Volume 647 Week 75 - Thursday 22 May 2008(continued on Friday 23 May 2008) 
Volume 647 Week 75 - Thursday 22 May 2008(continued on Friday 23 May 2008) 
[Volume:647;Page:16299] 
Thursday 22 May 2008 
( 
continued on Friday 23 May 2008 
) 
Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill 
In Committee 
Debate resumed. 
Part 1 Personal tax cuts and Working for Families tax credit increase: 2008-09 start ( 
continued 
)  
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 During the debate last night National members raised concerns about this tax cut legislation the cynicism of it bringing in cuts just 2 weeks before what we now presume will be the election and the lack of real help to families when an average person gets only $16 a week which is only the price of a family block of cheese. But with Dr Cullen being the Minister in the chair I would like to take the opportunity to focus on the particular issues in Part 1 which is the part we are now debating. The danger with putting legislation on tax through all stages in the way we are doing is the risk of error and I think we need to examine this bill to make sure we understand exactly what it is doing. Because it is amending some quite complex parts of our tax law we need to understand it. 
The point I would like to raise first with the Minister relates to what he said in his speech yesterday when he said that the legislation—or the Budget and this legislation—will be a bringing forward of indexation of Working for Families and a forecast second round of such indexation. I would like to check with the Minister exactly what he is indexing in this legislation because as I understand it Part 1 handles those issues. If we look at the clauses in Part 1 we see that the particular clauses that affect both the personal income tax schedules and the Working for Families payments are clause 5 in the case of Working for Families and clause 7 in the case of the income tax schedules. 
Clause 5 makes amendments to section MD 3 of the Income Tax Act 2007. Section MD 3 in the Income Tax Act covers family support. It seems to make sense that the changes to section MD 3(4) spelt out in clause 5 appear to be consistent with what the Minister has said and if we look at subclauses (1) and (2) we see that the changes there would apply to this indexation and the one that the Minister has forecast will come ahead. Then we see that clause 6 indexes the abatement threshold and amends section MD 13. If we look at the principal Act we see that section MD 13 appears to be doing what the Minister says. 
While we have the Minister in the chair I would like to ask him whether this Budget policy indexes all the Working for Families payments because he gave the impression in the Budget that all Working for Families payments would be indexed. So I ask him which clause indexes the issues covered in section MD 4 because section MD 4 of course covers the in-work payments provisions. It is a crucial part of Working for Families. In fact it has been the flagship part of the Government’s Working for Families policy. The Government claims that the in-work payments section is where the incentive is provided for people to get into work. I might be missing something here but as I scan the provisions in Part 1 and look at the various clauses I cannot see where the matters covered in section MD 4 are indexed yet they are very crucial parts of the system. 
If we look at not just section MD 4 itself but the whole group of MD sections—section MD 4 through to section MD 10—we see that section MD 10 for example in the principal Act has some figures actually spelt out so it is not as if they are percentages that automatically adjust or abatement rates that automatically adjust; it has some actual figures. I would appreciate the Minister’s advice as to where the amendments for indexation to the figures spelt out in section MD 10(3) are covered in the bill because I just cannot see them. 
I imagine the Minister would have tried to be accurate in his Budget speech. If they were not meant to be amended by the legislation I am sure he would have told us which bits of the Working for Families tax package the Government plans to index. I am sure the Minister would have wanted to be very straightforward with this and not indicate that the whole package was being indexed if in fact parts of Working for Families were not being indexed. 
I stress that I could well be missing something in the legislation here but I just cannot see where the actual payments that are a crucial part of Working for Families covered in the principal Act in section MD 10(3) are amended in the bill. 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 After 5½ years of the National Party saying that tax cuts are the only important thing in life the only thing it can find to criticise in this bill is something that was in the original legislation—that is the in-work payment is reviewed on a regular basis not automatically indexed. That was in the original legislation. 
Dr the Hon Lockwood Smith 
: Why didn’t you tell us? 
Hon Dr MICHAEL CULLEN 
: Because it is in the original legislation. This is no change. It has always been there and it is required to be reviewed by the end of June this year. This is all National members opposite can find to criticise. 
I want to tell the Committee that this morning the leader of the National Party has finally told us what National’s tax policy is. It is that National does not have one. He said that National had always had one but actually it was still developing it that actually it had not got it yet and that it would not be announced until 4 weeks out from the election. Then he told us two other things. He told us that Working for Families would not change—not at all. He said that it was structured badly but that it would not change under a National Government. Then he said that a National Government would have bigger tax cuts but they would not necessarily be more expensive. Those who got through arithmetic at school should try that one on for size: National would have bigger tax cuts but they would not be more expensive! You know loose lips sink ships and that ship is starting to look very very dodgy with a pair of loose lips out there that cannot stick to a single line. But best of all on Radio New Zealand National this morning Mr John Key announced that tax cuts are not the only thing that matter in life. Having said yesterday: “I believe in tax cuts.” he said today: “Actually it’s not very important. A lot of other things are important.” Then he told us in terms of the offset for increased tax cuts that Government spending is nice but that sometimes it is a luxury. A luxury for whom? Is it a luxury for those who depend on the support in the education and health systems? 
We are going to see a National Party programme that depends upon cutting social spending to fund smaller tax cuts for those on low incomes because Mr Key did not commit himself to the second and third stages of this programme. He said that what happens on 1 October will not be changed but then he said: “We won’t commit to what happens after 1 October.” That is code for cutting the tax cuts for those on low incomes to increase the tax cuts for those on big incomes. That is how we can have bigger tax cuts that do not cost more money because those tax cuts are redistributed upwards. 
That is why Dr Lockwood Smith a man who spends a lot of his life thinking deeply—it shows on his brow which is furrowed so deeply with that deep thinking—can find only one thing in this bill to criticise: that is it does not change the existing legislation which does not provide for indexation for the in-work tax payment. It provides for a regular review of the in-work tax payment. The family tax credits and the abatement threshold are subject to automatic statutory-based indexation. This part brings forward that indexation from 1 April next year to 1 October this year so that families in New Zealand will get some compensation for the increase in food prices and fuel prices. 
If the National Party really thinks this is all bad then its members should vote against it. They should vote against this bill but of course they do not have the bottle to do that so they will vote for it. 
GERRY BROWNLEE (National—Ilam) 
: 
 How many people in the Chamber heard the news commentators this morning talking about some of the email traffic they have had through their wires concerning the Budget? Some of the questions raised in those emails may well be answered if Dr Cullen can answer some questions about Part 1. 
The email that struck me most poignantly was the one from some fellow who said: “Thanks mum. You’ve abused me for 9 years and now when I’m just about to leave home you want to give me a lollipop.” That encapsulates the whole deal does it not? We seem to be in some sort of parallel universe this morning where everything is somehow for Labour at least switching round the other way. After 9 years of Dr Cullen not being able to give tax relief to working New Zealanders suddenly he is challenging the National Party as to why we do not want to give them bigger tax cuts. He has got it all wrong. We do. That is exactly why we are voting for his legislation today. New Zealanders should consider it a down payment. It is just a start. At a later point in the year in our time not in his time and not in anyone else’s time we will make our intention exactly clear. 
I think it is extraordinary that Labour after spending years and years talking about the social wage if you like the Working for Families programme—how it was a great benefit from the Government that topped up the needs of New Zealand families—is suddenly repackaging it as years and years of tax cuts. I say to Dr Cullen that it does not work like that because people know that only those with families are affected by that package; many many people are not. Although we do want families in this country to do better to have more in their pockets National sees another reason to vote for this legislation. 
Hon Dr Michael Cullen 
: You’re against it but for it. 
GERRY BROWNLEE 
: Dr Cullen says: “So you were against it before.” The interesting thing is that in 9 years we have never seen a bill like this on the floor of the House—not once. [ 
Interruption 
] They are at it again. The paint strippers in the back row are screaming out “What about Working for Families?”. Well Working for Families is not a tax cut. That those members have the kind of mentality that allows them to scream out “What about Working for Families? It’s a tax cut.” shows how far out of touch the current Government is with working New Zealanders. The No. 1 point is that all the money that the Government dishes out belongs to the people. Those members have gone quiet. This is a revelation. All that the Government is actually doing with this tax cut is saying: “We’re not going to stick our hand as far into your pocket as we would like.” [ 
Interruption 
] Listen to them! Tax money apparently grows on trees. I cannot believe that sort of mentality. All the money the Government gets belongs to the people. The only thing we can say about these tax cuts is that the Government is going to take less of their money. Somehow Labour members are saying that that is a virtuous thing that the Government is marvellous. There have been 9 years of their going deep in there 9 years of their feathering all sorts of programmes that have had little effect on New Zealanders’ lives and they are suddenly saying they are going to take a little bit less and are wondering why people are not more grateful. That is the subtext of it all. 
It has to be cruel luck that a Government after 9 years in office offers tax cuts that New Zealanders have been wanting for all of that time and suddenly it is knocked off the first 15 minutes of the news by the complete failure of our system to protect children in this country. I do not think New Zealanders will miss the point. All they want to say about Working for Families is that a lot of families are under stress and that is why—[ 
Interruption 
] It is all connected. The fact is that in 2007 there was an extraordinary number of child murders and last night we saw the effect from families that do not have a lot of purpose. One of the interesting things is that this Budget has not lifted the spirits of New Zealanders one little bit. 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I am loving this! Now we have learnt why National members voted against Working for Families: because it was not a tax cut they say! Although it put more money into people’s pockets they voted against it because it was not a tax cut. Now we can see the National Party mentality. It is a kind of  
Animal Farm 
 mentality: tax cuts good; bigger tax cuts better; putting money into people’s pockets bad. Working for Families equals tax credits for those in employment. In any case even if it did not why would the National Party have voted against it when Mr Brownlee now tries to claim that it is actually a good idea for families to be helped? Indeed National is voting for it this morning—but voted against it previously. 
We also learnt from that speech and from the speech made by Mr Key on  
Morning Report 
 why the National Party manages to have both Gerry Brownlee and Lindsay Tisch in the same caucus. The tax cuts are both too big and too small simultaneously—that is what the National members say. The tax cuts are both Gerry Brownlee and Lindsay Tisch simultaneously. They are so big that I heard previously we might have to borrow but they are so small that they do not make any difference. The National Party will have bigger tax cuts but they will cost less money and it will not have to do anything. This is wonderful! The National Party has spent 9 years in Opposition and it can still come out with that kind of rubbish and expect people to vote for it. 
Mr Brownlee clearly did not hear Mr Key on  
Morning Report  
this morning. He said that tax cuts are not very important any longer—because Labour has introduced tax cuts they are no longer as important as other things—but National will be announcing a big tax cut programme. He says it will not cost any more money—or it might; we do not know. It will be 4 weeks before the election and by then we would have had a pre-election fiscal update; I will be interested to see then whether the National Party believes that it can afford larger tax cuts without large-scale borrowing or without cutting social services. And National will not cut social services but Government spending is sometimes a luxury says Mr Key on the front page of the  
New Zealand Herald 
. 
That party thinks that it will go into a coalition agreement with Mr Peters that as part of that coalition agreement Mr Peters will be Minister of Foreign Affairs and that it will cut Vote Foreign Affairs and Trade. Well if National thinks that it had better think again. I can tell National members that it does not work like that and it will not work like that for them. It is no good National picking on the poor old Ministry of Foreign Affairs and Trade people on the cocktail circuit; it will have to find social services to cut. [ 
Interruption 
] That is right. Mr Hayes agrees. Yes indeed because that is where the big spending is. 
Mr Key said that National might find $500 million over 3 years by slashing the bureaucracy. Well $500 million will not add up to anything much by way of tax cuts. It will not deliver large tax cuts to the people earning over $60000 a year. That “dinky” couple on the radio this morning who are renting in Remuera and finding it hard to make ends meet could move to Glen Eden. It is cheaper out there. It is where my sister lives. They could move there. They would get a cut in their rent there. They are finding it hard. They are saying that two tax cuts of $110 a week will not make much difference to them. I can tell them that it will make a hell of a lot of difference to the people living in Otara in Glen Eden in South Dunedin and in Pirimai in Napier. National is saying that it will give smaller tax cuts to those people it will claw back stages two and three from those people in order to give more money to the people who already have a great deal more. That is called helping families in the National Party guise. 
Labour will fight an election on those grounds with the greatest of joy. We know and National members know from reading the front page of the newspaper that I have not merely stolen their fox but eviscerated it strangled it and thrown it back into their back garden and they do not know what to do about it at that particular point. They do not know where to go and they are praying that something will turn up between now and 4 weeks out from the election. I say “Good luck!”. 
Dr WAYNE MAPP (National—North Shore) 
: 
 Well I guess it was very disappointing for Dr Cullen to find out last night that National is actually voting for this tax cut. That is the truth. He said: “Of course National’s going to roll it back.” Why would we do that? I tell Dr Cullen that we are actually voting for it. So Dr Cullen will not be able to run that line out on the hustings any time soon because we have shown that his game is up. It is just a down payment. 
Do members know that Dr Cullen and indeed the Prime Minister went around the last few days saying: “Of course National is going to slash doctors slash nurses and slash teachers.”? They just conveniently forgot to tell the country that the Government will be spending $47 million on Government House. That is the Government’s priority. Dr Cullen should ask the people in Porirua and Glendene how important they think that is as a priority for Government expenditure. Dr Cullen should tell the people how important it is to build a new embassy in Stockholm for heaven’s sake! I can understand that there might be some priorities in foreign affairs but Stockholm? It is simply not that important and shows up this Government’s priorities does it not; Government House Stockholm 10000 extra bureaucrats in Wellington and nothing to do with doctors nothing to do with nurses and nothing to do with teachers. The Government’s preference is the bureaucracy in Wellington and frankly I tell Dr Cullen wasteful Government expenditure. So do not let me hear from any members of the Government that there is no space for an additional tax cut. 
One of the features of Part 1 is that the real tax cut is delayed. People have to wait 3 full years to get a reasonable level of tax reduction—$55 in 2011. That is why the public is saying that it is too little too late. One cannot expect them to wait another 3 years after 9 years of waiting to get a decent tax cut. Of course they will get a tax cut I guess in 2009 just enough to buy a block of cheese but I tell Dr Cullen that that will not cut it. 
I guess it is disappointing for the Government to find out that it will have to wait for National to announce its programme. So what? Why should National wait on the Government’s agenda to meet its needs to announce its package now? The public will know in enough time what National’s programme will be and they will judge it. The truth is and it is completely clear from this Budget that there is space for a better tax cut; one simply has to reprioritise expenditure. 
Hon Dr Michael Cullen 
: Really? 
Dr WAYNE MAPP 
: Yes. We are not going to spend $620 million extra on foreign affairs. We will make a different choice on that precise issue. We will not open an embassy in Stockholm. We do not see any necessity to spend $47 million on Government House. 
Hon Dr Michael Cullen 
: Oh! 
Dr WAYNE MAPP 
: Look Dr Cullen is shocked. He is absolutely shocked to see that we are saying no to $47 million being spent on Government House. Sure there might be some repairs needed but $47 million of repairs? Get real! It is simply fatuous for this Government to come along and say there are no choices other than the ones it has made. There are different choices—reasonable choices—that can be made that will deliver a better tax cut for all New Zealanders. 
One of the interesting things I must say is the change from the low-income earner rebate to a scheduler rate. Actually that has some merit and I tell Dr Cullen that National members will be voting for it. We can see some merit in changing from a low-income earner rebate to a scheduler rate. National is the party for tax cuts and that is why we tell the Government we are happy to vote for this bill. We say that this is a first instalment and we say to the public of New Zealand that they can bank on this tax cut but they can also bank on more because National will have different priorities and different expenditure and will not waste $620 million on the Ministry of Foreign Affairs and Trade. The Minister’s response to that was: “Oh well you’ll have to get the permission of Winston Peters.” Yeah right! Are we going to say to Mr Peters: “We’ve got to have your money for a tax cut.”? Hardly no. 
JOHN HAYES (National—Wairarapa) 
: 
 I rise to support this bill because it is a down payment on future tax cuts. 
Hon Steve Chadwick 
: Oh that’s a good line. 
JOHN HAYES 
: But I want to explain to “Ms Raucous” in the back row that she will get no tax from most of my hill and sheep country farmers because they are not earning sufficient money to pay taxes this year. I had an email from a farmer stating: “I spent $50000 buying in feed for my farm. I’ve had to sell all my cows and my calves I’m going to have no winter income I’ve worked my arse off”—that is what he said—“and where am I? Worse off than I was a year ago.” He stated: “I’ve got no money and I’ve got a huge overdraft of $300000.” Why are we in this situation? Because this Government is spending far too much money. It is taking too much money from the community and spending it on unproductive programmes like the $600 million for the foreign ministry. Labour should go and campaign on that; it will give Labour lots of votes I am quite sure. 
I find it very disappointing that in this bill there is no long-term framework. There is no coherence about what these cuts will feed into. It is astonishing that the 33c tax rate is not changing and even more astonishing that the 39 percent rate is not changing. There needs to be a vision whereby these cuts feed into a long-term programme that is coherent. There needs to be a 5 or 10-year programme of tax cuts and our country and our community need goals to aspire to. They need to know where we are going. It is critically important that we have buy-in from our communities for a programme of coherent tax cuts. I welcome this bill in so far as it provides a down payment but it does not fit into anything bigger. It is a total adhockery intended to buy votes in this next election. 
What does this bill articulate about what the Government is trying to achieve? Nothing! Tax should be about taking just enough money from the community to drive this country—to provide for our collective self-administration. But this Government is trying to use the tax system to reduce poverty it is trying to use it to reduce income inequality and it is trying to provide compensation for rampant rises of petrol—$2 a barrel now—and blocks of cheese at $18. It is trying to compensate for increasing power prices and it is trying to incentivise savings. Those members need a reality check. 
Hon Rick Barker 
: It’s $200 a barrel. 
JOHN HAYES 
: Sorry $2 a litre. This Government needs a reality check. The tax system in this country cannot deliver all of these things and nor should it. I think there is no fairness in this system that the Government is imposing on our community. Why should a family on $80000 a year with two children pay 14 times the amount of tax as a similar family on $45000? Where is the fairness in that? Why should the family on $80000 pay 14 times the tax to this Government that a family with two children on $45000 does? There is no fairness there—no fairness whatsoever. This is a very poorly thought-out bill. It is total adhockery. 
This country is in trouble because this Government has relied on taxing heavily the incomes of a few mobile people and what are those people doing? They are marching with their feet to Australia. Day by day we have never had such a big outflow in this country—79000 people in the past year. They are voting with their feet. Why are they doing that? Because they are paying too much tax. 
I have to say that this bill is a start. It is a down payment but it is not a coherent programme of long-term tax cuts and that is what a National Government will deliver to the people of this country. We need to cap Government spending; it is outrageous that we are going to take $600 million and spend it in the foreign ministry area. 
CHRIS TREMAIN (National—Napier) 
: 
 I rise to speak to Part 1 of the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill 2008. The bill is part of a Budget that Dr Cullen is keen to take on to the hustings and to fight in the 2008 election. I say today that those words are small in that he had the opportunity to genuinely take that fight on to the hustings. In 2007 I challenged Dr Cullen to stand on the hustings against me in the seat of Napier and to take his tax policies to the hard-working people of New Zealand. I challenged him to stand on the hustings in Napier and to take up that challenge to genuinely get out there amongst hard-working people. 
Nathan Guy 
: What did he say? 
CHRIS TREMAIN 
: When I put that challenge to him he said that no he would not take it on. He had a clear opportunity to stand in Napier and to take up the challenge but he did not. 
We are sitting here today under urgency to take this bill through the House and to write it into law. The people of New Zealand may be asking why we are doing this under urgency. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Can I have people out of the corridors and into their seats please. Thank you. 
CHRIS TREMAIN 
: New Zealanders will be interested to know that that was the future leader of the Labour Government in the corridors taking up time by discussing his own future tax policy. 
I come back to the debate. I ask why we are here under urgency to pass this bill. We are here to ensure that it becomes law. We need to make sure that it becomes law. And why is that? It is because we cannot trust Dr Cullen to actually put tax cuts into place. 
