CTU media release

20 May 2010

Tax cuts won’t lessen lure of Australia

The Government could be spending more to help people on lower incomes and to improve public services with the improved economic outlook and government deficits disappearing even earlier than forecast in the last Budget or in December, said the CTU. Instead $460 million is being spent this year on tax cuts, meaning the Government exceeds its self-imposed Operating Allowance of $1.1 billion.

“The tax changes announced won’t stop anyone leaving for Australia,” said Bill Rosenberg, CTU Economist and Policy Director. “Treasury calculates the net benefit will be 0.7 percent for those on high and low incomes, and 0.4 percent for middle income New Zealanders. But those on high incomes don’t all own property, and those that do have plenty of room for finding ways to avoid the property tax rises. People on incomes of millions of dollars could benefit by up to 5 percent – but these figures are hardly enough to bridge the 20-30 percent income gap with Australia.”

“We welcome the changed tax regime for property but it is not enough to bring a ‘step change’ in our economy.”

“District Health Boards are going to be under great pressure. Their funding has been increased by only $350 million, compared to the $450 million the CTU has calculated they require. In addition, they won’t have any help with deficits from central government.”

“Opportunities have been missed to put more into education at a time when students are queuing to get into tertiary education. More opportunities for industry training are urgently needed as skills shortages loom as a result of competition with Australia.”

ENDS

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