Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Bill

Members, we now come to the debate on Part 2. This is the debate on clauses 8 to 15, Amendments to Income Tax Act 2007. The question is that Part 2 stand part.

Thank you, Mr Chair. I want to turn to the question of the New Zealand Consumers Price Index, which underpins a number of the benefit increases, particularly with the Best Start tax credit and the family text credit, etc. In clause 13(1), as the Chair will know, it is proposed to replace section MF 7(1)(a)(i) with “correspond to the movement in the New Zealand Consumers Price Index after the quarter ended … 30 September 2021 that has not yet been taken into account by an increase:”.

So the big question here is: previously, it was pretty clear what the Consumers Price Index (CPI) was, specifically, and all groups, excluding cigarettes and other tobacco products, measure. So what has happened in this bill is that we’re going to revert back to a CPI—a Consumers Price Index—which I’m not quite sure whether it includes tobacco or not, because it just seems to talk about a generic Consumers Price Index. I understand that the rationale for the change is that there was a discontinuance of the annual tobacco excise tax increase that occurred at the end of 2020, and that seems to be the reason why we’re reverting back to a Consumers Price Index, which is the way it’s referenced here in the actual bill.

So what I’d appreciate from the Minister is: does it include tobacco? Because, whilst there may no longer be an annual tobacco excise tax, because that was discontinued, the fact is that if you go into any corner store, the price of tobacco could be, and has been, subject to significant price increases. So is tobacco included—and cigarettes—and, if not, what is included in the Consumers Price Index, and is it the standard measure of the Consumers Price Index or have we got something that has been tailored to this arrangement? Because, I think, in terms of the people that will most benefit from these benefit increases, having a clear understanding of the nature of the types of basket of products and services that are taken into account in the Consumers Price Index is a pretty important aspect to be considering.

So I’d very much appreciate the Minister’s view on that and what other advice he may have received from officials as to other more appropriate alternative indexes to use in terms of continuously reassessing the inflation component of compulsory increases in these benefits. As he knows, once inflation breaches or exceeds a 5 percent increase, that triggers an increase, and that’s why we’re seeing these changes come through in this piece of legislation tonight. But, obviously, there’s a wide range, as he’s aware, he’s got the producer price index, which, probably more likely, is about 15 percent inflation rate at the moment, and there are many types of CPI.

So to what extent did he receive advice on it? What other options were considered? And how do we know that this is an appropriate mix and whether, in fact, it does include tobacco and cigarette products? So I’m looking forward to his response on those issues.

I’ll do my best to answer that question. As it happens, Corin Higgs, the adviser in my office, has got a Master’s in the Consumers Price Index, and I suspect he’s still in his office, so if I get this wrong he’ll send me a text. That’s the first time that I’ve put his name on Hansard and he deserves to be there.

The member is correct, that the Consumers Price Index (CPI) measure is changing to reinsert cigarettes. The reason that it was previously excluded for a period was the last Government—National Party and the Māori Party—decided to significantly increase excise duty on tobacco as a price-based measure to discourage tobacco use. It was thought at the time, with some justification, that if you just flowed that through to compensatory adjustments to benefits, the price effect would be muted and therefore it wouldn’t have the desired health outcome, which is a reduction in the consumption of cancer-causing cigarette products. That particular policy has now moved through the system and that change to the CPI measure is no longer appropriate going forward, therefore cigarettes come back into the CPI measure that is used.

Thank you very much, Mr Chair. I’ve been enjoying this discussion, including Minister Parker’s response on the subject of the way that the CPI—consumer price index—has been calculated and as that relates to the calculations and so on. I do have a question, actually, in relation to that, but perhaps I can come to that after my initial contribution is made in relation to a different clause within the bill—obviously, talking about Part 2.

