it is important to remember some of the history of what has happened in the Labour Party. 
Hon Pete Hodgson 
: You come from the Waikato remember? 
DAVID BENNETT 
: Yes let us talk about the Waikato and what the Labour Party has been doing there. It is pretty rich for these guys to come into this Chamber and talk about research and development tax credits when AgResearch was laying off staff before the election and they did not do a thing. Where did we see the Labour Party in the election campaign? In Hamilton East we campaigned against the Labour Party. Labour members would come along to campaign meetings and say “Look at our research and development policy.” All I had to ask them was why they were laying off people at AgResearch. They would not come to the support of scientists. 
The reality is that scientists have never got anything out of the Labour Party and they never will. Scientists’ incomes are about 15 percent lower than any other profession and the Labour Party did not come and help them did it? It had 9 years of talking about how it loves science how it loves research and development how that is the future of New Zealand and how we will have a knowledge wave and a global economy. What did it do? It gave up on the knowledge wave and it did not give those increases in wages. In fact it put AgResearch in a position where it had to lay off staff to meet its budget. That is what the Labour Party does: it says one thing and then it does another. Reality speaks and the reality is that the National Party has come to the aid of scientists helped out and made sure that we do not have the degree of job losses that the Labour Party started out with. 
There has been a great change in mood because people realise that reality is more important than words. Labour members are bringing out words today—look they have all gone silent now! They know they are in trouble. They know that they cannot go out there and say what they have been saying because it is not true. They know that they were the ones screwing the research and development budgets by making sure it was hard for AgResearch to employ people and that is the reality of the situation. How dare the Labour Party come in here today and try to say how it is the research and development party and how it is there for agricultural research! Labour should have put its money in front of it when it was in Government; it did not so it should not come in here and try to do it now. It had its chance and it blew it—it will not get another chance to do it again. 
The reality is that the biggest thing we can do for the research and development sector is to give it a growing economy. That is what it needs. If there is growth in the economy businesses will invest in the future. That is the reality. These tax cuts are the first step in providing that growth economy. This is what the National Party is about. We have a programme for growth and these tax cuts are the first step. If we really want to look at what will be best for research and development in the future we see that it is the growing economy that the National Party will produce. We will invest in this country’s infrastructure and we will give people money in their hands so that they can spend it in this economy. 
We will not invest all our money in the US stock exchange just as Mr Cullen did and lose it. We will look after our people in our country and we will build a stronger country. This is what will happen. The reality is that New Zealand will be stronger we will have a growing economy we will have a position where businesses want to invest in research and development and we will be able to deliver to the agricultural the research and the scientific sectors the vision they require. They will actually see a future ahead of themselves because they will see corporates and enterprises making money that will be able to be invested in research and development. This is not a question about the tax credit as such; this is a question about how we provide the environment for research and development to flourish. To create that environment we need a growing economy and the National Party is committed to that. 
Labour members are sitting there now and trying to attack this legislation on the basis of research and development expenditure. Well that is not the case. The case is that the Labour Party did not come to the aid of research and development did not come to the aid of AgResearch before the election—you just let them go. You were quite happy to see those people go out of work; you went through an election campaign not actually doing that— 
Hon Trevor Mallard 
: Point of order— 
The CHAIRPERSON (Lindsay Tisch) 
: I know what— 
Hon Trevor Mallard 
: If you are aware of it you should be stopping it. 
The CHAIRPERSON (Lindsay Tisch) 
: The member cannot use the word “you”. 
DAVID BENNETT 
: The Labour Party did not come to the aid of that sector. It did not come to the aid of those people who were going to lose their jobs. 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 Parts of this bill are either unfair dishonest incompetent or plain stupid. This is the plain stupid part—the abolition of the research and development tax credit. The member has just been talking about tax cuts. Let me enlighten him: this is a tax increase. This is a tax increase of $330 million a year on business. This part claws back what is getting on for half of the corporate tax rate cut. Why should we be surprised? Which Governments have ever cut corporate taxes in New Zealand? Only ever a Labour Government has in 1998 and in 2008. Those are the only times in the last 50 years that corporate tax rates have been cut in New Zealand and both times were by Labour Governments. National has never ever cut those rates. 
So when we cut it this was yet another one of those bitter little things for Mr English which he had to reverse some way or another because he was not allowed to let Labour have any credit for anything. So he is clawing it back but is he clawing it back off everybody? He is clawing it back off the most innovative productive and exporting firms in the country. Let me tell Mr Bennett something else. What was he referring to as Agriculture New Zealand? 
David Bennett 
: AgResearch. 
Hon Dr MICHAEL CULLEN 
: No—that is a Crown research institute. AgResearch is a Crown research institute that has been underperforming actually for some years. But that is public sector research and development. If the member knew anything he would know that New Zealand’s underperformance is in private sector research and development. Why? That is because we are about the only country in the world up until recently that has not been offering any inducement to private sector research and development. In an ideal world no country would offer incentives for research and development. In an ideal world we would have a level playing field and decisions would be made by the market and nothing would happen. But once some countries have research and development incentives it becomes very hard. 
You see National is still playing the early 1990s’ trick. It is still  
Star Trek 
 in reverse for National. Its members still want to go where no man will follow. They still want to go down a route with no research and development tax incentive and they will be surprised that firms will shift research and development to Australia where there are research and development tax incentives. What have we heard for years from National members? “Everybody who is bright has gone to Australia.” And looking over the other side of the Chamber whenever they said it I thought maybe it was true because what was left from what I could see was not bright. They said: “We’ve got to stop people going to Australia.” 
So what do they do? They do something to threaten portability of superannuation and they remove the research and development tax incentive designed to get research and development in New Zealand and to keep it here because they want it to go there. And what are they going to make it up with? They are going to put more money into the State’s research and development. When they go up on the platform and slaver in front of Business New Zealand the Chambers of Commerce and the Business Roundtable dripping sincerity say in the way only Tony Ryall and others can: “It is the private sector only that creates wealth in New Zealand so what we will do is take money out of the private sector and put it in the public sector.” 
That is what is called Logic 101 for the National Party—just follow the logic: “Only the private sector creates wealth so let’s take that wealth away and give it to the public sector. And if a public sector identity or entity is not performing particularly well and not managing to live within budget we’ll just give them more money. We won’t ask any questions about what they are doing. We won’t say whether other CRIs such as HortResearch might be doing better research. We won’t say whether they should work better with the private sector. No we’ll just give them some more money.” 
That is what the Government has done. So that is wise is it? That will grow the economy? I listened yesterday to the sorts of clichés in a kind of National Film Unit documentary for the 1950s way that finished off the Speech from the Throne and I heard about the turbocharging of the New Zealand economy. I now understand it. We are going to have a turbocharged 1953 Morris Oxford and we will call it the New Zealand economy. I have to tell the Committee that a modern Japanese mini-car can outstrip a turbocharged 1953 Morris Oxford. It is no wonder that the leading agricultural scientist in the National Party was not allowed to be a Cabinet Minister. He was parked on the Speaker’s bench instead because in fact he might know too much about some of these areas to be involved in making decisions. 
Do we really want to grow this economy and how do we do it? We do it in the modern world by developing human capital by investing in research and development and by investing in new products. In New Zealand we do that particularly in the primary sector industries because that is where our comparative advantage lies. So what is the Government doing? It is abolishing what was going to be a $2 billion Fast Forward Fund to invest in agriculture and to invest in the primary sector and it is giving a lick and a promise that it will increase funding for the Crown research institutes. 
But of course Mr English is about to work on a Budget. He is about to work on a Budget that will project cash deficits in excess of $10 billion a year by the end of the forecast period. So do Mr Hutchison and others think they will get this extra money in large amounts for Crown research institutes? That will be a lick and a promise; it will get pushed out and squeezed and will not look like the Fast Forward Fund. But that fund was there it was locked in it was provided for and it was going to happen. The Labour Government was getting ready to do it. It is a bit like broadband where people are lined up ready to put their stuff in. They have made the applications but now they will have to wait 18 months or more for National to work out how actually to operationalise its funding in that area. We will wait ages. 
We have firms working in research and development but we are told they are rorting the system. Well how do we know? Nobody has had a research and development tax incentive approved by the Inland Revenue Department yet. They have yet to apply. Indeed the only complaints that I have heard of is that it is too hard to get the incentive. It is not too easy to rort it; it is too hard to get it. Indeed we will find that out after April when people apply but they knew. Indeed National members did not put lots of thought into this. It was not a well-developed policy to abolish the research and development tax incentive. National announced its policy months ago. The policy was to cut the incentive to 10 percent—which is at the lower range of international comparability whereas the 15 percent was at the higher range of international comparability—to save a bit of money. 
Then of course those members had the preview and for some peculiar reason they did not think the preview was going to show a worsening situation compared with the Budget. They knew what was going on in the world. It was pretty obvious to anybody that the world was slowing down faster than we had all thought in April of this year. Then they said: “Oh my gosh!”. We promised the average person on the average wage a $50-a-week tax cut. Well we can pretend that it is not on top of Labour’s package so that will save us a lot of money. And now we need to squeeze and push. So what goes?”. 
What goes is the remaining 10 percent of the research and development tax credit. This is called going for growth—$2 per week on average per taxpayer to pay for the research and development tax credit. That I tell Mr Bennett will really turbocharge the New Zealand economy. It will be an extra couple of dollars a week of spending power in the average taxpayer’s pocket but no doubt it will be spent in large part on imported consumer goods. It might provide about the equivalent of one drop of petrol for the South Chinese economy not for the New Zealand economy. The Government should be investing in the private sector to gear up. The private sector has been woefully inadequate in New Zealand in investing in almost any way in future development—such as research and development human capital and new plant and machinery. So the Labour Government lowered the corporate tax rate. We increased depreciation rates. We brought in the research and development tax credit. We put forward an integrated Skills Strategy and improved the investment in that Skills Strategy in the workplace. 
Those are the drivers of economic growth not piddling little tax cuts going into consumption to buy stuff not even noticed—not even a block of cheese barely a slice of cheese not even a half of the kind of loaf that Paul Hutchison would buy every day. He would not buy the $1 loaf at the garage; he would buy the $6.99 special loaf down at the Italian bakery. This tax cut would not even buy half of one of those loaves of bread a week and we are somehow going to turbocharge this economy. Well we might be slightly heavier we might be slightly weightier but we will not have a faster-moving economy as a result of this part of the bill. 
National is reducing savings and investment in research and development and human capital and calling that turbocharging. This is National going for growth. I say this is the worst of all possible nightmares for anybody with any aesthetic sense. This is Ruth Richardson without a tracksuit. 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Well Dr Cullen is wrong about one thing. I do give him quite a bit of credit—or whatever the terminology was that he used—as easily the most competent member of the previous Labour Government. He did all the hard work and he has something to show for it but none of the rest of the members of that Government do including the previous Prime Minister. I give Dr Cullen full credit for the huge effort he put in while he was the Minister of Finance. 
That does not mean of course that he was right about everything and it does not mean that when the Government changes there will not be different priorities. That is really what this debate on the research and development tax incentive is about. It is an idea with some merit. The question is whether it has sufficient merit to be put ahead of all the other calls on the Government’s resources including what was National’s top priority in Opposition and what remains its top priority now that we are in Government and that is to reduce personal income tax rates. In the situation that New Zealand is in with the economic outlook that we face we have to make choices about priorities. Opposition members think the world is always the way that they experienced it when in Government; they experienced a fiscal tsunami every year of waves of money crashing on to the Government beach where they lazed around deciding among themselves how to give it out to someone. 
Hon Tony Ryall 
: Like some sort of version of  
From Here to Eternity 
. 
Hon BILL ENGLISH 
: That is right. It may well be that any Government in that situation would behave in the same way. I happen to think that Labour is more partial to enjoying giving out other peoples’ money than perhaps other Governments would be. But that was the business of Government. That has now changed. Now we have to make decisions about priorities. In the case of economic growth we did not believe that this tax incentive would be a sufficient driver of it. The Opposition believes that it would be. All I can say is the Labour Government floundered in the knowledge wave. After 7 or 8 years and hundreds of millions of initiatives driven off the idea that the economy could be transformed we ended up with a conversion on the road to Damascus whereby the only member of the Progressive Party suddenly decided that New Zealand was about primary production. Well that was fantastic. It just happened to contradict all the policy that that Government had tried to implement for the previous 6 or 7 years. 
The reality is that a National-led Government with a good understanding of and strong representation from the whole productive sector of the New Zealand economy is focusing on lower tax rates less regulation better infrastructure and higher education standards. Certainly we could focus on 16 other objectives. Every strategy of the previous Government that I read had about 16 other objectives—all contradictory none of them achieved but lots of meetings that gave the impression of action. Well we will not go down that path. 
We have discussed the research and development tax incentive with people who are using it and actually we get contradictory stories. One of the strongest advocates owned up in my presence that he had spent $70000 on the accountant and it turned out that the research and development tax credit was only $50000. The deal he had was to give the accountant 40 percent of any recoverable credit which I gather is the upper end of the going rate. Most accounting firms are pitching themselves at 20 percent to 30 percent. They turn up to a business with their Australian supervisor go through the books work out what the tax credit might be—it is turning out to be quite a bit smaller than many companies had expected—then take about one-third of it as their fee. Well that is innovative but it is not what we would call innovation. 
In Australia it is not 3000 highly productive companies that get this credit; banks and mining companies make up by far the largest number of claimants of this incentive. In New Zealand the banks have their own ideas of what they regard as research and development. They now represent themselves as being essentially information technology companies because they are based on information technology and any development that they do in that area must count for the research and development tax credit—and how would one say no to that? 
A research and development tax credit is not a bad idea; it is just that it is not the priority of the newly elected Government. We are focusing on basic things that will affect every organisation company and household such as lower taxes and better infrastructure. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I did hear the Minister of Finance say that we have to make choices about priorities. I did hear him say that. In fact that is what Governments do all the time; they do it all the time. I would like to suggest that the choice that the Government has made to eliminate the tax credit for research and development is simply the wrong choice. I want to adduce a little bit of evidence to that effect. 
Members will be aware that New Zealand is a poor performer in the research and development stakes. The normal way of measuring research and development effort is to measure research and development expenditure as a percentage of GDP and to look at it in the public sector and in the private sector. Compared with countries around the world in the public sector New Zealand underperforms a little. We are around about three-quarters of the Western World average. It would be good if we could get ourselves up to 100 percent or indeed 120 percent of the Western World average but we are below the Western World average in the public sector. However in the private sector we are not at 75 percent of the Western World average; we are at 33 percent of the Western World average. New Zealand private sector investment in research and development is amongst the lowest in the world. The good news is that it used to be even lower. In 1999 it was not 33 percent of the Western World average; it was 25 percent of the Western World average. A number of things have contributed to that increase such as the Venture Investment Fund Technology for Business Growth the Pre-seed Accelerator Fund the law around venture capital and the establishment of the Incubator system and on and on it goes. Throughout the past 9 years a lot of private sector effort and a lot of Government effort have gone into improving private sector investment in research and development. It has gone from 25 percent of the Western World average to 33 percent. That is progress but it ain’t much progress. 
When the Labour Government decided to introduce the tax credit at 15 percent—and it came in on 1 April 2008—the Inland Revenue Department had to determine how much money it would forgo. It had to do the modelling. It knew that it would take a while for private sector entities to get used to the new system. It knew that it would take a while for companies to gear up their research and development. It knew that it would take a while for companies to stop oozing offshore and to start coming onshore with their research and development. It knew that it would take a little while so it did a 4-year projection and at the end of 4 years the amount of money forgone—the amount of money going to businesses for innovation—would have been $332 million a year. 
The point is that if we do our sums and work out how much research and development would have to come to book in order for $332 million to be forgone we see that New Zealand’s private sector research and development would rise from 33 percent of the Western World average to almost exactly twice that—to almost exactly 66 percent of the Western World average. That is still below 100 percent of the Western World average but way better than 33 percent. Of course we know that it would include some research and development that was under-reported. That is known that is taken into account and that is modelled. It is also known to give the case cited by the Minister of Finance that the banks might call themselves information technology companies and claim that their software development was somehow eligible for a research and development tax credit. So we put a cap on that. We said that a company could not claim more than $2 million per year for software. That was a black hole that we would not let the Inland Revenue Department fall into. So the tax credit was designed to be both generous in terms of rate and limiting in terms of rorts. It was designed that way. 
We had long enough to design it. As the previous Minister of Finance the Hon Michael Cullen said he wished he had done it earlier. But you see if the Inland Revenue Department predicts that New Zealand’s reported private sector research and development expenditure will go from one-third of the Western World average to two-thirds of the Western World average over the next 3½ years then I suggest that if we are to pass this legislation we have to be prepared to acknowledge the fact that that expenditure will stay at 33 percent over the next 3½ years that therefore the economic base of New Zealand will stay at a lesser amount than it would otherwise have been and that therefore the taxable base will be a lesser amount than it would otherwise have been. 
This is fiscal nonsense. This is as Dr Cullen said the stupid part of the legislation. To have the good Dr Paul Hutchison get up and try to defend it—well all I can say is that I saw him wringing his hands and he wrung his hands for the whole 5 minutes that he spoke. I heard Mr Bennett the member of Parliament from the Waikato—I am sorry; I have forgotten his first name—get up and tell Labour members to put our money where our mouth is when it comes to primary production research and development. My retort rather obviously is that we did—$0.7 billion. It was called New Zealand Fast Forward and this Minister of Finance swiped it. He swiped it. He got rid of private sector involvement got rid of the fact that there would be a legacy fund got rid of the fact that there would be certainty about the money and replaced it with nothing. Labour members think that that will be very very bad for New Zealand’s economic development future. 
The tragedy is that 3½ years from now this $330 million if it is divided amongst 4.1 million New Zealanders will put about $1.60 in the pocket of every man woman and child per week—$1.60 a week. That is the price we pay for a dumb economy. Every person in New Zealand will get it except of course the poor people—they will get nothing. The rich people will get let us say $3.20 a week in their pockets and we will have a dumb economy a slower-growing economy a less export-oriented economy and a less innovative economy and we will have a bunch of firms that will not be able to grow faster because they do not have a tax credit and therefore cannot fund their own growth as quickly as they otherwise could have done. It is a really dumb policy. It is one that I am really sad about. And when I am not sad about it I am angry about it. I think New Zealand will be a worse place as a result of this decision I think $1.60 per person per week is a very very low amount of money and I do not think the decision that this Government has taken—it says that it has to make choices about priorities—is the right one. I think that if it is going to prioritise an extra $1.60 per person per week for consumption over an innovative future if that is its priority choice then clearly it has taken the wrong choice. 
Dr PAUL HUTCHISON (National—Hunua) 
: 
 Thank you Mr Chairman for the opportunity to speak again on Part 2 “Research and development tax credits repeal”. I think it is important to reaffirm that central to the Australian innovation policy was getting right the basic business framework in order to carry out research and development innovation and in order for that country to benefit from it. Australia’s priorities were clearly spelt out as getting taxes down getting the regulatory regime right and having a flexible labour market. There is no doubt that this Government’s programme does exactly that and in terms of the scientific field it will be helped by the improvement of the Resource Management Act and the Hazardous Substances and New Organisms Act. 
I acknowledge very much the fact that the Hon Pete Hodgson put a lot of effort thought and time into research and development over the last 9 years. I think that some worthy programmes were brought in such as the Incubator phenomenon the Venture Investment Fund the Pre-seed Accelerator Fund and numerous others. However this question of the quality of the tax credit has certainly played on the minds of many thinkers throughout the world for many years. The Hon Jim Anderton might say that to remain competitive we have to do what the rest of the world has done. But Finland one of the countries that have demonstrated high economic growth year after year and prominence in innovation does not depend on tax credits at all. In fact it has targeted funding of research and development. 
I emphasise once again the press release that the Hon Bill English put out the other day. It pointed out: “We firmly believe in the importance of research and development to keep New Zealand internationally competitive but the tax credits aren’t the most effective way to ensure that. We will work with business to better target government expenditure on innovation.” This is one of the areas that I for one will make sure I keep reminding the Minister of Finance about. 
But I also think it is important to point out that it was the Hon Pete Hodgson who said that New Zealand was underfunded in terms of investment in research and development both in the public sector and certainly in the private sector. Well it is a bit rich for Labour members to talk about this. They had 9 years and as a percentage of GDP investment in the public sector actually went down slightly over the last 9 years. It went down at a time when New Zealand had the greatest opportunity to grow investment in this crucial area. After all it was Helen Clark who said in the Speech from the Throne in 2005 that research and development innovation was critical to driving New Zealand’s economy yet the next Budget spent billions of dollars on areas that will only cement in intergenerational welfare dependency and a mere $19.4 million was put into research and development. Here they were at the eleventh hour setting up the Fast Forward Fund which we will be replacing with exactly the same amount of funding but far far less bureaucracy. We have committed to the initiatives that are of high quality and to spending very much the same amount but we will avoid the duplicative bureaucracy that Jim Anderton managed—inevitably with his Pavlovian socialistic reflex—to put into that fund. But we think investment is very very important and I accept that. 
The other point which Moana Mackey made was regarding the $315 million over 3 years. That $315 million is absolutely committed to go to secure funding for the Crown research institutes something which has been recommended by the OECD and many others for many years. That was very much the point made by my colleague the good Mr Bennett from Hamilton East who said that one of the legacies of our pre-eminent Crown research institutes AgResearch is the fact that it is having to make 50 60 or 100 scientists redundant as a result of its poor performance under the watch of the Labour Government. That is a particularly important point. The other 50 percent of that $315 million will go to the Health Research Council the Performance-based Research Fund and the Marsden Fund. Clearly those are funds that are very much in need of support from Government because they will not get it from anywhere else. 
In terms of private research and development and the effect of the tax credit there certainly has been a very mixed reaction on behalf of businesses. Many of them have said to me—and I personally am involved in two businesses that carry out research and development—that they are going to carry on with the investment despite the repeal. They will carry on and they will most likely increase their investment because of the fact that a new National Government will improve the business environment so that many thousands of businesses in New Zealand particularly innovative businesses can indeed thrive. We will continue to decrease taxation we will improve the regulatory regime and we will make the labour market more flexible. 
As Bill English said there is no doubt that this is a matter of choice and in the circumstances where we had dire warnings in the pre-election fiscal update this was the only wise choice to make. After all this Labour Government has left us the legacy of 10 years of deficits and it did not even have the honesty to disclose the huge accident compensation losses. When Dr Cullen says this particular part of the bill is dishonest unfair and plain stupid I would reply to him that he is myopic in denial and the man responsible for taking New Zealand two steps further down the ladder of the OECD. There is no doubt that research and development are vital for New Zealand that they absolutely will play a part in the economic growth of the future and that National will be committed to high-quality investment in this area. 
Hon JIM ANDERTON (Leader—Progressive) 
: 
 Unlike Mr Foss I want to deal with some of the idiocies trumpeted by the last few speakers. If the National Party thinks that private sector investment and public sector investment are important for the future of this economy I ask why on earth it would throw away the first and most important partnership between the Government and the private sector in our most important economic base—agriculture and horticulture and the scientific research and development that backs it up—to the tune of $2000 million comprising $1000 million from the Government matched dollar for dollar by the private sector. Here is the challenge: can Dr Hutchison or anyone else Mr Bennett and all of them included guarantee to me that the private sector will put up $1000 million over the next 10 to 15 years without the Fast Forward scheme and without the research and development tax credit? If those members can let us hear all about it. 
Hon Dr Nick Smith 
: They never promised that. 
Hon JIM ANDERTON 
: Here comes Mr Smith again. Mr Bennett says that science is very important to National. It is so important that in the aspirational and visionary—as National members describe it—Speech from the Throne it was not mentioned once. That is how important science is to National. I think it came as a surprise to Dr Hutchison and a few others over there that it was not mentioned. They could not believe it; they know how stupid that was. The agricultural sector was not mentioned and exports were not mentioned. I ask how that fits with a Government that is “going for growth”. 
Mr Bennett says that tax cuts will lead to equal growth in science. I see. Will someone on $750000 who gets a $264-a-week tax cut invest that money in Crown research institutes or in research and development to support agriculture? They are more likely to go for a holiday to Bali actually. That is the truth of it. 
This is a terrible indictment on a Government that claims that it wants to “go for growth”. What does this mediocre visionless Government propose to do? The first act it takes in this Parliament is to introduce the largest tax increase on business in New Zealand’s history—the largest tax increase on business in New Zealand’s history. Never before has any Government come into this Parliament and massively increased tax on innovation. 
Hon Dr Nick Smith 
: It’s not as much as the Alliance wanted. 
Hon JIM ANDERTON 
: Mr Smith would not know anything about it of course. Never before has any Government come into this Parliament and carefully targeted tax increases at not just any businesses but the most innovative and creative businesses in New Zealand the ones that we need the most for our economic development. What are the chances that this aspirational and visionary policy and leadership are going to succeed? 
Dr Paul Hutchison 
: Very good. 
Hon JIM ANDERTON 
: Very good are they? I see. The title of an earlier part of the Taxation (Urgent Measures and Annual Rates) Bill was “Personal tax cuts”. If we are consistent the title of this part of the bill should be “Business tax increases”. That is what the title should be because that is the reality. 
Before the election a very creative and successful Auckland business leader took out a full page advertisement in the  
New Zealand Herald 
. Members may have forgotten it so I will show it to them. The advertisement said: “I’ve voted as many times for National as for Labour. I’m a founder of five successful companies selling globally to more than 30 countries.” Then he went on: “The party that should get your vote is the one with the best policies for real economic growth.”—the one “going for growth”. Well I ask members to guess which party it was. It was not the party now on the Government benches. If people want to know why they just have to look at this bill. He goes on to say: “Borrowing for tax cuts”—which is what this Government is doing—“going into a global recession is an attempt to drive a consumer spending recovery and frankly that is placing our kids in debt without addressing the financial crisis in any meaningful way.” I have heard today that we can afford tax cuts for the richest people in New Zealand but we cannot afford research and development investment for companies in New Zealand to develop our economy. I ask how that squares with “going for growth”. The truth is that it does not. I suspect that most of the members of the National Party know it. Most of its members outside Parliament know it and most of the people here in the House know it. 
Hon Dr Nick Smith 
: They voted against it. 
Hon JIM ANDERTON 
: Yes I am quite sure that the National Party told people “Don’t worry about it; we’ll fix it.” I think removing tax credits on research and development undermines our manufacturers and our exporters and their ability to compete against global competition. The global competition they are competing against has tax credits. Most of them do. 
Members can say that the previous Government brought in the tax credits late in the piece. That is fine; I will accept that. I had been arguing for them for some time to be honest and others had been too. Anyway we got there. We were late sure and we should have done it earlier sure but we got there. We had not only research and development tax credits but also a partnership with industry whereby industry would put in $1000 million. What does this visionary aspirational Government do? It cans the lot. Research and development investment and Fast Forward are gone. Where does the replacement come from? It comes from $262 a week extra for someone on a salary of $760000. Well that will do it! It is like that Tui ad: Yeah right!”. That will fix it. That will give us the visionary economy. 
By abolishing the research and development tax credits as well as Fast Forward National is telling New Zealand that we have enough research and development in this country already. Do we? We know that is not true. It is saying that it will work against companies that are thinking about doing more investment in this vital area. It is going to work against them. It is going to punish them for doing it. It is going to punish the most creative and innovative ones—not the rest but the ones who are actually doing the job now. 
In the last election—perhaps more than in any election in recent history—the economic management of this country was a critical issue. I accept that. People expect that we will make decisions for the long-term future of New Zealand. How is the long-term future of New Zealand benefited by $260 a week for say the richest New Zealanders versus research and development tax credits and investment in Fast Forward? 
I can give the Committee one simple story. The best and brightest student at Massey University—the best and brightest—had a scholarship to go to the UK. When our Government announced the Fast Forward scheme he announced without any influence from anybody that he was going to leave that scholarship after 6 months and come back to New Zealand because he could see a future here for scientific investment research and development particularly in the agriculture and horticulture sector. What are we saying to him now? We are saying: “Don’t worry it will be all right because when you are on a salary of $760000 a year you will get another 262 bucks a week.” That is not what he said he was coming back for. He was coming back to be a part of a future for research and development industry in New Zealand as the best and brightest student at Massey University. 
The National Government is closing the door on students like that. If it wants to see the best and brightest New Zealanders leave this country—and it claims it is against that—then it should just carry on with policies like this one and it will succeed. Countries are going to the IMF for loans and banks are closing all around the world. New Zealand I must say is in a much better position than most of those countries. We have a much better opportunity particularly as the world’s most efficient country in terms of food production. Our future in my view is much more secure than that of many countries but it will depend on the quality of the research and development investment we make at both public and private levels. In my view right now in Wellington in this Parliament the National Government is closing the door to that future because it is saying “No” to investment and it is saying “No” to long-term development in favour of a short-term return that it thinks will garner it support. 
I say to the Maori Party in particular and to United Future that their constituencies did not vote for this kind of future. Many of the Maori incorporations and developing Maori companies will be hit because of this research and development close-off. The challenge for the Maori Party is to work out what it is going say to the Maori companies and corporations which are starting to be an important element in New Zealand’s economic development. 
It seems to me that this legislation is the most short-sighted that I have seen in Parliament for a very long time. It is short-sighted in inspiration it is short-sighted in aspiration and it has no practical hold on the reality of what our country desperately needs. This side of the House will fight for the next 3 years to make sure that the National Government and its acolytes if they vote for it are held accountable for what will happen as a result of this failure. 
CHRIS TREMAIN (Junior Whip—National) 
: 
 I move  
That the question be now put 
. 
Hon SHANE JONES (Labour) 
: 
 Tena tatou katoa. Firstly I say greetings to you Mr Chairman and I acknowledge the status that has been bestowed upon you. No doubt you sought something else but your very dry and balanced approach from the deep south will balance our liveliness from the north. Tena koe. To those who have been made Ministers I say we look forward to ensuring they earn their keep and to returning all the favours they sought to send in our direction—including Mr Hide who occupies the seat of Winston Peters and who no doubt celebrates his success in politics such as it is by wandering around Auckland and claiming to be the man who buried Winston. He of course will in good time learn that what goes around comes around and I look forward to enjoying many lively whakataetae with him. 
Hon Rodney Hide 
: I raise a point of order Mr Chairperson. There are two things about the Hon Shane Jones’ speech. First he is not actually addressing the Committee stage of the bill which he is required to speak to even at this late stage under urgency. Secondly I have always been quite clear about it being Mr Peters who buried himself and the Labour Party. I did not do anything. 
The CHAIRPERSON (Eric Roy) 
: That is not a point of order. 
Hon SHANE JONES 
: There were three points coming out of the Speech from the Throne crafted for the Prime Minister. It stated that it is “very clear that at all times strengthening the economy will be front and centre of … priorities. For it is this growth agenda upon which my Government’s vision for New Zealand rests.” Other than the mangled and worsening style of speaking—obviously John Key is the worst presenter we have seen in terms of a Prime Minister—the first thing we see today is the stripping away of the capital base of New Zealand’s industry by this mean-spirited attempt to take away the research and development contributions imagining that somehow the funding will materialise when it has not been there for nigh on a decade. Where is it going to go? It will go to reward the partisan interests of those who have quietly plotted away to bring John Key forward and surely John Key will bring out his foul scheme. 
Not only do we see a complete absence of anything in that speech about how we are to inject greater strength in the capital base of New Zealand’s economy but we see absolutely nothing to grow exports and to grow value-added industries. Rather it is a revision a return back to Ruth Richardson’s approach which is firstly to strip people of their labour rights and secondly to reward those who are doing well and in some way to make the vulnerable and the anxious more insecure as if that will stop the flow of Kiwis going to Australia. And to ensure that the Kiwis whom the Government is supposedly apprehensive about disappearing go even more quickly the Government says it will destroy the KiwiSaver scheme and make it a skeletal anaemic version of what the Aussies enjoy. 
So it is a disappointment Mr Chairman that you so early in your tenure should be exposed to such falsehoods. First the savings regime is being gutted. Secondly this measure is very mean and short-sighted—it fits with Mr English’s Cheshire cat Lewis Carroll style of enigmatic smile which we have tolerated. But the reality of point number two is that these research and development tax credits are indeed business growth credits. When they are stripped away that weakens the firms that are supposedly to grow the jobs and grow the wealth of New Zealand. National is scaring further people away from coming back here because that reduces our competitive advantage to a dreadfully low scale. Thirdly I note a great line here from the Speech from the Throne: “Honourable members. In going for growth”—permanent growth—“my Government will be acutely conscious of the fact that it is … to the detriment of us all to allow an underclass to develop in New Zealand.” I say that without jobs without ongoing investment in firms without the creation of a flow of goods and services through excellent research and without income within the class of those people in our society who are vulnerable and anxious that rhetoric there will be made into a dreadful lie. 
So it will be great over the next 3 years as invidious as this position is proving to be personally to remind all our iwi that the Maori Party is actually supporting a set of initiatives that not a single Maori on the Maori roll voted for. Secondly it will be great to remind that party that it is supporting a group of people who are rewarding a very narrow partisan group within society without a skerrick of concern for the broad base out in the pastoral farming areas and in industry and in the knowledge that the Aussies have double the performance in relation to research and development as a percentage of GDP that we have in our country. Without an initiative of this nature we will never recover. Of course National does not want us to recover. It actually wants to reward that narrow group who are doing reasonably well as it is. One does not send this type of Christmas present without being rewarded with a harsh response. 
DAVID BENNETT (National—Hamilton East) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question that the question be now put. 
The CHAIRPERSON (Eric Roy) 
: Before I announce the result of the vote I just remind members that votes are to be taken in silence for two reasons. The first is that it is hard for the Clerk at the Table to hear at times if he or she is computing and secondly no member in this Chamber will vote under the duress of having other people speaking for whatever reason when he or she is voting. So I just remind members and say there will be no tolerance about breaches of that rule. 
A party vote was called for on the question  
That the question be now put. 
Ayes 68 
New Zealand National 57; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 52 
New Zealand Labour 43; Green Party 8; Progressive 1. 
Motion agreed to. 
A party vote was called for on the question  
That Part 2 be agreed to. 
Ayes 67 
New Zealand National 57; ACT New Zealand 5; Maori Party 5. 
Noes 53 
New Zealand Labour 43; Green Party 8; Progressive 1; United Future 1. 
Part 2 agreed to. 
The CHAIRPERSON (Eric Roy) 
: We come now to Part 3. This part sets the rates of income tax for the 2009-10 year—that is clause 29 does. Standing Order 333 requires the Committee to take such a provision as a separately debatable question unless the Committee by leave decides to do otherwise. As clause 29 sets the annual rates of income tax we will take it first before the other provisions of Part 3. It is in fact the first clause in Part 3. The question is that clause 29 stand part. 
CHRIS TREMAIN (Junior Whip—National) 
: 
 I raise a point of order Mr Chairperson. I am seeking clarification. Are you saying that clause 29 is to be taken as a separate debatable motion? 
The CHAIRPERSON (Eric Roy) 
: Yes. 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 The member is probably not aware that this is a new provision in the Standing Orders. It actually came in with the changes made just before the election as a result of Standing Orders Committee deliberation. 
The CHAIRPERSON (Eric Roy) 
: I hope that is clear. I think members ought to be cognisant of the fact that the debate should pertain particularly to the tax rates for the 2009-10 year. That is what the debate is about. It is not a wide-ranging debate. 
Hon Judith Collins 
: It is a wide-ranging debate. 
The CHAIRPERSON (Eric Roy) 
: Well it is wide ranging but it is about taxation issues. 
Hon Dr Michael Cullen 
: It should be about the rates of tax. 
The CHAIRPERSON (Eric Roy) 
: Yes exactly. Do we all understand? 
Clause 29 Rates of income tax for 2009-10 tax year 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I will restrict my comments to one brief call on this very specific clause. It sets the rates for the 2009-10 tax year and as such it brings us to the heart of a point formerly made by the Minister of Finance. His suggestion was that nobody would be worse off because the progressive tax reductions that had been put in place by the previous Government had not been implemented yet. Well if that were the case there would be no need for this part which changes the tax rates for the coming year. This particular clause is necessary because Labour’s proposed rate reductions are already part of our law. 
That takes us to why significant proportions of the New Zealand public will in fact lose. Before I return to the specifics of the mechanisms that mean that many New Zealanders will lose let me clarify a very important prior point and that is the difference between the average-income earner and the median-income earner. We know that the “average” income is $45000. It is very interesting that in my electorate of New Lynn 66 percent of all taxpayers earn less than $40000—earn significantly less than the average income. Two-thirds of people on less than the average wage? What is that about? It is because the average is skewed by a small number of very high earners who drag the average above the median. So when we say that the average-income earner gets $1.92 out of the National Government’s tax reduction and anyone on below $44000 with children gets nothing or loses we are actually saying that two-thirds of all taxpayers in my electorate of New Lynn are either not affected or worse off and only one-third gains. In Mr Tremain’s electorate of Napier 71 percent of all taxpayers earn less than $40000 so 71 percent of his taxpaying constituents—if they have children—potentially are worse off as a result of this tax change. Why is that? When we get into the mechanics of the bill— 
Hon Steve Chadwick 
: Is that “nobody”? 
Hon DAVID CUNLIFFE 
: That is nobody who will be voting for Mr Tremain next time. 
This issue is of particular importance to the Maori Party. The Maori Party is supporting this bill. If two-thirds or more of all taxpayers across the country earn less than the average income and therefore are going to be losers under this bill—if they have children—imagine the implications for Maori communities whose incomes are skewed below the mean. The vast majority of Maori New Zealanders will be hurt by this bill. We know as a start-off that most people who voted for Maori Party candidates gave Labour their party vote so this is a sensitive matter for the Maori party members anyway given that they have gone into coalition with National—all for two seats outside Cabinet. 
Hon Clayton Cosgrove 
: Mana-enhancing! 
Hon DAVID CUNLIFFE 
: Mana-enhancing for the individual Maori Party MP but not for the community. Those people will be asking their representatives why they have done this. Why have they inflicted upon them in the first business week of the House a tax increase? 
What is the mechanism? I see that Mr Tremain still does not understand. If one is on an income of between $14000 and $20000 by April 2011—following the period during which this clause applies—one would by law have been on a marginal tax rate of 12.5 percent under Labour; under National those people will be on a rate of 21 percent. That is a big difference. That is a big big difference. Merry Christmas to all of those people who thought that they were going to get a tax cut! 
Hon Clayton Cosgrove 
: They did not tell us that before the election! 
Hon DAVID CUNLIFFE 
: They did not tell us that before the election. I think this measure is a symbol of a much much deeper problem and of course it is a problem that the Maori Party will have to wrestle with and that is that National campaigned on the glossy idea that everybody would have everything that he or she would have had under Labour but with a few fresh faces to carry it forward. It was a very palatable suggestion. It fed into that old idea that it was time for a change—“But we actually quite like you guys so we do not want too much change.” Mr Key understood that and he campaigned on not making too much change. 
But the rhetoric did not match the reality. On the first business day of the House in comes a tax bill that gives a tax rate cut and a threshold lift to upper-income earners and of course—supported by the financial sector—penalises real businesses our innovators and exporters which lose their research and development tax credit and penalises low and middle income families the heartland of New Zealand. It disproportionately penalises Maori and Pacific Island New Zealanders. Good luck to Mrs Turia good luck to Dr Sharples and good luck to all the Maori Party MPs in their next round of hui as they explain what is in this bill for ordinary Maori people who will be paying more not less tax during the period to which clause 29 applies. 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 This is an interesting clause—and in ways a somewhat unusual one—which is a kind of historical relic. We have to pass legislation to confirm the annual tax rates even though in Part 1 of the bill we have set the annual tax rates for 2009-10. In Part 3 we have another provision to confirm that we have actually set those annual tax rates for 2009-10. One may well ask why on earth we have to do that. Well the historical reason is quite simple: we are confirming the Sovereign power to tax and we are not allowing the King or in our case these days the Queen to levy monies without the consent of Parliament. Although in one bit we have said that those are the tax rates in this bit we confirm that it is the intention of Parliament and we have the authority of Parliament to levy those particular tax rates. 
