The 2007 budget - the aftermath the political comments...
Michael Cullen and John Key:
Key: it is a money-go round budget
Michael Cullen is defending compulsory employer KiwiSaver contributions; Nats leader says Dr Cullen has failed as Finance Minister
17 May 2007
The Finance Minister is defending his decision to introduce compulsory employer contributions to the KiwiSaver scheme.
Under the budget Michael Cullen has unveiled this afternoon, employees will get a tax credit of up to $20 a week. There will also be compulsory matching employer contributions from April next year.
Dr Cullen says the rate of employer contributions will increase by one percent each year until they reach four percent. He denies employers will feel resentful, saying the costs to them are quite small and many were moving to thinking about providing employer contributions anyway.
National leader John Key is labelling it the "money go round budget", pointing out that while business is getting a billion dollars in tax cuts it is losing another two billion elsewhere. He says instead of a tax cut, Aucklanders are getting a tax increase in the form of a petrol tax to pay for rail electrification. He says it is also clear workers will not get a pay increase for years, because of the compulsory employer contributions to KiwiSaver. Mr Key says he has received advice that 50 percent of workers will not take the KiwiSaver scheme up, because they cannot afford to.
Big business is also unimpressed. Business Roundtable executive director Roger Kerr says while a reduction in corporate tax from 33 to 30 percent is welcomed, it is not going to stop Kiwis heading across the Tasman for better wages. He says the tax reduction is a baby step.
Mr Kerr says there is nothing in the budget to contribute to productivity. With a growth rate of 2.5 percent predicted over the next four years compared with Australia's four percent, Mr Kerr says the income gap between the two countries is set to widen.
The National leader says Dr Cullen has failed as Finance Minister. Mr Key shouted across Parliament that he now no longer cares who presents next year's budget for the Government.
"I do not not know whether it will be Michael Cullen show reads Budget 2008 and I do not care. Because I know who will read Budget 2009 and it is going to be Bill English. And is going to be a lot better budget than that."
His criticism has been dismissed by Prime Minister Helen Clark, who labelled Mr Key a lightweight and said his budget response speech "makes a bird bath look deep".