Taxation (Budget Measures: Family Incomes Package) Bill

on behalf of the Minister of Finance: I move, That the Taxation (Budget Measures: Family Incomes Package) Bill be now read a first time. Today’s Budget reveals a strong, growing economy and a healthy set of Government accounts. It is important that New Zealand families directly share the benefits of that strong economic growth, and that is increasingly the case. Median earnings have increased from $40,000 to $48,000 since 2010, and incomes across the distribution have increased. But because of that, many more middle-income earners are faced with a marginal tax rate of 30 percent. We also have a number of lower-income people with young families who are struggling to get ahead. We have a system that is becoming too complex. As a result of Working for Families and other changes, it can be very hard for people to work out what they are entitled to and how the work they do is linked to the income they receive.

This Government’s $2 billion per year Family Incomes Package, announced today, will provide better rewards for hard work, start simplifying the tax and transfer system, help lower-income families with young children to meet their living costs, and improve incomes for people with high housing costs. This bill gives effect to the aspects of the Family Incomes Package that require amendments to primary legislation.

First, the bill increases the bottom two income tax thresholds, from $14,000 to $22,000 and from $48,000 to $52,000. Second, it discontinues the independent earner tax credit. Third, it makes changes to Working for Families to increase family tax credit rates for children under 16 to align them with the rates for children aged 16 to 18, increase the abatement rate from 22.5 percent to 25 percent, and decrease the abatement threshold from $36,350 a year to $35,000 per annum. The bill also makes other amendments required to give effect to the changes, such as adjusting the thresholds for fringe benefit tax and resident withholding tax. The final part of the Family Incomes Package—the increases to the accommodation supplement and accommodation benefit—will be given effect by Order in Council in the near future. All substantive measures in the bill and in the package will apply from 1 April 2018.

The income tax thresholds were last changed in 2010. Income growth since then has pulled more people into higher tax brackets. This bill reverses that trend by increasing the bottom two tax thresholds, in turn increasing the rewards for work for low- and middle-income earners. This change provides a tax reduction of $10.77 a week to anyone earning more than $22,000 a year, increasing to $20.38 a week for anyone earning more than $52,000 per year.

This bill discontinues the independent earner tax credit to help simplify the tax system. It is claimed by only about one-third of eligible recipients during the tax year. Individuals who currently receive the credit will be fully compensated by the increase in the bottom tax threshold, and will not have to file a tax return at year-end or select a different tax code to claim it. The Government wants to help low-income families with children to meet their living costs. This bill raises the family tax credit rates for children under 16 to align with those for children aged 16 to 18. The maximum family tax credit rate for the first child aged under 16 will increase by $9.25 a week, while the rates for each subsequent child increase by either $17.75 or $26.81 per week, depending on the age of the child. Aligning the rates for children of all ages also helps to make the payment rules easier to understand. At the same time, this bill completes the Government’s planned adjustments to the Working for Families abatement rate and threshold to ensure additional support is targeted at low-income families.

These are the main points of this important bill for New Zealand families. The Family Incomes Package will benefit around 1.3 million working-age families by, on average, $26 per week. There will be flow-on gains to around 750,000 superannuitants and 41,000 students, who also benefit from the Family Incomes Package. The package particularly focuses on assisting low-income families with young children and those experiencing high housing costs: 154,000 families in the lowest quintile will benefit by an average of $35.32 a week, or $1,836.64 per year. The measures in this package are expected to lift 20,000 households above the threshold for severe housing stress and reduce the number of children living in families receiving less than half the median income by around 50,000.

The package forms a comprehensive set of measures to improve the rewards for work, to start to simplify the tax system, and to lift family incomes. It is therefore with great pride that I commend this bill to the House.

The member who has just resumed his seat, Simon Bridges, might like to answer the question of what is fair about the tax package that he has just proposed in this legislation. Is it fair that the wealthiest households will get $35 a week from it, and the lowest-paid New Zealanders will get $5.13 a week? Is that a package that is delivering to the New Zealanders who need it the most, or is that a package in a classic election year Budget from the National Government?

National members might think it is clever politics and that they have done something to march into the territory of the Labour Party, but I do not think New Zealanders see it that way. I give New Zealanders a lot more credit than that. They know that the Budget today should have been one that had solutions to the housing crisis, that properly funded the health system, that created an education system that is right for the 21st century. But, instead, the legislation that National put in front of the House tonight is one that delivers a tax package that ultimately will mean that Simon Bridges can buy two more pottles of Brylcreem from Rodney Wayne—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

—that Simon Bridges, and me, and the Assistant Speaker all get benefits from a tax cut far in excess—I am not suggesting that the Assistant Speaker is buying Brylcreem from Rodney Wayne, don’t you worry—than those people who the National Government purport to help.

Let us go into some detail about that. I actually got an email over the dinner break from somebody who earns just under the minimum wage. They are a single person, and they said they have looked at the Budget and worked out that they are—their name is not Bill, but they are “One Dollar Bill”. They are the person who got the independent earner tax credit worth $10 taken off them today. Eleven dollars, that is the big promise from the National Party for this person—$11 per week—but we are taking $10 per week off. They are “One Dollar Bill”. How is that fair? How is that a fair tax package to put in front of this country?

Around 800,000 New Zealanders on taxable incomes below $14,000 will get nothing from this—nothing whatsoever. Five hundred thousand low-income workers, just like the person I mentioned, who have been getting the independent earner tax credit lose that and are left with $1 a week. They are the people the National Government says it is trying to help here, but, instead, it is people on higher incomes who get the greatest benefit from this package. The Government knows this. The Government knows. Steven Joyce, earlier tonight when he was on Newstalk ZB just before me—it was put to him that, actually, the lowest income earners would not get that much from these changes, and he said: “That’s right. They’ll get most of the benefit out of Working for Families and the accommodation supplement.” Well, how much is the Government actually spending on that? It is spending around $1.9 billion on the tax cuts—this is annually—and it is spending $373 million on Working for Families and $361 million on the accommodation supplement.

So if the Government really wanted to deliver for low-income New Zealanders, it would have put that money into Working for Families and the accommodation supplement, not into an election tax-cut bribe, and that is what it is plain and simple in an election year Budget. What is being put in front of us tonight is not a package that would deliver to those low-income families.

This is a Budget—and this is the first time I have the opportunity to say this tonight—where the Government has squandered one of the great opportunities that it had. In the explanatory note of this bill, some time is devoted to talking about housing. So I am going to take a little bit of time now to talk about it, because it is in the explanatory note. But it is actually not in the bill—that is the thing. The Government knows it is in huge trouble on housing. It knows that New Zealanders have a housing crisis in front of them, and it has got no solutions.

After 9 years we have got a Budget that does include some changes to the accommodation supplement, but that in itself is actually an admission of failure by this Government—and so actually, frankly, is the rest of the package that is in the bill. It is an admission that things have got out of control; that, actually, wages are not keeping up. In the Budget documents released today, we see that successively over the next couple of years inflation will outpace wage growth—inflation will outpace wage growth.

💬 Andrew Bayly: And how do you know that? How do you know that, Grant?

So New Zealand is working harder and harder and for more and more hours. In the end all this Government has got—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! The member did two things wrong in a row then, and—Mr Bayly.

💬 Andrew Bayly: Sorry?

The ASSISTANT SPEAKER (Hon Trevor Mallard): Is he aware of what he did wrong? I will ask his colleagues to explain it to him, and just save his interjections until he can get some that are within order.

This package today is actually an admission of failure from this Government, an admission that, actually, it has no vision for how to grow the economy sustainably. Do you know that this Budget today says that exports as a percentage of GDP are going to go down? They going to go down further. This Government does not have a plan. It is actually quite remarkable. There is almost nothing about regional development. There is almost nothing about how we are actually going to grow wages, and, instead, a hand-out of a bribe here that actually is thoroughly inadequate when it comes to dealing with the costs that are facing low-income New Zealanders.

