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Brash’s promises reckless and unaffordable

11 June 2005 Media Statement

Brash’s promises reckless and unaffordable

Finance Minister Michael Cullen said today that Don Brash’s statements about tax cuts were becoming more and more incredible by the day.

“Now Dr Brash is promising tax cuts to every worker and a cut in company tax together with increased spending on nurses, teachers and police officers,” he said commenting on an interview Dr Brash gave on the Agenda programme this morning.

“All he can put up to pay for this is the fact that the core public service has grown by 8000 people over the last six years.

“Even if all those workers were sacked at no cost, this would go nowhere near paying for the kinds of tax cuts Dr Brash is talking about - and he knows it.

“It is unbelievable that a former Reserve Bank Governor should try to argue that such a massive loosening of fiscal policy will not lead to higher interest rates, especially given the bank’s current unease about inflationary pressures.

“It is equally unbelievable for a former Reserve Bank Governor to be arguing that a surplus at the top of an economic cycle can continue to pay for tax cuts year after year after year.

“More and more Dr Brash is looking like an old man in a hurry who does not care how much damage he does to New Zealand in his ambition to become Prime Minister,” Dr Cullen said.

Attached: Agenda transcript


SIMON Last week's UMR Insight poll had National ahead of Labour by one percent. On the strength of that poll National could form a coalition government with New Zealand First, it's the first time National's led Labour since leader Don Brash's Orewa speech on race relations in January last year. Tax is another major policy platform - while the party's yet to release its tax policy National is advocating tax cuts, these would funded in part by reducing the number of public servants. Don Brash is with me now from Howick in Auckland.

SIMON Dr Brash welcome to the programme, how committed are you to tax cuts?

DR BRASH Oh very committed indeed Simon we think New Zealanders are substantially overtaxed at this point, have been overtaxed indeed for the last several years and it's one of the reasons we're losing 600 Kiwis across the Tasman every single week, we think there's ample scope for tax reductions and quite frankly with the government running at a surplus of about seven billion dollars a year there's no reason to defer those.

SIMON Okay Dr Brash I've heard the rhetoric and I've heard the platitudes for some time now, when are we going to hear some detail?

DR BRASH Ask Helen Clark when she's gonna hold the election. The reality is we will announce our tax policy well ahead of the election. We said we'd do it within a few weeks of the budget when that budget was announced and at that time we thought the election would take place at the end of July, we don’t want to announce it at a time which gives the primary advantage to Helen Clark, but we will announce it well ahead of the election I can assure you, and it'll be much better than 67 cents a week in three years time which Labour is offering.

SIMON Is it prepared?

DR BRASH Of course it is.

SIMON It's ready but you’re just holding it back waiting for the strategic advantage?

DR BRASH That’s correct.

SIMON What about giving the public the opportunity to digest some of it?

DR BRASH They will have ample opportunity Simon, it's very important they do, it's no point in announcing a policy which doesn’t have an opportunity for the public to react to, they’ll have plenty of opportunity I can promise you.

SIMON You’re playing a game of double bluff here aren’t you? Are we gonna have tax cuts by Christmas as was originally promised. Let's clear this up.

DR BRASH No no no no, that was never promised, what was promised was a budget before Christmas. The Sunday Star Times reported that as tax cuts by Christmas. Realistically IRD can't change the tax schedules by Christmas, we said we'd have a budget before Christmas and that of course became – because the headline was misleading that became a backtrack, it was not a backtrack at all, we said a budget before Christmas and tax cuts just as soon as we can get the IRD to change the schedules.

SIMON Okay April the 1st next year?

DR BRASH That’s a realistic target.

SIMON So we could legitimately expect that tax cuts would be on the board by April the 1st next year?

DR BRASH Yes you can.

SIMON What sort of tax cuts? I know you’re not gonna give me figures but are we talking corporate tax cuts, are we talking across the board, are we talking low to middle income or are we talking high earners. Who's gonna get them?

DR BRASH We've said that hard working New Zealanders have been overtaxed by this Labour government and we propose to relieve that tax burden, we've also said the company tax rate now 33% should be on a par with that in Australia at 30%, we're committed to that.

SIMON On the 13th of July 2003 you said you would reduce company tax and the top two personal rates to 30%, in a press release on the 17th of March last year you said National's top priorities for tax reductions and tax relief for low to middle income families. What is it? Who's getting it?

DR BRASH We're committed to have tax relief for all hard working New Zealanders that’s what I've said that’s the latest statement I've made and that’s what we'll stick with.

SIMON So by all the hard working New Zealanders you mean across the board?

DR BRASH I mean across the board.

SIMON Including the lowest tax bracket?

DR BRASH Let's wait and see the details Simon I don’t want to go further than that.

SIMON Well you said all hard working New Zealanders, do you include all hard working New Zealanders within the lowest income bracket?

DR BRASH That’s correct.

SIMON Okay. What are you gonna do to pay for these cuts then? How are you gonna pay for these cuts?

