English Bill: General Debate 
English Bill: General Debate 
[Volume:667;Page:14211] 
Hon BILL ENGLISH (Minister of Finance) 
: 
 At the end of next week we will see the implementation of one of the more significant tax reform packages in New Zealand for quite some time. It is an important measure in assisting the rebalancing of the New Zealand economy. The changes on 1 October will reward effort. They will reward work savings and investment and they will help Kiwi families get ahead. Just as importantly the package as a whole will help to deal with the consequences of the appalling mismanagement of this economy through the term of the previous Labour Government. This tax package will openly favour savings investment and exports. It is designed to increase the disincentives to consume too much to borrow too much particularly for property speculation and to exacerbate the imbalances that built up in this economy over the first decade of this century. 
I think a number of New Zealanders will be very familiar with the idea that GST will rise from 12.5 to 15 percent—not from 0 percent to 15 percent as the Labour Party is putting in its pamphlets. When it comes to misleading numbers and implications there is not much that could be more misleading than that. But New Zealanders are probably not quite expecting the reduction in income taxes and it will take a couple of pay— 
Hon Clayton Cosgrove 
: You’re a fool. 
Hon BILL ENGLISH 
: Oh! The member for Waimakariri is really struggling. 
Hon Clayton Cosgrove 
: I raise a point of order Mr Speaker. I raise it in goodwill. I was certainly not calling Mr English a fool; I was calling Mr Quinn a fool. 
Mr SPEAKER 
: Members should not do that to interrupt us. We will not have this ongoing interjection. Members should not interrupt speeches for trivial reasons so I apologise to the Hon Bill English. 
Hon BILL ENGLISH 
: That intervention just shows why the member for Waimakariri is doing so well in the Labour Party. That is his most insightful and thoughtful contribution in this term of office. He is lost without Mike Moore as he has been for about 15 years. 
I am sure people will believe the income tax cuts when they actually see them but here is just one figure: after 1 October 72 percent of New Zealand earners will have a top statutory tax rate of 17.5c. The lower 72 percent of New Zealand earners the lowest earners will have a top statutory tax rate of 17.5c because we believe that incentives matter across the board. One of the features of this package is that when we take account of the range of tax increases that are occurring—because this is a roughly neutral package; tax cuts are offset by other tax increases—we see that the impact of those tax changes is broadly even across the income groups. The Government took the unprecedented step in the Budget of producing a number of measures on the equity impact of the tax cuts. 
Hon Steve Chadwick 
: Deceiving the community. 
Hon BILL ENGLISH 
: It does not do that. New Zealanders can like the Opposition go to www.taxguide.govt.nz put in the figures that reflect their own circumstances and calculate just how well they come out ahead from the tax changes—or otherwise. 
There has been a bit of discussion about inflation. As I pointed out in question time the Reserve Bank forecast for inflation actually showed that the forecast for inflation is now lower than it was a number of months ago. 
Hon David Cunliffe 
: That’s because there’s no recovery. 
Hon BILL ENGLISH 
: The Opposition cannot have it both ways. Those members either have to argue there is high inflation in a growing economy or if the economy is failing they have to accept that there will be lower inflation because of a slower-growing economy. 
The fact is that even with the GST rise the one-off inflation rate will get to a bit over 5 percent. That is about the same rate as it was when Labour left office with no GST increase and no one-off price increase. Of course New Zealanders are wearing the consequences of a number of Labour’s decisions. For instance the increase in accident compensation levies is directly attributable to the reckless incompetent management of the taxpayers’ single largest asset. It is taking us 2 or 3 years to clean up that mess.