22 May 2008
VIDEO: 22 May. John Key responds to Budget 2008

John responds to today's presentation of Budget 2008. "After nine years of waiting - just $16 a week" in tax cuts for the average earner.

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Hansard of John's speech (unofficial version)

14:47:46~JOHN KEY (Leader of the Opposition)

JOHN KEY (Leader of the Opposition): I move, That all the words after "That" be omitted and the following words be inserted: "This House has no confidence in the Government led by Helen Clark, because New Zealanders have had to wait far too long to see any changes to personal tax thresholds or any lowering of personal tax rates, and over nine Budgets this Government has presided over a decline in New Zealand's standard of living compared to the rest of the world."

So there we have it—Michael Cullen's ninth and final Budget. It may have been his election-year Budget, but it was also his valedictory.

You see, he read the Budget speech but he did not believe one word of it. He did not believe one word of it. And did it not just smell of desperation?

After 9 years of putting off tax cuts I heard him read out the words. He did not believe those words, but it was a giant acknowledgment of the failure of his Government's leadership when it comes to the economy. When it came to the tax cuts it was far too little and it was far too late. It was pretty interesting that this was the Finance Minister who had been telling New Zealanders for 9 years that they could not have a tax cut. But guess what? In 4 or 5 months' time there will be an election, and 2 weeks beforehand Michael Cullen, after 9 years, will give a tax cut that he does not believe in.

It will be the only chance for a tax cut. But the saddest bit about the whole speech, because it was pretty sad, is when people start to reflect not just on the tax cut but on the price that New Zealanders are paying for the economic leadership shown by the Labour Government—or lack of leadership, as the case may be.

You see, they were led to believe, by Michael Cullen, that he would keep interest rates under control, and he has not. Interest rates have doubled under a Labour Government.

There was no apology in the Budget this afternoon to the hard-working couple who borrowed $200,000 and who now find themselves paying $150 a week more for interest—no apology to that family.

There was no apology to the families and the New Zealanders to whom he said: "Don't worry—your wages will go up." But he did not tell them that the cost of living under his leadership would rise faster than their wages.

The same people reading his Budget tonight will be the people who picked up the New Zealand Herald today and saw that cheese had gone up 112 percent, who had just gone to fill up their car and paid over $2 a litre for petrol, and who cannot afford to buy butter in the supermarkets of New Zealand because Michael Cullen has not managed to produce wages that can keep pace with those price rises. There was no apology to the 1,700 people who have lost their jobs in the last 2 months, and to whom Ruth Dyson said: "Don't worry about it because we're all doing OK."

There was no apology to those people, and no apology to the thousands of New Zealanders who every day go to a hospital and ask the question why, after 9 years when spending has doubled in health, they still cannot get their operations—why they still have to go to Australia to get cancer drugs, and why, if they take Herceptin, they are funded for 9 weeks and not for 52 weeks.  There were no apologies for all of that.

You see, the interesting thing about this Budget is that it is ideologically opposed to everything that Michael Cullen believes in. He believes in taking people's money off them and spending it faster than they can. That has been the strategy. But then, let us be honest: we have heard over the last 9 years a lot of talk from Labour. We do not hear so much of it these days. Gone is the talk of New Zealand getting into the top half of the OECD. That was where Labour started 9 years ago: "We will be in the top half for the OECD."

But Michael Cullen does not tell New Zealanders that we are not 20th any more, which is the placing we had out of 30 when Labour came to office; we are 22nd. The only place where we have literally gone up in the OECD rankings is in being more heavily taxed, and we have moved from 20th to 12th. So gone is that talk.

And gone is talk of closing the gaps. Do members remember that? That was in 2000, when the average Māori family earned an income equivalent to 82 percent of a Pākehā family's income. Has that gap closed? No! It has widened so that that income is now only 73 percent of the income of a Pākehā family. So gone is talk of closing the gaps.

Then there was talk of the knowledge wave. There was no talk about the knowledge wave in this year's Budget, and no talk of the hundred information technology companies that would have a turnover of $100 million. That has gone—no talk of that.

Does anyone remember the talk of economic transformation? I remember listening through speeches where we heard it about 30 times—economic transformation. We are still waiting—New Zealand is still waiting—for economic transformation.

What about growth and innovation? That was the talk.

