11. JOHN BOSCAWEN (ACT) Link to this
to the Minister of Finance
Will he be reversing the cycle of ever-higher Government spending, an ever-rising tax burden, and mounting inflationary pressures, which occurred in the 9 years while the Hon Dr Michael Cullen was finance Minister, and which put so much pressure on household finances in New Zealand; if so, when?
Hon BILL ENGLISH (Minister of Finance) Link to this
The member is right to point out problems that existed in the New Zealand economy well before the global recession took hold. Those pressures are fairly embedded in the economy because of almost a decade of misdirected policy from the previous Government. Yes, we will set out to reverse that cycle, starting with the Budget to be delivered on 28 May.
Will the Minister attempt to fix the Working for Families scheme, which properly reduces the burden on families, but which—like much else Labour was responsible for—is incompetently designed, leading to effective marginal tax rates for households of 53 to 59 percent, and, therefore—
Hon Trevor Mallard Link to this
I raise a point of order, Mr Speaker. Do I need to make it clear what the point of order is, or will you act?
Mr SPEAKERHon Trevor Mallard Link to this
The Standing Orders and Speakers’ rulings make it clear that questions should be succinct and not contain unnecessary controversial matter; this does.
Hon Rodney HideThe simple requirement is that oral questions be factual. I think that everyone accepts it as a factual statement that Working for Families, which was designed by Labour, was incompetent—
That goes beyond the point of order. The point of order made by the Hon Trevor Mallard is a perfectly valid point of order. However, if I were to enforce that in every supplementary question, I would be intervening on well over half of them. I invite the honourable member to continue his question, but he should be a little careful about making assertions about other parties’ policies.
I will try to be succinct, and I will summarise it by saying this. Is the Minister of Finance prepared to rework the Working for Families scheme so the high effective marginal tax rates of 53 percent to 59 percent, which currently destroy any incentive to get ahead financially, are reduced?
The Government has made it clear in recent months that we intend to leave entitlements such as Working for Families in place, because we believe that people need a sense of security in the middle of a tough recession.
Hon Clayton Cosgrove Link to this
Can he confirm that from 1999 to 2008 gross Government debt was reduced from 36 percent of GDP to almost 17 percent of GDP, that for the first time in New Zealand’s history the Government accounts reached a net positive asset position, and that the unemployment rate dropped to 3.4 percent, the lowest rate in 21 years?
I can confirm that the previous Government squandered the opportunity of a generation. New Zealand will—
Hon Clayton Cosgrove Link to this
I raise a point of order, Mr Speaker. I asked a specific question as to whether he can confirm factual statistics—that those statistics are correct. I did not ask him about anything else. I asked whether he can confirm, for instance, that debt went down and unemployment went down. Those are very specific points, but he started waffling on about something else.
—perhaps too long—to know that he cannot expect a yes or a no as an answer. He can put a question, and the Minister is entitled to answer it.
No, I have heard quite enough on this. When the member asks a question as to whether the Minister can confirm something, he invites the Minister to confirm a range of things that he may not have expected. If the member wanted information on those specific issues, he should have asked the Minister exactly what was the outcome on those specific issues. I would have made sure he got a specific answer. But when he seeks an opinion, it is standard practice that the Speaker cannot be responsible for the nature of that opinion.
I can confirm that the previous Government squandered the best 10 years that the New Zealand economy will see in a generation.
Hon Clayton Cosgrove Link to this
Does he agree with Moody’s, one of the credit rating agencies that assess New Zealand’s sovereign credit rating, that looking at gross debt is “too simplistic” and that a much more sound approach “requires an examination of the whole of the government’s balance sheet and therefore of the government’s net worth.”?
I can confirm that. If the member reads the Budget carefully he will see that the Government is moving in the direction of a much more sophisticated assessment of the Crown’s liabilities.
Does the Minister realise that the effective tax rates that flow from the Working for Families scheme mean that the after-tax real return is now zero, and worse still, negative, and that at a time when households are desperately trying to rebuild their financial position, should this not be addressed as a matter of urgency?
I cannot confirm those details. With any kind of system like Working for Families there is inevitably the result that people face high marginal tax rates. Unfortunately, the only way to fix that is to take some money from them, and the Government is not planning to do that in the bottom of a recession.