Future Directions (Working for Families) Bill

I think one of the things the Committee should first take note of is that even though this bill is the centrepiece of the Government’s Budget, we have just completed Part 1 of the Committee stage of the debate and the Government is already making amendments to its legislation. This shows how poorly thought out this legislation is and that it is likely to be full of flaws and, given that there is no immediate need for the appropriation to be made, it shows that this bill should have gone to a select committee.

Further, coming to Part 2, “Taxation related amendments”, there are some 40 pages in which a number of calculations spell out how this benefit will be delivered to people who previously thought they could look after themselves because they had a job.

This will have a number of mistakes in it. It is quite unacceptable that the Committee will be given the limited time of, perhaps, 2 hours to consider these 40 pages of calculations. I predict that within a very short period of time—possibly before the bill takes effect in October this year, in April next year, and in April 2007—the Government will have to come back to Parliament to correct it.

I am amazed by the figures I see in these tax calculations. What it tells us is that there are an appalling number of New Zealanders on very low incomes. It tells us that this Government has squandered the opportunity to raise the living standards and incomes of New Zealanders over the past 5 years, when New Zealand has experienced some of the highest commodity prices ever and has had very, very favourable trading conditions, and when the Government itself has been able to record very large surpluses. These figures are not significantly different from those introduced by a National Government for a similar sort of support back in 1998.

It is a sad indictment on the Labour Government that it should be waving banners in front of people’s faces and saying this is “your Budget”, when that statement is just a cynical, laughing attempt to get a vote off them. I ask Mr Cunliffe, the outgoing member for New Lynn, how long he thinks it will be before the family displayed on the poster stating “Your Budget” sees one cent of it. He does not know. That is the problem we have here today. Even the Government’s own members do not know what the effects of this bill will be. They have been wheeled into a room by the Minister of Finance, accompanied by the Minister for Social Development and Employment, and told that this is a marvellous Budget that will deliver extra dollars into the hands of low-income New Zealanders, whether they are in work or on a benefit, and that we should be celebrating that.

I want the Minister to confirm that the family on the poster stating “Your Budget” will not see a blind cent of that money prior to 2007. If he is going to stand up and say that it will, then I hope he outlines the circumstances of that family so that we can all learn what the Government is planning. It seems to me that there is a great deal of cynicism about a poster that states “Your Budget”. Most people would say, “If that’s my Budget, then I’m being roundly abused. I am being asked to go to work every day, to put in my 40, 45, or 50 hours a week, and at the end of it, still be a State beneficiary.” New Zealanders will not buy that.

I am delighted to take a call on this part. I start my comments by reminding people that I remember very well the “mother of all Budgets”, prior to my coming into this place. I remember, as a result of that Budget, the redistribution of income from the very poor to the wealthy. Let me tell members what happened as a result of that redistribution of income in my city. We saw businesses close. The theory of trickle down simply did not work. Those who became wealthy remained wealthy, and the poor had to scrap and fight for a living. The workers of this nation saw their jobs put in jeopardy by those others who were so desperate they worked for less. We saw workers—who had been told their wages and conditions would never be attacked—lose their penalty rates, lose their work on Saturdays and Sundays, and lose their overtime rates, so that their families had to go to the Department of Social Welfare to get enough to pay their bills.

We know that that party opposite, despite the fact that its members are not prepared to say so now, would see this package of change—this redistributional effort made by this Government in this Budget—gone by lunchtime, and we know that Gerry Brownlee, Katherine Rich, John Key, and Don Brash would see that their mates got the vast bulk of the money back in their pockets.

I heard Dr Cullen on the radio this morning being very heavily questioned by Morning Report’s Sean Plunket, who asked why Dr Cullen did not simply give everyone a tax cut. That family in Waihī on $55,000 a year, which is so incensed the Government has done nothing for it, will be $150 a week better off by 2007. We know that that family will be $60 a week better off by 2005, and $120 a week better off by 2006. We know that for that family to get $150 a week in the hand, delivered to it now, would mean there had to be a flat tax rate in this nation of 11c in the dollar, which would be $20 billion out of the tax take.

Members of that party opposite should stand up and tell the families of this nation how they would deliver to low and middle income families, in a tax cut that would not see the wealthy advantaged over the poor. It is about time it was the Budget of low to middle income families. For the last 20 years they have carried the brunt of this nation’s economic reforms, and we are giving them a little bit back. It is about time! I am sick and tired of my constituents having to go to Work and Income to get a special grant to buy a second-hand refrigerator. It is time they had the ability to live with some decency, and we are restoring that now. We have restored a lot of things to make life a little bit easier for them.

I have had enough of the National Party’s cant. It is time its members stood up in this Chamber and told the families of this nation they either support them or they do not. I say they do not. I say they do not give a damn. I say they do not give a damn for anyone other than their rich mates, because the distributional efforts that have been made in the last 20 years have been for the rich. Now a little bit of balance is being restored to the battlers who have worked hard to make sure they pay for their families.

I know many of those people. They work in the freezing works, the fishing industry, and the timber industry. They sweep the streets and they collect the garbage. They do the work that members on that side would not contemplate doing, and it is time we gave them something back. The thing those workers will understand, which members on that side will not understand, is that we are giving it back to them in a way that is sustainable now and into the future. That is why we are doing it over 3 years. That is why we are making sure that it is fiscally prudent, and that we can continue to pay our debt. What those families understand when they get their wages every week, is that if they do not pay their rent, their phone, or their electricity, those things are taken from them. So what gives for mum and dad is food, because the kids eat but mum and dad miss out.

I compliment the previous speaker on his passion. We could feel it from over here. He made a lot of sense, but the bit I do not understand about the whole thing is, if this legislation is so urgent, why did the Government veto my earlier amendments? If what Mr Peck is saying is true, why did it veto my amendments?

💬 Hon Member: Money.

Money, the member says. Money, money, money—that is the old Abba song. I will play it to him one day.

I thank the Minister, because he has taken note of one point we made. He recognised that and acknowledged it publicly, which is a small gain. It is not enough, but it is a small gain. Perhaps Winston Churchill’s words can best describe New Zealand First’s attitude to this—and maybe Mr Baldock would like to take notice, because I hear him castigating, by implication, my character.

