Cunliffe David: Questions for Oral Answer — Questions to Ministers 
Cunliffe David: Questions for Oral Answer — Questions to Ministers 
[Volume:660;Page:8816] 
4. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister of Finance 
: What was his public response to Treasury’s suggestion in the 2008 briefing to the incoming Minister that he consider a “move towards a tax system more heavily weighted towards consumption taxes”? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 I do not recall exactly what was said or what I was asked about that. The Government is working with the economy in the state that it finds it in. We set up the Tax Working Group in May last year. It started to publish its proceedings in August last year. Its very thorough and openly debated public report has drawn the Government to the conclusion that it should consider the option of cutting income taxes offset by a modest increase in GST. 
Hon David Cunliffe 
: To assist the Minister’s recall does he still stand by his statement “… we won’t be doing anything with GST. We are focused on personal tax cuts as our top priority.”; or should that now read “Keeping our word is no longer our top priority; raising GST is.”? 
Mr SPEAKER 
: The member knows that the latter part is not an appropriate way to frame a question. 
Hon BILL ENGLISH 
: The fact is that the incoming National Government did campaign on tax cuts. We put in place the first tranche of them and then we had to cancel the second tranche of them because of the effect of the global recession. At the same time we set up the Tax Working Group which has openly discussed an increase in GST for 6 months. It took till yesterday for that member to think to ask a question about it in this House. 
Hon David Cunliffe 
: How can he expect New Zealanders to trust his Government’s promise of some kind of compensation for GST when he said “We want to maintain GST as it is. … We want to keep that rate” only to break that promise a year later? 
Hon BILL ENGLISH 
: I have outlined to the member the circumstances. National campaigned on income tax cuts. In fact in Budget 2009 there was the option to increase GST in order to fund more of the tax cuts. But we decided not to proceed with income tax cuts because the country could not afford them. Since then the Tax Working Group has put in front of the Government advice that changing the balance of tax or cutting income taxes funded by a modest increase in GST would result in a better tax system and from our point of view would result in a better economy. 
Amy Adams 
: Why is the Government considering a small increase in GST as part of a wider package of tax changes that will help New Zealanders to get ahead? 
Hon BILL ENGLISH 
: New Zealand is still a country that spends more than it earns. In fact our total debt to overseas lenders has now reached $160 billion— 
Hon David Cunliffe 
: You’re going to make it worse. 
Hon BILL ENGLISH 
: —and it got significantly worse in the last 4 or 5 years. It is time that we took stock and created incentives in this economy that favour working earning saving and investing because we cannot continue with overspending and borrowing to fill the gap as happened under that member’s economic management. 
Hon David Cunliffe 
: If the Minister believes that that was then and this is now given that he is a former leader of his party and a former finance Minister how can he expect the public to trust him on GST when he has now broken two promises on tax cuts since taking office this time around? 
Hon BILL ENGLISH 
: The member will just have to wait and see how the details of the package shake down. Those decisions are ahead of the Government. When we have made them we will announce them and people will be able to see what impact they will have on them. 
Hon David Cunliffe 
: Does he now accept that his pledge to maintain GST at its current rate made in February 2009 after the election means that his leader’s defence which was different from his own yesterday on his GST flip-flop could now have been better considered? 
Hon BILL ENGLISH 
: No I do not accept that.