Taxation (Budget Measures: Family Incomes Package) Bill

on behalf of the Minister of Finance: I am very happy and proud to speak to the Taxation (Budget Measures: Family Incomes Package) Bill.

💬 Mr SPEAKER: Order! I just require the member to move the third reading of this legislation.

I move, That the Taxation (Budget Measures: Family Incomes Package) Bill be now read a third time. The action we are taking in this Budget is all about helping New Zealand families get ahead. To recap briefly, this bill reduces taxes for low- and middle-income earners, increasing the rewards for working hard. This bill starts to simplify the tax and transfer system by discontinuing the independent earner tax credit and aligning the family tax credit rates for children of all ages. This bill ensures Working for Families is better targeted at lower-income families. In total, approximately 310,000 families will benefit from the increases to the family tax credit. The measures in the Government’s family income package will lift 20,000 households above the threshold for severe housing stress.

As always, I am grateful for the efforts of all of those who have contributed to the passage of this bill so far. My thanks go to the officials who worked on the policy development and to the drafters who worked on the detail of the draft legislation.

The measures in this bill are the first step in allowing Kiwi families to spend more of their own money so they can make the decisions that are best for them. It is therefore with great pleasure that I commend this bill to the House.

There we go. That is as much as the National Government is really committed to this. That was a sort of half-baked speech from a Minister, the Hon Jacqui Dean, who could not even get the beginning of it right.

💬 Hon Jacqui Dean: Oh, don’t be harsh!

“Don’t be harsh.”, says Jacqui Dean—paid the big bucks to just get out the motion, but could not quite do it.

The package that the Government has put up, in terms of helping low and middle income people—you can divide it into seven. One-seventh of it is the accommodation supplement changes. They are alluded to at the start of this bill, in the explanatory note. What this is is a necessary payment to people struggling under housing stress, struggling in a housing crisis. It is actually an admission of failure by the Government, because what it means is that the housing crisis has got so out of control that it has had to come in with an emergency payment. It is the classic ambulance at the bottom of the cliff approach from this Government. So the Government has come in, and it is needed, and it is necessary.

Let us make sure we get on record, though, that the accommodation supplement is a deeply flawed instrument. It is, effectively, a subsidy for landlords, and when Labour leads the next Government we will be reviewing that and trying to make sure we get a much fairer system. But right now, today, that one-seventh of the Government’s package is necessary, and we could support that.

There is another seventh of it that is about Working for Families changes. I think everybody in this House recognises that if you want to get money to working families directly and make sure that working families are the people who benefit the most from a package, that is how you do it, because that is the system. It is a tax credit system and you can target it.

So in the Government’s package, one-seventh of the $370 million next year is for Working for Families. While on this side of this House we do not support the changes to the abatement rates, which squeeze Working for Families in a little bit more, we do support the idea of simplification and we do support the idea of increasing some part of Working for Families payments. So that is two-sevenths.

The other five-sevenths, $1.9 billion next year, is in tax cuts. These are tax cuts that are not about inflation adjustment, and they are not about so-called bracket creep. They are a straight out election-year bribe—$1.9 billion of unfocused, irresponsible tax cuts. They are unfocused because if they really were about supporting working people and low-income people, then would we really have 800,000 New Zealanders earning less than $14,000 getting nothing? Would we really see a package where single people, earning up towards $48,000 a year, get $1—$1 of benefit? Would that really be a package that was targeted and well-focused? It is not. It is all about Steven Joyce and his role as campaign manager for the National Party, not as finance Minister for the National Party. Steven Joyce has come forward with this tax cut package, designed totally for 23 September and not to actually support working families.

But this is also irresponsible, this tax package, because there are people who pay for tax cuts like this. They are the parents who are sending their children to early childhood centres, and then early childhood centres are coming back and saying: “We’d really like to have fully qualified staff in this centre. We’d really like to provide all the services that we can. But our funding has been frozen by the Government for years.” And so they are paying for this tax cut because the National Government has not put in funding for that.

This morning we have heard from GPs that as a result of a very tiny $9 million versus $1.9 billion tax cut—a $9 million increase for primary health care in this Budget—they are going to have to put their fees up. That will eliminate the tax cut benefit that is legislated for here, for many New Zealanders.

There is a cost to making tax cut changes. Tax cuts are spending. It is spending by any other name. Well, on this side of the House we are absolutely clear. There are better priorities. There are more important things for New Zealand and New Zealanders than these tax cuts here, because they are so unfocused and they are so poorly targeted.

What we believe, on this side of the House, is that that $1.9 billion could go to making sure New Zealanders, first-home buyers, young New Zealanders, get into the housing market. There was nothing much about housing in the Budget, nothing to replicate Labour’s KiwiBuild plan of actually building tens of thousands of affordable homes for first-home buyers to buy. That is not here, in this Budget, because the National Government has prioritised these tax cuts.

The Government has got the wrong priorities, and that is never more clear than when we look at another winter with more and more homeless New Zealanders—another winter where New Zealanders will look on in shame at the fact that there are families living in cars and garages, and that there are young children trying to do their homework by torchlight, in the back of a van. There is nothing in this Budget for those people.

Sitting suspended from 1 p.m. to 2 p.m.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Before kai time, we were debating the Taxation (Budget Measures: Family Incomes Package) Bill. Grant Robertson was speaking, and, if he wishes, he has 4 minutes and 11 seconds remaining.

I would not deny members of the House and those watching another 4 minutes from me. When we broke for the lunch break, I had characterised what had happened in this legislation as being the imposition of unfair, irresponsible, and poorly focused tax cuts, and that is what they are. They are nothing to do with bracket creep changes; they are nothing to do with keeping up with inflation. They are plain and simple tax cuts aimed at an election year from a finance Minister acting as campaign manager for the National Party.

This bill presented in front of us today has, next year, $1.9 billion worth of tax cuts and, alongside that, $373 million worth of support under Working for Families. It is of great regret to members on this side of the House that National members did not agree to the changes that we were proposing to make through this bill to allow the whole House to support the Working for Families changes, because that is a way that this House could have shown to New Zealanders that we care about their prospects in the future, that we are prepared to target our support to those who really, really need it in the coming months and years. It is hugely disappointing to us that that was not taken up by National.

The kind of Budget a Government delivers reflects the kind of country that it is looking to create, and that is what, to me, is so sad about this piece of Budget legislation. It lacks any vision whatsoever for the kind of country New Zealand could be. It lacks any plan for how we grow good jobs with decent wages right across New Zealand. It has got none of that in it. There is nothing about how we help people adapt to the future of work and how we make sure that New Zealanders are well prepared as we enter that period. Instead, what this legislation is about is a series of tax cuts that, unfortunately, are weighted towards upper-income earners and a small recognition of changes in Working for Families.

I want to highlight two specific aspects of the bill that the Labour Party is particularly concerned about. The first of those is the changes in the abatement rates for Working for Families because, while the National Government might be giving with one hand when it comes to increasing family tax credits in this, it is taking with the other by lifting the abatement rate and lowering the threshold at which that kicks in. So, essentially, what that means is that the amount of money people get disappears faster under this system. It restricts the number of people who get Working for Families. It squeezes in on those families in terms of the benefits that they get, and that is reflected in the out years of the Budget, where overall spend on Working for Families declines. That is not the Budget of a party that is interested in giving all of those young families in New Zealand a chance.

