Income Tax (FamilyBoost) Amendment Bill

The National Party is delighted to support the third reading of the Income Tax (FamilyBoost) Amendment Bill. Of course, it’ll ensure that more families are eligible, it will lift the amounts that are available. I commend the bill.

I rise to again provide Labour’s support for this bill, not because we support the policy itself when it repealed what was an excellent policy of early childhood education free for two-year-olds but because Kiwis right now are doing it really tough. My electorate of Mana is an area that is one of the highest deprivation areas in the country. It’s an area that I drive past as I go home every day. Every day in my constituency of Mana, I see the impact that the high cost of living is having on our families. I see it when Pātaka Kai, which is the first time we’ve had a soup kitchen in Porirua, has had to be open this year to feed the homeless people who are now increasing in our community.

I was able to go and help out one particular Monday at Pātaka Kai, which is led by Ngāti Toa, our local iwi, to talk to homeless people about the struggles that they’re facing, to be able to have a conversation with them because a lot of people ignore them, and just to be able to play a simple game of Last Card. What really saddened me at that time was I recognised a person and I said to this young person, “What’s your name? How old are you?” That young person was 23 years old and I said, “What school did you go to?” She told me her school. I recognised then and there that in many of my children’s school pictures in my home, there was that young person in the same classroom as my daughter. This is the impact that the cost of living is having on our families every day—that a 23-year-old is homeless; a 23-year-old that was in the same class as my daughter. These are the struggles that everyday Kiwis are facing.

So that’s why Labour is supporting this bill. We know that, right now, Kiwi families need every single dollar that they can get. We’ve had a lot of political debate today over this particular bill because, yes, it has come in under urgency; yes, we haven’t been able to, as a Parliament, scrutinise it and ask officials the detail of this bill; but what we did on this side of the House was try to be constructive. We tried to offer the Government members ways to actually increase the eligibility, to increase those payments. We said, “Change the commencement date of this bill.” FamilyBoost started on 1 July 2024, but this bill only comes in from 1 July 2025. Why can’t you go back to the very side of your failed policy—but none the less a policy—and make that the commencement date so that families that missed out then can actually get some now? Why can’t we go back there so that some families can get a little bit more? That was voted down by the Government.

We also, constructively, had tabled amendments that increased the abatement threshold just a little bit more from 7 percent, down to 5 percent. For those members who don’t know, when that abatement threshold cuts in, that’s at the level at which every dollar after that threshold gets cut back. Dr Lawrence Xu-Nan offered 5 percent, but the Government voted it down.

Let me take you back to why we are here for this bill. This bill was meant to help families with the cost of living, with the childcare costs. Yes, we disagree—we believe that extending early childhood education to two-year-olds was the better policy but we came to the House today to be constructive, to try and help the Government fix their failure of a policy, to try and make it better, because right now it is absolutely appalling that I, as the MP for Mana, have to go to a soup kitchen and recognise a homeless person who’s only a year older than my daughter and happened to be in her class. That is an indication that something is wrong with our society. Something is wrong with our economy when you have a 23-year-old who is homeless.

We came to this House today to be constructive, to offer constructive tabled amendments, to help the Government—and it sits within the scope and purpose of this bill. It was to increase the number of recipients eligible for the payment. Those tabled amendments were to increase the payment amounts. Those tabled amendments were also to help maintain the fiscal envelope for the scheme because the regulatory impact statement, in the absence of a select committee, was actually a very good statement because it set out that only 52 percent have actually taken up this policy. There was fiscal headroom for this—because there’s clearly an underspend.

We implored the Government members, with tabled amendments, to try and get Kiwi families that extra dollar more. Instead, they were rejected. They were laughed at by the Minister of Finance, and they were totally voted down, which to me points to “Where is your connection with your communities?” Where is the Government members’ connection with their communities? Do you not see the increased homelessness? Do you not see the increase in unemployment? Do you not see the increase in pain on our families today? If you did, you would have had your road to Damascus moment and approved those tabled amendments. Instead, it was shameful that Government members turned down those tabled amendments during the committee of the whole House.