This is interesting because this is the one year in which nobody loses—2009-10—because the current tax law provides for a series of tax cuts in 2010-11. In 2010 the bottom threshold will move from $14000 to $17500 and then to $20000 on 1 April 2011. On the other hand the changes made in Part 1 will remove that increase to that threshold so on incomes from $14000 to $20000 a year a higher level of tax will be paid. But that change will not occur until 1 April 2010 so for this one brief year of glory the National Party will be able to parade around the country saying that nobody is worse off as a result of its tax changes. 
But wait—help is on the way from this side of the Chamber as has so often been the case so far in this Parliament. We have had to help those members procedurally and we are now going to help those members in terms of what they will try to tell everybody up and down the country. Very shortly we will come to an amendment when we get on to the next question. It will continue the ability to ensure that nobody is worse off as a result of this bill by providing a mechanism where nobody will see themselves worse off than they would have been under the provisions in place before this bill is enacted and comes into force. 
That is where it will be very interesting to see how people vote. I am particularly interested to see how the Maori Party votes both on this clause and on later clauses. The Maori Party has been calling I think for a kind of expansive policy—for the first $25000 to be tax free for the lowering of GST and for an enormous range of things which add up to a vast and gob-smacking sum of money that would clearly have to be raised by an enormous number of raffles being run up and down the country because it would run into many many many billions of dollars a year. What it had to do with Maori needs is by no means apparent to many of us. Those members now have the chance to decide whether they really want to vote for big tax cuts at the bottom or big tax cuts at the top because this tax bill provides for tax cuts at the top and increases in tax at the bottom. 
I do not think the Maori Party members understood that. I do not think they were properly briefed on that. I do not think that when they signed up to something that was supposed to be mana-enhancing they thought they were signing up for the exact reverse of what they had promised their constituents. We will be happy to help their constituents as well. We will be happy to remind them of how their members have voted because we know that for small parties of only five members it can be very difficult communicating with their constituents and telling them what they have done. We will be very happy to assist in that and make sure the Maori Party’s constituents are properly informed about how their members have voted within Parliament. 
We will also be very interested to see what judgment those constituents make upon that party. It is not beyond the realms of possibility that those constituents will decide that having seen a tax increase over what they were expecting to get that is somewhat mana-reducing from their perspective rather than mana-enhancing. It may well be goodbye to the Maori Party at the 2011 election which will solve a lot of problems for a lot of people. But of course Mrs Turia has a way of making up the difference. She believes that Maori own the foreshore and seabed; no doubt she will be charging for entry to that at some point in the future under a National Government and that may well make up some of the difference for some of the families involved. 
I think not; I do not see the National Party going down that route. The polling tells us—amazingly—that people believe that any change to the current law should reduce Maori rights not increase them. So I strongly advise the Maori Party to adopt the route that Ngati Porou has taken and to advise people to negotiate very strong agreements that will give proper recognition of those rights rather than hold out a false impression that something more significant can be gained from a National-led Government which will certainly not be the case when reality sets in. Like the Resource Management Act changes it will be the reverse of what many people were hoping to see. 
Therefore this small part confirms those annual tax rates. For this one brief year of glory nobody will lose and then the losing will begin. 
Hon DAVID PARKER (Labour) 
: 
 I rise to take a brief call on this particular section of the Taxation (Urgent Measures and Annual Rates) Bill as well. As has been said by the previous speaker this section of the bill sets the tax rates for the forthcoming years at the rates that have been set out earlier in the bill. In other words this entrenches for the future a decrease in taxes that is weighted to those who already earn the most and a tax increase for those on lower incomes. It is exactly the opposite of what Maori Party members say that they stand for given that Maori are disproportionately among those who are low earners. Their already low socio-economic status will be hurt by the provisions in this bill that will entrench tax cuts for those who are better off and tax increases for lower-income earners. 
This also entrenches the somewhat inconsistent position taken in the legislation compared with the National Party rhetoric in prior years. Over prior years they have continually said that the price point or the income point at which the highest tax rate kicks in should be raised. The Labour Government legislated for an increase to $80000 above which the higher tax rate kicked in. This new tax rate kicks in the highest tax rate at $70000. This seems to me to be yet another broken promise by the National Party compared with the rhetoric of yesteryear on what is but day two. 
Here we have a National Government doing exactly what the Labour Party predicted it would do; that is prefer the interests of those who are already well off over those who are less well off. Far from being the friendly face from being all things to all people as National members tried to present themselves over the last period prior to the election they are already being exposed as preferring the interests of those who are better off over those who are less well off. It seems unimaginable at a time when we have rising unemployment as that means that there will be more people on low incomes as they are reliant on part-time rather than full-time work. They will fall within the low-income bands rather than the high-income bands. Against that reality that we know is real at least for a short period in New Zealand given international events those members are proffering a tax package that reduces the tax entitlements of people who are on lower incomes and prefers those who are on higher incomes. It is funded of course by the research and development tax credit cuts that were spoken of recently and also by the gutting of KiwiSaver. So we have fewer jobs in the economy and those on shorter hours of work as a consequence with lower incomes will be among those who suffer the tax consequences of a lower taxable income. It is a matter of some concern for me that the first act of National Party members is to visit the cost of their unwise tax cuts upon those least able to afford the loss of income that will accrue. 
Hon CLAYTON COSGROVE (Labour—Waimakariri) 
: 
 Earlier in the debate I took out a copy of the National Party’s taxation policy. In referring to this part of the bill I note it confirms the tax rates going forward for 2009-10. I reflect on Dr Cullen’s words and those of my colleagues Mr Parker and Mr Cunliffe when they talked about fairness. I look back at the National Party’s weighty document of propaganda and recall how all the National members—some soon to give their maiden speeches some from Maori constituencies as well; and now supported aided and abetted totally sycophantically by the Maori Party—went around and said National knew that New Zealanders wanted a tax system that was fair. I reckon we could probably all sign up to that; we all say we want a tax system that is fair. The problem lies in the definition of fairness. If members look at the confirmation of these rates they will see that what we would define as fair and what most ordinary New Zealanders would define as fair is not something that the National Party defines as fair. 
National Party members told everybody before the election not about these rates and how they would be confirmed today but that the tax system would be fair. The document also states: “National’s tax package will give households confidence and some cash in their back pockets.” I just ask as the Government confirms these tax rates what is fair about what we have heard today when for instance a person with no children and an income of $23999 a year will get nothing? I wonder what Mrs Turia and Ms Parata the new member who will purport I suspect to represent a Maori constituency will say to their constituents when they go back to the marae. As the National Party confirms these rates they know that those at the very bottom will get no assistance at all or will end up paying more tax than they currently pay. I wonder how those members will respond when somebody on the marae stands up probably quotes this document and asks Ms Parata or Mrs Turia: “How do you define fairness?” 
To be charitable to the Maori Party—let us be a little bit charitable—maybe it got sucked in by this bill. Maybe the Maori Party members did not read it or it was not explained; maybe they were hoodwinked or maybe they were not told. Let us be as charitable as we can. But they have been told today and they were told yesterday about this measure; it has been explained over and over again. What will be etched in my memory is the face—and I have some sympathy for him—of poor old Hone Harawira as he buried himself behind the desk yesterday and put up his hand to vote with the National Party— 
Hon David Cunliffe 
: Trembling! 
Hon CLAYTON COSGROVE 
: —knowing that morally this is wrong. He knows that all the constituents he works for—and I am told he is a damn hard-working MP and is respected as Mr Mallard said last night—will be sold out by this measure in toto. I am going to find the situation very interesting as we deal with the confirmation of these rates when some of the Maori members go back to their marae and their communities and somehow explain this measure to them. It is going to be an interesting course of events. 
It shows me that this is a traditional National Party move: to have an election promise fairness equity aspiration love peace and happiness to all and then to do people over—put the sword into them and slash at the most vulnerable part of our communities. The National members are doing that before Christmas under urgency with no select committee scrutiny in the vain hope that people are tired of politics. They hope people will want to get out to the barbecue and go to the beach with the family to have a few sausages play a bit of golf or whatever else and be with their kids and will not concentrate on politics. They hope and pray that our communities are thick. Well I say our communities are not thick and when people open their pay packets in the months and years to come and when they try to do some good for their children and their loved ones— 
Chris Tremain 
: I raise a point of order Mr Chairperson. Clause 29 is a very narrow clause. The member is an experienced speaker. He is way outside the scope of clause 29 which is very narrow. 
Hon CLAYTON COSGROVE 
: Speaking to the point of order I have consistently referred to the confirmation of the tax rates and I am now explaining the consequences of confirming them. That is in order. 
The CHAIRPERSON (Eric Roy) 
: The Hon Clayton Cosgrove. 
Hon CLAYTON COSGROVE 
: Thank you very much. The National members may not like that or course. They do not like to hear that. They do not like it when Dr Cullen repeats that. A couple of them over there grin and laugh and they do not like it when we repeat what the consequences of the actions taken in this Parliament over the next few hours will be. They can jeer and they can laugh. Mr Dunne is a straw man who blows with the breeze—the great man of common sense. I suspect that deep down—although he has his backside in the LTD I have respect for the member—even he knows this is wrong. Even he knows this is wrong deep down. 
It is very interesting I say again as we confirm these rates that not one member in the National Party has contradicted Dr Cullen me David Cunliffe Mr Mallard or Mr Parker when we have stood up and given case after case of situations where injustice will occur as a result of confirming these rates. Not one of them has contradicted that. I would have thought that if we were wrong OK we were wrong. But the National members should tell us that give us the evidence stand up and justify their position. They cannot do so; they will not do so. They have no evidence. I look forward to holding up this document around the country and inviting people to say whether in their communities they have been treated with fairness with dignity and with respect. Have they had their aspirations warmed and supported and have they chosen a brighter future when those who need some dough and some help are being sold out by those guys over there? 
Debate interrupted. 
Maiden Statements 
Hon STEVEN JOYCE (National) 
: 
 Firstly I would like to congratulate my local MP Lockwood Smith on his election to the role of Speaker. 
Could I start by saying a fond greeting to Jeremy Greenbrook-Held of Oriental Bay. In the letters to the editor in the  
Dominion Post  
on 24 November under the heading “Just who is this man Joyce?” Mr Greenbrook-Held lamented that I had made it into my role without giving a single interview. This will come as a surprise to a number of journalists who had interviewed me prior to that time but I will nevertheless attempt to fill some gaps for Mr Greenbrook-Held today. 
I live north of Auckland but I am a Naki boy—born and raised in New Plymouth. It is a wonderful part of the world and I love to go back to visit the mountain the parks and the wild west coast. However I have to say I am a fan of pretty much all of this country; I am actually a bit of a greenie just not the type who sits over on that side of the House. 
As it is for all of us my family came here from lands far away. My father’s family are Irish Catholics. My great-grandfather Eugene Joyce arrived as a young man on the  
Invercargill 
 in 1879. He married Ellen and they settled in Taranaki where they had seven children. One of them was my grandfather Len a bee-keeper who lived with his wife Eileen in Eltham which is where my father grew up. 
On my mother’s side my great-grandmother Granny Hooper was a Cockney. She migrated with her family in 1878 landing in Nelson after 4 months at sea. She must have liked it here because she lived to 101 and I can vaguely remember her 100th birthday party held when I was about 5. My mother was born in Kaponga. Her father was a lawyer turned insurance salesman and a lay preacher in the Anglican Church. Their family were staunch Anglicans my father’s family were staunch Catholics and that was a time when those differences did matter. It tested both families when my parents married in 1961 now nearly 50 years ago. I am thrilled they are both here together in the gallery today. 
My parents scrimped and borrowed and bought a Four Square dairy in New Plymouth. They were not greatly educated—they both left school at 15—but they worked really hard to make a go of their business and their family. They ran a 7-day business and brought up five kids at the same time. From where I am sitting today that seems pretty heroic. My family then is from a long line of small-business people. Apart from a few years managing a supermarket my father and mother always owned their own businesses including their own supermarket. So it is probably not a surprise that I did the same. 
I had my first taste of radio when I was finishing my zoology degree at Massey University in 1983. A bunch of us worked at Radio Massey. In 1984 members may recall there was an election so we decided to run a series of current affairs shows in the style of the political television shows of the time with intercut interviews. With seriously inferior equipment a fearless group of us worked 24 hours at a time to bring to air the hugely important Radio Massey election specials on political issues of the day. We interviewed luminaries like the late Bruce Beetham and the late Trevor de Cleene and put those shows to air for audiences of roughly 50 people each night probably 48 of whom would have preferred to hear the latest Joy Division track. 
So I could have been a journalist maybe. I have a brother and a sister who are members of that truly esteemed profession. Instead it was during those late-night sessions at Radio Massey that five of us decided to start a commercial radio station of our own. We each put in $100 and Energy Enterprises—which became RadioWorks—was born with $500 in the bank. Energy FM ran as a summer station in New Plymouth for 3 years which was all we were allowed to do under the law at that time each time making a bit of money to help pay for our full-time FM licence application. We chased down shareholders and a board of directors went to a licence hearing with the Broadcasting Tribunal then waited 15 long months for a decision to be released. During that time we lost three of our number—I think they got bored—and found one more. In mid-1987 Energy FM got a licence to start broadcasting across Taranaki and on 30 November that year we went to air. 
Running one’s own business is hard work. It is hard work a lot of the time and fantastic fun some of the time. Running one’s own radio station is even more fun. The three of us poured all we had into that business. We continued to live like university students for years on the grounds that if we did not become used to a more comfortable lifestyle we would not miss it. We bought stations in Tauranga and Hamilton. We started The Edge and Solid Gold FM and built those two and The Rock into national satellite-delivered networks. We added stations by growth and acquisition until by 2000 we had offices in every major town and city in the country and 650 staff across four networks and 18 local radio stations. It was an amazing ride. We all learnt a huge amount about growing and running companies organisational cultures and getting the best out of people. I met and worked with hundreds of fantastic people many of whom I count as friends today. Throughout we had mostly the same board: Norton Moller Derek Lowe and John Armstrong. They were my mentors commercially and I am greatly indebted to them. 
CanWest raided our share register on the stock exchange in 2000. Some of us held out for a while but eventually we realised the dream was over and I retired from my role as chief executive officer of RadioWorks on my 38th birthday. 
It was time to take stock and time to give something back. I joined the gym. I started running; unfortunately I later stopped running. And I joined the National Party. I put my name forward and nearly stood in 2002 but as it turned out it would have been a purely academic exercise. Instead I got my first National Party job after the election. I was asked to join the campaign review and then the full strategic review of the organisation. It was an absolute honour to do both and to be trusted by a set of people who had no history by which to trust me. The party in 2002 was hurting pretty badly and I was conscious of the need to take real care. 
The rebuilding of the National Party was a team effort and I am very proud to have played my part. However a lot of the credit must go to our party’s president. Judy Kirk is now coming up towards 7 years in the role. In 2002 when she took over as president an opinion poll that week rated the National Party at 18 percent. For the first time in its history it was in danger of no longer leading the centre-right in the New Zealand Parliament. In the 2008 election—1 month ago—the National Party achieved 45 percent of the party vote the highest vote by any political party under MMP and the highest vote full stop since 1990. It is a fantastic turn-round ably led from the front by our new Prime Minister the Hon John Key and prior to him our previous leaders Don Brash and Bill English. However any great leader needs an organisation to lead and Judy Kirk rebuilt that organisation without sacrificing either her decency or her principles. When all is said and done I am confident her name will be up there as one of the National Party’s great presidents alongside the name of her mentor Sir George Chapman and that will be no more than she deserves. 
It is traditional to thank your electorate workers in your maiden speech for helping you get to Parliament. I am of course one of the lesser beasts—a list MP—and worse still one who did not stand in an electorate. But I did run a campaign of sorts. It was a little bit dire in places according to some of my critics but redeemed by a fine candidate who shone through despite the poor support he received from his national campaign chair! There are many people I can and do want to thank for that campaign particularly those at campaign HQ in Wellington and the thousands of volunteers around the country who put up with the rather dictatorial requirements of the Wellington crew. I will not mention names today. They all know who they are. Can I just say that I could not hope to work with a finer bunch of people. 
So via a stint running another marvellous proud smallish New Zealand company with another great team of people Jasons Travel Media I arrive here in this building this hermetically sealed vortex which is our Parliament. So what contribution can I make to this place? Who do I represent? Well I think I can be a voice for the people who always pay their taxes and who want to see them go to a good home. Primarily because I have been in business for most of the last 21 years I can bring an understanding of the thinking of business people—small and medium sized business people in particular who organise most of the wealth creation that takes place in this country. 
I understand the mentality of those who become frustrated at Government getting in the way of their doing their job who chafe at needless regulation and the sight of wasted tax money who become frustrated by poorly performing infrastructure. I understand the fear they have of Government organisations muscling in on their industries by spending public money to compete with them in their marketplace for no good reason. 
I bring a real understanding of the value of a dollar. From the time I was a little tacker sitting at my family dining table as my parents added up the week’s takings I understood that there was no money around if you did not go out and earn it yourself. I understand those people who see Wellington as a “great sucking sound” that hoovers up more and more of the nation’s money so that politicians can look like heroes when they spend it—people who are happy to pay their share but are not happy to see it wasted. I also understand what drives people: the desire to better the lot of themselves and their families under their own steam and to not have to rely on Government handouts. 
I understand that as a country we have limitless calls on our resources and limited resources. I know that the only way we are going to progress in the manner we all hope for and provide for those less fortunate is by spending wisely the money we have and spending most of our time working out how to grow faster to pay for all the things we need. And I think I understand what is possible in organisations that think small and nimble where the frontline is encouraged and well resourced and the back office is pared back and that are tuned to what the customer is seeking. 
One of the distinctive features of this country is that we are a small group of islands at the bottom of the world. There are only 4.25 million of us. Small can be tough. It means small home markets not as many resources and not as big a pool of talent as some bigger countries have. However our smallness need not be a negative; it can be a strength and it should be more often. Individuals with ambition and drive have shown throughout history that they can achieve a lot more here a lot more quickly than they can in bigger countries. One great running coach one great rowing coach can achieve amazing things. Our smallness means that a high proportion of us are interconnected. People used to talk a lot about the six degrees of separation; in New Zealand I am sure that half the time it is just two or three degrees. 
Our smallness can translate to nimbleness: the ability to change course move quickly make things happen. Sadly from a vantage point outside the Government and now from inside it I can see that we get wrapped up in the fact that this new regulation or law or entitlement or initiative is world best-practice that by doing it we are suddenly right up there with the EU or the UK or the US. Maybe a world-beating all-singing all-dancing multilayered process is the correct approach for a large country. Maybe for us we can trim it down shorten it and dare I say spend less money doing it. Put it this way: if we cannot how can we compete with much larger countries? I am all for fair and sensible rules of commerce and social interaction; we just need to scale them to our size and look for the simpler way. 
I believe we have a once-in-a-lifetime opportunity in this country and a corresponding risk that goes with it. We can recapture our mojo and become the feisty resourceful exciting No. 8 wire sort of place that enabled all our forebears to make a success of themselves way down here at the bottom of the world; or we can fade away and continue on the path of figuratively and maybe one day even literally being the smallest and poorest also-ran state of Australia. 
I do not believe I bring any pretensions to this new role. I am honoured to be provided with the opportunity to serve and I will work diligently to repay the confidence that has been shown in me by my party by my leader and by New Zealanders. When it comes to work I am a believer in doing the hard yards. In rugby terms and I stress that my familiarity with the code has pretty much always been as a fan I like to grind it out—nothing too flashy. 
I also these days like to have a little balance. Members may ask what I am doing here! Apparently it is a little bit tricky in this Parliament to have balance but I find that it helps people to keep perspective—which also might be a bit tricky here. I have an inspiration though: my wonderful wife Suzanne; our daughter Amelia; and Gemma the retrodoodle. I know they will insist on seeing me regularly no more than I will insist on seeing them. 
Mr Speaker I will work diligently to help make this country a stronger more successful and proud place. That is why I am here—for no other reason. If I can help to do that then I will be able to hold my head high when I report back to New Zealanders when my time here is done. 
HEKIA PARATA (National) 
:  
E te Mana Whakawa tena koe. E nga whanaunga e nga hoa e te hunga kainga i haramai i tenei ra ki te tautoko i ahau tenei te mihi aroha ki a koutou katoa.  
[ 
Greetings to you Mr Speaker. Also to relatives friends and to those from home who travelled here today to support me this heartfelt acknowledgment to you collectively. 
] 
I acknowledge my family and friends who have travelled here today to share this occasion. 
Ko Hikurangi me Aorangi aku maunga ko Waiapu me Waitaki aku awa ko Ngati Porou me Ngai Tahu aku iwi. I identify through my cultural frame of reference my mountains Hikurangi and Aorangi; my rivers Waiapu and Waitaki; and my iwi Ngati Porou and Ngai Tahu. 
Tenei te mihi ki te mana whenua ki a Te Ati Awa me nga waka katoa i tau mai nei ki Te Whanga-nui-a-Tara. I acknowledge the guardians of this land Te Atiawa and all those waka that have come ashore here in Wellington. 
Tena koe e te Pirimia John Key. Ka tikina e ahau nga kupu o tetahi waiata na toku tipuna na Hanara Rire i tito mo Ta Apirana Ngata e pa ana ki a koe i tenei wa.  
[ 
My greetings to you Prime Minister John Key. I reach back in time for the words of a song that my grandfather Arnold Reedy composed for Sir Apirana Ngata—words that I consider apply aptly to you at this point in time: 
] 
I greet you Prime Minister and recall the words of a song originally composed by my grandfather Arnold Reedy for Sir Apirana Ngata: 
“Te wa-ka o Aotearoa he tini nga kaihautu ko koe ra e Hone kei te kei e koro kia u.” 
[ 
“The New Zealand canoe has many captains but you John are at the helm hold fast.” 
] 
“The waka of Aotearoa has many captains but you John are at the helm.” 
Kei te rangatira kei a Helen Clark mo to whakahaere i nga tau kua pahure ake nei tena koe. Tena koe e te whanaunga Parekura. Talofa e te mema mo te rohe o Mana a Luamanuvao Winnie Laban. Otira tena koutou katoa nga kaihoe o tena waka o tena waka o te Paremata. 
[ 
To you Helen Clark former leader I acknowledge your stewardship over these past years. Greetings to you my kinsman Parekura and to the member for Mana Luamanuvao Winnie Laban. Indeed my acknowledgments to all oarspersons of each parliamentary canoe. 
] 
To our former leader for her stewardship over these past years I salute you Helen Clark. To my kinsman Parekura Horomia I greet you. To the member for Mana I acknowledge you. To all the different waka that have berthed at Parliament I greet you. 
Mauriora! 
Mr Speaker I should like to congratulate you on your appointment. I also acknowledge the Governor-General who commissioned the opening of the forty-ninth Parliament; my colleagues Peseta Sam Lotu-Iiga and Melissa Lee—fakafetai and ahn nyung ha se yo—my colleague the Hon Steven Joyce who opened our paepae this afternoon; and those who will follow. Tena koutou katoa. 
As I stand before you today I am at once conscious of the weight of history and expectation that press upon me and the lightness of possibilities that beckon. I am familiar with this dichotomy; I have grown up in a culture that walks through the present with the constant companions of the past and the future. This practice prepares us particularly well for this parliamentary role I think as we weigh actions of today against those of the past and the implications of the future. 
In 1885 my great-great-grandfather Tame Parata entered Parliament as the member for Southern Maori. He served a distinguished career of 26 years dedicating his efforts to his people in their search for quality citizenship in their own lands. Later in 1905 another tipuna of mine—ours—Sir Apirana Ngata entered Parliament as the member for Eastern Maori and committed his public service of 38 years to seeking opportunities for and emphasising obligations to citizenship. 
They along with many others shared a profound appreciation of the birthright of this small young nation and its potential. They also held in common an attitude that characterised those generations of the reciprocal responsibility to return in equal or greater measure that which had been given. I enter Parliament and I begin this phase of my public service journey proud to follow in the footsteps of these ancestors in the pursuit of quality citizenship for all. They provide a model that I am glad to emulate: unambiguously Ngati Porou and Ngai Tahu unequivocally a New Zealander. 
I come to Parliament by way of an extensive Public Service career with detours into wealth-creating and whanau-employing business experiences and punctuated by recalls to my home of Ruatoria the capital of Ngati Porou. I grew up in the central business district of Ruatoria when our area was famous for land innovation dairy factories cultural foreign policy lawyers educators and public servants. It was a community where Ngati Porou was the spoken language except in schools and te reo Maori was for dealing with other distant tribes and their strange dialects and practices. 
I grew up at the centre of a strong and dynamic web of kinship relationships amongst orators thinkers debaters and composers where competence and whakapapa were the determinants of leadership—not gender. I grew up believing that everyone was Anglican all worshipped Sir Apirana Ngata Hikurangi was the highest mountain in the world and the Waiapu swept majestically to the sea. I saw no need for reality to intrude upon this set of beliefs because they performed the very useful function of securing identity. 
I came from a community at a time when it was peopled by hard hard workers who eked out livings on infertile and soft country that even as it was farmed slipped away into the river and out to sea. These people suffered the boom and bust of officialdom the capricious ideas of what next to invest in how now we might be saved—always by well-meaning yet very distant bureaucrats and politicians and all the time oblivious to the possibility that we might actually save ourselves. 
I come from a community where whanau was the pivot round which life turned; where education was the magic bullet; where self-reliance and self-determination were practised not talked about; and where humour courage hope and gratitude were the hallmarks of citizenship—most nobly personified in the 28th Maori Battalion literally the most costly in lifeblood. 
In my lifetime I have seen the very kinds of communities of my upbringing succumb to the disease of dependency where State intervention is the norm not the exception; where caregivers providers facilitators and sector workers replace aunts uncles neighbours and friends; where State welfare rather than social welfare is the first resort and the basis of an intergenerational life sentence rather than a lifeline; where despair and alienation are masked by drugs alcohol and abuse; where displaced anger makes victims of children and their mothers; where low expectation in schools is predictably repaid with low achievement; and where fault and blame-laying have become the defence of failure. 
Ruatoria I now know was always economically challenged. But its cultural wealth and social richness its determined self-belief and hard work kept it viable. We must find ways to lay bare all the causes of these symptoms so that we might with purpose and compassion find durable solutions. I feel called to Parliament to do something about this. 
I have spent my professional career in the Public Service informing policy with these realities striving to create opportunities for communities to drive their own development advocating fiercely for meaningful resourcing and realistic time lines resisting the bureaucratising of the original flair and ingenuity that attracted funding in the first place promoting the value of different cultural approaches and exposing the presumptuous bias of majority culture presented as the norm. 
I was born and brought up in a family of eight by parents who instilled in us the importance of family education community service education hard work education high expectations and an attitude of success. Our parents worked; we worked—often several jobs at once. None of this was unusual or peculiar to our family. All the families we grew up with went to school with and continue to be in touch with lived lives like this. These are the whanau I know and recognise. This is the model that informs my vision for the building blocks of modern Aotearoa New Zealand. 
My parents’ very different backgrounds converged successfully in their children I think and gifted us with the very New Zealand legacy of mixed ancestry: Scottish Irish English Ngai Tahu and Ngati Porou. So I come to Parliament a fully committed bicultural citizen a descendant of both Maori and Pakeha and imbued with the spirit of Sir Apirana Ngata’s prescription for life: “Grow up and meet the needs of your generation master the technologies of the modern world for your material well-being cherish the treasures of your ancestors as a plume for your head your soul given to God author of all things.” 
I come to Parliament equipped with our experience of starting our own businesses and managing them through all the highs and lows that attend such initiatives. We have faced the risks that small businesses up and down the country face. We have slogged through the mire of compliance regimes and related costs. We have encountered the impervious official at the point of export indifferent to the effects of inexplicable bureaucracy and the costs incurred. We must liberate businesses to create employment and wealth and bend our minds to that rather than to ever more clever ways to redistribute it. 
I come to Parliament by way of my residence in the greater Porirua region—a microcosm of Aotearoa New Zealand. It is an area of great diversity with a high proportion of very old people and very young people; with extremes in socio-economic status with some of the highest average household incomes and some of the lowest; and balanced by a deep pool of potential and a crucible of cultural richness in the form of Maori Pacific Pakeha Asian and other ethnic minorities. It is a growing creative community well served by the internationally renowned Pataka Museum and Art Gallery which is to be complemented—when we can secure the resources—by a performing arts centre; and by the strong and innovative Whitireia Community Polytechnic which with sufficient investment can and will design programmes that arise out of the cultural wealth of the region creating new technologies we know to be essential to the productivity and growth and international competitiveness of our nation. And cradling it all there is an environment that is both beautiful and fragile and while it looks after us we in turn must care for it. 
Mr Speaker and honourable members I come to Parliament with high expectations of what is possible. I come shaped and moulded by the influences and experiences I have outlined. I come with an unshakeable belief in the potential of this country its people and this Parliament. My recipe has three simple ingredients from my own life story: family identity and education. We must restore whanau and families as the cornerstones of our communities invest in the cultural diversity of this country—not because it is fashionable but because it carries identity and the potential for innovation and new technologies—and join the crusade for literacy and numeracy and for a good-quality education for every New Zealand student. We must adopt an uncompromising attitude that failure is not an option. All our other aspirations for economic growth raised standards of living and national confidence and pride will flow from getting these basics right. 
I come to Parliament determined to add to the legacy of those who have gone before—the pursuit of quality citizenship. As I go to my office in this historic building I pass my own panel of scrutineers their faces challenging and supporting me. I am grateful to walk alongside them. 
In closing I should like to acknowledge all the people who have touched my life. A small number have been able to join us here today; others watch Parliament TV at home on the Coast down South and around the country. I know that my mother Hiria Te Kiekie Reedy will be watching and I pay tribute to her constant love and support as I do to that of my brothers and sisters and their partners and families who together form the kind of whanau that is so easy to have policy theories about but who everyday work hard at making it real. 
Finally I would like to especially acknowledge my husband Wira Gardiner whose pragmatic approach to what is possible encapsulated by Maggie Thatcher’s instruction to her generals “Go to war with what you’ve got.” has become part of the language of our home and keeps me grounded when in pursuit of perfection. And to our two wonderful gorgeous smart funny demanding fabulous daughters Rakaitemania and Mihimaraea I say that you deserve the very best. Since having their bright lights shine into my life there has been a heightened sense of urgency and a sharpened focus on the kind of society in which their aspirations and ambitions can be given loft and momentum and through which they can walk with confidence and poise as Ngati Porou citizens of the world blessed—as we all are—to call this magnificent country Aotearoa New Zealand home. 
Mr Speaker and honourable members I come to Parliament with high expectations of what is possible. Tena koutou tena koutou tena koutou katoa. 
Waiata; haka 
AMY ADAMS (National—Selwyn) 
: 
 It is with a great deal of respect that I rise to present my maiden speech in this Chamber and I offer my congratulations to you sir on your election. I stand before this House as the representative for the newly formed Canterbury seat of Selwyn and I am conscious of the great debt that I owe to the people of my electorate for the faith they have shown in me. I would like to begin today by pledging to them my commitment to work in their interests and for their advancement for the time I am here. 
I would also like to pay a personal tribute to the Prime Minister the Hon John Key. Our Prime Minister is a man of great honour and real charisma and a man with a heartfelt empathy for the people of New Zealand. He has been an inspiration to me my electorate and all New Zealand and I am especially honoured to be serving in his Government. 
We seem to raise strong politicians on the Canterbury plains. I come from the same part of the country as the great Sir John Hall a farmer and former Premier of New Zealand who in the 1870s formed and maintained a Government in a period of great change and instability. Sir John is particularly to be remembered for one of his final acts of public life which was to successfully shepherd the women’s suffrage bill into the House in 1890. 
In the passage of time we seem to have lost sight of the enormous contribution Sir John made and as a woman now representing his home area I take a moment to acknowledge his legacy. As a farmer he and his brothers formed one of the first large-scale sheep runs in the South Island which later became Terrace Station. As a politician for the original Selwyn seat he was respected for his integrity and huge contribution to the developing nation’s landscape. Sir John was a staunch conservative who felt that women would bring more decorum and civilised behaviour to politics and who would be least likely to countenance official extravagance. Women he noted “instinctively possess a far keener insight into character than men and the result of giving them a vote would be that a candidate’s chance at election would depend more on his character for trustworthiness for ability and for straightforwardness than on mere professions made on the hustings.” He said: “A clever ready-tongued political adventurer may cajole a set of dull-witted men but if he has to pose before a number of women they will see right through his real character. It will be of no use trying to get around them with blarney and humbug; they will soon discover whether he is the unselfish patriot he professes to be or a selfish hypocrite who wishes to make use of the people for his own benefit. Women’s intellect would be a surer guide in cases of this kind” Sir John said “than that of the majority of men.” 
One hundred and fifteen years since that pivotal moment in our history I am extremely proud to represent the new Selwyn electorate and I wish to acknowledge the many notable members of this House from the area who have come before me including two former Prime Ministers: the Rt Hon Sidney Holland and the Rt Hon Jenny Shipley. I come to this House as a commercial lawyer and a Canterbury sheep farmer and based on that just last week in Wellington someone called me a “typical Nat”. Well I make no apology for that side of my background. I am extremely proud of what I have worked very hard to achieve. But for those who are looking to stereotype me it is worth pointing out that I also grew up in a sole parent household always short of money with my mother putting herself through a degree with two preschoolers underfoot to eventually become a psychologist bonded to the Education Department. Her job working with some of the most unfortunate families meant we grew up all over the place—Ngaruawahia Hamilton Wellington and eventually Auckland. 
Compared with many Kiwi kids though I was fortunate because I came from a family of self-starters who believed that anything was possible if one worked hard enough. One of my grandfathers was an engineer and an inventor who started a factory in his Wellington garage that employed many people for decades. My other grandfather is a well-respected accountant in Motueka who again built his business from the ground up—a business that has strong roots in the agricultural and farming communities in the Tasman region. For myself it was while I was at Canterbury University and met my husband that I began my relationship with the farming and rural sectors. 
Back in Sir John Hall’s day New Zealand was a young country building its fortunes on the sheep’s back—an agricultural economy with a bright future. Today agriculture is still the backbone of our export-based economy. It was our past and it remains our future. It is the primary sector that will help us as a country find our way through these troubled financial times. However the farming sector is under threat from all sides and the threats that face the rural sector in New Zealand are serious and will need commitment and innovation to find solutions. At this time we need the rural sector more than ever. We need to treasure our rural communities not trash them. 
Something that worries me is how many New Zealanders have lost touch with the land. Most Kiwi kids do not visit farms any more. They do not see lambs in the spring and they do not grow up knowing that farmers care about their land—its health and its future. It is not in farmers’ interests to pillage nature. Farmers farm for future generations and they farm for the prosperity of all New Zealand. Environmentally we must find a workable balance between the needs of the environment and those of the rural sector and other stakeholders. But when we talk about sustainability as we must let us not forget the need to also be economically sustainable in the international marketplace. Although the issues we face will be challenging and at times contentious I am confident that if all sides can approach the issues collaboratively solutions can be found and implemented. 
We must also remember that the plight of agriculture is not just about the success of our economy. The world has a massively expanding population and UN predictions are that feeding those people will be one of the biggest challenges in years to come. We cannot afford to let our agriculture industry in New Zealand shrink where we have the proven capability to produce some of the best and most environmentally sound foodstuffs in the world. 
The management of water and in particular the need for large-scale water storage facilities in Canterbury is one of the most difficult but also most important issues facing my electorate. Water is life and nowhere is that more true than on the farm. In rural homes throughout the country the amount of rain that has fallen and the forecasts from the rain radar are not just small talk. They can make the difference each year between survival and foreclosure. To resolve the matter we must look for the optimal solution and then ensure that the law enables it to be achieved. Decisions should not be driven by who got in first or which option is most expedient under the Resource Management Act. Rather a macro-analysis of long-term outcomes and community needs must be the central consideration. We as politicians must ensure that the law supports rather than hinders such an approach. 
That brings me to infrastructure. For too long politicians have dodged the issue of infrastructure development. Time and time again infrastructure has been shunted into the too-hard basket. Infrastructure requires long-term thinking long-term funding and long-term commitment. I have no doubt that short-term thinking has already cost this country considerably. We have to start thinking as a nation and not just as individuals. It really is a case of doing it for the greater good. And it is not just the economic cost. Communities suffer when schools roads libraries broadband services and the like do not keep pace with population growth. The lack of community infrastructure is a major issue for many parts of Selwyn. I do not want our communities to be nothing more than a place where people go to sleep. For communities to support their people we must first support our communities. For New Zealand to succeed we cannot keep saying no to infrastructure projects because they involve change. The process should instead focus on fairly balancing all competing interests including wider public needs. To build New Zealand’s productivity we need to get innovative take risks and do it fast. 
Fifteen years as a commercial lawyer has taught me that there are already hugely innovative and talented people in our business communities but we are making it very hard for them to succeed locally and on a world stage. All over the country these business people are telling me that one of the biggest challenges is getting a straight answer from central and local government. People are generally happy to work within the rules. They just want to be told definitively what the rules are. Businesses need to have certainty and to be able to plan ahead confident that the playing field will not change every few years. Being told by central or local government that the system means that it will take many months or years and often cost hundreds of thousands of dollars in consultant and legal fees to work out whether something can be done is not OK. It is a huge drain on business and it is pouring productivity down the plughole. 
Making laws that effect people’s lives is a very grave responsibility. When the law does put restrictions on people we owe it to them to make the rules clear and concise and not open to subjective interpretation leading to wide inconsistencies of result. An example is that of a farmer in my electorate who was building two sheds that were exactly the same a few paddocks apart on the same farm. One council two building applications and two different council officers were involved. The approval for the first shed took just a few weeks and did not require anything further. The second identical shed took months and required the furnishing of considerable further information and reports and of course extra costs. That is not right. 
Of course we must have regulations but let us think very carefully about what any restriction on people’s freedoms actually gives to society. If the benefit is minimal and the compliance or productivity cost is high let us not do it. Business in this country has often been demonised in recent years as large heartless corporations making money off Kiwis for their international owners. But in reality the face of New Zealand business is a couple of guys working in a workshop out at the back of town fixing cars or a mum selling kids’ products on the Internet from home or builders sparkies cleaners lawn-mowing contractors and painters. The productivity of this country is in their hands. They form the bulk of New Zealand businesses and they will be very exposed in the coming economic storm. They are the infantry of our economy and they are fighting on the front lines right now. 
So are we sending in reinforcements or will we abandon them? And it is the same in the social sector. We need some long-term thinking focused on early intervention initiatives that can make a real difference. We have serious social issues to confront as a nation. While there are outstanding programmes in place we need more. We need major attitudinal change right across this country. I believe that the key is fostering a strong sense of individual responsibility. As a parent I can say that there is only one way to teach responsibility and that is for there to be clear and consistent consequences for one’s actions. If 3-year-olds can get it I think other Kiwis can too. That means that to be part of the very special community that is New Zealand we expect people to take responsibility for themselves and their families. The State is here to help but it is not its role to run our lives tell us what to do or tell us how to do it. The role of Government is not to wrap us in cotton wool to save us from ourselves. 
I can assure people that I will stick up for the right of Kiwi kids to play on swings see-saws skateboards and cycles; and to climb trees and build tree houses without the need for a building consent. 
I want to take the opportunity to publicly acknowledge my husband and my two wonderful children who are here today for their unending love and support and for making sure that my feet stay firmly on the ground. Don Thomas and Lucy you are the reason for everything I do and I love you deeply. Thanks must also go to my wider family my parents my sister Belinda particularly and to my new Selwyn electorate family for all their tireless work supporting me over the previous year. There are simply too many of you to name but you know who you are. My thanks also go to the National Party its president Judy Kirk and our regional chairman Roger Bridge and my caucus colleagues for your unfailing support and guidance. 