Winston Churchill once said: “Never give in. Never give in. Never, never, never, never—in nothing, great or small, large or petty—never give in, except to convictions of honour and good sense. Never yield to force. Never yield to the apparently overwhelming might of the enemy.” Those words describe New Zealand First’s attitude to families. We will not roll over and say we support families—and put it into practice next year. We will not roll over.

That reminds me of a quote by another English Tory politician and it also describes United Future’s position very well. Chris Patten, the last British Governor of Hong Kong, once said: “In democracy everyone has the right to be represented, even the jerks.” When it comes to United Future’s attitude to family, I think that describes that party.

I shall give United Future and the Committee another opportunity to recognise the worth of families. New Zealand First will be putting forward a new definition of families—namely, the Craig McNair definition, which I have here, and I shall read it out to members, because I know they are interested: “For the purposes of this Act, family is defined as—(a) in which there is at least 1 adult member; and (b) in which the members have a biological or legal relationship.” For the benefit of Mr Dunne in particular, I have to tell him that his No. 8 spokesperson was on Radio Rhema the other day actually giving some merit to that clause. Mr Baldock shakes his head. I have a tape of what he said.

💬 Darren Hughes: Table it.

I will. It is not in the Chamber at the moment. However, I can tell members that by the time we finish debating the legislation, it will be here. I will have a transcript and I will tell members exactly what that member said on Radio Rhema. Outside this Chamber we call people hypocrites who tell the public one thing and the Parliament something different. However, members are not allowed to use that term in this House.

💬 Hon Peter Dunne: I raise a point of order, Madam Chairperson. I have listened to this speech with some interest. Generally, I would give it the charity of my silence, but to imply that my colleague is being dishonest is a breach of the Standing Orders of this House, and you should pull him up on that.

The CHAIRPERSON (Ann Hartley): I thank the member. He is quite correct. I ask Mr Brown to withdraw that remark.

I withdraw the implication of Mr Baldock being dishonest.

💬 Hon Peter Dunne: He can’t do that.

The CHAIRPERSON (Ann Hartley): The member will just withdraw and that will be the end of it.

I withdraw. I am prepared to table the transcript—

💬 Deborah Coddington: I raise a point of order, Madam Chairperson. I am sorry to interrupt, but I seek your advice on this. You might not have heard, but the Hon Peter Dunne was making what I would consider unparliamentary interjections on Mr Brown when he was speaking. Is it general practice that members can take a point of order when someone who is being fiercely interjected on responds with a comment about a person in that member’s party, and then the same person who has been interjecting using unparliamentary terms, wants that member to withdraw?

The CHAIRPERSON (Ann Hartley): I thank the member. If the member did hear something she considered to be unparliamentary—and I certainly did not—she must raise it at the time.

💬 Hon Peter Dunne: I raise a point of order, Madam Chairperson. I think I might be able to help the member. I think I said that Mr Brown was a sad old man who had forgotten more than he had ever learnt. If that is unparliamentary, then I invite you to rule on it.

The CHAIRPERSON (Ann Hartley): That is not a point of order.

I assure the Committee that I am not worried about anything those has-beens say. They will be going to the scrap heap—big time. I have been insulted by the professionals—the watersiders and seafarers of this country. So there is nothing Mr Dunne could say that would worry me, at all. I have seen and heard the lot. Mr Dunne has an opportunity to rectify—

💬 Katherine Rich: That’s not very Christian from a Christian party.

Is it the Christian party? Oh, no it is not Sunday! They are Christians on Sunday or when they are on Radio Rhema.

I am amazed to find this sort of levity in the Chamber today. It shows that everybody here is totally in support of this very, very significant Future Directions (Working for Families) Bill. We are light-hearted, optimistic, and really thrilled. Even though we have heard very sad, bitter, and cynical opposition from members opposite to the Budget yesterday and, now, the introduction of the Future Directions (Working for Families) Bill, I know that mothers and young parents in the Opposition like Simon Power really do believe that families deserve assistance. They really do understand that unless we front-end load investment into families we will never ever get over the stigmatisation of at-risk families in this country.

Any member of this House who has been an electorate MP, who has sat down with families in despair, gone through their entitlements under the old Social Security Act, and worked out that they are getting all their benefit entitlements but still cannot afford to pay their indebtedness, get the power restored, or get that food parcel, knows in his or her heart of hearts that this legislation is an absolutely fantastic fillip for families in New Zealand today. Members opposite talk about our not understanding that flat-tax rates—their idea of the future—actually provide a benefit. But we are front-end loading families so that they are resilient, are optimistic, have hope, and ultimately participate in society in a productive way, and that is what this bill achieves.

It also achieves a beautiful elegance in the benefit system, not a dependency. I congratulate the Greens on the work they have done with us in our electorate to help beneficiaries understand how to get their full entitlements. I made several phone calls from my office last night to check back with a few of my constituents who had had to have help. They had already rung the 0800 number. They had already used the 0800 number to learn what would be in the Budget for them, and they were absolutely thrilled. They were prepared to wait. Those constituents did not even know there was an election next year—that is how disempowered they have been. But they knew that help was on the way for them, and I found that absolutely gratifying.

I also had a phone call from my son, who would like to thank Mr Maharey. In 3 years’ time, when his daughter, who was born last week, is 3, she will be entitled to 20 free hours of childcare. He said that was fantastic. My son is young and upwardly mobile, he has a huge student debt and a wife who wants to go back to university, and they will need childcare, so Mr Maharey is helping them enormously. He thanks Mr Maharey and Dr Cullen for a fabulous Budget yesterday.

Once Opposition members truly read the detail in this bill they will see the elegance of it, see the change to the benefit system whereby people will know what their entitlements are, and then will feel that they are truly empowered to grow healthy and resilient families. I thank Mr Maharey.

I rise to speak to the amendment that has been put on the Table by Mr Peter Brown. It is another attempt by New Zealand First to make this bill better—though its first attempt went down in a screaming heap. New Zealand First members have been making claims all week about how they will govern when they get into power, yet it was clear from the first amendment that they did not understand the budgetary process.

I have to say, though, that there are some problems that New Zealand First members would solve if they got into power. One of them would be the traffic congestion problem in Auckland. If New Zealand First ever got its hands on the Treasury benches again, so many people would leave New Zealand that there would be no problem with congestion anywhere in the country.

