Turei Metiria: Oral Questions — Questions to Ministers Questions to MembersText is subject to correctionTurei Metiria: Oral Questions — Questions to Ministers Questions to Members[Sitting date: 10 February 2016. Volume:711;Page:8837. Text is subject to correction.]6.METIRIA TUREI (Co-Leader—Green) to the Prime Minister: Does he stand by his statement to Parliament yesterday that he’s in government to make this country a better place for New Zealanders and their families?Rt Hon JOHN KEY (Prime Minister): Yes.Metiria Turei: Why is his Government’s fiscal priority spending on tax cuts in an election year when it would cost only about $10 million a year to feed lunch to the thousands of kids who go to school hungry every day?Rt Hon JOHN KEY: Firstly the member is making assumptions about what the Government may or may not do in Budget 2017 but I would make the point that this is the Government that has actually ensured that all young New Zealanders who want to have a breakfast in their school may get that and I think about 5 million of those have literally now been provided. This is the first Government in 43 years to raise benefits and obviously that will be beginning on 1 April. This is a Government that is currently spending $4.3 billion per year on benefits $2.4 billion on Working for Families and $1.9 billion on subsidising housing for low-income families. We certainly want a competitive tax rate and a competitive tax system. It might come as a shock to the member that some people out there are very very hard working and just deserve to keep a little bit more of what they earn.Metiria Turei: Why has the Prime Minister prioritised spending on tax cuts in an election year when he could instead properly insulate another 200000 cold damp homes?Rt Hon JOHN KEY: The member is making some assumptions about what may or may not be in Budget 2017 but I would point out that this is a Government that has insulated over 300000 New Zealand homes and is very proud of that record.Metiria Turei: When the cost to our rivers and lakes of pollution from dairy farming is expected to cost around $15 billion to clean up should he not prioritise the passing of tough new laws to stop this destruction rather than prioritise tax cuts for the very rich?Rt Hon JOHN KEY: This Government has done a tremendous amount actually to improve water quality in New Zealand including national standards and other measures that have been taken. In fact if the member wants to stay tuned she will be able to read the new discussion document on freshwater that will be coming out and see many of the policies and ideas that have been canvassed in that. She will probably enjoy reading that and we will personally make sure that a copy gets delivered to her office so that she can read it.Metiria Turei: Much appreciated Prime Minister. Does the Prime Minister agree with the IMF that taking steps to “reduce the tax advantage of housing over other forms of investment” would help to fix the Auckland housing market and also help young families buy into their first home?Rt Hon JOHN KEY: Firstly in relation to tax the Government took steps last year that were aimed primarily at the Auckland housing market but in relation to the brightline test. Secondly the Government has indicated that there will be almost certainly a withholding tax applied to foreigners which we are currently working on. Thirdly it is my personal view that if you really wish to fix the issues in relation to house prices in Auckland then that remains very much a supply issue and that is why the Government’s focus of attention has been there. I think we are starting to see signs of that working with record levels of consenting and building activity over the last 12 months compared with say the last 7 or 8 years. That is more likely to be the most effective form.Metiria Turei: Is it not time that the Prime Minister considered a proper capital gains tax to help level the playing field between those who are lucky enough to own their own home and those families who are still desperate for one given that the IMF recommended reducing the tax advantage to housing?Rt Hon JOHN KEY: I do not support the Greens’ policy which has obviously just been announced by the member of putting a capital gains tax on the family home.David Seymour: How effective have capital gains taxes been at suppressing house prices in Vancouver Sydney and London?Rt Hon JOHN KEY: Highly ineffective. One of the things that you see though in relation to places like Vancouver Sydney Melbourne and the like is that house prices have risen but they have actually risen in part for the same reason as in Auckland: because this is now a place in a country that people want to come to. I remember when utopiawas for a lot of people racing to the Auckland International Airport to get away from Helen Clark’s Government but now—Mr SPEAKER: Order! The question has been answered.Metiria Turei: Why is his Government’s priority tax cuts rather than saving for our future and will he announce the resumption of contributions to the Superannuation Fund before spending on tax cuts for the wealthy?Rt Hon JOHN KEY: The member makes one correct point which is that this Government has been more focused on savings than probably any other Government. Because of its tight fiscal management—and careful fiscal management—debt is likely to be around about $100 billion less than it would have been. What the Green Party does is come to Parliament every single day and tell people that they are going to be able to tax them more and spend more and believe that will have no impact on the indebtedness of New Zealand. Secondly if the member really believes that the answer to all of these issues is to put money into the Superannuation Fund and get some remarkable return then what the member should do is go and borrow $500 billion whack it into the stock market and see how she goes. She might do a little bit better than George Soros but I suspect she probably will not.Metiria Turei: Given that the IMF recommended yesterday new incentives for KiwiSaver to address our “chronically low national savings” does he still stand by his statement that “the removal of the $1000 kick-start contribution will not make a blind bit of difference to the number of people who join KiwiSaver”?Rt Hon JOHN KEY: In my opinion yes and it would not make any difference to national savings because the Government would actually be borrowing that $1000 to give to someone to put into their savings account.Metiria Turei: What was the KiwiSaver enrolment rate this time last year before he cut the $1000 kickstart and what is it now?Rt Hon JOHN KEY: I do not have those numbers with me. The member would need to put that question down in writing or direct it to the Minister of Finance.Metiria Turei: Does the Prime Minister genuinely think that spending on tax cuts is more important than hungry kids polluted rivers and saving for our future?Rt Hon JOHN KEY: The Government spends in the order of $72 billion to $73 billion a year the bulk of which is actually spent on a range of different areas such as obviously health and education and a great deal actually on low-income people and people who are in need. What is absolutely true is that when a country has a competitive tax rate which actually encourages people to work gives them the incentive to save and take on extra employment and actually ensures that inflation does not eat awayat their income because of the bands that we have in our tax system that is a fair model and system. Actually our whole system relies on people getting out of bed in the morning working hard and paying taxes. In my experience there are literally millions of New Zealanders who get up every morning who do not want the Government to give them a handout and certainly just want to have a fair system in which to operate.David Seymour: Can the Prime Minister please confirm that cutting taxes is a priority for this Government; if not can he explain to the House the difference between on the one hand not taxing money in the first place and on the otherspending it?Rt Hon JOHN KEY: The Government has indicated that within the right fiscal parameters it would like to cut taxes for the reason that I think the member has pointed out in his question which is that otherwise the burden of tax on individuals actually goes up over time because of fiscal drag if for no other reasons and actually we want to make sure that we have a competitive tax system. As we know when we have a broad-based low rate that is fairly applied actually what you see is that New Zealanders get on and they pay their tax bills. They do not spend time trying to avoid taxes. What we know actually with the Green Party and to be frank with the Labour Party is that all they know how to do is spend other people’s money when the rest of the country is actually focused on how to make money.