I conclude by saying that in my view for most of the past decade New Zealand has been heading down a no-exit street—economically socially and psychologically. We have been penalising hard-working families struggling to keep their heads above water with higher costs and higher taxes. We have been strangling business with red tape making it harder for them to hire staff and miring them in a field of regulatory uncertainty. We have been downgrading the education system creating meaningless qualifications giving kids poor work habits and loading teachers with responsibilities that should rest with families. For too long we have had a culture where the State thinks it knows what is right for every family and for every business; a culture where every social problem is renamed a condition that people should not be held accountable for; a culture where violent offenders seem to have greater rights than their victims. Well that is not OK with me. I have higher aspirations for this country and I have a strong belief that we can achieve them. 
I would like to finish with the words of Sir John Hall back in 1890: “We cannot afford as a nation for [our politicians] to stand aside from the work of the nation: we need all their spirit of duty their patience and their energy in combating the sorrow and sin and want that is around us.” Mr Speaker I look forward to serving the people of Selwyn and Aotearoa for as long as they allow me the privilege of representing them. I thank you. 
TODD McCLAY (National—Rotorua) 
: 
 Mr Speaker I begin my maiden speech today by offering congratulations on your election as Speaker of this great institution. I also congratulate my new colleagues the Deputy Speaker Lindsay Tisch and Assistant Speakers Eric Roy and Rick Barker. 
I pay tribute to our Prime Minister John Key in the way that he has led the country since the election on 8 November. Many many people in my electorate of Rotorua have told me that this is the type of leadership they voted for and the change they want. I also paint a glowing tribute to the National Party president Judy Kirk. Judy is an exceptional person and many of us were helped to be here today by her hard work and dedication. 
I praise the central North Island chair of the National Party Jo Stewart and thank her for standing on the side of the road with me waving placards during our campaign. In the streets of London as on the sports fields of Munster New Zealand has a reputation for reward for hard work. I thank my campaign team for their hard work over the past year: my electoral chairman Ian Patchell who is here today; my campaign chairman councillor Mike McVicker; my finance agent Don McFarlane; Ian McLean for his great wisdom and guidance; and the many many others who were responsible for our success in Rotorua this year. I also acknowledge the people who have travelled from Rotorua to be here today and thank Neil for the unfettered access to his fridge during the campaign. 
I make special mention of a very special person—my father-in-law Ron Wattam. Ron and my mother-in-law Margaret live in Cromwell and they came to stay with us in Rotorua for a week about 6 months ago and they are still there. Ron worked from early in the morning until late in the evening removing great moustaches from my hoardings. I say to the Prime Minister that the people of Whakarewarewa believe that I look better with a moustache than he does. I report that bakeries in other electorates should not bother entering the national pie contest next year because I can vouch for the pies made in Maketu. I know this for a fact because I consumed nearly 500 of them during my campaign this year. 
I pay tribute to the Hon Steve Chadwick across the House—a worthy opponent who dealt with the issues on the campaign trail and fought a clean campaign. Mrs Chadwick has great affection for Rotorua; I am grateful that she has offered for us to work together over the next 3 years to advance the interests of the people of Rotorua and I accept this offer. 
If I had forgotten it I was certainly reminded during this year’s campaign that my family is the most important thing to me in this world. My ambition as a member of Parliament the things I want to do for my community and the reason I want more violent criminals and drug dealers locked away for longer are all because I have an overwhelming desire to protect my family and offer my family opportunity. On issues of conscience in this House I will be guided by what I want for my four small children and by whether they will grow up to be proud of their father based upon his decisions and how he voted. 
My wife Nadene and I have been have been blessed with four outstanding children: Joshua who is 10; Samuel who is 8; Caelen who is 6; and my daughter the perfect one Ana-Kiera who is 4. Joshua Sam and Caelen attend Lynmore School in Rotorua and have told me how excited they were to see their dad on TV today. I must for a moment speak of the great love and understanding of a truly exceptional and long-suffering woman—that is my wife Nadene. Nadene and I have been married for 14 years this year and the last 14 years have been a joy—well at least for me! And never could I have imagined that I might complement somebody so well. Without Nadene’s support understanding and perseverance as a wife and as a mother my life would have been much more ordinary. 
It is important to remember one’s origins. I am proud to say to this House that I was born in Rotorua as was my mother before me and I am the son of a school principal with a lifelong commitment to improving children’s lives. When I was born my parents lived in Reporoa and my father drove a school bus each morning before teaching children how to read and write. The school bus in Reporoa is no longer driven by a teacher and sadly early next year it may no longer be based in the district—and this is not right. I thank my parents Roger and Dawn for sharing this day with me. I had a great childhood and against frequent demands for retribution from my siblings do not ever remember my father raising his hand against me in anger. My two brothers Tim and Steven are extremely hard-working successful New Zealanders. They are good fathers and they are great brothers. 
I grew up in Taupo and attended Tauhara College there and Wesley College in Pukekohe. I am sure that the honourable Minister Paula Bennett would agree that my school in Taupo was better than her school in Taupo! In my younger years I had many jobs. I cleaned cars I cut firewood in the bush and I worked for Carter Holt in its sawmill. But mainly I was like many young New Zealanders: I loved fishing I enjoyed hunting and I played rugby with a passion. I had little interest in politics and I am not sure that education was as important to me as it should have been. 
My journey to this Chamber as for many of us was not without detours. I have spent much of my adult life outside of New Zealand. I have worked in one of the world’s largest bureaucracies in and around the European institutions in Belgium. At that time few if any New Zealanders had worked in the European Parliament politically. As a result I am no fan of bureaucracy and to quote a former President of the European Commission Jacques Delors: “I firmly believe that governments should do less but what they do they must do better.” 
I have owned a business where on a daily basis we balanced the demands of finding and keeping good staff with the need to remain competitive and productive. I have great sympathy for every New Zealander who will fight to survive in the coming months and years as the world’s economy struggles to change. I do not subscribe to the view that employers are bad people yet I accept that employees must be afforded rights. 
I have experience of diplomacy. In 2000 I travelled to Cotonou in Benin to attend the signing of a development and trade agreement between Europe and the countries of Africa the Caribbean and the Pacific Islands. There I met the Foreign Minister of the Cook Islands and the Premier of Niue. Over months these two countries decided to establish diplomatic representation to the European Union in Brussels. I was honoured to be asked to represent those two beautiful countries as their ambassador to Europe. I declare an interest: in 2005 I was awarded honorary Cook Islands nationality by the Government and people of the Cook Islands. I am proud to stand here today and say to the people of New Zealand that I am a Cook Islander and I send greetings to my friends in Rarotonga: kia orana. 
After many years in Europe my wife and I were faced with an important decision—a decision that would decide the very people our children would grow to become. Our choice was between living a life different from that of our childhoods or embracing the very things that make New Zealanders unique. It was not a choice between a life in Brussels where it always rains and a life in Wellington where it never does. During my campaign I met a man in Rotorua while I was door-knocking who wanted to talk to me about how to keep young people out of trouble and I was impressed by this man. He had been a gang member for much of his life; he had served time in prison. He said that he had never voted because he just did not care but when he last came out of prison he decided to change. He wanted to change because of love for his family and he wanted a different life for his children. He left the gang he got a job and he now works with the community. His children will have a brighter future and in future when I am faced with decisions that affect New Zealanders I will think of this man. 
I want for a moment to reflect upon the country that we live in. Many years ago New Zealand society was based upon the structure of the family. Neighbours knew each other and they liked each other. Rural communities were strong and perhaps life was simpler. When a school needed a new swimming pool—and schools used to have swimming pools—or a small community needed a hall funds were raised to buy timber and cement and people came together to build these things. Today funds are raised for resource consent and for development levies and many of our children no longer know how to catch a fish or climb a tree. 
The Rotorua electorate is an exceptional place and it is reflective of much of New Zealand from our beautiful lakes—and we have many in Rotorua—to Mount Tarawera and Ngongotaha and to the trees of the central North Island. Indeed Nick Smith and I were known to hug such trees during the early part of our campaign this year on the foreshore of Lake Tikitapu. We have great beaches at Maketu and Pukehina and some of the best saltwater and freshwater fishing in this country. 
My electorate is truly a place of vast opportunity. We are rich in culture and Maoridom is strong in this region. I believe Maori culture to be my culture because I was born in this country. Kawerau and Murupara are communities where the people are proud and where they have achieved together. Kawerau is the smallest council district in New Zealand and we should learn from its commitment and emulate its successes in other parts of this land. 
I lay claim to the following claims on behalf of the people of the Rotorua electorate. Rotorua is the tourism capital of New Zealand. Next year the Bay of Plenty will celebrate the upgrading of the Rotorua airport to international standard. This airport will be a gateway to the Bay and will provide benefit to the many towns and cities in our region. Visitors come to Rotorua expecting the very best service. They want memorable and unique experiences and they want to eat and drink and go shopping. In parts of our country this is possible but in Rotorua over Easter it is not. If we are serious about tourism in this country if we are to embrace the benefits of increased visitor numbers then we need to change. The message that we send from this tourism capital is “Don’t come to Rotorua over Easter; it is closed.” We need to change this message to fully embrace the future. 
The Rotorua electorate is also the forestry capital of New Zealand. Engineering trucking and transport innovation all play a vital role in our local economy. I believe that forestry has importance to our future; the way to meet our international environmental commitment is to plant more trees and then to process those trees in this country—to add value to them here. We must send a clear signal to the forestry industry that as a Parliament we offer support. I am fully committed to working with the forestry sector and to all those whose livelihoods are dependent upon it for the future of my electorate. 
Following boundary changes my electorate is also the kiwifruit capital of New Zealand. Our kiwifruit are impressive. They are large they are sought after by international markets and some of them are even shaved. The kiwifruit sector like others has suffered over recent years but the development of infrastructure in the Bay of Plenty and an unrelenting focus on productivity will help the kiwifruit farmers of Te Matai Road. I will work closely with them to ensure that their industry is managed as they wish it to be. 
During her maiden speech yesterday my colleague Melissa Lee spoke of the horrific death of little Nia Glassie in Rotorua. It would be easier to speak of only the good things about my home and to ignore the problems as if they had not happened but that is not my way. It concerns me that the very people who should love and cherish our young the most—Nia’s parents and grandparents—treated her life so cheaply. The action of those found to be responsible for Nia’s death was evil and I know of no other way to describe it. Justice for Nia Glassie will be done only when horrific child abuse in all parts of New Zealand stops. Today I challenge all communities of New Zealand to care more for our children. It is a privilege to be a parent; it is not a right. It will take more than reports and inquiries to stop this cycle of violence—child abusers do not read our reports—it will take consequence and personal responsibility. It will take each of us as a community to stand up and say that violence of any type is not acceptable. 
Two weeks ago I met a small boy who attends Otamarakau School on the edge of my electorate in the Eastern Bay of Plenty. He asked me what my job was and I explained that the job of an MP was to represent and to be a loud clear voice on behalf of the people of his electorate. I also said that more than anything I believe the job of a member of Parliament is to listen not just to talk and quoting a Greek philosopher said: “This should be easy as I have two ears and only one mouth. I will be able to listen twice as much as I talk.” This small boy studied me. He looked at me and he said: “Sir I think you will be a great MP. I can see two of your ears.” 
To be a member of this House is a privilege and I pledge to remember this each and every day I am here. It is an opportunity to work hard to help others and to make New Zealand and my home Rotorua better. The day that I forget this privilege will be the day that it is time for me to leave this place. Tena koe Mr Speaker and I thank the House. 
PHIL TWYFORD (Labour) 
: 
Pou hirihiri pou ramarama  
Tiaho i roto marama i roto.  
Tenei te pou  
Te pou ka eke  
Te pou kai a koe na  
Ko te pou o enei korero  
Tihei mauri ora. 
[ 
Pillar that recites spells and gleams 
Is radiant and lucid within. 
This pillar that controls and consumes you 
And is the pillar of these utterances. 
’Tis the sneeze of life 
.] 
I rise for the first time in this House proud to be a Labour member of Parliament inspired by the democratic tradition this House represents and humbled by the great parliamentarians who have come before. I congratulate you Mr Assistant Speaker on your election I acknowledge the Speech from the Throne and I look forward to contributing to a robust Opposition that fulfils its constitutional duty for the next 3 years. 
As I look around the walls of this debating chamber and reflect on the battles waged and lives lost by thousands of New Zealanders to help forge our young nation I am moved by the simple but brilliant concept of this House. Like the countless often nameless people who have served and sacrificed for New Zealand in war we too are servants of something bigger—something grander; something bolder. We come from varied backgrounds but we all are united in a goal to collectively serve. At the end of our times here some of us will be remembered but most of us will not. Regardless we all will have served our nation and for that I greet every member of this House regardless of whichever side of the aisle he or she sits and I look forward to working with all members and to disagreeing strenuously with some. 
If there is one thing that unites us all in this House I would hope it is the belief we can make New Zealand the best it can be. It seems a minor miracle that this little collection of islands at the bottom of the Pacific with a mere 4 million people can sustain a successful modern nation State that boasts some of the best quality of life the world can offer. What an implausible but heroic project it is bringing together the descendants of the first settlers who 1000 years ago crossed the Pacific by waka to this the last significant land mass in the world to be settled by humans and also the 19th century Europeans who sailed to the other side of the planet to build a new life free from class exploitation and the 20th century Boeing arrivals who fled poverty and oppression or who were simply seeking a better life for their children. We are all united by a desire to create a better world and the only difference between us is when our waka touched these shores. 
This common bond created a whakapapa of pioneering social reform: the Parihaka prophets of Te Whiti and Tohu who offered a strategy of non-violent action to resolve previously lethal disputes; Kate Sheppard and the suffragettes securing the vote for women; Richard Seddon and the Liberals bringing in ground-breaking social and industrial legislation; Michael Joseph Savage creating one of the world’s most comprehensive social security systems in the 1930s; Peter Fraser at the UN in 1945 helping to draft the Universal Declaration of Human Rights; Norm Kirk in the 1970s standing up for a nuclear-free Pacific; and the Treaty settlement process started by Kirk and Matiu Rata a unique effort at post-colonial reconciliation over more than 3½ decades. There is much to be proud of and to draw inspiration from. 
Let us not forget our other nation builders: the entrepreneurs the scientists public servants our artists educators sportspeople the men and women who worked the land the workers who built the roads raised the kids and fought the wars when we asked them to do so and those who clean the offices run the footy and netball teams look after our older and frail New Zealanders and work in the kitchens shops and factories. 
In spite of our national tendency to self-doubt we know we are capable of great things. I believe that to achieve great things there are a few things that we must do first. I believe we must unleash the talents of all of our citizens. This will take great health and education systems and a shared belief that unemployment incarceration and ill health are above all a waste of human potential that we cannot afford. I believe we must recognise there are some things we do more efficiently and fairly together rather than privately. Smart strong Government can deliver the essentials: health care cost-effective social insurance education and superannuation. These social supports mean we all get the best possible start in life and after that it is up to each of us to apply our talent and hard work. This to me is modern socialism. This to me is what it means to be in a modern New Zealand Labour Party. 
I reject the notion that Government is a burden. In a global market place where billions of dollars can be moved across borders at the click of a mouse it is easy for the big to get bigger at the expense of the vulnerable. Rules are needed for fair competition and to make markets work. Government can have a role in owning strategically important enterprises. I believe we must constantly look for ways to help our firms to grow and create high-value jobs and seize the opportunities in global markets. We have to invest more in research and development and science based on our comparative advantages. We have to keep building the infrastructure for a 21st century economy and we must meet head-on the challenge of sustainability. If we win we can continue to do business in a post-carbon world and enjoy a truly clean and green New Zealand. If we lose it does not bear thinking about. Is there a New Zealander who does not want his or her children or grandchildren to once again be able to swim and fish at our beaches and rivers and lakes? 
None of this will happen unless we strike a deal with each other based on the common good: a deal that says if we work hard and play by the rules we will have every opportunity to get ahead and enjoy the fruits of our labours and that we pay our fair share of taxes because they are the price of a decent society and the only way to truly protect the Kiwi way of life: the fair go for all. They are the price of a decent New Zealand where the local school provides a great education where access to health care is not determined by the size of someone’s wallet where people who are injured at work or play are looked after and where no one needs to live in a gated community to feel safe. That is why I am proud to stand here today as a Labour member of Parliament. 
One of the issues we need to talk about is the constitution. That conversation about our nation’s destiny must be framed by the republic and not by the constitutional trappings of our colonial past. We have been far too shy of having this debate. But as our nation rapidly changes its make-up its ties to England will become even more strained and irrelevant. As I look around this Chamber I see the most diverse House in the history of this institution and the last thing that I think of is the Queen on the other side of the world. It is not a debate we should leave for the Australians to have first then by some kind of osmosis follow in New Zealand. We must have this discussion on our own terms. 
It is a journey that I hope to play a role in as a first generation New Zealander the fourth child of Sam and Gillian Twyford who arrived fresh off the plane at Whenuapai shortly before I was born in 1963 as part of the great post-war British diaspora. My mother who will be watching this speech on television more than anyone made me who I am. She brought love and hard work to the task of raising five children on her own. We were never what you would call poor but to put jam on our bread she cleaned other people’s houses and worked the night shift at a local rest home. In mid-life a stroke left her disabled but she recovered amazingly and has lived independently for the last 23 years thanks to her grit and drive. 
Although mother is the core of my being I trace my political awakening to a couple of important moments. As a fifth former at Westlake Boys High School I listened on a transistor radio at lunchtime to a news broadcast of the police and army evicting Ngati Whatua from Bastion Point on the orders of then Prime Minister Rob Muldoon. It struck me as shameful that a democratic nation could send in the might of the State to evict these people from their land. The second was the visit to my school by Michael Lapsley a New Zealand Anglican priest who was part of the anti-apartheid movement in South Africa. A parcel bomb from the South African intelligence services blinded him and blew his hands off. I wagged a class to hear him speak to a group of older students and the story of his courageous refusal to compromise his beliefs before the unyielding power of the State changed my life. 
My moral and political compass took its bearings through the economic and social turbulence of the 1980s. Like thousands of other New Zealanders I marched against apartheid blockaded our harbours against nuclear-armed ships and door-knocked for the election of the fourth Labour Government. Its independent foreign policy long overdue social and environmental reforms and progress on the Treaty were cause for elation. But as for many the sweet taste of social progress turned to ashes in my mouth. An economic crisis became the pretext for an ideological blitzkrieg that tried to impose a commercial model on almost every facet of our nation’s life. Change was needed but by God we paid the price in terms of poverty inequality loss of productive capacity in our firms and damaged generations. We are still paying. 
It is possible I believe to run an open economy that welcomes good foreign investment while also protecting what is good and valuable about our landscape our institutions and our way of life. It is possible to have a business-friendly environment while respecting the rights of workers and treating them with dignity. It is possible to celebrate success and wealth creation while also giving a hand up to those who need it. It is possible. 
During the dark years of the Douglas-Richardson experiments I refocused my energies on humanitarianism and development first as the founding executive director of Oxfam New Zealand then as the advocacy director of Oxfam International based in Washington DC. We gave many thousands of New Zealanders the chance to help in a practical way to make our planet a fairer place. We smuggled medical supplies into Bougainville through a military blockade so mothers who had fled the fighting by going into the bush would not die from preventable deaths in childbirth. We funded loans to Ethiopian farmers driven from the land by famine so they could start businesses. We provided legal support for widows who lost their husbands and children in the Guatemalan civil war so human rights abusers would be brought to justice. 
I tell members these things to illustrate my view that we all need to stand up against what we see is wrong in our communities. Not to act makes us part of the problem. My latter years with Oxfam taught me that one cannot achieve lasting change without politicians who are prepared to be courageous and to take risks to do what is right. As I lobbied the UN Security Council against the invasion of Iraq Helen Clark’s stand against the Bush-Blair-Howard war made me proud to be a New Zealander. 
As a social democrat it is hard to underline enough how important Helen Clark and Michael Cullen and their generation in Labour politics have been to our hopes for this country. They rescued our party and rebuilt it. They brought our nation’s politics back to a better more sensible place. They reconstructed a working model of social democracy anchored in Labour values. For that I say thank you. 
I want to conclude by thanking those who have travelled with me so far on this journey: my colleagues in journalism my fellow members of the Service and Food Workers Union and the wider labour movement my Oxfam mates both here and abroad and numerous party colleagues. I want to single out my campaign manager Barbara Ward and the members of the North Shore Labour Electorate Committee who have campaigned alongside me for two elections particularly Frances and Bill Bell. And most of all today for my partner Joanna and our son Harry I say this: this land is our land and nothing is too good for the future generations we will pass it on to. 
No reira e nga mana e nga reo e nga rangatira maha kua rupeke mai nei ki raro i te tuanui o tenei o to tatou Whare tena koutou tena koutou kia ora mai ano tatou. 
[ 
So to the powers languages and the many leaders gathered beneath the roof of this House of ours greetings to you greetings to you and greetings once again to all of us. 
] 
KELVIN DAVIS (Labour) 
: 
Whakarongo mai whakarongo mai. Whakarongo mai ki tenei uri o Ngatokimatawhaorua e tu atu ra i te akau o Ipipiri. E tuwhera atu ra te awa o Taumarere-herehere-i-te-riri. Ka rere ma Otuihu tae ki nga rekereke o Tapukewharawhara. Raro i a Puketohunoa ko Puhangahau takoto kau nga koiwi tupuna ara mai he tetekura. Ka hiki te manawa i te kakara reka o Te Karetu. Nga kaitiaki o te ahika ko Ngati Manu. Tiheiwa mauri ora. Tena tatou katoa i whakarauikatia mai i raro i te tahuhu o to tatou nei Whare. Tena ra hoki koutou e toku whanau whanui kua patu mai i nga huarahi mai i nga pito tawhiti o te motu ki te tatu ki konei hei tautoko i te kaupapa o te ra nei. Tena tatou o tatou mate maha. 
[ 
Hearken listen to my words. Take heed of this descendant of Ngatokimatawhaorua. I stand on the shore of Ipipiri at the mouth of my river Taumarere-herehere-i-te-riri. It flows by Otuihu and reaches the heels of Tapukewharawhara. There at the base of Puketohunoa is Puhangahau the final resting place of the ancestors. A new frond has arisen. My heart is imbued by the sweet scent of Te Karetu. Ngati Manu are guardians of the homelands. Sneeze ’tis the breath of life. Greetings to us all assembled here under the ridgepole of our House. Greetings to you my extended family who set out on the highways from distant points of the land to be here to support today’s event. And greetings to you our many dead 
.] 
Mr Assistant Speaker I acknowledge and congratulate you on your election to your position. I also acknowledge the leaders of the Labour Party the Hon Phil Goff and the Hon Annette King. I look forward to working with them both and with the Labour caucus and to making a contribution to our team and nation. Also I would like to acknowledge and congratulate the Rt Hon Helen Clark on her formidable leadership of the Labour Party and indeed on having been the Prime Minister of New Zealand for the last 9 years. I thank Helen for the way she honoured my people of Ngati Manu earlier this year when she visited our valley and marae and endorsed my candidacy. 
With affection I acknowledge my family and friends—those who have been able to traverse the length of Te Ika-a-Maui to be here especially my wife Moira and my father Panapa as well as those who could not be here including my children Kelly Billie and Reweti; my mother Glenys; my brothers Patrick and Greg; my sister Sonya; my brothers-in-law and sisters-in-law; my mother-in-law and father-in-law Tom and Raewyn Hoddle; my numerous nephews and nieces aunties and uncles and cousins; and my whanau from Ngati Manu. I also acknowledge my many tribal connections in the mid-north to Te Kapotai Ngati Hine Ngapuhi whanui Ngati Wai and Ngati Whatua. I acknowledge in the far north the iwi Ngati Kuri Te Aupouri Ngai Takoto Ngati Kahu and Te Rarawa and also those of my iwi further south—in particular Ngai Tai Ngati Kahungunu and Ngati Raukawa. 
I am honoured to have stood for Labour in the seat of Te Tai Tokerau and although disappointed not to have won it I acknowledge my whanaunga Hone Harawira who was successful—tena koe e Hone. I also congratulate and acknowledge all other Maori members of Parliament and hope that Maori will see the benefits of our presence here. 
I hail from the valley of Karetu. Across the road from our marae stands Puketohunoa one of our ancestral maunga. On the summit of Puketohunoa once dwelt my tupuna Whetoi Pomare. From his whare named Tihema he had sweeping panoramas of the valley and across to Ruapekapeka the site of the last battle of the northern land wars. At the foot of our maunga Puketohunoa flows our Karetu creek which runs seaward and connects with our tupuna awa known as Taumarere-herehere-i-te-riri. One of our Ngati Manu waiata connects these three features to one another in the lines: “Tu ana matou ki runga o Puketohunoa ka titiro atu ki Ruapekapeka ka hoki mai ki te puna o oku matua e e karekare nei e ko Taumarere.” 
[“ 
We stand on Puketohunoa and look upon Ruapekapeka and back again to the rippling waters of our parents’ bathing pool it is Taumarere 
.”] 
If one was to drift in the current of first the Karetu creek past the foot of Puketohunoa then into the flow of Taumarere one would eventually pass by the cradle of our nation Waitangi where as we all know in February 1840 a number of Maori chiefs including my tupuna Whetoi Pomare drew their moko on to a piece of paper that is now known as the Treaty of Waitangi. I would like to believe that when my tupuna Pomare etched the shape of his facial tattoo on to that piece of paper he did it in the hope that his actions would ensure the future prosperity of his whanau his hapu and his iwi. The world has changed 168 years later beyond what my tupuna could have imagined. But what has not changed at least in my whanau is that in the six generations since from generation to generation through to my grandparents parents and my brothers sister and myself is the understanding that our actions today leave a legacy for generations to come and must contribute to the ongoing prosperity of whanau hapu and iwi. 
The prosperity of all Maori is necessary if we are to fulfil the words of our great Tai Tokerau rangatira Sir James Henare when he once said: “It is preposterous that any Maori should aspire to become a poor pakeha when their true destiny prescribed by the Creator is to become a great Maori.” What makes Maori great? I believe all Maori who achieve their potential or beyond and bolster the standing of their whanau and community achieve a measure of greatness. As a former principal it was immensely rewarding to witness the joy and satisfaction on the face of whanau when their children achieved. I was acutely aware though of how thin those ranks of achievement are in many of our schools. New Zealand history shows that Maori can succeed in the face of adversity. But this success needs to become the norm rather than the exception. The greatness of a nation is linked to the distinction of its people. 
I come to the House seeking to make a contribution that enriches our nation through expanding the ranks of those Maori families who seek educational achievement. The lessons of the chalkface have value and ought to be borne in mind as we debate how to innovate fund and improve our system of education. Being a great achiever begins for our children when they enjoy aroha—that is unconditional love from parents and caregivers who realise that raising children is not a right to do as one likes but an obligation to the next generation. Educational engagement and achievement is vital to Maori greatness and prosperity. We will achieve more with one full generation of highly educated Maori than we will from the last 168 years of grievance. We need Maori to be educated so that we become the people of influence and the decision makers. 
I have spent 20 years at the chalkface in education. I enjoyed a 14-year career as a principal and am especially proud of the achievements of the board of trustees staff and students of Kaitaia Intermediate School which in 7 years saw a school turn from almost total academic failure to academic success. We proved at Kaitaia Intermediate School that Maori do not need to wait decades or generations to see improvements to Maori achievement and well-being at school. It can happen almost immediately. With the right approach by principals teachers bureaucrats politicians and others within the system Maori can and will make immense and rapid gains in achievement. Those will lead on to gains in Maori health and life expectancy financial well-being leadership positions and influence and being able to collectively and fully contribute to our country. 
We must ensure our education system engages Maori from their first day of school right through until their last day at end of year 13 and on to a lifetime of striving for knowledge wisdom and understanding. For many Maori disengagement from the educational system is but the first step in disengagement from society in general. Maori will never achieve greatness or beyond our potential unless we are educationally successful. Therefore it is imperative if Maori are to achieve great things that we get the education system right for Maori. 
Conversely we Maori have to realise one of our greatest weaknesses is to blame the system. We know that history has conspired against us. We know a heck of a lot happened to our people that has set our progress and development back and has resulted in our struggle to prosper and achieve greatness. But as critical as I am of those who deny the effects of the damage the system has done to Maori over the last 168 years I am equally critical of Maori who blame only the system for their own failings. Do we as a people have the courage to accept responsibility for our lives? It is time for us to collectively step up and as we say para te huarahi—blaze a trail. I have sat in hui where the talk has all been about the injustices the grievances and the excessive navel-gazing that stagnates the mind and saps the energy and the soul. It is time we stopped wallowing in self-pity and instead looked for solutions. It is time our hui were all forward thinking positive and solutions based. 
Last Wednesday I attended a seminar where a group of Maori gathered to discuss information and communications technology. These people were educated professional and motivated. There was no self-pity there was no talk of grievance and there was no talk of injustice. There were problems and frustrations but they searched for solutions. We need to replicate that sense of purpose and mission in our hui our marae and our homes. Blaming the system implies we are too weak as a people to help ourselves—that we are victims. Bad stuff has happened but we must cease to be victims. Maori need to sort ourselves out. Education is the passport but we need to put ourselves on the flight to the future. Obviously policy process and ideology are a part of the journey and it will happen with a collaboration of the spirit. 
A kaumatua said to me earlier this year that the problem with our Maori youth is actually us the adults. His words to me were: “We need to lay off our youth and sort ourselves out.” If we want our Maori youth to act in a certain way to achieve personal greatness then they need Maori adults to be the role models and demonstrate how that is to be done. If we are serious about wanting to prosper and provide hope for our kids then Maori adults need to step up. We Maori men need to step up. It is said that being a male is a matter of birth but being a man is a matter of choice. Likewise being a Maori is a matter of birth but being a Maori achiever is a matter of choice. We Maori men must have the courage to lead our whanau and hapu towards prosperity and greatness. We are renowned for our warrior spirit but it is time that warrior spirit manifested itself in new ways. We need to replace anger grievance and self-pity with dignity determination resilience and forgiveness. 
I conclude by stating that I have hope for the future: the future of my children and the future for us as Maori. I believe that by lifting Maori educational achievement and by us as Maori having the courage to take control of our present we will as a people achieve prosperity and the future greatness that is our destiny. That road to greatness has been paved with trials and tribulations. But those trials and tribulations never stopped Sir James Henare a boy from Motatau deep in the heart of Ngati Hine from standing as an example of how our destiny as Maori prescribed by the Creator is to achieve greatness. I look forward to the contributions I can make to this forty-ninth Parliament as an educator a politician and a Maori for the benefit of the whole nation. 
No reira tatou ma huri noa i to tatou Whare rau rangatira ma e te whanau tena koutou tena koutou tena koutou katoa. 
[ 
So to all of us throughout our House the many leaders and the family greetings to you greetings to you and greetings to us all 
.] 
Waiata 
IAIN LEES-GALLOWAY (Labour—Palmerston North) 
: 
 May I add my congratulations to you Mr Speaker on your election to your position. I look forward to your guidance and wisdom as my colleagues and I find our feet in this place. I am proud honoured and humbled to enter this House as the member for Palmerston North and a member of the Labour caucus. Unlike my esteemed predecessors Steve Maharey and Trevor de Cleene I am not a native of Palmerston North nor did I spend my formative years in the same State house on Savage Crescent where coincidentally that pair grew up. 
Hon Ruth Dyson 
: Together? 
IAIN LEES-GALLOWAY 
: Not together. My childhood was spent a world away on a beef farm near Waiuku south of Auckland. For me the decision to live in Palmerston North was a conscious one that was made without the weight of parochial loyalty that I now feel towards my home town—and Palmerston North is my home. I have lived there for close to 11 years I met my wife there and my children were born there. Over the last 10 years all of my immediate family have followed me to Palmerston North and it is my desire that our family will have a close connection with the city for many many years to come. 
Like my relationship with Palmerston North my relationship with the Labour Party is not one founded on generations of family loyalty. Exactly how a privately educated boy from a beef farm who had Bill Birch as his local MP grew up to become active in the student and Labour movements still has many people somewhat perplexed not least my parents. 
That is a story for another day but the reason I joined the Labour Party is quite simple: its values match my own. I believe in communities. I believe in decent pay for good work. I believe in strong public services and that the State is still relevant and necessary in a modern economy. I believe in freedom of choice and individual responsibility. I also believe that we each have a responsibility to work in one another’s best interests and not just our own. Most of all I believe in empowering people. That means investing in our communities and in each other. It certainly does not mean withdrawing support from those who are the most vulnerable and at the margins of our society. 
These are values that were taught to me by my parents who I am pleased to say are watching us from the gallery today. Everything they did for their two growing sons was done out of a desire to give us the very best opportunities in life. It is fair to say that these days my family and I do not exactly see eye to eye politically. In fact it seems it caused quite a dilemma for my parents when choosing between voting for their son or for the local National Party candidate. My parents are lateral thinkers and they came up with a novel if not slightly drastic solution. They moved out of the electorate. I am sure Simon Power will be relieved to know that he has two more loyal supporters. Nevertheless I know that I would not be here today if it were not for the love and encouragement that pervaded my childhood and for that I thank them both. 
The city where my wife Clare and I have chosen to raise our own children is a bustling vibrant regional centre. It has a robust economy thanks to a mix of public and private sector industries and services. It excels in servicing the agricultural sector of the Manawatu and beyond. It excels in research education retail manufacturing and distribution. The city is full of innovative people and the work being done at Massey University at the Fitzherbert Science Park and in numerous small businesses in the city has the potential to put Palmerston North and New Zealand on the map as a leader in sustainable agrifood research. Such research and the teaching of the skills required to carry it out are at the heart of New Zealand’s ongoing and necessary economic transformation. The public sector must support the kind of blue-skies research required to make substantial scientific advances and it is right that Governments remain committed to funding such work as well giving our scientists the freedom to explore avenues of potential benefit. 
However it is equally important that an environment is created in which New Zealand businesses are encouraged to invest in research and development. New Zealand’s private sector research and development investment is woeful by international standards. In fact as a percentage of GDP it is one-third the OECD average. The countries ahead of us have been offering something called research and development tax credits for years. Currently 21 OECD countries are offering research and development tax credits; it is soon to be 20. Our research and development investment must improve because 
New Zealand needs a private sector that is committed to research and development. As my colleague the Hon Pete Hodgson told the House last night businesses engaged in research and development are by their nature more likely to be high growth economically sustainable more likely to have a commitment to staff retention and more likely be exporters. They need skilled labour not cheap labour. They are what this country needs. 
If we are to remain on the path towards a high-wage economy we must stay focused on what makes New Zealand unique. Part of what makes New Zealand unique is that thing we call our clean green image. When thinking of New Zealand most international travellers tell us that they come here to experience our lush native bush our pristine mountain ranges our unblemished beaches and our pollution-free rivers. The marketing is perfect: 100 percent pure New Zealand. Unfortunately the reality does not quite match the hype. But it is not just the tourism industry that relies on clean green New Zealand. The quality of our exports will increasingly be judged by the environmental impact of their production. Yes we already do well by international standards but given the distance to our markets and the misleading attention given to food miles there is increasing pressure to be cleaner and greener than everybody else. 
But the arguments in favour of environmental sustainability are about much much more than the economic imperatives. I am immensely proud to be a member of the party that led the Government into finally facing up to the difficult challenge of taking just the first few steps towards reducing emissions. I am equally dismayed to be a member of a House of Representatives that plans to stall the progress of the emissions trading scheme. To me the sustainability question can be boiled down to this: in what state will we leave our one and only planet for future generations? Will we hand them the legacy of blind greed of an environment so devastated that there is no foundation for a sound economy? Or will we take action now so that our children our grandchildren and our great-grandchildren can enjoy the lifestyle we naively take for granted? 
We should also ask ourselves what kind of society we would like our children and grandchildren to inherit. Palmerston North is a great place to raise a family. It is a safe culturally diverse city blessed with tremendous schools an effervescent arts culture and outstanding sporting facilities. The opportunities to learn work and play seem boundless. It is a place where children thrive. Sadly though so many of our families are unable to create the environments in which children prosper. Some of the reasons are financial and I ask members to take note of the advice I have received from the Palmerston North Salvation Army and Methodist Social Services that their food banks are now increasingly being frequented by low-income working families that are struggling to make ends meet. 
But money—or the lack of it—is not the root of all the challenges for our young families. When I listen to the principals of our primary schools there is a clear theme in what they are telling me. When they see a child walk through the door at age 5 they can tell straight away how stable his or her home environment is and by extension the likelihood of that child’s academic and social success and the likelihood that he or she will go on to be a productive and valuable member of the community. We can demand all we want from our schools: to teach our children how to read and write the fundamentals of maths science history and geography how to use a computer and how to access the Internet. We can expect our schools to provide opportunities for children to explore their artistic and sporting talents and we can even ask them to teach civics and instil discipline. We can ask our schools to do all that but if our children then go home to an environment where learning is not supported where there is little or no adult supervision where violence is a day-to-day occurrence and where there is no food on the table then all our demands on our schools are for naught. 
I am not saying our nation is riddled with bad parents. I know that the overwhelming majority of parents want the very best for their children. Parents who are struggling want to give their children the opportunities they might not have had themselves. But often they just do not know how. What many of our parents desperately need is guidance and support. We need role models to help set our parents and our children on the path towards achieving their own goals. How can we help? What can we do? Is there a place for the Government to offer assistance or do we baulk at the idea of interfering bureaucrats moving into our homes and telling us how to raise our children? If that is what I was advocating then I would expect an outright rejection but it is not. There are already numerous organisations working within their own communities to assist the parents of young families. Te Aroha Noa Community Services is just one of several I could name in Palmerston North. Te Aroha Noa is based in Highbury a suburb in our city that struggles to hit the news for the right reasons. Five years ago things hit rock-bottom in Highbury. Tensions between rival gangs flared and it culminated in the tragic end of a young life. The community could have chosen to turn a blind eye or to blame some outside force but they chose instead to take ownership of the problem. They decided they needed to rebuild their community. They decided they wanted people to be proud to live in Highbury and there are now several organisations involved in achieving this splendid ambition including the primary health provider Te Wakahuia the Highbury Whanau Centre and the people of Rangitane. 
I single out Te Aroha Noa because their focus is on children and their families. In particular it delivers the Home Interaction Programme for Parents and Youngsters—HIPPY for short. This is a home-based programme that supports parents in becoming actively involved in their children’s learning. Parents and children work together for 15 minutes a day with story books puzzles and games and the goal is to help those children become successful learners. The tutors are parents themselves who have been through the programme with their own children. They visit people in their homes so it creates an opportunity to build community relationships. Te Aroha Noa specifically works within the Highbury community and the neighbouring communities of Takaro and Cloverlea—they work in and with their own community. Some of the tutors are young mothers who have themselves struggled—indeed they are still struggling—to build the life they want for their families. 
Earlier this year I met three young women—very inspirational. They are all mothers and all are now giving something back as tutors. They spoke of their goals and ambitions and more important how they planned to achieve them. One woman spoke of making Highbury violence free. I wish we could all be so bold to articulate such aspiration. My deep desire is that every parent in New Zealand would have access to the Home Interaction Programme for Parents and Youngsters or something like it. I appreciate that significant funding is already available through the Ministry of Education but there are still so many families that the providers cannot reach and my fear is that these are exactly the families whose need is greatest. 
The Government can and should do more. It will be difficult to measure the outcomes of any spending. We are not likely to see the results for another 20 years maybe. But I say to members that proactive investment is far more cost-effective and far more valuable to our society than trying to fix the problems we are ultimately responsible for through our own inaction. We must also pay attention to the pressures placed on all families by the organisation of Western society in the 21st century. 
