1. Hon PHIL GOFF (Leader of the Opposition) Link to this
to the Prime Minister
Does he stand by his statement that “the vast majority” of people will be “better off” as a result of his tax switch on 1 October 2010?
Rt Hon JOHN KEY (Prime Minister) Link to this
Yes, because that is what the facts clearly show. Raising GST will increase prices by a touch over 2 percent, but will be more than compensated for by income tax cuts and an increase in benefits, Working for Families, and superannuation. Therefore, it is plain for everyone to see that people will be better off.
Does he really think that the more than 400,000 Kiwis who earn $15 a week or less and who will at best get a net $5.70 a week will be better off when, in addition to GST, they are paying rents that are going up by $20 a week in Auckland, paying rates that are up, paying accident compensation charges that are up, and, for some people, paying $20 to $25 a week extra in early childhood care? I ask whether he is really saying that those people will be better off, because they do not believe it.
Yes, they will be better off. What is so often the case is that when the Leader of the Opposition comes into the House, he says things that are factually incorrect. In fact, his story last week about rents is wrong—
Hon Darren Hughes Link to this
I raise a point of order, Mr Speaker. All members of the House are honourable members who give their word as they see it as being correct when they are asking questions. For Mr Key to say that another member is factually incorrect, and imply that an honourable member is not being truthful—
Hon Rodney Hide
Mr SPEAKERBefore I hear the honourable Rodney Hide, members may not agree with a point of order, but it must still be heard in silence. I will rule on the matter in a moment.
It is certainly true that members cannot question another member’s integrity in this House. But a member can certainly say that a member is factually incorrect; that has to be allowed in this House.
I thank members. There will be silence. The dilemma that the member asking the question faces is when one builds supposed facts into a question—and that question contained a number of statements of alleged fact—Ministers are at liberty to dispute those facts. It does not mean that they are impugning the integrity of the questioner at all. They just have a different view of the facts. That is why the Standing Orders strictly do not allow members to load additional supposedly factual material into questions. I do not stop it, because I think we would constrain question time too much. But the risk is that the Minister answering the question—in this case, the right honourable Prime Minister—may dispute the supposed facts, and that is what has happened on this occasion. I do not believe he was saying that the Leader of the Opposition was misleading the House. He was just disagreeing with the supposed statement of fact.
When he says that the vast majority will be better off, does he not really mean that the top 10 percent of taxpayers, who get 41 percent of the tax cuts, will be a whole lot better off, but the bottom 20 percent of taxpayers, who get 2 percent of the tax cuts, will be a lot worse off?
No, I mean what I say, which is that the vast majority of New Zealanders will be better off. I point out that two-thirds of the entire tax cut package was applied to the lowest two rates. But I say to the Leader of the Opposition that if he is so convinced that he is on to a winner, he should go to the election campaign in 2011 agreeing to reverse the personal tax cuts that National has introduced.
Jo GoodhewActually, I have. I have seen pamphlets from the Labour Party implying that GST is going from zero to 15 percent on 1 October. Not only is this completely false and an attempt to mislead the public, but one would think that Phil Goff, of all people, would know that GST is 12.5 percent, because a Labour Government introduced it, and raised it, with no compensation.
If people are to be a whole lot better off, why are debt collection agencies like Baycorp predicting that over the next 6 months there will be “a massive spike in the number of people who just won’t be able to pay their bills.”?
Because the country is coming out of a recession, which was caused by 9 years of economic mismanagement by Labour.
In the press statement put out today the Government has claimed a high level of extra income from after-tax incomes, and why did he neglect to say in that press statement that just under half of those tax cuts were introduced under Labour; and of the tax cuts, the other half that he introduced overwhelmingly benefit the very rich and not the average New Zealander?
Because they form the first tranche of National’s tax cuts. Let us be honest: the only reason Labour ever introduced tax cuts, after 9 years in office, is that it was desperate and heading for the exit door.
Yes, I have. I have seen reports of policies to take GST off fresh fruit and vegetables. Such a policy would needlessly complicate the tax system and create all sorts of perverse anomalies. New Zealanders would rightfully wonder, for example, why GST was being taken off out-of-season asparagus and imported figs but not for a packet of Wattie’s frozen peas. In addition, this policy would cost somewhere near $450 million in revenue and would be paid for by more borrowing.
Can the Prime Minister name just one other country in the world with GST at 15 percent, or higher, that does not exempt fresh fruit and vegetables?
I do not have that information to hand, but, for once, I will take my guidance from Michael Cullen, who said: “I am aware of many countries that have appallingly inefficient GST systems where they exempt various articles … Thank goodness we have not followed those very bad policies.” But when one is desperate, one will do anything.