Thursday, 25 May 2017

THURSDAY, 25 MAY 2017

THURSDAY, 25 MAY 2017

Mr Speaker took the Chair at 2 p.m.

Prayers.

Bills

Appropriation (2016/17 Supplementary Estimates) Bill

Procedure

Hon STEVEN JOYCE (Minister of Finance): I hereby present the Supplementary Estimates of Appropriations for the Government of New Zealand and supporting information for the year ending 30 June 2017.

Mr SPEAKER: That paper is published under the authority of the House.

Bills

Appropriation (2017/18 Estimates) Bill

Procedure

Hon STEVEN JOYCE (Minister of Finance): I hereby present the 2017 Budget Speech, the Budget at a Glance, Capital at a Glance, the Fiscal Strategy Report, the Budget Economic and Fiscal Update, the Summary of Budget Initiatives, and the Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2018.

Mr SPEAKER: Those papers are published under the authority of the House.

First Reading

Hon STEVEN JOYCE (Minister of Finance): I move, That the Appropriation (2017/18 Estimates) Bill be now read a first time.

Bill read a first time.

Budget Statement

Budget Debate

Budget Debate

Hon STEVEN JOYCE (Minister of Finance): I move, That the Appropriation (2017/18 Estimates) Bill be now read a second time.

Mr Speaker

I move that the Appropriation (2017/18 Estimates) Bill be now read a second time.

It is an honour and a privilege to present my first budget to the public of New Zealand – the ninth of this National-led Government.

In doing so I acknowledge my predecessor and our new Prime Minister Bill English for his hard work and leadership in facing down the decade of deficits, bringing New Zealand successfully through the Global Financial Crisis, and responding to the impacts of the Canterbury earthquakes.

Bill English is widely seen internationally as one of the world’s best Finance Ministers of the last decade.

Mr Speaker, the 2017 Budget is about “Delivering for New Zealanders”.

It is New Zealanders who have worked hard over the last eight years, who have made sacrifices, and who have turned this country around in the most trying of circumstances.

It is New Zealanders who are striving to build a more confident, more robust country.

This budget is about delivering more of the public services, the infrastructure, the resilience, and the incomes that New Zealanders need to get ahead and to provide for their families.

This budget is about the opportunity we have to build on the platform we have all created and deliver greater prosperity for New Zealanders.

Budget 2017 is possible because of the constructive working relationships the National Party has with United Future, the Māori Party and ACT. I want to acknowledge their continuing support and contribution to strong and stable government.

Economic Outlook

Mr Speaker, the New Zealand economy is performing well.

We have experienced positive growth in all but one quarter of the last six years. We are at the moment growing faster than the United States, the UK, Australia, the EU, Japan and Canada.

Our economy is 14 per cent larger than it was just five years ago.

This growth is being achieved by Kiwi entrepreneurs, Kiwi businesses, and Kiwi workers, all taking on the world and succeeding.

Under the Government’s strong economic leadership, New Zealand is shaping globalisation to its advantage. We’ve embraced increased trade, new technologies, innovation, and investment.

We are becoming more confident both overseas and here at home.

When we hit tough times in dairy – our biggest export industry – we got on and diversified.

We’ve grown our tourism industry, education and business services.

We’re selling more apples, wine, kiwifruit and other high-value foods.

And we’re growing an increasingly impressive tech sector, with hundreds and hundreds of competitive Kiwi companies selling their amazing technologies all over the globe.

This is our future Mr Speaker. An innovative outward facing hi-tech country selling high value products and services to the world.

A strong and growing economy is important because of the job opportunities it provides for New Zealanders.

Well over 200,000 more jobs have been created over the last three years.

Our adult employment rate is now its highest ever with 67.1 per cent of everyone over the age of 15 employed. That’s the third highest rate in the OECD.

The strength of our economy in recent years has started correcting some of the imbalances that have worried us for a very long time, notably our external accounts.

We have an unusually low Balance of Payments deficit for this stage of our economic cycle, and the amount we as a country owe the world has dropped from 82 per cent of GDP in 2008 to 60 per cent today. That’s good progress.

We have, however, much more to do. We need to maintain and extend this growth if we are to decisively deal with the long-term imbalances of the past and provide the sustained prosperity that New Zealanders deserve.

The medium-term economic outlook is positive, led by rising export values, high levels of house building and commercial construction, and low interest rates.

Treasury forecasts annual economic growth to average over 3 per cent for the next five years, peaking at around 3.8 per cent in 2019.

The outlook is driven by the Government’s strong economic plan, and confident New Zealand companies who are investing, innovating, exporting, and creating skilled jobs.

Employment is forecast to keep growing strongly and unemployment is expected to steadily decline.

Nominal GDP is now forecast to be a cumulative $23.9 billion higher over the next five years than was expected at the Half Year Update.

Fiscal Outlook

Treasury’s economic projections flow through to increased tax revenues. These are expected to grow slightly more than forecast in last year’s budget, even after the changes I am announcing today.

Included in the tax forecast is $250 million over the forecast period in additional revenue from the Government’s work to halt multi-national tax avoidance.

The Government has taken the decision to increase the operating allowance in this budget to $1.8 billion a year, $300 million more than was previously allocated. This will allow us to invest more in the public services necessary for a growing country. As previously signalled the pay equity settlement for care and support workers is being treated as separate to the allowances.

We have also increased future operating allowances. Next year’s allowance will be $1.7 billion and subsequent years will be adjusted upwards by 2 per cent each year.

The OBEGAL surplus for the 2017/18 year is predicted to be $2.9 billion, rising to $7.2 billion by 2020/21.

These surpluses are significant, but they will be needed to meet the cost of the very large new capital investment the Government has committed to over the next four Budgets.

The Government’s capital spend over the next four years uses virtually all the cash generated from the operating surpluses. When added together, core Crown residual cash over the forecast period is almost exactly nil.

As a result of our responsible fiscal management, net debt peaked at 25.5 per cent of GDP and is projected to fall to 19.3 per cent of GDP by 2020/21.

New Zealand Superannuation Fund contributions are expected to resume as scheduled in that year.

Keeping the Economy Growing

Mr Speaker, the first priority in any budget must be to take the right steps to keep the economy growing.

To improve public services, invest in infrastructure, or boost family incomes, we must continue to have a strong successful economy.

A strong economy can never be taken for granted. It must be nurtured and worked on, or it will quickly go backwards.

While the world economy is growing, there are plenty of risks and plenty of political uncertainties that could affect us.

One of the biggest current risks is the more inward-looking isolationist economic policies being pushed in some parts of the world, and by some politicians here at home.

These people want to be more protectionist on trade, slash immigration, reduce foreign investment, centralise wage bargaining, and increase taxes.

All of these things would slow our industries down, reduce competitiveness and cost jobs.

That’s the opposite of a recipe for growth – that’s a recipe for stalling growth.

The Government’s plan for growth is sensible conservative fiscal policy, strong orthodox monetary policy, and an ongoing programme of microeconomic reform that enhances the competitiveness and confidence of Kiwi businesses.

It is crucial that we pull on all three of these levers.

Our programme of microeconomic reform is called the Business Growth Agenda. It includes measures to boost New Zealand’s trade, lift the skills of our workforce, recruit skilled migrants our companies need to grow, boost innovation, attract new investment especially in regional New Zealand, and build the infrastructure that a growing economy needs.

Budget 2017 invests $1 billion over four years in sustaining the strong economic plan that is getting New Zealand to grow.

First, the Government is allocating $373 million in the second round of our Innovative New Zealand programme.

Innovative New Zealand is a series of science, R&D and skills initiatives that are working together to lift the innovation activity of New Zealand companies.

The funding includes $82 million for the Government’s pre-eminent applied science fund – the Endeavour fund; $132 million for Tertiary Education to ensure young New Zealanders obtain the skills we need; and $75 million for Callaghan Innovation’s R&D grants to help our tech companies succeed.

It’s all about adding more value to our export volumes. Investment in innovation is hugely important for lifting our productivity and providing for our future prosperity.

Budget 2017 allocates $134 million over four years to advance New Zealand’s Trade Agenda 2030, including opening new embassies in Dublin and Colombo, as we work towards our ambitious target of having 90 per cent of goods exports covered by trade agreements.

There is $304 million towards the ongoing development of our screen sector, and $146 million in new funding to grow our tourism infrastructure around the country so every region can benefit from the growth in our tourism industry.

We can’t talk about lifting economic growth in New Zealand without talking about the increasingly important Māori economy which is crucial for lifting not just the economic and social fortunes of Māori, but of all New Zealanders.

The Government’s comprehensive programme for Māori Economic Development is called He Kai Kei Aku Ringa and it is led by Māori Development Minister Te Ururoa Flavell. Budget 2017 contains $93 million in new Māori Development initiatives, including $10 million to support the development of Māori tourism, and $17 million for Māori housing initiatives.

The funding will also allow for an extra 2,500 families to access Whānau Ora, and additional support for the continued revitalisation of te reo and Māori culture.

Better Public Services

Mr Speaker, the Government’s biggest single fiscal priority in Budget 2017 is to invest in the public services necessary for a growing country.

We are therefore allocating $7 billion over four years to sustain and expand public services in health, education, law and order and social development.

This investment reflects our commitment to meet the requirements of a growing population while investing prudently in the core services Kiwis rely on.

The new funding in Budget 2017 includes $3.9 billion over four years for New Zealand’s Health Sector – taking health investment to a record $16.7 billion next year.

DHBs will benefit most, with an extra $1.76 billion added over four years to invest in services, improve access, and help meet cost pressures and population growth. Over $200 million will be invested in Disability Support Services, and $38 million more in primary care.

$59 million will be invested in our ambulance services, across health and ACC, so that all emergency road ambulance call outs are double crewed by 2021.

$60 million more will be provided to Pharmac for access to new medicines for Kiwis that need them.

The Health budget includes $1.54 billion for the pay equity settlement of 55,000 care and support workers. From 1 July this dedicated and predominantly female workforce will receive a significant pay increase. For the 20,000 workers currently on the minimum wage, this increase will be at least 21 per cent which means full-time workers will be taking home at least an extra $100 a week.

Mr Speaker, we are committing $1.1 billion over four years in additional operating expenditure for schools and early childhood centres, including $767 million for roll growth, a $61 million increase in operational grant funding for schools, and $35 million in targeted additional funding for early childhood centres.

$63 million will be provided to support students with additional learning needs including more teacher aide hours and a new programme for parents and teachers of young children with autism.

We are also investing significantly in school infrastructure and I want to come back to this later because infrastructure is a major focus of Budget 2017.

We are investing $1.2 billion in new operating expenditure over four years for law and order.

This includes funding 10 per cent more police staff to reduce crime and reoffending and ensure 95 per cent of the population will live within 25 kilometres of a 24/7 police presence.

We’re also upping our investment in justice, courts and corrections services, and introducing new initiatives in burglary prevention, reducing youth reoffending, and supporting at-risk prisoners.

Social Investment

This Government is focused on helping our most vulnerable people lead more successful lives.

Budget 2017 includes $64 million to help people move off benefits and into work by tailoring interventions to individuals’ needs.

$37 million will be provided to help improve the safety of family violence victims and stop family violence escalating.

We will be providing $185 million to further expand social housing services.

And we are making a $424 million investment in the new Ministry for Vulnerable Children, Oranga Tamariki, including funding for caregiver support, Children’s Teams, Family Start and Youth Justice.

Budget 2017 includes $321 million for fourteen cross-agency social investment initiatives that are designed to tackle long-term issues for vulnerable New Zealanders.

These cover areas like helping kids get a better start in life; addressing barriers to employment and independence; and reducing criminal reoffending.

A big focus in our social investment programme is mental health, so we’ve ring-fenced $100 million in a special social investment fund to support innovative solutions to address mental health issues.

Overall the Government has budgeted an additional $224 million over four years for mental health services.

Social investment is about tackling our most challenging social issues. The combination of these new initiatives and the Government’s decisions about family incomes will allow us to make serious headway with some of the longer-term challenges faced by the most vulnerable New Zealanders.

Mr Speaker, it is crucially important that those delivering core public services maintain a constant focus on lifting the productivity of their sectors.

These are big funding increases, which reflect the needs of a growing country. However it is my expectation that we also achieve a greater return for each additional dollar of taxpayers’ money.

As well as placing a number of requirements on results for the increased expenditure, I am today announcing that the Government is asking the Productivity Commission to conduct an investigation into measuring and improving the productivity of core public services – to ensure all New Zealanders see better results from the investment of their tax monies in these services.

Infrastructure

The Government’s second fiscal priority in this budget is investing in the infrastructure for a growing economy.

This Government has a strong track record as New Zealand’s infrastructure government. Over the last several years we have grown infrastructure spending considerably and commenced some major transformative investments in New Zealand’s public infrastructure on behalf of taxpayers.

We are completely modernising our telecommunications system with the ultrafast broadband and rural broadband programmes. We have embarked upon the most ambitious development of new motorways and expressways seen in several decades, and invested more than $4 billion in our railway system including funding new commuter rail fleets in both Auckland and Wellington. And we are in the process of building more new hospitals and schools than New Zealand has seen in generations.

However Budget 2017 takes New Zealand infrastructure investment to another level.

For the first time, the Government is allocating $4 billion in new capital funding in one budget across the Education, Health, Defence, Justice, Housing, Primary Sector and Transport portfolios.

The new investment includes a further $392 million for more new schools and classrooms around New Zealand – taking our total investment to $1.4 billion over the last four budgets.

The new money will provide for six new schools, two major school expansions, the relocation of two special education schools, 11 new special education satellite units and around 305 new classrooms nationwide.

Budget 2017 includes $150 million in additional capital for the Health Sector, $576 million for Defence Force upgrades, $763 million for new prison capacity, $63 million for Crown Irrigation to invest in new water storage and $100 million for the Crown Land Programme, which frees up more Government land for housing.

$1.8 billion of the new budget spend is in the Transport portfolio. This includes $450 million for KiwiRail for the rail network around New Zealand, $436 million for the first stage in Auckland’s City Rail Link, $812 million for the reinstatement of State Highway 1 north and south of Kaikōura, and $98 million for upgrades to Wellington’s metro rail network.

I am also confirming today the Government’s intention to allocate a further $7 billion in new capital spend in the next three budgets, taking our total additional capital spend to $11 billion.

Through this new capital spend and existing commitments the Government and its key infrastructure agencies will invest a total of $32.5 billion over the next four years in new infrastructure.

That’s a 40 per cent increase on the last four years.

The New Zealand Transport Agency alone will invest $9.17 billion in new State Highways over the four years, and will open over 540 lane kilometres of new highways.

And Housing New Zealand will invest $2.2 billion in the Auckland Housing Programme as announced by Minister Adams last week, which will contribute to the 34,000 new houses that we will build in Auckland over the next 10 years alongside the huge growth in private sector housing construction which is underway.

This is an unprecedented level of infrastructure investment for any New Zealand government, even including the period of funding the Christchurch rebuild.

We intend to extend that investment further with a greater use of partnerships between central and local government, and between government and the private sector. I will have more to say on that subject in the coming weeks.

Resilience

Mr Speaker, one of the most important duties of government is to be able to stand behind vulnerable communities and vulnerable people when the chips are down.

People generally prefer to look after themselves, and for the most part they can.

But when disaster strikes, or a big economic shock happens, families and communities need their government to be ready to help them through.

This government’s definition of ‘resilience’ is the ability to provide that support.

Through the Global Financial Crisis we stood behind New Zealanders. And following the Canterbury and now the Kaikōura earthquakes, we have pledged to rebuild shattered communities.

It is that experience that has taught us the importance of having the financial capacity to respond.

The GFC and the Canterbury earthquakes involved the Government running up debts amounting to around 20 per cent of GDP. It was the right thing to do, and the right thing to do now is to run a strong economy and reduce that debt so we have the room to do the same again, if and when we need to.

That is why I announced a new medium term target of reducing net debt to between 10 and 15 per cent of GDP by 2025, following on from the current target of around 20 per cent of GDP by 2020.

We owe it to our future to take that decision.

Once we reach that target, the intention is to stabilise debt at that level, and use any extra fiscal room for further investment in public services and infrastructure, or further tax changes.

Another important part of the New Zealand resilience story is the role of the Earthquake Commission and the National Disaster Fund.

With the help of international re-insurance, the Fund has so far paid out over $9.5 billion in claims to those affected by the Canterbury earthquakes. It is currently expected to pay out another $550 million in claims for the Kaikōura earthquakes.

Those claims will completely exhaust the National Disaster Fund. We need to re-start the process of replenishing it.

I am therefore announcing that from 1 November this year the EQC premium rate will increase from 15 cents per $100 in cover to 20 cents per $100 in cover.

This will have the effect of increasing home owners’ annual EQC premiums by up to $69 per year.

The change will mean that we are well on the road to restoring the National Disaster Fund to around $1.75 billion within 10 years.

Family Incomes Package

Mr Speaker, it is important that New Zealand families directly share the benefits of strong economic growth. This is the whole point of having a strong, growing economy and a healthy set of Government accounts.

The first and most enduring way we can do that is to ensure that there are job opportunities for all those who want to work.

That is now increasingly the case.

There are more than two and a half million people employed in this country for the first time, and indexes of job vacancies are at near record highs.

Fewer people are reliant on the benefit system. The percentage of people whose income is received through a main benefit has dropped to just 9.6 per cent of the working age population – the lowest level it’s been in the March quarter since 1997.

The number of children growing up in a benefit dependent family has dropped by more than 50,000 over the last five years.

However it is also important to ensure that the income tax system works well for New Zealanders and keeps pace with rising incomes.

It is now seven years since we last altered the income tax system. Over that time the average wage has risen from $49,500 to $58,900.

That’s good news. But because of that change many more middle income earners are faced with a marginal tax rate of 30 per cent cutting in at just $48,000.

We also have a number of lower income people with young families that are struggling to get ahead.

And we have a system that is becoming too complex. As a result of Working for Families and other changes, it can be very hard for people to work out what they are entitled to, and how the work they do is linked to the income they receive.

If the level of complexity is indicated by the number of businesses advertising to do people’s tax returns, then confusion is at near record highs.

Today I am announcing a $2 billion a year Family Incomes Package commencing 1 April next year that will start addressing some of these issues.

The Package will make changes to tax thresholds, Working for Families and the Accommodation Supplement to help Kiwi families get ahead.

It is a first step towards simplifying the income tax system.

The Family Incomes Package is carefully designed to assist low and middle income earners with young families and higher housing costs.

It will benefit 1.3 million working-age families in New Zealand by, on average, $26 per week.

The Package is in four parts.

First, it increases the $14,000 income tax threshold to $22,000, and the $48,000 tax threshold to $52,000.

This change provides a tax reduction of $11 a week to anyone earning more than $22,000 per year, increasing to $20 a week for anyone earning more than $52,000 per year.

A couple with both partners earning the average wage will be $41 a week better off from these threshold changes.

Second, it removes the Independent Earner Tax Credit of up to $10 a week.

The Independent Earner Tax Credit was introduced to provide a tax reduction to lower income people without families. It is only claimed by about one third of eligible recipients during the tax year.

People who lose this Credit will be compensated in full by the lifting of the lowest income tax threshold from $14,000 to $22,000.

The third change is to Family Tax Credits.

Working for Families currently varies the amount each family receives according to the age of their children, with families with children aged 16 to 18 years old receiving a higher rate than those with children aged under 16.

And yet as many parents will tell you, bringing up younger children can be just as expensive as bringing up older children.

I am therefore announcing today that the Government will lift Family Tax Credit rates for young children to those of children aged 16 to 18, also from 1 April next year.

This is a significant change.

The Family Tax Credit rates for the first child aged under 16 will increase by $9 a week, while the rates for each subsequent child increase by either $18 or $27 per week, depending on the age of the child.

At the same time the Government will complete its planned adjustment to Working for Families abatements, with the Family Tax Credit set to abate at 25c in the dollar above an income of $35,000. This will ensure that the Government’s extra assistance is targeted at lower income families.

Approximately 310,000 families will benefit from these increases to the Family Tax Credit.

A couple with two children under 13, and one partner working earning $55,000 a year, will gain $41 per week – $20 from the income tax change and $21 from the Working for Families change.

The final part of the Family Incomes Package relates to the Accommodation Supplement, which assists New Zealanders with high housing costs.

The Accommodation Supplement has not been updated since 2005, and is based on 2003 rents.

Today I am announcing that from 1 April next year the maximum Accommodation Supplement rates for a two person household will increase between $25 and $75 a week, while the maximum rates for larger households will increase between $40 and $80 a week.

In addition, changes to the Accommodation Supplement areas will provide further gains for some families.

These are in addition to the tax and Working for Families changes already announced in the Package.

This increase in the Accommodation Supplement is expected to directly benefit around 136,000 low income households around New Zealand. It will also reduce the reliance on Temporary Additional Support that some families currently receive to top up their Accommodation Supplement.

I am also announcing that the Accommodation Benefit, which is paid to eligible Student Allowance recipients who experience housing stress, will also increase by up to $20 per week.

The Family Incomes Package is a coordinated set of measures to lift family incomes and improve the rewards for hard work.

Each element works together.

While lower income families receive a smaller amount from the tax component, they receive relatively more from the Accommodation Supplement and the Family Tax Credit changes. The reverse is true for higher income families.

The Package particularly focuses on assisting low income families with young children and those experiencing high housing costs.

154,000 families in the lowest quintile will benefit by an average of more than $35 a week, or $1,840 per year.

It is expected to lift 20,000 households above the threshold of severe housing stress, and reduce the number of children living in families receiving less than half of the median wage by around 50,000.

There will also be flow-on effects of this package. Around three quarters of a million superannuitants will benefit because of the link between New Zealand Superannuation and after-tax wages. The couple rate for superannuitants will increase by $13 a week on 1 April next year in addition to the normal adjustments because of wage indexation.

A small number of families may face losses from this package because of the complex interactions of our tax and transfer system. The Government has established a transitional fund of $2 million over the next four years for anyone significantly impacted by the changes.

The total cost of this package is $6.5 billion over four years, rising from $604 million in the 2017/18 financial year through to $2 billion in out years.

Mr Speaker, it is always important for politicians to remember that the money they spend each year comes directly from the pockets of hard-working Kiwis.

We spend a lot of time thinking about how we can spend that money. The Families Incomes Package is the first step in allowing Kiwi families to spend more of their own money, to make the decisions that are best for them.

Conclusion

Mr Speaker

This budget is all about “Delivering for New Zealanders”.

It takes four significant steps to bring the benefits of a stronger economy to all New Zealanders. It makes a big investment in public services, it makes a record investment in new infrastructure, it improves the resilience of our country to future shocks, and it strengthens families by lifting their incomes.

It’s important that we remember that the only reason we get to have this conversation is because we have a strong and growing economy built on a strong economic plan.

We must maintain our focus on growing the economy and sticking to the plan.

It is only by doing that, that we can provide for the prosperity of all New Zealanders.

ANDREW LITTLE (Leader of the Opposition): I move, That all the words after “That” be omitted and the following substituted: “this House has no confidence in a government that has had nine years to build a better New Zealand, and yet we have a housing crisis, we have mental health services on the verge of collapse, we have education that is becoming more and more expensive, and we have infrastructure that is unable to cope with the demands of a surging population, and it is time for fresh thinking and real solutions.”

After 9 years—and 4 months out from the next general election—this National Government has suddenly discovered that wages for too many are too low. It has done nothing about it until now, and even then it has not done much about it. Too many people can no longer afford to buy or even rent a home, and it has done nothing about it. Too many people are squeezed into our big cities, schools are overcrowded, public services are struggling, congestion is choking our cities, and it has done nothing about it. Here was its chance, a chance to show that it takes New Zealanders’ concerns seriously, and it muffed it.

Let me just take you through some of the points that come out of this Budget. Let us look at the tax package, shall we? Let us look at the minimum-wage worker. The worker on the minimum wage working 40 hours a week, who was getting the independent earner tax credit and was getting the tax break that the Government gave them—they got $11, and they got $10 taken off them. They got $11 given to them, and $10 taken off them. One dollar. One dollar—here it is. This is the “Dollar Bill Budget”—that is what it is.

It gets worse. It gets worse. Even the Government’s own figures, which it proudly furnished us all with in the lock-up—the little bit of paper that talks about two low-income workers, both on an income of $33,000 each. They lose their independent earner tax credit, so they lose $20, and the tax benefit for them is less than a dollar each. It is less than a “Dollar Bill Budget”. This is the “Dollar Bill Budget”. This is not taking low-income earners seriously at all.

Let us have a look at health. Let us have a look at mental health. The so-called ring-fenced $100 million—that is money that has already been promised and provided to the district health boards (DHBs). Now they are being told that the money they had to spend for general health services they have now got to spend on mental health services, without any expectation of what that is going to go on. This is not fixing up our mental health services. This is a fudge. This is a fudge. The Government does provide for $25 million a year, unspecified, on extra mental health services. It is so woeful in its planning, so woeful in its direction, that it does not even know what it is going to go on—it put it in the Budget. It is so out of touch with New Zealanders’ concerns about mental health right now that it does not even know what needs to happen and it will not fund it properly.

I have to tell you, the biggest health risk this nation faces today is the amount of fudge being rammed down New Zealanders’ throats that they are expected to take in this Budget. It is not good enough. The Government has funded DHBs for the next financial year and, subsequently, more than $200 million less than the DHBs need to keep pace with population growth and demographic changes. It is short-changing and starving our health services yet again, year after year. No wonder they are struggling. It might have double-crewed the ambulances, but it is still the ambulance at the bottom of the cliff.

In housing, there is nothing of substance to address the most urgent, pressing issue facing the nation today, and that is the shortage of housing. The Government says $100 million for purchasing land for—you know how many houses? For 1,200 houses. Remember the announcement a couple of weeks ago of 34,000 houses? That was still woefully inadequate too. Well, it has provided in this Budget for 1,200 houses. That is going to fix Auckland’s 40,000-house shortage, not to mention the rest of the country’s 20,000- or 25,000-house shortage! This is a rinky-dink, short-changing, “Dollar Bill Budget”.

Do not even get me started on the schools operations grant. What an embarrassment, what a disgrace. A 1.3 percent adjustment, at a time when inflation in that sector is going through the roof—that is lower than inflation, and the people who will suffer will be the students, their families, and the teachers, who are struggling to provide a high-quality education in this country as it is. New Zealanders deserve better. New Zealanders deserve better.

We are blessed to be in one of the greatest countries in the world, and to enjoy unparalleled beauty and a sense of security and freedom to chase our dreams. We pride ourselves, like all New Zealanders, on our hard work, innovation, creative thinking, our great artistic expression—that is what we are known around the world for—and our brute determination to get stuff done. But that is not the experience of many New Zealanders today. Too many are missing out, and after 9 years of this Government, New Zealanders now are being shut out of things that have been our boast to the world.

You see, there is something else that defines us as a nation, something that holds us to together. It is the idea that our small, plucky nation faces the world to meet its challenges and that as we do that, we look out for each other. We insist that no matter the circumstances of our birth—whether in New Zealand or abroad, rich or poor, Māori or Pākehā—we will have the opportunity to fulfil our potential, to do our best, to be the greatest, and to do what we can to do great things or to do humble things. Knowing all the time that we will be picked up when we fall, and that we will give back when we have the chance—that is the Kiwi spirit. That is the very essence of being a New Zealander. That is the idea of New Zealand.

Nine years on under this National Government, we ask why we have such a chronic shortage of housing and many young couples who, no matter how hard they work, no matter how hard they save, cannot get their first home. Nine years on under this National Government, a growing number of New Zealanders ask: why do we have New Zealanders who are homeless in this country, living in overcrowded houses, living in cars and garages? Nine years on under this National Government, New Zealanders ask why the rent is rising so fast and why their pay cannot keep up.

Nine years on under this National Government, New Zealanders ask why 60,000 of our fellow citizens could not get hospital treatment last year because the local hospital could not afford to treat them. We ask why our mental health services are stretched to breaking point and why, in this beautiful country of ours, we have one of the highest teen suicide rates in the developed world. That is not right, and what is worse is a Government, 9 years on, that does not take it seriously, does not have anything serious to say or do about it. That is shameful.

Nine years on under this National Government, New Zealanders ask why so many schools are overcrowded and why, with an ageing teacher workforce, so little is being done to grow the next generation of great teachers. Nine years on under this National Government, New Zealanders ask why tens and tens of thousands of young New Zealanders are out of work and not doing any training or are not in any education and are fast running out of hope. Nine years on under this National Government, New Zealanders ask why the regions have been neglected and why they cannot generate jobs to keep their local populations at work.

Today’s Budget is a squandered opportunity. This was an opportunity to do the real social investment—to invest in those things that are the foundation of opportunity and fairness, the foundation of wealth and prosperity for this nation, the foundation of the Kiwi spirit and of the New Zealand idea. No one will say that those on low and middle incomes do not need extra cash at the end of the working week—of course they do. They need it now, not next April. But let us not kid ourselves. Remember Working for Families? Remember when that was first introduced? Remember who voted against it? Remember what they called it? They vehemently opposed it then. It was introduced as a measure to deal with a dysfunctional labour market that was incapable of providing a living wage to many, many New Zealanders. And you know what? Nothing has changed. That remains the case today.

Now the Government is trying to seek plaudits for funding the significant pay increase for home-care and aged-care workers, and I congratulate Kristine Bartlett, E tū and the predecessor unions, and all those who were involved in taking it to court and bringing this Government to justice. That deal happened and that line item is in this Budget because this Government was ordered by the courts to do so. Make no mistake, this is not generosity and it is not part of some big strategic plan to lift incomes of the lowest-paid New Zealanders.

So let us get real. New Zealand needs a fresh approach. New Zealand needs new ideas. We cannot claim success as a nation, nor can we claim we are prosperous, when so many are missing out and when we are setting up a bleak future for the generations that follow.

Labour’s plan is very clear. On housing—we understand. We get that every New Zealander, every family, needs a roof over their head that they can call their own. We need, and Labour will build, affordable homes across Auckland and around New Zealand. We will set up the apparatus. We will develop the workforce. We will deal with the landowners. We will deal with the property developers. We will deal with the councils. We will deal with iwi. We will deal with Uncle Tom Cobleigh and all if we have to, to build affordable homes—100,000 of them. And we will build State houses. Some of them will be for people who, once upon a time, voted for the Māori Party, as well. People will have warm, safe, dry homes, and we will not have 40,000 New Zealanders homeless—that is shameful and that is a disgrace. There was not a single reference—not a single reference—in this Budget to a single solution about that.

On health—we will work to restore the $1.7 billion cuts from health over the last few years. Yes, that is real, and yes, that has happened, and yes, New Zealanders are suffering as a result. People will again have confidence that they can get good, safe treatment from their local hospital, and that will include getting pharmaceuticals that deal with modern conditions and are effective. We will fix mental health services. We will have a primary mental health care pilot that will set us up and set generations up and fix our mental health problem. We will have nurses in schools as well, and we will do the workforce development that goes with it, because what matters most is giving our young people a chance, and hope, again.

On education—we will have an education strategy that is about preparing our children for success and having education available throughout a person’s working life, because, let us face it, the world of work is changing and technology is changing. It is changing what we do and how we do it, and we need an education system that suits. We will lift the funding freeze on schools and we will make sure that there is a plan for school buildings that we will actually follow through on. We will work with teachers and parents and employers so that we have a school system that is fit for the 21st century and beyond. You see, education is so vital—so vital—for that new world of technology and for new ways of working. We have to get education right, and right now it is floundering because it has a lack of leadership and a Government that does not care. Labour—Labour—will bring a fresh approach to education.

On the regions—we will partner with the regions, and we will secure new investments that will generate new jobs, good jobs, skilled jobs, and better-paid jobs, just as we have proposed to do in Dunedin with a centre of digital excellence and just as we have proposed to do in Gisborne with the plant to build prefabricated housing, because it fits our housing strategy as well. Thinking ahead, thinking about the issues that matter to New Zealanders—that is what New Zealanders are looking for. They are looking for a plan. That is what we are going to do.

For our young—it is just plain wrong and just plain shameful that the number of young people not in work, education, or training is growing year by year. We are selling a generation down the drain, and I will not have it anymore. This is a top priority for me and for Labour. We will pay employers the equivalent of the dole whenever they take on a new apprentice. We will set up long-term youth unemployed with a 6-month job doing important work in their communities. Accuse me of job creation—I will wear that badge with pride. I want to look after our young.

On infrastructure—we will get our cities moving again, getting freight and people moving, and it will not just be about roads. It will be about rail. It will be about coastal shipping. It will be about all transport modes, so that we can get the country moving again and get investment that actually makes a difference, and we will partner up with local government to make that difference.

We need a fresh approach. New Zealand needs a fresh approach. New Zealand needs a plan that works, a plan that is about working for those who cannot work at the moment. One thing I can tell you that is absolutely guaranteed is that our party has signed up to Budget responsibility rules. That means planning not just for the next financial year but for all the years that follow. Being responsible about the present and the future—that is what we will bring to it. We will not write out any cheque that cannot be cashed.

This Budget is an election year Budget. That should come as no surprise when you make your finance Minister your campaign manager too. That is what is in this Budget. That is what is reflected in this Budget. This is about a National Government, 9 years on, that is out of energy, out of ideas, not knowing what to do, and desperate to convince people that it wants to do something—realising what the real problems are: that it has not listened to New Zealand, for too long. On 23 September New Zealanders will have a chance for a fresh approach, for new ideas. They will be voting Labour.

Rt Hon BILL ENGLISH (Prime Minister): It was interesting to see the Leader of the Opposition reading off an iPad. I think he logged on to the wrong part of the Labour website, because that was Mike Moore’s speech from the 1993 Budget. I know that because I heard it. On a sunny day in New Zealand when hundreds of young New Zealanders this week have taken up their first ever apprenticeship, when exporters are looking forward to opening new markets behind the trade agreements that have been negotiated, when innovators are finding the capital to start their online business—on a sunny day here comes the Labour Party like a cold, wet wind and rain, because that is how it thinks New Zealand is. Well, it is not. It is a confident country going ahead with real momentum and more confidence about its place in the world than it has had for a long, long time.

The Labour Party is more like a kind of tattered old red phone box, watching the traffic go by, wishing the world would stop and wind backwards so it would become relevant. But I have to tell the Labour Party that the phone is off the hook. The phone is not going to ring. The traffic is only going to speed up and get faster, and the Labour Party, after 9 long years of Opposition, is like its policies: worse than when it started.

This is a Budget that represents, and presents to New Zealand, looking out ahead, one of the best opportunities in a couple of generations to build the benefits of sustained growth. It could be delivered only by a National Government, and I will tell you why: it is because we are confident about New Zealand. The Opposition parties simply are not. They do not believe in our families and our communities and our businesses. We are confident about New Zealand, about the growing assurance of its place in the world. We are confident about our increasingly respected economic performance, growing faster and more sustainably than most of our peer countries, if not all of them. We are confident about the courage and the hope and the aspirations of so many New Zealanders who in the last few weeks and months have got off benefit, and whose children therefore are among the 50,000 fewer who are in welfare-dependent households.

We are confident about the young women who get on with starting their online business, selling to the world in a way that probably should not happen, in theory, but in practice they are making it happen every day. We are confident that our primary production sector can deal with the environmental challenges that will help to reinforce our “clean, green” brand around the world and drive up the value of our products.

We are confident because we are going forward. For the next 5 years 3 percent growth is in the forecasts—3 percent growth for the next 5 years. We have under 5 percent unemployment, the lowest numbers of people on benefit in 20 years, the highest proportion of New Zealanders in work ever—ever—and rising surpluses and falling Government debt. This is better than the good old days. This is better than the good old days, particularly because so many people have work, and particularly because the economy consistently keeps delivering not just lots of new jobs but more than we expect. Of course, the Opposition parties sneer at it. The person who got off benefit and took a job at the rest home—that is low productivity. Apparently, we would be better off without that, and instead have high productivity. Well, that person will not get to be high productivity until they get their first job. The thousands of young New Zealanders who have gone into apprenticeships—more than ever; better than the good old days—yes, they are low productivity. I agree. If you are 17 and you have just gotten on to the building site in the biggest construction boom this country has seen in two generations, yes, you are low productivity, but I want to say to that apprentice: “Girl, we’re proud of you.”

The other reason this could be done only by a National-led Government is the political stability that this Government represents. I want to acknowledge the Māori Party, United Future, and the ACT Party. We have some hard-edged discussions, but over a period of time we have been able to create ways of looking ahead, making decisions, and getting things done that are good for New Zealand, that represent a higher common purpose, despite our sometimes quite divergent views. I want to pay respect to the integrity and the transparency and the honesty that those parties bring to this stable Government.

This year New Zealand gets to think about the alternative. I am looking forward to it: a Labour-Green Government led by Winston Peters. We know that because he is going around telling everybody, but for good reason—for good reason. There has not been a leader of the major Opposition party that has polled fourth as preferred Prime Minister. And I have been wondering—[Interruption] It is not a matter of what the public thinks about it or what we think about it; it is what Andrew Little’s own party thinks about it.

I have been watching the performance of two of the best-educated, smartest, apparently most dynamic politicians of the left in the last generation, Ms Ardern and Grant Robertson, and it has been pretty poor. It has been pretty poor. They are not trying. Surely they are better than this—surely. But the plot is unfolding, because the wise head of the Labour Party, the balanced, wise, considered Annette King—they dispatched her, and now they look like nothing more than two happy undertakers, the double-crewed ambulance that is going to wheel off the leader of the Labour Party.

That is why Winston Peters feels like he is on a roll: he is watching the Labour Party sink under the weight of its own mediocrity, inertia, and irrelevance. [Interruption] Well, if the Labour members want to make themselves relevant, they should work out how to vote for at least parts of this Budget. Are they going to vote for 1,125 more police staff? No, no, they will not. Are they going to vote for double-crewing ambulances? No, not now. Are they going to vote for 20 to 30 percent pay increases for the minimum-wage rest home and home-care workers? No, they are not. Are they going to vote for building 34,000 houses? No. What they are going to do, apparently—we have spent a bit of time on this—is build four times as many houses, with less money than we have allocated on land, which they do not own. So that will work! So that will work! And that is actually before I have got to the announcements made today.

I want to congratulate the Minister of Finance on the announcements made today. We have worked closely together on all the other Budgets, and it is fantastic to see Steven Joyce delivering a Budget that seizes the opportunities. And it is different now. We have a lot more positive choices, but the same discipline, and that is where Steven Joyce understands absolutely how Government runs, how the economy runs, and where the money can and should be spent. And, actually, it is harder to manage surpluses than deficits. As a finance Minister, I could just say no; he has to find 53 ways of saying yes, and today he has managed to find them. I want to acknowledge his huge effort.

Today 1.3 million families will be, on average, from 1 April next week, $26 a week better off.

Carmel Sepuloni: Next year.

Rt Hon BILL ENGLISH: Next year—I agree. The lowest-income 150,000 families will be, on average, $36 a week better off. In addition to that, on 1 April next year 750,000 superannuitants will get a bigger increase than they expected, couples will get an extra $13 a week, and singles will get $8 extra a week. Why? Because after-tax incomes are higher. That is why you do not listen to anything the Opposition says about after-tax incomes. They are higher. That is how superannuitants got twice the rate of inflation increases over the last 4 or 5 years. The other reason is that you have a Government that can run all the expenditure it needs to run and have lower taxes. That is why. That is the only way you get those sorts of increases.

