English Bill: Questions for Oral Answer — Questions to Ministers 
English Bill: Questions for Oral Answer — Questions to Ministers 
[Volume:642;Page:11990] 
3.  
Hon BILL ENGLISH (Deputy Leader—National) 
 to the  
Minister of Finance 
: Is it still his position that tax cuts would require “severe cuts on expenditure on public services and infrastructure”; if not why not? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 My comment was made in the context of National’s utterly irresponsible 2005 promise to cut taxes by 2½ billion dollars a year from 1 April 2006 rising to $4 billion a year by 1 April 2008 and I absolutely stand by that comment. Given the member’s remark that retirement income provision in New Zealand is too generous one can see where one of the cuts would have occurred. 
Hon Bill English 
: Does the Minister stand by his reported statement today where he is quoted as acknowledging that tax cuts are affordable and that there is fiscal headroom; does that mean he has changed his mind on his position that any tax cut means significant spending cuts? 
Hon Dr MICHAEL CULLEN 
: If the member had bothered to listen to my Budget speech in May this year that is precisely what I said. I might refer him to the Treasury report of 30 November 2006 which has been in the public arena that made it clear the reason why there should not be fiscal loosening was in relation to the macroeconomic situation—a point this member has been making for months that fiscal policy should be tighter—and now he says it should be looser. The National Party now agrees but agrees on the wrong position. 
Hon Mark Gosche 
: What reports has he seen on the advisability of large-scale tax cuts in the current macroeconomic environment? 
Hon Dr MICHAEL CULLEN 
: Along with the many reports from agencies such as the IMF OECD and the Reserve Bank warning that significant stimulus above that currently planned would be inflationary I have also seen a report saying that: “Now is not the time to be giving extensive tax cuts.” That was said by Mr Bill English. 
Rodney Hide 
: Will the Minister be announcing a programme of tax cuts in his next Budget; if not why not? 
Hon Dr MICHAEL CULLEN 
: What I have said on many occasions over recent weeks and months is that in next year’s Budget I expect to announce a programme in relation to revenue over the medium to longer term. I also expect that that programme will be looking at ways in which any tax reductions can be shared more evenly across the population and not simply go to those whom the member represents. 
Gordon Copeland 
: If the Minister still believes that meaningful tax cuts would lead to infrastructural investment cuts why does he not look at alternative ways of funding that investment by for example selling down a minority stake in State-owned enterprises to Kiwis thus building an ownership society reducing tax and growing infrastructural investments—a win-win-win situation for New Zealanders? 
Hon Dr MICHAEL CULLEN 
: Selling off part of the State-owned enterprises to pay for current consumption is not something I think almost anybody in this House supports. I am not sure it is at all consistent with the kind of long-term view one might expect from a spokesperson from a Judaeo-Christian – principled party. 
Hon Bill English 
: Is it now the Minister’s position that any tax reductions by Labour are affordable and there is fiscal headroom for them and any tax reduction by National means that doctors nurses and policemen will be sacked? 
Hon Dr MICHAEL CULLEN 
: It certainly is that if the member cares to lay over the current and last 2 years’ fiscal statements on the economy tax cuts are $2.5 billion on 1 April 2006 rising to $4 billion a year from 1 April 2008. Without significant fiscal loosening without stimulating further inflation large reductions in spending would have had to occur and that is what this member has consistently opposed and told John Key in 2005 was not affordable. 
Hon Mark Gosche 
: How much would it cost to deliver a $10 per week tax cut? 
Hon Dr MICHAEL CULLEN 
: Assuming that was reasonably evenly spread it would cost something over a billion dollars a year—about the same amount invested in KiwiSaver which will lead to significant increases in people’s retirement income. But unlike the investment in KiwiSaver it would of course have fed into further demand in the economy placing further pressure upon monetary policy leading to a longer period of higher interest rates and a higher exchange rate. 
Hon Bill English 
: Does the Minister recall his statement in the 2005 Budget that he would raise income tax thresholds to reduce taxes his repeat of the same promise in the 2006 Budget and then his decision to rescind both of those promises in the 2007 Budget and is he aware that that is why most people do not believe anything he says about tax cuts? 
Hon Dr MICHAEL CULLEN 
: Yes no and yes and of course what the member did in response to the 2005 Budget was to say that those cuts were not worth having. If they were not worth having then I am afraid he got his best wish in that respect. 
Hon Bill English 
: Can we sum up the Minister’s position on tax cuts in this way: that he said he could not and he would not then he could and he would and later he cannot and he shall not but now—[ 
Interruption 
] 
Madam SPEAKER 
: Please continue. 
Hon Bill English 
: I raise a point of order Madam Speaker. Can I start the question again? 
Madam SPEAKER 
: Yes you can. 
Hon Bill English 
: Can we now—[ 
Interruption 
] 
Madam SPEAKER 
: We will have the question in silence so we can get it through. 
Hon Bill English 
: Can we now sum up the Minister’s and Labour’s position on tax cuts in the following way: he said he could not and he would not then he said he cannot and he shall not then he said he could and he would and now he might when it is right and why does he not listen to those New Zealanders who are telling him he is wrong and he is gone and his Labour colleagues who are saying that he is tired and should be fired? 
Madam SPEAKER 
: We will now have the reply in silence. 
Hon Dr MICHAEL CULLEN 
: Like the member of course that was a heavily recycled joke. But what I can say is that my position over the last couple of years can be quoted in the following simple words: “Now is not the time to be giving extensive tax cuts.”—the Hon Bill English. 
Rodney Hide 
: Would the House be correct in concluding from what the Minister said earlier that there will be some announcement of a programme of tax cuts in the next Budget; they might not be say the tax cuts that this particular member would be interested in but there will be some announcement of tax cuts? 
Hon Dr MICHAEL CULLEN 
: I expect that any announcements I would make in next year’s Budget are not likely to lead to a mass break-out of the “Bolly” in Kohimarama.