One might ask why anyone would take that line of attack. Well the proof is in the Cabinet papers. In the 2005 election Dr Cullen promised that there would be tax threshold cuts which is what we are now seeing in Part 1. He promised there would be those cuts. But very quickly the reality of that got washed down the tube. I have here a Cabinet paper from 2007. Rick Barker would have been at that Cabinet meeting and I guess the potential new leader of the Labour Party would have been there too and would have agreed to this Cabinet paper. Dr Cullen’s Cabinet paper recommends that “we do not adjust tax thresholds in the medium term thereby retaining fiscal drag and potentially allowing tax to GDP ratios to rise slightly. Accordingly this paper seeks Cabinet’s agreement to rescind our previous decision to adjust income tax thresholds on a three-yearly basis. Within the projection period … we will adjust the tax thresholds for inflation but some portion of fiscal drag might need to be retained to finance our decisions.” 
That was the paper that rescinded the initial decision to change the tax thresholds and that is why we are rushing this bill through under urgency. Those members and the potential leader of the Labour Party Mr Phil Goff do not trust Dr Cullen on the tax threshold issue because he said tax thresholds would not be adjusted in the medium term. The medium term here would have been 2008 2009 2010 so that is why we are under urgency making these adjustments to the tax threshold levels. In that regard it is a good bill and National is supporting it today because it is taking us forward and starting to deliver some of the money of hard-working Kiwi taxpayers back into their pockets. On this side of the Chamber we believe funnily enough that hard-working taxpayers know how to spend their money best. They know how to make decisions about where to educate their children; they do not need this Government to tell them that. They know how to make decisions about their health; they do not need this Government to tell them that. They know how to make their own decisions and that is why we are supporting the changes to the tax threshold levels. Thank you Madam Chairperson. 
Hon TAU HENARE (National) 
: 
 I will tell members who likes this Budget. One person really really likes this Budget and his name will become apparent very soon. 
Dr the Hon Lockwood Smith 
: Phil Goff. 
Hon TAU HENARE 
: That is exactly right. Phil Goff loves this Budget and do members know why? It is because of the tax cuts of 12 bucks a week. That is a packet of smokes a week—a packet of 25s. 
Hon Phil Goff 
: That shows your priorities! 
Hon TAU HENARE 
: The holier-than-thou Phil Goff thinks it is terrible that I am talking about smokes but what about the people in South Auckland and the people in west Auckland? The leader of the coven over there talks about people in Otara and she talks about people in west Auckland but she has never ever lived like the people in west Auckland or even South Auckland. I can tell members now that for the brothers and sisters on the streets of South Auckland west Auckland and I might add Wainuiomata 12 bucks or 16 bucks a week— 
Hon Trevor Mallard 
: You’re welcome to visit any time. 
Hon TAU HENARE 
: —not a problem; I will—will not cut it. We have gone from chewing gum to a block of cheese. 
Labour members talk about Working for Families and how that was a tax cut. Well it was not a tax cut; it treated good decent hard-working Kiwis as just another welfare recipient. So mum and dad with four kids have to trot off to the Work and Income office every week or so in order to get their benefit. That is what Labour made the people do. There is nothing in this bill that says otherwise. 
I say kia ora to giving a $16-a-week tax cut; it is a start. The Government should be patted on the back for giving back any money that it can to working people in this country. But I tell members that after 9 years all it can give back is 12 bucks or 16 bucks. 
Hon Steve Chadwick 
: Tell us about Working for Families. 
Hon TAU HENARE 
: That is the head witch of the coven over there—the leader of the coven. She asks me to talk about Working for Families. Well let us talk about the $690 million - odd that the Government paid for a clapped out railway that does not even run. There are no trains in Rotorua there are no trains in Gisborne and there are no trains up north. Where are the trains? 
Dr the Hon Lockwood Smith 
: There’s one a week. 
Hon TAU HENARE 
: Oh sorry there is one a week. And the Government says that this is a great taxation bill! The Government bought the little train set—the little Tonka toys; I wonder who the Fat Controller was—and earmarked new embassies in Switzerland and all over the place. Just those two things add up to a billion dollars. 
Hon Member 
: What do we need then? 
Hon TAU HENARE 
: Well why does the Government not give it back to the workers? But that is all right because Lynne Pillay comes from a union background the Service and Food Workers Union which is about to steal $200000 off its own members. Why? It is to employ a political organiser to run around the country and talk about the tax cuts that this Government has given. What a rort and what a pack of thieves the Service and Food Workers Union is. 
There is nothing in this bill other than to say: “Oops we are running out of time. Here is 12 bucks. Can you please please on election day vote for the Labour Party?”. And the answer is absolutely not. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Before I call Dr the Hon Lockwood Smith I ask members to do three things. Firstly can we actually start to address Part 1? I have let a general debate go for quite a while. I would like to be addressing Part 1. 
Dr the Hon Lockwood Smith 
: I did that. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Yes I do accept that. Secondly the level of noise is pretty high and could the interjections be on the bill and not on other extraneous things? The debate has gone fairly wide; can we now focus on Part 1. Thank you. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 Indeed—and I did that when I opened the debate this morning. All we got from the Minister of Finance was just a political rant in response to the serious questions I asked. That shows with what little seriousness he takes his own tax law. 
I would like to come back to Part 1 and ask some questions of the Government again. The Budget speech said that Working for Families would be indexed. I accept now and we have established it in the legislation that certain components of Working for Families have to be indexed. Other components of Working for Families can be indexed via Orders in Council. OK let us now ask the Government clearly what is to happen from here. The Government said that Working for Families will be indexed. This bill provides for just the family support bit which is about only a third of the payments or fewer of the Working for Families payments and that one-third is to be indexed by this legislation. Clause 5 does that and clause 6 indexes the abatement. 
The Government should make it very clear to hard-working New Zealand families what it is doing about the in-work payment and the parental tax credit. They can be indexed by Order in Council but will they be? I tell the Minister in the chair Mr Mallard that I am prepared to take my seat again if he is prepared to tell New Zealanders whether the Government’s statement in the Budget speech that Working for Families—as distinct from family support—is to be indexed because this legislation deals with family support. This legislation which amends sections MD 3 and MD 13 of the Income Tax Act 2007 deals with family support and its abatement. Sections MD 4 and MD 11 deal with parental tax credits. This bill does not deal with them. We have established why. It is because they can be done by Order in Council; I accept that. The Government though in the Budget speech made a promise that Working for Families would be indexed. People think that that means adjusted for inflation but the Budget speech did not say “family support”; the Budget speech said “Working for Families”. Working for Families includes in-work payments and parental tax credits and nothing in this legislation alters those. Yet they are a significant part of the whole Working for Families package. 
Some of my colleagues have criticised quite rightly the Working for Families package. There are all sorts of problems with it and I agree with that criticism. There are some dreadful problems with it—high effective marginal tax rates the locking of people into poverty and all that kind of thing. But for this Part 1 that we are focused on right now I believe that New Zealanders have a right to know whether Dr Michael Cullen meant what he said in the Budget speech. Will the Government adjust those other components of Working for Families? It can be done by Order in Council—I accept that absolutely—under section MD 10 of the Income Tax Act 2007. Orders in Council can provide for in-work payments to be increased and likewise under section MD 11 the parental tax credits can be increased. Let us hear whether the Government will do that. 
Hon Trevor Mallard 
: Those matters are the subject of a report back to Cabinet by the end of June and a decision will be made at that time around the use of Orders in Council. 
Dr the Hon LOCKWOOD SMITH 
: I thank the Minister for the clarification that these matters will now be dealt with by a further report to Cabinet. I appreciate that; New Zealanders at least now know that much. The timing was towards June? 
Hon Trevor Mallard 
: End of June. 
Dr the Hon LOCKWOOD SMITH 
: OK. I want now to pursue that what we have established the Minister of Finance said in the Budget speech was not factually correct; it was not factually correct. The Government so far has announced that it will index family support not Working for Families. The full Working for Families indexation issue is to be addressed by Cabinet later on. We have established that bit and that is a significant bit of the Budget speech because so much of the Budget focused on tax. It focused also on the Working for Families package but there we have found that Michael Cullen was not actually correct in what he said. How much of the rest of what Michael Cullen said in the Budget speech was not strictly correct? I think we need to dig quite deeply into some of the things surrounding this Budget to see what else is not actually correct and upfront in what he said. I will quote him. Dr Cullen said “a bringing forward of indexation of Working for Families and a forecast second round of such indexation.” If he were being upfront and honest that should have read as “an indexation of family support” because that is what he is doing here. That seems to be the only decision and where that is misleading is in the fact that the Government has not even decided whether it will index the in-work payments and the parental tax credits. I do not think it is good enough for the Minister of Finance to make statements in the Budget speech that are not correct. Whatever way one looks at that that is simply not correct. 
Hon Trevor Mallard 
: The member does not understand. I am happy to further clarify. 
Dr the Hon LOCKWOOD SMITH 
: If the Minister is happy to clarify it further I will give him the opportunity. 
Hon Trevor Mallard 
: Just to make it absolutely clear to the member I tell him that in the Budget and in the bill we are dealing with now the Budget indexed the family tax credit and the abatement threshold. That brought forward something that was due to happen on 1 April; it will now happen on 1 October. The minimum family tax credit is reviewed annually. It was last reviewed late last year. And the third and fourth components—the in-work payment and the parental tax credit—are reviewed periodically. The first review is due to be done by 1 June this year. That will be reported to Cabinet during June and dealt with then. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Dr the Hon Lockwood Smith before you resume your call I tell you that I will regard that last intervention as your having yielded so you have 3 minutes left. 
Dr the Hon LOCKWOOD SMITH 
: I appreciate that Madam Chair; I realise that I was running a risk of that not being accepted. 
I ask the Minister one further thing. He has made it clear that there are still two components of Working for Families—that is the in-work payment and the parental tax credit—that are not dealt with in this legislation. The Budget speech said they would be indexed so I ask the Minister right now whether the fiscal figures in the Budget provide for any significant increase in those payments. They could amount to quite a lot of money. If the Government is going to index the in-work payments and the parental tax credits that could amount to quite a significant sum of money. Do the figures in the Budget allow for that or has the Government made no provision for that at all? If no provision has been made for it then the honest thing to tell the people of New Zealand is that the Government does not intend— 
Hon Trevor Mallard 
: The Government hasn’t received the review. It’s not due to receive it till 30 June and it takes decisions after that. 
Dr the Hon LOCKWOOD SMITH 
: I tell the Minister that this Budget goes from 1 July through to 30 June next year. 
Hon Trevor Mallard 
: But how can you adjust something for results you haven’t got? 
Dr the Hon LOCKWOOD SMITH 
: Well in preparing a Budget where Working for Families is one of the Government’s big claims—that the Budget is addressing Working for Families and indexing Working for Families—I am asking the Minister now whether the fiscal projections in the Budget include an increase in the in-work payments and the parental tax credits. I accept that the Government may not have received— 
Hon Trevor Mallard 
: Page 144. 
Dr the Hon LOCKWOOD SMITH 
: And what does it say I ask the Minister? 
John Carter 
: He’s yielded again. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Are you yielding again with another 1½ minutes left after this? 
Hon Trevor Mallard 
: It gets a little sad when someone has a PhD and the Budget has to be read to that person. But he has asked me to— 
John Carter 
: Stop being a dork and get on with it. 
Hon Trevor Mallard 
: Does the member want me to or not? 
John Carter 
: Yes—get on with it. Stop being a dork. Come on. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Please go on. 
Hon Trevor Mallard 
: Well Madam Chair is that appropriate language? I do object. 
The CHAIRPERSON (Hon Marian Hobbs) 
: I ask— 
John Carter 
: I withdraw and apologise. 
Hon Trevor Mallard 
: I turn to page 144 of the Statement of Fiscal Risks in the Budget and the section headed “Revenue—Working for Families Review of Rates (unchanged unquantified risk)”. So the risk is the same as it was last time. It states: Working for Families legislation requires a review of the amounts of the In-Work Tax Credit and Parental Tax Credits to be undertaken no later than June 2008. This review is to assess whether the current rates still meet the policy objectives behind Working for Families. This policy cannot be quantified until the review is completed.” That statement was in the half-year update; it is also here and it is unchanged. That member probably has about the same number of years’ experience in the House as I have yet he cannot read a Budget despite having been an Associate Minister of Finance. That is a very very sad situation. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Dr the Hon Lockwood Smith you have 1 minute and 37 seconds left. 
Dr the Hon LOCKWOOD SMITH 
: Let me make it clear why I asked the question. Last time that member was a Minister in a Labour Government that was on its way out—in 1989—we had a Budget like this and there were issues like these tax credits that were not covered in the Budget. The Budget was false and when National came in as a Government it had to make legal some of the illegal spending of those Ministers—like Phil Goff and Michael Cullen—prior to the 1990 election. The Minister in the chair Trevor Mallard was part of that Government that provided in supplementary estimates for expenditure that it far exceeded in the run-up to the election. He knows it and the Labour members who were there when that Labour Government was on its way out know it. They spent money that was not in the Budget and the incoming Government had to make it legal. 
Part 1 agreed to. 
Part 2 Personal tax cuts: 1 October 2008 start 
CRAIG FOSS (National—Tukituki) 
: 
 As I noted last night it is an absolute pleasure to be voting finally for a bill that brings in personal tax cuts. I thought we would have to wait another 6 months or so for that but I suppose that after 9-odd years it was always going to come sometime. Perhaps Part 2 could also be called the “Road to Damascus section” or the “Contradiction part of the bill” because it deals with changes to the Income Tax Act 2007—the tome sitting there on the Table. Part 2 changes the particular notional amounts etc. 
I note that this bill has had to cross a threshold first because in the last Budget and on numerous times after that the finance Minister has set himself four tests before he would even consider tax cuts. I will address those tests because that is very relevant to this part of the bill which is supposedly about how those changes will be funded. Those tests supposedly were firstly that tax cuts would not lead to greater inequality; secondly would not lead to inflationary pressures; thirdly would not require borrowing to fund them; and fourthly would not require cuts to public services. I will come back to the first test because there will be probably be plenty of time for that one next week. 
In relation to the fourth test though I make the point that Dr Cullen is playing silly word games again when he says that the tax cuts will not require cuts to public services. I think that in the Budget he used the word “reprioritisation” or something like that. In answer to questions leading up to the Budget in the House the other day he gave all sorts of bureaucratic nonsense and silly answers to what actually looks like his hidden agenda. 
I will address tests two and three because Part 2 relies on them. Test two was that tax cuts would not lead to inflationary pressures. Right there on page 70 of the Budget Economic and Fiscal Update from which this bill arises we see annual CPI forecasts for the next 4 or 5 years. A forecast of 2.7 percent was predicted at the half-yearly update—now it is 2.9 percent on average. Members should remember that it is virtually illegal for inflation to go north of 3 percent but the forecast for 2009-09 is for 3.2 percent inflation. The Minister has failed to test two— 
Hon Trevor Mallard 
: I raise a point of order Madam Chairperson. Although Part 1 was a relatively broad part of the bill Part 2 is about as narrow as we can get. There are some numerical changes there and some consequentials flow from them. The Committee stage is certainly not the place for a broad-ranging Budget debate. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Is the member replying to the point of order or does he want to continue? 
CRAIG FOSS 
: I will continue and will refer straight back to the part. 
The CHAIRPERSON (Hon Marian Hobbs) 
: I just want to think about the point of order that has been called— 
CRAIG FOSS 
: Madam Chairperson I point out that Part 2 has tables that include changes—for example from $60000 to $70000—and it refers to section CS of the Act. When we look through pages 13 and onwards we can see changes to resident withholding tax etc. that all change the underlying rates. I am questioning this bill and how it will be funded—for example how changing the threshold from $60000 to $70000 will be funded. If it cannot be funded it is therefore inaccurate. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Yes you may continue. 
CRAIG FOSS 
: Thank you very much Madam Chairperson. The changes in Part 2 will show that as inflation gets further out of control the real impact of these changes to New Zealand taxpayers will be diminished. Of course over the last 8 or 9 years inflation has been driven up by the current profligately spending Minister. 
It is also quite relevant to Part 2 to question how these changes will be funded. How will the $70000 change to $75000 in clause 13(2) be funded because one of the Minister’s tests is that we will not borrow to fund cuts? Yet page 104 of the Budget Economic and Fiscal Update shows us there will be $6.4 billion of extra funding/borrowing to fund the current Budget. That will lead to a $12.8 billion cash deficit in year 4 I believe. If that is not borrowing I certainly do not know what is. There is also a very interesting table on page 102 of the update that Part 2 is very much linked to. 
Again it is a pleasure to be voting for this bill but I am just asking for more clarification more honesty and more transparency because the same Minister who delivered this Budget and this bill has for many many years argued the total opposite to what is contained in the bill. Even on the hustings at the last election many Labour members opposite constantly argued against the merits of tax cuts. The Minister himself gave a speech pretty much through gritted teeth and we could tell that Labour really did not want to endorse what was in the Budget. Part 2 will be talked about a lot during the campaign—a lot of numbers and what is good for a family of three a family with two kids etc. But I say “Give me truth give me transparency be upfront.” and if the Government is borrowing to fund these tax cuts then I would like to see that and see that very very quickly. Thank you. 
Hon TREVOR MALLARD (Associate Minister of Finance) 
: 
 I have a question: where is the amendment? Where is the amendment from the National Party? National has spent years saying it has a better tax package than the Labour Party has. National members go around the country day after day to say that they have a tax package that is better for the country than Labour’s. There is one part of the bill where an amendment should be moved and it is Part 2. I ask John Key: “Where is your package mate? Why don’t you front up with your package and tell us what you want to do?”. 
I know why John Key has not put an amendment on the Table. The reason is that this Budget is more generous to low and middle income people than what the National Party had in its plan. Why can John Key not be big enough to stand up in the Chamber and admit that? Why can he not say the reason he has failed to put an amendment on the Table is that his amendment would not have cut taxes for low and middle income people; it would have put them up—again. I ask John Key where his amendment is. This is the part. I know he is a relatively young and new member but someone like Lockwood Smith could have briefed him on the point when he should put his amendment in. John Key is not putting in an amendment. That just shows how hopeless and disorganised the National Party Opposition is. 
PHIL HEATLEY (National—Whangarei) 
: 
 Here we have “Tricky Trevor”. “Tricky Trevor” is asking why the National Party does not put up an amendment. Has he told the public and Parliament that he has a power to veto an amendment? No he has not. Has he told the public and Parliament that he will waive that power to veto the amendment? I say to “Tricky Trevor” that we have called his bluff. Why does he not waive the power to veto our amendment? No “Tricky Trevor” has been caught out. He is back-pedalling. I have seen cyclists in my time— 
The CHAIRPERSON (Hon Marian Hobbs) 
: Could you refer to members by their proper names and not by a— 
PHIL HEATLEY 
: Their common name. 
The CHAIRPERSON (Hon Marian Hobbs) 
: No—by their proper names as they are called in the House. 
Hon Trevor Mallard 
: I raise a point of order Madam Chairperson. You may not have noticed but during your ruling Phil Heatley interjected on you very very directly. I ask that he at least be asked to withdraw and apologise. Most Chairs in the history of this House would send someone out for that. 
PHIL HEATLEY 
: I happily withdraw and apologise. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Thank you. 
PHIL HEATLEY 
: I have seen cyclists going forward but I have never seen anyone back-pedal as quickly as Trevor Mallard just then. He called for National’s amendment but he was not prepared to waive his power of veto over that amendment. 
We are here in this Parliament debating Part 2 which is all about the personal tax cuts. Here we are legislating for them to go through. Why? Because Michael Cullen does not trust himself not to reverse his position on these changes to tax rates—which are a start and which National members say we will support—and certainly his Labour Party colleagues do not trust him not to. So we have to pass this legislation through Parliament. Interestingly Lockwood Smith has clearly identified that necessity. 
As Lockwood Smith said in speaking to Part 1 the Government is not legislating the indexing of the tax credits—we know that it will perhaps not keep that promise—and it is not legislating the indexing of the in-work payments in respect of Working for Families because it knows it may end up not keeping that promise. But it is legislating for the personal tax cuts because it has been caught out on that before and it has caught itself reversing that decision before. So the Government is legislating for the tax cuts. 
I also put to the Minister the question: “Are you or are you not indexing the parental tax credits? Are you or are you not indexing the in-work payments?” I guess will be a pre-election announcement. We are debating Part which is all about the tax cuts that have come in Michael Cullen’s ninth Budget. Did Michael Cullen give personal tax cuts 5 years ago when he had a surplus of somewhere between $5 billion and $7 billion? No. Did Michael Cullen give tax cuts 4 years ago when he had a surplus of somewhere between $6 billion and $8 billion of taxpayers’ money? 