One particular biblical story that I think might help the Minister—and I went to an all-girls Catholic school, and I was very, very good at religious studies.

Shanan Halbert: Good school.

Hon BARBARA EDMONDS: Very good school, yes, on the North Shore of Auckland. One of the things that I learnt at that Catholic school was around social justice, the importance of social justice and making wrongs right. One of the stories, which I think members on the other side of the House might not necessarily remember if they went to a Christian school, is the story of King Nebuchadnezzar. That particular story is about unrepentant pride, and, unfortunately, what we’ve seen through this House is a party who is incredibly proud about this bill, about bringing this bill to the House. Yet when time and time again the Opposition tried to be constructive, to help extend that bill so it actually helped more families, all we saw was rejection, laughing, and the voting down.

I do stand here proudly as a Labour Party member, being able to support this bill. I don’t support FamilyBoost as a policy because I believe that early childhood education extension to two-year-olds was actually better. It was better for a number of reasons. Firstly, the family didn’t have to apply for it; secondly, they didn’t have to try and gather their invoices and receipts every quarter; thirdly, they didn’t have to go on to myIR and input their information; and, fourthly, they didn’t have to wait for their reimbursement.

Hon Kieran McAnulty: Who has time for that?

Hon BARBARA EDMONDS: The Hon Kieran McAnulty asks “Who has time for that?”

Hon Kieran McAnulty: Not working people.

Hon BARBARA EDMONDS: Not working people, which is why the uptake of this particular policy has been so bad. If the members on the Government benches don’t believe me, then they need to read their own regulatory impact statement, which actually sets out the problems with this policy.

Working parents are time-poor, and what you see in the distribution of income within that regulatory impact statement is that those at the highest income are the ones that are actually accessing this policy. Why are people on higher incomes able to access the policy more easily? For the same reasons that Dr Deborah Russell set out. It’s access to digital. It’s access to computers. It’s access to printers. It’s access to all the things that many of the members in this House take for granted.

I implore members on the Government benches, go and talk to your communities. If you’re a list MP and you don’t necessarily want to talk right up and down the country, go to Wellington. Go to Wellington City. Go to the city mission there and talk to the City Missioner Murray Edridge. Go and talk to him about the impact he’s seeing on Wellington City with the rise in unemployment, the rise in homelessness, and maybe get some perception and some humility, and be connected to your communities. Again, I think it is a travesty of our society when I go to a homeless kitchen and I see a 23-year-old girl, who was in the same class as my daughter, be homeless.

Hon Judith Collins: Where were her parents?

Hon BARBARA EDMONDS: I hear the Minister say, “Where were her parents?” but this is the thing—life is complicated. If you stay connected with your community, you’ll be able to understand the complications of being a human being. I’m not going to pass judgment on that 23-year-old. Instead, my job is to be able to help her, to be her voice, and to support a bill that will, hopefully, bring a dollar extra for our families.

Mr Speaker, thank you. This bill will help provide people $6,240 more a year. We’ve increased both the eligibility and the amount of money that people will receive. We’ve just heard from the Opposition that some of their amendments have said, basically, “Let’s do more and more—even than what we’re doing now.” Yet they voted the first one down. They say, “Shame”, but they’re going to support today’s amendment. They’re trying to have their cake and eat it too. I commend this bill to the House.

This is a five-minute call—the Hon Willow-Jean Prime.

What a speech to follow. I have spoken on the earlier readings of this bill in the House, and I have outlined what my concerns are in terms of a missed opportunity that we have here today to make this scheme more accessible to more families. This Government has completely ignored that, and they haven’t taken the time, and they haven’t acknowledged that this is one of the key issues that New Zealanders have—that working parents have—with accessing their scheme.

