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Key Notes: Labour's Money-go-round Budget

18 May 2007

Labour's Money-go-round Budget

Taxpayers are worse off after yesterday's Budget. It failed to deliver tax cuts for middle New Zealanders who face ever higher mortgage rates and an ever higher cost of living, while the Government rakes in ever more taxes.

The biggest hoax is the much-touted tax cut for businesses. On the one hand, businesses get a cut in the company tax rate, but on the other, they are forced to match their employees' Kiwisaver contributions. This budget takes more money off businesses than it gives them in tax cuts. It is nothing more than a cruel money-go-round.

But businesses aren't the only ones being duped. Labour has axed the paltry 'chewing gum' tax threshold changes due next year, and Aucklanders and Wellingtonians will pay more tax through regional petrol taxes.

Then there's the Kiwisaver money-go-round. Those workers who can afford to join Kiwisaver will be expected to forgo wage increases for four years while compulsory employer contributions to the scheme rise.

Those workers who can't afford to join Kiwisaver, and that's likely to be the bulk of low to middle income earners, will be paying for those who can. Their taxes will subsidise the Government's contribution to workers who join the scheme. Kiwisaver is hardest on those who can't afford to save.

Since 1999, Labour has failed to deliver any return to hard-working Kiwis. It has offered them no chance to get ahead under their own steam. It has squandered huge surpluses on growing bureaucracy and complex schemes that attach a raft of conditions to every cent the Government spends.

In 1999, Helen Clark said that Labour would take New Zealand up the OECD ladder. She has done the opposite. New Zealand has fallen from 20th on the ladder to 22nd. We compete with Portugal and the Czech Republic, not the US or Australia.

Labour's money-go-round budget is simply not good enough. It doesn't do enough for taxpayers. It doesn't do enough for businesses. It doesn't do enough for New Zealand.

For more on the Budget, and our response to it, join the conversation at

50 by 50

For too long, New Zealand has talked about climate change without taking any real action. Our carbon emissions are soaring while our forests are being felled at record high rates. Labour has presided over a massive blow-out in our Kyoto liabilities and talks endlessly about carbon neutrality, but can't agree on what to do.

This is not good enough. Tackling climate change requires global action, and we need to play our part. Ongoing procrastination by the Government will put our international reputation and our clean and green image at risk.

That's why, last week at the National Party Northern Region Conference, I announced that National will stand by New Zealand's commitment to the Kyoto Protocol. And that's why I set a goal of a 50% reduction in carbon equivalent net emissions compared to 1990 levels by 2050.

50 by 50 will send a clear message: New Zealand means business on climate change. It is a credible emission target, it is similar to targets set by other developed countries, and it makes sense for our agriculture-intensive economy.

We are committed to boosting economic growth, and confronting climate change will be a vital part of that. To achieve 50 by 50 we will put in place the following measures:

'Cap and Trade' Permit System. We will introduce a 'cap and trade' emission permit system to cost-effectively reduce emissions across the economy.

Fast-track Renewable Energy Projects. National will make it easier to build renewable energy projects by amending the Resource Management Act.

Forestry Incentives. We will encourage more planting and less deforestation by giving some carbon credits to the foresters who plant the trees in the first place.

Boost Research and Development. Agricultural technology, especially in ruminant microbiology, has potential for big climate-change gains by reducing methane emissions from livestock. We already have the world's best research skills in this area, but there are few scientists working in this field. National will up the ante.

Global Action and Trans-Tasman Co-operation. A strong New Zealand voice on climate change is vital to the "brand" our exporters rely on. National sees advantages in a trans-Tasman carbon market and co-operation with Australia on research and development.

Empowering Consumers. Kiwis need encouragement to make climate-friendly choices. National will ensure that New Zealanders have access to the infrastructure, information and meaningful incentives that encourage climate-friendly behaviour.

To read my full speech to the Northern Regional Conference, click here.

John Key MP

Join the conversation at


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