Hon Members 
: No. 
PHIL HEATLEY 
: Did Michael Cullen 3 years or 2 years or even 1 year ago give personal tax cuts when he had surpluses of $9 billion $10 billion or $11 billion? No. 
Chris Tremain 
: He promised them and then reneged. 
PHIL HEATLEY 
: He did promise chewing gum tax cuts” but he reneged on them. 
So what is the difference between this year when we have troublesome economic growth and the last 5 years—up to 1 year ago—when we had good economic growth? Why did he not give tax cuts in that environment when he is giving tax cuts in this environment? There is only one difference and that is this year’s general election and the threat of Phil Goff taking over the Labour Party and dumping him as Minister of Finance. Leader-in-waiting Phil Goff knows that Michael Cullen is the worst advertisement for the Labour Party going into this election and he would not have him as his Minister of Finance. 
I know Trevor Mallard was looking at the job of Minister of Finance. I know Trevor Mallard would have put up a different tax cut regime if he was the Minister of Finance. But because of his brawling and general bully-boy antics he has lost that opportunity into the future. So here we are looking at Part 2 on the personal tax cuts that could have come 4 or 5 years ago. 
The CHAIRPERSON (Hon Marian Hobbs) 
: Just before I call the next speaker—and it will be John Carter—can I ask people to stick to Part 2. It is not enough to say: “I am talking about Part 2.” and then take off on a broad pattern. Let us stick to Part 2. Let us set a new record. 
JOHN CARTER (National—Northland) 
: 
 Thank you for the challenge Madam Chair. Obviously though we still have the convention of being allowed a wide-ranging 30 seconds. Let me just start off because I would not want to do anything if we are setting records that actually changed them. 
Hon Trevor Mallard 
: Fifteen seconds left! 
JOHN CARTER 
: No that is the start of the start. This debate is all about honesty. It is about credibility. It is about this Government actually being credible or not. The first thing we found is that this Minister asked National to put an amendment on the Table and show what we have got. So we asked him to tell the public that he has the right to veto and what did he do? He back-pedalled. 
Part 2 which we are debating here and which the National Party supports is all about tax rates and that sort of issue. What we need to know is whether there is credibility that this Minister and this Government are going to stick by the legislation. I remember being in here in 1989 when the past Labour Government came down to the House and said it had balanced the Budget—the first time for years. It said it had a $89 billion surplus and what did we find? We found there was a $1.5 billion deficit. 
We want to ask this Minister whether when we are considering these tables in Part 2 they are actually credible. Can the Minister confirm for us that the Government is going to stick by them because they are based on honesty and credibility? I wonder whether the Minister can confirm that point. Quite honestly I doubt it given Labour’s history. 
I also say this: we have been in this House for nine of Michael Cullen’s Budgets and this is the first time we have had the opportunity to have this debate—with one exception. We had a debate about the fact there were some promised tax cuts in 2005. I am sure the Chair may recall that. The fact is there was no bill unfortunately—unlike today where we have the schedules and the tables that we are debating. The fact is that a promise was made that was not kept and that is the very point that this debate is all about and why we have to have this bill. If anybody wants to ask why we have this legislation it is because it is making the Minister stand by what he told the House would happen in this budget. That is what this whole issue is about. 
I want to ask this question: if these tables are implemented as the bill says then what impact does it have on people who are struggling in areas such as local government rates?”. Will it actually help us in that regard at all? Will it help those people who are on fixed incomes? Will it help them meet the pressures that this Government has put on them in the way of increased bureaucracy in both central and local government? Will it mean that they will get some relief? I say that it will not. In fact if we have a look at the whole issue that is being debated right now none of it is actually going to help those sorts of people who have been struggling. The Government asked for and got an inquiry the Shand inquiry into local government rates and it has not responded to that at all. 
I ask the Minister in the chair the Hon Trevor Mallard what impact these tables and the debate we are having today will have on the income of those people who are on fixed incomes and how it will help them to address their rates. I bet that the Minister cannot answer that question because he knows what the answer will be. The answer is that it will have such a small impact that it will have no impact at all. 
Hon Trevor Mallard 
: It’s not related to the rates in Part 2 of this bill. It’s different rates. This is about tax rates not rates for local authorities. 
JOHN CARTER 
: Yes I understand that but the question is whether this bill will have an impact on the people who are struggling. Will it have an impact on the people who are meeting constant demands from this Government because of increased bureaucracy? Will it have an impact on the people who are struggling because they have increased rates because of the pressure this Government has put on local government? The simple answer is—and the Minister does not have an answer to this—no it will not. It will not affect one diddly-squat the cost that local government is meeting. It will not affect one diddly-squat the people who are on a fixed income and who are struggling to meet their rates. I say to the Minister that it will not help them at all. 
Hon TAU HENARE (National) 
: 
 I want to ask a couple of questions on Part 2 but before I do so I will comment on what the Minister in the chair the Hon Trevor Mallard said—about why the National Party does not have an amendment to the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill. It is pretty obvious. The reason is that the Minister has a financial veto and unless he stands up and seeks leave to suspend that financial veto then we should not talk about it any more. We should not talk about some sort of proposed amendment that National should be putting up; this is the Government’s bill. 
This is a Government bill. I want to ask the Minister whether the Government will borrow in terms of the tax rates set out in Part 2 and whether will it stick by them. In hard times will the Government stick by the rates that have been set out in Part 2? If in 12 months from today oil is US$200 a barrel will the Government stick to these rates? Is there any money left in the coffers for these rates? We have seen before that this Government has not been too forthcoming about the surpluses it has had. People are as my colleague John Carter mentioned facing tough times; people in Waitakere City are now facing a 7.4 percent increase in their rates. Where will their $12 go? Will it be enough for them to pay not only the extras out there but also on top of that for people in the Waitakere City area the increase in rates? 
I want to take just a brief call and I suppose there are three questions. Will we borrow for the tax cuts—the tax rates—in Part 2? Will the Government stick by them? National will certainly stick by them—in fact we will increase them most probably. And what about some relief for those who are facing hard times in the city of Waitakere? It is all well and good to talk about the rates in this bill and about how they will help a lot of people but how will the public and the community of places like Oringi cope? How will they fare in terms of the tax rates before us? I suggest that these rates are not going to do a hell of a lot for the 29000 people who have lost their jobs in the last quarter because to get tax relief surely one must be working and unfortunately those people are not working at the moment. So I ask whether this Government will borrow whether it will stick by these rates and what relief there is for people such as those who live in Waitakere City who are facing a 7.4 percent increase in their rates. 
TIM GROSER (National) 
: 
 Part 2 of the bill contains only a few words but they are very important words. Essentially they represent the Government’s final response to a question that I think not only National as the Opposition has been asking but also New Zealanders have been asking now for 9 years. The question is when will middle New Zealand share in the good times? When will middle New Zealand which produced better results in at least the first 5 years of this Government—the roots of those results of course predate this Government—get an economic return on that? This legislation is the answer 9 years on. 
I am searching for adjectives to describe yesterday. I could say “unusual” or perhaps “irresponsible” when I think about the Government’s response. Actually I think that the word I would choose would be “bizarre”. I found it absolutely bizarre when I thought about the importance of the message in Part 2 of this bill. We had Dr Cullen finally gritting his teeth and spitting out the figures that we see in Part 2. I thought that an extraordinarily clever cartoon that appeared in the  
Listener 
 a few months ago said it all politically. It had the Prime Minister wearing a sheriff’s hat and holding up a Colt .45 that was still smoking. Dr Cullen was lying on the ground muttering the words: “Over my dead body.” and the Prime Minister was asking her caucus: “Has anyone else got any objections to tax cuts?”. 
Yesterday we had the strange spectacle of Dr Cullen spitting out tax cuts which unfortunately given his ideological conceptions had to include some relief for the people he calls what is it the rich— 
Hon Member 
: Pricks. 
TIM GROSER 
: No no; the word in the expression “He is a jolly good brick.”—is that the word I am searching for? Unfortunately Dr Cullen had to swallow hard. He had to deliver at least something for political reasons after 9 years of denying the people of middle New Zealand a share in the good times that they have produced. It is not Governments that create wealth; it is the people out there in New Zealand who create wealth and the Government can either facilitate or get in the way of that. 
Then we had the Prime Minister—and this is truly bizarre—talking to New Zealand about her glory days during the Springbok Tour and the Viet Nam War. Last night we had the Minister talking about what was it 16 image consultants that he thought he had found in the Opposition third-floor wing and Minister Shane Jones was talking about some meaning in te reo of Mr Henare’s first name involving some informal slang. If I was sitting in the pub and not in Parliament then I might have had a bit of a laugh with them. But I find it utterly bizarre that yesterday which is the most important day in the political calendar barring election day itself we had Ministers of the Crown and the Prime Minister not talking about the substance that we are addressing here in Part 2 of this bill but essentially either making jokes or irrelevant observations. It just raises the question of whether they have lived so long in their hermetically sealed zone of silence that they have completely excluded from their attention what is actually going on out there. When they give a $16-a-week tax cut to the average New Zealander I wonder whether they realise that the cost of filling up a Toyota Corolla has doubled in the last 12 months. The $16 does not even cover that. Do they realise what it means to have had a $26 billion increase in spending in the last few years? Do they realise how much pressure is going on middle New Zealand as a result of having the second-highest interest rates in the developed world and what that means for people in the mortgage belt of our country? 
New Zealanders have been told for 8 years that they could not have tax cuts because it would mean higher interest rates and then we have— 
SUE MORONEY (Junior Whip—Labour) 
: 
 I raise a point of order Mr Chairperson. We are debating Part 2 of the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill. Part 1 was indeed a wide-ranging debate but this part is quite clear. I wonder whether the member could stick to Part 2. 
The CHAIRPERSON (H V Ross Robertson) 
: It does not matter anyway because the member’s time has expired. Thank you. 
Part 2 agreed to. 
Part 3 Annual rates consequential personal tax cuts amendments and remedial matters 
The CHAIRPERSON (H V Ross Robertson) 
: Before I call the next speaker I note that in this part clause 61 includes a subclause setting out the annual provision that fixes rates of taxation and that it is “customary to have a wide-ranging debate at least over the field of taxation” in this context. That is covered by Speaker’s ruling 103/4. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 Part 3 covers a very wide range of issues. I am sure members will be struggling to understand exactly what all the clauses in Part 3 do. I will leave it to some of my colleagues to address some of those wider tax issues that clause 61 will obviously enable because I am particularly interested in making sure I understand what is going on here. 
Naturally National supports the clarifications around charities. We support clause 20 and a number of the other clauses relating to charitable bequests and that sort of thing and the clarifications around tertiary institutions and schools with regard to their charitable status. But I would particularly like the Minister to clarify for me the issues dealt with in clause 24. Clause 24 deals with the LC 1 section of the principal Act and the LC sections involve tax credits for persons on low incomes. I understand why there will probably be a need for amendments to some of the LC sections because the Government proposes with this legislation to lower the bottom tax rate from a rebate system on the first $9500 to a statutory rate of 12.5 percent at varying stages—initially at $14000 and rising to $20000. So I can understand the need to address some of the tax credits for persons on low incomes. 
But so that we know exactly what is happening here I would particularly like the Minister to advise us on clause 26 “Child’s income” which amends section LC 3. Clause 26(1)(a) for example which amends section LC 3 reduces the threshold figure from $351 to $321.75 and that affects the amount of credit that a child may get. Clause 26(2) further modifies section LC 3 in that the percentage is adjusted naturally from 15 percent—the figure given in the formula in subsection (4) of section LC 3—to 13.75 percent and then to 12.5 percent. I would like the Minister to tell us what this actually does to the child’s tax outcome. It has been quite difficult in the short space of time in which we have had the legislation to calculate the combined impact of those changes to tax credits for children. On the one hand I can see that the amount of money allowed is reduced but on the other hand I can see that the percentage applied in the formula is also reduced. So it is possible that they will offset each other. Given that we do not have the opportunity to refer the bill to a select committee and question officials about exactly what the impact will be I would appreciate the Minister making clear for us—and it is important that the Government makes it very clear—what these changes will do to a child’s after-tax income. I accept they could be making no change at all. 
Hon Trevor Mallard 
: That is the effect. 
Dr the Hon LOCKWOOD SMITH 
: If that is the case I think that should be made very clear. It is very difficult to discern that from the series of changes that the legislation makes. But I take it from the Minister’s interjection that with regard to a child’s income the combined effect of clauses 26(1) and (2) is that— 
Hon Trevor Mallard 
: You can still earn up to $45 a week or $2340 per annum tax-free. That is effectively unchanged. 
Dr the Hon LOCKWOOD SMITH 
: So the situation for a child is that the reduction in the bottom tax rate does not actually reduce the amount of tax taken from a child at those income levels. 
Hon Trevor Mallard 
: It doesn’t reduce the amount of tax—kids end up not paying tax up to $45 a week anyway. 
Dr the Hon LOCKWOOD SMITH 
: The Minister has just said that the effect of that is to make sure that the child pays no tax on income up to that level. If that is all it is doing I am a little curious as to why clause 26(2) is involved. It changes a tax rate and not just a threshold. It seems to me that if it were a matter simply of making sure the child paid no income tax on a certain level of income it would be easy to make that clear on the face of the bill. But because the subclause changes a percentage amount it is hard to accept that that is all it is doing. That is why I am seeking further clarification. 
Hon Trevor Mallard 
: Currently the tax rate is 13.75 percent. It drops to 12.5 percent next year and this recognises that change in order to maintain the status quo as to the effective level of the rebate. 
Dr the Hon LOCKWOOD SMITH 
: So it maintains the status quo as the effective level of the rebate that would apply. 
Hon Trevor Mallard 
: Yes that’s right. 
Dr the Hon LOCKWOOD SMITH 
: OK I accept that and I thank the Minister for making that clarification to the issue around a child’s income. 
I ask him also whether there are any other changes because a number of provisions in the LC section are repealed. Section LC 1 “When net income under low income amount” is repealed by clause 24 and section LC 2 is repealed by clause 25. This is the kind of thing that we have to take the Minister’s word on because we do not have the chance to satisfy ourselves at a select committee. Section LC 2 covers the whole issue of the low income earner rebate—the $9500 limit and the 15 percent tax rate applying up to that level. We can only take the Minister’s word that the repealing of section LC 2 covers only that. Even though section LC 2(4) goes to some specific issues that appear to go just beyond the $9500 limit and the 15 percent rate I trust that the repealing of the entire section LC 2 will leave us with no gaps. The point I am making is that the changes being made here are the kinds of things that a select committee should be able to look at and the fact that this legislation is being forced through under urgency when there is no need for it means we have to ask some quite mundane questions to make sure that what is on the face of the legislation is in fact not producing any unexpected outcomes. 
If we go through some of the other significant changes in Part 3 we note that in clause 33 the fact that the Government has decided to bring forward the indexing of the family support payments into the middle of an income tax year now pushes pages of new legislation into our tax legislation. I put it to the Minister that clause 33 “New sections MF 4B and MF 4C” with all those pages of new legislation is required because the Government has panicked and brought forward the indexing of the family support payments. I take it that that is what clause 33 concerns and that all those pages are necessary in our legislation simply to allow the adjustments to family tax credits to happen in the middle of the year. I think the Minister is nodding that all those pages are required in order to do so. 
Hon Trevor Mallard 
: And to make sure that we don’t under-collect so that people have to pay back later. 
Dr the Hon LOCKWOOD SMITH 
: I accept that point too because with the Government’s Working for Families package this has become a real problem. Families are being over-collected from and are having to pay back. Even before these changes are made that is an inherent problem with the Working for Families tax credit system. 
I intend to give my colleagues a chance to raise further issues because as we go on through Part 3 we see that a number of amendments are made to the principal Act that relates to GST ratio methods for tax payments and provisional tax payments. There are a number of changes there. And again the dilemma is that these are quite technical changes—some of which I assume are fixing up problems in the old Act. I think the Minister owes it to the Committee to explain in more detail some of the large number of changes that Part 3 makes. We have had only a few hours to look at this legislation including time overnight and it is extraordinarily difficult to actually sort out exactly what these changes are making. I think the Minister should give us a greater explanation of some of them. 
Hon TREVOR MALLARD (Associate Minister of Finance) 
: 
 I accept some of the points that the member Lockwood Smith makes. There is some volume and some formulae in the bill do take a little bit of working through in order to make sure they are right but I give the member the assurance that a lot of thought has gone into this. 
I accept that having these extra pages of legislation is a result of bringing in changes for half a tax year rather than for a full tax year. The Government made the decision and I might say it was finally tuned—not on the basis of need; need was pretty clearly established. Anyone who looks at petrol prices and the prices of some items of food—the cost of some items of food has dropped—knew that it did have to come in on 1 October if it was practically possible. The approach that is taken here in our opinion makes sure that that is the case. 
In order to be clear in response to the questions that Dr the Hon Lockwood Smith was making about sections LC1 and LC2 I point out that these are the low-income rebate arrangements which create an effective tax rate of 15c and 21c. They have been replaced by new statutory rates of 12.5c and 21c as I think members are becoming increasingly aware. 
CRAIG FOSS (National—Tukituki) 
: 
 As I rise to speak on Part 3 I note that we are allowed to have a wide-ranging discussion and I will do a mix of both talking widely and talking about specific matters. First of all it is a bit of a tradition and a simple courtesy in the Committee stage to thank the officials for all the hard work they have done around the select committee inquiries and in giving us advice on a bill as a robust select committee process examines and investigates the bill. Sadly I cannot thank the officials for that in this instance because this bill is going through the House under urgency and has never been seen by a select committee. But I do heartily congratulate Treasury officials because obviously their ideological burping has finally been heard. Perhaps it is no longer ideological burping at least in the eyes of the Minister of Finance who through gritted teeth delivered this Budget yesterday. He has finally taken Treasury advice which when I first came into this Parliament was robustly included in its briefing to the incoming Minister. I think that that advice was in the Reserve Bank’s briefing as well. 
Also a select committee has not had the opportunity to ask for and get further advice on this bill. As we glance at the bill we know we have really had it for only about 3 or 4 hours in terms of parliamentary time. Normally we would ask the officials to tell us about say clause 59 or clause 60. I suggest that the Minister get up and explain the clauses in this part because they are all cross-referenced to the various income tax Acts on the Table there—great doorstops that they are. We are not able to cross-reference every clause here and the provisions here are massively wide ranging from fix-ups to the changes announced in the Budget. Who quite knows what might be lying between the lines here? 
One thing that was missing from the Minister’s comments on the bill even when he spoke on this part—and someone introduced this point earlier in the debate on Part 1—was passion. There was no passion. There was no vision. The Minister talked about what is written in the bill but it is actually what is between the lines that is important. As New Zealanders know this bill was introduced with incredible reluctance and if any one doubts that he or she needs only to read any speech make by the Minister of Finance and his associates over the past 8 or 9 years. I will come back to that. 
I refer now to clause 54 “Portfolio tax rate entity to give statement to investors and request information”. I will just touch on the basics and ask the Minister whether he would like to clarify that clause. I presume that it relates to portfolio investment entities etc. After the last Budget I had a chat to the Minister of Revenue. I know that his nirvana is “30 30 30”—a top corporate rate of 30c in the dollar a top personal rate of 30c in the dollar and a top trust rate of 30c in the dollar. Well actually this bill goes nowhere near to addressing the complexity of the legislation on taxation or the need to spend more than would otherwise be necessary on accountants and officials in order to find the most efficient tax position for individuals companies and trusts. So the “30 30 30” issue has not even been addressed here. As I said I recall that after the last Budget we had quite a discussion. Obviously the Minister of Revenue has got some wins in the bill. His speech yesterday about the intent of taxation was very good but he obviously has not won on this one. 
I would also like to touch on clause 58 “KiwiSaver Act 2006”. The KiwiSaver Bill was rushed through under urgency—I am sure there was urgency—and then various amendments and changes came through again under urgency. As corporates out there were struggling to adjust their payrolls in order to account for KiwiSaver—to take account of the contribution rates; 1 percent 2 percent 3 percent and 4 percent etc—issues and problems came about simply because the legislation had been rushed though under urgency and had not been thought through. Yes we did have officials here but the issues slipped past them at that time. There is a lot of complexity in the system; it has various rates some of which are half-yearly. I appreciate what the Minister said about smoothing it out come 1 April next year. Yes further trees have been lost for the sake of this bill but perhaps for the benefit of personal tax cuts that is a small price to pay. 