Our societal focal point is unarguably the workplace. Family time community activities and volunteering all take second place and must be fitted in around the requirements of the workplace. I believe we need to shift that focal point towards the family home or at least promote non - workplace-based activities on to an equal footing with the workplace. There is no doubt that children do better in an environment where there is at least one adult family member available to nurture them. We ask so much of our parents and we are quick to point the finger when things go wrong. I am certain no one in this House would disagree that parenting is the most important job there is and that parents shape the future of our civilisation. The previous Government certainly acknowledged this and made incredible progress in supporting families. But we have considerably more to do to make our words anything more than empty sentiment. I suppose what I am talking about can be summed up in that cliché phrase work-life balance hardly something politicians are renowned for. 
I am sure it is obvious just how important my own family is to me and I would briefly like to mention just how thankful I am that my wife agreed to join me on this journey. Unfortunately Clare and the kids could not be here tonight but—technology willing—they are watching us on the Internet from the other side of the world which by the way I think is marvellous and I hope more of Parliament’s public activities will be available through that medium one day. I am thankful to all the wonderful people in Palmerston North who have supported me thus far. We ran a long campaign and we faced many hurdles. But I was never alone and it was the team that truly carried the day ably led by our campaign manager John Shennan. It would be remiss of me not to acknowledge the support and mentoring I have received from the Hon Steve Maharey. I know he will be missed in these halls and will be remembered as a dynamic man of action who achieved lasting change in his portfolios. I once heard him described as the “Minister of Everything That’s Important” although I must say he showed his wisdom by never taking on the health portfolio. His return to Palmerston North as vice-chancellor of Massey University was warmly received by our community and I look forward to working with him in our new respective roles for as long as Palmerston North will have me. 
I cannot count the times I have been told since my selection as the Labour Party candidate for Palmerston North that I have big shoes to fill. I hope this does not disappoint anyone back in my home town but I have no plans to do so. Steve Maharey may have been as well known for his fashion sense as anything else he achieved in here but I want you all to know that I have my own shoes they fit me very well and I am comfortable in them. I do hope however that my footsteps will leave even a slight impression akin to that of my predecessor’s. That would be an achievement indeed. My focus is on the future and I expect to be judged on the effect my time here has on future generations of all New Zealanders. 
NATHAN GUY (Senior Whip—National) 
: 
 I seek the leave of the House to allow the next speaker his full allocated time for his maiden statement which will mean he will encroach into the dinner hour. 
Mr SPEAKER 
: Is there any objection to that course being followed? There is no objection. 
Dr KENNEDY GRAHAM (Green) 
: 
 Tena koutou tena koutou tena tatou katoa. Mr Speaker I greet you and my colleagues in the name of our common spirituality humbled as we are in the sight of the divine whatever we each perceive this to be. I acknowledge the mana whenua on whose land this House stands. I honour my late parents Robert and Patricia Graham whom I and my brothers continue to miss 25 years on. I embrace my two sons David and Christopher and their families. And I acknowledge with tender love and devotion my wife my friend my partner-in-life Marilyn Moir Graham. I acknowledge the two predecessors in my family in whose footsteps I am proud to follow: the Hon Robert Graham who served this House with distinction a century-and-a-half ago and whose hei tiki lies here before me; and the Rt Hon Sir Douglas whose presence on the floor of this Chamber I acknowledge today who left such a profound legacy of dignity and vision in his ministerial career of more recent times with whom the fraternal bond remains forever unbreakable. May their contributions prove everlasting for the future of this nation. 
I am proud to represent the Green Party whose contribution to New Zealand is already considerable with yet more to come. I acknowledge my colleagues in the party whose collective endeavours laid the basis for our electoral success. I acknowledge in particular the peerless contribution to this country of Jeanette Fitzsimons. I pay tribute to the memory of Rod Donald. 
I enter this House imbued with respect for its history fortified by its many achievements. Let us all ensure that this forty-ninth Parliament honours this House not only with the dignity that is its due but with a foresight that empowers it to meet the far-reaching demands of our time. For it is our duty to pass on to the next generation a planet whose physical integrity enables them to advance their own part of the human story. 
To that end it is my belief that this country through a unified resolve and strength of purpose should aspire to the attainment of two related goals: to become a sustainable country and to act as a responsible global citizen. Our human tenure on this Earth is still young. With some five millennia of political experience behind us we stand on the shoulders of perhaps a hundred generations that have gone before whose courage and sacrifice enable us to glimpse the future from the strategic heights where we stand today. Our generation looks back with gratitude mindful of their accumulated trials and labour. Yet as we turn to the future we glimpse the unprecedented challenges that lie ahead. For ours is the first generation to confront problems of a planetary scale—daunting in their complexity seemingly intractable in nature. 
As our human numbers increase our Earth-share diminishes. As our materialistic lifestyle expands our ecological footprint grows ever larger. Humankind today casting precaution to the wind is recording an ecological overshoot beyond the planet’s carrying capacity anthropogenically inducing climate change of unprecedented magnitude and alarming danger. We are drawing down on Earth’s natural resources borrowing forward on the human heritage irretrievably encroaching on our children’s right to inherit the Earth in a natural and sustainable state. It is the uniquely dubious fate of our generation to have broken the eternal promise of intergenerational justice. 
We in New Zealand are part of the problem not yet of the solution. Our individual ecological footprints are three times higher than the global average our carbon emissions almost five times higher. If we offer the world a national ecological surplus it is not through prudent husbandry or modesty of habit on our part but because we are simply few in number. A sustainable world a sustainable country requires a change in mindset. That requires a new world-view a transformational change in individual lifestyle a refashioned approach to governmental management. It is time we measured national success not through mindless material growth but through genuine progress in human well-being. It is time we relinquished our feverish ranking within the OECD and began contributing to the true advancement of the emerging global society. 
Sustainability is the supreme political value of the 21st century. It is not a concept of passing political expediency—a clip-on word for post-economic environmental damage. It is now the categorical imperative of personal behaviour. Individual freedoms are no longer unlicensed but henceforth subordinate to the twin principles of survival and sustainable living. The political rights we enjoy today are to be calibrated by the responsibility we carry for tomorrow. 
With a sustainable economy New Zealand can aspire to be a harmonious society. That is the day we rediscover our egalitarian roots attaining true partnership between Pakeha and tangata whenua. That is the day we reach out to immigrant cultures welcoming their children to these shores where the future beckons in this still young land of ours. That is the day when Aotearoa comes of age. And with a harmonious society this country may then aspire to responsible global citizenship—by honouring our international obligations and never collaborating with those that do not; by thinking of tomorrow’s children and meeting our Kyoto targets today; by showing a true commitment to a nuclear-weapon-free world not only through our national zone here at home but more critically in our voting pattern overseas and support for a nuclear weapons convention; by promoting fair trade and aid in the quantity and quality we once promised we would; and by respecting all civilisations and faiths around the world in a spirit of respect and due humility. 
Above all it is time we abided strictly by the global constitution of our times working within coalitions of the lawful rather than the unwilling. Sixty-three years ago our forefathers created the United Nations to save succeeding generations from the scourge of war that twice in their lifetime had brought untold suffering to humankind. Under the UN Charter “war” has been rendered unlawful. Today armed force may no longer be used by member States save in the common interest. By adopting the charter each member State including New Zealand undertakes never to commit aggression. It is time to ensure that we live up to our binding international obligations. It is time that the State responsibility New Zealand has assumed not to commit aggression is implemented in domestic legislation. 
Over the years we have translated international obligations into our own legislation—in 1946 to abide by economic sanctions of the Security Council and in 1987 to forswear nuclear weapons. In 2002 we made it a criminal offence for any New Zealander to commit genocide war crimes or crimes against humanity. Now is the time to take the next step: to make it a crime in domestic law for any New Zealander including its leaders to commit aggression as defined by the General Assembly of the United Nations in 1974. This simply requires the adoption by this House of legislation to that effect. If any New Zealand Government were in the future to commit aggression in violation of its obligations under the United Nations Charter it would bring this country into global disrepute incurring unacceptable political shame to this House. In such a situation the moral legitimacy that underpins the jurisdictional authority of that Government will have collapsed with potentially far-reaching implications for its constitutional status. 
We shall not take the critical step towards the future global society until we rise above the constraints of our national sovereignty sharing our judgments our beliefs and our trust in one another as peoples of this world united by our common human values inspired by our common interests and resolved to pursue our common dreams together. Only through a “new patriotism” shall we free ourselves from the bondage of enmities past securing ourselves from the carnage of the kind that those enmities once inflicted upon us. 
Generations gone before have sacrificed for our cherished freedoms—freedom of speech and association freedom to practise our religions freedom from want and freedom from fear. The rights we proclaim—civil and political; economic social and cultural—are matched today by responsibilities that are comparable in scale and shaped for our times. It is the responsibility of each human endowed with reason and conscience compassion and concern to act towards one another in a fraternal spirit in pursuit of the planetary interest with which all legitimate national interests today are compatible. 
Mr Speaker I never knew my uncle. He lies to this day beneath the shifting sands of the Egyptian desert. Lieutenant Colonel Alec Greville 24th Battalion gave his life for his country that we might live in freedom and it was to be hoped secure in the promise of a better future. It is in his name in the exercise of that freedom that I advance these political beliefs that all New Zealanders might find their true destiny in a global unity with a common strength of purpose across all of humankind. I so pledge myself and all my future actions in this House to that end. 
Sitting suspended from 6.04 p.m. to 7 p.m. 
Taxation (Urgent Measures and Annual Rates) Bill 
In Committee 
Debate resumed. 
Clause 29 Rates of income tax for 2009-10 tax year ( 
continued 
)  
A party vote was called for on the question  
That clause 29 be agreed to. 
Ayes 68 
New Zealand National 57; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 52 
New Zealand Labour 43; Green Party 8; Progressive 1. 
Clause 29 agreed to. 
Part 3 Annual rates independent earner tax credit and consequential personal tax cuts amendments (except clause 29)  
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 This part is a very interesting component of the bill and merits the close consideration of the Committee for some time. It is a misguided attempt to ensure that New Zealanders do not lose because of the clumsy and haphazard effects of this rushed and ill-conceived tax legislation. Unfortunately the Government has introduced the independent earner tax credit but is vetoing—on financial veto grounds I understand—an amendment proposed by my colleague Dr Michael Cullen that seeks to protect all income earners from exactly those effects. Dr Cullen took the Minister of Finance Bill English at his word when he said earlier in the Committee debate: “There are no losers under this bill.” 
Hon Ruth Dyson 
: That’s what he said. 
Hon DAVID CUNLIFFE 
: That is what he said and that is the Government’s position. The interesting thing of course is that it is just not true. As we have proven earlier in the debate anyone earning between $14000 and $20000 will by April 2011 face an 8.5c increase in their tax rate. 
Hon Ruth Dyson 
: Wouldn’t that make them worse off? 
Hon DAVID CUNLIFFE 
: That would make them worse off. Let me prove the point. Dr Cullen’s amendment simply provides for a compensatory tax credit for low-income earners and others who might find themselves “inadvertently” penalised. If we took the Government at its word nobody would be in that situation and the cost of the amendment would logically be zero. Nobody would lose so it would cost nothing to indemnify them. However the Minister of Finance has come along with a very blunt instrument called a financial veto. He has said that the actual cost of insulating low-income earners would be—wait for it—$730 million over 5 years. In other words he has made a $730 million change of mind—that is the nicest way I can put it. He told us earlier that the penalty would be zero but he went away and did his sums and found that—oops—he was out by another three-quarters of a billion dollars. Sorry! That is a hole he cannot blame on the outgoing Government. It is a $730 million kick in the guts for low-income New Zealanders. 
Who are the people who will pay this $730 million so that someone earning three-quarters of a million dollars can have an extra $260 a week? They are people who might have a second job cleaners people who are late in their careers and have a pre-retirement part-time job. They are people who earn well below the average wage. As admitted by the Government those kinds of people will be taxed in order to subsidise those who do not need a cut. This is Robin Hood in reverse except that Bill English is not playing the role of Robin; he is playing a rather venal Sheriff of Nottingham just before Christmas. It is not a good look for the Government let us all admit in its first week on the job. In particular it is not a good look because Government members told us there would be no such penalty and now they have quantified the real penalty in order to veto Dr Cullen’s rather elegant amendment. They have shot themselves in both feet at the same time. 
The particular irony of this rather interesting self-contradiction is that it stands in strong contrast to the so-called independent earner tax credit which seeks to improve the relative position of certain sectors of the community who felt a little brassed off because they did not get Working for Families payments. To enter that argument we need to think back and ask ourselves why Working for Families was brought in. It was brought in at a time when our families were under particular stress because of increased housing costs rising fuel prices and other things that we have all talked about and that we all understand are beyond our control. People who had the responsibility to bring up children faced huge costs so we prioritised; we targeted State assistance to those who needed it most. It was a pretty fair thing to do. 
Ah along came a little thing called politics. Some of my parliamentary colleagues from all sides of the Chamber have probably done what I do occasionally in an election campaign and that is stand on a traffic island. Jonathan Coleman does that—[ 
Interruption 
] Mr Coleman’s electorate is just north of the bridge and I recommend that he go back there sometime soon. [ 
Interruption 
] Labour won the party vote in New Lynn thank you very much. And that will be the high tide for the blue tide—let us not worry about that. I noticed while standing on the traffic islands of New Lynn that anybody with a non-Caucasian face would generally give two thumbs up as he or she drove past. But I always knew I was in trouble when I saw a four-wheel drive driven by an overweight white male with a No. 2 haircut. Those drivers would generally wave only one digit and it was not the thumb. That is the market segment that this independent earner tax credit is designed to assuage. The grumpy white male vote is in play here. OK that is fine; I think we can assume that the Government won the grumpy white male vote in the election. 
Hon Gerry Brownlee 
: He’s sitting behind you. 
Hon DAVID CUNLIFFE 
: No no. Here he comes. I said grumpy not bumbling. Mr Brownlee should read the Standing Orders; then he will be just fine in a year or two if he is still here. The independent earner tax credit is a remarkable achievement for this Government. This bill was predicated on the unevenness of the marginal tax rate effects throughout the tax scale. In some misbegotten attempt to solve that problem the Government has helicoptered in a tax credit for one particular section of the population. The net effect is that it makes the problem worse by singling out one small group of people who do not receive any of the other high-priority benefits and giving them a seemingly arbitrary gain. 
I come back to where I began. If the Government were serious about indemnifying New Zealanders at risk it would choose not this mechanism but the mechanism that my good colleague Dr Cullen thought of in 5 minutes during the tea break. It would indemnify the net losers whom Bill English said do not exist—except that he then changed his mind and said that they exist to the tune of $730 million. Merry Christmas New Zealanders! They thought they had voted for a benign kind of National Government one that would keep in place the things they appreciated from the last 9 years of a good Labour Government such as Working for Families KiwiSaver and the research and development tax credit that gave help to our innovators. The smiling face of Mr Key as a likable bloke bounced from cloud to cloud and told us it would all be OK. Then on the Government’s first day in the job it introduced legislation that kicks low-income New Zealanders in the guts. It kicks our innovators in the guts and kicks in the guts prudent New Zealanders who are saving for their future. Merry Christmas Mr Key. Merry Christmas Mr English. 
I say to New Zealand that unfortunately this is probably a foretaste of things to come. As one colleague said earlier today when we look back in history we can see that this week is remarkably similar to the first week of the Ruth Richardson economic reign when tax cuts to the wealthy punitive employment relations legislation and misguided intervention were the order of the day. 
It is interesting to see Sir Roger Douglas back in the House. He opposed that Government and now he is in favour of the same thing. He still holds to the same ideals; it is just that he has had an interesting policy evolution on the way to serve them. I look forward to nothing so much as his maiden speech so I am getting in early to see whether I can identify the contradiction before he gets the chance to underline it. That will be a precious moment in New Zealand’s economic history—when he justifies the full circle that he has travelled. We look forward to that with great anticipation. That kind of full circle that kind of logical OODA loop to use military technology is rather like the logical backflip that has been done here by the Government. It has put in an independent earner tax credit. It has singled out the grumpy white males with the No. 2 haircuts and chucked them $10 a week ignoring low-income families. 
CRAIG FOSS (National—Tukituki) 
: 
 When I look across to the other side of the Chamber I do indeed see some grumpy white males but not with No. 2 haircuts—not yet. The electorate became sick and tired of hearing a couple of grumpy white males telling them that their taxes could not be cut until those members were 15 points behind in the polls. 
Chris Tremain 
: Then there was the road to Damascus. 
CRAIG FOSS 
: That is right. The independent earner tax credit— 
Hon David Cunliffe 
: There are 9 billion reasons to be generous. 
CRAIG FOSS 
: Did the previous speaker say he was looking forward to Sir Roger Douglas’s maiden speech? 
Chris Tremain 
: He doesn’t get another one. 
CRAIG FOSS 
: He does not get another one. I think he is about 30 years too late. 
Hon David Cunliffe 
: I was giving the member the benefit of the doubt. He may have been deflowered a couple of times but he is still a maiden in our eyes. 
CRAIG FOSS 
: I did make the point to the member that we learnt the other day that Sir Roger Douglas never made a valedictory speech so I guess he had a premonition that he would be back. That is over to him. [ 
Interruption 
] “The Return”—whatever. There are a few speech notes there! 
The independent earner tax credit forms a cornerstone of one of National’s commitments that we are committed to pushing through in the first 100 days of our administration. Yes it will be pushed through before Christmas. I note that the previous member talked about a long night or a long speech— 
Hon David Cunliffe 
: I raise a point of order Mr Chairperson. I see Sir Roger Douglas is preparing to leave. If indeed he does not need to give a maiden speech I wonder whether the member who is on his feet would cede part of his time so that Sir Roger can illuminate us which we would very much like him to do. 
The CHAIRPERSON (Eric Roy) 
: That is not a point of order and it is not helpful to the debate. One of the things that is going to change somewhat is this habit of members raising points of order that are not points of order but some kind of interjection. The tolerance of that is going to diminish as the days go by let me assure that member and anybody else in the Chamber. Points of order will be points of order. 
CRAIG FOSS 
: Thank you for your guidance Mr Chair. The independent earner tax credit is a cornerstone of this legislation and of National’s commitment to the electorate. It will be very interesting because it seems obvious that the members on the other side of the Chamber will be voting against this part. 
Hon David Cunliffe 
: Better believe it. 
CRAIG FOSS 
: We had better believe it. They will be voting against it. They keep talking about the people in the electorate. They are going to rock up to 630000-odd New Zealanders—stand on traffic islands you name it; whatever the previous member said—who have not enjoyed any benefit whatsoever from the huge tax gains made over the last 9 years by the previous administration. They have not benefited one little bit. In fact they have been punished by fiscal drag over those years of 25 percent to 30 percent I guess. They have been dragged through higher prices etc. and have been taken into new tax brackets. The party opposite is going to tell those 630000 people who are eligible for $10 a week from 1 April 2009 moving to $15 a week from 1 April 2010 that they should not share in the tax cuts. 
The Opposition has been playing wedge politics. Its speeches are constantly about other parties in the Chamber and about the make-up of New Zealand. Those members are going to tell 630000 people that they should not share in the tax cuts that the National Party put before the country at the last election. That proposal led to our being resoundingly voted in. The previous administration refused to cut taxes and it refused to recognise this particular demographic who work just as hard as anybody else. They resoundingly voted the previous administration out. This group does not have children. The tax cuts are targeted. Many may have delayed having children. Whatever the reason what business is it of this House as to why people did or did not have children or when they did or did not have children? Goodness gracious! The previous administration tried to control light bulbs and shower heads and now it is trying to control even further what goes on in people’s personal lives. I will not elaborate. 
The members of the previous administration are being true to form. Every single speech made by those members shows their true colours. They will not be more clear and succinct than when they vote against this part whereby 630000 New Zealanders will enjoy $10 a week from 1 April 2009 in these tough economic times in this deep recession which began under the previous administration—prior to it beginning in any other country by the way. Those people will get $15 a week from 1 April 2010. 
It is a start. As I said in my first reading speech it is a start. The tax changes in this bill are part of a greater plan. They send a very special and very succinct message to the electorate. The message that these tax changes send is that Government members value New Zealanders’ hard work. We value the hard work that they do to help make our country great. We value the fact that they are still here in New Zealand and have not joined their friends and family overseas. We value the fact that they are choosing to make a better life for themselves in New Zealand. We value the fact that one day they may have children or maybe they will not—it is none of our business whatsoever. The message this bill sends is that hard work is hard work regardless of family status regardless of whether a person has children. Does someone who works on the factory floor who has two three or four children work harder than someone on the factory floor who does not have children? Yes or no? 
A previous speaker the Hon Clayton Cosgrove made some superfluous points about the cut-in at $23999 and argued how arbitrary it was. Yes in a really academic sense he may be right on that small point but we should look at it logically. Is hard work different because of who does it? Should not all New Zealanders enjoy the benefits of a positive taxation commitment from their Government? Should not they all enjoy it regardless of their status? Of course they should. 
I have just one other point—I think the next grumpy old man is ready to speak. Dr Cullen raised some interesting points and I believe he tried to table an amendment earlier. I look forward to it. It obviously is in the same realm as his other accusations about this bill—about pension portability and KiwiSaver—which have been blown out of the water but we will look forward to discussing it in the debate on Part 4. Thank you. 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 One scarcely knows where to begin on this piece of nonsense. I said at the start of this debate that there were some incompetent and silly bits in this bill and this is certainly incompetent and silly and certainly unfair. We are told that this independent earner tax credit applies to 630000 people. There are 3 million taxpayers in New Zealand so 2.4 million taxpayers are getting nothing out of the independent earner tax credit. 
Chris Tremain 
: But they are in the tax threshold changes. 
Hon Dr MICHAEL CULLEN 
: No they are not in the tax threshold changes. The member has not listened at all today. Anybody earning $14000 to $24000 was getting a threshold change under Labour but it is taken away under National. They will be paying more tax under National by 2011 than they would have been paying under Labour. They will be paying $9 a week more if they are on $20000. Everybody believes that. It has been in the newspapers. My God—if we can convince the  
Dominion Post 
 and the  
New Zealand Herald  
then we have the Tory press on side and that is a pretty good start on winning that particular argument. 
We have this nonsense whereby if one is earning $23999 and one earns $1 more one will get a $750 bonus—a $780 bonus by 2010 with the independent earner tax credit. So for that $1 I guarantee that there will be an awful lot of people earning exactly $24000 a year by April 2010. Talk about rorts on research and development tax credits! It will be amazing. We will have businesses around the country saying: “If I slip you 20 bucks extra give me a couple of hundred back under the table because you will qualify for a $780 tax credit from the Government.” That will go on—it will be rorted up and down the country. It will not be all the clever guys in the glass towers who work this one out—small businesses will be working it out for themselves with their own employees. 
But who does not get the independent earner tax credit? Anyone who is receiving an income-tested benefit. So a solo mum who is struggling to bring up her kids going out to work—Paula Bennett’s ideal past—and earning say $8000 a year or $150 a week does not get the independent earner tax credit. She might be struggling to bring up three kids and the Government says to her: “Sorry about that. You’re bringing up kids so you don’t get the independent earner tax credit.” However the guy next door who is her ex-husband and walked out does get it. Members would feel pretty ticked off if they were that solo mum. They would say: “What kind of pro-family National Government is this one?”. This is pretty strange what they are doing here. Had they thought about that? Look at them—they never think about these things when they make up these policies. Why? Because it was made up on the hoof. They promised 50 bucks a week for those on the average wage—which of course was including what Labour was already doing. It was not 50 bucks a week on top of that although they led people to believe that. 
Then when they got the Pre-election Economic and Fiscal Update there was not a dry seat left in the National Party caucus and they said: “Somehow we have to save some money. So how do we deliver 50 bucks a week at $46000 a year?”. Then they had a bright idea. They would have a targeted tax credit that would start somewhere or other fade out by $50000 a year and just happen to add up to not quite $50 but $49.13 I think it was at $46000 a year. That is where this came from. This was a last-minute put-together job that looked as though it was Gerry Brownlee trying to assemble a Chinese bicycle from the parts. It did not work. The wheels were on top of the handlebars and nothing was going anywhere at the end of the day. 
Who else does not get the independent earner tax credit? Anybody who is receiving a veterans pension does not get it. We have heard about all the vets. My goodness have we not had hands on hearts from various people including during the Prime Minister’s speech. Well if one went to one of those places—say Malaya—and got injured and is on a veterans pension and one earns say 10000 bucks which is a couple of hundred dollars a week one does not get the independent earner tax credit. Because one is not independent. So here is a veteran 70 years old or whatever although he is probably a bit older if he went to Malaya. Say he went to Viet Nam and here he is at 60 years old with an injury and qualifying for a veterans pension and my goodness me! He will be cut out of the independent earner tax credit. So that is a thank you for his service to the nation—from the party that sent him there in the first place and did not honour him when he came back. And now it will not give him the independent earner tax credit. I am sure that person will say: “Well thank you very much—again.” 
The person concerned might not be receiving New Zealand superannuation. He or she might have the gall to go out and carry on working which is a good idea with an ageing population he said subtly. It is a good idea to carry on working in that situation. But no that person will not get the independent earner tax credit. And if the person gets Working for Families both partners both spouses do not qualify for the independent earner tax credit—not just one but both. How did Government members make that up in their minds? How do both people get cut out of the independent earner tax credit because of this? This is the first time I am aware of in any developed economy where somebody has developed a tax credit to discriminate against families with children. It is not in favour of families with children as Working for Families is but against them. It says it is a bad thing to have children and if people have children the Government will not say that they are working as hard. 
But what about a person on $23000 or $27000 who is a solo parent going out to work and slaving and probably working horrible shift hours probably paying for childcare and probably struggling to bring up their kids? Those people are being told according to Mr Foss that they are not working hard. Mr Foss who is lying on the great luxurious Government backbenches with no real job to do says: “I know you’re bringing up three kids. I know you’re working 25 or 30 hours a week but you are not working hard enough to qualify for”—what is it from this magnificent this munificent this great turbocharged New Zealand economy? It is $10 a week. When we had a tax cut that for a full-time earner was a minimum of $16 a week it was derided as being merely the cost of a block of cheese. But suddenly $10 a week providing a person does not buy the block of cheese presumably will drive this economy faster into a golden future. 
Hon Ruth Dyson 
: Turbocharge it. 
Hon Dr MICHAEL CULLEN 
: Yes turbocharge it into the future. Are we seriously meant to take this as an intelligent well-thought-through policy by a party that spent 9 years in Opposition planning what it wanted to do in Government? It is rickety put-together ramshackle and expensive. It is expensive to administer. One hundred extra bureaucrats— 
Hon Darren Hughes 
: What! 
Hon Dr MICHAEL CULLEN 
: Do members remember that word? Members opposite call them public servants now that they are in Government but they were called bureaucrats when those members were in Opposition only a few short weeks ago. One hundred extra bureaucrats are needed to administer this bill. It will cost ten million bucks a year which is easily about $100000 per bureaucrat by the time we take the overheads into account etc. etc. That is 100 fewer front-line staff somewhere else in the system delivering services. Well brilliant! It just shows what a brighter future looks like when one cannot think properly when one cannot work out policy and when one does not think about the kinds of individual examples that this applies to. 
I say to Mr Foss that he should go and tell his superannuitants if they work that they do not work hard. He should go and tell the solo mums who are working that they do not work hard. He should go and tell people on veterans pensions who are doing some work that they do not work hard. He should go and tell the struggling families with two income-earners that neither of them will qualify for the independent earner tax credit and then come back here and tell me what a great policy it was. People did not think that is what was happening. The Government might have had it in the fine print but that is not the message it sent to them. The message that National sent was tax credits tax cuts for everybody; that is what National would be doing. But that is not what this bill does and that is why we are voting against this part. 
DAVID BENNETT (National—Hamilton East) 
: 
 First I would like to congratulate the Chair on his very good ruling earlier which set the tone for his chairmanship which is something that the public and this Parliament have been looking forward to for a long time. 
Hon Dr Michael Cullen 
: I raise a point of order Mr Chairperson. It is out of order to comment on a presiding officer’s ruling. 
The CHAIRPERSON (Eric Roy) 
: Yes I know it is. I was hoping he was going to terminate. Will the member get on with his speech. 
Hon Ruth Dyson 
: I was hoping he was going to terminate as well. 
DAVID BENNETT 
: The only termination we have seen is the Labour Party at the last election about a month ago. They are sitting there now trying to work out what is going on are they not? 
The independent earner tax credit is an initiative that National and its coalition partners have put through in this great legislation the Taxation (Urgent Measures and Annual Rates) Bill. It is something many New Zealanders have looked forward to for a long time. They have looked forward to a signal from the Government of the day that it actually does reward hard work and that it sends the right signals to those people who are willing to go out there and make the most of their opportunities. That is what this legislation is about. It is about sending the signal to hard-working Kiwis that the Government does care that the Government does provide the circumstances so that people can provide for themselves and for their families in the future. 
That is what the tax credit for independent earners is all about. Its importance will develop over time as the individuals who take advantage of this tax credit become the families of the future of our country. A lot of young people starting off in their careers now find that they are in situations where they pay high taxes and they feel that they are not getting any support. They are the people who want to get married have children buy a house and set up what we consider to be the heart of the New Zealand community. We have not been looking after those people in this country. We have not been giving them the incentive to stay in New Zealand to actually do the things that develop their communities in this country. Well National is making a constructive step today to give them some kind of a signal that we want to reward their enterprise and their activity. We want to show them that there is a future in this country and that the Government of the day will look after them and will provide the platform for them to go ahead and achieve their dreams. 
That is fundamental to building a stronger economy. When we talk about this legislation as being part of a process of economic growth many people will ask how that will be part of that process. It is quite obvious now that if we look after the young people who are making their first steps in their career to encourage them to stay here and to deliver for this economy then we are building a stronger economic base for our country. That is the fundamental element of this legislation and the reason behind it. We want to give that future—that brighter future—for the next generation of New Zealanders. 
To do that we must give them the tools to invest in themselves and also give them the tools so that they get the reward for that investment. No other Government has done this in recent times but National has. We are not afraid of taking the steps to set out an agenda and a process for New Zealanders to succeed and prosper. We are not afraid to set out a process by which people can have hope and faith in their country and their future. This legislation gives hope and direction to young New Zealanders who want to make a better brighter future in this country. They need not go overseas to take advantage of their future and their careers. They can stay in New Zealand and take advantage because we will give them the reward for their hard work the reward for their education and the reward for their diligence and dedication to their job. 
That is an important signal for any Government to send. It is important that we as a Parliament send that signal especially at this time when we need young people in our country when we need people to feel that they have direction and motivation and that there is a way forward. National has provided that direction. We have provided the way forward. We are providing that brighter future. It is great legislation; its tax credits for independent earners will go down as something that will be one of the major steps and one of the first steps in providing a brighter future for all New Zealanders as we go forward. 
Hon RUTH DYSON (Labour—Port Hills) 
: 
 It is clear that when that member David Bennett makes his contribution in the House he has a soundtrack to a movie playing in his head. There could not have been more clichés packed into a 5-minute contribution than that member just demonstrated. I am assured that every National Party MP has been offered a dollar for every time he or she says “a brighter future” in the House. David Bennett will retire rich. That was an awful contribution if I may say so even by comparison with previous ones. 
I would like to make two points during my contribution to debate on Part 3 of the Taxation (Urgent Measures and Annual Rates) Bill. The first is to ask the Minister sitting in the chair some specific questions about what is clearly a misunderstanding on the bill. I was able to pose these questions to the Minister of Finance earlier. Unfortunately he was called away from the Chamber on urgent matters of public affair; he had to leave and was not able to give me an answer. So I ask the Minister in the chair the Hon Dr Jonathan Coleman to provide on public record the answers to these questions. His colleagues clearly do not know. 
Over the dinner break I witnessed another one of the new bewildered backbenchers of the National Government asking a senior colleague whether what Labour was saying was true; whether it was true that we are increasing taxes for low-income earners. That bewildered backbencher was told to just ignore what Labour is saying. [ 
Interruption 
] In my view that is a totally dishonest way of proceeding with any legislation let alone legislation that is being rammed through under urgency without any public input let alone public scrutiny. 
I ask the Minister in the chair what is—under existing law—the 20/11 marginal tax rate for a person who is earning between $14000 and $20000 a year? Does the Minister know the answer to that question; if so is he prepared to answer by interjection? Right. He probably does not know; I will help him. The answer is 12.5c. That is the current 20/11 marginal tax rate for a person earning between $14000 and $20000 a year. Under the bill that we are debating under urgency tonight what will be that same person’s marginal tax rate? The answer is 21c. I ask the Minister what is higher—21c or 12.5c? In my view increasing a person’s marginal tax rate from 12.5 percent to 21 percent is raising his or her tax rate. A person earning between $14000 and $20000 a year does not have excessive amounts of money to splash around. There is not much left over every week. So the Minister needs to say that either it is a typing or drafting mistake—and that is possible as it may well have been put together in a bit of a hurry—or that what Labour is saying is right and that what the Minister of Finance and his Acting Minister is saying is incorrect. This bill increases the tax rate for the lowest-income earners in our country and every member of the National Party who said that they would cut taxes for every single New Zealander should go back to where he or she campaigned and apologise to the public of New Zealand. 
If National members do not do that we will make sure that every single person who heard that dishonest commitment knows what actually happened during the process of this bill. It is just plain dishonest to say prior to the election that every single working New Zealander will benefit from tax cuts to make that commitment to the country and then come into this House and raise the tax rate of the most vulnerable people in our community. 
The second point I want to raise is in regard to the amendment that has been presented by Michael Cullen an amendment to insert a new clause 30A. The point of this amendment is quite simple and is explained as is appropriate in the explanatory note. It says that this amendment “will ensure nobody is made worse off as a result of the new rate and threshold changes.” It could not be more straightforward as outlined in that explanatory note. This “will ensure nobody is made worse off as a result of the new rate and threshold changes.” What National member would disagree with that? What National member would say that this only confirms what John Key said all through the campaign? It only confirms what Bill English said all through the campaign—“Nobody will be worse off in fact everybody will be better off.” In fact this amendment should confirm National’s commitment. But what has happened to it? What has happened to this amendment? 
I will leave the answer to that question for just a little moment because I want to quote what the Minister of Finance said during one of his earlier contributions in this debate tonight. On record in the House—recorded extraordinarily accurately by the Hansard stenographer and the tape—he specifically said: “There are no losers under this bill.” That to my mind means that nobody will be worse off. They may not be better off—I will accept that. But “no losers” means they cannot be worse off. He said: “There are no losers under this bill.” So if that is true if what the Minister of Finance said in this very debate in the Committee is true this amendment would get the total agreement of Parliament. [ 
Interruption 
] Sorry; with the exception of ACT members who may vote differently just because they are so inclined every thinking member of Parliament would support this amendment because it does nothing more than confirm what the Minister of Finance said. He said there were no losers so if this amendment confirms specifically in the legislation that there are no losers then it must be at no cost because the Minister of Finance has already confirmed it. Yet that same Minister of Finance has used an extraordinary process a financial veto on this amendment saying that it would cost $730 million over 5 years. Now how does that figure? I think even David Bennett might be able to work out that if there are no losers then an amendment to confirm that there are no losers cannot cost $730 million over 5 years. So where is that money? 
Hon Dr Michael Cullen 
: Unfortunately his teachers never told his parents anything. 
Hon RUTH DYSON 
: That is right. He probably did not have a literacy and numeracy test at 5 years of age. His parents never had his standards explained to them in plain English and that is why we have ended up with the situation that we have. If there are no losers under this bill then there is no way that Michael Cullen’s amendment can cost $730 million over 5 years but that is what the Minister of Finance has said. 
Where is that money now? We know that that money is in the wage packets of the lowest-income earners of New Zealand—the people who have either already had their tax reduced or who under the existing legislation are to have their tax rates cut over the coming 3 years. That is where that money either is going or would be going. For example the law as it is currently gives those people whom I mentioned earlier—the people earning between $14000 and $20000—a marginal tax rate of 12.5 percent. They are to lose that marginal tax rate and they will instead be paying over 20 percent. That is a loss. That is a tax increase. Bill English has confirmed in the House during this debate that keeping this bill honest to National’s commitment that there will be no losers would cost $730 million over 5 years. Well in my view it is now quite clear that it will cost a lot more than that to keep National honest. On this one bill we have had an absolute contradiction which was confirmed in the debate. 
CHRIS TREMAIN (Junior Whip—National) 
: 
 I move  
That the question be now put 
. 
Hon DARREN HUGHES (Labour) 
: 
 I appreciate the chance to take a call on Part 3 of the Taxation (Urgent Measures and Annual Rates) Bill. It is very important that the Opposition gets a chance to speak and to scrutinise this bill and particularly this part because throughout the debate on the items in the urgency motion the Opposition has not been given the chance to see the legislation until we start debating it. It is an absolute outrage that that is happening. 
Hon Maurice Williamson 
: Oh that never happened under you lot—outrageous! 
Hon DARREN HUGHES 
: The Hon Maurice Williamson says that that never happened under Labour and he is right. I want the Minister Maurice Williamson to tell me how often the previous Labour Government put the House into urgency and all the legislation in the urgency motion was not available to the House. How often was the legislation to be debated not available? How often was it made available bill by bill only even though the Leader of the House had said at 2 o’clock that he would make it available now? That was a quarter of a day ago which for Gerry Brownlee is pretty fast progress I concede but for most ordinary people a quarter of a day is quite a long time. If the Opposition is not given the chance to read a bill before we start debating it it is important that we are able to give our part by part analysis in the Committee stage. 
Clause 29 sets the tax rates for the financial year 2009-10. It is part of Part 3. Clause 29 has done that; it makes the whole thing quite clear. 
Hon Gerry Brownlee 
: I raise a point of order Mr Chairperson. Surely the rest of this contribution cannot be even slightly relevant if the man is not even aware of what he is debating. Quite clearly judging by his embarrassed look he has not read this particular part. 
The CHAIRPERSON (Eric Roy) 
: That is not a point of order. 
Hon DARREN HUGHES 
: Thank you very much Mr Chair. I assure the member that I always look this way regardless of whether I am in an embarrassed state. I was born looking this way and I have learnt to love myself in this shape unlike Mr Brownlee who always seems resentful and bitter about the way that mother Nature has him appear in the House of Representatives today. [ 
Interruption 
] That is right; he had to work very hard to look that way. I started off looking like this and that is the way it has to be. 
We have debated the tax rates for the coming year and as Ruth Dyson has already said for some people—particularly those on low incomes—their taxes go up quite substantially. Now we come to the independent earner tax credit which the Government is putting up as its major centrepiece to make sure that people get close to the $50 a week they were promised. But there is a problem with that because the $50 a week they were promised includes the tax cuts that were part of the Labour Government’s legislative programme in Budget 2008. But we have to take the argument even further because when we put that to Bill English the Minister of Finance he said we cannot say that there is a tax increase for people on low incomes because National is not counting Labour’s tax cuts—even though we know that when the legislation comes in it will be adverse for people—but when it comes to making up the $50 it cannot wait to get out the abacus and count Labour’s tax cuts as part of the programme that National is putting forward. 
The bridging policy is the independent earner tax credit but when one looks at it one sees how unfair it is. I ask the Minister in the chair the Hon Dr Jonathan Coleman a question. Is any single worker worse off as a result of the tax changes proposed in this part of the bill? The Minister’s colleagues are talking while he is trying to hear. He is now paid a quarter of a million dollars. He gets quite a good tax cut under this part of the bill. He does quite well out of it despite the fact that he is not an independent earner in that respect—he relies on nanny State to pay his wages. He can now tell us whether any workers will be worse off as a result of this part being passed by Parliament. The rising star of the National Cabinet cannot answer that question. We have to keep on debating this bill until we have a Government Minister in the chair who understands National’s policy. 
