Social Security (Social Assistance) Amendment Bill

When I look at this part I cannot help but think of the news this morning about the 20-year-old prostitute struck down by a bullet at Hunter’s Corner, Manurewa, who was described as a mother of three. I cannot help but think how this part of this bill, or, indeed, any other part, will affect her children.

I cannot for the life of me believe that that mother has named the father of her three children and she is only 20. I cannot for the life of me believe who is looking after those children while she is out working as a prostitute on Hunters Corner, Manurewa, in the electorate of the Hon George Hawkins, the Minister of Police. I cannot for the life of me understand what she would be making of these particular consequential amendments to the Income Tax Act.

I understand that the Hon Steve Maharey is known as being someone with whom one can spend 2 hours and come out with screeds of paper, as described by John Tamihere, and still come out none the wiser because one would wonder what has been said. I do understand that. What we have here is in fact an amendment bill that is nothing more than a reminder; the first acknowledgment ever from this Government that fathers are important. This afternoon I have heard the Hon Steve Maharey in the chair speak as though fathers are important. Yet just before Christmas this year I heard the same Minister stand up and say that there were no reports that he knew of that said that children who are brought up in single-parent homes may have worse outcomes than children brought up with both their biological parents. Yet we in this House know that his statement is simply not able to be backed up by any evidence at all. We know absolutely that children who do not know their fathers or do not have anything to do with their fathers will in fact suffer. And it is not just those children who suffer; it is their children, their grandchildren and their great grandchildren—it is generations to come.

I heard Muriel Newman speak about the unfair liable parent contribution laws. She is right. But the worst thing about the liable parent contribution laws, and the most unfair thing, is that only 10 percent of the domestic purposes benefit is paid for by liable parents. That is the worst and most unfair thing about those laws. They do not do anything for the taxpayer. They do not do anything for the self-esteem of the really good mums who look after their kids and do a good job, and it does nothing for the really good dads who try their very best and give whatever they can to their families, even if they are split up. It does nothing for them. It in fact treats those good fathers as though they are fools—mugs.

This Minister has the gall to stand up in this House and give speeches about how the numbers have come down. Well, frankly, it does not wash. The amount spent on the domestic purposes benefit under his watch has gone to $1.77 billion. It is a huge increase. Yet we have no excuse at all for people not to have to work in this country. There are jobs. Employers are trying to get people to stand in their shops and sell things, to do anything, yet there are still people—over 300,000 of adult age—who will not work. I do not say they do not work—they simply will not work for a paid income. All the time in this House members will know that they get approached by mothers and fathers on the domestic purposes benefit who will work only 8 or 10 hours a week at a particular job. When we ask them why they will not work more, they say they will not work more not because they want to spend more time with their children—after all, their children are at school—but because they say it affects their benefit. They would rather take money from the taxpayers than they would earn it.

That is not good enough, and the Minister has stood up in Parliament and said he does not know what our policy is. Well, he knows what the policy is in the National Party. It was articulated by Dr Don Brash at Ōrewa this year. The Minister knows it so well that the next day he came out and said: “What we’re going to do is have a single benefit.” That is what he said, and that is all rubbish.

Just for the sake of the Committee, I point out that Part 2 deals with consequential amendments to the Income Tax Acts. Clause 16 amends section OB 1 of the Income Tax Act of 1994 and the Income Tax Act of 2004 by removing references to the transitional retirement benefit, which no longer exists. There are consequential amendments, because of the transitional benefit being changed, to the Health Entitlement Cards Regulations, the Social Security (Period of Income Assessment) Regulations, and the taxation regulations. Clause 17, “Savings in respect of tax on benefits”, validates the practice of paying tax direct to the Inland Revenue Department at a grossed-up rate of income-tested benefit.

I just mention that because one of the things I have noticed, ever since Mrs Collins has been the National spokesperson on welfare, is that she never quite seems to know what she is taking about.

💬 Darren Hughes: She’s like that in every portfolio.

I understand that, but she has just given us another 5 minutes on Part 1, and I thought it may be helpful for the rest of the Committee to know that this part is not the part that has just been debated by the member.

