2. SHANE JONES (Labour) Link to this
to the Minister of Finance
What reports has he received on the advisability of extensive tax cuts in the current macroeconomic climate?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
The excellence of the member’s questions continues to amaze! I have seen a report that states that right “now is not the time to be giving extensive tax cuts.” That report, which is broadly in keeping with the recommendations of the Reserve Bank of New Zealand, is from Mr Bill English and mirrors his previous indications on this matter.
Hon Dr MICHAEL CULLEN Link to this
Not surprisingly, yes, because some people have two opinions on every subject. I have seen a report that suggests a policy of at least $7 billion of personal tax cuts over 3 years is appropriate, which was just the week previously from Mr John Key’s statement. It would seem that Mr English pays about the same amount of attention to his leader’s statements on tax policy as he does on his statements on meeting the Exclusive Brethren.
Hon Bill EnglishDoes the Minister of Finance agree with the Reserve Bank of New Zealand’s assessment of his plans for very large spending in the run-up to the election that the likelihood is that the $7 billion he plans to spend will rise as Labour starts to bid for votes, and that those plans are keeping interest rates up higher for longer for every New Zealand household?
Hon Dr MICHAEL CULLEN Link to this
I am glad the member mentioned that $7 billion, because he includes in that in the next 18 months $2 billion of business tax cuts. If he cares to think about it, he will realise the next 18 months takes us through to September 2008. A billion-a-year business tax package starting in April 2008 is not $2 billion in that period of time but is approximately half a billion dollars.
What reports has he seen on the impact of business tax cuts of the type foreshadowed in the business tax review?
Hon Dr MICHAEL CULLEN Link to this
I have seen a report from the Reserve Bank of New Zealand indicating that those changes should increase business investment and, in the long term, increase the sustainable levels of production. I have also seen a report describing them as wasteful spending that should be cut. That comment came from Mr English, who now seems to be suggesting that National is opposed to reducing the taxes on business.
Rt Hon Winston Peters Link to this
Can I ask the Minister whether he has seen other reports, and one report dated 29 November 2006 that stated: “As we have made clear many times, National’s policy on tax has been, and remains, to reduce personal and company taxes across the board.”, and how does he reconcile that with last week’s quote—not by Mr John Key but, this time, by Bill English: “now is not the time to be giving extensive tax cuts.”—
Rt Hon Winston Peters Link to this
—I have not finished—which of those reports does he intend to follow?
Hon Dr MICHAEL CULLEN Link to this
To quote Mr English, I can reconcile those two comments easily, because they were made by the co-leaders of the National Party, and therefore, by definition, are likely to contradict each other.
Rodney HideHas the Minister seen any reports of a political party that has always advocated extensive tax cuts, whatever the macroeconomic conditions, its own electoral fortunes, and the fads and fashions of politics—and, indeed, irrespective of floods and volcanoes?
Hon Dr MICHAEL CULLEN Link to this
Yes, I have. I have noted that both the size of the caucus and the size of its leader are shrinking at approximately the same rate.