In terms of the Working for Families part of the package, my colleague Jacinda Ardern will speak in some more detail about this, but, once again, we have the giving with one hand and the taking away with the other. While there is something to be said for the simplification around Working for Families, this package squeezes once again—this package squeezes once again. It lifts the abatement rate and it reduces the income figure at which it kicks in, and you look out across Working for Families as it goes out across the forecast period and the overall spend goes down. The squeeze is on, on working families.

So yes, there are some parts of this that are useful and actually will help people, but, unfortunately, it is again wrapped up in the National Government’s giving with one hand and taking with the other. And then there is, of course, the accommodation supplement, which I said I would refer to, which will be welcomed by the people who get it, but, unfortunately, on both sides of the House, I think, there is a shared view that the accommodation supplement is a very flawed instrument. It is, in effect, a subsidy for landlords. I can say on this side of the House that when we do get into Government we will be taking at another look at that scheme, but in the short term yes we do have to do something to support people with spiralling rents.

But it is double-crewed ambulance at the bottom of the cliff. There is no attempt to solve the underlying social problems. There is no attempt to come up with the solutions to fix the housing crisis. There is no attempt to get in early and help make sure that our health system works and we deal with mental health—no. It is making sure that we dress up the ambulance at the bottom of the cliff as something that actually is delivering for New Zealand. It is hugely disappointing to me that we have this package in front of us tonight, a package where the finance Minister and the Prime Minister get 20 times what a single person working full time on the minimum wage gets—20 times. It is not fair. It is not helpful to New Zealanders.

People like us—people like politicians in this House—do not need tax cuts. We especially do not need them when there are huge priorities out there in our community; when we have got homelessness again on the rise; when we have got the housing crisis; when we have got Waikato Hospital telling people: “Don’t come in. We can’t take you because we’re so underfunded.”; when we have got the Canterbury mental health officials saying to the Government: “We’re in crisis.”, and this is what the Government puts up. The Government says “No. We are actually going to save by giving $11 a week to someone on the minimum wage, and we have somehow solved those problems.” We have not. That $11 a week is wiped out. It is wiped out by increased costs of rent. It is wiped out by increased costs of going to the doctor. It is not even catch up. It is not even getting to the point of catch up.

So after 9 years we have a Budget, and the one piece of legislation emerging out of that Budget does not even get close to making up for what National has done to undermine New Zealanders’ well-being. So it thinks it has come up with something clever here. It thinks it has got a clever piece of election year politics. Well, going around New Zealand, I have confidence and faith in New Zealanders that they will see right through this piece of legislation for exactly what it is: an inadequate election year bribe that fails to come up with the solutions to New Zealand’s social problems and fails to have a vision to give New Zealanders some confidence about growing those decent jobs with higher wages that we need right across New Zealand.

This is a bill that the Labour Party will be opposing. This is not the right family and tax package for New Zealanders. We will provide that before the election, but this is not something that we can support.

Just before I call the next member, I just want to indicate to members that I did not pull Mr Robertson up when he was quite wide of the bill. We are now debating the Taxation (Budget Measures: Family Incomes Package) Bill. We are not doing the Budget debate—the appropriation debate. I did not pull Mr Robertson up, because the Minister’s speech was, in fact, itself quite broad, and I felt it was probably inappropriate to stop him. But I want to indicate to members that from now on, we will be tight around debating this bill, and we will not be having a pre-run of members’ Budget speeches.

💬 Grant Robertson: I raise a point of order, Mr Speaker. It is, perhaps, more in the nature of a clarification. I respect your ruling, obviously. In my speech I did allude at one point to the accommodation supplement, and I do just note that it and housing costs are actually covered in some detail in the explanatory—

The ASSISTANT SPEAKER (Hon Trevor Mallard): I heard the member. I looked at it, and it was probably the thing that let me let him go on a bit more. But he did go well beyond that in his discussions, and he talked about a whole pile of spending areas that are not in this bill.

Well, now we know where the Labour Party stands when it comes to helping working families, because every time the National Government puts forward a proposal, like this bill, the Taxation (Budget Measures: Family Incomes Package) Bill, every time the Government puts forward a proposal to help out those who need it most, the Labour Party votes against it. It voted against the 2015 Budget, which raised benefit levels for the first time in 43 years and gave those who needed it most up to $25 a week extra, and now it is clear it is going to vote against this measure.

Is this a bill that delivers more to those who do not need it? That is the charge that the Labour Opposition has made and that is the charge that Grant Robertson made just before. No, it is not. What this bill does—what this Budget delivers is tax cuts for those who need it most at the bottom of the income scale. What do we see in this bill? We see the increase in the two personal income tax thresholds from 1 April 2018. We see an extension from $14,000 to $22,000 for the 10.5 percent rate. We see an extension from the $48,000 bracket up to $52,000. Do we see a change in the top tax rate of 33 cents above $70,000 a year? Do we see that? No. So those earning above $70,000 a year do not get a cut in the rate they pay above that income. Do we see a cut in the 30 percent rate? No, we do not. What we see are real-terms cuts at the bottom end of the spectrum.

That is why someone earning $20,000 a year under this bill faces a 17 percent drop in the tax they pay, that is why someone on $50,000 a year sees a drop of 10 percent, and that is why someone on $100,000 a year gets only a 4 percent drop in the tax they pay. So this is absolutely not a tax bill and a Budget that delivers only for the rich. In fact, one of the stated aims of this bill and this Budget is to make sure that all New Zealanders share in the benefits of growth. When you have an economy that has grown every quarter, bar one, for the last 6 years, it is important that New Zealanders share in the benefits of that growth. And they are, and this Budget and this bill take the next step by delivering this Family Incomes Package.

There are changes to Working for Families, and Grant Robertson, again, in his speech just before said that these benefit only wealthy people. But, indeed, the tighter targeting around Working for Families, as, in fact, many social commentators like Max Rashbrooke have argued—

💬 Jacinda Ardern: Tighter targeting? It cuts out below the median income.

—makes sure that those benefits flow to those—you to go talk to your mate Max Rashbrooke—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

—because he points out that the changes make sure that it goes to those who need it most. It is a complete contradiction to the argument that Grant Robertson was making.

What else does this do? Well, members opposite like to talk often about child poverty, and fair enough. They like to talk about those facing severe housing stress. This package lifts 20,000 people above the threshold for severe housing stress. It reduces the number of kids living in families receiving less than the median income, by around 50,000 kids. This is absolutely a bill, absolutely a package, targeted at those who need it most, so it is just ridiculous for members opposite to argue otherwise. What else is the purpose of this bill and the purpose of the package, broadly? Well, it is to make sure that New Zealanders get rewards for hard work.

Absolutely one of the big dividing lines, I think, between the parties in Parliament at the moment is the attitude towards tax cuts. You heard what Grant Robertson said. You heard his attitude summed up in one word: they are a “bribe”. The Government is bribing people—except it is New Zealanders’ own money. They earned it; they deserve it. It is pretty hard to bribe someone with their own money. That sums up the philosophical distinction between the two parties. The Labour Party thinks that the money belongs to the Government, and that when you give it back to New Zealanders you are bribing with them with Government money. Except it is not Labour’s money. It is not the Government’s money. It is taxpayers’ money in the first place, and that is absolutely the distinction.

So let us just be clear, at the end of my speech. What we have got is a package that targets support at those who need it most; that cuts taxes for the poor; and that—in addition to the changes around the accommodation supplement, and the changes to Working for Families and the family tax credit, and the other changes included in this bill and the wider package—makes sure that people who are in need of it because of severe housing stress get more money in their back pocket at the end of every week. On average, 1.3 million families will receive, on average, $26 a week as a result of this bill and this package, and the Labour Party is opposed to it.

