3. JOHN KEY (Leader of the Opposition) Link to this
to the Prime Minister
Does she have confidence in the Minister of Finance?
Has the Prime Minister seen the statement from her Minister of Finance that “tax cuts are largely offered as a political bribe, not because of beneficial economic or social effects.”; if so, how enthusiastic does she really think Michael Cullen is to deliver tax cuts?
Hon Dr MICHAEL CULLEN Link to this
That statement was certainly made about the National Party in the past. It was certainly true about the National Party in the past. The Minister of Finance is very enthusiastic about delivering tax cuts, and these tax cuts will be responsible. We will not be borrowing to pay for them; National would. They will not result in cutting social services; under National they would. They will not result in extra pressure on inflation; under National they would. And they will be constructed in a fair fashion; under National they would not.
If the Minister of Finance is so enthusiastic about tax cuts and not just following the script he promised his Prime Minister he would follow simply because he was told to otherwise he would lose his job, why did he go on Agenda on Sunday morning and just kneecap the Prime Minister by undercutting every possible argument that could argue the merits of tax cuts; and is it not the truth that he does not want to deliver tax cuts, that he is doing what he is told, and that he is doing it very badly?
Hon Dr MICHAEL CULLEN Link to this
My understanding is that the Minister of Finance went on Agenda because Mr John Key refused to do so because he was too scared, and that left the opportunity open for the Minister of Finance to appear. He availed himself of the chance to point out that the economy has grown very substantially. As a consequence of that it is possible to pay out a dividend to all Kiwis by way of tax reductions. But he did point out that the notion that the economy is suddenly going to go into hyper-drive in terms of economic growth because of modest tax cuts is nonsense.
Does the Prime Minister agree with her Minister of Finance’s statement on personal tax cuts, when he said: “there will be something for everybody. But that means individual amounts are not likely to be large …”, and is she still confident he will deliver them, given that last time he faced that choice in 2007 he said that his previous promise about small, across-the-board tax cuts and his decision to get rid of them was “not a difficult one”, because a “small tax cut now would be spent and then gone.”?
Hon Dr MICHAEL CULLEN Link to this
I think one could be quite clear from the Minister of Finance’s comments that the tax cuts would be bigger than was talked about previously, in that particular respect. But they will be tax cuts that will be couched in a way that is fair to people across the board. The Minister was asked a very interesting question on Agenda if the tax cuts were spread across the board, would that mean they would be smaller? That question showed a view from the top, because obviously the answer is that tax cuts would be bigger for people on low to middle incomes if they were spread across the board, and smaller for those on high incomes.
Does the Prime Minister think that the reported applause at the Labour Party conference in response to her statement that personal tax cuts “will happen under Michael Cullen” was (a) a reflection of utter and sheer relief from the delegates who have waited for 8 years for a tax cut, or (b) a recognition that every New Zealander knows that Michael Cullen does not want to deliver tax cuts and will not deliver tax cuts, and therefore they will not be worth the paper they are printed on in the taxpayer-funded Labour pledge card?
Hon Dr MICHAEL CULLEN Link to this
If some of the paper they were printed on was signed by a former leader of the National Party, that could well be true, I suppose, if I were looking at the notes that might be used. I am afraid that the member, like some in the press gallery, shows a misunderstanding of the Labour Party. When the Prime Minister announced tax cuts, there was not immediate applause. When the Prime Minister announced that the Minister of Finance was going to deliver tax cuts, there was applause. That was the significant difference. I will give one guarantee to this House. The Minister of Finance will deliver tax cuts before that member has the courage to go back on Agenda, given his performance last time he was on.
Does the Prime Minister recall her recent statement on personal tax cuts: “I’d have liked to have done it much earlier … but we never had advice that made that possible.”; if so, how does that fit with her statement from the 2005 election campaign, when she said: “We don’t ask Treasury for permission for our policies.”?
Hon Dr MICHAEL CULLEN Link to this
Absolutely clearly and easily. Unlike that member, we do not ignore Treasury projections and make up our own just so we can promise $4 billion a year of tax cuts—which were actually impossible in terms of the Treasury forecast at the time.