Parker David: Questions for Oral Answer — Questions to MinistersText is incorporated into the Bound VolumeParker David: Questions for Oral Answer — Questions to Ministers[Sitting date: 04 June 2013. Volume:690;Page:10631. Text is incorporated into the Bound Volume.]5.Hon DAVID PARKER (Labour) to theMinister of Finance: Does he stand by his statement that the proposed reductions in ACC levies is a “stealth tax cut”; if so does he agree that by keeping levies higher than they need to be ACC is operating as a stealth tax; if not why not?Hon BILL ENGLISH (Minister of Finance): Yes I stand by my statement in the context that it was made where the member labelled ACC levies as a stealth tax. I do not agree with the member’s second point. Last month the Budget signalled ACC levies will fall by $300 million in 2014-15 and by around a billion dollars in 2015-16. This is a direct result of a much-improved performance by ACC. The Government has been keen to ensure that its much-improved performance on rehabilitation which is the core of its activities is well bedded-in before we have considered passing some of the benefits of that back to households and businesses.Hon David Parker: Is it correct that if he implemented the reduction of $700 million in ACC levies for this year and next as recommended by ACC an operating balance before gains and losses surplus would not have been forecast for 2014-15 in his most recent Budget?Hon BILL ENGLISH: No not necessarily because as I pointed out to the member before there is no single decision that means the Government achieves surpluses and it makes its Budget decisions as a package—for instance you could argue that if we had not given schools up to $80 million in increased operational grants we would not have posted a surplus. But of course that is not how the Government approaches the issue. The Government has had a different view from ACC about the future funding track because we wanted to ensure that its better performance was well embedded and that we could reduce the number of changes in the levy—for instance not have levies go down and then have to put them up again.Hon David Parker: Well then if other revenue and other expense items were unchanged but he implemented the reduction of ACC levies as recommended by ACC is it correct that an operating balance before gains and losses surplus would not have been forecast for 2014-15 in his most recent Budget?Hon BILL ENGLISH: No because we could say that about every single decision as I have explained to the member. What we do know for sure is that if ACC had continued to be run as it was by the Labour Party as a political tool we would be nowhere near surpluses today because it was losing hundreds of millions of dollars.Hon David Parker: I raise a point of order Mr Speaker. My question could not have been more specific—Mr SPEAKER: Order! And I invite the member to ask his question again.Hon David Parker: If all other revenue and expense items were left unchanged and if he had implemented the reduction of ACC levies as recommended by ACC is it correct that an operating balance before gains and losses surplus would not have been forecast for 2014-15 in his most recent Budget?Hon BILL ENGLISH: No for exactly the reasons I stated in the previous answer when I also said no. That is because that is not the way the Government makes Budget decisions—either this Government or the previous Government. What I can also repeat is that if we had left ACC running as it was under the previous Labour Government losing billions of dollars a year we would certainly not have surpluses.Hon David Parker: I raise a point of order Mr Speaker. Again my question has not been addressed. My question said: “All other things being equal if you changed this if you had accepted the ACC advice would you not have reached surplus?”. The Minister does not want to admit it but that question is directed specifically and I would like the Minister to be required to answer that question not what he wanted the question to be.Mr SPEAKER: I accept that the answer is not according to the design or the wishes of the member but the Minister when he started his answer disputed that. He simply said no and then gave some reasons.John Hayes: What reports has he seen on proposed stealth taxes?Hon BILL ENGLISH: I have seen a proposal to increase taxes under the emissions trading system by up to $500 per household. This report has puzzled me because the same people who are proposing to put up taxes on electricity by $500 per household have told the public they are going to reduce the cost of electricity by $300 per household. Both of those policies cannot be right.Hon David Parker: Is the Minister aware that if the system of pricing electricity moved to a basis of production cost plus return on capital the cost of carbon would not flow through to all electricity and the total cost of carbon and electricity prices would decrease?Hon BILL ENGLISH: No I am not sure what the member meant and I was not aware of it. I was not aware of it. What I can say is that it is puzzling that the same two parties are promising to put up electricity prices by $500 a year with one policy and reduce it by $300 a year with another policy.Sue Moroney: Why did he ignore official ministry advice in the regulatory impact statement that keeping ACC levies artificially high would “negatively impact on … economic growth and reducing costs for business.”?Hon BILL ENGLISH: The Government considered that advice but did not agree that the levies were artificially high. What it did agree on is that ACC had done a good job of turning round the fact that under the previous Government rehabilitation rates for injured workers got significantly worse and that meant that ACC was making large losses. It has over the last few years significantly improved the rehabilitation rates. Now that we believe that the damage done by Labour has largely been fixed we can start to reduce the levies.