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Budget Surplus Shows We Are Over-Taxed

Thursday 23 May 2002

Post Budget speech by ACT Leader Richard Prebble, in Parliament, Thursday 23rd May 2002.

Hon. RICHARD PREBBLE (Leader--ACT NZ): We have just heard from Mr Anderton, who managed to finish his speech by saying that, as a result of this Government's policies, more New Zealanders would return.

All I can say is that he must be so busy fighting with Laila Harré he does not even know what is happening. The latest figures for migration for April show that 357 more skilled New Zealanders left than arrived. That could help explain the skill shortages that Mr Anderton has seen. Then we look at an even more worrying figure--inward migration.

We see that 4,392 more unskilled than skilled people arrived. This Government, in its migration policies, is dumbing down the country, and the Deputy Prime Minister is so out of touch that he can get up in the House and claim that because of this Government's policies, more skilled people are coming back to New Zealand. I say to Mr Anderton that 357 more skilled people left in April than arrived. That is 10 skilled people leaving every day, which is, by itself, the ultimate vote. New Zealanders are voting with their feet, and they are, again, leaving the country.

I also refer to something else. Mr Anderton said that the Government was doing something for the wall of wood. Well, that is very interesting, because I have been looking through the Budget, trying to see what has happened to the extra petrol tax. Do members remember that? We got an extra petrol tax. It was somehow missed--it was pledge number 8 on the card, but it did not fit in.

We did not know that we were going to have an extra petrol tax. But has State highway funding--and it is the State highways and the motorway system that Auckland has been calling for--gone up? No it has not. It has actually been cut by $55 million. So I say to the Government--

Dr Muriel Newman: Where has the money gone?

Hon. RICHARD PREBBLE: That is a very good question. Where has the money gone? Then the Government says it is wonderful, because it has a surplus of $2.3 billion. What that means is that the Government has collected from New Zealand $2,300 million dollars more than it needs to run even Dr Cullen's imagination.

He cannot think of anything else to spend the money on, and I ask members opposite what sort of socialist world they live in where they expect to be praised for collecting more money than they need? What possible advantage is there to someone living in Otara to have more taxes collected than the Government needs to spend?

That is interesting--they are actually having to think about. It had not occurred to them in caucus to ask Dr Cullen why the Government increased the top rate of tax when it did not need the money, or why it went out and whacked everybody's cigarette taxes if it did not need the money. They did not ask why it went out and increased petrol taxes if it did not need the money. Of course, the reason is that Dr Cullen thinks that he should be praised for collecting more money than he needs.

Well, the ACT party actually favours a balanced Budget approach. But what I find incredible in this Budget is that the Government is clearly out of touch. If I pick up any newspaper, what do I see on the front page, day after day? Horrific crime, crimes that we never imagined we would see in New Zealand. We see double homicides in South Auckland, kidnappings, and the murder of a woman going for a walk in her own park.

The Beehive must have no windows now on the seventh floor, because Dr Cullen says that crime has fallen. He did not even bother to read the police statistics that show that, under this Government, just in the last 2 years violent crime has gone up 14.9 percent. Over the decade it has increased by more than 50 percent, and the Government says there is no crime problem. So then we go and analyse the Budget, and we see that the total vote on personal security has gone down.

There is a slight increase in the Police vote, but that is for a pay increase. The real Police vote has actually gone down, and in Auckland there is a shortage of beat police and they do not have a CIB (Criminal Investigation Branch) to investigate serious crime. This Government has not addressed that.

Then we look at the vote for the Department of Corrections, which Mr Anderton waxed eloquent about. He told us what a great job Matt Robson is doing. Well, I guess if one was a prisoner, one would say there had never been a better Minister. They have coloured television, a cooked breakfast, and now a kaumatua can go and visit them day or night.

Rodney Hide: And their girlfriends.

Hon. RICHARD PREBBLE: And their girlfriends. They are looking forward to an even better time, and they are looking forward to getting out early. There has been a debate between this side of the House and the Government over the spin--the Government said it was getting tougher on prisoners, but the Budget actually shows who is telling the truth.

The Corrections vote is falling $20 million. How can that be? I can tell the House how that can be. That is because on 5 May this year the Sentencing Act came into force, and in section 102 of that Act the Government now has no minimum sentence for murder--none whatsoever. So when that scumbag does come up to be sentenced for the two murders, it is technically possible that he could say thanks very much and walk out. Now I do not think that is likely.