Let us be extremely clear about that. The Labour Party is going to oppose this bill, and it is going to spend the next 3 months saying to New Zealanders: “No, we don’t think you deserve another $26 a week. No, we don’t think you deserve another 60 bucks a week in accommodation supplement. No, we don’t think you deserve extra money through the tax system. No, you don’t deserve it.” And then Labour members claim to stand up and they claim that they care. They claim that they care about lower-income New Zealanders and about poor New Zealanders. Well, the truth has just come out. Actually, by voting against this, they do not.

What an absolutely outrageous attempt to sum up what Labour has articulately put on this side of the House around its opposition to what the Government has simplistically put before New Zealanders today. Mr Bishop has done a complete disservice to New Zealanders by making the assumption that if given the opportunity to spend $1.9 billion—to spend $1.9 billion—they would prioritise having $10 a week over having decent healthcare, over having decent infrastructure in their schools, and over doing something about the 90,000 young people who are not in work, training, or education.

That is the trade-off that this Government has presented to the New Zealand public, and Mr Bishop has done an absolute disservice to the people of New Zealand by assuming that that would be their priority. I can tell you, Mr Bishop, having done a number of public meetings around the country in the last few months, that not once have I had a member of the public—and these have been members of this public interested in what political parties have to offer this election—raise a hand and ask: “What are you going to do about the tax brackets in New Zealand?”. I have not seen that on one occasion, and why? Because they see the deficit in our social spending and our social infrastructure, and that is what they are crying out for us to prioritise.

But I want to break it down a little bit further, because Grant Robertson also made another point. He has made it consistently as Labour’s spokesperson on finance. It is about making sure we have an economy where we have shared prosperity. Chris Bishop stood up and tried to claim that this change in tax brackets would make a difference in sharing prosperity for those on the lowest incomes. The problem, of course, as he well knows, is any time you adjust tax brackets, yes, you may dish out a small amount to those on the lowest incomes, but you will always disproportionately benefit those on higher incomes. That is the clumsiness of rearranging the deck chairs around tax brackets, which is why Working for Families was introduced by Labour as a way to make sure that we targeted those who needed it most.

Those who needed it most often were those who had kids, who were on low and middle incomes, and who had maybe one or two or even three children. They were often living in expensive parts of the country and struggling to get by. We created a package where we were able to nuance all of those elements and truly target—truly target—those who needed it most. That was a tool available to this Government, and it acknowledged that that was available, but instead of putting a larger proportion of its Budget into those families, it spent $1.9 billion on inefficient, piecemeal tax cuts that will deliver 10 bucks a week to those on the $20,000 mark and 20 bucks to those on more than $50,000. Then it spent $373 million on Working for Families. That is a totally disproportionate approach to genuinely helping families in their need, as members crow about on the other side of the House—a totally disproportionate approach.

For absolute clarity, we support the simplification of Working for Families and the vague attempt made in this bill to deliver more to those families, although I will get into more detail about the fact that the Government is giving with one hand and taking with the other. But if this bill was a bill that was simply about those simplification measures—and just to be really clear what they are, the Government has proposed increasing the rate for children under the age of 16 to the same rate that is delivered for children between 16 and 18 for the first child. It has also suggested changing the rate for subsequent children. By and large, that would deliver a positive outcome, and we think that that was a good suggestion from the Government. If that were the only thing that it was putting before us in this tax package, we would be able to support it, and to prove that, Mr Bishop, I have an amendment in my name that is solely about those tax changes, which we will be voting in favour of because that is the part of the bill that genuinely delivers to low and middle income New Zealanders.

However, demonstrating the fact that it is incapable of doing anything to Working for Families without then winding down the screws on other families, on those families who are still doing it tough, the Government has shifted the threshold for abatement and increased the abatement rate. So now Working for Families will start abating at $35,000. To be really clear, that means that a family that is on the median income in New Zealand, with one child, will be worse off—worse off—under this package from this Government, and by quite some sum. That is because of those continuing abatement rate changes and thresholds.

This is not the first time the Government has proposed changes like that. It has done it consistently since Labour left office. In fact, substantive changes came in in 2011 that almost amounted to roughly $500 million removed from Working for Families. Just to be clear, the Government took out almost $500 million in 2011. It is now putting back in $373 million. So let us keep its generosity in perspective, if we can. So—the Government took that out. If it was actually to maintain, taking into account inflation, the level that Working for Families was at in 2010, this would have to be a $700 million package just for Working for Families—just to stand still with those 2010 levels.

So let us keep this in perspective. This has always been a Government, when it comes to Working for Families, that has given with one hand what it has taken with another. But I do want to reiterate that it has fundamentally changed its approach to Working for Families. It has continued to squeeze out families who previously would have been eligible under Labour. Labour used Working for Families to reach middle and low income families—middle and low income families. This Government has changed that approach. It has fundamentally changed that approach in the way that it has worked with Working for Families.

I want to highlight something, though, that may not have been picked up as yet. Everyone in this House will know that Labour has long battled to try to get this Government to commit, in the long term, to reducing inequality and poverty statistics. We have long pushed for that to happen. The Government has continued to refuse to acknowledge the need for any kind of targets or even a measure for poverty at all—continued to refuse to do that—despite the Children’s Commissioner continuing to produce a child poverty monitor. The reason this is relevant is that two of the measures that we have always pushed the Government to adopt have been based on the median income levels. We wanted the Government to acknowledge that the 295,000 children in poverty are based on a measure of the number of families on 60 percent of the median income or less, and, actually, those living in the harshest poverty are those considered to be living on 50 percent of the median income or less.

In Fact Sheet 1 the Government finally makes reference to the number of children and families receiving less than half of the median income. It has chosen the harshest measure, to be fair, the one that it is easiest to move families in and around poverty out of, because it is such a harsh measure, but it has finally—finally—referenced one of the poverty measures we have consistently asked the Government to acknowledge.

💬 Chris Bishop: We reference them all the time.

Mr Bishop, I ask you to reflect on the Hansard and on the number of occasions we have asked the Minister to adopt that as one of the measures and they have continually refused. My request here is a generous one, Mr Bishop. My request here is that if you are willing to reference it in a Budget document, just be consistent—adopt these measures properly. Hold yourself to account consistently. Had this been a full Government measure that it included in the Public Finance Act, as Labour has said we would do, perhaps we would have seen a different Budget. One final thought: Labour, because we are willing to hold ourselves to those measures and targets—we know what it takes to lift families out of poverty.

We know that parents and families are in the harshest poverty while their children are aged 0 to 3. We know that that is also when it is fundamental for a child to be well supported. That is why Labour proposed Best Start. It still remains, we think, one of the best, most targeted, efficient mechanisms to support families with young children in need. It is $60 a week, because that is what it takes to move families out of poverty. A block of cheese does not. That is why this is a failure—$1.9 billion spread over a group. That will just make so little difference when we needed so much more.

I am delighted to speak on the Taxation (Budget Measures: Family Incomes Package) Bill 2017.

💬 Carmel Sepuloni: You should be embarrassed.

I just heard an interjection that I am shocked by. I just heard an interjection, which was “She should be embarrassed.”—to be embarrassed about supporting a piece of legislation that lifts the incomes of some of our most disadvantaged New Zealanders; thousands more children getting access to the basics. I am incredibly proud of this bill, and I am shocked and dismayed that the Opposition would even think about voting against the futures of so many of our disadvantaged young New Zealanders. This bill does a range of incredible things for those families who need it most, including—this is a $2 billion package, and this is what this legislation does: it raises the income thresholds, putting more money, $26 a week on average, for 1.3 million families.

