Wednesday, 14 February 2007

Anderton on the 'The Hollow Men' and tax cuts

Over Christmas I read the book The Hollow Men. It is a sad book for anyone who has a deep regard for the democratic process in New Zealand, because of the actions of senior members of the National Party who aspire to lead the country. The actions of those MPs have brought New Zealand politics into disrepute. One cannot read that book without coming to that conclusion. That description - hollow - accurately describes the speech made by John Key this afternoon.

Here is a critical reason to support that view. John Key talks about the underclass in New Zealand and proclaims himself deeply concerned about those New Zealand families caught in it. Anyone with a social conscience would be concerned the no-wage and low-wage families. I and, according to him, John Key as well, came from one of those families. We are all concerned about that group because we have experienced some of the problems those families face.

His prescription to help them - the only prescription, actually, that he gave today - was to reduce taxes. Will that prescription help them? I do not know whether John Key understands that the lower one’s income, the less effect that tax cuts have. I do not think John Key is unintelligent, but anyone who thinks that lower taxes help low-income families is either stupid or is deliberately misrepresenting the truth.

Do I think that John Key is stupid? No, I do not. So he is deliberately misrepresenting the proposition that lower taxes will help underclass families in New Zealand. They will not. How do I know that? Because I lived through and was in this House - when a Government that I was once a member of actually reduced taxes by far more than John Key has ever dreamed about.

The top marginal rate of 66c in the dollar was reduced to 33c in the dollar in 1988. Now there is a real tax cut! But, of course, the poorest families in New Zealand had their taxes reduced by only 5c from 20c in the dollar to 15c. So the richest people like John Key, and even now middle-class people like myself got the biggest tax cuts and the best opportunities in terms of increased income, while the poorest families got the worst deal.

What is different about what John Key is proposing? Nothing. I ask myself whether John Key or his National Party have learnt anything from that era and the answer has to be no, they have not. Except of course, they want even more now than they were given then. That was a licence to print money for the affluent of New Zealand. It is no wonder some people want more of it, but in my view that would be completely irresponsible.

If John Key is to be taken at his word, and he really cares one single iota for the poorest families in New Zealand, he could not possibly defend tax cuts as a solution for New Zealand's most vulnerable and poorest families. I believe that if that is his prescription, he doesn't really care about them at all. He is a hollow man. He is also representing hollow men and women because tax cuts cannot fix the problems of the least well off Kiwis.

What happens when we want a decent health system but we have to fund tax cuts? Who pays for their own health care? The people who have large tax cuts can pay for it themselves. But the people who cannot get a poorer health system and less accessibility to it. Furthermore, just to rub insult into injury, having given through one Government the biggest tax cuts in New Zealand’s history and having had that fail, the Ruth Richardson-led 'Mother of all Budgets' reduced the income of even poorer people, beneficiaries - by 24 percent.

I was here when it happened. I could not believe it. I was gobsmacked by the audacity of it. We had just been through this period of the richest people getting the most benefit from tax cuts by a country mile, and then even poorer people than the low-waged had their income slashed by nearly 25 percent. Has anyone noticed what actually happened?

The gap between rich and poor was escalated to an extraordinary degree by tax cuts on the one hand and cuts in the income of beneficiaries on the other and the least well off Kiwis have never really recovered. That is the truth and we are still struggling with that gap. I know for sure that we do not fix health, education, employment opportunities, and regional opportunities for New Zealand simply by cutting the tax rate. But that is what we are being told by John Key.

National members say that they are now ready to govern the country; they are ready to govern nothing.

ENDS

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