But I ask the Government where did it get a mandate to have no minimum sentence for murder. Then we go to section 86 of the same Act, and we find that every sentence of less than 2 years has been cut in half. So someone can do an aggravated assault, be sentenced by the judge to 2 years' imprisonment, and Matt Robson has cut that penalty in half.

No wonder the Corrections vote is down by $20 million. Then, of course, we have clause 82 of the new Parole Act, and that is the section that says that for most violent offenders they have had their sentences cut in half. Those offenders can now get out after serving only a third. So a scumbag, who has been sentenced to jail for 9 years for rape, can get out in 3 years, under this Government.

No wonder the Corrections vote is down. No wonder the surplus is up, and I say to members opposite that is a false economy. Where was the Government's mandate for that? Because of course the Government does not care about that. It just likes to quote public opinion polls. In the last election we had a referendum, and I remind the Prime Minister that 92 percent of the electorate asked for tougher sentences for violent crime.

This Government is so arrogant that it has actually done the exact opposite. Violent crimes are going up. Anyone who reads the newspapers can see it, and by Government members just getting up in this House and saying that crime is falling, all that shows is that they are completely out of touch.

The ACT party says that what we should be doing is looking at Australia. They have just had a Budget a week ago. What was their No. 1 priority? It was security--security for the nation and security for individuals. Our Government has ignored personal safety, and also ignored the security of the nation. There is nothing in this Budget for defence. September 11 apparently did not happen. This Prime Minister still says that New Zealand is situated in a benign part of the world.

We say that is a risk that we cannot afford to take, and that is not an assessment that Australia makes. The ACT party says that the Government should have spent more on our personal security and on our nation's security. I then address this point, and I listened to the remarks made by Mr English and I found myself in agreement with the point he is making.

When we really look at this Budget it is visionless. I think that is the reason that I nodded off, in the middle of it. There is no vision for New Zealand.

Rodney Hide: Have you ever done that before?

Hon. RICHARD PREBBLE: I never did it in Sir Robert Muldoon's Budgets. I had to listen to every word. There is no vision. We were told in February of this year by Dr Cullen that the Government had adopted the ACT goal of getting the country up in the top half of the OECD, thus restoring us to First World nations, and then saying upfront, that we need to grow at 4 percent a year.

We most certainly would. That is a minimum figure. When we look at this Budget, and look at Treasury's prediction, because Treasury is required to look at the Budget, put it through the computer and say: ``When we do all this, in 4 years' time where will we be?''.

Does Treasury say we will be at 4 percent growth? Does it say we will be at 3 percent growth? It actually says we will be at 2 percent.

Rodney Hide: One half.

Hon. RICHARD PREBBLE: That is one-half of what the Government says it needs, and it is happy. The reason it is happy is that most of the people opposite have not read those projections--

Rodney Hide: They can't.

Hon. RICHARD PREBBLE: I was going to say it is a failure of education--

Rodney Hide: And they were the teachers!

Hon. RICHARD PREBBLE: --and they were the teachers. The ACT party says we do need 4 percent growth, and I note the comments made by Mr Cullen, who thinks that if one repeats a statement often enough, it becomes true--that tax cuts do not work and do not assist. The first thing I would say about that generally is that if we go back to the mid-1990s, after the tax cuts he mentioned, were we growing at 2 percent? Were we growing at 3 percent? Were we growing at 4 percent? Actually, we were growing at 5 percent.

If it was not the tax cuts, then what was it that made New Zealand grow at 5 percent? Maybe we were inspired by Jim Bolger.

Rodney Hide: Maybe Bill Birch.

Hon. RICHARD PREBBLE: Maybe Jim Bolger and Bill Birch made us go out and work harder. No, I think the tax cuts actually worked. But I make this point to members opposite: I note there is nothing in the Budget about closing the gaps, but, of course, we know why that is. It is because in the annual tax bill going through the House, this Government has set a new rate of company tax--an ACT policy, actually. It is an excellent idea to cut company tax to 191/2 percent.

Have we had any of the businesses who are having their tax cut to 19/2 percent complain? Have any of them said that they will not grow faster? Have any of them said to Dr Cullen that this is a terrible cut in their prospects, because they will have 191/2 percent tax rate?

