2. JOHN KEY (Leader of the Opposition) Link to this
to the Prime Minister
Does she stand by her statement, in relation to the top income tax rate of 39 percent, that “Obviously, people’s incomes have risen, so they have gone into that bracket.”?
Does the Prime Minister agree with Dr Cullen’s comments that next year’s Budget will outline the Government’s long-term plans in respect of personal taxation, and that there will be room for modest personal tax cuts in the future; if so, why have cuts not taken place in the last 9 years?
Rt Hon HELEN CLARK Link to this
Yes; and it is all a question of priorities. Right now our Government has given priority to KiwiSaver, which National has voted against at every opportunity, despite knowing how much Kiwis want it.
Darren HughesDoes the Prime Minister agree that the increase in the top tax bracket in 1999 was to reverse cuts to superannuation; if so, has she seen any reports on the logic of continuing to pay New Zealand superannuation alongside other programmes such as the Government’s new KiwiSaver agreement?
Rt Hon HELEN CLARK Link to this
The Government, indeed, has made a huge contribution to ensuring the viability of New Zealand superannuation. That is what the New Zealand Superannuation Fund is all about. But I have indeed seen a statement that suggests that once incentives for private savings are offered, then the country is heading down a road where there is no logic to paying universal superannuation. That statement came from Bill English. Under Labour, New Zealanders get both KiwiSaver and New Zealand superannuation; under National, they would probably get neither.
How can the Prime Minister have the gall to come into the House this afternoon and claim that next year’s Budget might outline modest tax cuts, when she may have noticed that last week Dr Cullen actually cancelled the modest tax cuts he had already promised and announced in 2005?
Rt Hon HELEN CLARK Link to this
What Dr Cullen actually announced was the first adjustment in business tax rates in 19 years—something the so-called party of business has not delivered for business. Secondly, Dr Cullen announced a $20 tax credit for a worker who goes into the KiwiSaver scheme, backed by a $20-per-worker employer tax credit. That is worth an enormous amount to workers, and opposed at every step by the National Party.
Does the Prime Minister agree with the rest of New Zealand that over the last 8 years the Labour Government has had more than enough money for personal tax cuts—in fact, up until recently it has had a fairly low-inflation environment in which to roll out tax cuts—and that the only reason this Government has not rolled out tax cuts is that Labour believes that it knows how to spend New Zealanders’ money better than New Zealanders do? What a disgrace that is!
Rt Hon HELEN CLARK Link to this
What I know is that Kiwis expect a New Zealand Government to invest in health, education, superannuation, families, and infrastructure, and that over the past three elections they have said no to the National Party, which only ever had one policy, and that was to cut personal tax rates and never look after the basics that Kiwis wanted.
Is the Prime Minister aware that in 1999, when Labour came into office, the top personal tax rate in New Zealand cut in at $60,000, which happened to be exactly the same rate at which the top personal tax rate in Australia cut in; that after 8 years of a Labour Government, the top personal tax rate in New Zealand now continues to cut in at $60,000, while in Australia it is $180,000; and can she see why New Zealanders are just a little miffed at that—and hopefully she has her own answer and does not have to rely on Dr Cullen’s advice, because his tax advice has been rubbish in the last 8 years?
Rt Hon HELEN CLARK Link to this
As the member is so keen on Australia, I look forward to his announcing that its top personal tax rates are 40c and 45c in the dollar. Also, I look forward to his announcing that the compulsory employer contribution in Australia is 9 percent of an employee’s gross earnings.
Is the Prime Minister aware that if I did get up and announce Australia’s top personal rates and all of its personal rates, in fact 99.5 percent of New Zealanders would be better off, because at every income level under $220,000, one pays more tax in New Zealand than is the case in Australia?
Rt Hon HELEN CLARK Link to this
I can only assume from that answer that the National Party is not only opposed to cutting the business tax rate and is not only opposed to the tax credits for workers for KiwiSaver, but is now suggesting that it actually would like to tax workers more at 40c and 45c in the dollar.
Hon Dr Michael Cullen Link to this
Can the Prime Minister also confirm that in Australia ordinary workers face capital gains taxes and face a stamp tax whenever they buy a house, and that this Government not only has cut the corporate tax rate for the first time in 19 years but also, for the first time in many years, has cut the rates of taxation on savings, which National did not touch for 9 years except by increasing them in some respects?
Rt Hon HELEN CLARK Link to this
I can confirm all those things and that National tends to be all talk and very little do, when it suggests it is friendly to business. What I do know is that the leader of the National Party recklessly promises personal tax cuts, knowing he would have to slash public spending to do it and go against the advice of his own spokesperson on finance, who, I repeat, says that now is not the time for personal tax cuts.
Why would modest personal tax cuts be affordable under Labour in election year 2008, when the predicted surplus for election year 2008 is either the same as, or lower than, the surpluses announced in the 4 years prior to that—or is the magic just that it is election year and when one is 12 points behind in the polls one has to do something, I guess?
Rt Hon HELEN CLARK Link to this
I repeat: that member has recklessly promised personal tax cuts at a level at which he knows public spending would have to be cut. I can say that this Government has always prioritised restoring the shattered public services left by a National Government, restoring superannuation and infrastructure, looking after families with substantial family tax credits, and, now, looking after workers who want to save through KiwiSaver. All those have been top priorities for us.
What comment does the Prime Minister have for the business leader I met last night who employs 120 cleaners, who said that he was appalled at what was announced in the Budget last week, that the 120 cleaners working in his company will not get a tax cut, will not get a pay increase, and will not go into KiwiSaver, not to mention that his business is now going to be suffering under those additional costs; and has it occurred to the Prime Minister that well over half of the New Zealand workforce will not be in KiwiSaver, and some of those who may even be matched, like those in the State sector, are already matched and therefore will not be getting anything out of the KiwiSaver incentives—so, if the Prime Minister wants to back the 50 percent of the country who can afford to save, without the 50 percent who cannot, can she see why she is no longer winning?
Rt Hon HELEN CLARK Link to this
It is great to see the National Party keep digging into a hole on KiwiSaver. The member’s friend is obviously out of tune with the only known poll of business opinion on KiwiSaver, which had 68 percent of business people polled strongly agreeing with it.
Madam SPEAKERHon Dr Michael Cullen Link to this
Has the Prime Minister read reports that a prominent New Zealander has argued that large-scale tax cuts are affordable if the Government changes its “gearing”, that what that means is borrowing large sums of money to pay for tax cuts, and was the person who said that, John Key?
Rt Hon HELEN CLARK Link to this
I am well aware that a very influential factor in the last election campaign was the certain knowledge by voters that the National Party was prepared to borrow for tax cuts, and that never made sense.
Can the Prime Minister tell the House whether New Zealand has net debt that is positive or negative; and, when she works out that it is positive, that it will mean that we have more cash than we have debt, for the record?
Rt Hon HELEN CLARK Link to this
Under this Government and Minister of Finance, New Zealand has, for the first time ever, moved into a net positive fiscal asset position. That is easily squandered by a spendthrift Government and by a leader who is used to taking short-term positions in the money market. That is not the way to lead a country.