Seymour David: Oral Questions — Questions to MinistersText is incorporated into the Bound VolumeSeymour David: Oral Questions — Questions to Ministers[Sitting date: 19 March 2015. Volume:704;Page:2428. Text is incorporated into the Bound Volume.]2.DAVID SEYMOUR (Leader—ACT) to the Minister of Finance: In light of his statement in the House on 11 March that low inflation “makes it more challenging for the Government because higher inflation pushes up the tax base and enables us to collect more tax in a growing economy” does he agree that this phenomenon of fiscal drag is just another description for an increase in effective tax rates?Hon STEVEN JOYCE (Associate Minister of Finance) on behalf of theMinister of Finance: As the Minister said at the time New Zealand is in the unusual situation of having solid economic growth but also historically low levels of inflation. This is of course good for households because it means their cost of living is increasing at a very low rate but it is a challenge for Government revenue.Hon David Parker: This is just a speech which doesn’t address the question.Hon STEVEN JOYCE: Just take your time Mr Parker.Hon David Parker: Unless the country goes bankrupt.Hon STEVEN JOYCE: Shh take a breath David. Low inflation—Mr SPEAKER: Order! Listen. The constant barrage coming from my left is not acceptable—Hon David Parker: Point of order—Mr SPEAKER: Order! I am on my feet. If the member wants to take the opportunity to ask a supplementary question he will have his chance. But to engage with the Minister while he is attempting to answer the question is distracting certainly to me and to the House and in itself it is disorderly.Hon David Parker: I raise a point of order Mr Speaker. I would ask you to enforce the Standing Orders and to expect Ministers to address questions rather than—Mr SPEAKER: Order! The member will resume his seat. He will be having a very early departure from the House if he carries on like that. The answer was being given. It was being interjected on from the member so that was—[Interruption] Order! If there is one more outburst from the Hon David Parker he will be leaving the Chamber this question time. If there is constant interjection coming from the left of the House and the Minister is responding to that that is not helpful but the initial cause of the problem is the interjections from the Hon David Parker. Steven Joyce if he could complete his answer.Hon STEVEN JOYCE: Thank you Mr Speaker. As I was saying low inflation reduces Government revenue in part because of less fiscal drag as the member knows. In times of high inflation—for example as recently as 2008—fiscal drag was very significantly important and was an effective tax increase. In times of very low inflation as we are experiencing at the moment there is in fact a lack of fiscal drag that is noted. Despite pressures on its revenues this Government’s management of expenditure remains disciplined and we are on track to surplus.David Seymour: Is a time of low inflation when fiscal drag provides little additional revenue as the Minister has noted not the perfect time to introduce greater transparency into the nation’s tax system by indexing tax thresholds for income to inflation?Hon STEVEN JOYCE: In regard to income tax and indexation reducing tax rates we have been very clear that that was something we would consider from 1 April 2017 if economic and fiscal conditions allowed. Any tax reduction would be modest and focused on low and middle income earners. We do have the concern that the member outlines which is if wages are rising people can be taxed more. So we are interested in doing that. Would we do it in terms of an indexation? That is something that we would address at the time once we were confident we had the room to do so.David Seymour: Given the Minister’s ambivalence about indexation is he aware that since 2010 the lack of indexation of income tax thresholds to inflation has cost the average earning household $1036?Hon STEVEN JOYCE: I do not have those exact figures to hand but of course there are a number of other considerations in terms of household incomes. For example we have had very significant ACC reductions over the period. The income tax reductions in 2010 reduced income tax revenue by around $600 million over 3 years and that broadly offset the estimated fiscal drag effects. On top of that of course households benefit because inflation is lower and that of course means that their costs of living increases are lower which means that most households will be better off under the fiscal arrangements that this Government is progressing than we have seen from previous Governments.David Seymour: I seek leave to table a document prepared by the Parliamentary Library for the ACT Party detailing the cost to households from the lack of—Mr SPEAKER: It has been described. I will put the leave. Leave is sought to table that information. Is there any objection? There is none. It can be tabled.Document by leave laid on the Table of the House.