Cunliffe David: Questions for Oral Answer — Questions to Ministers 
Cunliffe David: Questions for Oral Answer — Questions to Ministers 
[Volume:668;Page:14849] 
7. 
Hon DAVID CUNLIFFE (Labour—New Lynn) 
 to the  
Minister of Finance 
: Why did he continue with his 2010 tax cuts when the Government has a cash deficit of $9 billion? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 Because the package of tax cuts will lift New Zealand’s rate of growth by improving the incentives to work to save to invest and to export and to help a much-needed rebalancing of this economy. The tax changes have little bearing on the Government’s cash deficit as they are broadly fiscally neutral and are revenue-positive by the end of the forecast period and in future years. Of course they will leave the vast majority of New Zealanders a bit better off. 
Hon Shane Jones 
: Can he confirm why his old-fashioned recipe of borrow and hope is going to generate jobs and lead to the creation of new firms in the face of tax revenue declining and the Government borrowing over a billion dollars a month as he confirmed this morning at the Finance and Expenditure Committee? 
Hon BILL ENGLISH 
: No I cannot confirm any of that because it is all wrong. It is a bit rich being lectured by Labour on borrow and hope. It is a bit like being lectured by a gambling addict on going to the pokies. 
Craig Foss 
: Did the Government at any stage borrow in order to give tax cuts? 
Hon BILL ENGLISH 
: The answer to that of course is no. The income tax cuts of April 2009 were fully funded by the accompanying changes to KiwiSaver and the research and development tax credit. The 2010 income tax cuts are funded by an increase in GST and by a tightening of the tax regime on foreign investors smokers and people who own investment property. Once this policy is fully in place it will produce an annual revenue gain of $175 million a year in 2013 2014 and beyond then. Our tax cuts have been good for economic growth and fair for New Zealanders. 
Hon David Cunliffe 
: I seek leave to table a copy of Budget 2010 showing—[ 
Interruption 
] 
Mr SPEAKER 
: It is a shame that the Minister of Finance interjected then; otherwise Mr Cunliffe might have been taking an early shower. When I get to my feet he will sit immediately. The member knows that we do not table copies of the Budget or waste time during question time on that sort of thing. 
Stuart Nash 
: Given that he admitted to the Finance and Expenditure Committee today that his tax cuts were not stimulatory can he explain to the House why according to Budget 2010 documents he is borrowing ever-increasing amounts of money to pay for them? 
Hon BILL ENGLISH 
: No the member is wrong. The Budget documents do not show that. 
Hon David Cunliffe 
: Oh yes they do. 
Hon BILL ENGLISH 
: Well no they do not show that. They show that over 4 years they are broadly fiscally neutral and that beyond year 4 there is actually a gain of about $175 million a year. I do not know which Budget the member is reading. 
Craig Foss 
: What impact did the 2010 tax package have on income distribution? 
Hon BILL ENGLISH 
: As demonstrated in Budget 2010 and the background documents the Government spent some time focusing on the distributional impacts of the tax package. It shows that the gain to the lowest one-third of households by income was about the same as the gain to the highest one-third of earners. Both groups had their real after-tax incomes lifted by 0.7 percent. If Labour really thought the tax cuts were unfair it would campaign to repeal them. Of course they are not. 
Brendon Burns 
: Can the Minister tell New Zealand’s hard-working families why they are paying more GST on everything they buy when he gets $200 a week in tax cuts and is borrowing nearly $300 million a week to pay for such cuts? 
Hon BILL ENGLISH 
: The Government is not borrowing anything for tax cuts; it has been a broadly fiscally neutral package. In fact the Opposition has been complaining that we put GST up in order to pay for the tax cuts so it cannot have it both ways. These are fair tax cuts but more important they help to rebalance this economy after a decade of mismanagement in which New Zealanders were misled into believing that borrowing spending and speculating on houses were the path to wealth when they are not. 
Hon David Cunliffe 
: Given that he admitted to the Finance and Expenditure Committee today that it cost $450 million in year 1 and $1.045 billion over 4 years to fund his tax cuts and that the reason he continued with the tax cuts in April 2009 which he knew the country could not afford was that it was a National Party election promise why did he raise GST when his Government had promised not to? 
Hon BILL ENGLISH 
: All the member’s assertions are wrong. As I explained to the member the tax cuts in April 2009 were actually offset by the changes in KiwiSaver and the research and development tax credit which the Opposition often refers to and the tax cuts in April 2010 were fiscally neutral. We are very proud that we have implemented tax cuts that favour saving exporting investing and creating jobs whereas the Labour Party favours consumption borrowing and excessive Government spending.