And last but not least was carbon neutrality. Did we hear that mentioned in the speech? No. You see, Helen Clark has finally worked out what carbon neutrality means—that is, we lead the world—we lead the world in costs, we lose jobs, we lose people, and we lose opportunities, and, most of all, all we do is export carbon dioxide emissions around the world.

So let us turn to the centrepiece of Michael Cullen's Budget—tax cuts. Well it has finally happened, but it has been a long, long wait.

I can only say that I hope they last longer than the ones he announced in 2005. They may not be supported by Michael Cullen—that is OK; we will come back to the legislation that will lock them in in a minute—but do they not just reek of that cynicism? They come in on 1 October. We can put a ring around the date for the election: 18 October. But do not worry, because Labour will get a revival before going to the polls—it thinks—having given the average worker of New Zealand a family size block of cheese.

That is what the tax cut is worth. New Zealanders have had 9 years of waiting and they will get a family size block of cheese. They will get two blocks before the election and they are meant to be grateful. That is the message; they are meant to be grateful. While they are being grateful, they should think about this: the next time they get a tax cut—theoretically, under that Budget—will not be for 2 years. It is a long time between toasted sandwiches. It is a long time between servings of macaroni cheese.

People will wait 2 years and they will not get tax cuts in 2009. Do any members know why? The reason is that it is not an election year.

So in 2009 people are not allowed tax cuts. There we go; that was Michael Cullen's "tax cuts Budget", motivated by one reason alone. It is not the belief of Michael Cullen in tax cuts, but in electoral survival. That is the reason those tax cuts are there. The reason they have taken so long to get there is that Dr Cullen never wants to deliver them. He does not want to deliver them.

What will be interesting to New Zealanders, as they go home tonight and reflect on Michael Cullen's Budget, is the thought that they have waited for over 3,000 days under a Labour Government to get a tax cut—3,000 days. If they are paying the top personal rate, which kicks in at $60,000 and will eventually move up under today's Budget, then they have to wait for only 125 days from whoa to go for their tax rate to go up.

You see, under Labour, one waits 125 days and one's taxes go up, and then one waits for over 3,000 days for one's taxes to go down. Earlier this week, Michael Cullen told us that tax cuts that would deliver a reasonable amount to New Zealanders were reckless and unaffordable. Maybe Dr Cullen should have looked over the road, over the Tasman, to the Australians.

Hon Dr Michael Cullen: These are bigger than the Australian tax cuts—miles bigger.

JOHN KEY:  Well then, the design is terrible, I say to Dr Cullen. We will come back to that in a minute. Let us look at it. During the same period of time that Labour has been in office in New Zealand, people in Australia earning $47,000 a year got $100 per week as a tax cut, whereas under Labour in New Zealand they would have received zero and, 2 weeks before the election, they will get their block of cheese.

In Australia they get $100 a week, and in New Zealand they get zero until they are within 150 paces of a polling booth, when they will get $16. That is the difference. If anyone is wondering why 44,000 people left New Zealand last year and went to Australia, it is because they were looking for economic leadership. It is coming, but not under a Labour Government.

What else did we learn when we heard what was in the Budget? There will be an urgency motion tonight. The House will go into urgency. Why? It is to legislate for the tax cuts that come in on 1 October. Actually, this is the real reason—and Michael Cullen admitted it earlier in the week. He does not trust himself to deliver his own tax cuts if he does not legislate for it. He is like a chocoholic who loves Caramello, but he has had to hide it in a box at the top of the bedroom so that he cannot find it. He is legislating for his own tax cuts because he does not trust himself. What is actually worse than that is that his own colleagues do not trust him. They want the House to go into urgency.

What do Governments do? They change legislation. That is what Governments do. Beyond 2009, if New Zealanders trust Labour for a tax cut, Michael Cullen will be whipping them away. Well, enough of Michael Cullen. We will get to some policy. I want to talk about National's plan. I tell the members opposite to listen up, because they may well be beneficiaries of it. This is the message to New Zealanders: under National, tax cuts are a priority—under National, personal tax cuts are a priority.

It is a pretty simple message: under National, New Zealanders will do better. The plan will be better, the structure will be better, and the delivery will be better. Most of all, New Zealanders will be able to believe our tax cuts, they will be able to trust our tax cuts, and they will not wait 3,000 days to get them.

They will not be doing that. Most of all, our tax cuts will not just be about putting dollars into the pockets of hard-working New Zealanders. They will actually be about delivering the right incentives in the economy.

