Cullen brushes off Australian tax cuts

Michael Cullen

Finance Minister Michael Cullen yesterday brushed off appeals for tax cuts to match those in the Australian Budget.

Australian Treasurer Peter Costello delivered his third income tax cut in three years with a A$22 billion ($23.4 billion) package that ensures every taxpayer will be better off.

National's finance spokesman, John Key, questioned Dr Cullen in Parliament and said about 585 people emigrated from New Zealand to Australia every week.

"When will the minister wake up and realise that Peter Costello's budget is a clear example of Australia launching a full-scale charm offensive on New Zealand's most productive workers?" he asked.

Dr Cullen said Mr Costello's tax changes meant 80 per cent of Australians would pay a tax rate of no more than 30 per cent, but added to that was 1.5 per cent for Medicare and 1 per cent for those earning A$50,000 a year.

"In New Zealand, 75 per cent of taxpayers pay no more than 21c in the dollar," he said.

"If tax was the driver, then people would be coming back in the opposite direction."

Act leader Rodney Hide asked how Mr Costello could afford tax cuts when he had a surplus of just 1 per cent of GDP, while Dr Cullen was "running around telling New Zealanders his Government can't afford one with a surplus four times that amount?"

Dr Cullen told Mr Hide that when next week's Budget comes out "he will find he has to revise his numbers".

Mr Hide's subsequent questions were equally unsuccessful. He was told to wait for the Budget.

Earlier , Mr Hide said the New Zealand Government's surplus - $7.95 billion in last week's Crown accounts - was almost exactly the same as Mr Costello's projected surplus.

"Dr Cullen could easily deliver a tax cut for every worker. It's fair, affordable and Kiwis deserve it," he said.

Australia's welfare system changes were also praised by National and ACT. National's welfare spokeswoman Judith Collins said the contrast was sharp.

"Australia is rewarding workers with big tax cuts, and reforming welfare.

"Here in New Zealand, Labour is handing out welfare to working families and loading on still more taxes," she said.

"While Australia is making a play for talent, and recognising that those collecting welfare do have reciprocal obligations, the New Zealand Government refuses to address these important issues."

Act's deputy leader, Muriel Newman, said Australia was tightening up on welfare and making changes that would encourage people to get off welfare and into work.

"Australia has announced a healthy mix of incentives and sanctions ... New Zealand's system of sanctions has been gutted by the Government and is now totally ineffective.

"At a time when we have low unemployment, it defies belief that we are spending more on welfare payments to working age people than ever before."

- NZPA