I am absolutely shocked that the Labour Party could even consider voting against this. It is not even just about helping some of our most disadvantaged children. It is also going to put more money in the pockets of students—those students who desperately need that accommodation funding. That is in this bill. It is also about supporting superannuitants more; 750,000 superannuitants are going to benefit from this legislation. This bill should be called the “Stephen Joyce Social Conscience Bill”. It is about equality of opportunity. It is $2 billion more for hard-working families, and anyone watching this should be absolutely shocked to see that the Labour Party is voting against this legislation.

So let us look at the provisions. If you look at it, we have obviously, very clearly—raising the income threshold from $14,000 to $22,000, $48,000 to $52,000. What does it actually mean for New Zealanders? This means someone working full-time on the minimum wage will receive $11 a week as a result of the tax threshold changes. Anyone earning over $52,000 will receive an extra $20 per week, but a couple with partners earning the average wage will be $41 a week better off from these changes. I cannot believe the Labour Party is voting against this.

It will also see the accommodation supplement maximum amount and accommodation supplement areas changed. That is very important. In parts of Auckland and, I think, in Tauranga, that is going to see more money in people’s pockets. Again, a couple with two children under 13 and one partner earning $55,000 will gain $41 per week, plus any increase in terms of their accommodation supplement. So if you look at this bill, it is not only simplifying in terms of tax arrangements, it is enabling more young children in some disadvantaged families, but also middle income New Zealanders, to have more money in their pocket.

This also has to be considered in the context of the rest of the Budget and what we have done in the last couple of years. We are the first Government in a very long time to raise core benefits. In this Budget you have literally hundreds of millions more, whether it is in increasing funding for schools, whether it is in mental health—this is actually a very strong budget for children, but nothing stronger than this piece of legislation. I am still struggling to get my head around how the Labour Party could possibly vote against the futures of so many children who will be affected by a $2 billion package. The reality is—we saw it today in Andrew Little’s speech; it was the prelude to them voting against it. He could not even finish his speech. [Interruption]

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I apologise for interrupting the member. I think when one member was interjecting and the member was replying, it was sort of OK, but I think that when it is added to by supportive comments and it becomes a debate between members—neither of whom have the floor—it is a little bit unfair on the speaker. So if Carmel Sepuloni and Chris Bishop could hold their tongues, or whatever—Nikki Kaye.

So, again, coming back to the people who will be affected by this legislation—and reminding every member of Parliament, before they cast their vote, what they are actually going to vote against if they are going to vote against this legislation. They are voting against thousands of children who will be better off as a result of this. They are voting against the students who will have more money in their pockets. They are voting against the superannuitants who will benefit from this. They are voting against hard-working families, particularly those who may be on the minimum wage, and I am absolutely shocked that the Labour Party would vote against this.

This is a very strong Government that is not only strong from an economic perspective but has demonstrated time and time again that we have more choices when we have a strong economy, and we are able to deliver significant pieces of legislation like this that help our most disadvantaged, that do more for some of those young children. That is alongside significant investments in health, in housing, and in education. In this Budget alone—this is the largest ever Budget for education, with $1.5 billion more.

It is a 41 percent increase now since we have been in office, in terms of Vote Education, and that goes alongside this legislation. So when we look at this legislation, it is not only about more funding, in terms of those families who need it, but it is also looking at this legislation alongside other investments in public services, because what we know is that if people have more money in their pocket then they are able to—

💬 Carmel Sepuloni: Why are they not showing up to any education political panels?

Ah—excuse me? Sorry, I am getting quite a lot of interjections from Carmel Sepuloni—but, again, the point that I would make is that in her electorate, in West Auckland, she is going to have to turn up to the political panels—[Interruption]

The ASSISTANT SPEAKER (Hon Trevor Mallard): OK. I thought the Minister was handling it, sort of, relatively well. If she would like me to settle it down, I will take charge of settling it down, not Mr Bishop.

As I said before, the member opposite will have to go to West Auckland and explain to those families how she voted against a package that was going to put more money in their pockets, was going to help them with their housing, was going to help them in terms of other basic costs every week, because that is what this legislation is going to do. This legislation is going to put, on average, $26 a week into the families who need it most—1.3 million families and $2 billion. I am very proud to support this legislation. [Interruption]

Order! [Interruption] Order! The advice that I gave to another member on that side can apply to whoever is helping me now.

I rise to take a call on the Taxation (Budget Measures: Family Incomes Package) Bill. The Green Party believes that this is a highly flawed piece of legislation in terms of its design, but will be voting for it nevertheless, on the basis that when it comes to people who are on low incomes, something is better than nothing—and they have had nothing for the last 8 years under this Government.

The 2010 tax cuts that were designed for and aimed at the high-income earners in this country have, in part, created the set of conditions that now require the Government to perform some kind of remedial action to try to do what it can for people on middle and low incomes in this country. What has happened over the course of the last 8 years of the National Government is that people in the bottom 30 percent of incomes have actually seen their disposable incomes go backwards, because their cost of living has increased far higher and far faster than any rise in their incomes over that period of time.

So while the Government likes to crow about how incomes in this country have been rising, when you break that data down by decile, people who are in the lower third of income earners in this country have actually gone backwards during the course of this Government. That is because the cost of things that they have to spend their money on—because, of course, they have few choices about what they can spend their money on—has increased extraordinarily, most of all in housing. That has put a huge squeeze on those families, which is one of the reasons why this bill then becomes necessary.

I want to pick up on a couple of points that were made by some of the previous speakers. Mr Bishop talked about rewards for hard work. This is part of the National Party mythology, as far as I can see, which is the notion that if you just work harder, you will be rewarded for it. I have to say, I know a lot of cleaners and people who work low-end jobs in this country and around the world, who, no matter how hard they work—and they work extremely hard—will not see a dramatic rise in their incomes as a result of more hard work. The plain fact is that they are not getting paid enough to live on.

This is a question I was asking this afternoon, and I still do not have a good answer for it: in this country, why is it that we have people who have got jobs and have got kids, who are working more than 40 hours—many of them up to 60 or 70 or 80 hours a week, doing one or even two jobs—and they are living in cars? That is a sign of two things: a massive breakdown in the housing market, which is why the changes to the accommodation supplement become necessary, and the fact that they are simply not getting paid enough.

Let us be very straight about this: Working for Families is a wage subsidy. Right? We are paying to make up the gap between what people are actually getting paid and what they need to live on, so it is a wage subsidy. The accommodation supplement is a rent subsidy that goes into the hands of private landlords. Those two massive deficiencies in what people are getting paid and what they are having to spend in order to make ends meet—the Government is having to cover the shortfall in that in some way, through those two schemes.

One of the things that has been raised by my colleagues in the National Party that is completely correct is that, actually, what this does is while people are—

💬 Phil Twyford: I think you mean Labour, James.

Sorry, what did I—

💬 Phil Twyford: Labour.

I beg your pardon.

💬 Richard Prosser: National’s over there.

Yes. I beg your pardon. It has been a long day. Those members did say a couple of things that were correct, but you guys said more things that were correct. The thing that the Labour Party said earlier that was correct about this is that the design of this package, which plays out in this bill, means that people who are at the high end actually do get more in the hand back than people who are on lower incomes. For families who are earning $127,000 or more, they get $33.22 a week through this tax package, and families who are earning $24,000 or less get $5.34. Right? The families who are on $127,000 or more get six times more back through the tax changes than families who are on $24,000 or less. That is just completely contrary to the way that this ought to be designed.