I rise to take a call on Part 2 of the Social Security (Social Assistance) Amendment Bill, which deals with the consequential amendments to the Income Tax Acts. Of course, whenever we have any bill that changes the way the benefit system is being dealt with, then of course it does have profound implications for the tax laws. While we are thinking about those issues, it does occur to me to say that the statistics report that the Minister released, I think, this morning, about the way benefits have changed over the last while shows that the domestic purposes benefit is now costing more than ever before in New Zealand’s whole history. If we think about the cost of benefits to taxpayers and the tax implications of that, we realise that is one reason, of course, why this country is taxed so highly. It is why the Labour Government put the top tax rate up from 33c in the dollar to 39c in the dollar, and it is why increasing numbers of New Zealanders find that they are now paying the top rate of tax, in spite of the Prime Minister’s assurances that it would hit only a small number of New Zealanders.

Of course, I suppose that, in a roundabout way, one could say that that is why Labour has introduced the Working for Families package—it has been taking so much money off working families that it feels it has to give something back to them in election year. The interesting thing is that that package, which the Labour Government proclaimed with such great fanfare as being probably the best thing since the introduction of the welfare State by Michael Joseph Savage, turns out to be little more than an inflation adjustment. When the Labour Party came into power it inherited a certain raft of benefits that were paid to families with children, and instead of adjusting those benefits as inflation crept up over the last 5 years, it left them unchanged. So families were slipping further and further behind. This great package that has had all the fanfare—including $17 million being spent on television advertising, with great family-type photographs—simply puts the levels of support to families with children back to what they were in 1999 when Labour took over. I think that is just about the biggest scandal in the Labour Government, given all the fanfare and all the money that has been wasted on trying to advertise a package that does not even have to be applied for.

While we are talking about the tax implications of this bill, I think taxpayers out there should be aware that the domestic purposes benefit now costs more than ever before in our history, and that this bill in front of Parliament right now is meant to bring in—[Interruption] I raise a point of order, Mr Chairperson. The member sitting on your right, the Minister over there, is yelling so loudly that I think it is the Minister who is actually preventing you from hearing the debate clearly.

💬 Hon Annette King: What’s the point of order?

The point of order is that the Minister should pipe down.

A point of order is to be heard in silence. Members have been here in this Chamber long enough to know that. I refer members to Speakers’ ruling 56/1, which states that interjections are to be rare, reasonable, and relevant.

💬 Dr MURIEL NEWMAN: When we consider the consequential amendments to the Income Tax Acts, we have to remember that the whole reason for this bill is to increase the level of child support that is collected in New Zealand from fathers who should be paying their financial dues, so that the cost of the domestic purposes benefit can come down. But the reality is that under this Labour Government that cost has continued to rise, so Labour is doing something wrong. It is soft on welfare policies, which results in more women going on the domestic purposes benefit at a time when New Zealand is crying out for workers. Most of those women would be far better off – provided they have children of school age – if they were back out in the workforce.

I rise to take a call with slight apprehension, in case there is a barrage of interjections. The lack of courtesy shown by the Minister in the chair, Steve Maharey, was quite scary. Dr Muriel Newman was trying to make some very valid points, which we could all benefit from hearing. Instead, I was struggling to hear the reasonable arguments put forward by that ACT party member. Labour members have shown that, as usual, they have no time for anybody whose opinions differ from theirs, and show no courtesy to fellow members of parliament.

I have just learnt, from the Minister’s 10-minute call on Part 1, that what he proposes in terms of the penalty for a mother not naming the father of a child will not work. Now, in Part 2, we are being asked to look at amendments—additional changes—that have to be made to the income tax legislation. Well, the House had a painful job just last year passing the Income Tax Act, which is over a thousand pages long and which, for the first time, consolidates all the various income tax amendments into one single statute. All the tax practitioners out there were just about to breathe a sigh of relief, and the poor staff at the Inland Revenue Department were saying that, at long last, there was one statute of a thousand pages and they could get on with the job, but what has the Government done? It has introduced legislation that not only will not do what the Government wants it to do—as we were told by the Minister—but also will complicate the Inland Revenue Department’s work.

Actually, it is quite interesting because on the one hand Part 1 introduces a penalty of a reduction in the benefit of $6—which actually is not going to punish anybody—but on the other hand the Inland Revenue Department has been told to administer the Working for Families package brought in by the Labour Government, which actually increases the benefit. Not only will the penalty not make people behave in the way that is intended; in effect, the bill is doubling the workload of the Inland Revenue Department. The benefit introduced through the Working for Families package probably more than compensates for the $6 penalty.

