Bill English MP
National Party Finance Spokesman

28 March 2008

The trans-Tasman wage gap - Labour’s legacy

National Party Leader Bill English is releasing two charts that show the trans-Tasman after-tax wages gap has accelerated under Labour.

“Next week, Labour’s chewing gum tax cuts would have started if Michael Cullen hadn't cancelled them. At least it would have been a start on closing the after-tax wage gap. Labour is now saying that despite eight years in office it has had nothing to do with the after-tax wages gap which has developed between New Zealand and Australia.

“But as these charts show, the gap has consolidated during the time that Australia paid its workers a dividend from economic growth by cutting taxes.

“By contrast, Michael Cullen has amassed large surpluses and spent the money on behalf of Kiwi taxpayers. His 2007 Budget also signalled that he was prepared to sacrifice borrowers who would end up paying higher interest rates for longer.

“Furthermore, the same Budget confirmed the decision to cancel the ‘chewing gum’ tax cuts was because of Labour’s plans for increased spending.”

Those tax threshold adjustments were due to kick in next week.

“Just this week Dr Cullen’s been delegated to tell Kiwis that Labour’s unchecked growth in spending will mean smaller tax cuts for New Zealanders, because Labour didn’t take better opportunities to lower taxes.“

Adjusting for differences in purchasing power, in 1999/2000 an average Australia worker could expect to receive the equivalent of NZ$ 32,704 after tax while their Kiwi counterpart received NZ$27,218 a gap of 20%.

By 2007, the figures show the gap increasing to 34%.

“Even Dr Cullen can’t argue with the fact the gap in trans-Taman after-tax wages has accelerated on his watch.”

Ends

Attached: Graphs showing gap in Aus/NZ after-tax wages – 1 page [Word doc].

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