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 second time. Is it not interesting to see the way the earlier debate has played out, with the isolation of only one party in this Chamber voting against more New Zealanders getting more of their money and against more money going to low and middle income families? Every party in this House, except Labour, wants to see it happen. How isolated and how out of touch must those members be feeling. What a shambles.

This bill gives effect to the Family Incomes Package that Steven Joyce has just announced today, which has been carefully designed to assist low and middle income earners with young families and higher housing costs. The Family Incomes Package will increase the incomes of the lowest-quintile families, excluding students and superannuitants, by an average of $35.32 a week, or $1,836.64 a year, and Labour is opposing it. It will also reduce, by about 50,000, the number of children who are living in families receiving less than half the median income—50,000 fewer children living in low-income families, and Labour is opposing it.

This bill, as we know, changes income tax thresholds, providing tax reductions of just over $10 a week to anyone earning more than $22,000 a year and just over $20 a week for anyone earning more than $52,000 a year. Increasing those bottom two tax thresholds in this way will provide greater rewards for work for low and middle income earners.

The bill, as we know, also discontinues the independent earner tax credit, which currently provides up to $10 per week to people with taxable incomes between $24,000 and $48,000 a year who are not otherwise eligible for Working for Families, a benefit, or New Zealand superannuation. Many recipients of the tax credit do not receive it until long after the year in which they are eligible, if at all, and removing the credit will help simplify the system, as individuals will not have to file a tax return at year end or use a different tax code to claim it. Individuals who currently receive the credit will be fully compensated by the increase in the bottom tax threshold.

The bill also sees the family tax credit increase by up to $9.25 a week for the first child who is under 16 and by between $17 and nearly $27 a week for each subsequent child under 16. So, as a result of these changes, the family tax credit rate paid to children will be the same, regardless of their age. There will be one rate for the oldest child, of up to $102 a week, and one rate for all subsequent children of up to $91.25 a week.

The bill also increases the family tax credit abatement rate to 25 percent and reduces the abatement threshold to $35,000. This means Working for Families payments will reduce slightly earlier and slightly faster but at the same time as the base rates for family tax credits are increasing for children aged under 16. Families who have children aged only 16 to 18 earning less than $35,000 a year in family-spent income, including beneficiaries, will see no change in family tax credit payments. This brings forward changes already planned to progressively occur by 2025, based on expected movements in the Consumers Price Index, and it means that the assistance is better targeted to lower-income families.

Due to the complex interactions of our tax and transfer system, a small number of families—a very small number—may face losses from the package, although the vast majority of these will be less than $3 a week. None the less, a transitional assistance fund of $2.2 million over the next 4 years will be available should there be any families who experience overall losses of more than $3 a week as a result of changes across this Family Incomes Package.

The package will also have flow-on effects for superannuitants, with around three-quarters of a million benefiting because of the link between New Zealand superannuation and after-tax wages. The weekly rates of superannuitants are expected to increase by $13.10 for a married or civil union couple, $7.90 for a single person sharing accommodation, and $8.50 for a single person living alone.

Also of great importance to me are the changes to the accommodation supplement. Quite apart from the changes we have talked about to the tax codes, the changes to Working for Families, and the family tax credit, these changes will see 136,000 accommodation supplement beneficiaries receiving up to $36 a week extra payment across New Zealand, and that is significant. It is an increase in the maximum that is available in certain regions, but, also—and, actually, just as importantly—it changes the way the areas for accommodation supplements are calculated. That means that all of the Auckland area is now regarded as area 1; all of Wellington, Christchurch, and a number of other towns are now included in area 2; areas like Tauranga, Queenstown, Arrowtown, and Wanaka are now all assessed as area 1. Before these changes, only 13 percent of accommodation supplement recipients were in area 1, the highest eligible area; now 39 percent of them will be in that top area. Across areas 1 and 2, nearly 70 percent of all those eligible will have access to those top two categories of entitlement. What we are doing here is seeing a recalibration from rates that were previously set on 2003 rents, and now updating them to 2016 rents. This will make a significant difference to the housing pressures families in the lower income bracket are facing.

The full average annual cost of the Family Incomes Package is $2 billion per year, and the total cost is $6.5 billion over the next 4 years. The reason we can afford to do this is the hard, disciplined work, primarily of New Zealanders but of this Government as well, to reflect the fact that we have to earn it before we spend it. This is not a Government that borrows and spends. We have done the work, we are back in surplus, and now, as a result, we can give money to low and middle income New Zealanders. We are very proud to do it, and we are appalled to see Labour opposing it. The package is expected to support the long-run economic performance of New Zealand.

It is important that Kiwi families share directly in the benefits of New Zealand’s economic growth. That is what this bill is about, that is what this Budget is about, and that is why I am pleased to commend it to the House.

