English Bill: Questions for Oral Answer — Urgent Questions Questions to Ministers 
English Bill: Questions for Oral Answer — Urgent Questions Questions to Ministers 
[Volume:639;Page:9256] 
2.  
Hon BILL ENGLISH (Deputy Leader—National) 
 to the  
Minister of Finance 
: Why is he cutting the corporate tax rate and why now? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I am sorry. The member will have to wait just one more day to find out what is in the Budget. 
Hon Bill English 
: Can the Minister confirm that his ability to pass a Budget including a cut in the corporate tax rate now depends on the Greens abstaining on a vote of confidence because he has lost his majority with New Zealand First and United Future; and has the Government consulted with the Greens about their views on a billion-dollar company tax cut? 
Hon Dr MICHAEL CULLEN 
: No. 
Charles Chauvel 
: What reports has the Minister seen on reductions in business taxation in recent years? 
Hon Dr MICHAEL CULLEN 
: Since coming to office in 1999 we have introduced a raft of measures in this area including reductions in fringe benefit tax in the specified superannuation contribution withholding tax greater interest deductibility for companies zero rating of GST on financial services introducing an exemption on tax in overseas income for new migrants and allowing high depreciation for low-value assets. We have also introduced tax concessions for the racing industry and I note that the National Party voted against almost all of these reductions in taxation. 
R Doug Woolerton 
: Can the Minister confirm that reviewing the business taxation regime is part of the confidence and supply agreement with New Zealand First and that New Zealand First has consistently lobbied the Government to reduce the current rate of corporate tax? 
Hon Dr MICHAEL CULLEN 
: I can confirm it was a condition of our confidence and supply agreements with both New Zealand First and United Future. 
Heather Roy 
: Does the Minister agree that it is good tax policy design to align the top personal tax rate with the company rate and what is the logic of maintaining—in fact widening—the differential between the company rate and the top rate of personal taxation? 
Hon Dr MICHAEL CULLEN 
: At a theoretical level there are advantages. Actually very very few countries align the top two rates and many countries have much wider differentials than New Zealand. In Australia for example the differential is between 45c and 30c in the dollar. 
Hon Bill English 
: Does the Minister expect to be having discussions this afternoon with the Greens in order to ensure that the Government can rely on their support for a billion-dollar corporate tax cut or have they promised to back Labour no matter what? 
Hon Dr MICHAEL CULLEN 
: I spend many afternoons having discussions with the Greens. I think this afternoon is not one of them. 
Jeanette Fitzsimons 
: Can the Minister tell the House on what conditions the Greens’ abstention on confidence and supply is based and can he comment on whether the conditions regularly flip-flop according to the Government’s numbers or whether it is actually based on policy? 
Hon Dr MICHAEL CULLEN 
: The agreement is based on good faith and on working in a direction that is consistent with the policies of both parties. The Greens remain consistent even in areas where I wish they would actually change their position and support the Government. But they have always been in good faith in terms of their relationships with the current Government. We are on track I think I can say on a range of key issues. 
Hon Bill English 
: Does the last answer mean that the Minister no longer believes all those sarcastic and sometimes funny things he has been saying about the Greens? 
Hon Dr MICHAEL CULLEN 
: I prefer to say funny and sometimes sarcastic. 
Jeanette Fitzsimons 
: Can the Minister also confirm that the Greens’ cooperation agreement with the Government is based on a great deal more than good faith and actually includes a considerable amount of policy that is a precondition to our continued abstention on confidence and supply? 
Hon Dr MICHAEL CULLEN 
: There are specific references to areas around energy sustainability transport and other policy areas and the Labour-led Government and the Green Party continue to work closely together on those matters. The Government has absolutely no doubt—unlike obviously the National Party—about the good faith on which the Green Party works. 
Hon Bill English 
: Can the Minister confirm that whereas at the moment his numbers to pass the Budget rely on confidence and supply agreements with both United Future and New Zealand First by tomorrow his numbers to pass the Budget will depend on a confidence and supply agreement with New Zealand First a confidence and supply agreement with United Future and a cooperation agreement with the Greens? 
Hon Dr MICHAEL CULLEN 
: We have rested on those since the last election and that is the nature of MMP politics. The National Party has never learnt how to operate MMP politics. 
Hon Bill English 
: What can New Zealand expect from the 2008 Budget which the Minister has already started talking about when in this one he was pushed into a company tax cut by United Future and savings incentives by New Zealand First and when clearly in the 2008 Budget he will be pushed into all sorts of weird economic policy by the Greens? 
Hon Dr MICHAEL CULLEN 
: We work carefully and closely with other political parties. The member will find out tomorrow what is actually in the Budget. Until that member learns that there are other parties in this House he has not got the faintest hope of ever being part of a Government. 
Hon Bill English 
: Why has the Government decided to make a cut in the company tax rate its top priority when people on the average wage used to pay 19 percent of their income as tax when he came to power and now those people pay 22 percent of their income as tax which means that the average tax on the average wage has gone up by about 12 percent? 
Hon Dr MICHAEL CULLEN 
: Actually for an average wage worker with two children the tax wedge on that household is now down to the second lowest in the OECD and is about an eighth of what it was under the National Government. 
Hon Bill English 
: Does the Minister expect to have to modify any policy immediately after the Budget because the Government’s majority now relies on the Greens abstaining from confidence and supply votes whereas previously its effective majority relied on New Zealand First and United Future alone? 
Hon Dr MICHAEL CULLEN 
: No and the last statement is incorrect. Since Taito Phillip Field left the Labour Party he is quite wrong in that regard.