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Tax Cuts—Funding

Wednesday 29 April 2009 Hansard source (external site)

Goff1. Hon PHIL GOFF (Leader of the Opposition) Link to this
to the Prime Minister

Does he agree with the statements in the House by his Minister of Finance on 16 December 2008 that “Yes, I can confirm that National will not be going back on any of those promises, as we fully costed and funded them”?

KeyHon JOHN KEY (Prime Minister) Link to this

Yes, I agree with the statement the Minister of Finance made at that time. Since then, as the member is well aware, New Zealand’s economic and fiscal position has deteriorated significantly. The Government has been up front in saying that in light of the deepening global recession, we will proceed with tax cuts in 2010 or 2011 only if they are affordable. If they are not affordable, we will defer them.

GoffHon Phil Goff Link to this

Is the Prime Minister therefore confirming to the House that on the central promise on which he was elected, which was tax cuts, he is now going to renege by not proceeding with the tax cuts on 1 April 2010 and 1 April 2011—yes or no?

KeyHon JOHN KEY Link to this

No, I am not confirming that. What I am confirming is that it did not take this Government 9 years to cut taxes, like it did the Labour Government.

GoffHon Phil Goff Link to this

What is the value of the Prime Minister’s personal guarantee, set out on this document that he has signed, where he personally pledged tax cuts on 1 April 2010 and 2011?

KeyHon JOHN KEY Link to this

A very high value. But the other thing I would say, of course, is that New Zealanders recognise that around the world the situation has changed dramatically in the last 5 or 6 months. New Zealanders are aware that the Government is likely to earn $50 billion less in revenue in the next 3 years. The one thing I would say is that members on this side of the House understand what we are doing. Members on that side of the House were telling us to cancel the tax cuts.

GoffHon Phil Goff Link to this

I raise a point of order, Mr Speaker. You have seen this day after day, and you know there is a Speaker’s ruling regarding conduct that is likely to lead to disorder. The Prime Minister’s comments at the end of his answer had nothing to do with the question that was asked. I ask you to bring him to order before the House comes to disorder.

SmithMr SPEAKER Link to this

The honourable Leader of the Opposition has made a fair point. I urge the Prime Minister to limit that kind of comment, if possible.

GuyNathan Guy Link to this

Has the Government delivered on its promises?

KeyHon JOHN KEY Link to this

I am aware that the Hon Dr Michael Cullen is giving his valedictory speech at 5.30, so I will try to condense this so as to keep within that timetable. Yes, we delivered a billion dollars’ worth of tax cuts on 1 April this year, we have introduced the ReStart package, we have introduced legislation to address law and order issues, we have set national standards in literacy and numeracy, we have fast tracked the funding of PlunketLine, we have ensured that women receive a 12-month course of Herceptin—I could go on.

GoffHon Phil Goff Link to this

Does the Prime Minister now regret promising $4 billion more in tax cuts than the Labour Party at a time when he knew full well that the world was in serious recession but made those promises in order to get elected anyway, and was that not simply dishonest?

KeyHon JOHN KEY Link to this

No, I do not regret that. I will make just one simple point, because it might help the Leader of the Opposition: the tax cut programme that National went into the election with in 2008 cost $250 million less than the one promised by the Labour Party.

DouglasHon Sir Roger Douglas Link to this

How can the Prime Minister still talk about implementing more Government spending in line with his election promises of 9 months ago, when the pace of economic deterioration means that the ideas mooted 9 months ago are both irresponsible and unaffordable?

KeyHon JOHN KEY Link to this

No, I would not agree with that statement. The Government is honouring its commitments. It is making sure that it is putting money into health and education. It is making sure that it is committed to, and follows through with, all of the promises from the 100-day programme. What is true is that the Government is taking matters seriously in terms of trying to save money. Our line-by-line review has been successful, and when people see the Budget they will realise that we are taking the fiscal position going forward seriously, as well.

GoffHon Phil Goff Link to this

Was yet another promise broken by the Prime Minister when he said to the New Zealand Public Service that it would be capped, but that it would not have its numbers cut, and what is his explanation now to the more than 880 decent, ordinary, hard-working public servants who have already been sacked?

KeyHon JOHN KEY Link to this

No, and the only person who is going to be cut around here is the Leader of the Opposition. [ Interruption]

SmithMr SPEAKER Link to this

I have called Nathan Guy.

GuyNathan Guy Link to this

Has the Prime Minister seen reports of a Minister of Finance not merely deferring but, in fact, cancelling tax cuts?

KeyHon JOHN KEY Link to this

Yes, I have seen a report of a Minister of Finance announcing personal income tax cuts in the 2005 Budget, but then cancelling them outright in 2007. When the Government was posting an $8 billion surplus, he said that he did not want to go through with tax cuts, because people would just spend the additional money anyway.

GoffHon Phil Goff Link to this

When the Prime Minister promised the country that he was not going to touch superannuation entitlements, did he also explain that he was going to cease pre-funding those entitlements, so that, inevitably, his policy would lead to a crisis and a breach of those entitlements just a few years down the track?

KeyHon JOHN KEY Link to this

The economic understanding of the Leader of the Opposition is quite woeful if he thinks that a minor deferment in payments into the Superannuation Fund—if that was to happen—would cause a crisis in the superannuation system in New Zealand.

DouglasHon Sir Roger Douglas Link to this

Could the Prime Minister please explain to the House how it is possible, in today’s economic circumstances, to spend more this year than Labour did last year, especially when households are having to spend less?

KeyHon JOHN KEY Link to this

That is because we are putting more money into things that we think are very important. I think if members were to look around the—

Hon Member

Like what?

KeyHon JOHN KEY Link to this

Well, $750 million into health, and hundreds of millions of dollars more in other areas. The reason for that is that we are taking the approach that most westernised countries are taking, which is that this is a time when Governments should use their balance sheet, but we are not going to diet on debt forever.

GoffHon Phil Goff Link to this

Why did the Prime Minister not consult in any meaningful way with Aucklanders, as he had promised to do in his manifesto, before jointly with Mr Hide determining and announcing what was best for them, when clearly Aucklanders have rejected what he is trying to ram through and impose on them?

KeyHon JOHN KEY Link to this

They are not rejecting what we are proposing for Auckland.

GoffHon Phil Goff Link to this

Can the Prime Minister, as a result of all the answers he has just given the House, confirm that the personal guarantee he wrote and the promise the Minister of Finance made in the House on 16 December both count for nothing, because he has confirmed today that he has already broken not just one but three or four of his major promises—he has not met his undertakings to the people of New Zealand?

KeyHon JOHN KEY Link to this

I can promise New Zealanders that this Government will show good economic leadership, and that we will make sure that New Zealand comes through this recession. We are not a fair-weather Government that knows how to operate only under surpluses—that is for sure.

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