This bill is yet another example of the National Government sticking it to future generations of New Zealanders, because while Government members puff their chests out and talk about giving a couple of bucks extra a week to people on low incomes, what they do not say is what they are cutting in order to pay for that.

For the eighth year in a row, they have cut funding from early childhood education in New Zealand. On a per-child basis, early childhood education has been cut every year that National has been in Government.

National has cut funding for those in tertiary education. Every single Budget that this Government has passed has cut the level of financial support available for tertiary students. It has done something in this year’s Budget around the accommodation supplement for tertiary students—the vast bulk of tertiary students will not benefit from that. Not one cent extra will go to most tertiary students, who are struggling to pay the rent. The amount of money they get from their allowances and from their loans does not even cover the rent, let alone give them money to live off. They cannot eat, because this Government has cut the level of financial support they get, every single year. They are the ones who are paying for this Budget. They are the people who are missing out because of this Budget, which does nothing for them.

While the National Government members puff their chests out and ask how we could oppose this, my question to them is: why not more? Why not cut tax more? Because it is a question of affordability. This is not affordable. It is the next generation of New Zealanders who is going to end up paying for this. It is the students in schools, who are finding that their schools’ funding is being cut. The teacher aides are being laid off because the schools cannot afford to pay them anymore, because the operations grant was frozen last year. The funding increase this year does not even compensate for what they lost last year, let alone catch up at all with the increase in costs in the meantime. It is future generations who are being robbed in order to pay for this.

What is it that they are actually getting? What is it that families are actually getting? I think that that is really important, so let us talk about that. It is a typical smoke-and-mirrors exercise on the National Government’s part. Government members say they are trying to do something for low-income earners, but, actually, we know that the people who are benefiting most are those on the highest incomes.

Let us talk about Bill English’s tax changes. You get an extra 35 bucks a week if you are in the wealthiest income tax bracket. If you are the lowest-paid New Zealanders, you get an extra five bucks a week. Someone on the average wage gets just $11 a week. But ah! Hang on, there is a catch to the extra 11 bucks a week they get, because the Government then takes away the minimum wage tax credit that they currently get—the independent earner tax credit—which was 10 bucks. Suddenly, they are down to $1. We call it the “One Dollar Bill Budget”. Remember these? This is what a $1 bill used to look like. Funnily enough, $1 bills were taken out of circulation the first year that Bill English became a member of Parliament, and he has not had a new idea since then. He went and got the Treasury lobotomy, he came to Parliament, and he has not had a new idea since the $1 bill was taken out of circulation. That is the amount of money that people on low incomes, minimum-wage earners, will get from this Budget: an extra $1 a week.

Let us take a single hospitality worker who is on the minimum wage. Once they have had their $11 given with one hand and the $10 taken with the other hand, they will get $1 a week from this Government. What is Paula Bennet’s argument? Paula Bennett’s argument about that is: “Oh, they should work for tips.” So the Government is giving them their first $1 tip. This is the first example of Paula Bennett’s tipping culture in New Zealand—a $1-a-week tip from Paula Bennett for the hospitality workers who are earning the minimum wage. That is the best that they can get under the National Government. If they cannot make ends meet, they can rely on the charity of the customers coming into their establishment. Because they cannot make ends meet, Paula Bennett’s attitude to low-income earners is: “Well, work harder, and you’ll get tips.” Forget about being paid properly, you will just get tips from the people there!

I will tell you what, talk to any hospitality worker in the United States or in the UK, where the tipping culture is common, and they will say they barely make ends meet. Tipping culture drives down wages. That is the type of culture that this National Government wants to introduce, which is why it is giving hospitality workers on the minimum wage an extra buck a week—because it is not willing to back people in low incomes and give them something that would be meaningful.

Let us take the Government’s Working for Families changes, then. The Labour Party introduced Working for Families. We support it, but, here we go again, there is a catch. It lowers the thresholds for Working for Families, but then it increases the abatement rates. Give with one hand, take with the other hand—that is the typical response of the current National Government.

Let us then go back to the tertiary students. Anyone earning less than $14,000 a year gets nothing as a consequence of this change. That is 800,000 New Zealanders who will get not one cent extra from the Government. In fact, for many of those New Zealanders, life gets worse. Tertiary students will be disproportionately represented in that 800,000 figure, because they will be working part-time, often in minimum-wage jobs. They will get nothing from the tax changes or the changes to Working for Families, but what will they get? They will get increased costs for their tuition, they will get increased costs for their accommodation, they will have increased costs for their cost of living, and this Government does nothing to back them—nothing at all. Those students are instead relying on credit card debt, on loans from families, and on loans from banks, because they cannot get enough money just to live on. They are the ones who are bearing the brunt of this year’s Budget under a National Government, just as the tertiary students of future generations of New Zealanders have borne the brunt every year for the 9 years that National has been in Government.