The fact that people who are earning low incomes are getting $5 a week back is why we are voting for this bill, because $5 a week, when you have so little, is absolutely necessary. It needs to be a great deal more than that. If we were the Government—and when we are the Government, later on this year, we will design a tax package that is actually more heavily oriented towards those on low incomes than those who are on higher incomes. We need a taxation system in this country that is fair, that is redistributive, that ensures that, actually, every family is secure in the knowledge and can trust the fact that they are going to be able to make ends meet at the end of the month when they are able to pay off their rent or their mortgage—whether they rent or they own—and that they are still able to put food on the table. We think that the design of this bill and the design of the package here is flawed. Having said that, a little something is better than nothing.

One of the other things that I want to speak to, given that it is covered in the introductory notes to the bill, is in relation to housing—and my colleague Grant Robertson referred to this before. This bill, as part of this package, admits, essentially, that the housing crisis has completely gotten away from this Government. One of the things that Government members were kind of boasting about, if you like, this afternoon was the amount of money that they are putting into emergency housing. That is not something to crow about; that is a massive failure. The fact that we have to spend hundreds of millions of taxpayer dollars putting families into motels and emergency accommodation is a huge admission of failure.

My regret about the change to the accommodation supplement in this bill is that it is a function of the total failure of the Government’s ability to house its own citizens in this country. It is also, from a use of taxpayer funds, money moving directly from public hands into the private sector, essentially, because it is moving into the hands of motel owners and private landlords. If the Government was focused on actually building houses, keeping them in public hands, and putting those people into public housing, then that money would come back and the measures in this bill would not be necessary.

Like I said, this is a flawed bill. We think that the design of this package is oriented in the wrong direction. Having said that, families who are on low incomes are really doing it tough in this country, because their disposable incomes have gone backwards over the course of the last 8 years. Every single penny that they are able to receive—I think we should not be churlish about that. We should support them. It is just regrettable that people on higher incomes are going to benefit more as a result of this package than people on lower incomes. Thank you.

It is a pleasure to rise to take a call in this Taxation (Budget Measures: Family Incomes Package) Bill on behalf of New Zealand First and, once again, on behalf of my colleague Fletcher Tabuteau.

It will probably come as no surprise to anyone on the other side of the House that on an overall basis New Zealand First obviously will be voting against the Budget. However, we are going to be voting for this bill. It is—[Interruption] It is not all bouquets, I say to members opposite. There are brickbats in here as well. Essentially, I will echo some of my colleague Mr Shaw’s comments—that something is better than nothing. In actual fact, this tax bill, as part of the necessary enabling legislation for the Budget—anyone could argue that it is not as good as it could be, but it is a lot better than things have been. We have found it incomprehensible, actually, that a party of opposition—what is currently a major party of opposition—could vote against a tax bill that will increase the bottom line of incomes for those nearest the bottom of the ladder.

💬 Carmel Sepuloni: Most of it’s going to the higher-income people.

My colleague Ms Sepuloni says that most is going to people on higher incomes. Well, in dollar terms, on an individual basis, it is probably true. However, that is kind of irrelevant, from the standpoint of people who are at the lower end of the scale, who will be getting another maybe only $11, maybe $5, maybe $20, maybe $30, maybe $41 a week. For those people, that is an important increase, and it is one that we are not going to stand against.

We do not agree with a lot of what this Government does, on an ideological basis. Ideology is what Budgets really should be about, and tax bills that are part of the enabling legislation, to make those Budgets come about, need to be driven by philosophy. We are not here to talk, I do not think, at this stage—certainly not until we get to perhaps the later stages of the bill—about the technical details of the way that the taxation infrastructure is organised. It is about the driving philosophy behind it and about the central tenets, the central points, of this bill and what it says it intends to do and how the Government that is promoting it claims that it intends to go about making those changes.

I am pleased, actually, that Ms Kaye, when she spoke, talked about the Opposition. There is actually no such thing as the Opposition. We are a party of opposition, as are the other parties around us. But we are certainly not a unified entity, and that will be seen when the campaign, which obviously this Budget will be a part of, kicks off.

Getting back to the essence of the bill, when we look at what it is fundamentally intended to do, it is designed especially to assist low and middle income earners with young families and high housing costs. And it does do that. That is unarguable. But whether it does it in a way that some other parties would prefer, whether it goes as far as anyone would like, us included, is actually neither here nor there. What it does do is deliver more money into the pockets of a lot of people who need more money in their pockets, and for that reason we will be voting for this taxation bill.

The biggest issue, obviously, that we have as a nation—and with this Budget, of which this tax legislation is a part—which we have to address, is that the agenda that the National Government has been following over the last 9 years has simply gone too far. It is almost like they want to wind the clock back to 1984 and restart all those experimental things that were done to New Zealand that have caused such an enormously deleterious effect on our social structure, on the way that New Zealand was.

What has happened over that time is that we have seen a major rise in inequality between wealth and opportunity from those at the bottom and those at the top. This bill will go some way, a small way, to addressing that, and that is a worthwhile thing to do.

Mr Robertson, when he spoke, made the comment that this tax bill, on the part of the National Government, was a march into the territory of the Labour Party. Well, actually, yes it is. You cannot argue with that. I understand why Labour would be experiencing some chagrin about that. Essentially, National is kind of cutting Labour’s grass a little bit, and perhaps that is what has motivated Labour members to vote against a bill that, fundamentally, they should be voting for, because of the things that are in it that it will do right.

When we look at the thresholds that this bill will bring in, lowering the marginal tax rates for low and middle income earners and increasing the bottom two income tax thresholds are good things to do. When we say that we have increased the bottom threshold from $14,000 to $22,000, that actually, for a lot of people in that particular sector, in that quintile, as it has been called, is a significant change. It is an enormous difference, in percentage terms, not in dollar terms as far as those of us who are in a fortunate position are used to thinking of.

I will get a tax cut, as will everyone else in this House. I will get my 20 bucks a week, or whatever it works out to be. Yes, it could be argued that I do not need it. But being consistent across the board means that if you are making more to start with, then, yes, you will get more of a tax cut in dollar terms. That does not mean that it is a greater percentage of your disposable income. In those terms, the net beneficial effect for the people in the lower quintiles will be much greater than the amount that we get. Actually, there does not appear to be a facility by which anyone who does not want a tax break is able to give it back to the Crown, and maybe that is something that could be addressed.

But tax rates and thresholds and so forth are but one element. I know we do not want to stray off the topic, but one thing that this bill—in fact the Budget overall, but this bill in particular—does not do is address secondary tax rates. It is all very well moving thresholds, and doing that is a good thing, and that will assist the position of those people who find themselves there, but nearly 2 million New Zealanders work multiple jobs, and actually getting rid of secondary tax might be of more benefit to them. That is perhaps a discussion for another day.

The independent earner tax credit is going to be discontinued, and fundamentally it might as well be because, as we have heard, only about one in three people who are entitled to it actually claim it. I wonder how much of that is due to the fact that most of the people who are entitled to it do not know they are entitled to it, and that perhaps has been one of the things that has led to the proliferation of companies that advertise on TV and online, offering to get you your tax refund, when in fact you were entitled to it anyway. You could simply apply for it and get all that back, without having to give 20 percent of it to the likes of the companies that specialise in doing those sorts of things.

The people who do lose that will be compensated. As the Government has said, the tax credit, as it is taken away, will be replaced by the change in the threshold. Those people will benefit to the net tune of 77c. They are not actually the $1 bill people; they are the 77c people. Maybe Labour has rounded that up to $1, or perhaps they are just not very good at maths. Before the members over there start crowing, being good at maths is something you are going to have to be good at as well, because if you take 59 members and subtract 15 percentage points at the election, how many does that leave you with? That is something that you are going to have to deal with in 4 months’ time.

