Social Security (Benefits Adjustment) and Income Tax (Minimum Family Tax Credit) Amendment Bill

Members, we come now to our final debate, clauses 1 and 2. This is the debate on clauses 1 and 2, “Title” and “Commencement”.

Thank you. So just on the time line and commencement of this bill, I guess, I’m interested to get a sense of whether the April deadline was the key consideration that was made, and particularly with inflation projected to eventually go down, whether there had been any considerations of any reviews to make sure that the current decision formula was working as projected, and to adequately support people, and whether the Minister at the time thought that perhaps evaluating the commencement more in detail could have resulted in better evidence and data being gathered? Because at this point, the commencement date and the lack of any reports and research to support this bill is concerning and I’m just wondering whether anything like that had been considered at any point?

Thank you, Madam Chair. I thank the member Ricardo Menéndez March for his contribution. As my good colleague on the left here, the former Minister of Finance Grant Robertson, will know, every benefit is adjusted on 1 April. It’s an absolute, standard date. It would be inconceivable to contemplate—and I see, I think, Mr Robertson agreeing with me—not adopting 1 April as the commencement date.

We have a formula, right, as it is, and so not having this bill commence by that date still means that benefits will get indexed, just by the previous formula. I guess what I was trying to ascertain was just around allowing for more time to actually gather that evidence—that is in the coalition agreement—to back the legislation that is being introduced.

It is a fantastic privilege to get up and speak in this title and commencement debate, because I actually have some really good ideas around what we could change the title. And I know that’s very bizarre—

Hon Nicola Willis: You’re an ideas man.

DAN BIDOIS: Yeah, exactly. One thing we would do is the “Back to Work Bill”—getting beneficiaries into work. We could call it that, because that’s what it’s all about: encouraging people that—was it 67,000 people extra on a jobseeker benefit under that Government? We want to get them into work because that’s the way that they will make a better life for themselves and their families. That’s the way that they will have mana motuhake. That’s the way that they will restore their own dignity and have dignity. That is the way that they will realise tino rangatiratanga.

So I think that, actually, changing the title of this bill—I haven’t spoken to the Minister about it, but I’m sure she may be open to the idea of changing it to the “Into Work Bill”. Let’s call it that because that’s what it’s about under this Government: actually encouraging people into work and encouraging them to live happy, independent lives, independent of the State.

Stuart Smith: What about mahi—“Into Mahi”?

DAN BIDOIS: Mahi? Oh, yes. That’s another good title, actually, from the honourable member from Kaikōura, Stuart Smith. We could call it the “Into Mahi Bill”. I’m sure maybe that side may be open to that idea—into mahi. “Mana in Mahi” we could call it. We could call it Mana in Mahi. I think we might have unanimous consent to just, all of a sudden, change the title of this bill, and I’m sure the Minister will be open to that.

So I really would love a discussion in the Chamber today. I know we’ve all got things to do, but let’s create a bit of a vibe in here about what this bill could do to really bring out the ethos of what we’re trying to do here. So I’d love to get the Minister in the chair’s position on this about amending it to talk about the essence of what we are trying to do in this Government bill today.

Thank you, Madam Chair. First of all, I’ve got to thank the member Dan Bidois for his very courageous suggestion there. It’s pretty unusual, particularly at this late stage. But I’ve got to say I fully appreciate what he’s endeavouring to do, which is: we’ve got what might be called a very boring bill title, I think: Social Security (Benefits Adjustment) and Income Tax (Minimum Family Tax Credit) Amendment Bill.

Yes, I understand if you’re listening in from Kaitāia or something and watching this fantastic debate that’s going on, you might wonder what the dickens we’re talking about. So I do appreciate the sentiment—Mana in Mahi or whatever his suggestion. But I have to say to the member at this stage that it’s probably passed the point. If that recommendation had been made earlier, I think it might have fallen on very receptive ears with the Minister, but at this stage, I think it’s very unlikely that we would change this bill title at the moment. But I’m looking forward to his next contribution.

Thank you, Madam Chair. I thought I’d be able to take a call to give the other side of the Chamber a bit of a hand in relation to the renaming of this bill. I think this bill should be called the “Social Security Bringing More Kids into Poverty Amendment Bill”.