I’m interested in the Best Start tax credit at clause 14. We see that a figure is to be replaced: “$3,120” is to be replaced by “$3,388”, and no doubt that’s appropriate—I actually haven’t looked into that particularly. I’m not highlighting the quantum of the increase particularly, but I am interested in the fact that that subsection applies for the 2022 to 2023 and later tax years. So what that tells us is that this legislation is going to be on the books for ever, on the face of it, and there is no end in sight to the traffic light system. We’ve already spoken about the fact that it’s like a board game: you’ve got to roll a zero to start. You know, we’re going to start in red and go all the way to green, and even then, in green, we’re not back to life as normal. So the question is, is there any light at the end of the tunnel in relation to the traffic light system?

💬 Barbara Kuriger: A train could be coming the other way.

And my colleague Barbara Kuriger suggests that the light at the end of the tunnel might indeed be a train coming the other way. But as far as the legislation is concerned, this will go on forever and ever.

Now, the Minister might well say, and I invite him to respond—indeed, I’d like him to respond—along the lines that, oh, well, eventually it will be repealed when it’s no longer needed. But surely the smarter approach would be to say that the operation of the legislation is linked to the COVID-19 Protection Framework—namely, the traffic light system—because that way we would have the support in place as long as it’s needed, not less and not more. And I say “not less” because I wouldn’t suggest or advocate, just to be clear, that the support only be put in place, let’s say, for the 2022-23 tax year or perhaps for that one and one more, and try and make an educated guess about how long the global pandemic will last. We don’t know that, of course.

But we do know that the support will be needed as long as the Government response is such that the support is needed. And it sounds quite circular, but that’s the whole point. The two should cross refer. There should be no reason that the legislation can’t contemplate an end of this life as we know it—you know, under the framework. That broader point that my colleague and friend the Hon Paul Goldsmith made was absolutely right: the elephant in the room is that the best way to avoid needing all this extra support is to allow businesses to simply get on and trade in the way that they would wish to, to be able to get themselves out of the hole, instead of giving them a shovel that they might continue to dig it still deeper.

So my question to the Minister, therefore, is has he contemplated, or would he contemplate, perhaps by way of Supplementary Order Paper—it’s not too late; after all, the night is yet young. As we all know, we’ll be here, potentially, until midnight. So is there any reason that we can’t have a formulation in there whereby the legislation applies for as long as the measures in the other bill, which is about to become an Act, apply? So that’s my first question, or set of questions.

My other one is in relation to the Consumers Price Index, often referred to, broadly speaking, as inflation. But my question to the Minister is along the lines of that asked by Andrew Bayly, but it develops the theme a bit further, because, I would note, particular businesses have particular cost pressures, costs that rise in a way that is above the general rate of inflation—with or without the tobacco. So, for example, a business in my electorate that’s involved in construction—a hugely important industry, of course, across New Zealand, because, of course, you know, we all need places to live and it goes without saying that there are housing supply issues that have plagued, you know, all the country for a number of years now.

But the cost pressures in that industry, particularly with regard to timber and other supply issues, would affect a construction outfit in my electorate, or any other, in a way that’s disproportionate to the general rate of inflation. So above even the 4.9 percent that we’ve experienced recently, and goodness knows how much higher that will get, notwithstanding, or perhaps because of, in any case—well, regardless of the intervention of the Reserve Bank, inflation might go higher. But for particular businesses that might be particularly affected by particular price movements, will the Minister contemplate a more generous regime to match that? Or is his mind closed to the point more generally about inflation, being the market?

The changes to entitlements to Working for Families and the family tax credit aren’t intended to be linked to COVID. Although they are a benefit to people during COVID, they are intended to endure.

Thank you, Mr Chair. I do appreciate getting the call. Minister Parker has raised a good point that actually this Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Bill—the Working for Families component is not intended to address the shock, the hardship, the loss of income that families are suffering during COVID-19. It’s part of the Government’s much wider agenda, clearly signalled over the last two generations of Labour-led Governments, to bring more and more New Zealand workers and their families into the welcoming embrace of what turns out to be a permanent and disabling relationship for these people and their families. That’s called Working for Families. A former leader of the once-great National Party described Working for Families as communism by stealth, and what I understand that leader of the National Party at that time meant was that more and more people will become dependent on the State to define whether they will succeed in life and lose their independence and freedom.

