1. JOHN KEY (Leader of the Opposition) Link to this
to the Prime Minister
Is it still her Government’s goal to see New Zealand’s economic indicators back in the top half of the OECD?
Rt Hon HELEN CLARK (Prime Minister) Link to this
The Government would certainly like to see New Zealand’s GDP per capita ranking back in the top half of the OECD. As I told the member several months ago, to achieve that requires clear, deliberate policy programmes sustained over time.
Is the Prime Minister aware that in 1999 only nine countries in the OECD had a lower tax burden than New Zealand but that by 2005 it was 17 countries, and that under her leadership she certainly has got New Zealand into the top half of the OECD—the half that pays a lot more tax?
Rt Hon HELEN CLARK Link to this
I am advised that taking into account a one-off change, our tax revenue as a proportion of GDP sits at around the OECD average and puts us in the same bracket as the United Kingdom.
Is the Prime Minister concerned that for the last 5 years the Australian Federal Government has embarked on a programme of lowering personal taxes, and that we have now seen both the Labor Party and the Liberal Party in Australia promising large future personal tax cuts; and does it not worry her that that gap between New Zealand and Australia for after-tax income continues to widen because of those tax cuts, and for how long can New Zealand ignore this problem?
Rt Hon HELEN CLARK Link to this
As has been said many times, this matter will be addressed in next year’s Budget.
Why is the Prime Minister telling New Zealanders that for 8 years the Government has been roughly running large surpluses, that the inflation environment in many of those years has been low, but that, miraculously, the only time a Labour Government in New Zealand will ever talk about tax cuts is election year, and does she not think that looks a little bit desperate?
Rt Hon HELEN CLARK Link to this
Of course, the Government has enabled families to have substantial tax cuts, it has cut taxes on savings, and it has made substantial tax cuts on business to encourage economic growth.
Hon Dr Michael Cullen Link to this
Given the Leader of the Opposition’s enthusiasm for the Australian tax scales and rates, will the Prime Minister be expecting from him support for lifting the top tax rate, introducing a capital gains tax, and introducing stamp duty, which are all part of the Australian tax system?
Rt Hon HELEN CLARK Link to this
My experience is that the National Party borrows very selectively from Australian figures. For example, it does not want to face the fact that under a Labour Government unemployment is consistently lower than in Australia. It does not want to face the fact that under a Labour Government in New Zealand economic growth rates have outpaced those of Australia as well as the whole OECD.
Is the Prime Minister aware that in 2000 the average wage in New Zealand was roughly $34,000 and it has risen to about $44,000—that is, a $10,000 increase—but that, in fact, if one takes into account the increase in inflation and the bracket creep, the average New Zealander is only $500 better off after that $10,000 increase, and is that not a bit of a insult to the average New Zealander?
Rt Hon HELEN CLARK Link to this
I would not take any of that member’s figures at face value. What I know is that for the average single-earner couple with two children in the family, the tax wedge is at the second-lowest in the OECD at 2.6 percent, compared with 13.6 percent when National left office. The National Party did nothing to reduce the tax burden on the average family.
If tax cuts have not made sense for the last 8 years, why will they miraculously make sense next year, in election year?
Rt Hon HELEN CLARK Link to this
The member should listen more carefully. There have been huge tax cuts for families under Labour, and there have been big tax cuts for business under Labour. Both those areas of tax cuts have been consistently voted against by the National Party.
Why should any New Zealander trust whatever miraculous tax cut programme Labour comes up with in election year when all of those New Zealanders will know that they are the same people who were promised tax cuts in 2005 only to have them taken off them by the same Labour-led Government?
Rt Hon HELEN CLARK Link to this
I wonder why any New Zealander would believe anything those National members said about tax cuts when they have consistently voted against every Government bill bringing in tax cuts in the House.
Rodney HideDoes the Prime Minister accept that no OECD country has achieved 4 percent growth on a sustainable basis—which was her Minister of Finance’s goal on assuming office—with total spending above 40 percent of GDP, and if she does not accept that the tax take has an impact on growth, why not?
Rt Hon HELEN CLARK Link to this
I understand that there have indeed been countries in the OECD that have seen growth rates like that. They might perhaps be better described as emerging economies that have come more recently into a market economy system. But the last time I looked, the average amount of economic growth since this Labour-led Government took office was close to 3.4 percent a year. That was higher than Australia, higher than the US, Japan, the United Kingdom, the OECD, and the European Union average rates for that period. That is economic success, Labour style.