The second change is that of the abolition of the independent earner tax credit—that $10 a week, $520 a year, that has given a real boost to people in work to give them some extra support, if they do not have children and if they do not get other benefits from the State. That is a mean-spirited change by this Government—a mean-spirited change—because, in return, those people get $11 worth of tax cuts, in other words, $1 a week in the hand.

That is the mark of this Budget measure. It does not deliver to the people who need it most. It has been designed for the election year. Steven Joyce thinks it is clever politics; I do not think it is clever politics. I also do not think it is the right thing to do for New Zealand, and on 23 September New Zealanders will get the choice to vote in a Labour Government that will deliver real benefits for families.

I rise and very proudly support this taxation bill, because the consequence of this bill delivers for all New Zealanders. It delivers the dividends of a successful Government. It delivers the dividends of a thriving economy, because without that there would be no dividends of success. There would be no tax cuts available. There would be no increase in accommodation allowance and there would be no ability to improve the family tax credit system.

The previous speaker, Grant Robertson, talked about his side of the House—his side of the House—opposing this bill. But, in fact, that is not the case. The reality is that there is only one party opposing this bill. All other parties in this House are supporting this bill. Labour is the only one that does not care about those people who will benefit from this bill. So I would like to say that once more: Labour is isolated. So I suggest that its members reflect on that when they go home to bed tonight, because they are the only ones not supporting this bill in the House.

This bill does make a difference. It makes a difference to those who have children and those who are working. There is that improvement and increase in Working for Families tax credits, which will affect thousands of families. The accommodation allowance, again, affects thousands of families. What this bill significantly does is it pulls one-third of those children who are currently in families or households that are below half the median income—those who have been described as, by one measure at least, children in poverty. This bill takes one-third of those children out of that category—out of that category. That, therefore, demonstrates that those parties supporting this bill do care about those who are least well off—who are least well off. That is the thrust of this bill.

So I would like to acknowledge the support of the Greens and New Zealand First members, who would not normally support everything we do, and I would just like to acknowledge the support and the recognition by those two parties’ members, who acknowledge the target that this bill is aimed at, because it matters.

This bill does increase accommodation allowances and to say—as the Opposition has tried to say—that it subsidises landlords is just a nonsense. If we wanted to subsidise landlords, we could do other things. The money here goes to the tenant. And it might well go to the landlord, but it enables and gives hard, alternative cash into the pockets of those tenants so they are able and they do have an increase in their disposable—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Not in the bill.

—income as a result of those accommodation allowances.

Similarly, the family tax credits—basically treating all the kids the same and moving them to the higher bracket—puts more cash into the pockets of those families affected. And, of course, the change in the tax bands affects all those taxpayers—in fact, all those taxpayers to a greater or lesser degree.

The Opposition talks about the rich getting richer as a result of the change in the tax bands—20 bucks a week. By implication, it wants to increase taxes on those who earn $52,000 or even $60,000—so anything above the median wage. By implications, those members think that those people, who are also Kiwis, who are also working hard, who are also contributing to their community, should be taxed more. But this party delivers for all New Zealanders. This bill delivers for all New Zealanders and, based on that, I commend this bill to the House.

There is some irony in following on from that member, Alastair Scott, directly. I am aware that our candidate in the Wairarapa has an event tonight that includes a signed Brian Lochore rep jersey and photographs. How things have changed in the Wairarapa. But I guess, given the member has not visited for some time, he may not be aware of the changes that are afoot there.

I want to speak directly to the last sentiment that—

💬 Hon Maggie Barry: That made no sense.

—was shared by that speaker. I want to speak directly—Brian Lochore; he was quite a famous rugby player, very supportive of the Labour Party and Kieran McAnulty.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! Back to the bill.

I want to speak to the last sentiment that the speaker mentioned. That was that National, in delivering this tax package, is the party that delivers to everyone—with the exception of anyone on a minimum wage and without kids, and with the exception of families with kids who earn the median wage. There are a number of groups that lose out from this tax package. The point that we have been trying to make, I think quite successfully, has been that when you take into account that even what someone on an income of $55,000 or $28,000 is going to receive—between $10 and $20—actually, those families are experiencing enormous costs in other ways, which will only continue to increase.

Just today—and I highlighted this in the Committee stage—a parent contacted me to tell me about the workshops they had been a part of for the local school, for fund-raising. They were fund-raising for basic digital needs in their local school. These are parents who are increasingly being asked to dish out in donations, schools galas, and fairs to meet basic infrastructure costs with their school, and these are the same parents who are likely, potentially, to get $10 or $20, which is going to go straight into meeting the growing needs of our core services, of which education is one example; health is another.

The point that I have consistently tried to make is that when Andrew Little and I have travelled around the country, doing the state of the nation tour that we have been carrying out, on not one occasion—on not one occasion—has anyone raised the issue of tax brackets. But in every single meeting, someone will raise the housing crisis, the rising cost of education, and even things like the fact that over the weekend, Waikato Hospital shut down its services because demand was so great that it could not cope. For us, it is a matter of prioritisation. We are not in a position where $1.9 billion can be spent with such a lack of targeting and with such a lack of deliberate emphasis.

I want to speak to another comment that the last speaker made, around the accommodation supplement. He has continued, throughout this debate, to try to make an argument that the accommodation supplement is somehow—the member across the way has tried to make the argument that the accommodation supplement is somehow just a discretionary additional amount of cash that goes into a household’s income. In fact, I think the words that he used were “hard cash” for the tenant. Well, the accommodation supplement is directly related to the amount that people are required to pay to their landlords because of increasing rental costs. In Auckland alone we have seen, what, in the last 8 years a 40 percent increase in the cost of a rental. An increase in the accommodation supplement here does not get paid out to a tenant and then spend some time there just sitting in a tenant’s bank account while they decide whether it’s necessary to pass that on to a landlord. [Interruption] It is literally—and it is very relevant, Mr Assistant Speaker, because the $10 to $20—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I have let the member run on for some time in replying to the comments that were outside the bill from the previous speaker. I think it has been fairly well established earlier on that in the substance of this bill, those changes do not occur. In the third reading, what we are meant to be doing is debating what is in the bill as it emerges from the select committee.

💬 Hon David Parker: I raise a point of order, Mr Speaker. The problem is, there is no other legislation that we can talk to on this, because the Government is doing it by way of regulation.

The ASSISTANT SPEAKER (Hon Trevor Mallard): The member will resume his seat. [Interruption] The member will resume his seat. Next Tuesday, when we come back, the first order of the day is the Budget debate. There is quite a large opportunity to debate it at that stage. It is the Appropriation (2017/18 Estimates) Bill, rather than specific legislation, but to say that there is not an opportunity to debate it is not correct.

As I was touching on in my third reading speech at the conclusion of this debate, the $10 to $20 that is granted through this bill will very quickly be subsumed by household costs that those individuals whom the Government has tried to target are facing. The amount of disposable income available to these families has been on the decline. If you look at any of the analysis, which I am sure the Government did when it formulated this tax package—if the Government looks, for instance, around housing costs relative to income and the report that Bryan Perry produced as part of the Ministry of Social Development’s annual reporting on household incomes, it no doubt will have seen—and I quote from the section on housing costs relative to income—that housing costs now take a much greater proportion of household income, especially for low-income households. For all working-age, under-65 households, they are up from 14 percent in the late 1980s to 20 percent in 2015. For the bottom quintile, they are up from 29 percent to 54 percent—up from 29 percent to 54 percent. This change has had a major impact on the trend in incomes after deducting household costs.