I ask Jonathan Coleman another question. What was the range of the independent earner tax credit that he campaigned on in the election? He does not know. He shakes his head. He does not know. He has no idea what the independent earner tax credit was that those members campaigned on. I ask him what range it has now that it is in the bill. Oh he does not know that either. To be fair to the man I tell him that it is on the piece of paper in front of him. I know what it is I tell Mr Coleman; it is on the page in front of me. He will find it on page 15. I will give him a few seconds to find it. It is a different figure from the figure quoted during the campaign when National members went around the country saying that they would put in an independent earner tax credit. They said that it would range from $24000 to $50000. That is not what the bill before Parliament right now states. Thank goodness we have the chance to go through the bill carefully in the Committee stage because under the bold brighter inclusive future that National MPs have been programmed to tell us about we did not get to see the bill before we started debating it. 
What it means is that there are people who get only $10 a week which is a pretty pathetic amount considering that Dr Cullen’s tax cuts were larger. One of the great ironies of this debate is that the largest tax cuts in this 3-year programme are Michael Cullen’s tax cuts not Bill English’s tax cuts. Oh the big man is now on the move towards the papers on the Table so we might learn what the non-independent earner has to say about it. Maybe he could sit in the chair and tell us what the range was. I know that he has pored over every detail of the legislation before the Committee. I know that the Leader of the House has not let a single page go unmarked as he makes sure that workers in this country get the best deal. I cannot believe that he allowed this $6000 figure to escape from the National Party manifesto. Gerry Brownlee was all over the detail so I cannot believe that there is a $6000 hole for working people in the bill before the Committee of the whole House this evening. 
I ask him to get into the chair now and relieve Jonathan Coleman because he will be able to tell us why people who get a benefit do not get the independent earner tax credit if they are earning money. We were told by Mrs Collins before her demotion that National wanted to raise the amount that beneficiaries could earn to $100 immediately on becoming Government because work was so important. Work would set people free. Katrina Shanks yawns at the mention of the word “work”; she is working at 7.50 in the evening on the third day of this Parliament. That is what those members are going to have to put up with. This Government which has barely taken office cannot tell us why it campaigned on beneficiaries being able to earn more money—because apparently that is an important philosophy that people have to learn—but if they get a job and earn money they are not entitled to the independent earner tax credit. I want the Minister in the chair to explain to me how he can reconcile that social policy with that economic policy. I think it is quite an important point which the Committee of the whole House does want to know about. It seems to me to be quite crucial. 
Dr Cullen talked about veterans pensions for people who have served our country in war. 
Hon Tau Henare 
: He would talk about veterans pensions. 
Hon DARREN HUGHES 
: Well Tau Henare knows about being in a few battles and a few wars. None of them were official ones but in every single one he was a victim. He is the walking wounded without ever having put on a uniform. He may well want to line up for the independent earner tax credit before he joins the Maori Party having been shunned and made to feel whakama by the National Party. That is what has happened there. 
For people on New Zealand superannuation I see the new member of Parliament for Otaki over there. I know that seat has the highest number of people over the age of 65 and I know that a lot of them still work. He is going to vote to make sure they do not get the independent earner tax credit. They will be worse off as a result of the bill being passed by Parliament tonight. Those people would have got a tax cut under Labour. I want to know what these bold new members of Parliament are going to do about the fact that they campaigned all around the country on letting people keep more of their money—that is what they said—yet when the legislation comes to Parliament they cannot wait to take money out of the pockets of pensioners and put it in their own back pockets. One of the first announcements from this Government was an increase in the pay of members of Parliament but those members cannot wait to take money out of the back pockets of pensioners which is what they are doing in clause 31. Very many people are going to be affected negatively by the independent earner tax credit particularly those who earn under $40000. 
I see the new member of Parliament for Te Tai Tonga over there. I congratulate Rahui Katene on her election to Parliament but 73 percent of her constituents earn less than $40000 a year which is way worse than the average for a lot of other electorates in the country—although for Otaki it is 60 percent. 
Hon Tau Henare 
: And what did you do about it for 9 years? 
Hon DARREN HUGHES 
: We increased the minimum wage every single year so that it went up by $5 over the 9 years that we were in Government. It went up by 70c in the 9 years that Tau Henare was part of a Government. So these figures are better than what they would have been if Labour had not been in Government. When 73 percent of a member’s constituents earn less than $40000 a year that member needs to read Part 3 of this bill really carefully because those people cannot by definition benefit from the changes that the National Government is introducing. This bill unpicks law that is already on the statute book and replaces it and that means they are worse off a second time because they will not get the benefit of what Parliament legislated for earlier on. That is the key point. 
When the Minister of Finance was in the chair before he tried to gloss over this point by not counting Labour’s legislated tax cuts but he has to count it in order to get to the $50 he promised. The $10 amount that he is putting in is an absolute sham. It is a disgraceful amount that will not make a difference for ordinary people. We have tried in the debate on this part to ameliorate the concerns we have as an Opposition party. We believe that National Party members were not up front with the public about this matter when they were campaigning. They said they were in favour of tax cuts. Tens of thousands of people right across the country will now find that their taxes are going up under National; they are not going down as they were meant to do. Craig Foss will not be too worried about that because Craig Foss is in Parliament for Craig Foss but those of us who are interested in making sure that New Zealanders do well say there is a problem with this part. Michael Cullen has a solution. His Supplementary Order Paper fixes this problem. 
Hon DAVID PARKER (Labour) 
: 
 Not so long ago when it was in Opposition the National Party came down to this House and repeatedly accused us of communism by stealth. That was about Working for Families. National opposed Working for Families. National members said it introduced too much complexity into the tax system that it made beneficiaries out of taxpayers who had to fill in a form in order to get some sort of entitlement. Now in Part 3 National introduces an independent earner tax credit which is probably the most difficult to administer wrinkle in the income tax system that any Government has been silly enough to put into the tax legislation for a long long time. It means more bureaucrats and more cost to taxpayers as they have to file tax returns to get their entitlements and less certainty for taxpayers who will not know what they are entitled to. This tax credit that National talks up ad infinitum has a very narrow ambit. It applies only to people who are earning between $24000 and $44000. The abatement rates are confusing for people. It will cause additional cost to the Inland Revenue Department and additional compliance costs to taxpayers—and this from the party that said it was all for tax simplification. 
Well if taxpayers want tax simplification that means they simply want to know whether they will go forwards or backwards as a consequence of legislation. Of course that is what Dr Cullen’s Supplementary Order Paper would give people. It would give them the certainty that this legislation would not reduce their incomes by increasing their taxes. It is a very simple Supplementary Order Paper. It says exactly that. The motion is “to ensure no taxpayer is disadvantaged by the new rate and threshold changes in this Bill.” This is exactly what the Government said not just in this House but during the election. No one would be worse off—those were National’s words. This is exactly what the Supplementary Order Paper would achieve. Bill English had the temerity to say that this should be vetoed. He would not even let it be put to the vote in this Chamber. He used the very rarely used veto powers that are able to be exercised if there is a substantial financial effect from the Supplementary Order Paper. 
National exercised the right of veto on this occasion because truth be known it now says it would cost $730 million over 4 years. In other words the effect of this tax bill is to take $730 million of tax off people. They are being taxed more not less to the tune of $730 million. If Working for Families was communism by stealth it appears that this bill is Robin Hood in reverse—taking from the poor and giving to the rich. That is the effect of this legislation. 
This legislation decreases the wealth of those who are most vulnerable and it is being voted upon by the Maori Party which is supporting the National Party in this legislation to raise taxes on the lowest income people in the country and that disproportionately affects Maoridom. 
Hon Tau Henare 
: The Maori Party the Maori Party. 
Hon DAVID PARKER 
: We have Tau Henare over there. Tau spent many years in a prior failed allegiance with the National Party which ended in tears for his members and which party spent lots of money on underpants but not much on the people he was meant to be representing. 
This legislation is an outrage. It increases compliance costs for taxpayers. There will be more money wasted within the Inland Revenue Department. It takes money from those who can least afford it. 
Hon Sir ROGER DOUGLAS (ACT) 
: 
 Mr Chairman— 
Hon Members 
: Hooray! 
Hon Sir ROGER DOUGLAS 
: Well I was not going to say anything but you know how could one resist after listening to the Labour Opposition. The Committee on this bill has spent a considerable amount of time this afternoon and this evening debating whether this taxation bill helps or hurts low-income taxpayers—whether it helps to restore the margin between low-income workers and those on benefits in order to encourage them to seek work. I believe that the bill does help achieve both of these objectives. 
Let us look at the issue of whether this bill in fact helps low-income earners or whether it helps the rich. The Opposition has claimed throughout this debate that the decision to hold the 12.5c rate to the $14000 tax bracket rather than raise it to $20000 was designed to hurt low-income people. Not so. Not so. If we put aside beneficiaries whose income in whole or in large proportion comes from the Government we come to realise that the people who are in the tax bracket zero to $20000 all—or a vast majority; 90-plus percent of them—come from high-income households or they are people with high assets. So the people who are in the zero to $20000 tax bracket come from high-income households. They are the sons and daughters of the rich or the partner the wife or the husband of a very high-income earner. In fact if we look at Michael Cullen’s 2008 Budget and the tax changes in it we see that it was an invitation to income split. He created a new industry with that Budget—accountants going to their clients and helping them income split. So the Michael Cullen Budget was designed to help the rich and the high-income earners by enabling them to income split—hardly the action of a party that wants to help those on low-incomes. So the reality is in fact a lot different from the rhetoric of those members. 
The group of taxpayers who need tax relief are those who fall within the 21c tax bracket. Anyone who is working full time is actually a taxpayer who falls within that tax bracket. So the people we want to help are the ones whose last dollar of income falls within that 21c tax bracket. It was this group of people who were in the 21c tax bracket that was disgracefully treated by the last Labour Government. A lot of the people in that tax bracket who in 2000 were paying $1 in $5 found when the Labour Government came along that for every extra dollar they earned $1 in $3—not $1 in $5 as it was in 2000—went to the Government. From that point on it was $1 in $3. Quite a lot of people found that they had to pay up to an extra $30 a week because the Labour Government did not want to help these low-income people. It did not want to help so it held the tax bracket where it was. If it had been inflation-proofed it would have gone to $50000. 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 I am going to talk about high marginal tax rates and I think it is worth reminding the Committee of what probably almost everybody in this Chamber has forgotten. At one stage Sir Roger proposed a form of guaranteed minimum family income that was never put into place in its original form which up to an income at that time of $23000 a year—and this is the 1980s we are talking about; well over $40000 a year in modern money—had a 100 percent effective marginal tax rate. That is what Sir Roger actually wanted to be his legacy. But let us take this extraordinary argument. Sir Roger was always a wonderful person for making up figures and then expanding on them. Without the discipline of a whiteboard he gets terribly lost in the thicket of non-facts—90 percent of those earning less than $20000 a year are high-income earners! This is his kind of reverse logic. Of course 90 percent of those earning $200000 a year are poor whereas 90 percent of those earning less than $20000 a year are rich! 
Now of course some people on low incomes are well-off for two reasons. First they fiddle their taxable income. That is probably the most important reason why they are rich. Perhaps the most important reason why most people are rich is that they have managed at some point in their ancestry to fiddle their taxable incomes because most people who are rich have inherited their wealth not made it along the way and that also needs to be remembered. The second point— 
Hon Dr Richard Worth 
: That’s not right. 
Hon Dr MICHAEL CULLEN 
: That is right actually. Even in New Zealand that is true. The second point is that of course some second-income earners in families have low incomes. It may be a spouse who has a partial income or an investment income that is small and so on. But of course given what Sir Roger started with—ignoring beneficiaries and superannuitants—with one enormous expansive wave of the arm at least 800000 New Zealanders disappeared just like that. There were 500000 superannuitants as a start. They are not to be encouraged to work hard. He said that the purpose was to have the gap between earned incomes and benefits yet he will not reward those people who are trying to move off benefits and have partial additional income whilst maintaining family responsibilities. If one is a sole parent and the choice is between earning $10000 or $15000 a year part-time or $30000 to $35000 a year full-time and one is trying to bring up three kids what is actually the most socially desirable outcome in that situation? Will it always be the full-time job? In many instances it is better if that person can work part-time and receive some assistance from the State so as to spend sufficient time devoted to those children. I have to say that it is hard enough bringing up kids when there are two parents. When there is only one it is a very hard job indeed. We cannot just ignore those people. 
Even then if the worry that Sir Roger has is that some people on low incomes actually have high incomes in the wonderful sort of world in which Sir Roger moves where the people with whom he spends most of his time do not have high taxable incomes at all—indeed it is only when they have made a mistake that they have a taxable income at all by and large—then deal with that issue. This is complex enough already. Imagine the poor employer under the independent earner tax credit: “Madam have you got a partner?”—“Well I had one last week I’m not sure this week. We had a bit of an argument this morning.” If people have a partner and they have kids they do not get it; but if they do not they do. That will be a difficult one for employers because if they are deducting this off at source at 10 bucks a week they will have to ask an awful lot of penetrating questions. This party opposite that is so keen to take the State out of people’s homes is now putting the employers back into them and they will be asking questions in a world where life is very different from the old days of the married tax code and all the rest of it. And employers are going to have much-increased administration costs because of this and much-increased compliances. They are not going to thank the Government at all for the enormous complexity of this mechanism. 
What we do know is that it is going to take money off lower-income people because it is not quantified. The Government has had to quantify this. It told us clearly that $730 million over 5 fiscal years is the cost of making sure nobody is worse off but that is the next 5 fiscal years. That includes this year and next year when in fact it does not matter until 1 April 2010. The real cost is over $200 million a year. That is what is being taken off low-income earners earning between $14000 to $24000 year and families earning at least under $44000. But many are actually earning more than that. If they are two-income families they can be earning well over $44000. 
Hon JOHN CARTER (Minister of Civil Defence) 
: 
 I move  
That the question be now put 
. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I do want to begin this intervention by acknowledging Sir Roger Douglas. For many of us probably on both sides of the Chamber his earlier work in Parliament was the stuff of legend—or nightmare depending on one’s perspective. But he is one of the few people who have left an indelible imprint on this country’s history and it is certainly a matter of great moment to see him back. 
It is also very interesting to take this opportunity to reflect on the modus operandi that has been demonstrated in his first intervention. He started by redefining the question. The question we started with was: how do we make people better off through tax policy? He forgot that question and answered his own question which was: how do we narrow the gap between income bands or between income earners and beneficiaries? So that was step 1—redefine the question. It was done very quickly and done without drawing much attention to it. 
Step 2 was “put aside beneficiaries”. I think we should all frame that as a quote because 800000 people vote and they do not want to be put aside. They have families and they have needs and we are here to protect them with our Green colleagues to make sure that they are not put aside. But the ACT Party wants to put aside beneficiaries and let us only hope they cannot do too much damage to New Zealand before they are thrown out. 
Step 3 was to say that he wanted to help those within the 21c tax bracket. Yet that seemed to deliberately fly in the face of the fact that at the moment under existing law they will pay a marginal rate of 12.5c in the dollar. Under the Act the legislation that is being proposed that he is supporting they will pay 21c in the dollar. So he has ignored the contradiction and redefined the question. He wants to help people by almost doubling their marginal rate of tax! It is extraordinary but he moved so fast through the contradiction that I am glad I was taking notes. 
Step 4 of course is the fact that his argument is completely useless because Bill English has already contradicted it in writing. Bill English has answered the question—definitively and on the public record—that people are $750 million worse off because that is what it would cost to fund the motion that Dr Cullen put on the Table taking him at his word that no one would be a loser. So I guess that step 4 in Sir Roger’s mojo was to ignore the proof that was already lying on the Table. 
Step 5 of course was for us to recall that Sir Roger’s idea of a progressive policy was a 20c in the dollar flat tax. That was the high-water mark of ideology that got him thrown out of the Labour Party. The impact of that would be the same as the impact of elements of this tax bill. Raise the tax on the poor to 20c in the dollar and cut the tax on the well-off almost in half from 39c or 37c to 20c and somehow that makes everybody better off! The last time I read an argument like that was from Voltaire who said: “We live in the best of all possible worlds by definition.” Well I hope he had a good whiteboard because when one writes down the logic of the argument it ties itself in knots real quick. 
Hon Dr Michael Cullen 
: You can’t read Roger’s handwriting when he does it. 
Hon DAVID CUNLIFFE 
: Yes. We welcome him back. We are glad to have witnessed this extraordinary logical knot and we are happy to have the opportunity not only to untie this knot but to untie every other knot that he tries to tie New Zealand up in. 
But I will get back to this bill. What New Zealand knows definitively is that this is an ugly Christmas present for those working Kiwis who will be part of the $750 million bill that the Government itself tonight certified. I say merry Christmas to beneficiaries merry Christmas to part-time workers merry Christmas to 57-year-olds with a part-time income as they move towards retirement and to those over 65 who are keeping themselves going and putting a lesser burden on the State. Merry Christmas—the Grinch has arrived. 
The CHAIRPERSON (Hon Rick Barker) 
: I call the Hon Pete Hodgson. 
Hon John Carter 
: I raise a point of order Mr Chairperson. It is normal to alternate the calls from side to side and our very good member Katrina Shanks actually sought the call at the same time as Mr Hodgson and Mrs King and for some reason you chose not to do what is normal convention in this case and choose from the Government. I just draw your attention to the fact that Miss Shanks had called. You now have recognised Mr Hodgson and will no doubt have to proceed with that but I just draw your attention to the fact there was a call from this side of the House. 
The CHAIRPERSON (Hon Rick Barker) 
: The member is correct. I have already given the call to the Hon Pete Hodgson; the call will stand. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I want to bring the debate back to the tax credits for independent earners and just point out gently that the Government has broken a promise. National said in the course of the election that there would be a $10-a-week tax break for independent earners earning between $24000 and $50000 and that is not the case. The law that is being passed does not do what the rhetoric before the election said National would do. But it might—it might. It would be easy to amend this. It would be easy to amend it if the Minister in the chair would care to follow the debate follow the bill or follow anything at all really; he could indicate whether his Government would be prepared to support an amendment to section LC13(5) in clause 31 by changing the amount of $44000 to $50000 because this side of the Chamber would gladly draft such an amendment. It would take a matter of moments; we could put it to the Committee and the Government of the day could maintain its pre-election promise. 
It is not a big promise that is being broken—it is only $6000; it is only $10 a week over that $6000 range—but it is a broken promise. It can be corrected. We have picked it up and we are bringing it to the Government and asking whether it would like to fix it. We are happy to draft the amendment. Of course the Government could draft the amendment itself—we do not mind; we would vote for it if the Government wanted to put it on the Table or we could draft it for them. The Minister may want to take the call and indicate whether he would be prepared to support such an amendment. We can put it on the Table in no time at all. 
You see what has happened is that the $44000 is where the rebate starts to bleed out. It is bled out by $50000. That means that if one is on $49000 and thought that one was going to get an independent earner’s rebate of $10 a week the news is that it will actually be about $1.50 a week. So that is a broken promise for that person. 
Hon Member 
: How much? 
Hon PETE HODGSON 
: A dollar fifty a week. Someone on $48000 will be getting $3 a week instead of $10 a week and so on. So we have a Government that has managed to break a promise for every New Zealander who would be eligible for the independent earner’s tax credit who is earning between $44000 and $50000. They will not be getting $10 a week they will be getting less than that something between $10 and zero a week. So I am saying that to the Minister in the chair Jonathan Coleman to see whether he would like to contemplate receiving an amendment on the floor of the Committee from the Opposition. Indeed the Minister may wish to propose it. It is not difficult and it probably is not very expensive. It probably is nowhere as near as expensive as addressing the problem of the fact that we are going to have higher tax on very low-paid New Zealanders than we would otherwise have. That is the real crime in this legislation but this is a broken promise because National told us about the first amendment before the election. This amendment arrived this afternoon. This afternoon it became clear that the tax credit for independent earners was not as generous as National had promised in the course of the campaign and if it would like to correct this clear obvious and unmistakable broken promise then now is the time to do so. 
So I will just say to the Minister in the chair that if he would like to nod I will write the amendment. It will be just a pleasure if the Minister would just nod. I am just trying to get something. What did I get out of that Mr Carter? Did I get a nod? Is that a nod? Let me ask another Minister. Can I ask the Minister whether he would support an amendment to allow National for not any great price to not break an election promise? Are any National members prepared to agree to not break one of their election promises? Are any National members within the Chamber prepared to indicate to this Labour Opposition whether they would support any amendment that for not too much cost would stop them breaking an election promise? 
I am still not getting any answers. I ask Tau Henare whether he as an esteemed member of the National caucus will give me a nod of support that would be followed by his vote if I were to put forward an amendment to make sure that National did not break an election promise. We have picked it up we have pointed it out and there is still time. We are in the Committee stage and it can happen ladies and gentlemen. This Parliament can stop the governing party from breaking an election promise. We are here to help and we are very happy to offer this up. Would one member of the National Party indicate his or her preparedness? 
KATRINA SHANKS (National) 
: 
 I move  
That the question be now put 
. 
Hon ANNETTE KING (Deputy Leader—Labour) 
: 
 This Opposition is a very very fair one. We are very fair; we want to give the Government a fair go and a chance. So I want to start again. Let us start from the beginning of Part 3 and ask the Minister in the chair the Hon Dr Jonathan Coleman to answer this question—and he must take a call. We cannot have a Minister on his quarter-million-dollar salary sitting in the chair like a dried arrangement and doing nothing. He has to take some responsibility when he sits in that chair so I want the Minister to answer this simple question—it will not take long—will the Minister reaffirm the claim made today by Bill English that no New Zealander will be worse off under these tax changes? It is a yes or no question Minister. We are getting the Cheshire cat grin but no reply. 
Earlier today Bill English said that no New Zealander would be worse off under National’s tax changes. Well that is not true. That is not true and we want every New Zealander to know that within 3 days of forming a Government those members have reverted to form. They have gone back to the old Tory Government they were when they went out of office in 1999 and they have broken a promise within hours of being able to put legislation in this Chamber. 
I tell members why it has happened. It is because National members worked on their tax package for a long time. There were a lot of arguments and a lot of changes. Mr Key could not make up his mind and he could not agree with Mr English. There was a lot of division but finally they got it together. But did they release it to the people of New Zealand so that people could get a closer look at it? No they did not. In October this year they released their tax package within days of a general election. During the election campaign the National Party candidates could not even talk about their tax policy because they did not understand it. They had not had it explained to them. In fact their whole tax policy had been buried because what people did see of it was unpopular. 
You see those members hid so much of it and now today the truth is coming out. The truth is that if we look at Part 3 we will see that this is the nub of what they are doing. They promised that every New Zealander would be advantaged by their tax cuts—every New Zealander. The members opposite know they said that. That is what those members said to the public as they went into the election campaign: every New Zealander would be better off. Are New Zealanders better off under these tax changes? No they are not. Part 3 tells it all. This independent earners tax credit means that many New Zealanders will get nothing. 
Who are these people? Are these people rich? Are these people undeserving? Or are they hard-working independent taxpayers who do not have dependants who go to work do a 40 or 50-hour week’s work but do not earn the net $24000 a year? They actually earn $23999 but they do not qualify for this tax credit. They do not get anything. They are not good enough to get anything. But what did they think during the election campaign? What did they think when the National candidates said they would get a tax break? They thought it was them. They thought they were part of this tax package from the generous National Party. It is a fraud it is a hoax and many many New Zealanders have been tricked into thinking that the National Party was going to provide them with a tax break. Small as it was at $10 a week they now get nothing. 
Just think of the inequities of that. A good example would be two people who live together but they do not have their own independent income. One earns $24000 net and gets the independent earners tax credit but the other person earns less than that and does not. 
Hon TAU HENARE (National) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question now be put. 
Ayes 68 
New Zealand National 57; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 52 
New Zealand Labour 43; Green Party 8; Progressive 1. 
Motion agreed to. 
The CHAIRPERSON (Hon Rick Barker) 
: The question is that new clause 30A in the name of the Hon Dr Michael Cullen be agreed to. 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 I raise a point of order Mr Chairperson. Can I just be clear that this is the amendment in my name that ensures a compensatory tax credit so that nobody suffers in the difference between the current tax rates and the new tax rates if he or she makes a loss on it. 
The CHAIRPERSON (Hon Rick Barker) 
: The question I have here is the amendment in the name of the Hon Dr Michael Cullen. This is the one. We are all clear on the question? OK. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I raise a point of order Mr Chairperson. I think the Chamber finds itself in quite an interesting situation. As members are aware a document was presented on the Table and it was signed by the Minister of Finance; it was a signed declaration of a financial veto. Not only was it signed and distributed to Parliament and has since been distributed publicly but it also happened on the basis of a quantification of some $750 million. That is a large amount of money. If it were the case that the Minister signed that document it must be true because otherwise he would have signed an inappropriate document—and I am sure he would not have done that. If it is true it cannot be withdrawn because the Government would have grounds to apply the veto and the Chamber finds itself in an extraordinary situation. Is the Government now committing to fund the motion that the Minister has proposed? 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 My understanding was that the veto can be withdrawn. One assumes that the Maori Party has now been persuaded to vote against the amendment. 
The CHAIRPERSON (Hon Rick Barker) 
: Can I just say to the Committee that I have been handed by the Clerk a handwritten note signed by the Hon Bill English Minister of Finance stating: “I hereby withdraw the financial veto”. 
The question was put that the following amendment in the name of the Hon Dr Michael Cullen to Part 3 be agreed to: 
To insert the following new clause: 
30A Section LC2A Compensatory Tax Credit for low-income earners and others. 
A person who under this Act would pay more tax than they would have done under the provisions of the Taxation (Personal Tax Cuts Annual Rates and Remedial matters) Act 2008 shall be entitled to a Compensatory Tax Credit equal to the difference between the tax otherwise payable under this Act and the tax payable under the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Act 2008. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 52 
New Zealand Labour 43; Green Party 8; Progressive 1. 
Noes 68 
New Zealand National 57; ACT New Zealand 5; Maori Party 5; United Future 1. 
Amendment not agreed to. 
A party vote was called for on the question  
That Part 3 excluding clause 29 be agreed to. 
Ayes 68 
New Zealand National 57; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 52 
New Zealand Labour 43; Green Party 8; Progressive 1. 
Part 3 excluding clause 29 agreed to. 
Part 4 KiwiSaver: 2% employee and employer contribution rates and repeal of employer tax credits 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 May I comment in passing that that was the most extraordinary vote I have seen in many a year: that the Government of the day would put on a “hugely justified” financial veto told the Parliament and the public that it would cost three-quarters of a billion dollars to protect poor New Zealanders—overwhelmingly and disproportionately Maori New Zealanders—from the negative consequences of this bill and then once it had secured the support of the Maori Party to ditch the interests of— 
Craig Foss 
: I raise a point of order Mr Chairperson. We have moved on from Part 3; we are now on Part 4 which talks about KiwiSaver. I would ask that the member could bring it back to this part please. 
The CHAIRPERSON (Hon Rick Barker) 
: The member makes a fair point. 
Hon DAVID CUNLIFFE 
: The member makes a fair point. I confess my incredulity got the better of me and I will move to Part 4. 
Part 4 is the single most important part of this bill. It is the single most important part of this bill because it contains the lion’s share of how it is paid for. $3.5 billion is being stripped out of KiwiSaver and the Opposition parties will show in detail in this Committee stage of debate what is being done: precisely what changes are being made that cause KiwiSaver to be gutted; why once again the Government is not being full and frank in the way it is presenting these changes; the financial and economic effects of the change and the impacts on ordinary Kiwis; and finally why this is bad policy on any measure of the Government’s own objectives. 
Let me begin with what is being done. In very very simple terms the Government is proposing to change the so-called minimum contribution from 4 percent to 2 percent. Now that of itself does not ostensibly sound bad and it did not sound bad in the election campaign. At a lower threshold more people might come in and it might improve uptake one might think. Does it sound good so far? A number of Kiwis thought it was a palatable change. Here is the not-so-fine print: it is effectively not a minimum at all; it is an effective maximum. Why is that? Firstly because the default setting for any new worker is not now 4 percent but under this bill it will be 2 percent. We know and the data shows that most of the 827000—I think it is now—New Zealanders who are in KiwiSaver came there through the default option when they took a new job. So it is being prejudiced from the start-off. 
The second and perhaps most important feature is of course that the matching contribution is capped at 2 percent. So technically people could put in more than 2 percent it is just that they would not get any return on it because it would not be subsidised by either the Government or the employer. That accentuates the difference between the Australian scheme which is a 9 percent—wait for it—purely employer-funded scheme and the New Zealand scheme under this bill which is now largely employee funded. Interestingly enough the Government is also going to repeal the part of the KiwiSaver legislation that protects employees from the actions of employers who seek to offset against wages. It may come up with another solution to that problem so I will not overemphasise that one. To make matters worse when the Government realised that it had stuffed up in the campaign and over-promised to the tune of some $700 million because it finally figured out what had been obvious to Labour for months—that ordinary working Kiwis on low incomes would have their actual annual contribution cut from $1000 to $520 and it decided to restore that very sharp-edged Christmas present— 
Hon Dr Michael Cullen 
: Not quite! 
Hon DAVID CUNLIFFE 
: Not quite as Dr Cullen says but that move cost the Government $700 million. It then did the Grinch act with the $40 enrolment fee to save $200 million. 
Hon Lianne Dalziel 
: How miserable is that! 
Hon DAVID CUNLIFFE 
: I hear people on this side of the Chamber outraged and the well-suited gentlemen on the far side of the Chamber give not a toss. Why is that? Because for someone on the income of I do not know Steven Joyce when he sold RadioWorks $40 is not a big deal. But for someone on a minimum wage of $12 an hour—or something closer to $9 after tax—$40 off savings is a significant disincentive. When that is combined with the fact that Government has just scrapped anything over a 2 percent contribution and one is going to get diddly-squat from one’s boss suddenly it is not looking so attractive. 
Now we come to the next point. The Government’s own analysis provided in the introduction to this bill was clarified by my esteemed colleague Dr Michael Cullen when he asked the question: “What provision has been made for further enrolments in the financial estimates for this bill?”. The answer was “Nothing”. Why is that? It is because the Government is not expecting anybody else to enrol because it has just gutted the scheme. 
I want to cast our memories back to a particular moment for us—one of the most hopeful moments of the election campaign—which was the day the National Party announced its tax policy. Our tracking polls showed its support drop about 5 percent in a day because this policy is a political lemon. It is a loser. A million Kiwis either enrolled in KiwiSaver or wished they could have. A million Kiwis thought it was great to have a nest egg and mainly they are New Zealanders who are not of substantial means. Average-wage earners enrolling at 30 get about $420000 when they retire. That is a big deal for them. That is the value of their home and that for many people I have talked to is not only their principal saving vehicle but also their hope for a better future. That hope has been taken away from them by a Government that does not seem to care. 
Why? It has been done in order to fund a tax cut for the better off. Those who earn less than $44000 and have kids will lose. Those on the average wage of $45000 get $1.92 a week more. Whoopee! But those on three-quarters of a million dollars get $264 more a week. Wow! The Government is taking from the poor gutting KiwiSaver to give to the rich. That is fabulous stuff and the Government has done that on its first day in the job! I could say: “Told you so New Zealand.” I wish I did not have to. 
Hon Bill English 
: So Labour got it wrong? 
Hon DAVID CUNLIFFE 
: The current Minister—he may not last long at this rate; a bit like Gerry Brownlee the shortest-lived Leader of the House—Mr English tried to enter a financial veto. When he realised it was going public he quickly withdrew it but sadly the damage was done because the public knows it was a $750 million stuff-up. That is the second $700 million stuff-up that that Minister has made in his first week with a warrant. I tell Mr English that it is not a good start. We wish him luck from here on. 
Finally if this is inequitable and if this is a very unpopular move it is also an economically fundamentally stupid move. It is stupid because if Bill English had not noticed there is a global credit squeeze on. Presumably that is the reason he wants to tilt the New Zealand Superannuation Fund into loaning to itself by having both assets and liabilities. He wants more savings in New Zealand but he is gutting the best single savings vehicle the country has ever known. It is bizarre. The only other example I can think of was Rob Muldoon killing that superannuation fund of yesteryear—the Kirk fund—whereas he said he would not. So in a sense we are used to that kind of double-talk from that party but it is none the less sad for New Zealanders whose hope for the future is being sold down the river. 
CRAIG FOSS (National—Tukituki) 
: 
 I am intrigued by mention of the New Zealand Superannuation Fund and I am looking forward to further debates on it with members opposite although I cannot quite see it in this particular bill the Taxation (Urgent Measures and Annual Rates) Bill. However the member obviously has some strong opinions on it as does New Zealand because that matter was on the table before New Zealand again at the general election and people resoundingly endorsed the National Party’s policy of up to 40 percent of the New Zealand Superannuation Fund being invested in New Zealand infrastructure as opposed to offshore infrastructure and being exposed to various risks. As the member is no doubt aware the recent updates included quite an asset write-down for the New Zealand Superannuation Fund. Perhaps 40 percent of that risk would not have been there if the funds had been invested in New Zealand in the first place. But anyway that is a debate for another day. 
Part 4 brings in the 2 percent plus 2 percent option. It was interesting to hear the previous speaker because as I noted in my first reading speech I recall being at the Finance and Expenditure Committee when the original KiwiSaver legislation came through and there were strong submissions on it. It was agreed by the Green Party and the Labour members of the committee and I think by the New Zealand First members as well that “2 plus 2” was very desirable and in fact was quite pragmatic; it was not some political philosophy or anything like that. There was simply a recognition that many New Zealanders cannot afford to save 4 percent of their gross salary. It was as simple as that—about 5.5 or 6 percent net. 
So I find it surprising that members opposite are arguing that it is a bad thing that we are going down to “2 plus 2” particularly when some of the unions that contributed to their election fund were in favour of that at the Finance and Expenditure Committee. Business New Zealand was in favour of this at the Finance and Expenditure Committee. In fact it is something that makes KiwiSaver—and it was Labour’s original policy—more robust more durable more sustainable and more affordable for all New Zealanders. It is as if somehow any higher contributions have been banned. This measure does not ban any higher contribution whatsoever; it simply allows the entry level to and the durability of KiwiSaver to be much more robust and sustainable at 2 percent plus 2 percent. If individual organisations want to negotiate different agreements with their employers so be it. What is the problem? There is an interesting silence opposite. 
I imagine that the next speaker will be the previous Minister of Finance. In previous speeches he has talked about pension portability and about how at risk KiwiSaver is because of the agreement with Australia in relation to pension portability and the discussions on that. He said that the Minister obviously had not called Australia that the Minister did not know what he was doing and that it was all at risk simply because of this 2 percent plus 2 percent rather than 4 percent plus 4 percent. If we read the press releases and watch television we can see that to quote the Australian officials there is no problem whatsoever. The key to the agreement that the Australians had was the fact that KiwiSaver was locked away until the retirement age of 65 years which is the same as their scheme. 
It is interesting that the current Opposition finance spokesperson was trying to dissociate or separate the New Zealand KiwiSaver scheme from the Australian scheme yet the previous Minister of Finance was obviously trying to bring the two closer. Maybe his hidden agenda was to income test superannuation because that is what the Aussies do. I presume Dr Cullen will speak next because we do not quite know about that. There is nothing at risk. Pension portability is not at risk. That is another red herring raised by that member opposite who is trying to be clever. Obviously he has far too much time on his hands these days. I tell Dr Cullen to get used to it but I am interested to hear his response because to quote the Australians again there is no problem whatsoever with the changes that the National Government is putting before the Committee today to bring the minimum contributions to KiwiSaver down to 2 percent plus 2 percent—locked in. There is no problem about portability whatsoever. Thank you. 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 The point I was making was whether the Government had checked with Australia which it had not. The Government drafted this scheme—or launched its policy—without thinking to ask the Australians whether it would affect portability. National did not even bother to ask. I know for a fact that no check was made with the Australians. I still think the previous speaker would be wise to wait longer for definitive statements from Australian Ministers not from Australian bureaucrats whom he was quoting in that particular respect. 
Let me take another point. The unions were not asking for a “2 plus 2” scheme. The unions were asking for the retention of the “2 plus 2” entry point which then goes up to “3 plus 3” or “4 plus 4”— 
Craig Foss 
: No. 
Hon Dr MICHAEL CULLEN 
: Yes; over the next 2 years which is what the current law provides but is then phased out. The unions did not want to stick to “2 plus 2”; they wanted “4 plus 4” but they wanted to make it easier for people to start in the scheme. The reason I said no to that was that it would have become much more complex for employers. If employers have to run 4 percent for them and 3 percent for them and 2 percent for them it means large compliance costs for employers. But if the National Government had decided just to make that change well one would have accepted that it was always an arguable point. Nobody was arguing for a “2 plus 2” scheme because it does not add up. 
Craig Foss 
: Yes they were. 
Hon Dr MICHAEL CULLEN 
: It does not add up to anything like enough to make a difference. Why do members think Sir Roger Douglas had “4 plus 4” in 1975! Why do they think the Australians are on 9 percent now and talking of going to 12 percent or 15 percent? The sums do not add up particularly when the National Government has removed the fee subsidy which was a flat-rate subsidy designed to ensure a higher net return for small savers within the KiwiSaver scheme whereas that now has gone. 
This is a scheme now that is so much less attractive. National opposed the KiwiSaver legislation when it was first passed. National opposed the extensions to KiwiSaver and National has hated the success of KiwiSaver. The fact that well over 800000 New Zealanders have joined KiwiSaver has got National members’ bitterness their bile their envy and their jealousy wrapped up. We have just listened to a member who is eligible to join a superannuation scheme based on a salary of $131200 with an 8 percent employer contribution. He gets up on his hind legs—he who is eligible for a more than $10000-a-year employer contribution to his superannuation scheme—and tells people on 30000 bucks a year that they cannot get a 4 percent employer contribution for $1200 a year. That is his idea of equity. No doubt it is because he thinks he is a hard-working New Zealander whereas people on $30000 are not hard-working New Zealanders. Talk about the politics of envy! 
Why are those members over there always envious of those on low incomes? A kind of strange reverse envy always comes across from them. Those members think that low-income earners do not do any work because they do not earn as much. They grade people according to their income—the more one earns the harder one must be working. Well I tell Mr Foss that in the real world life does not work like that. A lot of people on low incomes work a lot harder—and at much less attractive jobs—than a lot of people on higher incomes. That is the reality. KiwiSaver has been hugely successful. 
Mr Key has gone around the country in the last few years saying that New Zealand does not have a debt problem. Actually we have the second-highest national debt as a proportion of GDP—after Iceland—in the developed world. What has happened to Iceland? It has gone down the tubes. The way that Iceland has gone over the last few months Icelanders are almost hoping that the ice cap will melt so that half of them will drown. We will probably end up being the outstanding country in terms of national debt. We have an appalling savings record. We have had a net dissaving for year after year after year at the household level and all that has disguised that in the last few years has been the strong growth in house prices. Now that that growth has gone the reality is being revealed very very clearly that New Zealanders are as a collective divesting themselves of assets at a fairly substantial rate. That is why so few people in retirement in New Zealand have any significant additional income. Some have a lot but most people have next to nothing in addition to superannuation. They may get an extra couple of thousand dollars a year—that is all. 
KiwiSaver was going to give ordinary people the chance to get into a subsidised superannuation scheme lift New Zealand’s saving rate and change our whole psyche about savings in New Zealand. But National members are again telling us that we can consume our way to victory. It is as though we are in World War II and are being told we should—not dig for victory but—eat potatoes for victory. That would have been the National Party’s slogan in the United Kingdom during World War II. People would not have grown things; they just would have been told to eat more because that would somehow or other solve the problem. National says we can solve New Zealand’s economic problems just by consuming more—much of it produced offshore—rather than producing more and exporting that. We have to save more in New Zealand to produce more of our own capital for investment both here and offshore. 
