4. Hon BILL ENGLISH (Deputy Leader—National) Link to this
to the Minister of Finance
Does he stand by his statement that “If, as some have suggested, New Zealanders are fleeing as tax exiles to Australia, one can only conclude that those individuals are functionally innumerate, and we are probably better off without them”; if so, why?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
That statement was made in July 2005, it related to tax rates at that time, and it remains correct in that respect. But I welcome the opportunity to remind the House that on Wednesday of next week Labour’s $10.6 billion tax cut package starts rolling out, and it will deliver between $12 and $28 per week to all workers.
Does he still believe that the tens of thousands of New Zealanders who left for Australia in the last 12 months are so innumerate that they have not noticed Labour’s economic record of zero growth, 4.5 percent inflation, climbing unemployment and bankruptcy, New Zealand slipping down the OECD rather than going up, and an opening of the books that will reveal very significant cash deficits in the Government’s books?
Hon Dr MICHAEL CULLEN Link to this
The record, of course, is one of growth that has equalled that of Australia and outstripped that of the United States, Britain, and the European Union; of reductions in unemployment to levels that the member previously described as a hoax; and of strong growth in household incomes. On the matter of the Pre-election Fiscal Update, yes, it will show a significant deterioration in the level of cash deficits, yet the member continues to promise billions of dollars of tax cuts. Apparently, Jacqui Dean was right—the money will come from overseas.
Sue MoroneyHas the Minister received any advice on the comparative financial position of individuals in New Zealand and Australia?
Hon Dr MICHAEL CULLEN Link to this
The most recent advice from Treasury shows that the real wage gap between Australia and New Zealand fell by 2.6 percent between 1999 and 2008. That compares with an increase of 50 percent during the 1990s, when that member and many of his colleagues were in Government. Real wages in New Zealand have grown faster than those in Australia since 1999, reversing a long-term, historical trend.
Can the Minister confirm that the figures that Labour, the Council of Trades Union, and the Public Service Association are using were calculated by Trevor Mallard, and they are wrong?
Hon Dr MICHAEL CULLEN Link to this
No, I cannot confirm that, at all. In fact, I would be quite happy to table this particular piece of paper, for the member’s instruction.
Madam SPEAKERDoes the Labour Government think that the thousands of Kiwis who have left New Zealand in the last 12 months for Australia are so innumerate that they have not noticed the legacy of 9 years of mismanaged growth and lost opportunity, including the Minister promising tax cuts in 2005, then changing his mind after the election? One reason they have left is that they simply do not believe him.
Hon Dr MICHAEL CULLEN Link to this
What I can say is that this Government has nearly trebled spending on infrastructure from the parlous level of spending it inherited from the previous National Government; it has massively increased spending on industry training, including such measures as Modern Apprenticeships; it has introduced major reforms into almost the entire education system; it has introduced KiwiSaver, which 800,000 Kiwis are now benefiting from; and it is working on further measures to improve the operation of New Zealand’s capital markets. Indeed, the real issue with Australia is its higher wages, not the level of the tax rate. During the 1990s, under a National Government, the out-movement to Australia grew every year, peaking in a net figure of close to 30,000 in 2000.
Why did the Minister promise tax cuts before the 2005 election, then break that promise; and why should any New Zealander believe he will implement another round of tax cuts in 18 months’ time, if he is re-elected?
Hon Dr MICHAEL CULLEN Link to this
The story is changing; he is catching “Key syndrome”, as it is called! On 1 October, next week, tax cuts come into force; tax cuts for Mr Key, who can go and buy some shares in a foreign rail company on this occasion. Of course, Mr English is trying to raise doubts about the 2010-11 tax cuts because he will pretend, when National announces its tax policy, that all its tax cuts are additional, and are not, in fact, simply sucking back money from what has been legislated already, handing out more at the upper end and taking it away from the bottom end, which is what he is planning.
Why is the Minister implementing tax cuts on 1 October, when for 8 years he bitterly opposed personal tax cuts and said that any cuts in taxes would have to be financed by borrowing, and now he is implementing tax cuts and is financing them by borrowing?
Hon Dr MICHAEL CULLEN Link to this
If the member thinks about the logic of that, he will see that any additional tax cuts will have to be totally financed from borrowing.
Hon Dr MICHAEL CULLEN Link to this
Yes. I am advised that when someone actively trades shares, he or she may have obligations to disclose profits on the sale of those shares as income, and to pay income tax on it. In other words, if somebody buys shares with the intention of selling them quickly, then, in fact, there is a question of intention of sale. I note that John Key said that when he bought the Tranz Rail shares in 2003, he bought them with the intention of sale. Let us see the tax returns, I say to Mr Key.