We know that this bill is an admission that their original policy has been an absolute failure. It’s taken almost two years for this Government to acknowledge that it has been a failure and to come here and fix up their mistakes. The Minister—the Hon Nicola Willis—could have been a little bit more humble in her contribution earlier today, but instead we heard her laughing and dismissing and attacking the other side of the House. This Minister should have been a bit more humble in coming here, accepting that a mistake has been made and that they are doing something to fix it, and open to the further suggestions that this side of the House had suggested that could improve this, but that didn’t happen. Instead, she chose to focus on us and our change in position of now supporting this policy.

Let’s be very clear: Labour is supporting this because these families were promised this money, and they have not received it because the Government overpromised and under-delivered. Let’s look at the statistics. Up to 130,000 people were supposed to benefit from this policy. It’s been a complete failure because only 244 families have received the full amount, and we don’t even know one single family who has received the $250 that they promised. Nicola Willis promised 100,000 families would get FamilyBoost, but only 27,000 families have consistently received it.

We heard in a contribution in the second reading how wonderful it is that $69 million had been paid out, but what that member on the other side of the House failed to mention is that it was expected that $174 million would be paid out—over $100 million short on what New Zealanders were promised. Labour supports this bill because it will result in more families actually receiving cost of living support despite this policy’s abject failure.

When I started, I talked about my concerns that the Government has rushed this through without giving consideration to how they might make this scheme more accessible to busy, working parents, instead giving them even more life admin on top of looking after young people. I spoke to the ECE Parents’ Council Aotearoa yesterday and they talked about this additional life admin that many stressed, working parents are having to do in order to access this. Why could it have not been made simpler? We know that this has been an issue because we see that the IRD are fielding a huge number of phone calls, something like 28,000 phone calls about FamilyBoost, over 20,000 web messages relating to FamilyBoost, and that they’ve spent $13.9 million on administering this with 95 fulltime-equivalents working on it. That is money that could be going directly to families, but instead they’ve made it such a cumbersome process and ignored the request from parents to make this a more simplified process. Why can’t the Minister of Finance do that? Why is she making it harder for families to access something that she promised?

Hon Nicola Willis: But you voted for it.

Hon WILLOW-JEAN PRIME: Oh, look at her! Where is that humility? That’s what I was talking about earlier—absolutely none, absolutely defiant in coming to this House. Kia ora, Mr Speaker.

New Zealand, don’t believe them, don’t believe anything they say. They don’t support this. They don’t support more money for working New Zealanders. Check the Hansard: they voted against it in committee stage every single clause; they don’t support it. If you can take one proof point, look at what Deborah Russell said, look at what Barbara Edmonds said. They said, “We don’t want to extend this. We don’t want to give this to more high-income families.” Well, guess what! Those families: one police officer, one nurse—go and sit on the street and go and talk to them, go call them high-income families and say, “We’re going to take money out of your pocket.” I look forward to seeing a single policy proposal from the Labour Party at some point, but we see nothing.

Thank you, Mr Speaker. I look forward to a 10-minute contribution on this bill, which will be somewhat more fulsome than the Minister’s earlier contribution. Labour supports this bill, the Income Tax (FamilyBoost) Amendment Bill, because it puts money where it’s desperately needed, and families under immense pressure need that support, as the Hon Willow-Jean Prime has said. Even though it is difficult and even though it is administratively burdensome for these families to claim this difficult rebate scheme, there are still families who really need this support. Even though this is not what we would have done—these are interventions which would have been better dealt with through Labour’s policy to extend early childhood education more fulsomely and more universally—this is something that we can get behind, because in the current situation where families are dealing with an affordability crisis that the Government is overseeing, they need some sort of relief, and this is something positive that the Government can do.