This definition that has been put forward for consideration is nothing short of simple political point-scoring. We had a very interesting discussion on Radio Rhema yesterday, when New Zealand First tried to convince New Zealanders that somehow this definition would solve everybody’s problems, and questioned how we in United Future could be opposing civil unions and the omnibus bill yet could have a definition of family that, supposedly, opens the door to same-sex parenting. Well, let us look seriously at New Zealand First’s definition to see whether what its members proudly claim is correct—that is, that their definition does not cover same-sex families.

First of all, their definition excludes orphaned groups of siblings who have tragically lost their parents. [Interruption] I hope New Zealand First members will be quiet for a moment and consider this. According to the New Zealand First definition of a family, there must be at least one adult member. So not only could a family of three or four kids, say, aged 14 to 6 suffer the loss of their parents overnight but also, with New Zealand First’s definition of a family, they would suffer the loss of instantly ceasing to be a family, which would cause more pain for those children. We were a little bit clearer in the use of words in our definition to make sure we did not exclude anybody.

Secondly, does their definition exclude same-sex families in which there is at least one adult member and in which the members have a biological or legal relationship? Clearly, it covers same-sex families in this country right now, because they may have a biological attachment because of the way they have become involved with in vitro fertilisation treatments and so on—something I am very strongly opposed to. So their definition would include them. Everyone in this Parliament knows that the Care of Children Bill, perhaps soon to be passed by the Labour Government with the support of the Greens, will give legal recognition, through guardianship, to those same-sex families, so this definition is nothing more than simple political point-scoring. It has nothing to do with improving this legislation, at all.

This bill that we are supporting and debating today is about families. It is about kids. We want to help the children of New Zealand to be able to have a reasonable standard of living, through giving assistance to those who are raising them. Everyone who knows me knows that I have very strong beliefs about marriage—marriage between a man and a woman. In fact, I will introduce a member’s bill into the ballot very soon that will make it clear that our Marriage Act relates to marriage between a man and a woman. I disagree with gays claiming the right to have children and to raise children, because I believe that it is the right of children to be raised by a mother and a father—that is the child’s right, not the adult’s right—but given that society has already allowed the circumstance where children find themselves being raised by two fathers or two mothers, it would be adding insult to injury for us to come up with a definition of family that excluded them. That is why United Future will not support this amendment. It is simply a political game to try to gain points.

💬 Peter Brown: The member didn’t say that on Radio Rhema.

I will be happy to go on Radio Rhema at any time with the member to discuss this, as we have been doing for so long. This legislation should not exclude any child in New Zealand, whatever the make-up of his or her family, and that is the point that we will continue to stand up for. We will not exclude one single person from the benefits of this very good legislation.

We have heard a lot from the Labour Party today about how good this bill is. Well, if it is so good, why is no one sitting on the front bench? Where is the Labour Party? Why are its members not here in the Chamber supporting the bill, talking about it, and defending it to the hilt? We have heard from one member that there is a beautiful elegance in this bill. If that is the case, why are Labour Party members not in this Chamber demanding their turn to debate it, so that they can talk to their constituents? We have heard it is a fabulous fillip. That is a joke, is it not? If that is the case, where are the Labour Party members? Why are all these empty seats before me? Where are the big guns? Where are the people who are going to debate this bill?

As for the 0800 number, so far the only use of the 0800 number to members on this side is to find out that some of the original figures were incorrect in the first place. I hope New Zealanders are ringing the 0800 number.

💬 Gordon Copeland: I raise a point of order, Madam Chairperson. I am sorry to interrupt the member, but I think it would be quite nice actually to find which clause of the bill she is talking to in this Committee stage. There has been no mention of anything yet.

The CHAIRPERSON (Ann Hartley): I guess I have been fairly lenient, I suppose, is the word, because—

💬 Peter Brown: You’re very lenient on their members.

The CHAIRPERSON (Ann Hartley): That member knows the rules. When I am ruling on a point of order there will be silence. I say to Mr Copeland that I have been lenient over the last several speakers. I now ask members to address Part 2 of the bill.

In speaking to the point of order, may I say we have just had a speech from Mark Peck, who said nothing whatsoever about the bill. We had a speech from Steve Chadwick, who did the same.

The CHAIRPERSON (Ann Hartley): The member will pleased be seated. I have ruled on Mr Copeland’s point of order. I have indicated that, yes, I have been lenient. I now ask that members speak to Part 2 of the bill.

I raise a point of order, Madam Chairperson. I understood that members who rise to speak in this debate are able to make mention of comments that previous speakers have made. In fact, all of the comments I have made so far have been in relation to comments made by other members who have spoken, and in fact have been rebuttals of comments that other members have made.

The CHAIRPERSON (Ann Hartley): That is true. However, I have ruled, and I have ruled that I have been lenient, and that there has been some leeway this morning. I am now saying that the member has raised a legitimate point of order, and I am now asking people to speak to the bill.

I raise a point of order, Madam Chairperson. As a point of clarification, are we led to believe that because a lot of other members have spoken and had their say, when a National members stands up to speak you will not be lenient from this point on—now that the Opposition is having a say?

The CHAIRPERSON (Ann Hartley): I have already ruled on that, and I have asked members to return to the bill.

Part 2 is about the taxation-related amendments. It has been very interesting to hear some members from that side talk about how excited they are about some of the headlines they have read up and down the country. I would like the Minister for Social Development and Employment to take a call to say how he feels about the Otago Daily Times headline that states: “Budget on the never-never”. That confirms what I think four out of five New Zealanders have already established—that there is nothing in this bill for them. Mark Peck spoke about the battlers. He said this bill was all about the battlers. Well, the Otago Daily Times states: “Battling New Zealanders will have to wait.” So, once again, we are seeing confirmation that this bill does not deliver anything for most working New Zealanders at all, and for those to whom it does deliver something, it drip-feeds it out over a couple of years.

