3. JOHN KEY (National—Helensville) Link to this
to the Minister of Finance
Does he intend to make any reductions to personal tax rates or increase personal tax thresholds in Budget 2006; if not, why not?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
No, because at this point neither the fiscal nor the macroeconomic position would make that a sensible move.
Does he seriously think, in a week when Australia announced $45 billion of tax cuts, that a New Zealand campaign launched today in Australia and costing $400,000, with such clumsy billboards as “In New Zealand a cultural wilderness is a concert at a vineyard”, will really make a blind bit of difference in attracting back the half a million Kiwis who now call Australia home?
Hon Dr MICHAEL CULLEN Link to this
If the member lived as close to the Church Road winery as I do, he would not sneer at concerts in vineyards. Also, if he lived almost next door to a New Zealand family that has just returned from Australia, he would not sneer about New Zealanders returning from Australia.
Is this ham-fisted campaign not just further confirmation that privately this Government is deeply concerned about the impact that Australian tax cuts are having on attracting and retaining New Zealand’s skilled and motivated workforce, and if he is not concerned about that, why is the Government bothering to launch the campaign in the first place?
Hon Dr MICHAEL CULLEN Link to this
Clearly, we want to attract New Zealanders back home to New Zealand from Australia, and we are so generous that we would like to attract Australians to come to New Zealand. There is a competitive market out there in the world in that respect. We can be sure that if we saw a National Government again, people would flee the country, as they did during the 1990s.
Has it come to his attention that 680 people leave New Zealand each week for Australia, in which case will the Government be running this clumsy campaign not only in Australia but here in New Zealand as well, in a bid to stop the flood of talent across the Tasman—or has the Government reconciled itself to the fact that those New Zealanders already know that this administration will not be cutting taxes, as he pointed out in his answer to a question today, at least as long as he is Minister of Finance, which we all mercifully know is not for much longer, when Mr Cunliffe will move along one seat?
Hon Dr MICHAEL CULLEN Link to this
I think that is what psychologists call projection, though in his case it is two seats.
Rt Hon Winston Peters Link to this
Has he received reports in a historical context about political parties and tax cuts, namely in the late 1980s and in the latter part of the 1990s, and does that not suggest that although the National Party talks about tax cuts, in contrast to the Labour administration under Douglas and Caygill, the record of the administration under Ruth Richardson and Birch is not to have introduced tax cuts when it got into office, and that the last and biggest tax cuts of $1.1 billion happened when New Zealand First provided the Treasurer in this country?
Hon Dr MICHAEL CULLEN Link to this
It is certainly true that the top tax rate when we became the Government was 33 percent and the company tax rate was 33 percent. It is certainly true that National became the Government in 1990 and the top tax rate was 33 percent and the company tax rate was 33 percent, and that those rates were put in place by a Labour Government. It is also true that the highest level of net out-migration to Australia from New Zealand occurred in late 1998, 1999, and early 2000.
Shane JonesDoes he intend to introduce a general capital gains tax, impose stamp duties, or introduce a dedicated health tax in Budget 2006?
Hon Dr MICHAEL CULLEN Link to this
No, certainly not. However, of course, if the Opposition wants to talk turkey and lift the top tax rate to 45 percent and the second rate to 40 percent, introduce a stamp duty, and have a general capital gains tax, we could talk about some tax gains for low to middle income New Zealanders.
Why is Jason Walker from Hays Specialist Recruitment wrong when this morning he said on National Radio that the impact of tax cuts would have “pretty serious ramifications, with individuals crossing the ditch.”?
Hon Dr MICHAEL CULLEN Link to this
I invite the member to think for a moment and look in the mirror. In the year 2000 this Government put up the top tax rate; Mr Key came back to New Zealand.
Rt Hon Winston Peters Link to this
Is it correct in a historical context that the highest-ever personal taxes in this country occurred under a National administration with a Minister of Finance called Ruth Richardson, when she imposed a surtax increase in 1991 of effectively, in its worst case, an impost of 92c in the dollar?
Gerry BrownleeRt Hon Winston Peters Link to this
I raise a point of order, Madam Speaker. Again Mr Brownlee shouted out during the question.
Madam SPEAKERRt Hon Winston Peters Link to this
And the answer is that I did not vote for it. I was expelled from the National Party.
Hon Dr MICHAEL CULLEN Link to this
It is certainly true that in the 1991 so-called “mother of all Budgets” the National Party attempted to introduce a very rigid income test on the State pension, which it subsequently had to abandon. I do note that in Australia such an income test still exists, so presumably we can expect to see New Zealanders come home again when they get to about 55.
Why is the Australian Chamber of Commerce and Industry wrong because it believes that low taxes play a part in attracting skilled workers and welcomes the fact that the Australian Treasurer has had the courage to cut personal taxes in Australia for 4 years in a row, and why does he think that that has a significant impact on attracting New Zealand workers over to Australia?
Hon Dr MICHAEL CULLEN Link to this
If we look at the total migration flows we see, in fact, that over the last 5 years net migration flows as a percentage of population have been higher in New Zealand than in Australia.
Is it not a fact that when it comes to tax cuts, Kiwi workers contrast his inaction with the action of an Australian Government that, for 4 years now, has cut taxes and shared prosperity; if so, does he agree it will not be Australia but New Zealand that will wake up one day soon looking for its skilled and motivated workforce and asking the most obvious question: “Where the bloody hell are ya?”
Hon Dr MICHAEL CULLEN Link to this
I am over here. I do not know where he is, but I am right here and I intend to stay here for the long-term future. The public was offered the chance to have unsustainable tax cuts at last year’s election, and it did not get over the line, and now all National can do is to wobble across the plank and try to get to the future.
Rt Hon Winston Peters Link to this
In the context of the history of tax reform and tax changes, can he recall the commitment made by a political party to remove the surtax “no ifs, no buts, no maybes”, and then having got into power on that promise—much like a used-car salesman, with plenty of pre-sales talk but no after-sales service—can he recall that it increased the worst impost of that tax to 92c in the dollar; and what was that party called?
Hon Dr MICHAEL CULLEN Link to this
As the Minister of Social Welfare at the time the promise was made, I well recall a former member of the National Party—who has since seen a great deal more sense about life—promising in an address in the Wellington Town Hall that “no ifs, no buts, no maybes” the surtax would go, then trying to introduce an income test, and never removing the surtax until it was a condition of coalition Government with New Zealand First. That was the National Party and, indeed, in 1999, once no longer in coalition with the New Zealand First Party, National cut New Zealand superannuation again once it had a tax cut legislated for.
Can the Minister of Finance recall a Government that left office telling the people of New Zealand there was an $89 million surplus, when there was actually a $3 billion deficit, and can he name that Government?
If I cannot hear the member, then I am sure those at the back cannot. Would the Minister please start his answer again.
Hon Dr MICHAEL CULLEN Link to this
I wish the Leader of the Opposition would not wave his pinkie at me when the rest are waving their forefingers. In fact, if the member cares to consult his facts, he will find out that the party he belongs to was saying before that election there was a $1.8 billion deficit.