6. Hon DAVID CUNLIFFE (Labour—New Lynn) Link to this
to the Minister of Finance
How much money has his Government borrowed since coming to office?
Hon BILL ENGLISH (Minister of Finance) Link to this
Net core Crown debt has risen $31.2 billion, or 15 percent of GDP, in the 3 years from 1 July 2008 to the end of June 2011. This has helped to pay for the rebuilding of Canterbury, maintain welfare and superannuation payments, and protect the most vulnerable New Zealanders through the recession.
Hon David Cunliffe Link to this
Why, then, did his Government implement a tax package last year that Budget 2010 says will result in a billion dollars of extra borrowing in its first 4 years?
The Government’s tax changes since it has been in office represent a net fiscal gain. We have focused on changing the tax system to rebalance this economy from excessive speculation on housing and excessive consumption and borrowing to a focus on savings, investment, and exports, and there is some progress in that respect.
Hon David Cunliffe Link to this
Speaking of tax system rebalancing, what was the fiscal cost over 4 years of reducing the top marginal personal tax rate from 39c to 33c?
The Government calculates the impact of the tax changes as a package. The most recent package in 2010 was broadly fiscally neutral. The decisions made in 2009 were actually fiscally positive, so the calculation of the top tax rate does not make any sense on its own. I cannot tell the member the numbers off the top of my head.
Hon David Cunliffe Link to this
I raise a point of order, Mr Speaker. By the Minister’s own admission, he has not addressed the question, which was about the fiscal cost of changing the top tax rate.
Mr SPEAKERHad the member listened to the Minister’s answer, he would have heard the last part of the answer in which the Minister said he did not have those figures.
David BennettHow does this Government’s borrowing compare with the forecasts it received immediately after the 2008 election?
This calculation is based on what would have happened if we had continued with the policies we inherited in the context of a New Zealand and global recession. The forecast we had stated that if we had not changed those policies, then we would have had never-ending fiscal deficits and Government debt rising to 60 percent of GDP, which is around twice the ceiling the current Government has set of 30 percent. The decisions in the last three Budgets mean that by 2015 we will have cut the borrowing that would have been needed to support Labour’s policies by $40 billion.
Hon David Cunliffe Link to this
To assist the Minister’s memory, can he confirm that the gross cost of tax reductions in his last Budget was $14 billion, of which two-thirds of the revenue reduction went to the top one-third of income earners?
No, I cannot confirm that, but I can confirm this: higher-income taxpayers under National actually pay the amount of statutory tax, which is a levy. The system Labour left was full of holes, rorts, and avoidance, and we have closed up those.
Probably the main focus has been on tidying up the extensive, wasteful spending that was built into the tax system by the previous Government. Depending on how we calculate it, we have reprioritised around $9 billion of spending into more effective front-line services that are actually beneficial to the public.