The other point the Minister made was about the tax implications of the accommodation supplement. It was very interesting to hear Steve Maharey talk about the accommodation supplement. When he was in Opposition he railed against the accommodation supplement and said things like: “The Government will rely on shuffling money from people who will have to register for the accommodation supplement to get that supplement and give it back to the landlord, who will give it back to officials, who will put it into the accommodation supplement in order to give it back to those people.” Well, has he not changed his tune? He has gone from thinking the accommodation supplement was a waste of time to further entrenching it. He used to think it was just a payback for landlords. He originally said that New Zealanders needed to have it explained to them that the accommodation supplement was a hoax, and that it seemed silly for the Government to take money off people through taxation only to give it back as the accommodation supplement. Well, has the Minister not changed his tune? I think he needs to take a call and explain why he is now so keen on the accommodation supplement, when he was so anti it when it was first proposed by National.

The next thing that the Minister said he was aiming to do was to simplify the benefit system and simplify the taxation implications. Well, I challenge the Minister to go out into the street, show this bill to New Zealanders, and say: “There you go. You work out what you’re going to get as a result of this bill.” I think most New Zealanders would read this bill, look at how complex it is, and say: “I’m none the wiser.” I think that is why New Zealanders have worked out that four out of five New Zealanders will not get anything out of this Budget, and that those who will get something will have to remain on a benefit for the next 3 years. I challenge the Minister to get up and explain what some of these implications are.

I think it is a travesty that the Minister has not got the guts to refer this bill to a select committee for full scrutiny. Already we have seen some amendments, and that shows us that the bill is actually a work in progress. I predict that we will be back here very soon doing some amendments to Part 2 because what has been done has not been fully worked through. It has not had the scrutiny of Parliament. There have not been public submissions. We have not seen what Treasury’s response is. The bill is going to be a disaster.

My oath, Katherine Rich is right! Let us look at Part 2 and then at what the explanatory note to the bill states. It states that the bill will “take steps to simplify the social security system.” Obviously, the Minister himself wrote Part 2. Listen to this from Part 2. I am reading from new subsection (6), which clause 39 inserts into the principal Act: “A person who satisfies the requirements of subsection (1)(d)(ii) but who in a 1 week period is not engaged in an activity related to their employment and who is on leave from that employment because of the birth of a child and who is eligible to receive the parental tax credit in respect of the child is treated for the purpose of subsection (1)(d)(ii), and for the period for which the parental tax credit is paid to the person, as being engaged in the week in the activity for the number of hours in respect of which the Commissioner is satisfied that the person would have been engaged but for the birth of the child.”

I challenge the Minster to get up and tell us what that means. While he is on his feet, could he please tell us what the next bit, new subsection (7) means—and this, I remind the Committee, is from a bill that plans to take steps to simplify the social security system. New subsection (7) states: “A person who satisfies the requirements of subsection (1)(d)(ii) but who in a 1 week period is engaged in employment for less than the number of hours required in employment for less than the number of hours required to satisfy . . .” –blah, blah, blah.

This is the reason that bills like this should go to a select committee. This is one of the reasons that they should not be rammed through the House under urgency, especially when the provisions for this bill do not even come in until October. The Minister could have got the bill through without using urgency. The reason the bill is not going to a select committee is that he does not want people to see his writing—his typical woolly-woofter degree in “bureaucratese” from Massey University, which one has to have to be able to write such garbage. The only people in New Zealand who will benefit from this bill are the bureaucrats. We will see a huge build-up of bureaucrats. A greater behemoth will spring up out of what social welfare or WINZ, or whatever they call it these days, already is. We will have lawyers employed by the hundreds just so they can “simplify the social security system”.

Part 2 makes no sense, at all. Part of Part 2 will address issues like more assistance for childcare so parents can go out to work. What about those parents who want to stay home? What about the Home Instruction Programme for Pre-school Youngsters? That programme integrates parents and early childcare, but it gets a measly couple of hundred thousand in this Budget. That programme works, but all this Government wants to do is herd children away from their parents and families and put them into institutions. What do they do to do that? They pay them a bounty. Part 2 will further obfuscate the social security system. It will not simplify it, at all. Dr Cullen is now the Minister in the chair. That is an improvement. Perhaps Dr Cullen could get up and explain to us what these two new subsections in clause 39 mean. Can he get up and tell us what they mean? They are absolute nonsense and make no sense, at all.

It has been very interesting in this debate to see the scrap between United Future and New Zealand First. We still do not know which party they are scrapping to support. They are sort of hedging their bets at the moment while National goes up in the polls. They are sitting on the fence, and we know what happens when people sit on the fence. They get bowled.

Ten percent of the workers contribute 45 percent of the tax take, and this Government is just going to redistribute more of that. As the Dominion Post commentator said this morning, there is nothing in this bill for people who work, for middle and high income families. Middle and high income families in this country are not even rich.

I really enjoy following on from a speech made by that member, and before her, Katherine Rich. I want to speak to Part 2 and the taxation-related amendments. If any member in this Chamber would know about taxation, especially GST, that member would—and we know why. That member would know all about taxation and avoidance. She would know the lot.

I want to address a couple of points for the old tumbleweeds over there. I want to quote from a former Australian Prime Minister who said: “This is the one that brings home the bacon.” We know that that crew over there are psyched out by this package. I cannot believe some of the arguments. We have just heard Katherine Rich and Deborah Coddington who, one would hope, would have some intelligence, say that there is nothing in this package for low and middle income people. Let me tell them that 300,000 families are delivered an average increase, through this package, of around $100.

💬 Pansy Wong: I raise a point of order, Madam Chairperson. I thought you had made it very clear to the Committee that this debate is now much narrower. It is confined to the amendments to the Tax Administration Act, the Housing Restructuring Act, and—

The CHAIRPERSON (Ann Hartley): Please be seated. I listened to the member. He was speaking to Part 2.

They cannot hack it—that is their problem.

💬 Deborah Coddington: I raise a point of order, Madam Chairperson. Where in Part 2 does it refer to tax evasion by other members of the House?

The CHAIRPERSON (Ann Hartley): The member will be seated. I have ruled on the point of order.

About 300,000 families on between $25,000 and $45,000 are delivered an average increase of about $100 a week in direct income assistance. That is fantastic. I refer members to the $55,000 bracket. Let us go through it. This package has been attacked by members on that side because the measures do not all come in in one hit. Why is that? Because that would not be sustainable, and sustainability in an economic sense was something that the old tumbleweed Lockwood Smith and a few of the others were actually for before this package came out.

So let us have a look at it. This is what occurs. Under Part 2, a single-income person on $55,000 with four kids will be $70 a week better off in April 2005. In 2006, that person will be $110 better off, in 2007 will be $150 a week better off, and we will maintain our surplus.