Let us look at the impact that a strong and growing economy can have for a family, say, since 2014: free doctors visits for under-13s. Let us think about Josie in Lower Hutt. Her older children are now more likely to achieve NCEA—actually, particularly if they are Māori or Pasifika, where the rates have gone up from the low fifties to the mid-seventies. There has been around a 40 percent increase in the number of those children who achieved NCEA level 2. If she was on a benefit—1 April last year—there is $25 a week extra for every beneficiary household with children. Her chances of getting work are greatly increased because of 200,000 new jobs over the last 3 years. Let us say she got a job in the rest home at the minimum wage, which has gone up every year, and she now faces the prospect of a 20 to 30 percent wage increase and a path to qualification and skill levels in the growing aged-care industry. When she did that, her children became some of those 50,000 fewer children from a benefit-dependent household. If she had more children and was paying higher rent, particularly if she had very high rent in Lower Hutt, the benefits of the accommodation supplement could be $50, $60, or $70 a week.

In this Budget, Steven Joyce has made sure that those with the highest housing costs get the biggest benefit. It is that simple. One figure he did not mention is the OECD measure of low income—that is, households below 50 percent of the median income. Today we have made announcements that mean that from 1 April next year there will be 50,000 fewer children under that threshold—by 1 April. This amounts to about a 30 percent reduction in that measure of child poverty, although there are many other measures; that is just one. The families benefit from that.

A whole lot of other people are going to benefit as well, because one of the big debates in this election campaign is going to be between those who think that spending money shows you care, which is the Opposition, and those who think you show you care by changing lives. That is us. It is that basic.

We heard it in the Leader of the Opposition’s speech. Here is the difference. The National-led Government wants—

Carmel Sepuloni: Kids in cars, doing homework. Yeah, that’s a life-changing thing to happen!

Rt Hon BILL ENGLISH: —no, listen to this carefully—by 2021, to have a 25 percent reduction in the rate of hospitalisations of children for preventable conditions. We all know that is a huge challenge. We are learning how to take it on from the rheumatic fever project, with the thousands of kids who turn up with respiratory diseases, cellulitis, asthma—all things that are avoidable. What does Labour want? Labour wants a demographically adjusted, Consumers Price Index - adjusted real increase, with the technology factor and the population bit, for more money. That is what it wants. We want healthier children; Labour wants more money.

In education we want to deal individually with the kids who need more help to get over the line. Labour just wants more money. [Interruption] That is right—you are right. You are right. Sometimes it is not more money; the other one is a review—a review. So “Mental health is a really big issue, I have had 9 years to think about it, and I thought: ‘We’ll have a review.’ ” That is how the fifteenth Labour health spokesperson justifies Labour’s policy.

It is the same with serious crime. What I am very pleased about in this Budget is, as a result of the tools we are using—called social investment—we are getting into very granular understandings of not just who has got a low income but exactly what types of other issues trap them there. One big motivation for that is that when you have got a growing economy, you want everyone to be able to get on that bus. The fact is that even with some of our households—even if they have more income, it still will not change the toxic mix of offending, welfare dependency, and family violence that traps them where they are.

We are unashamedly addressing the hard core of New Zealand’s longest-run social problems, and in this Budget there are 14 initiatives that do that. I want to pay tribute to public servants who, I know, find it difficult to fit the model. It creates a lot of tension and sometimes a bit of frustration, but we are making some progress because what is the point of having a Government if it cannot deal with the most complex, the most vulnerable, and those who under Labour’s model of mass funding, run by their union mates, get forgotten as they did under the last Labour Government?

So as Steven Joyce said, the only reason we can have these conversations is that we have got a strong economic plan that is underlying a strong economy. If we can have 3 percent growth for 5 years, that would give New Zealand one of the longest periods of 3 percent growth it has had for a long time. In that context we can achieve things in the next 5 years we could not have even thought of 5 years ago. We can achieve more in our markets, more in our innovation, more in our growth of employment, more in our infrastructure, where we are making a huge investment, and more for the most vulnerable New Zealanders, who, of course, want to come along for the ride. [Interruption]

Mr SPEAKER: Order! [Interruption] Order! [Interruption] Would members please resume their seats.

JAMES SHAW (Co-Leader—Green): E Te Māngai o Te Whare, tēnā koe. Ki a koutou, huri noa i Te Whare, ngā mihi o te wā ki a koutou katoa.

[Greetings, Mr Speaker. Acknowledgments to us all throughout the House.]

The Steven Joyce who stood up to give that speech looked and sounded like somebody who actually wanted to do something for low- and middle-income New Zealanders. But the Steven Joyce who wrote the Budget—who actually filled in the detail below the headline—was an entirely different person. So would the real Steven Joyce please stand up?

The big headline in today’s Budget is, of course, this $2 billion family income package. After 9 years of making lives harder for low-income families, now, in an election year, National makes yet another headline-grabbing announcement to make it look like it is doing something about it. It sounds great, but a quick glance at today’s announcement suggests the following things: on the one hand, it says that it is increasing family tax credits for some people, but, on the other hand, the abatement rates will be higher and they will cut in earlier. It gives with one hand, and it takes away with the other.

The changes to income taxes go well beyond simply resetting thresholds to take account of inflation. As always with these guys—as always—the largest share of the tax cuts go to those on the highest incomes. Families who are on more than $127,000 a year get a tax cut of $33.22 a week, whilst those on $24,000 a year or less get $5.34 a week. I am just going to say that again. Families on $127,000 or more get $33 a week back in their tax cuts, whilst those on $24,000 a year or less get only $5.34, and that is in their package.

This so-called $2 billion Family Incomes Package is just another tax cut for those on the highest incomes, in disguise. It reminds me a little bit of Budget 2015, when National announced so-called benefit increases of $25 a week. That sounded great too, until we realised later that fully half of all beneficiary families with children did not get the full $25. In fact, some—many—got nothing at all. That is the thing about this Government. It is the master of the shell game. Steven Joyce’s first and final Budget, along with unprecedented waves of pre-Budget announcement, shows one thing: National may be out of touch, but it is very in tune with its polling data. So it has set about to look very, very busy indeed. But looking busy is not the same as actual results. So let us talk about this Government’s actual results. It wanted to be tested on its record; let us talk about its record.

Climate change: National says it is super ambitious on climate, but in the last 9 years since it came to office, New Zealand’s greenhouse gas emissions have risen 19 percent.

Rivers: National says that it is cleaning them up, but after 9 years of a National Government you cannot swim in 62 percent of our rivers without the risk of catching some horrible disease.

Conservation: National says it is doing everything it can to save our endangered species, but it has got no problem with a coalmine in a Kiwi habitat on conservation land.

Transport: National says that new motorways will drive productivity, but after 9 years of a National Government, Aucklanders now spend as much time sitting in traffic as they do on vacation every year.

Energy: National says it wants 90 percent renewable electricity, but New Zealand gets a lower percentage of its electricity from renewable sources now than it did in 1980—1980.

On productivity: National says it is spending more on R & D grants in this Budget, but after 9 years of a National Government we are still spending less than half of the OECD average on R & D in this country.

In the Māori economy, National says that it is improving well-being and job opportunities for Māori, but after 9 years of a National Government, Māori unemployment is still twice the national average. It has not budged in 9 years.

On housing: after 9 years of a National Government, New Zealand is the most unaffordable country in the world to buy a house. We have 40,000 homeless people in this country—40,000. Today’s increase to the accommodation supplement is an admission of failure. It is a failure to build more houses. It is a failure to keep housing affordable. The accommodation supplement that takes taxpayer money and gives it to private landlords—if the Government had actually built more of its own social housing stock, that money would come back to the Government to be reinvested.

Steven Joyce says that he wants New Zealanders to judge National on its record, and it is a broken record. Housing—broken. Our rivers—broken. The climate—broken. Transport—broken. But we can change this. New Zealanders can change this, and we just need to change the Government. This Government reminds me of one of those tired old bands that keep touring the world, playing their old hits, talking about the good old days with that old lead singer that they used to have. The problem is, the songs were not even that good the first time around. It is time to give it up, guys, there is a new super-group in town.

Kiwis are generally a pretty happy and tolerant lot, but 9 years is a long time to put your trust in a Government that is big on announcements and short on results. I mean, can we really trust National to make our rivers swimmable again, when after 9 years our rivers and our lakes and our aquifers are even more polluted and degraded than they were when they came to office? Budget 2017 sinks another $90 million into subsidies for industrial irrigation, which will only make things worse. The braided rivers of Canterbury are on the verge of vanishing for ever. Coes Ford is an ankle-deep puddle. More than 60 percent of our monitored rivers are now unsafe to swim in.

The Land and Water Forum has broken down under National. It no longer trusts this Government to act in good faith, saying, on the one hand, that it wants to clean up our rivers, whilst on the other hand it is subsidising the very things that make that impossible. Instead of trying to fix the problem, National is doing what it always does: trying to wring a few more dollars out of a broken system before the public catches on. Our rivers are too precious to be spoilt in National’s short-sighted pursuit of a quick buck.

What of our children’s future? Can we still trust National to protect our climate and move our economy towards a low-carbon future? Yes, sure, they signed up to the Paris Agreement, committing us to a low-carbon economy. But at the same time, under their stewardship, New Zealand’s greenhouse gas emissions have been getting steadily worse. They are now 19 percent higher than when this Government came to power, and they continue to rise and rise and rise.

Budget 2017 makes things worse. These guys are still stuck in the 1950s, thinking that they can spend $9 on motorways for every $1 they spend on rail—more pollution, more congestion for Aucklanders. The National Government’s failure to take meaningful action on climate change means that we are going to have to pay other countries to reduce their pollution, so that we do not have to. That is going to cost us a fortune.

The Green Party revealed this week Cabinet briefing papers that estimate that the cost of National’s inaction on climate change is going to cost us at least $14 billion over 10 years. That is nearly $1.5 billion every year just to buy carbon credits overseas. It is a massive transfer of New Zealand wealth overseas, and that is at today’s prices. When the price of carbon increases, we will be stuck with a bill that makes our looming superannuation goal look teeny by comparison.

We still have a small opportunity to act. New Zealand has got the resources and the clean energy expertise to meet the climate challenge and to show the rest of the world how it is done. This is, in fact, one of the greatest economic opportunities in at least a generation, and one that National members are simply letting slide on by while they have their heads buried under the sea, looking for oil. If you want to live in a country that is not crippled by climate debt, one that is truly sustainable, with innovative, meaningful, well-paying jobs, you need to vote to change the Government before that window of opportunity closes.

This year we estimate that the Department of Conservation (DOC) will have $53 million less to invest in protecting nature than it did in 2008. That amounts to a cumulative budget cut of $422 million since National started cutting. These long-term budget cuts have resulted in fewer front-line rangers on the ground protecting our most precious and vulnerable birds from further decline and extinction. It also means we have fewer scientists discovering new ways of doing conservation smarter.

After 9 years, can we really trust National to protect the wild spaces that we love, when they are happy to starve nature’s front-line defenders whilst handing out fat subsidies to oil companies to drill in the Maui’s dolphin sanctuary? Give me a break. Only a vote for the Green Party in 121 days’ time will restore DOC funding for nature and create a whole lot of good jobs out in the regions where they are needed the most.

There has been a lot of talk about social investment. National’s big idea is to use big data to target social spending more accurately, especially when it comes to our most vulnerable children, in order to reduce future Governments’ fiscal liability. Children are not a liability. They are our greatest asset. And you do not target children; you care for them. Everyone knows the old saying, that it is better to build a fence at the top of the cliff rather than have an ambulance waiting at the bottom. The Greens have argued for decades that investing a little bit more up front, in things like early childhood education, will enable our children to grow up to be thriving adults with strong families and good jobs.

Social investment has the potential to be the Holy Grail of social policy—an evidence-based approach to building a 21st century welfare system that actually does what it is intended to do, which is to lift families out of long-term, intergenerational cycles of poverty and exclusion and into ever-increasing cycles of inclusion and opportunity. But how can you trust a National Government to deliver on that promise when, at its heart, it is simply using the language of social investment to cloak 9 years of cutting social spending in order to deliver Steven Joyce’s small State dream. National is not building a fence at the top of the cliff. It is leaving a tangle of barbed wire on the edge and hoping that nobody trips over it and falls over.

If Steven Joyce truly believed that people mattered, National would have curbed its instincts to blame and bully beneficiaries. If Steven Joyce truly cared about our most vulnerable families, National would have reacted very differently to the stories of indifference and bureaucratic blockheadedness that are regularly encountered in Government agencies like ACC, or Child, Youth and Family, or Income Support, and in our prisons.

When times are, at least theoretically, so good for the New Zealand economy, explain to me why people who are working, who have jobs, and are doing more than 40 hours a week in those jobs, are living in cars. Why are people who are working 40 hours a week, or more, living in cars? Why are New Zealand’s houses so cold and so damp that there are 40,000 visits by kids to the emergency rooms every winter because their homes make them sick? Why do 1,600 people die in the winter months every year, compared to the rest of the year?

New Zealand’s homes kill five times more people every year than the road toll, and this Government killed off the very home insulation scheme that was designed to save those lives. Social investment—give me a break. The home insulation scheme had a benefit-cost ratio of 6:1. This Government understands the cost of everything and the value of nothing.

Yesterday the Prime Minister posted a survey on his Facebook feed, asking his followers what sort of pie he should eat today. The answer is humble pie. Budget 2017 disappoints in its lack of a big vision for our great nation and a lack of self-belief that we can actually solve the great challenges of our time if we change the direction that we are heading in. We can have rivers that we can swim in. We can lift tens of thousands of children out of poverty. We can fix the housing crisis. We can show the world what it takes to have a truly sustainable economy that works for and includes everyone. Budget 2017 will not be the defining political moment of this year. That moment belongs to the people of New Zealand at election 2017. After 9 years of a National Government, it is time to change the Government—and change is coming. Nō reira, tēnā koutou, tēnā koutou, tēnā tātou katoa.

Rt Hon WINSTON PETERS (Leader—NZ First): These—[Interruption]

Hon Gerry Brownlee: He’s brought his ashtrays in!

Rt Hon WINSTON PETERS: No, these are not for you, Gerry. These are tins—t-i-n-s. There is no surplus. Any fool can see that. What we had today was a wilful, wanton, weak, wobbly, woeful Minister with a wilful, wanton, weak, wobbly, and woeful Budget, and National is going to lose the next election, big time. The most worried people watching me right now are those good, hard-working, loyal National Party voters who know this will not cut it. Out there in their homeland, and in the provinces and in the regions, there is nothing for them at all.

Here was the claim by Mr Joyce: 200,000 more jobs in the last 3 years. To get on that list you have to work just 1 hour a week. Who can possibly believe in that sort of hypocrisy? Then they talked about their growth rate. It is actually 2.8 percent, and if you take out the 2 percent of population growth, that is 0.8 percent, and that is down the bottom of the OECD. You cannot believe these people. I know those National supporters out there who remember the likes of Holyoake and Holland and all those other people, when National was a worthy party. Know that these people—and the polls show it—are just a bunch of useless, hopeless, lazy, idle, and, in the main, old “use-by date well gone” members of Parliament. And they have got something to do with tins; they have got a tin ear. They do not listen. They do not care, and this Budget showed it.

Budgets are meant to be about philosophy; they are meant to be about what demarcates a party against all the others. They are meant to be about a plan—a vision—which every sporting, cultural, or business enterprise knows you must have, except for the National members, who came in today with no plan, no vision, no idea. They are just trying to hang on for 3 more years so that Gerry does not have to do any work and so that some of them do not have to go back to their tawdry, hopeless, former lives, where they never had a real job in the first place. Those members do not know what it is like to make a lot of money in business, at all. They came here because they are political and business failures.

Hon Member: Ha!

Rt Hon WINSTON PETERS: Oh, do not laugh at me. I do know. I have got a record of making some serious money when I had a practice in a law firm. [Interruption] Ha! I made more than anybody over there did, and I can prove that with the greatest of ease. But I gave up that life for the people and for the cause of this country, and I have never regretted it—never regretted it.

Did you like the way Steven Joyce reeled out billions and billions and billions of dollars, all over 4 years? He never gave a comparison against 2008. He never gave a comparison against what they do in Australia, Canada, Scandinavia, and all the First World countries. No, he thought he could confuse people with big figures, and then the cacophony of clowns got up, and what did they do? They clapped him—unbelievable. I have never seen so many sheep going to the slaughter and clapping their way to it—not one Judas goat but about 25 of them; all of the backbench, and they will not be here after the next election.

Those members believe—and they said it again today—in globalisation. They believe in mass immigration. For 65 million people the UK target is net 100,000. New Zealand today has 4.7 million people. Our target? It is 72,000 as we speak, all cramming into Auckland—spilling over—and every social service under massive stress, with a housing crisis that today says to a young student at university: “When you leave, it’s going to be three times as hard as it was for your parents to get a house.” That is the legacy of this party. Oh, the Government members are not smiling now, are they? Oh no. I can tell you at home that they are all looking down at their notes. They are all fascinated by their correspondence. Some of them are reading the Budget again, trying to make head or tail of it, because they can see it might have been the longest suicide note in history for them. That is what is going on here.

Let me tell you how bad these globalists are, because, you know, they do not pay attention to the rest of the world—whether it be Brexit, whether it be the United States, or whether it be Australia. The Chinese Government has recently changed regulations to put a capital gains tax on properties held overseas, and, guess what? Just the other day Chinese investors were rushing to buy land in New Zealand. Two examples: Massey University sold land to Whyburns, which then onsold to a Chinese investor at a massive profit. They did not care what the profit was; they wanted to get that land in New Zealand and they got it. An Auckland golf course sold land to Mansons, which onsold to a Chinese investor at twice the market value. These are just two examples. And we sold more land offshore last year—five times more than the previous year. Those members are land agents for a foreign culture and for foreign economies, and the very last thing they will ever do is stand up for you.

When we sought to have a register of land and homes in this country so we might know what is going on, these people over here opposed it because they want you to be like their caucus. They want the mushroom principle. They want you in the dark permanently, and our job here is to shine some light on what is going on in this country.

That was a hopeless Budget speech—appalling. And then, to top it off—usually they go from the sublime to the ridiculous, but this time it was from the ridiculous to the pathetic. Up gets Bill English. When you see people standing in a certain way, you know, psychologically, how they are. When somebody crosses his arms like that, that means he is open to all sorts of attack because he knows he has got something to hide—and he did for most of that speech.

Hon Simon Bridges: Well, you’re doing it now.

Rt Hon WINSTON PETERS: Yes, I am just showing—oh, for the benefit of “Simple Simon”—

Mr SPEAKER: Order!

Rt Hon WINSTON PETERS: For the benefit of “Simple Simon” of Tauranga, I am showing those people there the way Bill English was standing. And do you know what he said? Do you know what he said? “You’re doing it now.” I mean, do these guys become Ministers in a raffle? It is unbelievable.

He claimed a surplus of $1.7 billion. He claimed a surplus of $1.7 billion. If I am looking at roading, that is $1.7 billion short already. If I am looking at railways, that is $1.7 billion short already. If I look at the Cullen fund, which the Government is not contributing to, that is $2 billion short already. If I look at our hospital system, that is $1.7 billion to $2 billion short already—and the Government claims a surplus. Whilst out there, where the struggle is real, it does nothing whatsoever, and that is the reason why it should lose. National has forgotten what it stands for. That party used to be called the National Party, with a capital “N”; now it is the “International Party”: the puppets of every other society and every other people but ours. That is how bad those members are, and if they think they are going to win the next election—as Muhammad Ali would say, if they even dream they are going to win the next election, they should wake up and apologise. Unbelievable—unbelievable!

There is family poverty; mental health services are in disarray; the conservation estate and services are in dismay because the only work that is going in is if it can help tourists, and to hell with New Zealanders and their legacy; there is social housing in motels—$100,000 a night now—and science, research, and technology is in disarray. Were there any figures today about what it is going to put into science and technology as against GDP so we can have a comparison with Singapore and all the smart countries? No—no comparison at all. There is runaway immigration, house-price inflation going through the roof, infrastructure deficits in every town and city, and over the regions and provinces there is utter neglect—utter neglect. And the New Zealand Superannuation Fund—as I say, if we were contributing $2 billion a year, then there would be no surplus. We would be down $300 million today. That is the truth. That is the truth—unbelievable.

Hon Gerry Brownlee: So you borrow to save. Brilliant! Absolutely brilliant! Borrow to save!

Rt Hon WINSTON PETERS: And here we go—oh, here we go. The person shouting out here is a man called Gerry Brownlee. If you are down in Christchurch, you will know who he is, because down there they call him “Mr Useless”, “Mr Do Nothing”, “Mr Slow as You Go”—and National made him a foreign Minister. The most amazing thing about that is he does not even know where Canada is. The first thing he did was insult one of our old friends—unbelievable. And then he goes over to Australia, and I bet the Aussies thought: “Good God! What’s coming here? What have we got here?”. And then he calls the foreign Minister the Prime Minister. Unbelievable! Not trained—been here for years. He has been here for years. Unbelievable!

The real figure New Zealanders wanted to know today was what our GDP growth per person is. When you know that, you will know whether we are going that way or that way. And with all those economists and all those high-paid people in Treasury, why would anybody not tell you what the GDP per person growth rate is so that you will know against the rest of the world how you are doing? Not a word, not a syllable, not a sound, not a mutter, not a murmur in this Budget, because the Government believes in the Budget of mushrooms as a principle. Do not tell the New Zealanders anything!

Do not tell them, for example, that in most trades and most professions, if you are in Australia—

Hon Gerry Brownlee: His party’s funded on mushrooms.

Rt Hon WINSTON PETERS: Look, do not try to shout me down; I am having a conversation with real people. I am having a conversation with the people of New Zealand. I am not talking about people who spend all their time thinking about their next meal; I am talking about the people who are thinking about the next bill they have got to pay, because out there the struggle, Mr Brownlee, is real, and one party knows it and understands it and has answers for it.

Did the Government tell you how it is going to grow the economy? Did it tell you, for example, that manufacturing against GDP in this country is declining? Did it tell you that exporting as opposed to GDP is declining? Did it tell you, for example, some of the most amazing things in this Budget—and I will get around to it very shortly. Then it got on and said it is doing things for the Māori people, as though the Māori people are not like the rest of us. In this country we have got red tape, and under the National Government we have got brown tape. That is what we have got: racism, separatism. But let me tell the Māori people out there—and there will be a lot watching right now, up there in Hokianga, in Kaitāia, because they would love to vote on our roll, and they ain’t going to be voting for the National Party. But let me tell you this: after all the work that the Government said that it had done, and money that it has given to the Māori Housing Network—$14.4 million in 2015-16, $17.6 million in 2016-17, and more in this Budget—I want to ask those two members from the Māori Party here, who are here for the next 3 months, how many houses they have built.

Marama Fox: Hundreds.

Rt Hon WINSTON PETERS: See what Marama Fox says? She opens her mouth and lets the wind blow her tongue around. But the answer out there, Marama, if you are concerned about this, is they have built 11—11 houses. That is at $2.8 million a house, and they are not in Paritai Drive or Remuera. No, they are around the country. And they have consented 63 houses. That is, they have given them the consent. Now let me ask you: can you live in a consent? How many people do you know living in consents? This is a sham. It is separatism, racism, an endless campaign. The people of this country and those in Māoridom—the followers will be legion, because the mass majority of Māori do not want your policies; the mass majority of Māori want a safe, affordable house. They want a decent health system should they fall ill. They want an education system to give their children an escalator for progress in life. They want First World wages and First World jobs. Those four things are what Māoridom wants, and, come to think of it, that is what everyone wants, all around the world and in this country. One party alone understands that, and that is why Māori will be lining up in their tens and tens of thousands in this campaign to back a party called New Zealand First.

But, of course, see, we are not separatists. We do not look at our race. We are not gender-biased. We do not look at people’s religion. We take on people because they have got a thing called talent, and it starts at the top.

Let me just say that Mr Joyce got up and he said that all these people—1.3 million families—are going to be $26 better off. You know that famous line from the movie The Shawshank Redemption? “The colossal”—I cannot say the next word—“The colossal [so-and-so] even managed to sound magnanimous.” Twenty-six dollars!

Ladies and gentlemen, in 2006, 2007, and 2008 we gave the minimum wage people $3 extra. We took it from $9 to $12 in 3 years flat. Multiply that by 40—how many extra dollars is that a week? Even Gerry should be able to work that out. Even Gerry should be able to work that out. That is $26; we gave them over $120—if they are working Saturday as well, much more than that—per week. We did that 10 years ago. If you give us a chance, we will do it again. But we will make sure that business, because of sound tax policy, is able to pay for it. That is the difference.

You know, Mr Joyce talked about economic growth. He said the economy today—and I am glad he said it—is 14 percent larger than it was 5 years ago. We have looked behind the figures. Take out inflation and that means it is 9 percent growth in 5 years—that means 1.8 percent per year. Now take out the population growth of 2 percent, and we are not even growing at 1 percent per year. Now more and more economists are beginning to understand that.

But we have got people like somebody in the New Zealand Herald today—you know the clown who wrote this. He said that the Government was swimming in money. Tell that to the people in mental health institutions, the people who are looking for a home, and the people who are looking for a job—a decent job; some of them have got three jobs—who want to get rid of secondary tax and have a decent life.

But here is the real rub, for the benefit of the Māori Party, and it is this—

Marama Fox: We’ll take it—$354 million.

Rt Hon WINSTON PETERS: No, no, I saw you get up and clap. But only yesterday the overseas merchandise trade statistics came out, and they revealed the stunning success of National’s much-vaunted, tiringly boastful export agenda. Guess what has happened. In the 12 months to April this year, New Zealand merchandise exports grew by a staggering—listen to this—0.2 percent. Multiply that by 10—that is 2 percent growth for a decade. And the Government members get up here and say that they have got a plan. They are a joke. Underneath the hype and misinformation it is a fake Budget that delivers nothing meaningful for ordinary New Zealanders, and nothing to make our economy go faster. It does not tell New Zealanders how they compare with the rest of the country.

Ladies and gentlemen, there is an election on 27 September.

Carmel Sepuloni: The 23rd.

Rt Hon WINSTON PETERS: Sorry—23 September.

Hon David Bennett: Get it right!

Rt Hon WINSTON PETERS: Ha, ha! You see, that is how I know they are listening. That is how I know they are listening. I was thinking about the day we are all going to be down here as a huge caucus, and I got a bit ahead of myself. I got a bit ahead of myself. But there is an election on 23 September, and in that campaign, on that day, in that vote, and in the 2 weeks beforehand, people are going to have a chance, whether they are going to vote for their province, for their families, for their communities, or for their politics. Right now all the signs are showing that New Zealanders realise that they had better put their hand up for their provinces, for their regions, and for their communities, because if they do not do that, then nothing will help them now.

I have never seen such a disparity between the rich and the poor, now creeping into the middle class, in all my life. The great dream of people like Holyoake and others, when that party was a proud party, was a property-owning democracy with the greatest level of egalitarian equality of any society on earth. Look at it now: divisions everywhere. Now even in wealthy families there are people who are poor because they are students, with no chance of ever buying a home unless mum and dad can give them $300,000 or $400,000 to get a start. How many families who thought they were comfortable can afford that? But National has no plan for housing. It is going to bring in the population of Rotorua every year for the next 10 years, but it will not build the infrastructure. If you look at the motorways in Auckland now on a Saturday morning, you will know what a catastrophe this all is.

This has been a day of bad and sad news. The people in this Parliament and those watching on that TV station and listening out there in New Zealand have had to put up with 45 minutes of sad, bad news. But I have got one piece of great news for everybody watching and listening today. I have got one piece of great news for everybody out there who is watching, and it is this: that was Steven Joyce’s first and last Budget.

Hon TE URUROA FLAVELL (Co-Leader—Māori Party): Kia ora tātou katoa. That speech was beautiful—that speech was beautiful. It was touching. I was almost moved to tears—almost, but no. That was sad, sad news for Aotearoa. If that is what is coming round the corner, we are in trouble, e hoa mā. We are in big, big trouble. I am pleased to stand on behalf of the Māori Party today to declare support for this Budget and, indeed, support for the honourable Mr Joyce for delivering, I think, a good job—a good job. It must have been because the Māori Party was beside him.

As we say in Te Arawa—and this is a very important saying—the singer may have changed, but the waiata is exactly the same. The Minister of Finance may be new, but with the help of the mighty Māori Party there are some real goodies in this Budget for whānau. Whānau have always been at the heart of what we have been about as a Māori Party. From the first time we came into this House, we have talked whānau at all times, above all. We have promoted whānau, we have been looking after whānau from day one, and the Māori Party, by the sounds of it, has had our sticky fingers all over this Budget, because its focus has been on whānau.

While it has been a National Party Budget in some ways, I can say that the huge footprint of the Māori Party is over this part of the Budget in looking at supporting whānau. Like his predecessor, he sees the value of innovative approaches to tackling issues affecting Māori. Bill English, the Prime Minister, in his time as Minister of Finance, worked closely with the Māori Party, and I am pleased to say that Steven Joyce has done a similar approach, recognising that we as the Māori Party are all about tackling issues upfront and head on. We want to contribute, not get angry, not go wild, not lose our head, not do the spin, but, actually, we want to contribute in a positive way.

So I am saddened by the fact that Mr Peters voted against Treaty settlements again and again and again—because that is what he does. He voted against housing projects like Point England, voted against—oh, anything to do with Chinese names, he is up for it, because it is election time. As soon as we heard it was election time—uh, oh, pull out the racism card; it is a winner every time. So that is the sort of sad approach that has happened.

I want to say this: you have got to be in the game—you have got to be in the game. You cannot play the game from the sidelines; you need to be in the game. Sometimes we need someone to blow the whistle a few times, attract a bit of attention, and get results. But you cannot get anything unless you are on the field. And so, as I say, at the table we are, and we will continue to be and support any initiatives that assist Māori people.

Being at the table as a support party for the National Government, we have secured and influenced—hold on, here it is—more than $2 billion worth of gains in the Budget. It is only $2 billion—

Marama Fox: Is that all?

Hon TE URUROA FLAVELL: No, no, hold on; there is more. Actually, it is more than $2 billion.

Kelvin Davis: Two percent of the Budget.

Hon TE URUROA FLAVELL: Those in Opposition who are yelling at me at the moment—hold on, what have they gained over the last 9 years? Kore, nothing, zilch, zip, naught, nothing—that is what they have achieved, and yet they have got the cheek to come into this House and have a go at the two Māori Party members of Parliament, who sit next to the Government and get more than $2 billion. It is a good day to be in the Māori Party.

That means $2 million more in Whānau Ora in this year’s Budget—$2 million. That is $10 million. And it is $10 million more than that lot have got, I will tell you that. But hold on, there is more. That is right. Hold on. That is the difference between us, eh? We just talk to each other; they have got to ask Willie. They have got to ask Willie—

Marama Fox: Or Andrew.

Hon TE URUROA FLAVELL: Or Andrew. Either way they have got to ask somebody, not like you and me.

Marama Fox: No.

Hon TE URUROA FLAVELL: No, that is right. Back off, back off, get down the back. Settle down, boys—kia tau. So that is what happens.

We have got more: $10 million for marae. Let us hear it. Is somebody going to speak up about $10 million against marae? Hold on. Shh! Shh! [Interruption] Oh, they are; they are going to speak up against marae. They are going to speak up against marae.

Hold on, here is another one: $21 million—$21 million—for Māori language and culture initiatives. Hold on—[Interruption] Oh, they did it again—they did it again. They spoke up against Māori language and culture, because that is what they do in the Labour Party: they speak against things Māori.

Gains for Māori, that is what we are on about. Every day, every month, and any dollar we get today is better than the dollar we did not have yesterday, so we are on a roll, and we are here to make gains. So watch this space.

Just in case there is any doubt, for the people of Whanganui, I need to tell them that there is $122 million in this Budget, Mr Deputy Speaker. I know you are the Deputy Speaker, and I know you would want to clap, but I will let you off today. There is $122 million in the Budget.

At the heart of this Budget, we have pathways to allow people to move into homeownership. Hold on. Let us see whether they talk about moving into homeownership. Shh! Shh! Let us listen. [Interruption] Oh, they did it again. Not again! They spoke against homeownership. It is so sad. My people—whakarongo; listen to this—unbelievable. Here is the point: if you want to have people speak against things Māori, look (1) to New Zealand First and look (2) to the Labour Party, because that is what they do. I am really sad about that because we are all different, we all have different shapes and sizes and are, clearly, in different political parties. Our solution is to look across the board, to try to find solutions for our people. Man, there have been so many gains in this Budget—unbelievable.

But we expect—and I will be clear here—that Māori are overrepresented in some statistics, some statistics. But you do not just moan. The idea is not to moan about it; do something about it, and for too long—in fact, for 9 years—the Labour Party members have moaned and moaned and moaned. And what has the Māori Party done? We have moved and moved and will continue to move forward. That is what we are about. In fact, I can say this: an extra 2,500 whānau will be reached by Whānau Ora through this Budget, and that is on top of the 11,500 who have already been supported just in this last year. So we are supporting looking after whānau. So hold on—some more whānau are to get help in this Budget. Let us listen—[Interruption] Oh, they did it again. Not again! That is four times. That is shocking. It is unbelievable.

Let us just check on one more—let us just check on one more. So we got Te Ture Whenua Māori Bill going through the House; we have got $32 million to build a Māori Land Service, which is going to look after Māori land—$32 million all ready to go. That is just the first part—that is just the first part. Hold on. Shh! Shh! [Interruption] Oh, No. 5. I have got five. I would go for six, but I am running out of time. In fact, I am pretty sure that, no matter what I said, that lot would speak against it—against more than $4 billon of money for Māori communities in this land. There is $4 billion. That is right—over the length and breadth of the time that the Māori Party has been in here. But hold on. Let us see whether they know how much money they got in the last 9 years. Shh! Shh! Let us just check.

Kelvin Davis: Where?

Hon TE URUROA FLAVELL: Oh yes, where? Oh no, where? Where did you see any money around, at all, from the Labour Party for this country? Nowhere; that is where—nowhere. So I can say this is a good day; this is a good day to be in the Māori Party. And, hey, the main thing—and here is the big pitch—all by two people; all by two people have the gains been made. So I am looking forward to the election, because the Māori Party is on fire when the shark and the fox rock your House.

DAVID SEYMOUR (Leader—ACT): They say that the definition of insanity is to do the same thing again and again expecting a different result, and I am not sure whether Te Ururoa Flavell is guilty of insanity by having far too much hope in the Labour Party.

I rise in support of this bill and this Budget, and I support this Budget and this Government because I have seen the alternative. Andrew Little, for the first time I have ever seen, failed to even use his allocated speaking time—he had so little to say. New Zealand First—we just heard from Winston Peters. It was a comic routine, but there was no substance behind it. What a joke. Look at his op-ed in the New Zealand Herald this morning. Raising R & D expenditure to 2 percent of GDP—well, the Government can very easily do that, but simply pursuing a certain amount of money spent on something is not the same as getting a result.

This Budget has one very good aspect to it, and that is relief for taxpayers. Raising the thresholds is a victory for ACT and ACT’s thinking, because we have been on this for over 2 years, relentlessly saying that bracket creep, which has taken money out of hard-working New Zealanders’ pockets week after week after week in greater amounts every year, is fundamentally wrong. So we applaud the Government for doing that. But once you get past those minor tax adjustments, which are going to take around about $1 of expenditure for every $7 of new expenditure that the Government is bringing in with this Budget, there is not much more good news.

I look from Labour to National and from National to Labour, and then all the way back to National again, and it gets very hard to see any difference. This is a Budget that is a tax and spend Budget, it is a vote-buying Budget, and it is a Budget that is designed to buy votes with other people’s money. The transfers to Working for Families, a policy once described by the National Party as “communism by stealth”—well, finance Minister Steve is wearing the hammer and sickle proudly on his sleeve today, as this Government expands transfers from taxpayers to recipients of middle-class welfare.

And what about the transfers that will take place from taxpayers to landlords in the form of the increased accommodation supplement? If you do not have a large—or even, really, any—increase in the number of properties being built in New Zealand, and if you give more money to people to rent the same properties, you know what is going to happen. Prices are going to go up and, in this case, rents are going to go up. It is an enormous transfer of wealth from the taxpayer to the holders of all-too-scarce rental property.

Those are the criticisms of this Budget. It is a tax and spend Budget. It is a politically calculated Budget. It is the kind of Budget that we used to expect from Michael Cullen. The fact of the matter is that what this Government should have done is cut taxes, and, specifically, it should have cut them by the $24 billion of forecast surplus that the Budget estimates tell us are coming down the line in the next 4 years. Rather than taking all of that money off hard-working New Zealanders and their businesses, we should have given it back to them by allowing them to keep the money they earn in the first place, through tax cuts.

The ACT Party has shown how New Zealand could have a top income tax rate of 25c in the dollar without cutting any spending. In fact, we would not only not cut spending; we would allow it to increase by $14 billion, as forecast in the coming 4 years. We would deliver a top tax rate of 25c, we would drop the bottom tax rate to 10c, and we would drop the 17.5 percent rate to 15 percent. Three tax rates: 10, 15, 25. Nobody should pay more than a quarter of their income in taxes, and that was completely possible in this Budget, just by giving back the surplus that this Government will now keep for the next 4 years. Just remember that a Government surplus is a taxpayer deficit.

But what about infrastructure? We have a huge problem in infrastructure because we cannot build enough homes, and we cannot build enough homes because we do not have enough infrastructure to get to the sections and the land where people would like to build them. Well, in ACT’s Budget, we would have given half the GST on construction to the council that consents it—a simply beautiful way of achieving the outcome of transferring an extra $1.2 billion in infrastructure spending, all within the Budget figures that I have just presented. With a 25 percent top tax rate and money left to spare, it would have given $1.2 billion to councils to build infrastructure so that people could build homes. It is so beautifully simple, it is automatic, and it would not require any photo opportunities. It would just transfer money to the councils, which get on with consenting and building. That is what this Government should have done.

The other thing it should have done was think about business, because the fact of the matter is that there is nothing in this Budget for business at all—at all—unless you happen to be one of the few favoured businesses that provide enough photo opportunities to get grants from some of the honey pots this Government likes to keep, largely for publicity purposes, and that is a shame. ACT would have reduced the company tax rate to 25c, and we would have done it by cutting the $1 billion of corporate welfare that this Government hands out in return for photo opportunities for Ministers each and every year.

But there is something much bigger that is not in this Budget that should be, and it is of great concern to New Zealanders under 40—that is, the question of making superannuation sustainable. I now stand here as the only Millennial political party leader and as the only person in this House prepared to say that superannuation as it stands is not sustainable and that we need leadership, rather than to be putting our heads in the sand on this issue. The Retirement Commissioner, whom the taxpayer pays for, and Treasury, which the taxpayer pays for—in fact, every time the Government pays for a report on the sustainability of superannuation, these people tell us that we have to make adjustments, and you have to wonder why the Government does not either take their advice or stop paying them to produce these reports. The fact of the matter is that there are currently four taxpayer-aged New Zealanders for every superannuitant, and in 20 years’ time there will be only two. That is not sustainable.

The ACT Party, in this Budget, which has a 4-year time frame or forecast, would have begun to raise the age of entitlement to New Zealand superannuation by 2 months a year in 2020, taking that age to 67 by 2032. That would be fair. That would mean that all generations would be involved in an adjustment that has to happen, instead of what the current Government is saying to Millennials, which is: “We acknowledge there’s a problem. We’re going to make an adjustment, but we’re not going to make it until 2037. That means we’re going to tax your generation $58 billion to give superannuation at 65 and 66, and then we’re going to pull the rug out just as you become eligible.”

