English Bill: Questions for Oral Answer — Questions to Ministers 
English Bill: Questions for Oral Answer — Questions to Ministers 
[Volume:643;Page:13278] 
3.  
Hon BILL ENGLISH (Deputy Leader—National) 
 to the  
Minister of Finance 
: Does he still stand by his statement “If as some have suggested New Zealanders are fleeing as tax exiles to Australia one can only conclude that those individuals are functionally innumerate and we are probably better off without them.”; if not why not? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 The statement I made in I think it was July 2005 remains correct in that respect. Now of course the main attractions of Australia are lifestyle family considerations and wages in that order—with wages being about 17 percent—not lower taxes. I note in a survey of financial professionals perhaps the group most likely to consider tax implications reported in the  
New Zealand Herald  
today that tax rates were not even mentioned as a factor for those considering working overseas. 
Hon Bill English 
: Is the Minister aware that people do take into account after-tax incomes even if they do not specifically mention tax rates; and has he seen recent reports suggesting that even after adjusting for cost of living differences the average Kiwi family would be more than $5000 a year better off in Australia than in New Zealand and what is his response? 
Hon Dr MICHAEL CULLEN 
: Nobody has any doubt that wage and salary rates in Australia are higher than they are in New Zealand. Part of the reason for that has been the fact that until very recently organised labour in Australia was in fact stronger than in New Zealand and the balance between the growth of wages and the growth of profits has been quite different in Australia from what it has been in New Zealand. The Employment Contracts Act of course was a considerable contributor to the reduction in working conditions in New Zealand. 
Hon Bill English 
: Can he confirm that he has continued to treat New Zealanders as if they were functionally innumerate by refusing consistently to move tax rates or tax thresholds at a time when our nearest neighbour and strongest competitor for human capital has shifted tax thresholds consistently now for 5 years and plans further large tax cuts? 
Hon Dr MICHAEL CULLEN 
: I note first of all that the Opposition voted against any movements in working conditions such as 4 weeks’ annual leave. I note the Opposition voted against tax cuts for business. I note the Opposition voted against tax cuts for savers. I note the Opposition indeed voted against every tax cut that this Government has introduced. But of course Opposition members have these sudden conversions on the road to Damascus. The problem is they keep finding themselves marching on Tripoli instead. 
Peter Brown 
: Is the Minister aware that there are enterprising New Zealanders leaving for Australia not particularly for tax cuts but because of greater opportunities higher wages—as he has just acknowledged—better working conditions tougher policing and a more efficient health system and does he accept that many New Zealanders would prefer to see more investment in health education and law and order in particular than a tax cut; if he does accept those assertions can he advise what he is doing to rectify the matter? 
Hon Dr MICHAEL CULLEN 
: I think the last thing I can be accused of is not investing more in health and education over the last 8 years. Budgets over those years have expanded very significantly indeed. But the member underlines a very important point: there is no single set of reasons why people move from New Zealand to Australia. One should add further to that the fact that New Zealand has continued to maintain and does so in the latest numbers a net immigration of skills. This Government has moved the immigration system from other criteria to skills as the primary matter of concern. We are a net skills importer in New Zealand not a net skills exporter. 
Hon Bill English 
: Does that answer mean that the Minister regards today’s figures about the rate of immigration to Australia as good news because the dumb ones are going and we are getting brighter people instead? 
Hon Dr MICHAEL CULLEN 
: Looking opposite I could not possibly argue that the dumb ones are going. 
Te Ururoa Flavell 
: Has the Minister any evidence to substantiate his statement that New Zealand is better off without those who leave as tax exiles; would he say the same of those who leave for Australia because of better economic opportunities higher wages and a lower cost of living? 
Hon Dr MICHAEL CULLEN 
: I am not sure the last part is entirely true. For example people going to Australia to buy a house are going to face very large stamp duties which they have to take account of in terms of home purchasing. But certainly wages and salaries are higher in Australia than in New Zealand and that is primarily the result of the fact that between the early 1980s and the early to mid 1990s Australia had a very much higher economic growth rate than New Zealand. Over the last 10 years we have in fact matched the Australian growth rate on average. 
Hon Bill English 
: Can the Minister confirm that according to his own figures under his Government although someone on the average wage has had his or her gross income increase by almost $10000 that person is in fact in net terms only $1700 better off in 2007 than in 2005; what happened to the rest of the money? 
Hon Dr MICHAEL CULLEN 
: I am grateful that the member now admits that he got his original calculations some 70 percent wrong in that regard when he put out the original press statement on the growth in net incomes. 
Te Ururoa Flavell 
: Does the Minister consider that Maori who are going to Australia because of the economic opportunities higher wages and the lower cost of living are also as functionally innumerate as those who are fleeing as tax exiles; if so why? 
Hon Dr MICHAEL CULLEN 
: The member seems to think the main reason for “fleeing to Australia” as he puts it is tax. That is not what the surveys tell us. The surveys tell us the No. 1 reason—unfortunately—is for reasons of lifestyle which is a thing we should all be concerned about. Secondly there are family reasons because many people have family already in Australia. Thirdly 17 percent was the figure for income not tax. I very much doubt that most Maori who migrated to Australia were actually in the highest tax rate in New Zealand.