But in terms of taxation let us look at what the alternatives would be to Part 2. If the National Party had its way, we would get a flat tax of 11c, costing $20 billion. I want to know from that side over there, and their rich mates in ACT, and using that $20 billion, which hospitals and schools they would close and which pensions they would cut. They should front up and tell us now, because, in talking to Part 2, I say that we have fronted up in this bill today with a policy directly targeting hard-working low and middle income families.

What have we heard from the Opposition? Zip. I tell members why. They are psyched out, absolutely psyched out. The old “tumbleweed” over there can grin at me, but I invite him to get up and give us his tax policy and keep talking about it. Because I say that under Part 2—

The CHAIRPERSON (Ann Hartley): The member knows that he must refer to members by their correct titles.

I apologise, I was referring to Dr the Hon Lockwood Smith. Our policy actually targets low and middle income people. I just use the words of the Prime Minister yesterday. National Party members say this Part 2 is an election bribe. That is what they have been going around the country saying. Well, why is it, as the Prime Minister said, that when we target hard-working, battling, low and middle income people, they say it is an election bribe, but not an election bribe when they propose a $20 billion tax cut that will give people like Dr Smith and Gerry Brownlee 600 bucks a week extra, and then somebody on $55,000 will get 39 bucks a week extra, and somebody on $39,000 will get zero? Because if we stack up our figures in Part 2, and our calculations targeting low and middle-income battlers, against what those members say they will do, we know what will happen.

We know this policy has been well received because it is honest, because it is over 3 years, and because we want to make sure it is stable. I suppose what Dr Cullen could have done is what the National Party says he should have done—plonked it all in 1 year. Then we would have been criticised, I am sure, for spending the whole lot in one hit. Then they would have stood up and said that this is a traditional Labour Budget—sell everything off, tax and spend. One cannot have it both ways. This is a sustainable package. Mr Brownlee nods. How two-faced is that? That is true. Did the member nod?

💬 Gerry Brownlee: No, not at you mate!

Of course that member comes from Ilam, and those income earners in the tax bracket that will be affected by his tax package are all in their big, flash houses, all wearing their jewellery on their wrists, and saying: “This is terrible, isn’t it?”, because the low and the middle income earners get a break. Mr Brownlee’s mates in Ilam—and I look across at him with glee—do not get a break, because they are doing OK.

I am just so glad to follow the previous speaker, Clayton Cosgrove. He is the chairman of the Finance and Expenditure Committee, of which I am also a member and to which ordinarily, I thought, Part 2 might have gone.

We are very concerned because that select committee recently recommended to the House a taxation bill with over 2,000 pages—and the House generously supported the passage of the bill, which the Hon Dr Michael Cullen sponsored—but now the Hon Dr Michael Cullen, together with the Hon Steve Maharey, has suddenly dropped in this piece of legislation, Part 2 of which makes taxation changes, without it having been scrutinised. Shortly after the House passed the taxation bill we had a lot of amendments—and that is after the select committee spent 1 whole year deliberating on it. Today, under urgency, I really would like the Minister of Finance to stand up and give us an assurance that we will not return in a short time to debate further amendments because of some technical hitches or because some clauses do not have the right references to the taxation Act. For a Labour Government that says it is looking at simplifying taxation, I thought that was a very strange way of going about it.

The junior Labour whip said that if anybody does not understand Part 2, which relates to the calculation of family tax credits, he or she should ring the 0800 line and get the answer. But our very diligent spokesperson on social welfare, Katherine Rich, has already spoken about the 0800 hotline last night. She is the future Hon Katherine Rich, because she would be a good Minister. She understands that hard-working New Zealanders do not want to stay on a benefit. She would move them to work, in a caring and constructive manner. Last night she rang the hotline and she has already denied the public relations spin put out by the Labour Government about a family with a 16-year-old child. That family, in effect, will not have relief of $170, because that child in 3 years’ time will no longer be eligible as a dependent child. So on day one the package was already wrong.

How can this Committee and the public have confidence that Part 2 is absolutely error-free, particularly if I share what I have read, for example, about the calculation of subpart KD credit? I am not too sure, actually, how many people understand this, but it states that there are complications. Clause 29 has a few long sentences that tell people who want to know the amount they will be entitled to that it is $3,744 if the child is under the age of 16, $4,420 if the child is 16 years or older, or a “weighted average of the amounts in subparagraphs (i) and (ii) that reflects the proportion of the period …” Well, I am not too sure that any person can actually get through to the 0800 number, as the junior Government whip is apparently already on the line, checking on what I have just read to him. When he goes back to his electorate later on, he will not be able to answer any questions.

I want to speak to clause 39, which is about in-work payments. I think Deborah Coddington made quite a valid point in respect of subsections (6) and (7) of section KD 2AAA, when she said they are somewhat economical with full stops. At least they are symmetrical, because there is one full stop every 10 lines exactly. So some thought and care obviously have been given to where full stops should go. It is a bit of a pity, when we have just rewritten the tax legislation at great expense and in a process that took some years, to put in those two provisions without any full stops in them.

However, let me come to the main point that I want to talk to in this Committee stage, and that is the in-work payment. In the explanatory note of the bill we are told that the in-work payment will be available to superannuitants. I want to relay to the Committee exactly what happened at the Finance and Expenditure Committee. We had a visit from a grandmother who wanted to draw our attention—in relation to the Budget Policy Statement, which we were considering then—to the problems of grandparents raising grandchildren. She was already a superannuitant. She was about 66 years of age. She had taken on two of her grandchildren in what can only be described as undesirable circumstances. She told the committee that in order to make ends meet and to support those children, which she was committed to doing, she had to take out a $20,000 mortgage on her house. She went on to tell us that by living off that mortgage very, very carefully and being very careful about her funding she hoped to have it paid off within 20 years—namely, at the age of 86 years.

I think that all of us on the Finance and Expenditure Committee—in fact, we actually put it in our report back to the House, in a rather oblique manner—expressed the hope that superannuitants would continue to receive, in spite of that status, assistance with childcare costs. It is true that grandparents raising grandchildren do, under this bill, get the unsupported child’s benefit, and would get the in-work payment in clause 39 if they were in the workforce. But when we think about it, a 66-year-old woman who is looking after two of her grandchildren is most unlikely to be in the workforce, and therefore she does not qualify for the in-work payment. She is left simply with the unsupported child’s benefit.