My point here is that the Government has tried to make an argument that these bracket changes will be putting extra discretionary, disposable income into the back pockets of low- and, it has claimed, middle-income New Zealanders—it seems to have discounted the fact that those same amounts are going into the pockets of those on higher incomes. But my point is that those amounts will simply be feeding back into those households significantly increased costs around housing, in particular, through a lack of addressing those wider issues. So that $10 to $20 is very unlikely to make anyone feel better off in the long term, given the relative costs that they are facing and those increasing costs.

I particularly want to expand on the last part of the statement here in this section from the household income survey, which says that, on average—from the survey in 2011 to the last one—43 percent in the bottom-income quintile had housing outgoings of more than 30 percent of income, and one in three households spent more than 40 percent of their income and one in four spent more than 50 percent of their income on housing costs. That goes outside the realm—we know, of course, that we consider it to be affordable if you are in the 30 percent range, so that gives an indication of just where, exactly, it is likely that the tax cuts included in this package are likely to immediately go.

I will finish on one point: in June 2016, almost all renters receiving the accommodation supplement—94 percent of them—spent more than 30 percent of their income on housing costs. Three in four spent more than 40 percent, and half spent 50 percent. Half of people receiving the accommodation supplement then went on to also spend 50 percent of their income on housing. What does that tell you? That is the reason we do support that element that the member spoke to, but it is a short-term measure, and should not be seen as a solution.

The one thing in this bill that was a solution was the amendments around the Working for Families package. We have been very open about supporting them, and, had this been a bill that broke it down into discrete parts, we would have supported those parts. Instead, we presented that in our own amendments. The $373 million that the Government invested in the Working for Families changes, we supported. They were targeted, they benefited those who needed it most, and it was a good use of taxpayer dollar. When you look at the proportion, though, of that $373 million versus the $1.9 billion that we spent on those tax bracket changes, our argument is that that is inefficient and a poor way to target that spending, particularly given the trade-offs that I have already highlighted. What we give, on the one hand—simply, parents and families in particular will be paying for that increase in costs that comes through lack of investment in those other core areas of Crown spending.

Overall though, our message has generally been that because of our belief in things like Working for Families and the family tax credit—obviously, that is something we strongly support. Of course, our grievance around the abatements and thresholds still stands, but because of our view that it is a really efficient way to deliver to people, we stand by things like our Best Start package. It is our intention that, going forward and into the election, voters will see what we will be proposing as an alternative. That will include not just our thoughts on take-home incomes for people and wages but also our view that we need to get back to basics. We need to remember those really simple sentiments around all people ever really needing being a place to live—a warm, dry one at that—something to do, someone to love, and something to hope for. That is exactly what you will see encapsulated in an alternative, Labour budget before the election.

It is a pleasure to be talking on the third reading of this debate around the Budget. I think is a great Budget. It is an exceptional Budget. In fact, I think is a generous Budget. In fact, if you look at the future cash flow of the Government over the next few years, we have, basically, spent as much as we can. I think it needs to be looked at in the context of the other announcements that have surrounded this Budget. We have announced an $11 billion additional spend into infrastructure. That is going to go into roads, schools—all those other good things. The other massive investment in health—

The CHAIRPERSON (Hon Trevor Mallard): No, the member is not even really trying to speak—[Interruption]—to the bill. He will.

OK. Well, the big centrepiece of today is the generous family tax package. I have listened to the Opposition today, including the members from the Labour Party, and I do not think they actually know how to respond to this package of tax reform that we have set about doing here. In fact, I just wonder where the intellectual rigour has gone, because I have not heard a comprehensive argument. All I have heard is highfalutin things about “This is not enough”. Well, we have spent all we can, and it is a comprehensive package. I do acknowledge New Zealand First, and I do acknowledge the Greens, for at least supporting this Budget—as they should.

I just want to talk about some of the aspects of the bill, particularly the tax thresholds. I think it is really interesting where we have moved to with our tax thresholds. We all know that the tax system in New Zealand is very simplified and very effective. What we have done has been to increase the minimum tax threshold from $14,000 to $22,000, and at that rate you are paying only 10.5 percent. We have also increased the next threshold from $48,000 to $52,000, which, again, is reducing the tax burden for everyone in New Zealand—everyone in New Zealand.

It was interesting—I had a look at the Australian tax system and did just a little bit of a comparison. We have a tax system for the first $22,000 to pay 10.5 percent. In Australia it is a bit different—you do not—but you quickly go to 19 percent in Australia, up to $37,000. This compares with our 17.5 percent, up to $52,000. That means that you can earn $20,000 more in New Zealand and still pay a much lower rate of tax, but then, from there on up, it shoots up—32 percent, 37 percent, and 45 percent. That is just putting aside all the other taxes you have in Australia. So I think, in the context of Australasia, our tax system and the family tax package is actually a very good, very simple, and very light tax system. I fully endorse that.

The other one, of course, is the family tax credit. I think many speakers have traversed this before, but we have increased it to the maximum that you currently get. There is a range of the type of tax rebate you get at the moment, but we have increased it to the maximum. So for the eldest child it has increased by $9.25 a child, and for your next child it is between $17.75 and $26.81. That is massive. That is really quite significant, and to downplay that, I think, is just wrong.

The accommodation supplement, as we have heard before—for a one-person house, if you need an accommodation supplement, you get $20 extra a week.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Refer me to a clause if you are going to talk about it.

Right, just by background, and just to remind people, $80 per week if you have got a three-person household. Now, I have heard a lot of debate about this, and I think it is quite current to this particular point, because a number of speakers have spoken about this—about the supplementary income for housing. I have heard this argument that—

The ASSISTANT SPEAKER (Hon Trevor Mallard): I am going to stop the member now. I think I have made people on both sides grumpy because what I have said is a long-term ruling, and that is that the debate on the third reading is a debate on the bill as it emerges from the select committee. I think members have been mixing up what is in the Budget and is the subject of the appropriation debate, which started earlier today, parliamentary time—yesterday in normal people’s time—and will resume next Tuesday. The member will speak to this bill.

OK, I just want to finish off my comments by saying the effects of all the proposals in this bill will improve the lot of 1.36 million families in New Zealand, will improve the lot of 41,000 students, and will improve the lot of 750,000 superannuitants. I believe that is a fantastic package, and I fully endorse this bill.

There is a saying that the perfect is the enemy of the good, meaning that sometimes you should take what you can get, even if it is not perfect. I think it perfectly encapsulates where we are in relation to this bill. It is far from perfect, but it does do something, just a little, for people who need it. So I just want to spend a little bit of time unpacking why we are supporting this bill in its third and final reading.

I do want to commend the Labour Party for the rigour and for the analysis with which it has dissected the Government’s numbers on this, because the Government has used sleight of hand to disguise what is essentially a tax cut for people who are on higher incomes as a support package for people who are on lower incomes. Labour has done some very good analysis and presented some very good arguments in the House over the course of the last 24 hours, and I commend it for that.

