Key John: Questions for Oral Answer — Questions to Ministers Questions to Members 
Key John: Questions for Oral Answer — Questions to Ministers Questions to Members 
[Volume:643;Page:12762] 
2.  
JOHN KEY (Leader of the Opposition) 
 to the  
Prime Minister 
: Does she stand by her statement in regard to a personal tax cut: “I’d have liked to have done it earlier and I think all our Cabinet and caucus would have but we’ve never had advice which made that possible.”; if so why? 
Rt Hon HELEN CLARK (Prime Minister) 
: 
 Yes—and I am sure those members are going to like the answer—because our Government has not been prepared to sacrifice investment in areas like health and education to fund tax cuts. That is National Party policy. 
John Key 
: Has Treasury ever advised the Minister of Finance or any other Ministers that personal tax cuts were possible; if so when was the earliest this advice was given? 
Rt Hon HELEN CLARK 
: Probably to earlier generations; but most specifically I can refer to the 2005 briefing papers to incoming Ministers which advised that there was scope to redirect some of the money set aside for new spending into tax cuts. That would have meant that our Labour-led Government could not have implemented policies like interest-free loans for students 20 hours’ free early childhood education completing the roll-out of cheaper doctors’ fees giving rates rebates to older citizens and supporting our families. We put those areas ahead of National Party - style tax cuts. 
Tim Barnett 
: What progress has been made so far on reducing taxes? [ 
Interruption 
] 
Madam SPEAKER 
: We will be having the answer in silence. 
Rt Hon HELEN CLARK 
: I know this is an answer the National Party will not like because the Labour-led Government has reduced taxes on families it has reduced taxes on business and it has reduced taxes on savers. Those reductions will amount by 1 April next year to $4 billion per annum. The National Party voted against every single cent of every cut. 
John Key 
: Is it the case therefore that the Prime Minster should have sought advice from her own Minister of Finance because in May 2003 Treasury advised the Minister of Finance that the surplus was so big the Government could cut taxes without sacrificing the rest of its fiscal objectives and it went on to say: “This healthy fiscal financial position presents the Government with scope to cut taxes increase expenditure and build up financial assets.”? 
Rt Hon HELEN CLARK 
: The member will recall that in the 2004 Budget this Labour-led Government delivered substantial tax cuts to families which the member voted against. 
Tim Barnett 
: What feedback has the Prime Minister received about the tax cuts already available through Working for Families? 
Rt Hon HELEN CLARK 
: I have received overwhelmingly positive feedback from families about those Working for Families tax cuts but I have seen reports that suggest the National Party now cannot work out whether it supports them. I have seen a report that Mr Key said at the time of Budget ’05 that middle-income New Zealanders eligible for Working for Families would probably get less under National. By  
Morning Report 
 yesterday he had changed his tune but then we do find he has difficulty singing in the same key for long. 
John Key 
: When did the Prime Minister’s Government first become aware that increases in tax revenue and therefore the Government’s surpluses were structural in nature rather than cyclical? 
Rt Hon HELEN CLARK 
: At the weekend I referred to the Government—[ 
Interruption 
] Madam Speaker it is— 
Madam SPEAKER 
: It is impossible to hear the answer. 
Rt Hon HELEN CLARK 
: Even the National Party must have worked out that tax revenue has consistently come in well over forecast because Treasury’s model has got it wrong. The 2005 Budget forecast for the June 2007 year forecast a deficit of $1.6 billion. Even in the 2006 Budget the forecast for the June 2007 year was a deficit of $1.5 billion. Earlier in October that deficit came out not as a deficit but as a surplus of $2.6 billion. Treasury has now advised Dr Cullen that it is forecasting an increase in revenue over the forecast period and the National Party will just have to wait for the updates in the fiscal situation to see the full picture. 
John Key 
: I raise a point of order Madam Speaker. I wonder whether you could ask the Prime Minister to answer my question. I asked a very specific question: when did Treasury advise the Government? That has been the premise on which the Government has said there was advice from Treasury that surpluses went from being cyclical to structural. I asked the Prime Minister a very direct question about when she received that advice. 
Madam SPEAKER 
: I listened very carefully to the answer—that which I could hear over the barracking—and it seemed to me the Prime Minister addressed the question. 
John Key 
: On what date did the Prime Minister receive the advice from Treasury that surpluses had now moved from being cyclical to structural which would allow the funding of personal tax cuts under a Labour Government? 
Rt Hon HELEN CLARK 
: I have received advice from the Minister of Finance whom I trust—unlike John Key not being able to trust Bill English I trust the Minister of Finance— 
John Key 
: I raise a point of order Madam Speaker. We have had two goes at this now. I asked the Prime Minister for the specific date on which she received that advice. I wonder whether you could ask her to answer the question. 
Madam SPEAKER 
: If the member would enable the Prime Minister to complete her answer I am sure she will. 
Rt Hon HELEN CLARK 
: In recent weeks Dr Cullen has advised me that Treasury’s advice to him is that it is forecasting an increase in revenue across the forecast period which is a structural movement in revenue not a cyclical one. 
John Key 
: Is the Prime Minister aware that in 2003 the Minister of Finance in fact said that Treasury had given him advice that there had been “a structural increase in tax revenue which made more money available than was flagged in Budget 2003 while still delivering on their fiscal objectives”; and is it not a fact that Michael Cullen had years earlier received advice from Treasury that the surpluses were structural and the reason tax cuts did not happen is that Michael Cullen and Helen Clark did not want to deliver them? 