What ACT would propose is rather than the State collecting more and more taxation from New Zealanders: in the past year during the COVID pandemic when everybody is doing it tough around New Zealand—everyone who owns a business, who employs people, who is working from home, and even if they’re on a salary and they do get paid every fortnight—the tax take has gone up by over $10 billion to $98.5 billion. What that tells you is that the Government cannot actually keep its hands out of your pockets and now needs to find a way to redistribute the money so it doesn’t end up looking guilty and ashamed by the time it gets to the next Budget.

So when we look at this bill, what this amendment proposes, we look at the regulatory impact statement. What is the problem: “Improve income adequacy for beneficiaries and low-income people”—yes. “Improve financial incentives to work”—yes, says the ACT Party. “Pay welfare support at a sustainable cost to government”—yes, yes, yes says the ACT Party. The problem is clear: people work, they don’t get to take home enough of what they earn, and that’s primarily because the Government has its hands deep in their pockets in terms of income tax; GST, of course; but on goods which are suffering from inflation, so as the price of materials and goods supplied into New Zealand goes up—the inflation rate at 4.9 percent this year—the GST take automatically inflates with the bubble, with the balloon, with the waterbed that is the increase in consumer prices.

ACT does not believe there’s anything in this bill that will actually contribute to getting more people off benefits and off Government support and back into work so they can experience that feeling of making decisions for themselves about where they live, the things that they choose to spend money on, rather than becoming dependent on the Government, on having to go through complicated tables and fill out forms—and I’m going to find one in the back here—which describe just exactly this. This form here describes just exactly what the abatement ratio is, and if you earn a little bit too much, then you’ll lose your entitlements. These things are all disincentives for people to move from welfare and from low-paid jobs, and to seek higher-paid jobs so that they can actually share those economic benefits of working and earning a good wage or salary with their families and with their communities if they choose to give to charity or to spend time coaching a kids soccer team or helping out with the PTA at school—all of those things that they can choose whether to do them or not if they earn a decent salary.

That’s why ACT would propose rather than this Working for Families tax credit—in other words, we’ve taken it and we’ve managed to lose 30 or 40 percent in overheads in Government, now there’s 60 cents in the dollar to give back. What ACT would do is give middle-income New Zealanders a tax cut so that somebody earning $70,000 a year had $2,000 more in their pocket every year. That was their money to start with. They earned it. But the Government taxed it off them—an extra $10 billion in the last year. ACT believes workers should be able to keep more of what they earn. This won’t do it.

Responding to the suggestion of Simon Court, if you go back in history to the time when we had very high income tax rates in New Zealand under the Muldoon-led National Government, income tax rates were 66 cents in the dollar for higher income earners. That was seen to be, by parties all around this House, as excessive, and the Governments of the day changed the tax system so as to have lower income tax rates and more consumption taxes. Consumption tax in New Zealand is a broad-based GST, and it is an effective tax, but it is a regressive tax, in that it’s a higher proportion of the income of low- and middle-income earners than it is of higher-income earners.

After those changes, successive Governments, including the last National Government, led by the Rt Hon John Key, who did, prior to becoming Prime Minister, call Working for Families “communism by stealth”, and then kept it. But he came to the same realisation that we have on this side. That is, if you have a system of lower income tax rates and a quite high consumption tax proportion of total tax take, which we do in New Zealand, then in order to enable families who have got additional responsibilities to raise children, you need to have a tax credit in the system through the Working for Families tax credit system, which is what we believe in on this side of the House, and what this bill improves for the benefit of families who are eligible for it.

Thank you, Mr Chair. I’d like to speak in my contribution in the committee stage in Part 2 to a couple of Supplementary Order Papers (SOPs) in my name. I’ll start with the first one, which is seeking to delete, in clause 2, section 11, which is about the increase in the abatement rate from 25 percent to 27 percent. We’re putting this forward in the hope of gaining support across the committee, because we believe this is consistent with the Minister’s articulation of the intent of this legislation, being to implement some of the recommendations of the Welfare Expert Advisory Group (WEAG), which two years ago now said that in terms of immediate steps towards income adequacy, the Government needed to be increasing benefits and also making really significant changes to Working for Families, including moving closer to being a universal system available to all except high-income earners. They were advocating for a reduction in the abatement rate from the 25 percent to 10 percent for those earning between $48,000 and $65,000, and up to 15 percent for those earning $65,000 to $160,000, and then for it to be 50 percent above $160,000.