Now, in terms of the bill’s flaws, we have waxed lyrical about the nature of the tax component of the bill where you have the absurdity of a family who is earning $127,000 or more, every year, receiving $33.22 out of this package, versus a family who are on an income of $24,000, or less, getting $5.34 out of this. It is literally one-sixth of what the higher-income family is getting as a result of the tax changes in the package. One of the things that the Labour Party has spoken a lot about is that if you had just adjusted for inflation, the total cost of that would be about $900 million in forgone revenue. But this is a $1.9 billion tax cut, so, in other words, above inflation this is a billion-dollar tax cut. It is a billion-dollar tax cut above inflation, the vast majority of which goes to families on higher incomes, not families on lower incomes. That is a deep flaw, and some would say a fatal flaw, at the heart of this bill.

The second criticism is around the accommodation supplement, which, despite the protestations from the Government, is public money that ends up in the pockets of private landlords and motel owners. What that means is that that is essentially a transfer to the private sector. The third flaw in this bill is in the nature of Working for Families—the complexity of it, the fact that people often do not know what they are entitled to, and the fact that it does not apply universally. It applies only to people who are in work, and the people who, by definition, are the hardest-up in this country are families where neither parent is in work and, therefore, they do not get any access to Working for Families, and therefore remain at the bottom of the heap and the most excluded.

Having said all of that, there are three things that we think are worthwhile to note in this bill. While the majority of the tax cut benefits accrue to people who are on higher incomes, there is some benefit that does accrue to people who are on lower incomes. So for people who are earning $22,000, they will get an additional $10.77—people who are earning between $22,000 and $52,000—and they are obviously not high earners. Those are not high-income earning people in this country. So there is some benefit, and they will appreciate that additional $10.

The accommodation supplement, for all its flaws, is necessary, because we have such a stuffed up housing market in New Zealand. Families on benefits will see an additional $30 a week as a result of this. And these are people who are in absolutely desperate straits. Now, $30 is not going to cover even close to what has happened in accommodation cost rises in this country, but it will be a welcome relief to those families.

The third is in relation to the family tax credit. That is really why we are voting for this bill. The family tax credit is universal. You can be in work or out of work and you still receive the family tax credit. There are 150,000 children living in poverty in this country, and the Child Poverty Action Group, whose numbers I do trust, believes that this will support about 35,000 to 50,000 of those children. There is $9.25 a week for the first child under the age of 16, and we know that support for children should be oriented towards the younger end. An additional $9.25 increase per week to some of our most desperate families is nine loaves of bread, and that will not go unnoticed. And $17 to $26 a week will be the increase for subsequent children, and that is universal to those children. Those are for children under the age of 16, who are the ones who need it the most. So increasing the tax credits for children under 16 means more in the hand for our hardest-up families.

It is because of those things in this package—and only because of those things that are in this package—that we are voting for this bill. You have got to remember that these are people who absolutely need it. There was a story in one of the newspapers this morning illustrating the plight of a Pasifika family in South Auckland with three children. The mother would eat half a can of food some days—that was all she had left over—in order to be able to feed her kids and meet the rent and just get by on the absolute basics. She was working. She had a job. She was doing 60 hours a week as a cleaner. So let us remember why we are here.

It is beyond me that we struggle so much to empathise with such a large number of New Zealanders in this country who are in absolutely desperate straits. Over the last 9 years of this National Government their plight has gotten worse because any increases to their incomes have been completely soaked up and reversed by cost increases in the things that they have no choice but to spend money on. That is why in this country we have people who have jobs, people who are working 40 to 60 to 70 hours a week, who are living in cars—people with jobs living in cars. That is just unacceptable in New Zealand. It is unacceptable in this country that we have that level of deprivation, that we have 150,000 children growing up in severe deprivation in this country.

This bill is deeply flawed. I believe that we would do things differently. We would not wait 8 years to actually do what needs to be done. We would get started immediately. We would design it so that it is oriented for the people who need it most. We would not give away a tax cut for people who do not need it. We would use that money to invest it at the bottom end, in those lowest-income families, where it is going to make the greatest difference to lift those people out of deprivation and poverty and into cycles of opportunity.

So if we really want to solve this problem, if we really want to alleviate poverty in New Zealand, then we actually have to change the Government. That is why this September those of us on this side of the House are going to be working so hard to put in place changes to welfare and income and taxation that actually are designed to fix the problem and that start from day one of the new Government, not 8 years down the track once it has made things worse. Thank you.

I am enormously pleased to rise on behalf of New Zealand First and, once again, on behalf of my colleague Fletcher Tabuteau, to make my final contribution in this third reading of the Taxation (Budget Measures: Family Incomes Package) Bill. It has been a lot of rollicking fun. I was unaware that taxation legislation could be quite so exciting, but seeing the passions that it has excited in members across the House, I have found my eyes opened in a new way, even though Grant Robertson talked—I thought he was going to break into “the winter of our discontent” when he was making his contribution earlier.

But, being as this is an enabling piece of legislation for the Budget that the Government has delivered, I am disappointed actually that it did not take the opportunity to make a few more sweeping changes, to perhaps get rid of that waffly term “Working for Families”, which does not really seem to mean much and probably call it “Family Incomes Package” instead, because that does mean something. Actually, this bill could have covered that.

The independent earner tax credit has received a lot of attention in our discussions and deliberations around this bill, and I think it is probably a bit of a red herring. When members around me have spoken about the demise of the independent earner tax credit and how that means that some people are really going to be gaining only $1—in fact, it is 77c—in a practical sense, that is not really going to be the case, because, as we have heard, only about one in three people who are entitled to that particular rebate applies for it anyway. So what is more likely to happen is that the great majority of people who were entitled to that $10 a week but were not getting it will, in fact, get the $10.77 instead. So even for them that is likely, in a practical sense, to be a bonus.

The accommodation supplement and the increases to that are probably the unspoken greater part of the benefit that this bill will bring to the people in most need, including students, who—for some reason that I have yet to have explained to me properly—are not entitled to the same kind of accommodation supplement as others. It is a different form of allowance for them. This bill has made some intelligent changes, in terms of simplifying the tax system, in terms of moving the thresholds and so forth, and I wonder whether it could have been even better had students been brought into the same framework as others within this accommodation allowance.

We have seen some suggestions that came through the Committee of the whole House stage, and the abatement rate was something that was the subject of an amendment. It does need to be looked at because, as it sits, it is a disincentive for beneficiaries working. Obviously, the numbers that were quoted, we feel, need to be costed in more depth, because I do not believe that they are sustainable. So we have heard a lot about what the bill could have done and does not do.

I understand that you are keeping quite a tight rein on where we go with this, and that is understandable, Mr Assistant Speaker Mallard. I imagine that next week everything will be let loose and the Budget itself will be dissected—torn to pieces—by members on this side of the House, in all quarters. So confining ourselves to this taxation bill, I do have to correct Mr Bayly, when he said that New Zealand First supported the Budget. We do not. We support this piece of tax legislation, but, of course, we will be opposing the Budget. I imagine that goes for my Green colleagues as well. I imagine that Mr Bayly got that piece of information from Newshub.

Newshub also reported that—despite the fact that some members around me have complained that the targeting of this bill has not been particularly accurate and that those most in need will miss out, there are a lot of individual examples, because of the complexity of people’s individual situations. In fact, Newshub also reported about a single mother by the name of Jade Temepara who earns $50,000 and, under this regime, will be $83 a week better off. I am wondering how it is that Labour members, particularly, can stand up and say that they are going to deny a person in that situation that amount of an increase, on the vague promise that after the election, at some point, at some time, should they be in a position to do something better, they might do something better, whereas, regardless of the outcome of the election, these changes will kick in from April next year.

