JOHN BOSCAWEN (ACT) : I rise to speak on the first reading of the Taxation (Business Tax Measures) Bill. This is a bill that the ACT Party will be supporting. However, before commenting on the bill in particular, I will refer back to my maiden speech where I said that it was a real privilege to be a member of this House. One such privilege was representing the ACT Party at Waitangi over the weekend. It was a privilege and an honour to be welcomed by the Ngāpuhi people on to Te Tii Marae. The feeling of goodwill and harmony was overwhelming, and it was a credit to both the Ngāpuhi people and other iwi from throughout the country, and to both the Prime Minister and the Leader of the Opposition, who led their respective teams.
This bill introduces a raft of changes to the way our small and medium sized businesses are taxed. Small and medium sized businesses are the engine room of the New Zealand economy. Ninety-six percent of businesses are small and medium sized enterprises, employing fewer than 20 staff. Collectively, they employ around a third of our workforce. However, the question that has to be asked is why these measures are necessary. I was quite incredulous to hear the Hon David Cunliffe and the Hon David Parker talk about National attempting to rewrite history. The facts are that over the 9 years of the Labour Government, Government expenditure over and above inflation, and over and above population growth, increased by double the rate of inflation—it increased by 6.5 percent, and by the equivalent of $12,000 per household per year, which is $1,000 a month or $230 a week. So over the last 9 years we saw a massive increase in Government expenditure.
The Hon David Parker talked about the Hon Michael Cullen being frugal and paying off debt. He talked about the wisdom of paying off debt during times of buoyancy. But in the last 9 years Mr Cullen presided over the greatest spend-up our country has ever had. The reason this country is in recession—and, I fear, depression—is that opportunities have been lost in the last 9 years. We have had very, very high export prices for our commodities during most of that time, and the opportunity to put that money, through tax cuts, back into the hands of ordinary New Zealanders has been squandered and lost.
During the period of the 1980s and the early 1990s, labour productivity increased by over 2 percent per annum. We can compare that with the last 9 years when it was less than 1 percent—it was three-quarters of 1 percent. I heard the Hon Parekura Horomia talk earlier in the debate about the incomes of low-income people. Well, the people who have been affected most by the large spend-up have been those people. They have been denied tax cuts and the chance to spend their own money. One of the key issues this country has to address is how we increase productivity.
Mr Parker also spoke about rewriting history. Well, let us look at accident compensation. One of the first moves of the Labour Government was to renationalise accident compensation, and that was despite the overwhelming evidence that the system was far more efficient during the short period when it was available for private tender and private operation. People got back into work from their injuries far earlier than they do under the current State-nationalised accident compensation.
I also heard the Hon David Cunliffe say that the Labour Government was going to do that, anyway: “We were going to do this, anyway; we were going to introduce these changes.” Well, I have a very simple question for him; I ask him why he did not. This National – ACT – Māori Party Government, with United Future, has taken urgency in introducing this bill. It took urgency on a number of measures in the last 2 weeks of last year. One of the measures that passed into law last year was to make it easier for employers to employ people. We are already in a recession and an important point to note is that this recession started long before the last election day on 11 November. It started long before then. This country has been in recession for the last 12 months. We led the world into recession. Yes, the situation has got a lot worse since October; the whole world is now in recession—that is acknowledged—but our country was one of the first to lead the world into recession.
So when I hear the Hon David Cunliffe say that the National Government is trying to rewrite history, I tell members that this country is in this situation right now because of the decisions that his Government made. He also said that he would like to do so much more. Well, on that note, the ACT Party and the Labour Party are absolutely united, because we in ACT would also like to do so much more. One of the problems this Government has is that it has committed itself to a number of stakes in the ground. Let us look just at the area of health. Earlier I mentioned labour productivity. Over the last 9 years expenditure on health, since the Health Funding Authority was cancelled, has increased by 18 percent over and above inflation, and over and above per capita increases—by 18 percent—and the number of operations performed under the district health board structure has actually reduced. So we have had a drop in productivity in the health sector.
This country has a number of challenges. Labour’s mismanagement in the spending of more than $230 per week, per household, over and above population per capita and inflation, is just one of them. That Government robbed every family of the ability to spend its own money. As our country moves further into recession we will hear more about tax cuts, but ACT does not believe that National has gone far enough. I heard the Hon Peter Dunne say that short of cutting tax altogether, it is hard to imagine that one could do better than this bill. The reality is that we can do a lot better than this bill. We can introduce low flat tax taxes. We can provide an incentive for people to get off benefits. We can reward people who actually want to work and contribute to the productivity of this country. We do not want to create a psyche in this country, as we have, that the people who receive Working for Families have effective marginal tax rates of 50, 60, or 70 percent. Where is the incentive for someone to go to work if he or she will lose three-quarters of his or her income?
Yes, reference has been made to the changes to the Resource Management Act. We will be hearing a lot more about that, because of the changes that have been pushed through by the ACT Party. One of the concessions that was made to the ACT Party in its confidence and supply agreement was the appointment of a Minister in charge of fiscal responsibility. Over the next 3 years I look forward to challenging my National Party colleagues on the changes that are required to turn this country round. We need to do more than just tinker. These changes are required in order to make the significant changes in productivity necessary to get this country back on its feet. I note with interest that my colleague Sir Roger Douglas has taken the opportunity to address members of the Ōrewa Rotary Club on this very issue, as I speak.
I conclude by saying that the ACT Party will be supporting this bill, but like the Hon David Cunliffe we believe that so much more can be done and we look forward to convincing our National Party colleagues of that fact. Thank you very much.