Cullen to meet key investors in Hong Kong, Tokyo and New York
Finance Minister Michael Cullen will meet key investors in Hong Kong, Tokyo and New York during his first overseas trip since the coalition Government took office.
April 12 - Hong Kong
Dr Cullen is meeting with government officials, the Hong Kong Bank, Bank of Asia and the HK Monetary Authority.
He is delivering a speech to the Asia Society titled New Zealand in the Global Economy. He has interviews organised with CNN, the South China Morning Post and the Asian Wall Street Journal.
April 13 - Tokyo
Meeting with Nomura Securities, Ministry of Finance, Economic Planning Agency, Morgan Stanley and the Bank of Japan.
Speaking to the Japan National Press Club: New Zealand: A Stable Presence in the Asia-Pacific Region.
He has interviews with the Nikkei and Nihon Keizai Shimbun and others.
April 17 - New York
The Minister is meeting NZ government bond holders at a breakfast hosted by Deutschebank, a dinner for investors hosted by Ambassador Jim Bolger and is addressing the American Australian Association - US/NZ Council: Stability and Growth.
He also has meeting with JP Morgan, Moody's Investor Services and the NY Federal Reserve. Dr Cullen is attending a high level UN Economic and Social Council and the British Chancellor of the Exchequer.
Public Backs Super' Fund
Many New Zealanders have warmly responded to the Government's intention to partially pre-fund the future costs of super' through a targeted NZ Superannuation Fund.
There is a clear recognition at almost every level of New Zealand society that something must be done and be done quickly. People are sick of politicians dumping the issue in the too hard basket.
The aging of the population poses a huge policy challenge for the Government. One of the reasons the country is able to run budget surpluses now is that the baby boomers are in the late 40s to early 60s. They are often at the height of the careers and are paying much more to the Government in tax than they are taking out in social services.
But when the baby boom generation begins to retire that position will be suddenly and dramatically reversed. The tax base will shrink and there will be more people reliant on the support of the tax dollar.
NZ has only three choices. We can [A] cut future pensions or return to some form of mean testing, [B] increase the tax burden on future generations of workers or [C] smooth the costs by putting aside some savings now.
Pre-saving has the added advantage that the money can be invested to provide a second income stream.
Taxation
Much has been achieved in the tax area since the Government took office. The signal achievement has been the introduction of a new 39 cent top personal tax rate on incomes over $60,000. The move will affect only 5 percent of taxpayers but the money it raises is essential to the Government's social and economic spending programme.
The new tax has required other legislation to deal with the downstream effects. This has enabled the Government to remedy a long-standing unfairness in the Fringe Benefit Tax regime.
We have introduced a three-tier FBT regime to ensure that workers pay no more tax on their fringe benefits than they pay on their wages. In the past, the FBT has been set at a single rate equivalent to the top income tax rate. As a result, workers in receipt of fringe benefits but not in the top income bracket, were over taxed.
We are also acting to close opportunities for tax avoidance. In the area of company superannuation schemes, we managed to do this while also providing a tax incentive for high-income earners to save for their retirement. Provided the scheme is genuine and the savings locked in, they will be taxed at 33 cents rather than the 39 cent rate.
Work to counter tax-avoidance through the inappropriate use of companies, partnerships and trusts is continuing.
Coalition Relationships
Michael Cullen, speaking to the Labour Party Regional Conference on April 1, paid tribute to our Alliance partners and Jim Anderton for their major contribution to the stability and success of the Coalition Government.
"Its not an easy thing to be the minority partner in a coalition. Initially, there is a tendency for the success of the government to be credited to the much larger partner. But the fact is that a coalition government cannot work effectively if the minority partner is obstructive or difficult.
"That has not been the case in the Labour-Alliance partnership. This is not simply a Labour government with Alliance support. It is a coalition and we must continue to acknowledge and respect the role of the Alliance within it. And, at a personal level, I want to recognise the extent to which Jim Anderton and I have been working together on a range of matters, even where we begin from markedly different positions."
ACC
New legislation that returns workplace accident insurance to a single public scheme was passed last month.
As Minister for Accident Insurance I am proud of Labour, Alliance and Green MPs for holding their nerve and reversing National's unmandated plunge into a private competitive market for accident insurance.
The new legislation means that for the next three months from 1 April to 1 July this year:
- Employers and self-employed may choose to return to ACC
- All new employers and self-employed will be insured with ACC automatically
- The accredited employers programme assessments will begin.
From 1 July this year:
- ACC will cover all work and non-work injuries
- Private insurers will not provide cover for any new injury claims after 30 June, and will manage out those claims for injuries occurring during the pre-July 2000 cover period.
We have ensured the survival of a no-fault, 24-hour cover accident compensation scheme.
ACC is already able to offer cheaper premiums than the private sector and for the first time the Accident Compensation Corporation will be required to focus on injury prevention, rehabilitation and compensation, in that order.