💬 Hon David Parker: After the election.

So, well, that is much the same—as my colleague says, after the election. It is the same, as we have heard, with any bill. But here is a definitive change that will benefit people in that situation by a tangible amount, and for that reason we are supporting this bill.

Of course, the reality—and it is a reality that most of us in this House do not need a tax break of another $1,000 a year. We are all, of course, perfectly at liberty to donate it to charity, as long as we do not then go claiming the rebate, which would be a bit of double-dipping, I think. So, for people who feel some sort of moral opposition to taking a tax cut that they feel they do not need or want, there is always the option of giving it away to somebody else, even if you cannot give it back to the Crown.

I do not want to labour the point. We have been through all the major issues that this bill throws up. We have had the arguments. At the end of it, although we will, as I say, be opposing the National Government’s Budget, we do support this piece of tax legislation because the package that it aims to bring in is something that we believe will be of benefit to a great many people who very much need it. Thank you.

I rise in support of this Taxation (Budget Measures: Family Incomes Package) Bill, a bill and a set of actions and initiatives that will target assistance where it is most needed, which is at our low and middle income earners—our low and middle income families in particular. Whether it is through adjustments to tax thresholds or changes to Working for Families payments—also, and I will not traverse them, but there are obviously some changes to an accommodation supplement as well—we will see 1.34 million Kiwi families receiving, on average, $26 a week more to help live their lives, to help feed, clothe, and run their families. It is an economic dividend of a strong economy with well-managed Government books, and one that is projected to remain strong for years into the future. We are looking to share that with the people who could most do with our assistance, and that they are those families who are on lower or middle incomes.

It has been pretty sad to see and hear, over the course of this bill’s passage through this House, albeit being quite quick, that the Opposition members in this Chamber and outside of it—and particularly leaders of Opposition parties—have sought to paint this set of measures as tax breaks for the wealthy, on the basis that there will be $20 a week in the hand for someone who earns $52,000 a year or more. It made me wonder whether perhaps the Opposition members do not understand the distinction between changing a tax threshold, which this bill does, and changing a tax rate. If you change the rate—and look, I will not belabour the point, but you could argue that there may be circumstances in the future where that might be a good idea, but it is not what we are looking to do here now—then those on even higher incomes would receive even more back in their hands. But under changes to a threshold, someone receiving $52,000 will get $20 a week extra, and someone who receives any amount more than that, whether it is a couple of dollars or many, many more dollars, still only gets the same $20 a week extra in their hand.

So what the Opposition and its leaders have done is they have sought to redefine what it is to be wealthy—the level at which you are considered to be rich. They have redefined that as $52,000. Some years ago, Sir Michael Cullen, in this Chamber, set a level of what he considered to be rich—and I will not use the full term that he used—at $60,000, and he changed the tax rate for that income level. That was 1 April 2000; that $60,000 today would be the equivalent of just over $86,600. The Opposition and its leaders want to set a level of what it is to be rich at $52,000—$34,000 less than that. Although average wages have grown and grown faster than inflation under this Government, that $52,000 is $6,000 a year less than the average wage, and they want to say that that is the level of being rich.

What is even worse than that, if you consider any member of this House, members across the House—those backbenchers, they earn a salary of $160,000, they get an expense allowance of almost $17,000, they get a $28,000 accommodation allowance to live in Wellington, and they get more than that again. That is easily an income of over $200,000—the leaders get more again—and they have got the absolute gall to say to someone on $52,000 that they are rich. That is an absolute disgrace. It is one party in particular there, but it is an Opposition that is out of touch with hard-working Kiwis, the issues and challenges in their lives, and their aspirations. Those members simply do not understand them; they do not understand what is important to them. New Zealand voters will have the opportunity later this year to reflect that this Government does care about them, does care about giving assistance to help them with their lives, and to reflect on how the Opposition members have turned their backs on them.

The Labour Party members are going to vote against this bill. For one, you cannot possibly know the outcome of the vote until it is held, so they do not know yet what the outcome of this vote will be. But what they are saying is they are prepared for those people, those Kiwis, to not get any of that assistance just so they can preach their politics in this House. They have turned their backs on the hard-working people of New Zealand. They shun them, they treat them with absolute disdain, and on 23 September all of those New Zealanders will have the opportunity to treat Labour exactly the same way. They can consign Labour members to some tiny little corner of this Chamber where they belong. I commend this bill to the House.

I am pleased to rise to speak on the Taxation (Budget Measures: Family Incomes Package) Bill, but I take issue with the comments made by the previous speaker, Mr Brett Hudson, that we have a strong economy, and we will get on to debating that next week. This bill is a miserly bill, but it is one that the Green Party is prepared to support—and we are certainly not supporting the Budget—because it does deliver benefits for those most in need. It is, as the Child Poverty Action Group said, a drop when we need a tide of relief for those families—it is a trickle when we need a tide—but it is at least something.

It is enormously cynical that this Government has waited for nearly 9 years to do this, and that it is doing it now, in an election year, yet holding out the benefits that the changes to the tax thresholds and the abatement rates will bring until 1 July next year. We made attempts in the Committee stage to make sure that the changes came in earlier, in April; those did not go through. We would have preferred them to come in earlier, because we know the very real hardship that so many families are enduring, and, as my colleague Marama Davidson has said, it is simply negligent to require those families to wait for 12 months or more before the changes come in. So we are very disappointed that that amendment did not pass.

The Green Party believes that the Government has a critical role in enabling our society’s well-being, and it is, of course, through changes to our taxation system that that can be achieved. We will be announcing a much more progressive tax policy closer to the election, because it is Government policy that makes the biggest difference in terms of family incomes. We have seen this Government allow the housing crisis to get worse and worse and worse, so that more and more of family income is devoted to paying housing costs.

In 1982 we had 14 percent of children living in poverty; right now, 28 percent of our children are living in poverty. But this bill, through the changes to the tax thresholds, through the increase in the family tax credits, will give some assistance to several thousand families that are dealing with fundamental hardship. For them a few dollars a week does actually make a real difference. The bill is cynical in that it does allow tax cuts for those, like us in this House, who do not need them, but it is because of the support that it gives to those families who are enduring the most—particularly families where parents are not in paid work and are on a benefit—that the bill delivers to them. They are at the bottom of the heap, they need the most assistance, and the bill does give them something. That is one of the major reasons we are supporting it, because otherwise they would get nothing. The Greens have always voted for legislation that does seek to deliver benefits to those who are enduring hardship. Thank you.

There are two main points I want to deal with in the short time I have available. The first is the comment from a number of speakers on the other side that “this bill delivers for all New Zealanders”—that was a quote that I wrote down when one of them recently spoke, and others have said something similar. There are 500,000 people in New Zealand who currently get the independent earner tax credit—500,000. That is in the Government’s own impact analysis on this bill, at page 17, so that is the Government’s number, not mine. Those people are generally on the minimum wage. They do not get the tax credit if they have a family, because they would be getting Working for Families, and you cannot get Working for Families and the independent earner tax credits.