In that regard, the principal point she was making to us is that although that benefit will be increased by $15 a week from 1 April 2005, it still remains $30 below the foster-care allowance. I would like the Government to think very, very carefully about why there should be that $30 gap between the two benefits. If members were to listen to this woman and to hear the circumstances in which she was bringing up her grandchildren, it would be clear to them that there was no less work and no less expense—including psychiatric counselling and things of that sort—in bringing up those grandchildren than there would be in bringing up foster-children. I think that for the sake of another 30 bucks a week, and, perhaps, too, for the sake of simplification, the Government should give thought to whether there are valid policy reasons for superannuitants raising grandchildren to be on the unsupported child’s benefit rather than on the foster-care benefit, which would give them another $30 a week.

That is my central point, and I would like the Government to think about that. If the Minister felt inclined to take a call, that would be great.

I move, That the question be now put.

Part 2 is fairly technical. It deals with the actual tax implications of the Future Directions (Working for Families) Bill. This bill is all about the difference between Labour and National. It really demonstrates that. Labour is very keen on re-establishing the welfare State, and that is what this bill is all about. It is about socialism—about taking tax off people, and the Government then making its choices about how it is spent. We certainly heard from the people reported in the Dominion Post this morning who said that those on middle incomes will miss out again, as they always have missed out. Another couple said they would be happier if there were taxation cuts rather than benefits. Why do they want that? Why do middle New Zealanders want taxation cuts? It is because they want a choice about how they spend the extra money in their pockets. They want to be able to choose where they have their childcare assistance. They do not want to be dictated to about having to go to a State provider.

People want to choose where they might be able to spend a little more money and buy a bit of health insurance, because under this Government they cannot get a hip or knee replacement to save their life. More money may have been put into that in the Budget, but that is only because this Government was doing less major-joint surgery than in 1999 when National left Government, despite an ageing and increasing population. That is clearly shown in the Health and Independence Report to the Minister last year—on page 174, if members would like to look it up. We also see cataract surgery is in that list, so it is true that someone has to be blind and in a wheelchair before the Government will help that person. People talk about wanting to have taxation cuts rather than a benefit, or they say they hope that those on middle incomes may actually benefit from the Budget, but they have not.

There is nothing in all the pages in Part 2 of this bill that will improve growth in the economy. I think most people would much prefer to have better jobs than to have this Government hand them out a little bit here and a little bit there. They would prefer to have better educational opportunities, better jobs, and higher incomes. People would prefer to be like our Australian cousins, who are $180 a week better off than us today—not in 2005, 2006, or 2007, which is what this Government is handing out in its drip feeding. No, today the Australians are better off than we are, and most New Zealanders would like to see an investment in things that will create growth for this country and bring us back to the same level as our Australian cousins.

Some of the language in this part of the bill is interesting. Section KD2(6B) inserted by clause 29 states: “For the purpose of subsection (6), a ring-fenced family support recipient”—

💬 Judith Collins: What does that mean?

What is a ring-fenced family support recipient? The bill is not going to a select committee; it is being rushed through the House. I would like the Minister in the chair, Dr Cullen, to take a call and tell us what a ring-fenced family support recipient is, because that is the sort of language that is in the bill, and without the scrutiny of a select committee it will be difficult to come to understand the details of how the legislation will impact on people. There are sure to be problems and we are sure to see some amendment bills. There is a family tax credit, a family support credit, and a child tax credit.

I sat here in the Chamber and listened to Government members give speeches of envy. They talked about the people on the Opposition side of the House being rich. I have to tell Government members that a whole lot of people on the Opposition side of the House grew up in poor social circumstances, and worked extremely hard to get where they are. We know that rewarding effort by being able to have a better education and earn more money is exactly what is needed. I started my working life as a nurse-aide at Porirua Hospital, and it was better education that got me to where I am today—through being a nurse and a doctor. That is what people want. Those people in the Labour Party who are a bunch of unionists and teachers, and who generally have not done a hard day’s work in their life, are the ones who have not got their hands dirty.

I would like to bring the Minister in the chair, the Hon Dr Michael Cullen, to the clauses in Part 2 of this bill, because they are very important. Part 2 purports to address the poverty traps that currently exist in our family tax credit, family support tax credit, and child tax credit arrangements. I would like the Minister in the chair to answer some questions. Obviously under clause 30 the family tax credit remains. The family tax credit will be raised, so that the net income of a family receiving the family tax credit will go up to, from memory, about $17,000. From memory, it is currently about $15,080. My question is this: does the abatement rate remain dollar for dollar? If it does, does that mean the effective marginal taxation rates through certain income ranges in this system remain at over 100 percent, by the time the accident compensation payment is included—probably 101.2 percent? If that does remain the case, the Minister has not dealt with that poverty trap. That is my first question—although the family tax credit is retained in this legislation and will be increased eventually, does the 100 percent abatement rate remain? If it does, there is a poverty trap in the system.

Next, I would like to focus on the interaction between the benefit system and family support. Clearly, under clause 38 the abatement system for family support is being changed, so that family support will no longer abate while the benefit is abating. That is a plus. National would support that, because it means the effective marginal taxation rate faced by people in the $20,000 to $27,000 income range—well over 80 percent—will now come down to a much lower effective marginal taxation rate of no more than 70 percent. It seems there is to be no change to the abatement rate of the domestic purposes benefit, which remains at 70 percent. But at least we do not have the family support tax credit abating at 18 percent on top of that, making a combined effective marginal taxation rate of well over 80 percent. Although that change has been made, page 22 of the explanatory note states: “However, EMTRs will be higher for some middle and higher income families not previously eligible for assistance:”. If this legislation had gone to a select committee, the committee would have had the chance to examine the crucial issue in all this, which is the effective marginal taxation rates throughout the low to middle income earning bracket.