There is nothing wrong with New Zealanders owning more offshore as that spreads the bets for our future retirement income within New Zealand. That income should not all be based on the New Zealand economy. In that respect it is wise for us to spread our bets internationally. Sir Roger Douglas agrees with that. National is cutting the possible KiwiSaver contribution from both employers and employees from 4 percent to 2 percent. Employers will initially not be able to take the percentage off gross wages but National will change the law again so that from next year employers can give employees who are in KiwiSaver a 1 percent pay increase and those who are not in KiwiSaver a 3 percent pay increase. Because National is taking away the employer tax credit there is no incentive at all for any employer to contribute 4 percent. 
Finally let me deal with the question of the $20 a week employee tax credit. National has worked a con job on the media by convincing them that everyone will get the $1040 a year—rubbish. National has said that if an employer is contributing 4 percent—that is above the 2 percent—it will match that dollar for dollar up to $20 a week. But if an employer is contributing 2 percent National will still match it dollar for dollar up to $20 a week. So those on $26000 a year will see their employee tax credit halved from $1040 to $520. The media have completed misunderstood that. The Minister of Finance has done a con job in that regard. For ordinary employees the total contribution to KiwiSaver has gone from 4 percent plus 4 percent plus $1040 to 2 percent plus 2 percent—and they may pay the lot themselves—plus something less than $1040. Their savings have effectively been halved and in many cases they will be paying the same amount they were paying previously. In practice they will end up paying 4 percent to get a bit over 4 percent when they would have been paying 4 percent to get something like 10 percent. Is this addressing New Zealand’s savings problems? Is this building a habit of capital accumulation? Is this a property-owning democracy? Is this driving stronger growth? Is this turbo-charging New Zealand? It is nothing like that at all. Like the research and development tax credit this is yet again a short-term gain for long-term pain. It is the exact opposite of what Sir Roger Douglas used to argue for. To be fair he did get the long-term gain eventually; it is just that we had to undergo a lot of short-term pain. 
This provision is fundamentally wrong. It fails to address one of our most important structural economic problems in New Zealand—it has gone into the air as if somehow or other it is not important. It is crucially important in this country. We are in the middle of an international financial crisis in part driven by the growing gap between savings countries and spending countries. National says we should be a spending country continue on this huge long historic shopping binge and not worry that someone some day will call in the bill. We have to get off that shopping binge. We in New Zealand have to start working saving producing and exporting but this bill—and this part in particular—will help to destroy that ambition and destroy this programme that has not been given the chance to work. 
Hon BILL ENGLISH (Minister of Finance) 
: 
 It was interesting to hear the previous Minister of Finance recast a number of his arguments. Today is the first time I have heard him describe KiwiSaver as the equivalent of the original Douglas scheme or the Australian scheme. Well New Zealand has quite a different context from the Australians of course. They have a sharply income and asset tested public pension; we do not. We have a relatively generous—by international standards—universal pension and we are one of the only countries in the world to have that. On top of that we have the Cullen fund—named after Dr Cullen—which has been pre-funded on a scale matched only by Norway with its oil reserves. It is not matched by Ireland despite the Irish economic miracle. Its pre-funding is about half the size of ours. 
In terms of public provision for pensions we already have universal national superannuation which is paid to everybody regardless of income and we have pre-funding—which I might say for the next 5 years will be funded from borrowed money. Now Dr Cullen has said that on top of that he meant KiwiSaver to be the equivalent of the Australian scheme. Well the Australian scheme is designed to replace public superannuation—that is why the employer contribution is 9 percent. Dr Cullen did not go around the country telling the public that it was always Labour’s intention to replace national superannuation. That is a new rationalisation he has dreamt up today to criticise this policy. The fact is that New Zealand is providing adequately for retirement income with a universal pension which the Aussies do not have with pre-funding which the Aussies do not go anywhere near and with the significantly subsidised KiwiSaver. 
In fact the jury is still out on KiwiSaver. A lot of people have signed up but it will take time to see whether it achieves what Dr Cullen claims it will. Dr Cullen says that unlike almost all other incentivised schemes in the world it will unambiguously lift private savings. Well it is not clear that it will. I hope it does—I surely hope it does—because the taxpayer is contributing billions of dollars to KiwiSaver to incentivise savings. But the fact that 800000 people have signed up does not of itself mean that private savings have increased. They are increasing because the cost of debt is high. 
Well here is one thing that Labour has not thought of: KiwiSaver takes away from people their choice to repay debt. If they join KiwiSaver they reduce their ability to repay their debt. People are not just some kind of automaton. They make complex financial choices across their consumption their investment and their debt. If many New Zealanders have a top priority now it is to address directly the problem that Dr Cullen diagnosed—and I agree with him—and that is very high household debt. How do we get debt down? We pay it off. That is what we do. That is why this Government is putting tax cuts back into people’s pockets and reduced subsidies for KiwiSaver will make up for some of the reduced tax take. 
New Zealanders have the option to spend more. Well to keep the economy ticking along they do need to spend something or to pay off debt. Most assuredly they should pay off debt. Why would the Government automatically make a better choice than everyone else about whether to pay off debt? New Zealanders now understand the risks of debt. They have dropped their consumption remarkably and with lower interest rates they will be able to pay off debt. In fact one of the problems that this economy will have is everyone paying off debt instead of spending money. That will hold growth down in the shorter term and cost people their jobs but in the longer term it is an adjustment that may well be good for the country because people will pay off debt. The simplistic notion that putting big subsidies into KiwSaver will fix everything is wrong. 
The other argument is that KiwiSaver provides a pool of capital for local businesses. How many local businesses got $1 out of a KiwiSaver provider’s investment? None actually and none will for some time because a lot of providers like a lot of Kiwis rightly see that as somewhat risky. Let us have a more nuanced and intelligent debate about savings in this country instead of these mindless slogans. 
Hon LIANNE DALZIEL (Labour—Christchurch East) 
: 
 I think the public would be surprised to know that the Minister who has just resumed his seat was the last Minister in this country to cut the pension. He reduced the floor below which superannuation could fall; he reduced it from 65 percent of the average wage to 60 percent of the average wage. I know that there is a word we are not allowed to use in this Chamber but I would use it happily to describe what that Minister just did. He talked about what would happen to people under a particular position that has never been a proposition put forward in this country and that is to do away with our national superannuation scheme. New Zealand superannuation has been designed to provide across-the-board access to support at age 65 and it is protected at its percentage of the average wage. The last time that was adjusted downwards it was done by that very Minister when he was a Minister of Finance. 
I noted the statement in the explanatory note of the bill—and some Government speakers have talked about this—that the Government is committed to keeping the KiwiSaver scheme and making it an enduring and affordable scheme for members employers and taxpayers. But I think that is an absolute nonsense. I think that the lie to that statement in the explanatory note of the bill can be found in the reality that these changes have been designed only to pay for the promised tax cuts which have been subsidised by some of New Zealand’s lowest income earners. 
Actually no one out there can understand why National has taken the knife to this scheme. It has been the best chance New Zealand has had for decades to foot it with other countries that have recognised the need to encourage a savings culture over many years. Those who have been committed to growing the depth in our capital markets for example were hugely welcoming of KiwiSaver when it was first announced. No one thought that National would take the knife to this scheme under urgency straight after the general election and ram through the changes without consulting anyone in our capital markets without consulting anyone in the industry more broadly and also particularly without the scrutiny of a select committee to consider the detail of the bill in order to take the time so that the National Party could be persuaded to soften the position that it is taking. 
I say this is an ill-conceived policy and it is not one that is supported by the business community generally. Sure some small-business employers will be happy to see the end of the 4 percent contribution. But they are not paying the 4 percent contribution at the low end of the income level because there has been a direct subsidy to employers in return for that. In actual fact the smaller employers were always going to find the 4 percent manageable under the scheme. The reality is that those who run our capital markets are absolutely devastated that this change has occurred to KiwiSaver. 
I listened to National candidates say that this measure has been designed to encourage more people to join KiwiSaver. After all with over 800000 people enrolled it is only about 150 percent more successful than Treasury originally forecast it would be. But the point has been made that nowhere has National budgeted for an increase in enrolments because the bottom line is that it is not expecting any more enrolments. 
This measure is not about encouraging low-income people to put aside 2 percent of their income and have it matched by a further 2 percent from their employers. It is not about developing a savings culture in New Zealand. It is about chipping away yet again at a Labour Government’s attempt to get New Zealanders saving. The sooner the National Government realises that savings are important to the future of our economy the better it will be. There is as Michael Cullen pointed out before extreme dishonesty in the way that National has pretended to keep the Government contribution at $1000 a year because of course it is not $1000 a year if people are contributing only 2 percent of their income to the scheme as lower-income earners. 
I too am concerned about the situation in terms of our trans-Tasman arrangement over the question of portability. Why did the National Government not think to speak to the Australian Government before announcing these changes? 
CHRIS TREMAIN (National—Napier) 
: 
 I would like to bring the debate on Part 4 back to where Dr Cullen was going with it. He talked about the real world which he likes to speak about although I am not too sure he inhabits it. It is certainly not a world he inhabits on the campaign trail—that is for sure. When we were out on the campaign trail in provincial towns like Napier KiwiSaver was one of the key things that hard-working Kiwis wanted to ask about. They wanted to know what National’s position on it was. I visited many many businesses such as Reinforcing Steel and Mesh Brebner Print Napier Engineering and Contracting and AllBrite and talked to lots and lots of employees at the coalface. 
First and foremost before touching on that I congratulate the 800000 people who have signed up to KiwiSaver. I think that is a good start to the scheme. Congratulations and well done! But Mr English is correct. The count is out as to how successful it will be. On a number of occasions when in Opposition I asked written questions of the Minister of Finance. I wanted to know how many of the 800000 people who are in the scheme are on $50000 or less a year. 
Hon Annette King 
: About half. 
CHRIS TREMAIN 
: Oh rubbish! Half are on $50000 or less? How many are on $40000 or less? I asked written questions of the Minister but I did not receive any replies. He could not give me any answers. 
Hon Annette King 
: You can have those answers. 
CHRIS TREMAIN 
: Can I? There were no answers to those questions. 
When I was on the campaign trail I was out in the real world talking to hard-working Kiwis. Guys at AllBrite for example are on $12.50 an hour $13.50 an hour or $14 an hour. They are hard-working Kiwis working 50 to 55 hours a week. It is hard out there. I asked in the canteen how many of them were in KiwiSaver. Only one or two out of 20 put up their hand and said that yes they were in KiwiSaver. I asked whether it was the 4 percent contribution that had put them off. Most of them said that yes they cannot afford it. People on $30000 $35000 or $40000 cannot afford to contribute 4 percent of their income. When I asked them whether they would join up at a 2 percent level not everyone in the canteen said yes—that would be exaggerating—but certainly a significant number above two or three said they would be interested. 
Why it is important that those guys at that end of the income scale get into KiwiSaver? Because right now they are missing out on that tax advantage. Right now they are missing out on the $1040 that Labour is saying we are trying to cut out from under their feet. Actually we are giving them access to it. 
Darien Fenton 
: Rubbish! 
CHRIS TREMAIN 
: Rubbish? I say to Ms Fenton that one has to be in the scheme to get access to the credit. She should understand that. If one is not in the scheme one does not get access to the credit. What we are doing is helping hard-working Kiwis to get into the scheme and get that tax break. 
Hon Annette King 
: What a load of rubbish! 
CHRIS TREMAIN 
: Rubbish? People have to be in the scheme to get the credit. Unlike the Labour Government we are out there trying to help hard-working Kiwis. On the campaign trail it was clear that Kiwis want the opportunity to be in KiwiSaver. People on under $40000 want to be in it and now we are delivering that opportunity. Just 32 days after the election we are in the House giving those Kiwis the opportunity to get into the scheme at 2 percent— 
Hon Darren Hughes 
: So why isn’t the Government budgeting for an increase in savings? 
CHRIS TREMAIN 
: They can voluntarily put in 4 percent of their income I say to Mr Hughes. They can go up to 8 percent—so can the employer. They will get access to the credit. Employees around the country on low income levels will get a significant tax break. That is great. I am proud of what we are doing here today. We are delivering what we said we would. We were totally transparent throughout the election process about what we would do. Now we are delivering on our promises going forward. Thank you Mr Chair. 
Hon PAREKURA HOROMIA (Labour—Ikaroa-Rawhiti) 
: 
 It is a fact that more than 800000 people have signed up to KiwiSaver. I have just heard my colleague from Napier talk about going to workplaces and seeing only one or two people put their hands up to say that they have joined KiwiSaver. There are 800000 people who have put their hands up. 
It was fascinating to listen to the Minister of Finance’s assumptions about those who save. He said that our superannuation scheme is generous. It is generous if people are at the top end of the scale of pay and have a life whereby they can save. But for the 73 percent of Maori in this country who get nothing out of this tax adjustment this is a sad sad day. It is a sad day for Maoridom. I am really sad that the Maori Party has supported this measure. I know that Hone Harawira knows better. I was pleased that at least he was on TV tonight talking about the next exercise which is the 90-day stand-down period bill. Every member of KiwiSaver is worse off under National’s adjustment. 
There will be trouble with portability. It will be very interesting to follow up Mr Foss’ statement that he has it organised. That is hard to believe. Who was he talking to? The bureaucrats or the Ministers? It cannot be sorted out because there is an incompatibility between the structure and design of the two schemes. I think he was telling a short one. 
People are worse off. A Maori who worked in the 1950s the 1960s and the 1970s could never save because he or she was on a low income. The last time Maoris ever got into saving was in the 1950s and 1960s when we had the little pink Squirrel savings books at school. I think Pakeha had them too. Children had to take their threepence or whatever it was along to school every Wednesday and put it in. That is a similar alignment to the design of the National Government’s KiwiSaver programme. 
I go back to the statements made by the leader of the National Party. They were very very interesting. What did he say? He said he was and continues to be supportive of what Labour was doing in relation to KiwiSaver. I am not too sure but I wonder whether the Minister responsible for this measure is waiting for him to trip up. Mr Key said in May 2008: “We haven’t finalised our KiwiSaver programme yet but there will be compulsory employer contributions. They’re likely to be at pretty similar levels to what is outlined in the legislation at this point.” That is what people talked to Chris Tremain about in those coffee shops during their lunch breaks. They talked about those levels. Then Mr Key said: “Well we’ve always said that we’ve got concerns about certain aspects of KiwiSaver we’ve also said that there would be a KiwiSaver. I didn’t like the first version that Michael Cullen had because there wasn’t really much in it and that’s why he beefed it up in Budget 2007.” This is a sinister manipulative calculated move to undermine one of the best schemes in this country. 
Let us talk about low-income people who have never saved. What is wrong with contributing 4 percent? Mr Tremain’s mathematics are quite interesting. He talks about the $1040 but what he does not talk about is the fact that he has taken 50 percent of the injection into the accumulated figure. He has taken it away. He has flogged it. That will put pressure on low-income people who will get nothing out of this. There was a culture that was delivering. People knew that in 7 to 10 years they would have a putea a nest egg that would help them to go forward. Now there is an assumption that if we stimulate business and keep it all up in the macroeconomic area around the big-business boys they will trigger activity down at the bottom and everybody will be right. Never mind the poor people. Never mind the low-income people. That is what Bill English has done. He has gutted KiwiSaver without going to the people without declaring it— 
Hon Bill English 
: We had an election. 
Hon PAREKURA HOROMIA 
: Yes National won the election—that is dead right. But that is the sort of arrogance that is starting to spurt out in this House. It is sheer arrogance. They are taking from the poor and giving it to the rich. 
DAVID BENNETT (National—Hamilton East) 
: 
 I think that when we look at this part of the Taxation (Urgent Measures and Annual Rates) Bill and the KiwiSaver aspect of it it is important to look at the general nature of the bill and the general nature of what we are dealing with in the economy. We are dealing with an economy that is in recession. It has had 9 long years of poor economic management. It is an economy that needs new direction and leadership in a country that needs leadership. 
There are young people out there who are training in New Zealand. They want to make New Zealand their home but they want to see a future in this country. They want to see a Government that will deliver a future for them so they can stay and work here. They want to see some reward and some incentive for their hard work and their direction. This bill does that. Not only does the independent earner tax credit do that but the KiwiSaver changes do that for young New Zealanders. Young New Zealanders who would not have joined KiwiSaver before because 4 percent was too high now have a chance to be part of that scheme. Young New Zealanders who want to make their future in this country now have a reason to stay here. They have a reason because we are giving them the ability to get into a savings regime that will deliver a future for them. Young New Zealanders will see a future in this country. They will believe in this Government and they will see that we are delivering for them. We are giving substantive delivery so that they can make a constructive future in New Zealand. That is the heart of this legislation. That is the heart of what the National Party is about. 
National is here to deliver for New Zealanders. We want to bring a new vision. We want to create an economy that is strong and growing. This measure will actually deliver that growing economy. It is the first step in delivering that growing economy because it will send the right signals and give the right incentives to those young people to stay in New Zealand. If they know that they can be part of a savings regime they will stay here and be part of the New Zealand dream that they want to buy into. We are giving them that chance—a chance the Labour Government did not give them. That is why they were leaving in droves. They did not see a direction or a future from the previous Government. But this Government is giving them that direction and future. We will not just say the scheme is a Government-knows-best scheme as the Labour Government did. We will give them the opportunity to partake in that savings regime. It is important that we do that. It is important that we give people that chance to invest in the future of their country. That is what we are doing through this KiwiSaver regime. The reduction from 4 percent to 2 percent gives people that opportunity. It gives them the chance to have a savings scheme. 
The worst thing that can happen is to have a scheme here that means the low-income people in New Zealand do not get the chance to save. If we have a scheme that is just for middle New Zealand or for high-income earners it leaves a whole generation of low-income New Zealanders without savings to top up their superannuation when they retire. That will be the dilemma that will face this country. The National Party does not want to see that. We do not want to see young New Zealanders on low incomes who do not have a savings regime and cannot therefore supplement their superannuation in the future. We want to see them have their homeownership we want to see them supplement their superannuation and this is the opportunity to do that. This gives a chance to young New Zealanders to have a future here to get into a savings scheme so that when they actually need that money it comes to them. 
The Labour Party does not care about them. Labour members do not care about the people who do not go into the savings schemes. As long as they can be in a savings scheme that is all they care about. They do not care about the people who do not get into a scheme. They do not care about the low-income earners who cannot give 4 percent. They never have and they never will because that is not how they think. But the National Party will deliver a structure that will benefit all New Zealanders. It is a structure that will deliver and it is the structure the public wanted at the election. They wanted a chance to be part of the future of this country and that is what this measure will do. We are giving more New Zealanders the opportunity to be part of a savings scheme and to build a better future for themselves. That is what National is doing and it is something that Labour would not do. 
Hon DAVID PARKER (Labour) 
: 
 I want to start by referring to a statement made by the Hon Bill English in his last contribution which stood in stark contrast to things he has been saying outside the House recently. In response to Dr Cullen’s point highlighting the importance of KiwiSaver in improving the savings of New Zealanders Bill English said that the effect of cutting KiwiSaver was being fed back to people in tax cuts that they would use to retire debt. I thought that the National Party was saying that the tax cuts were part of the fiscal stimulus that would increase economic activity. Mr English cannot use the money for two purposes. It is either a fiscal stimulus or it is being used to retire debt. It cannot be both. That will be recorded in  
Hansard 
 and I think it ought to be remembered next time National members point to tax cuts as being part of their fiscal stimulus package. 
“Going for growth” was the slogan yesterday and it is but a slogan. National wants to improve productivity in New Zealand. New Zealand workers already work very hard. We work longer hours than Australian workers. We work longer hours than most people in OECD countries. Our problem is not how hard our workers work it is how productive the output of their labour is. Total factor productivity in New Zealand is poorer than in Australia because we have lower savings than Australia and in addition so many of our important assets are owned by overseas owners because we do not save enough money to own our own assets and we are reliant on overseas capital to fund our assets. KiwiSaver was the key to fixing that. It made us more like Australia where Australians have a 9 percent contribution to their savings scheme all paid by the employer. The “4 plus 4”—4 percent from the employee and 4 percent from the employer—under KiwiSaver plus a $1040 tax credit to the employee was pretty similar. New Zealanders would have started to accrue savings so that we could own more of our own country so that we could invest in increasingly sophisticated plant and equipment so as to improve total factor productivity to add to the very hard work that is already done by New Zealand workers. 
But oh no that sensible prescription for economic growth has been ruined by the National Party as a result of turning it from a “4 plus 4 plus $1040” scheme into a “2 plus 2” scheme. National members say that the scheme will be more accessible to people yet they have admitted that their projections are that no more people will enrol in the scheme. So the same number of people will be in the scheme but they will be saving less. How does that improve the wealth of New Zealand? How does it improve the productivity of New Zealand? The answer is that it does not. It does exactly the opposite. 
Hon Darren Hughes 
: No go for growth! 
Hon DAVID PARKER 
: That is right there is no go for growth. As a result of this 800000 New Zealanders—the 800000 people who are already in the scheme—will be worse off. But even more significant is the difference between us and Australia. For a long time the National Party has been rattling on about people moving to Australia for higher incomes. Australians have higher incomes because they have higher total factor productivity and they own more of their own country. If we have less sophisticated plant because we cannot afford as much because we have a higher cost of capital in New Zealand or because we do not save enough productivity in New Zealand will never get towards the productivity increases seen in Australia and the income gap will continue to grow. That gap stopped growing under the Labour Government. We had it halted but just watch it will grow again. 
Hon STEVEN JOYCE (Associate Minister of Finance) 
: 
 It was strange coming into the Chamber tonight and hearing Michael Cullen look for Roger Douglas’ endorsement of what he was saying. I do not think I have seen that in 20 years. I thought that I must have walked into some sort of time warp because Michael Cullen was citing the approval of Roger Douglas for what he was saying. 
The other thing I was concerned about was that I wondered whether Labour members actually realise why they lost the election. It was because they stopped listening to New Zealanders. One of the things they stopped listening to New Zealanders about was KiwiSaver. On the subject of KiwiSaver up and down this country stacks and stacks of hard-working New Zealanders were saying to politicians who would listen that they could not afford and did not want to put 4 percent of their income into the scheme. Up and down the country people were saying that to all the politicians who would listen. Unfortunately for the country the only ones who were not listening are the ones who are not listening now and that is the Labour members. The reality is that a lot of people are saying: “Give us a 2 percent scheme. We will participate and join in a 2 percent scheme.” 
Hon Darren Hughes 
: Who is saying that? 
Hon STEVEN JOYCE 
: The people who were talking to the politicians who were listening before the election were saying that. Labour members were not listening and that is why they lost. There is still an excellent chance for people to contribute to their superannuation. The $1000 has improved the whole scheme. As Mary Holm said today it is a very good scheme now for both employers and employees. 
The more important thing which the Labour Party does not want to think about is the long-term economic growth in this country. That is the bit it does not want to think about. It successfully drove long-run productivity growth in this country right down over the 9 years it was in Government. Labour successfully drove down our economic growth projections over the time it was in Government and it does not know why. It simply does not know why. The reason it happened was that fundamentally Labour tried to control too much of people’s incomes. Whatever way Labour did it it put taxes up it spent people’s money and it refused to give back to people more of their own money so that people had their own incentives to control their own lives to work hard and to get ahead under their own steam. That was the problem and that is ultimately why the people of Auckland in particular voted the Labour Party out. Labour was imposing high tax rates on ordinary Aucklanders and people up and down the country and 82000 people voted with their feet and left this country because Labour would not listen and realise that people wanted the right to spend more of their own money to make their own decisions on whether they would save or consume. “Nanny Labour” was not the deal for controlling their income and the way that they spent it. 
There is only one solution to the economic challenges that we face in this country and that is to grow a whole lot faster. The only way we will grow a whole lot faster is not by sitting here in Wellington and arguing over which percentage of people’s incomes we will control; it is by reducing the amount we control and giving people the opportunity to work and get ahead under their own steam. That is the only way we will do it and that is why we have made the choices that we have made about KiwiSaver and the research and development tax credit—to give New Zealanders a chance to have more of their own money. 
They are not the easy calls. They are the calls that were never made by the New Zealand Labour Party while it was in Government and that is why the growth rate was so low when it left and that is why the long-run productivity growth was so low. Frankly we could not afford to have those members any longer. The people of New Zealand knew that. They voted for change because they wanted a crowd that would listen to them and understand. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 This has been an extremely insightful discussion—insightful because of the complete claptrap that the Government is reciting having dredged the barrel for anything resembling an economic argument. David “Cliché” Bennett fell back on the last press release that he read which must have been a pre-election one and then his lookalike twin brother the Parnell yuppy rehearsed his Crosby/Textor lines. This apparently is the man who is the king of listening: whatever the punters want give it to them. What they did not want was their superannuation contributions their savings future capped at 2 percent. Nobody asked the National Government to cap employer contributions nobody asked it to take away the $40 overhead subsidy nobody asked it to take away the superannuation tax credit and nobody asked it to take $3.5 billion out of the best savings scheme New Zealand has ever had. The ghost of Muldoon is stalking the Government benches: “Find a good savings scheme and scrap it—heh heh heh!”. 
To get back to economics for a moment we have witnessed tonight David Bennett saying that the whole reason he is in this House is to care for low-income New Zealanders. 
Hon Darren Hughes 
: And a brighter future. 
Hon DAVID CUNLIFFE 
: And a brighter future. It almost brought tears to my eyes but my enthusiasm for his religious conversion was tempered by the fact that the Minister of Finance not an hour ago had to withdraw through embarrassment—his butt having been saved by Hone Harawira—a financial veto relating to a $750 million kick in the guts for low-income Kiwis just before Christmas. So when David Bennett goes home and rereads his clichés he should think about how what Mr English has done affects the people he purports to serve. 
But getting back to economics for just a second I wonder whether anyone on the Government benches understands the savings gap. I hate to do Economics 101 on my first week in this job but it seemed to me that the fact that Kiwis were spending $1.20 for every $1 they earned because they thought they were becoming wealthy because their house values were going up—that is called dissaving—was offset by the surpluses that our Government was running. If members opposite do not run Government surpluses and are now spending us into debt they are borrowing to pay for these tax cuts. If Kiwis are not saving do members know what happens? Our current account blows out even further. Our current account deficit is the difference between what Kiwis are borrowing overseas and what we are earning through exports and what the Government is saving on Kiwis’ behalf. So the consequences of this ill-fated move go beyond taking away ordinary Kiwis’ nest eggs. They gut the Government saving on Kiwis’ behalf and KiwiSaver was the one tool that was fixing that long-run problem. And now by National members’ own admission they have killed it because their own books make no provision for new enrolments and they are too scared—where is the point of order for my saying they lack bottle—to put the future debt track out there so that all New Zealanders know how far in the shtook this is going to get us. 
Hon Steven Joyce 
: The debt track’s yours. 
Hon DAVID CUNLIFFE 
: Oh no sir! When we were elected we inherited a gross debt to GDP ratio of—wait for it—35 percent. We got it down by half. Can Mr Bakshi do those sums while he is still here? That is half. My great fear for New Zealanders is that through the ill-fated efforts of the new Government the debt track will go back to the 35 percent that we inherited in 1999. 
Craig Foss 
: Decade of deficits. 
Hon DAVID CUNLIFFE 
: It was not a decade of missed opportunities because we did a hell of a lot to cut the ratio in half but members opposite have squandered in a week what it took New Zealanders 10 years to build up. And why? The media the press gallery and the public know that the real reasons for this bill are not economic and they have nothing to do I say to Mr Bennett with helping low-income New Zealanders because those members have just kicked them in the guts by three-quarters of a billion dollars at Christmas. This bill has everything to do with rewarding constituencies. That is why the lion’s share of the tax cuts go to the best-off—they happen to be the voters who are the most faithful to the National Party—and that is why those members have penalised real businesses and rewarded the financial sector’s soft-shoe guys. The games that have been played to cover this up the half-truths that have been told and the rubbish economics that have been paraded would make one wince. 
Some of those members cannot tell the difference but I fear for New Zealand because I know that the Minister of Finance is better than that. He can tell the difference but he did it anyway. He knew all along that there was a billion-dollar kick in the guts in this bill but he did not tell us until Dr Michael Cullen forced him to by putting an amendment that asked him to insure low-income New Zealanders against the effects of his policy. And then he said: “Oh you got me. OK I will veto it. Here is the financial veto.” Stupidly he made it public; stupidly he signed it; and stupidly he gave us the number. It is now on the Internet—$750 million with the Minister’s signature beside it. You are too late—sorry not you Mr Chairman. The Minister of Finance then withdrew it throwing National’s new coalition partner deeper into mana-depressing territory because its mana was used to bail out your lack of honour. You did not tell New Zealanders what was coming. You surprised them— 
Hon Bill English 
: I raise a point of order Mr Chairperson. The Chair is obliged to enforce the conventions of the House. This member has been using the term “you” incorrectly as have other members of the Opposition yesterday and today. I suggest that you let the Opposition members know that they are not to bring you regularly and generally in a derogatory way into the debate. 
The CHAIRPERSON (Lindsay Tisch) 
: I thank the member. 
Hon DAVID CUNLIFFE 
: Mr Chairman I certainly withdraw and apologise for drawing you into the debate. There was no intention to do that and it was quite inadvertent. 
The Minister of Finance is the one who has trashed the mana of the Maori Party. Our team has tonight provided to New Zealanders the fact that something like 71 percent of all Maori earn incomes of less than $40000. That means some 71 percent of Maori people if they have children are in the category of people who are net losers from this bill. They are part of the crew that is paying the $750 million bill. 
Chris Tremain 
: I raise a point of order Mr Chairperson. The member is an experienced former senior Minister. We are talking to Part 4 of this bill and he has gone back to Part 3. I ask you to ask him to talk to Part 4 which has the provisions relating to KiwiSaver. 
Hon DAVID CUNLIFFE 
: Speaking to the point of order Mr Chairperson I respectfully submit that earlier there was a very similar point of order from Mr Foss on exactly the same point. Because of the interdependencies between the spending provisions of this bill and the funding provisions your alternate Chairman ruled that it was in order to draw those links. 
The CHAIRPERSON (Lindsay Tisch) 
: Continue. 
Hon DAVID CUNLIFFE 
: Thank you Mr Chairman. New Zealand has a historical problem of a savings gap. It was held off by the fact that the Government was saving on New Zealanders’ behalf. The structural solution to that problem was KiwiSaver. It has worked a dream. It has exceeded all expectations. There is no justification for the Minister of Finance to even raise the suggestion that it has not increased net saving because 827000 New Zealanders who were not saving are now saving massively through this scheme. OK there may be some diversion but the chances of it being 100 percent are nil—absolutely nil. That is a red herring one of many floated by the Government tonight because it knows that it is on very shaky ground here. It knows there is no economic justification. There is no logical linkage between undermining one’s savings programme and one’s incentives for innovation in order to fund a short-run consumption increase. 
Hon Ruth Dyson 
: So why would they do it? 
Hon DAVID CUNLIFFE 
: Well the politics are plain. National does it because it rewards constituencies that have been faithful to it. Upper-income earners and the financial sector are the beneficiaries and they just happen to be the main donors to the National Party. Do we see any potential connection here? After years of trying to get National elected they have finally got that and on National’s first business day it has put the interests of its core constituencies ahead of the interests of the many New Zealanders who are going to pay the bill. 
The strategic mistake that National has made is that it is just a bit too obvious. If National members had waited until some time next year to introduce this measure perhaps they would have snuck it through with less public concern—but actually I think we would have called them on it. The fact that they are trying to ram it through without select committee consideration with an enormous lack of mana—in fact lowering the mana of this whole House and of every Minister of Finance who has gone before Mr English—is what is truly sad about this legislation. It is bad economics; it is bad I say to Mr Bennett for many low-income New Zealanders because many of them will lose; and it is bad for Maori. 
JO GOODHEW (National—Rangitata) 
: 
 I move that the motion be now put. 
DARIEN FENTON (Labour) 
: 
 It is a pleasure to make my first contribution on this bill. I would call this a very disastrous bill particularly Part 4. This is a bill that gives big tax cuts to people on high incomes but increases in taxes to people on low incomes. Part 4 which I will endeavour to address—unlike lots of members of the Government—guts KiwiSaver by halving employer KiwiSaver contributions. It caps workers’ contributions at 2 percent rather than the choice that workers had before of 2 percent or 4 percent under the Labour-led Government. Of course employer tax credits are abolished. I want to explain to Government members who have tried to say this is about helping low-paid workers and who have terribly misrepresented the union movement’s position on the 2 percent contribution that what the unions were advocating was an option of 2 percent as a minimum. No one supported removing the 4 percent minimum. What happens under Part 4 of this bill is that employers will not be contributing 4 percent. They will be contributing 2 percent. 
Hon Member 
: As a maximum. 
DARIEN FENTON 
: That is right. Over a lifetime that adds up to hundreds of thousands of dollars for many low-income and indeed many higher-income workers. That is the objection that members on this side of the Chamber have to the changes to KiwiSaver. There are many others but that is the main objection I want to point out. 
The problem with this is that many unions and employers have already gone in and made agreements around the previous KiwiSaver scheme. Many have agreed to 2 percent plus 2 percent with an agreement that in future it will go to a 4 percent contribution. The problem with this bill is that in the future it will be really hard to persuade employers to contribute more than 2 percent. It will mean that some employers are going to put pressure on workers to fund the employer contribution out of a wage increase. Workers should be able to choose a 4 percent supported option and already hundreds of thousands have. The implementation of the changes under this bill will mean that these workers will be significantly disadvantaged. 
Let us talk again about low-income workers the workers who are going to be paying more under National’s tax plans. These are the workers that I am particularly concerned about; for example the caregiver in aged care who earns $12.50 an hour who is going to pay more in tax in 2010 and 2011 under National. Now those workers’ chance of having a savings scheme that will help them when they are older is being gutted. 
I do not accept the argument that low-paid workers have not signed up for KiwiSaver. In fact there has been specific research done on it by the Inland Revenue Department. That research is on the website if members choose to look at it and it shows that a large number of low-paid workers have signed up to KiwiSaver. Do members know why? It is the only chance they have ever had to have a superannuation fund where the employer is making a contribution. I know that thousands of workers have tried for years and years to negotiate an employer contribution in their bargaining. Those workers who do not have any power and who struggle to get a decent wage increase year in and year out have suddenly thanks to the Labour-led Government had an employer contribution that was going to see them enter their old age with a decent pension on top of the State pension. As I have said those workers stand to lose hundreds of thousands of dollars over a lifetime of saving. 
To add insult to injury we now find out they are going to have to pay the fee of $40. How mean how miserable is that! It has taken years and years to get this scheme. When was the last one? Was it 1975 the one that Muldoon abolished? 
Hon David Cunliffe 
: About then. 
DARIEN FENTON 
: They have waited all of those years to get a compulsory workplace savings scheme and here it is being gutted by the National Party in its first week in Government. It is absolutely shameful. 
The other thing that is very concerning is National’s intention to allow employers to take KiwiSaver contributions out of wage rises. That will result in employers putting more pressure on workers to forgo wage increases in order to cover the employer contribution. 
Hon JOHN CARTER (Minister of Civil Defence) 
: 
 I move  
That the question be now put 
. 
Hon DARREN HUGHES (Labour) 
: 
 The Taxation (Urgent Measures and Annual Rates) Bill is another example of a bill the Opposition has received just as the debate has started. If there is not going to be select committee consideration of these bills and if the Opposition is not going to get the opportunity to read them before the debate starts it is important that we get the chance during the Committee stage to ask questions of members and of the Minister in the chair Bill English in particular. If we cannot do that it will mean these important bills go right through the legislative procedure with no proper scrutiny—because we can guarantee the Government caucus will not have asked any questions when Cabinet took it to the meeting. There will have been no proper chance for transparency on this legislation. We need to use this opportunity to do that. 
I have some questions to ask the Minister of Finance when he has finished sending text messages and smiling about how smart he is. My first question to him asks how many extra people will join KiwiSaver because of this change in Part 4. I am asking the Minister of Finance how many extra people will join KiwiSaver because of the changes he is introducing in Part 4. Can he give me a number? 
Chris Tremain 
: How are you going to know that? 
Hon DARREN HUGHES 
: Chris Tremain asks how we are going to know that. Every single speech that National Party members have given tonight including the speech made by Chris Tremain has said that halving KiwiSaver contributions will open the floodgates to low-income workers wanting to join KiwiSaver. When I ask Government members whether this will lead to 10000 or 20000 extra people joining a year they laugh and say nothing about it. They have no answer. Chris Tremain used the basis of his speech to tell us that this change in Part 4 will make sure that lots of other people will be able to join but those members will not answer the question. 
Hon Bill English 
: Ask the question again. 
Hon DARREN HUGHES 
: I have already asked the Minister the question. The Minister knows what it is. 
Hon Bill English 
: How many people voted against you in the Otaki seat? 
Hon DARREN HUGHES 
: Not many. I tell the member that yes I was defeated. Oh yes; “Mr Comedy Show” over there thinks he is David Letterman but that is about half an hour away. The only joke Bill English knows about defeats is the 2002 one because out of every member sitting in here there is only one man who had the worst defeat in 100 years and it is not me; it is Bill English. 
Hon Bill English 
: I’m back. 
Hon DARREN HUGHES 
: He says he is back. He thinks he is the leader of the Government. He thinks he is the Prime Minister of New Zealand but we know he is not. He is the also-ran and when I asked him a serious question about people joining KiwiSaver he had nothing proper to say at all. 
The KiwiSaver scheme is the one that National members said was nothing more than a glorified Christmas club. They voted against it in droves after we introduced it. John Key said that the only person it would be good for was his pool boy which I thought was an extraordinary revelation. Those members said the scheme was a glorified Christmas club and not worth anything whatsoever. Then New Zealanders joined and they joined not just in the numbers we thought they would—and we were an optimistic Government a sunshine Government; we looked at things and said this would work—but in numbers four times that amount. Tonight the number of New Zealanders who have joined the KiwiSaver scheme stands at 827000. 
We are told that if the benefits of KiwiSaver are reduced if the entitlements people get from KiwiSaver are halved as in Part 4 then somehow more people will join. National has no answer except to say that halving the contribution will make more people join—and Annette King said that if it is zero plus zero then even more people will! If four plus four is so terrible that two plus two is better then maybe zero plus zero would be better or even better maybe 2 percent from the worker and 4 percent from the boss. But National members did not want to go for that one either. Why is National not giving a choice in Part 4? I thought National was the party of choice. It could have said it would introduce a third level into KiwiSaver which could be either “2 plus 2” “4 plus 4” or “8 plus 4”. National could have put more choice into KiwiSaver but instead it is shutting the door on it. 
This whole bill is a disaster. We are opposed to the whole thing. It is amazing that some of the parties in Parliament are voting for it. It is amazing that the Maori Party is voting to put taxes up for some people. It is amazing that the ACT Party is voting for it. Roger Douglas wrote books about the fact that the scheme he helped with back in the 1970s was abolished. He said it was one of the biggest missed opportunities yet on his first week back in Parliament he is voting out another scheme that is for savings for the economy and for working families across our country. So it is amazing to see the number of parties that are lining up to vote against it. What they are doing is a mistake. 
Out of all the parts in the bill this part is the worst. The reason is that this part will have an effect on New Zealand for the worst in 20 years’ time. This part of the bill changes the choices people can make in their working lives and in 20 30 or 40 years’ time they will not be able to go back and change those choices. People cannot go back and save more once their working lives are over. Tax rates go up and down of course with political debate. We know that. That will happen throughout political history. But those members opposite are shutting the door on a chance for working people to build up their savings over their working lives 
Hon PANSY WONG (Minister for Ethnic Affairs) 
: 
 I move  
That the question be now put 
. 
Hon DARREN HUGHES (Senior Whip—Labour) 
: 
 I raise a point of order Mr Chairperson. The closure motion of course is in your purview and yours alone. I make the point— 
The CHAIRPERSON (Lindsay Tisch) 
: It is. I refer to— 
Hon DARREN HUGHES 
: My colleague Moana Mackey has been calling all evening trying to get a call. 
