Cunliffe David: Taxation (Business Tax Measures) Bill — Second Reading 
Cunliffe David: Taxation (Business Tax Measures) Bill — Second Reading 
[Volume:652;Page:1930] 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 The Opposition notes with some regret that on the very day that the Taxation (Business Tax Measures) Bill reaches its second reading the Performance of Manufacturing Index has reached its lowest point ever. Today is also the day when the Reserve Bank has dropped the official cash rate to 3 percent—one of its lowest levels for many many years—in view of the deepening and worsening recession that will hit small business hard. I know that out there beyond the confines of Parliament many small-business people are worrying about meeting their payroll each week and people are fearing the loss of their jobs. It might be said that people are taking very little comfort in their small businesses because they are not covered by the 9-day fortnight idea. 
Against that background we are here to discuss a tax bill that is good as far as it goes and that we will be supporting. But this bill was largely written by the previous Government in about August last year—before the global recession was really felt and before we had the opportunity to take stock and drive the bill further. I echo the comments made by the Associate Minister of Finance Simon Power on behalf of the Minister of Revenue in thanking all members of the Finance and Expenditure Committee and acknowledging its chair Craig Foss and his colleagues. Members of small businesses would be encouraged by the level of cooperation around the House on getting this bill through. We have worked together to identify measures where the bill could be extended and they are written in the committee’s report. 
I give notice today on behalf of the Opposition that in the Committee stage of the bill the Opposition will introduce a series of amendments. All of these amendments are taxpayer-friendly and will take the bill further as we would have done if confronted by this situation in Government. Further we formally indicate to the Government that we would be happy to cooperate with the Government in a bipartisan way and see those amendments introduced in a Supplementary Order Paper rather than through an Opposition amendment should the Government wish to cooperate in the interests of giving small business an even greater tax remission in this way. 
In many respects therefore this is a good bill and it largely implements ideas that we worked on earlier. But it is also a missed opportunity. National has come to office and simply lifted ideas that were around or in process or in Labour’s manifesto. Of the 13 substantive elements of the bill nine of them fall into the category of matters previously legislated or for which work streams were already under way. National has no broad-based plan to give New Zealand’s public confidence that this Government has taken the action necessary to tackle the gravity of this recession and to protect the most vulnerable or to prepare New Zealand for the opportunity of taking advantage of the inevitable upturn. 
As many international commentators have started to work out—and as I think New Zealanders are starting to recognise—this Government is becoming isolated in international terms. It is one of the very few that is committed to a conservative approach although the global recession demands robust action. Even in the best spirit one could hardly call this small bill robust. Where is the plan? Where is the stimulus? New Zealanders have watched an American President take office and take action passing a NZ$1.5 trillion stimulus bill. They look across the Tasman and they see a Government prepared to move heaven and earth with a NZ$67 billion stimulus package. 
This is the greatest financial crisis the world has faced since the Great Depression. It is the first time that the whole world economy has gone backwards since World War II. The International Monetary Fund chief economist has advised world Governments to commit whatever it takes to avoid a depression and above all to adopt clear policies and act decisively. It is better to do too much than too little—so says the International Monetary Fund. The US Secretary of the Treasury in the Obama administration Tim Geithner has warned that given the scale of this economic crisis “the policy response has to be comprehensive and forceful. There is more risk and greater cost in gradualism than in aggressive action”. Not two days ago the World Bank—no less—revealed that the global economy will shrink this year for the first time since World War II. Only today President Obama called for other nations to enact similar stimulus packages to that of the US. So where is New Zealand’s National Government? According to the  
Wall Street Journal 
 looking from the United States it is a global outlier taking a fiscally conservative deregulatory approach to a recession that was caused in the first place by a lack of adequate regulation and supervision over financial markets. 
Up to now the National Party has got by through copying and pasting measures that the outgoing Labour Government already had in the works. That is exactly what this bill represents. 
Nathan Guy 
: You’re voting for it so you agree with it. 
Hon DAVID CUNLIFFE 
: I am voting for it because we wrote it—surprise surprise for the senior Government whip. We are voting for it because we wrote most of it. The question is what the Government has done in the 6 months since the bill was written. Where is the Government’s insight? Where is the Government’s robust approach to tax legislation? Why does it take the Labour Opposition to drive further to introduce amendments appropriate to the scale of the recession in order to make our tax law even more business-friendly? 
Labour supports this bill so far as it goes but it does not go far enough. As a tangible demonstration of good faith with the struggling small and medium sized businesses of New Zealand—the 99.5 percent of all businesses that employ fewer than 100 people; the 99.5 percent of all businesses that are excluded from participation in Government funding of the 9-day fortnight; and the 99.5 percent of businesses that will be vitally interested in the contents of this bill—we urge the Government to retarget its tax cut programme. It makes no equity sense and no economic sense to shift the bulk of tax cuts from people who need them who will spend them and who have below-average incomes to people on above-average incomes. It is not needed there and it will have no substantial effect on our economy. The Government is nickel-and-diming small business: the measures in this bill are worth only a few hundred million dollars—far less than the cancellation of the research and development tax credits and far less than the income tax cut to upper-income earners. There will be precious few upper-income earners amongst small businesses which this bill was originally designed to help. 
I say again that this is not a bad bill; we will be voting for it. We wrote most of it. But members opposite can bet their bottom dollars that if Labour had been in Government since last August when these ideas were mooted we would be seeing a whole lot more content and substance in this bill than we are seeing today. That is why the Labour Opposition will introduce substantive amendments—unless the Government wishes to adopt them—at the Committee stage. We welcome the Government taking up the amendments as Supplementary Order Papers and working on them. 
Chris Tremain 
: That would be more unfunded amendments. Or are these ones allegedly unfunded? 
Hon DAVID CUNLIFFE 
: I call on Mr Tremain who is seeking to interject to rise above politics and to help the small businesses of the Hawke’s Bay a province he loves. I call on him to help small businesses to rise above politics and to introduce the amendments by way of Supplementary Order Papers. Labour does not need to own the amendments just like it does not need to own the rest of this bill. We wrote most of it; we are happy to vote for it. Those members opposite can bet their bottom dollars that the bill would have been a lot more substantive if we had known that the global recession would be as big and bad as it is. We would have spent the last 6 months putting more taxpayer-friendly measures in this bill. 
In conclusion this bill is good as far as it goes. Labour appreciates members’ cooperation on it. We will be voting for it. We will be introducing amendments to take it further and we would welcome cooperation from the Government to introduce those amendments by way of Supplementary Order Papers so that the struggling small businesses—the people who are feeling unprecedented pain and the people who are represented by today’s historic low in the Performance of Manufacturing Index—will get the help they need.