I turn to clause 44 “Resident passive income”. The clause talks about dividends but I cannot quite find it at the moment. 
Hon Trevor Mallard 
: Which clause? 
CRAIG FOSS 
: Well let us go to clause 39 “Methods for calculating provisional tax liability”. Again I wonder whether the Minister could expand on that a bit further. Perhaps it synchronises with GST provisional tax dates etc. Again we do not have the luxury of asking officials and advisers for further in-depth information about these various clauses. 
It is very important to note that yes the Ministers may be going around the traps and talking up that alignment there but what is being lost sight of in this debate is the fact that provisional tax payments for this year are down by some 10 or 15 percent from what I have seen. Sorry—the payments are up but the estimations of profit and loss at least up in Hawke’s Bay are down by about 10 or 15 percent. That is a shocker. Fair enough it is mentioned in the Budget that revenue is tracking down and the economy is tracking down. That does not quite align with the GDP growth going up to about 2.8 percent which I think the Budget says somewhere will occur. I guess my point is that this measure again does not really deal with the hard side of things; it deals with one side of the equation. The key part of the equation here is the ability of companies and New Zealanders to pay—their ability to manage and to fund their way through the commodity booms etc. 
I will make just a couple of other points. I refer to clause 29 “Adjustment when person is non-resident for part of tax year”. I ask the Minister or the officials to clarify that. Does that include for example the 70000-odd Kiwis who have left New Zealand this year? How does it apply to them? I presume that most of them will be in that position. Once the Kiwis who left to join the other 500000 Kiwis in Australia get their adjustment back for part of a tax year here plus the benefits of an income in Australia that is one-third higher than here their New Zealand tax return for this year subject to clause 29 will be very interesting. 
I can see that your finger is on the button Mr Chairperson but I have a final question. I would like the Minister to expand a wee bit on clause 31 “Meaning of charitable or other public benefit gift”. The brief talks about schools etc. but would it include things such as an interest-free loan? Is it tightly tied in with tertiary education institutions or in fact is there the ability for someone to arbitrage that and provide say an interest-free loan outside the tax net? I do not know whether that is the case. 
This speech may be going all over the show but that is simply because we have not had the democratic process involving Treasury officials at the select committee an independent adviser and the Eichelbaum process being followed so that we can address these issues and have robust taxation legislation in New Zealand. Thanks Mr Chair. 
CHRIS TREMAIN (National—Napier) 
: 
 It is always a pleasure to speak after the member for Tukituki Craig Foss. We work together pretty hard to back the Bay— 
Hon Shane Jones 
: What about the health board? 
CHRIS TREMAIN 
: I can tell the member that we backed the health board too. Its members were unjustifiably dismissed as the member well knows. 
I am here this morning to talk about Part 3 and I want to focus on three clauses in particular—clauses 21 22 and 61. I would like the Minister in the chair the Hon Trevor Mallard to take a call on clauses 21 and 22. We are rushing this bill through the House under urgency without its going through the select committee process. I would like the Minister to take a call on these clauses because I have not had the opportunity to have them fully explained to me. Clause 21 deals with charities and business income and clause 22— 
Rt Hon Winston Peters 
: I raise a point of order Mr Chairperson. Has there been a change to the Standing Orders or to  
Speakers’ Rulings 
 to suggest that we cannot sit all the way through tonight tomorrow morning and tomorrow afternoon on this issue? Unless that is the case why are members getting up and saying that we are rushing things through today? We would have all tomorrow to consider it as well if they were not so work-shy. 
The CHAIRPERSON (H V Ross Robertson) 
: Mr Peters you have been here a long time and you know the rules. 
CHRIS TREMAIN 
: Some would say that the member has been here far too long. 
Gerry Brownlee 
: Will he stand in Tauranga? 
CHRIS TREMAIN 
: Yes will he stand in Tauranga? That is what we want to know. Will you stand in Tauranga? 
Rt Hon Winston Peters 
: Ask Bob. 
CHRIS TREMAIN 
: No no Bob has decided not to stand in Tauranga. We are asking you the question. 
Hon Trevor Mallard 
: Point of order— 
The CHAIRPERSON (H V Ross Robertson) 
: It is a wide-ranging debate. 
Hon Trevor Mallard 
: I raise a point of order Mr Chairperson. I think it is relatively important that when one is sitting in the whip’s chair one does not refer to the Chair in that way. I am absolutely certain that Mr Robertson is not going to run in Tauranga. 
The CHAIRPERSON (H V Ross Robertson) 
: Thank you. 
Rt Hon Winston Peters 
: I raise a point of order Mr Chairperson. You have allowed a reasonably wide-ranging debate but it must focus on the legislation before the Committee. More particularly these members have a fair degree of effrontery. They do not have a candidate for Tauranga themselves because “Bob the Builder” became “Bob the Quitter”—he jumped before he was pushed—but they have the audacity to ask where our candidate is. What a cheek that is. 
The CHAIRPERSON (H V Ross Robertson) 
: Thank you Mr Peters. 
Gerry Brownlee 
: I raise a point of order Mr Chairperson. You know very well Mr Chairperson that it is inappropriate for Mr Peters to refer to Bob as “Bob the Quitter”. Of course I am not raising a point of order on that—I think the public can draw their own conclusions because the member as I have said before has become “Winston the Bitter”. 
The CHAIRPERSON (H V Ross Robertson) 
: No no. 
Gerry Brownlee 
: My real point of order is this Mr Chairperson. Mr Mallard intervened and suggested that you would not be standing in Tauranga. I do not think that was the right thing to do because no one should suggest that you would be standing anywhere other than in the seat that you have held for a very very long time—I understand that it is approaching 25 years. But what I would like to know is whether it is true that the Labour Party is trying to move you on. 
The CHAIRPERSON (H V Ross Robertson) 
: This is a wide-ranging debate at least over the field of taxation. 
CHRIS TREMAIN 
: The point is that if the member were actually standing in Tauranga he would be able to speak about this bill in relation to— 
Rt Hon Winston Peters 
: I raise a point of order Mr Chairperson. There have been three points of order on this matter and one attempt at a point of order by Gerry Brownlee. That said the member should know what your restriction is Mr Chairperson which is that he gets back to the bill. But in his first sentence he started up again. I know that his party is filled with a bunch of slow learners but four warnings should be enough. 
The CHAIRPERSON (H V Ross Robertson) 
: I remind members of Speaker’s ruling 103/4. It is a wide-ranging debate but it is over the field of taxation. 
CHRIS TREMAIN 
: I get back to the bill and in particular to clause 21 “Charities: business income” and clause 22 “Charitable bequests” and if the member was standing in Tauranga he would be able to take a call on those clauses on behalf of the people of Tauranga and he would be able to ask the question that I am about to ask the Minister— 
Rt Hon Winston Peters 
: I raise a point of order Mr Chairperson. I may have been a bit presumptuous in thinking the member was just slow. He is now being downright obtuse. You have told him five times that he cannot do that and he is back doing it again. If he cannot focus on the legislation before him or get a colleague to explain it to him then perhaps he should pass his speaking time to someone who can. 
The CHAIRPERSON (H V Ross Robertson) 
: Thank you Mr Peters. I can see that if this continues it will lead to disorder. I ask the member to desist. 
CHRIS TREMAIN 
: I am speaking on clauses 21 and 22 in relation to how they will work in Hawke’s Bay. I represent the Napier electorate and I am going to ask some questions on behalf of my constituents from Napier and the constituents of Mr Craig Foss in Tukituki. I refer to the likes of the Napier Community House DOVE Hawke’s Bay Inc.  the Disability Information Trust the Red Cross Society the Stroke Foundation of New Zealand the Multiple Sclerosis Society (HB) Inc and Presbyterian Support. Can the Minister explain exactly how clauses 21 and 22 will affect them? Without the opportunity for submissions to be considered at a select committee hearing I am interested to know how these two clauses will impact upon those charities in Napier and Tukituki. I think we will be all the better if the Minister can explain that. Unfortunately in this situation there will not be the opportunity for those organisations to make a submission on the provisions which will have a major impact on them. 
Hon Trevor Mallard 
: I am happy to. Shall I do that now? 
CHRIS TREMAIN 
: Yes that would be good. 
Hon TREVOR MALLARD (Associate Minister of Finance) 
: 
 Very briefly I think that many members are aware that the Charities Commission has been slower than all of us would have liked in doing registrations. We were concerned that its slowness might stop some organisations that would otherwise be registered as a charitable entity from being able to avail themselves of the benefits of being so registered. So we have created a new category called “tax charity” which effectively says that these organisations have taken reasonable steps that they are in the process of registering and will therefore qualify on that basis after a period of time. It will not harm any organisation in the Hawke’s Bay and it will help those who have been caught up in the slow process. 
Part 3 agreed to. 
Clauses 1 and 2 
NATHAN GUY (National) 
: 
 We are in urgency today talking about the title of the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill. I think there could be several options for a title. The bill could be called the “Catch-up Budget that Doesn’t Catch up”. Michael Cullen has delivered a catch-up Budget— 
Chris Tremain 
: Begrudgingly. 
NATHAN GUY 
: Yes begrudgingly. It is a catch-up bill that does not catch up. There is a second possible title for this bill: the “Wait 9 Long Years and Get a Jerrycan Full of Petrol on 1 October Bill”. The title of the bill could refer to the fact that people have waited 9 long years for a tax cut on 1 October that for the average wage earner will be 16 bucks. I worked out that that is about a jerrycan full of petrol. That could be another title for this bill. The third option I thought about was the “Election Bribe Tax Cut Just a Couple of Weeks Before the Polling Booth Bill”. 
This bill is too little too late. New Zealanders are now screaming about the domestic costs they have to meet in their household budgets. Dr Cullen after 9 years has delivered this bill into Parliament against the wishes of a whole lot of his caucus colleagues. When he announced the tax cuts yesterday—for those who were not listening—he did not get any applause from any of his caucus colleagues because a whole lot of them do not believe in them. Michael Cullen does not believe in them. His track record is that when he came into office in 2000 he lifted taxes. In 2005 he promised the “chewing gum tax” cuts and he could not deliver them. He reneged on his promise. That is why we are in urgency now. We have to get legislation in place because with Michael Cullen’s track record no one believes him. He has been led screaming and kicking by a chunk of his caucus to deliver tax cuts. 
Michael Cullen is ideologically opposed to these tax cuts. Let us look at Michael Cullen’s four tests for tax cuts: there has to be enough fiscal headroom; there has to be no borrowing—we know he is borrowing for these; they have to be non-inflationary—we do not know whether they will push up inflation; and they must not lead to inequalities—and we do not know that as well. National is saying that Michael Cullen’s and Labour’s track record on this is pathetic. Labour has been led screaming and kicking after 9 years to deliver a tax cut that will enable someone in the spring to mow the lawns with a jerrycan of fuel. People will be able to go down to the service station in October and fill up their jerrycans with about 6 litres of fuel. By then the forecast is that it will cost them about 16 bucks which is their tax cut. It is absolutely pathetic. 
We see the waste in this Government’s spending where it is spending $600 million through the Ministry of Foreign Affairs and Trade to do something with an embassy building in Stockholm. There is a whole lot of waste which we believe New Zealanders should focus on and we are going to do a lot better. 
The history of this Government is pathetic. People are showing that by voting with their feet. In the last 12 months 44000 people have left New Zealand to go to Australia indefinitely—44000. That is the whole number of voters in the Kapiti and Horowhenua area combined. Our youngest and brightest have gone to Australia in the last 12 months. [ 
Interruption 
] Does Mr Jones know why they have gone? They have gone because they are getting one-third higher wages their pay packets are better by a third and they are paying less tax. This Budget will not turn those people around because they do not believe that Labour can deliver. They do not believe that $16 for the average hard-working New Zealander is enough. Is that going to be enough to keep them in New Zealand? We need to re-incentivise people in this country. We need to tell them that it is fantastic here. We need to create the right incentives in education to grow our wages and to have a longer-term tax package. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 I have to say how astonished I am to hear the party that has spent its last 20 years preaching the value of globalism internationalism getting offshore investment—whether or not it is a corporate raid on any company in New Zealand—that is allowing in all sorts of immigrants in their tens and tens of thousands and that has argued for everything to do with the international world now has its members get up and say they want to retreat. They do not want to be part of the real world when it comes to diplomacy and trade. If their idea is that they are going to go out on the campaign trail and win the campaign of tax cuts on the basis of stopping there being an embassy in Sweden then they have lost the plot entirely. Worse still they are the very worst specimens of what used to be a great political party. 
I can recall Brian Talboys—as can Dail Jones—30 years ago making this very speech. When the isolationists in the National Party who wanted to retreat from the real world got up at a conference and were starting to argue about why we were involved here there and everywhere else he said: “If we want to retreat to New Zealand wrap our blanket up around our heads and hide in the dark that would be a disaster.” That is what they are saying right now. The National Party members’ idea of how they are going to ply their trade our identity and our reputation around the world is by putting no money into it. All I have done is restore the Ministry of Foreign Affairs and Trade to have the level of personnel it used to have when National once had a decent leader. 
The National Government started the cuts in 1992 and when it had finished the ministry had declined in real terms by 40 percent. No wonder our trade is not what it should be. No wonder we are not exporting what we should be exporting. The reason is that we do not have people on the ground where we should have them. Some of the successful countries are Finland Sweden Norway Denmark and Iceland. They are the five parts of the most successful regional economy in the world. They are our size and we could learn a lot from them. We should have been there a long long time ago. That is why we are making the investment. But if John Key fresh out of plying junk bonds on the London stock market thinks he can talk about this country’s international reputation and engagement then that is an outrage. 
I thought that people like Lockwood Smith who pretends to know something about trade might have been in support of this. Oh no he would like us to be in the Philippines with all those millions of people with but two people on the ground. If one gets sick there is one person left. If one has to go out of town there is nobody in the embassy. That is exactly what the National Party had in mind. So if its members think they are going to win this debate on this issue of the value of these tax cuts on the basis of being able to deliver more on making massive savings in the area of foreign affairs and trade then firstly they are betraying their country; secondly they are destroying this country’s potential in the future; and thirdly we will spend decades trying to turn the situation back towards New Zealand’s improvement. Brian Talboys knew that. Holyoake knew that. Marshall knew that. But then of course that was a time when there was a party that was led by real leaders and had a fine front bench comprising people who were stand-out characters. Look at the front bench today— 
Dail Jones 
: Where are they? 
Rt Hon WINSTON PETERS 
: It would not matter whether or not they were there. It would still be the same value. But there is no one of calibre ability or experience. In fact it is a disgrace that with all that money—$7 million of taxpayers’ funds and all the Business Roundtable funding and all the capital markets money—those members are the best they can produce. 
It is a disgrace that with all that resource they have now produced a party with people who are so bereft of imagination and so lacking in understanding of the economy that they think that if they can somehow touch enough greed and avarice out there amongst people who think they can get tax cuts whether or not they are affordable then they are not going to win the next election. Mind you I always knew that. I always knew they never had the ability to win the next election and I will tell every pollster right now that the talent that is required to win the next election does not lie on the National Party front benches. That is why they will not make it. They can display all the cock-a-hoop feelings they have now but as time unfolds month on month to the election just watch the polls close. We shall see the kind of extremism they will go to even to the extent that they now agree with my immigration policy—do they not? I was a racist 10 years ago. Now it is their policy. On Maori affairs and equality of law I was anti-Maori. I was a Maori basher. Now it is their policy. 
Dr WAYNE MAPP (National—North Shore) 
: 
 I have to say to the Minister of Foreign Affairs that he has supped at Helen’s cup altogether too long. If he thinks that Norway Iceland Sweden and Finland are the best examples for New Zealand then he is simply wrong. If he thinks that the best thing that the Ministry of Foreign Affairs and Trade can do is to build an embassy in Stockholm as a solution for our trading problems he is simply wrong. 
What is demonstrated by this is that that party New Zealand First is voting against the China - New Zealand free-trade agreement—the agreement that actually promises the most for New Zealand’s trade with the fastest-growing economy in the world. And what is he doing? He is voting against it. It is the prize of his ministry and what is he doing? He is voting against it. I say to Mr Peters not to tell us what we think about wise expenditure in the Ministry of Foreign Affairs and Trade. I say to Mr Peters to go and ask the voters of Tauranga whether they think the highest priority for New Zealand Government expenditure is a new embassy in Stockholm. How many of them will say: “Oh yes Mr Peters you are absolutely right. We clearly have to vote for you on that basis.”? I say to Mr Peters that he is welcome to try that line and see how far he gets. The truth is that Mr Peters has spent too much time on the ninth floor and obviously has been seduced. That is all I can say. 
This bill is clearly at the very heart of Labour’s Budget. Actually in truth there was not much else in the Budget except wasteful expenditure. I would have to nominate Stockholm as being at the top of the list. The second one I would nominate is the $47 million spent on rebuilding Government House in Wellington. I have been up there a couple of times. It does not seem very bad to me. Quite a bit of money has been spent on it over the last few years. Yet this Government has issued a press release saying that this is a really important Government House is part of New Zealand’s cultural heritage. 
Dr the Hon Lockwood Smith 
: Extravagance! 
Dr WAYNE MAPP 
: That is exactly what it is. It is extravagance and the public will see right through that. 
New Zealanders can make a different set of choices about sensible Government expenditure. The choice is not between Labour and all its $47 million and this is the tax cut; or National and no more doctors no nurses and tax cuts. That is not the choice that New Zealanders will be facing. We can sensibly reprioritise expenditure and do better than this tax cut. For National this is but the first instalment. We will announce in our own good time when we will have our tax cut package and New Zealanders will have an absolutely clear choice on that. 
One of the interesting things about this Budget is the choice that Labour made on broadband. It is much more interested in 19th century technology and spending $620 million on that plus apparently hundreds of millions of dollars more than spending $1 billion on broadband. Broadband is National’s choice. We have said clearly to the public of New Zealand that National will spend $1.5 billion on broadband. What has Labour said? It will spend $300 million to $500 million. That is the interesting issue. I listened to the speeches made by Mr Key and Helen Clark. Helen Clark spent her time reminiscing about the Springbok Tour about the Viet Nam War and about Sir Robert Muldoon’s numerous Budgets. She is very much mired in the past so it is not surprising that she would spend her time focusing on 19th century technology. What will National do instead? National is looking forward to 21st century technology and that is why it is prepared to spend $1.5 billion on broadband to power this country ahead. That is the symbol of the Budget: Labour 19th century technology; New Zealand First embassies in Stockholm; National broadband technology for the 21st century. 
A very clear issue in this election will be how we deal with the next decade rather than the 19th century. New Zealanders will have a very easy choice to make—a bigger tax cut than Labour will deliver a bigger tax cut than New Zealand First will deliver and 21st century broadband technology. 
Dr JONATHAN COLEMAN (National—Northcote) 
: 
 If Dr Cullen were really being honest about this Budget if he were telling us what he really thinks he would be calling this the “tax cuts are largely offered as a political bribe not because of beneficial economic or social effects Budget”. That is what he has said in the past. He has been on record many many times noting his aversion to tax cuts. I can tell members that there will not be anyone happier about this Budget than Shane Jones. He knows that Labour is going down the drain and this is its last gasp. Shane Jones will be very very well positioned perhaps with his friend Annette King to launch a coup straight after the election. 
Mark Burton of course will not be quite so happy. He knows he is toast. He will be out of here. He will not be here. We can look at the Taupo electorate and say that it will not be a Labour seat after the next election. He will be getting out the retirement plan and calculating his parliamentary superannuation. He will be very concerned. Of course there will not be much room for people like Louisa Wall to get back into the Labour caucus as a result of this bill. She is the promising future of the Labour Party but on the back of this Budget she probably will not be returned. We knew long ago that Jill Pettis would be going. Sue Moroney who is a Labour whip is supposed to be coming back into Parliament on the back of this bill. But I say that things will be looking pretty shaky for her too. She has the big smile but it is with gritted teeth. 
Sue Moroney 
: I raise a point of order Mr Chairperson. One of the National members complained previously that he did not want to be here because he felt the bill was being rushed through. We now have a member on his feet who is not even talking to the bill. Can he please speak to the bill? 
The CHAIRPERSON (H V Ross Robertson) 
: I say to the member that although this is a wide-ranging debate one always has to be careful it does not lead to disorder. 