Rodney Hide: Have any of them offered the money back?

Hon. RICHARD PREBBLE: No. Has any member opposite, who now says that tax cuts are not good for the nation, said that this 19/2 percent tax cut is not a good thing? No, I heard a number of them get up and tell us what a great thing it is. What is the problem? The problem is this minor one--it applies only to Maori. The ACT party is not saying that Maori businesses should not get this 191/2 percent tax rate. We are delighted they are getting it. We just want that 191/2 percent for every other business in New Zealand.

We say to members opposite, who say that Maoris should have it because they are poor, then what about the Pacific Island community? They are even poorer. Where is the tax cut for them? Where is the tax cut for the Chinese community or the Indian community? What about the most discriminated group--middle-aged white males who are running businesses? What about a little bit of a tax break for them?

I say to members opposite that they cannot have it both ways. They cannot go on to marae and say: ``Vote for us in the Maori seats, because we have cut taxes for Maori business.'', and then get up in this House and say that tax cuts do not work. Of course they do.

We are the last bus stop before Antarctica. We need to make New Zealand a better environment for business. What is within our governance: one is to cut tax for business, and in New Zealand ``business'' means small business. We have to cut taxes for small business, and the second thing we need to do, and I direct these remarks particularly to Mr Swain, is that there is no point in going around the country saying, as Government members do: ``We love business. We're going to cut compliance for business; we just haven't got round to it yet.''

Well, Government members have been in office for 21/2 years and in that period they have increased compliance costs. Of course they have. We have occupational safety and health legislation and the Resource Management Act, we have Accident Compensation Corporation requirements, and now they slip into the Budget the Climate Change Response Bill--just as an aside to members, it is very interesting that as an experienced parliamentarian I always go around to see what bill is being slipped in on Budget day, because it is a day on which it is thought things can be slipped through that people otherwise would scrutinise--which, if it were to be wonderful for business, could members imagine the Government slipping it in on Budget day?

No, it now knows that in the Kyoto Protocol, thanks to the Government's lack of skill, New Zealand has the worst deal of any country in the world. The protocol will increase compliance costs--

Hon. Ken Shirley: ``Climate Change Compliance Bill.''

Hon. RICHARD PREBBLE: Well, if it were to save the planet it would be a saviour, but no one believes that. No one believes that it will make any difference while China and the United States do not sign. We have just put on a hair shirt so that Ministers opposite can enjoy themselves at cocktail parties in Geneva. That is the motivation of this Government. I say to its members that they should be concerned about the real nervousness that faces the economy.

This is the first point. I have listened, during Budget speeches, to many Ministers predict Budget surpluses. In fact, Bill Birch was the father of Budget-surplus predictors. I heard him in an election year say that Budget surpluses would rise to $9 billion. It was not a piffling $2.5 million. Did we have those surpluses? Did we ever see them? No, they sort of vanished as we drove along the economic highway.

What we actually have is an economic bubble that is riding on the back of record commodity prices. They will not last. We have a low dollar that has risen 12 percent in 6 weeks. We have low inflation that is now rising. We have low interest rates, which are predicted to reach 9 percent for floating mortgage rates by Christmas. That is why the Government wants to go to a general election early. Mortgage rates of 9 percent striking at the mortgage belts of Auckland does terrible things to one's majority. We have the highest rise in interest rates of any country in the OECD--

Rodney Hide: And the lowest growth.

Hon. RICHARD PREBBLE: No, it is not quite the lowest growth, but we have growth rates that are far lower than Australia, and, we have unsustainable, inward, unskilled migration. I tell the Minister that this is not a Le Pen statement; this is a statement made by the Acting Governor of the Reserve Bank. When he increased interest rates, what reason did he give? It was the increase in migration that has pushed up Auckland house and retail prices in a way that is unsustainable.

The Minister of Finance knows that, and he knows that this Budget is an economic bubble. He also knows that it will not last until Christmas. That is why he is delivering this Budget and then saying to Helen Clark: ``For goodness' sake! Don't believe it. Go early, before high interest rates, before the effects of my policies start to bite home, and before the public of New Zealand asks what sort of nation are the Cabinet Ministers living in, when they don't know that the real increase in prisoners in New Zealand are in those people who feel that they are prisoners in their own homes through the violence and crime in our streets that this Budget does nothing to combat.''

ENDS


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