Another point that I want to just touch on, without dragging this process out too long, is the family tax credit rates and increasing the rate for young children so that they come up to the same level as kids aged 16 to 18. As anybody who has kids knows, they cost a lot regardless of what age they are at. Their needs are different at different stages of life, but there is always money going out, and it makes a lot of sense, and that is one of the good things in this bill, to increase the abatement rate and decrease the threshold, and simplify that part of the system so that, regardless of the age of the kids, you do get the same amount. There are plenty of things to spend it on, and, again, it is one of the things that those people who are most in need of it will appreciate getting.

To reiterate, as I say we will be voting against the Budget but we will be voting for this bill because in actual fact, as part of what is generally an overall bad package, this is not a bad piece of legislation. For that reason we will support it. Thank you.

Now I have two things in common with Mr Prosser. The first is an interest in wine making, and the second is the agreement with the man’s words just in the last 5 minutes. If I was speaking later, I would actually go and ask to borrow his notes. I agree with almost every word he said, and it was well articulated.

Mr Prosser made it very clear where he stood. Labour, on the other hand, is not so clear about where it stands on this bill, and although it is going to vote against it, it is interesting. I was having a beer with Mr Robertson last night at The Backbencher with, as well, Mr Seymour and Ms Genter. The question was asked: do you—not you, Mr Assistant Speaker—Mr Robertson, support tax cuts? We were all asked the same question. It was very clear from Mr Seymour and me that we believe that taxpayers’ funds earned during the day, during the week, during the month should be returned to the taxpayer whenever possible—whenever possible. I had a condition: a focus on families. My view is that tax cuts, at this time, are appropriate, especially when targeted for families. And here we are 24 hours later with exactly that.

The problem Mr Robertson had was that he was not clear about tax cuts at all. In fact, he said he did not think there was a need for tax cuts.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I am now going to ask the member—he has had a minute and a half to introduce the speech. Get to the bill.

Sure. Thank you, Mr Assistant Speaker. So what do we have? What do we have in this bill? We have tax cuts. We are returning income earned by the taxpayer to that person, and the whole theme is that everyone in New Zealand deserves a share in the prosperity of this growing economy—everyone. So that is the essence of it, and there is $2 billion and every taxpayer will pick up something from it.

The target of families is also welcome. We are going to see an increase in family tax credits as described, making it much simpler, and also the need to support those who are suffering with increased rental costs. And so, therefore, we have got some targeted benefit in increasing the accommodation allowance—exactly what is required.

This is a very sensible and pragmatic bill, in that it is not over the top. We are not cutting tax rates, we are not cutting the top tax rate, and we are not cutting the tax rates in themselves. We are just moving the bands. We could move it more aggressively. My point here is that we are doing it in a reasonable and practical and affordable manner.

Despite the fantastic forecast surpluses, we are focusing on repayment of debt and the infrastructure, and this bill deals with returning taxpayer money to those who have earned it. And that is the difference between—well, it seems that there is only a very small group of people in the House who disagree with that notion tonight, and that is, unfortunately, the Labour Party. So its members are going to have to explain to taxpayers why they are not interested in returning $10 or $20 a week to their constituents—

💬 Carmel Sepuloni: We won’t support tax cuts that put more money into higher-income earners’ pockets when the country’s suffering.

—to New Zealand taxpayers, to people who earn and work every day looking for—well, you have already had a very eloquent explanation of what it really means and the fact that this is a targeted bill looking at accommodation and families. And for that reason, I commend the bill to the House.

💬 Carmel Sepuloni: For that reason, sit down.

Sorry. Before I call the member Metiria Turei, I think the member Carmel Sepuloni—she is getting a little bit loud. And sort of, I think, inviting a member to sit down like that probably goes towards their freedom to make speeches in the House, and she should settle. She should really settle quite quickly.

I just want to make a reasonably short call on this bill. This bill delivers tax cuts, which the country has said it does not want. Actually, what the country wanted was to see more money being delivered in services, in particular, and to the families who need it most. What we see with this legislation is a very meagre opportunity to provide additional funding to the families who need it the most, and the maximum benefit going to those who earn the most.

That is pretty traditional National. We know that. We saw that when it first came in. After the 2008 election, its first choice then, in response to the global financial crisis, was to give significant tax cuts to the very wealthy, and we are seeing that now as part of its attempt to try to win a fourth term at this year’s election. Nobody is fooled by this. Everybody can see that that is what National is doing—that it has been, over the last 8 years, systematically eroding Working for Families, systematically eroding social services, education services, and health services.

Now it is crowing about delivering a tiny proportion of what it took from New Zealanders over that period of time, and it is trying to sell it as being a great advantage for working families when, in fact, working families will still continue to suffer from the effects of increased poverty, increased housing costs, and increased costs of living as a result of National’s policy. I just want to demonstrate some of that here. As you know, those on the lowest incomes will be getting around $5 a week extra from the tax cuts from this—

💬 Phil Twyford: Hallelujah!

Ha, ha! Five dollars a week extra, right? That is what they are going to be getting. That is what they will be getting. Let us just have a think about what that means, because one of the arguments in the legislation is that the Government is delivering this meagre little tax cut to the low-income earners because of high house prices. Right? That is how it is justifying it. Its members talk at length about the accommodation supplement as being one of the measures in this—it is not in the provisions of the bill, but it is in the description of the bill.

But what we also know is that National has been clearer and more upfront in the past about the risk of simply increasing the accommodation supplement. Just in 2015, it refused to increase the accommodation supplement, and its members said that they refused to do it because of “the risk of landlord capture of the assistance.”

💬 Phil Twyford: Well, well, well.

Well, well, well. So National knows that by increasing the accommodation supplement and doing hardly anything else in housing, all it is doing is transferring a mass of money—and we are talking $400 million over the 4-year period—from the public purse. That money could be used to actually build the homes that New Zealanders want, but instead, by delivering it through the accommodation supplement, National is giving to private landlords, over 4 years, $400 million more. That is what it is doing, and it knows it because it discussed exactly that—that there would be landlord capture of the accommodation supplement if it put it up.

So why would it be doing that? It is doing that because it thinks it can fool the country. It thinks that New Zealanders will be fooled by this—giving a little here but taking a great deal more over there. It is a swindle. It is a swindle. National thinks it can fool the country. The country has seen time and time again that National promises big and delivers little, and we still have increases in homelessness, we have still increases in house prices, we still have increases in rent, and we still have increases in child poverty. So nobody is going to be fooled by this little swindle that National is trying to pull with this.

But I would also just note that, along with this $5 tax cut that is being delivered, there are other things that are being cut that families really rely on. One of those things has been access to the home insulation fund. As we know, over a number of years now the home insulation fund has been a subsidy to help to insulate New Zealand homes, particularly for those who are on low incomes, in order to make sure that they are living in warm, dry homes.

I would not have interrupted the member if she was being totally relevant, but her time has expired.

I am a little surprised but delighted to be able to stand up and speak today. I am surprised because the ACT Party and Māori Party have not taken up the opportunity to speak in this important debate about tax in our country. I was looking forward to David Seymour’s contribution, given that earlier in the day he excoriated the Minister of Finance for wearing a hammer and sickle because of these Working for Families changes, but then meekly voted in favour of the Budget. So I was looking forward to his contribution tonight. I was looking to the contribution of the Māori Party, whose constituents, for the very great part, will be those who receive the scraps out of the tax package that is in this bill, and I will talk more about that shortly. I have got to say, anyone watching this debate will have been slightly confused this evening. We have had contributions, of course, from the Government, but also from Opposition parties. Opposition parties are often good allies in the cause of a stronger and more just and fair New Zealand, but have somewhat surprisingly voted in favour of the tax cuts package that is in this bill.

