4. Hon ANNETTE KING (Deputy Leader—Labour) Link to this
to the Prime Minister
Does he stand by his statement that New Zealanders were “more than compensated” for last year’s increase in GST?
Rt Hon JOHN KEY (Prime Minister) Link to this
Yes, because at the same time that GST went up, income taxes were reduced across the board and benefits, along with Working for Families and New Zealand superannuation, were increased. Those changes at least compensated—in most cases, more than compensated—people for the increase in GST. If the member disputes that, then she should fire up the bus and campaign on reversing the tax cuts.
Mr SPEAKERHow long did he envisage that the impact of the GST increase to 15 percent would take to filter through the system, at which time those on fixed incomes, like pensioners and beneficiaries, would be compensated for price increases through the normal annual adjustment?
In some cases, price increases from GST have not actually filtered through; people have reduced their margins and held prices. But the increases to beneficiaries and the like were immediate.
Why did the Government legislate for the temporary pre-funding of pensions and benefits to be withdrawn on 31 March, in 16 days’ time, even though Treasury is predicting that the CPI will rise to 4.5 percent by 31 December this year? If he is true to his word that pre-funding will more than compensate for price increases, will he now extend pre-funding until March 2012 to help people through the tough times ahead?
It is very simple: an annual calculation is done for an increase in benefits, superannuation, and the like that takes into account yearly inflation. Of course, that figure includes the 2.02 percent increase from GST going up. The Government put a temporary patch on to get people through till the annual adjustment took place. The Government then took it up, took that temporary patch off, and compensated it fully with the increase in the CPI.
Does he believe Grey Power when it stated 3 weeks ago that there have been extraordinary price rises that are severely challenging the resources of older New Zealanders on fixed incomes, with further cost of living pressures to come throughout this year? Will he revisit the Government’s decision not to keep temporary pre-funding in place until March 2012?
The full increase of the CPI has been passed through with an increase in superannuation. I might add that the increase in superannuation has been significant under our Government because, of course, there are calculations on after-tax average wages, and those amounts have increased significantly under our Government. Whether there have been extraordinary increases, I do not know, but if Grey Power wants to detail them that is fine. One thing I can say to its members—and I know they thank me for it every time I go and see them—is thank goodness they do not have a Labour Government, under which power prices went up 72 percent in 9 years.
Is he aware that Grey Power members believed his promise to assist them and beneficiaries through the period while price increases stabilised, but now they believe that his lack of commitment to that promise indicates the shallowness of his October 2010 assurances; and will he now apologise to Grey Power members, many of whom are on fixed incomes and face a difficult year ahead as costs keep going up?
The member might be trying to confuse New Zealanders; she has obviously confused her own back bench. The reality is that an adjustment takes place every year for the CPI. That adjustment is in—
If the member wants to hear the answer, she is welcome to; if she does not, I am happy to sit down and we will not bother answering questions.
Rahui KateneDoes he believe that New Zealanders have been adequately compensated for the GST rise, given that for the full year fruit and vegetable prices increased by 8.1 percent? What consideration will he give to the Māori Party proposal to remove GST from healthy foods?
Yes. It is important to understand that the increase in GST is only one reason for the overall increase in food prices. I might add that, in terms of fresh fruit and vegetables, in certain areas there has actually been a reduction in cost over the course of the last 12 months.
Hon Trevor Mallard Link to this
When will the final items be measured by Statistics New Zealand and incorporated into the CPI—the ones that went up in October but have not been measured yet? When will they finally be measured and incorporated into the CPI this year?