Dr JONATHAN COLEMAN 
: Members can tell that what I was saying was hitting the nail right on the head because Sue Moroney immediately rose to take a point of order. It shows that we are right on the button. 
We heard a wide-ranging speech from the Minister of Foreign Affairs. He was talking about embassies in Stockholm and what happened in the 1990s but I can tell members that the people of New Zealand are concerned about what is happening in New Zealand today. They are worried about the real concerns of real New Zealanders such as filling up the gas tank at the petrol station. [ 
Interruption 
] These interjections from the Minister of Foreign Affairs are the best reason I have heard yet for us to install breathalysers in the lobbies. We heard all this stuff. He had his head in the wine box during that speech. [ 
Interruption 
] Here we go. I knew this would happen. 
Rt Hon Winston Peters 
: I raise a point of order Mr Chairperson. I tell that member that I want an apology right now and if I do not get it I will nail about four of his colleagues. If that is the kind of conversation— 
The CHAIRPERSON (H V Ross Robertson) 
: Order! 
Rt Hon Winston Peters 
: The member cannot make that sort of comment. 
The CHAIRPERSON (H V Ross Robertson) 
: Is the member raising a point of order? 
Rt Hon Winston Peters 
: That man said something totally defamatory that if it were said outside this Chamber would be slanderous. He is not going to get away with it. I tell him that either he apologises now fulsomely or I will nail four or five of his colleagues and he will be responsible. If he wants to throw that sort of dirt he is going to get it back and in double measure. 
The CHAIRPERSON (H V Ross Robertson) 
: If the member made any defamatory remarks and exception has been taken then he should withdraw and apologise. 
Dr JONATHAN COLEMAN 
: I withdraw and apologise. We have to sit here all the time and hear stuff about cigars and cigar smoke but when we give a little bit of dirt back to a member who has been sitting here for 30 years he is on his feet whingeing and complaining and crying to the Chair. Is it not amazing? I would have thought that after 30 years a member could sit there and grin and bear it and take what comes his or her way in a robust debate. 
Rt Hon Winston Peters 
: But can you? 
Dr JONATHAN COLEMAN 
: Exactly! Can I? The record will show it. I come back to the tax cuts. Of course David Benson-Pope will not be here but for totally different reasons. 
The CHAIRPERSON (H V Ross Robertson) 
: Order! 
Dr JONATHAN COLEMAN 
: I said I was coming back to the tax cuts. I have another word on the title. How about this as a quote from the 2000 Labour Party conference: “Tax cuts are a path to inequality. They are the promises of a visionless and intellectually bankrupt people.” I say that that pretty much sums up the Labour Party. Annette King is sitting in the chair. She has her arms folded. She is not very happy because she knows that this is a Budget that shows how desperate and down on its luck Labour is. It has thrown the kitchen sink at this Budget. Its members know that there was nothing left for Labour but to put absolutely everything it could in this Budget. They know in the bottom of their hearts that this will not be enough to win the next election. They know that the phone is off in middle New Zealand; the phone is off amongst their core Labour supporters—in fact it has been ripped out of the wall and thrown into the swimming pool. 
People have had enough of this crowd. When I go out door-knocking in Northcote the mood now is completely different from what it was in 2005. People are saying “You’ve got to get rid of this mob.” They are also saying “I’ve voted Labour for the last seven elections. Never again! I have been let down by this crowd.” We can see that the heads are down now. Labour members are looking in their newspapers. They know that it is true. 
Hon GEORGINA TE HEUHEU (National) 
: 
 In speaking to the title of this bill I ask whether the title should be the “Last Chance Saloon (Tax Reduction) Bill”?. That title would suit the bill better particularly given the cartoon on the front of the  
Dominon 
 Post  
this morning entitled “Last Chance Saloon” 
  
because that is about all it is. This is the last chance saloon and the New Zealand public have closed the door on that Government and do members wonder that they have done that? No absolutely not. 
For 9 years Dr Cullen has sat on that side of the Chamber and enjoyed all the perks of Government and he has actually treated his fellow citizens with absolute disdain. I say shame on him shame on Helen Clark and shame on the Labour Government. Arguably the people he is trying to help now are the people who for years and years have given that Government their support and that includes Maori. It would not be so bad if Parekura Horomia had come forward with something directly for Maori but the most he had in his announcement yesterday was $40.5 million for the Earth Building Association of New Zealand a new Maori incorporation—but with no money voted for it and no appropriation and Shane Jones might like to answer that but he will not. There was no money appropriated to it just money to be set aside. So if one takes that out there is absolutely nothing in the Budget for Maori. 
If one thinks about the $12 a week that most of the working Maori families are going to get I ask Dr Cullen where that is going to go. Why does he not take a call and tell us how that helps our struggling families—all New Zealanders who are struggling but particularly Maori families on low wages. After 9 years he is basically giving them $12 which will not buy even a block of cheese. Again it is a shameful tenure and a shameful stewardship by a Government that has enjoyed the support of those very people for 9 years and previously but who will not have it this time. The number of people who say to me and I am sure they say it to all my colleagues: “I’ve voted Labour for years and years but I won’t be doing that again.” is why this bill should be called the “Last Chance Saloon Tax Bill” because actually the chances have gone. They have absolutely run out. 
When one thinks about the Minister of Foreign Affairs saying he is going to “flashen up” all the overseas posts and stuff it sounds good but what about his people up north? What is in this Budget for them? There is absolutely nothing because a lot of them are not working they are unemployed they are on benefits and they are struggling. There is nothing in this Budget for them. Working for Families does not even impact on them— 
Rt Hon Winston Peters 
: What about the old people? 
Hon GEORGINA TE HEUHEU 
: OK there is help for a few of our old people which is good and I do not for a minute begrudge help for our elderly. They deserve it. It was on their backs that this country was built and it is on the backs of members of the Labour Government that this country is now broken. Labour members have the gall after 9 years on those benches to bring tax cuts which we know that Dr Cullen hates. If he had believed in tax cuts he would have brought them in long ago in 2003-04. We had good economic conditions then. Now when the economy is in a slump in a downturn he brings the tax cuts forward. So what will that do? It will leave a mess for National because that is what Labour always does. That is what it absolutely does it leaves a mess for National and we always have to spend the first few years of our stewardship fixing up the mess. That is what we will be doing shortly. 
I suppose if there is a party that is capable of fixing up the mess it has to be the National Party. It is only the National Party that can fix and manage the mess that Labour Governments always leave the country in when they go out of power. That group of MPs over there is gone. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 As we now debate the title and the commencement of this bill it is little wonder that the headlines running around the country today are saying “Too little too late”. When one comes into the Chamber with a Budget like this after 9 years of refusing even to consider—[ 
Interruption 
] Well when I say “consider” that is not true. Dr Cullen and Labour did consider personal tax cuts. That was in 2005 was it not the “chewing gum” tax cuts and of course Labour reneged on its promise. But after 9 years of no personal tax cuts for the average working New Zealander to be given a tax cut equivalent to the cost of a family block of cheese is an insult. It is an insult to New Zealanders and that is the way New Zealanders are seeing it because what difference will it make to their lives? As it now costs them more and more to fill the car with petrol—well over 100 bucks to fill the family car—and as it costs them more and more every time they go to the supermarket is that block of cheese going to make any real difference? Of course it will not and they find that insulting. But what is more insulting— 
Rt Hon Winston Peters 
: You’re the only guy in this House who could eat a block of cheese sideways. 
Dr the Hon LOCKWOOD SMITH 
: I guess that member would know because he always told this Parliament that all he wanted to be was the MP for Tauranga. Well I can tell my colleagues that Winston never told the truth about that. He wanted to be the MP for Kaipara. 
Rt Hon Winston Peters 
: I raise a point of order Mr Chairperson. There are some people around this country who are not known and never will be known and some who are known by his or her first name. I happen to be one of them but he cannot use it in this Chamber. 
The CHAIRPERSON (H V Ross Robertson) 
: Thank you Mr Peters. All I can say is that there has been a good exchange between both sides. 
Dr the Hon LOCKWOOD SMITH 
: Let me call him the Rt Hon Winston Peters. He always told New Zealand he only ever wanted to be the MP for Tauranga. What a lie. In 1983 he—[ 
Interruption 
] I said that statement was a lie. In 1983 he went for the nomination for selection for Kaipara and— 
Rt Hon Winston Peters 
: I raise a point of order Mr Chairperson. Just so the public might know there is a bill before the Committee. That is the subject being discussed. But the member has lost the plot entirely just because of an interjection that he is the only one in this Chamber who can eat a block of cheese sideways. He got all upset and now he is running through my brilliant political career. Now I know it is scintillating but it is not part of the debate in this Chamber. 
The CHAIRPERSON (H V Ross Robertson) 
: I think we have had our fun for the morning. 
Dr the Hon LOCKWOOD SMITH 
: Let me just finish the story to make sure the Rt Hon Winston Peters does not miss out any bit of it. Of course he got thrashed in the selection for Kaipara he did not even take me to a final ballot and with his tail between his legs he limped off to Tauranga and tried to con the people there that all he wanted to be was the member for Tauranga. 
Let me come back to the title and commencement of this bill. What is so insulting about it is that New Zealanders get the block of cheese this year and then if one looks at the provisions in the commencement clause it is 18 months before they get any more from these tax cuts; 18 long months. So we have had 9 years of Labour New Zealanders get a block of cheese and then it is another year and a half which will take it to 10½ years. Do members know how much more the average— 
Hon Member 
: Half a block! 
Dr the Hon LOCKWOOD SMITH 
: The average worker gets half a block because they get $6 I think in that second tranche. So after 9 years we get the block of cheese and after another 18 months we get half a block of cheese. What an insult! 
Do members know why students are also angry? This is a Government that cares so much about low-income earners like students. Under the provisions of the Budget the tax changes and all that sort of thing students can borrow an extra 5 bucks a week. Instead of $150 they can borrow $155. Five bucks will not buy half a block of cheese. But even worse the age at which the means test on parental incomes no longer applies has been dropped by 1 year from 25 to 24. No wonder the students up and down the country feel absolutely betrayed by this Labour Government just as the average worker does because after 9 years it is an insult to give them just the equivalent of the cost of a block of cheese. 
I see that Dr Cullen is back in the chair. Last time he was a member of a Government that was going out of office in 1990 his Government ignored the Budget totally. Dr Cullen was the Minister of Social Welfare at the time; he had been the Associate Minister of Finance. The Government ignored the Budget totally. Dr Cullen and the Department of Social Welfare just spent money as he tried desperately to hang on in 1990. He spent money with no appropriation to spend it way beyond the supplementary estimates. Members can ask Jenny Shipley about it; she had to make legal Dr Cullen’s illegal spending in 1990. I bet he will do the same thing again. Labour will take no notice of the fiscal projections in this Budget. There are unquantified risks around this Budget and Labour will just spend it. I bet that Labour will do this if it stays behind in the polls. Annette King remembers; she was not so guilty. Her mate Phil Goff was guilty though. In 1990 he spent money willy-nilly leading up to the election—totally illegally. 
COLIN KING (National—Kaikoura) 
: 
 It is certainly a privilege to speak to the title of the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill 2008. It is worth mentioning at the outset of this little presentation that when National becomes the Government this bill will be merely the first instalment of what will turn into a very ambitious future. When we stop and look at the Labour Government in relation to the long period of time when it said that tax cuts were impossible to deliver we see that there will be tax cuts for New Zealanders with just 2 weeks to go before the election in mid-October. Unfortunately when we hear the arguments that are rolled out around what is doable by this Labour Government we find that the public are certainly saying that the Government has been crying wolf for far too long. It has been crying about what is doable and what good management is and the public has totally switched off. Labour has cried wolf far too much; the public is telling the Government that it has missed too many opportunities. 
It was quite interesting to go to the XTRA website this morning and see what the public is saying. Eighty percent of respondents to the news poll rated the Government’s performance as inadequate. When 80 percent of the country is calling the performance of the Labour Government inadequate we know that even though tax cuts are on the way they too will be inadequate. When we look at the tax cuts that we are facing we can start to see why this country needs an ambitious leader like John Key and a National Government. We have got ourselves into a terrible spot under this Labour Government. The cake has been getting progressively smaller so the opportunities and the pieces that the cake is divided into have become so small they are not worth measuring. When we look at the tax take for people earning $14000 it is great to see that 2 weeks out from the election they will be paying only $1750-odd in tax. But a person earning from $40000 to $70000 will be paying $23000 worth of tax. We do not have to be rocket scientists to realise that if we can grow this nation’s economy we will be able to have a lot better time than what the present Labour Government considers to be the best time in 30 years economically. It is OK for former Minister David Benson-Pope to shake his head but it is a shame that we have missed out on the opportunity. 
We can measure the opportunities by the number of people who are leaving the country. Twenty-five percent of our tertiary-educated people have cashed up and left this country. When we compare that figure with Australia’s we find that only 2.5 percent of Australia’s people are outside that country. “Too little too late”—that should be the title of this bill. The tax cuts amount to only the cost of a block of cheese which is a damned insult to all working New Zealanders. We should not miss the point that there has been a chilling effect towards the Labour Government because under Dr Cullen we have missed the greatest opportunities in a generation. Wastage over 8 years has meant that at the end of it all we will have only a block of cheese before this election and it would have been 18 months before Labour intended to give any more to honest hard-working New Zealanders. 
So we are talking about tax cuts. We are very pleased about them but I would hope that those listening to this debate will understand that under a National Government those tax cuts would be only an instalment. If we want our children and our younger generations to go forward we have to have the ambitious leadership of a John Key National-led Government. All hard-working New Zealanders are sick and tired of Labour members crying wolf and saying that the cupboard is bare and that there is no better way for people to manage their money. I tell the Labour Government that the honest truth is that the general public know more about how to spend their money than it does. Those Labour members have failed New Zealand many many times. They have driven our best and our finest overseas to seek opportunities. They have wasted money in so many areas that the cake has become so small it is impossible to divide it up. Thank you. 
Clause 1 agreed to. 
Clause 2 agreed to. 
Bill reported without amendment. 
Report adopted. 
Third Reading 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 It is with great pleasure that I move  
That the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill be now read a third time 
. What a fun time we have had in the House since about 5 o’clock yesterday! The National Party started off looking like a bunch of rabbits that had just been rolled over. Mr English told National members not to promise anything because Dr Cullen had actually spent up to the limit. That line was held to very strictly by National Party members for at least 10 to 15 minutes of the debate; they could talk about anything else but they could not make promises. But then Lockwood Smith PhD took over the running of the campaign and suddenly National Party members were fiscally camping it up all over the place as the debate proceeded from then on. He is the man who staunchly opposed the Working for Families package saying it was a terrible insult to New Zealand families. Now it is pretty good and the National Party is supporting the enhancements in this particular bill. Before we had this bill he said that Working for Families was an insult to the average working New Zealander—an insult a terrible thing. 
We have learnt that National Party members have an obsession with cheese. I get the impression—I thought it was only Gerry Brownlee but apparently it is all of them—that their every spare penny is spent on cheese. And they eat it! That party over there is the “Bigger Block Party”. When something goes up in price people should buy more of it. That is the attitude of those members towards family budgets. People should not buy chicken fruit veges or something else that has not gone up in price; they should buy more cheese. That is those members’ approach to life. 
Throughout this debate we have learnt some wonderful things. While National Party members have been arguing away in here and indeed have been fighting to the death a bill they support right down to the final moment—and they will be gone by lunchtime today; they will go off to explain to people that in fact they support this bill to the death and will continue to do so—Mr Key has been out there giving interviews. Mr Key giving an interview is always an exercise in watching the changing picture as it moves along. In the immortal words of John Campbell he is “as slippery as a snake in wet grass.” unable to give a clear answer on anything. Mr Key has given quite different answers from the answers that Dr Lockwood Smith is giving. Dr Lockwood Smith tells us that this tax package is nothing like big enough. It has to be much bigger to satisfy Dr Lockwood Smith; at least three blocks of cheese have to be in this tax package for Dr Lockwood Smith to be satisfied. But the economists are saying that the fiscal package is a bit too stimulatory. 
Dr the Hon Lockwood Smith 
: Really. 
Hon Dr MICHAEL CULLEN 
: “Really.” he says. Yes! That is the trouble with his standing in front of the mirror practising his poses for the House—he forgets to listen to what people are saying out there. When he promises huge blocks of cheese for everybody on 1 April next year he had better understand that they cannot be paid for. 
How will National Party members pay for all of that? They said firstly that they will not rebuild Government House. Well that is fine but it will fall down around their ears if they do not rebuild it. Secondly—and Mr Peters was not here for this—the other great offer-up to pay for much bigger tax cuts is to cancel the increased funding for the Ministry of Foreign Affairs and Trade. 
Rt Hon Winston Peters 
: In Sweden. 
Hon Dr MICHAEL CULLEN 
: Well as soon as National Party members become the Government—if they become the Government—that is the plan. I thought that Winston Peters—in case he had some plans about possible arrangements with other political parties—might want to be forewarned in order to have ready the arguments necessary to support his stance on that. Dr Lockwood Smith is happy for Winston Peters to be just the member for Tauranga but he might have other ideas in that regard. 
We learnt more from Mr Key today. We learnt today that Mr Key is now saying he will not change one bit of the Working for Families package. Did Dr Lockwood Smith know that Mr Key had said that? He would not change it one bit. He says that it is badly structured but he will not change it. That is a man with ambition. He is surrounded with things he thinks are badly structured and he says: “I will not change them. I am firm in my resolve to make no impact upon this country moving forward.” That is our friend the Leader of the Opposition. 
And he said clearly that he will not repeal the first tranche of tax cuts. That is brave. They will be in force on 1 October; it is a bit hard to repeal them. What he did not say was that he would keep the second and third tranches. What he did say was: “Well we may have bigger tax cuts but they may not be more expensive.” He said that on the radio this morning: “Well we may have bigger tax cuts but they may not be more expensive.” I can see Mr Tremain trying hard to understand that; he is working out how to get his 4 percent on that particular statement—if he is ever in a National Government. Well it does not add up except if one changes the second and third tranches of this package takes away the increase in the bottom threshold and redistributes it upwards; then there can be a bigger tax cut at the top end that is not more expensive. So the workers will not get more cheese at all—no not even enough for a mousetrap. There will be no more cheese at all but the big cheeses will get all the blocks that are going. That will be the National Party programme running into the election. 
Of course National Party members have also said they will not announce their programme until 4 weeks out from the election. By then there will have been a pre-election fiscal update. They had better be careful about what that might say to them as well about the forward fiscal position. I think it is time for National to start listening to Bill English’s caution rather than following the gambling instincts of Mr Key in this respect. 
We also learnt from Mr Key in the  
New Zealand Herald  
this morning that Government spending is nice but it is sometimes a luxury. What does that mean? In respect of early childhood education is it 20 hours’ free education? Is it support for KiwiSaver? Is it the money to reduce class sizes for new entrants? Is it the money for the cancer vaccine for women? Is it the money for the oral health of children and adolescents? Is it the money that the district health boards require to continue to maintain their services? You see there is not much point in people having an extra half a block of cheese if they cannot afford to go to the doctor to discuss their obesity problems. There is not much point in it at all. 
That is where the National Party is getting it all wrong. Those members do not understand the importance to ordinary families of not being able to afford to go to the doctor of worrying about it costing too much with the result that they do not go and the kids’ illnesses get worse; of worrying about the cost of prescriptions with the result that they do not have scripts filled and they do not take the medicines that they need to take; and of worrying about the cost of sending their kids to early childhood education with the result that their kids do not go and they do not get a good start in life compared with kids from more affluent backgrounds. All of those things matter. Ordinary families do not want to worry about their future retirement income; they do not want to feel unable to afford to save with the result that in retirement they do not have as good a standard of living as other people do. 
We learnt also from Mr Tremain that the National Party does not oppose these tax cuts; it just opposes the Budget. Well what else in the Budget do National Party members oppose? Which bit of this Budget do they oppose apart from the tax cuts? 
Dr Wayne Mapp 
: Broadband. 
Hon Dr MICHAEL CULLEN 
: Oh they oppose the broadband roll-out. They oppose a much more efficient way of leveraging broadband growth than throwing $1.5 billion at Telecom New Zealand. They always were the political wing of Telecom and they still are the political wing of Telecom within Parliament. Maurice Williamson has always been the bought and paid for “MP for Telecom” within this House. Our programme of broadband will—for much less money—leverage a result that is just as good in a more competitive environment and that is more technology neutral. So those members should not say that they oppose that one. And they are proposing to spend over a billion dollars more on broadband than the Labour-led Government is planning to spend. 