If we are to pass this legislation today, I believe the Minister in the chair should tell this Committee what the effective marginal taxation rates now will be. What will they be? What does this legislation mean? How high will effective marginal taxation rates go? We know of the Waihi family with four children that is on $55,000. One of that family’s problems was that as it was in the $35,000 to $55,000 income range, it faced an effective marginal taxation rate of 63 percent, all the way through that income range. This legislation will change that to some extent. But the Minister in the chair should tell us what will happen to that family’s effective marginal taxation rate as its income goes a bit higher. If we are to believe what page 22 of the explanatory note tells us, the effective marginal taxation rates at the higher end of the middle income bracket will go higher. They will be way higher than 39 percent; there is no question about that. We know the problem with the interaction between the benefits, family tax credit, family support tax credit, and child tax credit. It is the poverty traps caused by the interaction of all those tax credits—the effective marginal taxation rates they generate. Government members do not have a damn clue what this legislation is doing to those effective marginal taxation rates. Darren Hughes could not calculate the effective marginal taxation rate that these changes will make; he would not have a hope of doing it. I believe that Parliament should know about this issue, because those are the crucial incentives that face people through that income range. What is this legislation doing to the effective marginal taxation rates?

The final point I would like to make is that the in-work payment, provided for in clause 39, is a bit of a con. The Government talks about a $60 in-work payment. Do Government members know it is a bit of a con? Do the United Future people, who think this in-work payment is all wonderful, know it is a bit of a con? For a family with three children, the only extra bit is $15 a week, because it replaces the child tax credit. For a family with three children, the child tax credit already pays $45 a week, so the in-work payment is a con. It has not been honestly expressed, at all.

I move, That the question be now put.

In rising to speak against Part 2 of the Future Directions (Working for Families) Bill, I am amazed at the fact that just about every speech today from the Government and its poodles has involved a personal attack on members on the Opposition side of the House. Government members have had nothing to say, other than to personally attack us. Mark Peck has been fantasising about when Labour will be in Opposition. Well, I say to Mr Peck that it will not be far off. [Interruption] He will not be in Parliament at all, because National will take the Invercargill seat. We have looked at what this bill will do for families. I looked at what Steve Maharey put out yesterday, because, as National’s spokesperson on families, I was slightly interested in what he might want to say about families. This is what he had to say: “Parenting is society’s most important job.” What? What sort of loony place does that man come from, if he thinks that parenting is society’s most important job? I notice that the United Future people are very, very quiet about that. Do those members really think that parenting is society’s job? No, it is the job of parents. Parents are in charge of families. Parents do parenting—not society, and certainly not the Labour Party. That party cannot tell the difference between parents and society, whatever that term may mean.

There is a clause in the bill that talks about a ring-fenced family support recipient. I had a look through the bill to see whether there is anything in Part 2, or even in Part 1 or any other part, that tells us what a ring-fenced family support recipient is. I can tell members there is no definition of a ring-fenced family support recipient, or even a definition of a ring-fenced anything. What we are doing today is creating a law, so it would be very interesting to find out what the legal definition of “ring-fenced” is. I think we will find that it is another example of a situation where this bill should have gone to a select committee. Although Part 2 is full of mistakes and definitions are not given in it, the bill will not be going anywhere near a select committee, and the reason is that the Government does not want people to know about the detail of the legislation. It does not want people to know what is really in it. What the Government thinks we might want to do is to find out about what it wants to tell us.

The Hon Steve Maharey again told us that this legislation will provide more free childcare centres and early childhood education for children aged 3 to 4. That sounds great. That sounds fantastic, except there is a little catch: it is available only for those children who go to community-owned childcare centres. But in every new housing area in my electorate, and in every new housing area around the country, there are no community-owned childcare centres. This Government says that those people are on too high a decile—over 3—so they will not get anything. It does not want them to have anything out of this Budget. All those nice people, who are bringing up their own children and asking for very little from the Government, are thinking today that they may get at least a little bit of early childhood education, in return for all the hard-earned money they pay in taxes. But they will get nothing, because this Government will give it only to the community-owned centres—in other words, the kindergartens. Those are the very same organisations that ban Christmas and Easter. [Interruption] They did that; they banned Christmas in my electorate. They do that because of this politically correct Government, which is kept in power by United Future, and now by New Zealand First.

Even Sue Bradford said that this legislation is not good. She said that the detail of this legislation shows us that some beneficiaries will be worse off than they are. This Government has not risen to answer Sue Bradford’s questions. I do not agree with Sue Bradford on most things, but when she tells me that beneficiaries will be worse off under this legislation, I know she is right. One of the things I do know is that most beneficiaries are very good at working out the detail on these things. We have heard from Clayton Cosgrove, who stood up and verbally attacked—abused—people in this House.

I rise on behalf of United Future to speak on Part 2. I think that the title of the bill—“Future Directions (Working for Families)”—is an excellent one. United Future will be supporting the bill, and I am very pleased, because although we have been in Parliament for only 2 years, all of a sudden families are at the forefront in this year’s Budget. When I looked at the Budget, I rated it and gave it 5 out 10; so I guess that shows where I am on it—in the centre.

This package for families has funding allocated to it in the Budget for its implementation. It is based on Labour’s ideology of wealth distribution, but I personally do not believe that is the best way of handling it. In listening to the various aspects of the debate on Part 2, which deals with taxation matters, I heard Mr Peter Brown encouraging United Future members to support earlier implementation dates. I personally do not support that, because although I am pleased that the Budget takes a good look at families in New Zealand, and very pleased that it recognises that those who are bringing up children face a tremendous challenge at present, I do not disagree with Mr Peter Brown’s claim that the help is needed right now. Some have said that perhaps the commencement dates in the bill are related to the next election. If that is the case, then I welcome that. I am pleased that the Budget allocates funding for future dates and puts consideration of families at the forefront. I believe there will be a time in the future when whoever is in Government will look at how these requirements for families can be implemented.

I personally believe that the correct way to help families is through the taxation system. I know that in respect of the current rate we consider only whether a person is in the category of a single-parent family or in the category of a couple living together. I suggest that it is quite easy in terms of the taxation system to distinguish whether a family comprises a couple with one child, two children, or three or four children, and adjust the taxation system accordingly so that the family gets the rebate—something that most members would agree those families need and deserve.