Let us talk more about Working for Families for just a moment. Let us rewind the clock back to 2011, when the National Government cut $500 million out of Working for Families in one of its earliest Budgets. When those members say that they want to give low-income families a bit of a break—that was not their attitude in 2011, when they went and cut $500 million out of Working for Families. This is a Government that simply thinks there is an election around the corner, so it better appear to do something for low-income families, when actually it is not. Those low-income families—

💬 Jono Naylor: Interest-free student loans.

Oh, interest-free student loans—very proud of interest-free student loans, introduced by a Labour Government that actually cared about tertiary students, that actually cared about future generations of New Zealanders, and that was actually embarrassed that future generations of New Zealanders were leaving their education with the highest levels of debt. They were unable to buy a house, they were putting off decisions about having families because of the level of debt they were in. We wanted to do something about that, and, instead, this Government has made their plight worse.

The Labour Government made it better. The National Government has, quite proudly, made it worse. That generation of New Zealanders is unlikely to ever be able to afford to buy a house under the National Government. They will leave with record levels of debt—higher levels of debt than any other generation—because National has allowed the fees to go up, their cost of living to go up, and it has done nothing, absolutely nothing, to support them in their studies. That is because National does not actually care about education.

Let us just presume that everything National says is correct—which, of course, we know it is not—and that families are going to get some extra money in their back pocket. The Government will then take that away again. Take families with kids in early childhood education—early childhood education services have had their funding cut every year that National has been in Government. Where do the centres make up the shortfall? They ask parents to pay for more. What about schools? They have had their funding frozen or going backwards for the last few years. Where do schools make up that money? Parents end up paying more. What about the tertiary students? They have had their support cut or reduced or frozen every year National has been in Government. What happens there? They end up having to make up the shortfall.

Give with one hand and take more with the other—that is the approach of the current National Government. New Zealanders will not end up better from these changes. In fact, the people who most need additional support are the ones who are going to end up worse off, who are going to end up paying more. It is the future generations, in particular, who are being done over by this Government, because it is interested only in the next 4 months, not the next 4 years or the next 40 years. It is interested in getting through to September and trying to win an election. It is not interested in what happens after that.

All the Government members care about is preserving their backsides in ministerial limousines, rather than actually delivering for New Zealanders. Chris Bishop would have loved to get his backside into a ministerial limousine, but he has got the talent squad of people like David Bennett and Jacqui Dean ahead of him in the line, so he is unlikely to ever make it around the Cabinet table under the current National Government.

This legislation is another example of the National Government sticking it to future generations of New Zealanders. I have got no hesitation in opposing it.

I have got to say a couple of things about Chris Hipkin’s speech—that was a much better speech than Andrew Little gave this afternoon in the Budget reply. It was actually funny at times. It was actually energetic. It was actually relevant to the bill we are debating, and he actually made the time—he got to 10 minutes. The most amazing thing about Andrew Little’s speech in the Budget reply this afternoon is that when he got to 17½ minutes—he had already run out of puff about 5 minutes in—he sat down. That was it. After 9 years—and we are up to the fourth Leader of the Opposition—there was bluster and anger and hostility from the Opposition. He got to 17½ minutes and he sat down. That is all they have got to say about the Budget. I thought it was pathetic, but well done to Chris Hipkins. It was actually not a bad speech. It was full of factual inaccuracies, like the fact that we have cut early childhood spending, even though it has doubled in the last 8 years—full of factual inaccuracies—but at least it was a good attempt.

The Labour Party’s attitude to this bill and to the overall Budget is pretty weird, I have got to say.

💬 Brett Hudson: Disgraceful.

It is disgraceful, as my colleague Brett Hudson says. And it is pretty weird, because there is actually a degree of consensus in the House, a reasonable degree of consensus, that what this bill does—which is deliver tax relief and more money into the back pockets of hard-working families, particularly those under housing stress—is a good thing. There is consensus that that is a good thing, and that is what the bill does. That is why the Greens have taken a courageous political decision, a principled decision, and I want to congratulate James Shaw and Marama Davidson and Metiria Turei on that decision to vote for it, because it must have been tough with the memorandum of understanding about being partners in fiscal responsibility—the hilarious pledge. I call them the partners in fiscal irresponsibility given their history in Government. But it must have been tough for them to—[Interruption]

💬 Mr DEPUTY SPEAKER: Order! I am loath to interrupt the member, but there has been interjection from this side. And, quite honestly, we listened to the last member talk about people’s backsides in limousines, the talent squad, and all the rest of it. Quite honestly, one side asked for it, and I think the other side is going to give it to them.

