8. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
Does the Government’s tax calculator still omit the effect of inflation when attempting to establish whether members of the public will gain or lose from his Budget 2010 tax switch; if so, why?
Hon BILL ENGLISH (Minister of Finance) Link to this
Yes; because the calculator correctly provides information on the effects of the switch between income tax and GST as it affects taxpayers on 1 October. As I said yesterday, even when all forecast cost of living increases are taken into account—and the calculator is not designed to take into account all forecast cost of living increases—real after-tax wages are forecast to rise by 1.2 percent in the 3 months to 31 December 2010. This means that the increase in wages will more than offset the effect of inflation, and that 1.2 percent increase in those 3 months compares somewhat favourably with the 3 percent increase in real after-tax wages over 9 years under the Labour Government. Those calculations are based on the same data series used to calculate annual adjustments to national superannuation.
Hon David Cunliffe Link to this
Can the Minister confirm that the 500,000 New Zealanders whom he said had dialled into the online tax calculator have been effectively misled not only because it has still omitted inflation but because the numbers that he has quoted account for Labour’s 2008 tax cuts under National’s real income growth figures?
I can confirm that 500,000 people have looked at the tax guide, which is a lot more than the number of people who signed up to go to Mr Cunliffe’s speech in Rotorua today at lunchtime, which I understand was two, and that is why he cancelled it. [ Interruption]
Mr SPEAKERI do not believe that a serious attempt was made to answer that question, at all. I invite the Hon David Cunliffe to repeat his question, if he would like to. He does not have to. If he would rather go on, he is welcome to. I give him the choice.
Hon David Cunliffe Link to this
I would be delighted, Mr Speaker. I could do it again and again. Can the Minister confirm that the 500,000 people whom he said had dialled into his tax calculator were effectively misled not only because it continues to omit the effects of inflation but because the figures that he has quoted include Labour’s 2008 tax cuts under National’s so-called net income increase?
As I have explained to the member any number of times, the tax calculator is exactly the same as the tax calculators that were used by the previous Government. It is designed to show the impact of the increase in GST on 1 October versus the reduction in income taxes, and it shows that most New Zealanders will, in fact, be better off. As I have also explained to the member, although the effects on 1 October are important to people and they will be interested in them, the real benefits of these tax cuts are about the long-run rebalancing of the economy.
Hon David Cunliffe Link to this
Can he further confirm that he has based his estimates on a data set that pre-dated the 2008 election, and that if that and the tax cut anomaly are corrected, there is far higher real income growth under the previous Government than under the current one?
The member is trying to conflate two different sets of numbers: one is the tax calculator and the other is a calculation of real after-tax incomes, and they set out to measure quite different things.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. At no stage in that supplementary question, as opposed to the previous two, did I mention the online tax calculator. The Minister began his response to a question I did not ask—
I think the member should give the Minister a chance to answer the question. On this occasion, I believe that the Minister was attempting to answer the question in a pretty genuine way.
I stand by my point. The primary question was about the tax calculator, and the member is trying to mix up those calculations with calculations of real after-tax wages. I guess the test will be whether Labour believes this tax switch makes New Zealanders worse off. If so, I look forward to seeing Labour members campaigning in 2011 on reversing the tax switch. Then I will believe that Labour members seriously believe what they are saying about these changes making New Zealanders worse off.
David BennettI have seen reports that confirm that tables explaining tax cuts in October 2008 did not include the impact of inflation, which at the time was running at 5.1 percent in the final months of the dying Labour Government, and that is with no GST increase. So it was actually right about that—with a tax calculator, it does not make sense to include inflation. After the tax cuts on 1 October this year, real after-tax wages, even accounting for all cost of living increases, will have increased very significantly since late 2008, but, more important, the tax changes will help rebalance this economy away from excessive consumption and debt, and towards savings, exports, and sustainable jobs.
Hon David Cunliffe Link to this
Were his revised net income estimates assisted by forecast revisions to the inflation track, which itself reflects the faltering recovery, loss of confidence, reduced GDP growth, and high unemployment; and will he now concede that he has just proven to New Zealanders beyond all doubt that his Government lacks a plan for jobs and growth?
No. We do not follow Labour’s “muppet-nomics”, as it has been called. The fact is that the member cannot have it both ways: he cannot claim that New Zealanders will be worse off because inflation is too high, and then turn round and say that the economy is failing because inflation is low. He needs to make up his mind which story he is telling.
Hon David Cunliffe Link to this
I seek leave to table Statistics New Zealand figures indicating that the Minister has misled the House in his response—
The member cannot allege that. The member is seeking leave to table a document. He cannot allege, in doing that, that anyone has misled the House. He must simply identify the document that he is seeking leave to table.
Hon David Cunliffe Link to this
I seek to table Statistics New Zealand figures that show that for the last 5 years the current account deficit was not 8 percent on average—
I do not believe that that is a proper description of any Statistics New Zealand document. The document will either be a series relating to New Zealand’s current account or it will be a document relating to a standard Statistics New Zealand release, and that is what the member should describe to the House, not his interpretation of what it shows. I am still none the wiser as to what the document is.
Hon David Cunliffe Link to this
I seek leave to table from Statistics New Zealand the balance of payments fifth edition ratios, quarterly for March, June, September, and December, for the current account balance from the 2005 second quarter to the 2010 second quarter, at minus 6.9 percent of GDP, which indicates—
The member will resume his seat immediately. The member is trifling with the Chair. I accept that he gave a very accurate description of the document, and I am grateful for that, but the bit he added at the end is totally out of order. He cannot use leave to table a document to tell the House about the document. He must only identify the document. He did that—
I am going to seek leave for the document to be tabled. Leave is sought for that document to be tabled. Is there any objection? There is objection.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. I seek your guidance because that appears to have left us in a difficult position. The Minister has, quite clearly, either deliberately or accidentally, made an error—