The CHAIRPERSON (Lindsay Tisch) 
: I refer to Speakers’ ruling 60/7. 
A party vote was called for on the question  
That the question be now put. 
Ayes 68 
New Zealand National 57; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 51 
New Zealand Labour 43; Green Party 7; Progressive 1. 
Motion agreed to. 
The question was put that the following amendment in the name of the Hon David Cunliffe to clause 55 be agreed to: 
to omit this clause. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 51 
New Zealand Labour 43; Green Party 7; Progressive 1. 
Noes 68 
New Zealand National 57; ACT New Zealand 5; Maori Party 5; United Future 1. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon David Cunliffe to clause 56 be agreed to: 
to omit this clause. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 51 
New Zealand Labour 43; Green Party 7; Progressive 1. 
Noes 68 
New Zealand National 57; ACT New Zealand 5; Maori Party 5; United Future 1. 
Amendment not agreed to. 
The question was put that the following amendment in the name of the Hon David Cunliffe to clause 58 be agreed to: 
to omit this clause. 
A party vote was called for on the question  
That the amendment be agreed to. 
Ayes 51 
New Zealand Labour 43; Green Party 7; Progressive 1. 
Noes 68 
New Zealand National 57; ACT New Zealand 5; Maori Party 5; United Future 1. 
Amendment not agreed to. 
A party vote was called for on the question  
That Part 4 be agreed to. 
Ayes 68 
New Zealand National 57; ACT New Zealand 5; Maori Party 5; United Future 1. 
Noes 51 
New Zealand Labour 43; Green Party 7; Progressive 1. 
Part 4 agreed to. 
Clauses 1 and 2 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 It is appropriate in the Committee stage debate of the title clauses to recall the overall significance of the measure that they represent. This has been an extraordinary debate so far on an extraordinary bill. What is clear which will no doubt carry through into the third reading debate is that thanks to the loss of mana by the Maori Party the Government will have the numbers sadly to pass this bill and thereby these clauses will be enacted. That I think we can take as a given based on the voting patterns so far. 
What has become equally clear through the debate is that there is neither a valid social justification nor any valid economic justification for the measures that are proposed. There has been a growing recognition throughout the House in the media and amongst the commentators that when we strip it all away the bill is about politics it is about who gets what and it is about rewarding constituencies. It is not about growth it is not about savings and it is not about good policy design. 
Let us recall that the bill that these clauses represent is going to cost New Zealand about $5 billion. Of that $5 billion $3.5 billion comes from gutting KiwiSaver: providing not a 2 percent option but effectively a 2 percent cap and thereby taking away with it not only the best chance working New Zealanders have ever had to have a nest egg—a big nest egg on retirement—but the hopes and dreams of many New Zealanders who had just started to believe that maybe they too could have a pool attendant like Mr Key one day. But those dreams are gone. So has the dream of paying off the mortgage when they can cash in their KiwiSaver because 2 percent plus nothing will not go very far. It will cost the average income earner starting at 30 years of age about a quarter of a million each by the time he or she retires—thank you National Government! 
So the real losers today are ordinary New Zealanders but the other loser here is actually the National Party interestingly—and ironically—enough. Up until today National had done a pretty fair job of telling New Zealanders they could have everything they had under Labour. The polls were very clear. We were not a Government that was reviled by New Zealanders; they just thought maybe it was time for the other guys to have a go. We will find out in 2011. All of the data is showing that most New Zealanders thought that the economy under Labour was well managed that the Government was doing a good job and that overall it acted in New Zealand’s best interests. It is just that they were a bit bored and thought they could have all of that and some new faces. 
The real problem with this bill—the bill supported by the title clause—is that the title should be the “Emperor’s New Clothes Bill” or the “Wolf in Sheep’s Clothing Bill” or the “New Zealanders Start to Come to Their Senses Bill” because it dashes the hopes of the million New Zealanders who were KiwiSavers and it gives a kick in the guts to those Kiwis who were paying the self-admitted veto-driven $750 million loss that Bill English first confessed to which is now on the Internet and which he then withdrew—that was extraordinarily inept for his first week on the job. That is almost historic. I have never seen a financial veto withdrawn and taken off the Table after it has been posted on the Internet. Extraordinary! 
Those people will not forget this. They will not forget this because on our first day of business National dropped all pretence and reverted to type just like Ruth Richardson’s first week on the job. Bill English once presented himself as the centre candidate in the leadership race against John Key—and why is it by the way that Mr Joyce is sitting right behind Mr English? We will figure that out. 
Hon Dr Michael Cullen 
: He gets to stab Bill before Bill stabs John! 
Hon DAVID CUNLIFFE 
: I figured that might be something to do with it. 
So we know who the losers are. I actually think one of the biggest losers here is the Maori Party. We had been hoping to build a working relationship with the Maori Party because I think there is some stuff we need to work on together. I fear that those members are not going to be here in 2011 because the majority of Maori Party voters who voted Labour with their party vote are not going to be impressed by the fact that the only reason that this veto was not needed and the only reason they are not getting the $750 million insurance cheque from Michael Cullen’s amendment is because Hone Harawira and his mates supported that bill. It is the beginning of the end for the Maori Party. It is like the foreshore and seabed legislation in reverse. This is the beginning of the end of the Maori Party because it has put itself let us hope unwittingly in the situation of propping up a National Government that is already showing itself to be different from what it told the electorate— 
Hon Parekura Horomia 
: And what they told the Maori Party. 
Hon DAVID CUNLIFFE 
: —and what they told the Maori Party. So I feel kind of sorry for them in this because they have been taken for a ride. 
This bill could also be called the “Bad Economics Tax Reform Bill”. It is bad economics for four principal reasons. The first reason is the savings gap is one of New Zealand’s enduring structural economic problems and it is one of the most important legacies of the outgoing Government that there was a structural solution that was working well. This guts it. 
The second principal reason is because the measures in this bill are the opposite to productivity enhancing. They are funding a tax cut that will be either frittered on consumption or perhaps squirrelled away and have no multiplier. But either way—and Mr Bennett cannot count it twice—it does nothing for the drivers of growth. It does nothing for technology; in fact it does the reverse. It cuts the research and development tax credit that was being used to good effect by our most innovative businesses. 
The third reason it is bad economics is because it was never going to be an appropriate solution to a relatively short-run cyclical recession problem. It is a structural tax cut which Treasury itself has confirmed was inappropriate. Members should read the bill which says it was inappropriate. The briefing to incoming Minister states it was inappropriate. The flow-ons have not been quantified and the briefing to incoming Minister makes it clear that after $9 billion of stimulus from the Labour tax package in Budget 2008 another $5 billion was imprudent. Between Budget 2008 and now—wakey wakey!—the world financial markets have gone into a tailspin. That means it will be harder to borrow and banks are having to get expensive credit guarantees. 
Against that background the last thing we need is to be driven further into debt. I tell New Zealanders that the fear is that we will be driven so far into debt that the decade of prudent management inherited from the outgoing Government will be wasted. We started off on 35 percent sovereign gross debt to GDP. We got it down to 17 percent. My bet is— 
Chris Tremain 
: At $48 billion. How can that be? 
Hon DAVID CUNLIFFE 
: I tell Mr Tremain that National will not actually tell us. National will not publish the forward debt track. My bet is it is back up to 35 percent in part as a result of this bill and in part admittedly as a result of factors beyond the control of all of us. But it is not an appropriate solution to a cyclical problem. 
Finally this does not maintain a prudent stance in the markets. Both this and talk about driving the New Zealand Superannuation Fund to override good process and forcing it to buy assets in New Zealand will push up the price of assets it will push up the price of debt and it will make the borrowing problem worse. It is bad financial economics as well as bad real sector economics. 
But let me conclude as I began this summary under the title clause. I think New Zealanders now know it is not about economics it is about who gets what. 
CRAIG FOSS (National—Tukituki) 
: 
 I would like to talk to the title of this bill and to suggest some other titles that perhaps we could consider. It is the Taxation (Urgent Measures and Annual Rates) Bill. It is actually very very urgent. Perhaps when the Minister of Finance was drafting this bill he considered naming it the “Labour Still In Denial Bill”. Those members are totally in denial. They are still not listening as my colleague the Hon Steven Joyce pointed out before. They are not listening. They have not been listening for the last few years they were not listening during the election and they most certainly are not listening now. In every speech from the minute we started to debate this bill yesterday until now—and no doubt during the third reading—they have been totally in denial. They have been furiously looking around trying to make themselves busy and trying to find a couple of academic points here and there. They are actually contradicting themselves from speaker to speaker. From the previous finance Minister to the current finance spokesperson they are totally contradicting themselves. 
Then we got some lecture from the spokesperson over there about cycles and all that. With regard to the denial part he said something about a short recession. The Reserve Bank predicted New Zealand would go into recession late last year and early this year and New Zealand followed its prediction and forecast. The Labour Government led New Zealand into recession long before any other country went into recession—in particular the countries we compete with. New Zealand is still in recession and sadly it looks like we will stay in recession for a bit longer. None of us in this Chamber wants that of course but that is the situation and members opposite should not deny it because by denying it they are not doing their—probably short—legacy any good at all. 
Something was also said about the forward debt track. Perhaps those members are in denial about the forward debt track. As I noted in an earlier speech members opposite are asking what the forward debt track is. Well I ask members opposite what revelations are still to come. What ticking time bombs have been set up in other portfolios in other ministries? I cannot understand members opposite. One of them talks about before the Pre-election Economic and Fiscal Update and another one of them talks about after the Pre-election Economic and Fiscal Update. They have talked about the debt to GDP ratio etc. Yes it is down to 18 percent but the Pre-election Economic and Fiscal Update took it out to about 30 percent and possibly even higher—and that was before the revelation about the accident compensation scheme. 
Those members should get in the real world today and get out of denial. Why do they not celebrate this bill which will mean that at long last New Zealand has an ongoing programme of personal tax cuts of rewarding New Zealanders for their hard work? After 9 long years a bill to bring in personal tax cuts will be voted on; after 9 years—about 3100 days under the previous regime—it will be in law very shortly. The first tax measure of the previous regime was to hike the top marginal tax rate from 33c to 39c and 3000-odd days later they admitted that yes they were wrong and they brought in their tax cut plan when they were about 17 points behind in the poll. New Zealanders saw right through that. Labour members are still in denial in every speech. 
One point I note is the disgraceful and disgusting attempt in the last few days by the Hon Trevor Mallard at wedge politics aimed at the Maori Party and low-income New Zealanders. Some of the language and the rhetoric that have been used are absolutely disgusting. Anyone reading  
Hansard 
 will see it as simply disgusting and disgraceful racism. 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 Diddums is all I can say to the poor member Craig Foss who has just spoken. Let me get this right. New Zealand is in a recession. That is not surprising—so is the United States so is Germany so is Japan so is most of Europe and so are all kinds of other countries around the world. The member says that the answer to the recession is as follows—and let me get this right. Firstly we cut long-term savings; secondly we reduce innovation; thirdly we increase taxes on people on low incomes. Then of course we have the really brilliant part of the growth strategy: we get teachers to tell parents in plain English how their kids are doing. This in itself will drive increased productivity throughout the economy. This is the growth strategy. On top of that the real big driver the real turbocharger for this 1953 Morris Oxford that the National Party is putting up is a $10 a week tax cut. People will flood into work for that; they will work so hard that the economy will take off and exports will double! We will be in the top half of the OECD within 3 years thanks to a $10 a week tax cut! Does anybody believe this rubbish? Do people believe that that is a growth strategy in the 21st century? It would not have been very good in the early 20th century; it is hopeless in the early 21st century. 
So what does this bill do? It increases taxes for many people. There is nothing urgent about this bill. The only thing that is urgent is that it is being taken under urgency. That does not make it urgent. The bill also provides for annual rates. Actually it talks about KiwiSaver. I do not know why the Office of the Clerk approved KiwiSaver being in this bill because there is no reference to it in the title of the bill. It says “Taxation (Urgent Measures and Annual Rates) Bill”. I would like to know how cutting KiwiSaver contributions come within that particular heading. National has got away with stuff I never got away with when Dave McGee was Clerk I might say in that regard. 
We know what the increased tax on low incomes is. The increased tax on low incomes is $730 million over the next 5 fiscal years. It is worse than that sounds because the increase does not take place until 1 April 2010. So it is actually $730 million over about 3 tax years. It is actually about $230 million a year in increased taxes. On whom? On those earning $14000 to $24000 a year on all families with kids that earn under $44000 a year and on quite a lot of families with kids that earn over $44000 a year. They will pay higher taxes than under the current law. That is what this bill does. 
The second thing it does is reduce innovation. It abolishes the research and development tax credit. We are told that this is because companies are rorting it. Well not a single company has got a research and development tax credit yet because the first tax year that it applies to has not yet finished. It is all very well that PricewaterhouseCoopers and all these people have been vetting these lovely schemes but nobody has actually tested anything. I have heard complaints from accountants that the Inland Revenue Department is being too tough around the rules for the tax credit. Far from the tax credit being too easy to get the complaint is that it is too hard to get. 
What we do know is that if we do not have one and Australia has one we will continue to see research and development sucked out of this country. I do not like tax credits in these areas any more than I like bank guarantees. We had to have bank guarantees because everybody else had them. If we did not have them then we did not get the money linked to New Zealand banks and we would not see New Zealand retail deposits in New Zealand banks. If everybody else does it unfortunately we have to do the same thing. The same is unfortunately true with research and development tax credits. If everybody else is doing it and we are not doing it that is an incentive to site research and development elsewhere. 
What is research and development? It is the brightest brains the highest-value jobs the companies that produce the most the companies that export and the companies that are more innovative and pay higher salaries. National says that it is going to turbocharge this economy by taking those jobs away and exporting them across the Tasman. This is part of its great strategy for bringing people back to New Zealand. Can anybody explain the logic of this? Nobody in National can explain the logic of this. Basically it is the same as with all the rest: the Labour Government did it and therefore the National Government will reverse it because it hates stuff that looks good. That is what it has done. It is like Working for Families and it is like KiwiSaver. 
Then of course we reduce KiwiSaver in this bill. We turn it from a scheme in which the average worker accumulates savings of 10 percent of his or her wages per annum of which the worker pays 4 percent to a scheme in which he or she accumulates savings of about 5 percent per annum yet many workers—particularly the low paid—will still pay 4 percent because the employer will shift the cost on to the employee. Mr English claims that lots more people will join but he failed to answer the question. In terms of the money that National has calculated—and it has calculated money; it has come up with costings and those costings are based on assumptions—one of the assumptions has to be what the increased uptake of KiwiSaver will be compared with the status quo. The fact is that National has not budgeted anything in that regard. It does not expect an increased uptake at all. 
Yes the unions wanted to retain the “2 plus 2” entry point. But they were not arguing to stay at “2 plus 2”; they were saying that people could go in at “2 plus 2” then gear up for “4 plus 4” with annual wage increases so that they did not feel the initial pain quite as much. That is enormously different from sticking at “2 plus 2” over the lifetime of savings. The sixty-eight members of this House who voted for this are all entitled to an employer’s superannuation subsidy of between 8 and 20 percent on their superannuation scheme. They all voted to lower the subsidy for ordinary workers to next to nothing and they conned the media into believing that they would get $1040 a year. They will not—only if they contribute 4 percent continuing. At 2 percent many will get a tax credit that is a great deal less than $1040 a year as a result of these changes. And the threshold of the employer’s superannuation tax payment has been lowered. It goes down from 4 percent to 2 percent. So if the employer continues to pay 4 percent instead of 4 percent going into the employee account 3.4 percent goes into the employee account. 
Time after time after time at every step there is a cut in savings. This is a country with an appalling savings record with a chronic current account deficit with an excessive reliance upon foreign capital and with endless debates about foreign ownership of the New Zealand economy—and this Government decides to cut savings. There is in an international financial crisis partially driven by the growing gap between the debtor countries—the borrowing countries—and the savings countries and the National Government has firmly nailed its flag to the mast of more borrowing and more spending. This is not an economic programme that makes any sense: a dumber economy lower private sector research and development funding more taxes on low incomes fewer savings—that is the National Government’s formula. Somehow or other a little tax cut in the middle and the top will make up for it! 
We are not actually lowering marginal tax rates for most people; they barely change for the vast majority of people. So the incentives are not there because economists tell us that the incentives are in terms of the marginal tax rate not the average tax paid. Once one lowers the average tax paid people just bank the difference—that is a given. It just becomes part of the family budget from then on. It does not change incentives to work from that point on. 
The final point is the betrayal by the Maori Party of its constituents. Those members are voting for a bill that discriminates particularly against their constituents. The low-income people who lose under this bill are disproportionately Maori. Maori disproportionately benefited from and were enthusiastic about KiwiSaver because it was particularly geared to helping low to middle income earners get a regular savings habit at work. For the first time for decades we were seeing significant Maori uptake of work-based superannuation. And the Maori Party voted for this. That is why the financial veto was withdrawn—the National Government was worried that the Maori Party members would abstain on or vote against the measure. The National Government leant on them and they caved in. Their so-called mana was not enhanced at all. Their mana is knocking around somewhere in the gutter at the present time. They are feeling about this big. Mr Harawira said that he wants to kill Trevor Mallard because Trevor Mallard dared to point out that he has betrayed his own constituents. Well utu time has a date: it is probably November 2011. 
It is already launched; the blogs are turning against National. When one of National’s favourite journalists the daughter and sister of National Party MPs is attacking it in her blog today we know that the worm is turning. The honeymoon is over. I say to the National members that it is time to get out of bed boys and girls and start trying to defend where they are because the honeymoon is over as a result of the legislation that they are pushing through. They should listen to  
Checkpoint 
 tonight as group after group is lined up to attack the National Government. This is the real world those members are in. They will go back to their offices wait for the officials to turn up and scare them with the latest frightening story panic again rush in blame everybody in sight and try to pretend they are not the Government. Well they are the Government. We know where we are—we are the Opposition. They are the Government they have to do it and what they are doing at the moment is cutting the taxes of the wealthy increasing the taxes of low-income people cutting savings cutting innovation and betraying the very people who voted for them in this election. 
Hon BILL ENGLISH (Deputy Prime Minister) 
: 
 Dr Cullen just cannot stand the idea that the National Party put a plan for the economy to the New Zealand public and they voted for it. It is a different plan to his plan. In fact people who are voting for the KiwiSaver changes tonight are voting for a KiwiSaver that will be fair. It will be fairer for the simple reason— 
Hon Member 
: Fairer? 
Hon BILL ENGLISH 
: —it is—that Labour has never understood that most of the working-age population is not in KiwiSaver. Labour has always believed that the great battling New Zealand public should put their hands in their pockets to fund Labour’s latest little vote-catching scheme. We have changed the rules so that those New Zealanders get an opportunity to join KiwiSaver because if they are able to join KiwiSaver they will get the benefit of the subsidies provided by the Government. If they cannot join KiwiSaver which most working-age New Zealanders have not done they do not get one cent to help them with their saving. If they are working on the average wage trying to pay off a mortgage when interest rates have been rising and cannot afford to join KiwiSaver because they cannot give up almost 6 percent of their net pay each week—which a lot of people cannot; and they are the ones who did not vote for Labour because Labour would not listen to them—those people who are struggling to keep their heads above water on their mortgages now have a better chance. Because interest rates are dropping they may now be able to enter KiwiSaver at 2 percent. 
See Labour did not listen to those people. They listen only to the people who take the cash and say they are grateful. Those are the only people they listen to. Also through this debate we found out that Labour always intended KiwiSaver to replace national superannuation. That is why they have been talking about— 
Hon Member 
: We did not! 
Hon BILL ENGLISH 
: Dr Cullen has been saying that his intention for KiwiSaver has been to make it like the Australian scheme. The Australian scheme is 9 percent KiwiSaver is 10 percent and that is how we should have it! The Australian scheme—as I pointed out to the House—replaces the public pension. It is viciously income-tested and asset-tested. New Zealand does not have income and asset-testing. We had a 20-year debate over it we have settled on universal superannuation and now in addition to that we are pre-funding it. So every year the New Zealand taxpayer puts $2.5 billion into the New Zealand Superannuation Fund to pre-fund national superannuation. That is staying where it is. That is part of the deal for retirement income. The KiwiSaver arrangements Labour had simply cut too many people out so we have changed them. 
The other example of Labour listening only to people who take its cash and are grateful is that of all those people in New Zealand who over the last 4 or 5 years have not benefited from Working for Families. The benefits of Working for Families for households with children have been significant: big increases in their net income—$100 or $150 a week in some cases. But people who earn under $44000 who have no children of whom there are 630000—battling Kiwis who voted Labour loyally for 10 years—got nothing. The strongest economic growth in a generation and they got nothing. Tonight we have listened to them and we have given them something so alongside families they now have the tax cuts and the share of the economic growth they should have had 10 years ago. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 I stand to speak to the title clause of the Taxation (Urgent Measures and Annual Rates) Bill. Of course the use of the word “urgent” in the title is rather perplexing. It does not seem to me that there is anything so urgent that this bill has to be rammed through the House tonight or tomorrow. What is so urgent about this bill that it could not be considered by a select committee? What is so urgent that we could not have a proper public debate about the content of this bill? What is so urgent that we could not let civil society which is the foundation of our community have a look at the content of this bill? And what are the urgent things that are not in this bill? 
The UK Tory party the Conservative Party has become very interested in climate change because it thinks that is quite an urgent thing. It has started to embrace the idea of using the tax system in order to move our society towards a more sustainable direction. Its leader David Cameron has talked a great deal about it. It seems to me that climate change is an urgent issue and if we want to take urgency to deal with something urgent then why not deal with climate change? Surely that should be at the top of the agenda like green taxes are now at the top of the agenda for discussion by the Conservative Party in the UK. But there is nothing in this bill about climate change. There is no transition for the tax system—to shift taxes off income and on to resources and pollution. Instead the only discussion we are having about climate change is that maybe the taxpayer should pick up more of the costs because the Government is about to weaken the emissions trading scheme. Every time we weaken the emissions trading scheme the taxpayer is going to hand over more money to pay for the pollution of other people. It seems to me that if “urgency” is what this bill is meant to be about then we should be looking at climate change and what we are going to do about it. 
What about discussing something else that should be dealt with in this bill? I think the state of our rivers is quite an urgent issue and is something that our tax system should look at. There is nothing in this bill about making sure people pay in that respect. There is the issue of a tax on commercial water-use. This bill is a tax bill so it could have talked about a tax on commercial water-use. It could have something about that as an urgent issue. Then there might be a financial incentive to use water efficiently. Instead there is no financial incentive because this tax bill does not really deal with the urgent issues that are facing our country. 
What about another urgent issue that should be addressed by this bill—that is inequality and poverty in our country? We have a major problem with inequality and poverty and this tax bill will actually make it worse. Instead of the tax bill that we have already passed into law that would give tax breaks to lower and middle income earners particularly lower-income earners this bill reduces the tax breaks that we are going to give to those people. The tax cuts we were going to give to lower-income earners are being taken away. 
But it seems to me that what is really urgent in this bill and why it is so important that it is passed quickly is that next year people are going to get tax cuts of one sort or another. Now when they get those tax cuts most of them will say: “Oh look National gave us tax cuts just like they promised to do.” That is what most people will say. They will not realise they were already going to get bigger tax cuts particularly for lower-income workers. The reason this bill is so urgent is the politics of it. The Government needs to get it through quickly before people realise what is being done. That is what is urgent about this bill and that is why it is being pushed through. The reason we are having this debate at 10.30 at night and going through to midnight is the politics of it so that people do not realise. 
What about the savings problem? That is another urgent problem that I would like us to address. The fact is that we have a massive current account deficit most of which is an investment deficit because we are highly indebted. We borrow lots of money so we can trade each other’s houses. What about dealing with that problem? Instead this bill does not deal with that. It makes the problem worse. We have a bad savings culture. We are trying to do something about it. 
KiwiSaver was very very far from perfect but it was a step in the right direction. The Greens support the 2 percent but it should be “2 plus 4”. Why does the Government not do “2 plus 4”? Why does it have to be “2 plus 2”? Why not go to “2 plus 4” if the Government really cared about savings? We have a savings problem and we all agree about that. What about “4 plus 4”? Why do we not go that way? Let us give people the option of 2 percent but let us support it. It seems to me that an urgent problem that we have as a country is our savings culture. But this bill puts things backwards. 
We have another big problem an urgent problem—because it seems to me that the bill should be about our urgent problems. We have another urgent problem which is research and development. We do not do a lot of it in New Zealand. Most of it happens in universities and the public sector. Very little of it happens in the private sector. We had this idea of a research and development tax break in order to get more research and development in the private sector. It was not necessarily going to work and it was not perfect but it was trying to address one of the fundamental problems of our economy which is that we do not do enough research and development in the private sector. That is an urgent problem which we should be doing something about. Instead we are going in the opposite direction with this bill. 
It is urgent that the Government has another look at it and that the Minister of Finance thinks whether this is really what he would want to be responsible for or whether he really wants to put down as his first bill through the House something that does not deal with the urgent problems we face like climate change water quality inequality savings and research and development. In fact it starts to put some things backwards. In terms of the urgent problem of the economic stimulus package—which is an urgent problem I give you that—I ask whether we want to have a stimulus package that consists of tax cuts. A large part of those cuts will be spent mostly on imports although not entirely. Therefore we will be stimulating the Chinese economy with our tax cuts. Some of those tax cuts will be saved which is good. But if we really wanted a stimulus package to deal with the urgent problem which is the fact that people are losing their jobs why not build more State houses? Why not insulate cold damp houses which has long-term benefits and employ New Zealanders? It would stimulate economic activity because even though the Government does not think it is a problem we think it is a problem that people live in cold and damp houses. We think we need more houses. If we insulate houses it has benefits for the health system the education system and energy efficiency. That would be a good way to stimulate the economy. That would be a good kind of stimulus package instead of this package which is very very focused on tax cuts. It does not look at the big picture—what we need to do as a society and what we need to do as an economy to prepare for the future. That would be a much better way to have an economic stimulus package. 
Hon PETE HODGSON (Labour—Dunedin North) 
: 
 I just want to respond to some of the comments made by the Minister of Finance when he said at the outset that what Labour could not get used to was the fact that the National Party had gone into the public arena with its tax policy had made it clear to the public of New Zealand and had won the election. 
Hon Gerry Brownlee 
: Title debate. 
Hon PETE HODGSON 
: Well let me just ask the Minister of Finance whether when he went into the public arena to take part in an election campaign he was in a position to spell out that those people earning under $20000 or under $44000 if they had children were going to get a tax cut decrease compared with what was already in New Zealand statute? Did he tell the public of New Zealand that? I do not think so. Do we think he told the public of New Zealand who are earning between $44000 and $50000 that the $10 a week these people who have been missing out all this time were going to get is not coming after all? Did he say that to the people in the— 
Craig Foss 
: Between $24000 and $44000. 
Hon PETE HODGSON 
: No those on $24000 to $44000 are getting it. But National members campaigned that those on $24000 to $50000 would get it and then they broke the promise. Mr English did not— 
Hon Bill English 
: That’s not right. 
Hon PETE HODGSON 
: That is not a broken promise? Well should we go back into Part 3 with the leave of the Committee of course and change the law so that we can have an amendment to make sure that the promises that the National Party made in the election will be kept? At the moment unless we go back into Part 3 that is the case. The abatement starts to occur well before $50000 and the measly $10 in Annette King’s words is much less than that. Did he say to the people of New Zealand that any dollar above 2 percent paid by the employer would have to go and visit the taxman first? Did he say that? No he did not say that before the election. In fact he did not say it before yesterday. Yesterday the announcement came in the form of Mr English saying that it should not come as a surprise to anyone. Well if it was no surprise then why did he not just say so? He did not point that out so National has gone into the election with one tax package and come into the House with another. 
But the other thing I would like to say about Mr English’s remarks is that ridiculous comment about how Dr Cullen had hoped that KiwiSaver would replace New Zealand superannuation. This is what is ridiculous about it. If the previous Government had wanted that to be the case we would not have made KiwiSaver opt-out; we would have made it compulsory. 
You see the whole point of making it an opt-out system was to give a bit of choice to the public of New Zealand but also to protect New Zealand superannuation from right-wing Tories in future generations. This was in addition to New Zealand superannuation which the Minister was generous enough to point out has now become a universal entitlement and is now being pre-funded thanks to the Cullen fund—there is $14 million in that fund and I tell Mr English not to go near it. 
So let us just see whether the logic of Mr English’s comments about Dr Cullen’s intentions is true. It is palpably false. A few things about the New Zealand economy are in good shape and a few things about the New Zealand economy are not in good shape. Generally speaking we can say that our net or gross debt to GDP levels are in good shape and have been in good shape for a few years. We can say that we have a high— 
Craig Foss 
: Is 45 percent prudent? That is what Helen Clark said in the 1990s. 
Hon PETE HODGSON 
: I do not know the member’s name and I do not know where he comes from but he would be very hard-pressed to back that assertion up with any record in  
Hansard 
. He should go and look; he will not find it. The member is just making it up. 
But let us take a look at some of the good things about the New Zealand economy. We would probably agree that we have a relatively good credit rating internationally—in fact we have a very good credit rating internationally. I think we could agree that the business regulatory environment is in good shape. The World Bank keeps telling us that and other surveys keep telling us that we are near the top for setting up or pulling down a business and near the top for regulatory regimes for businesses. We have low or very low levels of corruption and we are all pleased and proud about that. We have low unemployment though we know that that will go up in due course. But we know that some things about our economy are not good. We are a low-wage economy even though in 9 years the Labour Government managed to lift the minimum wage from $7 an hour for an adult to $12 an hour for an adult. In the 9 years prior to that it had been lifted by somewhat less than $1 an hour. 
Hon David Cunliffe 
: In 9 years? 
Hon PETE HODGSON 
: In 9 years—less than a dollar an hour; $5 an hour over the 9 years of our Government. But we are still a low-wage economy. We are an economy that does not save and we are an economy that does not do research and development. And we are passing legislation today that increases taxation on the low paid that cuts research and development and that causes dissaving. What is sensible about that? What is reasonable about that? 
What is more this change is structural. This is not a short-term stimulus. The Greens suggested that we might retrofit a few more houses or build a few more State houses—that would be a short-term stimulus. Or we could do what they did in Australia and say married superannuitants would get $2100 and a single superannuitant would get $1100—or whatever the figures are. It is a short-term stimulus. People on the equivalent of Working for Families in Australia would get $1000 a child or whatever it was—I am sorry I do not recall the details. That is what a short-term stimulus is like. This is not a short-term stimulus; it is medium-term wealth redistribution. It is a structural fiscal change that will cause deficits. 
Hon Dr Michael Cullen 
: Social engineering. 
Hon PETE HODGSON 
: It is social engineering at its worst. I cannot believe that National would use the offices of this House to ensure that its own social engineering predilections would come to pass. But that is what it is. 
Hon Annette King 
: It is putting the rich back on the dummy. 
Hon PETE HODGSON 
: Yes it is putting the rich back on the dummy. That is exactly what it is—a wealth redistribution in the medium term. The whole idea of fiscal restraint went out the door when the Speech from the Throne was read on Tuesday this week and we heard that there would be fiscal deficits foreseeably. That is not acceptable. That is not prudent. That is something resembling shadows of Muldoon. 
Hon Gerry Brownlee 
: Ha ha! No it is a legacy of Labour actually! 
Hon PETE HODGSON 
: It is not a joke. 
This country has come into a fiscally positive position in recent years under successive Governments. It has certainly stayed there for 9 years of the Labour Government and here within days we are moving into fiscal deficit. A fiscal deficit for a short period would be a good thing. You see that is what a short-term stimulus would deliver; it would help to pull us through. But no the Government has not done that; it has eschewed the idea of a short-term stimulus and instead gone for a medium-term structural change which is the redistribution of wealth. That is Tory behaviour at its worst. It is bad for our economy it is bad for the rich-poor gap it is bad for innovation it is bad for saving it is bad for exports it is bad for high wages and it is bad for our competition with Australia. I cannot think of a thing that is good about it and the shame of it is that we had this opportunity and we blew it. That is the shame of it. We had the opportunity to do something that was going to be clever and nothing clever came before this House. That is a shocking shocking shame and I am very very sad that we will end the Committee stage of this legislation in due course which shifts us in the wrong direction at the wrong time for all of the wrong reasons. 
Hon JOHN CARTER (Minister of Civil Defence) 
: 
 I move  
That the question be now put 
. 
MOANA MACKEY (Labour) 
: 
 I am happy to take a call on clauses 1 and 2. When we deal with the title we can see that this bill would probably best be called the “Taxation (Tax Increases for the Poor Less Security in Retirement for the Low Paid and a Dumber Economy) Bill”. That is exactly what this legislation does. That is what the National Government thinks is so urgent that it needs to be passed at quarter to 11 at night in urgency—tax increases for some of our most vulnerable families less security in retirement because it is gutting KiwiSaver and a dumber economy because it is getting rid of the research and development tax credits. 
With the kind of global crisis we are facing now there are probably a few things that people might expect their Government to do. First they would probably expect it to protect the most vulnerable—those who are most likely to lose their jobs those who are most likely not to get pay increases and those who are most likely to be unable to afford to pay their mortgages pay their food bills or be able to buy the kinds of things they need to send their kids to school. The second thing one might expect one’s Government to do is to promote innovation promote research and development and promote the kinds of policies that will bring in higher-paid jobs increase exports and put more money into the real economy. When the country has such high personal debt levels the third thing one might expect the Government to do is to take savings seriously and try to increase personal savings and increase the depth of capital in the country. 
The astonishing thing about this legislation is not that National has ignored one of those things but that it is that it has ignored all of them. And not just that—it has done the exact opposite of everything one would expect a responsible Government to do in a global financial crisis. Indeed it has done the opposite of what just about every other country we compare ourselves to is considering doing in this global financial crisis. 
The most offensive thing about this bill is that the members who have spoken on it tonight have tried to make us believe that they are doing it because they care about poor people. They have tried to make us believe that they care about the low paid and about workers. Maybe this bill should be called the “Taxation (Merry Christmas Low-paid Workers and You Are Welcome from the National Party) Bill”. 
We heard from Mr Chris Tremain who did a little dance while he said it that workers should be thankful for this legislation. We are sorry but we did not realise we were meant to be grateful for the fact that the lowest-paid workers will have their taxes increased and for the fact that the lowest-paid workers will have their retirement savings slashed. When those workers get to retirement age there will be no point in doing any more extra work because they will lose their independent earner tax credit when they work. They cannot supplement the retirement income they lost through this legislation by working because they will be disadvantaged. Mr Chris Tremain told us that we are meant to thank the National Government for this legislation because it is so good for our workers. 
Then David Bennett came in. Amongst all the clichés he tried to tell us how much he cared about young people. Well I would welcome anyone to listen on the Internet to Mr David Bennett’s speech on the youth minimum wage abolition bill. He called that communism. He said that paying young people the same money for doing the same job as someone who is one day older than them was communism yet we had to listen to speech after speech from Mr David Bennett with all the clichés telling us about how much he cared about those young people. 
Young people are joining KiwiSaver I say to Mr Bennett. Mr Bennett can stand up in this Chamber and tell us until the cows come home that this bill will make more people join KiwiSaver yet he will not answer the simple question as to why those increases are not budgeted for. If the Government is expecting an increase in KiwiSaver participation why is that increase not budgeted for? He now pretends he is reading his papers because he has no answer to that question. 
Those members know that this legislation single-handedly with a stroke of a pen destroys KiwiSaver. They know that this legislation single-handedly with a stroke of a pen will seriously damage the real economy. It will drive jobs offshore at a time when we need them the most. Other countries around the world will be saying: “Thank you New Zealand National Government for getting rid of your research and development tax credit because we have benefited from it.” 
Worst of all this legislation will increase the tax on some of our most vulnerable families. I urge the Maori Party to think very very seriously about supporting this bill. It is not mana-enhancing to take money out of the pockets of the poorest families in this country and give it to the people who need it the least. 
Hon PAREKURA HOROMIA (Labour—Ikaroa-Rawhiti) 
: 
 We have just witnessed one of the quite interesting assumptions dished out by the Minister of Finance. I think Dr Cullen’s chronological order on the framework that it is supposed to stimulate the economy is spot on—take away the 2 percent and make believe that the $1040 is still there but it is not against $26000; it is against $52000. Then we hear this preaching and leeching from people like Mr Bennett that this measure is about helping poor people. Roger Douglas stood up in this Chamber and said “Well as a start you forget about the beneficiaries.” 
Hon Annette King 
: And the old people. 
Hon PAREKURA HOROMIA 
: And the old people. That is what he was alluding to and that was parroted by the Minister of Finance in a very simple way. He has put out the assumption that at the end of the day our superannuation fund is too generous. So all this hinting is going on. It was not too different from the rough talk and the make believe in relation to accident compensation. It was a whole lot of hogwash. 
We have listened to Mr Bennett flick out the platitudes in relation to caring and sharing and wanting to help young people and Maori along the freeway to the future. Well the freeway to the future in this country has a hell of a lot of potholes in it—potholes brought about by mean-spirited people. We are heading towards Christmas a time when the mistletoe is glistening and the fellow with the red cap comes ripping through town. [ 
Interruption 
] What has Gerry Brownlee given to people? Big bags of nothing! It is a disgrace. Maori people are affected. Tena ano taku korero ki a koe e Hone. 
[ 
I have told you that before Hone 
.] 
Hon Gerry Brownlee 
: That won’t go down well at home. 
Hon PAREKURA HOROMIA 
: It might not go down well with you but our people will understand that. 
The CHAIRPERSON (Eric Roy) 
: Order! 
Hon PAREKURA HOROMIA 
: I am sorry Mr Chairperson. I should have said “Mr Brownlee”. It will go down well with our people because 73 percent of Maori who work miss out in this case. 
What a sad day for Maoridom! That the Maori Party was not told or that it was not explained clearly enough to them is not too dissimilar to what was not told to the public. A whole lot of porkies were told to the public and one does not have to be a rocket scientist to know that. Craig Foss huffs and puffs over there because he is a price-taker. He knows how to play the futures market; he knows how to let it slip. There are a whole lot of people with passionate theories about how to build up the price of the profit margin. That is why Merrill Lynch is down in the mud. That is why a lot of those big corporations driven by price-takers and the leader of this country have hurt people’s investments. That is why old people in this country are crying and worrying—it is because their superannuation has been taken away from them by bogus investors. Craig Foss knows about that. 
At the end of the day it seems quite peculiar that the Minister of Finance is saying that this was a prelude to changing the KiwiSaver programme to take over superannuation. He is lucky that the Cullen fund is there. Treasury has told the Minister that a strong platform has been left for the National Government to work off. National is lucky and it should be thankful that we have helped it along. But what does it do? On its first day in here it has come in and dealt to the poor people and to the Maoris. Those National people could not even run the House properly on the first day and that was a sad example. 
One does not have to be a rocket scientist to understand that when one stimulates business there are fundamentals in it—one understands where the market is one makes sure that the product is saleable and one makes sure that there is good research and development. This bill has been about stripping the general research and development which is something that the majority of businesses in this country asked for. What did the Government do? It closed research and development and shoved it down a ditch. Shame on it! 
JO GOODHEW (National—Rangitata) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the question  
That the question be now put. 
Ayes 68 
New Zealand National 57; Maori Party 5; ACT New Zealand 5; United Future 1. 
Noes 50 
New Zealand Labour 43; Green Party 6; Progressive 1. 
Motion agreed to. 
A party vote was called for on the question  
That clause 1 be agreed to. 
Ayes 68 
New Zealand National 57; Maori Party 5; ACT New Zealand 5; United Future 1. 
Noes 50 
New Zealand Labour 43; Green Party 6; Progressive 1. 
Clause 1 agreed to. 
A party vote was called for on the question  
That clause 2 be agreed to. 
Ayes 68 
New Zealand National 57; Maori Party 5; ACT New Zealand 5; United Future 1. 
