6. Hon ANNETTE KING (Deputy Leader—Labour) Link to this
to the Prime Minister
Does he stand by his statement that “We are boosting New Zealand Superannuation and Veterans’ Pension to fairly compensate for the GST rise”?
Rt Hon JOHN KEY (Prime Minister) Link to this
Yes, because that is what the facts clearly show. After 1 October superannuation rates will immediately be increased by 2.02 percent to compensate for the price effects of raising GST. In addition to this, superannuitants will get the benefit of lower income tax rates, which will increase the amount of superannuation they receive in the hand. As a result of both these increases, superannuitants will be more than compensated for the rise in GST.
When he told single superannuitants living alone that they would be $15 a week better off from 1 October, did that mean that superannuitants will have $15 extra a week after they have paid for the increase in GST on all goods and services, other Government charges such as accident compensation, the cost of the emissions trading scheme, and inflation; if not, what did he mean?
The first thing I should have told them is they were right to vote National, because the emissions trading scheme would have been twice as expensive under Labour. I would tell them the same thing that every Government has told superannuitants since New Zealand superannuation was brought in: general increases in the overall cost base are met with the CPI adjustment that takes place on 1 April every year.
Chris TremainThe Minister of Finance earlier used an example of a married couple who are retired and receiving superannuation. Under the 1 October tax changes they will get a tax cut of $11.52 a week, plus an increase of $10.12 a week as a result of GST going up. That makes a total of $21.64 a week. It is worth noting that since 2008, tax cuts and ongoing price adjustments have meant that that couple would have seen their superannuation payments go up by a grand total of $71.26 a week, or just over $3,700 a year.
Has he received correspondence from single superannuitants pointing out that after paying the increased cost of power, telephone, rates, bus fares, doctors’ bills, insurance, and groceries, they will be worse off, and does he think that they are incapable of working out the tax switch that affects their back pocket?
I do not see all the correspondence that comes into my office, but if letters of such a nature came in, I would go back to those superannuitants and say this. First, they will be better off absolutely as a result of the GST tax switch. Secondly, any changes that affect the overall price base—electricity and the like—will under our Government, as they were under previous Governments, be updated on 1 April of each year. Thirdly, I point out that this Government has been running an inflation rate that has been substantially lower than under the previous Government because we have good economic management skills.
Does he consider that spending over $250,000 to send a letter to all superannuitants in New Zealand—which fails to tell them how much GST they will pay and what impact the emissions trading scheme and other increases in Government charges and increased inflation will have on their tax switch—is a good use of taxpayers’ money?
Firstly, I cannot confirm how much the letter I sent out cost, because I genuinely do not know. But I do know that every dollar of taxpayer money spent on that letter was a better dollar invested than those spent on the one sent out by that mickey mouse party yesterday, which did not even convince a scuba-diver that 15 percent GST was the responsibility of this Government.
Has anyone explained the meaning of double standards to him, given that he criticises Labour’s GST pamphlet, which cost a fraction of the $250,000 he has spent on a letter to superannuitants that did not tell them the whole truth about what will be left in their pockets after 1 October?
Mr SPEAKERI apologise to the honourable member. I say to National members that I struggled to hear the member asking the question. I encourage them to be a little more reasonable in their interjections. I invite the Hon Annette King to repeat her question so that I can hear it.
Has anyone explained the meaning of double standards to him, given that he criticises Labour’s expenditure on a GST pamphlet that cost a fraction of the $250,000-plus that he spent sending a letter to superannuitants that fails to tell them what will be left in their pockets after 1 October?
No, but I managed to watch the TV3 news last night, which pointed out that hundreds of thousands of New Zealanders will get a brochure from the Labour Party that is nothing short of a lie.
I say this again to National members. Their own senior whip is seeking to ask a supplementary question, and they would be advised to show their senior whip some courtesy.
Can the Prime Minister name just one other country in the world with GST at 15 percent or higher that exempts fresh fruit and vegetables?
I thank the member for re-asking Phil Goff’s question, and I say that he did it better than Phil Goff did yesterday. I am advised that 23 OECD countries have GST or VAT rates of at least 15 percent. Of those 23 countries, only Mexico and the UK have no GST or VAT on fresh fruit and vegetables.
Yes. The issue of exempting certain basic necessities from GST was discussed in the Tax Working Group’s report earlier this year. The Tax Working Group rejected this idea, stating: “However, narrowing the GST base would substantially reduce the efficiency of the tax and increase compliance and administration costs, while having limited impact on equality. For example, removing food from the base makes almost no difference to the distribution of tax across income levels, but loses 20% of GST revenue. This fall in revenue would then need to be recovered by higher rates of GST, or increasing other taxes.” There was a time when the Labour Party knew that the GST system we had in New Zealand was the right one—that was a time when it was not desperate.
I said that I had no intentions of raising GST to cover the deficit, and we are not doing so. You see, that is the reason—[ Interruption]