2. Hon PHIL GOFF (Leader of the Opposition) Link to this
to the Prime Minister
When he told Kiwis that they should not be envious if the rich get more from the Budget tax package because they were in core and critical categories for the economy, what was he telling middle and low income New Zealanders about their importance to New Zealand?
Hon JOHN KEY (Prime Minister) Link to this
What I actually said on Monday was that people paying the top personal rate included skilled professionals like doctors, engineers, scientists, and the like who fit into some core and critical categories in the economy. Those people are in demand all around the world and we need to have their careers here, and for them to be put to work in New Zealand. I did not mention the rich at all, because the rich, by and large, do not pay the top personal rate. Really wealthy people will probably find that they are paying considerably more tax as a result of the Budget tomorrow, not less.
If the tax switch that the Prime Minister talks about is to be revenue-neutral, as he claims, why is he telling middle and lower income Kiwis struggling to meet rising costs that they should get less, so that higher-income earners can get an even bigger slice of the pie?
For a start, even taking all the aspects of the package put together, middle and low income New Zealanders will not be getting less. The good news for them tomorrow is that they will be getting more. The interesting thing is that someone earning $60,000 a year, with no children, who waited 10 years under a Labour Government to get absolutely not a cracker, will be getting more in the Budget tomorrow than he or she might expect.
Why does the Prime Minister think it is fair that chief executives, who as we saw in the media last week were getting pay increases of more than $1,000 a week last year and getting very handsome tax cuts last year, should get $700 a week more this year under his proposed tax cut, while middle and low income earners, such as families earning under $40,000, got nothing last year and will get very little this year in net terms?
There are two things. Firstly, the chief executives the member is talking about had pay increases locked in under his Government, not ours; and, by the way, New Zealanders earning $40,000 who have two children do not pay any tax in this country, because of Working for Families.
Mr SPEAKERI apologise to the Hon Jim Anderton, but I have no chance of hearing his supplementary question while that amount of noise remains.
Hon Jim AndertonIs the Prime Minister aware that New Zealand has one of the worst income gaps between rich and poor in the developed world; if so, why is he planning to make that situation even worse, while asking the poorest New Zealanders not to be envious?
I raise a point of order, Mr Speaker. I do not know how you heard that question, because I am closer to the member and I did not hear it at all over the interjections from the Government benches.
All I can say to the member is that if it was something that concerned him so much, why was he part of a Government that for 9 years made it worse?
I raise a point of order, Mr Speaker. I think my question to the Prime Minister was very clear. I know he was talking to the Minister of Finance to try to get some help, but he did not address the question in one single way at all. What he did was abuse the questioner.
What I will do on this occasion—because members complained that they could not hear the question, and I am not totally surprised by that—is invite the member to repeat his question so that no one can be in any doubt about it.
Is he aware that New Zealand has one of the worst income gaps between rich and poor in the developed world; if so, why is he planning to make it even worse while at the same time asking the poor not to be envious?
I am aware that it became worse under the previous Labour Government, and Jim Anderton was a member of that Government. I am also aware—
I apologise to the Prime Minister but members were concerned about the previous answer given. I allowed the questioner to repeat his question. The House showed courtesy in hearing it in virtual silence. The Prime Minister is answering the question, which I heard very clearly, and he should be able to do that without a total barrage of interjections.
I am acutely aware that there are low-income New Zealanders who would like to earn better wages, and the fastest way to do that is to have good economic leadership. For 9 years we waited for that and it never came. Tomorrow the bus is arriving here in Parliament.
How will average wage earners and salary earners be better off when banks are forecasting that with GST increases inflation will rise to, or above, 5 percent over the next year, and when the same forecasters are saying that the average wage will go up probably by less than 3 percent; so how will they be better off?
As that member is aware, because he has been in the situation before, if there is to be an increase in GST, then the Reserve Bank looks through that and the economic implications in terms of inflation from that will not have a bearing on interest rates. What I will say, though, is that, if I recall correctly, the last 4 or 5 years of the Labour Government was a time when we saw not only quite high inflation but very high interest rates, and we did not get any answers from that Government at that time.
How does the Prime Minister intend to stop any increases in property tax simply becoming a rent tax that is passed on and adding to the burden of the 30 percent of New Zealanders who rent their homes?
Although I cannot give indications today, for obvious reasons, I can say that the Budget will spell out clearly tomorrow what Treasury’s advice was on that matter. I can advise the member that the effect is negligible.
How does he explain to Henry Lindsay, who is 84 and suffering from critical illnesses, that he and thousands of other elderly New Zealanders have suffered cuts to their home help because the Minister of Finance regards that as low-quality expenditure, while, apparently, it is high-quality expenditure to make the biggest tax cuts for the wealthiest New Zealanders?
I can explain in two ways. Firstly, tomorrow that man will be able to celebrate the fact that we will be spending on health the highest amount ever spent in this country and be spending more on aged care than ever before. Secondly, while he was having a cup of tea this morning, he was, hopefully, reading the Dominion Post headline “How the wealthy dodge tax” and seeing that tomorrow we will be making sure that all New Zealanders, the wealthy included, pay their fair share.
Can the Prime Minister confirm that the article in the Dominion Post states that the way we close the loophole is we open it up so that everybody can get through it—it is a bit like saying we close a breach in a prison wall to stop one prisoner getting out, and knocking down the wall so everyone can get out?
No, actually, but I am aware that that very article in this morning’s Dominion Post states: “Financial author Martin Hawes said he would be surprised if any of the richest Kiwis paid the top income tax rate and, if they did, it would be on only a tiny fraction of their worth.” John Shewan, the highly respected tax partner, and rightfully so, said that trusts were “breeding like rabbits in the South Island”. The Dominion Post has quite rightfully worked out that a lot of high-income earners are not paying the top personal rate, and maybe we should tighten up the tax system so they pay their fair share.