Key John: Taxation (Venture Capital and Miscellaneous Provisions) Bill Taxation (Annual Rates of Income Tax 2004-05) Bill — Third Readings 
Text is incorporated into the Bound Volume 
Key John: Taxation (Venture Capital and Miscellaneous Provisions) Bill Taxation (Annual Rates of Income Tax 2004-05) Bill — Third Readings 
[Sitting date: 14 December 2004. Volume:622;Page:17823. Text is incorporated into the Bound Volume.] 
JOHN KEY (National—Helensville) 
: 
 There is much in this taxation legislation but I am duty-bound to say there is not much that is any good. That is the honest-to-goodness truth about this legislation. The Government could not even get the simple bits right. Let us start with some of the really easy stuff. But just before I make my comments on why this is such hopeless legislation and why all New Zealanders should reject it let us think about the Government’s own partners in confidence and supply: the Progressives. What was their response to this legislation? They did not even turn up to vote in the second reading and the vote was tied at 59 all. The Minister of Finance had to go grovelling to the media to tell the people of New Zealand that if the Progressive party pulled that stunt again and forgot to show up this time it would be all over for Parliament—not just for this year of 2004 but all over red rover. “We will go to the polls!”. That is what the Minister said. He went grovelling to the media and said that the Government’s own partner the partner that Labour was in a relationship with had not even bothered to front up to vote for this legislation. 
Now let us turn to the other partner that Labour has for matters of confidence and supply—to United Future—to see what that party thinks of the legislation. If a certain journalist Vernon Small was writing about this legislation he would use a word I probably cannot use in the House. It is the same word he used to describe Dr Cullen’s surplus. I cannot use the word but I will tell members that it sort of rhymes with “locks” and it has a “bol” in front of it. That is what he would think of it. This is what United Future the party that supports the Government on matters of confidence and supply thinks of this legislation: the United Future members think it sucks. They think it is so bad they have had to put forward their own Supplementary Order Paper 284 in the name of Gordon Copeland—and my mother would not necessarily like that but she would not like this legislation one little bit. 
United Future has had to put forward its own Supplementary Order Paper and what has been the Government’s response to it? A veto. It does not want to give one dollar away. Yesterday in the Budget Policy Statement the Government went out and told the people of New Zealand that there was no room for tax cuts. It told people not to worry about tax cuts because there was not a spare dollar to return to them in tax cuts. It does not matter that household debt is going through the roof from 100 percent on average of household income in 1999 to 130 percent now. That is right—every New Zealander on average owes 130 percent of the average household income. But Government members do not care about that because they are OK. 
I want to turn for a moment to the issues around the venture capital legislation because it has not had a lot of discussion in this debate. The Government could not even get that bit right. It somehow seems to think that it can just redraft the legislation by going out there and presenting rules that no other country follows and that somehow miraculously offshore funds will come into New Zealand and be invested. Well I have news for the rather non-commercial elements of the Labour Party: “It ain’t gonna happen that way!” It is easier to go to Australia or the United Kingdom both of which understand limited partnerships or to go to hundreds of other countries that understand limited partnerships than to invest here. Somehow New Zealand does not understand that concept and still believes miraculously that people will come here. What did venture capital societies say about this legislation? Well they said it was a step in the right direction—yeah right. It is a baby step in the right direction but once again when presented with an opportunity to get some real capital into small companies that could become the backbone of the New Zealand economy in going forward and that could really create jobs and opportunities and provide enterprise for young New Zealanders the answer is that the Government cannot get past its ideology. It is just dishing something up to make it look as though it knows what it is doing but really it does not know anything at all. That has been the response in the venture capital area. 