They believed, and we thought, that the Government—and I do just want to just mention again that WEAG was a group of representative people. It involved voices from business. It involved health practitioners working with families. It involved people who’d had experience using the welfare system and advocating for people in the welfare system. It was a broad representation of our society and found consensus across those groups in these recommendations. So it is, to me, very strange to hear the Minister saying that this bill is about taking a step to implement WEAG’s recommendations. And yet this increase to the abatement rate is going in the exact opposite direction from what WEAG was asking.

So if the Government supports our SOP to remove that clause, it doesn’t actually move them further towards WEAG’s recommendations, but at least it stops them going the wrong way. So this is our contribution to the Government to help keep you on track in terms of implementing the recommendations of WEAG. And one of the reasons we’ve put this forward is because that abatement rate is a disincentive, particularly for second parents working. This creates a really high effective marginal tax rate for still relatively lower to middle-income families, and the regulatory impact statement tells us that there will be 91,000 losers of up to $6 a week from this policy. These are families who—we know times are tough at the moment. Like, people have had their hours reduced; people have lost their jobs. There’s a sense of kind of insecurity, even for those people who have managed to maintain their hours and their jobs, and are juggling a lot, and costs in terms of power etc. have gone up. We don’t need to be pulling money away from those people to put towards others.

Really, for us, that is a really particularly important point, because it is unnecessary. The Government has options in terms of raising income. While we may hear from others that things are incredibly tight and there’s the sense that people were overtaxed—and I heard from the ACT Party member their solution to poverty is reducing tax. The Green Party’s concern with that is that we like schools, we quite like hospitals, we like strong communities, and we really believe in good public services. Those things cost money. We want to be able to pay our nurses. We want to be able to pay our admin and clerical workers and our DHB the wages that they deserve. That has been a strangely long fight to be able to get to that point, and we haven’t even got there yet. And part of the reason for that is the sense of austerity, of having limited options in terms of funding available, of having to trade off climate action with funding our health system. The Green Party believes that we can do a lot more if we just taxed wealth at 1 percent, just 1 percent, which would affect 6 percent of the country—of wealth over $1 million, sorry. At 1 percent, that would affect 6 percent of the country and would enable this country to bring in a guaranteed minimum income. And assessed by other groups, not the Green Party, we could eliminate child poverty by doing that. So I believe that is an option that would serve our families and our communities, because we know that when families have enough money, they make good decisions.

We’ve heard this idea that people are just kind of work-shy. I’ve heard that a lot over many years from that side. What people are ignoring is the fact that over 50 percent of the people receiving income support are doing so because of sickness or disability. Many of those people want to work, but the truth is that, as yet, a Government has not done the work to remove the barriers and discrimination to ensure all those people can get the jobs that they’re able to do, that work for them. The Green Party believes we have a responsibility to those people to the point we’ve done that work to eliminate that discrimination. We should not, as a country, be making those people pay and restrict their lives because of the work that we have not done as a Parliament or as successive Governments.

Another aspect of it, and they intersect, is parenting. You know, it’s a job, and it is an incredibly important job. For some parents, being able to be in paid work and parent is the best way to parent. But not every child can cope with that, and if you’re going to be the best parent possible, you need to be led by what is best for your child. That is also when we know that a significant number—I’ve been hearing this in select committee—of families are not able to get their kids consistently in school, because we have not removed those barriers to those kids being sent home basically every day from their schools because the schools are not able to meet their needs. We have just absolute discrimination through our school system. That is a reality, and those parents have to be there when their kids are sent home.

And yet again, some of the views expressed from the National and ACT Party would suggest that those families should just be getting a job, putting the needs of their children—

💬 Hon Member: A lot of them have a job.

