Key John: Questions for Oral Answer — Questions to Ministers 
Key John: Questions for Oral Answer — Questions to Ministers 
[Volume:632;Page:4413] 
3.  
JOHN KEY (National—Helensville) 
 to the  
Minister of Finance 
: Does he stand by the comment he made last December when announcing the business tax review that “we envisage some very bold measures emerging. It will not be a matter of tinkering with the tax rules”; if so can he confirm that the measures released in the review are in fact “very bold” and not at all a matter of tinkering? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 The answer is yes and yes. I said also that some may prove to be “too big and too bold for a wide variety of stakeholders including officials”. The business tax proposals are certainly much bolder than those proposed by National last year which merely proposed to lower the rate by 3c with no other moves. 
John Key 
: Has the Minister seen the opinion of numerous tax experts who think the report is superficial and timid including Mike Shaw a senior tax partner at Deloitte who said: “I would have thought on a scale of 1 to 10 it was probably about a 2 or 3 mark.”; in which case is the Minister himself surprised that it took 7 months to produce such a lightweight document? 
Hon Dr MICHAEL CULLEN 
: That member is the last member to talk about being lightweight on matters of this sort. I am not surprised. It is my experience that whenever we spend more money on anything or reduce tax anywhere everybody always asks for more. The problem that that member has not understood is that one cannot give more to everybody on everything people ask for. 
Shane Jones 
: Has the Minister seen any reports expressing disappointment that the report expressly excludes consideration of a payroll tax? 
Hon Dr MICHAEL CULLEN 
: Yes I have seen a number of reports that seem to suggest great disappointment that a payroll tax was not included. Most of those reports seem to come from Mr Key. 
R Doug Woolerton 
: Does the Minister agree that the proposals aimed at incentivising research and development and exports which are endorsed by New Zealand First are of vital importance in improving our competitiveness with Australia and consistent with the policy programme within the confidence and supply agreement? 
Hon Dr MICHAEL CULLEN 
: Yes I do indeed. It is significant that much of the negative comment has come from so-called tax experts who are obsessed simply with the rate not with other ways in which the tax system can help the economy grow. 
John Key 
: How much money does the Minister think he can allocate to the business tax review and to any subsequent changes he might make to personal taxes or is that a minor detail he has not yet bothered to calculate? 
Hon Dr MICHAEL CULLEN 
: Only time will tell but I would note that if we aligned all personal company and other rates to a top rate of 25 percent which some people seem to think should have been in the document the annual cost would be $4.3 billion. 
John Key 
: How can he afford any of the changes proposed in the business tax review let alone his late-night musings last night about personal taxes when he still cannot confirm whether the changes he announced to personal tax thresholds in Budget 2005 will go ahead and they would cost only $360 million? 
Hon Dr MICHAEL CULLEN 
: If the member bothered to read the Budget documentation he would know there is a large difference between Inland Revenue Department and Treasury forecasts of revenue over the next couple of years. Secondly if he cared to open the newspaper he would notice that there was a certain degree of uncertainty in world affairs at the present time which could impact on New Zealand’s economy. Thirdly of course my colleagues will have to show some restraint about future spending proposals if we are to achieve anything in the taxation area. Unlike Mr Key I do not get up and say that we can do everything that everybody wants and it is all just easy. 
Shane Jones 
: What support has he received for the proposals? 
Hon Dr MICHAEL CULLEN 
: I have indeed received some support. In particular I was very pleased to see very positive feedback—though it did not seem to be widely reported—from Mark Weldon of the New Zealand Exchange whom Mr Key was reported as trying to get into Parliament on the National ticket. He commended the focus on productivity and investment. 
John Key 
: Did he find his road to Damascus experience last night on Television One’s  
Close Up 
 programme when he argued the merits and affordability of tax cuts as bizarre as the viewers did his having spent the entire election campaign doing the complete opposite? 
Hon Dr MICHAEL CULLEN 
: What I did say in the election campaign was that $2.3 billion of tax cuts on 1 April this year would have had to be paid for by cuts in health education and superannuation. The National Government in 1999 cut taxes by a small amount and cut New Zealand superannuation to pay for it. Mr Key wants the elderly to pay for a tax cut for him. 
Peter Brown 
: Is it not true that in the confidence and supply agreement that the Government has with both United Future and New Zealand First there is a commitment to look at levels of taxation—to some degree at least? 
Hon Dr MICHAEL CULLEN 
: Indeed that was a condition of the confidence and supply agreements of both New Zealand First and United Future. I worked in great partnership with the leader of United Future the Hon Peter Dunne on the report that we released yesterday. I repeat that it goes much further than National’s policy on corporate taxation because it goes about three times as far in dollar terms as National’s policy does. 
John Key 
: When he said last year that some of the options he was considering might prove to be “too big and too bold for a wide variety of stakeholders” can he confirm that sadly for him the stakeholder who held that view turned out to be none other than his own Prime Minister; and is that not just further evidence that his days as Minister of Finance are over? 
Hon Dr MICHAEL CULLEN 
: No. I do wish Tony Ryall would stop waving his hand at me in that fashion—I could misinterpret it. There is no truth in that story at all. The member has to stop making it up—lying in bed at night and not doing anything useful at all but making up funny stories that appear to give him some pleasure.