So, to be able to assist in relation to that amendment, I thought I would give the Chamber a bit of a history lesson around Working for Families. The actual Working for Families policy is around tax credits—they’re tax transfers which are administered through Inland Revenue, and provide different entitlements. When Working for Families came in under a Labour Government, in 2005, it was a staged implementation process. So I think some of the commentary in the Chamber around it having to be 1 April—actually, when Working for Families did come in in 2005, there was some October implementation dates around that. Working for Families, just so the other side of the Chamber understands, really helps people get into work. That’s exactly why it’s called Working for Families: it’s to incentivise people to go back to work. The abatement threshold allows for—once you hit a particular rate of income, then it basically starts to cut back on how much the Working for Families entitlement a particular family can get.

I acknowledge the work by Ricardo Menéndez March today to be able to bring back some history to this Chamber. For me, when I was a young mother, going through university, and at the time I had two children—

Hon Nicola Willis: Still a young mother.

Hon BARBARA EDMONDS: Thank you very much, the Minister of Finance is saying I’m still a young mother—appreciate that compliment. I was going through university. My husband was in a low-paid labour job. He earned just above the minimum wage. We were getting family support. But then in 2004, when the Labour Government decided to bring in Working for Families, we went from $8 in the hand at the end of the week—all our bills paid, $8 in the hand to be able to help our children. We only had only two children at the time—

Hon Rachel Brooking: Only two?

Hon BARBARA EDMONDS: Only two, and it was really difficult at the time. But then Working for Families came in, and that $8 at the end of the week became just over $100. That is the implication of Working for Families. It actually really helps families come out of poverty, and be able to give them opportunities. I am a living proof of that ability. It allowed my husband and our family to operate while I was studying my law degree.

So the reason why I stand for this amendment—to rename it the “Social Security Bringing More Kids into Poverty Amendment Bill”—is because this particular bill removes the ability and changes the way in which benefits are basically raised. There is official advice that has been received. I know members have gone through this in both Part 1 and Part 2. But I want to just remind members that this bill will impact on children. We all have a responsibility in this Chamber to those children of the lowest-paid families, families both on benefits and entitlements, those who are working, who are trying hard to get ahead. We’ve got to come back to the reason why this side of the Chamber opposes this bill, and why this side of the Chamber absolutely believes that this bill should be renamed as getting children back into poverty.

So we’re getting into a discussion on what title would be most appropriate, right, and I don’t want to indulge the committee in more scapegoating off more people on the benefit and talking about how people on the benefit don’t have dignity, but I do think the previous member has a point. But if we were to go by the evidence that was provided to the Minister around the impacts of this bill and we were to be guided by the only reports that this Minister has been able to produce about the impacts of this bill, then, yes indeed, something like the “Increasing Poverty and Retaining the Status Quo for the Family Tax Credit Bill” could be an appropriate name.

Again, I think there is a lot in a title, and why we actually should have titles that are not so boring as the Minister described them is that it helps people understand what this bill aims to do, which is not just to amend a piece of legislation; it’s to create a difference for our communities. Based on the reports that we have, there’s actually nothing here—no report—that talks about what the previous member from the National Party said, that this bill will support people into employment. We have to call it out for what it is, which is simply an assumption that if you punish people on a benefit, that they’ll enter work, and yet, despite those assumptions, there’s nothing in this bill to adequately even change how support is provided to people who enter employment despite parts of the legislation that touch the Working for Families package, which, as the Minister in the chair previous to him being there alluded to, are not being addressed. So, indeed, a name that actually describes what this bill does, which is increase poverty, would be far more suitable than what we have right now.

I wasn’t going to take a call on the title until, actually, the National Party member decided to lay bare the truth of what this bill is about. It’s about an assumption that people are not worthy or treated with respect and dignity when they are on a benefit.

If the member spoke about dignity and work, there’s a gross, gross implication here about what they believe people on the benefit experience and how they should be treated. It also assumes that people on the benefit are not doing work. So I’d like to get a reflection from the Minister about why he thinks having a title of the bill that reflects the data and evidence that has been provided to the Minister—which so far has nothing to do with employment outcomes and actually only talks about increasing poverty—wouldn’t be a better title for this piece of legislation.

Thank you, Madam Chair. Thank you for the two contributions about the title. Look, my reaction to this is that it’s based on a false premise. Both members referred to the issue of increasing poverty. I remind the members of the House that what this bill does is it returns the situation back to what the situation was since 2011, in which the benefits were and have been linked to the Consumers Price Index (CPI) and not to wage inflation. And, as all the members know, in this first year or the next financial year, there actually will be additional benefit.

Hon Grant Robertson: No.