Actually, they’re saying lots of those people have a job. Some of what we’re talking about is the people who are not able to, because they have to go home to be there for their kids, because their kids are sent home every day. Those people who are not able to get a job because they’ve applied and applied and applied, and nobody has even given them an interview. That is a daily lived reality for a huge number of people with disabilities that is ignored when people suggest the answer to poverty is to get a job. It sounds easy. It feeds to people’s sense of anger about the struggle of managing life, right? But not everyone’s life is the same.

Thank you, Mr Chair. I think I’m going to cause a bit of a stir in the Chamber next, and the reason is I agree with some of what Jan Logie has been talking about.

💬 Hon Member: Future of the National Party!

I know. Just hold fire, just relax—just breathe and relax. I also have proposed an amendment to delete clause 11, which is the same as part of what Jan Logie has done. So I’m partly agreeing.

💬 Hon Member: New coalition forming?

A new coalition. We’re always open to extending our friendships, and we have with the Greens in the past. If you think back to 2008, we had a great cooperation with the Green Party. But in all seriousness, I am proposing an amendment which would delete clause 11, basically because we already have a high effective marginal tax rate and we actually want to see that, when people are working, they should keep more of what they earn, and they shouldn’t be penalised for doing so.

I also want to say I acknowledge the very real challenge of many parents and families of all shapes and sizes where juggling work and parenting is incredibly challenging, but the National Party believes that the incentive always should be favouring work, and so this is a very simple amendment that we are proposing.

Of course, the interesting part of the changes that are being proposed tonight is if you look at the regulatory impact statement, you know, there has been no consultation, and what is interesting is because many of these changes were part of the Welfare Expert Advisory Group recommendations—and I’m speaking specifically around the Working for Families tax credits part of this bill—I am somewhat perturbed that the Government didn’t take the steps to consult on this ahead of the bill being introduced, or actually take this to select committee, because there’d be a range of views, and very sensible views, on whether clause 11 was necessary or not, and we would have had the opportunity to actually tease out some of the challenges around the very important incentive to be in work. Actually, sorry, I’m just going to try and find the regulatory impact statement—one of the comments in there is that the Government did want to maintain that focus on work.

So I think this is a sensible change that I do want the Government to consider: the removal of clause 11. So I’m partially agreeing with Jan Logie, but the reality of this particular bill is that the largely touted increases in the Working for Families tax credit side of this are just the Consumers Price Index (CPI) adjustment. So I think it is—and I’m careful with my words, similar to Jan Logie being careful before—not accurately representing to New Zealand families the reality of what this package does, because the majority of it is the CPI adjustments that happen anyway and would have happened on 1 April. So the Government pretending to be incredibly generous with $20 a week actually isn’t, because $15 of that would have happened with the CPI adjustment, so we should be clear about what this bill does and what it doesn’t do.

So I will be asking other parties in this Chamber to support the amendment. So Jan Logie and the Green Party, we would support half of yours, so that would mean, surely, you could support all of ours, which might give us the opportunity in this Chamber for the Government to see some sense. I would be interested in the Minister answering some questions in response to my amendment to remove clause 11. Thank you, Mr Chair.

Thank you, Mr Chairman. Can I thank Jan Logie and the Hon Louise Upston for their contributions. I accept that their amendments proposed are similar. We will be voting against both of them. The additional fiscal cost of those measures would be $90 million per annum, and we think the money is better directed in the fashion that we have proposed in this legislation rather than as has been proposed by those members.

In respect of the efforts that we have made to lift children out of poverty, that is one of the cornerstones of the Prime Minister’s commitments to this country that she was elected to pursue. Through a myriad of changes to the Best Start payment—or the introduction of the Best Start payment—which is being increased by $5 per week per child through this bill, but also through benefit increases, the winter energy payment, and changes like the change that we are now making to the family tax credit, thousands of children have been lifted out of poverty; progress continues to be made.

But not all of the recommendations of the expert advisory groups have yet been actioned, and we’re not supporting that amendment tonight.

