Social Security (Working for Families) Amendment Bill, Taxation (Working for Families) Bill

I move, That the Social Security (Working for Families) Amendment Bill and the Taxation (Working for Families) Bill be now read a third time. Having listened carefully to the debate, I would like to take my few minutes at the end of this to summarise the excellent provisions in the bills, as they provide more support to low and middleincome families with children, and go on to address some of the other points that were raised during the debate. Families will be benefiting from the Working for Families package this year. On 1 October this year, housing will become more affordable. On 4 October this year, the thresholds in the areas of childcare subsidies and out-of-school care rates will be increased. We will see Work and Income New Zealand offering childcare to coordinators around the country to ensure that people access what they need. Contrary to what was being said here, people can choose whatever early childhood or quality childcare centre they want to.

On 1 April next year family support, unsupported child’s benefit—the orphans benefit—will be increased to some 260,000 New Zealand families, improving their weekly income by over $32 a week alone. That will happen as from 1 April next year. There will be changes to all of our systems to ensure that their value no longer erodes. The number of accommodation supplement areas will be increased from three to four, and the amount of accommodation supplement to people will rise. On 3 October next year, childcare and out-of-school care rates will increase again, assisting 28,000 families. On 1 October 2006 the new in-work payment will come in, providing $60 per week, $15 for each child in larger families. It will replace the child tax credit and ensure that work pays. Family income assistance abatement thresholds are simplified and made more generous on 1 April 2006. On 1 April 2007, family support increases once again, and the legislation locks in increases in all of those areas.

We listened carefully to Peter Brown. Although we could not accommodate everything he said, we did move on the invalids benefit rules. We appreciate his support in putting that forward, and we would like to support him in doing so.

I record now my thanks to all of the parties that have stood up in this House for low and middle income families with children who want to go to work to earn a dollar. They are the Labour Party, the Progressives, United Future New Zealand, the Greens, and New Zealand First. That is an overwhelming amount of support for making work pay for parents as they move off the benefit. We will increase the family income, address accommodation affordability, place childcare assistance on a secure footing, and simplify our social security system.

There are two things that are being supported here today that are absolutely the foundation of why I came into this House and why these bills came into the House. The first is social justice. We believe in social justice. That is why we are here. Today we have spread the money that is available, because of a growing economy, across those families that have worked hard and deserve to share in the prosperity of this country. That is justice.

The second thing we have stood for is social development. We have spread opportunity. We see in the paper today that people who have said that they could not go to work, now say that their dream has come true. They can now go to work, earn enough, look after their children, make a difference to their family, and get on with their lives. That is what social development is about. Those are the two things that we stand for on this side of the debate; and on the other side, predictably, disappointingly ACT and National have failed to stand up for kids and jobs. That is hard to fathom.

I look at the lacklustre, pathetic performance of the National Opposition in particular. It knows that these measures are good and will make a genuine difference to 300,000 families in this country. National has put up a token argument. It has said that it might change things, and will not repeal things, and will do a little tinkering. New Zealanders know that the National Party will say that it will muck around with this package, but it knows good policy when it sees it. I look forward, as all my colleagues do, to the day we can get up on a platform and hear them go on and on about tax cuts as their only policy, against the fact that a family earning $55,000 a year, with four children, would gain only $39 from its tax cuts, as long as it went down to 20 percent, whereas, under this package, that same family will get $70 from 1 April next year, building up to $110 in April 2006, and $150 from 1 April 2007.

I am begging for the opportunity to stand alongside a National Party person to listen to him or her say that that family will get less. National will cut that family’s health, education, and all the other things that that family needs to be able to make ends meet. We heard National and ACT members say that if people take family support they will become beneficiaries. The bulk of the support comes through the family income assistance system. People will not go on to welfare. They will be rewarded and supported for having children and for going to work. This is about kids and jobs. It is not about the privileged few. It is not about them. It is about the majority of New Zealanders, kids, and jobs. Kids and jobs are what we are on about here.

I thank Sue Bradford, Judy Turner, Barbara Stewart, and the other members from different parties who have stood up in the House to give thoughtful contributions. They have not just stood up, as members of the National Party and ACT have done, to try to fill in the time so that they do not have to worry about being told that they collapsed in front of this legislation. This is a collapse. National and ACT have no arguments. They have had hardly anybody down here. They have had nothing to say, but other people have come to the House to make thoughtful contributions to this debate.

I, like those thoughtful people, want to see working New Zealanders get on with their lives. I want them to share in prosperity. I want their kids to be able to grow up to be secure young people and to take this country forward. I want them to share in the good things that we have to offer, and this Government will make sure that we have more and more to offer.

Finally, I thank the officials from the Ministry of Social Development, the Inland Revenue Department, and Treasury who have worked tirelessly to make this a real success for this country. They have worked tirelessly, because they know that this will make a difference. They have put their hearts and souls in it. It is a very, very important day for them as well. It is hard to pick out individuals. In particular, I thank Sue Mackwell from the Ministry of Social Development, Mike Nutsford from the Inland Revenue Department, and Paul Clarke from Treasury, for their particular efforts in their leadership of large teams of people who have done a large amount of work.

Finally, it has been a pleasure to work through this with my colleague Dr Michael Cullen because of three things. He brings to these issues a level of intelligence and commitment to social justice that makes him one of the best Treasurers, if not the best Treasurer, we have ever had in this country. I thank him for delivering this Budget.

After that patronising tirade, listeners will expect that this legislation will fix all the problems currently out there in our communities, all the problems that currently face New Zealand as we plan our future. The only future direction that this bill takes us towards is the dole queue and entrenched welfare dependence in this country. Dr Cullen had a once-in-a-lifetime opportunity to make a big change to this country. After 5 years of overtaxation, he had an opportunity to invest that money in something that would grow the economy and close the gap between living standards here in New Zealand and in Australia, and he blew it. He did not do that. I read from the Otago Daily Times: “… Michael Cullen may have squandered the opportunity to leave a lasting mark on the New Zealand economy and eventually attain legendary status in Labour Party history.” Michael Cullen had a major opportunity to make some big changes, but he has not done it.

By the Government’s own admission, only one in five households will benefit from this legislation. Four out of five households will get absolutely nothing. Four out of five households will look at the changes that are being made and realise that they will get absolutely nothing. While that Government continues to patronise New Zealanders and expect them to be grateful for getting their own money back, that Government will miss the point. New Zealanders do not feel grateful for getting handouts. New Zealanders do not feel grateful for getting back their own money that they earned in the first place.