So is it the money for health? Is it the money for education? Is it the money to improve the lives of superannuitants? What in this Budget do the National Party members oppose? When we know that we will know what they will take off the great bulk of families in New Zealand to make life worse for them then say: “Please be grateful; we have bought you another block of cheese.” 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 We would have thought that in that 10-minute third reading speech on the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill Dr Cullen may have just said something in defence of his tax cut package. Did he say anything at all to defend his package? Not a thing! He just gave personal abuse. You know it shows that he does not actually believe in it at all. In fact if Labour were not so far behind in the polls we would not be seeing this tax cut package because Dr Cullen does not believe in it. If he believed in it for one minute he would have defended it and explained why the structure of the tax cut package made sense—why it was the best way to restructure income tax in New Zealand. We would have thought if he believed it that we might have heard something like that. 
There was not one word defending that tax package because we all know that personal income tax cuts cause Dr Cullen to choke. He can hardly say the words and we know why: Dr Cullen genuinely—and I do not say this unfairly—believes that he knows far better how to spend our money New Zealanders’ money than we do. Ordinary New Zealand people are far too stupid according to Dr Cullen to be trusted with their own money. Dr Cullen knows far better how to spend it! Of course the Rt Hon Helen Clark takes the “Labour Government knows best” approach. I think Labour members genuinely believe this; they think they know how to spend our money so much better. All I can say is that New Zealanders are sick of it. They are heartily sick of this Government telling them how to run their lives how to raise their children and what to have in the school tuck shop—all those things. New Zealanders are sick of this Government telling them how to lead their lives. Taxes have a lot to do with it because people do not have the freedom to lead their lives the way they want to when they are overtaxed. Right at the heart of freedom is the issue of excessive taxation—not enough money being left in people’s own hands for them to actually enjoy freedom in their lives. 
People find it an insult after 9 years of a Labour Government to have a tax cut package just a few months before an election that gives them the equivalent of a block of cheese. That is just so insulting because New Zealanders are seeing—if they look at these Budget documents—a Government that has taken money from ordinary New Zealanders to the point where ordinary New Zealanders struggle to fill the car with petrol struggle to pay for the groceries at the supermarket struggle to get on with finding the money to buy the clothes the uniforms for the kids for sports teams and that sort of thing to enable the children to take part in weekend sport. They struggle with all those things while Labour has been lining its own pockets—the Government’s pockets. If we look at the Budget documents we see the Government has been taking money from New Zealanders and putting it in the Government’s coffers over these last few years in a way that will make New Zealanders angry. The Government has been lining its own pockets at the expense of ordinary New Zealanders and they are totally sick of it. It is little wonder that so many New Zealanders will be angry when we get a block of cheese in October this year and have to wait 18 months to get any more tax relief from this Government and that will be just half a block of cheese. 
It is interesting that the current Minister of Finance Dr Michael Cullen was an Associate Minister of Finance when Labour was last in trouble in 1990 and going out of office. He was also Minister of Social Welfare in 1990. Those of us who were around at that time remember the Budget in 1990 when Dr Cullen and his colleague David Caygill the Minister of Finance came into this House and presented a Budget that claimed there was an $89 million surplus. From memory they had in their supplementary estimates something like $160 million. Before that election in 1990 Dr Cullen who is the current Minister of Finance had without appropriation from this Parliament far exceeded the provisions in that Budget for supplementary estimates. He and Phil Goff who at the time was Minister of Education simply spent money illegally to try to win that 1990 election. I say that without any sort of hesitation. I can say that without hesitation because I took over as Minister of Education from Phil Goff and I had to make legal his illegal spending as Labour desperately tried to win the 1990 election. The very first contact I had with the Ministry of Education was with its financial controller. Within 2 or 3 days of becoming Minister of Education he came to my office and told me there was stuff I just had to know. He laid out in front of me the spending by Phil Goff for which he had no authority whatsoever to try to win votes heading into the election. Dr Michael Cullen did the same thing. 
That is why I was so interested in this tax bill to examine whether it covered the Government’s full promises around Working for Families and what we discovered was it does not. Working for Families has four basic tax credits; this bill indexes only two of them and it does not address the in-work tax credit and theparental tax credit. We discovered during the Committee stage on the bill that the Government currently has a review and that review reports before the end of June. This matter will be in front of Cabinet before the end of June. Does this Budget provide for any increase in in-work payments or parental tax credits under the Government’s flagship Working for Families policy? It says in fact on page 144 in respect of Working for Families that the review of rates is an “unquantified risk”. In other words there are no provisions in here for it. It is an unquantified risk. This Government I will bet if it is behind in the polls after this Budget and heading towards the end of June as the review of the Working for Families tax credits—the in-work payments and the parental tax credits—comes up will take no notice of the fiscal provisions in this Budget. The Government will just spend the money if it is behind in the polls. We have seen it before. Dr Cullen and Phil Goff in 1990 when Labour was last on its way out just spent the money without legal authority. I bet the Government will do it again if it is desperate. 
That is why New Zealanders cannot trust this Government. They are sick to death of this “Big Government knows best” approach from Labour. They are sick to death of being told how to run their lives. They want some financial freedom to get on with their own lives and that will not happen under this Labour Government because this Labour Government will always tax them far more than is necessary to enable these politicians opposite us to do what they want to do. It is time New Zealanders had the chance to be treated with respect—to be treated by a political party that values freedom and understands the value that New Zealanders put on their freedom. Come this next election if National can win that election New Zealanders will once again have the chance to enjoy the privileges of freedom from excessive taxation. It will be the last of the “block of cheese” insults. 
Hon PAREKURA HOROMIA (Minister of Maori Affairs) 
: 
 Well well well! It was very interesting to listen to the previous speaker Dr the Hon Lockwood Smith talking about going back on pledges because in that same year—1990—he made a promise to students that if he did not get rid of interest rates on student loans and halve them he would resign. Did he? No he did not. He had to climb out of a window to escape the students. He is still here now. That is what the National Party is known for in the sense of the claptrap summary we heard yesterday by its leader. It was insincere and that member in his speedos does not want to remember that. That is the truth. 
This Budget will go down as one of the finest time-breaking platform-setting Budgets in this country’s history. Why? It is at the top of what this Government has done well in the last 8 years. One just has to understand basic financial ideology to understand that it is full of wisdom and carefully crafted. We have made sure the country does well going forward. 
Mr Chris Tremain talked yesterday of his fear when people keep talking about the past. I want to make this a “Do you remember?” speech. I want Mr Tremain to understand. Does anyone remember by how much the previous National Government in its 9-year reign increased the minimum wage? 
Hon Annette King 
: Zero. 
Hon PAREKURA HOROMIA 
: No; it raised it by 58c an hour. We have raised it nine or 10 times and lifted it up to $12 an hour so working-class people understand where they are at. That is one thing this Government needs to be commended for. That is one thing that Michael Cullen has made sure about and is consistent about in going forward. He has been very clear and he will be recognised as one of the greatest if not the greatest financial administrators of any Government or party in power. That is what we have done to make sure that it goes forward. 
We heard from Dr Lockwood Smith. I am thankful to Dr Smith for raising the matters he did as people are thankful to those who discuss health issues. I will not talk on obesity—and members know why not—but we are sure and safe when we visit our medical doctor. This Government has done more for the health movement than has been done at any other time by any other Government in this country’s history. It has done that in Hawke’s Bay. It has made decisions in Hawke’s Bay and the community is thankful that those decisions were made. 
Michael Cullen has shown clear courage in producing something that can be sustained. When Mr Key was asked yesterday “How much?” with regard to the tax cuts we just heard that member say: “That will be only a deposit or a first instalment.” It is fascinating to wonder where National will get the rest of that from. 
What is so bad about this Budget? Is it that it has built on 14 weeks’ parental leave? That is what working-class people want. That is what families want. Is it about under-6-year-olds getting free health services? Is that what is so bad about this—that more funds have been available made for the health sector? Is it about progress in early childhood education? We have said for a period of time that what is done for youth and for preschool children in whatever forum goes well. 
Is it about the global tenacity that Winston Peters has shown? National members pooh-poohed that. They pooh-poohed the fact that we have to address the impacts from the global world at the moment. They pooh-poohed the fact that we should strengthen the forum for exporters. Dr Lockwood Smith is a farmer. He breeds bulls—blue bulls. It is a bit weird but he breeds these bulls. What is really important is that this Budget sets up a great avenue on to the global stage to make sure that future Budgets can be paid for. 
John Campbell’s quote about a certain leader being as slippery as a snake on wet grass is something we have to take cognisance of. The grass does not even have to be wet for half of that crew in the Opposition to be slippery; they are slippery all of the time. 
I want to tell people about the tax cuts for superannuitants—the strengthening of superannuation. At least superannuitants in this country are guaranteed that they will be looked after and they will be cared for like the people on benefits. They will be looked after. 
I hear crocodile tears from members opposite who are saying: “Boo hoohoo I care for the working class. Boo hoohoo it is unfair that you have given tax support to those most in need rather than giving it based on principles of greed.” That is what they are saying. That is what they are saying clearly. We understand that if those members rifle up and exercise with the big corporates and they overplay then the purchasers and owners of newspapers and the media in this country can carry on their dastardly game of deceit but on the ground New Zealanders know what this Government has done for them. They know that this Budget is about going forward. They know that this Budget is futuristic. They know most certainly that this party in Government is a caring and sharing party not one that flip-flops whenever it wants to. It is not one that says it will give more tax cuts and by the way it will borrow the money from overseas. People already know that so the Opposition is making rash promises. 
Members opposite want to talk about broadband and the advent of taking our place into the future. They want to talk about Telecom. Maurice Williamson narrowed it so much that he is stuck with just a single band in relation to the initial band with Telecom. And National wants to narrow the market again. What sort of honesty is that? What sort of financial nous is that? If you grow up being a price-taker if you go about sabotaging the small people and picking the pickings and the profits out of the top closed-eyes earnings then you bring that practice into Government. 
That is what that leadership is doing on the Opposition side of the House. You attack the frail and the weak you attack those people most in need and you give it all up to these people— 
Mr DEPUTY SPEAKER 
: Order! 
Hon PAREKURA HOROMIA 
: I am sorry Mr Deputy Speaker. Those members attack everybody else and we can hear the first initial stage of them knocking over the bureaucracy knocking over the Public Service and knocking over all those fine organisations that support the communities in their hour of need rather than greed. 
We certainly feel the hypocrisy when we hear there are 36 to 38 people in John Key’s office and half a dozen of them are there in relation to image correction. What is that about? Those members should not try to re-image themselves and make out that they care about the working class. Those members should not try to re-image themselves and make statements that Maori families are worse off than they were before. That is what that earlier speech from John Key was about. I am not too sure how he works his sums out because when we came into Government one out of three to four Maori families were unemployed and we have taken them off the unemployment list. The percentages were in double points—20 percent to 21 percent. We have put two-thirds of those people into work. 
John Key’s mathematics or that of the 36 advisers has told him that Maori families are worse off because they get less income in the household but the advisers have not said that by the way two-thirds of those who were unemployed before have been added to the workforce. That is how the sums are done. So we trust nothing that the Opposition is putting forward about the Budget. There are more Maoris in work and more Maoris in tertiary participation. There are struggles for Kiwis in this country but certainly this Budget has been very very good for this nation. It has been very good. 
I would be more than interested to see how National members will counter the Budget and whether somebody has the gumption and the nicety to tell us how much his or her tax cut will be. Dr Lockwood Smith has recognised that it has been a great Budget. He has accepted that. I say to Dr Smith that I am very very thankful for his support. I am very very thankful that he has recognised the greatness of Working for Families—something that was much needed. I am very very thankful to Dr Smith because Working for Families KiwiSaver early childcare funding free health costs for children under the age of 6 and all of those issues are real things that families want. They are real things that families feel the need for in this country. We will see those members at the next Budget and they will be over on the Opposition benches listening to us talk about what we are doing. 
JUDITH COLLINS (National—Clevedon) 
: 
 There leaves Parekura Horomia one of Labour’s best members. Next time I will ask for his speech to be delivered in Maori so that we can understand it; I could hardly understand a word he said. 
One of the most disappointing things about this Budget is that it will not address any of the issues that New Zealanders think are really important. National members will of course vote for the tax cuts today because we do not believe that Labour will go ahead with them unless we do. That is one of the really important things that New Zealanders want to talk about. This Budget has been called the “block of cheese Budget” but in the good old days when Norm Kirk led the Labour Party and when Labour said it represented workers—and it did in those days—this would have been called the “cheddar cheese Budget”. Nowadays under the current Labour Government of Helen Clark and Michael Cullen we have the “Budget of gruyère cheese”. That is really all it is—full of holes and pretty stinky. That is about it. 
Nowadays Labour members only ever want to talk about the arts and things like that. They want to tell people how to live their lives and how to bring up their children. Labour members want to tell people what they can eat what they can do and what they can watch. They say that they will fight obesity by telling people not to eat and that they will fight child abuse by telling people not to abuse their children as if somehow that is going to matter. 
Unfortunately there is nothing in this Budget and nothing in the tax package that will do anything about child poverty. Once upon a time in the 1990s the Labour Party in Opposition talked constantly about child poverty. It talked about it up hill and down dale. Labour members said they would do something about the benefit cuts that happened in 1991. And did they? They did not. We can hear the absolute sound of silence from the Labour benches. Those members did nothing. They just talked and talked. 
What did Ruth Dyson say 2 weeks ago when she was told that this year we had had the biggest drop in employment in one quarter in the last 19 years? She said: “Oh well I don’t think that this is bad news at all actually.” That is what she said. That is what the Labour Minister of Social Development and Employment which is what the Labour Government now calls it—or social welfare; I will put it into plain language—said about our having the highest drop in employment in one quarter in 19 years this year. That is what she said. When I asked her whether she stood by that statement hoping that she might say she should not have said it that it was a silly thing to say or that she was misrepresented she said yes. She said that she stood by that statement. A couple of days later I asked her again and she still said that she stood by it. 
Did Ruth Dyson care about the people who have lost their jobs at the meatworks recently? No she did not care about that either. She told them that they could go on a benefit. That is what she said. Did she go down to see the 300 Sealord workers who have been told that they are losing their jobs? No she did not. 
Jill Pettis 
: That member is not telling the truth. I have the Minister’s statement right here. 
JUDITH COLLINS 
: The member Jill Pettis who is taking herself out of a job—she was actually sacked by the Labour Party; that is the awful thing—should be quiet for a little bit and listen because she would be interested to hear that there has been a loss of 11000 jobs in the construction industry. What did Ruth Dyson say about that? Well she did not think there was much wrong with that either. What did she say about the 6000 jobs that have been lost in the manufacturing industry alone in the past year? That did not seem to be really important either. 
I ask what is in this tax cut bill for those people. There is absolutely nothing. When Labour members talk about this bill they say that it is all about spending every cent that the taxpayers have given them—every single cent—so that there is nothing there for National to spend. That is what this is all about. 
One of the things my colleague Dr Lockwood Smith said was very very pertinent. He said that when the previous Labour Government went out in 1990 in a massive landslide it said that there was an $89 million surplus. That is what it said. That was the previous Labour Government of Michael Cullen and Phil Goff and that is what it said. It said there was an $89 million surplus. The members opposite have gone very quiet; they do not like hearing that. But what was the truth? The truth was that National came in in a landslide victory in 1990 and it found that there was a $1.5 billion deficit—a $1.5 billion deficit. The previous Labour Government had not just spent everything that was there but also spent everything that would be there for years to come. That $1.5 billion deficit went out to $3 billion over the spending that the previous Labour Government had made. It spent money that it did not have the authority of Parliament to spend. That is what the previous Labour Government of Michael Cullen and Phil Goff did and by the way it was also the previous Labour Government of Helen Clark because as I recall she was the Deputy Prime Minister at the time. That is what those members did. The fact is that Labour cannot be trusted with people’s money. 
In looking at some of the things that National will not be spending money on should we be privileged enough to lead the next Government I promise people that we will not spend $96000 for a study on “boganology”. We will not do that but this Labour Government has. We will not I promise people spend $795000 of taxpayer money on an interesting little number entitled  
More than Bricks and Mortar 
 which is a study of social networks. Of course it would be a social networking study would it not? That study cost almost $1 million. We will not I promise spend $600000 of taxpayer money on a little study called  
The Impact of Economic Shocks on the Well-being of New Zealanders 
. I can tell members opposite who have gone so silent that those of us who live and work in South Auckland have seen the impact of economic shocks on the well-being of New Zealanders. We see it in mortgagee sales all over Auckland. We are seeing that now. That is the economic shock that has happened to New Zealanders. Why has it happened? The reason is that the cost of borrowing has gone through the roof. 
This Labour Government supported by New Zealand First and others has spent money like it is water. It has spent money as though it will always be there. It has not given money back to the people who earned it. It has not given money back to the very people who get up every day go to work do an honest job and look after their children without having to be told to do it—the very good people of New Zealand. 
Hon Harry Duynhoven 
: This speech is total gibberish and you know it. 
JUDITH COLLINS 
: It is good to hear something from Harry Duynhoven because I know that the Labour Party is trying to get him out of his New Plymouth seat. I know that. It is not fair; he has done a good job. But it is trying to get him out. All that those members can say to people after 9 years is that they will give them a block of cheese—a big holey one that smells a lot. That is all they will do. 
Labour members are beside themselves because they know that the people of New Zealand have switched off from them. People do not want to know about the personal insults that Labour members throw at members on this side of the House. They do want to know why after 9 years of very good economic times in terms of our international prices beneficiary debt is $730 million under a Labour Government. Why are the poor poorer than they have ever been? Why do 185000 New Zealand children live in poverty after 9 years of a Labour Government? Why is it that every time this issue is raised Labour members scream their little hearts out and turn to personal insults? 
Why do we need an embassy in Stockholm? I have to tell Labour members that a lot of New Zealanders are asking themselves where Stockholm is. Well I tell them that it is in Sweden. The Prime Minister likes Sweden better than she likes New Zealand and we know that because we know about her travel plans. We know that people are wondering why we have spent tens of millions of dollars on the single core benefit policy. Do members remember that? We have been having that discussion since 1989. Those members have wasted taxpayer money like never before. They have wasted it and wasted it. Whatever happened to the single core benefit? Whatever happened to that? 
Jill Pettis 
: What about the 37 people in John Key’s office? 
JUDITH COLLINS 
: But we do know that the good thing about the next election will be that at least people like Jill Pettis will not be pretending to represent the people of Wanganui. Chester Borrows already got rid of her last time and he will continue to do that. I say to Mrs Pettis that she will never represent those people because they have moved on. 
R DOUG WOOLERTON (NZ First) 
: 
 I was looking forward to the delivery of the Budget and more than that I was looking forward to the debate afterwards. I thought we would see something that has become a bit of a tradition in this House and it is something that we subscribe to. We said what we would like to see in the Budget. We put out our wish list and I thought it would be interesting to see the alternative Budget from the National Party. I honestly and truly believed that would happen because that is what has traditionally happened in this House in an election year. The Opposition has come forward and to its best endeavours put out an alternative Budget. If we had had that then we would have had a truly interesting and meaningful debate that would have filled the whole of this Friday. But we have not had that from the National Party and I think it is sad. 
However I am pleased and New Zealand First is pleased to see that National has at last backed a tax bill that has been put forward by the Labour Government. That is a first in 9 years and I think it is great. I hope those members keep on doing that because New Zealand First has said on the record many times that we will support tax cuts from whomever proposes them—and we have done so. 
Obviously we have said we would have liked to see some incentive for our exporters. Everybody knows that following the problems in America and around the world things are in a bit of a slow-down mode. We believe that the people who can get us out of that situation are exporters who in this country are mainly farmers. We believe we should have seen incentives provided through the taxation system to assist them to get up and help us. We would have liked to see that and we said so. We would have liked to see the first $5200 of taxpayers’ salaries be tax-free and we will be pursuing that in future years. We put those things forward hoping that we would be able to compare proposals from the various parties but we have not been able to do that. We also said we would have liked to see and we will be pursuing this also a reduction in the rate of GST to 10 percent—2.5 percent being taken off. We think that would be fair would not be costly and would not be administratively difficult. We would have liked to see that. 