Thank you, Mr Chair. And thanks to the Minister for responding to our Supplementary Order Paper (SOP). I’m disappointed that the Government won’t be supporting this amendment to help make this bill more consistent with the Welfare Expert Advisory Group’s (WEAG) recommendations. When the Minister was saying they haven’t implemented it yet, it’s in progress, this particular clause is going in the opposite direction from their recommendation. So that just doesn’t feel consistent with the Government’s messaging about implementing the recommendations of WEAG. And the point around costs—and maybe the Minister will clarify, because, when I’m looking at the regulatory impact statement, the cost of this policy, which I’m assuming is at $66 million, and so the $90 million, I’m assuming that’s just—

💬 Andrew Bayly: $68 million.

Well, it depends which page you’re looking at, Mr Bayly. There are differences on different pages, I have noticed. I’m not quite sure how to explain them. I would point out also to the Minister, saying that this is a flagship for the Government around addressing child poverty and progress is being made and the work around the Families Package, I do absolutely acknowledge the really dire state we were in four years ago, and a sense that just things were contracting and contracting. We were looking at the number of our children who were living in sheds and whose families were not able to have enough food to put on the table, and it was so critically important to have that commitment to change that. We are going in the right direction—but the glacial pace of that, when we know the lifelong costs of child poverty. It’s a horrible thing to see a kid without shoes, to see a kid getting rheumatic fever because of overcrowded homes, to see a kid without food in their belly, and their sense of disconnection to our community—that is a horrible thing to see. The problem I’ve got is I still see that. That is still the reality: the severe child poverty—still 160,000 of our kids are in that place now. I’m not feeling the urgency with a $5 a week increase to the Working for Families tax credit.

This leads me to our other SOP, which is to extend the in-work tax credit, which is embedded discrimination that has been recognised by our courts, and it is justified as being there as an incentive to encourage people to work. But actually, the Greens would argue the biggest disincentive to work is the effective marginal tax rate that comes through the abatement rates. And so how can we increase the abatement rate and not address that inequity between the in-work tax credit and the family tax credit? That shift alone would make a massive difference and would bring thousands more than the 3,000 to 6,000 who might just maybe get brought out of poverty according to the regulatory impact statement on this. They are very clear that they cannot be sure of the statistics around the 3,000 to 6,000 who might be brought out by this $5 a week increase. It just does not feel commensurate to the challenges our families are facing at the moment.

We know those lines for the foodbanks, the numbers of people coming into Work and Income to ask for food grants because the basic core supports are not enough—they are just not enough. And we’re putting people into more debt that actually reduces their core income because we’re making them go into debt to cover their immediate needs. None of that makes sense to the Green Party, and we really would love to see the support for removing the discrimination to incentivising people into work, and to actually showing some real guts in our commitment to reducing child poverty.

I move, That the question be now put.

Wow, I think, if ever there’s an indication that the Government has screwed it up, we have just seen it when we have the Hon Louise Upston and Jan Logie from the Green Party on the same page, talking about the same issue and wanting to make the same change. That just tells me that, if you ever needed a select committee process, now is the time, and that is the best indication, because, whilst I don’t always agree with everything that Jan Logie says, one thing I would say is that she is one of the most earnest, heartfelt people in this House, who will always stand up for the poor, and if she’s standing there saying that Labour has got it wrong, and Louise Upston from National is saying it’s wrong, then there must be something wrong. And I think that the Government should take heed of that. But, of course, they’re going to ram this through tonight, aren’t they? We’ll be here till midnight. It’s going to be an exciting night, isn’t it?

This comes back to a wider issue—and I’m sorry; I also want to pick up on Jan Logie’s issue. Yes, even the departmental disclosure statement, the regulatory impact statement—commonly known as a “RIS” to us MPs—even that, if I take her at her word, the numbers are wrong. The numbers are wrong in it! Wow! The Minister can’t even get the numbers right. The Minister must have done this legislation in such a hurry that not only are we doing a COVID bill today that has to be changed immediately after, but the RIS—how can you actually make a comparison? How can you actually assess the financial impact if the RIS is wrong? What is happening to this Government? What is happening to those backbenchers over there, also?