There is no vision for New Zealand in making the middle classes dependent on welfare. Michael Cullen is proud that families who earn $80,000 will be dependent on handouts. Michael Joseph Savage will be rolling in his grave. When he first brought in the welfare State he understood that it was supposed to be for people who were genuinely in need, and people were supposed to do as much as they could to help themselves. The thought that handouts are being given to families who earn $80,000 will upset not only Michael Joseph Savage up there but also Peter Fraser, who, interestingly, was concerned that many people thought the welfare State was an armchair ride to prosperity. Well, we know where that armchair ride is to; it is to poverty and it is to entrenched welfare dependence. This Government will look back at this Budget and see it as a watershed for welfare dependence in this country.

We have seen no vision. There is nothing in here that will contribute to growth, nothing that will allow New Zealand families to try to earn the $175 extra a week that they would get if they worked in Australia. No wonder our doctors are leaving. No wonder our nurses look across the ditch and see opportunities over there. Nothing in this legislation will try to make New Zealand a better place for those people. The young married couple who are just starting out, and are putting off having children so that they can pay their mortgage and pay their own way, get nothing from this legislation. The superannuitant gets nothing from it. I had a call to my office today from a superannuitant who cares for his son who is intellectually disabled. He said: “I resent that my taxes are going to families who do not work in the first place.” If members look at this legislation they will see that most of the families who benefit are already dependent on welfare. The original bill was called the Future Directions (Working for Families) Bill, but how can that be so when four out of five New Zealand households get absolutely nothing?

New Zealanders have worked that out. New Zealanders have realised it. They will not be sucked in by this Government, which expects them to be thankful for getting handouts, to be thankful for getting back their own money that they earned in the first place. That is why this legislation and this Budget will backfire on this Government—because New Zealanders are not thick. They understand that this is a lolly-scramble. They also understand that this is not about solving problems out there in the community. This is about buying votes. This is about winning elections. If the Government is not cynically attempting to win votes, then why do these provisions not start immediately? No, most of the significant benefits kick in after 2007. This is probably the most cynical bribe I have seen in, certainly, my short lifetime. This legislation is about buying votes; it is not about solving problems within our community. That is why the Otago Daily Times called this Budget the “Budget on the never-never”. It is a lolly-scramble all right, but people get their lollies 3 years down the track.

I think New Zealanders will see through that bribe. They will see that this is not a future direction for their community that they want. The original legislation had in its title the words “Future Directions”; I think that is laughable. What sort of future does this legislation build for our country? What does it do to make it easier for people to set up a small business? Where are the growth aspirations in this Budget and in this legislation? They are not there. This is totally about income redistribution. This is not about growing a pie; this is about redistributing it. In the long term, that means that New Zealand loses the chance to do something great with the overtaxation that the Minister of Finance has extracted.

The Minister has taken funding from New Zealand families over a period of years. Sure, the Government has announced hip operations and knee replacements, but that is no consolation to those New Zealanders who have been waiting for the last 5 years for these sorts of changes. The timing of all of this is for a reason. Although Michael Cullen says that Budgets are not put in place to win votes, I think New Zealanders are not stupid; they can see that this is a cynical attempt to win their votes. If it is not, then why do these provisions not kick in now? New Zealand First put forward amendments challenging this Government to put its money where its mouth is. If the Government is serious about these changes, why could they not start this year? The Government had no answer to that.

People seldom feel good about receiving support from the State. It is adding insult to injury to overtax people and place them in a position of dependency just to get back their own money in order to get by. I can see why the Waihi family is not very happy about what has been done. It is a sad comment on this country if families who earn $55,000 doing jobs that we look up to—teachers, policemen, etc—cannot get by. That will be Michael Cullen’s legacy with this Budget—further welfare dependence entrenched into our community. There is no vision for our country in making middle-income New Zealanders more dependent on the State. That is no vision for our country.

That side of the House should be embarrassed that that is the situation it is putting New Zealanders in. This Government had a once-in-a-lifetime opportunity to invest that money into growth, into something that would make a huge difference to New Zealanders’ lives. What we have here is something that four out of five New Zealand households can look at and say: “It doesn’t do anything for me.” That demonstrates that this Budget and this legislation are short-sighted. This is about responding to Labour Party supporters and saying: “Here you go, guys; here’s your payback.” New Zealanders will see through this cruel hoax. They can understand it. The Government is hacked off that people are not very grateful. People can see through the cruel hoax.

My colleague Steve Maharey referred to the opposition to this legislation earlier in the debate as lacklustre. Well, that was a very generous description. The member who has just resumed her seat has taken lacklustre to being an art form. In fact, if was a still-life art form, I think we would describe it as lacklustre on a lean. She was hardly able to hold herself up for the entire duration of her speech. Frankly, most of us had difficulty staying awake, as well.

The Opposition should know by now that just because it is called the Opposition does not mean it has to oppose everything, particularly when it is something that is good. There is nothing about providing working families with financial support, better assistance through the accommodation supplement, and better assistance with childcare that is worthy of their being voted against, let alone spoken against. All of those things should be supported. But it is not surprising that we now have a demonstration of the pure ideology of the extremists within the National Party. Lockwood Smith, Katherine Rich, and Maurice Williamson are, clearly, the extreme right wing of the National Party. They are the only people who are able to rise in this debate and oppose this legislation.

Katherine Rich seems to resent working families in New Zealand. She pays her taxes, so it should all go back to her! She seems to be the only hard-working mother in the country! I am sure she was too proud to take paid parental leave from the Government; that would have been an insult to her independence. I am sure she is too proud to take 3 weeks’ paid holiday. I am sure she is too proud to take a salary, frankly. It would be so demeaning to earn a salary; she would much rather be totally independent. Well, I say to Mrs Rich that she is not the only hard-working mother in this country, and I am very, very pleased that many others benefit from the legislation we are going to pass later on today.

I particularly look forward to the National Party campaigning during the election period against this legislation. I want to go around the country listening to Katherine Rich explain to a two-parent, one-income family with four children that earns $55,000 that this legislation is wrong. This legislation will give them $70 from 1 April next year, $110 from 2006, and $150 from the year after. I would like to hear Katherine Rich tell those people that that is wrong, and that it would be much better to give them a 20 percent tax rate, which would give them $39 a week. I would like Mrs Rich to explain that, and I hope that she explains that the reason she supports that tax cut, instead of our social development proposals in this legislation, is that she works hard and she should get back more of her taxes. That is what that member said to members earlier today.