It must have been tough for the Greens to make that decision. But they have made that decision and good on them—good on them. Good on New Zealand First as well for taking the courageous stand to vote for this piece of legislation. So the Labour Party looks very isolated tonight, and we know that it has caused a bit of unhappiness in the coalition opposite. There is a bit of testiness between the parties, and they will have to resolve that in the coming weeks and months, but good on the Greens for doing it.

The Labour Party says that this is a bribe, and that just sums up so much, does it not? The attitude of the Labour Party to New Zealanders’ own money: it is a bribe. We could not possibly have a situation where New Zealanders get to keep a bit more of their own money, where they have to work a bit less every year before they start handing over to the New Zealand Government to spend that money for them. That just sums up so much of the attitude of the Labour Party to how New Zealanders should view their own money.

Then we hear the classic. The classic is that this is a Budget and this is a bill that just helps the rich. Well, I have got to say that this is the most laughable and hysterical claim. There are 154,000 families in the lowest quintile—that is the lowest quintile; the bottom 20 percent—who will benefit, on average, by more than $35 per week, up to almost $2,000 per year. That is not a Budget that helps only the rich. It lifts 20,000 households in severe housing stress above that threshold. That is not a Budget that helps only the rich. It reduces the number of children and families receiving less than half the medium wage by around 50,000 people—50,000 children—and Labour is opposed. Jacinda Ardern, to give her credit, recognised that that is one of the measures that people often use to measure child poverty. That is one of the measures that people use, and the Labour Party has used it itself.

On the Government’s own numbers, this lifts those kids out of poverty to the tune of 50,000 children per year, and that is why the Child Poverty Action Group, which I think all members would agree is not traditionally a friend of this Government—in fact, it was not actually a friend of the last Labour Government either when it came to the in-work tax credit; but, anyway, it is a not a friend of the Government—said that these moves must be encouraged. And I do not want to be accused of misleading the House, because most of the press release was fairly critical, but it basically said: “You should have gone further. You should have lifted more children out.” We would disagree on some aspects of what it said, but it did say that these moves must be encouraged.

Overall, 1.3 million families benefit to the tune of, on average, $26 per week. This is not a Budget that helps only the rich. This is not a Government that does that. It was this Government in 2015 that raised benefit levels for the first time in 43 years. It was this Government that did that. It was a National-led Government that did that, not a Labour Government. It was a National-led Government that did that. We were only able to do that because of the strong, hard work over the last 7 or 8 years under the leadership of John Key and now Bill English—the strong economic plan we have been delivering that has been raising wages, creating jobs, and, now, gives the Government the fiscal headroom to deliver to those who need it most. That is exactly what the Budget does, and that is exactly why I am very proud to vote for it.

I raise a point of order, Mr Deputy Speaker. I seek leave to table the results of an opinion poll in Wainuiōmata that shows that five out of six voters were voting Labour, and the only voter the Wainuiomata News could find who was going to vote National was Chris Bishop.

I wonder whether the member can confirm that it actually exists, or has it yet to be done? [Interruption] Leave is put for that purpose. There is objection. Well, that is a bit of a shame because I was looking forward to reading it.

It appears that Mr Bishop is hurt that the Labour Party is not praising his tax policy enough. We have already heard from Jacinda Ardern, acknowledging that the Working for Families changes are acceptable. We are not going to heap praise upon the Government for those changes, because, previously, a few years ago, the Government stripped $500 million out of Working for Families entitlements. We are not going to heap praise upon you, Mr Bishop, in that, but we are not opposed to them.

What we are opposed to is this very poorly targeted tax cut. And it is poorly targeted. Our tax policy, when you see it, will be better. Your tax policy does not take effect till next year—till next year. Why would we vote for this when we know that we have got something that is better? The size of these tax cuts is not dramatic. The size of these tax cuts is less than 1 percent of GDP. The size of these tax cuts is not dramatic. What is the problem with them, then? The problem, actually, is not the size of them. The problem is the targeting. A multimillionaire who does not need a cent, who has been getting huge increases in income under the inequality that grows under this Government, gets a higher tax cut than the low paid. It is so obvious that I cannot understand how Bill English and Steven Joyce missed it, because it is so clear. As Chris Hipkins has pointed out, if you are on the minimum wage without children, you get a dollar a year. That is a lot of people in the hospitality sector. That is cleaners. These are the lowest-paid people. If you want to use the words “tax relief”—

💬 Hon Dr Nick Smith: What about the accommodation supplement?

I will come to the accommodation supplement. Actually, I will divert into that. There is no area of policy that the housing Minister who just asked about it has bungled more than the accommodation supplement. When the Government came to power in 2008 the accommodation supplement cost $890 million per annum. A year and half out from here it is going to cost $1.5 billion—$1.5 billion. Why has that area of welfare expenditure exploded? It is because of appalling policy by the National Government, made worse by this Budget increasing the subsidy that is available to be paid to landlords. This will bid up rents and it will hold up house prices, to the detriment of first-home buyers. That is basic economics. The National Government should hang its head in shame that the cost of the accommodation supplement has risen from $891 million in 2008 to $1.5 billion after this Budget goes through.