However we have seen some things that we are very happy with. We have seen the relativity of superannuation for our seniors retained. We have had promises that it will be increased and that is fantastic. We have also seen and we applaud this because it is our initiative an undertaking be given that if the price of electricity goes up because of the emissions trading scheme—and we will see whether that gets through in the fullness of time—there will be some support for those people who find themselves in difficulty. We think that is the way we should go throughout this economy. Nobody should be disadvantaged and the producers the people who go out and get our markets and earn our money should be looked after. 
We have not heard about any of that from the National Party either. That is tragic because what we needed to know today and last night from the National Party is how much it would give in tax cuts to the earner on the average weekly wage. If this Budget is as bad as the National Party says it is—and almost every one of its speakers on this issue has said the tax cuts are too little too late—then I ask how much it would give. Is it not fair that the public should be able to assess a group of people who put themselves up as Her Majesty’s main Opposition—that is what those members say they are—and who say they are looking forward to an election? I ask why they are afraid to tell us the extent of their tax cuts. 
Hon Member 
: Timing. 
R DOUG WOOLERTON 
: I will tell members what timing is. Timing is political. 
All through this debate I have heard National members raving on about Labour’s tax cuts being political. They say the cuts are about expediency. But now the National members say they will not tell the public about National’s plan. They will not be upfront with the public and they will not be honest with the public and allow them to compare National’s tax cuts with those of the Labour Government. This is the day to do it so that it is a fair comparison. While people are looking at this Budget it is traditional that they also look at the alternative Budget of the Opposition compare the two documents and make a decision. Sadly they have not been able to do that. I am told by way of an interjection that it is because of political timing. Political expediency is what that is. We understand that but National has been railing against it and I think that is double-talk. 
Dr the Hon Lockwood Smith 
: Your time’s up mate! 
R DOUG WOOLERTON 
: My time is not up yet; I have a few more minutes to speak. Sadly I think it shows a lack of moral fortitude on the part of Her Majesty’s Opposition to be dodging those issues at this point. 
I have said what New Zealand First would have liked to see in this Budget. New Zealand First gives notice that we will pursue those things in future years and that we will do so unashamedly and with vigour. 
We are also pleased to see that the Labour Government at least has come on board when it comes to what we call strategic assets. Those are mainly assets that the Americans describe as utilities—things that people in our society cannot avoid using such as electricity companies transport companies etc. We believe that instead of hocking those things off to private enterprise—in many cases to overseas private enterprise—we should manage them within this country and reap the rewards of good management in that instance. 
Therefore we are pleased to see in this Budget the purchase of Toll’s rail and ferry operations which was announced before the Budget but allowed for in the Budget. We understand that there will be a further infrastructural cost in order to maintain and further develop the rail structure in New Zealand and we do not have a problem with that. We would have had a big problem if we were just giving subsidies to the tune of $100 million per year rising to a foreign-owned company that was managing our rail network. Even then there was some talk that Toll would have needed assistance to redo the rolling stock. New Zealand First would have had problems with that and we would have been talking about that from the rooftops. We are more than happy for those things to be pursued in future years under the ownership of New Zealanders. 
To all of those who compare the purchase of Toll’s rail operations with the old days of New Zealand Rail we say they should look at Air New Zealand. The Government of New Zealand had to put $800 million into it. Air New Zealand is now a shining example of success. It has slimmed down has a sensible business strategy and is thriving in a very very difficult economy. We in New Zealand First look forward to the rail operation becoming of a similar nature to that and returning benefits to New Zealanders. 
TE URUROA FLAVELL (Maori Party—Waiariki) 
: 
Tena koe Mr Deputy Speaker; kia ora tatou katoa. The tax cuts programme is apparently all about fairness and social justice according to the Minister in his speech earlier. So the question is: what does nearly $11 billion worth of personal tax cuts mean for the wallets of most New Zealanders? 
We know in dollar terms that high-income earners will get back 2½ times more tax dollars than those working full-time on the minimum wage and around 3½ times more tax dollars back than families supported by benefits. So although someone living in poverty will get an extra $12 or $15 or so per week someone earning $80000 will receive around $55. I suggest that many New Zealanders would say “Big deal!” to that. With price rises and so on these days $12 will disappear pretty fast. You see every day of the week newspapers have headlines describing the scourge of poverty affecting an increasing number of New Zealanders. Insufficient disposable income substandard housing inadequately nutritious food and unequal access to health care all contribute to an increasingly desperate state of health. 
This Budget has been a long time coming and the drive for personal tax cuts has pretty much dominated public discussion for years. So the question is: who gains the most from the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill 2008? Where will the bulk of the $10.6 billion go? 
The Minister has been upfront about the fact that personal tax cuts have been specifically designed not to exacerbate inflationary pressures in the economy. Those are flash words but what do they actually mean? I think they mean that the money has been directed more to those who will be able to save money rather than to those who will spend it given that consumer spending causes inflation to increase. We know that this Budget is a sweetener for Generation Y. The bulk of the $10.6 billion will also go to those middle-income earners—those classic swinging voters—on the flawed assumption that they will be more likely to save than to spend and that giving money to the poor is pointless as they will just waste it. In fact the poor are far more likely to repay debt than to go on a consumption blowout. 
The question that everyone has been asking is: where is the relief for the poor for Maori and for Pasifika in this great tax cut package? Where is the tax cut package that will mean that Maori and Pacific Island women whose lives are currently tied up in gambling will have another pathway forward? Where is the real and meaningful tax relief to confront all the other social hazards that are symptoms of poverty such as the fact that Maori and Pasifika people are especially vulnerable to unethical lending practices? Where is the genuine tax relief that will make a difference to Maori and Pasifika families who are disproportionately affected by reduced housing affordability and as a consequence are most likely to live in inadequate overcrowded housing? Does this tax bill do anything to make a difference to the demands on the Auckland City Mission where 50 percent of the users of the food banks are Maori with Pasifika making up another 25 percent? 
The tax changes announced today will not eliminate this poverty. We in the Maori Party really do want to see this tax cut programme come in and start to make the difference we urgently need in our personal tax system. But we are genuinely torn by our knowledge that it will not make a tangible difference to those who suffer—those we may refer to as te pani me te rawakore those who are the most vulnerable members of our community. It is because of what appears to be crumbs from the tables of those of us in this House who are privileged that we abstain on the basis of principle. We are referring to those whose lives were changed for the worse by the “mother of all Budgets” in 1991. This House will remember that Budget as one that reduced the income of beneficiaries by 24 percent. It was a Budget in which the economy suffered and the social impact on New Zealanders was immediately felt in health education and social services. For the last 17 years this group of New Zealanders have been struggling to get back on their feet. 
We know that this group of New Zealanders were looking for a break yet just weeks ago the Minister of Social Development and Employment announced in the now infamous  
Pockets of significant hardship and poverty 
 that beneficiaries are now comparatively worse off than in 1991. We now have a situation where the Budget legislation that was passed by this House in 1991 which slashed benefit levels and forced New Zealanders into recession has still not been rectified in 2008. What is the big relief in store for those who are most in need? When we really drill down into the detail of the 2008 Budget and look at the breakdown we find benefit reductions: the unemployment and emergency benefits by $39 million the sickness benefit by $13 million the widows benefit by $3.5 million and special circumstances assistance by about $635000. 
It has been disappointing that much of this Budget debate has been reduced to some comments of ridicule about a bigger block of cheese. As boring as they may be for the purposes of debate bread butter milk and cheese are vital elements of the daily budget for far too many people. It is in the absence of such basic provisions for instance that people are forced to ask for help when they are in severe and significant hardship. It is in the absence of such provisions that people may be catered for through special circumstances assistance—assistance that has now been cut. That appropriation is to assist people in financial difficulty: with clothing allowances domestic violence and witness protection relocation home help civil defence payments civilian amputees assistance and other forms of welfare assistance. But all have been cut reduced diminished. 
It is probably no wonder that cerebral palsy sufferer Helen Capel thinks that beneficiaries are the forgotten people. It is no wonder the Salvation Army has come out and said that there is nothing to support the hard-end group of people who are really suffering. It is no wonder that economist Susan St John has described people who cannot do paid work because of a disability or family responsibilities as being “totally invisible”. The 2008 Budget could have introduced a tax change to restore benefit levels to what they were before the “mother of all Budgets”. 
Some of the speakers in this debate have asked what some of the solutions are. Here are a few and there are more on the way. The Maori Party believes that lower-income people should carry less of the burden proportionately than those on higher incomes. We know that 1.8 million taxpayers are on incomes of $25000 or less. It is this group that should have benefited from tax cuts not the other way around. We need to pledge to end child poverty in terms of all poverty measures by 2020 and one part of this is to introduce an official poverty line so we actually know where we are. We could follow the lead of the New Zealand Council of Trade Unions and introduce a new minimum wage of $15 an hour. Food could be exempt from GST on the grounds that it hits low-income people struggling to buy food with the same burden per dollar as rich people. It makes the difference at the checkout and the petrol pump. 
We need to address Maori unemployment. The fact that unemployment rates for Maori have shot up to 8.6 percent and for Pasifika peoples to 8.2 percent compared with 3 percent for Europeans is really a national shame. One way we could achieve our objective is by encouraging Maori enterprise and encouraging Maori iwi economic development not just by setting up another Crown agency to call the shots. Why not give us a break? Maori innovation could be a major contributor. Let us determine the solutions; this House might well be surprised. 
This is just the start; there is much more to come. The Government could have done this—it could have been bold and it could have made a difference. Instead as others have said already its tax cut package has won some favours and perhaps gained some ground but for some New Zealanders it has been merely more of the same. This is a Budget where they are forgotten where they are invisible and where they continue to suffer. 
Mr DEPUTY SPEAKER 
: The Labour call is split; there will be 5 minutes for each member with a bell at 4 minutes. 
Hon DARREN HUGHES (Deputy Leader of the House) 
: 
 I am pleased to rise in support of the third reading of this bill which clearly sets out the plan for the future that the Helen Clark Labour-led Government has starting with a 3-year tax programme going forward starting on 1 October this year. It is a significant package that the Minister of Finance has outlined to the House. There is one thing I have been thinking about though as we have been debating this issue of tax cuts over the past day. It is that after the last general election Labour came to office with some very clear priorities to try to change New Zealand for the better. We said we wanted to make KiwiSaver a priority in this term. We said we wanted to make a priority of lowering the cost of going to the doctor and of picking up prescriptions for ordinary people in our country. We said we wanted to take the interest off student loans for our young people starting out so that they had the best start in life. We also said we wanted our babies—our young 3 and 4-year-olds—to get 20 free hours of early childhood education and that has been the biggest single expansion in the public education system in many many decades. They were the priorities that Labour brought to the Treasury benches. They were the priorities we campaigned on wrote in our manifesto and have delivered through this term of Parliament. 
If we look through the Labour Party manifesto we will not find this bill anywhere in it. The Labour Party did not campaign on a programme of personal tax cuts. But today we have brought to Parliament a bill that delivers in that area on top of all the other things we have said to the people of this country that we would achieve for them and with them—together. I am proud of that. I am proud we have kept our word on those key social issues and on top of that we bring a tax cut programme to Parliament. 
National members throughout the debate have not got that simple point. They are obsessed with one policy and one policy only. None of it fits together there is no theme and there is no philosophy. There is nothing to tell us what it is they want to do. All they want to do is cut taxes for no obvious reason and no plan has been put forward for it. We heard Dr Smith say that New Zealanders need the freedom to spend their own money as though somehow the National Party does not plan to charge any taxes at all. 
If tax is so terrible if it is much better for people to spend their own money and not have Governments in the way let us have no taxes. But of course that is not National’s policy. If we take National’s argument and expand it through it is just a different shade of Labour’s policy. We will have different income thresholds cutting in and National might have a different rate here and there but it will still take money off hard-working New Zealanders and spend it on their behalf. As a Government it would still take out about a third of the economy and spend it. These debates that National members are having are absolutely academic puerile and silly in trying to argue in that regard. 
Labour is putting in a tax cut plan that will cost $10.6 billion over 3 years. That is about the size of the education budget. This Labour-led Government is taking about the same amount that we spend on education for our kids and our young people starting out and returning it to New Zealanders by way of tax cuts. This is a significant tax cut package on top of those key social and economic justice issues that Labour campaigned on and has worked on with other parties in this Parliament in order to achieve. 
National members were asked many times what their plan would be. Mr Woolerton from New Zealand First made an excellent point. The Government has put up its programme and it has been voted on by Parliament. Why does the Opposition not put up the mirror of that so that we can have a proper debate on it? 
Hon Dover Samuels 
: It’s timing! 
Hon DARREN HUGHES 
: The Hon Dover Samuels says that timing is the problem. We had to put up with Nick Smith the Opposition front-bench strategist sitting in Parliament yesterday and screaming at the top of his voice “Cynical! Cynical!”. He said that the whole thing was just cynical. Yet National members say that the reason they cannot tell us about their plan is simply timing. Let us have a little bit of honesty in this debate. 
There is another thing we need to hear about from National members. The only savings they were able to identify were things like closing one or two embassies and not running one or two arts programmes. They found an arts programme somewhere that they did not like costing $600000 or $700000 and they tried to say they would have tax cuts on the back of that. It is not as simple as that. The people of this country deserve a proper campaign where two sides put their arguments together and fight it hammer and tongs on the facts not on the kind of silliness we heard from the Opposition in that regard. National members cannot say they are not going to have an embassy in Sweden and that that will deliver a massive tax cut bigger than what Labour has done. 
Finally the area that I think we have not spent enough time talking about is the fantastic win in the Budget and in this particular bill for New Zealand superannuitants. On 1 April this year married superannuitants received an extra $27 a fortnight in their pension pay packet and single people received $17. That happened last month on 1 April. That is money already in the bank for our old people. But now on top of that through this Budget an extra $45 a fortnight will go to married couples and $23 a fortnight extra will go to single people. That is about a $73 and a $40-a-fortnight increase to our pensioners this year alone on top of KiwiSaver on top of interest-free student loans on top of 20 free hours of early childhood education and on top of lower doctors’ fees and prescription charges. This is a balanced programme from a party leading a Government that has a plan for the future that cares about ordinary people and that will be honest with them until the very last day because we know what we can do working together with the community to make our country a better place for our people. This bill includes everybody and I am proud to put the vote of the people of Otaki behind its third reading. 
MOANA MACKEY (Labour) 
: 
 Like my colleague Darren Hughes I too am proud to stand to support this bill in the House. This bill is one of a package of tax cuts that the Labour-led Government has delivered over the 9 years it has been in Government. National members have tried to forget that. They are trying to say that this is it and it is not enough. If we put these tax cuts on top of the Working for Families package on top of business tax cuts and on top of the research and development tax credits that this Labour-led Government has delivered we see that it is significant. We have already delivered $4.6 billion worth of tax cuts. This bill adds $10.6 billion over the next 3 years. That is significant. Have National members ever voted for a business tax cut when they were in Government? 
Hon Members 
: No. 
MOANA MACKEY 
: No they have not. Did National members vote for Working for Families? 
Hon Members 
: No. 
MOANA MACKEY 
: No they did not. It is interesting that those families around the country that are benefiting significantly by hundreds of dollars a week from Working for Families are saying: “We want to know from the National Party whether it will touch it because if it does it is history. If National does that we do not want a bar of it.” But of course the National Party will not tell us that. 
I point out that in 1999 6 months before the election at the time of the Budget Labour put out an alternative Budget and told the country what it would do so that people could compare. Labour did this so that people could look at what National was delivering in Government and at what Labour would do in the same position so that people could make a choice—and they did. In 1999 they voted Labour in so that it could deliver on the promises it said it would deliver on but National is refusing to do that. It is refusing to tell us what it would deliver. 
One of the extraordinary things about this bill and this Budget is that we are in uncertain economic times internationally. We have record high oil prices and record high food prices. Also there is the credit crunch coming out of the subprime mortgage crisis in the United States. It has put enormous pressure on the international economy. 
When we have seen conditions like this in the past in New Zealand we have had slash-and-burn Budgets from National. In 1998 when National faced uncertain economic times it cut superannuation it sold State assets and it stopped investing in health and education. What has this Labour-led Government done? We have increased the amount of money going to superannuitants. In fact we have increased the amount of money across the board. We have continued to invest in health in education and in infrastructure development and we have bought back a State asset—New Zealand rail. That is the choice that New Zealanders have at the coming election. It is the stark difference between a Labour Government and a National Government. 
When we had big surpluses and the National Party was screaming at us to squander them away—there were cartoons of Michael Cullen sitting on huge piles of money—we said no because we knew that one day we might need that money so that when the tough times came we would not have to take away cheaper doctors’ visits and cheaper prescriptions from the people who need them the most and we would not have to take away free education in our schools. We will not put charges on our public hospitals like National did the last time it got to the Treasury benches. We will not do that because we are a Government that believes that when times get tough and people need us the most that is when the Government should be here. That is when a Government should plan ahead prepare for the future step in and continue to provide all the services that New Zealanders particularly those at the bottom need. 
I want to talk about the crocodile tears for working people that we have seen from the National Party. This Labour Government has delivered 1000 extra jobs a week. We have introduced legislation that has stopped the wage gap between New Zealand and Australia from widening. When National was in Government that gap widened by 50 percent because it brought in legislation that meant that workers could not bargain for a fair wage. Australian workers shot ahead; our workers fell behind. Yet National members have the gall to say in this House that they would be a Government that would do well for workers. It would not. 
Judith Collins talked about unemployment. We have had unemployment at under 4 percent for 4 years. In 1998 in Gisborne unemployment hit 21 percent under a National Government. What did National members say? They said that the invisible hand of the market would deliver for places like Gisborne and the East Coast. Well it does not. I am happy to see $30 million in this Budget to continue the support for Tai Rawhiti and Northland for roading infrastructure that our council has struggled to continue funding. I know that our council and our community are grateful for that. They are also grateful for the buy-back of rail and for the money going into coastal shipping because that is important to our region as well. 
In relation to broadband I can tell members that people in provincial regions do not believe that a Telecom monopoly that National will set up and pay $1.5 billion to will deliver for rural New Zealand. It will not. Telecom has not delivered so far. It has been an abysmal failure. It says that it will reach 75 percent of New Zealand with its package. I can tell members where the 25 percent that will not get it will be. It will be rural and provincial New Zealand just as it always has been. Our tax package of $500 million will deliver more for taxpayers more bang for the buck and it will do it quicker. 
CRAIG FOSS (National—Tukituki) 
: 
 It is a pleasure to follow the previous speaker Moana Mackey who is well known for singing “The Gambler” at the Labour Party conference. Perhaps she will rewrite the song because the headline on the front page of today’s  
Dominion Post  
is “I bet the bank” and the gambler is Dr Cullen. I thought I should note that. 
One thing seems to be lost on members opposite. In the last half-hour or so Government members have started to speak on the third reading of this bill and on the Budget in general. I do not think any Government member spoke in the Committee stage of this bill and Government speakers were few and far between during its other stages—except for the Ministers of course. The key speakers Dr Cullen and Mr Mallard have implied that it is all locked in that it is about absolute power and that the numbers are so tight that there is no room for any movement—no room for John Key no room for Bill English and no room for the Nats to improve upon it. I will let members into a secret: there is a lot of room. But they seem to have missed the obvious. If we are to believe those speeches from Dr Cullen and Mr Mallard they have poll-axed Mr Goff. If it is true that this Budget leaves the next Minister of Finance with no room to do anything then if by some absolute tragedy Labour wins the next election—a tragic tragic event—the next Labour Minister of Finance whoever that might be will have absolutely no room to move. Dr Cullen has poll-axed Mr Goff or Mr Cunliffe who we know has ambitions or Mr Jones who is lining up quietly amongst the undergrowth. He has poll-axed his own caucus. 
Obviously his caucus colleagues are sick and tired of being bullied by him year after year about tax cuts etc. Now he has finally caved into them. Talk about swallowing rats! These tax cuts have to be the biggest spikiest dirtiest ugliest rat that a Minister of Finance has ever swallowed. The rat that Dr Cullen has swallowed to produce this particular bill is of elephantine proportions. 
