21 Nov 2016

PM 'irresponsible' to talk tax cuts after quake - Labour

6:32 pm on 21 November 2016

Prime Minister John Key is being called irresponsible for talking of tax cuts when the full cost of the damage from last week's earthquakes is still not known.

John Key talks to tourists waiting to leave

Prime Minister John Key - pictured talking to tourists waiting to leave Kaikōura after the earthquakes - has signalled tax cuts are still possible. Photo: RNZ / Rebekah Parsons-King

Mr Key has signalled tax cuts are still on the table, despite the estimated billions needed to deal with the damage of the Kaikōura earthquakes.

Labour leader Andrew Little said considering tax cuts at such a time was completely irresponsible.

"Well this is crazy stuff, I mean in addition to a government having $63 billion worth of debt it is yet to start repaying, and you've got a billion dollars extra each year just in the cost of superannuation.

"Now we have another major civic disaster that is going to cost in terms of repairs. I do not see how John Key can say tax cuts are justified in the present circumstances."

A bank, ANZ, also said the government would have less head room for tax cuts in the 2017 Budget.

But Mr Key said it was too early to make that call.

Initial estimates of the quake damage range between $2bn and $3bn, and Mr Key said that needed to be weighed up against forecasts of rising surpluses of up to $8bn or $9bn by 2021.

"We're trying to plan over a three to five year horizon and we just don't have that feel for that yet, but I don't think - of itself - the earthquakes, as they currently stand, would over the medium term stop us wanting to do other things."

Mr Little said one of the failures of the Key-led government was that wages had not increased in the way that Mr Key had promised in 2008.

"I meet so many people who tell me it's not just a year that they've gone without a pay rise, it's three years, and five years and six years, so a whole heap of people struggling to make ends meet, terrified of the one-off costs that might hit them, so in the absence of doing anything meaningful to lift wages, John Key's left with tax cuts in the hope that that will fill the void - well it's not good enough."

Green Party co-leader James Shaw said it made no sense to be talking tax cuts at a time like this.

"I just think it's weird, the people of Kaikōura don't want a tax cut, they want a rebuild and I would imagine most of the rest of the country would be saying that would have to be an immediate priority."

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