This Budget is far better than anything the Opposition could possibly have put forward, and yet it still carries so many imperfections, so many long-term issues in housing and infrastructure funding. It lacks a commitment to the basic proviso on which the National Party was formed, which is that people’s property belongs primarily to them and the Government takes it only where necessary. That is what the $24 billion of excessive taxation—of surplus—is about. If this Government stayed true to its principles, then what it would have done is taken that money, taken those forecasts, and let people keep it, with a maximum tax rate of 25 percent.

People might be interested in what that means to them in practical terms. If you want to find out how much money you could have saved under ACT’s tax policy, go to www.ACT.org.nz/tax, punch in your numbers, and find out just how much this Government’s reluctance to stick up for the taxpayer has cost you. Thank you.

Hon PETER DUNNE (Leader—United Future): Can I begin by expressing my congratulations to the Minister of Finance, Steven Joyce, on the production of his first Budget. I know how much he has been looking forward to today and how much effort has gone into its preparation, and I just want, at a personal level, to congratulate him on that achievement. He is one of very few members in this House who will get the opportunity to present a Budget, and he should savour every moment that he has, in that respect.

The next thing I want to say is that no Budget is prepared in isolation. Every Budget is a reflection of the context of the time, and the context that lies behind this Budget is a very fragile one. Since about 2010-11, this country has been going through a period of steady economic growth—about 6 years. That is one of our longest periods of sustained growth in the last half-century, or more. Six years—it is not very long, which shows the frailty of the economic cycle.

This Budget projects growth over the next 4 years. Time will tell the accuracy of those projections. But, effectively, what we have is a Budget that is a moment in time, and I think that the approach taken has been a prudent one of saying that there are areas where we need to spend more, where we need to make adjustments, and where we can afford to because we have a surplus at this time, but that cannot be where it begins and ends.

I see this Budget as a “building blocks” Budget. The work that has been foreshadowed, in terms of the increased social expenditure in health, education, welfare, and justice, is good, generally, but it needs to be sustained year in, year out while the surpluses remain. The family assistance package—the four steps outlined there are, again, positive, but there is more to do in the future. We do need to be looking to a more fundamental reform of our tax system, both in terms of thresholds and rates and the interface between the tax and benefit system, for want of a better term. If you took the totality of expenditure across the family assistance package—Working for Families, tax changes, the income tax system, etc.—there is the capacity for much more radical structural reform over a period of time, but that needs to be well founded, on a base of good economic outcomes.

We have talked in this House for years about the infrastructure deficit. We know where the problems are. It is good to see a substantial commitment being made to addressing those. But, again, we have got to be very careful that we do not fall into the trap of saying: “We did all that in Budget 2017; we don’t need to be worried about these issues for the next number of years.” The point is that continuous improvement is what is going to continue to see this country progress and, perhaps, address that very short window of about 5 or 6 years, being our maximum period, in recent times, where we have enjoyed economic growth and prosperity. I accept that a number of those factors are external and beyond our control, but it does highlight the fragility that this economy is constantly exposed to and the need to benefit productively from the gains while we can. I think this Budget strikes a good and proper balance, and I think what it does is foreshadow the types of improvements that could be made in the future.

It has been a sobering contrast to listen to the debate this afternoon: an essential air of optimism from this side of the House—perhaps stated quietly, but none the less clearly—versus a sustained barrage of negativity from the Opposition. The Opposition has no clear policies, no sense of direction, no purpose, and a sense of bitterness that the areas that those members traditionally saw as their babies are being addressed today. I do not think that bodes well for the future of this country, because there will come a time—there will come a time, many years from now—when the political spectrum changes. If there are no ideas, no optimism, and no positivity, then this country’s essential economic frailty will be exposed and we will begin the process of restructuring all over again. I think if we are going to have an election campaign—as we are this year—it needs to be focused on a debate around sound ideas, not about how we recreate a better yesterday.

I was in Christchurch recently talking to social service providers down there, and they told me of an experience they had with two senior members of the Labour Party about the social services that they were providing in Christchurch, and the things that were being done. They said that these two senior members, the deputy leader and the finance spokesman, said to them: “Look, that’s all very well, but you shouldn’t be doing it.” When they asked who should be doing it, the Labour Party members said: “The Government.” So butt out community, butt out local people—big Government takes over! That idea went out in the 1930s, and it is being recreated by the Opposition in a time when we have well moved on from that. If you contrast that type of big Government approach with the much more strategic approach that the Government’s investment strategy ushers in, where we focus on results and outcomes, not on the quantum of expenditure—where we focus on the risks, not on the silos of how Government services are delivered—the contrast becomes absolutely striking.

What New Zealanders expect is a Government—it does not matter what its political hue is—that will deliver the services that they need in a way that they want them delivered, not a Government that tells them: “This is what we think you need, and we will deliver for you.” It is the other way round, and if the people opposite do not understand that, they should look at the campaign recently fought by Emmanuel Macron in France. That is exactly what he did, and look at the way he broke the political nexus in that country and stormed to power. There is a very important lesson in that—that the reaction to the extremism and the nationalism that is occurring in a number of countries is not to reinvent the past, but to respond in innovative and flexible ways. We see signs of that in this Budget. Much, much more has to come, and the Government faces some huge challenges over the years.

I will give you one example where there is a conundrum to be resolved. We do need to spend more to upgrade our prisons, because we have more people going to prison and they deserve to be housed in dignity. But, at the same time, we have got to adopt a longer-term approach to make sure that the conditions that lead to people being in prison in the first place are being reduced. You cannot play the game of saying “We’re going to be tough on law and order.” by dealing solely with the consequences; we have to actually deal with the causes. What this Government has done, and is starting to do more clearly through the investment approach that it is focusing upon, is to address the deficiencies in the short term but also put much more emphasis upon progress in the longer term. The Opposition will not like that, because those members’ whole approach to politics is essentially a grievance approach: find an itch, promise to resolve it, make sure that you do not actually eliminate it—because you need a political cause for the future—but just resolve it, keep it happy, and hope it keeps bubbling for next time. The last thing they actually want is to see substantial social progress made, because that actually addresses the fundamental problem that many people face.

I do not think that this Budget is the absolute answer. I think it is a very positive step in the right direction. It deserves support for what it does, but more importantly for what it foreshadows: the opportunity to use hard-won surpluses effectively, for the benefit of New Zealanders; the opportunity to make sure that this economy is resilient to international economic shocks; and the opportunity to start to see big deficits in infrastructure and social spending addressed in a way that will benefit the people of New Zealand. Against that backdrop, it is very hard to see any rational reason for any political party that claims to be credible seeking to oppose the Budget. But we will—we will find every sort of manufactured excuse to find it unacceptable; we will find every way in which we can say: “This is not what the people want.”

The reality, if you look at the reaction so far that is already coming through, is that people are welcoming the initiatives that are being foreshadowed in the Budget. They want to see them happen, and they appreciate that they are getting some dividend for the struggle that they have been through in recent years. They are supportive, and what they expect their parliamentarians to do is to give them the opportunity to enjoy those well-earned fruits of recovery, not to be constantly saying “We’re going to take those away from you.”, or “You’re not really entitled to them.”, or “We don’t really think it’s fair that you get them because others get them as well.” They are the politics of a bygone era, and the really sad reality is to see them played out in the House this afternoon.

Hon SIMON BRIDGES (Leader of the House): I move, That this debate be now adjourned.

A party vote was called for on the question, That this debate be now adjourned.

Ayes 62

New Zealand National 58; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 57

New Zealand Labour 31; Green Party 14; New Zealand First 12.

Motion agreed to.

Urgency

Urgency

Hon SIMON BRIDGES (Leader of the House): I move, That urgency be accorded the introduction, first reading, and referral to a select committee of the Care and Support Worker (Pay Equity) Settlement Bill, and the introduction and passing through all stages of the Taxation (Budget Measures: Family Incomes Package) Bill. The Government is moving to take urgency on these bills because they are all a part of a package of moves that has been signalled today in Budget 2017.

The Care and Support Worker (Pay Equity) Settlement Bill gives effect to elements of the care and support worker pay equity settlement agreement. As part of that agreement, the parties agreed that certain matters would be provided for in legislation. A settlement was agreed between the Crown, Crown agencies, and relevant unions in April 2017. The parties to the settlement agreed that elements of it would be legislated. As the bill needs to be in effect by 1 July 2017, it will go to a select committee for a short amount of time so it can be reported back to the House by 6 June 2017. This intention has been well signalled.

The Taxation (Budget Measures: Family Incomes Package) Bill gives effect to many of the changes announced as part of the Budget 2017 Family Incomes Package. As a package, the changes are intended to provide better rewards for hard work, improve incomes those with young children or high housing costs, and start to simplify the tax and transfer system. Urgency is necessary to give effect to the proposal so that certainty can be provided and the measures can be implemented in time for 1 April 2018. Thank you.

A party vote was called for on the question, That urgency be accorded.

Ayes 62

New Zealand National 58; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 57

New Zealand Labour 31; Green Party 14; New Zealand First 12.

Motion agreed to.

Bills

Care and Support Worker (Pay Equity) Settlement Bill

First Reading

Hon Dr JONATHAN COLEMAN (Minister of Health): I move, That the Care and Support Worker (Pay Equity) Settlement Bill be now read a first time. I nominate the Health Committee to consider the bill. At the appropriate time I intend to move that the bill be reported to the House by 6 June 2017 and that the committee have authority to meet at any time while the House is sitting (except during oral questions), during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 191 and 194(1)(b) and (c).

It is a great pleasure to be speaking here on Budget day 2017, a historic Budget that shares the benefits of growth with the people of New Zealand by improving public services, investing in infrastructure, reducing debt, and lifting incomes. It is a reflection of the sound fiscal management of the Government over the past nearly 9 years that we now have surpluses and a growing economy, and, of course, that brings options with how to spend that accumulated surplus. In that context, it is great to be taking the first call in the debate on this bill, a bill that implements what is likely to be the largest employment settlement in New Zealand’s history. It is also the first pay equity settlement achieved, and as such, it is truly historic.

I would like to thank all those involved in the negotiations for their constructive and positive approach, and that has been over 20 months of negotiations. I would like to acknowledge in particular the unions—that is, E tū, the Public Service Association, the New Zealand Nurses Organisation, and the New Zealand Council of Trade Unions—and, of course, the employer associations, consisting of the Aged Care Association, the Home and Community Health Association, and the New Zealand Disability Support Network. I would like to thank also the Crown negotiator and the many officials who worked tirelessly to achieve this settlement. But actually, above all, I think the House should pay tribute to Kristine Bartlett, who agreed to put herself forward to advance the original claim, and an excellent person she is. This is a major achievement that she is responsible for delivering. It was certainly great to host her in my office here in the Beehive just a few weeks ago, when we signed the agreement.

I would also like to thank all parties in the House that have agreed to progress this legislation giving effect to the settlement. And what a settlement it is—$2 billion over 5 years to increase wages for around 55,000 dedicated and hard-working care and support workers. This predominately female workforce cares for some of our most vulnerable people, helping them to live with dignity and with as much independence as possible. During my days as a GP, I saw the dedication and hard work of these people at first hand on many, many occasions. The skill and effort that they bring to the job is something that deserves to be rewarded fairly, and I am very pleased to be able to introduce legislation that is going to make that happen.

The settlement agreement in this legislation will mean that from 1 July this year, care and support workers will start being paid at the level that reflects their qualifications and experience. For the 20,000 workers currently on the minimum wage of $15.75 per hour, it means that on 1 July they will move to at least $19 per hour, which is a 21 percent pay rise. For a full-time worker, that means they will be taking home an extra $100 a week, which is over $5,000 per year extra in the hand. New pay rates will be based on qualifications, and will be phased in over 5 years.

But we also recognise that many carers without formal qualifications have a wealth of experience, so current workers with extensive experience will move to new pay rates based on that experience. For example, a care and support worker with no formal qualifications but 8 years of experience will receive the pay rate applying to a worker with a level 3 qualification. That means that a worker in that situation who has been working in a rest home for a decade, helping people find comfort through their last months of life, might be getting $17 an hour. From 1 July they will now be getting $21 an hour, rising to $25 an hour by 1 June 2021, and that person will be getting help to get formal qualifications. So overall, for that worker that would be a 47 percent increase in remuneration over 5 years. The increase in income is going to make a massive difference to those workers and to their families.

I can tell you that when I visited Anne Maree Court rest home in my electorate of Northcote the day after the announcement of the settlement, the care and support workers were literally singing and dancing and cheering with excitement. It was quite an experience.

It is important to note that this was a successful negotiation all round, with more than just the care and support workers benefiting from the settlement. The employers managed to avoid further court action, and they also avoid the risk of back-pay liability. The Government will be funding them to offset the costs. Employers will also receive the benefit of lower turnover of the workforce due to those increased wages, and they will also have a more capable and skilled workforce through access to training and qualifications. At the same time, the Government gets an agreed and certain outcome that is affordable, thanks to the headroom built up by a long-term fiscal strategy. All of this money is new money added to Vote Health.

But, most importantly, the clients of these services will see a benefit from more highly trained health workers who are more likely to be the same ones they saw yesterday. So there will be a more highly trained workforce with lower turnover and a definite career path for those workers.

The bill implements those parts of the settlement that the parties agreed would be legislated. It extinguishes all current pay equity claims for this workforce and bars future proceedings for the term of the agreement. It establishes a set of wage rates based on qualifications, with a transitional arrangement for workers who do not have formal qualifications but who do have extensive experience. It requires the funders to give the employers extra funding towards the costs of the increased wages and other requirements of the settlement. It provides for the settlement to apply to all care and support workers, whether or not they are union members.

The Government recognises that implementation of this agreement will be complex for some providers. This agreement will see a new pay matrix introduced that will standardise the pay offered by hundreds of providers under thousands of separate contracts. The key point is that 55,000 care and support workers will be receiving their increased pay in their pay packets from 1 July this year. Aged residential care providers, which employ about 43 percent of the total workforce, have agreed new contract prices that reflect their increased costs. For others, they will be paid according to their actual costs until new prices can be agreed.

Because this bill needs to be in effect, obviously, by 1 July, there is limited time for select committee consideration, but even a shortened select committee consideration will be important in order to ensure that the House has got the legislation right and to ensure that people and organisations affected have the opportunity to comment on the bill.

It is, of course, a big day for health in the Budget: $3.9 billion over 4 years, taking health spending to a record $16.8 billion for 2017-18. That is going to be $888 million—$888 million. It is hard to believe, but it is the single biggest increase in 11 years. That is what this Government is delivering in this Budget. There is $1.76 billion over 4 years for district health boards. That is $439 million this year. Of course, we have covered the $279 million in this Budget for care and support workers. There is $205 million for disability support services, and, as was previously announced, there is $60 million for Pharmac, $52 million for emergency ambulance double-crewing, and $38.5 million for bowel screening—all services that we are delighted to be delivering for New Zealanders.

But one of the most important things is the $224 million over 4 years for mental health, to strengthen our services and make sure that all New Zealanders can get access to the services that they need. That includes $100 million in the social investment fund for innovative approaches over the next 4 years; $100 million, roughly, for the ring-fence; and an extra $24 million for mental health initiatives delivered in an innovative manner across a range of portfolios.

This is, indeed, an extremely historic piece of legislation. It is going to make an enormous difference for care and support workers and their families, and I would just like to once again thank all the people and organisations who have worked so hard to make sure that this agreement happens. I am very proud to commend this bill to the House.

Dr DAVID CLARK (Labour—Dunedin North): Did that not sound like pulling teeth? Did that not sound like pulling teeth? The words coming out of the Minister of Health’s mouth said one thing; his body language said something completely different—completely different. That Minister was not comfortable delivering that message.

This is a day of celebration. Finally—finally—those low-paid workers have some justice. I agree with the Minister that this is a historic day. This is a really significant settlement. He talked about the constructive relationship over 20 months in getting to this point. He did not mention 5 years—5 years—since the court cases began to get to this point. He did not mention that lawyers whom he instructed, whom his Government instructed, fought this tooth and nail every step of the way. That Minister has said the things that should have been said, but he has not meant them. I think we can see that in this House. I think the body language gives it away.

My congratulations, first and foremost, to those who took the case. Let us say a thankyou for the TerraNova case to Kristine Bartlett and to the Service and Food Workers Union, which took this case and made this happen. This is a very special day. This will have implications that will continue for some time to come, for low-wage workers in this sector and also in other sectors.

I want to cover briefly a little bit of the history. We know that this industry, the care and support industry, is mostly made up of female employees, with a high proportion working part-time. A 2015 workforce survey by the Ministry of Health indicated that the average wage rate was between $15 and $16 an hour.

I remember when I was doorknocking before I was a member of Parliament—out doorknocking in the streets of Dunedin North—coming across somebody who worked in the sector who had recently given in her notice. She was reluctant to do that because she loved the work she was doing and she was good at it, but this woman concluded that she could no longer afford to feed her family in doing this work that she was good at, and doing the caring that she believed in for people who really needed it. That woman was going to stack shelves in a supermarket at night, a job for which she did not have any particular qualification, but she was grateful for the few extra dollars that would mean she could feed her family at the end of the week. It is a disgrace that we ever got to this situation, and so it is a really good thing that we are working out how we can move on from there.

The pay equity claim, as I mentioned, was filed 5 years ago in 2012 in the Employment Court—TerraNova v Service and Food Workers Union and Bartlett. The plaintiff’s claim was that because the work is predominantly performed by women, care and support workers are paid less than would be paid to a man performing work involving similar skills, responsibilities, conditions, and degrees of effort. The Employment Court, and subsequently the Court of Appeal, determined that the Equal Pay Act of 1972 did allow for such pay equity claims to be pursued. The Government fought that all the way. In June 2015, after the Supreme Court refused leave for TerraNova Homes and Care to appeal, a Crown negotiator was appointed to facilitate a negotiated settlement.

That is how we got to where we are today—a position where some skilled workers will get $5,000 more in their hands. They would not have got that had they not taken that case. This Government opposite is the same one that threw out a bill I had when I was a new member in this House to take the minimum wage to $15 an hour because it thought it was too much. Now, today, it is here saying that it is glad this has been settled, but let us not forget—let us not forget, members—that it fought this tooth and nail every step of the way.

The $5,000 more I mentioned—it will be different for different workers, but the workforce will get between 15 and 49 percent more, depending on their qualifications and experience. For example, an aged-care worker on the minimum wage will now take home around another $106 a week from July. And that is what they should always have been getting. That is what they should always have been getting, had it not been for the Government fighting this all the way.

This is not a victory for the National Government. This is a victory for the workers and for the union that generously took this case and shared the benefits across the industry, with those who are union members and those who are not. This is a victory for low-wage workers. This is a victory for the labour movement. The members across there were dragged, kicking and screaming, trying to fight the 55,000 low-paid workers who benefited from it, trying to fight it all the way, appealing at each and every stage. The Government came to an agreement, finally, because it realised it had no choice. The public was not on its side.

This is matched today in the announcements around funding for the health system. The Minister mentioned them in his speech. He talked about record amounts going into the health sector, but it is simply not keeping up, Minister. We know that $650 million was required for district health boards (DHBs) just to stand still, to deliver the same level of services that they are delivering now. The Minister gave them $439 million—over $200 million short in this Budget alone. That adds to the $1.7 billion—$1.7 billion—that the Government has cut out of the healthcare sector over the last 6 years.

Treasury published a report that has recently been released—it was written in February this year—that says that there have not been productivity gains in the sector. That leaves only one conclusion: if there have not been productivity gains in the case-weighted discharges, that means that services are being cut. If you fund less and there are no productivity gains, you deliver fewer services. That is, unfortunately, what this Government is delivering for healthcare generally.

Then the Minister talked about mental health. The Minister talked about the money that he is hoping to put into mental health. Let us not forget that 2 weeks ago, the Minister delivered a speech that said that he was going to take a paper to Cabinet shortly for $25 million a year—part of the social investment package, so-called. That $25 million a year is a drop in the bucket, and the Minister announced that only when the pressure came on from the Labour Party saying that we need more money in mental health and need to put extra money in with specific initiatives. The Minister still does not know what he is doing. His press release today said that he still has not taken the paper to Cabinet, and that Cabinet has still not even considered what it is doing with mental health.

There is a growing crisis in this country, and the Government has no answer. It tried to beef up its press release by saying that there would be an additional $100 million over 4 years, which was within the DHB baseline funding—i.e., that $439 million announced, which was short of the $650 million required, would also be tied up in part with mental health funding. So it has tied the DHBs’ hands further and announced money that is already being spent. That is the best it can do. I am not surprised Mike King walked away from this Government’s efforts to look at mental health.

I want to read some words from the press release announcing that particular flagship: “$100 million for a new cross-government social investment fund that will target innovative new proposals to tackle mental health issues.” Does anyone in this House know what that means? I hear silence. I do not think anyone in this House knows what that means, and I do not think, especially, that the Minister knows what that means. That is gobbledygook. That is rubbish. That is the best this Government has got for the mental health crisis in New Zealand—a 60 percent increase in people using mental health services, and today all that was in the Budget was a few words that said “a cross-government social investment fund that will target innovative new proposals to tackle mental health issues.” That was the best it could offer. It has no vision. It is out of ideas. It has been here for 9 years, and that is 9 years too long.

What we need is a fresh approach. A Labour Government will deliver a fresh approach in health. It will deliver that fresh approach in mental health. We have announced school-based services already; we have announced a pilot where there will be community mental health workers available, free GP consults, and so on. A fresh approach will come from a Labour Government.

But today I do want to say that Labour will support this settlement because finally the Government has got there, 5 years on, fighting it tooth and nail at every step. It is a victory for the labour movement. My congratulations to Kristine Bartlett, my congratulations to the Service and Food Workers Union, and thank goodness that the Government has finally settled on this and that those workers will get the pay they should always have been getting.

Hon NICKY WAGNER (Associate Minister of Health): I am absolutely delighted to speak to the Care and Support Worker (Pay Equity) Settlement Bill. This is a significant bill and it is an important bill because it is about supporting our most vulnerable older and disabled people. If you are an older person, and if you are older and disabled—and you have got to realise that of anyone over 65, perhaps about 60 percent of those people also have a disability—this is a significant bill for you. This because for our most vulnerable older and disabled people, their health, their well-being, and their quality of life revolves around the attention and the care that they get, often on a daily basis, from specialist care and support workers.

Care and support workers are mostly women—we know that—and they work very long hours. They do a very difficult job. Until the passing of this bill, they were often paid at a minimum wage. This bill delivers on the Government’s $2 billion pay equity settlement for some of the health sector’s lowest-paid workers. It is a historic settlement. It recognises that the work carried out by this female workforce—and there are 55,000 workers whom it affects; this workforce of care and support workers—really does underpin the well-being of our aged and disabled people. Whether they are in residential care or whether they are in home and community care, support services across the country are reliant on these people.

This settlement and this bill will help ensure that we have a higher-paid, more skilled, and more engaged workforce across the country. Those people are supporting 110,000 of New Zealand’s most vulnerable. I could not be more pleased. The work of these women is so appreciated by older people and disabled people, but, actually, everywhere I go in the sector, people tell me how important it is for carers and support workers to be appreciated and how much they make a difference to their lives.

These new pay rates are significant. They are significant for 55,000 workers, but for at least 20,000 workers—those are the full-time workers—they will get an extra $100 a week, up to $5,000 a year. The settlement is not just about wages. It also provides incentives to help care and support workers to access training and formal qualifications. Employers are required to provide the necessary systems and support to enable workers to achieve New Zealand Qualifications Authority health and well-being certificate qualifications. The idea behind that is that qualifications will increase from level 2 to level 4 over a 6-year period. The Government is very supportive of that, and, to that end, it will fund employers for 2 days per employee, per year, as its contribution to the education and training.

Society’s attitudes are changing. They are changing towards older and disabled people. This settlement provides new opportunities to deliver different services. The changing models of care mean that disabled people are increasingly living in home-like settings in the community, with 24-hour support from care workers. Whether they are disabled or older, where they can no longer live in their own homes, care workers also help them live well—as well as possible—in residential care facilities.

The care and support workforce has traditionally had a high turnover, of about 30 percent. We think that the increased wage rates are expected to help with recruitment and the retention of workers. That will mean a better continuity of care for clients and a more stable workforce overall. I think this is particularly important as we have an ageing population.

The settlement also links pay rates to qualifications, as I have said, and this will encourage care and support workers to increase their qualifications, meaning that over time workers are likely to be more highly-trained, more skilled, more innovative, and more able to provide a more flexible type of care. I think that is going to underpin the quality of life for the people they care for.

This settlement has been well received across the community. Everywhere I go, people seem to appreciate the work that carers and support workers do, and they are really pleased to see their increased wages. I think also, because they are mostly women, it is a real win for gender equality. Everywhere I have gone in the community, people right across the board have been positive. That includes health professionals like the New Zealand Nurses Organisation and also business interests like the New Zealand Aged Care Association.

The New Zealand Nurses Organisation Industrial Services Manager, Cee Payne, said: “This equal settlement delivers pay rates that truly reflect the skills and importance of the work that care and support workers undertake every day. Decent pay rates and the right to achieve qualifications will grow and retain skilled workers to care for our elderly. This will build public confidence that high quality care will be delivered to our families’ loved ones in our rest homes and hospitals.” For business, the New Zealand Aged Care Association Chief Executive, Simon Wallace, said he was happy with the outcome—that it would be a “game changer” by making the industry more attractive to workers and that “It will lead to a well-trained, better-paid, and more stable care workforce.”

In conclusion, I am very, very pleased to be able to support this bill. It will give carers and support workers a significant increase in wages and it will give them greater access to training and a well-deserved appreciation from the public of New Zealand. I think it is well supported right across the community by health professionals and by businesses, and I think the reason for that is that it will improve the healthcare, the quality of life, and the well-being of our most vulnerable elderly and disabled people. So I too would like to congratulate Kristine Bartlett and her supporters, and everyone who has been involved in this settlement. Kia ora.

IAIN LEES-GALLOWAY (Labour—Palmerston North): Today is certainly a day to celebrate. Like others have done, I want to acknowledge Kristine Bartlett. I want to acknowledge the leadership of the unions that were involved in this: E tū, its precursor union the Service and Food Workers Union, the New Zealand Nurses Organisation, the Public Service Association, the Council of Trade Unions, and the entire union movement, which threw its weight behind this campaign, which has been going on for a number of years. In particular, I want to acknowledge the thousands of unionised care and support workers who have held the line year after year after year and stuck to this campaign.

Before I came into Parliament I had the privilege of working for the Nurses Organisation, and my first job for it was as an organiser. I met—and it was a real privilege to do so—hundreds of care and support workers who were trying to build this movement within their industry amongst their co-workers. It can be a real challenge to convince people who are already on incredibly low wages to pay that union fee in the hope that one day the campaign will be successful. For thousands of people, that was too much of a challenge, but so many of them did. They stayed in—they stayed part of the union. Now that they have got the win—now that they have got the victory—they are sharing it with everybody. That is a wonderful thing to do, and they should be congratulated and acknowledged for doing it.

People have talked about the 20 months of negotiation and they have talked about the 5 years of court battles, but no one has yet mentioned the years and years and years and years of campaigning that went on, and the struggle that has gone on. So I want to say to those who did stay in the movement, who stayed firm, and who held the line: congratulations. The day has finally come, and it is not long now before the money will be in your bank account.

I know that is not what it is all about; it is actually about recognition, because the other thing that I discovered when I met these incredible women—incredible people; predominantly women, of course—was their commitment and dedication to what they did and to the people whom they cared for. It is not a job that I think most people in this House could do. It is an incredibly intimate job. It is caring for another human being and providing incredibly intimate services. It takes a certain disposition, it takes an incredible amount of empathy, it takes love, and it takes dedication. For too long we relied on that love and dedication to keep people in the profession, even though they could earn more pulling veges out of the ground, stacking shelves, or even looking after animals at the city pound. All those jobs paid more than being a care and support worker, and yet women carried on doing what they did because of their commitment to the people whom they cared for.

Today, in this settlement, it is not just about the money. It is about acknowledging what a tremendous job it is that they do and how lost we would be as a society if we did not have those wonderful care and support workers doing the job that they do. It is also an acknowledgment that we are finally recognising the place of our elderly. I always found it—well, I thought it was poor form that we considered caring for our elder people such a low priority that we paid the minimum wage, or barely more than that, to the people who were responsible for caring for them. So it is not just an acknowledgment of the workers themselves; it is an acknowledgment of the elderly people.

We have heard a lot about the package—$2 billion. We have heard a lot about what is going to happen, on average, to people. I just want to share one story about one worker who is going to be affected by this. Her name is Amor Taite and she is from Palmerston North. She works in home support, so she is one of the people who goes into people’s homes to care for them in their own home. Again, it is an incredibly intimate relationship she has with her clients. She has been a home support worker for 20 years, and because she wants to provide the very best care she has become qualified—she has a level 3 qualification. Despite two decades of experience and despite being qualified in her role, she currently earns $16.22—barely above the minimum wage. As a result of this settlement her hourly rate will rise to $21 an hour—finally, some decent recognition of her experience, her qualification, and her commitment to the people whom she cares for.

Amor said: “It’ll just make things so much easier. You can do so much more. You can buy more things, have a social life. It’ll all go back into the economy.”, and she is absolutely right. One of the best things we can do to stimulate our economy is actually to put more money in the back pockets of low-income workers. And you can save a bit. It will just ease things right across the board. It is as simple as that. It is about giving people real freedom and real choices.

So I want to congratulate all those workers and the movement on getting to this position, and, look, I want to congratulate the Government for getting around the table. I want to say this gently but honestly: it got around the table because if it did not, then the court settlement was actually going to result in a much greater, much more expensive exercise for the Government. Good on the unions and good on the workers for being prepared, actually, to give up on back-pay claims and to come to a settlement that the Government was prepared to pay out on, because if it was stuck with a court decision it would have cost an awful lot more. But, again, this is the practicality of the unionised workforce: it is actually prepared to get around the table and do what is right and do what is in the national interest as well as in its own interest.

I want to say this: I think the model of workers, employers, and the Government getting around the table and saying “We have a real problem in this industry. Wages are not high enough, conditions are not good enough, we’re struggling to retain and attract workers, and we’re not actually recognising the role of those workers properly.” is an incredibly good model. I want to acknowledge that in a way the Government has set, I think, a wonderful precedent here. This is an industry-level agreement that sets minimum standards right across the care and support industry, regardless of whether workers are unionised or not, in which any employer—in this case, tendering to district health boards to use public money to provide a service—has to meet these minimum standards of pay and conditions for their workforce. They cannot undercut each other on those standards. I think that is a brilliant precedent, and I want to congratulate the National Government on bringing that precedent forward and working with that precedent—that tripartite approach of employers, workers, and the Government working together to get good conditions and good outcomes for working people.

I say to the Government, do not make this the end. Do not cut off the future pay equity settlements. I know that is not part of this bill, but there is another piece of legislation, and we are going to have to negotiate a little bit in this House about what the future holds. It is not just for pay equity settlements and equal pay but, actually, for other industries where people are low-paid and other industries were workers are vulnerable. This is an incredibly good model—the idea of having an industry-standard agreement that is negotiated and sets standards for everybody working in that industry. It is a wonderful idea. We really like it on this side of the House, and we are really pleased that the National Government is on board with that concept as well.

So I want to say congratulations to everybody involved in this. This is a good settlement. This is a victory for working people. It has been incredibly hard fought, and it just demonstrates that when working people work together and when they organise under the banner of unions, then the victory does come. It sometimes seems a very long way off, and 12 years ago when I was an organiser it did seem a long way off, but victory does come when we work together. Let us continue this legislation in that spirit. Let us work together to get this bill passed as quickly as possible and get that money in the pockets of those care and support workers.

SIMON O’CONNOR (National—Tāmaki): I am very pleased to take a call on this Care and Support Worker (Pay Equity) Settlement Bill. I might actually start generally before I get specific. Why I want to start generally is to acknowledge those who work in the care and support sector. As someone who has engaged, often with a different hat on, with hospitals, hospices, retirement villages, and the like, I have always been very conscious of that level of care that is provided. It is not a level of care or an aspect of care that a lot of Kiwis get to see. I think, for all of those who serve our communities in these roles, it is something to be acknowledged and given a heartfelt thankyou.

From my own side—granted, not in New Zealand, but from doing this work in Fiji for a number of years—I would actually echo what the previous speaker, Iain Lees-Galloway, was saying and reaching towards. There is an intimacy, for want of a better word, with this role, as you are working to support and care alongside people who often have lost the ability to look after some of their most basic needs. It really is just, I suppose, a small personal element to acknowledge somewhat of an understanding of this dynamic, but also to say thank you to those who are involved.

More specifically, we are very aware that this is a settlement negotiated between the Crown and a variety of unions, led particularly through that court case by Kristine Bartlett. So, to all the unions, to Kristine, and to all those involved, including the Crown negotiators, I thank you for bringing us to this point.

This bill, in its first reading today, is all about bringing effect to the settlement. We have actually been through this dynamic before. This was around pay and travel costs, also for those providing support in the community. What is really important, particularly for those at home who are trying to understand, is that while an agreement has been reached, it does still take a piece of parliamentary legislation to make it happen.

Importantly too, for those who have been following the debate—“discussion” is perhaps a better word—this evening, we are moving to quite a quick select committee process. We intend to report this bill back to the House the day after the Queen’s Birthday weekend—so just over a week away. The primary reason for that is that the agreement is set to take effect on 1 July. The long and the short of it is that we have to get this piece of legislation passed by then.

We will, as a select committee—and I am very pleased to chair the Health Committee; I think this is an appropriate committee for the bill to come to—be moving rapidly in the next few days, and sitting extraordinary hours, actually, to make sure we can manage it. We will move swiftly, and so I suppose there is the invitation in the discussion and debate today for those groups that are interested to put in a submission as quickly as possible and, where possible as well, to come and speak with us next week.

I think importantly, too, for those making submissions, this bill is about a particular agreement, and, obviously, we want to hear about that. This bill is not for the wider pay equity discussion. That bill is being worked on by the Government and will be introduced in the House at a different point in time. But I think I can speak for the whole committee in saying that we are looking forward to considering this bill.

The work that carers do has been acknowledged in many ways, and a number of the people speaking so far have, obviously, talked around the recompense—the monetary side of things—but I think it is also important to acknowledge that this agreement brings in education and upskilling as well. First and foremost, levels of experience and levels of qualifications are going to affect how much a person receives in their pay settlement. But, really importantly, this agreement is about making sure employers help to facilitate, encourage, or are cajoled, if required, to make sure that their caring staff are able to train and upskill as necessary. I think that is a win for all involved. It has been noted, obviously—the stability of staff. But I think also, really importantly, it stresses the importance of care.

I know that on our Health Committee at the moment and in some public fora, there is a lot of discussion about how we appropriately care for our elderly and for those who are ill. I think, actually, that carers in our community show the way forward, which is to provide more and more generous care. I know that some others have provided other options that might be available, and I think this is why this bill becomes more important. It really stresses the importance of one human being caring for another—providing all that is required.

So this is a very good settlement. This is a very good negotiation. I am not going to go into all the technical elements such as claims being extinguished, which the Minister referred to, but this bill fundamentally comes back to acknowledging a sector of New Zealand’s workforce that I think is often unseen and is clearly undervalued. Importantly, the agreement not only acknowledges that and moves the pay rates up, but I think it is putting a structure in place to continue to support carers to be even better and stronger in their role. I think, and I hope, that this is, in some ways, the first step in a continuing journey in this regard.

I am very pleased to recommend the bill, and I commend it to the House. I am looking forward to it coming to the select committee. I think we will be meeting—as a heads-up to my colleagues—first thing tomorrow morning to begin work on this, and throughout the rest of the week. I commend the bill to the House.

JAN LOGIE (Green): It is a huge honour to stand in the House this evening to contribute to, and offer the Green Party’s support for, the first reading of the Care and Support Worker (Pay Equity) Settlement Bill. I want to join with the others who have spoken already—and just so full-heartedly—in paying tribute to Kristine Bartlett and her E tū union colleagues, and the New Zealand Nurses Organisation and Public Service Association colleagues, who came and joined the fight.

This is a step along the journey that was started by Kate Sheppard over 120 years ago. The suffragettes in this country—next on their agenda was equal pay for work of equal value. Here we are; we have been slowly, slowly moving. This is a struggle. I just want to express how incredibly impressed I am with these women for getting this across the line. This is a truly historic moment and it gives hope to so many other women in this country who have been undervalued and exploited for far too long. So thank you, thank you, thank you, on behalf of the Green Party.

I want also to acknowledge that alongside the pay equity struggle, this has also been a struggle for recognition of, and valuing specifically, the work in the aged-care sector. This has been a struggle that has been going on for 30 years in this sector alone, with select committee reports and inquiries and volumes of paper, including an inquiry done by the Labour Party’s Winnie Laban and Sue Kedgley from the Green Party in 2012. Then, of course, there was the very notable report Caring Counts by the former Equal Employment Opportunities Commissioner Judy McGregor. They all identified that training and pay were major issues that needed to have been resolved well ahead of time in the caring industry.

I do just want to point out that Judy McGregor, through the Human Rights Commission, in that incredibly considered report—for which she went undercover and worked as an aged-care worker—laid out a time frame for resolving these issues, as well as the other issues in the sector in relation to training. We would have had this sorted by 2016—by last year; all of the issues in the sector—if the Government had picked up on that expert advice.

It was laid out there to do, but the Government instead chose to intervene, alongside the employers, against Kristine Bartlett and the aged-care workers who were seeking justice in the courts and an end to exploitation. Kristine and E tū were forced to go as far as the Supreme Court. Really, I think people need to get their heads around the fact that these are some of New Zealand’s lowest-paid workers, who gave up a section of their pay that could have gone to feeding their families and keeping a roof over their head for their union contributions to pay for a court case that had to go all the way to the Supreme Court because the employers and the Government kept on challenging the decisions of the Employment Court, when this never needed to go to court.

Anyone who has had any dealings with aged-care work has known that those workers—mostly women workers—have been being exploited and that that job is an incredibly skilled job and is worth so much more than minimum wage. It was one of those things for me out on the election trail in many elections—well, the two I have been through. When you were talking to people about inequality and they were like “Yeah, I think people should, you know—they just need to work harder or, you know, pull their socks up.”, and then you would say: “Well, what about the aged-care workers, you know, who are on minimum wage, who are struggling to pay their bills? Don’t you think that’s a problem?”. Every time, that person had no comeback, because everyone recognises how incredibly valuable the work that they do is and how all of us want that good, friendly person to be there for us when we get to that time in our lives.

I do want to point out—oh, there is so much to say. I just want to touch on some of those points around just, specifically, acknowledging some of the work that people are doing in aged care and that the pay and training that is being pushed for is really important, but also staffing levels are important. That has not yet been acknowledged and we need to keep working on that because I think it puts an undue pressure on what is already an incredibly difficult job.

I do also want to acknowledge that this is a little bit like a Treaty settlement, in some ways, in the context that you have got to—I acknowledge the massive effort and the achievement and the work and the feat of negotiation that have gone into getting this result and the recognition of a fundamental right that underlies this around pay equity and the end of exploitation. But we have to recognise that this, and the legislation on the Table, is a deal that has been done in lieu of a just response, and it is a deal that the unions and Kristine have been—it is extraordinary, what they have managed to achieve against a Government that has fought them all the way.

But it is a deal and, as the Employment Court recognised, economic arguments do not stack up when it comes to pay equity. Economic arguments were used to justify slavery, and we kind of get that that was wrong. When we are seeing the pay increase being phased in over 5 years, that is telling me that the Government is still, despite the court rulings and despite the pressure, thinking that the economic arguments override the basic fundamental right and the basic fundamental drive to end exploitation.

