Key John: Questions for Oral Answer — Questions to Ministers Questions to Members 
Key John: Questions for Oral Answer — Questions to Ministers Questions to Members 
[Volume:629;Page:1222] 
4.  
JOHN KEY (National—Helensville) 
 to the  
Minister of Finance 
: Can he assure the public that income tax thresholds will be adjusted for inflation from 1 April 2008 as set out in the 2005 Budget? 
Hon Dr MICHAEL CULLEN (Deputy Prime Minister) 
: 
 Not at this point although I welcome the member’s conversion to the idea given his long opposition to it. 
John Key 
: Can the Minister confirm that Treasury documents estimate the Government surplus to be running at between $3.4 billion and $5.9 billion in exactly the same period that he is arguing that this Government will not be able to afford a $360 million tax cut; and if this Government cannot afford a $360 million tax cut when it is running roughly a $6 billion surplus exactly how large would the surplus need to be? 
Hon Dr MICHAEL CULLEN 
: That is Treasury’s projection. A surplus at that level of $3.4 billion is completely insufficient to cover the Government’s capital expenditure including the transfers into the Superannuation Fund. Mr Key believes in large-scale borrowing to fund tax cuts; he admitted so before the election. He is continuing to sing that irresponsible song when every independent commentator on the New Zealand economy is calling for the Government if anything to tighten fiscal policy rather than to loosen it. Unlike foreign exchange speculators this Government will not borrow for the sake of trying to make some money. 
Hon Mark Gosche 
: Has the Minister seen other reports on the personal income tax situation in New Zealand? 
Hon Dr MICHAEL CULLEN 
: I have seen a number of reports. I have seen a report recommending a tax-cut plan that would cost the Government $11 billion over 3 years. That is notwithstanding the comments from every independent commentator including the Governor of the Reserve Bank that cutting taxes at this stage of the cycle would only exacerbate imbalances and end up putting more pressure on interest rates and the dollar. Of course Mr Key may simply be trying to make more money for his former mates in foreign exchange speculation. 
Hon Dr Nick Smith 
: I raise a point of order Madam Speaker. 
Madam SPEAKER 
: That last comment was unnecessary so would the Minister please withdraw it. 
Hon Dr MICHAEL CULLEN 
: I withdraw. 
John Key 
: Does the Minister recall that in 1999 he assured the nation that only 5 percent of taxpayers would pay the 39 percent marginal tax rate—a number that turns out to be about 150000 people—and is he surprised to learn that that number has now risen to a third of a million people or 11 percent in which case why is he in reverse gear about doing something about that? 
Hon Dr MICHAEL CULLEN 
: Yes and that just shows how much incomes have grown over the intervening 6 years. But I do remind the member that the indexation of tax thresholds was specifically rejected in the National Party’s policy before the election and opposed by the National Party. 
John Key 
: Does he remember horrible though I am sure it is for him to recall it now his Budget 2005 speech when he said: “The Labour-Progressive Government therefore has decided to adjust the thresholds every three years.” in which case why is he trying to shirk on the deal? 
Hon Dr MICHAEL CULLEN 
: I also recall that we were committed to a carbon tax for which we do not have the numbers in the House. Unlike the Opposition member I can count. He will need to learn to do so before he becomes a leader. 
John Key 
: Does he stand by his comment to the Finance and Expenditure Committee yesterday that: “People who think there should be tax cuts on the back of big surpluses should be taken out and quietly drowned.”? If he does have two factors occurred to him: firstly that a majority of New Zealanders actually voted for political parties that favoured tax cuts and secondly on a more serious point that New Zealand has one of the highest rates of drowning in the Western World a rate twice the per capita rate of Australia; and how does he think that Water Safety New Zealand reflects on his comments beamed across the TV channels last night? 
Madam SPEAKER 
: I just remind members that normally there is just one supplementary question so the Minister has a choice out of the three or four that were asked. 
Hon Dr MICHAEL CULLEN 
: I was pointing out that it is utterly foolish to argue that because we have strong surpluses at the top end of an economic cycle one should then blow those and borrow one’s way—massive numbers of billions of dollars—to the bottom end and then wonder why at the end of all that debt keeps rising and we are leaving it to our children and grandchildren to pay it back. That is exactly what the National Government did from the 1970s through to the early 1980s. If Mr Key was a little bit older he might remember that previous period of National Government. 
John Key 
: Was the deep dark secret of Budget 2005 the fact that even though the Minister announced tax cuts on the day the poor old public are now finding out that they are never going to get them and is that the reason they were not on the pledge card that the taxpayer had funded for Labour? 
Hon Dr MICHAEL CULLEN 
: There are tax cuts coming into force in 6 weeks and 1 day. In 6 weeks and 1 day hundreds of millions of dollars of tax cuts come into force for New Zealand business and the National Party voted against them.