So there are 500,000 people. These people are all ages. Some of them are young people working in the hospitality sector, and quite a few of them are older. Some of them are parents whose kids have left home, working as cleaners or doing other low-paid jobs in society. These are some of the poorest people in work in New Zealand. Those 500,000 people—half a million people—they get $1 a week when wealthier people from these tax cuts get $20 a week. That is an illustration of why the Opposition says this is so poorly targeted. How could the Government be so heartless as to direct its tax cut package in a way that leaves those people out when they are some of the poorest in society?

The Government knew it was in trouble on this, and it misrepresented what it was doing in the Budget speech and in the documents. I think this is the influence of the chief spinner of the Government for many, many years, the Hon Steven Joyce. His hands, as Minister of Finance, are all over this. He said this in his Budget speech: “[We are removing] the Independent Earner Tax Credit of up to $10 a week … It is only claimed by about one third of eligible recipients during the tax year.” Everyone thought: “Well, that’s poorly designed—about one-third.” Then, in the easy guide that the Government has produced for everyone, Family Incomes Package at a Glance, produced by Treasury—and, by God, there will be some questions about its transparency around this at the select committee—what it said was exactly the same thing: “Only 32 per cent of eligible recipients claim it during the year they are eligible.” Well, we thought, only 32 percent—that is bad. It turns out in the bill that 80 percent of those 500,000 people get it; most of them get it when they file their tax return after the end of the tax year. The whole thing was spin to hide the fact that 500,000 people in New Zealand get only $1 a week out of these tax cuts when the wealthy get so much more.

Then the other people—the Government tried to say they get Working for Families. Obviously they do not get Working for Families. Then it tried to say they get the accommodation supplement. No, they do not. It passes through their hands to their landlords. It is the biggest example of middle-class, upper-class welfare in New Zealand, and that cost incentive has gone up under this Government from $190 million to $1.5 billion after this Budget comes in, and none of it—none of it—stays in the pockets of the people who are paying the rent, because they get it only if they have got high rent costs. They get only 40 percent of those high rent costs, and they never get it if they have not got those high rent costs and a low income in a way that requires them to need it in order to pay their landlord, and the landlords are getting $1.5 billion—just about all going to landlords; some goes to mortgages, but, mainly, increasingly, to landlords—every year.

This is poorly targeted. Yes, the Working for Families is good, as Jacinda Ardern has said and has presented amendments on to try to split this out from the rest of this rubbish legislation. We are in support of that, but we do know that the same Government previously took $500 million out of Working for Families. So, rather than patting itself on the back, it should apologise for ripping it out of Working for Families in the first place. I think it is absolutely disgraceful that the Minister of Finance came down here on Budget day and spun. He spun to the media, and they took it; he spun to us, and it took us over a day to get it because we are in urgency; and he spun to every New Zealander. He misrepresented the nature of this for low-income people, saying that only 32 percent got the independent credit when 80 percent did.

Order! The member’s time has expired. I have been listening very carefully to the beginning and the end of the member’s speech and I do want to warn the House of the rules that to state that it was the intention of a Minister to misrepresent something is, in fact, indicating a breach of privilege, and that is something that is not appropriate to bring up on the floor of the House.

Thank you, Mr Assistant Speaker—

💬 Hon David Parker: So they get away with it.

It is my pleasure to stand in support of the Taxation—

💬 Hon David Parker: Point of order, Mr Speaker.

The ASSISTANT SPEAKER (Hon Trevor Mallard): No, I am going to deal with the member first. First of all, he should not chip my rulings like that, but I am going to take the bait that he has offered to me. The member has the opportunity until 2 o’clock on Tuesday to write a letter.

💬 Hon David Parker: I raise a point of order, Mr Speaker. Not one breach of privilege complaint by the Opposition has been accepted by the Speaker in the last 9 years of this Parliament.

The ASSISTANT SPEAKER (Hon Trevor Mallard): I call Maureen Pugh.

Thank you, Mr Assistant Speaker. As I said, it is a great pleasure for me and a source of pride to stand in support of the Taxation (Budget Measures: Family Incomes Package) Bill in its third and final reading today. As we stand here today it is Pink Shirt Day, and perhaps we should refer to it as “Red Face Day” because the Labour Opposition members have found themselves isolated on this debate. They are, in fact, on an island—an island—cast away on a desert island. Perhaps we should call them the “Robinson Crusoe Party”, because every other party in this House is supporting this bill, such is the support and the recognition that it has for the hard-working, low to middle income earners in this country.

I must say that Labour members have been spinning their own butts off today in referring to this bill, because they have been talking about one aspect in isolation. I remind the member on the other side of the House that this is a package, and the package includes a whole lot of stuff that benefits those low to middle income people.

This Family Incomes Package is, as my colleague said earlier, the centrepiece of this Budget for 2017. There is $2 billion worth of investment in this package and 1.3 million families are going to benefit in some way; not 1.3 million people but families. From 1 April next year the $14,000 income threshold will increase to $22,000 and the $48,000 threshold will increase to $52,000. That puts real money into the pockets of Kiwis. So for a couple on an average wage, they will be benefiting by $41 a week and that is significant to low to middle income working families.

Also part of this package are the changes to Working for Families, and those changes will see around 310,000 low to middle families—not individuals, families—with children under 16 years of age benefiting. There will be $9.25 a week for their first child under 16, and either $17.75 or $26.81 for subsequent children depending on their age. That is a significant addition to their incomes.

Substantially more support is included in this package for households through the accommodation supplement—and we have heard a lot of debate about that today from the Opposition. What they forget when they talk about the rents and the rental properties is that most of them are owned by mum and dad investors who are putting that aside for their retirement. The accommodation supplement rate that is included in the family income package, which we are debating today—

The ASSISTANT SPEAKER (Hon Trevor Mallard): No, we are not.

Ah, the bill—the taxation bill.

The ASSISTANT SPEAKER (Hon Trevor Mallard): And just to make it clear, it is not included.

Right—thank you, Mr Assistant Speaker.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Right, we have established that.

Yes. So the accommodation supplement rate for a two-person household will go up between $25 and—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! The member will resume her seat. I am going to give her one last chance. I think she has had three warnings now. Some of them were non-verbal, but she saw them. The member will now speak to the bill.

Thank you, Mr Assistant Speaker. I also understand that from 1 April next year New Zealand superannuation will go to $622 a week.

💬 Kris Faafoi: That’s not in this bill, either.

Oh. This is a fantastic bill. We have heard today that the contents of this package for Kiwis are absolutely superb and I commend it to the House.

In the lead up to this Budget the National Party put a lot of intellectual rigour and effort and time into trying to humanise the Prime Minister by associating him with a meat pie, trying to make him more human. I suppose it was worth a try. It was a bit forced, but it does actually give us a good analogy to think about this Budget and this bill, because this bill and this Budget are like a dodgy pie. It is like when you go along to a coffee shop in a part of town you do not know. You want something to eat, and you look in the warmer and it looks pretty good: nice flaky-looking pastry on the outside and you think: “That’s it. I’ll spend my $3 on that.” But you bite into it and it is a gristly, gruelly mess. Once you get into it, you see that it is not as good as it looked like from the outside, and let us talk about that in respect of this bill.

💬 Kris Faafoi: I hate that.

I hate that, as well. It is not a pleasant experience and, for New Zealanders, this bill is not a pleasant experience, as well.

