2. Hon PHIL GOFF (Leader of the Opposition) Link to this
to the Prime Minister
What adverse impact on costs and prices, if any, have his Government’s policies had on New Zealanders?
Rt Hon JOHN KEY (Prime Minister) Link to this
In April the Government increased the tobacco excise. This was strongly supported by Labour, which said: “This is a huge step forward in health promotion for all New Zealanders,”. From 1 July a number of sectors, including liquid fossil fuels, came into the emissions trading scheme. This is expected to have an impact on households of around $3 per week, which, I might add, is about half the cost of Labour’s emissions trading scheme. On 1 October GST was increased to 15 percent, but people were more than compensated for this increase by tax cuts and increases in benefits, superannuation, and the Working for Families package. However, the most important thing to look at is the overall increase in prices across the economy. Inflation over the last year has been only 1.5 percent. The last time inflation was any lower than that was well back into 1999.
When the Prime Minister said at the start of June that “People will be better off, they just don’t know it yet.”, does he think the 16.4 percent increase in the price of fruit and vegetables over the last year is making families feel better off?
Firstly, it is worth noting that food prices rose by 2.2 percent in the quarter. Secondly, it has been interesting to note how many people have been remarking on their tax cuts and how much money they have had, and how easily the switch and the rebalancing of the economy has gone, from a slight increase in GST to a reduction in personal taxes. But, of course, if the member wants to campaign on reversing the GST increase and increasing personal taxes, he should go ahead and do so.
Is he aware of last month’s report from the Ministry of Health that stated that only a third of New Zealand children are eating enough fruit and vegetables to be healthy; if so, how does he think the 16.4 percent increase in the price of those goods over the last year will help children to eat more healthy food?
I have not actually seen the report, but I certainly would encourage parents to give their children fruit and vegetables. What I would say is that although it is not my responsibility to apologise on behalf of the previous Labour Government, I was shocked to learn that the price of fruit and vegetables went up by 21 percent in the last 2 years of that Labour Government. That contrasts with an increase of 12 percent in the price since then, even including the increase in GST. That is a tragic set of circumstances.
Chris TremainAt 1.5 percent, the current rate of inflation is very low compared with the rate between 2000 and 2008. Price growth in New Zealand is well and truly under control. This is in stark contrast, I might add, to the position in September 2008, when annual inflation was running at 5.1 percent. Members will recognise that 5.1 percent, under Labour, is much higher that 1.5 percent, under National.
Hon Jim AndertonIs the Prime Minister aware that the real GDP per capita in constant prices and constant purchasing power parity between Australia and New Zealand closed by about 0.5 percent in each of the first 6 years of the Labour-led Government—from 1999 to 2005—but has widened by over 0.5 percent in each of the 2 years that there has been a National-led Government; if he is aware of that, why does he believe that that is the situation when he has promised to close the gap?
I have not seen that data, but I have seen data that shows a lot fewer New Zealanders are going to Australia, and I have certainly seen data that shows that the gap in real incomes is narrowing between New Zealand and Australia.
Does he support the statement made by his Minister of Health that after the 6.5 percent increase in doctors’ visit fees last year, which he approved, a further increase of only $1 this year would be permissible because of the GST increase?
What I do support is the extra subsidies that went into general practitioner visits to help people in the most low-income and vulnerable communities. What I support is the $14 billion - plus worth of expenditure that is going into the health system. What I support is the relentless focus that the Minister has had on moving our resources from the back office to the front office. What I support is the way that the Minister is trying to get greater productivity in the health system. I certainly support the recommendation he received about sharing neurosurgery between Dunedin and Christchurch. Overall, I support the tremendous efforts he is making to improve health in New Zealand.
Given that increasing GST has lifted prices, how easy would it be to reverse the Government’s GST - income tax switch?
Funnily enough, it would be very straightforward to reverse the tax switch. For instance, reversing it would be far easier than taking GST off fruit and vegetables, which would require pages of rules and armies of bureaucrats to administer it. Reversing the tax switch would be relatively simple—all Labour would need to do would be to take down GST, put up personal taxes, cut benefits, cut superannuation, and get back on the bus.
If the Minister of Health said that it was OK for doctors’ fees to go up by only $1, because of GST, how does he explain the increases of up to $7.50 a visit recorded today in the Mana electorate, since 1 April, which takes the fee for children going to the doctor up to $42.50 a visit?
As I have said, many people in Mana who attend Very Low Cost Access practices have been getting extra subsidies. I cannot talk about individual cases. But, frankly, with about 5 days to go until the by-election, I am not surprised that Phil Goff has had to wade in, because all the people of Mana know that Kris Fa’afoi has done a pretty hopeless job, albeit he has had 10,000 billboards out there.
Rahui Katene
Mr SPEAKERI apologise to the honourable member. I cannot accurately hear the questions being asked, at all, so I cannot assist members if they do not believe their questions have been answered, and that is not fair to the members asking the questions. It is coming from all around the House; no particular party is to blame. The whole House is far too noisy during the asking of questions.
What has been the impact on the Government’s policies in addressing the poverty of many New Zealanders of the assessment from the United Nations that New Zealand was rated as having the sixth-greatest gap between rich and poor among developed nations last year?
The Government is working very hard to close the gap. If we look across the range of different policies that the Government has been implementing—whether it is Whānau Ora; national standards to try to lift literacy and numeracy skills; the 90-day trial periods, which give people an opportunity to work; or the 17.5 percent tax rate that three-quarters of New Zealanders face—we see that all of these things will help. But we need to recognise that we are in difficult times and we do need to do our best, and the Government is working on those issues.
If New Zealanders are overwhelmingly better off after his tax switch, as he has promised, how does he explain the statements from Baycorp and Veda Advantage that recently there has been a massive increase in the number of New Zealanders unable to pay their bills?
The same way I did last week or the week before when I answered that question: there is always a lag effect. But, interestingly enough, if one was to look hypothetically at the number of defaults that are taking place at the moment, and contrast that with the number of defaults in 1991-92, the advice I have had is that the current number is about a quarter of the number in 1991-92. Yes, there have been difficult times for a lot of New Zealanders, but they are very fortunate, I would suggest, to have the policies we have, which are helping them through it.
As the table prepared by the OECD on national accounts, which I will seek leave to table, shows the gap widening between the income per capita in New Zealand compared with that of Australia, will the Prime Minister—
Paul Quinn