In respect of other areas, I have talked about how someone on the minimum wage gets only a dollar a year, but it is not fair for middle-income people. Why should the electrician get the same amount as the multimillionaire? The multimillionaire should not get the same as the electrician. It is just not right.

💬 Hon Dr Nick Smith: He does not get the accommodation supplement.

What is that?

💬 Hon Dr Nick Smith: The millionaire will not get the family support increases, and will not get—

Oh, he does not get the accommodation supplement. Right. His defence of this is that the multimillionaire does not get the accommodation supplement. Oh, poor multimillionaire, with numerous houses rented out to people, who is receiving the accommodation supplement for every one of their houses in Auckland! Oh, the poor multimillionaire! That was the housing Minister—my goodness.

In respect of Mr Joyce, he boasts about spending. Why is this spending necessary? It is because of one of the highest rates of net migration in the Western World. In fact, I think there is only one country that has got a higher rate, and we are playing catch-up.

The health services have not been funded enough. The schools have not been funded enough. The roads have not been funded enough. In respect of infrastructure, I want to quote what the “Minister of Spin”, Steven Joyce, said. I paid attention to this in his Budget statement, because I thought it seemed strange. This is a quote: “We are in the process of building more new hospitals and schools than New Zealand has seen in generations.” It is just not true. I was sitting next to Annette King. She listed all the hospitals that we had built, from Kaitāia to Invercargill—both new hospitals. Auckland City Hospital was built by the last Labour Government. That was the most expensive capital building project ever in the history of New Zealand, for anything—by the last Labour Government. There was a new hospital in Wellington and, in the area where I was then an MP, a new hospital in Dunstan.

It is just untrue what Minister Joyce said, that this is somehow some new record building of hospital infrastructure, and that it was similar for schools. And then he listed down—as if he should be proud of it—$763 million for new prison capacity, not many years after the former Minister of Finance, now Prime Minister, Bill English, said that prisons were a “moral and fiscal failure”. How can he turn from that to being proud of wasting another $763 million on a new prison?

And what about the state of the economy? We have heard virtually no talk about that from the National Government, because it is truly appalling when you strip out the effects of immigration. The Government is spruiking growth by these high rates of immigration. Take that out and per capita growth is less than 1 percent. Productivity growth is pathetic. It is pathetic. It is terribly low. It is no wonder, because all of the money is going into trading houses—not new houses, but trading existing houses at ever-higher prices—instead of being invested in export industries.

So what is happening? Well, wages are stagnant. We know many people do not have a wage increase keeping up with inflation, never mind housing costs. But what is happening in the underlying economy? In 2008 the Government’s objective was to lift exports from 30 to 40 percent of GDP. What has happened? Well, at the moment they are down to 27.8 percent. That is after 9 years of National. The Government’s target was to lift exports from 30 percent; they have gone backwards to 27 percent. So what do you think their forecast is? At the end of the forecast period it is even worse—26.2 percent. By that time, National would have been in Government—thank goodness it will not be—for 13 years. What did we hear about that in the Budget? Nothing. Instead we got this risible target about the percentage of exports—which will be going down as a percentage of the economy—that are being sold into countries that we have got free-trade agreements with. That is not a silly ambition, but it is not one that is ambitious for New Zealand.

I will not talk about housing. I mentioned a little bit about the accommodation supplement, and my colleague Phil Twyford is talking about this, but you really do have to question whether in reality this is a real surplus, as the Government says it is. There is no contribution to the Cullen fund, even though we know that the Government should be putting $2 billion a year into it. Not one cent. It keeps putting it on the never-never. It says it still believes in it, but after 9 years in Government not one cent came into Government. It keeps piling up the bills for the next generation, just like in climate change. You know, since the Budget has been delivered I have had a call from someone in one of the foreign affairs areas, and they say they think this shows the Government is just all talk; it is stalling, it is not doing anything material, and those bills are piling up for the future.

So the next generation—they are the ones who are working for the minimum wage in hospitality. They get a dollar a year. As Chris Hipkins has said, they have also got student debt. They have got the unaffordable housing and the dropping homeownership rate, they have got this future where New Zealand is not paying its way in the world because our exports are dropping, and if you do not think that is right, well—National, can you tell me what the rate of savings is in the next few years in the Budget? Can anyone over there tell me how much we are saving as a country? No—I cannot hear a word; they cannot. Well, what is it? It is minus 2.2 percent—it is minus 2.2 percent—of household disposable income next year. And what is it the year after that? It is negative. And what about the year after that? It is negative.

