Maharey Talks Tax Cuts With Scoop

Wednesday, 17 August 2005, 10:54 am
Article: Kevin List

Maharey Talks About Tax Cuts With Scoop

Today the National Party will begin running a series of television advertisements aimed at convincing voters the current Government is a profligate bunch of spendthrifts wasting hard-grafted taxpayer money hand over fist. Next Monday, National's long-heralded and often-delayed tax cut policy will be announced.

Shortly after the election was called, Scoop had a quick word with Social Development and Employment Minister Steve Maharey - who was happy to talk up Labour's tax cut/relief package [Working For Families] and told Scoop that Labour relished fighting this election on the issue of tax cuts.

Scoop: 'Working for Families' has been accused by its opponents of being welfarism. If someone is in a a full time job and receives 'Working for Families', is this the first step on the slippery slope to welfarism?

Steve Maharey: I don’t know what makes it welfarism. It wouldn’t be our term - it wouldn’t be John Howard's Government's term - it wouldn’t be Tony Blair’s Government's term – [or] Gerhard Schroeder's term – these are very common arrangements around the world. If you have a look at the kind of assistance that is provided to families, without working for families we’d be way behind what the Australians directly provide to families in this kind of income bracket.

We are not doing anything different to the [above] mix of conservative and social-democratic governments. The majority of 'Working for Families' is delivered through Inland Revenue rather than Work and Income. All you get through Work and Income is the accommodation subsidy and the child care subsidy. It is not welfarism - it is essentially tax relief. To call it welfarism is silly.

Scoop: Is National likely to get rid of 'Working for Families'?

Steve Maharey: They have about five distinct positions on Working for Families. National would love to hate it – but they can’t find anything that they can better so they will [probably] have to be stuck with it.

Scoop: National certainly did hate it when it was released last year though?

Steve Maharey: They really hate everything. National really hated apprenticeships when they came out – they hate interest off student loans.

Scoop: A dedicated National Party supporter that had been reading John Key, Katherine Rich and Judith Collin's statements on 'Working for Familes' - wouldn’t they be terribly disappointed though if the whole thing wasn’t scrapped?

Steve Maharey: I think [a dedicated National Party] supporter would be shocked if the whole thing wasn’t wiped in favour of a blanket tax cut – that is what they think National is actually trying to say. In practice however National can’t deliver $100 dollars into a household on a low income so it is really stuck with the fact that 'Working for Families' does what a Government like John Howard's is doing.

Scoop: Getting back to tax cuts - what sort of benefit would be gained from someone on say, you or Dr Brash's income, getting a 100 bucks a week in their back pocket and how would this equate further down the line after an across the board tax cut?

Steve Maharey: Nothing – because they wouldn’t pay enough tax. If you're earning about $38,000 dollars you wouldn’t get anywhere near the same as what we are paying. You're really in trouble. To use the words of Tony Blair, a tax cut that National will be offering will mean that privilege is it’s own reward. Which means the more you’ve got the more you’ll get [back].

If they are thinking about middle NZ – the kind of struggling household that is trying to get ahead – you simply can’t deliver enough money into those households.

Scoop: The alternative argument though is that paying the most tax are the wealth creators so they deserve more money back. So a hotel manager on 100k whose income makes them a 'wealth creator' - shouldn’t this person get more back in tax than say a road worker earning 35K?

Steve Maharey: I wouldn’t say there would be a party in Parliament that would say investment in the infrastructure is not one of the number one issues of the day. Those road workers are adding value. Just because you have a high income doesn’t mean you are more valuable to the economy.

This is one of the curious things about the National Party argument because it implies the bigger your income the more important you are to the economy. All the trades-people who have middle-income jobs are absolutely crucial to creating wealth. Tax cuts that give a lot to Don Brash and not much to them is an insult.

Scoop: Do you see the coming election as being a very ideological election – for example it would seem John Key sees the private sector as being inherently superior to the Government sector?

Steve Maharey: I do think National have rediscovered their ideological roots and that is why ACT are dead in the water because they don't matter anymore. I think National are a heavily ideological party now. They believe in a small state, tax cuts and more money for those who are already well off. It's basically a last gasp of the ideas that Roger Douglas represented in the 1980s and Ruth Richardson carried on in the 1990s.

I think National is having one last big tilt at power which is why National has got so much money. They have people who are very well off prepared to provide them with some money again. Those people want National back in the driving seat because they would love nothing more than the deregulation agenda back – slashing wages in a race-to-the-bottom formula - that was good for people who were very well off. I think National have told those people – 'we'll give it another try for you!'

Scoop: Bill English didn't have much of a war chest to fight the last election?

Steve Maharey:They didn't like Bill English at all. Under Bill English National couldn't get any money at all. Bill English is pretty much a centre-right politician – he believed a lot of what we believe – he wasn't their boy.

Scoop: Is there any country in the world, which has introduced tax cuts, and there hasn't been greater inequality of income as a result?

Steve Maharey: No, if you look at the American economy- which people like Roger Kerr like to tout as a wonderful economy, a trillion dollars in debt economy - you are looking at the amazing sight of more and more money trickling up towards well-off Americans due to the very successful ideological agenda under Bush.

Other people who are on ordinary incomes are paying more state taxes, more school taxes and somehow Bush is getting away with convincing people of the [benefit] of that. Tax cuts always produce greater inequality

Scoop: A Canadian Documentary maker Avi Lewis, pointed out to Scoop that tax cuts gave him a couple of grand in his back pocket, unfortunately he also said that homelessness increased markedly and beggars became a common sight in his hometown – is this likely in New Zealand or scare-mongering?

Steve Maharey: It is no mystery why we have poverty in New Zealand. The Salvation Army foodbank grew 1200% in one year after the benefit cuts. Those benefit cuts were partly to pay for the tax cuts. For every force there's a reaction. If we are going to go down the road of tax cuts policies here expect to see poverty, overcrowding in houses and kids not eating at school.

Scoop: Do you think this election's central issue is tax cuts?

Steve Maharey: People have said the National Party is running tax cuts and the Labour Party doesn't want to talk about it - well it's not our agenda. Are we happy to fight on tax cuts? You betcha – When National came out with its promises of tax cuts I said 'thank you God'!

We will fight on tax cuts because we know exactly what it means and we want New Zealanders to know what it means – it means the 1990s back again. I can't remember many New Zealanders finishing the 1990s and saying 'that felt good'. Most New Zealanders were thinking this is a horrible country to live in – people are mean, they are mean-spirited, you feel like the economy is going nowhere. Older people were feeling ignored. It was a horrible place to live and if you want one symbol for that era – it is tax cuts.

ENDS

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