It’s biting harder here for most families than other parts of the world because of this Government’s hands-off approach to economic management for them. These are policies that many institutions around the world have urged Governments to take on, particularly targeted relief for families that are struggling with rising costs that they cannot get out of: rising food costs, rising power costs. Having some sort of subsidy designed to put the relief where it is needed most, particularly for families with young children, is sensible economic policy.

To design that policy in a way where it is hard to claim, where it is difficult for people to understand, and where it is not universal is not the advice. This is a policy which has been designed in a way which is harder and more unreasonable for people to claim for. It creates more indignities in an economy which is already in the grips of monopolies, who are quite happy to trick people—to trick people with unfair pricing and to trick people with prices that are not well displayed in stores and so they end up paying more. Online in ticketing it is common for New Zealanders to be paying extra fees on top of what they thought they were paying.

The Government is using that tactic here to introduce more and more barriers for people who need persistence and perseverance to get a fair deal. Why are we happy for New Zealand consumers and these families to need to jump through more and more hoops to get what they deserve from a Government who says that they are helping families and helping with a cost of living crisis when, in fact, the only people getting that are those who are most persistent, who are keeping their receipts, who are keeping their records, and who are the best placed to actually get any of that support. There’s not one family that the Government can point to who are getting the full amount. There are some families out there who are owed that, but they are not claiming it. There are these families who are going by the wayside, and I’ll talk about that a little bit more.

When you look at this kind of policy and you look around the world and you compare it to other jurisdictions, one thing that you would notice is that the rest of the world is picking up, that global inflation has peaked, and yet New Zealand is stuck because the Government’s responses are things like this that don’t get to the people who need it—that don’t address where the pain is being felt most. That’s because the plan doesn’t match up with the promises that were made in the election campaign. Their vision for economic growth is growth for a few at the top. They’re talking tough with people like supermarkets, with people like banks, but they roll over when they are asked for concessions.

The results are clear to the families we are talking about today—the families who are not getting the $250 that they were promised, the families who are walking down the supermarket aisle when they were told at the election that this was a Government that was focused on rising food costs and noticing that things are continuing to go up, those families who are paying more in every power bill. Those families know that they are living through an affordability crisis, which is getting worse and worse under this Government.

The results are also clear for those 19,000 New Zealanders who have lost their job in the building and construction sector. That’s only since this Government took office that there has been this massive downturn in that particular sector. Those are 19,000 people who could have been supporting their families and supporting their children through early childcare and through early education. Those are 19,000 people who were buying a pie and a Coke at their local bakery and putting money into small businesses and into their local economy. None of that is happening and that’s why these families, even if they’re not directly impacted by those job losses, are feeling that this economy is getting worse and worse and it’s getting worse for them.

The Government also chose to only put the minimum wage up by 1.5 percent. A huge number of these families have seen their wages going backwards in real terms this year. As prices rise around them and the cost of butter goes up 40 percent, those families who are minimum wage earners are seeing their real income drop and drop. The affordability of simple things like a dinner of mince on toast is now out of those families’ reach. That has a big impact on children. What the Government should have been doing is focusing on the impact on those kids. This policy is not designed to help those kids because it doesn’t get to all of the kids. As my colleague the Hon Deborah Russell said, a more universal policy—

Hon Nicola Willis: What, so you want the really, really rich people’s kids to get it? Where’s your socialism now?

ARENA WILLIAMS: —would have dealt with the Māori and Pacific members who that member’s—who is heckling me—own policy documents show are missing out on being able to claim this policy. It should have been in their hands and it should have been a better-designed policy that really got to them and gave them some sense of relief in this affordability crisis.

Nothing in FamilyBoost helps those families who know that this is a problem and that also they are living through an economy where larger and larger corporate entities own more and more things, and therefore they are paying more and they are also dealing with the indignities of being tricked into paying higher prices that they didn’t even expect. There’s nothing in this to actually address the problem of continuing affordability problems for those families.

