4. CHARLES CHAUVEL (Labour) Link to this
to the Minister of Finance
Has he received any reports on movements in real incomes?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
Yes, a number. The real increase in average gross household income between 2000 and 2007 was 25.4 percent, or 3.3 percent per annum. The increase in real net income for someone on the average income was around $4,400, or 14 percent, over the same period. This was a result of the longest period of sustained economic growth in over a generation, combined with the lowest unemployment on record and more people working than ever before.
Has the Minister received any alternative reports purporting to show changes in real income between 2000 and 2007?
Hon Dr MICHAEL CULLEN Link to this
Yes. I have seen a report that purports to set out the impact of inflation on taxation on one “Joanna Average”, and claims there was practically no real net increase. But this report is fundamentally flawed, as it confuses net and gross incomes and applies the consumer price index adjuster to the wrong one. Due to this error, the actual real net increase is more than three times higher than that suggested in the report. This is yet another example of what is coming to be called economic “Billiteracy”.
Sue BradfordIs the Government considering doing anything at all to improve the incomes of the hundreds of thousands of individuals and families who are dependent on benefits, given that the 1991 benefit cuts were never restored and we now have an $8.7 billion Budget surplus?
Hon Dr MICHAEL CULLEN Link to this
Indeed, large parts of the Working for Families package apply to those on benefits with dependent children, including, of course, the very important $10-per-week per child increase that came into force on 1 April this year. That has probably done a very large amount to reduce the number of children living in poverty.
Has the Minister received any reports on alternative ways of accounting for unpaid debts in the Government accounts?
Hon Dr MICHAEL CULLEN Link to this
Yes. I have seen a report suggesting that New Zealand should abandon accepted accounting procedures and treat unpaid debt that is not likely to be paid as if it were money we could spend on tax cuts. That is yet another example of economic “Billiteracy”.
Hon Bill EnglishCan the Minister confirm that what he has just said is a load of rubbish—that I did not make those comments—and that, in fact, I was pointing out something he did not point out to the public, which is that in this last financial year the Government wrote off $1.9 billion of debt in uncollected taxes and fines, when the usual amount is about $90 million, and that meant that the surplus came down from over $10 billion to $8.7 billion?
Hon Dr MICHAEL CULLEN Link to this
If that was all that the member had done, he would have just been pointing out standard accounting principles; he then went on to argue that it meant the Government could afford bigger tax cuts, because of the $1.9 billion write-off. That was the economic “Billiteracy”.
Rt Hon Winston Peters Link to this
Can the Minister of Finance confirm that anyone with any background in Treasury, particularly as a civil servant, would know that; and how would it be possible for someone to get the calculations so dramatically wrong yet be elevated so high in this Parliament?
Hon Dr MICHAEL CULLEN Link to this
The last point is easy: one has only to look at the alternatives. He was the best they had.