﻿Mr SPEAKER: Question No 6, Metiria Turei.
METIRIA TUREI (Co-Leader—Green) to the PM: Does he stand by his statement
to Parliament yesterday that he’s in government to make this country
a better place for NZers and their families?
Rt Hon JOHN KEY (PM): Yes.
Metiria Turei: Why is his Government’s fiscal priority
spending on tax cuts in an election year, when it would cost
only about $10 million a year to feed lunch to the thousands of kids
who go to school hungry every day?
Rt Hon JOHN KEY: Firstly, the member is making assumptions
about what the Government may or may not do in Budget 2017,
but I would make the point that this is the Government
that has actually ensured that all young NZers who want to have a breakfast
in their school may get that, and I think about 5 million of those
have, literally, now been provided.
This is the first Government in 43 years to raise benefits,
and obviously, that will be beginning on 1 April. This is a Government
that is currently spending $4.3 billion per year on benefits,
$2.4 billion on Working for Families, and $1.9 billion on subsidising housing
for low-income families. We certainly want a competitive tax rate
and a competitive tax system.
It might come as a shock to the member that some people out there
are very, very hard working and just deserve
to keep a little bit more of what they earn.
Metiria Turei: Why has the PM prioritised spending
on tax cuts in an election year, when he could, instead,
properly insulate another 200,000 cold, damp homes?
Rt Hon JOHN KEY: The member is making some assumptions
about what may or may not be in Budget 2017,
but I would point out that this is a Government
that has insulated over 300,000 NZ homes
and is very proud of that record.
Metiria Turei: When the cost to our rivers and lakes of pollution
from dairy farming is expected to cost around $15 billion to clean up,
should he not prioritise the passing of tough new laws
to stop this destruction rather than prioritise tax cuts for the very rich?
Rt Hon JOHN KEY: This Government has done a tremendous amount, actually,
to improve water quality in NZ, including national standards
and other measures that have been taken.
In fact, if the member wants to stay tuned, she will be able to read
the new discussion document on freshwater that will be coming out
and see many of the policies and ideas that have been canvassed in that.
She will probably enjoy reading that, and we will personally make sure
that a copy gets delivered to her office so that she can read it.
Metiria Turei: Does the PM agree with the IMF that taking steps
to “reduce the tax advantage of housing over other forms of investment”
would help to fix the Auckland housing market
and also help young families buy into their first home?
Rt Hon JOHN KEY: Firstly, in relation to tax,
the Government took steps last year that were aimed primarily
at the Auckland housing market, but in relation to the brightline test.
Secondly, the Government has indicated that there will be,
almost certainly, a withholding tax applied to foreigners,
which we are currently working on.
Thirdly, it is my personal view that if you really wish to fix the issues
in relation to house prices in Auckland, then that remains very much a supply issue,
and that is why the Government’s focus of attention has been there.
I think we are starting to see signs of that working, with record levels
of consenting and building activity over the last 12 months,
compared with, say, the last 7 or 8 years. That is more likely
to be the most effective form.
Metiria Turei: Is it not time that the PM considered
a proper capital gains tax to help level the playing field
between those who are lucky enough to own their own home
and those families who are still desperate for one, given that the IMF
recommended reducing the tax advantage to housing?
Rt Hon JOHN KEY: I do not support the Greens’ policy,
which has obviously just been announced by the member,
of putting a capital gains tax on the family home.
David Seymour: How effective have capital gains taxes been
at suppressing house prices in Vancouver, Sydney, and London?
Rt Hon JOHN KEY: Highly ineffective.
One of the things that you see, though, in relation to places like Vancouver,
Sydney, Melbourne, and the likes, is that house prices have risen,
but they have actually risen, in part, for the same reason as in Auckland:
because this is now a place in a country that people want to come to.
I remember when utopia was, for a lot of people,
racing to Auckland International Airport
to get away from Helen Clark’s Government, but now—
Mr SPEAKER: Order! The question has been answered.
Metiria Turei: Why is his Government’s priority tax cuts
rather than saving for our future, and will he announce the resumption
of contributions to the Superannuation Fund
before spending on tax cuts for the wealthy?
Rt Hon JOHN KEY: The member makes one correct point,
which is that this Government has been more focused on savings
than probably any other Government.
Because of its tight fiscal management— and careful fiscal management—
debt is likely to be around about $100 billion less
than it would have been. What the Green Party does
is come to Parliament every single day and tell people
that they are going to be able to tax them more and spend more
and believe that will have no impact on the indebtedness of NZ.
Secondly, if the member really believes that the answer
to all of these issues is to put money into the Superannuation Fund
and get some remarkable return, then what the member should do
is go and borrow $500 billion, whack it into the stock market,
and see how she goes. She might do a little bit better than George Soros,
but I suspect she probably will not.
Metiria Turei: Given that the IMF recommended yesterday
new incentives for KiwiSaver, to address our “chronically low national savings”,
does he still stand by his statement
that “the removal of the $1,000 kick-start contribution will not
"make a blind bit of difference to the number of people who join KiwiSaver”?
Rt Hon JOHN KEY: In my opinion, yes,
and it would not make any difference to national savings, because the Government
would actually be borrowing that $1,000 to give to someone
to put into their savings account.
Metiria Turei: What was the KiwiSaver enrolment rate this time last year,
before he cut the $1,000 kickstart, and what is it now?
Rt Hon JOHN KEY: I do not have those numbers with me.
The member would need to put that question down in writing
or direct it to the Minister of Finance.
Metiria Turei: Does the PM genuinely think that spending on tax cuts
is more important than hungry kids, polluted rivers, and saving for our future?
Rt Hon JOHN KEY: The Government spends in the order
of $72 billion to $73 billion a year, the bulk of which is actually spent
on a range of different areas such as, obviously, health and education,
and a great deal actually on low-income people
and people who are in need.
What is absolutely true is that when a country has a competitive tax rate,
which actually encourages people to work, gives them the incentive to save
and take on extra employment, and actually ensures
that inflation does not eat away at their income because of the bands
that we have in our tax system, that is a fair model and system.
Actually, our whole system relies on people getting out of bed in the morning,
working hard, and paying taxes.
In my experience, there are literally millions of NZers
who get up every morning, who do not want the Government
to give them a handout,
and certainly just want to have a fair system in which to operate.
David Seymour: Can the PM please confirm that cutting taxes
is a priority for this Government;
if not, can he explain to the House the difference between,
on the one hand, not taxing money in the first place
and, on the other, spending it?
Rt Hon JOHN KEY: The Government has indicated
that within the right fiscal parameters, it would like
to cut taxes for the reason that I think the member
has pointed out in his question, which is that otherwise
the burden of tax on individuals actually goes up over time
because of fiscal drag, if for no other reasons, and, actually,
we want to make sure that we have a competitive tax system.
As we know, when we have a broad-based, low rate that is fairly applied,
actually what you see is that NZers get on and they pay their tax bills.
They do not spend time trying to avoid taxes. What we know, actually,
with the Green Party and, to be frank, with the Labour Party,
is that all they know how to do is spend other people’s money,
when the rest of the country is actually focused on how to make money.
Mr SPEAKER: Question No 7, Chris Hipkins.
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