1. AMY ADAMS (National—Selwyn) Link to this
to the Minister of Finance
What reports has he received on the economy?
Hon BILL ENGLISH (Minister of Finance) Link to this
I mentioned yesterday a report that showed that in the 9 years from September 1999 to September 2008, real after-tax wages in New Zealand grew by only 3 percent in total. I thought that number must be wrong, and I asked my office to check it. The figure is correct. But in fact almost all of that growth happened in the first 4 years of the period. In the last 5 years, from September 2003 to September 2008, there was essentially no growth in real after-tax wages in New Zealand.
Hon Gerry Brownlee Link to this
I raise a point of order, Mr Speaker. We have repeatedly brought up with you the issue of the sound system. It clicked in then, so I am now echoing back upon myself. It is very easy to hear comments from the other side of the House, and there is nothing wrong with that, but it was not easy to hear the Minister’s comments. There is something seriously wrong here that needs to be sorted out. It is quite unfair to members at the present time.
Hon Trevor Mallard Link to this
It might be something to do with the balance, because the system seemed to be working when comments were coming in our direction. The problem might be just comments coming back to members on that side.
Mr SPEAKERI do not believe we need to take further time on this right now. But let me apologise to all members. I am not happy with the performance of the sound system. Members will recollect that we gave permission for sound technicians to be present on the floor of the House to make tests and conduct an analysis of what is wrong with the sound system. Those technicians are coming back in September, next month, to make further adjustments to the sound system, following the problems that they detected from their work here. I do apologise in the meantime for the inadequate performance of the sound system.
What were some of the reasons for real after-tax income increases being so low in the 9 years to 2008?
One reason was that annual inflation was frequently running at above 3 percent. In fact, by September 2008 annual inflation had reached 5.1 percent, without any pressure from an increase in GST. The other reason is that right through those 9 years to September 2008 there were no tax cuts, which meant that people on the average wage were paying an increasing proportion of their wage in tax.
What measures has the Government taken to increase New Zealanders’ after-tax incomes and boost economic growth?
Of course, the two of those go together: measures that boost economic growth will ultimately boost after-tax incomes. In Budget 2010 the Government announced across-the-board personal income tax cuts. These will help families by leaving more cash in their pockets, giving them stronger incentives to get ahead. The average household, after it has paid the increased GST, will be $25 per week better off.
It certainly will, if only because the Government will be collecting less revenue from GST than it will be paying out in income tax cuts. For example, the average household income is $76,000 a year, and those households will receive a weekly tax cut of $46. Even if they spend every last dollar aside from their housing costs, they will pay extra GST of $21. This will leave them $25 a week better off. A wage worker on the average wage of about $50,000 a year will be around $15 a week better off. A typical couple on New Zealand superannuation, with a fixed income, will receive a tax cut and compensation worth $22 a week, and pay about $11 a week more in GST, so they will be $11 a week better off.