3. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
Why did he say that the gap between rich and poor is “about the same” as a result of Budget 2010?
Hon BILL ENGLISH (Minister of Finance) Link to this
Because on a range of measures it is about the same. The Budget made sure that low, middle, and higher income earners receive roughly the same proportion of increase in income. This was achieved by tax cuts that more than offset any rise in GST at all income levels, compensation for those who receive Government support, and a series of revenue-raising measures that impact predominantly on high-income earners.
Hon David Cunliffe Link to this
How can the gap between rich and poor remain the same when a family with four children in Māngere will face additional childcare costs of around $100 a week, plus a hike in power charges, groceries, transport, etc., of around 6 percent, while someone on $1 million a year gets $1,000 a week back in tax cuts?
As I said, the Budget package switched tax from direct to indirect tax, and we made sure that right across the income scale the income tax cuts are larger than the impact of GST increases on those families. The people who pay more out of the Budget package are smokers, the overseas owners of New Zealand assets, and anyone who invests in property—that is who pays more.
Hon David Cunliffe Link to this
How can he say that the gap between rich and poor is about the same as a result of the Budget when the wealthiest one-twentiethof New Zealanders get almost one-third of the tax back?
At least two-thirds of the cost of the income tax package went on lowering the bottom two rates of income tax. For those who are on lower incomes the best news in the Budget is 170,000 new jobs. It will provide new jobs for those people who have lost their jobs, and job security for New Zealanders who are concerned about it. Most New Zealanders share the Government’s point of view that the Budget is good for the economy.
David BennettThere has been some discussion about the future gains for taxpayers. An average-wage earner, for example, will immediately be about $15 a week better off after GST in October 2010. By 2014, using Treasury’s forecasts for wages and prices, the amount that that taxpayer has gained will have risen to about $1,000 a year, or $20 per week. That is, the longer we apply the forecast as a result of this tax package, the better off the average-wage earner will be. This will be the case for most households, with the gains from the tax package getting bigger as their incomes rise.
Hon David Cunliffe Link to this
Given that the Secretary to the Treasury, Mr Whitehead, had pre-cleared with the Prime Minister his comments on Q+ A that 15 percent GST was just a first step, and since GST is a regressive tax that leaves hard-working Kiwis worse off, how will raising GST further narrow the gap between rich and poor?
The changes in GST are part of a package of measures that will lift the growth rate of this economy and provide 170,000 new jobs. If the member knows one thing—
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. The Minister well knows that the Budget documents ascribe only 6 percent of that change to his Budget.
Mr SPEAKERThe member must not use a point of order in that manner. If he disagrees with an answer the Minister is giving, the member should question further with a further supplementary question. Has the Minister finished his answer?
Catherine Delahunty Link to this
Kia ora e te Whare. Talofa lava, malo le soifua. Does he agree that more-equal societies produce better health and education outcomes for people across all income brackets?
I understand that that is a hypothesis put forward by some. It may be correct. Certainly, one of the keys to equality in any society is that people can get jobs. The poorest people in any society are those who do not have jobs. That is why the Government has a strong focus on creating new jobs in a stronger economy, and the Budget delivers about 170,000 new jobs over the next 4 years.
Hon David Cunliffe Link to this
I apologise for not doing so earlier, but I seek leave to table a report from the OECD that showed income distribution and poverty reducing under the term of the previous Labour Government.
Hon David Cunliffe Link to this
I seek leave to table a transcript of the Q+ A interview by the Secretary to the Treasury, in which he advocates on behalf of the Government—
This is a recent television programme, as I understand it. Members have seen that. There is no need to take that course of action.
Hon David Cunliffe Link to this
I seek leave to table OECD research that shows the types of tax policy changes employed by the Government increase income inequality.
David GarrettTalofa lava, malo le soifua. Is the Minister surprised that after Labour’s 9 years, when low-income suburbs were left infested with criminal activity, when large proportions of children left school illiterate and innumerate, and when the tax burden on all workers steadily rose, the underclass continued to grow and remains a problem to this day?
The key to opportunity for many of the New Zealanders whom the member describes is that they can get a job. That is why as much policy as possible that the Government is implementing focuses on getting businesses to create new jobs, because there are no new jobs until a business decides to invest and to take the risk. That is why the Budget encourages 170,000 new jobs.