Dave Gee: Life from Right Field

It was revealed late last week that the Labour-led minority coalition Government is sitting on a massive operating surplus of $8.7 billion.

But still Finance Minister Michael Cullen continues to act like a spoilt child with too many toys, blatantly lying to uninformed journalists about the benefits of a huge tax package unveiled this week by Australian Treasurer Peter Costello.

Cullen claimed "there was nothing in the Australian tax cut package for those earning under $30,000 a year".

Either he is seriously misinformed, or seriously mathematically challenged. For most low income workers in Australia, their first $20,000 of annual earnings would effectively be tax-free once the full package is implemented. (The tax-free income level for senior citizens is higher again).

David Farrar over at Kiwiblog has calculated that someone earning "$30,000 a year" (whether single or married, and with or without children) will pay just $1,500 in tax... which translates to an average tax rate of just 5%. (A NZ worker on $30,000 currently loses $5,730 in income tax each year!!)


A generous tax-free threshold is something New Zealand's next Government needs to address as a priority. Forget the arguments from the left that "tax cuts benefit the rich"... introducing a 0% tax rate on the first portion of income means every single workers start off on the same footing.

A 'Personal Tax Allowance' is common overseas... in the UK the tax free amount is currently £5,225 (~NZ $14,000). Even the Green Party (at the last election at least) are in favour of a 0% tax rate for all New Zealanders... for the first $5,000 of income at least.


On top of the tax-free allowances and lower tax rates, Australian workers also get an extra 9% of their gross salary (minimum) paid by their employer directly into their personal superannuation plan (by contrast, New Zealand workers enrolled in KiwiSaver can look forward to a whopping 1% contribution from next April, rising to 4% by April 2011).

Again, check out Kiwiblog where David Farrar has done a great breakdown and analysis of the relative potential tax bills between New Zealand and Australian workers, based on Costello's plan...