The Government continues to tell the public that it is serious about reducing compliance costs throughout the private sector and the public sector, but this legislation is actually increasing those costs. We all know that when the Inland Revenue Department has more work, the Government introduces more staff, the public sector grows bigger, and, eventually, guess who has to pay for all of it? So I really think the Minister in the chair, Steve Maharey, should think carefully about why he has introduced this legislation in the first place, which will not do what he intends it to do and will actually introduce more complications into the income tax legislation.

The other thing we learnt is that, in promoting the Working for Families package, the Inland Revenue Department by itself has to design a policy about alerting people to those benefits. I want the Minister to take a call and say whether he would devote attention to publicising the intention of this legislation to ensure that a mother names the father of her child, in the same dedicated manner as the Government is allocating over $20 million to promote the Working for Families package. Why is there uneven treatment in terms of promoting the policy? Would the Minister take a call and say how much he has allocated to promote the intention of this legislation?

The CHAIRPERSON (H V Ross Robertson): The question is that Part 2 stand part. All those in favour—

I raise a point of order, Mr Chairperson. From where I was sitting, it looked as though Muriel Newman was seeking the call. She was standing. You were not looking around. I am sure the member wished to take a call on this part, and I ask that she be given the opportunity to do so.

The CHAIRPERSON (H V Ross Robertson): I am happy to do that, but I did not hear the member call.

💬 Dr Muriel Newman: I did call.

The CHAIRPERSON (H V Ross Robertson): I am happy to do that.

Thank you, Mr Chairman, and I thank Mr Tisch for his help, as well. I did want to take a further call because, given that we are talking about tax in Part 2 of the Social Security (Social Assistance) Amendment Bill, I want to alert the Committee to the fact that the statistical report the Minister released this morning identified exactly how much tax it costs New Zealanders to pay for benefits. It costs $23 million a day to pay for welfare benefits in New Zealand. That is almost $1 million an hour, under a Labour Government that is meant to have done something about welfare. We know that beneficiary numbers have risen dramatically. We find that although in fact the number of unemployed people is down, the numbers of people going on to the sickness and invalids benefits have increased dramatically, by almost 40 percent since Labour has been in power, and the number of people who have been on a benefit for more than 4 years has gone from 95,000 to 108,000, so we are in a situation whereby taxpayers have to pay $23 million a day in welfare. When the economy turns down, which we all know it will—because those things are cyclical—then the number of unemployed people will grow and welfare will become an enormous problem for New Zealand.

The Minister in the chair, Steve Maharey, has had an opportunity to fix the welfare system. He has had 5 years to put in place some proper welfare reform policies, which would have brought all the numbers down, not just the unemployment figure—and the unemployment number tends to go down because people want to better themselves, find jobs, and get off welfare and into work. To help people on the sickness, invalids, and domestic purposes benefits takes a bit of initiative, gumption, and leadership from a Minister. I say to the Minister that he has been a complete disappointment to New Zealand, because those tough areas have really been left. This bill is a Clayton’s bill. Sure, beneficiary numbers will come down, but the Minister knows that he is not actually fixing the problem. He knows that, in his heart.

I would have liked to see Labour, instead of being soft on welfare, actually sort out the problems in the system that allow far too much abuse and fraud to go on, and ensure that the people who are on welfare are genuinely in need. That is what every New Zealander wants to see—instead of seeing people who could be working, and should be working, receive welfare day after day. That costs taxpayers money, makes families struggle, and does nothing at all for those people themselves or for their children and their future. It is no life to be on a benefit—it is a dead end—and this Minister condones more and more people going on to welfare. Twenty-three million dollars per day is being spent on welfare. That is $1 million per hour. By the time that this debate on this bill finishes, the taxpayers of New Zealand will have spent $1 million on paying for people on welfare. In terms of the genuine people who will never be able to work, nobody has a problem at all. But in terms of the people who could be working, why are they not? New Zealand is crying out for workers; the labour shortage is holding the country back. On the one hand there are all those able-bodied people sitting on welfare whom the Minister is happy to pay for, and on the other hand small businesses are crying out for people to come and work for them.

There is an enormous mismatch and imbalance created by the Labour Government. Any other Government would have had the welfare numbers down and ensured that anybody who could work was working. The cost to the taxpayer would then have been at an all-time low, which is logically what it should be, and the country would have been in great shape.

I move, That the question be now put.