Let me just break down the issues with that, because it is all very well to say “Oh well, it’s better than nothing, and some people at the low-income end will get something out of this.”, but it ignores the question of opportunity cost. As we all know, the Government coffers are not infinite, and every dollar that we put into this tax cut package that goes to the people at the top end is another dollar that is not spent on the people who really need it, another dollar that is not spent on housing and the social services that we need.

Let us look at this really simply, and I would invite members in this House to actually spend some time in front of a spreadsheet. This is a $1.9 billion tax cut package. Do you want to know how much of that $1.9 billion goes to the top half of income earners? It is $1.5 billion of it. So when any member of this House gets up and pretends that this is a tax cut that will deliver a greater level of social equality in our country, they are ignoring not only common sense but the very facts, the very data, that the Government has put through in its own documents. Over 75 percent of the benefit of these tax cuts goes to the top half of income earners.

Do you know what? The top 10 percent—the top 10 percent—of income earners get the same benefit from this tax cut package as the bottom 50 percent. So I am not going to stand here and listen to any other member of this House tell the Labour Party—which will proudly stand here and oppose an inequitable tax cut package, as we always have because we stand up for working people, not just the privileged few at the very top. I am not going to stand here and hear anyone in this House say that this tax cut package delivers a greater level of equality or greater social justice in this country.

I will just demonstrate that further by talking about a family that could have lived in my electorate back in 2007. If their rent at that time was $450 a week—we will go along to the Reserve Bank of New Zealand Consumers Price Index calculator. That will tell you that their rent, if it was $450 back in 2007, which was the last time that the accommodation supplement was increased—under a Labour Government—their rent today would be $690 a week. That is $240 more. Do you want to know what? If you take the very, very best-case scenario out of this miserable package that has been put forward by the Government today and you add up the tax cut, you add up the accommodation supplement increase—which would be an $80 increase for that family—and you add up the family tax credit, that family would be $155 better off. They would be $155 better off, when their rent has gone up by $240 a week. So just on the increase in housing costs under this Government, that family is worse off.

So we are not going to stand here and hear about the generosity of the Government for putting up an accommodation supplement that it has frozen for 10 years—bear in mind it does not come in until 1 April 2018, so it will have been frozen for 11 years at that stage—at the same time as ordinary working families over the last 3 years alone have had a $40 average increase in their rents. So what we see, at the very best, in this Budget—at the very best—is this Government kind of, sort of, part of the way, making up for the erosion in the incomes of ordinary working families under its term in office over the past 9 years.

There are a number of other things in this package that bear a bit more scrutiny. I was interested to see in the bill claims that only 80 percent of people claimed the independent earner tax credit—I thought that was quite high. But, actually, in the finance Minister’s speech he claimed it was only 30 percent. It would be good to hear which is actually correct.

💬 Chris Bishop: 32.

Being as this is the Budget, could we understand whether this is right, or whether the finance Minister is correct. Read the document yourself, Mr Bishop. This bill delivers nothing but scraps for ordinary working families. It is time for a fresh start, and we look forward to delivering that in 4 months’ time. Thank you.

I feel a little bit offended by the previous speaker, Michael Wood, because the scraps that the previous speaker was alluding to—they are my people. They are Māori who he was referring to. They are Māori who are going to benefit from this important bill. It does not matter if it comes in on 1 April 2018; it will be my people who will benefit from it. So I feel offended when he starts talking about “scraps”. “Scraps”—honestly. It is not scraps.

My mother is a superannuant. She will benefit from this. She will benefit from this. She says to me: “Joanne, when are we going to get something?”. Tonight, today, at the Budget reading, she has sat and listened to what this Budget is delivering for people of her age and older. She is 85 years old. So when I sit here and I listen to the debate that goes on in the Opposition benches over in Labour, I do feel aggrieved that it is my people who are getting slam-blasted around this House.

I can say that we looked tonight on the television, during the news, and we saw two families who were interviewed over their reaction to the Budget announcements. There was one family—one was part-Māori; they had about four or five kids—they will receive $120 a week in their pay packets.

💬 Alastair Scott: That’s the scraps.

That is the scraps. They are absolutely over the moon—absolutely over the moon—that this is what they will be receiving. Then we moved to listening to another family who had two children, one income, and they will receive an additional $70 a week in their income. You cannot sit there and say that that is just absolute rubbish and scraps. That is gold to these people—absolutely gold. I know that when I was on a benefit, if I received an increase of any sort, I would treasure that. I would absolutely treasure that.

💬 Phil Twyford: You get a thousand bucks.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! The member, like all other members, might get a thousand dollars, but I would prefer if not all the thousands of dollars were referred to me. In fact, I would probably like all of the thousands of dollars the members are referring to, but actually you are not to refer to the Speaker.

When we look at the Family Incomes Package and we look at the amount of money that is being invested here—$2.1 billion is being invested here, and that is surplus. That is not borrowed money; that is surplus. That is where that is coming from. Where do you get a surplus from? You get it from a well-managed Government that manages the books of this country. From that, the result is a strong economy. We all know that there is only one party in this House that can do that for this country—not just now, not just tomorrow, but in the future, right through—this Bill English - led National Government. That is what this Government is doing for the country that I love and that I live in, and that my colleagues love and live in.

I cannot abide by the absolute denigration of my people in the scraps. I will not have that. I want to congratulate New Zealand First for seeing through it and supporting this bill. I feel a little bit confused about whether the Greens are supporting it—one supports, one does not. It was a little bit wīwī, wāwā, but you know—I suppose that is what happens when the two leaders get up: wīwī, wāwā.

As I said at the start of my speech, I support this bill. I think it is a great bill. I look forward to it receiving Royal assent at the end of the debates tonight and tomorrow. I commend it to the House. Thank you.

I call Phil Twyford—it is good to see you.

It is good to see you, Mr Deputy Speaker. I think the best that can be said for this bill is that it is a clever piece of election-year politics. It is an election-year Budget, but it is not really the kind of leadership that this country needs. So what does this bill do? It adjusts the tax brackets, it adjusts Working for Families, and it increases the entitlements under the accommodation supplement. It is worth, in total, about $1.9 billion—$26 a week on average for the recipients. But it is not going to do anything for the people in my community who are living in tents and garages and sleepouts, and families living in their cars. It is not going to do anything for the mental health services that are on their last legs, all over the country. It is not going to do anything for the classrooms that are so overcrowded because this Government has failed to properly invest in the infrastructure to support a rapidly growing population. It will do nothing for the gridlock on the roads that make the daily commute a living hell for people in our largest city.

So, after 9 years in Government, as one problem after another has been allowed to fester out of control, this Government steps up 4 months out from an election with a Budget that is basically a case of spray and pray. This is an election bribe from Steven Joyce in his maiden Budget, but it is not even a very effective bribe. And why is that? It is because the last few weeks have been spent trying to frame this Budget as a families package, and we have heard one speaker after another from the National Government benches get up and say that it is targeted at people who need it most. I am shocked to see people like Nikki Kaye and Chris Bishop stand up with all this kind of faux outrage and indignation at the suggestion from this side of the House that it is, in fact, a package that is disproportionately benefiting people on higher incomes. They seem to have somehow suspended their critical faculties and they want to pretend to this House and to the public of New Zealand that this is a package that is designed to be most generous to the New Zealanders who need it most.

Well, it clearly is not, and Michael Wood made the case very persuasively. This package puts the benefits into the hands of the top income earners. The top 50 percent of income earners in this country get 75 percent of the benefits of the package that is legislated by this bill—75 percent of the benefits go to the richest half of the population. How is that a package that is targeted at New Zealanders who need it most? The top 10 percent of New Zealand income earners get the same as the bottom 50 percent. How is that a package that is targeted to help the poorest and most vulnerable New Zealanders? It is not. The National Government clearly thinks that New Zealanders are thick, to spin this line that this is a package that is setting out to help the New Zealanders who need it most. It clearly is not.