It’s also getting sucked up. I mean, this is a good policy that we need to offer these families some relief for, but it’s getting sucked up into their rising costs. When you have food prices that are up 5 percent, fruit and vegetables that are up 9 percent, meat up 9.1 percent, cheese up 14 percent, and power bills up 11 percent, the Government might like to laugh it off, but that is having exactly the kind of impact on these families that sees them working harder to stay in the same place. This is a policy that will still see those families working harder but feeling as if they are living a life which is worse than it was two years ago or, as the Minister would like to say, 22 months ago. The difference isn’t relative for these families; the difference is that they are working harder and they’re not earning as much. This Government has made choices which mean that they have lost their jobs and they have lost their salary increases that they otherwise could have expected.

This bill is meant to be the answer to that. They told New Zealanders that they would get up to $250 a fortnight in relief, and $150 of it would come from this policy, but they cannot show us one family who are receiving that. That is not relief; that is the same logic of those companies that are charging New Zealanders more than they expect to pay and those companies who are operating in monopolistic markets where they are making excessive profits from what their reasonable costs are. That is the same logic where you make it harder and harder for people to get a fair go, and easier and easier for those people who are restricting their quality of life to get away with it. It’s not logic which lets anyone live a dignified life and it’s not the way you would design an economy where people feel like and are really getting ahead.

What’s worse—we’ve talked about this—the design of this policy is cumbersome and, frankly, ridiculous. Families keeping every childcare receipt, feeding them through the Inland Revenue Department, and then waiting, when the alternative was Labour’s policy, which made this available to them without doing that. Well, there’s no wonder that only 27,000 families have managed to get any payments. Families being busy with kids is something that we all know is true, and it shouldn’t be the case that exactly those people who are the time-poorest of any generation in New Zealand are the people who should be encumbered with this sort of administration. It’s not fair on those families and they know it too. This is the way to design a policy if you were setting out to make it something that didn’t pay out to these families—that is the way you would do it.

This sense of indignity that people feel, the sense of being tricked, is not something that this Government will get away with for long. When people feel like they are being laughed at because of rising prices and their wages are not keeping up, they know that there is a problem. No matter how much the Government tries to brush it off, no matter how much the Government tries to blame other people, tries to blame those families, tries to blame the Labour Party, tries to blame the small businesses who are on-charging for surcharges, no matter how tough the Government talks, those families who are finding it harder and harder know that things are getting worse and they have got worse since the election. This Government is making the cost of living crisis worse for families with their decisions.

Hon James Meager: Big fat lie!

ARENA WILLIAMS: They are tinkering around the edges with competition policy without really addressing the true cause of the issues that families are facing, and they are making things worse.

Before I call the next member, Mr Meager, you heard the Speaker before. There will be a ruling on the use of that word. Refrain in the meantime.

It gives me pleasure to rise to give this, the final speech, as we mark the passage into law of the Income Tax (FamilyBoost) Amendment Bill. The changes we are voting for as a Parliament today mean that tens of thousands of families with very young children will be financially, materially, better off.

I do want to acknowledge the important change that has happened with this bill, which is that the Labour Party, who previously opposed the significant FamilyBoost scheme to support tens of thousands of Kiwi families, have reversed that position and are now going to support this important policy from the coalition Government. Now, it may be the case that their speeches on the matter have been more focused on critique than support, but what we know counts is their votes, and they are voting for it, therefore endorsing this policy.

There is no wonder why, because households will get much larger FamilyBoost rebates on the early childhood education (ECE) fees they pay, as a result of the passage of this legislation. While it is just a short bill, it will have a big impact for many people because rebates are being increased from 25 percent to 40 percent of fees for eligible families. That means, for example—and a very practical and relevant example—that a family with early childhood fees of $200 a week could now have their weekly FamilyBoost payment go from $50 a week to $80 a week. That is meaningful. That is a meaningful amount of money, which will certainly make a difference to the household budgets of many parents with young kids. In that example, that family would receive a quarterly payment after three months of attending early childhood education each quarter, and then, over the course of the year, those payments would have added up to $4,000—$4,000, which previously, if we were not amending the legislation as we are today, would have been $2,500. That is a significant difference to families with children, being delivered by this Government. We know, very much, that a lot of families are still doing it tough, and so we are pleased that these changes will help many households deal with the increased costs that come with having young children.