It is a great honour to be part of this debate and to be in one of the many parties in this Parliament that are supporting the legislation to have come from the Future Directions (Working for Families) Bill. I want to acknowledge the Labour-Progressive team here, but I also acknowledge that we are being supported on this legislation by United Future, the Green Party, and New Zealand First. That is quite unusual, and it is a particularly proud moment for all members of New Zealand First for them to be able to say: “We looked at the legislation, we understood the intent, and we are going to support it.” The members of all those parties can now go around the country and say: “We back working families.”

We support social justice. We say that the many hard-working families around New Zealand deserve ongoing support, and when our financial circumstances mean we can increase that support, we should do so. Working families deserve support. They have worked hard, and they are getting that additional support in this legislation. The issue of social development is one that, clearly, has totally bypassed the National Party and ACT. They would not understand the term, so it is no wonder they oppose its implementation in this legislation. But social development does make a real difference to people’s independence, their self-esteem, and their ability to earn their own way and care for their families. We should never underestimate the value that that contribution makes in our society. It provides the opportunity for people to support themselves and their families in dignity.

I end by endorsing the comments Steve Maharey made in relation to the officials from the Ministry of Social Development, the Inland Revenue Department, and Treasury. They are well worthy of commendation during the final stages of this legislation, because their work has been huge, and they have applied their considerable intelligence consistently over many months to produce this legislation. Steve Maharey and Michael Cullen also deserve particular mention. To have in our caucus two men who provide such intellectual rigour, vision, determination, and commitment to this legislation is something I am very proud of. I was going to say “young men” but I think that would be a slight exaggeration. But I am very proud to be part of the team they lead.

New Zealand First will support this bill—

💬 Government Members: Good!

Goodness me, I have said only about four words! [Interruption] I hear that I should sit down while I am ahead.

This bill was delivered late to this House, in our view, and we read the aims on the very front page, and thought they were exceedingly good aims and very commendable. How could we not support them? To oppose the Government on this bill would have put us in an impossible position. We had to support this bill. But I need to tell members that we have some real concerns about how things come and go through this House.

We think that a bill of 50 pages, which is quite complicated in parts, should have gone through a more extensive process. We are fearful that there might well be some mistakes in this bill. Indeed, from looking at our amendments, the Minister has picked up a mistake in the bill, which, I am pleased to say, he has recognised and given New Zealand First the credit for pursuing it. But we think there might well be other mistakes. We hope there are not, but we think there might well be others.

It saddens us that this bill will not take effect for quite some time. Indeed, I think the first measure with any meaningful deliverance will not take effect until April next year, so we think this bill could have been put under the scrutiny of a select committee. That way—and maybe Mr Baldock and United Future could listen to this, because they go off on a tangent quite frequently—we could have challenged the statements the Hon Steve Maharey made that there is not the money to pursue this bill any quicker than that. I would have liked to cover that point in depth, because I believe there would be a way around it. I believe that this bill could have been implemented a lot more quickly. I cannot categorically say that, but I believe we should have had the ability to challenge and scrutinise that statement in the select committee.

New Zealand First does not just roll over and accept everything that is put before it. We like to know that there are the nuts and bolts, and we would have preferred that this bill go to the select committee. There is time enough—plenty of time—for it to be referred to a select committee, be examined, and, if necessary, come back as it is and be implemented in the time frame stipulated in the bill. But I have strong suspicion that had it gone to a select committee, and had our members had a fair opportunity to examine it in detail, we would have been able to tell the Government how to implement these measures more quickly. We would have been able to tell the Government how to pass on the gains in this bill to families in this country well before April next year, which seems to be an alarmingly long time away.

Too frequently quite extensive legislation and Supplementary Order Papers come through this House at the last minute and we do not get the chance to examine or scrutinise them in full. Nevertheless, the bill is here. We hope and pray that the Government has got it right. I would like to say with confidence that it has got it right. I certainly think the direction is right and the aims are very worthwhile, but I do not know whether the Government has got the nuts and bolts right. We have scrutinised this legislation as best we can in the time frame under urgency. There is a lot of pressure on MPs to examine a bill of some depth in a relatively short time and come up with the right answers. So we hope the background work has been done. We hope that it all sticks together, not only for the Government’s sake—well, I am not too worried about the Government, to be honest—but for the people of New Zealand who will benefit from this. That is where our principal concern is.

In summary, the aims are worthwhile, but the process is wrong and ill considered, and I believe that, to some degree, this has treated Parliament with some contempt—particularly after last Monday, when members all gathered in this House and told the nation on live television how important Parliament is and what it does for the people of this country. This bill should have gone through the proper process.

However, I am pleased to see some more money in the pockets of family people in this country, as against sitting in Michael Cullen’s chest—not his physical chest, but the little chest he sits on at night when he goes into his office, counts all those gold coins, and says: “Oh, another billion here!”. We would prefer to see some of that money in the pockets of family members in New Zealand. We know there are people out there suffering. We know there are people out there who need a helping hand, and we know that this bill will eventually help them quite some way—if the Government has done its homework correctly.

As I said, the legislation should have gone through the correct process. We would have been able to challenge the assertions of Steve Maharey when he said the Government could not deliver any more promptly because of money problems. We are not totally convinced by that argument; nevertheless we will support this bill, and we hope that families and New Zealanders are better off in the long run for it.

Yesterday afternoon when the Budget was announced, I felt genuinely moved and gratified that at last this Labour Government was doing something that would directly go some way towards alleviating endemic child poverty. Overall, the Green Party has welcomed—indeed, applauded—the Working for Families package, which at least partially redresses the structural imbalance between rich and poor that has developed over the last 20 years.

However, there are a few issues of concern lurking beneath the socially benevolent exterior of the 2004 Budget. Those are issues that the bill in front of us today actually brings to the fore.

First of all, and most alarmingly, upon reading the fine detail of the Future Directions (Working for Families) Bill, some of us were somewhat startled to discover that suddenly and without warning the special benefit is to be disestablished and replaced with a much more limited form of assistance called temporary additional support. Now, to those who are happily not familiar with the labyrinthine intricacies in New Zealand’s income support system, that will not mean much, if anything at all. But for those who depend on that very system for enough money to live on, the special benefit is, unfortunately, an unavoidable tool of survival.

In an ideal world, the Green Party would like to see that special benefit, and the whole complex range of third-tier assistance, abolished completely and immediately—and we would welcome such moves to do that from the Government. The 35 or so forms of benefit and allowance that have grown up over the years are a nightmare to administer. They soak up huge administrative costs, including salaries, which could be put to a much more productive use elsewhere in the economy, or even within the Work and Income system—for example, in providing a lot more vocational support for unemployed people.

