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Prime Minister—Statements

Tuesday 22 March 2011 (advance copy) Hansard source (external site)

Goff2. Hon PHIL GOFF (Leader of the Opposition) Link to this
to the Prime Minister

Why did he say on breakfast television on Monday, 21 March that people earning between $40,000 and $70,000 a year were “really struggling”?

KeyRt Hon JOHN KEY (Prime Minister) Link to this

Because some of them are, and, actually, some of them probably have been for a very long time, notwithstanding that in the 2 years National has been in office someone earning $48,000 a year has received a tax cut of $64 per week. That is because people in that category often have children, they face a significant number of costs, and some of those costs are unexpected, like higher petrol prices.

GoffHon Phil Goff Link to this

Are they really struggling because his Government, contrary to its promise, put up GST on almost everything those families had to buy, including high-priced goods like milk and petrol?

KeyRt Hon JOHN KEY Link to this

Quite the contrary, actually—they received a reasonable tax cut. As I said, someone earning $48,000 a year has received a tax cut of $64 a week while this Government has been in office. As I have said so often, if the Leader of the Opposition does not agree with the policy he should just go and reverse it.

GoffHon Phil Goff Link to this

Are middle-income people really struggling because the tax cut that he gave to somebody on $40,000 a year is about $22 a week while he gave himself and his mates on the same income a thousand dollars a week?

KeyRt Hon JOHN KEY Link to this

I do not get a thousand dollars a week as a tax cut. The point I make is that the Leader of the Opposition has just answered his earlier question—they are getting $22 a week more.

GoffHon Phil Goff Link to this

Is the couple with two children in early childhood education, who are now paying $50 a week more because of the cuts his Government imposed, really struggling because that $50 a week more for that one thing alone is more than they got for their entire tax cuts?

KeyRt Hon JOHN KEY Link to this

I cannot say that there is not a New Zealander who is paying $50 a week more, but I will say this: I will be surprised if there are too many, because I fondly remember a question in the House about a month ago where the Labour member went through all of the increases and listed people paying $14 to $18. He could not come up with one solid name at 50 bucks.

GoffHon Phil Goff Link to this

Are there a whole lot of families who are, to use his term, “really struggling” because with the number of unemployed going up by an extra 700 Kiwis a week, many families that used to be able to meet their rent or their mortgage with two incomes are now forced to do it on just one?

KeyRt Hon JOHN KEY Link to this

It is always possible that if somebody loses their job, their family might have to survive on one income and not two. I would point out, if we are talking about mortgages, that the average floating rate at the moment is 5.7 percent in New Zealand; it was 10.9 percent the year Labour left office. A family with an average mortgage of $200,000 would be paying $200 a week less under National than Labour.

GoffHon Phil Goff Link to this

Are those families really struggling because their incomes have not gone up, because under his Government in the last 6 months of 2010, New Zealand had one of the worst rates of growth of any developed country in the world?

KeyRt Hon JOHN KEY Link to this

No, that is not the case. If one looks at real after-tax wages, one can see they have grown by about 9 percent under this Government in 2 years in office. They grew 3 percent in the entire 9 years under Labour. If the member is interested, I am happy to point out to him exactly what the increase has been. Someone on the average wage in after-tax terms in the time the Government has been in office has seen their income rise from $39,518 to $42,214—last year alone. That was a rise of 6.8 percent.

GoffHon Phil Goff Link to this

If any of that were true, why is it that the number of New Zealanders emigrating to Australia last year was the second highest in 10 years?

KeyRt Hon JOHN KEY Link to this

Well, it is true, and if the member does not believe it is true, he is quite welcome to take a breach of privilege claim. I can assure members that he will not be doing that this afternoon. If the member wants to talk about people leaving for Australia, he should look at the figures for the entire time he was in Government.

GoffHon Phil Goff Link to this

If the Prime Minister thinks somebody on $40,000 a year is really struggling, how does he think that the person on the minimum wage, $27,000 a year, is getting on when his Government gave that person a miserable 25c an hour extra in face of the highest level of inflation in 20 years?

KeyRt Hon JOHN KEY Link to this

If the member thinks that 25c an hour is miserable, then why is he promising all New Zealanders a $10 tax cut, which equates to exactly the same number? [ Interruption]

SmithMr SPEAKER Link to this

We will have some order. The member has been waiting for microphones to be open and has been interjecting quite extensively today. It is not good enough.

NormanDr Russel Norman Link to this

Does he agree with the Minister of Finance’s statement from 1 February that borrowing an additional $5 billion would almost certainly lead to a credit ratings downgrade for New Zealand, pushing up interest rates for Kiwi families and businesses and costing jobs; if so, why in his response to the Christchurch rebuild is he proposing to do exactly that: borrow an additional $5 billion rather than strike a temporary levy?

KeyRt Hon JOHN KEY Link to this

Yes, I agree with the Minister of Finance, and the reason is that the Government has decided that the most effective way of paying for that short-term build-up in debt is to try to trim its expenditure. That way we can cut out some expenditure we think is not as optimal today as it was back when it was first introduced, as opposed to sending New Zealanders a bill. Under the policy being promoted by the Green Party, he would be sending New Zealanders a bill for the earthquake.

NormanDr Russel Norman Link to this

Does he agree that if he proceeds to borrow $5 billion to pay for the rebuild, the bill for the New Zealand Government in interest alone will be around $250 million a year, not even paying off any of the capital, and that a much more fiscally responsible approach would be a small, temporary earthquake levy?

KeyRt Hon JOHN KEY Link to this

No, and no, because the Government will be trimming its expenditure and therefore paying off its debt.

NormanDr Russel Norman Link to this

Does he believe that savage cuts in Government spending will have a negative impact on the New Zealand economy?

KeyRt Hon JOHN KEY Link to this

I would not describe the proposal the Government is reviewing at the moment as “savage cuts”. The Government will, in fact, spend more money next year. It may like to get to a point where it—

CunliffeHon David Cunliffe Link to this

That’s not what you said on Sunday.

KeyRt Hon JOHN KEY Link to this

I am sorry the member does not understand the economics. I know Labour is struggling to come up with a finance spokesman. The reality is that one’s discretionary spend might be zero, but there will be more older people in New Zealand next year getting superannuation, and there will be more people taking other benefits from the Government. So, no, I do not agree with that proposition.

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