Rt Hon HELEN CLARK 
: I have already pointed out today that the National Party has voted against the whole package of tax cuts delivered by the Labour Government. Because the Labour Government has run a strong economy and surpluses it has been able to cut taxes for families taxes for business and taxes for savers. It has cut taxes on the racing industry as well. The National Party has consistently voted against tax cuts. 
Hon Member 
: Oh they’re in trouble! 
Hon Dr Michael Cullen 
: The Prime Minister is never in trouble when answering Mr Key—that much is clear. I am interested in the answer to the next question: has the Prime Minister received any reports that Mr Key continues to oppose Working for Families as too generous to people and can she confirm that Working for Families delivered $100 a week to the average Kiwi family which could not have been delivered by changes to tax rates? 
Rt Hon HELEN CLARK 
: It is absolutely true that when the Labour Government made its choices about where to cut taxes it decided to cut them first for families rather than spreading the amount of money available thinly across every other taxpayer. That was our judgment and we stand by it because families carry out arguably the most important job in our society. My understanding is that the National Party’s position—articulated it is true by Mr English not Mr Key—is that our Government invests too much in Working for Families and indeed too much in superannuation and savings. 
John Key 
: Does the Prime Minister agree with the Minister of Finance’s opinion on future tax cuts that under Labour “individual amounts are not likely to be large”; if so why? 
Rt Hon HELEN CLARK 
: I am sure that under a Labour-led Government we would not be proposing to throw New Zealand’s Government books into the red to the tune of $6 billion per annum which is what National would have had New Zealand’s cash deficit at by this year. 
John Key 
: If the Government’s decision to now look at personal tax cuts is as a result of large surpluses does she still agree with the Minister of Finance whose analysis of last year’s fiscal position went something like this: “Eight and a half billion … and still no tax cuts? So? What’s the connection between the two? None right.”? 
Rt Hon HELEN CLARK 
: It really is quite disturbing when a leader of the National Party does not know—[ 
Interruption 
] 
Madam SPEAKER 
: Please be seated. It is impossible to hear the answer. This is the last warning. Those with the loudest voices will be leaving the Chamber next. 
Rt Hon HELEN CLARK 
: It really is disturbing to hear a Leader of the Opposition so financially illiterate that he does not know the difference between a cash surplus and the operating balance. 
Hon Dr Michael Cullen 
: Can the Prime Minister confirm that the briefing to the incoming Minister in 2005 said that the Budget allowance was $1.9 billion a year and that any tax cuts should be paid out of that; and that National was promising $2.5 billion a year in its first year? 
Rt Hon HELEN CLARK 
: I certainly can and I can say on the basis of the financial forecasts that were put out at the time of the 2005 Budget that National was prepared to run by this year cash deficits of around $6 billion a year. It has always been prepared to borrow for tax cuts and to cut basic services for families and older citizens. 
Rt Hon Winston Peters 
: Does the Prime Minister not think it is a better idea rather than to have a so-called tax cut regime of the type National is promising—which will end up in the hands of foreign banks because as people downsize their mortgage that is where the money will go—[ 
Interruption 
] Well I know why Maurice is laughing; it is because he is in their pockets— 
Madam SPEAKER 
: That last comment is out of order and the member knows it. Would he please withdraw. 
Rt Hon Winston Peters 
: I withdraw and apologise. 
Hon Maurice Williamson 
: I raise a point of order Madam Speaker. I take high offence at that. I did not even slightly snigger at Mr Peters’ comments. I made no comment whatsoever. For him to bring me into the debate and then to accuse me of being in anybody’s pockets is outrageous and the member has been here long enough to know that he should have to go. 
Madam SPEAKER 
: I know and I intervened on your behalf. The member has withdrawn and apologised. Would the member please ask his question. 
Gerry Brownlee 
: Paying off a foreign mortgage is not good for the country? How does that work? 
Rt Hon Winston Peters 
: No no what I am saying is that if we are going to spend all our money by handing it over to foreign bankers how will that advance the domestic economy? It is only a right-wing moron who would think that. It is only a right-wing loony-tune who would see any sense in that. I am saying—[ 
Interruption 
] 
Madam SPEAKER 
: Order! 
Rt Hon Winston Peters 
: Madam Speaker I know they are all getting very excited but I want to ask the Prime Minister why would it not be a smarter idea in the interests of the growth of New Zealand’s economy and higher wages and higher incomes and therefore in the end a greater tax take to target tax cuts towards New Zealand’s exporters who are the people on whose backs we live or die? 
Rt Hon HELEN CLARK 
: As the member will recall the Government this year did offer very substantial tax cuts for business and the whole package included incentives for research and development and also substantial export grants for up-and-coming exporters. I believe that is a far better decision to have made this year on the advice we had available to us about revenue than simply just cutting personal taxes. 
John Key 
: In preparing her conference speech this year which praised tax cuts did the Prime Minister get any advice from the Labour Party leader who announced at Labour’s 2000 conference that “Tax cuts are a path to inequality. They are the promises of a visionless and intellectually bankrupt people.”? 
Rt Hon HELEN CLARK 
: That would be true of every tax cut the National Party has ever offered. 
John Key 
: Which announcement surprised the Prime Minister more: the one from Treasury that surpluses had moved from being cyclical to structural or the one from Charles Chauvel’s office telling us that he had been promoted? 
Rt Hon HELEN CLARK 
: I would not be surprised about the penny dropping at Treasury after all these years that the revenue was running well ahead of forecast. I can say that I am extremely fortunate to have ambitious people on this side of the House who can be Ministers—unlike the tired old retreads of the 1990s sitting over there.