4. Question No. 4—FinanceNICOLA WILLIS (Deputy Leader—National) to the Minister of FinanceQuestion No. 4—Finance4. NICOLA WILLIS (Deputy Leader—National) to the Minister of Finance: Does he agree with tax advice provided to him by the Treasury that fiscal drag has had the greatest impact on average full time wage earners. However it is increasingly impacting lower income individuals over time" and will the Government adjust tax thresholds to address this?Hon GRANT ROBERTSON (Minister of Finance): In answer to the first part of the question yes; as the member and I have discussed on a number of occasions fiscal drag does have an impact on New Zealanders across the board. This is an issue that all Governments have faced and as I have stated previously adjusting tax thresholds is something that all Governments will need to consider over time. However there are trade-offs involved in doing so and in deciding that fiscal space should go towards changes to tax thresholds that means deciding not to invest in other areas like critical public services such as education health and housing. In answer to the second part of the question the Government has indicated its tax policies at the Budget and this was not part of that.Nicola Willis: Is he concerned by advice he received in February that fiscal drag is likely to be most acute for those currently earning near the $48000 threshold which includes full-time earners on the minimum wage?Hon GRANT ROBERTSON: I am aware of the advice that I was given and all Governments—all political parties—have to work out how they balance together providing support to people for example earning around that $48000 level. I do note that the member's party's policy would see those people getting $2 a week and the trade-off for that would be significant cuts in health education and housing and services they rely on. Nicola Willis: Is he concerned that the average wage is currently above the $70000 tax threshold so according to his own advisers is taxed at a marginal rate of 33 percent whereas in 2010 it was just above the $48000 threshold taxed at a much lower rate?Hon GRANT ROBERTSON: Well in answer to the first part of the question no because I want New Zealanders to earn higher wages.Nicola Willis: Well does he agree with the advice he has received that having a higher proportion of earners with higher marginal tax rates may be expected to lead to lower incentives to work and save over time as the returns on these activities are reduced? Hon GRANT ROBERTSON: We are clear that we want to see New Zealanders' wages rise. That is the thing that will continue to provide incentives for them to keep working harder and to be part of a more productive economy. What the member needs to be able to answer to New Zealanders is how does this all balance up because offering tax cuts in the environment that we are in now means they have to be paid for from somewhere and that in the case of the National Party would have to be cuts to services. Hon Damien O'Connor: Has the Minister any reports on what would be the impact of an increase in GST after the next election?Hon GRANT ROBERTSON: An increase in GST obviously would need to be communicated by a political party and there is a track record of a party in this House that raised GST and didn't communicate that. The impact would be significant. David Seymour: Does the Minister accept that the size of the core Public Service is 28 percent larger than when he first became the Minister of Finance and if so can he point to an actual outcome such as kids learning more or safer streets or more operations that have resulted from all these extra people he's hired?SPEAKER: That doesn't really relate to the primary but if you want to answer—Hon GRANT ROBERTSON: I was going to say that the question has been put to the Prime Minister last week and was answered for the member. The question around the growth of the Public Service should be put to the Public Service Minister but what I can say is that I'm extremely proud over the last few years of the way that the Public Service has stepped up to support New Zealanders through the global pandemic; the work that they did saved tens of thousands of lives and thousands of businesses. That is a demonstrable result I am proud of. Nicola Willis: Isn't it in fact the case that the Minister is ignoring the advice about the overwhelming case for income tax reduction for working people because he continues to believe that he and his merry band of Ministers can spend New Zealanders' money better than they can despite the clear evidence that they have been wasteful and have not delivered outcomes for that spending?Hon GRANT ROBERTSON: No. The reason why we believe that now is not the right time for tax cuts is because we are in very uncertain and volatile times and because we think New Zealanders deserve to have quality health and education services. Over the course of the last five years we have been rebuilding from the underfunding of those services by a Government that prioritised tax cuts over investing in them. New Zealanders deserve quality public services. We are delivering them. They are at risk under a National Government.David Seymour: Is the Minister of Finance aware that the pandemic is for all intents and purposes over; and if so will he commit to returning the size of the Public Service to pre-pandemic levels and when?Hon GRANT ROBERTSON: As in terms of my responsibilities as indicated to the member on a number of occasions we are on a track to reduce Government spending as a percentage of GDP back towards the long-run average. If we clicked our fingers and did that right away as I would acknowledge the member has at least put out a plan to do it would cause significant damage to the New Zealand economy and to New Zealand society. At the moment that is the economic plan of a potential alternative Government—because it's the only one that's out there—and it's massively damaging and risky.Nicola Willis: What conversations if any has he had with the Associate Minister of Finance delegated responsibility for assistance on tax policy one David Parker and has that to date included any discussions about their mutual disappointment they can't go on a wealth tax tax grab?Hon GRANT ROBERTSON: I have many conversations with Mr Parker and usually in the middle of them the words "Tory" and "putting the country at risk" and "tearing up the social contract"—they tend to be the things that feature in those conversations.Nicola Willis: Do those conversations also feature discussions about their mutual disappointment that the Prime Minister kiboshed their plans for a wealth tax?Hon GRANT ROBERTSON: As I indicated I'm more than happy to go through some of the other topics that Minister Parker and I discuss from time to time but mostly they focus on the importance of continuing the excellent work of this Government to lift children out of poverty to build more State houses to make sure that our economy continues to grow sustainably and to make sure that we get on with reforming the Resource Management Act—one of Mr Parker's other portfolios—which the Opposition singularly failed to do across nine years."