My colleague David Parker pointed to, I think, the most egregious aspect of this, and I do think it was absolutely egregious and outrageous that the Minister of Finance stood up in this House and, in my view—in the printed speech, in plain language—implied that only one-third of people who were eligible received the independent earner tax credit, which is a $220 million tax credit that is being slashed, completely annihilated, as part of this bill. It took Tim Macindoe, to his credit, while he was sitting in the chair in the Committee stage, in response to questioning from me and David Parker, to actually concede—to actually concede—that the notes in the bill were correct and, actually, 80 percent of eligible people receive the independent earner tax credit. That is a pretty big difference.

Those members look down now, but they are about to vote for the abolition of that tax credit, which they tried to slip through by suggesting that it was claimed by hardly any New Zealanders at all. I am actually a little surprised by that. It was one of the few good things in the area of tax reform that this Government has done. It brought it in in 2009, and it was a way of recognising those people on low incomes below $48,000 who do not benefit from Working for Families.

💬 Chris Bishop: You opposed it at the time.

Yes, but we can recognise it was a good thing. We have got a little bit of flexibility on this side of the House, Mr Bishop, just like there has been a little bit of flexibility—let us face it—from National in respect of Working for Families. It was called communism by what, Mr Bishop? It was called communism by stealth when it was introduced by the Labour Government, but you are pretty proud of it these days.

We reckon the independent earner tax credit should stay, because those battlers—those battlers in that band, the people who do not have kids and who are earning under $48,000—they are often a little bit younger. If you look at the information produced in the Budget, these are the people in quintile No. 2—you know, earning sort of $24,000 up to about $48,000. They are not in a high-paid job, life is pretty tough, particularly when you look at accommodation costs, and this was one little thing that we had in there that helped those people out.

By sleight of hand, burying it deep in the Budget, and being dodgy about the figures, this Government is taking that away. What that does for most of these people is pretty much annihilate the benefit of any income tax cut that they gain, because people in that band are probably going to get the princely sum of an $11 a week tax cut. That is something for a start, I suppose, but then you take off the $10 and they are down to the princely sum of $1 a week.

💬 Peeni Henare: $1.

One dollar a week.

The Labour Party had a Budget breakfast this morning. It was with a business audience—probably people who are interested in Labour because they can see that a change is coming, but who are not necessarily instinctively attuned to social democratic values. We got on to the topic of tax, and a woman stood up at this breakfast and said that under this, her son—how long is it going to take him? It is going take him something like 10 years on the basis of that tax cut to be able to afford his next visit to the doctor, because doctors visits have gone up by so much under this Government.

We also talked in the Committee stage about the fact that there is some interesting stuff in terms of the independent earner tax credit. The official advice from Treasury actually says that by removing this, you are creating a disincentive to work, and it will actually result in fewer hours being worked across the economy. It is there in the regulatory impact statement, for any members opposite who might like to refer to that before they actually vote on the bill. Of course, that is the way it would be, because it is something for people who are in work, so why would you take it away when those people are working hard and just need a little bit of extra help?

The other area that I think of when I think of that gristly, gruelly pie that you bite into is what is happening in terms of the income tax changes themselves. Frankly, these are the heart of this tax bill. Yes, we are going to talk about the family tax credit, and we are not going to talk about the accommodation supplement, of course—

The ASSISTANT SPEAKER (Hon Trevor Mallard): No.

—but $1.9 billion of this package, or five-sevenths of the package, is there in the income tax changes. The National Government members speaking in this debate have been very reluctant to actually dive into the detail and understand how that distributes across wage and salary earners. Whenever you look at income tax changes from a policy point of view, that is what you should do. This is real money, it affects people’s lives and affects their incomes, and it affects the choices that Governments have going forward.

How does $1.9 billion actually break down? Here is how it breaks down: $1.5 billion, or 80 percent, of that tax package goes to the top 50 percent of income earners. What is that word we have been hearing from the National members time and time again through this debate? The lads on the ninth floor in the comms team put this word into all of their speeches: targeted. Targeted, targeted, targeted. That is about as well targeted as a bacon butty at a bar mitzvah—$1.5 billion out of $1.9 billion goes to the top half of income earners. How on earth is that well targeted?

How is it well targeted for the total benefit of that $1.9 billion tax package? Break it down. The top 10 percent of income earners get $379 million of that pie—the top 10 percent of income earners. The bottom 50 percent get $380 million—right? So out of that pie that National is cutting up and voting upon, and every other party in this Parliament, it would seem, the top 10 percent of income earners get the same cumulative benefit as the bottom 50 percent. Tell me again that that is a good targeting of resource to those New Zealanders who need it most. Tell me that again. I ask the next National Party speaker who stands up and gives the customary 4½ minute response that we have been getting today to justify how that is a good targeting of the limited resources we have to help the lowest-income New Zealanders.

Then we dive into the detail a bit more, and this is really interesting. Again, it is in the regulatory impact statement. Do you know what? Those New Zealanders earning under $48,000, whom, apparently, we are targeting—35 percent of them get nothing. They get absolutely nothing. I am not talking about just the income tax changes here, but the whole package. They get nothing. Everyone earning over $48,000 benefits. Every single wage and salary earner earning over $48,000 can bank some money because of this package. Thirty-five percent of those earning under $48,000 get nothing, and it actually gets worse. There are 3,000 families who are left worse off under this package. Surprisingly, we have not heard about that from anyone on the benches opposite.

Tax is about opportunity cost. Every policy decision we make in this House, I suppose, is. What the Labour Party says is that given the challenges that New Zealand faces today—we are not going to hell in a handcart. There are good things happening in our country and our society.

💬 Hon Maggie Barry: Thanks to National.

But there are issues—be a bit more graceful, Mrs Barry. There are issues that we face.

💬 Hon Maggie Barry: A bit more accurate, “Mr Whoever You Are”.

There are issues that we face in this country. Well, if you do not want to concede that, you know, that is fine. There are issues that we face. If you do not think that it is an issue that 40,000 New Zealanders are homeless, that is fine. Take that to the election campaign this year—[Interruption]

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I will ask the member to just resume his seat for a second, and I ask Mr Faafoi and Ms Barry to stop their interchange. As I have said, I think the other way yesterday—when members are handling it fairly well themselves, assistance from their own team is, in fact, not only not useful but it is quite disruptive.

Thank you, Mr Assistant Speaker. It is good to have a supportive team, though. I enjoy it in the Labour Party.

The ASSISTANT SPEAKER (Hon Trevor Mallard): And the member will not comment on my ruling if he wants to continue.

Thank you, Mr Assistant Speaker. As I say, it is about opportunity cost. What we know is that there are real needs and real issues in our country and in our society, and those are the things we should be focused on. So that is why the Labour Party, in the amendment we put forward, said that, actually, if there are some genuine targeting in terms of income support that we can do through this bill, we are all for that. That is what Jacinda Ardern’s amendment said. It said: “Let’s actually get in there and go forward with the family tax credit changes.” We could be right behind that. We think some of the stuff the Government is doing with abatements does not make any sense because it disincentivises work, but let us actually look at those family tax credit changes. We could have gone there.

But with the $1.9 billion package that is here, we could do so much more. We could actually invest in decent, affordable homes for all New Zealanders. We could tackle the fact that since the accommodation supplement was last raised in 2007, average rents have gone up by $240 a week, and nothing in this package even touches the sides of that in terms of the impact on family incomes.

We could do something about getting our young people into jobs, instead of spending $760 million on prisons. New Zealand families deserve—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

—better than this tax bill.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! Back to the bill.