DR BRASH Look this Labour government has been spraying money around like it's gone out of style, huge increases in bureaucracy, huge increases in very low value tertiary courses like Hip Hop Tours, homeopathy for pets, you name it. We are convinced there's ample scope to reduce that wasteful expenditure to give tax relief to New Zealanders.

SIMON Well be a bit more specific who's going to go, where are the cuts going to be allocated?

DR BRASH We will clearly announce what we plan to do to finance the tax relief well ahead of the election.

SIMON John Key told the Herald on Sunday National government will reduce spending from 32% of GDP to 27% within three years.

DR BRASH No no he did not, he did not. That was a gross misreporting of an article by Brian Fallow 18 months ago based on a speech I'd made even earlier which talked about a gradual reduction in the ratio of government spending to GDP over a ten year period. It was total misreporting.

SIMON Nevertheless that reduction means cuts, cuts in expenditure where are they coming?

DR BRASH No no no no, it didn’t mean that at all, it said that if we grow government spending slightly slower than we grow the economy to which we're absolutely committed then the ratio of government spending to GDP would of course decline, that’s what it said, I said it, he said it, and we mean that.

SIMON So you can guarantee that no core public sector employees will be cut?

DR BRASH No I did not say that.

SIMON No I'm not asking you if you said that, I'm asking you if you’re saying that now?

DR BRASH No, well I am saying that over the last six years core public services have grown from 30,000 to 38,000 roughly a 25% increase over that period. Now frankly we think there are far too many bureaucrats and not enough nurses, teachers and Police Officers.

SIMON Well if you think there aren’t enough nurses teacher and Police Officers you’re saying there's gonna be more?

DR BRASH We can say we can reallocate government spending to get better effect for New Zealanders, we need better health care, we need better law and order, we need better schools.

SIMON More front line Police Officers?

DR BRASH More front line Police Officers.

SIMON This is more cost, where's the cost going to come out?

DR BRASH I've made it very clear in a speech in July last year that New Zealanders do not feel safe and their families do not feel safe in their homes, do not feel safe in their communities, we need better policing and better allocation of the Police resources we have.

SIMON So it's just allocation you don’t have to have any – where's it going to be funded again, is it just from a grown tax pie is that what you’re saying?

DR BRASH Increased spending on law and order is one of the issues which we think deserve attention and we've said that repeatedly, we've said we want to abolish parole for repeat and violent offenders, that costs money, but the amount of money being spent is relatively small, relative to the huge amount of money which this government has been wasting.

SIMON Let's move on to the nuclear issue. ACT's Ken Shirley has promoted a bill to overturn the ban on nuclear powered vessels yet you've indicated you oppose it, why?

DR BRASH Look this issue is far too important to be dealt with by private member's bill. We've made our own policy very clear indeed and that is that this issue ought to be decided by referendum. We're committed to doing that before there's any change at all.

SIMON Ken Shirley told us yesterday that he is going to amend that bill to included a referendum will you support it then?

DR BRASH Look as I said earlier the question is does foreign policy get decided by private member's bills, our answer to that is categorically no.

SIMON Well you just said you'd support a referendum, he said he's gonna change it, will you then support the bill?

DR BRASH Well we'll look at the bill, but as I said earlier we don’t believe foreign policy should be decided by private member's bills. Look we're committed to the really important issues which concern New Zealanders, poor quality education, welfare dependency, too much crime on our streets, Treaty of Waitangi issues, racial bias in the system, the fact that we've got 600 New Zealanders I mentioned a moment ago going off shore every year to Australia, those are the important issues facing New Zealand.

SIMON As opposed to our relationship with the US as well that’s important I'm assuming in terms of trade?

DR BRASH Of course it's important.

SIMON Nuclear legislation then is a very important issue as well because that factors straight into it, on Agenda last year on the 8th of May when asked whether you'd overturn the no nucs legislation you said not without some kind of explicit public mandate which is a referendum or a National victory, after we've made it quite clear what our policy will be in the next election.

DR BRASH That’s correct.

SIMON And you stand by that?

DR BRASH Absolutely right. No no I've said that we would not change the nuclear ships legislation without a referendum or as you say going into an election committed to making a change. We're not committed to making a change, on the contrary we're committed to making no change without a referendum.

SIMON So you'll support Ken Shirley's bill then cos it calls for the referendum?

DR BRASH We will not make foreign policy decisions by private members' bills.

SIMON A senior MP we spoke to said neither you nor the majority of your caucus believe in nuclear free policy, is that true?

DR BRASH I'm not sure to whom you were talking, I believe fundamentally that we should not have any nuclear weapons in New Zealand and I've also said we will not change the ban on nuclear propulsion without a referendum and I stand by that.

SIMON And that’s what he's offering.

DR BRASH Who's he?

SIMON Ken Shirley in his bill, he wants to support the nuclear propulsion.

DR BRASH Simon I just said to you foreign policy decisions are far too important to be dealt with by private members' bills. Let's focus on the important issues facing the country at this election and frankly this is not one of them.

SIMON You also said you'd consider it if it included a referendum, he said he'd change it, I don’t see what the problem is.