The special benefit also has a particularly difficult history, because it has been administered so ineffectually and with such random application between geographical areas. As a result of that, beneficiary advocacy groups in the last couple of years have carried out what they call special benefit impacts in Rotorua, Hawke’s Bay, and the East Coast, in an effort to get Work and Income to pay people what they were actually entitled to in the first place in those areas that suffered particular discrimination. Those impacts have had a significant effect in encouraging local departments to improve their attitudes towards beneficiary entitlements. The Government is to be commended for the work it has done in trying to reduce some of the greater inequities and stupidities in special benefit administration, for being prepared up till now to budget more for special benefits, and for having an overarching policy that says all beneficiaries should actually be able to access their full entitlements—quite a novel notion, really, in the history of social welfare in our generation.

However, what we are seeing in this bill in front of us this afternoon overturns all of that. The effect of this bill is to remove the special benefit and replace it partially with something called temporary additional support. While that sounds fine on the surface, in fact what the Government has not spelt out in any of its great Budget promotion in the last 24 hours is that this new allowance will be much lower and far more restricted in its application than a special benefit. When I introduced an amendment during the Committee stage this morning to attempt to reverse that aspect of the bill, I was probably naively surprised when the Government suddenly placed a fiscal veto on my innocent little amendment, alerting me to the fact that the financial implications of what was going on were probably a lot worse than I had suspected. I then turned, rather belatedly, to the estimates themselves, to discover that the Government will be saving $7 million on the special benefit in 2004, $45 million in 2005, $57 million in 2006, and $91 million in 2007.

While there will be some compensation for some future beneficiaries in the fact that those with children will gain through the new family support regime, and while some people will get help through the additional temporary support allowance, the savings I have just outlined go to show that, in fact, the Government plans to gain a substantial amount overall from cutting the special benefit. The people who will suffer particularly are most likely to be beneficiaries without children and those who have particular high living and medical costs. The Government will save a great deal of money from scrapping that benefit, at the expense of a lot of people who rely on the temporary support it affords them in otherwise desperate situations.

It is particularly disturbing that the Government is rushing a change of this significance through under urgency, and under the cover of a bill that, overall, seeks to improve things for families and the poor. That is the sort of administrative change and benefit cut that should have been subjected to the normal select committee process, where all concerned groups and individuals could have had a chance to analyse the bill closely and make their views heard. I just hope that the Government implements its further promised reforms of the benefit system with enough alacrity, and with enough compassion, to ensure that the kinds of social and personal disasters that could result from what it is doing today, will not in the end eventuate.

Apart from the matter of the abolition of the special benefit, the Green Party has some broader underpinning concerns about the way this new legislation will continue to bed in and extend the discrimination between the families of beneficiaries and the families of those in paid work. Beneficiary families gain only very modest amounts from changes made in the legislation, and the new in-work allowance is directly aimed at encouraging beneficiary parents out of their homes and into the paid workforce. I have no problems with anything that can be done to assist people into the paid workforce, but what we should not be doing as a society is saying that, firstly, somehow the children of those people should be punished for the situation their parents find themselves in, and, secondly, that somehow people should be forced into getting a job—of any kind, at any cost. People should have the choice of staying home with their children when those children are young, and should not have the kind of pressure put on them by a society that says paid work is automatically and intrinsically worth more than caring for one’s children.

A third area of concern, which New Zealand First brought up in this debate, is the timing of the proposed changes. We were happy to support New Zealand First’s amendments—which were also met with a fiscal veto—that changed the timing so that increases to family assistance and the rest of the changes could be brought in a lot more quickly. Of course, the Government says that it cannot afford that. But we can see the Budget the Government is dealing with, and we say that if the Government were serious about supporting families now—and it acknowledges for the first time that there is serious child poverty in this country—then those changes should have been brought in a lot sooner. Through the media in the last 24 hours I think we have seen some of the people who have been really upset to have heard, first of all, the promises that Dr Cullen made yesterday afternoon, and then to have realised that the impact of those promises—the benefits they will gain, and whether they will mean a few dollars or a lot of dollars—are not really going to hit in for at least a year, if not 2, 3, or 4 years.

A further area of concern is that area around the accommodation supplement. The Government is putting a lot of hope into the fact that the accommodation supplement will increase for some people. We see that in the long term the accommodation supplement is not the solution. It is a subsidy to landlords and employers, and the Government should be putting a lot more focus on extending social housing stock.

But, overall—and in some ways I am sorry to have been so negative in this final speech on this bill—the Green Party is delighted with the direction the Government is taking in this legislation. We would also like to acknowledge the role that United Future played in putting it together. We are delighted that Labour is helping families overall, and that it is finally making an overt commitment to ending child poverty, and that is long overdue, so we congratulate it on the overall direction it is taking. We will vote for the bill.

ACT New Zealand will be opposing this legislation, so the Minister will not be disappointed. I should point out that we oppose this legislation for several reasons, but the first one that is certainly worthy of note is the way in which the Government, as it has several times during this session of Parliament, is showing yet again its contempt for the democratic process. Despite the staggered commencement dates that the Government has put forward for the introduction of many parts of this legislation, it has insisted on having this bill heard through all its stages in urgency. There will be no select committee process, no public scrutiny, and no time for the Opposition to look carefully at the pitfalls in this legislation that the Government obviously is not the least bit interested in. The Government is exhibiting yet again its “don’t worry New Zealand, we know best, just do as we tell you” attitude. This is wrong. The New Zealand public knows it is wrong and will vote accordingly at the next election.

Our other concerns are of a much more fundamental nature. We should completely ignore Mr Maharey’s very clever words about social justice and social development. In fact, we should point out that this legislation is about social engineering. It is about engineering the social fabric of New Zealand society. At the end of the day this legislation will mean that more New Zealand families will be dependent on the State. This legislation is about welfare dependency. It is about vote buying.

This Labour Government is very happy to have New Zealanders dependent on the State. When people are dependent on the State they are not about to vote for somebody else. That is what the legislation is all about—welfare dependency. Time and time again ACT New Zealand has railed against welfare dependency. There are much better ways of going about promoting families in New Zealand society, progressing New Zealand, and ensuring that we have strong economic growth. This Budget is a tax-and-spend Budget, and the legislation to support it will not achieve any of the visions that ACT has for New Zealand’s future.

It is worth taking a moment or two to look at some of the comments that the Minister in charge of the legislation, Mr Maharey, made when he was debating it. He said that New Zealanders are excited about it. I look around this House and I do not see a great deal of excitement. The place where I see the least excitement is on the Government benches. There is not a great deal of excitement in the press gallery. Where have the journalists gone? They know what the legislation is about and they will be reporting that. Then there is the Holmes show poll. Are New Zealanders out in the provinces excited about this legislation? No. In one newspaper report today about this legislation one man said: “This is not enough.” In fact, there are many reports of a similar nature. That is the trouble with welfare dependency in this country—there is never enough. When people are dependent on the Government, when they have their hands out expecting money to come to them, there is never enough.