I note that the name of this bill—Labour does not miss an opportunity; I have to give its communications unit credit for that—is the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill. Was the 1999 bill that hiked taxes called the “Taxation (Personal Tax Hikes) Bill”? Have any of the measures introduced by Labour all the way through its terms been called the “Interest Rate Increase Bill” because of the effect of the prolific and unproductive spending of Labour and its taxation grab? Labour does not miss a trick. One has to give it the nod there—although I wonder whether this bill has been referred to the Electoral Commission because of its blatant advertising. 
As I have said in every single speech on this bill it is an absolute pleasure to be voting finally for a personal tax cut bill. It is a bit of a road to Damascus Budget from Dr Cullen in view of the big big rat he is swallowing. But it is all about trust. Quite simply if I do a quick search of  
Hansard 
 and have a quick look at the old pamphlets and brochures from the 2005 election and at previous Labour Budgets then contrast them with the Minister’s Budget speech I realise that he did not write it. He read it out and he read it well but I do not think he wrote it. Someone else wrote it. Perhaps it was Mike Williams or perhaps it was Helen Clark. At least she is reading the political tea leaves in public. 
The previous speaker talked about the railways. A member from New Zealand First—the party of contradictions—also spoke about assets and railways. I will give members yet another reason why National will be voting against the Budget—the Budget not this bill. I refer them to page 153 of the main Budget document under the heading “Purchase of Rail and Ferry Network from Toll Holding Limited”. I will read out the last paragraph and members should remember that the Government has put $690 million of taxpayers’ funds into the railways: “There is a risk that if any differential in the purchase price and the value of Toll New Zealand’s rail and ferry assets and liabilities cannot be recovered through rail operations a write-down in the Government Financial Statements will be required.” We should remember that this Budget is supposed to be produced under New Zealand International Financial Reporting Standards so everything is supposed to be market to market. Translated that paragraph means we paid about $290 million too much and we have seen that reflected in the share price of Toll Holdings. 
This part is blatant. I cannot recall it being mentioned in the Minister’s speech yesterday. The paragraph quoted refers to a “write-down”. It does not state “write-up”. That is an admission right there that we paid too much and the taxpayers have been gouged. At what value will the railways etc. that have been bought from Toll Holdings go on the books? What contingent liabilities are about to hit the books? We know all about the subsidisation of the trucking firm the leases etc. and the $50 million that taxpayers have granted essentially so that Toll Holdings can buy another trucking company. The document states right there—and this is not a Treasury ideological burp; it has stopped burping now; its Minister has taken on board tax cuts apparently—that Dr Cullen paid too much. 
I will tell members another reason for not supporting the Budget. Between the Budget and today the 3-year interest rate has gone up 50 basis points. In the Budget speech time after time the Government tried to show its heartfelt feelings for people suffering because of high mortgage rates. It blamed it on the subprime issue. The previous speaker tried to do that as well. It is more than the subprime issue because the starting point for New Zealand interest rates is higher than that of interest rates anywhere else. What a change! From before the Budget to after the Budget 3-year interest rates went up 50 points the Kiwi dollar went up 1c and short-term interest rates went up again. 
What else is going on? How is this Budget going to be funded? Well page 102 of the main Budget document talks about $6.4 billion of additional borrowing—additional borrowing. Dr Cullen is failing miserably his third test in respect of tax cuts. Also the assets that the Debt Management Office has been looking after—basically the cash stash; where the Minister has been keeping it all—will be sold or matured. What will the effect of that be? Billions of dollars of assets coming on to the short-term market will hold at the very least interest rates or send them up—that is 90-day rates 60-day rates 12-month mortgages rolling mortgages etc. will stay up and stay up for longer. 
If colleagues still do not believe me they should look at the forecast in the Budget itself and at the numbers that are relied upon to produce those forecasts. The Budget Economic and Fiscal Update refers on page 70 to the 90-day bank bill rate. It was guesstimated at the last update to be 8.6 percent on average this year; it is now 8.8 percent. It is expected that it will plummet post this Budget to 8.6 percent. That is miles above that of any other OECD country. And those members shed crocodile tears on TV. It is absolutely absurd. The 10-year rate is staying up. It is not even moving around. 
Members should look at the current account and the CPI—the cancer on the future of our economy. It is the result of unproductive spending by this crowd for the last 8 years. The CPI is nudging the top of 3 percent. What does that mean? It means that short-term interest rates will be higher for longer. It means that the New Zealand dollar will be higher for longer—higher than necessary. The Labour Government premium—the Cullen premium on New Zealand interest rates—and the discount on our future growth have been embedded in this Budget. Thank you Mr Assistant Speaker. 
Hon DARREN HUGHES (Deputy Leader of the House) 
: 
 The debate has almost concluded. We have heard from almost all the speakers who want to participate in it but we are due to break at 1 p.m. for lunch. I seek the leave of the House to continue the sitting of the House beyond 1 p.m. until we can conclude the third reading of the debate. 
Mr DEPUTY SPEAKER 
: Leave has been sought for that course to be followed. Is there any objection? There appears to be none. 
Hon LUAMANUVAO WINNIE LABAN (Minister of Pacific Island Affairs) 
: 
 Kia ora talofa lava and warm Pacific greetings. I stand with pride to support the Taxation (Personal Tax Cuts Annual Rates and Remedial Matters) Bill. I am very proud to be part of this Labour Government which is delivering for all Kiwis. I am proud of all the achievements that our Government has made and very excited about our vision and our plan for the future. 
I am particularly excited about what this legislation means for Pacific Island peoples. Our people have made great advances under the Labour Government with unemployment reducing from 12.2 percent in December 1999 to 4.7 percent in December 2007 and our education and income levels are improving. Pacific people in full-time employment are increasing their hourly earnings at a faster rate than those of any other group and Pacific children are also increasingly taking part in early childhood education which is critical for future success. Their increase in enrolments is more than twice that for other ethnicities. The number of our students who leave school with National Certificate of Educational Achievement (NCEA) level 2 or above is increasing. Nearly a third of our young Kiwi Pacific people aged between 18 and 24 are taking part in tertiary education and their degrees and PhDs have improved hugely. That is all good news and there is also a lot more. 
What is fantastic about our Government is that we are continuing to deliver for Pacific peoples and for all New Zealanders with this bill. We know that households have come under considerable pressure. That is happening in New Zealand and across the world as nations cope with rising food and petrol prices and with higher mortgage repayments driven up by the credit crunch. Those problems are not of New Zealand’s making but Labour is committed to managing the economy through these challenges. Because of this Government’s responsible economic management putting aside money in the good years we are able to deliver relief when it is needed. Labour is helping Kiwis to cope with rising living costs without driving the public accounts deep into debt or slashing public services in order to do so. 
These tax cuts are responsible. They are providing relief while there is also continued investment in public services like better hospitals modern classrooms cheaper doctors’ visits and prescriptions and more nurses doctors teachers and police officers. The Prime Minister has also recently announced expenditure of $18.5 million to rebuild Porirua College which is a decile 1 college and is one of the leading schools in terms of its NCEA results in our electorate. Tax cuts will benefit people across the board and especially those on lower incomes our families and our superannuitants. The lowering of the bottom tax rate will benefit those on the lowest incomes and people in part-time work. The people on middle and higher incomes will also be able to earn more before going into higher tax brackets. Families will also receive even more support through a boost to the Working for Families family tax credit. That investment in our families and in our children is critical because it is an investment in the nation’s future success. It is critical for people to understand those links in order to understand how important this legislation is. This legislation will make a difference and we will see evidence of that. 
For our Pacific people this legislation will also mean they will have more money in their pockets. Census 2006 showed that 77 percent of Pacific people earn an income of less than $50000 a year so our people have a lot to gain from this legislation. A full-time Pacific worker on the average wage will now receive an additional $16.54 a week and that is great. It is an improvement and it is really appreciated. Our tax cuts and our Working for Families increases mean that a Pacific family with a husband who earns $35000 per annum with a wife who works part-time and earns $10000 per annum and with four children aged 4 6 12 and 14 will be better off by an additional $1975 per year. That will increase to $2273 per year in 2010 and $3719 in 2011. 
The tax cuts will also mean significant increases in the amount paid every fortnight to older New Zealanders. For our superannuitants our Pacific elderly whom we love very much the tax cuts will mean an increase from 1 October this year of $45.88 a fortnight for a married couple and of $23.84 a fortnight for a single person who lives alone. There will be even more in 2010 and 2011. This is extremely good news for New Zealand. All members of our families will benefit. I am extremely pleased and happy that during these times when our elderly will have found the recent increases in the cost of living difficult to manage we are in a position to support them. 
Let us not forget that the last time economic turbulence hit our shores the National Government cut superannuation and public services. The misery and the violation of Kiwi values and the Kiwi heart caused much misery and anxiety for many of our families. 
Our Labour Government has looked at the costs at the petrol pump and at the supermarket checkout and it has looked at rents and mortgages. It has decided that this support for New Zealanders which would have been given on 1 April 2009 will now be given on 1 October 2008. We are supporting our people when they need it the most. I would particularly like to acknowledge and thank Dr Michael Cullen for bringing this bill to the House. Under his leadership the public purse has been managed responsibly which means we are now able to support Kiwis who are dealing with the pressures of today. I am very proud to be part of a Labour Government that is ensuring the people in my Mana electorate our Pacific peoples and all New Zealanders and Kiwis have a strong and sustainable future. Thank you fa’afetai tele lava maloaupito meitakimaata maloni. 
TIM GROSER (National) 
: 
 I shall take just a brief call. Obviously I want to leave the next leader of the Labour Party the final word. I recall about an hour ago a Minister of the Crown literally saying that this was the finest Budget in New Zealand’s recent history and describing the author of the Budget Dr Michael Cullen as the finest financial administrator New Zealand has seen in recent times. I think we have to agree that in politics a little bit of exaggeration is fair. A little bit of hyperbole is part of the game and we all understand that. But it reminds me of a very cynical political statement that comes out of the Russian school of politics which is about as cynical as one can get. Obviously I know only the English version so I will change it slightly to keep the language within parliamentary language rules. It states: “You can mislead the people and you can mislead them often but know when to stop. Know the point where you have completely lost your credibility. You should stop at that point.” A Minister of the Crown is using such language to describe what is not just one Budget—let us be plain about this. What we are debating today and what New Zealanders will be debating in their living rooms is not one Budget; it is a Budget in a sequence of nine. We are debating the legacy of this three-term Labour Government in terms of economic management. 
To use another cliché: “One swallow does not make a summer’s day.” One Budget out of nine is not what we are debating today. We are debating a legacy of 9 years of a definite set of political choices. One thing I absolutely agree with Mr Darren Hughes on is that there is a choice. He is absolutely right. There is a choice to be made. New Zealanders are to be given that choice as they should be. That choice is between two completely different sets of priorities. 
Let us look at this outrageous claim in the context of some facts rather than just pure rhetoric. Labour inherited an economy that grew in the last year before it took office by 4 percent in real terms and that averaged 3.5 percent real growth in the preceding 8 years. Labour has now delivered us an economy in which everything is going south. Labour inherited an economy in which inflation—by the way several times this morning we heard some absolutely ludicrously wrong figures from the Government—peaked at about 14 percent and it was tracking down to about 2 percent when Labour took office. For the last 4 years it has been about 3.5 percent and trending up to 4 percent. 
Of course although I do not have the time to develop the analysis of the difference between tradable and non-tradable contributions to it people who have looked at the facts know that the fundamental problem here in terms of inflation peaking upwards on Labour’s watch has been in the non-tradable sector. What is the gorilla in the room in the non-tradable sector? It is Government spending which has increased from $32 billion to $60 billion in this 9-year period. This is the legacy of the finest economic manager New Zealand has ever seen? Labour had unemployment that had peaked at around 11.1 percent in 1991 and from memory the Maori rate of unemployment had peaked at an atrocious 21 or 22 percent in 1991. It had tracked down progressively throughout the 1990s down to 6 percent unemployment generally with the Maori rate still unacceptably above that. 
Since the roots of good economic performance are of course laid in years in terms of the past there was almost nothing short of a Mugabe-style approach to government—which is not the expression I would use personally because of the same issue about credibility—but there was nothing this Labour Government could do or did do that was going to dramatically alter the first 5 years of its term in office. Labour came in with all this favourable wind behind it. What do we have now? We have a very significant large loss in employment in the last quarter. Unemployment is tracking up. We had interest rates at a little more than half the level 9 years ago of what they are today. That is the legacy we are debating today. 
Hon Member 
: And the 90-day bill rate is going north. 
TIM GROSER 
: Absolutely right. We had massive surpluses built in by responsible fiscal management and we are now heading south. 
The tragedy in all this is that the centrepiece of this ninth debate if one likes on this legacy is about tax; and tax as many other people have pointed out quite correctly is not just a matter of putting money in people’s pockets. That is a very important aspect of it when people are under pressure but it is also fundamentally about incentives. Had Dr Cullen and this Government used the good years to put in place 9 8 or 7 years ago tax structures that would have incentivised New Zealand’s middle class one can bet one’s bottom dollar we would be seeing real economic consequences of that right now in a very positive way. We would have seen productivity which has tanked in the life of this Government. Total factor productivity growth which averaged 3.2 percent in the 3 years before it took office is now 0.4 percent; labour productivity growth which was around that level is now 0.5 percent—another aspect of the legacy of the “finest financial administrator” of the generation as described by a Minister. 
We would have seen real economic returns from those decisions and from those investments in New Zealanders. In fact we have all seen the estimates from economists that if productivity had actually held up at the rates Labour inherited New Zealand would not have an inflation problem. If we did not have an inflation problem we would not have had an interest rate problem; and if we did not have an interest rate problem we would not have seen exporters—at least they have had some relief in the last few months—buckling under the pressure of an exchange rate that puts them under an enormous competitive disadvantage. So that is the real legacy we are debating. 
We have had ambitious words from the Government in this 9-year period but very little action to back them up. We have had the words: “knowledge wave conference” “growth and innovation framework” “economic transformation” and “sustainability” in every sentence in every Minister’s speech. We have had this force-fed down our throats for 9 years but where has been the delivery? When we look at the facts we are looking at a slowing economy rising unemployment high interest rates that are putting New Zealanders under pressure and drastically reduced productivity gains. Where does this evidence lead? I tell members that it leads to a conclusion that is so radically different from the Minister’s words I quoted at the beginning of my comments. It leads us to the conclusion that New Zealand fundamentally now needs a change of Government. 
Hon PHIL GOFF (Minister of Defence) 
: 
 Let me start where Tim Groser the member who has just resumed his seat left off. He talked about a legacy. I remember the legacy of 1999. I remember that 161000 people were registered as unemployed. What is that figure today? It is 19000. As the Minister of Defence I remember the legacy of that Government in terms of defence. We had a defence force that had been run down year after year and sent to places like Bosnia with equipment dating back to Viet Nam that was not safe to put our troops in to do the job that we expected of them. 
I remember the legacy—the legacy of broken promises. Lockwood Smith said that he would abolish student fees and he doubled them. Lockwood Smith promised that he would resign as Minister of Education if he did not eliminate student fees and he stayed on for 6 years. I remember the legacy of lies about superannuation right from the beginning. “No ifs no buts no maybes”—National said that it would get rid of the surtax. It increased the surtax. And Bill English one of the new-generation National people was the Minister who in 1998 pushed down the rates of New Zealand superannuation. The same guy by the way today says that superannuitants are handled too generously. That is the same man who said that decile 1 schools were paid too much. That is equity from the National Party. That is what those members believe in. 
I say to Mr Groser that we both remember how well National managed governing under MMP. The previous National Government failed to govern this country with stability because it failed to work with other parties. That Government relied on the vote of Alamein Kopu. We remember that. If New Zealanders can remember that then why would they want this “new” team that includes Dr Smith—both of them; Nick and Lockwood—Mr English and Mr Williamson? It is the same failed group. It has no ideas and no vision. 
I sat and listened when the Leader of the Opposition was speaking. I took out a blank piece of paper picked up my pen and thought that I would take down the substantive points he made. Twenty-five minutes later I had nothing written on that piece of paper. That is exactly what the National Party has offered the House in this debate—nothing. 
National members are like stunned mullets. They read about the $10 billion in tax cuts. They have read that the average New Zealand family would be $42 a week better off by 1 October and they thought: “Where does this leave us? Where have we to go?”. That accounts for the utter failure of the National Party in this debate to be critical of what this Budget does. It is an exceptionally good Budget and this bill is very good legislation. 
National members have learnt one thing: they have voted against every tax cut this Government has brought in. They voted against Working for Families they voted against KiwiSaver and I say to Mr Groser they even voted against bringing down corporate tax rates. You know National is meant to be the party that supports the business sector. National had 9 years in Government and did it cut taxes for the business sector? Did National try to lift research and development funding in order for the business sector to go out and do its job? No it did not. National failed where the Labour Government has succeeded. 
This Budget gives tax relief to all New Zealanders. Not only does it give tax relief to all New Zealanders but also it acknowledges the fundamental point that where families have young dependent children the Government has to give more support to those families. We have to give help to those families and that is why we brought in Working for Families. A family on $35000—a low income—with two kids would not have got more than $10 or $20 in simple tax cuts but out of Working for Families they will get $190 a week. 
I will tell members what I am proud of about this Government. I am proud that we have lifted tens of thousands of kids out of poverty because we have recognised the cost of raising a family and have done something about it. That is something to be proud of. When I think of people who are working in the social sector I think of Major Campbell Roberts of the Salvation Army who has worked for people on low incomes for all of his life. What was his verdict on this Budget? He said that this is a fair Budget because somebody on the lowest income gets more than a 5 percent tax cut. 
John Hayes 
: 1.4 percent. 
Hon PHIL GOFF 
: The member John Hayes who is making so much noise from his chair got only a 1.4 percent tax cut. I am very sorry about that I say to the member but the truth is that he did not need more than a 1.4 percent tax cut while a family on a low income needs all of the help it is getting. This Government which is always good for social justice and builds on the traditions of Michael Joseph Savage continues to give social justice for working families in this country. That is why I am so proud of this Government. 
This is a good Budget because it delivers tax cuts at the same time that it continues to give for our social services. There is a huge investment in the health sector to make sure that we have a public health system that does not ask for somebody’s health insurance card or ask to see the width of people’s wallets before they get treatment. That is another thing that I am proud about with regard to this Labour Government. 
Sometimes the older folk in our community get a little grumpy about things and think that things could get better and should be better. There was a couple in the news who said that they had voted for Labour all of their lives and they thought that maybe they should give the other crowd a go—there is a sense of fairness amongst New Zealanders. They thought: “This group has done pretty well over 9 years. Maybe we should give the other group a go.” Well I was glad to see when I picked up this morning’s  
Dominion Post 
 that that couple looked at what this Budget offered them and said: “No no; we are doing pretty well with this group.” 
I even saw that the vice-president of Grey Power said that older New Zealanders would be very pleased with this Budget. People should be very pleased with this Budget. If we calculate what elderly people were getting each fortnight we find that they were getting $27 extra a fortnight as at 1 April. On 1 October they will get another $45 extra. That is an extra $72 a fortnight that our elderly people will get to help meet the cost of living. That is not bad going. Even National members know that it is not bad going and that is why they have been so dejected and so pathetic during this debate. They have nowhere to go. 
This is a responsible Budget that looks after the elderly looks after our families and looks after all New Zealand taxpayers. The Budget was done in a way that did not push this economy so far that we had to think about whether we could sustain social services or whether it would have an inflationary effect. 
You see this Budget gives people money at the time they need it because of the cost pressures that Mr Groser talked about. Mr Groser when he was in Tokyo blamed those cost pressures on international inflation but when he got home he said it was the Government’s fault. Well I do not know how it could be the Government’s fault that we were paying US$20 a barrel for oil a few years ago and now we are paying US$133 a barrel. When Mr Groser was in Tokyo he said that food price inflation is a worldwide phenomenon that has a crushing effect on people in developing countries and he was right. But I would ask him why when he came back to New Zealand did he say that it is something that the Government has caused? 
Of course the Government is not responsible for that inflation but this Government has responded by recognising people’s needs and giving them help when they need it. We are able to give them that help because we have managed this economy responsibly for 8 years and we have the money there. I say to Mr Groser that we have lowered the debt legacy of 35 percent of GDP that the previous National Government left us to less than 20 percent of GDP. 
By good management we have created the money that can help New Zealanders when they need it at a time when the international economy is in some trouble. This is a responsible Budget from a good Government as opposed to what we have heard from the failed people who sit on the National benches and this Budget is an election winner. 
Bill read a third time. 
The House adjourned at 1.13 p.m. (Friday)