Lotu-Iiga Peseta Sam: Questions for Oral Answer — Questions to Ministers Questions to Members 
Lotu-Iiga Peseta Sam: Questions for Oral Answer — Questions to Ministers Questions to Members 
[Volume:663;Page:11597] 
2. 
PESETA SAM LOTU-IIGA (National—Maungakiekie) 
 to the  
Minister of Finance 
: How will the Budget help give New Zealand economic advantages over other countries which are being forced to increase income taxes and go deeply into debt? 
Hon BILL ENGLISH (Minister of Finance) 
: 
 New Zealand has an opportunity to stand out from other countries in the next few years by having lower income taxes and bringing public debt under control. The Budget tax package leaves the vast majority of New Zealanders better off. It tilts the economy towards savings productive investment and exports and away from borrowing housing speculation and the excessive Government spending that were the hallmarks of Labour’s term in office. If we had followed its policies we would not be able to stand out compared with other countries. 
Peseta Sam Lotu-Iiga 
: After the Budget tax package what will be the top marginal tax rate faced by New Zealanders on the average wage and how does this compare with the marginal tax rates of average wage earners in other countries? 
Hon BILL ENGLISH 
: From 1 October excluding tax credits someone on the average wage will pay a top marginal rate of 17.5 percent. In fact 73 percent of all New Zealand income earners will face a top statutory tax rate of 17.5 percent or less. In the OECD the average tax rate on the average wage is 36 percent. In the United Kingdom it is 32 percent and even in Australia it is 26 percent. So by comparison with those countries we have a much lower statutory tax rate on the average wage. 
Hon David Cunliffe 
: What would have been the economic advantages to New Zealand had the previous Labour Government cut taxes to the extent that the then Opposition National Party advocated prior to the global economic crisis and had not instead paid net debt down to zero? 
Hon BILL ENGLISH 
: The problem with the previous Labour Government was that it let spending get out of control and that made it difficult for that Government to cut taxes. 
Hon David Cunliffe 
: Why does the Minister allege that the previous Labour Government let spending get out of control when Government expenditure as a proportion of GDP is forecast to rise under his administration to 33 percent of GDP? 
Hon BILL ENGLISH 
: The member should consult the Labour spin doctors who are all trying to argue exactly the opposite of that. The member says our expenditure is going to rise as a proportion of GDP. Labour’s general line contradicts him and says it is going to drop because we are slashing and burning. 
Peseta Sam Lotu-Iiga 
: How does the Government’s current gross debt level compare with that of the same countries that the Minister referred to earlier? 
Hon BILL ENGLISH 
: When the Government took office we were facing forecasts of ever-growing debt. This situation was first outlined in Labour’s last Budget where it showed a decade of deficits and rising debt. New Zealand’s gross debt as measured by the OECD’s internationally comparable data is about 30 percent of GDP. Government gross debt in the United States is 90 percent of GDP and it is 80 percent in the United Kingdom. Australia however has gross Government debt of 20 percent—so it is better than New Zealand—because it did not squander the last decade. 
Hon Sir Roger Douglas 
: Can the Minister explain to the House why the fact that New Zealand is going more deeply in debt—$23 billion or 133 percent over the last 2 years—and substantially increasing indirect taxation is somehow not a problem and is better than what other countries are doing by going more deeply in debt and increasing income tax? 
Hon BILL ENGLISH 
: The Government has made some considered and balanced decisions about the extent to which it is willing to cut Government spending in a recession. We could have cut spending considerably. That would have dealt to some extent with the problems that the member is talking about but we decided to continue with Government spending to underpin growth in the economy and to protect people from the sharp edges of the recession. However as we come out of the recession we need to have significant fiscal constraint to prevent public debt from rising too rapidly. The Government is borrowing $240 million per week every week for the next 3 years to finance its deficits and refinance existing debt. 
Peseta Sam Lotu-Iiga 
: What economic forecast did the Government inherit when it took office just 18 months ago? 
Hon BILL ENGLISH 
: Far from one of a golden economy we actually inherited deeply worrying forecasts starting in the 2008 Budget under the previous Government which featured sharply rising debt a deepening recession and billions of dollars of unfunded Government spending commitments. In Budget 2009 we got on top of those difficult circumstances but now we need to make further progress as we have done in the 2010 Budget.