Key John: Financial Review Debate — Procedure In Committee Speaker Recalled In Committee 
Key John: Financial Review Debate — Procedure In Committee Speaker Recalled In Committee 
[Volume:616;Page:11844] 
JOHN KEY (National—Helensville) 
: 
 The Crown accounts have proven to be in a very solid state of affairs. Last year the Crown produced an operating balance excluding revaluations and accounting changes in the order of NZ$5.6 billion. That is the number the Minister of Finance himself demanded that this House recognise as the change of net worth as he became the Minister—$5.6 billion was the operating balance excluding revaluations and accounting changes number. 
I want to reflect for a moment if I may on what that means. For the last 10 years—from 1993 to 2003—the New Zealand economy has grown about 2.3 percent on a per capita basis. So for every man woman and child our economy has grown about 2.3 percent. That is a vast improvement on the per capita growth rate some time before that where it was well under 1 percent and nearly 0.5 percent. That needs to move to 4.1 percent if New Zealand is to move into the top half of the OECD. 
I refer as part of Vote Finance to the reports from Treasury which outline issues for economic growth in the next 12 months and beyond. This is the very kind of research that the Minister of Finance through Vote Treasury pays for. He pays to get that advice from his own department. That advice tells the people of New Zealand that Treasury is worried that New Zealand cannot achieve an economic growth rate anywhere near 4.1 percent over the next 10 years—nor in fact anywhere near 2.3 percent over the next 10 years. The Government will no longer talk about when New Zealand can move back into the top half of the OECD because it cannot define that time in terms of the Treasury document I have in front of me. 
Interestingly enough one of the first things in the document is its advice to the Minister of Finance in the area of taxation. It told the Minister that a lowering of the top rate of personal tax would be one of the fastest ways to grow the economy. 
Dr Wayne Mapp 
: Did they do that? 
JOHN KEY 
: The Government certainly did not. The first move it made when it came into office was to increase the rate of personal taxation. Did it need to when the country is now babysitting the largest surplus it has had in 50 years? The Minister can get to his feet if he wants to and argue about the cash position—I say to the Minister that we all understand the cash position—but there is a $5.6 billion operating balance excluding revaluations and accounting charges. 
When the National Party told the country last week that a National Government would reduce the level of company taxation the Minister was somewhat scathing about that. He told the public that that would deliver a benefit only to offshore companies. So he too must have been absolutely stunned yesterday when his own virtually Government-owned corporation Air New Zealand—the Government owning 87 percent—came to the Stock Exchange and told the people of New Zealand that the company now has a tax liability of $107 million. Why does it have that liability? Because it had chosen to base its own aircraft leasing operation in a jurisdiction where tax rates are lower at the company level. What an embarrassment to the Minister of Finance that a company of which he effectively owns 87 percent sends money to a jurisdiction where company tax rates are low—and he had the audacity to tell the people of New Zealand that the Government would do nothing for corporate taxation. What an embarrassing day it was yesterday. 
I want to turn for a second to the area of trade and talk just for a moment about the advice on trade that Treasury officials gave the Minister of Finance in the meeting they had on Wednesday 8 October. Treasury officials told the Minister that the Doha round could provide significant one-off benefits but that if the breakdown continued then bilateral arrangements would be significantly important. The report next told us that New Zealand should lean on Australia’s Treasurer Peter Costello to try to help us get a free-trade arrangement with the US because our Government has made such a botch-up of it that it cannot get one itself. We will go cap in hand across the Tasman to Australia and we will beg for help on a free-trade arrangement because this Government made such a botch-up along the way. That is the sort of advice we are getting from the Minister of Finance’s own Treasury.