Key John: Estimates Debate — In Committee 
Key John: Estimates Debate — In Committee 
[Volume:618;Page:14325] 
JOHN KEY (National—Helensville) 
: 
 What an illuminating debate this has been. There was Clayton Cosgrove the head of the Finance and Expenditure Committee who one would think would know better because one would think he had been reading the reports that come from Treasury produced out of the $3.29 million worth of policy advice given to the Minister of Finance. One would think he would read those reports. Those reports indicate quite clearly that Treasury has significant concerns about the growth rate. Treasury does not apportion any of the growth rate to the current policies of this Government; it apportions them to the reforms of the 1980s. So do members of the OECD and any other external commentators who have taken a moment just to have a look at our things. 
When we look at the policy advice provided to the Minister of Finance pre the Budget Treasury was quite clear in the things it wanted the Minister to do. One of them was to address the top rate of personal taxation and I think the second one off the top of my head—I read the report only three or four times clearly more times than the Minister of Finance read it—was to cut the company rate of taxation. 
Treasury does not believe in the Clayton Cosgrove - Michael Cullen definition of forming tax policies for companies. It does not believe that we have to take the best of our system—let us say no payroll tax and no capital gains tax—and then take the best of the Australian system a lower nominal rate. Treasury is a lateral thinker in the world of finance. It knows—OK I am extending things slightly—that one can design tax policy that indeed has the best of the New Zealand system:no capital gains tax and no payroll tax; and the best of the Australian system: a lower company rate of taxation. 
The next point I want to address just for a moment is that the Minister of Finance stated that he believed I said that the Government should not have bought the railway tracks. That was not the statement I made at all. The Minister should go and reflect on that. The statement I made was that the taxpayers of New Zealand have a right to know that due diligence was done when the Crown on behalf of the people of New Zealand assumed a huge liability. 
Darren Hughes 
: What wishy-washy stuff is this? 
JOHN KEY 
: I say to Mr Hughes that if we had done some due diligence we could understand. It may be a great shock to Mr Hughes but my 20 years in the finance industry were not spent telling companies to go out and buy whatever they felt like willy-nilly without doing any due diligence because they were buying a huge black hole at $1 and should ignore the liabilities because they were going to do it anyway or because the best information was held by the seller. 
It is quite standard practice to do due diligence. It is not an unusual sort of thing. In fact given the amount of time that Chris McKenzie and the group had up in Auckland I would have thought that they must have been doing something. They were obviously enjoying the Auckland lifestyle and having a few laughs. Clearly they were not doing due diligence work and I say to Mr Hughes that they told us that. That is just a very interesting point to note. 
Can I also reflect on the comment made by the member for United Future about abolishing GST on rates. What a misguided policy that is—putting to one side of course the $230-odd million that they would be expected to find somewhere else. One of the great principles of the New Zealand GST system is that GST is on everything. We do not have it not on uncooked chickens and on cooked chickens; we do not have it on this and on that. We have it on everything. It is a fair system and we understand the rules. I might add that just last week I saw employees of the local authority in the area I live in out chopping trees. 
Darren Hughes 
: Which one’s that? 
JOHN KEY 
: In a number of places. They were chopping trees and if I had undertaken that myself I would have had to pay GST. It is a fundamentally flawed policy. 
I want to talk just for a moment in Vote Finance about the build-up of the State sector. There was a very interesting answer to a parliamentary question I asked just a few weeks ago. The information that came back stated that in 2000 the Government had at its disposal about 1700 policy analysts. Now we find that at the end of 2003—and this number will already be considerably larger now because we are 7 months into the year; and I might add that it is 2 years to the day since the election of 2002 but that is an aside—there are now 650 more policy analysts than that.