1. CHARLES CHAUVEL (Labour) Link to this
to the Minister of Finance
What new economic initiatives come into force on 1 April this year, and what has been the reaction to them?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
On 1 April we have a number of significant initiatives coming into force. The company tax rate is being cut for the first time since the fourth Labour Government. Combined with the research and development tax credits that come into force on 1 April, this will allow businesses to invest more in their workers and in their long-term success. Business New Zealand has called the company tax cut very welcome, and according to Ernst and Young New Zealand’s research and development tax credit regime is far more favourable than Australia’s. The only significant opposition to these moves has come from John Key and the National Party, which voted against them.
What further economic initiatives come into force on 1 April this year, and what has been the reaction to them?
Hon Dr MICHAEL CULLEN Link to this
On 1 April we are increasing the minimum wage for the eighth time in 8 years. Under Labour, the minimum wage has increased by $5 an hour. Those increases have been opposed by the National Party, and the only time the minimum wage increased in the 1990s was when New Zealand First forced the then National Government to do so. During its 9 years in Government, National increased the minimum wage by 87c an hour.
Hon Bill EnglishCan the Minister confirm that 1 April is the date on which his “chewing gum tax cuts” were originally going to come into place, but that he canned them last year in order to pay for his overspending?
Hon Dr MICHAEL CULLEN Link to this
I can confirm that one policy was changed; that policy was also opposed by the National Party at the time it was announced.
What further new economic initiatives come into force on 1 April this year, and what has been the reaction to them?
Hon Dr MICHAEL CULLEN Link to this
On 1 April employer contributions to KiwiSaver commence, and also the tax credits for employers that go with them. This is great news to the almost 500,000 Kiwis already in KiwiSaver. Despite that, the National Party still has not told us its position, and as recently as yesterday Bill English refused to rule out scrapping the employer contribution.
Is the Minister planning any major changes to Government initiatives such as superannuation in light of the global economic conditions?
Hon Dr MICHAEL CULLEN Link to this
No. I am able to confirm that from 1 April the newly adjusted rate of New Zealand superannuation for a married couple who both qualify for it is 66.23 percent of the net average weekly wage. Under the policy we inherited from the previous National Government it would have been only 61 percent, a difference of $34.35 a week or $1,786 a year for a married couple. I noted calls in the House yesterday for cuts in Government spending. That is exactly what National did when it was last in Government; there was a slow-down in the economy, and tax cuts were paid for by cuts to New Zealand superannuation.
Can the Minister explain why, on 19 May 2005, he announced that income tax would become inflation indexed from 1 April 2008, then last year he decided to cancel the only tax cut that many New Zealanders would have had in 8 years under Labour, despite record surpluses?
Hon Dr MICHAEL CULLEN Link to this
Because we decided to introduce the enhancements to the KiwiSaver scheme, which that member notably still fails to endorse, despite the fact we will pass the 500,000 member mark in KiwiSaver either tomorrow or at the beginning of the next week. Nobody believes National on those kinds of policies.