I do want to acknowledge that the unions have managed to—in this deal, they have given up the right to back-pay and we need to acknowledge that. That is an established right in our courts, and they have given that up. They have given it up through the negotiation to be able to get to addressing qualifications and minimum standards, which they have been fighting for for so long. That is, again, another indication of the fact that these, mostly, women put the care of the people whom they are serving and working for first, above some of their basic legal entitlements and rights.

You know, hats off to them. I wish I could express it better, but I have so much admiration for them, and we should all just be so grateful to these women and should be committing to ending that exploitation, whenever we can, as quickly as we can, because they should not be having to trade off back-pay or the qualifications and the minimum standards for the immediate realisation of their right to equal pay.

Finally, I just want to again state how important this is. This is a fight that has been very, very hard fought, and it is a huge honour to stand and be a part of celebrating this victory for women coming together in union in the interests of all. Kia ora.

TRACEY MARTIN (NZ First): I rise on behalf of New Zealand First to speak to the Care and Support Worker (Pay Equity) Settlement Bill. Because New Zealand First wants to hear the voices of the individuals involved, the unions involved, and all those involved, we are going to support this bill at first reading, to get through to the select committee tomorrow. Both my colleague Ria Bond and I will be sitting in on the hearings because, as has been addressed, this is a monumental piece of legislation in its own way. But we cannot guarantee our support past that.

Unless the unions and unless the women themselves are a hundred percent happy with what is going on here, we are not prepared to support the Government. So we want to make sure that this is what the workers want. We want to make sure that this is what was talked about and signed behind closed doors and really made and really arranged between those workers and those unions and not somehow changed as it went from that room to this room. So I make that very clear. We support the bill at first reading. We hope we can support it all the way through, but we have seen this Government before.

It is interesting sitting here and listening to the Government members rise and talk about how happy they are that this is now going through and what a wonderful thing it is and how the carers really deserve it. I want to go back to 2012, and I want to go back to the Caring Counts report by Dr Judy McGregor. She came to give a briefing to New Zealand First. People may not remember it, but, actually, I was sent by New Zealand First to go to the protest outside TerraNova Homes and Care offices way back then. I was there with Jacinda Ardern. I was a bit green at the time—I had done a bit of protesting, but not a lot as an MP. I was not quite sure how far you could go.

Judy McGregor, when she came to brief us on Caring Counts, said that this was a case of State-sanctioned emotional blackmail, because the women, predominantly, who are in this workforce—and Jan Logie remarked upon it—would not leave their clients in the lurch. They would not just walk out and go and protest. They made sure that every protest that they held to draw attention to this issue was done with the least disruption to their clients because they did not see them as clients; they saw them as people.

I want people to remember what this Government and its support partners said back then in 2012. John Key said that this deal was a risk to the Budget, and possibly to the country’s future. That is what he said back in 2013. So there has been a long pull forward, and it got here only because Kristine Bartlett and the unions got together and took the Government to court. And, quite rightly, as was pointed out by my colleague Iain Lees-Galloway from the Labour Party, the Government was looking down the barrel of a much bigger settlement. So that drove it to the table.

In her report, Dr Judy McGregor said that to address the equal employment opportunities issue, there needed to be a dignified leadership within Government. Unfortunately, we were not able to find it inside this Government, and so, particularly as women and as a country, we had to go and find that leadership in Kristine Bartlett. The dignified leadership of Kristine Bartlett, who made herself the figurehead of this movement, well supported—absolutely, no doubt—by her fellow workers and by the unions. But that woman placed herself at the front of this issue, and it was not easy. It has never been easy to be a woman who has stood up and said: “I deserve it.” It was the message—and it was the message of this Government—that when a woman stood up and said “I do the work. I deserve the pay.”, somehow she was being selfish. That is what needed to be overcome. That is the criticism that took place when this issue first started.

I am not going to take very much more of our time because we do want to get this to the select committee. We do want to hear. We want to make sure that what is written down here is what people believe it to be. I will, however, comment on the kaiāwhina workforce and Careerforce, and the work that has been done after the Caring Counts report on developing that in-place, in-workforce training at very low cost to upskill that workforce.

I want to remind people about how vulnerable the New Zealanders are who are cared for in their own homes by this workforce. When an untrained person is sent there, both of those individuals are physically at risk. That is from personal experience, having been called by constituents in Rodney asking for support, both for themselves and for their carer. So we will be watching, we will be listening—it is a very tight time frame, and we understand why. We do not object to the very tight time frame because if this is correct, if it is good, then we want it to go forward and we want it in place by 1 July. But we will be listening, we will be watching, and we encourage as many people as possible to come forward in the time frame and submit to the select committee. Thank you.

BARBARA KURIGER (National—Taranaki - King Country): Today, Budget day 2017, is a really momentous move forward for a group of 55,000 care workers, who have worked so diligently for a very long time for the care of their patients. They are just an outstanding workforce, and it is a real pleasure to be standing here.

I am really disappointed. This is a chance for all of us to start on the elimination of what has been a systemic undervaluation of a workforce that has been going on for way past our political times—it has been going on in history. We can stand here and talk, as the last speaker, Tracey Martin, did, about what happened in 2013 and what happened in 2012, but I think we should celebrate what has happened since that time.

I think we want to commend everybody who was involved in this process, getting it to the point that it is today. I also want to commend Kristine Bartlett, who put so much effort into leading the cause to where we are now.

This settlement really is important. As I said, we are addressing something that has been in the system for a very long time. There are a whole lot of reasons why this is very important, not just for the people who are being cared for—particularly when it is primary care, and particularly when those people want to be cared for in their own homes. There is a workforce out there, as we have heard today, of loving, caring people who actually go above and beyond what their work description says, who are out there and doing it because they care about the people whom they work for. I think that is really important. It keeps a lot of people close to home for a lot longer, and when they do need to go into care, there is a specialist population of workers there to look after them.

There is something else that I think is really important today, and it is around the links in the pay to the qualifications. That will really give these care workers the opportunity, after a very long time, to be able to start stepping up, getting extra pay for extra qualifications, and opening themselves up to choices. Often people end up in a space where that is where they have been for a lot of their life, and often they do not look at their options for getting out. I want to mention—back to the Budget—hearing the Prime Minister’s speech this afternoon, when he talked about investing in people and having them lifting themselves out of their situations and helping themselves to make a better life. So this education is a really, really important part of this deal, giving people a step up and stand out.

I also am very pleased to be part of the Health Committee. We work very constructively together, and I hope we will on this. We have got a very tight deadline and, as the chair, Simon O’Connor, said before, we are going to make every effort to endeavour to have this done by the Tuesday after Queen’s Birthday. Thank you.

The ASSISTANT SPEAKER (Lindsay Tisch): The next call is a split call. Denise Roche—5 minutes.

DENISE ROCHE (Green): I am delighted to take this short call for the Greens on the Care and Support Worker (Pay Equity) Settlement Bill. It is, indeed, a historic day. This settlement has come to the House after a massive scrap. We heard from my colleague earlier about the generations that it has taken to get this pay equity settlement legislation to the House today, and I want to acknowledge that, too. I want to acknowledge all the women who have worked on this. I am particularly thinking not only of Kristine Bartlett and the members of the E tū union, the Nurses Organisation, and the Public Service Association Inc. but also of our late, great mate, Helen Kelly.

This settlement is going to make a huge, huge difference to the lives of these women. We should actually acknowledge that this Government and the industry itself have known for decades that they have relied on the exploitation of these workers in the care sector. They have relied on the exploitation of their labour, of their emotional labour, and of their commitment to their clients. They have known that, and yet despite that—despite that—these workers have been willing to get together to work with their unions and to take the case to court, and they have been fought there, by the Government no less, and they have won. It is a victory.

I think it was Martin Luther King who actually said that “Freedom is never voluntarily given by the oppressor; it must be demanded by the oppressed.”, and it is the same for workers’ rights. It is the same for pay equity. It would never have been handed over voluntarily without Kristine Bartlett, without E tū union, and without the generations of women and workers who fought for this historic settlement.

We have got an ageing workforce in the care sector, and this settlement may go some way towards ensuring that there is a career pathway for younger people to come through and to work in what is, essentially, a really fulfilling occupation. I have done it myself—4 years of it. It is really hard work. To have your pay lifted from $15.75 an hour to $23 an hour is an acknowledgment, finally, of the worth of that work. It is darned demanding. It is, essentially, supporting our most vulnerable citizens in this country to live lives of dignity. Now the women workers will finally receive some of that dignity because their status will be improved through the recognition in their pay packets that they are actually worth it—finally.

I can talk about the qualifications, but, actually, care workers have been able to get qualifications for a very long time. It is just that they have not been able to get access to them from some of their employers, and they have not been paid for them by some of their employers. Despite this settlement and the fact that it has been negotiated as a tripartite agreement, we still have the situation where the ratification meetings are occurring right now—E tū union organisers are working with delegates right across the country, doing about a thousand ratification meetings. We have got sort of ratbag employers who are making a mint, who are making profits out of the aged-care sector—employers like Rymans Healthcare and Oceania Group—that are saying: “Well, we’re not going to let you have a ratification meeting so that the workers can vote to accept this remarkable settlement. We’re not going to let you do that unless we have managers and our staff in the room.” So it is still there. We still have to have our unions, and we have to have our unions continually fighting for the rights of our people in their workplaces.

I am joining with the other parties in the House to actually celebrate what is essentially a remarkable settlement. It would never ever have been achieved without Kristine Bartlett or without E tū union, particularly, getting together and making it happen. So we are really delighted to be supporting this bill through the rest of the process.

The ASSISTANT SPEAKER (Lindsay Tisch): I call Sue Moroney—5 minutes.

SUE MORONEY (Labour): It is with genuine excitement that I rise to support this bill today and to celebrate this historic victory for women and their unions, because that is, no doubt, what has happened. It feels quite emotional actually, because I still recall, on the first day of the Employment Court hearing, standing with other women to welcome Kristine Bartlett as she walked into the courtroom in Auckland. I think it was 2012; it seems like an awful long time ago. I had a big bouquet of flowers with me to present to her on behalf of the Labour women’s caucus because we felt so strongly about the importance of that case.

I have often—because I have done a few media interviews on this issue over the course of that time when people have wanted to ask “Well, you know, why should women get paid more?” and all of those sorts of things—referred to Kristine Bartlett as the Erin Brockovich of New Zealand. That is how it feels to me. She is this actually quite small, but fiercely determined woman who took on that Government, who took on her employer, who took on the patriarchy, actually—she and her union and all of the members of those unions—and won. They won the day. And I am looking forward to seeing the dramatisation à la Erin Brockovich—I do not know who is playing Kristine Bartlett; who is going to play her—and seeing, actually, the story recorded behind this wonderful victory, because it has been an awfully long time coming.

People may or may not know that prior to coming into Parliament, I spent most of my working time actually representing staff in rest homes. I worked for the New Zealand Nurses Organisation (NZNO) based in Hamilton for about a dozen years. That seems to be about the amount of time that I spend in a job these days—a dozen years. It seems to be my limit. I was bargaining and negotiating, and representing healthcare assistants and nurses working in rest homes for that period of time, and it was a battle that I have taken on for many years—to try to get this group of mainly female workers recognised for the extremely hard and important work that they do. This work of looking after the most vulnerable in our society—our precious elderly—is not only physically draining and physically challenging; it is also emotionally challenging, intellectually challenging, and mentally challenging. When you think about all those factors that go into providing that expert care and love and support for our elderly, is it not about time we recognised the value of that?

I want to recognise the unions who took this case to the court. I want to particularly recognise—well, I have to call it E tū, but I am a bit kind of old-fashioned so I am going to say the servos. I am going to say the servos. That is my union, and I feel exceptionally proud of the role that it played in being at the forefront of this. But there also is the Public Service Association and the NZNO, my old union, as well, and their role in this, and the Council of Trade Unions. They all worked very strategically together to make sure that this win succeeded. I know that at times they would have had their hearts in their mouths because it was actually a leap of faith, really, to sit down with a Tory Government and negotiate their way through this. But they took up that challenge, they did it, and they have won the day.

It took far too long. What was the Crown doing actually getting in the way of that? What was the Crown doing arguing against them in the court when it should have been supporting these women and their families—and, in fact, the men who work in those female-dominated occupations as well? But here is the real problem: if that National Government had not repealed the 1990 pay equity Act brought in by the previous Labour Government—if it had not done that in 1990—you know, all those families would have had pay equity more than a decade ago. They would have had it in 1990-91, and their families, those generations of those children who have been brought up in next to poverty conditions, would not have suffered that if that Government had actually left that Act in place.

MELISSA LEE (National): It is a great opportunity for me to stand in support of this bill, and I would like to just say congratulations. I acknowledge Kristine Bartlett and everyone who has actually been involved in this process. What a day to actually rise to speak. The first Budget of the Hon Steven Joyce was delivered, and it is going to be delivering for New Zealand families, delivering for New Zealand businesses, and, most importantly, supporting New Zealand’s aspirations.

The care and support worker bill will be a historic, $2 billion settlement for healthcare workers of New Zealand and will ensure thousands of hard-working people will be recognised for the work that they do in our care facilities and disabled and special needs communities. They will be paid fairly, as other members have actually said—and deservedly so—for the amazing job that they do. Pay rates will rise for full-time workers and will reach up to around $100 extra per week. That is more than $5,000 a year, making a tangible difference to those workers’ lives and their families’ lives.

This settlement, reached by the funders of care and support such as the Crown, ACC, and local district health boards, as well as by unions representing care and support workers and health and care workers, is an important acknowledgment of the role those workers play and will no doubt reduce the high turnover that comes with our care and support workers job sector. I also want to acknowledge the work of the New Zealand Aged Care Association, the Home and Community Health Association, and the New Zealand Disability Support Network, which all played a vital role in reaching this agreement over the past 20 months—apart from those that were already actually mentioned by other members. The work involves long hours and hard effort, and I am pleased that we as a National-led Government were able to provide this excellent outcome for the industry.

The settlement, of course, is also an important milestone for pay equity, as the workforce in this sector is made up of mostly female employees and, as other members have actually said, we celebrate the pay equity that is finally reached for those women workers who are in this sector. More than half of them have been working part time at an average wage of $16 to $18 per hour. Providing a real, practical way of recognising their service and supporting their aspirations is important to me, and ensuring that we acknowledge that work that involves similar skills, responsibility conditions, and degrees of effort is able to be paid in kind to similar work performed by the opposite gender. So maybe one day we will actually get to an era when women’s work is recognised and we will all be celebrating that, I am sure.

This bill will also allow for the Government to help providers invest in training their staff, providing incentives of real qualifications to expand their industry knowledge and formal skill sets. This will include access to relevant New Zealand Qualifications Authority health and well-being certificate study, or its equivalent, for employees working long term in the field and will make a difference to their ability to do the job professionally.

National and this Government are working for aspirational New Zealanders. We are there for the lowest-paid workers, and you can actually tell that by looking at the Budget that has been delivered today. There have been tax change announcements putting more money in the pockets of New Zealand households and providing more support for growing families.

I would like to commend the Care and Support Worker (Pay Equity) Settlement Bill to the House, and, like the $3.9 billion spending and the increase to Vote Health and ACC and to New Zealand’s health sector announced today, it will be delivering to New Zealand. I commend the bill to the House.

POTO WILLIAMS (Labour—Christchurch East): Tēnā koe, Mr Assistant Speaker. Today is a day of celebration, and I want to acknowledge, as the speakers before me have done, Kristine Bartlett, the servos, the Public Service Association, and the New Zealand Nurses Organisation. It is your day. Congratulations. Ā, tēnā koe, mihi mahana ki a koutou.

[Thank you, and a warm acknowledgment to you collectively.]

Thank you so much for all the hard work that you have done to bring this bill to the House, to bring this to a conclusion.

I have one word for the Government and its role in this, and that is “Whatever.” This is actually not about your hard work; this hard work belongs to those workers who work very hard every single day caring for our elderly and our most vulnerable, and to the unions that support them, which have fought for them long and hard.

Why I say that is because on reviewing the regulatory impact statement this afternoon, I am reminded of a couple of things. The first thing I am reminded of is that, actually, one of the first principles of pay equity is this: because the work is predominantly performed by women, care and support workers are paid less than a man performing work involving similar skills, responsibility, conditions, and degrees of effort would be paid. Where in this discussion is the comparator? That has been an issue that we have wanted resolved, because until we can decide on a comparator, not within the same sector but outside the sector, we are going to continue to have these arguments going down the line.

This Government has been kicking and screaming, not only about this piece of legislation but about the legislation on the travel time between work and about the sleepover conditions, which have been hard fought for and won by this sector and by the workers and their unions. So I say to this Government, whatever. Whatever. Nearly 2 years it took of discussion behind the scenes because it could not stomach what the court would eventually settle.

I go back to the regulatory impact statement. When we look in the regulatory impact statement at “Court determines pay rates for care and support workers”, “With any of the options, the resulting change in pay rates to address pay equity for these workers …”, “One of the key outcomes being sought is to achieve a sustainable equitable pay structure …”, and “A court determined solution as in Option 4 …”, what do we find? It is redacted—all redacted. So the Government knew what the cost would be if it was actually going to put in place what is actually deserved by the workers who work in the care and support industry in this country. It knows. The only information that we get on pay rates is actually the schedule that appears in the legislation, and here it is—the schedule that was fought for and won by our workers. That is the only information we have. All the rest of the information has been redacted.

However, I do want to be constructive because I am on the Health Committee, so there are four clauses in this legislation that I want us to examine. I have had a chance to look at the legislation and there are four clauses that I think require further examination.

The first one is about weekend and penal rates—clause 9—where we no longer have a penal rate as a percentage of an hourly rate. What will happen for some workers is that the penal rate will be the dollar value as it occurs in their current agreement, before the new legislation is put in place. For example, for somebody who is currently on $18, the penal rate for time and a half—or whatever the half-rate is—is $9. So if they go to the new pay rates and they get an increase to $21, their penal rate will continue to be $9. I want to see whether we can actually examine the fairness of that proposition.

The other thing I think we need to look at is clause 7, which looks at extinguishing the existing claims and bars potential future claims. I think we should examine whether this is actually fair, because there may be in future negotiations something that comes up that we have not anticipated, and this clause extinguishes the right to any future claims under that.

Clause 10 is about any agreements that might have been made in previous agreements, so any hard-fought-for conditions that might potentially have transferred over into new agreements are now also not going to be enforced. There may have been some conditions that have been grandparented over in the past and they are no longer actually going to be available to workers, so I think we need to examine that and the fairness of that.

The last thing is the definition that occurs in clause 4 of “continuous employment”. “Continuous employment” in this legislation appears to be only employment with the same employer, or when that staff member transfers to a new employer that, I presume, has purchased that business. So the potential for that, I guess, is that if you change employers, you could be working in the industry for several years or several decades and still achieve only the first two pay rates on this scale. So I think, as a select committee, we have the opportunity to examine that. A truncated period—yes, it is—but I think we will actually be able to tease that out and ensure we get those clauses right in the legislation.

In the few minutes I have got left, I actually want to tell a story about a caregiver whom I knew, because I used to work in this area myself a few years ago. A caregiver whom I knew worked in an elder-care facility that had a dementia unit, where many of the clients had Alzheimer’s. This staff member turned up for work, walked through the door, and she still had her handbag wrapped around her arm as she walked through the door, and she saw a client of hers walking towards her—an elderly lady. She walked up to that elderly lady and grabbed her by the hands. She held her hands within hers and she rubbed them, and she looked into her eyes and she talked to her for a good couple of minutes. It was a really lovely exchange because it actually showed how much she cared for that person.

Afterwards, after she had put her bag down and got herself ready for her day, I asked her why she did that. She said to me that a lot of people in our rest homes and in our care facilities often do not have families visit. This particular lady probably would not remember her tomorrow, but she felt like she had to provide some care and love to her.

I think the story of that woman says exactly what we want to acknowledge and support and value, which is that what they do every single day is provide a little bit of love and a lot of care to people who ordinarily might not get it otherwise. I think every member in this House, when we are a little bit older and we might be dribbling into our soup, would want care workers who, like that woman, take the time to just share a little bit of love with their clients.

Today is about unions. This is what good, strong unions can achieve. Unionisation is about supporting our best workers and supporting those who do the difficult jobs and who actually deserve to be paid the most. This is also about women and, for me, it is really important to acknowledge that this is about Pacific women—Pacific women who have worked for many years in this industry. Today they get a little bit more of what they deserve, which is going some way to their getting a living wage and a decent wage.

So I am really proud to support this bill. I hope that in the future the Government will really acknowledge that what it has done is that it has perhaps negotiated away some of those rights that the women in this industry do deserve, but in the interests of their sector, they have decided to forgo them. We support this bill. We support those workers. We celebrate the unions. Thank you very much.

Bill read a first time.

Bill referred to the Health Committee.

Hon Dr JONATHAN COLEMAN (Minister of Health): I move, That the Care and Support Worker (Pay Equity) Settlement Bill be reported to the House by 6 June 2017 and that the committee have authority to meet at any time while the House is sitting (except during oral questions), during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, despite Standing Orders 191 and 194(1)(b) and (c).

Motion agreed to.

Sitting suspended from 6 p.m. to 7.30 p.m.

Bills

Taxation (Budget Measures: Family Incomes Package) Bill

First Reading

Hon SIMON BRIDGES (Minister for Economic Development) on behalf of the Minister of Finance: I move, That the Taxation (Budget Measures: Family Incomes Package) Bill be now read a first time. Today’s Budget reveals a strong, growing economy and a healthy set of Government accounts. It is important that New Zealand families directly share the benefits of that strong economic growth, and that is increasingly the case. Median earnings have increased from $40,000 to $48,000 since 2010, and incomes across the distribution have increased. But because of that, many more middle-income earners are faced with a marginal tax rate of 30 percent. We also have a number of lower-income people with young families who are struggling to get ahead. We have a system that is becoming too complex. As a result of Working for Families and other changes, it can be very hard for people to work out what they are entitled to and how the work they do is linked to the income they receive.

This Government’s $2 billion per year Family Incomes Package, announced today, will provide better rewards for hard work, start simplifying the tax and transfer system, help lower-income families with young children to meet their living costs, and improve incomes for people with high housing costs. This bill gives effect to the aspects of the Family Incomes Package that require amendments to primary legislation.

First, the bill increases the bottom two income tax thresholds, from $14,000 to $22,000 and from $48,000 to $52,000. Second, it discontinues the independent earner tax credit. Third, it makes changes to Working for Families to increase family tax credit rates for children under 16 to align them with the rates for children aged 16 to 18, increase the abatement rate from 22.5 percent to 25 percent, and decrease the abatement threshold from $36,350 a year to $35,000 per annum. The bill also makes other amendments required to give effect to the changes, such as adjusting the thresholds for fringe benefit tax and resident withholding tax. The final part of the Family Incomes Package—the increases to the accommodation supplement and accommodation benefit—will be given effect by Order in Council in the near future. All substantive measures in the bill and in the package will apply from 1 April 2018.

The income tax thresholds were last changed in 2010. Income growth since then has pulled more people into higher tax brackets. This bill reverses that trend by increasing the bottom two tax thresholds, in turn increasing the rewards for work for low- and middle-income earners. This change provides a tax reduction of $10.77 a week to anyone earning more than $22,000 a year, increasing to $20.38 a week for anyone earning more than $52,000 per year.

This bill discontinues the independent earner tax credit to help simplify the tax system. It is claimed by only about one-third of eligible recipients during the tax year. Individuals who currently receive the credit will be fully compensated by the increase in the bottom tax threshold, and will not have to file a tax return at year-end or select a different tax code to claim it. The Government wants to help low-income families with children to meet their living costs. This bill raises the family tax credit rates for children under 16 to align with those for children aged 16 to 18. The maximum family tax credit rate for the first child aged under 16 will increase by $9.25 a week, while the rates for each subsequent child increase by either $17.75 or $26.81 per week, depending on the age of the child. Aligning the rates for children of all ages also helps to make the payment rules easier to understand. At the same time, this bill completes the Government’s planned adjustments to the Working for Families abatement rate and threshold to ensure additional support is targeted at low-income families.

These are the main points of this important bill for New Zealand families. The Family Incomes Package will benefit around 1.3 million working-age families by, on average, $26 per week. There will be flow-on gains to around 750,000 superannuitants and 41,000 students, who also benefit from the Family Incomes Package. The package particularly focuses on assisting low-income families with young children and those experiencing high housing costs: 154,000 families in the lowest quintile will benefit by an average of $35.32 a week, or $1,836.64 per year. The measures in this package are expected to lift 20,000 households above the threshold for severe housing stress and reduce the number of children living in families receiving less than half the median income by around 50,000.

The package forms a comprehensive set of measures to improve the rewards for work, to start to simplify the tax system, and to lift family incomes. It is therefore with great pride that I commend this bill to the House.

GRANT ROBERTSON (Labour—Wellington Central): The member who has just resumed his seat, Simon Bridges, might like to answer the question of what is fair about the tax package that he has just proposed in this legislation. Is it fair that the wealthiest households will get $35 a week from it, and the lowest-paid New Zealanders will get $5.13 a week? Is that a package that is delivering to the New Zealanders who need it the most, or is that a package in a classic election year Budget from the National Government?

National members might think it is clever politics and that they have done something to march into the territory of the Labour Party, but I do not think New Zealanders see it that way. I give New Zealanders a lot more credit than that. They know that the Budget today should have been one that had solutions to the housing crisis, that properly funded the health system, that created an education system that is right for the 21st century. But, instead, the legislation that National put in front of the House tonight is one that delivers a tax package that ultimately will mean that Simon Bridges can buy two more pottles of Brylcreem from Rodney Wayne—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

GRANT ROBERTSON: —that Simon Bridges, and me, and the Assistant Speaker all get benefits from a tax cut far in excess—I am not suggesting that the Assistant Speaker is buying Brylcreem from Rodney Wayne, don’t you worry—than those people who the National Government purport to help.

Let us go into some detail about that. I actually got an email over the dinner break from somebody who earns just under the minimum wage. They are a single person, and they said they have looked at the Budget and worked out that they are—their name is not Bill, but they are “One Dollar Bill”. They are the person who got the independent earner tax credit worth $10 taken off them today. Eleven dollars, that is the big promise from the National Party for this person—$11 per week—but we are taking $10 per week off. They are “One Dollar Bill”. How is that fair? How is that a fair tax package to put in front of this country?

Around 800,000 New Zealanders on taxable incomes below $14,000 will get nothing from this—nothing whatsoever. Five hundred thousand low-income workers, just like the person I mentioned, who have been getting the independent earner tax credit lose that and are left with $1 a week. They are the people the National Government says it is trying to help here, but, instead, it is people on higher incomes who get the greatest benefit from this package. The Government knows this. The Government knows. Steven Joyce, earlier tonight when he was on Newstalk ZB just before me—it was put to him that, actually, the lowest income earners would not get that much from these changes, and he said: “That’s right. They’ll get most of the benefit out of Working for Families and the accommodation supplement.” Well, how much is the Government actually spending on that? It is spending around $1.9 billion on the tax cuts—this is annually—and it is spending $373 million on Working for Families and $361 million on the accommodation supplement.

So if the Government really wanted to deliver for low-income New Zealanders, it would have put that money into Working for Families and the accommodation supplement, not into an election tax-cut bribe, and that is what it is plain and simple in an election year Budget. What is being put in front of us tonight is not a package that would deliver to those low-income families.

This is a Budget—and this is the first time I have the opportunity to say this tonight—where the Government has squandered one of the great opportunities that it had. In the explanatory note of this bill, some time is devoted to talking about housing. So I am going to take a little bit of time now to talk about it, because it is in the explanatory note. But it is actually not in the bill—that is the thing. The Government knows it is in huge trouble on housing. It knows that New Zealanders have a housing crisis in front of them, and it has got no solutions.

After 9 years we have got a Budget that does include some changes to the accommodation supplement, but that in itself is actually an admission of failure by this Government—and so actually, frankly, is the rest of the package that is in the bill. It is an admission that things have got out of control; that, actually, wages are not keeping up. In the Budget documents released today, we see that successively over the next couple of years inflation will outpace wage growth—inflation will outpace wage growth.

Andrew Bayly: And how do you know that? How do you know that, Grant?

GRANT ROBERTSON: So New Zealand is working harder and harder and for more and more hours. In the end all this Government has got—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! The member did two things wrong in a row then, and—Mr Bayly.

Andrew Bayly: Sorry?

The ASSISTANT SPEAKER (Hon Trevor Mallard): Is he aware of what he did wrong? I will ask his colleagues to explain it to him, and just save his interjections until he can get some that are within order.

GRANT ROBERTSON: This package today is actually an admission of failure from this Government, an admission that, actually, it has no vision for how to grow the economy sustainably. Do you know that this Budget today says that exports as a percentage of GDP are going to go down? They going to go down further. This Government does not have a plan. It is actually quite remarkable. There is almost nothing about regional development. There is almost nothing about how we are actually going to grow wages, and, instead, a hand-out of a bribe here that actually is thoroughly inadequate when it comes to dealing with the costs that are facing low-income New Zealanders.

In terms of the Working for Families part of the package, my colleague Jacinda Ardern will speak in some more detail about this, but, once again, we have the giving with one hand and the taking away with the other. While there is something to be said for the simplification around Working for Families, this package squeezes once again—this package squeezes once again. It lifts the abatement rate and it reduces the income figure at which it kicks in, and you look out across Working for Families as it goes out across the forecast period and the overall spend goes down. The squeeze is on, on working families.

So yes, there are some parts of this that are useful and actually will help people, but, unfortunately, it is again wrapped up in the National Government’s giving with one hand and taking with the other. And then there is, of course, the accommodation supplement, which I said I would refer to, which will be welcomed by the people who get it, but, unfortunately, on both sides of the House, I think, there is a shared view that the accommodation supplement is a very flawed instrument. It is, in effect, a subsidy for landlords. I can say on this side of the House that when we do get into Government we will be taking at another look at that scheme, but in the short term yes we do have to do something to support people with spiralling rents.

But it is double-crewed ambulance at the bottom of the cliff. There is no attempt to solve the underlying social problems. There is no attempt to come up with the solutions to fix the housing crisis. There is no attempt to get in early and help make sure that our health system works and we deal with mental health—no. It is making sure that we dress up the ambulance at the bottom of the cliff as something that actually is delivering for New Zealand. It is hugely disappointing to me that we have this package in front of us tonight, a package where the finance Minister and the Prime Minister get 20 times what a single person working full time on the minimum wage gets—20 times. It is not fair. It is not helpful to New Zealanders.

People like us—people like politicians in this House—do not need tax cuts. We especially do not need them when there are huge priorities out there in our community; when we have got homelessness again on the rise; when we have got the housing crisis; when we have got Waikato Hospital telling people: “Don’t come in. We can’t take you because we’re so underfunded.”; when we have got the Canterbury mental health officials saying to the Government: “We’re in crisis.”, and this is what the Government puts up. The Government says “No. We are actually going to save by giving $11 a week to someone on the minimum wage, and we have somehow solved those problems.” We have not. That $11 a week is wiped out. It is wiped out by increased costs of rent. It is wiped out by increased costs of going to the doctor. It is not even catch up. It is not even getting to the point of catch up.

So after 9 years we have a Budget, and the one piece of legislation emerging out of that Budget does not even get close to making up for what National has done to undermine New Zealanders’ well-being. So it thinks it has come up with something clever here. It thinks it has got a clever piece of election year politics. Well, going around New Zealand, I have confidence and faith in New Zealanders that they will see right through this piece of legislation for exactly what it is: an inadequate election year bribe that fails to come up with the solutions to New Zealand’s social problems and fails to have a vision to give New Zealanders some confidence about growing those decent jobs with higher wages that we need right across New Zealand.

This is a bill that the Labour Party will be opposing. This is not the right family and tax package for New Zealanders. We will provide that before the election, but this is not something that we can support.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Just before I call the next member, I just want to indicate to members that I did not pull Mr Robertson up when he was quite wide of the bill. We are now debating the Taxation (Budget Measures: Family Incomes Package) Bill. We are not doing the Budget debate—the appropriation debate. I did not pull Mr Robertson up, because the Minister’s speech was, in fact, itself quite broad, and I felt it was probably inappropriate to stop him. But I want to indicate to members that from now on, we will be tight around debating this bill, and we will not be having a pre-run of members’ Budget speeches.

Grant Robertson: I raise a point of order, Mr Speaker. It is, perhaps, more in the nature of a clarification. I respect your ruling, obviously. In my speech I did allude at one point to the accommodation supplement, and I do just note that it and housing costs are actually covered in some detail in the explanatory—

The ASSISTANT SPEAKER (Hon Trevor Mallard): I heard the member. I looked at it, and it was probably the thing that let me let him go on a bit more. But he did go well beyond that in his discussions, and he talked about a whole pile of spending areas that are not in this bill.

CHRIS BISHOP (National): Well, now we know where the Labour Party stands when it comes to helping working families, because every time the National Government puts forward a proposal, like this bill, the Taxation (Budget Measures: Family Incomes Package) Bill, every time the Government puts forward a proposal to help out those who need it most, the Labour Party votes against it. It voted against the 2015 Budget, which raised benefit levels for the first time in 43 years and gave those who needed it most up to $25 a week extra, and now it is clear it is going to vote against this measure.

Is this a bill that delivers more to those who do not need it? That is the charge that the Labour Opposition has made and that is the charge that Grant Robertson made just before. No, it is not. What this bill does—what this Budget delivers is tax cuts for those who need it most at the bottom of the income scale. What do we see in this bill? We see the increase in the two personal income tax thresholds from 1 April 2018. We see an extension from $14,000 to $22,000 for the 10.5 percent rate. We see an extension from the $48,000 bracket up to $52,000. Do we see a change in the top tax rate of 33 cents above $70,000 a year? Do we see that? No. So those earning above $70,000 a year do not get a cut in the rate they pay above that income. Do we see a cut in the 30 percent rate? No, we do not. What we see are real-terms cuts at the bottom end of the spectrum.

That is why someone earning $20,000 a year under this bill faces a 17 percent drop in the tax they pay, that is why someone on $50,000 a year sees a drop of 10 percent, and that is why someone on $100,000 a year gets only a 4 percent drop in the tax they pay. So this is absolutely not a tax bill and a Budget that delivers only for the rich. In fact, one of the stated aims of this bill and this Budget is to make sure that all New Zealanders share in the benefits of growth. When you have an economy that has grown every quarter, bar one, for the last 6 years, it is important that New Zealanders share in the benefits of that growth. And they are, and this Budget and this bill take the next step by delivering this Family Incomes Package.

There are changes to Working for Families, and Grant Robertson, again, in his speech just before said that these benefit only wealthy people. But, indeed, the tighter targeting around Working for Families, as, in fact, many social commentators like Max Rashbrooke have argued—

Jacinda Ardern: Tighter targeting? It cuts out below the median income.

CHRIS BISHOP: —makes sure that those benefits flow to those—you to go talk to your mate Max Rashbrooke—

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

CHRIS BISHOP: —because he points out that the changes make sure that it goes to those who need it most. It is a complete contradiction to the argument that Grant Robertson was making.

What else does this do? Well, members opposite like to talk often about child poverty, and fair enough. They like to talk about those facing severe housing stress. This package lifts 20,000 people above the threshold for severe housing stress. It reduces the number of kids living in families receiving less than the median income, by around 50,000 kids. This is absolutely a bill, absolutely a package, targeted at those who need it most, so it is just ridiculous for members opposite to argue otherwise. What else is the purpose of this bill and the purpose of the package, broadly? Well, it is to make sure that New Zealanders get rewards for hard work.

Absolutely one of the big dividing lines, I think, between the parties in Parliament at the moment is the attitude towards tax cuts. You heard what Grant Robertson said. You heard his attitude summed up in one word: they are a “bribe”. The Government is bribing people—except it is New Zealanders’ own money. They earned it; they deserve it. It is pretty hard to bribe someone with their own money. That sums up the philosophical distinction between the two parties. The Labour Party thinks that the money belongs to the Government, and that when you give it back to New Zealanders you are bribing with them with Government money. Except it is not Labour’s money. It is not the Government’s money. It is taxpayers’ money in the first place, and that is absolutely the distinction.

So let us just be clear, at the end of my speech. What we have got is a package that targets support at those who need it most; that cuts taxes for the poor; and that—in addition to the changes around the accommodation supplement, and the changes to Working for Families and the family tax credit, and the other changes included in this bill and the wider package—makes sure that people who are in need of it because of severe housing stress get more money in their back pocket at the end of every week. On average, 1.3 million families will receive, on average, $26 a week as a result of this bill and this package, and the Labour Party is opposed to it.

Let us be extremely clear about that. The Labour Party is going to oppose this bill, and it is going to spend the next 3 months saying to New Zealanders: “No, we don’t think you deserve another $26 a week. No, we don’t think you deserve another 60 bucks a week in accommodation supplement. No, we don’t think you deserve extra money through the tax system. No, you don’t deserve it.” And then Labour members claim to stand up and they claim that they care. They claim that they care about lower-income New Zealanders and about poor New Zealanders. Well, the truth has just come out. Actually, by voting against this, they do not.

JACINDA ARDERN (Deputy Leader—Labour): What an absolutely outrageous attempt to sum up what Labour has articulately put on this side of the House around its opposition to what the Government has simplistically put before New Zealanders today. Mr Bishop has done a complete disservice to New Zealanders by making the assumption that if given the opportunity to spend $1.9 billion—to spend $1.9 billion—they would prioritise having $10 a week over having decent healthcare, over having decent infrastructure in their schools, and over doing something about the 90,000 young people who are not in work, training, or education.

That is the trade-off that this Government has presented to the New Zealand public, and Mr Bishop has done an absolute disservice to the people of New Zealand by assuming that that would be their priority. I can tell you, Mr Bishop, having done a number of public meetings around the country in the last few months, that not once have I had a member of the public—and these have been members of this public interested in what political parties have to offer this election—raise a hand and ask: “What are you going to do about the tax brackets in New Zealand?”. I have not seen that on one occasion, and why? Because they see the deficit in our social spending and our social infrastructure, and that is what they are crying out for us to prioritise.

But I want to break it down a little bit further, because Grant Robertson also made another point. He has made it consistently as Labour’s spokesperson on finance. It is about making sure we have an economy where we have shared prosperity. Chris Bishop stood up and tried to claim that this change in tax brackets would make a difference in sharing prosperity for those on the lowest incomes. The problem, of course, as he well knows, is any time you adjust tax brackets, yes, you may dish out a small amount to those on the lowest incomes, but you will always disproportionately benefit those on higher incomes. That is the clumsiness of rearranging the deck chairs around tax brackets, which is why Working for Families was introduced by Labour as a way to make sure that we targeted those who needed it most.

Those who needed it most often were those who had kids, who were on low and middle incomes, and who had maybe one or two or even three children. They were often living in expensive parts of the country and struggling to get by. We created a package where we were able to nuance all of those elements and truly target—truly target—those who needed it most. That was a tool available to this Government, and it acknowledged that that was available, but instead of putting a larger proportion of its Budget into those families, it spent $1.9 billion on inefficient, piecemeal tax cuts that will deliver 10 bucks a week to those on the $20,000 mark and 20 bucks to those on more than $50,000. Then it spent $373 million on Working for Families. That is a totally disproportionate approach to genuinely helping families in their need, as members crow about on the other side of the House—a totally disproportionate approach.