Then we move to the Australian unit trust issue which is another very interesting issue. There the financial markets were reasonably creative and they found ways of getting New Zealand residents to invest in New Zealand Government stock through Australian unit trusts and then to be paid dividends in the form of bonus stock issues. That meant effectively that those New Zealanders received those dividends tax-free because there is no capital gains tax in New Zealand. We were supportive of closing that loophole down but what did the Government do? It went into the cupboard pulled out the sledgehammer and managed to belt everything over the head in relation to Australian unit trusts—equities and everything else. When the Government was doing the job and as it was about to do a Texas chainsaw massacre on unit trusts one would think it would get that right. But the Government did not get even that bit right because it forgot about England—yikes! It forgot about the product coming out of the United Kingdom and so it just did a hit job on the things that come out of Australia. Well that is hopeless—absolutely hopeless. 
When we go through this bill we cannot find anything that is good about it. But I want to spend the bulk of my time if I may in talking about the annual rates of taxation and about the fact that the annual rates are being confirmed in this bill with no change. At a time when New Zealanders are having inflation rob them of any gains they get in their income when they are working harder than ever and when they are looking to get the right incentives from the Government they get none whatsoever. Michael Cullen does not seem to think that incentives make any difference at all when one is earning money. He thinks they make a huge amount of difference in other areas but when one is making money they do not make any difference whatsoever. So he is quite happy for New Zealanders to face an effective marginal taxation rate of 91 percent. 
Michael Cullen is quite happy for a young family in Auckland to be working hard earning $38000 and raising two kids on that. He is quite happy for the couple to go out and get an education—maybe to get a student loan—or maybe to work harder to work two jobs to work longer or to work overtime. In doing so the couple will miss seeing the kids at Saturday morning sport and will miss what the rest of the family is doing. But if the couple puts in the hard yards and earn $70000 it will get to keep $2000 from the $22000 extra that it earns—and that is meant to be fair! Well I do not know what is fair about that and I would just love the Minister to get on his feet and tell the people of New Zealand who are out there working day in and day out how that is somehow fair. It is so far from being fair that it is not funny. 
Hon Matt Robson 
: Come on John be fair to the Government. It’s doing a good job. 
JOHN KEY 
: It is not doing a good job I am afraid I have to tell Mr Robson. I am delighted but not as delighted as Michael Cullen will be that that member is actually in the House. I guess that that means that he can vote so we are not to go to the elections just yet in January. I have no doubt that Helen Clark and Michael Cullen were ringing Mr Robson’s office frantically to make sure that he managed to pop in to the House from whichever Ahmed Zaoui soirée he had been to this afternoon. Ahmed Zaoui has only just got out of jail but I bet the member has been down at the welfare office to check out his eligibility for the emergency benefit for him. 
I will tell members something. Ahmed Zaoui has been out of jail for only a couple of days and even he emailed my office to tell me that this legislation was no good! That is what Ahmed Zaoui thought of it. 
What will happen to the millions and millions of dollars that are to be raised under the annual taxation rates set out in this legislation—and $46 billion will come into the Government’s coffers this year? That is 53 percent more than the Government raised in 1999 when it came into office. If this Government keeps on going by 2008 10 years after it first came into office—if goodness forsaken it is in office for as long as that—it will be earning 80 percent more than it did in 1999 yet there is no room for an adjustment to the taxation rates. We picked up the Budget Policy Statement yesterday and saw that the Government after it has paid for its entire operating surplus and its entire capital surplus will have $1.5 billion worth of cash in the hand but there is no room for an operating surplus. The quality of spending has already started to deteriorate miserably and it will get worse and worse. Things are coming out of the weird and wacky file that every Minister on the Government side of the House has and we will be funding all sorts of unbelievable projects—because when the Government spends money that is fine but when individual taxpayers in New Zealand spend money it is not. 
On Sunday afternoon as I sat in my home I wrote a press release about why the Government should give up just 1 week of the additional revenue—just 1 week—as a Christmas present. If the Government gave that up it could send every New Zealander young and old a cheque for $75. That would mean that the average household in New Zealand would get $300 and people could have a few presents under the Christmas tree a turkey on the table and some trimmings. But the Government will not do that because the turkeys in this scenario are Michael Cullen the Government and this legislation—and what a disgrace this legislation is!