Anyway, anyway, I want to return to the issue of the family tax credit increase and the proposition—and this is my first question to the Minister. I listened very carefully to his opening speech, way back, a few hours ago—it seems like a time line—when the Minister talked about increasing and lifting people out of poverty, particularly children, and he talked about 6,000 children being lifted out of poverty as a result of all these Working for Families changes. And, of course, all the backbench over there used the figure 3,000. So which figure is it, Minister? That’s the first thing, because we’d like to see a bit of consistency across that Labour Party over there. Not showing much consistency at the moment. But the big issue is how in the Dickens can you lift 6,000—or let’s say 3,000—people out of poverty when all you’re doing is playing catch up with inflation. So all these benefit changes are playing catch up, trying to catch up to the 8 percent inflation rate. Of course, it’s always triggered when it gets greater than 5 percent. So it’s not reimbursing them for what’s gone on; it’s just increasing the current Working for Families component to take that issue into account.

So there is no way that is ever going to remove children out of poverty. The only thing that is going to remove children, potentially, out of poverty is this $5 per week increase. And I know that the Hon Louise Upston, because she’s a hard-working person, has got an amendment on that which is saying, “Why are we putting the $5 per week in there? There’s already an 8.4 percent increase.”

💬 Kieran McAnulty: Here’s your chance, Doocey! Have a go, mate.

Sorry?

💬 Kieran McAnulty: I was just saying he should have a go at leadership, because who knows who’s up for it! Come on, let’s go!

So a very inappropriate contribution from the Chief Whip there. So the issue here is: does the Minister really think that a $5 per week per child increase is going to lift 3,000 children out of poverty when you’ve got rampant inflation? Of course, we’ve got the Reserve Bank in front of the Finance and Expenditure Committee at 8 a.m. tomorrow, and they have got inflation forecasts going like that, partly because of inappropriate, poor levels of spending by the Government and also the actions of the Reserve Bank. How is $5 per week going to lift children out of poverty? That, I think, is a proposition it put in here, made by the Government, but actually I think it has very little basis, and I’d love to hear the analysis of it.

Referring to the point that Mr—

💬 Andrew Bayly: Bayly.

Bayly, thank you.

💬 Andrew Bayly: I remember you too, David.

Ha, ha! Yeah, thank you—sorry about that. The point as to the difference in two of the calculations by the department as to the cost of this policy arises from the flow-on impact of other Government assistance—all of which is interconnected—and the difference between the annual cost under the two measures that they did was $2 million. That, in the scheme of these sorts of numbers, is almost margin of error. They do recalculate these figures periodically, and when they did the numbers a second time and factored into account some of the interconnections with other Government assistance, they came up with that minor difference.

I move, That the question be now put.

Thank you, Madam Chair. I’ve just had a wee chat to the Green member and I think on this occasion—there wouldn’t be many—she’s done more homework than I have. So I do want to come back to the point about the abatement rate.

I think the Minister said that the cost was $90 million, which is why that won’t be happening. But I’m somewhat surprised because, on the one hand, the Government is crowing about a really generous package and how this going to be the answer to lifting children out of poverty, and yet $90 million is an amount to quibble over. This year alone, Ministry of Social Development underspent twice that amount, $180 million, on employment programmes. So kind of interesting that $90 million to families, when it’s keeping more of what you earn and reducing the effective marginal tax rate, I would have thought would be quite useful.

But anyway, another question I’ve got for the Minister is, the projections of the number of children that they will lift out of poverty, and this is on the background to a promise in 2017 of 100,000 children being lifted out of poverty when, on that same measure, actually there are 1,500 more children. So I want to ask the Minister, based on the regulatory impact statement that clearly talks about data uncertainty and the fact that there hasn’t been sufficient time to consult on phase one, so, first of all, what is the figure? Because we’ve heard 3,000, 6,000, 10,000. Can he point to the section in the regulatory impact statement or any other evidence as to how those estimates have been derived?

