Key John: Questions for Oral Answer — Questions to Ministers 
Key John: Questions for Oral Answer — Questions to Ministers 
[Volume:632;Page:3757] 
1. JOHN KEY (National—Helensville) 
 to the  
Minister of Finance 
: Does he agree with the Minister of Revenue’s assessment that “Our major trading partner Australia is already looking at significant tax cuts to both business and private incomes in next year’s Budget and we simply cannot afford to ignore what Canberra is planning.”; if not why not? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 The excellent Minister’s statement last December was made referring to the 2006 Australian Budget which did not reduce business taxation significantly despite earlier expectations to the contrary. 
John Key 
: Has he seen the Statistics New Zealand data released today that show net migration from New Zealand to Australia has doubled over the last 3 years and now on average 650 people a week shift across the Tasman; does he consider the growing after-tax wage gap between the two countries to be one of the significant driving forces behind those trends? 
Hon Dr MICHAEL CULLEN 
: No not yet. I have however seen the data for the 1990s which show that every year out-migration to Australia increased peaking at a 40000 out-migration despite the fact that there were two rounds of tax cuts following which out-migration increased on both occasions. 
Hon Mark Gosche 
: Has he received any advice on why statutory corporate rates do not provide an accurate representation of the overall rate of corporate taxation? 
Hon Dr MICHAEL CULLEN 
: Yes. I have been advised that many of our major trading partners including Australia levy on business such taxes as comprehensive capital gains taxes payroll taxes and stamp duty on commercial transactions in addition to company tax. 
John Key 
: Is he aware of the latest figures showing that the gap between the take-home income of the average Australian worker and the average New Zealand worker which is currently 33 percent will in 10 days’ time widen when the new Australian tax rates become effective to a gap of 37 percent; can he tell the House what he will do to address that yawning chasm? 
Hon Dr MICHAEL CULLEN 
: The one thing that obviously cannot be done is to reduce tax rates to the point where that would actually close the net after-tax gap between the two countries. It is actually around growth that the difference is going to be closed over the long term. But even on the most optimistic forecast that would take quite a long time. 
Hon Mark Gosche 
: Has he seen any other reports on the impact of the tax changes announced in the recent Australian Budget? 
Hon Dr MICHAEL CULLEN 
: Yes I saw two reports both of some significance. One was a net 3 percent swing to the Australian Labor Party Opposition and the second was that two-thirds of Australian voters would have preferred more spending on services rather than the tax cuts—a result mirrored very much by a recent poll in New Zealand. 
John Key 
: Is he aware that the trans-Tasman wage gap has got so wide that the after-tax income of the average Australian worker the equivalent of NZ$45000 is now higher than the pre-tax income of the average New Zealand worker at $43000; if so does that concern him? 
Hon Dr MICHAEL CULLEN 
: I am aware of differences in that respect. I am also aware the Australians have higher tax rates on upper incomes and have a range of business taxation—including of course a compulsory superannuation levy of 9 percent of income—which widens their tax wedge. In New Zealand the tax wedge on the average worker is the third-lowest in the OECD. 
John Key 
: Does the Minister think in light of Australia’s new tax cuts that the Australian Tourist Board’s new advertising slogan will change to “Move to Australia and get your tax paid free”? 
Hon Dr MICHAEL CULLEN 
: That would depend of course on whether the board continues to hire a New Zealand company to carry out its publicity for it—because a New Zealand company was better than any Australian opposition for doing the campaign. 
John Key 
: Is he aware that if a single-earning family with two children on the average household income of $60000 were to move to Australia and keep the same salary not only would they pay less income tax but they would also get more from the Australian family tax benefit than they would from his Working for Families? 
Hon Dr MICHAEL CULLEN 
: That just shows the importance of extending the Working for Families programme which that member opposed attacked and said should not apply to people on middle incomes. That was an own goal if ever there was one.