1. Hon PHIL GOFF (Leader of the Opposition) Link to this
to the Prime Minister
Does he agree with his Minister of Economic Development’s statement yesterday that the current weekly income gap between New Zealand and Australian full-time workers “is certainly a lot less than it was when Labour was in office”?
Hon JOHN KEY (Prime Minister) Link to this
Yes, and I thank the member for asking. I am advised that the gap between gross average weekly earnings in Australia and New Zealand, adjusted for purchasing power parity, is currently $160.25. That is certainly a lot less than it was in 2005, when it was $187.60.
Why are he and his Minister for Economic Development spreading that misinformation when, since the election, the Australian Bureau of Statistics and Statistics New Zealand show that the gap between average weekly earnings in Australia and New Zealand has grown by more than $50 a week in Australia’s favour?
Because it is not a straightforward matter, and one can use a number of data series, depending on which one someone wants to use. But if I refer to the data series that I am using, which the most comparable one between Australia and New Zealand’s gross average weekly earnings, I might add that not only is the wage gap smaller now than it was in 2003 but it is smaller than it was in 2004, 2005, 2006, and 2007. Thank goodness that we have a Government with an economic plan to keep closing that gap.
Mr SPEAKERBefore I call the honourable member, I ask for the noise to be a little more reasonable on both sides. While the Prime Minister was answering the question, I was struggling to hear the answer. Since the question has been asked, I am sure that the answer is important. Likewise, the members on the Government side need to be a little more reasonable, too.
I seek leave of the House to table a compilation of figures from the Australian Bureau of Statistics and Statistics New Zealand, showing that the wage gap for average weekly earnings has blown out by more than $50 a week.
Hon Gerry BrownleeTo clarify that for the Minister, I tell him this was prepared by the New Zealand Parliamentary Library.
If the Prime Minister is so confident in his own figures, why has he moved from saying before the election that the fundamental purpose of his Government would be to close the wage gap to more recently describing that goal as simply aspirational?
They are one and the same thing. Now that the member has asked me that question, I will run through one or two things that form part of the economic plan that will close the gap with Australia.
The Prime Minister has clearly signalled that he is not going to answer the question but rather will go off on his own tangent. I ask you to bring him back to answering the question.
The House is a bit excited over this issue, and I can understand that, but members must obey the Standing Orders. I think, in fairness, that the question did not really invite the Prime Minister to go through the list of policies that he believes will close the gap. I invite the honourable Leader of the Opposition, who has another supplementary question, to ask it.
I raise a point of order, Mr Speaker. I am still waiting to hear the answer to the last question, which you said the Prime Minister had not answered.
I thought the Prime Minister answered it, but then went on to give further information. I cannot ask him to answer it in exactly the way that the Leader of the Opposition may like it to be answered. I think, having stopped the Prime Minister from giving further information, a further question is now required.
What does the Prime Minister say to his predecessor and former National leader Don Brash, who said on The Nation last weekend that New Zealand would not catch up with Australia on the National Government’s “present track”, and what would he say to Alan Bollard, the Governor of the Reserve Bank, who said National’s posturing in this way is unrealistic?
I would say that National has an economic plan. It involves cutting taxes, building more infrastructure, lifting skills, reforming the Resource Management Act, allocating more money for science and innovation, expanding our free-trade policy, getting on top of the size of the Government, focusing on front-line services, looking at labour-market reform, and having an absolutely brilliant Minister of Finance to guide us through it. All of that will help us to catch up with Australia.
Why would average New Zealand workers believe that they are going to be better off when the statistics show clearly that on average weekly earnings, the gap with Australia has blown out by $50 week, when from 1 October they will be paying 50 percent more on their consumption tax because he has pushed up GST, contrary to his promise, and when workers on the average wage and below will still be paying more income tax than their Australian equivalents?
I say exactly the same thing. If the Labour Party wants to reverse the $4 billion worth of personal tax cuts that will come in and help New Zealanders on 1 October, it should go ahead and campaign on that.
I raise a point of order, Mr Speaker. I invite you to examine the Prime Minister’s answer and whether he made any attempt to answer that question. [ Interruption]
There will not be any comments while the Speaker is on his feet. The honourable Leader of the Opposition should go back over the question he asked. Certainly he asked a question, but then he added a number of statements, one of which the Prime Minister picked up on. One of his statements related to people not being better off because of the tax changes. The Prime Minister picked up on that part of the question and answered it, which he is entitled to do.
How does he account for the fact that not only since November 2008 has the wage gap for those on average earnings increased by more than $50 a week but the same statistics from the Australian Bureau of Statistics and Statistics New Zealand show that for the last quarter the rise in Australian wages was five times that of New Zealand workers?
As I said earlier, that is one data series, and to see whether it is right we would have to go and look at it. But in the data series that I am looking at, the wage gap has narrowed not only compared with the gap in 2003 but compared with the gaps of 2004, 2005, 2006, and 2007. It took 9 years for Labour to make a complete and utter mess of the economy; it might take a bit longer than that for us to sort it out.
Hon Sir Roger Douglas Link to this
Is the Prime Minister concerned that New Zealand’s labour productivity growth of 3 percent between 1992 and 2000, which exceeded Australia’s, then fell under the period of the Labour-led Government to a mere 0.9 percent, well below Australia’s; if so, is not the lesson we should learn from this that if we destroy incentives by high taxes, poorly designed expenditure policies, excessive regulation, and ever-larger Government spending, then we undermine the very basis of higher incomes for working New Zealanders?
I think the member makes a very good point that if we want to have higher wages in New Zealand, then fundamentally we have to have greater levels of productivity. That is one of the reasons why the Government is very focused on moving New Zealand into higher levels of income production, so that we can earn more. I might also add that after 9 years of a National Government the gap in wages between New Zealand and Australia was $117 a week, and by 2005 it was $187 a week, which just shows us how much damage the previous Government did when it was in office for 9 years, and what poor economic managers its members were.
Why does the Prime Minister not simply come clean and admit to New Zealanders that, far from closing the wage gap with Australia, he has actually made it worse?
Firstly, I have not. Secondly, at least I understand what I am doing. That member does not know whether he is raising GST, lowering GST, or taking GST off everything from healthy food to hamburgers. That member has not come up with one policy in the entire time that he has been the Leader of the Opposition.
Hon Sir Roger Douglas Link to this
Does the Prime Minister agree that in order to lift productivity and increase New Zealand incomes, we need to reverse many of the policy decisions taken by the previous Government, such as free student loans and the purchase of KiwiRail; and does he agree that it would be worth taking the recommendation of the next report of the 2025 Taskforce seriously if we really want to make some progress in lifting New Zealand incomes?
In relation to certain parts of that question, no; in relation to the latter part of the question, yes, we will be taking it seriously. But one of the reasons why the Government is investing billions of dollars into KiwiRail is that despite the previous Government’s paying $1 billion for it, we could not give it away, let alone sell it.
I raise a point of order, Mr Speaker. I ask you whether the Prime Minister, when quoting statistics in his reply to my question, was quoting from an official document and, if so, whether he can table those figures.