I think there can be a problem with wealth redistribution, in that it is very easy to kill a dream. We must try to bring in legislation that shows people the importance of achieving. It does not matter where their place is in society as long as we give them an incentive to better themselves. It is important that people are encouraged to have a dream. If I may, I will give an illustration from motor racing. I was a young man in a family that was against motor sport, yet I had a dream of becoming a champion. Against all the odds I began to walk that path. It involved sacrifice, but I achieved my dream. When we are talking about families—

💬 Hon Richard Prebble: Which clause talks about motor racing?

That was an illustration. There is nothing wrong with being a dreamer. I believe that if we make people reliant on a system of Government handouts, even though well-intentioned—and I commend the intention—we can destroy their ability to dream and to achieve. Therefore, United Future supports the intention of this bill.

I thank the Committee for the opportunity to come at this matter from a personal aspect. I believe that the Future Directions (Working for Families) Bill takes us in the right direction. It is of the utmost importance. I hope that whoever is in Government continues in that way over the years that lie ahead.

I move, That the question be now put.

As a number of members have criticised contributions I have made, I want to speak to the Budget. Firstly, I say to Mr Paul Adams that he was a better motorcar driver than he is a parliamentary speaker, because he has actually given a very good argument against the Budget. He is absolutely right: this Budget will lead people into dependency.

I want to pick up on a point made by Dr Cullen, who I see is now the Minister in the chair. He said that as a result of the changes in Part 2, the incentives will be there for people to move off dependency and into work, and that this Budget will achieve that. Well, last week I gave an example to the House of a family on $50,000 a year deciding they would like to have more free time and reduce their income by half—to $25,000 a year. In gross terms, that is a 50 percent split, from $50,000 to $25,000; but if we look at what it means to that family, right now, as a result of Government subsidies and the like, we see that the $50,000 family moves to an income of $742 a week. However, the $25,000 family does not move to an income that is half of that; it moves to an income of $609 a week, as a result of the various incentives it gets. So does this Budget actually restore the incentive for that family with two children to remain on an income of $50,000 a year? No, it does not.

It is true that, as a result of this Budget, families with two children will eventually—in April 2006—have a weekly income of $839. That has gone from a gross income of $962, because they will still have to pay tax, but they will get some money back in the credits and end up with $839 a week. But if they halve their income, if they decide to take half of their time off, do they end up with their income being halved? No, they do not. Their gross income is $487, and, through these subsidies, it increases to $746. So they are only $91 a week poorer by working half the amount of time.

When we look at this Budget and the logic of it, we see that people who have two kids and earn $50,000 ought to halve their income and the amount of work they do, because the Government will give them so much in the way of subsidies as a result of their reduced income that, in real terms, 20 hours a week becomes worth a heck of a lot more than $91 bucks. I tell Dr Cullen that that is the problem with this Budget. That is the reality. People will look at this Budget and realise that it is saying to them: “The Government wants you to have a low income. The more you lower your income, the more money you will get from the Government.” That is what should be upsetting Paul Adams and United Future, because, although they identify that this is a bit of a trap, they say they will vote for the bill. That is what is wrong with these tax credits.

Politically, this Budget will work against the Government. I will explain that to Dr Cullen, because this is not the first time I have seen this sort of Labour Budget. I pulled out some comments that were made about David Caygill’s Budget in 1989. People described it as a “Michael Joseph Savage Budget”. Did it work? No, it did not. This Budget will not work either, because, firstly, most people on benefits do not intend to stay on them—they will not give the Government any thanks for this Budget—and, secondly, people do not intend to stay on low incomes for the next 2 years so they can take advantage of all these handouts. Some people might end up still being on low incomes, but if we are talking about their intentions, they will be against this.

Of course, as has been pointed out, the majority of working families get nothing from this Budget, and the vast majority of New Zealanders get nothing. I have given one example, but I would like to talk about what is really wrong with this Budget.

I move, That the question be now put.

I raise a point of order, Madam Chairperson. I want to bring your attention to the debate the member Clayton Cosgrove was involved in. You ruled on the comments he made concerning tax evasion. Comments—and Deborah Coddington brought the matter to your attention—in that exchange, where the member used the words “tax evasion”, were a reflection on all members, not only on Deborah Coddington. Also in that context Katherine Rich’s name was mentioned, and I ask that Mr Cosgrove be asked to withdraw and apologise for those statements about tax evasion.

The CHAIRPERSON (Ann Hartley): No. The matter should have been raised at the time, by the member concerned—

At the time Deborah Coddington did raise a point of order, but subsequent to that we have been able to determine that, under Standing Order 116, “Personal reflections”, bringing Katherine Rich’s name into it is unacceptable.

I just clarify for the member that I was not referring to Katherine Rich, at all. I would not do so.

The CHAIRPERSON (Ann Hartley): I tell the member that the point should have been raised at the time.

💬 LINDSAY TISCH: The member just said he was not referring to Katherine Rich. The question is, then: whom was he referring to? When the words “tax evasion” are used, it implicates somebody. In this case, the implication was against Deborah Coddington.

The point has been made by Madam Chair—and she is correct—that points of order have to be raised at the time the matter occurs. There are good reasons for that, partly about recollections, and partly about the fact that there would otherwise be endless points of order relating to something that happened the day before, hours ago, or whatever. It is clear in the Speakers’ Rulings; points have to be raised at the time matters occur.

The problem we have in this case is that while what Dr Cullen says is correct, this was a case when a serious reflection was made against a member. The point of order was raised at the time. I understand there was some disorder in the Chamber, and it may well be that the noise was sufficient for you not to hear it. But other people did, including listeners on the radio, and we have a situation where Mr Clayton Cosgrove made a personal reflection against a member in the House—one that causes grave concern. You did not rule on the matter—I hope because you did not hear it—but now that you are aware that it was heard and raised at the time, I think it would be appropriate for you to ask Mr Cosgrove to withdraw and apologise for making such an allegation against a member of this House.

The CHAIRPERSON (Ann Hartley): At the time that Deborah Coddington was raising the matter, we had had a discussion about the part, and the issue of taxation, and I honestly thought that that was what Deborah Coddington was raising the matter about. I think the matter would be cleared up if Mr Cosgrove were to withdraw and apologise.

I withdraw and apologise.

The question was put that the following amendment in the name of Peter Brown to clause 36 be agreed to:

to insert the following new subclause:

(11A) For the purposes of this Act a family is defined as one—

(a) in which there is at least one adult member; and

(b) in which the members have a biological or legal relationship.