💬 Hon Member: And they’re never grateful, either.

That is entirely right. We need to make people responsible for themselves. We need to encourage people to be responsible for themselves. People can spend their own money more wisely than the Government can on their behalf.

New Zealand First members made some very interesting comments during the debating process. Mr Maharey was nodding his agreement and shouting out in support of them at one point. They said that this bill would help people to get into work. But, not surprisingly, not one person stood up in the debate and said how that would happen. The reason for that is simple—there is not an answer. How will anything in this legislation help people get into work? It will not. It does not help business, which creates the wealth in the country that would help people get into work.

Mr Cullen stood up yesterday and said that there is a $6 billion surplus. I agree with the National Party member Katherine Rich that Mr Cullen had a golden opportunity yesterday that he turned down. It would have cost the Government $5.5 billion of that $6 billion surplus to implement a 20 percent flat tax rate.

💬 Hon Dr Michael Cullen: Oh!

Dr Cullen groans because he knows that it is correct. That 20 percent flat tax rate would include personal and company tax rates—a 20c in the dollar flat tax rate. Imagine the business that would come back to New Zealand if our tax rate was 10c in the dollar less than Australia’s. Business would flow back to this country, there would be more jobs than we knew what to do with, and families would flourish and prosper. This legislation, perhaps more than any other legislation we have debated in the time I have been in the New Zealand Parliament, shows the differences in attitudes to the fabric of New Zealand society.

💬 Government Members: Yes!

I am glad that Government members agree with me. In fact, it was the Hon Damien O’Connor who first pointed this out. We have a Labour Government that likes telling people how to live their lives. It is happy to assist people in doing that.

💬 Hon Richard Prebble: Socially develop them.

The Government socially develops them. It hands out money so that people become dependent on the State. Why does the Labour Government want State dependency? It is so that the people who are dependent on it will vote for it. Government members are in trouble and they know it.

However, on this side of the House we know what it is to have responsibility for oneself and for one’s actions. We know how that benefits people. We know the value of having a safety net, not a safety hammock that traps so many people in it that one cannot tell the needy from those who are capable of taking responsibility for themselves, looking after themselves, working for themselves, and providing for their own families. This country needs a safety net, not a safety hammock. All that this Budget and this legislation will achieve for the 300,000 families it is making dependent on the State is a safety hammock. It is trapping them further and further into dependency.

If we look briefly at the main objectives of the legislation, firstly, it is to make work pay for parents who move off benefits into work and to increase family income. Let me tell members opposite that lower taxes would have done that in a much more fiscally responsible way and in a way that is much more responsible for individuals. It was interesting to watch some of the television commentators yesterday discussing the legislation as the provisions in the Budget unfolded. In fact Chris Trotter has some very interesting comments to make. He said that he could not really work out what the details of the Budget were. He said that the most interesting point—and this is very pertinent—is that people must apply for every different step of the provisions within the legislation. They will not. I predict that approximately 20 percent of people will find the system cumbersome, complicated, and will have a great deal of difficulty applying for the provisions. That may be what the Government wants. It does not want people to cost it more money. A tax cut would automatically have gone to every working family in this country.

The other benefit of tax cuts, of course, is that they do not cost the country a huge amount of money. Every time we churn money through Government departments—and I am talking in an administrative sense—we lose approximately 10 percent at every step. We have people working, the money goes from tax to social security, and 10 percent is lost at every step.

For all the talk about individuals and beneficiaries, we seem to forget that this package is about assisting families, and that is why United Future is supporting this bill. Families are worthy of support. The decision to start a family involves a degree of financial sacrifice, and some would say that would-be parents have to take responsibility for the decision to start a family.

United Future believes that families are the cornerstone of our communities and our nation, and they need to be recognised and supported. If one parent decides to stay at home and look after children, then there is a potential loss of income. If both parents go out to work, then there are childcare costs. In clinical, economic terms, with children comes the arrival of non-productive yet highly consumptive members of the household. That is why the key mechanisms of this package put the focus fairly and squarely on children. Both family support and the in-work payment weigh joint income against the number of dependent children.

That said, we have expressed reservations about the fact that the key delivery mechanisms for this package come in a form that would appear to families to be, for all intents and purposes, like a benefit. In general, we would prefer that working families did not have to receive assistance in the form of a weekly payment alongside their wages but, rather, indirectly as more money in their pay packets, or as a lump sum at the close of a tax year that could be used to offset large expenses.

But we recognise that it would be more difficult, although not impossible, to use generalised tax cuts in such a way that recognises the different needs of different families, as they all come in different shapes and sizes. A cut to the 19.5 percent rate would be welcomed by all families and individuals alike, but it does not take into account the additional financial constraints faced by families. United Future’s own suggestion of income splitting would assist those families where one parent chooses to stay at home or work only part-time, and would be the perfect complement to this legislation today.

Although not fully comprehensive, the use of family support and the in-work payment as key delivery mechanisms in this legislation do at least recognise the needs of families, so when many elements of the taxation system assess an individual’s income, these are measures that are based on family income. At the end of the day it is worth remembering that they are tax credits, not benefits, and they have been in place in some form for some time.

The increase in eligibility and in the rates for the childcare subsidy also recognise the costs faced by families, as well as the goal of ensuring that all-important pre-school education is accessible to all families. My only regret in that respect is that such measures effectively favour families whose parents both choose to work. This is not to pass a value judgment on this decision, but merely notes that the option of either parent spending some of their working life at home with their children is not supported in a similar way. In the end, such financial implications mean that the choice to do so has become less of a choice and possibly even a luxury, or, as the Minister has said, an ambition.

The other element of this package that United Future finds favour with is the extension of its reach into what might normally be considered middle incomes. The Government’s first instinct in developing this package was to lift the living standards of those families on low incomes, whether or not they were in work. As the fiscal situation has appeared more favourable, we have been very pleased to see that the Government has recognised the increasing hardship of those families that would not consider themselves poor, but are finding it a challenge to get by.

