PHIL GOFF & RAHUI KATENE interviewed by PAUL HOLMES
PAUL The Maori Party have long campaigned for the removal of GST off healthy food, and now the Labour Party long opposed to it of course are beginning to think it's a good idea, altering the GST. Labour Leader Phil Goff says his party is close to adopting what he calls a more workable policy to take GST off fruit and vegetables. Maori Party MP Rahui Katene's private member's bill, Goods and Service Tax Exemption off Healthy Food Amendment Bill, is likely to come before parliament on Tuesday. Revenue Minister and United Future leader Peter Dunne, is anti it, he says it'll cost too much and that working out what is healthy food is too complicated, and National are also unwilling to breach the shield of GST. We were very keen to hear Mr Dunne's arguments against removing GST from food but his diary has said that he's unable to come on Q A this morning. National ministers were also unwilling to front on this. But we do have Labour Leader Phil Goff and the Maori Party MP Rahui Katene, welcome thank you very much both of you for coming Q A.
Ms Katene therefore would remove GST on what specifically?
RAHUI KATENE - Maori Party MP
Fruit and vegetables, on cereals like bread and rice, on milk products but not cream products, and on meat products like meat, fish poultry, beans those sorts of things.
PAUL Eggs, nuts, seeds and legumes.
PAUL What about salted peanuts? Cos they're not always bad for you.
RAHUI Not salted peanuts.
PAUL What about the Tegel chooks in the supermarket, that have got sage and onion stuffing, they're raw chooks, they're poultry, but they've got some processed, probably with a lot of butter inside. GST?
RAHUI Those are the sorts of things that we'd like to be able to discuss at Select Committee.
PAUL Those are the sorts of things that make the bill so untenable aren't they?
RAHUI Well they're not because this is the discussion that can be had, and these are the sorts of things that are already outlined in the Ministry of Health guidelines and the Heart Foundation's guidelines.
PAUL Yes they would be discussed but they would be discussed wouldn't they ad infinitum in the court system, right up to the Supreme Court?
RAHUI Well these things have been dealt with overseas in other countries, and they've sorted that out, why can't we follow their lead?
PAUL But go to the High Court to sort it out, and Abisco in the UK recently went to the High Court, the High Court of the United Kingdom to decide whether an Nabisco Pringle is a chip or a biscuit. That's very expensive for business.
RAHUI And why don't we learn from those overseas experiences and deal with that there? But you know the whole thing is it's about saving lives, because there are 11,000 people a year who are dying from eating related disorders.
PAUL We have a 500 million dollar a year obesity cost to the country, that's true. But the points that I've been making about you know the Nabisco and whether a cheese sandwich is gonna be GST exempt or not, this is why Labour would opt for a simple exemption of fruit and veggies, yeah.
PHIL GOFF - Labour Party Leader
Well fruit and vegetables are easily definable, there's no boundary problems, and we know that they're always healthy. So that's a very good place to start. But hey there's two reasons Paul why you want to do this. Firstly is that GST is now 50% higher than it is in Australia, that's putting pressure on family budgets on basic items, we know it's regressive, hurts the low income families more than the high income. But secondly that study that's come out of Auckland University, showed that if you dropped the price by 12.5% people actually consumed 11% more healthy food. So if you want to get people off the fast foods and on to the healthy foods, what better way to do it than send a clear price signal?
PAUL Yes, I know the study you're talking about, they surveyed 1100 people, Auckland and Otago University, 1100 people at supermarkets, 11% of them said they would buy more fruit and veggies.
PHIL No no no. No no, it wasn't what they said Paul.
PAUL But they're still going to go and buy the fast foods.
PHIL But it wasn't what they said, it was the receipts of what they spent the money on. The study is a sound one, it showed that people ate more healthy food if you sent them the right price signal. Look the government's sending a price signal about cigarettes, it says we're gonna whack up - they've already done it - whacked up the excise tax on cigarettes to stop people spending more on cigarettes. Why wouldn't you do it in a positive way and say we know fruit and vegetables are good for you, we know we've got an epidemic of obesity, the third highest fatness race in the world, why wouldn't you send a positive signal which we know works, to get people to eat more healthy food?
PAUL I have to say Mr Goff you're making me extremely uncomfortable, and you may be making people at home extremely uncomfortable. I know that you're wearing stripes but I can see the spots. You were one of the designers of GST. For 30 years you've campaigned against any changes to GST, suddenly we're talking exempting certain foods.
PHIL There's two reasons for that, and I've explained them to you. Firstly the GST is now 50% higher than that of Australia, it is hurting people on lower incomes, the big taxcuts went to people you know like some of the people in this studio, you and I, we got a hell of a lot more in the taxcut, but the GST is hurting those on lower, and lower middle incomes. Secondly, that study is new information, it's definitive information, we've got a crisis, this is a positive way of dealing with it.
