Hive News Tuesday: Key says 'hockey sticking' surpluses will allow tax cuts, extra social spending and debt repayment

John Key indicated yesterday that the budget surpluses to be revealed in next week's Half Yearly Economic and Fiscal Update (HYEFU) from the Treasury will be large enough to do it all: tax cuts, social spending, debt repayment and earthquake recovery.

Given a TVNZ poll broadcast last night showed voters preferred social spending to tax cuts, Key sought to reframe the debate away from a simple choice between social spending and tax cuts. The Colmar Brunton poll found 48% said surpluses should go on public services, 17% wanted tax cuts and 31% preferred debt repayment.

"When you see the HYEFU numbers, what you'll see is the budget surpluses start hockey-sticking up and they start getting quite big," Key told his post-cabinet news conference when informed of the poll results and asked if the surpluses were big enough for the Government to "do it all."

"I think when you see the numbers next week, that's what you'll think as well," he said.

"If the conversation is solely 'is it health and education vs a tax and family package', that's a very different discussion to one that says the Government is going to spend more money in health and education, it's going to spend more money on less-well-off New Zealanders, and it's also going to do these other things and it's going to repay debt in nominal terms and it's going to get debt down."

"And I'm telling you now, you might be having this debate today, but in a year or two from now the argument will be 'why is the Government, when debt is well and truly on track for its target of GDP to be below 20 per cent, why is the Government building bigger and bigger surpluses?"

However, he stopped short of saying the Family and Tax package unveiled before next year's election would be "distributionally neutral" in the same way the Government promoted the 2010 'Big Tax Switch' package.

National tourism levy in the offing

Elsewhere, Key said he was open to discussions with Phil Goff over his plans announced yesterday for a regional fuel tax and a NZ$5/night levy on tourists, but that he preferred any levy to pay for infrastructure be applied nationally, rather than locally.

If we're going do something in terms of that sort of mechanism, then I think we want to do it nationally and don't think we want to do it locally," Key said.

"Auckland may well have some tourism issues, given so many people flow into Auckland, but the reality is so does Queenstown, so does Taupo and so does the rest of the North Island," he said.

Key noted that a Working Group on Tourism Infrastructure led by Christopher Luxon had lodged a report with him yesterday, which he had yet to read. It would be released in the next week or two and would include options to deal with infrastructure shortages linked to the tourism boom.

Twitpic of the day:

Cartoon of a new game show: 'Facts don't matter'

Tweets of the day:

WallaceLChapman:

Entry fee to visit AKL? Would you do it? Get to wear sunglasses inside New World, spot Sally & Jamie, eat unbaked baking. $20 well spent

Have a great day

cheers

Bernard