Previously, families earning over $30,000 would have received the message that they were considered too wealthy to get help. Family support for a family with one child extinguished at a combined income of over $30,000, child tax credits disappeared at $33,000-plus, the family tax credit applied only if a family earned less than $18,368, and the parental tax credit starts abating at $33,000. The Government did not provide childcare subsidies to those with an income over $32,240. Yet families that earn over these amounts face impediments that others do not. They may face higher marginal rates of tax at $38,000. They are more likely to have student loans to service, which is just like another tax and takes even more money out of their pay packets. Someone who is earning $50,000 will be $3,000 or $4,000 worse off a year, thanks to a student loan repayment. These aspirational families are also more likely to want to buy a home, and that is no mean feat in today’s buoyant housing market. United Future is not afraid to say that it backs these families, and we are pleased to see that they will come within the ambit of this bill.

I want to touch on one final point. This package is also about ensuring that work pays for those moving off benefits, creating a gap between work and welfare. However, the way it does that is not immediately apparent, since a simple reading of the bill would lead to the conclusion that both benefit-led and working families get a lift. But if we examine the way the different provisions interact, we find that the size of this increase will be different for families, depending on the source of income. The enactment of this legislation will mean that financial assistance towards the cost of children will be primarily paid through one payment—family support. This means that the basic benefit rates do not include a child component, since it is loaded into family support, which is then readily transferred when a family moves from benefit income to paid work.

We think that a key requirement for the success of this provision in encouraging beneficiaries into work—and this is very important—will be to ensure that they can see the difference between what they receive in benefits and what they receive in family support, so that they will know what they will retain by starting work. It may take some work to get the balance right, but this bill at least provides the model through which such incentives can be created. For that reason, United Future is very happy to support the Labour-led Government’s legislation.

I want to make one point. I take my point from the “ACT - National Party” manifesto, that august magazine that did a Budget special that came out this morning—the National Business Review. I am drawn to the headline in that august magazine, which reads: “Incentive to work package is a welcome signal”, when speaking about the Budget and particularly the Future Directions (Working for Families) Bill. It states further that this Budget: “makes a potentially valuable contribution to economic growth.” It then states: “One of the items on the Budget wish list of many businesspeople is encouragement for people to work to fill the skilled labour shortage that has emerged as a significant growth constraint.” The package is a welcome signal. The Government is saying to the country that it values people who want to work, and is prepared to provide rewards and incentives to back that up.

💬 Hon Richard Prebble: It’s a handout.

No, this is not a handout. I am reading from a magazine that points out the unstable party of ACT, whose members cannot decide among themselves a potential leader, and have to use the people’s money to stump the country for airfares, and run a primary election to try to sort out their own stability, so that eight members can elect one member. They are using the money and the resources of this country, but they are absent during this great Budget debate. Their contribution is zilch. The papers say that the main contenders, Hide and Franks, adore the leader of the National Party. So we see this slipping through the cloth, in the shallow arguments, but in the confluence of their approach to this legislation a party is emerging—the “ACT and Hide National Party”.

I endorse this bill. The National Business Review, that august organ of the ACT party, the august organ of the National Party, recognises that the package of this bill provides an incentive to work. What the previous speaker seems to have ignored, and the previous speaker for ACT seems to have ignored, is that this puts money where it is needed. The effect of this on business is very, very strong. This is money that goes into the pockets of people who need to spend it, and will spend it in the businesses that the ACT party and the National Party claim to represent. If they had their way of tax cuts there would not be sufficient money to boost the business economy, and the very people whom they claim to represent would be suffering.

This is great legislation. Not only does it recognise the importance of families, and not only does it support them in the vital parenting role, but it also reinforces the approach that families are backed by strong services for the times they need a little extra help. Tax cuts would not give that assistance, but discreet services, discreet assistance, as is provided in this legislation, is the most plain and elegant way to provide that. That is an issue not spoken about by some speakers, and an issue that was not even considered in their speeches.

I am proud to represent a party that is stable and can stick with its leader, as opposed to the two parties opposite, which have leadership problems—there is a temporary leader for National, and an indecisive leadership position for ACT. We have a party that says we have our act together, and we know how to help people who need help, and they are the parents with young children. They are the parents who work hard and want to get into work, and provide this economy with a cash flow. That is the reason that I think this is a great day for New Zealand. This was a great Budget for the country. For years after, people will speak of the 2004 Budget as a watershed in the country’s affairs. They will speak of this as legislation that set this country on the future path of great economic security, social contentment, and advancement for all the hard-working, decent people. I thoroughly endorse this legislation, and every considerate, well-intentioned, thoughtful member of this House will do likewise.

About the only thing I agree with, that the honourable member said, is that this measure will set New Zealand on a path—but a path towards more and more welfarism. We know from history that that is not good for New Zealand.

We have seen in this last 18 to 20 hours a very shoddy legislative process. This is important legislation. It deals with very complex matters, and it is a disgrace that this Labour Government did not see fit to send this legislation to a select committee. There was absolutely no need to ram this through Parliament under urgency. Nothing happens for months, with this legislation. Some of it does not happen for years. There was no need to ram this through Parliament under urgency. It is bad legislative process, with legislation as complex as this.

Some might ask why this legislation is so complex when it is just handing out a bit more welfare to hard-working families. The reason it is complex is that it deals with the interaction between people on benefits who are trying to leave those benefits, doing more hours of work; the tax credits they receive as they do that, and the interaction of the abatement of the benefits, as they do more hours of work; the abatement of the various tax credits they receive—and they can receive three different lots of tax credits under this legislation; and how that interacts with the progressive old-style progressive income tax system. That produces an extraordinarily complex set of interactions—such that at present we have real genuine poverty traps in New Zealand, which no one can support and like.

We have a situation right now of, for example, a married couple, where one is working and they are on the unemployment benefit. They receive family support, and are trying to get off the unemployment benefit. The person working is a low-skilled $10-an-hour worker. That family, at present, after they have worked 8 hours a week at $10 an hour, earns a certain amount of money. Under current arrangements, if they were to try to earn a dollar more, they would not succeed in that. If they worked not 8 hours but 20 hours a week, they would not get another dollar. If they worked 30 hours a week at $10 an hour they would not get another dollar. At 40 hours a week that family is still in the poverty trap. They would not get another dollar. Only after they had worked 49 hours a week would that family get another dollar. That is not my research; that is the work of a researcher at Victoria University, Patrick Nolan. That is a serious poverty trap, because there is a low-skilled family on a benefit, trying to get off the benefit—trapped! This legislation purports to try to do something about that. The issue is that we do not know whether it has or it has not, because a select committee has not had the chance to examine this complex legislation.