RAHUI Well the thing is we keep hearing that it's going to complicate the GST system if we take it off something and not off other things, but in fact the thing is that we're already not having GST on financial transactions. So if we can have it exempt from one area why not from this area. And it works, 25 to 30% of people have said it is cost that prevents them from buying healthy food and if we can get the price off they will buy it.
PHIL I've also looked at the issue of compliance cost Paul, because that was one of the things that worried me. When we brought it in it was 85, we didn't have a developed system of computerisation. The Aussies have now got a system that even those that were opposed to exemptions say it's simple, it's straightforward, it's low cost.
PAUL Well that is true, in the UK and Australia they've now got what they regard as quite effective systems for exemption. But why don't we get frank? I mean I mentioned salted peanuts before, every now and then I like a salted peanut, I don't think I'm ruining - putting myself into an early grave with the odd salted peanut. Why don't we get frank? There's a target we're after. We're talking about McDonalds fast food, we're talking about KFC, why don't we simply tax those foods more, make those foods more price prohibitive, leave the rest of us alone?
RAHUI The problem is when you do that is that these companies have got the power to decrease their prices anyway. You've got a bottle of Coke, you've got a bottle of milk, Coke is always going to be cheaper than milk, if we take GST off milk then our people are going to be able to afford it.
PAUL Well why not put a tax on sugar, Romania and Taiwan are currently considering fat taxes, they would tax fat, sugar, like fizzy drinks, and fast food.
PHIL But why are you always whacking the consumer, why are you saying - look you're gonna whack the consumer, you've whacked them with the excise tax, you've whacked them with the GST, why don't you put a positive incentive in and say look here's an incentive for people to eat healthy foods, we know from that study that if you give nutrition education, it has almost no effect, but you bring the price down it had a real effect.
PAUL Yes yes, but you've admitted yourself, we manipulate the alcohol tax, we manipulate cigarette tax, we do that, that is a positive incentive because it discourages people smoking and drinking or buying too much alcohol, why not do the same for fast foods. It's not people like you and me who have KFC once a year, it's people who have KFC every night.
PHIL But look at the situation. At the moment it's always the tax on the families that are really struggling to make ends meet with their budget. Why don't you do it in a positive way, get people to eat more healthy foods, which this study shows doest happen, by taking the tax off? Otherwise it look very much like it doesn't it, Bill English suddenly decides he'll put the tax on cigarettes, was that about good health, or was that about raising revenue?
PAUL I've gotta move to Ms Katene, but I'll just say to that you know the problem with that is you take the tax off those good things and then we've got more money to spend on the fast food.
PHIL Or for making basic ends meet, that's the real question.
PAUL Peter Dunne says this is populist nonsense, Rahui as you know, he said it sounds good but simply doesn't work, and of course if you do what your bill would do, we lost 330 million dollars in revenue, GST after all is 27% of the total revenue. If you do what Mr Goff does it's only 200 million off. Now we've already got the 500 million dollar obesity bill. Don't you see that, you've gotta find, if we do what you want we've gotta find another 300 million.
RAHUI That's right and as I said 11,000 people a year dying from eating related diseases. We're estimating that that is a loss to the country of about 100 million dollars a year. Also the government is selling government bonds, every week they're raising 250 to 300 million by selling those. If they just sold an extra week's worth that would pay for GST off healthy food for a whole year. So these are situations that you can overcome.
PAUL Are you going to be able to sell Labour's position on this to the community, given that for 30 years not only were you being one of the designers of GST, but you've held out against any changes?
PHIL Yeah I think so, because compliance costs are much less now, the studies show that it works to cut the tax on nutritious healthy foods, and because GST is now 15% despite the fact John Key sincerely promised us that he wouldn't increase GST.
PAUL Alright, so Labour want healthy food and vegetables only, don't they?
PHIL Well that's where we start, we know that's worth 200 to 250 million a year.
PAUL Fruit and vegetables, can you live with that, if Labour support you?
RAHUI We would really want to see all those four basic areas covered, because you have to have a whole healthy eating...
PAUL What are the four, fruit, vegetables...?
RAHUI Cereals, milk products and the meat.
PAUL Of course the political reality is, even if Labour vote with you when your bill comes up this week, and if you get the support of the Greens, even with all of you, Maori Party, Labour, Greens, you ain't got the numbers to take it to the first reading have you, to Select Committee?
RAHUI We haven't at this stage, we're still crossing our fingers that the government will listen to consumers and to those advocacy groups, like the Public Health Association who are very concerned about our health, and are very supportive of the bill.
PAUL But again given realities, if we're borrowing a quarter of a billion dollars a week to keep us going, how can Bill English give away 330 million bucks worth of revenue.
PHIL Well he just got that from his cigarettes Paul. You know that was something he wasn't expecting to do. The cost of putting the extra tax on cigarettes would actually pay for the cost of taking the tax off fresh fruit and vegetables.
PAUL Thank you both very much for coming on the programme, Rahui Katene of the Maori Party, Phil Goff Leader of Labour.