For absolute clarity, we support the simplification of Working for Families and the vague attempt made in this bill to deliver more to those families, although I will get into more detail about the fact that the Government is giving with one hand and taking with the other. But if this bill was a bill that was simply about those simplification measures—and just to be really clear what they are, the Government has proposed increasing the rate for children under the age of 16 to the same rate that is delivered for children between 16 and 18 for the first child. It has also suggested changing the rate for subsequent children. By and large, that would deliver a positive outcome, and we think that that was a good suggestion from the Government. If that were the only thing that it was putting before us in this tax package, we would be able to support it, and to prove that, Mr Bishop, I have an amendment in my name that is solely about those tax changes, which we will be voting in favour of because that is the part of the bill that genuinely delivers to low and middle income New Zealanders.

However, demonstrating the fact that it is incapable of doing anything to Working for Families without then winding down the screws on other families, on those families who are still doing it tough, the Government has shifted the threshold for abatement and increased the abatement rate. So now Working for Families will start abating at $35,000. To be really clear, that means that a family that is on the median income in New Zealand, with one child, will be worse off—worse off—under this package from this Government, and by quite some sum. That is because of those continuing abatement rate changes and thresholds.

This is not the first time the Government has proposed changes like that. It has done it consistently since Labour left office. In fact, substantive changes came in in 2011 that almost amounted to roughly $500 million removed from Working for Families. Just to be clear, the Government took out almost $500 million in 2011. It is now putting back in $373 million. So let us keep its generosity in perspective, if we can. So—the Government took that out. If it was actually to maintain, taking into account inflation, the level that Working for Families was at in 2010, this would have to be a $700 million package just for Working for Families—just to stand still with those 2010 levels.

So let us keep this in perspective. This has always been a Government, when it comes to Working for Families, that has given with one hand what it has taken with another. But I do want to reiterate that it has fundamentally changed its approach to Working for Families. It has continued to squeeze out families who previously would have been eligible under Labour. Labour used Working for Families to reach middle and low income families—middle and low income families. This Government has changed that approach. It has fundamentally changed that approach in the way that it has worked with Working for Families.

I want to highlight something, though, that may not have been picked up as yet. Everyone in this House will know that Labour has long battled to try to get this Government to commit, in the long term, to reducing inequality and poverty statistics. We have long pushed for that to happen. The Government has continued to refuse to acknowledge the need for any kind of targets or even a measure for poverty at all—continued to refuse to do that—despite the Children’s Commissioner continuing to produce a child poverty monitor. The reason this is relevant is that two of the measures that we have always pushed the Government to adopt have been based on the median income levels. We wanted the Government to acknowledge that the 295,000 children in poverty are based on a measure of the number of families on 60 percent of the median income or less, and, actually, those living in the harshest poverty are those considered to be living on 50 percent of the median income or less.

In Fact Sheet 1 the Government finally makes reference to the number of children and families receiving less than half of the median income. It has chosen the harshest measure, to be fair, the one that it is easiest to move families in and around poverty out of, because it is such a harsh measure, but it has finally—finally—referenced one of the poverty measures we have consistently asked the Government to acknowledge.

Chris Bishop: We reference them all the time.

JACINDA ARDERN: Mr Bishop, I ask you to reflect on the Hansard and on the number of occasions we have asked the Minister to adopt that as one of the measures and they have continually refused. My request here is a generous one, Mr Bishop. My request here is that if you are willing to reference it in a Budget document, just be consistent—adopt these measures properly. Hold yourself to account consistently. Had this been a full Government measure that it included in the Public Finance Act, as Labour has said we would do, perhaps we would have seen a different Budget. One final thought: Labour, because we are willing to hold ourselves to those measures and targets—we know what it takes to lift families out of poverty.

We know that parents and families are in the harshest poverty while their children are aged 0 to 3. We know that that is also when it is fundamental for a child to be well supported. That is why Labour proposed Best Start. It still remains, we think, one of the best, most targeted, efficient mechanisms to support families with young children in need. It is $60 a week, because that is what it takes to move families out of poverty. A block of cheese does not. That is why this is a failure—$1.9 billion spread over a group. That will just make so little difference when we needed so much more.

Hon NIKKI KAYE (Minister of Education): I am delighted to speak on the Taxation (Budget Measures: Family Incomes Package) Bill 2017.

Carmel Sepuloni: You should be embarrassed.

Hon NIKKI KAYE: I just heard an interjection that I am shocked by. I just heard an interjection, which was “She should be embarrassed.”—to be embarrassed about supporting a piece of legislation that lifts the incomes of some of our most disadvantaged New Zealanders; thousands more children getting access to the basics. I am incredibly proud of this bill, and I am shocked and dismayed that the Opposition would even think about voting against the futures of so many of our disadvantaged young New Zealanders. This bill does a range of incredible things for those families who need it most, including—this is a $2 billion package, and this is what this legislation does: it raises the income thresholds, putting more money, $26 a week on average, for 1.3 million families.

I am absolutely shocked that the Labour Party could even consider voting against this. It is not even just about helping some of our most disadvantaged children. It is also going to put more money in the pockets of students—those students who desperately need that accommodation funding. That is in this bill. It is also about supporting superannuitants more; 750,000 superannuitants are going to benefit from this legislation. This bill should be called the “Stephen Joyce Social Conscience Bill”. It is about equality of opportunity. It is $2 billion more for hard-working families, and anyone watching this should be absolutely shocked to see that the Labour Party is voting against this legislation.

So let us look at the provisions. If you look at it, we have obviously, very clearly—raising the income threshold from $14,000 to $22,000, $48,000 to $52,000. What does it actually mean for New Zealanders? This means someone working full-time on the minimum wage will receive $11 a week as a result of the tax threshold changes. Anyone earning over $52,000 will receive an extra $20 per week, but a couple with partners earning the average wage will be $41 a week better off from these changes. I cannot believe the Labour Party is voting against this.

It will also see the accommodation supplement maximum amount and accommodation supplement areas changed. That is very important. In parts of Auckland and, I think, in Tauranga, that is going to see more money in people’s pockets. Again, a couple with two children under 13 and one partner earning $55,000 will gain $41 per week, plus any increase in terms of their accommodation supplement. So if you look at this bill, it is not only simplifying in terms of tax arrangements, it is enabling more young children in some disadvantaged families, but also middle income New Zealanders, to have more money in their pocket.

This also has to be considered in the context of the rest of the Budget and what we have done in the last couple of years. We are the first Government in a very long time to raise core benefits. In this Budget you have literally hundreds of millions more, whether it is in increasing funding for schools, whether it is in mental health—this is actually a very strong budget for children, but nothing stronger than this piece of legislation. I am still struggling to get my head around how the Labour Party could possibly vote against the futures of so many children who will be affected by a $2 billion package. The reality is—we saw it today in Andrew Little’s speech; it was the prelude to them voting against it. He could not even finish his speech. [Interruption]

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I apologise for interrupting the member. I think when one member was interjecting and the member was replying, it was sort of OK, but I think that when it is added to by supportive comments and it becomes a debate between members—neither of whom have the floor—it is a little bit unfair on the speaker. So if Carmel Sepuloni and Chris Bishop could hold their tongues, or whatever—Nikki Kaye.

Hon NIKKI KAYE: So, again, coming back to the people who will be affected by this legislation—and reminding every member of Parliament, before they cast their vote, what they are actually going to vote against if they are going to vote against this legislation. They are voting against thousands of children who will be better off as a result of this. They are voting against the students who will have more money in their pockets. They are voting against the superannuitants who will benefit from this. They are voting against hard-working families, particularly those who may be on the minimum wage, and I am absolutely shocked that the Labour Party would vote against this.

This is a very strong Government that is not only strong from an economic perspective but has demonstrated time and time again that we have more choices when we have a strong economy, and we are able to deliver significant pieces of legislation like this that help our most disadvantaged, that do more for some of those young children. That is alongside significant investments in health, in housing, and in education. In this Budget alone—this is the largest ever Budget for education, with $1.5 billion more.

It is a 41 percent increase now since we have been in office, in terms of Vote Education, and that goes alongside this legislation. So when we look at this legislation, it is not only about more funding, in terms of those families who need it, but it is also looking at this legislation alongside other investments in public services, because what we know is that if people have more money in their pocket then they are able to—

Carmel Sepuloni: Why are they not showing up to any education political panels?

Hon NIKKI KAYE: Ah—excuse me? Sorry, I am getting quite a lot of interjections from Carmel Sepuloni—but, again, the point that I would make is that in her electorate, in West Auckland, she is going to have to turn up to the political panels—[Interruption]

The ASSISTANT SPEAKER (Hon Trevor Mallard): OK. I thought the Minister was handling it, sort of, relatively well. If she would like me to settle it down, I will take charge of settling it down, not Mr Bishop.

Hon NIKKI KAYE: As I said before, the member opposite will have to go to West Auckland and explain to those families how she voted against a package that was going to put more money in their pockets, was going to help them with their housing, was going to help them in terms of other basic costs every week, because that is what this legislation is going to do. This legislation is going to put, on average, $26 a week into the families who need it most—1.3 million families and $2 billion. I am very proud to support this legislation. [Interruption]

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! [Interruption] Order! The advice that I gave to another member on that side can apply to whoever is helping me now.

JAMES SHAW (Co-Leader—Green): I rise to take a call on the Taxation (Budget Measures: Family Incomes Package) Bill. The Green Party believes that this is a highly flawed piece of legislation in terms of its design, but will be voting for it nevertheless, on the basis that when it comes to people who are on low incomes, something is better than nothing—and they have had nothing for the last 8 years under this Government.

The 2010 tax cuts that were designed for and aimed at the high-income earners in this country have, in part, created the set of conditions that now require the Government to perform some kind of remedial action to try to do what it can for people on middle and low incomes in this country. What has happened over the course of the last 8 years of the National Government is that people in the bottom 30 percent of incomes have actually seen their disposable incomes go backwards, because their cost of living has increased far higher and far faster than any rise in their incomes over that period of time.

So while the Government likes to crow about how incomes in this country have been rising, when you break that data down by decile, people who are in the lower third of income earners in this country have actually gone backwards during the course of this Government. That is because the cost of things that they have to spend their money on—because, of course, they have few choices about what they can spend their money on—has increased extraordinarily, most of all in housing. That has put a huge squeeze on those families, which is one of the reasons why this bill then becomes necessary.

I want to pick up on a couple of points that were made by some of the previous speakers. Mr Bishop talked about rewards for hard work. This is part of the National Party mythology, as far as I can see, which is the notion that if you just work harder, you will be rewarded for it. I have to say, I know a lot of cleaners and people who work low-end jobs in this country and around the world, who, no matter how hard they work—and they work extremely hard—will not see a dramatic rise in their incomes as a result of more hard work. The plain fact is that they are not getting paid enough to live on.

This is a question I was asking this afternoon, and I still do not have a good answer for it: in this country, why is it that we have people who have got jobs and have got kids, who are working more than 40 hours—many of them up to 60 or 70 or 80 hours a week, doing one or even two jobs—and they are living in cars? That is a sign of two things: a massive breakdown in the housing market, which is why the changes to the accommodation supplement become necessary, and the fact that they are simply not getting paid enough.

Let us be very straight about this: Working for Families is a wage subsidy. Right? We are paying to make up the gap between what people are actually getting paid and what they need to live on, so it is a wage subsidy. The accommodation supplement is a rent subsidy that goes into the hands of private landlords. Those two massive deficiencies in what people are getting paid and what they are having to spend in order to make ends meet—the Government is having to cover the shortfall in that in some way, through those two schemes.

One of the things that has been raised by my colleagues in the National Party that is completely correct is that, actually, what this does is while people are—

Phil Twyford: I think you mean Labour, James.

JAMES SHAW: Sorry, what did I—

Phil Twyford: Labour.

JAMES SHAW: I beg your pardon.

Richard Prosser: National’s over there.

JAMES SHAW: Yes. I beg your pardon. It has been a long day. Those members did say a couple of things that were correct, but you guys said more things that were correct. The thing that the Labour Party said earlier that was correct about this is that the design of this package, which plays out in this bill, means that people who are at the high end actually do get more in the hand back than people who are on lower incomes. For families who are earning $127,000 or more, they get $33.22 a week through this tax package, and families who are earning $24,000 or less get $5.34. Right? The families who are on $127,000 or more get six times more back through the tax changes than families who are on $24,000 or less. That is just completely contrary to the way that this ought to be designed.

The fact that people who are earning low incomes are getting $5 a week back is why we are voting for this bill, because $5 a week, when you have so little, is absolutely necessary. It needs to be a great deal more than that. If we were the Government—and when we are the Government, later on this year, we will design a tax package that is actually more heavily oriented towards those on low incomes than those who are on higher incomes. We need a taxation system in this country that is fair, that is redistributive, that ensures that, actually, every family is secure in the knowledge and can trust the fact that they are going to be able to make ends meet at the end of the month when they are able to pay off their rent or their mortgage—whether they rent or they own—and that they are still able to put food on the table. We think that the design of this bill and the design of the package here is flawed. Having said that, a little something is better than nothing.

One of the other things that I want to speak to, given that it is covered in the introductory notes to the bill, is in relation to housing—and my colleague Grant Robertson referred to this before. This bill, as part of this package, admits, essentially, that the housing crisis has completely gotten away from this Government. One of the things that Government members were kind of boasting about, if you like, this afternoon was the amount of money that they are putting into emergency housing. That is not something to crow about; that is a massive failure. The fact that we have to spend hundreds of millions of taxpayer dollars putting families into motels and emergency accommodation is a huge admission of failure.

My regret about the change to the accommodation supplement in this bill is that it is a function of the total failure of the Government’s ability to house its own citizens in this country. It is also, from a use of taxpayer funds, money moving directly from public hands into the private sector, essentially, because it is moving into the hands of motel owners and private landlords. If the Government was focused on actually building houses, keeping them in public hands, and putting those people into public housing, then that money would come back and the measures in this bill would not be necessary.

Like I said, this is a flawed bill. We think that the design of this package is oriented in the wrong direction. Having said that, families who are on low incomes are really doing it tough in this country, because their disposable incomes have gone backwards over the course of the last 8 years. Every single penny that they are able to receive—I think we should not be churlish about that. We should support them. It is just regrettable that people on higher incomes are going to benefit more as a result of this package than people on lower incomes. Thank you.

RICHARD PROSSER (NZ First): It is a pleasure to rise to take a call in this Taxation (Budget Measures: Family Incomes Package) Bill on behalf of New Zealand First and, once again, on behalf of my colleague Fletcher Tabuteau.

It will probably come as no surprise to anyone on the other side of the House that on an overall basis New Zealand First obviously will be voting against the Budget. However, we are going to be voting for this bill. It is—[Interruption] It is not all bouquets, I say to members opposite. There are brickbats in here as well. Essentially, I will echo some of my colleague Mr Shaw’s comments—that something is better than nothing. In actual fact, this tax bill, as part of the necessary enabling legislation for the Budget—anyone could argue that it is not as good as it could be, but it is a lot better than things have been. We have found it incomprehensible, actually, that a party of opposition—what is currently a major party of opposition—could vote against a tax bill that will increase the bottom line of incomes for those nearest the bottom of the ladder.

Carmel Sepuloni: Most of it’s going to the higher-income people.

RICHARD PROSSER: My colleague Ms Sepuloni says that most is going to people on higher incomes. Well, in dollar terms, on an individual basis, it is probably true. However, that is kind of irrelevant, from the standpoint of people who are at the lower end of the scale, who will be getting another maybe only $11, maybe $5, maybe $20, maybe $30, maybe $41 a week. For those people, that is an important increase, and it is one that we are not going to stand against.

We do not agree with a lot of what this Government does, on an ideological basis. Ideology is what Budgets really should be about, and tax bills that are part of the enabling legislation, to make those Budgets come about, need to be driven by philosophy. We are not here to talk, I do not think, at this stage—certainly not until we get to perhaps the later stages of the bill—about the technical details of the way that the taxation infrastructure is organised. It is about the driving philosophy behind it and about the central tenets, the central points, of this bill and what it says it intends to do and how the Government that is promoting it claims that it intends to go about making those changes.

I am pleased, actually, that Ms Kaye, when she spoke, talked about the Opposition. There is actually no such thing as the Opposition. We are a party of opposition, as are the other parties around us. But we are certainly not a unified entity, and that will be seen when the campaign, which obviously this Budget will be a part of, kicks off.

Getting back to the essence of the bill, when we look at what it is fundamentally intended to do, it is designed especially to assist low and middle income earners with young families and high housing costs. And it does do that. That is unarguable. But whether it does it in a way that some other parties would prefer, whether it goes as far as anyone would like, us included, is actually neither here nor there. What it does do is deliver more money into the pockets of a lot of people who need more money in their pockets, and for that reason we will be voting for this taxation bill.

The biggest issue, obviously, that we have as a nation—and with this Budget, of which this tax legislation is a part—which we have to address, is that the agenda that the National Government has been following over the last 9 years has simply gone too far. It is almost like they want to wind the clock back to 1984 and restart all those experimental things that were done to New Zealand that have caused such an enormously deleterious effect on our social structure, on the way that New Zealand was.

What has happened over that time is that we have seen a major rise in inequality between wealth and opportunity from those at the bottom and those at the top. This bill will go some way, a small way, to addressing that, and that is a worthwhile thing to do.

Mr Robertson, when he spoke, made the comment that this tax bill, on the part of the National Government, was a march into the territory of the Labour Party. Well, actually, yes it is. You cannot argue with that. I understand why Labour would be experiencing some chagrin about that. Essentially, National is kind of cutting Labour’s grass a little bit, and perhaps that is what has motivated Labour members to vote against a bill that, fundamentally, they should be voting for, because of the things that are in it that it will do right.

When we look at the thresholds that this bill will bring in, lowering the marginal tax rates for low and middle income earners and increasing the bottom two income tax thresholds are good things to do. When we say that we have increased the bottom threshold from $14,000 to $22,000, that actually, for a lot of people in that particular sector, in that quintile, as it has been called, is a significant change. It is an enormous difference, in percentage terms, not in dollar terms as far as those of us who are in a fortunate position are used to thinking of.

I will get a tax cut, as will everyone else in this House. I will get my 20 bucks a week, or whatever it works out to be. Yes, it could be argued that I do not need it. But being consistent across the board means that if you are making more to start with, then, yes, you will get more of a tax cut in dollar terms. That does not mean that it is a greater percentage of your disposable income. In those terms, the net beneficial effect for the people in the lower quintiles will be much greater than the amount that we get. Actually, there does not appear to be a facility by which anyone who does not want a tax break is able to give it back to the Crown, and maybe that is something that could be addressed.

But tax rates and thresholds and so forth are but one element. I know we do not want to stray off the topic, but one thing that this bill—in fact the Budget overall, but this bill in particular—does not do is address secondary tax rates. It is all very well moving thresholds, and doing that is a good thing, and that will assist the position of those people who find themselves there, but nearly 2 million New Zealanders work multiple jobs, and actually getting rid of secondary tax might be of more benefit to them. That is perhaps a discussion for another day.

The independent earner tax credit is going to be discontinued, and fundamentally it might as well be because, as we have heard, only about one in three people who are entitled to it actually claim it. I wonder how much of that is due to the fact that most of the people who are entitled to it do not know they are entitled to it, and that perhaps has been one of the things that has led to the proliferation of companies that advertise on TV and online, offering to get you your tax refund, when in fact you were entitled to it anyway. You could simply apply for it and get all that back, without having to give 20 percent of it to the likes of the companies that specialise in doing those sorts of things.

The people who do lose that will be compensated. As the Government has said, the tax credit, as it is taken away, will be replaced by the change in the threshold. Those people will benefit to the net tune of 77c. They are not actually the $1 bill people; they are the 77c people. Maybe Labour has rounded that up to $1, or perhaps they are just not very good at maths. Before the members over there start crowing, being good at maths is something you are going to have to be good at as well, because if you take 59 members and subtract 15 percentage points at the election, how many does that leave you with? That is something that you are going to have to deal with in 4 months’ time.

Another point that I want to just touch on, without dragging this process out too long, is the family tax credit rates and increasing the rate for young children so that they come up to the same level as kids aged 16 to 18. As anybody who has kids knows, they cost a lot regardless of what age they are at. Their needs are different at different stages of life, but there is always money going out, and it makes a lot of sense, and that is one of the good things in this bill, to increase the abatement rate and decrease the threshold, and simplify that part of the system so that, regardless of the age of the kids, you do get the same amount. There are plenty of things to spend it on, and, again, it is one of the things that those people who are most in need of it will appreciate getting.

To reiterate, as I say we will be voting against the Budget but we will be voting for this bill because in actual fact, as part of what is generally an overall bad package, this is not a bad piece of legislation. For that reason we will support it. Thank you.

ALASTAIR SCOTT (National—Wairarapa): Now I have two things in common with Mr Prosser. The first is an interest in wine making, and the second is the agreement with the man’s words just in the last 5 minutes. If I was speaking later, I would actually go and ask to borrow his notes. I agree with almost every word he said, and it was well articulated.

Mr Prosser made it very clear where he stood. Labour, on the other hand, is not so clear about where it stands on this bill, and although it is going to vote against it, it is interesting. I was having a beer with Mr Robertson last night at The Backbencher with, as well, Mr Seymour and Ms Genter. The question was asked: do you—not you, Mr Assistant Speaker—Mr Robertson, support tax cuts? We were all asked the same question. It was very clear from Mr Seymour and me that we believe that taxpayers’ funds earned during the day, during the week, during the month should be returned to the taxpayer whenever possible—whenever possible. I had a condition: a focus on families. My view is that tax cuts, at this time, are appropriate, especially when targeted for families. And here we are 24 hours later with exactly that.

The problem Mr Robertson had was that he was not clear about tax cuts at all. In fact, he said he did not think there was a need for tax cuts.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! I am now going to ask the member—he has had a minute and a half to introduce the speech. Get to the bill.

ALASTAIR SCOTT: Sure. Thank you, Mr Assistant Speaker. So what do we have? What do we have in this bill? We have tax cuts. We are returning income earned by the taxpayer to that person, and the whole theme is that everyone in New Zealand deserves a share in the prosperity of this growing economy—everyone. So that is the essence of it, and there is $2 billion and every taxpayer will pick up something from it.

The target of families is also welcome. We are going to see an increase in family tax credits as described, making it much simpler, and also the need to support those who are suffering with increased rental costs. And so, therefore, we have got some targeted benefit in increasing the accommodation allowance—exactly what is required.

This is a very sensible and pragmatic bill, in that it is not over the top. We are not cutting tax rates, we are not cutting the top tax rate, and we are not cutting the tax rates in themselves. We are just moving the bands. We could move it more aggressively. My point here is that we are doing it in a reasonable and practical and affordable manner.

Despite the fantastic forecast surpluses, we are focusing on repayment of debt and the infrastructure, and this bill deals with returning taxpayer money to those who have earned it. And that is the difference between—well, it seems that there is only a very small group of people in the House who disagree with that notion tonight, and that is, unfortunately, the Labour Party. So its members are going to have to explain to taxpayers why they are not interested in returning $10 or $20 a week to their constituents—

Carmel Sepuloni: We won’t support tax cuts that put more money into higher-income earners’ pockets when the country’s suffering.

ALASTAIR SCOTT: —to New Zealand taxpayers, to people who earn and work every day looking for—well, you have already had a very eloquent explanation of what it really means and the fact that this is a targeted bill looking at accommodation and families. And for that reason, I commend the bill to the House.

Carmel Sepuloni: For that reason, sit down.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Sorry. Before I call the member Metiria Turei, I think the member Carmel Sepuloni—she is getting a little bit loud. And sort of, I think, inviting a member to sit down like that probably goes towards their freedom to make speeches in the House, and she should settle. She should really settle quite quickly.

METIRIA TUREI (Co-Leader—Green): I just want to make a reasonably short call on this bill. This bill delivers tax cuts, which the country has said it does not want. Actually, what the country wanted was to see more money being delivered in services, in particular, and to the families who need it most. What we see with this legislation is a very meagre opportunity to provide additional funding to the families who need it the most, and the maximum benefit going to those who earn the most.

That is pretty traditional National. We know that. We saw that when it first came in. After the 2008 election, its first choice then, in response to the global financial crisis, was to give significant tax cuts to the very wealthy, and we are seeing that now as part of its attempt to try to win a fourth term at this year’s election. Nobody is fooled by this. Everybody can see that that is what National is doing—that it has been, over the last 8 years, systematically eroding Working for Families, systematically eroding social services, education services, and health services.

Now it is crowing about delivering a tiny proportion of what it took from New Zealanders over that period of time, and it is trying to sell it as being a great advantage for working families when, in fact, working families will still continue to suffer from the effects of increased poverty, increased housing costs, and increased costs of living as a result of National’s policy. I just want to demonstrate some of that here. As you know, those on the lowest incomes will be getting around $5 a week extra from the tax cuts from this—

Phil Twyford: Hallelujah!

METIRIA TUREI: Ha, ha! Five dollars a week extra, right? That is what they are going to be getting. That is what they will be getting. Let us just have a think about what that means, because one of the arguments in the legislation is that the Government is delivering this meagre little tax cut to the low-income earners because of high house prices. Right? That is how it is justifying it. Its members talk at length about the accommodation supplement as being one of the measures in this—it is not in the provisions of the bill, but it is in the description of the bill.

But what we also know is that National has been clearer and more upfront in the past about the risk of simply increasing the accommodation supplement. Just in 2015, it refused to increase the accommodation supplement, and its members said that they refused to do it because of “the risk of landlord capture of the assistance.”

Phil Twyford: Well, well, well.

METIRIA TUREI: Well, well, well. So National knows that by increasing the accommodation supplement and doing hardly anything else in housing, all it is doing is transferring a mass of money—and we are talking $400 million over the 4-year period—from the public purse. That money could be used to actually build the homes that New Zealanders want, but instead, by delivering it through the accommodation supplement, National is giving to private landlords, over 4 years, $400 million more. That is what it is doing, and it knows it because it discussed exactly that—that there would be landlord capture of the accommodation supplement if it put it up.

So why would it be doing that? It is doing that because it thinks it can fool the country. It thinks that New Zealanders will be fooled by this—giving a little here but taking a great deal more over there. It is a swindle. It is a swindle. National thinks it can fool the country. The country has seen time and time again that National promises big and delivers little, and we still have increases in homelessness, we have still increases in house prices, we still have increases in rent, and we still have increases in child poverty. So nobody is going to be fooled by this little swindle that National is trying to pull with this.

But I would also just note that, along with this $5 tax cut that is being delivered, there are other things that are being cut that families really rely on. One of those things has been access to the home insulation fund. As we know, over a number of years now the home insulation fund has been a subsidy to help to insulate New Zealand homes, particularly for those who are on low incomes, in order to make sure that they are living in warm, dry homes.

The ASSISTANT SPEAKER (Hon Trevor Mallard): I would not have interrupted the member if she was being totally relevant, but her time has expired.

MICHAEL WOOD (Labour—Mt Roskill): I am a little surprised but delighted to be able to stand up and speak today. I am surprised because the ACT Party and Māori Party have not taken up the opportunity to speak in this important debate about tax in our country. I was looking forward to David Seymour’s contribution, given that earlier in the day he excoriated the Minister of Finance for wearing a hammer and sickle because of these Working for Families changes, but then meekly voted in favour of the Budget. So I was looking forward to his contribution tonight. I was looking to the contribution of the Māori Party, whose constituents, for the very great part, will be those who receive the scraps out of the tax package that is in this bill, and I will talk more about that shortly. I have got to say, anyone watching this debate will have been slightly confused this evening. We have had contributions, of course, from the Government, but also from Opposition parties. Opposition parties are often good allies in the cause of a stronger and more just and fair New Zealand, but have somewhat surprisingly voted in favour of the tax cuts package that is in this bill.

Let me just break down the issues with that, because it is all very well to say “Oh well, it’s better than nothing, and some people at the low-income end will get something out of this.”, but it ignores the question of opportunity cost. As we all know, the Government coffers are not infinite, and every dollar that we put into this tax cut package that goes to the people at the top end is another dollar that is not spent on the people who really need it, another dollar that is not spent on housing and the social services that we need.

Let us look at this really simply, and I would invite members in this House to actually spend some time in front of a spreadsheet. This is a $1.9 billion tax cut package. Do you want to know how much of that $1.9 billion goes to the top half of income earners? It is $1.5 billion of it. So when any member of this House gets up and pretends that this is a tax cut that will deliver a greater level of social equality in our country, they are ignoring not only common sense but the very facts, the very data, that the Government has put through in its own documents. Over 75 percent of the benefit of these tax cuts goes to the top half of income earners.

Do you know what? The top 10 percent—the top 10 percent—of income earners get the same benefit from this tax cut package as the bottom 50 percent. So I am not going to stand here and listen to any other member of this House tell the Labour Party—which will proudly stand here and oppose an inequitable tax cut package, as we always have because we stand up for working people, not just the privileged few at the very top. I am not going to stand here and hear anyone in this House say that this tax cut package delivers a greater level of equality or greater social justice in this country.

I will just demonstrate that further by talking about a family that could have lived in my electorate back in 2007. If their rent at that time was $450 a week—we will go along to the Reserve Bank of New Zealand Consumers Price Index calculator. That will tell you that their rent, if it was $450 back in 2007, which was the last time that the accommodation supplement was increased—under a Labour Government—their rent today would be $690 a week. That is $240 more. Do you want to know what? If you take the very, very best-case scenario out of this miserable package that has been put forward by the Government today and you add up the tax cut, you add up the accommodation supplement increase—which would be an $80 increase for that family—and you add up the family tax credit, that family would be $155 better off. They would be $155 better off, when their rent has gone up by $240 a week. So just on the increase in housing costs under this Government, that family is worse off.

So we are not going to stand here and hear about the generosity of the Government for putting up an accommodation supplement that it has frozen for 10 years—bear in mind it does not come in until 1 April 2018, so it will have been frozen for 11 years at that stage—at the same time as ordinary working families over the last 3 years alone have had a $40 average increase in their rents. So what we see, at the very best, in this Budget—at the very best—is this Government kind of, sort of, part of the way, making up for the erosion in the incomes of ordinary working families under its term in office over the past 9 years.

There are a number of other things in this package that bear a bit more scrutiny. I was interested to see in the bill claims that only 80 percent of people claimed the independent earner tax credit—I thought that was quite high. But, actually, in the finance Minister’s speech he claimed it was only 30 percent. It would be good to hear which is actually correct.

Chris Bishop: 32.

MICHAEL WOOD: Being as this is the Budget, could we understand whether this is right, or whether the finance Minister is correct. Read the document yourself, Mr Bishop. This bill delivers nothing but scraps for ordinary working families. It is time for a fresh start, and we look forward to delivering that in 4 months’ time. Thank you.

JOANNE HAYES (National): I feel a little bit offended by the previous speaker, Michael Wood, because the scraps that the previous speaker was alluding to—they are my people. They are Māori who he was referring to. They are Māori who are going to benefit from this important bill. It does not matter if it comes in on 1 April 2018; it will be my people who will benefit from it. So I feel offended when he starts talking about “scraps”. “Scraps”—honestly. It is not scraps.

My mother is a superannuant. She will benefit from this. She will benefit from this. She says to me: “Joanne, when are we going to get something?”. Tonight, today, at the Budget reading, she has sat and listened to what this Budget is delivering for people of her age and older. She is 85 years old. So when I sit here and I listen to the debate that goes on in the Opposition benches over in Labour, I do feel aggrieved that it is my people who are getting slam-blasted around this House.

I can say that we looked tonight on the television, during the news, and we saw two families who were interviewed over their reaction to the Budget announcements. There was one family—one was part-Māori; they had about four or five kids—they will receive $120 a week in their pay packets.

Alastair Scott: That’s the scraps.

JOANNE HAYES: That is the scraps. They are absolutely over the moon—absolutely over the moon—that this is what they will be receiving. Then we moved to listening to another family who had two children, one income, and they will receive an additional $70 a week in their income. You cannot sit there and say that that is just absolute rubbish and scraps. That is gold to these people—absolutely gold. I know that when I was on a benefit, if I received an increase of any sort, I would treasure that. I would absolutely treasure that.

Phil Twyford: You get a thousand bucks.

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order! The member, like all other members, might get a thousand dollars, but I would prefer if not all the thousands of dollars were referred to me. In fact, I would probably like all of the thousands of dollars the members are referring to, but actually you are not to refer to the Speaker.

JOANNE HAYES: When we look at the Family Incomes Package and we look at the amount of money that is being invested here—$2.1 billion is being invested here, and that is surplus. That is not borrowed money; that is surplus. That is where that is coming from. Where do you get a surplus from? You get it from a well-managed Government that manages the books of this country. From that, the result is a strong economy. We all know that there is only one party in this House that can do that for this country—not just now, not just tomorrow, but in the future, right through—this Bill English - led National Government. That is what this Government is doing for the country that I love and that I live in, and that my colleagues love and live in.

I cannot abide by the absolute denigration of my people in the scraps. I will not have that. I want to congratulate New Zealand First for seeing through it and supporting this bill. I feel a little bit confused about whether the Greens are supporting it—one supports, one does not. It was a little bit wīwī, wāwā, but you know—I suppose that is what happens when the two leaders get up: wīwī, wāwā.

As I said at the start of my speech, I support this bill. I think it is a great bill. I look forward to it receiving Royal assent at the end of the debates tonight and tomorrow. I commend it to the House. Thank you.

Mr DEPUTY SPEAKER: I call Phil Twyford—it is good to see you.

PHIL TWYFORD (Labour—Te Atatū): It is good to see you, Mr Deputy Speaker. I think the best that can be said for this bill is that it is a clever piece of election-year politics. It is an election-year Budget, but it is not really the kind of leadership that this country needs. So what does this bill do? It adjusts the tax brackets, it adjusts Working for Families, and it increases the entitlements under the accommodation supplement. It is worth, in total, about $1.9 billion—$26 a week on average for the recipients. But it is not going to do anything for the people in my community who are living in tents and garages and sleepouts, and families living in their cars. It is not going to do anything for the mental health services that are on their last legs, all over the country. It is not going to do anything for the classrooms that are so overcrowded because this Government has failed to properly invest in the infrastructure to support a rapidly growing population. It will do nothing for the gridlock on the roads that make the daily commute a living hell for people in our largest city.

So, after 9 years in Government, as one problem after another has been allowed to fester out of control, this Government steps up 4 months out from an election with a Budget that is basically a case of spray and pray. This is an election bribe from Steven Joyce in his maiden Budget, but it is not even a very effective bribe. And why is that? It is because the last few weeks have been spent trying to frame this Budget as a families package, and we have heard one speaker after another from the National Government benches get up and say that it is targeted at people who need it most. I am shocked to see people like Nikki Kaye and Chris Bishop stand up with all this kind of faux outrage and indignation at the suggestion from this side of the House that it is, in fact, a package that is disproportionately benefiting people on higher incomes. They seem to have somehow suspended their critical faculties and they want to pretend to this House and to the public of New Zealand that this is a package that is designed to be most generous to the New Zealanders who need it most.

Well, it clearly is not, and Michael Wood made the case very persuasively. This package puts the benefits into the hands of the top income earners. The top 50 percent of income earners in this country get 75 percent of the benefits of the package that is legislated by this bill—75 percent of the benefits go to the richest half of the population. How is that a package that is targeted at New Zealanders who need it most? The top 10 percent of New Zealand income earners get the same as the bottom 50 percent. How is that a package that is targeted to help the poorest and most vulnerable New Zealanders? It is not. The National Government clearly thinks that New Zealanders are thick, to spin this line that this is a package that is setting out to help the New Zealanders who need it most. It clearly is not.

Steven Joyce is giving a tax cut of $1,000 a year to people earning the salary of an MP—$1,000. And yet someone who is, let us say, a single person, a full-time cleaner on the minimum wage gets an extra $11 in tax cuts—$11—but they lose $10 from the removal of the independent earner tax credit. They, effectively, get $1 from this package, and yet Steven Joyce is giving the members of Parliament in this House—the backbenchers at least—a $1,000-a-year tax cut. How is that fair? How is that rational? And how is that a tax package that is designed to help low-income New Zealanders? The finance Minister and the Prime Minister get 20 times more than what a single person working full-time on the minimum wage gets—20 times more. A property speculator earning $200,000 a year gets $20 a week. The minimum-wage cleaner, whom they pay to clean their office, gets $1—the property speculator gets 20 times more. I hope the members opposite are listening to this. I do not know how we could make it any clearer: this is not a generous package designed to help the New Zealanders who need it most.

Housing is the issue that hangs over this bill and hangs over this Budget. It is the No. 1 political issue in the election campaign that we are going to be debating over the next 3 or 4 months. It is set out in the commentary on this bill that one of the objectives of this tax package is improving the incomes for those people who have young children or high housing costs. Well, that is a very big group of people. More than half of New Zealanders now rent, and yet all over the country rents have been going through the roof because of a housing crisis that has been allowed to get out of control by this National Government. In Auckland in the last 7 years, the average rent has gone up by $7,000 a year—$7,000 a year. So this package of adjustments to the tax brackets and the accommodation supplement and Working for Families is dwarfed by the increase in housing costs—not only mortgages but also rents, and that is not just Auckland; that is happening all over the country. It should be the objective of this bill to actually make life easier for people who are suffering the effects of skyrocketing housing costs, but it is not going to do much, if anything at all, to ease those pressures.

I want to talk about the accommodation supplement, because that is one of the three key elements in this package and it is commented on in the bill, in the commentary attached to the bill. So what the Government is doing is it is increasing the maximum rates of the accommodation supplement. It is allowing students and other recipients to claim up to an additional $20 per week under the accommodation supplement in Auckland, Wellington, and Christchurch. This benefits 47 percent—so, a little under half of people who currently get the accommodation supplement—by an average of $36 a week. More than half of the recipients of the accommodation supplement will not get any benefit at all.

And here is the real kicker: families who have been claiming the temporary additional support, which is a substantial number of families, because they cannot live even when they are getting the accommodation supplement and extra benefits—they are not going to benefit at all, because the increase in the accommodation supplement is offset on a dollar for dollar basis against the temporary additional support. So those people get nothing, and that actually wipes out a quarter of what would have otherwise been the cost of the increased accommodation supplement. Two thousand households will see their accommodation supplement actually decrease under these changes up to $3 a week as a result.

But I want to say more about the accommodation supplement, because I think this is an admission of failure by this Government. The accommodation supplement is, effectively, a subsidy to landlords. It is a recognition that people’s wages are not high enough to pay the rent, and when you have got entrenched low wages, which this Government has gone out of its way to try to depress over the last 9 years, and skyrocketing rents because of a housing market that is turbocharged by property speculators, that is the only thing that is left for the Government to do. We have said that we recognise that increasing the accommodation supplement as a short-term emergency measure may be justified and we will back it for the first year. But in the second, third, and fourth years you are looking at almost $400 million a year—almost $400 million a year—in increased subsidies to landlords.

That is a total admission of failure by a Government that has refused to tax speculators, that has refused to ban foreign buyers from buying existing homes, that has utterly failed—that has totally failed—to increase the supply of housing, that even in the Budget housing announcements that we saw in the last week will not even build any kind of significant number of affordable homes for first-home buyers, and that has done nothing to give tenants more security of tenure. All that it has got is to bump up the subsidy for landlords by nearly $400 million a year. We do not accept that that is a good use of taxpayers’ money. We will support it in the short term, but in Government we will do a review of the accommodation supplement to find a much better way of using that taxpayers’ money.

ANDREW BAYLY (National—Hunua): What a great day it is for the people of New Zealand. This is about a Government continuing to improve the position of hard-working New Zealanders and their families. I think that before we start talking about this tax package we need to remind ourselves that the biggest thing we can do is to enable a place where people can go and get good jobs. We created 130,000 new jobs last year and 200,000 new jobs are predicted over the next few years. What that means is that you have got to create the right environment—a strong environment, a good financial environment—and this is a Government that has set about doing that.