So for the next 3 years household savings are negative, and we are meant to say we are going to vote for this legislation as a symbol of success on the part of the National Government. Exports are going back. Households are getting poorer because they are dissaving; they are not saving. And National thinks: “Oh, this is great progress.” We are having to double the subsidy in their housing accommodation supplement, and the housing Minister expects me to say that is good news. We are voting against this bill because it is indicative of a poor Budget.

Well, look, I would just like to start with saying there is one thing that I can agree on with the previous speaker, David Parker, and that is that it is not actually the size of the tax relief that counts; it is what you do with it that really counts. And, of course, he would know all about something of an incredibly tiny size, because, of course, that member served in a Labour Government where all it could offer was a packet of P.K. chewing gum, and it was proud to offer that. Well, under this initiative, under this bill, 1.34 million Kiwi families will get, on average, 26 bucks a week. That is a whole heap of P.K. gum to sit back and chew while you savour Labour getting obliterated on 23 September because it is out of touch with what New Zealand families want and what New Zealand families need, whereas this Government not only cares but listens and acts according to what New Zealanders want and need.

It is an absolute pleasure to rise in support of the Taxation (Budget Measures: Family Incomes Package) Bill in this, its first reading—the centrepiece of an absolutely fantastic Budget. It is a Budget that is taking an economic dividend of an incredibly strong economy, which is forecast to remain strong for some years, and applying it where it is needed most, which is lower and middle income Kiwi families—Kiwis who work hard and deserve our support to get even further ahead than they have been when we have seen average wages rising faster than inflation over recent years. But they deserve more support, and we are proud to offer it to them.

This package will deliver that support through changes to tax thresholds, though adjustments to Working for Families, and, for those families who have household rental stresses, through accommodation supplements. It is an extremely targeted set of measures. And, look, people might expect, of course, that a National backbencher would say that, so do not take it from me; take it from Max Rashbrooke—the guy who, basically, authored what he would like to call “Inequality New Zealand: We’re all going to hell in a handbasket.” but had to call it something else. Max Rashbrooke is no friend of the National Government. Max Rashbrooke tweeted today, going through the Budget detail, and he said “They’ve changed this, they’re offering this, and they’re changing that. This is clearly targeted at low-income earners.” Max knows that the Budget measures today are targeted at New Zealanders who need it most.

A further measure that will come from this—from the 1.3 million families who will receive, on average, $26 a week extra—is 50,000 more children living in families that are earning half or more of the median income. Some people use, or want to use, that as a measure—or the only measure—of poverty for children. There are other measures. But, by any measure, 50,000 more children living in families earning half or more of the median income is a good outcome. This is a Government that is absolutely committed to delivering that compassionate conservatism.

What do we get from the Opposition? I refer particularly to the leader of the Labour Party and the leader of the Green Party, who took an opportunity after the first debate speeches to go and talk to the media. What we got was an abject disgrace. What they tried to say was that these measures—these tax thresholds in particular—are all about helping the wealthy, because if someone earns more than $52,000 a year, they will get $20 a week. They said that is all about the wealthy. I remind the House that under the last Labour Government, the then Minister of Finance, the Hon Sir Michael Cullen, defined anyone earning $60,000 a year as a “rich prick” and he taxed them accordingly. Well, I tell you what: what Andrew Little and James Shaw have done today is they have redefined the threshold of what they consider to be a “rich prick” in New Zealand. It is anyone earning $52,000. That is $8,000 less than back in the early 2000s.

They are an absolute disgrace. They are out of touch with New Zealand. They have no understanding of what it is for a New Zealander to struggle or to work hard to get by. Those backbenchers over there earn $160,000 a year. They get almost $17,000 as an expense allowance, and they get $28,000 a year to live in Wellington. They get all of that, and they say to a Kiwi earning $52,000 a year that they are a “rich prick”. Well, that is absolutely disgraceful. It is a bunch of people who are certainly not fit to sit in this House, and they are not fit to govern New Zealand. I hope that New Zealanders see that, hear that, and act on that on the 23rd of September. I commend this bill to the House.

Maybe I can change the tone a little bit in my next contribution in the House. But I would like to start by picking up on the tone of the last speaker, Mr Brett Hudson, the National Party candidate in Ōhāriu, who said that I had made some comments—or who implied that—

💬 Mr DEPUTY SPEAKER: Order! The member has the floor. He is making his contribution.

Thank you, Mr Deputy Speaker. I would like to just say for the record that I have said precisely nothing about tax thresholds, in terms of the definition of someone who is earning more or less than $50,000—

💬 Brett Hudson: On TV ONE news, Mr Shaw.

I certainly did not say anything. This is a debating chamber, so Mr Hudson is largely entitled to say what he wants, but he should try to stick to things that have some factual basis, rather than just making crap up because he has gotten hot under the collar and has a political point to make.