Steven Joyce is giving a tax cut of $1,000 a year to people earning the salary of an MP—$1,000. And yet someone who is, let us say, a single person, a full-time cleaner on the minimum wage gets an extra $11 in tax cuts—$11—but they lose $10 from the removal of the independent earner tax credit. They, effectively, get $1 from this package, and yet Steven Joyce is giving the members of Parliament in this House—the backbenchers at least—a $1,000-a-year tax cut. How is that fair? How is that rational? And how is that a tax package that is designed to help low-income New Zealanders? The finance Minister and the Prime Minister get 20 times more than what a single person working full-time on the minimum wage gets—20 times more. A property speculator earning $200,000 a year gets $20 a week. The minimum-wage cleaner, whom they pay to clean their office, gets $1—the property speculator gets 20 times more. I hope the members opposite are listening to this. I do not know how we could make it any clearer: this is not a generous package designed to help the New Zealanders who need it most.

Housing is the issue that hangs over this bill and hangs over this Budget. It is the No. 1 political issue in the election campaign that we are going to be debating over the next 3 or 4 months. It is set out in the commentary on this bill that one of the objectives of this tax package is improving the incomes for those people who have young children or high housing costs. Well, that is a very big group of people. More than half of New Zealanders now rent, and yet all over the country rents have been going through the roof because of a housing crisis that has been allowed to get out of control by this National Government. In Auckland in the last 7 years, the average rent has gone up by $7,000 a year—$7,000 a year. So this package of adjustments to the tax brackets and the accommodation supplement and Working for Families is dwarfed by the increase in housing costs—not only mortgages but also rents, and that is not just Auckland; that is happening all over the country. It should be the objective of this bill to actually make life easier for people who are suffering the effects of skyrocketing housing costs, but it is not going to do much, if anything at all, to ease those pressures.

I want to talk about the accommodation supplement, because that is one of the three key elements in this package and it is commented on in the bill, in the commentary attached to the bill. So what the Government is doing is it is increasing the maximum rates of the accommodation supplement. It is allowing students and other recipients to claim up to an additional $20 per week under the accommodation supplement in Auckland, Wellington, and Christchurch. This benefits 47 percent—so, a little under half of people who currently get the accommodation supplement—by an average of $36 a week. More than half of the recipients of the accommodation supplement will not get any benefit at all.

And here is the real kicker: families who have been claiming the temporary additional support, which is a substantial number of families, because they cannot live even when they are getting the accommodation supplement and extra benefits—they are not going to benefit at all, because the increase in the accommodation supplement is offset on a dollar for dollar basis against the temporary additional support. So those people get nothing, and that actually wipes out a quarter of what would have otherwise been the cost of the increased accommodation supplement. Two thousand households will see their accommodation supplement actually decrease under these changes up to $3 a week as a result.

But I want to say more about the accommodation supplement, because I think this is an admission of failure by this Government. The accommodation supplement is, effectively, a subsidy to landlords. It is a recognition that people’s wages are not high enough to pay the rent, and when you have got entrenched low wages, which this Government has gone out of its way to try to depress over the last 9 years, and skyrocketing rents because of a housing market that is turbocharged by property speculators, that is the only thing that is left for the Government to do. We have said that we recognise that increasing the accommodation supplement as a short-term emergency measure may be justified and we will back it for the first year. But in the second, third, and fourth years you are looking at almost $400 million a year—almost $400 million a year—in increased subsidies to landlords.

That is a total admission of failure by a Government that has refused to tax speculators, that has refused to ban foreign buyers from buying existing homes, that has utterly failed—that has totally failed—to increase the supply of housing, that even in the Budget housing announcements that we saw in the last week will not even build any kind of significant number of affordable homes for first-home buyers, and that has done nothing to give tenants more security of tenure. All that it has got is to bump up the subsidy for landlords by nearly $400 million a year. We do not accept that that is a good use of taxpayers’ money. We will support it in the short term, but in Government we will do a review of the accommodation supplement to find a much better way of using that taxpayers’ money.

What a great day it is for the people of New Zealand. This is about a Government continuing to improve the position of hard-working New Zealanders and their families. I think that before we start talking about this tax package we need to remind ourselves that the biggest thing we can do is to enable a place where people can go and get good jobs. We created 130,000 new jobs last year and 200,000 new jobs are predicted over the next few years. What that means is that you have got to create the right environment—a strong environment, a good financial environment—and this is a Government that has set about doing that.

When you deliver that, that is when you can talk about delivering $2 billion worth of financial assistance to families—New Zealand families. I have got to say that I think the Budget that the Government presented today is actually the Budget that the Opposition would have liked to present. It is those members’ Budget, but we have done it because we are the ones who have managed the economy, so we delivered the Budget surpluses that meant that we could do this. This follows from last year, when we announced that wonderful package of $800 million, when everyone’s benefit was increased by $25 a week. This is a continuum of that, and it is about sharing the benefits of growth with everyone.

So I just want to turn to what is actually in the Budget, because I have not heard many speakers speak about it. The first thing is that I have heard the Opposition say that it is not going to deliver any benefits, and there is this byline about a dollar return to families. Those members are wrong. They are absolutely wrong, and I will tell you why. First up, everyone in New Zealand is going to benefit by our increasing the first tax threshold from $14,000 to $22,000—low-income earners, as well as everyone else. The second benefit is that everyone will benefit between the threshold of $22,000 and up to what was previously the threshold of $48,000, which is now increasing to $52,000. Those two benefits will deliver, in the first case, $10 a week to every family, and, in the second case, 20 bucks to every person who is earning more than that amount of money. So that is quite a significant amount of money.

The second one is the family tax credit change, which, in my view—my humble view—is very generous. It is also about simplifying our tax system, because whilst the family package that was brought in by Labour had the right objective, it was actually a very complicated package, and what we are trying to do is simplify it. So what that does is increase the benefit paid for the oldest child by an amount of, roughly, $10, and for every child thereafter by between $17 and $26. That is significant, and it is on top of that $10 that I talked about before.

Then there is the accommodation supplement, and this is also very significant. Do you realise that if you are a single person who needs the accommodation supplement, you will get an extra $20, and if you are a family of three, you will get up to a maximum of $80? That means 136,000 families will benefit just from the accommodation supplement. Then we have got the 750,000 superannuitants who are going to benefit from those tax changes. We have got the 41,000 students who are also going to benefit from the $20 increase in their—[Interruption]

💬 Mr DEPUTY SPEAKER: I would just like to interrupt the member, and I am sorry to have to do that. But I just need to point out that a previous Speaker, Speaker Hunt, said that interjections should be rare, reasonable, and, hopefully, witty. I would just like to—

💬 Hon Clayton Cosgrove: And it was.

💬 Mr DEPUTY SPEAKER: Well, I would just like to counsel the member, who referred to the member with the call as a Scottish terrier and has then gone on to call him Lassie. Everybody knows that Lassie was a Border collie.

💬 Hon Clayton Cosgrove: Speaking to the point of order, Mr Assistant Speaker, I absolutely agree, but I was trying to elevate him to a new standard.

💬 Mr DEPUTY SPEAKER: Well, I would just like to point out to the member that we may well be here for a long time. We are in urgency, it is a Budget debate, and, as members have come to expect, there will be points divvied out at the end of urgency.

Thank you, Mr Deputy Speaker, and I would just say that a dog is always a dog. It does not matter what type of dog—a dog is always a dog. I do want to bring this speech to a close. I just want to say that 1.36 million families across all of New Zealand are going to benefit from this package. I think it is great. I fully endorse it.