We know that Labour members do not believe in tax cuts, and they are admitting that. They may not like to hear it, but tax cuts deliver the right incentives. Tax cuts let New Zealanders get ahead in their lives. They encourage New Zealanders to work hard, to get extra responsibilities, to save, and to get further education.

We believe in tax cuts, we believe in the power of tax cuts, and we will deliver them. What is more, we can afford to do it. I will tell New Zealanders how we can afford to do it. This year the Government will spend $60 billion, and not one of those dollars is being reviewed—not one. The Labour Government has for 9 years wasted money hand over fist, and it does not care. One only needs to look at what is happening in Australia to know that tax cuts are possible. The Labor Government in Australia went in after 9 years of tax cuts and it still found savings and the ability to do things.

I want to make one last point about Michael Cullen. He has laboured on about interest rates, but this is the simple point: if Labour and Michael Cullen care so much about interest rates, why has he let them double under his watch?

Let me say this very clearly. We have a plan for New Zealand. It involves tax, it involves infrastructure, it involves curbing the bureaucracy, it involves having proper planning legislation, and it involves having the right future. But most of all let us answer the real question.

This is the difference between Labour and National: Labour is stuck in the past; it is the past. Helen Clark and Michael Cullen care more about the Viet Nam War and the Springbok Tour than they do about the big issues facing New Zealand today. They do not want to front up on a decent emissions trading scheme, they do not want to front up on the big issues of globalisation, they do not want to front up on the issue of why so many New Zealanders leave, and they do not want to front up on how to lift economic growth in New Zealand.

What they want to do is meander around in the past. National will not do that.

National will take New Zealand forward on a high-growth environment, where our young people know they have a future, where they know that we as a Government will back them to succeed, and where we will deliver them the tools they need. We will deliver fast broadband so they can be connected to the world; a future-looking Government that knows where it is going; and a country that is not afraid of itself, where winning is part of the national conversation, where it is not just about participation but about succeeding, and where there is aspiration, hope, opportunity, and ambition—most of all, ambition. New Zealand deserves a lot better than what it has had in the last 9 years.

New Zealand deserves a National Government, and in 5 months' time and two blocks of cheese, that is exactly what they will get.


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#1 - Kerry Sixtus 2008-05-23 05:45 - (Reply)

As a Tui billboard somewhere will say, I'm looking forward to my block of cheese, yeah right!! As the price of fuel rises the Government will get most of my tax cut back in the increase of levies and GST. If National want votes from the working man, and wants to do something that will help reduce inflation, remove/reduce the duty on fuel, everyone will be better off.

#2 - Steve 2008-05-23 10:55 - (Reply)

Reduce the influence of the state on the people please. Govt has way too much control over people's lives. People out there have to understand that 'tax cuts' are just a metaphor for GOVT control v personal responsibilty. You need to sell this message to the people. Ask them why they are so happy to be so reliant on the state. On the subject of tax, I believe the whole (unfair) system needs to completely overhauled and replaced by more of a sales/consumption based tax system. It's fair for everyone. It just makes me sick that the GOVT can exert such control over people's lives and the people willingly go along with it (See Campbell and Close up On TH. night for eg) and I hope you can do something about it - and get your message accross.

#3 - Donna Cole 2008-05-23 13:48 - (Reply)

Thanks to Labour I pay about $20 more a week in petrol taxes and they are so generous they will give me $16 of that back! Do they think we are so stupid that we will say "Fantastic! I will be voting for them to get that back!". Get real Labour! The sooner Labour is out the sooner National can get back in and fix up all the mistakes Labour have done. Roll on Election Day! Good Luck National, but I really don't think you will need it. You treat us as Human Beings not Robot Voters!

#4 - Ron Cave 2008-05-23 15:58 - (Reply)

I do believe that we are losing sight of something in the discussion on the Budget. In my long business career I have found it vital every now and again at budgetting time to go back to a zero based Budget. In the small print, there is a multitude of $ wasters such as the Health Research Fund and the extra millions being given. New Zealanders are concerned about Health, Law & Order, and Education. There is plenty of money there for tax cuts and improved health, law and order and education if you have the courage to cut out frittering the money away on nebulous rubbish. Good Luck John, there are an awful lot of us pining our hopes on you.

#5 - Di Bag 2009-05-29 10:20 - (Reply)

Oh dear......... Regardless of the reasons for the cancellation of the cuts(which are now in effect a tax increase)a promise is a promise is a promise. It was all about trust wasn't it ?

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