Hon Dr Michael Cullen
Minister of Finance

9 October 2008 Media Statement

Key needs to answer when, how original package changed

Finance Minister Michael Cullen has challenged National leader John Key to answer when and exactly how his party's original tax package was changed.

"In July, Mr Key was quoted by the New Zealand Press Association as saying that National's tax proposals were 'locked in'.

"On Monday of this week he said that the Treasury's Pre-election Economic and Fiscal Update meant that only slight changes would be required to its package as National had already factored in a deterioration in the fiscal forecasts.

"Then yesterday Mr Key claimed an original $5.7 billion package had been shrunk by a whopping $2 billion.

"Apart from the obvious 'there he goes again' interpretation of his changing stories, what this highlights is the ramshackle, hastily put together nature of John Key's package.

"It looks very much as if the Independent Earners' Rebate was a last minute substitute for a much bigger cut to the 21 per cent rate in an effort to try and make sure that the numbers did not look too bad around the average wage.

"As a result, modest income families, superannuitants and others miss out on their fair share of National's proposed tax reduction package, while innovative businesses and savers pay the price of the party's electoral bribes.

"It is all one big money-go-round - transferring money away from investment and saving for a stronger, shared future into more consumption for some in the present," he said.

Dr Cullen also challenged National to say what assumptions it had made about a lower contribution rate leading to more people becoming KiwiSavers, as Mr Key claimed would occur.

"Mr Key cannot have it both ways. Either he has assumed big savings by savaging KiwiSaver, or he has assumed increased take-up which would reduce those savings," Dr Cullen said.

ENDS

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