The ACT Party will be supporting the Taxation (Budget Tax Measures) Bill, but we are supporting it with a great deal of reluctance. In essence, this is a bill to delay tax cuts. We heard from the Labour Opposition this afternoon that the National Party went out and campaigned on a programme of tax cuts, and it has reneged. Yes, we find the country in difficult circumstances and there are a number of reasons for that. One reason is the last 9 years of financial mismanagement that saw Government spending, in real terms, increase by $5,500 per person in this country. That is $22,000 for a family of four. Allowing for the effects of inflation, the previous Labour Government went out on a spending spree over the last 9 years and took $22,000 on average, in real terms, out of the income of an average family of four.
Rather than face up to the issues or the need to go through and review Government expenditure, National has taken the easy option. It is proposing to postpone tax cuts. It is interesting that the Minister of Revenue said earlier this afternoon that the date of the tax cuts is unknown. We cannot say when the tax cuts are going to take place. We are looking at tax cuts that next year would have cost the taxpayer $1 billion. Let us put that in context. That $1 billion is out of total Government expenditure of $65 billion, which is $18 billion more in real terms than what it was 9 years ago. If Government expenditure had kept pace with inflation over the last 9 years, we might have expected Government expenditure to be $47 billion. But, no, it is $65 billion. It is $18 billion higher as the result of 9 years of financial mismanagement.
It was interesting to hear the Minister of Finance talk about what makes this country a richer country, and how we raise our living standards. How do we raise the income of New Zealand vis-à-vis our nearest neighbour, Australia? The reality is that incomes in New Zealand are some 20 to 25 percent lower than those in Australia. Our citizens are leaving for Australia and they are not coming back Our young people are going overseas and in years gone by they would come back to New Zealand, but in increasing numbers they are not.
One of the issues this country has to address is our productivity and our need to raise it. I will come back to productivity very shortly, but there is a second thing: we also need to get right the incentives to work. We just heard the Hon Lianne Dalziel talking about people on lower incomes. Well, it was the Labour Government that put in the Working for Families package. That was a badly designed scheme because it effectively puts the recipients of Working for Families support on a marginal tax rate of 54c to 59c. Where is the incentive to go out, work hard, get promotion, work longer hours, and work overtime to try to raise the living standards and income of one’s family, when one knows that some 59c in the dollar is being taken away?
Another key issue is productivity. We have to raise our productivity. Both the Minister of Finance and the Prime Minister spoke on that this afternoon, and I commend them for it. We absolutely have to raise our productivity. The Minister of Finance referred to infrastructure. It is a theme that Mr Key came back to. I struggled to hear what Mr Key was saying; I literally could not hear him. The banter backwards and forwards between Labour and National members meant I could not hear what Mr Key was saying.
I commend National for the decision to proceed with the Waterview Connection. Labour could have built that connection when it was in Government for 9 years. It was able to build a 4.5-kilometre motorway from Hillsborough to Mount Roskill. There was nothing to stop it from building from Mount Roskill to Waterview, but it chose not to because its option of building a $3 billion tunnel was totally unrealistic. It was an expense and a folly. Rather than front up and complete the job, as this National Government is proposing to do, it did not; it postponed it. National is now required to deal with that issue. That project will cost $1.4 billion, and I heard the Prime Minister say that 60 percent, or just under two-thirds, of that tunnel will be underground. People would not realise that on listening to the speech by Mr Norman this afternoon. Mr Norman, the chief doom master, talked about the bulldozers cutting a swath through Mount Albert. Of that motorway, 1.5 kilometres is on the surface. It follows the railway designation, and that is the same designation that Mr Norman would like to put a train set on. It is not a motorway that cuts through Mount Albert in the way that Mr Norman, the chief doom merchant, said.
We need to raise our living standards and we need to raise our productivity, but, first and foremost, we need to reduce waste. We need to provide an incentive for New Zealanders to go out and work and to contribute to this economy. We need to provide rewards. We need to provide incentives. Over the last 9 years we have had financial mismanagement on a scale that has never been seen before in this country. It has taken 100 years to get Government expenditure to $13,500 per family—over 100 years. In 9 years the Labour Government was able to increase it from $13,500 per family to just under $19,000 per family. For a family of four—two parents and two children—that is $22,000 taken out of the family budget.
The ACT Party will be voting for this legislation. It will be doing this with disappointment, and it will be doing this as part of ACT’s agreement to support the National Government on confidence and supply. Yes, ACT members will be voting for the deferral of these tax cuts, but we do so reluctantly. We only wish National had the courage to fulfil the promise it made to the electorate last year to provide those incentives and to create the environment where people want to go out to work and contribute to the economy.