Shirley Ken: Questions for Oral Answer — Questions to Ministers 
Shirley Ken: Questions for Oral Answer — Questions to Ministers 
[Volume:626;Page:20878] 
6.  
Hon KEN SHIRLEY (ACT) 
 to the  
Minister of Finance 
: Following his confirmation that the carbon tax will have an inflationary impact what is the best official estimate of the combined impact on the consumer price index since December 1999 of all Government sector increases in taxes duties levies or charges? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 That calculation is not available from Statistics New Zealand data. The data include local government charges also and they show that the two together had no significant impact on inflation over the period. However those data do not include excise duties as being separately calculated at all—they are included within the price of the goods that they refer to. The data also take no account of the deflationary impact of strong operating surpluses particularly by transfers into the New Zealand Superannuation Fund. 
Hon Ken Shirley 
: Does the Minister accept that inflation would be lower if the Government did not increase petrol taxes and that future inflation would be lower if the carbon tax was canned? 
Hon Dr MICHAEL CULLEN 
: Yes all else being equal. But it is equally true that if increased funding was borrowed to pour into roading without an increase in excise duty that would also have an inflationary impact via interest rates because of the Government running a looser fiscal policy. 
Larry Baldock 
: Does the Minister accept given the inflationary effect of the carbon tax that no regrets - type policies to deal with our Kyoto commitments are a better solution—like United Future’s proposal to be announced on Friday in our environment policy to replant a riparian strip of bush along our streams rivers and lakes that will filter the runoff from agricultural land use—because policies like those would mean we would be doing something positive for our environment as well as earning carbon credits rather than punishing our economy with a tax that may or may not be effective? 
Hon Dr MICHAEL CULLEN 
: Although I am sympathetic to the notion of planting along riparian strips— 
Shane Ardern 
: It’s already happening. 
Hon Dr MICHAEL CULLEN 
: Yes it is already happening in part. Indeed I have done some myself as we happen to have a riparian strip at the back of our place. But apart from that unless the Government is going to pay for it—and I am afraid United Future has already committed too much in tax cuts to have money left over for that—there will be demands as a cost upon homeowners and farmers and then presumably Mr Copeland will argue that there has to be compensation for that. 
Hon Bill English 
: Why does the Minister continue to believe that when he spends New Zealanders’ money every dollar is well spent and it is not inflationary but when New Zealanders spend their own money they always waste it and it is inflationary; and is he starting to realise that many New Zealanders do not share his views? 
Hon Dr MICHAEL CULLEN 
: I have not argued that. What I have argued—and the member should understand this as a former Minister of Finance—is that the looser the fiscal policy is that the Government runs the greater is the inflationary pressure that is created by the Government and the greater is the likelihood therefore of high interest rates. The ACT party of course has the very strange view that one can basically abolish taxation and still continue with expenditure and that somehow that will be non-inflationary. I suggest that a long period of discussion with a former Governor of the Reserve Bank might disabuse him of that strange idea. 
Stephen Franks 
: Why does the Minister not accept what the evidence shows: that it is the explosion in Government spending that is driving inflation and interest rates and that the best remedy for that would be to reduce taxes and spending not to increase them? 
Hon Dr MICHAEL CULLEN 
: For the last 3 years that member and every member on the Opposition side of the House have attacked me for running too contractionary a fiscal policy. They have suddenly decided sometime out from an election that we have been running an expansionary fiscal policy. 
Hon Ken Shirley 
: Why does the Minister not accept that giving taxpayers back their own money would be no more inflationary than the Government taking that money and spending it for them? 
Hon Dr MICHAEL CULLEN 
: The member is absolutely right with this one proviso: as long as basically for every dollar reduction in revenue there is a reduction in expenditure. That of course is precisely the point that we have been making on the Government side of the House for the last week with I think some impact on commentary from outside the House.