Let me share with members another reason why some of this legislation is so complex. This legislation retains what is known as the family tax credit. That tax credit guarantees a certain level of family income, after tax. This legislation eventually will raise that after-tax income by a couple of thousand dollars a year. But that family tax credit currently abates at 100 percent, so as that family earns one more dollar they lose a dollar of their family tax credit. That does not change with this legislation. I ask Dr Cullen: “Does that change?”, because that is another poverty trap. How could anyone support something that taxes a person at 100 percent? Yet that is what happens with the family tax credit that this legislation perpetuates. No one explained—not Dr Cullen, not Mr Maharey, no one—whether the family tax credit abatement in this legislation removes that poverty trap. Earn another dollar—be taxed another dollar! That is outrageous. The Government members sit there saying this is wonderful legislation. They should let the select committee examine whether it has dealt with those poverty traps. It is shameful—I do not believe one member sitting on the Government benches could explain how the in-work payment arrangements in clause 39 work. I would not mind betting that most of those members opposite could not even do the maths involved in working out whether people are still caught in the poverty trap.

💬 Jill Pettis: Like this member can?

Dr the Hon LOCKWOOD SMITH: Could the member repeat that?

💬 Jill Pettis: Like this member can?

Dr the Hon LOCKWOOD SMITH: It might just surprise the member that I do know how to work it out. I have done a lot of work on it. That is how I can tell that member exactly what the current abatement regimes are and why, in fact, people do face those poverty traps. In this legislation, the poverty traps have been moved further out. The explanatory note of the Future Directions (Working for Families) Bill states: “effective marginal tax rates (EMTRs) will be improved for low income working families with total income between $20,000 to $27,500 a year,”. That will not be done immediately, but when the abatement-free threshold changes for the family support tax credit. I would not mind betting that half the members opposite do not even know why that is the case. The problem is, as the explanatory note goes on to state: “However, EMTRs will be higher for some middle and higher income families not previously eligible for assistance:”.

All the Government has done is shifted the high poverty trap hurdles—the high effective marginal tax rates—just a bit further up the income tax scale. It has not solved the poverty trap problem. Labour members sit there and say what wonderful legislation it is. Why did they not let a select committee look at it to see whether those serious poverty traps were properly solved and whether the abatement regimes, as all these tax credits interact, produce rational effective marginal tax rates? But no, the Government did not want that to happen. Do members know why the Government did not want that to happen? The Government was frightened that once there was decent scrutiny of the legislation, the weakness and ineptness of it would be plain for all to see. This is a con job.

What has happened under this Government is that the average working person in New Zealand has been taxed more and more. That is what the OECD analysis shows. We have the second highest increase in the OECD in the tax that is taken off the average working person since the Government has been in office. Then it says, with this legislation: “Aren’t we wonderful? You can come along, cap in hand, to us and ask for some of it back. And if you do what we want, we’ll give some of it back to you after a while. But if you dare to send your child to a private early childhood institution, oh, no, we won’t give it back if you do that. You’ve got to send your child to an institution we like—in other words, a community one, or a kindergarten.”

That is an outrageous manipulation of people, using their own money. [Interruption] The average worker that this bill addresses earned that money—not that member. She earned none of it. The average working person earned this money. That member has taken it off them, and is coming to them and saying: “We’ll give some of it back to you.” It is a con job in order to bribe people with their own money. It is cynical, because it is not given back to them until after the next election. The people of New Zealand will see it for the cynical election bribe it is. It is poorly thought out and shows no innovation about how to solve the poverty trap problems. It shows an arrogant Government that thinks the public is stupid enough to be bribed with its own money, but the public is not.

It is a pleasure to stand in this House and speak in this debate. A couple of weeks ago I was a very proud grandfather attending the birthday party of my little 2-year-old grandson. I was sitting there looking at those little children who were enjoying that party, and then I looked at their parents. Not too many years ago they were the little 2, 3, and 4-year-olds coming to my house for my own children’s birthday parties, but now they are young parents.

They are the young parents this Budget seeks to help. They are the young parents who will wonder why the National and ACT parties say that they should not have $25 a week for those little children—that they should not get extra money in their wage packets to look after those little children, because it is not, philosophically, the correct way to do it. Well, they will be really interested in that argument when the rent has to be paid, and the National Party has said that they should not have enough money to pay it.

Some people in this House have short memories. The National Party would believe, and ACT absolutely believes, that anybody who dares take money from any sort of Government system—whether it be the old family benefit system we grew up with, or the family support system we are talking about here—will turn that person into a beneficiary and a bludger. Well, every New Zealander alive today should be described as a beneficiary and a bludger, because all our parents were in receipt of the family benefit when we were growing up.

My mum and dad bought the first family home with the help of family benefit capitalisation. When they started to have a heap more of us, they capitalised a bit more of the family benefit and built an extra bedroom so that we were not all in the same room together. Seven of us grew up not to be bludgers and beneficiaries. I dare the National and ACT parties—or anybody else in this House—to front up to my brothers and sisters and tell them that they are bludgers and beneficiaries.

Of course, Mrs Rich might be silly enough to do that, because she has not been around long enough to understand the ethos of New Zealand—that we are not a nation of beneficiaries and bludgers just because the Government finds a way of assisting us when we need help most. When we are young parents with the big overheads that come from being on small wages and having to pay rent and mortgages, that is the time that New Zealand has traditionally helped families.

Does Mark Gosche on a salary of $120,000 a year need an extra $25 a week? No, he does not, and he is not getting it from this Budget. But I did not rush to the telephone to ring up the Holmes show and say: “Oh, there’s nothing in this for me; I’m against it.” No, I said: “Bloody great!”, because my grandson and his parents, and all of those young people who are now parents, need that money. I applauded it. I voted for it, along with New Zealand First, Green Party, United Future, Progressive, and Labour Party colleagues. We know what it is like to be young parents, struggling every day to find enough money. That lot over there, too lazy even to go out and even visit a constituency, let alone win one, do not have a clue.

Mrs Rich would not have a clue what it is like to be one of the struggling young parents in this country, where every dollar counts. They do not like being told that they are beneficiaries and bludgers by the likes of her. They know what she got up to in her first few years in this House. They know that she took plenty of time off to have children, and then she voted against paid parental leave. That is the sort of nonsense that New Zealanders understand. It is described by the sort of word I cannot say in this House, but they know what it is. Those people over there have been employed for the last 4½ years in Opposition and still do not have a policy to help young families and the parents who brought those little children to my grandson’s birthday party.

It is a proud day every day to come to this place as the representative of the people of Maungakiekie. When I go home, I do not expect them to come to my house and say: “Well, great. You did an excellent job.” All we have done is what they expect us to do—make proper laws and write good Budgets that reflect what the vast majority of New Zealanders want. It is a fair system.

