Peter Dunne – Leaders Letter 24 May 2007

Last week's Budget shows clearly what a support party, determined to make a difference, can achieve.

This Budget implements in full the business tax package United Future put before the electorate in 2005. The business tax rate will be cut to 30 cents in the dollar, as we promised, and a new tax rebate regime of 15% will be introduced for research and development, along with more assistance to exporters and skills development.

These moves put New Zealand back on par with our major competitor, Australia, and will be positive for our country's long-term economic development.

In addition, the changes we are proposing to the taxation of income earned overseas by New Zealand companies are long overdue and should make it easier for businesses to stay in New Zealand, even if the need to be close to markets means operating manufacturing plants overseas.

Now, they will not be penalised the way they have been by the New Zealand tax system for doing so.

As Minister of Revenue I am absolutely delighted at being able to deliver this $3.4 billion package over the next four years. But there is more.

The changes to the tax rebates for charitable donations are all United Future policy.

From April next year all personal and corporate donations will be tax deductible – a vast improvement on the current business restrictions and the maximum personal rebate of $633. The whole point of this initiative is to promote a stronger culture of giving in our country, and to recognise the positive role charitable and oluntary agencies play. I also welcome the changes to KiwiSaver. May 24, 2007 No. 7

In a speech late last year I floated the idea of using tax credits for KiwiSaver contributions as a way of introducing non-inflationary tax cuts, so I am delighted to see the $20 a week member's tax credit the will be introduced form July this year.

Many businesses I have spoken with since the Budget are strongly supportive of the enhancements to KiwiSaver – even the compulsory matching contributions employers will be required to make from April next year. In fact, their only criticism seems to be that the scheme has not been compulsory for everyone from now.

My view is that if the uptake of Kiwisaver is strong, as all the signs suggest, then it will be only a matter of time before we should move to make it a compulsory scheme for all. In that regard, I think National is playing a dangerous game by refusing to commit to the future of the new KiwiSaver arrangements. If New Zealanders react positively to these new arrangements, as they seem likely to, it will simply be foolhardy for National or any other party not to back KiwiSaver fully. Overall, it is no coincidence that having a United Future Minister of Revenue coincides with the biggest tax reform Budget in 20 years.

The abrupt resignation of Gordon Copeland as a United Future MP was a shock, given his previous denials that he intended doing so.

It raises again the question of whether list MPs should be allowed to leave their parties and remain in Parliament. When United Future last considered this issue early last year, our Caucus decided unanimously that list MPs have no moral authority to be parliamentary representatives other than that provided by the political party under which they were elected, and that if they leave their party, should also resign their seat in Parliament.

Gordon Copeland was part of that decision. By his own admission, he is a man of integrity, so I am expecting him to demonstrate that integrity by standing down from Parliament in due course.

They say every dark cloud has a silver lining. That is certainly so in this case. New members joining United Future since the resignation are outnumbering those leaving by about 4 to 1.

It seems our role as a moderate, centre party, committed to social justice, and doing the best for all New Zealand parents, children and families, has just become a whole lot stronger and more attractive to the wider public. We will now be moving on with vigour and enthusiasm to promote that forward looking and inclusive message, rather than looking back to the past and trying to fight yesterday's battles all over again.

This year's Budget showed just how much even a small, but dedicated team of MPs can achieve. Now, we are looking to next year, and we have already begun to focus on the gains we want to make in Budget 2008.

Kind regards to you all,

ENDS

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