Hon ANDREW BAYLY: There is an additional benefit—$38 million it’s going to cost extra if we were to change. But the big issue I would also suggest to the members is that there is an issue about getting people back into work. There is a minimum requirement for Governments to make sure that people who can’t work and who are on benefits get recognised and get a permit paid by the Government, and this is what this bill does and continues that whole thought. But we do want to encourage people back into work, and the premise around increased poverty is not what the bill is about; it is about making sure that we move back to what was the original situation for a long, long period of time. And that does not necessarily lead to increased poverty. And, furthermore, one of the premises that the members keep referring to is the issue around the projections around what will be the increased CPI rate and what will be the increase in the wage rate. As everyone knows in this House, not even the former finance Minister sitting to my left here would be able to project with some certainty what will be higher over time and what will be lower. There are point estimates in the regulatory impact statement, or the analysis of the bill, but the long-term issue is that we want to return the basis for payments back to the cost of living CPI rather than having it based on wage inflation.

Well, I wasn’t going to take a call in the title and commencement debate, but, given Mr Bayly’s mention of me a couple of times, I thought it would be worthwhile proffering up to the committee a couple of other titles that could be used for this legislation, because one of those could be the “Social Security (Taking Money Off the Poorest New Zealanders to Pay for Tax Cuts for Landlords and Property Speculators) Bill”—because that’s actually what the bill does. There’s been this argument throughout the debate on this bill, and during question time this week, about why this was—

Simon Court: Hates landlords—demonised them for years.

Hon GRANT ROBERTSON: No—you see, the member Mr Court interjects “demonising landlords”. It’s not landlords’ fault that the Government’s bringing this policy to the House. What the Government has done—and it’s been extremely explicit about this in its fiscal plans—is that this money, $670 million - odd, will be coming out of the pockets of the future recipients of main benefits. And that money is part of what is needed to pay for the tax cuts that the National Party and the coalition Government are now proposing. So that title, I think, would be extremely appropriate because it’s actually what the bill does.

There’s been this inconsistency in the argument of Government members who’ve spoken on this, who—as Mr Bayly just did in his intervention there—say, “Oh, well, you know, they might be a little bit better off in the first year.” We’ve actually been through that, and that possibly isn’t going to be the case. But ultimately, it can’t possibly be true that those on main benefits will be better off, because the Government is going to get $670 million. Where’s that coming from, Mr Bayly? It’s forecast. It’s in the forecast you and your Government are using, which means that $670 million was going to go to the poorest New Zealanders and now it’s not going to. So those people will be worse off. The poorest New Zealanders will be worse off because of this bill. That’s a fact, Mr Bayly, because it’s actually in the projections. So that would be another title for the bill.

Hon Member: You’re making stuff up, Grant.

Hon GRANT ROBERTSON: With respect, the National Party’s fiscal plan literally has the numbers in it that they expect to get in future years. That was money that was destined for the lowest-income New Zealanders, and now it’s coming back and it’s going into the pockets of much wealthier New Zealanders via tax cuts. So that is the reason why I would say that this bill is far better titled as one that actually takes that $670 million away from the poorest New Zealanders and puts it into the pockets of others.

The other potential title for the bill would be the “Social Security (The Children’s Commissioner was Wrong) Bill”, because one of the things that we were told when we established the Welfare Expert Advisory Group was that one of the best things we could do to lift children out of poverty was to index benefits to wages. That’s what Andrew Becroft said. Now, Andrew Becroft was not always a fan of the previous Government, but that was something he said. So when we were working our way through the recommendations of the Welfare Expert Advisory Group, we said, “We’re going to pick that one up because we know it will make a massive difference to lifting children out of poverty.” And the reverse is clearly true in the material that’s on the Table and was discussed in the House today—that this bill will push 7,000 kids back into poverty.

Andrew Becroft was right. This was one of the best things we could do to lift children out of poverty: to index benefit to wages. And this bill, the title of this bill, could so easily, actually, reflect the fact that this Government thinks Andrew Becroft’s wrong. In fairness, the Government even said today they thought Andrew Becroft was wrong. He wasn’t; he was the Children’s Commissioner—he worked every day with children and advocating for children. And I’m sure that Mr Becroft would approve of a title that actually accurately stated the fact that the Government thinks that he was wrong and the Government thinks that a bill that pushes more people into poverty is right.

I wasn’t going to take this intervention, but I’ve taken it because I think it’s important to put on the record what this bill actually does.

I move, That debate on this question now close.