DR BRASH Well I've just explained to you I don’t want to make foreign policy decisions of this magnitude on the basis of a private member's bill.

SIMON Even after a referendum? You've also said one standard of citizenship for all, one of the great political phrases of recent times, are you still committed to removing race based funding?

DR BRASH Yes I am.

SIMON And abolishing the Maori seats?

DR BRASH Yes we are.

SIMON You call them an anachronism.

DR BRASH Absolutely they were put in place in 1867 for five years, almost a 140 years later we've still go them, I do believe every citizen should have the same legal and constitutional rights.

SIMON Well what would go and how would you get rid of it, would you just abolish it legislatively?

DR BRASH Why not?

SIMON Okay what about tinorangatiratanga, what's National's policy regarding Maori claims to self determination?

DR BRASH I think I want every New Zealander regardless of race to be treated the same and I think that applies to Maori New Zealanders, Asian New Zealanders, European New Zealanders etc. I want every citizen to have equal rights.

SIMON Does that mean you reject tinorangatiratanga?

DR BRASH That phrase means different things to different people Simon I'm reluctant to be dogmatic on what I reject or not, explain what you mean by it and I'll tell you whether I agree with it.

SIMON Well I'll tell you what Tau Henare said, he said last week on Agenda that the National Party support him and I quote 'absolutely with regard to self determination for Maori'. Do you?

DR BRASH Well if you mean by that that Maori should be able to run their own schools for example, why not – I'm happy for anyone to run their own schools I want much greater flexibility for parents to have the kind of school they want to send their children to. If Maori want to run their own schools that’s absolutely fine as with any other group, but it's not a right for Maori it's a right for parents.

SIMON The Maori Party would you be prepared to enter into coalition with them?

DR BRASH I find it very hard indeed to believe that the Maori Party and the National Party could ever be in coalition, why, because we have quite fundamentally different views about the future of New Zealand. I want New Zealand to move forward as one people not as two different peoples.

SIMON Do you rule out the Maori Party entirely?

DR BRASH Well on the basis of their currently announced policies I cannot see how any coalition would be feasible.

SIMON Statistics New Zealand issued a press release on April 22nd saying the Asian population in New Zealand will increase by 145% over the next 16 years compared to 5% for Europeans, how comfortable are you with that?

DR BRASH I think that projection was based on certain assumptions which have already been proved to be wrong, they assume that there'd be a very high continuing rate of Asian immigration and of course that Asian immigration's fallen off very rapidly indeed over the last 18 months.

SIMON Who will you be targeting for immigration, how will you change immigration rules.

DR BRASH I want immigrants coming into New Zealand who are of benefit to New Zealand, they should be skilled immigrants, people who can integrate into New Zealand society, and if we have that kind of immigrant I'm all for them.

SIMON According to Winston Peters of course Asian immigrants will outnumber Maori by 2021 won't that further damage Maori aspirations?

DR BRASH Look, Maori aspirations are best helped by society where everybody is treated equally regardless of race, and I want that for my children and I'm assuming you want that for your children.

SIMON Current polling though would suggest you'd almost certainly have to coalesce with New Zealand First and Winston Peters, what would it take for that to happen, what's the bottom line?

DR BRASH There's a long way to go to the election I'm not counting any chickens I'm not crossing any bridges, we will talk to parties which share our concern about welfare dependency about law and order and about the Treaty after the election.

SIMON It seems those parties won't offer you the right numbers that New Zealand First would, would you and John Key be prepared to forego the purse strings again if that was a condition?

DR BRASH I'm not crossing that bridge Simon, we will talk to other centre right parties who share our values, share our concerns, share our objectives after the election.

SIMON Mr Peters has promised to increase superannuation as a bottom line, could you accept that if necessary?

DR BRASH Look Mr Peters is making some promises which quite frankly he knows or should know cannot be met, I know that, Helen Clark knows that, Winston Peters should know that.

SIMON Who would you prefer to be in coalition with?

DR BRASH Oh I'm not going to answer that question Simon, I'm happy to talk with any of the other centre right parties and currently I see three centre right parties with whom we could have discussions.

SIMON Who are they?

DR BRASH United Future, New Zealand First and ACT.

SIMON In that order?

DR BRASH No no, no no, let's put it in alphabetical order, ACT, New Zealand First, United Future.

SIMON You've been quoted of course last year as saying that you'll quite if National loses the election, do you stand by that?

DR BRASH No no I didn’t say that, what I did say was that political party leaders who lose elections don’t expect to stick around for long, they normally get dumped pretty quickly. I'm not gonna cross any bridges on that regard either.

SIMON Okay then if you win how long will you stay on, you'll be 68 at the next election?

DR BRASH Look Winston Churchill I think was 66 when he became Prime Minister for the first time, I think I'm right in saying that, Ronald Reagan was 70 when he became President for the first time and he went on to have two presidencies, I don’t regard myself as an old man at all.

SIMON Don Brash, Leader of the National Party thank you very much for joining us today.

DR BRASH Thank you Simon.


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