Foss Craig: Taxation (Budget Tax Measures) Bill — First Reading Second Reading In Committee 
Foss Craig: Taxation (Budget Tax Measures) Bill — First Reading Second Reading In Committee 
[Volume:654;Page:3990] 
CRAIG FOSS (National—Tukituki) 
: 
 It is a shame that the previous Minister of Finance the Hon Dr Michael Cullen was not here during the Budget speech to listen and read—second-hand of course—the Budget that had to be put in place to repair the damage from the last 9 years and in particular from the last 3 years of the previous Government. I will point to some of the numbers in a moment but I am sure he has picked it up on the radio wherever he might be. The last 3 years were something of a travesty for the New Zealand economy and we are paying the price right now. I commend the new Minister of Finance for making the hard call. 
I again note that so far under this National Government over $1 billion has been put back into the pockets of over 1.5 million New Zealanders. They are enjoying over $1 billion due to tax cuts that were marked in October last year and came into effect on 1 April this year. That is in addition to the $500 million in the pockets of small businesses around the country—the engine room of the economy—given by the Taxation (Business Tax Measures) Bill which was passed in February this year. 
Part 1 of the Taxation (Budget Tax Measures) Bill is about delaying changes in tax cuts that were previously flagged. There are no secrets about that; we have been quite upfront. The key is why it is necessary that this happen. Part of the consideration which I alluded to is the last 3 years of the last Labour Government. One reason why the accounts of the New Zealand Government that we inherited are in such an appalling state—contrary to the opinion of the Hon Phil Goff who thought we inherited a great set of accounts; perhaps he was looking at them upside down through the wrong end of a telescope or something—is that in the last 3 years there was an ongoing compounding 50 percent structural increase in spending. OK some might like that—the Keynesians over there might like that—but the problem with it was there was only a 25-odd percent average structural increase in revenue. Hopefully someone sees the problem there. When expenses go up 50 percent and revenue goes up only 25 percent—half of the increase in expenses—there is a major problem. It is a compounding problem. 
The impact of the shambles of economic management we had in the last 3 years is nowhere better demonstrated than on page 1 of the Minister’s Executive Summary at the front of the Budget. The graph shows “Gross debt with and without Budget 2009 policy changes”. Quite simply that could also read “Gross debt track with a National Government or without a National Government”. This graph shows us that without any changes gross debt was going to peak at something like 70 percent of GDP. However with the changes the Minister of Finance has made the courage and leadership he has shown and the Budget that we have before us tonight the gross debt will peak at just over 40 percent then track down to an average of about 37 or 36.5 percent. The reason that graph is so important is that it represents New Zealand’s future. If the gap were not addressed and the blue line—the line showing gross debt without the Budget 2009 policy changes—kept going up that would mean our youngest leaving for brighter shores and a further slide down the OECD rankings. 
I heard previous speakers from the Opposition talking about what a wonderful thing it was that they had delivered on their commitments or something like that. I seem to recall that one of Labour’s commitments was to have New Zealand in the top half of the OECD within 10 years. I recall that that promise was made in 2001 at the Knowledge Wave conference; I have not heard about that promise in a while. We are almost in 2011 and I ask members whether we heard anything from Mr Goff or Mr Cunliffe about getting New Zealand up to the top half of the OECD. In fact I think we were No. 22 and sliding when Labour left office. 
Why is this legislation necessary? International conditions that have been unheard of and unseen since the Depression years of the 1930s are forcing some very hard decisions on this Government but it is prepared to make them. This Government is prepared to do what is right for New Zealand for New Zealand’s future for our children and for our great country. 
I note that Opposition speakers—and I will come back to this point in a minute—seemed to imply that they knew everything was coming and they knew that global economic conditions were going to be where they are today. Labour knew that the subprime mortgage situation was going to go all the way and wash on to these shores. They knew all these things! Actually as I noted in a first reading speech Dr Cullen the previous finance Minister is on record as denying that. It is very interesting. I do not quite know the angle that the Opposition is trying to go for. It keeps on alluding to an IMF report from midway through last year. As I said I recall that report and it begs the question: given that Labour knew in July last year when it was in Government the conditions that were going to be thrust upon us now what did it do about it? In July last year according to Mr Cosgrove and Dr Cullen the Labour Government knew. They are accusing Mr Key of not doing enough about it in Opposition but Labour was in Government in July last year—with all the knowledge of being in Government with all the forecasts and with the information—and it did nothing. The accusation that members opposite have been making is somewhat misleading and very very generous with the truth. It is perhaps revisionist of their final months in office. 
Mr Cunliffe keeps talking about the Superannuation Fund and what a great time it is to buy assets. If he knows that and if he knew the market was going down why did Mr Cunliffe not sell assets when he was in Government when the assets were priced higher? Why did the previous Government buy so many assets when they were so expensive? Why did it not sell them? Mr Cunliffe knew that we were going have these incredible conditions that have not been seen since the 1930s—according to his speech it was obvious! Well the central bankers did not know. Heads wiser than many in this room did not know. Treasuries around the world did not know. President Obama did not know. The Bank of England did not know. The General Motors Corporation did not know. Prime Minister Brown in the UK did not know. But the members opposite—Mr Cosgrove Mr Cunliffe and the Hon Phil Goff—did. They somehow knew! 
Since then about a trillion dollars worth of assets across the globe have been wiped out. The Labour members say they knew but they cannot have it both ways. If they knew about the recession back then what did they do about it? They did nothing. They alluded to a mini-Budget but they were not going to tell us about it. I recall that when Dr Cullen was asked about it he was a bit smug. It was more of a one-off comment of his I think. Labour did nothing. I ask Labour to show us the information and to show us what it was going to do because if those members say that they were not going to tell us then they went to the electorate under some kind of untruth. The Labour Government was going to have a mini-Budget because it knew with its lovely IMF report what the economic conditions were and the fact that things were going to deteriorate somewhat badly. Yet back then Labour did not do anything even though it had a mini-Budget that was going to solve it all but which it is not going to tell us anything about. 
I think we need to hear a bit more from the members opposite. I note the sagacity of these people; I keep asking them what the Lotto numbers will be next week given that they know everything else. I will give members a quote because we will be hearing about the Superannuation Fund: superannuation entitlements are exactly the same now—today and tomorrow—as they were yesterday. They are exactly the same. The entitlements are “66 at 65”. The entitlements were “65 at 65” but with the agreement of the Rt Hon Winston Peters they went up to 66 percent. National has taken those rates up. I recall an offhand comment that I believe Dr Cullen made about the Superannuation Fund. His words were along the lines of: “Well we’re going to have these surpluses. I’ve got to stash away $2 billion a year because I can’t let those nutters get hold of them.” I bet he was talking about his colleagues. To be fair that was a somewhat off-the-cuff comment from Dr Cullen. 
I will round up by talking about Part 2 of the bill which makes changes to the mortgage diversion facility. I acknowledge the Hon Mr Dunne for his confession if you like that it was a policy brought in by United Future. I recall one of his party’s members speaking at the time about the nuttiness of the Government trying to have the KiwiSaver savings scheme at the same time as it was trying to encourage debt. Lo and behold the policy has not worked. Only about 600 people out of over a million have taken it up. I look forward to working with this bill as it goes through the House. Thank you Mr Deputy Speaker.