In addition, it is relevant that those with household incomes of up to $229,000 will now be eligible for the FamilyBoost scheme. This broadens the net of families who will benefit from this policy. It doesn’t change the fact however, that FamilyBoost remains focused on low to middle income households—unashamedly so.

I was surprised by Arena Williams’ remarks that there were some children who would not be eligible for the policy. That is the case. Children in very high-income households who already receive subsidies through the early childhood education system, through the education system, will not qualify for this rebate. That is a surprising position from the Labour Party that they would wish to see those children in very high-income families getting more support.

But what this scheme is is targeted, so those families with slightly higher incomes will receive, at least, partial FamilyBoost payments as a result of this legislation. As with Working for Families, we have introduced an abatement rate, with the idea that we shouldn’t abruptly terminate entitlement when a household gets to a certain income; we should gradually reduce payments as incomes rise. Yes, there’s benefit for some households further up the income curve, but the focus of the scheme remains on those with lower incomes.

As has been discussed throughout this debate, FamilyBoost is a quarterly scheme. This reflects the limitations that IRD face in terms of their ability to make payments more regularly and assess payments more regularly. The changes will apply for fees paid from 1 July this year. Good news is, if there’s anyone listening to this debate today with children in early childhood education, ask your ECE service for an invoice for the last three months and you can apply for this rebate on 1 October. That should be the case. If you previously qualified for the scheme, you’ll probably get more out of it now, but even if you haven’t previously qualified, apply now because many thousands more families are now eligible for the scheme.

If there’s one thing that members in this House can do to make their votes real—and I urge Labour Party members opposite to take this course—it is to go out and remind all of the families in your constituencies and the communities that you care about to make sure they get the money that is owed to them by applying for their FamilyBoost rebate. I encourage households who think they may be eligible to register for FamilyBoost on the Inland Revenue website, and I can assure them that families who have done so tell us that once they have their simple invoice from their early childhood service, it is simple to upload it and apply. In fact, it only takes a few minutes.

I thank members for their contribution to these debates, and I thank the policy officials and drafters for their work on this bill. They have been responsive in ensuring that the Government’s intention to ensure that the funding that we have appropriated for the purpose of supporting families with young children goes to families with young children. With these tweaks we are making today, the funds that we budgeted for in 2024 will reach the people they are intended for. They will get into the bank accounts, back pockets, and household budgets of families with young kids: a time in life that I certainly recall and that many in this House are still experiencing, that is beset by pressures from all sides, not the least of which are financial.

Those people are very much in the minds of this Government because one of the things I want us to reflect on is that parents with young kids are doing two jobs. One job they’re often doing is going out and earning an income for their household to pay for the nappies, to pay for the food, to pay for the house, to pay for the activities; but the other work they are doing, which is so very important to our society, to our economy, to the New Zealand that we want, is they are parenting their children—and parenting their children well is something that we want to acknowledge. With these FamilyBoost payments, we are ensuring that they get just a little more support.

This is a day of rare and—I have to say, Mr Speaker—unexpected bipartisanship. I did not expect, following the ongoing quibbling we’ve heard from the Labour Party about whether or not these tens of thousands of families deserved this income, that Labour would come down to the House today and support the FamilyBoost scheme and vote for it. But they have, and that is the right course of action and I look forward to them continuing to support it into the future, doing their utmost to promote it and reversing their previous course, which was to deny the support for families with young kids.

It’s a great policy. It gets cash to people who need it. It gets it to them directly. This one is for the kids. I commend it to the House.