5. Hon BILL ENGLISH (Deputy Leader—National) Link to this
to the Minister of Finance
What is his position on the mortgage levy today and how does this compare to his position last Thursday?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
My position last Thursday was the same as that which I had understood the member’s position to be last Thursday, and that was that ideas should be considered carefully, particularly when they come from Treasury and the Reserve Bank. Unlike the member, my position has remained unchanged.
Can we take it from the Minister’s answer that Government officials are now still working on the concept of a tax on fixed-interest mortgages?
Hon Dr MICHAEL CULLEN Link to this
Pursuant to the agreement at the end of the meeting that further work would be done on the variable interest mortgage rate, I understand that a report is coming to me at the end of this week. As a matter of courtesy I shall make it available to the joint leaders of the National Party, Mr Key and Mr English, but, of course, if they wish to continue discussions I am happy to do so; if they do not, then clearly the issue is off the table, because it would require a bipartisan approach.
Darien FentonHon Dr MICHAEL CULLEN Link to this
In the meeting I held with Mr Key and Mr English, Mr Key indicated a high degree of interest in the proposal, which Mr Key himself explained quite carefully at the meeting. He now claims he was merely being polite. So the National Party seems to have stumbled from a leader who claimed to be too polite to debate the Prime Minister in public to one who claims to be too polite to debate the Minister of Finance in private.
Is the Minister aware that the Prime Minister said last week that it would be a waste of time for officials to keep working on it; and why has he defied her instruction to him to pull back on the tax on fixed-interest mortgages because it is political suicide?
Hon Dr MICHAEL CULLEN Link to this
The report was almost completed. Given the fact the report was being prepared—in effect—at the joint request of that member, his co-leader, and myself, I saw no need to stop it at that point. Indeed, it was Mr Key who referred to the proposal as a stabilisation reserve where the levy could be negative on occasions—and he nods his head, I see.
Hon Trevor Mallard Link to this
Can the Minister confirm that this meeting was held following a written request from Mr Key to consider these matters, and that at the meeting the strongest proponent of that mortgage levy was John Key; and, given that, is this question a set-up from Bill English as a very early start in his campaign to destabilise John Key?
Hon Dr MICHAEL CULLEN Link to this
It is certainly true that in a letter to me Mr Key said he was very interested in debating proposals, all of which were in the public arena at the time he wrote the letter. It was very clear at the meeting that Mr Key wanted more analysis on this matter. It was very clear also that Mr English’s body language was somewhat retentive—to put it mildly. It is very clear that the members of the “dream team” cannot agree on this matter, just as they cannot agree on fiscal policy, as Mr English showed at the Finance and Expenditure Committee this morning.
Can I take from the Minister’s answer that whether the levy proceeds depends on the Opposition’s view, and from his advocacy of the levy again at the select committee this morning that it is Labour’s policy to explore putting a tax on fixed-interest mortgages in order to buttress monetary policy?
Hon Dr MICHAEL CULLEN Link to this
What I said was—and it follows a policy that I have adopted for close on 20 years now that monetary policy framework should be a bipartisan matter—that consensus would be required. If the National Party has now dogged on the agreement it entered into in December in my office, then that is the finish of that proposal. But the fact remains the problem has not gone away, and the problem for that member, who is supposed to represent a rural electorate, is that it is doing immense damage to the exporting sector. If he went down to Southland occasionally, he might find that out.
Rt Hon Winston Peters Link to this
Does the Minister of Finance share the view of New Zealand First that the preferred method of addressing inflationary pressures now—and at the same time promoting employment and export growth—is to introduce a dramatically extended savings plan providing real incentives to increase New Zealand’s appalling rate of saving and, at the same time, to increase our domestic investment capacity; and will he consider introducing such a policy soon?
Hon Dr MICHAEL CULLEN Link to this
On 1 July the KiwiSaver scheme comes into operation. It is expected to have a significant impact, in my view, on the level of savings within New Zealand. We should always be open to further moves. I am personally still not supportive of compulsion on the contributor—the employee—because I now think the Government takes on a very high level of moral hazard around the failure of any particular savings scheme.
Can the Minister answer the question that I asked right at the start: what is the Labour Government’s position today—[ Interruption]
Madam SPEAKERI ask members to show restraint. That was the second inappropriate comment made by that member, and it will be the last one.
Can the Minister outline, for the benefit of the House and the public, just what the Labour Government’s position is on the proposal to put a tax on fixed-interest mortgages?
Hon Dr MICHAEL CULLEN Link to this
The position is that the fact that the National Party dogged on discussions means that no further progress can be made on that. But I invite the member actually to discuss seriously how monetary policy can be made more effective and what options are available. He has no ideas in the area, other than to slash social spending and perhaps to have tax cuts for the rich.
What are the public and the House to make of a situation where the Minister of Finance has just contradicted directly the Prime Minister’s position, which is that the proposal is a “dead duck”—and that is a quote?
Hon Dr MICHAEL CULLEN Link to this
I do not know whether the member noticed but I just put another bullet into the body. [ Interruption]
For the third, if not the fourth, time: can the Minister outline the Labour Government’s position on the proposal to put a tax on fixed-interest mortgages?
Hon Dr MICHAEL CULLEN Link to this
For the fourth, if not the fifth, time: the fact that the National Party has dogged on the discussions means that it is now a dead issue. It will not proceed. [ Interruption] Well, darling, if you were kissing me I would be saying no, even if you did not notice.