Norman Russel William: Questions for Oral Answer — Questions to Ministers 
Norman Russel William: Questions for Oral Answer — Questions to Ministers 
[Volume:674;Page:19947] 
8. 
Dr RUSSEL NORMAN (Co-Leader—Green) 
 to the  
Prime Minister 
: Does he stand by his statement that a capital gains tax would be a “dagger through the heart of growth”? 
Rt Hon JOHN KEY (Prime Minister) 
: 
 Yes. I think that the sort of tax system that has six different personal tax rates; GST on some things and not on others; a capital gains tax on some things and not on others; a big gap between the top personal rate the trust rate and the company rate; a tax credit that encourages people to rort the research and development tax system; and a large hole in the revenue base over the next few years leading to even greater Government debt would certainly be a big blow to the economy. Those sorts of policies simply encourage people to spend all their time and effort working around the tax rules rather than getting on and being productive. 
Dr Russel Norman 
: When the OECD recommended that we tax capital gains in a consistent and comprehensive way was it proposing to put a dagger through the heart of the economy? 
Rt Hon JOHN KEY 
: It was proposing to put a capital gains tax on the family home. If that is now Green Party policy and Labour Party policy I cannot wait until Thursday. 
Dr Russel Norman 
: To the Prime Minister—[ 
Interruption 
] 
Mr SPEAKER 
: I want to hear Dr Russel Norman’s supplementary question. 
Dr Russel Norman 
: When Treasury—[ 
Interruption 
] 
Mr SPEAKER 
: I apologise to the honourable member. I had no sooner said I wanted to hear the honourable member’s supplementary question than I got a lot of unnecessary noise from the Hon Tau Henare among others. 
Dr Russel Norman 
: When Treasury recently recommended that we make our tax system fairer by introducing a comprehensive tax on capital gains was Treasury proposing to put a dagger through the heart of our economy? 
Rt Hon JOHN KEY 
: Treasury was proposing a capital gains tax on the family home— 
Hon Member 
: No they never. 
Rt Hon JOHN KEY 
: Yes it was. 
Dr Russel Norman 
: When the—[ 
Interruption 
] 
Mr SPEAKER 
: Now I want the Labour front-bench members also to cease their interjections. I want to hear Dr Russel Norman’s supplementary question. 
Dr Russel Norman 
: When the Capital Market Development Taskforce recommended implementing a capital gains tax to create a level playing field for savings and investment decisions was it proposing to put a dagger through the heart of our economy? 
Rt Hon JOHN KEY 
: Although I do not know the particulars of the task force’s recommendations I can say that if one puts a capital gains tax on farms if one puts a capital gains tax on buildings if one puts a capital gains tax on investment properties but not on family homes and if one puts a capital gains tax on businesses and shares and all of those other things it slows down growth. 
Dr Russel Norman 
: Mr Speaker—[ 
Interruption 
]  
Mr SPEAKER 
: This time the Hon Clayton Cosgrove was the last to keep interjecting when I was on my feet. 
Dr Russel Norman 
: Mr Speaker—[ 
Interruption 
] 
Mr SPEAKER 
: I say to the House that Dr Russel Norman has every right to ask his questions and to be heard. 
Dr Russel Norman 
: Has the Prime Minister seen the evidence that the Australian economy has outperformed the New Zealand economy every year since 1985 the same year that Australia first introduced a capital gains tax which would supposedly put a dagger through the economy? 
Rt Hon JOHN KEY 
: There are many differences between the New Zealand and Australian economies. If New Zealand wants to have the same mining and exploration activity that Australia has the Greens might want to support a reversal of their position on schedule 4. But seeing as they are not having that if we want to adopt Australia’s tax rules then we will have a top personal rate that is a long way away from the company rate; we will see the need for a capital gains tax otherwise there is a gaping big hole; we will have a GST system that is not comprehensive; and we will have a top personal rate at 45 percent. I strongly argue that the tax system this Government reformed in 2010 is the envy of many countries around the world. Capital gains tax is applied in New Zealand on intent rules. Personally I think that with the 33 percent top personal rate aligned with the trust rate a top savings rate aligned with the company rate three-quarters of New Zealanders paying a rate of 17.5 percent or less and half the country virtually not paying tax in my view that sounds like a recipe for growth. If the— 
Mr SPEAKER 
: The House has its own life and there is no way I can stop it; it wants to live its own life. I let the Prime Minister go on a fair while there but I was not going to let him go on any further to comment on the Opposition’s policies. 
