Key John: Questions for Oral Answer — Questions to Ministers 
Key John: Questions for Oral Answer — Questions to Ministers 
[Volume:625;Page:20456] 
12.  
JOHN KEY (National—Helensville) 
 to the  
Minister of Finance 
: Will his 2005 Budget contain personal tax cuts similar to those announced by his colleague in Australia; if not why not? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 The member will have to wait until next week’s Budget when all will be revealed. 
John Key 
: Does the Minister stand by his press release of 24 March titled  
Surplus myth destroyed by data 
 where he said in relation to tax cuts: “The budget will show how unsustainable such cuts would be over the longer term. The current account deficit shows how foolish they would be in the short term”; how does he reconcile that with his odd implication that his Budget could contain tax cuts—which his press release clearly rules out—because they certainly cannot both be correct? 
Hon Dr MICHAEL CULLEN 
: The member will have to wait and see but I will point out to him as I have already pointed out to Mr Hide that the Budget will show that over time the gross debt to GDP ratio will flatten right out and therefore further structural changes will be very difficult. But if he wants to understand why when the economy is somewhat overheating it is unwise to pump it up further I suggest he talk to the former Governor of the Reserve Bank. 
John Key 
: Is it not true that the underlying aim of Peter Costello’s Budget last night was to make Australia an even more attractive destination for skilled and professional workers in which case for how long is this Government going to sit back and allow the wage gap between the average New Zealand worker and the average Australian worker to continue to widen? 
Hon Dr MICHAEL CULLEN 
: Mr Costello was proud to announce that he has achieved his aim that 80 percent of Australians pay a tax rate of no more than 30c in the dollar—not of course including the Medicare surcharge or the compulsory superannuation scheme both of which might be regarded as forms of taxation. In New Zealand 75 percent pay no more than 21c in the dollar. If tax was the driver then people would be coming back in the opposite direction from Australia to New Zealand. The second point I would say is that I know that the member was overseas for a long time making money out of nothing as paper-pushers do in the financial world; in the real world one has to earn an increase in income not just pay oneself an increase. 
John Key 
: Does he agree with Brendan O’Donovan Westpac’s Chief Economist who in an article today “Can Spend But Can’t Cut Taxes—Yeah Right!” wrote: “The Finance Minister reiterated his view that there is no room for tax cuts without long-term spending cuts or increases in debt but we have yet to see the analysis to suggest this is the case. Furthermore the massive increase in spending we’ve seen in recent years would suggest there has been considerable scope for reduced taxes.”? 
Hon Dr MICHAEL CULLEN 
: I refer the member to two counterfactual arguments. Firstly in the United States of course substantial structural tax cuts have not been accompanied by increased growth—rather by massive burgeoning fiscal deficits. Secondly if the member cared to look at the rest of the Australian Budget he would find a number of cuts in health spending. I am pleased to announce therefore that that is clearly now National Party policy.