Having said that, I would like to move on to some of the substance of the bill, which has been so avoided by the previous speaker—it was hard to hear whether he had anything to say, over the sound of his own voice. The kind of core of the debate tonight really does come down to how well targeted this bill is. Mr Bishop said earlier in the debate that the Labour Party has decided that this is targeted only towards the rich—that is actually a misrepresentation of the position. I do not believe that anybody here has said that this bill is targeted only at the rich. The point is that, actually, when you have an across-the-board cut like this, what happens is it also benefits people who are on higher incomes, and, actually, that money would be better targeted at people on lower incomes. That is the great reservation about the design of this.

If the tax thresholds had changed only to keep in line with inflation—which they needed to do, because clearly over the course of the last few years there has been bracket creep, inflation, and so on, and things have changed there—that would be equivalent to about $900 million worth of forgone revenue out of the Government accounts. But this package comes in at about $1.9 billion. So there is actually a whole additional $1 billion there above and beyond bracket creep.

The question is: OK, if you are going to, you know, look at that $1 billion, what is the best use of that money? What the Government has decided is that it is going to go for an across-the-board tax cut, and that $1 billion tax cut, essentially, includes a whole lot of people who are on higher incomes as well as those who are on lower incomes. What that means is that that $1 billion is then not available for more targeted support for those who need it most.

A lot of the rest of the debate has been about the extent to which those families on lower incomes who are, you know, receiving other forms of benefit in the form of changes to Working for Families or the accommodation supplement, and so on—whether that is so, kind of, paltry under the terms of this package and this bill that it actually might have been better, rather than to have a $1.9 billion tax cut, to actually use that $1 billion of additional revenue and to actually target that more at those families at the low end. That is why, as we have said, we think that the design of this is poor, because it actually ends up benefiting a whole group of people who are on higher incomes, who not only do not need it but actually do not want it.

I think my colleague Jacinda Ardern said in her contribution in the first reading that while travelling around the country and engaging with the public there was precisely nil appetite out there for mid- to high-level tax cuts. Actually, what people know is that even when they are doing well, they are really conscious that there are a lot of Kiwis who are being left behind as a result of the way that the National Government has run the economy over the course of the last 8 years. They are really uncomfortable with that, and, actually, they want to do something to support those families, to ensure that those people can trust that they are able to make ends meet, that they can have a roof over their heads, and that their kids are not ending up in the hospital every winter because they live in cold, damp homes, and so on. We would have preferred that this package was designed more that way, and we will be introducing amendments tomorrow, when the House resumes and goes into Committee, to that effect—to try to target this package more effectively than it is currently being targeted.

One of the examples that I wanted to raise in line with this is that the Government is sort of making some hay—just as it did with the so-called $25 benefit increase a couple of years ago—that this is some kind of grand move that is going to make an enormous difference to people. When it comes to Working for Families, Working for Families actually peaked in 2013 and has been declining for the last 4 years, because families have moved out of the range of Government assistance but they have not moved out of the range of hardship. So you have actually had people who have been moving off the Working for Families programme but are actually still in a great deal of hardship. So, in many ways, all this package does is start to play catch-up with people who have been going backwards and falling through the cracks, over the course of the last 4 years.

I said in my first reading speech that we have always had some criticisms about the design of Working for Families, because it obviously supports only people who are in work, and, actually, by definition, families where neither parent is working are the hardest-up families. All they have to go on is the unemployment benefit. We have created, amongst the most hard-up families in the country, a two-tier system, whereby people who have jobs and who are lucky enough to have some form of work are receiving an additional benefit through the Working for Families wage subsidy. But those who are not working do not. So you have got people who are getting into real trouble there, and this package, of course, does not help them.

If you are thinking about how we support people who are on the lowest incomes, we have to think about a more universal approach at the bottom end, rather than something that has this kind of more piecemeal approach. Mr Bishop referred to some of the things that the Child Poverty Action Group had said in its submission earlier—that this package does not go far enough. I think one of the things it would say is that there is still a great number of families who are going to be left in exactly the same situation they were in before—or worse—after this package goes through.

One of the other contributions earlier was around “At what cost?”. I think it was my colleague Chris Hipkins who was saying that one of the reasons why this package becomes possible is all of the things that the Government has, effectively, cut over the course of the last 8 years, through a sinking lid that takes no account of inflation or population growth. So, in real terms, spending on a number of things has actually gone backwards, creating the fiscal conditions that it is then having to use to repair some of the damage caused by having withdrawn that funding in the first place. So it is a kind of circular argument that the Government is making on this.