When you deliver that, that is when you can talk about delivering $2 billion worth of financial assistance to families—New Zealand families. I have got to say that I think the Budget that the Government presented today is actually the Budget that the Opposition would have liked to present. It is those members’ Budget, but we have done it because we are the ones who have managed the economy, so we delivered the Budget surpluses that meant that we could do this. This follows from last year, when we announced that wonderful package of $800 million, when everyone’s benefit was increased by $25 a week. This is a continuum of that, and it is about sharing the benefits of growth with everyone.

So I just want to turn to what is actually in the Budget, because I have not heard many speakers speak about it. The first thing is that I have heard the Opposition say that it is not going to deliver any benefits, and there is this byline about a dollar return to families. Those members are wrong. They are absolutely wrong, and I will tell you why. First up, everyone in New Zealand is going to benefit by our increasing the first tax threshold from $14,000 to $22,000—low-income earners, as well as everyone else. The second benefit is that everyone will benefit between the threshold of $22,000 and up to what was previously the threshold of $48,000, which is now increasing to $52,000. Those two benefits will deliver, in the first case, $10 a week to every family, and, in the second case, 20 bucks to every person who is earning more than that amount of money. So that is quite a significant amount of money.

The second one is the family tax credit change, which, in my view—my humble view—is very generous. It is also about simplifying our tax system, because whilst the family package that was brought in by Labour had the right objective, it was actually a very complicated package, and what we are trying to do is simplify it. So what that does is increase the benefit paid for the oldest child by an amount of, roughly, $10, and for every child thereafter by between $17 and $26. That is significant, and it is on top of that $10 that I talked about before.

Then there is the accommodation supplement, and this is also very significant. Do you realise that if you are a single person who needs the accommodation supplement, you will get an extra $20, and if you are a family of three, you will get up to a maximum of $80? That means 136,000 families will benefit just from the accommodation supplement. Then we have got the 750,000 superannuitants who are going to benefit from those tax changes. We have got the 41,000 students who are also going to benefit from the $20 increase in their—[Interruption]

Mr DEPUTY SPEAKER: I would just like to interrupt the member, and I am sorry to have to do that. But I just need to point out that a previous Speaker, Speaker Hunt, said that interjections should be rare, reasonable, and, hopefully, witty. I would just like to—

Hon Clayton Cosgrove: And it was.

Mr DEPUTY SPEAKER: Well, I would just like to counsel the member, who referred to the member with the call as a Scottish terrier and has then gone on to call him Lassie. Everybody knows that Lassie was a Border collie.

Hon Clayton Cosgrove: Speaking to the point of order, Mr Assistant Speaker, I absolutely agree, but I was trying to elevate him to a new standard.

Mr DEPUTY SPEAKER: Well, I would just like to point out to the member that we may well be here for a long time. We are in urgency, it is a Budget debate, and, as members have come to expect, there will be points divvied out at the end of urgency.

ANDREW BAYLY: Thank you, Mr Deputy Speaker, and I would just say that a dog is always a dog. It does not matter what type of dog—a dog is always a dog. I do want to bring this speech to a close. I just want to say that 1.36 million families across all of New Zealand are going to benefit from this package. I think it is great. I fully endorse it.

A party vote was called for on the question, That the Taxation (Budget Measures: Family Incomes Package) Bill be read a first time.

Ayes 88

New Zealand National 58; Green Party 14; New Zealand First 12; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 31

New Zealand Labour 31.

Bill read a first time.

Second Reading

Hon AMY ADAMS (Associate Minister of Finance): on behalf of the Minister of Finance: I move, That the Taxation (Budget Measures: Family Incomes Package) Bill be now read a second time. Is it not interesting to see the way the earlier debate has played out, with the isolation of only one party in this Chamber voting against more New Zealanders getting more of their money and against more money going to low and middle income families? Every party in this House, except Labour, wants to see it happen. How isolated and how out of touch must those members be feeling. What a shambles.

This bill gives effect to the Family Incomes Package that Steven Joyce has just announced today, which has been carefully designed to assist low and middle income earners with young families and higher housing costs. The Family Incomes Package will increase the incomes of the lowest-quintile families, excluding students and superannuitants, by an average of $35.32 a week, or $1,836.64 a year, and Labour is opposing it. It will also reduce, by about 50,000, the number of children who are living in families receiving less than half the median income—50,000 fewer children living in low-income families, and Labour is opposing it.

This bill, as we know, changes income tax thresholds, providing tax reductions of just over $10 a week to anyone earning more than $22,000 a year and just over $20 a week for anyone earning more than $52,000 a year. Increasing those bottom two tax thresholds in this way will provide greater rewards for work for low and middle income earners.

The bill, as we know, also discontinues the independent earner tax credit, which currently provides up to $10 per week to people with taxable incomes between $24,000 and $48,000 a year who are not otherwise eligible for Working for Families, a benefit, or New Zealand superannuation. Many recipients of the tax credit do not receive it until long after the year in which they are eligible, if at all, and removing the credit will help simplify the system, as individuals will not have to file a tax return at year end or use a different tax code to claim it. Individuals who currently receive the credit will be fully compensated by the increase in the bottom tax threshold.

The bill also sees the family tax credit increase by up to $9.25 a week for the first child who is under 16 and by between $17 and nearly $27 a week for each subsequent child under 16. So, as a result of these changes, the family tax credit rate paid to children will be the same, regardless of their age. There will be one rate for the oldest child, of up to $102 a week, and one rate for all subsequent children of up to $91.25 a week.

The bill also increases the family tax credit abatement rate to 25 percent and reduces the abatement threshold to $35,000. This means Working for Families payments will reduce slightly earlier and slightly faster but at the same time as the base rates for family tax credits are increasing for children aged under 16. Families who have children aged only 16 to 18 earning less than $35,000 a year in family-spent income, including beneficiaries, will see no change in family tax credit payments. This brings forward changes already planned to progressively occur by 2025, based on expected movements in the Consumers Price Index, and it means that the assistance is better targeted to lower-income families.

Due to the complex interactions of our tax and transfer system, a small number of families—a very small number—may face losses from the package, although the vast majority of these will be less than $3 a week. None the less, a transitional assistance fund of $2.2 million over the next 4 years will be available should there be any families who experience overall losses of more than $3 a week as a result of changes across this Family Incomes Package.

The package will also have flow-on effects for superannuitants, with around three-quarters of a million benefiting because of the link between New Zealand superannuation and after-tax wages. The weekly rates of superannuitants are expected to increase by $13.10 for a married or civil union couple, $7.90 for a single person sharing accommodation, and $8.50 for a single person living alone.

Also of great importance to me are the changes to the accommodation supplement. Quite apart from the changes we have talked about to the tax codes, the changes to Working for Families, and the family tax credit, these changes will see 136,000 accommodation supplement beneficiaries receiving up to $36 a week extra payment across New Zealand, and that is significant. It is an increase in the maximum that is available in certain regions, but, also—and, actually, just as importantly—it changes the way the areas for accommodation supplements are calculated. That means that all of the Auckland area is now regarded as area 1; all of Wellington, Christchurch, and a number of other towns are now included in area 2; areas like Tauranga, Queenstown, Arrowtown, and Wanaka are now all assessed as area 1. Before these changes, only 13 percent of accommodation supplement recipients were in area 1, the highest eligible area; now 39 percent of them will be in that top area. Across areas 1 and 2, nearly 70 percent of all those eligible will have access to those top two categories of entitlement. What we are doing here is seeing a recalibration from rates that were previously set on 2003 rents, and now updating them to 2016 rents. This will make a significant difference to the housing pressures families in the lower income bracket are facing.

The full average annual cost of the Family Incomes Package is $2 billion per year, and the total cost is $6.5 billion over the next 4 years. The reason we can afford to do this is the hard, disciplined work, primarily of New Zealanders but of this Government as well, to reflect the fact that we have to earn it before we spend it. This is not a Government that borrows and spends. We have done the work, we are back in surplus, and now, as a result, we can give money to low and middle income New Zealanders. We are very proud to do it, and we are appalled to see Labour opposing it. The package is expected to support the long-run economic performance of New Zealand.

It is important that Kiwi families share directly in the benefits of New Zealand’s economic growth. That is what this bill is about, that is what this Budget is about, and that is why I am pleased to commend it to the House.

CHRIS HIPKINS (Labour—Rimutaka): This bill is yet another example of the National Government sticking it to future generations of New Zealanders, because while Government members puff their chests out and talk about giving a couple of bucks extra a week to people on low incomes, what they do not say is what they are cutting in order to pay for that.

For the eighth year in a row, they have cut funding from early childhood education in New Zealand. On a per-child basis, early childhood education has been cut every year that National has been in Government.

National has cut funding for those in tertiary education. Every single Budget that this Government has passed has cut the level of financial support available for tertiary students. It has done something in this year’s Budget around the accommodation supplement for tertiary students—the vast bulk of tertiary students will not benefit from that. Not one cent extra will go to most tertiary students, who are struggling to pay the rent. The amount of money they get from their allowances and from their loans does not even cover the rent, let alone give them money to live off. They cannot eat, because this Government has cut the level of financial support they get, every single year. They are the ones who are paying for this Budget. They are the people who are missing out because of this Budget, which does nothing for them.

While the National Government members puff their chests out and ask how we could oppose this, my question to them is: why not more? Why not cut tax more? Because it is a question of affordability. This is not affordable. It is the next generation of New Zealanders who is going to end up paying for this. It is the students in schools, who are finding that their schools’ funding is being cut. The teacher aides are being laid off because the schools cannot afford to pay them anymore, because the operations grant was frozen last year. The funding increase this year does not even compensate for what they lost last year, let alone catch up at all with the increase in costs in the meantime. It is future generations who are being robbed in order to pay for this.

What is it that they are actually getting? What is it that families are actually getting? I think that that is really important, so let us talk about that. It is a typical smoke-and-mirrors exercise on the National Government’s part. Government members say they are trying to do something for low-income earners, but, actually, we know that the people who are benefiting most are those on the highest incomes.

Let us talk about Bill English’s tax changes. You get an extra 35 bucks a week if you are in the wealthiest income tax bracket. If you are the lowest-paid New Zealanders, you get an extra five bucks a week. Someone on the average wage gets just $11 a week. But ah! Hang on, there is a catch to the extra 11 bucks a week they get, because the Government then takes away the minimum wage tax credit that they currently get—the independent earner tax credit—which was 10 bucks. Suddenly, they are down to $1. We call it the “One Dollar Bill Budget”. Remember these? This is what a $1 bill used to look like. Funnily enough, $1 bills were taken out of circulation the first year that Bill English became a member of Parliament, and he has not had a new idea since then. He went and got the Treasury lobotomy, he came to Parliament, and he has not had a new idea since the $1 bill was taken out of circulation. That is the amount of money that people on low incomes, minimum-wage earners, will get from this Budget: an extra $1 a week.

Let us take a single hospitality worker who is on the minimum wage. Once they have had their $11 given with one hand and the $10 taken with the other hand, they will get $1 a week from this Government. What is Paula Bennet’s argument? Paula Bennett’s argument about that is: “Oh, they should work for tips.” So the Government is giving them their first $1 tip. This is the first example of Paula Bennett’s tipping culture in New Zealand—a $1-a-week tip from Paula Bennett for the hospitality workers who are earning the minimum wage. That is the best that they can get under the National Government. If they cannot make ends meet, they can rely on the charity of the customers coming into their establishment. Because they cannot make ends meet, Paula Bennett’s attitude to low-income earners is: “Well, work harder, and you’ll get tips.” Forget about being paid properly, you will just get tips from the people there!

I will tell you what, talk to any hospitality worker in the United States or in the UK, where the tipping culture is common, and they will say they barely make ends meet. Tipping culture drives down wages. That is the type of culture that this National Government wants to introduce, which is why it is giving hospitality workers on the minimum wage an extra buck a week—because it is not willing to back people in low incomes and give them something that would be meaningful.

Let us take the Government’s Working for Families changes, then. The Labour Party introduced Working for Families. We support it, but, here we go again, there is a catch. It lowers the thresholds for Working for Families, but then it increases the abatement rates. Give with one hand, take with the other hand—that is the typical response of the current National Government.

Let us then go back to the tertiary students. Anyone earning less than $14,000 a year gets nothing as a consequence of this change. That is 800,000 New Zealanders who will get not one cent extra from the Government. In fact, for many of those New Zealanders, life gets worse. Tertiary students will be disproportionately represented in that 800,000 figure, because they will be working part-time, often in minimum-wage jobs. They will get nothing from the tax changes or the changes to Working for Families, but what will they get? They will get increased costs for their tuition, they will get increased costs for their accommodation, they will have increased costs for their cost of living, and this Government does nothing to back them—nothing at all. Those students are instead relying on credit card debt, on loans from families, and on loans from banks, because they cannot get enough money just to live on. They are the ones who are bearing the brunt of this year’s Budget under a National Government, just as the tertiary students of future generations of New Zealanders have borne the brunt every year for the 9 years that National has been in Government.

Let us talk more about Working for Families for just a moment. Let us rewind the clock back to 2011, when the National Government cut $500 million out of Working for Families in one of its earliest Budgets. When those members say that they want to give low-income families a bit of a break—that was not their attitude in 2011, when they went and cut $500 million out of Working for Families. This is a Government that simply thinks there is an election around the corner, so it better appear to do something for low-income families, when actually it is not. Those low-income families—

Jono Naylor: Interest-free student loans.

CHRIS HIPKINS: Oh, interest-free student loans—very proud of interest-free student loans, introduced by a Labour Government that actually cared about tertiary students, that actually cared about future generations of New Zealanders, and that was actually embarrassed that future generations of New Zealanders were leaving their education with the highest levels of debt. They were unable to buy a house, they were putting off decisions about having families because of the level of debt they were in. We wanted to do something about that, and, instead, this Government has made their plight worse.

The Labour Government made it better. The National Government has, quite proudly, made it worse. That generation of New Zealanders is unlikely to ever be able to afford to buy a house under the National Government. They will leave with record levels of debt—higher levels of debt than any other generation—because National has allowed the fees to go up, their cost of living to go up, and it has done nothing, absolutely nothing, to support them in their studies. That is because National does not actually care about education.

Let us just presume that everything National says is correct—which, of course, we know it is not—and that families are going to get some extra money in their back pocket. The Government will then take that away again. Take families with kids in early childhood education—early childhood education services have had their funding cut every year that National has been in Government. Where do the centres make up the shortfall? They ask parents to pay for more. What about schools? They have had their funding frozen or going backwards for the last few years. Where do schools make up that money? Parents end up paying more. What about the tertiary students? They have had their support cut or reduced or frozen every year National has been in Government. What happens there? They end up having to make up the shortfall.

Give with one hand and take more with the other—that is the approach of the current National Government. New Zealanders will not end up better from these changes. In fact, the people who most need additional support are the ones who are going to end up worse off, who are going to end up paying more. It is the future generations, in particular, who are being done over by this Government, because it is interested only in the next 4 months, not the next 4 years or the next 40 years. It is interested in getting through to September and trying to win an election. It is not interested in what happens after that.

All the Government members care about is preserving their backsides in ministerial limousines, rather than actually delivering for New Zealanders. Chris Bishop would have loved to get his backside into a ministerial limousine, but he has got the talent squad of people like David Bennett and Jacqui Dean ahead of him in the line, so he is unlikely to ever make it around the Cabinet table under the current National Government.

This legislation is another example of the National Government sticking it to future generations of New Zealanders. I have got no hesitation in opposing it.

CHRIS BISHOP (National): I have got to say a couple of things about Chris Hipkin’s speech—that was a much better speech than Andrew Little gave this afternoon in the Budget reply. It was actually funny at times. It was actually energetic. It was actually relevant to the bill we are debating, and he actually made the time—he got to 10 minutes. The most amazing thing about Andrew Little’s speech in the Budget reply this afternoon is that when he got to 17½ minutes—he had already run out of puff about 5 minutes in—he sat down. That was it. After 9 years—and we are up to the fourth Leader of the Opposition—there was bluster and anger and hostility from the Opposition. He got to 17½ minutes and he sat down. That is all they have got to say about the Budget. I thought it was pathetic, but well done to Chris Hipkins. It was actually not a bad speech. It was full of factual inaccuracies, like the fact that we have cut early childhood spending, even though it has doubled in the last 8 years—full of factual inaccuracies—but at least it was a good attempt.

The Labour Party’s attitude to this bill and to the overall Budget is pretty weird, I have got to say.

Brett Hudson: Disgraceful.

CHRIS BISHOP: It is disgraceful, as my colleague Brett Hudson says. And it is pretty weird, because there is actually a degree of consensus in the House, a reasonable degree of consensus, that what this bill does—which is deliver tax relief and more money into the back pockets of hard-working families, particularly those under housing stress—is a good thing. There is consensus that that is a good thing, and that is what the bill does. That is why the Greens have taken a courageous political decision, a principled decision, and I want to congratulate James Shaw and Marama Davidson and Metiria Turei on that decision to vote for it, because it must have been tough with the memorandum of understanding about being partners in fiscal responsibility—the hilarious pledge. I call them the partners in fiscal irresponsibility given their history in Government. But it must have been tough for them to—[Interruption]

Mr DEPUTY SPEAKER: Order! I am loath to interrupt the member, but there has been interjection from this side. And, quite honestly, we listened to the last member talk about people’s backsides in limousines, the talent squad, and all the rest of it. Quite honestly, one side asked for it, and I think the other side is going to give it to them.

CHRIS BISHOP: It must have been tough for the Greens to make that decision. But they have made that decision and good on them—good on them. Good on New Zealand First as well for taking the courageous stand to vote for this piece of legislation. So the Labour Party looks very isolated tonight, and we know that it has caused a bit of unhappiness in the coalition opposite. There is a bit of testiness between the parties, and they will have to resolve that in the coming weeks and months, but good on the Greens for doing it.

The Labour Party says that this is a bribe, and that just sums up so much, does it not? The attitude of the Labour Party to New Zealanders’ own money: it is a bribe. We could not possibly have a situation where New Zealanders get to keep a bit more of their own money, where they have to work a bit less every year before they start handing over to the New Zealand Government to spend that money for them. That just sums up so much of the attitude of the Labour Party to how New Zealanders should view their own money.

Then we hear the classic. The classic is that this is a Budget and this is a bill that just helps the rich. Well, I have got to say that this is the most laughable and hysterical claim. There are 154,000 families in the lowest quintile—that is the lowest quintile; the bottom 20 percent—who will benefit, on average, by more than $35 per week, up to almost $2,000 per year. That is not a Budget that helps only the rich. It lifts 20,000 households in severe housing stress above that threshold. That is not a Budget that helps only the rich. It reduces the number of children and families receiving less than half the medium wage by around 50,000 people—50,000 children—and Labour is opposed. Jacinda Ardern, to give her credit, recognised that that is one of the measures that people often use to measure child poverty. That is one of the measures that people use, and the Labour Party has used it itself.

On the Government’s own numbers, this lifts those kids out of poverty to the tune of 50,000 children per year, and that is why the Child Poverty Action Group, which I think all members would agree is not traditionally a friend of this Government—in fact, it was not actually a friend of the last Labour Government either when it came to the in-work tax credit; but, anyway, it is a not a friend of the Government—said that these moves must be encouraged. And I do not want to be accused of misleading the House, because most of the press release was fairly critical, but it basically said: “You should have gone further. You should have lifted more children out.” We would disagree on some aspects of what it said, but it did say that these moves must be encouraged.

Overall, 1.3 million families benefit to the tune of, on average, $26 per week. This is not a Budget that helps only the rich. This is not a Government that does that. It was this Government in 2015 that raised benefit levels for the first time in 43 years. It was this Government that did that. It was a National-led Government that did that, not a Labour Government. It was a National-led Government that did that. We were only able to do that because of the strong, hard work over the last 7 or 8 years under the leadership of John Key and now Bill English—the strong economic plan we have been delivering that has been raising wages, creating jobs, and, now, gives the Government the fiscal headroom to deliver to those who need it most. That is exactly what the Budget does, and that is exactly why I am very proud to vote for it.

CHRIS HIPKINS (Labour—Rimutaka): I raise a point of order, Mr Deputy Speaker. I seek leave to table the results of an opinion poll in Wainuiōmata that shows that five out of six voters were voting Labour, and the only voter the Wainuiomata News could find who was going to vote National was Chris Bishop.

Mr DEPUTY SPEAKER: I wonder whether the member can confirm that it actually exists, or has it yet to be done? [Interruption] Leave is put for that purpose. There is objection. Well, that is a bit of a shame because I was looking forward to reading it.

Hon DAVID PARKER (Labour): It appears that Mr Bishop is hurt that the Labour Party is not praising his tax policy enough. We have already heard from Jacinda Ardern, acknowledging that the Working for Families changes are acceptable. We are not going to heap praise upon the Government for those changes, because, previously, a few years ago, the Government stripped $500 million out of Working for Families entitlements. We are not going to heap praise upon you, Mr Bishop, in that, but we are not opposed to them.

What we are opposed to is this very poorly targeted tax cut. And it is poorly targeted. Our tax policy, when you see it, will be better. Your tax policy does not take effect till next year—till next year. Why would we vote for this when we know that we have got something that is better? The size of these tax cuts is not dramatic. The size of these tax cuts is less than 1 percent of GDP. The size of these tax cuts is not dramatic. What is the problem with them, then? The problem, actually, is not the size of them. The problem is the targeting. A multimillionaire who does not need a cent, who has been getting huge increases in income under the inequality that grows under this Government, gets a higher tax cut than the low paid. It is so obvious that I cannot understand how Bill English and Steven Joyce missed it, because it is so clear. As Chris Hipkins has pointed out, if you are on the minimum wage without children, you get a dollar a year. That is a lot of people in the hospitality sector. That is cleaners. These are the lowest-paid people. If you want to use the words “tax relief”—

Hon Dr Nick Smith: What about the accommodation supplement?

Hon DAVID PARKER: I will come to the accommodation supplement. Actually, I will divert into that. There is no area of policy that the housing Minister who just asked about it has bungled more than the accommodation supplement. When the Government came to power in 2008 the accommodation supplement cost $890 million per annum. A year and half out from here it is going to cost $1.5 billion—$1.5 billion. Why has that area of welfare expenditure exploded? It is because of appalling policy by the National Government, made worse by this Budget increasing the subsidy that is available to be paid to landlords. This will bid up rents and it will hold up house prices, to the detriment of first-home buyers. That is basic economics. The National Government should hang its head in shame that the cost of the accommodation supplement has risen from $891 million in 2008 to $1.5 billion after this Budget goes through.

In respect of other areas, I have talked about how someone on the minimum wage gets only a dollar a year, but it is not fair for middle-income people. Why should the electrician get the same amount as the multimillionaire? The multimillionaire should not get the same as the electrician. It is just not right.

Hon Dr Nick Smith: He does not get the accommodation supplement.

Hon DAVID PARKER: What is that?

Hon Dr Nick Smith: The millionaire will not get the family support increases, and will not get—

Hon DAVID PARKER: Oh, he does not get the accommodation supplement. Right. His defence of this is that the multimillionaire does not get the accommodation supplement. Oh, poor multimillionaire, with numerous houses rented out to people, who is receiving the accommodation supplement for every one of their houses in Auckland! Oh, the poor multimillionaire! That was the housing Minister—my goodness.

In respect of Mr Joyce, he boasts about spending. Why is this spending necessary? It is because of one of the highest rates of net migration in the Western World. In fact, I think there is only one country that has got a higher rate, and we are playing catch-up.

The health services have not been funded enough. The schools have not been funded enough. The roads have not been funded enough. In respect of infrastructure, I want to quote what the “Minister of Spin”, Steven Joyce, said. I paid attention to this in his Budget statement, because I thought it seemed strange. This is a quote: “We are in the process of building more new hospitals and schools than New Zealand has seen in generations.” It is just not true. I was sitting next to Annette King. She listed all the hospitals that we had built, from Kaitāia to Invercargill—both new hospitals. Auckland City Hospital was built by the last Labour Government. That was the most expensive capital building project ever in the history of New Zealand, for anything—by the last Labour Government. There was a new hospital in Wellington and, in the area where I was then an MP, a new hospital in Dunstan.

It is just untrue what Minister Joyce said, that this is somehow some new record building of hospital infrastructure, and that it was similar for schools. And then he listed down—as if he should be proud of it—$763 million for new prison capacity, not many years after the former Minister of Finance, now Prime Minister, Bill English, said that prisons were a “moral and fiscal failure”. How can he turn from that to being proud of wasting another $763 million on a new prison?

And what about the state of the economy? We have heard virtually no talk about that from the National Government, because it is truly appalling when you strip out the effects of immigration. The Government is spruiking growth by these high rates of immigration. Take that out and per capita growth is less than 1 percent. Productivity growth is pathetic. It is pathetic. It is terribly low. It is no wonder, because all of the money is going into trading houses—not new houses, but trading existing houses at ever-higher prices—instead of being invested in export industries.

So what is happening? Well, wages are stagnant. We know many people do not have a wage increase keeping up with inflation, never mind housing costs. But what is happening in the underlying economy? In 2008 the Government’s objective was to lift exports from 30 to 40 percent of GDP. What has happened? Well, at the moment they are down to 27.8 percent. That is after 9 years of National. The Government’s target was to lift exports from 30 percent; they have gone backwards to 27 percent. So what do you think their forecast is? At the end of the forecast period it is even worse—26.2 percent. By that time, National would have been in Government—thank goodness it will not be—for 13 years. What did we hear about that in the Budget? Nothing. Instead we got this risible target about the percentage of exports—which will be going down as a percentage of the economy—that are being sold into countries that we have got free-trade agreements with. That is not a silly ambition, but it is not one that is ambitious for New Zealand.

I will not talk about housing. I mentioned a little bit about the accommodation supplement, and my colleague Phil Twyford is talking about this, but you really do have to question whether in reality this is a real surplus, as the Government says it is. There is no contribution to the Cullen fund, even though we know that the Government should be putting $2 billion a year into it. Not one cent. It keeps putting it on the never-never. It says it still believes in it, but after 9 years in Government not one cent came into Government. It keeps piling up the bills for the next generation, just like in climate change. You know, since the Budget has been delivered I have had a call from someone in one of the foreign affairs areas, and they say they think this shows the Government is just all talk; it is stalling, it is not doing anything material, and those bills are piling up for the future.

So the next generation—they are the ones who are working for the minimum wage in hospitality. They get a dollar a year. As Chris Hipkins has said, they have also got student debt. They have got the unaffordable housing and the dropping homeownership rate, they have got this future where New Zealand is not paying its way in the world because our exports are dropping, and if you do not think that is right, well—National, can you tell me what the rate of savings is in the next few years in the Budget? Can anyone over there tell me how much we are saving as a country? No—I cannot hear a word; they cannot. Well, what is it? It is minus 2.2 percent—it is minus 2.2 percent—of household disposable income next year. And what is it the year after that? It is negative. And what about the year after that? It is negative.

So for the next 3 years household savings are negative, and we are meant to say we are going to vote for this legislation as a symbol of success on the part of the National Government. Exports are going back. Households are getting poorer because they are dissaving; they are not saving. And National thinks: “Oh, this is great progress.” We are having to double the subsidy in their housing accommodation supplement, and the housing Minister expects me to say that is good news. We are voting against this bill because it is indicative of a poor Budget.

BRETT HUDSON (National): Well, look, I would just like to start with saying there is one thing that I can agree on with the previous speaker, David Parker, and that is that it is not actually the size of the tax relief that counts; it is what you do with it that really counts. And, of course, he would know all about something of an incredibly tiny size, because, of course, that member served in a Labour Government where all it could offer was a packet of P.K. chewing gum, and it was proud to offer that. Well, under this initiative, under this bill, 1.34 million Kiwi families will get, on average, 26 bucks a week. That is a whole heap of P.K. gum to sit back and chew while you savour Labour getting obliterated on 23 September because it is out of touch with what New Zealand families want and what New Zealand families need, whereas this Government not only cares but listens and acts according to what New Zealanders want and need.

It is an absolute pleasure to rise in support of the Taxation (Budget Measures: Family Incomes Package) Bill in this, its first reading—the centrepiece of an absolutely fantastic Budget. It is a Budget that is taking an economic dividend of an incredibly strong economy, which is forecast to remain strong for some years, and applying it where it is needed most, which is lower and middle income Kiwi families—Kiwis who work hard and deserve our support to get even further ahead than they have been when we have seen average wages rising faster than inflation over recent years. But they deserve more support, and we are proud to offer it to them.

This package will deliver that support through changes to tax thresholds, though adjustments to Working for Families, and, for those families who have household rental stresses, through accommodation supplements. It is an extremely targeted set of measures. And, look, people might expect, of course, that a National backbencher would say that, so do not take it from me; take it from Max Rashbrooke—the guy who, basically, authored what he would like to call “Inequality New Zealand: We’re all going to hell in a handbasket.” but had to call it something else. Max Rashbrooke is no friend of the National Government. Max Rashbrooke tweeted today, going through the Budget detail, and he said “They’ve changed this, they’re offering this, and they’re changing that. This is clearly targeted at low-income earners.” Max knows that the Budget measures today are targeted at New Zealanders who need it most.

A further measure that will come from this—from the 1.3 million families who will receive, on average, $26 a week extra—is 50,000 more children living in families that are earning half or more of the median income. Some people use, or want to use, that as a measure—or the only measure—of poverty for children. There are other measures. But, by any measure, 50,000 more children living in families earning half or more of the median income is a good outcome. This is a Government that is absolutely committed to delivering that compassionate conservatism.

What do we get from the Opposition? I refer particularly to the leader of the Labour Party and the leader of the Green Party, who took an opportunity after the first debate speeches to go and talk to the media. What we got was an abject disgrace. What they tried to say was that these measures—these tax thresholds in particular—are all about helping the wealthy, because if someone earns more than $52,000 a year, they will get $20 a week. They said that is all about the wealthy. I remind the House that under the last Labour Government, the then Minister of Finance, the Hon Sir Michael Cullen, defined anyone earning $60,000 a year as a “rich prick” and he taxed them accordingly. Well, I tell you what: what Andrew Little and James Shaw have done today is they have redefined the threshold of what they consider to be a “rich prick” in New Zealand. It is anyone earning $52,000. That is $8,000 less than back in the early 2000s.

They are an absolute disgrace. They are out of touch with New Zealand. They have no understanding of what it is for a New Zealander to struggle or to work hard to get by. Those backbenchers over there earn $160,000 a year. They get almost $17,000 as an expense allowance, and they get $28,000 a year to live in Wellington. They get all of that, and they say to a Kiwi earning $52,000 a year that they are a “rich prick”. Well, that is absolutely disgraceful. It is a bunch of people who are certainly not fit to sit in this House, and they are not fit to govern New Zealand. I hope that New Zealanders see that, hear that, and act on that on the 23rd of September. I commend this bill to the House.

JAMES SHAW (Co-Leader—Green): Maybe I can change the tone a little bit in my next contribution in the House. But I would like to start by picking up on the tone of the last speaker, Mr Brett Hudson, the National Party candidate in Ōhāriu, who said that I had made some comments—or who implied that—

Mr DEPUTY SPEAKER: Order! The member has the floor. He is making his contribution.

JAMES SHAW: Thank you, Mr Deputy Speaker. I would like to just say for the record that I have said precisely nothing about tax thresholds, in terms of the definition of someone who is earning more or less than $50,000—

Brett Hudson: On TV ONE news, Mr Shaw.

JAMES SHAW: I certainly did not say anything. This is a debating chamber, so Mr Hudson is largely entitled to say what he wants, but he should try to stick to things that have some factual basis, rather than just making crap up because he has gotten hot under the collar and has a political point to make.

Having said that, I would like to move on to some of the substance of the bill, which has been so avoided by the previous speaker—it was hard to hear whether he had anything to say, over the sound of his own voice. The kind of core of the debate tonight really does come down to how well targeted this bill is. Mr Bishop said earlier in the debate that the Labour Party has decided that this is targeted only towards the rich—that is actually a misrepresentation of the position. I do not believe that anybody here has said that this bill is targeted only at the rich. The point is that, actually, when you have an across-the-board cut like this, what happens is it also benefits people who are on higher incomes, and, actually, that money would be better targeted at people on lower incomes. That is the great reservation about the design of this.

If the tax thresholds had changed only to keep in line with inflation—which they needed to do, because clearly over the course of the last few years there has been bracket creep, inflation, and so on, and things have changed there—that would be equivalent to about $900 million worth of forgone revenue out of the Government accounts. But this package comes in at about $1.9 billion. So there is actually a whole additional $1 billion there above and beyond bracket creep.

The question is: OK, if you are going to, you know, look at that $1 billion, what is the best use of that money? What the Government has decided is that it is going to go for an across-the-board tax cut, and that $1 billion tax cut, essentially, includes a whole lot of people who are on higher incomes as well as those who are on lower incomes. What that means is that that $1 billion is then not available for more targeted support for those who need it most.

A lot of the rest of the debate has been about the extent to which those families on lower incomes who are, you know, receiving other forms of benefit in the form of changes to Working for Families or the accommodation supplement, and so on—whether that is so, kind of, paltry under the terms of this package and this bill that it actually might have been better, rather than to have a $1.9 billion tax cut, to actually use that $1 billion of additional revenue and to actually target that more at those families at the low end. That is why, as we have said, we think that the design of this is poor, because it actually ends up benefiting a whole group of people who are on higher incomes, who not only do not need it but actually do not want it.

I think my colleague Jacinda Ardern said in her contribution in the first reading that while travelling around the country and engaging with the public there was precisely nil appetite out there for mid- to high-level tax cuts. Actually, what people know is that even when they are doing well, they are really conscious that there are a lot of Kiwis who are being left behind as a result of the way that the National Government has run the economy over the course of the last 8 years. They are really uncomfortable with that, and, actually, they want to do something to support those families, to ensure that those people can trust that they are able to make ends meet, that they can have a roof over their heads, and that their kids are not ending up in the hospital every winter because they live in cold, damp homes, and so on. We would have preferred that this package was designed more that way, and we will be introducing amendments tomorrow, when the House resumes and goes into Committee, to that effect—to try to target this package more effectively than it is currently being targeted.

One of the examples that I wanted to raise in line with this is that the Government is sort of making some hay—just as it did with the so-called $25 benefit increase a couple of years ago—that this is some kind of grand move that is going to make an enormous difference to people. When it comes to Working for Families, Working for Families actually peaked in 2013 and has been declining for the last 4 years, because families have moved out of the range of Government assistance but they have not moved out of the range of hardship. So you have actually had people who have been moving off the Working for Families programme but are actually still in a great deal of hardship. So, in many ways, all this package does is start to play catch-up with people who have been going backwards and falling through the cracks, over the course of the last 4 years.

I said in my first reading speech that we have always had some criticisms about the design of Working for Families, because it obviously supports only people who are in work, and, actually, by definition, families where neither parent is working are the hardest-up families. All they have to go on is the unemployment benefit. We have created, amongst the most hard-up families in the country, a two-tier system, whereby people who have jobs and who are lucky enough to have some form of work are receiving an additional benefit through the Working for Families wage subsidy. But those who are not working do not. So you have got people who are getting into real trouble there, and this package, of course, does not help them.

If you are thinking about how we support people who are on the lowest incomes, we have to think about a more universal approach at the bottom end, rather than something that has this kind of more piecemeal approach. Mr Bishop referred to some of the things that the Child Poverty Action Group had said in its submission earlier—that this package does not go far enough. I think one of the things it would say is that there is still a great number of families who are going to be left in exactly the same situation they were in before—or worse—after this package goes through.

One of the other contributions earlier was around “At what cost?”. I think it was my colleague Chris Hipkins who was saying that one of the reasons why this package becomes possible is all of the things that the Government has, effectively, cut over the course of the last 8 years, through a sinking lid that takes no account of inflation or population growth. So, in real terms, spending on a number of things has actually gone backwards, creating the fiscal conditions that it is then having to use to repair some of the damage caused by having withdrawn that funding in the first place. So it is a kind of circular argument that the Government is making on this.

In relation to that, I wanted to bring up the home insulation scheme, because it was referred to earlier in the debate. When you think about the fact that there are 40,000 visits by children to the emergency rooms in hospitals around this country every year, because their homes are actually making them sick, and when you consider there are 1,600 people who die in the winter months, above what happens in the other months of the year, as a result of cold, damp homes, you have to wonder why this Government is withdrawing funding from the home insulation scheme—

Hon Member: Bring on Prosser.

JAMES SHAW: —because that scheme saved lives. It had a benefit-cost ratio of $6 for every $1 that was invested. I hear some interjections from members opposite, who want me to move off the fact that their policies are leading to increased deaths in the winter. I can imagine why they would want me to move on from that point. But it is a very real point. This is not simply a theoretical change to tax brackets that is going to upset people. It does, in fact, affect people’s lives. Thank you.

RICHARD PROSSER (NZ First): I had no idea that a tax bill at nearly 10 o’clock at night on a Thursday could be so exciting. Perhaps it is just Budget fever. We have heard some very impassioned speeches from both sides of the House, and I listened to Chris Hipkins make his contribution. I have always enjoyed listening to Chris Hipkins’ speeches, because he is a very good orator, and I actually admire his style in asking questions as well. It is a very straight bat. The man knows his stuff and he says it passionately. But after that contribution, honestly, I felt like reaching for the cyanide pills. He was painting such a bleak picture of the country and its future—that this is terrible. And, to cap it off, I finished up with an image burnt into my brain of Chris Bishop’s backside in a limousine. I am actually afraid to sleep tonight in case it comes back to me.

But I think there is a difference in approach from what I have heard in speeches from the Labour quarter and from the National side of the House about this tax bill. And I am aiming to talk about the tax bill. I realise that the Budget speeches themselves will come later. But it appears that we have—from Green colleagues and Labour colleagues—a serious case of old-fashioned socialist envy: wanting to keep everyone down, and let us bash the rich, or whatever level you want to put that at. It is not aspirational for creating wealth. It is not aspirational for growing the economy. I would love everyone to be in the top tax bracket. Would that not be marvellous? If everyone was earning and creating wealth to the point that they could be in the top tax bracket, that would be a great thing for the country. It would be marvellous.

But, actually, this bill will not achieve that, and it is not trying to. It is a cynical vote-buying measure from the National Government, and that is fine. It will still deliver some benefits to the people it is aimed at, and we will support it for that reason, but it does not address the things that actually need to be addressed in the economy. It does not simplify the tax system for small and medium enterprises, it does not promote adding value to raw materials, it does not offer a 20 percent corporate tax rate for exporters, and it does not aim to tax international corporates at the same rate that the people who genuinely create wealth in this country are paying. It does not do any of those things. It is a coat of paint over the rust, but, fortunately, that is all it needs to be. It has to last only 4 months, and then the next Government—the New Zealand First Government—will come in and sweep away the bad things, add to the things that are moderately good, and the future will be bright and rosy.

I am not sure how much time I have left before the close of play. I am not intending on carrying on this reading tomorrow, but I do want to touch on the accommodation supplement. It is a subsidy for landlords, and largely foreign landlords, and that is because this Government has not addressed the fact that the cost of housing has become untenable, that there are not enough houses, that rents are too high, and that part of the reason for that is that too many people from offshore are allowed to buy houses here with pretty much unlimited money at pretty much zero interest. That needs to be addressed.

However, the fact that somebody who is paying too much rent as a proportion of their income can look forward to an increase in their accommodation supplement of maybe $100 a week—that is a great thing for them. So this is a good piece of the coat of paint over the rust, which we are happy to support in that light. It does not fix the problems. It will keep things afloat until the New Zealand First Government, led by the Rt Hon Winston Peters, can come in and fix things properly, but it is a reasonable stopgap, and we will carry on supporting it. Thank you.

