Cunliffe David: Questions for Oral Answer — Questions to Ministers 
Cunliffe David: Questions for Oral Answer — Questions to Ministers 
[Volume:606;Page:3687] 
2.  
DAVID CUNLIFFE (NZ Labour—New Lynn) 
 to the  
Minister of Revenue 
: Has he received any recent reports on the comparison between New Zealand and Australian business taxation rates? 
Hon Dr MICHAEL CULLEN (Minister of Revenue) 
: 
 Yes I read a letter from the chief executive of Fletcher Building Ralph Waters stating that the corporate tax burden is in fact higher in Australia than here and pleading—I hope successfully but I am sure not—for some honesty in the tax debate in New Zealand. He deserves to be listened to. He has worked and paid taxes on both sides of the Tasman in a business context. 
David Cunliffe 
: How does Mr Waters describe the alleged company tax advantage across the Tasman and why? 
Hon Dr MICHAEL CULLEN 
: Mr Waters says it is a myth. There are three reasons: first when the Australians lowered their headline tax rate they also abolished accelerated depreciation rates; second they have a payroll tax of around 6 percent for large employers; third the administration of the Australian system is much more complex than New Zealand’s if that can be believed giving rise to large compliance costs. 
Dr the Hon Lockwood Smith 
: While the Minister may get off on letters to the editor how does New Zealand having the highest corporate tax rate in the Asia-Pacific region—after India Pakistan Bangladesh and Sri Lanka according to the 2002 KPMG corporate tax rate survey—assist in achieving the Government’s declared objective of restoring New Zealanders’ living standards to the top half of the OECD? 
Hon Dr MICHAEL CULLEN 
: I can remember when the corporate tax rate was lowered from 48 percent compared with the 45 percent National had left it at to 33 percent. The 3 years after that were our worst for economic growth for many many years. 
Dail Jones 
: What action will the Minister be taking about the way in which the incomes of New Zealand families and businesses are taxed more heavily than say their Australian counterparts as set out in the OECD’s annual tax and wages publication—which indicates for example that a New Zealand family with a sole breadwinner and two children has a net tax burden of 18.2 percent of the gross wage compared with the equivalent Australian family which has a net tax burden of 14.7 percent of the gross wage which must be one of the reasons that New Zealand families are leaving New Zealand to live in Australia? 
Hon Dr MICHAEL CULLEN 
: Australian tax rates and income tax levels are higher than New Zealand’s but I will deal with that question more fully when we wait through courtesy for Ms Coddington’s question which deals with that precise matter. 
Deborah Coddington 
: Why is the Minister boasting when the OECD report that is due to come out in April will show that since this Government took office the average married worker with two kids in New Zealand has had the second-highest increase in tax out of 30 OECD countries? 
Hon Dr MICHAEL CULLEN 
: Unfortunately we now cannot wait for Ms Coddington’s primary question. I will answer it in reply to the supplementary question. Firstly those tables deal with only income tax. As the member ought to know most European countries have a range of other taxes apart from income tax that need to be taken into account. When those are taken into account New Zealand has one of the lowest rates of tax at that level in international comparisons. Secondly the primary reason for the increase is the substantial increase in family incomes in New Zealand over that period—much higher than the OECD average. 
Gordon Copeland 
: Does the Minister have any plans to further advantage New Zealand businesses by comparison with Australia given that we are further from markets and our compliance costs may well be greater? 
Hon Dr MICHAEL CULLEN 
: The second point is interesting. The point that Mr Waters makes is that compliance costs are higher in Australia than they are in New Zealand. Every developed country has high compliance costs. In every developed country business complains about those. On a comparative basis we do not have high compliance costs compared with other developed countries. We do have higher compliance costs than many underdeveloped countries but by definition we are richer than they are.