Thank you very much, Madam Chair. I’ve got some questions tonight; some of them are relating to the bill and I’m going to ask those of the Minister because that’s what I have come to this place to do.

My questions are in relation to a number of the timings to which the bill applies, and I do want to acknowledge that the Minister engaged with a related question that I had before. I was asking about whether it would not be better to have certain sections that will apply indefinitely tied to COVID legislation. The Minister pointed out, quite rightly, that a number of these provisions aren’t anything to do with the COVID framework. So, for example, I had cited clause 14, which was in relation to the Best Start tax credit. So, fair enough, as far as it goes.

But it does beg the question—in light of the fact that some of the provisions in Part 2 do relate to the COVID-19 support payments and the similarly named resurgence payments, but others do not. So my question to the Minister is, quite simply: why is this legislation—which I understand mostly will come into effect in April of next year—being put through the House now, when obviously there will be many more opportunities to legislate those between now and that new tax year and to be able to do it in an environment that’s not urgency and to allow, for example, a select committee process? Other colleagues have mentioned the desirability of that more generally, and of course I would always agree with that, and particularly to thrash out some of the technical issues as to whether the increased amounts are appropriate, and even the design of the system more generally.

So a reasonably narrow question, in terms of why it should be that we are discussing this tonight, in urgency, as opposed to in a more measured way that’s likely to produce good sound legislation, and I refer to the bits that are not COVID-related within that Part 2 of the bill.

I move, That the question be now put.

Thank you, Madam Chair. I think there’s still quite a lot around the concept, if the clear intention of this bill is around the reduction of child poverty. I don’t think we’ve heard enough from the Minister in terms of the justification for why he thinks that will occur, particularly given the very different numbers that we heard from members of the Labour Party in the first reading speeches. I also haven’t heard any response in terms of the justification of how those numbers are derived. So I am looking forward to an answer to that.

The other questions I have relate to why it is that when Labour announced these changes they weren’t up front with the New Zealand public about the fact that the actual increase that was included in this package of legislation was only $5 a week. Actually, the National Party had its own solution to this for a similar amount, which would have been to actually allow people to keep more of what they earned themselves. I’d be interested to hear from the Minister of Revenue about the churn, the cost of churn, and the difference between taking tax off people and then returning it to them in another format through transfers called Working for Families, and the efficiency of actually just allowing people to keep their money in the first place. Because, at the end of the day, that would have the same result in terms of money in people’s pockets.

The other part that I don’t think has been addressed much at all in this debate, although I know my colleague Andrew Bayly has raised it on a number of occasions, is the fact that increases in the cost of living really have been an area that the Government could have focused on. Instead of focusing on this miserly $5 a week, which they sold as $20 a week, and why instead—if the focus was on targeting support, what the alternatives were that were considered, in terms of, for example, supporting those on benefit long term that could have been supported with a very intensive case management into employment, which would, of course, provide three times as much income into that household, and would have lifted far more children out of poverty.

Thank you, Madam Chair. The difference between the two figures as to the number of children lifted out of poverty being either 5,000 or 6,000 children depends on which measure is being used. Both figures were calculated by the Treasury. The 5,000 children lifted out of poverty is based on the before housing costs measurement of poverty, and the 6,000 children lifted out of poverty is on the calculation after housing costs.

I move, That the question be now put.

The question is that the Hon Louise Upston’s tabled amendments to clause 10 to amend the calculation of family tax credit be agreed to. All those in favour, say Aye; to the contrary, No. The Noes have it. Party vote has been called for. The clerk will conduct a party vote.

💬 Hon Marama Davidson: Point of order, Madam Chair. Could I please ask the House to correct my vote just then for the Māori Party? It should have instead been “abstain”. My apologies.

CHAIRPERSON (Hon Jenny Salesa): The clerk will correct that vote. The Ayes are 75, the Noes are 43, abstain 2. The Ayes have it. The question is that Jan Logie’s amendment to insert new—

💬 Matt Doocey: We’ve still got to vote.

CHAIRPERSON (Hon Jenny Salesa): Oh, sorry. We go back to the vote on Louise Upston’s amendments, please.