SARAH DOWIE (National—Invercargill): It is an absolute pleasure to rise in support of the Taxation (Budget Measures: Family Incomes Package) Bill. I am so very, very proud of what this Government has achieved, and of the fact that the Hon Steven Joyce has, yet again, delivered—built on Budgets delivered by our Prime Minister, the Rt Hon Bill English, once our finance Minister—a ninth Budget that is taking care of all New Zealanders. I am very, very pleased that this taxation bill will deliver for low and middle income families and put money in the back pocket of these families to make life easier for them.

I just want to start with a quote, actually, in response to the Opposition, which said that this is not going to make a difference for people on the ground. It is from Sonya Donnelly, who is the coordinator of the Invercargill & Districts Budget Advisory Service. She said: “An extra few bucks a week may be the difference to meet day-to-day living expenses and saving a little bit for things that don’t crop up every week, like car registrations and school fees.” I think that it is absolutely wonderful—

Mr DEPUTY SPEAKER: Order! It is tragic to interrupt the member; however, it is time for me to leave the Chair. The House will resume tomorrow at 9 a.m. Nō reira, tēnā koutou, tēnā koutou, tēnā koutou katoa.

Debate interrupted.

Sitting suspended from 10 p.m. to 9 a.m. (Friday)

THursday, 25 MAY 2017

(continued on Friday, 26 May 2017)

Bills

Taxation (Budget Measures: Family Incomes Package) Bill

Second Reading

Debate resumed.

The ASSISTANT SPEAKER (Lindsay Tisch): Members, the House is resumed under urgency. We are on the interrupted debate on the second reading of the Taxation (Budget Measures: Family Incomes Package) Bill. Speaking last time was Sarah Dowie, and she has 8 minutes remaining if she wishes. [Interruption] She does not want to take the call, so the next call is a split call. I am calling Marama Davidson—5 minutes for the Green Party.

MARAMA DAVIDSON (Green): I rise to speak on the second reading of the Taxation (Budget Measures: Family Incomes Package) Bill. This bill is part of a Budget package that reminds me of a scene from the movie Mad Max: Fury Road. There is a scene in that movie where, at the end, the tyrant who has taken control of all the water and kept it away from the people finally turns the taps on for the people. He turns the giant taps on, and the people are clamouring to get their bit of water. They are cheering and they are yelling, because they have been denied water for so long. There is cheering and yelling, and he turns the tap on, and then he turns it off a few seconds later. The water is on for only a few seconds, and then that is it for the people.

I was thinking about that. I was thinking that this bill turns that tap on, and for families and communities who have desperately needed help for years and have been denied it, it is a small, trickling drop. For our lowest-income families, this bill is a trickle. In the words of the Child Poverty Action Group, what we need instead is a tide to actually make meaningful change.

Increasing the lowest tax thresholds and increasing the child payment rates under the family tax credit will get more money to people on lower incomes, and we support that, yes. This bill increases Working for Families payments because costs are high, especially, at the moment, with housing.

So it is unfortunate that the Government has hooked the tax cuts for the lowest incomes to tax cuts for the higher incomes. The Greens do not support tax cuts for higher incomes. People on higher incomes themselves do not support tax cuts for higher incomes. They have been clear that they would prefer to have well-funded public services and provisions, and a country where people have enough to live well. Like everyone, the Greens are not fooled by this Government’s bill, which is pretending to fix up some of the big mess that the Government designed.

This Government wants to pretend it is finally making the changes our country desperately needs, after having run into the ground social services like social housing, like education support staff, and like mental health and addiction support services. In actual fact, this Government, once again, has made decisions for the past, not for the future, like the fact that the largest share of the tax cuts under this bill will go to families on more than $127,000 a year. There is around $33-odd a week for them, while those on the lowest incomes—less than $24,000 a year—will get maybe only five bucks, if they are lucky. Those tax cuts for higher incomes will come at the cost of even more public services.

The Greens know that that is the opposite of what we need. Five dollars extra is a pittance for people on lower incomes, but, at the moment, sadly, that $5 makes a difference. It makes a meaningful difference, and we should not be proud of that. Some families have become so used to scraping a meal together on so little that $5 extra is actually a thing. It is a deal, and so the Greens will not stand in the way of that. But this bill does not do what is really needed to improve the lives of people on the lowest incomes and to help us all benefit from stronger communities everywhere.

The Greens will keep fighting for those more meaningful changes while not standing in the way of the potential of what this bill has to offer to our lowest-income families. We will keep working for the real changes. We understand the true value of communities of people who have enough to live and survive and live meaningful lives. That is the leadership we need. Thank you.

The ASSISTANT SPEAKER (Lindsay Tisch): I call Dr Megan Woods—5 minutes.

Dr MEGAN WOODS (Labour—Wigram): It is my pleasure to take a call on this bill. I would just like to acknowledge Pink Shirt Day, when members across the House are united on taking a stand against bullying.

After 9 long years in Government, this is all this Government has got. This is what it dishes up in an election year bribe Budget. Does it do anything to address the big deficits that we have in this country? Does it do anything to address the housing crisis? No, it does not. Does it do anything to address overcrowding and the stretch on our schools? No, it does not. Schools in my electorate in Christchurch, in Wigram, are some of the most at-capacity and over-capacity schools in that city. Does it deliver for those schools? No, it does not. Does it do anything to address the $1.7 billion gaping hole we have in the health budget? No, it does not. Does it do anything to address the number of police that we need in our communities, that the police themselves are saying we need? No, it does not. This does not rebuild the social fabric of New Zealand. Instead, all we see is a package of regressive tax cuts that do nothing to rebuild the kind of society that we want New Zealand to be.

Well, Labour is a progressive party. Labour is a party that stands for values and ideas where we do have a strong social fabric, where we do not think it is acceptable that we have people who are now forced to bring up their children in a car. We do not think it is acceptable that children wait 12 weeks to see a mental health specialist after expressing suicidal thoughts—12-year-olds. Is that the kind of society we want? We do not think it is acceptable that we have overcrowding in our schools and that we can no longer, hand on heart, in this country say that we have a free, open-to-everyone public education system.

What will these tax cuts do? For some people, they will deliver $1 a week. It is the “One Dollar Bill Budget”. That is what it will deliver for some of the lowest-paid people in this country. What the members opposite are trying to dress up—they are trying to throw the kitchen sink at this, but let us actually just look at the tax part of this legislation that we are debating. We in this House are all going to get a good, decent tax cut, but for some of the lowest-paid workers in our country that is not what they are going to get. They will not get anywhere near the amount we will be getting. Those low-income earners will still be having to dip into their pockets—$200 a year for school stationery bills because this Government has underfunded the operational budget of schools and is doing nothing to address that. They will still not have access to a good public health system when they need it. The Government still has done nothing to address the housing crisis; instead, it has thrown the short-term solution of an accommodation supplement at it. But the simple fact is that we do not have enough houses.

What we need is a vision and some fresh thinking in this country, and that is what a Labour Government will deliver. A week and a bit ago, Andrew Little stood up at the Labour Party congress and showed what that is. Let us have a think about what it is when we think about the need for New Zealanders to have warm, safe houses. What is Labour planning to do about that? We are planning to give back the subsidy that this Government has cut from homeowners, to help them insulate and warm their homes. This bill and this Budget do nothing to address those things. Where is that? Instead, what it is doing is it is giving high-income earners money at the expense of those earning less.

We want to give those mid-income earners, those people who have struggled to buy their own house, whom this Government does not think need any assistance—we want to help them be able to insulate and warm their houses. We think that is a priority and that is what Budgets are about. And for Labour it is about rebuilding our health system. It is about rebuilding our education system. It is about making sure that we have a housing system that works for all New Zealanders so that nobody has to bring up their child in a car.

Dr PARMJEET PARMAR (National): It was a great day yesterday. This bill is the product of Budget 2017, and this bill has demonstrated again—yes, again—that this National Government believes in rewarding hard-working people. Yes, we believe in rewarding hard-working people. It is really amusing listening to the speeches from the Labour Party members. On the one hand, they are saying that this is an election bribe, and, on the other hand, they are saying that this is not doing enough. They are making contradictory arguments, so they need to decide which side they want to be on.

The anger that is coming out from their speeches shows that they cannot bear the fact that we have come up with such a good package. They are playing a position without any logic. I want to say this to them: they are not opposing us; they are opposing more money going into the pockets of low and medium income families. Yes, they are opposing more money going to low and medium income families.

I am taking this call to support the Taxation (Budget Measures: Family Incomes Package) Bill in its second reading. I am very proud to take this call. I am not a member of the Finance and Expenditure Committee so it is a real privilege for me to have this opportunity to speak on this bill in its second reading. Putting this bill through under urgency shows how eager this National Government is to help low and medium income families. We are talking about a package worth $2 billion. Maybe the Labour Party does not realise how many zeros are after “2” in $2 billion. This package is to help families in different phases of their lives, including people who are on superannuation. This package is to put more money in the pockets of 1.3 million families, and it comes to an average of $26 a week, which is great news for low and medium income families.

The economy is doing really well. We have a strong economy, and that is because of our responsible management of finances and also because of investing heavily in diversifying our economy. Now we are all enjoying the benefits of this strong economy. Through this bill we are passing on the benefits of this strong economy to low and medium income families. We know that wages are rising faster than inflation under this National Government. We have increased the minimum wage every year since coming into office in 2008. The annual average wage in the last 7 years has gone up from $49,500 to close to $59,000. As a result of that, some families have been faced with a higher marginal tax rate. We do not want to punish them for earning more. We want to reward them for earning more, for working hard.

It was the previous Labour Government that believed in punishing people for earning more, and Labour’s spending went up by 50 percent even when it knew the global financial crisis was coming our way. But on this side of the House we want to reward these families, and that is why we are shifting the $14,000 income tax threshold to $22,000, and shifting the $48,000 tax threshold to $52,000. This is a bill that employees are going to celebrate. This is a bill that businesses are going to celebrate. Businesses know that happy employees mean more productivity. Yes, happy employees mean more productivity. This bill is going to be celebrated by people on superannuation. We know that, as a flow-on effect of this bill, people on superannuation will get $622 from 1 April next year—this is the married rate. The current amount is $600. So this is an increase of $22. This bill contains many other components. For example—

Brett Hudson: Delivering for New Zealanders.

Dr PARMJEET PARMAR: Exactly—delivering for New Zealand. This bill also increases the accommodation supplement for student allowance recipients, as well as the family tax credit rate for young people. We are simplifying that through this bill, and as a result of that, some families are going to get more for their family tax credit rate that they get for their young children. This bill demonstrates that we are building on all the hard work that we have done in the past. For example, we made GP visits free for children under the age of 13. We increased benefits by $25—this was the first time in 40 years.

The ASSISTANT SPEAKER (Lindsay Tisch): Order! This is a debate on what is currently in the bill. It is not a Budget speech. This debate is about the taxation measures and the family package. So just concentrate on those. This is not a general Budget speech. That comes later on.

Dr PARMJEET PARMAR: Thank you, Mr Assistant Speaker. I was just saying to the Opposition that this bill builds on all the hard work that we have done in the past. So this bill is actually to help low and medium income families, and I want to say again that by opposing this bill the Labour Party is opposing more money going into the pockets of low and medium income families. I am really proud of this bill and I am really looking forward to this bill being passed. I support this bill and commend this bill to the House. Thank you.

STUART NASH (Labour—Napier): It is a pity I have not got a little bit longer, because there is about 10 minutes of rebuttal for every point that the last speaker, Parmjeet Parmar, made. There are a couple of things I would like to point out first and foremost, if I may. The member who has just resumed her seat talked about happy employees being more productive, and you know what? I could not agree more with that. All the evidence shows that when someone is happy in their work and happy in their life they are far more productive.

But I suppose, when I look at this bill and I look at what constitutes a happy employee, I have a different view of this. I have worked in business. I have studied business. I know how this sort of stuff works. I would suggest that 50c an hour—[Interruption] Are you clapping? Feel free to clap. I would suggest that 50c an hour, which is going to be delivered in a bill like this, is a hell of a lot less, in terms of making families happy, employees happy, and workers and businessmen and businesswomen happy, than perhaps, I do not know, delivering safer communities or perhaps delivering houses or maybe healthcare or maybe education. I am not sure. Maybe I am wrong in this, but every sort of indication I have is that happy, productive employees are not those who will get $1 an hour; it is employees who can go home to a house that they call their own. Happy employees have not got a child among the 50,000 who are in hospital with a respiratory disease.

Brett Hudson: You’ve just defined them as rich, Stuart.

STUART NASH: I am quite interested in hearing what this member has to say, because I think he is so far out of touch with what is actually going on in this country that it is quite astounding. I wish, actually, that those who are listening to this debate could hear this. There is a whole lot going on in our society at the moment that people are—on 23 September, and a couple of weeks beforehand, actually—going to have to make a choice about, and that choice is about what sort of country we want to live in. What sorts of communities do we want our children to grow up in? You can have the compassionate. You can have Labour, led by Andrew Little and Jacinda Ardern, where it is about building communities and understanding what makes communities work, what drives compassion. It is the sort of community that I grew up in.

What happened is I got home from school every day, we drank a pint of milk, we had a Marmite sandwich, and we scattered. We scattered around the neighbourhood. We did not lock the house, of course, and you could leave your bike outside the dairy without it being a problem. Then what would happen at 6 o’clock—my mother had this huge big bell. She would ring it and it would resonate throughout the community, and what would happen was children would scatter to all corners of the earth. There were the lawyer’s sons, the accountant’s sons, but there were the sons of the mechanic, the machine shop workers. This was a community and a society where everyone was equal. We all owned houses. Sure, someone’s father might have earned a little bit more than someone else’s father, but it did not matter. We all paid our taxes, we all owned homes, and we were happy. The thing is that we all went to school and played rugby and we all dressed the same. There were not these massive gaps. There were not these massive gaps and inequality. When I look at this—

The ASSISTANT SPEAKER (Lindsay Tisch): Order! I pulled up the previous speaker, and I reiterate the point I made. It is all very well having some generic material—that is always interesting—but you must relate it back to the substance of what is in the bill, and it is the Taxation (Budget Measures: Family Incomes Package) Bill. This is not a general debate. It is not a debate on the Budget. I ask you to come back to the substance of this bill.

STUART NASH: I raise a point of order, Mr Speaker. It is my understanding, and I have not got the reference in front of me, that if members from the opposite side are interjecting and throwing comments out, then I have the right to answer them.

The ASSISTANT SPEAKER (Lindsay Tisch): No, just because someone interjects does not mean to say that you need to deviate away from the substance of your bill. I have heard in that 3½ minutes probably about 3 minutes about what you used to do when you came home from school and having Marmite sandwiches. It is all very interesting because I used to do the same, but the thing about it is to relate it back to what is in the bill.

STUART NASH: I suppose the point I was making is that both you and I grew up in a different type of community where we valued community, where we were all equal, where there was not that level of inequality and social stratification that we see now. I suppose the reason I am making that point is if we are going into urgency, if the only bill we are passing under urgency that comes out of this Budget is a bill that talks about giving a few people a little bit of money, some who do not really need it a little bit more, and others not very much at all—if this is really where the Government thinks that the greatest need in our communities is, then that is a shame.

When I read this bill and I have a good look through it, and I try to digest where the Government’s vision for this country is—because we are sitting in urgency. Normally what most of us would be doing is visiting constituents, talking to organisations, or helping those with issues, but we are in this House debating this bill, so it is important, or it is seen by the Government to be important. But if this is the most important issue facing our country today then I think it shows how out of touch that Government is.

One of the reasons I say this is that on Tuesday one of the bills that we were debating was the tax rates bill for 2016-17. We have not even passed legislation that codifies the tax rates for last year. Yet we are putting a bill through urgency that talks about tax rates for next year. Surely, if it was so important then the Government would have done the other bill through urgency. I do not even think we have passed that bill yet, have we? We are debating next year’s and we have not done last year’s.

I suppose all that I can say is that I would love a tax cut. Like the vast majority of New Zealanders, I would love to have more money in my back pocket, because I do work hard. I acknowledge that every New Zealander who works—well, the vast majority of New Zealanders who work do work hard. I know that the vast majority of New Zealanders who work would love a tax cut. But what I also know is if you give New Zealanders a choice between a tax cut or an increase in education, or more police in their neighbourhood, or mental health services, then they will say: “Give me the social services.”

I know we are not supposed to bring families into this debate, but I have got four children and they range in age from 3½ to 15. The thing that I am a little bit concerned about is the world that they are growing up in, and it is different from the world that I grew up in, and that is the point I was making. The concern I have—

Hon Maurice Williamson: You’re telling me the world’s changed?

STUART NASH: The world has changed. You are dead right, Mr Williamson—the world has changed. But unfortunately the government is not recognising that fact. There are some things that have changed for the better. I get that. But there are other things where the Government can actually make things better, and that is the role of the Government.

There is the fact that our schools are underfunded by $100 million. Lloyd Burr got this right on TV3 last night when he said that the health system is so underfunded it remains in crisis. I suppose the thing that makes me a little bit sad, a little bit mad, and a little bit more passionate to work a little bit harder to win the election is if this bill, the Taxation (Budget Measures: Family Incomes Package) Bill, really is—really is—addressing the most salient issues, the most pressing issues in our community according to that Government, then it is out of touch, then it has got it wrong.

This will provide a little bit of extra money to a whole lot of workers, I acknowledge that. But what it does not do is really address the issues that New Zealanders are telling us they care about. No New Zealander said: “I want a tax cut. I do not care about anything else.” What they said is “Give me a house. Give me a warm, dry house. Make sure my kids can get educated. Make sure the health system is there for our children and our communities. Do not spend a billion dollars on a prison; spend a billion dollars on our schools.” That is what New Zealanders want. They want the life that I had and no doubt—I do not want to bring you into it, Mr Speaker—

Mr SPEAKER: Then do not.

STUART NASH: —that we all had. Alastair Scott grew up in exactly the same community that I did. We were running round. We were happy. We went to the hospital. Our schools were well funded. We had a great time but that is not the future or the present for a whole lot of kids in our community.

When we are having 50,000 New Zealand kids admitted to hospital with respiratory diseases, we know we are in a little bit of trouble. The thing about this bill is it does not address those issues. It does not address those issues. What is in here for the 50,000 kids who are admitted to hospital every year with a respiratory disease? How are they going to benefit from this? How are they going to benefit from this? The $20 a week, yeah, that is nice, and that will go a way for a lot of families, and it is money for a lot of families, but it does not address the core issues. It shows a lack of understanding of what makes a really good community.

New Zealanders should be rewarded when they work hard, but New Zealanders also deserve to grow up in a community where they are safe and where their kids are going to get education. In fact, my underlying political reason for being and my philosophy is equality of opportunity. I just do not see that this bill delivers on equality of opportunity in any way, shape, or form. That is the sort of bill that we should be debating under urgency—the sort of bill that does allow our kids to get educated, the healthcare that is needed in our communities, and the police that are required to keep our communities safe, that is why I cannot support this bill. Thank you.

ALASTAIR SCOTT (National—Wairarapa): That was an interesting but disappointing speech from the previous speaker, Stuart Nash. He could not pinpoint and could not speak against any part of the bill. In fact, he acknowledged a lot of it. He acknowledged that the bill does affect those who are least well off. He does accept that Working for Families and the accommodation supplement does affect those people. But, unfortunately, the disappointing thing is he is going to vote against the bill.

I would like to commend, if I can, the Green Party for having the balls to vote for this bill. I do not want to sound patronising or condescending, because I know that that party does care for those who are least well off. It talks about it all the time in this House, and I commend it for supporting the bill because it knows that this bill affects one-third of the children who are currently in households earning half of the average wage.

Brett Hudson: That’s right. Median wage.

ALASTAIR SCOTT: Median wage. In those households that are earning less than half of the median wage we will be pulling 50,000 kids out of that situation, one-third of those who are currently categorised as children in poverty, by that particular measure. That is a good thing—that is a good thing.

Some of the Labour members have also supported the notion of Working for Families, which is also a good thing. They have also talked about the accommodation supplement. Mr Phil Twyford was wrong when he said the accommodation supplement only subsidises the landlord. If we wanted to subsidise the landlord it would be very simple; we would simply adjust depreciation rates, for example, on buildings, back to allowing depreciation rates of some sort, which would flow directly to the landlord. That would be a subsidy for the landlord.

This is not a subsidy for the landlord. The accommodation supplement goes directly to the tenant—goes directly to the tenant. That tenant can choose on what and how to spend that money. I have no doubt that it will be focused and spent on the increasing rentals that we on this side of the House understand have occurred. So people who were in category 1 and people who now will be in category 1—the number of people has doubled. The number of people who will receive the accommodation supplement in category 1 has doubled. But these guys on that side do not support it—they do not support it. They do not support Working for Families, and of course—

Hon Members: Ha, ha!

ALASTAIR SCOTT: —will not vote for it; unfortunately, they do not want tax cuts. By definition, or by a consequence of what they have said, the one thing they do want—unspoken, implicit—is tax increases. They want to increase taxes for those in the higher income bracket. They have said that this bill gives money to the rich; those who earn over $52,000. Those people who earn over $52,000 will get more money, and that is true, and they do not like it. They do not want ordinary Kiwis to aspire, to earn more, and to put more in their pockets, and the only way that they are going to manage to balance their increased spending is by taxing—by increasing taxes. Watch—in their policies, in their Supplementary Order Papers (SOPs)—I absolutely expect an SOP that demonstrates that all they want to do is raise taxes to allow for an increased spending that will always be, and always will be, excessive and expensive. That is exactly why people can see straight through the rhetoric from that side of the House. Ordinary New Zealanders—those who are least well off—are more affected, and that is why this is an excellent bill and I commend it, alongside the Greens and this side of the House, to the House.

A party vote was called for on the question, That the Taxation (Budget Measures: Family Incomes Package) Bill be now read a second time.

Ayes 86

New Zealand National 58; Green Party 12; New Zealand First 12; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 31

New Zealand Labour 31.

Bill read a second time.

In Committee

Part 1 Amendments to Income Tax Act 2007

GRANT ROBERTSON (Labour—Wellington Central): It is a pleasure to take the first of several calls that I am going to be taking on this bill and, indeed, looking at this specific part. What I want to focus my first call on is indeed the tax cut changes that are put in place by this particular part of the bill, and they are the reason that the Labour Party is opposing this piece of legislation.

This piece of legislation, if we look at the 2018-19 year in purely dollar terms, creates nearly $2 billion worth of tax cuts—$1.9 billion—and it provides around $371 million for Working for Families. The Labour Party has done a pretty simple calculation here. We obviously think there does need to be more money for Working for Families. There are parts of the way the Working for Families package is structured here that we do not like—and we will go on to talk about that—but, by and large, we all agree that that is the way that we can get more money into the pockets of the people who need it. However, the calculation of $1.9 billion versus $371 million of that is pretty simple. The $1.9 billion worth of tax cuts here is poorly targeted, unfocused, irresponsible, and unfair, and I am going to work through all of those things in this call.

I think in these situations it is sometimes easier to visualise what people get. So let us take the example of some of the people who will be affected by these tax cuts. Firstly, let us take the example of the great person who cleans my office here in Parliament. He is a single man and he gets paid just over the minimum wage. He would have been entitled to the independent earner tax credit. That would have been worth $10, and that has been taken off him. He gets $11 from the tax cuts, minus the $10 from the independent earner tax credit, and so each week he gets one tin of Home Brand Corn Kernels. That is it. That is what this person gets. So that is the cleaner in the office—that is their benefit.

The National Government might say: “Oh, but it’s not just about single people. It’s about families, as well.” So, according to its own fact sheet on the tax cuts part of this package, a family earning under $24,000 will be getting $5.13 a week—$5.13 a week. It is worth these two packets of soup mix—that is it. Two packets of soup mix for a family earning $24,000 a week. So we have got one tin of corn for the cleaner, and two packets of soup mix for that family.

Then we come to people like Steven Joyce and me, who are going to get $20 a week each out of this. So what would that get us? Well, that would get me not one lovely, pre-prepared meal of butter chicken, not two of your beef stroganoffs, but, in fact, three pre-prepared meals. That is what somebody earning $200,000 a year can get out of this, versus the cleaner in our office, who gets one tin of corn a week out of this Government.

That is the point—these tax cuts are unfair. They are weighted towards the wrong people, and the legislation we are debating today is instituting unfair, irresponsible tax cuts. Why are they irresponsible? They are irresponsible because the Government has choices about what it does with the revenue it gets. It has a choice about how to spend the best part of $2 billion.

So who is paying for these tax cuts that are being legislated for here? The people who are really paying for them are the parents who will be dipping into their pockets, once again, to pay higher early childhood education fees because the funding for early childhood education has, once again, been frozen by this Government. Yesterday, the Early Childhood Council said 150 bucks per child, per year has been taken out of early childhood education by this Government, so that is who is paying for me to get my three pre-prepared meals a week. That is who is paying for it—the parents who end up with higher early childhood education fees.

Who else is paying for it? Any New Zealander who goes to the GP next year—any New Zealander—because in the Budget there is $1.9 billion for tax cuts and $9 million for primary healthcare. That is who is paying for it. So when New Zealanders go to the doctor and they discover that the whole value of their tax cut has been whacked out because the cost of a GP visit has gone up, they will know who is paying for the tax cut. It is them. That is the priority for the National Government.

So if you look at the homeless New Zealanders, they are paying for it as well, because this Government is not building the emergency housing that we need. So homeless New Zealanders are paying for me to be able to get my three pre-prepared, packaged meals.

These are irresponsible tax cuts. They are irresponsible, because this Government has a duty to New Zealanders to rebuild the social foundations that are in front of us, to rebuild our health system with $1.7 billion taken out of it over 6 years, and to ensure that our schools get more than just a 1.3 percent increase in operational funding, which is not even enough to be able to pay the increased power bill that those schools have had over the last few years. So these tax cuts are not only unfair; they are also irresponsible, and they are unfocused, because the reality is that if this Government had wanted low income New Zealanders to get money out of this, this is not the package it would have put up.

There are 500,000 New Zealanders who are losing the independent earner tax credit, which is repealed in the clauses in this bill—500,000. Half a million New Zealanders are having that $10 taken off them, and that is why the cleaner in my office ends up being able to afford one of these packets of soup mix a week. That is unfocused.

Eight hundred thousand New Zealanders earn less than $14,000 a year. They get nothing—they get absolutely nothing—from these tax cuts.

Hon Nicky Wagner: That’s not true.

GRANT ROBERTSON: It is completely true. Minister Nicky Wagner does not even know what is in her package. We are talking about the tax cuts here. We are talking about the tax cuts, and the tax cuts do not deliver.

I refer Nicky Wagner, if she has not read it yet, to page 3 of fact sheet one of the Family Incomes Package, table No. 1, which shows that a family in the lowest quintile gets $5.13 a week and a family in the highest quintile gets $34.65. That is it—that is the priority for this Government. That is what it has decided to put before the House, to put before New Zealanders—no plan, no vision, no creation of jobs. No, just an election-year Budget, 9 years in, from the campaign manager / finance Minister, Steven Joyce—$35 a week. This is not me saying this; this is the Government’s fact sheet. This is what it is putting out in front of New Zealanders. Low income New Zealanders do deserve more, but it is not the tax package in this part of the bill.

We have been very clear that Working for Families—there are parts that we do agree with and there are parts of that we do not agree with in this bill, but, overall, we are proud of that package, and it is ridiculous to hear people like Alastair Scott say the Labour Party opposes Working for Families. I was here. John Key called it communism by stealth—that is what John Key called it—and what we have got today is a partial package to give some relief to families, dressed up with $1.9 billion worth of tax cuts. So we are not going to take that from the other side.

What we are saying over here—and there is an amendment that is on the Table from the Labour Party that says let us take the Working for Families elements and put them out to one side. We will vote for that amendment—it is our amendment. I invite all parties in the Committee, if they believe that the answer here is Working for Families increases, to support our amendment. But we cannot support the parts of this bill that create an unfair tax cut package.

This is not about bracket creep. This is not about inflation adjustments. This is a straight-out election-year bribe. It is a straight-out election-year bribe—

Brett Hudson: Says the man who is behind interest-free loans.

GRANT ROBERTSON: —an irresponsible one, an unfair one, and one that greatly benefits people like me to buy my pre-prepared meals. It does not benefit a family who gets two packets of soup mix, and it certainly does not benefit the cleaners, who work so hard in this Parliament for just over the minimum wage. And if they are a single person, the independent earner tax credit is gone. Eleven dollars a week—11 minus 10, Mr Hudson, is one. One dollar a week—a “One Dollar Bill Budget”—which is so unfair and so ridiculous. New Zealanders can do a lot better than this, and we will talk about that in the coming calls.

JAMES SHAW (Co-Leader—Green): I would like to rise and support the Labour Party’s amendment that it is tabling, because I think it is a very helpful contribution to this debate. Listening to the first and second reading debates last night, it is pretty clear that there is consensus right across the House that there are changes to Working for Families that would benefit the people whom this package is designed for. But one thing that we on this side of the House are very uncomfortable with is the changes to the tax thresholds, which go well beyond what would have changed if they had just simply kept in line with inflation. If the tax thresholds that were outlined—if those changes—had changed just in line with inflation, the quantum of that would come to about $900 million. But, in fact, there is actually an additional billion dollars on top of that, which would have been much better spent not on tax cuts but, actually, on supporting the Working for Families changes, because the quantum of support for people on low incomes—through Working for Families, the income tax credit, and so on—is so small, as Mr Robertson has just pointed out, that, actually, for a lot of people it makes very, very little difference at all.

So that billion dollars on the additional tax cut that the Government is proposing here is actually largely wasted, because so much of it is going to families who are on high incomes rather than on low incomes. It would be much better if we could actually separate out the Working for Families portion of this bill from the tax rates thresholds portion of the bill, and to debate those two things separately, and to amend the tax section so that it actually, simply, keeps in line with inflation and retains that additional revenue that is lost through that portion of the existing bill and ploughs that money back into support for those on Working for Families.

I am going to go one step further with that, because, as has been noted in previous portions, when we come to the portions of the bill that are the Working for Families section—which is, of course, clause 6, “Calculation of family tax credit”, and so on—because it is, essentially, a wage subsidy, it does not apply to people who are on the unemployment benefit. And, unfortunately, those people, by definition, are actually the worst-off people in our society—the people who are most excluded by economic circumstance. The bill as presented has absolutely nothing to support those families, so we are going to get a huge portion of people there who get next to nothing, other than a tiny increase in the accommodation allowance, which does not even keep up with house-price and rental inflation over the course of the last few years.

Coming back to clause 6, this bill is barely playing catch-up at all, so the idea that it is somehow this great advance that is going to miraculously lift thousands and thousands of people out of poverty is a fallacy. In 2013 Working for Families support peaked and has actually been declining, and the amount of money that the Government has, by stealth, withdrawn from Working for Families since 2013 is greater than the quantum of support that is made available in this bill. When people on this side of the House say that the Government gives with one hand and takes away with the other, in this case, when it comes to the Working for Families calculations here, these do not even cover what has been taken away over the course of the last 8 years. It is an absolutely tiny amount of support. It does not go nearly far enough, and it is 8 years too late for very many people.

I do support the amendment that the Labour Party is going to be introducing. I do think it would be helpful if we were able to separate out those portions of the bill—the Working for Families portions of the bill—from the tax thresholds portion of the bill and be able to debate those separately, because that is the crux of the argument of this bill, which is, essentially, that this includes tax cuts for people at the top end who do not need them, do not want them, and think that that money would be better spent supporting those who are being left behind by the changes in the economy over the last 8 years under this National Government.

RICHARD PROSSER (NZ First): I guess we have got to the fascinating and technical part of the debate on this bill. I just want to say, first off—partly in answer, I guess, to my colleague James Shaw—that New Zealand First will not be supporting the amendments in the name of Jacinda Ardern, essentially because we have said that we are supporting the bill and for the reasons that we are doing so, although we oppose the Budget. This bill does bring about changes in taxation and accommodation allowances that will benefit those parts of society at which they are aimed. And this amendment, essentially, takes the guts out of it. It would, essentially, make the bill at nullity in terms of what it is intended to do, its stated intention, and how it will go about achieving that. So, for those reasons, we will not be supporting this particular amendment.

We do, however, have a late-minute addition to the process ourselves. There is an amendment in my name, No. 00, and the purpose of it is to ensure that tax and associated rates are adjusted automatically for inflation, using the New Zealand Consumers Price Index (CPI) metrics already in the bill. So, essentially, what it does is amend clause 15, schedule 1; clause 17, schedule 6; clause 18, schedule 31; clause 20, section 24B; clause 21, section 33AA; and clause 22, section 33C to bring about an automatic change in rates when there has been, from the date of 1 April 2018, a total movement in the Consumers Price Index of 5 percent.

As I say, this mechanism already exists in the principal Act, primarily with regard to the family tax credit. Making changes of this type now, at this stage of the bill, will help bring about an end to fiscal drag and will help, we believe, to ensure—with the measures undertaken as a result of this bill and Act that it will become after progressing—that New Zealanders will pay the right amount of tax, as opposed to having overpaid by, we are told, something like $800 million to date. I would be interested in hearing from members on the Government side—the Minister, perhaps—as to what the National Government’s approach and attitude is to having a look at this amendment in a way that we believe can improve the bill.

As I say again, we are supporting it anyway because of the stated aims and intention, although we oppose the Budget of which it is part. But we do believe that an amendment of this nature will make the bill functionally better, and it will expedite any alterations that may need to be made to it further down the track. If the ability to adjust the rates in line with the CPI is inherent in the bill as it goes through, the Parliament is not likely to find itself in a position in a number of years’ time of having to go back and debate the entire bill to make changes then. For those reasons, I would ask the Government and other members to consider this amendment and we continue to support the bill. Thank you.

BRETT HUDSON (National): I rise to cover a number of clauses in Part 1—clause 6, for instance, which is to make an amendment “to increase the family tax credit, and to align the family tax credit rates for younger children with the higher older children rates.” Of course, one of the very important measures in this package is supporting New Zealand families by increasing the Working for Families allowances for families, for children—in fact, supporting families who are larger, who have more children. So we will see the changes in this package—I think it is a little over $9 a week for the family with one child. The second child might be around an additional $17 a week, and, with larger families, that can be up to $27 for those subsequent children—each of those subsequent children—per week.

What we are doing here is also seeking to—there used to be a distinction between the ages of the children, so for a younger child the family would receive less of a payment for them than for an older child. One of the things we have determined in terms of simplicity, but also to respect that there are pressures for families across the range of their children whether they are younger or older, is that it would be a much better regime simply to have fewer rates. That clause, in particular, will help to bring that about.

There are other clauses, for instance, in this part that make consequential amendments resulting from the decision to change the tax thresholds, or bands, for the taxation rates that apply. Particularly, for instance, clauses 11, 12, 15, 16, and 17 make consequential amendments because we have taken a very clear measure to say we can best help low and middle income earners by adjusting the thresholds that affect every dollar that they earn. In fact, I will also bring the Committee’s attention to clause 18 in a few moments, because that actually shows even more that this is a set of measures that is targeting low income earners and not the wealthy, as some members opposite have chosen to define anyone who earns $52,000 or more.

So the tax thresholds are going to see, at least at a minimum, an extra $11 a week in the hand of low income earners, and an extra $20 a week in the hands of people earning $52,000 or more. Members opposite, particularly the leaders yesterday, made a comment that because at $52,000 you get $20 a week, it is simply subsidising the wealthy. Dr Cullen—Michael Cullen, Sir Michael Cullen—made a change in the year 2000 that income rates of $60,000 or more would have a higher tax rate. He called people in those rates rich. He called them something a bit stronger than that, but he called them rich. Now, $60,000 today would be the equivalent of $86,600—in fact, more—but yesterday, the leaders of the Labour Party and the Green Party redefined what they considered rich, what they called wealthy. They dragged it down from what would be, in effect, $86,000 to $52,000.

They are saying that if you earn $52,000 a year, you are wealthy. These people are on more than $200,000 a year themselves. Even backbenchers, when you take their pay, their entitlements, their expense allowances, and all the things they get, they get more than $200,000 value a year, and they have the absolute gall to say to someone who is earning $52,000 a year: “You’re rich.” That is absolutely disgraceful.

Clause 18, which I will finish on in this call, makes some consequential amendments in respect of the abatement rates that we are changing for Working for Families. What that means is that, if you are earning a bit more, the abatement rate for Working for Families is going to kick in sooner. But as Max Rashbrooke pointed out yesterday—I saw this on Twitter, and Max is no fan of this National Party or the National-led Government, but he pointed this out on Twitter yesterday, because he was going through the detail of this package very quickly on its release. He actually pointed to that specific change: the change about abatements for Working for Families. Max said that shows that the actual target for this Budget is lower income earners. That is a change he absolutely supports because he knows the effect that it has is to make sure that more assistance goes to, and is more targeted toward, those lower income earners.

So I am looking forward to the debate here in the Committee stage because this is an extremely good set of measures and it is actually very, very well targeted. It is the sort thing—it shows a Government that understands and cares about the pressures on Kiwis, particularly lower income earners and middle income earners and the pressure on their families, and it shows that we back them. We back them to succeed and we back them with the support of Government. I look forward to more calls.

MICHAEL WOOD (Labour—Mt Roskill): Budgets are, in the words of American theologian Jim Wallis, moral documents. That is because they are about the choices that we make with the resources that we have to tackle the problems that we have and to unlock the opportunities that exist within our people. The problem with this bill—and I am going to go into some detail on this—is that when you actually get into the detail of it, this Budget fails on all of those fronts in terms of making the right choices for New Zealanders, given the issues that people in our country face today.

One of the things we have heard a lot of from the Government benches over the course of this debate, often with chests puffed out, is that this is a package that supposedly really targets resources to those New Zealanders who need it most. We have heard that word over and over again—this is about targeting those New Zealand families who are doing it tough, who have needs, and who really need some additional assistance. What I want to do is go through the bill and look at just how closely this bill actually does target the limited resources we have, and to test it—to then test it to see: does it actually meet the needs that we have, does it actually resolve the problems we have, and does it unlock opportunities for New Zealanders or not?

Of course, the answer is that it does not. There is a very simple statistic that demonstrates that. If we look at the mix of this package, five-sevenths of it goes to the tax cuts, which, by definition, are untargeted, because every dollar of tax that you cut, even if you cut at the bottom band, goes to every single New Zealander in this country. Every single Government member sitting on those benches and every single Opposition member sitting on these benches benefits from those tax cuts. Can any member stand up in this Committee and tell me that that is a good example of targeting? Will anyone do it? I challenge any of the Government members to stand up in this Committee and tell me that it is a good example of targeting to give you a tax cut. Five-sevenths of this $2 billion - plus package go into the tax cut mix.

We have heard a lot about Working for Families. We have heard a lot about the accommodation supplement changes. One-seventh of the changes in this bill go into Working for Families, which is targeted, and we support that part of the bill. That is why I am standing in support of Jacinda Ardern’s tabled amendments. That actually enables us to target in the resourcing. That is why the last Labour Government set up Working for Families. We set up Working for Families, which members on that side of the House, and David Seymour yesterday, called “communism by stealth”. It is a good way of targeting limited resources, because it goes just to the people that you want it to go to, unlike the tax cuts that are in this bill.