Most of the people who are now grandparents like me will be saying: “Personally, I do not need huge amounts of money in my pocket, because I have gone through the hard years of my life. The mortgage is on the way to being paid off, or is paid off, I have a reasonable income, and I want to see my kids and their kids get a decent shot at life.” I want them to have childcare, a bit of money to pay the rent, some money to pay for food, clothing, and the normal things that people in the National Party and ACT do not even have to worry about, because a lot of them have never ever struggled.

I find it absolutely extraordinary that somebody like John Key, who is proud of growing up in a State house with all the benefits the State poured into him, is opposing this bill. He was not a bludger or a beneficiary before he came to this place, but what has he been doing in the last 4½ years? He has no policy, so is he earning his keep now? Absolutely not! That lot over there on the Opposition benches are bereft of ideas, have no policy, and are just telling ordinary New Zealand families and their kids that they should not get this money.

The ACT party says: “Vote ACT and we will give you $39, because that miserable lot called Labour will give you $150.” Well, that makes a lot of sense, as its members fly around the country at taxpayers’ expense, trying to figure out who the leader is by holding a primary. I want to get Mr Hide back here to perk-bust his own party so that they can ask themselves who is paying for those air fares. We want Rodney Hide to come back and answer the question about who paid his airfare so that he could go to Dunedin to stump up to the 3½ members of the ACT party who turned up to vote.

This is a wonderful Budget and Mr Steve Maharey is a great Minister. I am extraordinarily proud of the enormous work he has done, and of the work of all my colleagues in Cabinet. The Minister of Finance and every single member of this Government contributed to this package. We are proud of it; we will go home tonight feeling proud of it—and our constituents out there will be asking why that lot voted against it.

💬 Mr SPEAKER: I understand that Lindsay Tisch and Barbara Stewart will take a 5-minute call each. I presume there is no objection to that course being followed? There is not.

I have sat through all the debates on this legislation, from the first reading right through until now, as we are closing the third reading. It is interesting to note that of all the speeches we have heard, this afternoon’s third reading speeches from the Labour members have been the most proactive in trying to gloss over the in-depth problems that will occur with this legislation. During the Committee stage—yesterday and earlier today—only five Labour members took a call. The Committee stage was when we went through this legislation part by part. It was when we digested, dissected, and looked at what this legislation does. Yet only five Labour members thought it important to stand up and justify what this Government is doing and what the Minister of Finance did in the Budget announcement.

💬 Hon David Benson-Pope: Don’t be so silly.

The member may make those sorts of comments, but at the end of the day we need to see what this legislation does. Over the last 5 years this Government has taxed at such a level that it now has a windfall of money—and what will it do with it? It will redistribute. That is what socialist Governments do. They tax on this hand, build up a fund, and then on the other hand give the money back to the people it has already taken it off. Then they say: “Aren’t we doing well.”

When we look at it, if we want to lift New Zealand’s living standards we do not just give money out, we have to grow the cake. We have to grow the economy. That is the basis of economics. What do the wealth creators of New Zealand—those people who are prepared to invest and put a dollar at risk—get out of this? Absolutely nothing. There is nothing in this legislation to say to employers that the Government will cut compliance costs, make it easier to employ staff, and allow them to compete in the market place. There is none of those influences or catalysts to grow the economy.

What this Government has done, and what this legislation does, is lock people into dependency. Why would somebody on an $80,000 salary, with four children, get $25.12 per week in April 2007? Why would someone on that sort of income get $25.12 in April 2007? Why do those people need to be locked into dependency? They would far rather have a tax cut. Money in the hand today is worth a helluva lot more than what it will be worth in 3 years’ time. That is the basis of economics—money in the hand today, and what I can do with it, is worth a lot more. But this Government believes that it can do better with taxpayers’ money than they can do with their own money.

This really means that the 300,000 families out there who will benefit out of this legislation will not benefit immediately. There will be some concessions for beneficiaries, but those low-income earners whom we all aspire to help do not get assistance until April next year, and then again in 2006. So here is a Government that says it will help those on lower incomes and in the middle-income bracket. That is fine, but at the end of the day if we study all the figures there is little for those people. That is why they will be disappointed and why all the media comments say that it is just a lolly-scramble, as my colleague said.

The Government is saying that over the next couple of years many families will be assisted. The Budget benefits 300,000 households—that is one in five, because there are 1.2 million households that get absolutely nothing out of this Budget. When it is scrutinised and when people ask where they get this big handout from that the Government is talking about, they will be bitterly disappointed. When I am on the campaign trail I will say that this was a hoax—a cynical Budget to do nothing else but buy votes.

On behalf of New Zealand First I rise to speak to the third reading of this legislation. As my New Zealand First colleague Peter Brown has already said, we will be supporting this legislation. It should be good for New Zealand families—the low-income and middle-income families that it is actually designed for. This is a people’s Budget. In this Budget the Government has recognised that families matter, and has developed a strategy to help and support New Zealand families. The old policies that have been used for years have not worked, and it is time to develop new ones, and that is what we have in this Budget.

The family support and tax relief measures will be a help for many families. With the increasing rise in the cost of consumer goods, like petrol and electricity, and the subsequent flow-on effect on foodstuffs, meeting the needs of a growing family has never been more difficult, and every bit of income helps. This Budget is one for children and their families, and this legislation shows that. The increased subsidies should make working far more attractive.

I was reading recently that in 2002 only 10 countries showed Government spending that was lower than New Zealand’s, so the choices between tax cuts for the wealthy, and policies that reduce child poverty, are real choices that needed to be made. They have been made, with families this time being a priority. Budget surpluses mean there is no excuse for not dealing with child poverty—particularly when the Government’s own reports show that nearly one-third of New Zealand children live in poverty—and this has been done. We are a First World country and our children should reflect this. We once led the world with the care of our children, and we need to regain our place.

I can assure the House that childcare assistance is required for New Zealanders. Increasing the rate of the subsidy and the number of families eligible to receive it are good measures. I think back to the time when my son required childcare so that I could go back to work. Even 8 years ago the fees were extremely high, and I know that I paid the equivalent of another mortgage. I must admit that, like many mothers, I sometimes wondered what on earth I was actually working for. I ask how many other mothers come to the same conclusion and give up. Assistance in that area is really required.

The measures that are in this Budget and this legislation will help families get back to affording the best they can for their families. Policies to improve the well-being of children all alleviate some of the challenges that most New Zealand families are facing at the moment. New Zealand families are struggling to make ends meet, and this legislation is a good investment for everyone. I must admit that New Zealand First wanted to see this legislation enacted as soon as possible, and we have got some concessions concerning that. We hope this legislation is accurate and contains no errors. We want to see a better future for families in New Zealand. This legislation has worthy goals, and New Zealand First supports it.