King Annette: Questions for Oral Answer — Questions to Ministers 
King Annette: Questions for Oral Answer — Questions to Ministers 
[Volume:660;Page:8811] 
1. 
Hon ANNETTE KING (Deputy Leader—Labour) 
 to the  
Minister of Finance 
: What advice if any has he received on the likely impact of an increase in GST on New Zealand families? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 The advice I have received is that that would depend on the details of the switch between GST and income tax and also on the impact of changes in the taxation of property which tends to be owned by higher-income New Zealanders. 
Hon Annette King 
: When he said yesterday that most people will not be worse off under his proposed tax changes and the Prime Minister said that the vast bulk of people will not be worse off who will be worse off? 
Hon BILL ENGLISH 
: As I just told the member the impact on families will depend on the details of the income and GST tax switch and also on the impact of the taxation on property. I have to say the data about the ownership of property is a bit less certain but it does show that property is owned mainly by higher-income New Zealanders as one would expect. 
Hon Annette King 
: I raise a point of order Mr Speaker. The question was very direct and was based on the Minister’s own quote yesterday where he said that few would be worse off; having said that he must have some idea as to who is worse off. He did not answer that question. 
Mr SPEAKER 
: Well in fairness I do have to say to the honourable member that the Minister in replying pointed out that that would depend totally on the detail of the final measures. He clearly does not have that detail at the moment. I do not believe it is possible for me to ask him to answer any more precisely. 
Hon Trevor Mallard 
: I raise a point of order Mr Speaker. I want to be a little bit careful because I am I think disputing your ruling. But it was very clear in the House yesterday that the Minister of Finance said that few people would be affected. For that to happen he had to have at least a decision that involved a range of people. I think for him to continue to mislead the House as to pretending— 
Mr SPEAKER 
: I do not mind the member raising his point of order but he is now getting into dangerous territory. The English language is a fairly simple language. When someone says “The vast majority of people will not be worse off” that does not necessarily mean that he or she has the detail of who may or may not be worse off; it means the intention in setting the final policy is that the vast majority will not be worse off. That is my understanding of what the Minister said. That is why I am not asking him to answer further. It was perfectly clear to me what he said. 
Hon David Cunliffe 
: I raise a point of order Mr Speaker. Following on from the exchange that has just occurred and fully accepting that the Minister may have in his possession a range of scenarios but no final decision has yet been made to choose between them and thereby accepting your point it would seem to suffice if in his answer to my colleague he were able to give just one example of an individual— 
Mr SPEAKER 
: The member will sit down. 
Hon David Cunliffe 
: But he has made no attempt— 
Mr SPEAKER 
: The member will resume his seat. I think I have listened to enough on this matter. 
Hon Annette King 
: As New Zealand Superannuation is adjusted annually only what action will he take to ensure a pensioner whose meat bill went up by 3 percent whose milk bill went up by 5 percent whose power bill is going up by 5 percent and who now faces 15 percent GST on top of all that will not be worse off under his proposed tax cuts? 
Hon BILL ENGLISH 
: I would simply repeat the answer I used before. But I point out to the member that in a GST - income tax switch superannuitants are a group who would find that they benefit from income tax cuts because as she knows superannuation is tied to the after-tax average wage. The member might reflect on the fact that during her term in office most annual CPI increases were greater than 2.5 percent—during her term in office. She did not seem worried about it then. 
David Bennett 
: How will the Government make the tax system fairer? 
Hon BILL ENGLISH 
: We will certainly do a better job than the previous Government. Under the previous Government an Inland Revenue Department survey showed that of the 100 wealthiest taxpayers in New Zealand half of them were not paying the top tax rate. Inland Revenue Department information also shows that under the Labour Government in 9 years the number of people paying tax on $1 million actually dropped—it actually dropped— 
Hon Pete Hodgson 
: Point of order. 
Hon BILL ENGLISH 
: —so for the Labour Government to say they are all about fairness— 
Mr SPEAKER 
: The Minister is sailing close to the wind when he ignores the Speaker on his feet. The Hon Pete Hodgson had called a point of order. I am not surprised that members could not hear that he had called a point of order because the noise was just unacceptable. 
Hon Pete Hodgson 
: I raise a point of order Mr Speaker. The question was “How does he intend to make the tax system better?”. Now 1 minute into the answer it seems to me that the question ought to be addressed. 
Mr SPEAKER 
: The Minister was pointing out what he saw as a problem with the tax system which he I presume intends to try to fix up. It seemed to be a reasonable answer to the question asked. 
Hon Annette King 
: Has he seen Treasury’s assumptions on GST which showed that if GST were reduced only a fraction of the reduction would be passed on to consumers; if so has Treasury given him assumptions showing that if GST is increased retailers are likely to add a margin for themselves; and if so how will he compensate New Zealanders for those increases in prices? 
Hon BILL ENGLISH 
: I thought that that member would know how it works because she has been a member of two Cabinets that dealt with GST—the first one to bring it in and the next one to increase it to 12.5 percent with no compensation at all. 
Hon Darren Hughes 
: I raise a point of order Mr Speaker. 
Mr SPEAKER 
: I suspect I know what the point of order will be. The Hon Annette King asked a reasonable question and I think the Minister should have made some attempt to answer it rather than just say that the member has been involved in increasing GST in the past and therefore should know about it. I think the House deserves a little more focus on the question than that. 
Hon BILL ENGLISH 
: I expect that the advice Treasury has given me—and there will be more to come—will be the same as was given to that member as Minister when her Government increased GST from 10 percent to 12.5 percent with no compensation whatsoever. That advice is to the effect that a significant part of the increase is not passed on and that retailers have to absorb it because of the competition in the market. 
Hon Maryan Street 
: What compensation for any GST increase does the Minister have planned for the 348000-plus tertiary students who if they are employed at all are typically in low-paid and part-time positions so therefore will not benefit from tax cuts for the rich and are neither superannuitants nor beneficiaries who may receive some compensation so they will simply have to bear the increase in GST? 
Hon BILL ENGLISH 
: Those matters are all under consideration. 
Hon Annette King 
: Has he seen a report that the Maori Party members are looking at ditching their support for the Government over the proposed increase in GST; if so was he as finance Minister aware of their intentions and what does such a threat do to his tax proposals? 
Hon BILL ENGLISH 
: I am aware that the Maori Party members have points of view that they want to advance and we are in intensive discussions with them so that we can all understand. We all have an interest in understanding the impact of any rise in GST just as we all have an interest in understanding the impact of lowering income tax rates so this country which spends more than it earns can get around to earning more investing more saving more and increasing incomes.