Key John: Questions for Oral Answer — Questions to Ministers 
Key John: Questions for Oral Answer — Questions to Ministers 
[Volume:624;Page:18969] 
10.  
JOHN KEY (National—Helensville) 
 to the  
Minister of Finance 
: Is he concerned about the level of real after-tax wages currently paid to the average New Zealand worker; if so what does he propose to do about it? 
Hon TREVOR MALLARD (Acting Minister of Finance) 
: Treasury advice is that the unadjusted labour cost index provides the broadest measure of changes to individuals’ remuneration over time. This showed wage growth of 4.8 percent between December 2003 and December 2004. Inflation growth over the same period was 2.7 percent. That reflects a strong economy and a labour market at capacity. Also evident of that strength is that we now have the lowest unemployment rate of countries with comparable data. 
John Key 
: Will the Minister explain how New Zealand workers who earn $50000 who have two children and who receive a 5 percent pay rise while in receipt of the Government’s Working for Families package will see their gross pay rise by $2500 per year but their take-home pay rise by $5.20 per week; and does he think that is what the unions had in mind when they started asking for “5 in 05”? 
Hon TREVOR MALLARD 
: I am sure that that is not what they wanted. 
John Key 
: Will the Minister explain why under his policies many hard-working families with kids will lose up to 90c of every extra dollar they get in future pay rises; and how on earth does he call that “Working for Families”? 
Hon TREVOR MALLARD 
: One of the issues whenever one makes a tax credit system is the marginal amount that families get. I agree with the member that having effective marginal tax rates at that level is not highly desirable but the alternative would be to stop giving families at that level any money at all—the way the Tories say they would. We will not have that because we know that families on $50000 with two kids do need more money. 
Peter Brown 
: Is the Minister aware that places like Britain the USA Australia and Singapore to name a few are regarded as countries with high wages and low taxes whereas in comparison New Zealand is regarded as a low wage - high tax country; if he is would he tell us how the Government intends to bring thousands of New Zealanders from all over the place back to their country of birth? 
Hon TREVOR MALLARD 
: I am not an expert on the rates of all the countries the member has mentioned but I do know that effective tax rates in the United Kingdom and in Singapore—when one takes into account superannuation and medical levies and everything that sits on top of those—are a lot more than those in New Zealand. I say to the member that families in New Zealand have on average received over $1000 extra of health spending per year as a result of the very good work of Annette King. 
John Key 
: Can the Minister confirm to the House that he is telling us this afternoon that if working families with kids receive a future pay rise of 5 percent worth $2500 they will get to keep $250 of it; and how can that be helping those working families? 
Hon TREVOR MALLARD 
: No I cannot confirm that. 
Hon Richard Prebble 
: Does the Minister stand by the answer the Minister of Finance gave in the House on 7 December to oral question No. 7 when he told the House that the average household income after tax increased in the 4 years since the 1999-2000 year and that in those 4 years the increase in the average family’s income was exactly the same as the increase in the consumer price index—in other words the average family is no better off after tax—and if the Minister does stand by that statement why does he not at least adjust the threshold levels for income tax? 
Hon TREVOR MALLARD 
: One of the effects on the average wage income of New Zealanders is that as more and more people who previously did not have jobs go into work they are generally in lower-income jobs and the average can actually drop. 
John Key 
: Does the Minister agree with Andrew Little of the Engineering Printing and Manufacturing Union who said at the weekend that cutting personal tax rates would not increase real after-tax wages; if the Minister does not agree with him why has he spent the last 5 years in raising personal tax rates and not in cutting them? 
Hon TREVOR MALLARD 
: From my memory there has been one small change to personal tax rates in the last 5 years and that was right at the top. The reason this Government is collecting so much more in taxes is that many more people are working and also that the enormous loopholes opened up by the previous Government for its mates in order for them to avoid tax especially company tax have been closed.