They deserve decent housing and decent health and education. They deserve a fresh start, and that is what the Labour Party will give them. Thank you.

The member who just resumed his seat, Michael Wood, is obsessed with pies, because he spent most of his speech talking about gristly pies. And I, as my girth indicates, love a good pie. If he had enjoyed my steak and cheese pie that I got from Pak ’N Save, Pētone, yesterday—an award-winning steak and cheese pie—he would not be talking so disparagingly about this Government’s Budget and, in particular, this bill.

Earlier on in the debate Grant Robertson said something very true—I do not usually say that about Grant Robertson—but he said something very true. He said: “The type of Budget that is delivered reflects the type of country that the Government wants it to be.” Absolutely—Budgets do reflect Government priorities and what sort of country we want to live in. That is absolutely true about this bill, the Taxation (Budget Measures: Family Incomes Package) Bill and the wider Budget.

What does it show about what sort of country the National Government wants it to be? First of all, it shows that we want this to be a country where all New Zealanders can share in the benefits of growth. After years and years of deficits built up through the aftermath of the global financial crisis and the Christchurch earthquake, peaking at $18 billion at 2011, we now have surpluses and we now have choices. One of the choices the Government has decided to make, and this is reflected in the bill, is to allow New Zealanders to keep more of their own money. The changes in this bill, in addition to the other changes made through regulation, will benefit 1.3 million working families by, on average, $26 per week.

The first thing it does is allow New Zealanders to share in the benefits of growth. It is the dividend that New Zealanders get from a growing economy and from a solid economic plan. The second thing this bill says about this Government and this country is that we want to help out those who need it most. That is why the bill’s measures are targeted at the bottom end of the income scale. It does not touch the top tax rate of 33c in the dollar. This bill does not touch the 30c in the dollar taxation rate. There are lots of people out in the community who would like us to do that. Those rates are left unaffected. What it does do is it adjusts the bottom two tax brackets by extending the bottom bracket from $1 to $22,000 at the 10.5c rate and increasing the rate from $22,000 to $52,000 for the 17.5c rate. These are changes targeted at the bottom end. In addition to the changes to Working for Families, the family tax credit, the rest of the bill, and the accommodation supplement, these are very significant increases for those most in need of support in our community. The third thing this bill says about this Government and the country we want to live in is that where the Government can lift people out of poverty we should and we can. Where we can redistribute resources from New Zealanders to help out those who need it most, who are most vulnerable in our community, who are facing pressure because of housing stress, we can and we should.

The numbers show that in the bottom quintile—that is, the bottom 20 percent—154,000 families will benefit by on average $35 per week. We know that 50,000 children living in families receiving less than half the median wage will benefit and be lifted above that threshold—will be lifted above what is sometimes called a child poverty definition. It is one of the things that Jacinda Ardern and other members point to as a definition of child poverty. Well, by their own definition, this bill and this Budget lift 50,000 kids out of poverty. Let us be very clear: the National Government is voting for this bill, so is New Zealand First, so are the Greens, so is ACT, so is United Future, and so is the Māori Party. The only party this afternoon opposed to lifting kids out of poverty is the Labour Party.

The fourth thing this Budget and this bill say about what we want the country to be and how this Government regards New Zealanders is that they create a sense of aspiration and they move further along the line of creating reward for hard work, allowing New Zealanders to get ahead under their own steam, recognising and rewarding individual initiative. That is why those tax changes at the bottom end are so important.

What have we heard in the debate this afternoon in rebuttal? The Labour Party members have made five claims in response. The first claim is that this is a bill that gives only to the rich; that it disproportionally helps those who do not need it: the wealthy. This is a silly argument. As I have just demonstrated, this is a bill that is targeted at those who need support the most. You only need to look at the income levels to work this out. Someone who is on $20,000 a year faces a drop of 17 percent in the tax they pay. Compare that with someone who is on $100,000. They face a drop of 4 percent in the tax that they pay. So of course someone on $100,000 gets more money in nominal terms—of course they do; they are earning $100,000 or $150,000 a year. By definition they get more money, but in a proportional sense their tax drops by 4 percent. Someone on $20,000 a year faces a real income increase of 17 percent. That is a magnificent increase. That is four times more than someone earning over $100,000 a year. We have not touched the top tax rate; we have not even touched the middle-income tax rate. Someone on $20,000 a year faces a decrease in their tax of 17 percent so it is just ludicrous to argue that this is a bill that benefits only the rich.

The second thing that the Labour Party members say is that this is a bribe. You know, it is just so emblematic of the Labour Party’s view about Government money to say that this is a bribe. Actually, Michael Wood—not in that last speech but earlier on in the debate—talked about the direction of precious Government resources. Actually, before they became Government resources they were New Zealanders’ resources. It was New Zealanders’ money that they had worked for and earned by getting up early in the morning, going to work, trying to provide for their families, and having a job and bringing home money to pay for their kids’ education, to pay for housing, and to pay for some of the nice things in life. So they are not precious Government resources. They are when we take them off New Zealanders and we have got an obligation as a Government to make sure that we spend that money wisely and prudently, but they are not Government resources before we take it, they are New Zealanders’ resources. We want to make sure that New Zealanders keep a little bit more of their own money. You cannot bribe someone with their own money.

What else did those members say? They say: “Well, this is irresponsible. The money should be spent elsewhere.” This is—to be fair to the Labour Party members—a more reasoned critique. They are talking about the allocation of resources, and they say it should go on health and education and things like that, but the problem with Labour and the Greens is they want to have everything both ways. They want to alleviate poverty in this country, they want to solve the housing crisis, they want to invest money in mental health and in education—they want to do every single thing. They want to achieve nirvana. If we could achieve nirvana, trust me, this Government would be creating it. If we could spend billions and billions and billions with absolutely no problems being created from doing so, we would do that. The Greens are the worst at this. The Greens are the worst at this. They create this fiction that everything can be solved if we just spent more Government money. That is a legitimate critique, but one I reject.

The other thing that they say—the fourth thing they say—is that this is a Budget that gives with one hand and it takes with the other. They have been talking away about the tax cuts at the bottom end and the abolition of the independent earner tax credit. Well, Michael Wood has discovered the independent earner tax credit; he thinks it is an amazing thing. The Labour Government voted against that when National introduced in 2009—he did a road to Damascus conversion on this one. It is true that our tax system is incredibly complicated. When you pull one thread, other threads get dislodged—that is the nature of our complex system of tax credits and the tax system, more generally. We want to simplify the tax system, and, actually, the Labour Party agrees with some of those aims. We want to simplify the tax system. This is the Budget and the bill that start doing so by some of the changes to the family tax credit.

The fifth thing they say—and this is the most laughable criticism of all—is that this is a political Budget. Well, of course it is political. We are in politics. What is this debating chamber if it is not a political theatre? Of course the Budget is political—of course it is. We are in the third term of a Government that is taking New Zealand in the right direction. We are 4 months and 2 days out from the 23 September election. This is a party and a Government that desperately want to be re-elected, not for our own sakes—not for our own sakes—but because we fervently believe that New Zealand is heading in the right direction under the careful stewardship of Bill English and Steven Joyce and the rest of the team. We can see New Zealanders being more aspirational about their lives. We can see New Zealand being more confident as a country. We can see our thriving technology and agricultural and tourism and international education sectors. We see a rise in wages and a rise and jobs, and this bill will help all of those things. I commend it to the House.