National have no plan for the economy – only raise GST

On Monday 20 October 2008, National leader, John Key told a press conference that morning that if National was elected and did “a half decent job” at growing the economy, then increasing GST would not be necessary”.

Well, presumably it has not even done a half decent job. National have done no job at all. This is the man that used to taunt the previous Labour-Progressive government about what it said it should do.

John Key, who had been overseas all those years working and shuffling money around, speculating against the New Zealand dollar and all the rest of it, he told us we had to keep our word.

He said if National did a half decent job it would not have to increase GST. So presumably it has done a lousy job, why doesn’t it resign now and go back and have another press conference?

John Key said to the Wall Street Journal: We can use this recession to transform the economy to make us stronger so that when the world starts growing again we can be running faster than other countries we compete with.

Running faster? We are actually crawling backwards. That is what has happened.
Mr Key in opposition used to taunt the previous Labour-Progressive government about Australia.

We were stagnant in terms of our research and development last year – worse still the $2000 million Fast Forward fund was cancelled. The government said it would make a leap forwards, a step change.

We found out about the step change at the Select Committee when I asked how much money has been invested in research, science and technology in the most important agricultural and horticultural sectors of the New Zealand economy.

The answer from MAF’s CEO was zero – nothing.

That would be bad if it was a mistake, but when in the House I asked David Carter, the Minister of Agriculture, why the Government had made zero investment in agriculture and horticulture, where we earn 65 percent of our overseas exchange, he said it was part of his plan.

So it was not just a mistake, it was not something that he forgot; he meant not to spend any money.

When we look at the Budget this year, $40 million is to be spent – that is over 2 years so that is $20 million a year – compared with the $700 million we put into the Ministry of Agriculture and Forestry, which would have built itself up with the private sector and interest to $2000 million.

That is called running when one comes out of a recession. Oh really! How does putting up GST make us run faster than the other countries that we compete with? Well, I can tell members that I was one who opposed GST. That is a matter of record, so no one can taunt me on that.

One of the reasons I did so was that it is the most regressive form of tax known to mankind. Does Mr Key know that the introduction of GST and the halving of the top tax rate that New Zealand introduced – dare I say a Labour Government introduced – in the 1980s - led to the greatest increase of wealth gap between rich and poor in New Zealand’s history.

The top tax rate was 66c in the dollar. It was halved to 33c so the people on the top rate got, and still get, a huge windfall in comparison with what they used to pay.

They got 33c on every dollar over the threshold, and that was a lot of dollars, whereas the poorest people in New Zealand were paying 20c in the dollar and they went down to 15c.
So they got 5c, the richest got 33c, and then they all paid 10 percent GST. That is fair, is it not?

The richest have discretionary income and they do not have to pay it all, whereas the poorest people have to pay all of their money on goods and services. Mr Key is either disingenuous or he thinks we are thick, because he said that is just a small increase in GST.

A small increase – 2.5 percent. If we look at the records, we see that GST income revenue for the government is about $11.55 billion. A 2.5% increase on $11.55 billion is another nearly $2 billion. That is $2000 million. That is just a small increase for Mr Key – he is a slow earner – but that means that every single New Zealander will face an increase on all goods and services they pay for.

That is particularly so for people on low incomes and medium incomes, which represents 75 percent of the country, I might tell members. Seventy-five percent of the country is on around or below the average wage.

Those people will face a $2000 million increase on all the goods and services they pay for. How does that work? And if we are to compensate those people with the $2000 million that we are forcing them to pay, then what is the point.

There is only one point if one is not going to compensate them with the same amount of money, then one cannot spend it.

But no, Mr Key thinks that we can take $2000 million out of the pockets of most New Zealanders, many of whom are below the average wage, and we will compensate them with the same amount of money that we charge them for GST, and that somehow it will all work out on the night.

If one believes that, then one believes in voodoo economics.

The Labour-Progressive Government had a research and development tax credit that would have amounted to about $380 million for science and technology, and we had to fight very hard to get that.

I thought that would be one of the policies that National would be sure to steal. Why would it not? No it cancelled it.

In the speech we heard today, there was talk about improving productivity and the rest of it in the agricultural and horticultural sector. Actually, while we were in government, the agricultural and horticultural had the highest productivity of any sector of the economy as a matter of fact, but it will not have it much longer, because all of that research and development investment has gone.

Here is what John Key said, again, in January 2008. It was a prolific year for John, that year. He stated: “Do you really believe this is as good as it gets for New Zealand? He went on to ask: “Or are you prepared to back yourselves and this country to be greater still?”

Greater still by increasing GST, canning investment in research and technology for the future, and not providing a skill base for tens of thousands of young Kiwis who will make a contribution to Australia, I presume, because that is where they will end up. We used to get hammered for that, but just watch this space as we go through this lot.

John Key’s speech lacks ideas. If one reads the 23 pages of it – I went through it and it is a big ask, I can tell members – one sees that there is not an original idea in it.

If one is looking for a strategic plan for New Zealand to do the sort of stuff he talks about, such as catching up with Australia, he mentions, among other things, rebuilding the Kopu Bridge.

I know that Queensland will be terrified at the thought that we will say that they may well have signed a contract for $100 billion of coal exports to China, but we are building the Kopu Bridge, so they should watch out. I mean is he serious?

While we are going through all this, Australia is up and running, which is the thing that we should have been planning for. We should have had a strategic plan.

I know that late in 2008, if we had won the last election, there would have been meetings of Cabinet over Christmas after that election. I think that the previous Prime Minister would have had meetings at her place over a roast chicken and would have used Christmas Day for an emergency Budget, and we would have had plans to get New Zealand through this and out of it with everything running.

What did we get from this new government?

Those members all went on holiday, and they stayed there.

We were almost wondering if they would ever meet again and whether there would be a Parliament, and one would have thought that everything in the world was hunky-dory, yet the rest of the world was melting down.

This is the result: a no think strategy.

When I was in the Labour government of the day, I used to say that there was one thing worse than a Think Big strategy, and that was a no think strategy. We had that then, and this is it now.

The thing is like Nightmare on Elm Street 3. One would think that someone would have learnt something from what did not work. This did not work.

If it had worked well, then why are we would not be in the problem we are now. If all this had worked well, then why are we in the hole we are in?

We did not go through all the meltdown in the financial sector that people in America went through and all the rest of it, so we had a great chance here.

We had good finances, low public debt, a strong financial balance sheet, and all the rest of it. That is what got us through.

That lot have no plan to deal with the crisis that we face with our own people.

This is the thought that I think I should leave the National members with: 150 relatively unskilled jobs available in a supermarket in South Auckland and 2.500 people queuing up for them.

If that doesn’t register, if those members do not know what that means, then they know nothing about New Zealand.

ENDS

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