In relation to that, I wanted to bring up the home insulation scheme, because it was referred to earlier in the debate. When you think about the fact that there are 40,000 visits by children to the emergency rooms in hospitals around this country every year, because their homes are actually making them sick, and when you consider there are 1,600 people who die in the winter months, above what happens in the other months of the year, as a result of cold, damp homes, you have to wonder why this Government is withdrawing funding from the home insulation scheme—

💬 Hon Member: Bring on Prosser.

—because that scheme saved lives. It had a benefit-cost ratio of $6 for every $1 that was invested. I hear some interjections from members opposite, who want me to move off the fact that their policies are leading to increased deaths in the winter. I can imagine why they would want me to move on from that point. But it is a very real point. This is not simply a theoretical change to tax brackets that is going to upset people. It does, in fact, affect people’s lives. Thank you.

I had no idea that a tax bill at nearly 10 o’clock at night on a Thursday could be so exciting. Perhaps it is just Budget fever. We have heard some very impassioned speeches from both sides of the House, and I listened to Chris Hipkins make his contribution. I have always enjoyed listening to Chris Hipkins’ speeches, because he is a very good orator, and I actually admire his style in asking questions as well. It is a very straight bat. The man knows his stuff and he says it passionately. But after that contribution, honestly, I felt like reaching for the cyanide pills. He was painting such a bleak picture of the country and its future—that this is terrible. And, to cap it off, I finished up with an image burnt into my brain of Chris Bishop’s backside in a limousine. I am actually afraid to sleep tonight in case it comes back to me.

But I think there is a difference in approach from what I have heard in speeches from the Labour quarter and from the National side of the House about this tax bill. And I am aiming to talk about the tax bill. I realise that the Budget speeches themselves will come later. But it appears that we have—from Green colleagues and Labour colleagues—a serious case of old-fashioned socialist envy: wanting to keep everyone down, and let us bash the rich, or whatever level you want to put that at. It is not aspirational for creating wealth. It is not aspirational for growing the economy. I would love everyone to be in the top tax bracket. Would that not be marvellous? If everyone was earning and creating wealth to the point that they could be in the top tax bracket, that would be a great thing for the country. It would be marvellous.

But, actually, this bill will not achieve that, and it is not trying to. It is a cynical vote-buying measure from the National Government, and that is fine. It will still deliver some benefits to the people it is aimed at, and we will support it for that reason, but it does not address the things that actually need to be addressed in the economy. It does not simplify the tax system for small and medium enterprises, it does not promote adding value to raw materials, it does not offer a 20 percent corporate tax rate for exporters, and it does not aim to tax international corporates at the same rate that the people who genuinely create wealth in this country are paying. It does not do any of those things. It is a coat of paint over the rust, but, fortunately, that is all it needs to be. It has to last only 4 months, and then the next Government—the New Zealand First Government—will come in and sweep away the bad things, add to the things that are moderately good, and the future will be bright and rosy.

I am not sure how much time I have left before the close of play. I am not intending on carrying on this reading tomorrow, but I do want to touch on the accommodation supplement. It is a subsidy for landlords, and largely foreign landlords, and that is because this Government has not addressed the fact that the cost of housing has become untenable, that there are not enough houses, that rents are too high, and that part of the reason for that is that too many people from offshore are allowed to buy houses here with pretty much unlimited money at pretty much zero interest. That needs to be addressed.

However, the fact that somebody who is paying too much rent as a proportion of their income can look forward to an increase in their accommodation supplement of maybe $100 a week—that is a great thing for them. So this is a good piece of the coat of paint over the rust, which we are happy to support in that light. It does not fix the problems. It will keep things afloat until the New Zealand First Government, led by the Rt Hon Winston Peters, can come in and fix things properly, but it is a reasonable stopgap, and we will carry on supporting it. Thank you.

It is an absolute pleasure to rise in support of the Taxation (Budget Measures: Family Incomes Package) Bill. I am so very, very proud of what this Government has achieved, and of the fact that the Hon Steven Joyce has, yet again, delivered—built on Budgets delivered by our Prime Minister, the Rt Hon Bill English, once our finance Minister—a ninth Budget that is taking care of all New Zealanders. I am very, very pleased that this taxation bill will deliver for low and middle income families and put money in the back pocket of these families to make life easier for them.

I just want to start with a quote, actually, in response to the Opposition, which said that this is not going to make a difference for people on the ground. It is from Sonya Donnelly, who is the coordinator of the Invercargill & Districts Budget Advisory Service. She said: “An extra few bucks a week may be the difference to meet day-to-day living expenses and saving a little bit for things that don’t crop up every week, like car registrations and school fees.” I think that it is absolutely wonderful—

Order! It is tragic to interrupt the member; however, it is time for me to leave the Chair. The House will resume tomorrow at 9 a.m. Nō reira, tēnā koutou, tēnā koutou, tēnā koutou katoa.

Debate interrupted.

Sitting suspended from 10 p.m. to 9 a.m. (Friday)