Noes 50 
New Zealand Labour 43; Green Party 6; Progressive 1. 
Clause 2 agreed to. 
Bill reported without amendment. 
Report adopted. 
Third Reading 
Hon BILL ENGLISH (Minister of Finance) 
: 
 I move  
That the Taxation (Urgent Measures and Annual Rates) Bill be now read a third time 
. It is not surprising that there was some debate in the House over this matter. The political parties have had competing tax packages out in the public arena for some time. The previous Government in the 2008 Budget finally gave in on the argument for tax cuts. It announced tax cuts of its own which is described as being at the edge of reasonable or at the edge of prudence or whatever it was. In the run-up to the election the National Party announced its tax package. There have probably been few issues as thoroughly debated as tax rates over the last 4 or 5 years particularly at the time of the 2005 Budget because the previous Government had promised some tax cuts and it was a matter of some debate that after the election it decided not to implement the tax cuts it had promised. It has been a fairly significant debate since then. 
This bill has been part of the plan on which the National Party was elected. It is a plan to get this country through a recession as best we can—a recession that began well before international events started to unfold as dramatically as they have in recent months; it began early this year—and to lift our long-term growth rates for the benefit of all New Zealanders. We were elected on the basis of that plan just a month or so ago but also I think on the basis that many New Zealanders felt it was time for a Government that had a bit more respect for their capacity to make their own decisions about their own lives whether they be about the size of the heads they were allowed to have in the shower and how long they were allowed to stand in the shower right through to making more of their own financial decisions. Of course any Government makes a great number of financial decisions for people but they were in a position where the previous Government was telling them when to save when to spend and when to pay off debt. Our approach is different from that which is one of the reasons that our tax cuts are larger than the previous Government’s. 
This tax cut is part of a fiscal stimulus that began with the 2008 Budget which according to Treasury calculations—and it is somewhat of a dark art as to how it does them—means that over the next 2 years $7 billion of fiscal stimulus will come into the New Zealand economy. I have seen some commentators and some of our political opponents describe that as being insignificant or too small. In fact it is not. By international standards it is one of the largest fiscal stimuli that are occurring in the developed world. So it will make a difference to this economy. Of course we cannot avoid being in a recession. As I said New Zealand was in a recession before international events came on. That was a product to a large extent of 9 years of complacent and misdirected economic management by the previous Government. But this fiscal stimulus will help people to keep jobs who would have otherwise lost them and it will protect people from the sharpest edge of recession. We will see in other countries just how sharp that edge can be. 
The tax package fits into that context but it also fits into a longer-term context where we have argued for many years—it is part of the philosophy of our party—that a lower tax take and lower tax rates would in the long run provide better incentives for people to get ahead and that the private sector part of the economy is more likely to get things right than the Government would when making decisions about too much of the activity in the economy. Of course the balance between those two swings around. In the last couple of months the previous Government with our support issued guarantees for bank deposits and wholesale borrowing by banks which was quite a big shift in the role of the Government. Of course our view has to adapt according to the circumstances. 
That is the tax part of the legislation. Then we come to the KiwiSaver part of the legislation where I think the fundamental point that the debate missed is that many working-age New Zealanders—even with the number at apparently 800000 or whatever it is—are simply not in KiwiSaver and they face tough times. During the election campaign we made our plan for KiwiSaver clear: it is focused on making it fair—that is allowing more New Zealanders access to the benefits of KiwiSaver because if they cannot afford to save almost 6 percent of their net income then they cannot afford to be in KiwiSaver. I would suggest as we go into this recession that we should be realistic about how many Kiwis feel about their job security and their ability to give up 5 percent of their net income particularly when many of them are carrying too much debt. Putting money into KiwiSaver does not pay off one’s debt. In fact putting it in there means one is likely to lose it in the current circumstances but one still has to pay interest on the mortgage. 
So our approach has been to give people tax cuts. They then have the opportunity to decide how they will use that money. Many of them will pay off debt; that is actually a form of saving. That is why savings rates are bound to increase. The Labour Party missed the reality that the only way to save is actually to consume less and many New Zealanders are doing that right now. One of the reasons they are consuming less is to pay off their debt and that is a decision that they make according to their own sense of what the risks are. That is why we have lowered the threshold for KiwiSaver contributions to 2 percent. People are free to contribute whatever they like above that and to make use of whatever arrangements they have made or will continue to make with their employers. 
The bill also includes one significant change from our pre-election policy on KiwiSaver which is to revert to what was the pre-existing policy on KiwiSaver—that is the member tax credit will be paid out at the rate of dollar for dollar. There was some suggestion during the debate that this was not what it appeared to be. Well it is what it appears to be. If people on $30000 a year are contributing 4 percent of that to KiwiSaver then they will get $1040 from the Government. Of course if they go in at the default rate of 2 percent they will get a smaller member tax credit. Everyone knows that. 
Finally on KiwiSaver I say we should see it in the context of retirement income for all New Zealanders. We have as was discussed during the Committee stage a universal pension in New Zealand—New Zealand superannuation—after many years of debate. We have a pre-funding arrangement that is beaten I think by only the Norwegians who are using oil revenues—very large-scale pre-funding by any international standard—and in that context the Opposition’s argument that KiwiSaver has to be as big as the Australian scheme can only mean that Opposition members envisage KiwiSaver one day replacing New Zealand superannuation. That is not our vision for KiwiSaver; it is a top-up for people who save during their working life. 
We are pleased to support this bill in its third reading. It is a different tax package from Labour’s and that means there will be different rates and thresholds. But I will make this one simple point: no one is worse off as a result of this legislation. [ 
Interruption 
] If as an Opposition member claimed Maori are going into Christmas on bad incomes I say that they are the incomes Labour left them with after 9 years of the strongest economic growth the country has had. They are not affected at all by this legislation so I say the rubbish from the Opposition about low-income people being attacked is nonsense. If those people are hard up it is because they have loyally voted for Labour for 10 years and not been rewarded either by Labour winning the election or by the benefits of economic growth. The crocodile tears for low-income New Zealanders were I think ridiculous; 630000 people will finally get a tax break after 10 years of Labour ignoring them. We are proud that that is part of this legislation. 
Debate interrupted. 
Points of Order 
Bills—Availability in Urgency 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 I raise a point of order Mr Speaker. I have raised this point a number of times today. It is still the case that none of the other bills that the House will consider are on the Table of the House. The previous Government never adopted the practice of going into urgency and taking as long as this to table bills. Either this Government is so incompetent that it has not got them drafted yet and does not really know what it has taken urgency on or it is deliberately withholding the bills from the House. 
Hon GERRY BROWNLEE (Leader of the House) 
: 
 A couple of things have become evident to me in the last couple of days. One is that Dr Cullen is hell-bent on everybody following the letter of the Standing Orders to the nth degree. That is exactly what is happening here. There is no requirement on the Government at this point to table any bills at all—no requirement whatsoever. After the extraordinary performance of the huge amount of outrage from the members of the previous Government at the reinstatement of most of their own business it seems to me that those members have very little interest in knowing about anything that this Government will do. But they will have those bills on the Table in time for them to be debated at a time to be chosen by the Government. If I were to seek leave to introduce those bills now Dr Cullen would say: “Well done you have just put them on the Table; they can stay there for 3 days.” or he would play some other clever trick that the Standing Orders might by the letter of the law allow. We will play it very safe so he can be happy. 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 That is an incredibly arrogant response. People in that member’s position in the past have taken the view very properly of reminding Governments of their responsibility in these matters. It is clear now that the Government has got the bills available— 
Hon Gerry Brownlee 
: Yes. 
Hon Dr MICHAEL CULLEN 
: —yes—and the Government is choosing not to table bills it has available out of spite and out of arrogance. This is the second full day of this Parliament and this Government is acting like one already heading for the graveyard because it does not want to follow any kind of normal procedure. That is not the practice that has been followed in this House for many years now. I went with the practice as Leader of the House of being very very full about what business the House would consider. The Opposition always knew well in advance what business would be considered. In urgency if bills were coming forward to go through all their stages they were tabled at the earliest opportunity. That is just basic common courtesy about making this House work. If the Government chooses to have no cooperation at all then it will pay for that in a very significant fashion over the period of time. It will come to regret it. That member should know that this House cannot work if there is no cooperation between the parties in it. 
Mr DEPUTY SPEAKER 
: Thank you Dr Cullen. Earlier this morning I made the point on advice that when the House is sitting under urgency at the time that a bill is to be introduced copies of the bill must be available at the Table. There is no requirement to have a bill available prior to that. Standing Order 263 sets out the general rule but it does not deal specifically with bills introduced under urgency. It simply establishes the principle that copies of a bill must be available upon its introduction. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I raise a point of order Mr Speaker. I seek your advice on an apparent conflict between two Standing Orders that bear upon this matter. Standing Order 116 prohibits members from making personal reflections. For example when I reflect upon the fact that the Leader of the House Mr Brownlee earlier today gave his undertaking to do his very best to put these bills on the Table in advance of debate on them I am prevented from making any comment on his honour or lack of it in now not doing so. By his own free admission the bills are available. However Standing Order 106 prohibits misrepresentation. It would appear to me that Mr Brownlee may have placed himself in the position of misrepresenting his own position because he earlier said that he would do his best to bring the bills forward for scrutiny. This is against the background that no select committee process is available to the country in respect of these fundamentally important bills. He has made a statement. He has contradicted that statement. I am prevented by the Standing Orders from reflecting upon that. Mr Deputy Speaker I ask your guidance: what happens when a member the Leader of the House apparently contradicts himself on a matter of this import? 
Mr DEPUTY SPEAKER 
: The first point Mr Cunliffe is to ask whether you are taking exception under Standing Order 116 concerning personal reflections. You mentioned that. Do you take offence at the comments made by the Hon Gerry Brownlee? 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I may not have made myself clear Mr Deputy Speaker. It was not that I take offence; it was that if I were to characterise the Leader of the House’s late change of position on this matter he would likely take offence because I would have to refer to him as being dishonourable in this House and that would be a very serious charge. I take it that I am prevented from doing that by Standing Order 116. On the other hand the House remains in the situation that the member has apparently contradicted himself on a matter of significant constitutional practice. On a strict reading of the Standing Orders it may be an option legally available to him not to present bills before the debate on each bill starts. That is not in dispute. What is in dispute is that he gave an indication to the House earlier in the day that he would do his best to get the bills here in advance in response to an earlier point of order made in good faith by the previous Leader of the House who made exactly that a standard practice. There is both a substantive and a procedural lack of apparent honour in this matter and I do not know how the House will handle it unless the member— 
Mr DEPUTY SPEAKER 
: Mr Cunliffe you have made the point very clear. I remind members that when points of order are taken they are to be heard in silence. Please observe that. On advice these are matters of debate. Standing Order 106 does not prevent misrepresentation; it provides a manner for dealing with it. I am sure the member can find a way of expressing his views without making a personal reflection. It is a matter for debate. 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 I raise a point of order Mr Speaker. You might recall that on a previous occasion during the previous Government Mr Brownlee took some time of the House in seeking to table one by one the Standing Orders of Parliament. I would like an indication from you Mr Deputy Speaker whether that would be a legitimate thing for me to begin to do as this particular point. 
Hon GERRY BROWNLEE (Leader of the House) 
: 
 Mr Deputy Speaker you will find there is a Speaker’s ruling on that particular matter. The Speaker ruled that deliberate disruption of the House or its progress in that way would be considered unruly behaviour likely to lead to the member concerned being ejected or named. 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 I make the point that that matter was sparked off by nothing at all on the part of Mr Brownlee; what we have now is Mr Brownlee deliberately failing to implement an undertaking that he gave at 2 o’clock. He said at 2 o’clock that I had made a fair point and that he would address the matter and see that it was seen to. He is now point-blank refusing to honour an undertaking given in this House across the House. He should be experienced enough by now to know that behaviour of that sort does have consequences in Parliament. I suggest to him that he might care to go home have a cup of cocoa think about life come back in the morning and while we are still in the third reading of this bill think about tabling some of the bills that are coming up tomorrow. 
Mr DEPUTY SPEAKER 
: The point has been well made. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 Mr Deputy Speaker the issue for the Green Party is that clearly the Leader of the House has some animus towards the previous Leader of the House and the Labour Party. However that has nothing to do with us I say to the Leader of the House. This Parliament is not just a Labour and National Parliament; it is an MMP Parliament. All of us need to be able to look at the legislation which the Leader of the House has now told us is in his possession. It is very difficult to see how we can undertake our democratic responsibilities if the bills are not placed on the Table. 
Mr DEPUTY SPEAKER 
: I made it very clear before that there is no requirement for a bill to be tabled before the time that it is to be debated. That is a point I made earlier this morning. I intend to move on. 
Taxation (Urgent Measures and Annual Rates) Bill 
Third Reading 
Debate resumed. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I think it is fair to say that many members of this House come to the third reading of this Taxation (Urgent Measures and Annual Rates) Bill late this evening with a strong sense of sadness—a sense of sadness about the process that has been employed a sense of sadness about a wasted opportunity to make a significant positive difference for our economy and a grave sense of sadness about the social impact of these measures. Let me take each in turn. 
I said in my first reading speech that the public could if nothing else take from this bill that the honeymoon was over that the sheep’s clothing had fallen from the National wolf and that the true nature of its intentions was becoming all too clear. But I have to say that during the course of the debate the exact nature of those measures has become even clearer and the—perhaps duplicity is not too strong a word of the Government in this matter has been stark. It is highlighted by the process. Here we have a Leader of the House who has contradicted an earlier undertaking to the House and refuses to place bills on the Table as has always hitherto to my knowledge been the practice. That is an innovation. 
Hon Gerry Brownlee 
: I raise a point of order Mr Speaker. I think you need to be careful about allowing repetition of a point being made somewhat unfairly. The Standing Orders are very clear in this matter and I have been pulled up considerably over the last couple of days for apparently not understanding the Standing Orders. Now I have actually cottoned on to how they work and I am simply following the Standing Orders to the letter. It would be an absurdity in the middle of an urgency motion to ask a party that has voted against that motion to grant leave for the bills to be tabled in that motion. So I think we are caught in a bit of a cleft stick created by those who are utter sticklers for the way in which the Standing Orders are applied. 
Hon Dr Michael Cullen 
: There are two points here. The first is that leave is not required for the Minister to table bills under urgency. Once urgency has been taken the bills can be put on the Table of the House immediately at that point. The member is getting confused I think; if a bill had been tabled in a previous sitting day then urgency could not be taken on that bill until the bill came above the line after some 3 days. The Minister can table any bills now that he wants that are being dealt with under urgency. That does not affect when they are taken during the urgency debate. The member need not worry about that fact. 
Further than that the fact that the member can be discourteous and can behave badly within the Standing Orders does not mean to say that it is not discourteous and behaving badly and that it cannot be the subject of reference by members on this side of the House. One has to live by one’s decisions in this place. The Minister has made certain decisions. He will have to live by the consequences of those decisions. 
Mr DEPUTY SPEAKER 
: Standing Order 263 is clear but that does not prevent members raising the timing of the availability of bills in the debate. The point that was made earlier was that there is no requirement in the Standing Orders for the bills to be tabled prior to the urgency debate taking place. 
Hon DAVID CUNLIFFE 
: For the record the point being made before the member’s point of order was not that it was against the Standing Orders but that it was against an earlier undertaking given by the member. That seemed relevant because it was yet another example of the same practice that was preventing this bill going to a select committee in the first place. Mr English said that it was in their manifesto so it did not need a select committee process. By implication everything that was in National’s manifesto could do without a select committee process. Would not that be terrific—and where would our democracy be? 
This is a very very important bill; this is a very very serious matter. New Zealand is at a serious crossroads facing an international crisis the magnitude of which we have not seen in several generations. But apparently no select committee process is appropriate for a principal tool for dealing with this recession. It is a wasted opportunity because this bill does nothing to assist New Zealand to face the challenges. It reduces savings paradoxically at a time of the most serious international liquidity crisis when our domestic savings now count for more than they ever have and we are undermining them to the tune of $3.5 billion plus there are the spin-offs from behaviour that that undermines. It does nothing to encourage innovation. It has the contrary effect of taking away a much-needed incentive and a much-needed international equilibrator for companies that are high-tech and that employ more innovate more and export more than average. Those are the companies that ought to lead us through recession to the productivity growth we all share as a goal. 
And it is bad economics because as many speakers—and I think most notably Russel Norman—have contributed it seems to mistake a short-term stimulus package where it is a wasted opportunity for what one of my colleagues has called medium-term wealth redistribution. There is nothing of what could be done to provide more houses for the needy to retrofit more houses to keep our children healthy to boost skills to import technology or to improve our woeful lack of private research and development. It does none of that. It is even bad fiscal policy because it comes against the context of formal advice from Treasury that says that the existing level of fiscal stimulus is appropriate that we have already invested nearly $10 billion and that this $5 billion is misdirected and unwise. 
Mr English talked about KiwiSaver as if somehow this bill were a measure designed to advance it. It caps the automatic enrolment at 2 percent it caps the employer contribution at 2 percent it cuts the enrolment subsidy—which is a regressive move—against low-income contributors and it cuts the tax credit on superannuation contributions thereby disadvantaging our more senior savers. It is a 2 percent plus 2 percent scheme with the grave risk that it ends up with the employee bearing more and more of the 4 percent and the employer bearing less and less and the Government has misrepresented the position of the union movement to boot. 
So that brings us to the social re-engineering aspect of this bill. It is kind of ironic is it not for a party that says it has been listening and that we have not. Those members have been listening so much that they thought our poorest New Zealanders wanted a $750 million kick in the guts just before Christmas and we have seen the most bizarre display from the Minister of Finance attempting to veto a well-intentioned amendment from the Opposition that would have ensured that those people did not suffer at this time. He put on the Table the veto quantifying the penalty to them and then took it off again after it was already made public— 
Hon Ruth Dyson 
: A little embarrassed. 
Hon DAVID CUNLIFFE 
: —a little embarrassed. What we do know from our analysis is that anybody with a couple of kids who is earning less than $40000 is worse off and that income earners in the $14000 to $20000 range are particularly worse off because of the higher rate they find themselves in relative to what is already in the law. Again to give credit to Dr Russel Norman he asked the question as to why this bill is urgent because this policy is medium-term stuff. He offered the insightful comment that it is urgent because the Government does not want to be discussing this around next March or April when the next lot of Labour-led tax cuts come into effect. National members would rather that people thought they were National’s tax cuts even though they are rather less than many of them would have got if this bill were not to be passed tonight. 
We the media the bloggers and the commentators have seen through the charade. We have seen through the electoral rhetoric—the sad part is that David Bennett still believes it—and we understand this for what it is. It was remarkably frankly acknowledged by Mr Craig Foss who reminded us that “You did 39 percent tax in your first year.” That is what this is about—taking it back again. It is about utu. Mr English said “KiwiSaver was Labour’s latest vote catcher.” That is what this is about—that we thought of it and not National and therefore it deserves to be undermined. That would seem to fly in the face of our higher duties to the public which are to do what is good for New Zealand not what is good for our own egos and not only things we thought of first. 
I guess that brings us to the rather sad position of the Maori Party. There is much in that party’s ideals that I admire and I look forward to Labour working together with Maori of all parties to redefine constitutional relationships in the future but not by supporting a National Government that is harming the people the Maori Party was sent here to represent. 
This is a sad day for New Zealand. It is a sad sad day for this Parliament. It is not a mana-enhancing day for any of us actually that to get us here on its first working week the Government has breached longstanding constitutional practice. It has done so based on the argument that anything that was in National’s manifesto before the election does not deserve select committee consideration and in fact it does not even deserve we hear now a bill to be placed on the Table after an urgency motion but before the bill has started. 
And National members had the gall to say that we were not listening! My God New Zealand is lucky that the Government has a few cards in its hand to deal in the interests of good government and New Zealand’s future. Those cards are a debt to GDP ratio that is half what we inherited from a National Government last time; the fact we have got research and development up a fair bit mainly through Government sponsorship; the fact that income levels of our poor are a quarter higher than they were a decade ago in real terms and therefore there is some cushion. I do not see people choosing between going to the doctor and putting food on the table or paying rent in quite the way I used to. As someone rightly said there are still poor people in New Zealand. Yes there are so I say shame on the Government for making many of them $750 million poorer through the Taxation (Urgent Measures and Annual Rates) Bill. Do not kid yourselves and do not kid New Zealanders I say to Mr Bennett that you are doing it for their sake. Just be honest about it and say that you are doing it for the sake of others who voted for you—at least that is honest. 
Hon Pete Hodgson 
: Not “you”. 
Hon DAVID CUNLIFFE 
: Not you Mr Deputy Speaker. We hold you in high regard and we appreciate your chairing of this debate. We are only sorry that we do not have better news to bring to New Zealanders. 
Mr DEPUTY SPEAKER 
: The member’s time has expired. Can I make it very clear that members cannot use the words “you” or “your” in any debates. That brings the Chair or the Speaker into the debate and that is not allowed. Please abide by that ruling. 
CRAIG FOSS (National—Tukituki) 
: 
 What a great great day this is for New Zealand. It is perhaps a sad sad day for members opposite but it is a great great day because we have seen democracy in action. Over 1 million New Zealanders gave their party vote to National and at the election National laid out its personal tax cuts plan to New Zealand. It also laid out its KiwiSaver plan and its research and development plan to New Zealand. What a great day this is. We are seeing democracy in action and those measures will be delivered tonight or perhaps tomorrow morning once the third reading of the Taxation (Urgent Measures and Annual Rates) Bill has been voted on. Many members are now waking up after the previous speech. But goodness gracious who knows how many listeners have turned off the radio because that speech was an absolute shocker? No doubt Mr Jones is doing the numbers again tonight. 
I was not going to mention debt ratios again because I think I have mentioned them a few times but unfortunately the previous speaker the Hon David Cunliffe brought them up again. I have to ask whether Labour members read or saw the Pre-election Economic and Fiscal Update. Did they look at the statistics? Labour members are stuck in the time warp of the previous administration’s May 2008 Budget which had debt to GDP ratios of about 17 to 18 percent—that is quite right. But then everything started to unravel and the Pre-election Economic and Fiscal Update showed us a decade of deficits that were nudging 30 percent and with the recent announcements that are now coming out of the fiscal closet the deficits will quite possibly go higher than that. The previous speaker was in total denial of that. We would perhaps listen to you a bit more if you put yourself in today with the— 
Hon Darren Hughes 
: Point of order! 
CRAIG FOSS 
: Excuse me Mr Deputy Speaker I did bring you into the debate and I apologise for that. Thank you Mr Hughes; I acknowledge that this has been a long day. I ask that members opposite and in particular the Opposition spokesperson on finance take note of the latest fiscal accounts available to the public and to all of us here in this building then frame his comments and speeches around the latest updates and perhaps any other secrets that those members know. 
We listened to a tirade before but we have to face the fact that New Zealand is a capital-deficient nation. We know that. We have a savings issue in New Zealand. Both parties acknowledge that and everyone has spoken about it but the previous speaker started to talk about the New Zealand Superannuation Fund again. He has a problem with something that National again placed before the public. We said we would ask the Guardians of New Zealand Superannuation to invest 40 percent of the fund within the boundaries of New Zealand. We are a capital-deficient nation and a savings-deficient nation so I ask why someone would not endorse the fact that we are trying to keep more of that capital within these borders rather than funding the motorways and tunnels of Australia. 
Although the previous speaker did clarify matters later he also tried to give us a lecture about the multiplier effects and other things this morning. He did seem to correct himself a bit later so I will give him credit for doing that but the logical conclusion of what he said—his true colours were revealed—was that tax hikes were better than tax cuts. If members read his speech in  
Hansard 
 they will see that is exactly what he was saying this morning. 
I will make a couple of further points. I think two speakers on the other side of the House have talked about bloggers. Well there is one way to get into the blogging space and that is to talk about bloggers so that will be highlighted somewhere tonight. I do not know the site that another member was talking about. I ask a question of the previous speaker about bloggers. I ask whether he was talking about The Standard the union-engineered and funded blogging site. Which blogging site was he talking about? Many of those sites have gone quiet now that many of the previous Government’s employees have moved out of the Beehive. 
Finally I round off my speech by commenting on the issue of process. I have noted in other speeches in various readings of this bill that this plan was presented to New Zealand before the election and during the election and that the public resoundingly endorsed the plan. It is our 100-day commitment to New Zealand and we are delivering on that plan right now. Because we listened to the public then we are acting upon that plan now. I have a bit of advice for members on the other side of the House. If they get out of denial and into the real world and if they start to listen to real New Zealanders they may start to do quite well. 
Hon Dr MICHAEL CULLEN (Labour) 
: 
 I pick up a point that Mr English made in his speech. He said the big issues around the details of the taxation changes have been thoroughly debated over the last year or two in the debate on the various Labour and National proposals in the public arena. That is fundamentally wrong and fundamentally misleading. The National Party did not publish the details of its tax policy until early October some few weeks before the election. From then on National never mentioned the details of that policy at all. Its only reference to tax cuts was in the context of everybody getting them. 
That was because National’s polling showed exactly the same results as our tracking polling did. The announcement of that policy caused a sharp dip in National Party support because it was so unpopular. People did not want KiwiSaver interfered with. People did not want the research and development tax credit to go. People were suspicious about the shape of those tax cuts. It was only when National got back on to its underwear motto—“It’s time for a change.”—that its tracking polling picked up again. That was all the election was fought on actually. It was fought and won on that one simple motto: “Time for a change. You’re bored with the old so in with the new. They cannot be any worse and if they are you can chuck them out again after 3 years.”—which is no doubt what the public will do. So let us not pretend that the National Government has got some kind of detailed mandate from the country for the details of this bill. It has no such thing at all not in any shape or form. 
In any bill dealing with taxation and related matters it is useful to summarise who the winners and losers are because there tends to be winners and losers. The big winners are clear: very high income earners. People on hundreds of thousands of dollars a year or more get a pretty significant tax cut. Once the top rate is cut it really starts to bite when one gets into those big incomes. But there are modest winners. Let us be fair: there are some modest winners. Non-saving single people on middle incomes are winners. They get about 10 bucks a week in the first year and 15 bucks a week in the second year which is less than the amount in the 2008 Budget—which was derided I might say. The second set of winners is bureaucrats. About 100 or so new ones will be required to administer the complex independent earner tax credit and other aspects of the bill. With a cap on the total bureaucracy and with 100 more people going into the Inland Revenue Department 100 other people will be going from somewhere else—no doubt bureaucrats who deliver services that affect a different group of the population. 
So those are the winners. Who are the losers? They are low-income individuals earning $14000 to $24000. We can say people earning up to $24000 because people in that income bracket either get less or get nothing—everybody in that income bracket 90 percent of whom Sir Roger Douglas thinks are wealthy. That is what happens when one sits round the Business Roundtable for too long. Other losers are many modest-income families all families with kids that earn under $44000 but also many families with kids that earn quite a lot more than that. Families with three kids that earn $80000 a year will be worse off under this package compared with the current law. It is not a lot—10 bucks a week—but then that is all that middle-income single earners will get. They will get 10 bucks a week in 2009— 
Hon Member 
: 10 bucks a week? 
Hon Dr MICHAEL CULLEN 
: Yes about 10 bucks a week. They will be worse off because they do not qualify for the independent earner tax credit; for them it will all get sort of washed away. Going back to the families with three kids that is assuming that the couple are on $40000 a year each. Beneficiaries and superannuitants who have the temerity to work part time or have some additional investment income will also be losers. They have saved all their lives and have got some income and now they will be taxed more on it because they do not qualify for the independent earner tax rebate. They will therefore be paying more because the National Government is not going to raise that $14000 threshold to $20000 a year. 
Those are just the losers. The big losers are the savers the innovators and the New Zealand economy. On the one hand very high-income earners are winners there is a little bit for middle-income single people who are not saving and there will be about 100 new bureaucrats. They are on that side. On the other side we have low-income individuals modest-income families some middle-income families savers innovators and the New Zealand economy. How does one see those scales moving? How does it look to you in the Chair Mr Deputy Speaker? Does it look as though the winners outweigh the losers? Well we know from the figures that the Government has used that 80 percent of taxpayers do not gain anything. It all right to quote the 630000 who gain something; there are 3 million taxpayers in New Zealand. Eighty percent of taxpayers get nothing out of this change. Taxpayers were led to believe that they all got something out of it. Well they do not. 
But the real loser is the New Zealand economy and that is the sad thing. We are living in the middle of the worst international financial crisis for getting on for 80 years and in part that crisis is driven by a growing gap between saving nations and borrowing nations. We are right at the far end of the borrowing nations. This policy this bill says “Let’s borrow more.”—borrow more by the Government and borrow more by individuals. Why? Because then we might spend a bit more and keep the economy moving along over the short term. As long as we are going into Briscoes the Warehouse Farmers etc. all will be well with the world. We do not need to produce anything. 
You see the Government’s coalition partner is ACT which is the Association of Consumers and Taxpayers. What is sickeningly missing in that description is producers wealth creators innovators researchers and anybody who is actually creating a stronger economy. We are all just consumers and taxpayers according to the ACT Party. The National Party believes the same. It does not believe any longer in the rural sector being the backbone of the nation. It does not believe in a backbone of the nation; it believes in the shopping bag of the nation. If somewhere or other somebody trundles a shopping bag around we do not need a spine to hang it on. That is National approach to the New Zealand economy. And we do not need research and development; we just live off other people’s research and development. We do not need it. 
And we do not need to change our savings culture—our appalling savings culture in New Zealand. A Government all of whose members qualify for an 8 percent or a 20 percent employer subsidy on their own superannuation is cutting the employer subsidy for ordinary earners from 4 percent to 2 percent. Those members try to claim that all KiwiSavers are wealthy. Actually the median income of KiwiSavers is about $36000 a year. If one takes out the kids the median income is about $40000 a year which is well below the average wage. Indeed that median income has been moving down since the first rush of transferees out of existing superannuation schemes into KiwiSaver as new people are signing up and new savers are appearing. We are actually getting 18 to 40-year-olds to regularly save. Mr English says there are only 830000 people in the scheme. That is after 16 months by which time we expected to have about 350000 people in KiwiSaver. At this rate particularly once the financial markets pick up and stop scaring people so much we will pass 1 million easily and we will be pushing on to 1.5 million to 2 million people in KiwiSaver. Within 5 to 10 years most people in the workforce will be in KiwiSaver and they will be people on modest incomes because for those on high incomes there are better options than KiwiSaver. But for those on modest incomes KiwiSaver is an absolute boon because it is structured to give a stronger benefit to those on lower incomes than to those on high incomes. 
We learnt today why KiwiSaver is being changed. Mr English finally let the mask drop. He finally showed what a little man with a little mind he is when he described KiwiSaver as Labour’s latest bribe to the voters. So it had to be punished and the previous Government had to be punished. And of course I had to be punished because I was the author of KiwiSaver and I suspect there is a bit of personal silly stuff in all of this. Well actually KiwiSaver was not about him nor about me; it was actually about New Zealand and changing our savings behaviour. For the second time in the last 40 years a National Government has destroyed our best chance to change our savings habits in New Zealand to turn us into a capital-rich country to emulate Australia to provide reasons why people should stay here and to provide a basis for a stronger financial sector within New Zealand—because the Australian scheme has been a massive boon to the Australian financial sector over the last 25 years. All of those things are being given away in the hope that somehow or other some people having 10 bucks extra a week will transform the New Zealand economy. That is not a brighter future; that is a dumber future. It is a dumber future from a dumber Government. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
: 
 The Green Party is looking for a transition. We are looking for a transition to a more sustainable and a fairer society and economy. That is how we judge this tax bill. We judge this tax bill on whether it helps in the transition to a more sustainable society and economy and a fairer society. It seems to us that that is how we have to approach it. That is the bar against which we compare it. 
One way to look at the bill is to divide it into two parts. One part is the tax cuts and what is going on there and the other part is how the tax cuts are to be paid for. When we look at the tax cuts we see that we are replacing the already legislated-for tax cuts with these new tax cuts. These new tax cuts reduce what is going to low to middle-income earners and increase the tax cuts that are going to the very wealthy. That is what we are doing here. If we did nothing—if this Parliament did not pass this law—then low to middle-income earners would be better off. So if we are going to say that if this bill does not make our country a fairer place if this bill does not even make New Zealand fairer and if letting the existing tax law just run would make New Zealand fairer then in terms of fairness criteria in terms of making our society fairer how could one possibly support the bill because it does not make our country fairer? 
I think the attitude was best exemplified when Sir Roger Douglas talked about beneficiaries. He said to put them to one side because they get Government money. Somehow if people are beneficiaries and they get a benefit from the Government they can be put to one side. They do not have to be factored into making policy in this country or they do not need to be factored into our democracy. If one is a beneficiary one can just be put to one side because one does not have to be considered. I think that typifies ACT’s approach to ordinary New Zealanders. 
I would also say of course that one of the things we would have liked to see fixed up by this bill was the Working for Families discrimination against beneficiaries. One of the problems with the previous Government was actually the discrimination against beneficiaries under the Working for Families package. It would have been great had National actually moved to fix that anomaly instead of adopting a more unfair scheme. 
The other side of this bill is how we are to pay for the tax cuts. One way we will pay for them is by reducing incentives in research and development. That is not a good idea. The Green Party would like to see our research and development tax incentives targeted towards sustainability rather than just in general but none the less having tax incentives for research and development is a good idea. 
The other way this bill proposes to fund the tax cuts is through reducing incentives towards savings. For a country with a chronic current account deficit incentives to savings are critical and reducing incentives to savings does not seem to make much sense to us. We do agree with the incoming Government that using some of the superannuation fund and directing it more towards New Zealand where there are profitable ways to invest the superannuation fund money towards New Zealand does make sense. There is also I think an interesting argument to be had: there is a question mark about whether it is a very wise thing to be doing at the moment at a time of running big deficits where we are borrowing money from overseas to be channelling borrowed money from overseas into the superannuation fund. I think we need to have that debate. We also agree with having a 2 percent entry level within KiwiSaver but of course we also want to have the 4 percent. 
Then there is the question of how we should pay for the tax cuts. Aside from what is in this bill about how it proposes to pay for the tax cuts by reducing incentives to get smart and reducing incentives to save how should we pay for the tax cuts? That is where the Green Party supports ecological tax shifting. We think that as it says in the briefing note to the bill we should broaden the tax base. The briefing note to the bill states that we have to broaden the tax base and lower the rates. Well there is no broadening of the tax base in this bill. A way to broaden the tax base is to introduce resource rentals such as a water levy which would broaden the tax base and create incentives to actually use resources more efficiently and to have a polluter-pays principle when it comes to greenhouse emissions which would also broaden the tax base and create incentives to produce fewer greenhouse emissions. That would ease the pressure on the taxpayer who as the emissions trading scheme is watered down under this Government will have to pick up more of the cost of the polluter. 
The other option for broadening the tax base which is seldom discussed in New Zealand is of course using a capital gains tax excluding the primary family home. After all why should capital gains—people who make gains out of capital—not be taxed but other sources of income are taxed? The Green Party would exclude the primary family home but we think that is a way to broaden the tax base. If we are serious about broadening the tax base and I think we should be then we need to look at resource rentals polluter pays and some form of a capital gains tax. We also need to look at the question around ring-fencing losses on investment properties which has been a major problem in our tax system over the last years. 
In terms of macroeconomics this policy is designed to be a stimulus policy but it has major problems in it. It would be much better if we were to invest in sustainable infrastructure—that is public transport which would prepare us for the future of having to reduce our greenhouse gas emissions and higher oil prices. It would be much better to invest in planting hillsides. We have a major problem of erosion in New Zealand. That would be a much better way to invest in terms of a stimulus package. 
Our sewerage schemes are desperately in need of attention right around the country. I am going to Whangarei on Friday because their sewerage scheme up there is leaking into the harbour and that is not really very good for tourism in our country. To clean up our rivers and lakes would cost money. That would be a fantastic investment. It would create jobs. 
I totally agree with the Government’s focus on broadband—not necessarily the way it is doing it but I think investing in broadband clearly is critical to the future of New Zealand. Home insulation is an obvious thing to do if one wants a short-term stimulus package. I think it was Rod Oram who said on the radio that home insulation is something that can be ramped up very quickly. It employs people. One can use New Zealand products so one does not add to the trade deficit and ultimately the current account deficit. And of course there are State houses which have a high local content. By building more State houses one actually has high local content so it does not add to the current account deficit or the trade deficit.  
To focus on that kind of a stimulus package makes a lot more sense in terms of macroeconomic policy than going through this tax cut policy. In terms of the kinds of transition that the Green Party is looking for which is a transition to a more sustainable and fairer New Zealand it makes a lot of sense to actually invest in those kinds of projects. 
There are a few positive aspects about this bill: the 2 percent that I talked about and there are some other aspects on it. But overall this bill is not helping to make the transition towards a more sustainable and fairer Aotearoa New Zealand and it is for that reason that the Green Party has opposed this bill and will continue to do so. We think actually it is a missed opportunity. There has been a lot of talk in the National Party about Bluegreens and it is something the Green Party has been very interested in because our view and why we come to this place is actually to get progress on our policy. We do not care especially that we do not have seats in the Government. What really matters is to make progress on policy. Were we able to convince National to actually embrace Green ideas then that would be a good thing. We were encouraged when the Conservative Party in the United Kingdom seemed to be open to some Green ideas. We were encouraged by the talk about Bluegreens in New Zealand. But when it came down to it in this bill that we are looking at today where there was a real opportunity to do ecological tax shifting and to have a stimulus tax package that would have sustainable infrastructure in it and when this brand-new Government had an opportunity to think outside the blue box and think a bit about the green box it completely failed and we got a classic blue policy. We did not get anything green in this nothing green at all. 
So this was a missed opportunity from the point of view of the Greens for National to think a little bit outside its boundaries. I hope that over the next 3 years those in the National Government—and I know they do exist—who care about the future of our country and sustainability actually put some pressure on the leadership of National to think outside the blue box and think about how we make the Bluegreen thing real. But because this bill does not as it stands help a transition towards a more sustainable and fairer Aotearoa New Zealand we will be voting against it. 
JOHN BOSCAWEN (ACT) 
: 
 Once again it is an honour and a privilege to speak in support of the Taxation (Urgent Measures and Annual Rates) Bill. One of the great challenges that confronts this country is the requirement to get our rate of productivity growth up. One of the key issues that was in the supply and confidence agreement between the ACT Party and the National Party was to set an aspiration to raise New Zealand’s living standards up to the level of Australia’s by 2025. That is some 16 years away but that is no easy task and it is likely to require increases in productivity of over 3 percent per annum. A key aspect of achieving those productivity gains is to have a taxation system that encourages hard work thrift and responsibility. 
It has been very interesting to listen to this debate over the last couple of days because the Hon Dr Cullen asked the question earlier today why do people move to Australia? He quoted as an example the 9 percent superannuation contribution to employees’ superannuation savings by their employers. I put it to Dr Cullen that the reason people move to Australia is that the standard of living there is far superior to the standard of living in New Zealand. 
Hon Dr Michael Cullen 
: Oh! 
JOHN BOSCAWEN 
: I tell Dr Cullen that it is far superior to that here. The incomes in Australia are 25 percent or more higher than those in New Zealand and one of the reasons that has contributed to that is that Government spending under the last 9 years of the Labour Government here has been in excess of the per capita inflation-adjusted base by over $18 billion—$1000 per household per month; $12000 per household per year. I tell Dr Cullen that that has resulted in the tax rates in New Zealand cutting in at the highest top marginal rate of 39c in the dollar. 
Dr Cullen talked about the winners under this legislation being those on hundreds of thousands of dollars of income a year. My point to Dr Cullen is that the winners under this legislation are the 80 percent of New Zealanders who will be paying no more than 20 percent as their top marginal rate of tax from 1 April 2011. 
Debate interrupted. 
Sitting suspended from 12 midnight to 9 a.m. (Thursday)