Hon Clayton Cosgrove 
: I raise a point of order Mr Speaker. It seems there may be a new convention in the House. I wonder whether you could review the tape and advise us now on your recommendation—what you feel is appropriate—on the length of answers. You have already berated some of our members for the length of their questions. That was an extraordinarily—it was probably record-breaking—long answer which you let go. I would like some advice please. 
Mr SPEAKER 
: I thank the honourable member for his lecture. It may have escaped the notice of the honourable member that the Prime Minister was responding to the question. I accept that the answer was longer than I would have liked to see—I agree with that—but as soon as he started to divert into what I perceived to be criticism of that member’s party I stopped him. I stopped him. It was longer than I would have liked to see but so long as it was providing information in response to the question it was difficult for me to stop it any sooner. I ask Ministers to not go on too long in answering questions. 
Hon Clayton Cosgrove 
: I raise a point of order Mr Speaker. I am not challenging your ruling but am I right in concluding that it is now a new ruling that a Minister can take any length of time he or she likes in answering a question as long as he or she does not criticise the Opposition? Is that now your ruling? 
Mr SPEAKER 
: I think the member is really— 
Hon Clayton Cosgrove 
: I’m asking you a question. 
Mr SPEAKER 
: And I am on my feet. The member will be quiet while I am on my feet. The member is being unnecessarily silly. It does not take a lot of thought to see that the answer was longer than ideal. I have asked Ministers not to do that. If Ministers persist in doing that I will wind them up sooner. But where a question comes from the Green Party and a fair length of time is taken to respond to it I totally draw the line at extra time then being taken to attack the member’s party. That is not on and I stopped the Prime Minister immediately when I perceived that he started to do that. 
Hon David Cunliffe 
: I seek leave for the Prime Minister to conclude his answer with the rest of  
Macbeth  
act 2 scene 1— 
Mr SPEAKER 
: The member will resume his seat and stop trifling with the House. 
Hon Sir Roger Douglas 
: Is it not best that any consideration of a capital gains tax be done not in isolation but in the context of an overall look at business tax not simply a grab for extra money? 
Rt Hon JOHN KEY 
: I think the member makes the right point which is that any tax has to fit into the overall tax system that is in place. Of course one can change the mix of taxes but if one is simply putting a tax on businesses which a capital gains tax in this environment would do and putting up the price of rents which a capital gains tax in this environment would do one has to ask whether one is going to deliver economic growth. The fact is that Treasury documents show that rents will rise by 6 percent. We look forward to having that discussion with “Supremo” on Thursday. 
Dr Russel Norman 
: Does the Prime Minister agree with former Treasury head John Whitehead who said: “At the risk of being chased down by an angry crowd with pitchforks and flaming torches we need to tax more capital gains.”; if not has he now become the leader of this angry mob and is that the right role for a Prime Minister to play in this very serious policy debate? 
Rt Hon JOHN KEY 
: I agree with John Whitehead. That is exactly why the Government in 2010 and 2011 made significant moves to tax capital. That is exactly what happened when the Government put in place a number of different changes including depreciation rules better administration of the intent rules etc. In fact as we know Labour is trying to put up the case that it is solving a problem that it had when it was in office for 9 years but failed to address. The only reason it is putting up a capital gains tax on Thursday is because it cannot get its numbers to add up— 
Mr SPEAKER 
: The Prime Minister is stretching his luck. 
Dr Russel Norman 
: Has the Prime Minister read the latest OECD country report on New Zealand which states: “New Zealand is one of the few OECD countries with no comprehensive capital gains tax on any asset class” and does he not believe that a comprehensive and consistent capital gains tax would be much better than the tangle of rules that he just keeps adding to? 
Rt Hon JOHN KEY 
: I certainly do not believe it would be better. As I say the OECD is also recommending—to quote the member—a “comprehensive capital gains tax”. It is important that all New Zealanders understand what the word “comprehensive” means. The answer is the family home. 
Dr Russel Norman 
: Supplementary question Mr Speaker—[ 
Interruption 
] 
Mr SPEAKER 
: The member will resume his seat immediately and the House will come to order. It is my understanding that the Green Party has used its six supplementary questions today. 
Dr Russel Norman 
: I raise a point of order Mr Speaker. My apologies if you were not informed but we will be using seven today. It should have been given to you earlier. 
Mr SPEAKER 
: The Green Party has only six to use. [ 
Interruption 
] A point of order is being dealt with. The House will come to order. The Green Party can access more than six supplementary questions only if another party has given them supplementary questions. I have had no notice that any other party has given the Green Party any questions today. The Green Party cannot access seven itself because it has an allocation of only six.