Let us talk about the accommodation supplement changes as well—about $361 million going there. Of course that is welcome—of course that is welcome—but here are the facts. Back in 2007, which is when the accommodation supplement thresholds were last changed, one person in Auckland would have received $145. These changes bring that up to $165. That is good, but if you adjusted just for house price inflation, they should be receiving $222. When the Government stands up and boasts about helping New Zealanders—and I note the member opposite talked about Max Rashbrooke’s comments. Well, if he read further into Max Rashbrooke’s comments, he would have seen that that is exactly what Max was saying: that this Government, which has ignored the needs of New Zealanders over the last 9 years, is now coming back in this Budget package and partly filling the pot up. It is not even adjusting for the real increases in costs that New Zealanders have faced, and it is now asking to be treated with garlands and flowers, and for people to be grateful for that. That is simply ridiculous.

A three-person household in Auckland receiving $225 in accommodation supplement, under the best set of circumstances, will now receive $305; to cover just the increase in housing costs, that should be $344 a week—that is just using the Reserve Bank’s inflation calculator. So the Government has not even covered the increases in accommodation costs under its own watch. That is not meeting the needs of New Zealanders.

I want to talk a bit about the independent earner tax credit, which is, of course, done away with in clause 5 of the bill. I have got a question for the Minister in the chair, Tim Macindoe, about this, actually—I posed it in my speech yesterday. It is actually a really important one, because if we go to the bill itself—and we go to the notes that support the bill and this major, major change, which takes away an important tax credit for about 500,000 New Zealanders—it tells us that 80 percent of those eligible claim the tax credit. It sort of justifies it by saying that 20 percent of the people who are eligible do not even claim it, and that is one of the reasons that we are given for getting rid of this tax credit. Yet in the Minister of Finance’s speech yesterday, he said that only 30 percent of people claim it. When the Prime Minister then stood up, he said that 33 percent of people claim it. And when he interjected yesterday in the middle of my speech, Mr Bishop said that 32 percent of people claim it.

I think that before members of this Committee vote on abolishing a tax credit that goes to 500,000 New Zealanders, and that, as Mr Robertson said before, will take the net benefit of any tax gains for the lowest income New Zealanders down to $1 per week—before members of this Committee vote on it, we should hear from the Government about whether it is 80 percent of people who claim it, 33 percent of people who claim it, 30 percent of people who claim it, or 32 percent of people who claim it. I have now heard four answers from the Government, and they are vastly different. In the bill, again, it says that 80 percent of people claim it; in speeches, Government members have said around about 30 percent of people claim it. When we get a chance, I would really appreciate hearing from the Minister in the chair what the correct number actually is. That is important information that members in this House need before they vote on this bill.

As I said at the beginning of my comments, this comes down to choices. Tax bills are always about choices. We all understand that we have limited resources, and when we go back and look at that tax package, it is very clear that in the use of the limited resources that we have, this Government and this bill fail that test of using those resources wisely. I have already explained how five-sevenths of the package is about the tax cuts. Let us delve further into that when we actually look at the bill, because that breaks down in a way that shows that the choices that the Government is making in this bill are inequitable in themselves.

Here is a very simple statistic: if you add up the tax gain for the top 10 percent of New Zealanders in this bill—the total tax gain—it is about $373 million; if you add up the tax gain for the bottom 50 percent of earners in New Zealand, it is about $380 million—basically the same. In other words, under the provisions of this bill, the top 10 percent of earners get five times the benefit, per person, of the bottom 50 percent of earners. Let us go back to that word “targeting” that we have heard time and again from the Government benches, and no doubt will hear in the contributions that are to come. How is that a good example of targeting the needs of low income New Zealanders, when you are giving the same total tax gain of precious, limited Government resources to the top 10 percent of earners that you are giving to the bottom 50 percent of earners—that you are giving the bottom 50 percent of earners?

These are the choices that define Governments. If you want to define this Government, it has made the wrong choices. It has made choices to spend resources, to take this package, which we could be doing so much good with, and to target it that poorly. Seventy-five percent of the total benefit goes to the top 50 percent of earners. This is not a good example of targeting.

If we are talking about tax—this is actually very important—we heard yesterday, in the Minister of Finance’s speech, that the Government is booking $250 million of additional tax revenue from multinationals. Yet here we have got the tax bill in front of us and there is absolutely nothing to say how we are actually going to do that. You cannot book a quarter of a billion dollars of revenue and not actually say where it is coming from. Yet in this tax bill, we are making choices to significantly advantage—in that $1.9 billion package—the top 10 percent of income earners, while doing nothing about the multinationals, which the Government concedes are ripping New Zealanders off to the tune of $300 million per year.

There is a better choice. The better choice that is before all members today is to support Jacinda Ardern’s amendment. It would mean that we can get the benefits that families need through the Working for Families package, and then we could look at the resources that we collectively hold and are responsible for in this House, and look at how we really allocate them to deliver fairness and opportunity in this country. A Labour Government would target them so that those families have more resources, so that they have a decent and affordable house over their heads, and so that they do not pay more for health and education. That is what we stand for, and we reject this bill.

METIRIA TUREI (Co-Leader—Green): I welcome the critique from Labour of the tax package that is in this bill, because I think that is quite right. It is a regressive tax package; most of the benefits go to those who are at the higher incomes rather than at the lower. It does make positive changes, this bill, to those who are on those lowest tax brackets, but it is true that most of the benefit goes elsewhere. The reason why the Green Party is prepared to support this bill—and not the whole Budget, I might add; just this bill—is that those tax thresholds at the very bottom do move, and we think that is the right thing to do, and particularly because the family tax credit changes are in this part as well.

From our point of view there have been a number of gaps in the Working for Families approach that have tended to discriminate against those who are beneficiaries, for example. It has been incredibly complicated and difficult for families to navigate, and it creates far too many gaps for families to fall through, especially as their circumstances change. For many families in insecure work and on those low incomes, their circumstances are constantly changing, so they are in constant flux around what kind of income they are going to get, when they are going to get it, and what it means. So it is very difficult for those at the bottom end to navigate this.

There is a small step forward in this bill that we are prepared to support, and that is a better aligning of the payments for the eldest dependent child and for subsequent children in the family tax credit. The family tax credit is also one of the few parts of Working for Families that is accessible for those on benefits, on superannuation. A great deal of Working for Families as originally designed leaves out beneficiary families, and that is completely unacceptable because those families are the ones who need the most support. So we are prepared to accept that small—small in terms of this legislation, but significant in terms of those families—shift in the family tax credit and the thresholds.

I do just want to note that this is a Government that is very good at sleight of hand. In this bill—

Chris Bishop: Oh!

METIRIA TUREI: Well, you can see it right here; it is in black and white. In clause 6 in Part 1, which we are discussing, there is the provision for a slight increase in the family tax credit. In clause 7 there is the taking away of what has just been delivered, more or less, for a large number of families, because in clause 7 we have the changes in the abatement rates. So National is increasing the amount of money for the family tax credit—good. On the other hand, those who are earning $35,000 or more are going to lose more of that in abatement. So the abatement threshold—income threshold—is coming down, so more families will lose money, and the abatement rate is going up, which means that more families are going to lose more money. That is after—immediately after—increasing the family tax credit.

This is a Government that has no capacity to deliver to families in a real way. It will do a small thing over here, and it will reap it back over here wherever it can. There is no doubt that most families will still benefit to some extent, but why is it that National cannot bring itself to make sure that every family is going to do well? Why is it that National is so obsessed with this intense targeting that it is happy that families will fall through the cracks? Because that is what these two provisions—clause 6 and clause 7—do. National has been doing this now for the last 8 years, and so this is why the value of Working for Families has been in constant decline. It is why we are seeing cuts in the health services and cuts in education being paraded as increases—because of this intellectual “pretzelism” that National suffers from, in being unable to take a family and their needs and deliver for that family.

So we really need to just be really clear about this, because I would like some answers from the Minister in the chair, Tim Macindoe—should he be so inclined to stand up and respond—as to why it was that it was so necessary to change the abatement rates for this. I have a Supplementary Order Paper (SOP)—[Bell rung] Thank you, Mr Chair. I would like the Minister to stand up and explain why it was necessary that National should give with one hand and take with the other, because that is what this abatement change does. I have a Supplementary Order Paper—it is either on the Table now or will be soon—that changes this provision, increases the threshold to $50,000 and decreases the abatement rate to 5c. It is a means to demonstrate how ridiculous it is to have financial systems in place that take money from families when they need it the most. An income of $35,000 a year is a meagre income for a family—it is meagre. It is around about the minimum wage. It is absolutely—it is appalling.

So why would any Government choose to attack the potential for stable income, the potential for certainty, for those who are on the lowest incomes in this country? Only National could do that. I have watched a Labour Government in my last 15 years—I have seen most of a Labour Government; I have seen all of a National Government in my 15 years, and it is really clear to me that National has been incapable of being generous enough with the country’s resources to make sure that families have got what they need, and this is a classic example in this bill, because in clause 6 it gives and in clause 7 it takes away.

So what is the justification for it? Because we have heard, also, for example, in respect of the accommodation supplement—which has been one of the arguments for some of the changes in this bill—that there are going to be increases in the accommodation supplement. We also know that, as a result of that, $100 million over 4 years will be taken from families who will get that increase, because they will lose access to other support.

So why—why in this bill give with one hand and take with the other? Why, when it comes to accommodation supplement, give with one hand and take with the other? When National and all of us here in this Chamber and the whole country know that families are suffering—beneficiary families, working families, middle-class families are all suffering from increased housing costs, increased cost of living, difficulty paying their power bill over this coming winter, difficulty getting access to the health and education services that they deserve. Why is it that even in an election year Budget, National cannot bring itself to actually be genuinely generous to the families and the New Zealanders who are citizens of this country, who are responsible, who make their contribution, who pay their taxes—including beneficiaries, I might add—who contribute to the well-being of our nation? But this Government, this National Government, cannot bring itself to be genuinely generous to those families when they need it the most.

This is bitter-sweet, but I would like to see the explanation from the Minister as to why the changes in the abatement rates were necessary, when it could have been possible to simply improve the family tax credit—as is, needed to be done and as is, very good; it is a very good change to be made and families will benefit from it. But why was it necessary, then, to take from a number of those families some of that benefit? They did not deserve to have money taken off them. They deserve to be treated with fairness and decency. Thank you.

ALASTAIR SCOTT (National—Wairarapa): The Opposition members, particularly Mr Wood, have requested more and more and more. That is the thing. He wants to take and spend more and more and more of taxpayers’ money. He calls it Government money. He calls it Government money but it is actually taxpayers’ money. They have earned it, the Government has facilitated and used it effectively and efficiently, and now—due to the surpluses, due to the strong economy—we are able to return what is taxpayers’ money.

Brett Hudson: It’s a dividend.

ALASTAIR SCOTT: It is a dividend of success.

The theme of the Labour Party members, particularly, is that they think, they believe, that those on higher incomes—apparently more than $52,000 is a high income now—are earning or receiving too much dividend, too much of their own money by way of this bill. We can only assume that they would like and would demand higher tax rates for those earning $52,000—or let us even give them some benefit of the doubt; let us say $70,000. There or even below the average wage, they want to increase taxes because they think they are better at spending taxpayers’ money—a patronising, sanctimonious attitude that continues to come from the Labour Party members.

In this bill the clauses relating to the thresholds and the clauses that relate to Working for Families are very targeted—are very targeted. That is why we have almost unanimous support around the Chamber for this bill—almost unanimous support; quite unusual. The only party that is not supporting it is the Labour Party. Its members are the only ones who do not care about the people who are going to receive these targeted tax incentives. That is very unfortunate, because they claim to be supporting those who are least well off. We know that 50,000 kids, one-third of those who are in families who earn less than half of the median wage, will now be pulled out of that category that is defined as one measure of child poverty. One-third of those kids—that is a significant effect, a significant difference, that this bill will make. That is why we have heard from across the Chamber why those other parties are supporting the National Government in caring for those families.

It is another unfortunate part of the Labour Party members’ contribution, given that they decry the least-aspiring party in this House, given that they want to increase taxes on those who work harder and earn more. So the plumber, the sparky, the guy who is doing well in the Wairarapa, under the Labour Government will face higher taxes—will face higher taxes; there can be no doubt. They want to decrease debt. They have got a plan for decreasing debt but at a slower rate than this Government because they want to spend more of the taxpayers’ money. They are not interested in repaying debt as quickly as we do. They do not want to repay and give the dividend of success back to the taxpayer.

They think they can spend taxpayer money better, on behalf of the rest of us. Well, that is the fundamental difference—the sanctimonious, patronising attitude from that side, contrary to two-thirds, or three-quarters, of this House. They are a lone voice when it comes to this bill. They are a lone voice when it comes to helping those who are the least well off. They are a lone voice when it comes to supporting those who want to work harder and support their families and communities. They are a lone voice when it comes to targeting those who struggle with housing and who would appreciate an increase in the housing allowance. They are a lone voice when it comes to supporting those people on lower tax thresholds.

It is disappointing. I would love those members to support the bill, so that it could be unanimous, but, unfortunately, as I say, they have isolated themselves. They are out of touch, and the general public can see straight through their excessive and expensive policies.

Dr MEGAN WOODS (Labour—Wigram): It is my pleasure to take a call in the Committee stage so that we can get into some of the detail of this bill and examine what is actually in here. In particular, I want to speak to my colleague Jacinda Ardern’s amendment and the changes that that amendment proposes to bring to the legislation.

Let us look at what is actually happening in this bill. There are three things that this Budget is proposing to do. There is the increase in the accommodation supplement, which does not require legislation because that can happen by Order in Council, and that is something that Labour accepts needs to happen. We do not think it is a long-term solution. We think that the reason we have got ourselves into this situation is that we have a Government that has failed to address a housing crisis, so now we are forced to simply do a stopgap, band-aid measure of putting up the accommodation supplement. But we accept that there are people who are struggling to get by and pay their rent, and so that is something that we support.

In terms of the second measure—one that is covered in this legislation—it is the Working for Families package. We have been quite clear throughout this debate that we support the general direction of the changes to the Working for Families package. Working for Families was—we will remind those members over on the other side of the Chamber who seem to have historical amnesia this morning—a Labour initiative, because we recognised that Working for Families was a much more precise instrument for getting extra money to those who most needed it, rather than the very blunt instrument of the taxation system. So we accept the general direction of this measure, and what my colleague’s amendment does is proposes to separate out this measure from the changes to taxation.

Let us actually look at the taxation measures in there. Brett Hudson, the member opposite, seems to have become an overnight disciple of Max Rashbrooke, but if he actually went and read what Max Rashbrooke is saying, what he is saying is that most of the benefit is being delivered to low and middle income families through the Working for Families package, through the increase to the accommodation supplement, and not through the changes to the taxation system.

The first two measures are measures that Labour will support. Why we will not support this legislation is that for the 50 percent of people who earn the lowest incomes in this country, they receive 20 percent of the benefit of the tax measures in this legislation. Let us flip that around the other way. The 50 percent of New Zealanders who earn the highest incomes receive 80 percent of the benefits of the taxation measures in this legislation. That is not something that we see as being the way to target the people who are struggling the most and who need the support. That is a blunt instrument. This is—let us make no bones about it—a regressive taxation package that a progressive party such as Labour could never support.

What we want to see is that we would address the deficits in our country. We would address the fact that that plumber or that sparky whom Alastair Scott, the member who just sat down, was talking about probably cannot get on a waiting list in the health system because this is a Government that has taken $1.7 billion out of our health system over the last 8 years. The child of that plumber or that sparky is probably in an overcrowded classroom because this is a Government that has failed to address the infrastructural needs of our educational system. That plumber or that sparky could well be struggling to find a house that they can afford to buy because this Government has given up on the dream of homeownership for middle New Zealand. It is not something that those members think that ordinary New Zealanders should have access to. It is something that only the very wealthy can aspire to, under this Government’s thinking, and that is not something that a Labour Government sees as being a good use of $1.9 billion worth of spending—giving 80 percent of the benefit to the top 50 percent of income earners in this country.

We recognise that there are many people in those middle income brackets who are struggling to buy a house, and we want to support those people. One of the things that these changes to taxation do nothing to address is the fact that people need to live in warm, dry homes. So, rather than having a spend-up of $1.9 billion, with 80 percent of the benefit going to the top 50 percent of income earners in this country, Labour has a different proposal. What we want to do is help those people who have bought their first house, or even their second or third house, if that house is not insulated, is not warm, is not dry, and does not have a good heating source. This Government has cut any kind of support for families that own their own home because it seems to think that people who own their own home do not deserve any help to ensure their home is warm and dry. It has cut that assistance, but Labour will put that back. That is a much better use of the $1.9 billion that is outlined in this bill.

So what we are asking the Government members opposite to do is support Jacinda Ardern’s amendment to split out the measures and split out the changes to the Working for Families package because, despite the rhetoric that you are hearing from the other side, these are measures that, by and large, with some changes, Labour does support. We recognise that that is a way of delivering benefit to families—something that we have always believed from the time that we invented that scheme and put it in place. We are asking members to support Jacinda Ardern’s amendment so that we can examine the tax measures and the changes to Working for Families as separate initiatives, because that is what they should be.

If this Government was genuine about actually wanting to deliver to the most in need, it would not try to hide its tax cuts, where 80 percent of the benefit goes to the top 50 percent of income earners, behind the smokescreen of making a change to the Working for Families package. It would section out those clauses and it would allow them to be debated and decided as two separate packages.

Let us be very clear about the quantum of money that we are speaking about here. Let us imagine this is a cake—the package that is being put into place. One-seventh of that cake is going towards changes to the accommodation supplement, one-seventh of that cake is going towards changes to the Working for Families package, and five-sevenths of it is going towards spending on tax cuts—tax cuts where 80 percent of the benefit goes to the top 50 percent of income earners. So when we hear the rhetoric from members opposite about how they are trying to help low income earners, that is not the case. That is not something that the tax changes are doing.

The Working for Families change is fine. But support my colleague’s amendment to this bill and allow those two measures to be drawn out separately, in order for us to have a real discussion about taxation and Working for Families as two separate measures, which they should be.

Hon TIM MACINDOE (Minister of Customs): A couple of members have asked some questions, and so I would just try to give an answer to those. Michael Woods commented on what he saw as some inconsistencies—

Dr Megan Woods: Wood. No “s”. No “s”. No “s”. No. I’m Woods.

Iain Lees-Galloway: Plural. Singular.

Hon TIM MACINDOE: Woods? I beg your pardon—I beg your pardon—Michael Wood. He commented on the independent earner tax credit (IETC)—

Hon David Parker: Can’t see the wood for the trees.

Hon TIM MACINDOE: Ha, ha! Oh, but I am sure he will get there eventually, Mr Parker. The point is that the IETC is relatively poorly targeted. Only 32 percent of eligible individuals claim it during the actual year of their eligibility. The important thing to note is that they are compensated in this particular Budget measure by the $14,000 threshold increase. I am advised that 645,000 people were eligible in 2015, 80 percent did claim eventually, but only 32 percent claim during the year—that was 204,000 people. So the rest either claimed after the tax year or not at all. So clearly it was not having the impact that would have been anticipated at the time that was introduced.

Metiria Turei added to that particular point and added some more comments on the tax threshold changes in Working for Families. The tax threshold changes at $14,000 will undoubtedly help lower income families. Not only is that helping those at the bottom end; it has got to be seen in the context of a much more significant families package in this Budget, which is a very substantial package indeed. That includes the accommodation supplement changes, which will benefit 136,000 families by an average of $36 a week; 75,000 beneficiary families will gain, on average, $30, so that will definitely be welcome and very helpful to them.

Working for Families payments are being increased by considerably more than is currently scheduled in the inflation indexation, by between 10 percent and, in some cases, as much as 42 percent. Around 310,000 families will benefit from those changes. Working for Families payments are a very targeted measure to increase incomes to families with young children. It is important to note that that is where the focus is. Changes to the abatement settings will help to target that assistance to relatively low income families. I would have thought that the Labour Party would warmly welcome that and would be supporting those changes.

Hon DAVID PARKER (Labour): The Hon Tim Macindoe, can I say, is one of the people who I think is very honest and straight in this Parliament. We have just heard from him that the statements that the Government had about the independent earner tax credit are different from those that we have got in the publicity materials from the Government and from the Minister of Finance in his speech yesterday. The Minister, in the speech yesterday, used this as a cover, or an excuse, for taking away from people on the minimum wage the tax break that they get from the tax margin changes. They virtually lose it all because the independent earner tax credit goes away. So someone on the minimum wage gets about only $10 a week out of the tax package anyway, and all but $1 a year—is it a year or a month? A month, is it not? Whatever it is—$1 a week. It is just about in the unmeasurables—

Hon Members: A buck a week.

Hon DAVID PARKER: It is a buck a week that they are left with, because the Government has taken away the independent earner tax credit. And its excuse—I have got the speech from Mr Joyce, because they must have known this was a weakness—was: “It is only claimed by about one third of eligible recipients during the tax year.” That is what he said in his speech. That is a direct quote. He said nothing else about it. And what is in the glossy pamphlet—the one that the journalists and all of us pore over? The excuse for this—the same wording: “Only 32 percent of eligible recipients claim it during the year they are eligible.”

So the Government is saying it is ineffective, and therefore, recipients are not losing anything if it takes it off them. That is the implication that it is saying. But it turns out that 80 percent of people are getting it—80 percent of people are getting it. And that is what the Hon Tim Macindoe has just admitted, in response to my colleague Mr Wood’s—apostrophe “s”—question. Ha, ha!

Michael Wood: We’re multiplying.

Hon DAVID PARKER: Ha, ha! This is now shown for the scam that the language—the master of spin, the Hon Steven Joyce, was trying to say yesterday: “Oh, look, but, really, not that many people are losing it, because only 32 percent claim it.” But we did not think that “during the year” was so significant, because they did not explain it until forced to under questioning in the Committee stage—when, in actual fact, we know that 80 percent get it.

So this exposes, again, how poorly targeted this tax package is. That is why Jacinda Ardern’s tabled amendment is dead on—separate the tax from the Working for Families. I do not want to overstate the generosity of the Working for Families changes, given that the Government stripped out $500 million in an earlier Budget. But we support the changes to Working for Families. What we do not support are these poorly targeted tax changes. They could be so much better.

I want the Minister in the chair, Mr David Bennett, to say why, in this speech yesterday, when the Budget was launched, and why in all of the publicity materials, none of this was disclosed. The Government knows that it is exposed at the poor targeting here. It knows that it cannot defend the fact that a multimillionaire gets—what is it—20 bucks a week, and someone on the minimum wage, if they have not got kids, gets $1 a week. It is not fair. Is this the sort of country that we have become—truly? Is this really the sort of country that we want to live in, where we have got these raging gaps in income, and asset inequality? And this Budget makes it worse—this Budget makes it worse. The people on the other side might say: “Oh, 20 bucks for the millionaire. That’s not worth that much.”

Iain Lees-Galloway: It’s $35—$35.

Hon DAVID PARKER: It is $35 a week, is it, for the millionaire? Well, I tell you what, it would make a lot of difference for the people who are on the minimum wage. They do not get it, and they are the people who are the most needy in our society.

I do not know what other people see in their electorate offices. We actually get young men and women, and middle-aged men and women, coming into our electorate offices who look poor. Some of the poorest people in society now are our young people and middle-aged people, who are single-income people. They have not got a spouse. They have not got kids. They have got the cost of living. They come into our offices, and they look poor because they are poor.

This Budget was an opportunity for the Government to do a little bit of social justice for them and get the distribution of this tax policy right, by ensuring that the people on the minimum wage got something. And what did they get? They got given a tax break and then they got it taken away, because the independent earner tax credit was taken off them. The Government knew that—it knew that. There is no way that you can explain this tricky wording in the Budget speech and in these documents in any other way. During the first day of this Budget, when the media goes out, the Government was trying to hide behind the fact that it said only 32 percent of eligible recipients claim it during the tax year, which is what was said in the Budget speech and in the materials.

I want to return, in the time that I have got available, to this other myth—this other myth—about the millionaires not getting the accommodation supplement. They are the ones who do get it. If you have got multiple houses in Auckland that you are renting out, you are a multimillionaire. You are the one who gets the accommodation supplement. It passes through the hands of the person struggling to pay their rent, but they do not keep it. Every cent of it goes to the landlord. Not 98c in the dollar, not 50c in the dollar—100c in the dollar of the accommodation supplement passes through the hands of the tenant, who is paying it to the landlord. Otherwise they are not allowed to get it. It is all going to the landlords. It is bidding up rents. It is holding up house prices, to the detriment of first-home buyers, and it is a disgraceful illustration of an abysmal housing policy for 9 years by the Government.

It is absolute proof that the Government’s poor housing policies have these distributional effects on income as well, because the rich, with all their assets, are now getting more income through the increase in the accommodation supplement. That is why we have said that we reluctantly support it in the short term, but, by God, we are not going to support the funding of this in the long term, because it is wrong and there are better remedies.

We know that under the term of this Government the amount that has been spent on this class of welfare payment, which goes, every cent of it, to the landlord—every cent of it—has gone up from $890 million in 2008 to, after this Budget comes in, $1.5 billion in the next year or two. That is an increase from $890 million to $1.5 billion in this class of welfare payment, and it is all going to the landlords. None of it stays in the pockets of the people who are so poor they cannot afford to pay the rent—or not even poor; middle-class people are caught up in this now.

I used to hear about the Government railing against middle-class welfare. I am ashamed that I now live in a country where we have got welfare for the millionaires, because that is what this is, and it has gone up from $890 million in 2008 to, after these changes, $1.5 billion a year. What terrible management of the economy leads to that? This is just further evidence of the widening gap between the haves and the have-nots.

Hon Damien O’Connor: Subsidy for landlords.

Hon DAVID PARKER: A subsidy for landlords—you are quite right.

Alastair Scott: It goes to the tenant.

Hon DAVID PARKER: There we go again. They still do not get it. The tenant gets it only if he pays it across to the landlord. I always hear from the other side: “Oh, we do not want top-down approaches for these things. We want bottom-up.” That is their line—bottom-up, when they try to take our language. The trouble with top-down over there is there is a block to the electrical signals, because there is so much bone. How can you explain that response from Alastair Scott, a decent man, saying that this goes to the tenant, not the landlord? They get it only if their rent is so high that they cannot afford their rent and they need more money from the Government to pay the rent to the landlord. So who is it going to? It is going to the landlord.

I want to hear a counter view to that from Minister Bennett, because I want him to defend this increase in the accommodation supplement from $890 million a year to $1.5 billion a year under the Government’s watch.

RICHARD PROSSER (NZ First): I want to take a moment to address the tabled amendments placed by the Greens’ Metiria Turei and Marama Davidson, but before I do that, that was a very passionate speech from Mr Parker, and I want to make a comment on that, because, in actual fact, Mr Parker’s view and that of the Government are both right. They are both correct in that the accommodation supplement is a subsidy for landlords, but it does go into the pocket of the tenant who is having trouble paying their rent.

It is not, as Mr Parker quite rightly points out, a good way of managing the fact that housing is prohibitively expensive. It does not address the fact that too many landlords do have this whip hand over the rental market, that they are able to buy houses when other people are not. There is this under-competitive, overpriced housing and rental market in this country, and a lot of that is to do with offshore owners and so forth. So Mr Parker is quite correct in saying that this increase in the accommodation supplement from $800 million and something to $1.5 billion does go into the pocket of the landlords.

However, the reality for the people on the ground who are renting is that if you are faced with a hundred-dollar hole in your weekly budget that is currently going on rent, which has to be filled from somewhere, be that the power bill, the grocery bill, or new shoes for the kids or whatever, then that is a real hundred-dollar hole, and if this increase in the supplement can help fill that hole, then that is money in the pocket of, again, the people who need it most. I am not pretending that it is anything more than paint over the rust, as I commented yesterday, but it does address the issue in the short term, as it needs to be addressed.

Turning to the amendment tabled by Marama Davidson first, the amendment changing the date of commencement for the calculation of the family tax credit from 1 April 2018 to 1 July 2017—New Zealand First will be supporting this amendment. We do think that it is a way of showing whether or not the Government is prepared to put our money where its mouth is, because effectively, being that far on the other side of the coming election, this entire bill and the Budget measures that depend on it are almost virtual. They are almost pretend. Everything could change come September, and certainly come April everything could be very different. So I would ask the Government to look at this proposal quite seriously. If it is genuine about the intent of what it claims that this Family Incomes Package and the related taxation bill to do with it are meant to achieve, then I do not see that it will have any problem in changing that commencement date. So we will be supporting that one.

Turning to the amendment in the name of Metiria Turei—there are two parts to this, obviously. Changing the family income threshold above which the tax credit is abated by increasing it from $36,500 to $50,000—this, we do think, is a good move, and will put even more money in the pockets of those who are most in need of it. However, when we turn to the second part—decreasing that abatement rate from the current 22.5c in the dollar to 5c—we do have some concerns about that. I am wondering whether Metiria Turei or somebody else from the Greens would mind rising and taking a call to explain, perhaps, some of the costings behind this suggestion, because it seems to us that it is likely to be prohibitive. I do not imagine the Government will support it, on that basis. It is certainly an area that could be improved, and perhaps a lesser movement might be acceptable to the Government. I imagine that Mr Joyce has done his sums and there is not space for a movement of this type.

I understand that this, again, could be something that could be seen, if the Government were to support it, as addressing concerns that have been raised, particularly by members from the Labour quadrant, that in their view too many of these proposed changes are aimed at higher earners, as opposed to lower earners. It might be a way of offsetting that, but I think going from the one figure of 22.5c to 5c probably alters it too much. There are, obviously, ways in which the inequality, as it has been stated, can be addressed. This may be one way of doing it, but I do not believe that, proportionately, it is the correct thing to do, and for that reason, because these two measures are in the same amendment, we find ourselves unable to support that one. So we will be supporting Marama Davidson’s amendment, but we will not be supporting Metiria Turei’s amendment.

IAIN LEES-GALLOWAY (Labour—Palmerston North): One of the talking points that the National Party’s minions out there on Facebook are using to defend the fact that the richest get $35 a week out of the tax changes and the poorest get $5 a week if they are lucky, or $1 once they have had the clawback from the removal of the tax credit, is that in percentage terms $35 is not a very large percent return to those who are the richest. Well, you cannot go to the supermarket and buy groceries with a percent. You actually need dollars at the supermarket, and it is the people who are at the lowest end, who are earning the least, who need those dollars more than anybody else. But this is a classic National Party tax package, which gives the most to those who have the most, and gives crumbs to those who have the least.

Let us talk about what tax is actually for, because you get the impression by the way the Government members have been speaking today that tax is just a punishment for working. Well, tax is actually the way we all contribute to the services that we all need in a functioning society. Tax is how we make sure we have enough police officers to keep our communities safe. Tax is how we pay our doctors and our nurses and our care assistants to make sure that we get the healthcare that we need. Tax is how we pay our teachers and our teacher-aides, so that our children get the education that they need. And all this bill is doing is reducing the money that we have to do all of those things in order to put more money in the back pockets of people who are already doing the best. That is what this bill does.

At a time when it is nearly impossible for people to get on a waiting list to go to the hospital, at a time when, for adults, going to the GP is more expensive than it has ever been before—and I guarantee that every single one of us who is an electorate MP has had constituents come to talk to them about the price of going to the GP and how they have actually delayed going or not gone to see their doctor because of the price of it—at a time when that is a critical issue, this Government thinks that we should have less revenue to pay for those things to put more money in the back pockets of people who are already doing well.

At a time when the rates of burglaries and violent crimes are climbing, against decade-long trends of falling crime rates; when we are suddenly seeing crime on the rise again; when we need more police officers; and when we need to give them the resources to actually do good old-fashioned community policing and for it to be embedded in our communities—not just to respond to crime, but to prevent it—this Government is cutting taxes, giving them less revenue to provide the resources that our police officers need and to provide enough police officers to keep our communities safe.

At a time when our schools are bursting at the seams because of the astonishing rate of population growth that this country is currently experiencing; at a time when teacher-aides are struggling because of their low pay and the few hours that they actually get per week and the money that they get to make ends meet; and at a time when parents are paying more in so-called donations than ever before, rather than putting money into the education system so that the next generation get a world-class education and are fit and ready to participate in 21st century society, this Government thinks that it is the time to cut taxes and put money in the pockets of people who have the most. Well, I say that that is wrong.

The families who get the least out of this need a decent health system that is affordable. They need an education system that is affordable. They need to know that their communities are safe and that there are police officers out there keeping their communities safe. That is what we use our taxes for. Cutting taxes to make the rich richer and make the poor struggle even more is entirely the wrong thing to do but it is exactly what you would expect from a National Government.

KRIS FAAFOI (Labour—Mana): It is my pleasure to take a call on Part 1 of this Taxation (Budget Measures: Family Incomes Package) Bill. Anyone who has been watching the National Budgets for the last 8 or 9 years will know that National takes a giveth and taketh approach—it gives with one hand and takes with another. Another example of that has been, I think it was in 2013, where on the one hand it threw out the lollies and on the other hand we had larger class sizes. It is not until 2 or 3 days, or 4 days, after the Budget is announced that you find out what the real cost of the Budget sweetener is.

This is another one of those pieces of legislation that giveth and taketh. I do want to stick to the rules of the Committee stage—I think it is clause 5 that is one of the taketh clauses in this bill because it gets rid of the independent earner tax credit. So, the reality of that is—we have got some legislative jargon here—someone who is single and is on the minimum wage apparently under this Government gets $11 of a tax cut or tax break. But clause 5 of this bill will mean that the reality for their entire pay packet is that they will lose the independent earner tax credit of $10. So I am sure there is a bunch of Einsteins over there who can figure that out—that if you give someone $11 and take away $10, you have actually given them only $1. So for someone who is on the lowest income, living by themselves, and doing some of these jobs like cleaning the likes of Parliament, in and around our country, the big win for them in this Budget and in this bill with clause 5 is, let us wait for it, $1.

I do not need $1,000 a year—I do not need it. But that is what will happen for someone like me when this piece of legislation comes in. The best that this Government can do for someone who is single and earning the minimum wage is $1. So that pretty much sums up, in my books, what the priorities of this Government are in this Budget: it is not focused on those earning the least, but focused on those earning the most.

The Government has also said, in the spin around this Budget: “We’re making sure we’re looking after low and middle income earners.” Someone earning $52,000 is not rich—let us make an absolute fact of that—and they will get some help, but those who are earning under that are getting very little. Someone who is in the lowest quintile—and I want to get it right; I am taking it from the Government’s own documents—will get a $5 tax credit. Five dollars a week, I think—yes, that is right. Someone in the top quintile will get $35 a week. I reiterate my point here: the Government spun its backside off yesterday, saying that this piece of legislation arising from this Budget was for those on low and middle incomes. But those on the lowest of incomes get a $5 tax break and those on the highest incomes get seven times more, at $35.

Alastair Scott: Increase taxes then. Increase taxes for those in the higher bracket. Say it!

KRIS FAAFOI: Another out-of-touch member from the other side of the Chamber—another out-of-touch member from the other side of the Chamber. It would be nice if he went and spoke to the people of Masterton about this, when he gets in his car and travels over there. So that is what I have got to say to that member representing Masterton. He is out of touch with his own community—allegedly his own community.

This Budget does not look after the people whom yesterday the Government said it does, because that is the way this Government works. On the night it will say one thing, but 2 or 3 days later the truth comes out. And that is what is happening now. Yesterday, it was “We are looking after low and middle income earners.”, when the Government’s own figures show that is not the truth. The Government is looking after the people whom it has traditionally looked after the most: those who earn the most.

At the same time, schools, housing, and education are suffering in our community. Housing, schools, and education are suffering in our community. We are struggling to be able to get a full roster of doctors at the 24-hour, after-hours surgery at Kenepuru Hospital in my electorate. If we put the $1.7 billion back into the health budget we would not struggle to do that anymore. So the people of that man’s alleged electorate and the people of my electorate on the Kāpiti coast would be able to go to the doctor after hours, for their children, without having to worry whether or not it will be open or staffed properly. That is the alternative that we have got here.

JACINDA ARDERN (Deputy Leader—Labour): I want to, if I can, speak to my amendment, which is on the Table, just to be really clear about what it is that Labour intends to do with the Taxation (Budget Measures: Family Incomes Package) Bill. What our amendment essentially does is it acknowledges the elements of the bill that we do think are tightly targeted and will make a significant difference to those families and working people who absolutely need it, without the trade-off of pouring $1.9 billion into tax cuts for those who do not—for people like ourselves. So that is what our amendment does. It supports the good and it cuts out the bad. So I want to run through what those elements are because a lot of them significantly affect Part 1 of the bill.

We are obviously keeping those parts that are relevant to making a bill work: the title and commencement. But clause 4 and clause 5 both go. Clause 6 remains, because clause 6, of course, is the element of the bill that adjusts the payment rate and makes the current payment rate of Working for Families the equivalent of that for children aged 16 and 17. It spreads that higher rate across younger children. That means that the eldest dependent child will have a $5,303 rate. So for those families that does lead to the equivalent of a lift of about $9 a week. Then for each dependent child there is a higher rate again: $4,745 across a year. That works out to a varying rate depending on how many dependants a family might have. All in all, our view was that those elements of the bill should stay. They will make a difference for working families. We acknowledge that; we think it is important they remain.

However, we do not agree, then, with the next clause down, clause 7, because, again, it is a demonstration that the National Government continues to give with one hand and take with the other. Those are the clauses that replace our existing threshold and abatement rates. At the moment, abatement kicks in at a threshold of $36,350. National has decided it wants abatement to now kick in at $35,000. That actually, functionally means that with this bill and that clause, some families with one child will be worse off as a consequence of this bill than they currently are and by quite a substantial amount. Our view is that those families should get the boost of these changes, without the removal of their eligibility, which is what these threshold changes mean.

National is also increasing the rate of abatement at the moment, from 22.5c in the dollar, to 25c in the dollar. So, sharp cutting out of those tax credits. We do not agree with that, so we are removing that via our amendment as well.

We have kept in the inflation adjustments that the Government has. Without going into it, some of those were already scheduled to occur. These clauses alter it, based on the fact that this package brings forward some extra benefits for those eligible. And then, basically, we cut the remainder of the bill because the remainder of the bill will see an untargeted $1.9 billion worth of tax bracket changes. Our view is that what happened with the Working for Families changes shows what a difference you can really make for those who genuinely need it, without their being a kind of flow-on effect for earners like us who do not need that extra boost. So $373 million is well spent on the Working for Families changes, and $1.9 billion is wasted on untargeted spending.

We might have been having a very different debate if the Government had chosen to use the family tax credit as its way of delivering to those families who need it the most, without doing what it has done in this bill. So I think our amendment really does a great job of taking the good, acknowledging the good, and giving an indication of what we would have liked to see more of, whilst cutting out that which we did not think was useful.

I want to speak specifically though, now, to clause 6 of the bill. Clause 6 is where we see that different rate change for the first child. I want to speak a little bit to the origins of that. It has not come from nowhere. I acknowledge that the Government obviously did look at some elements of the recommendations from the Children’s Commissioner’s expert advisory group’s report, which was put out some years ago now but still has some excellent work in it.

Under one of the chapters, on tax credits, the expert advisory group made it very clear that “The immediate cause of child material deprivation is low family income. Family income is usually low due to low employment income.” It is a very important point, and one that goes unaddressed in this Budget.

But it goes on, further in, to say that “Around 60 percent of children in poverty … are in beneficiary households, and most of these are sole-parent households. Sole-parents face considerable challenges in supporting their children through paid employment and meeting their childcare needs. Any system changes need to be sensitive to these challenges.” It goes on: “The system needs to take account of the fact that children have different care needs at different ages …”.

But it also then makes a very specific recommendation: “We recommend that, in the short-term”—because I think they were acknowledging that a lot of what we are trying to repair is a low-wage economy—“the government increase the Family Tax Credit by: initially raising the maximum rates for all children aged below 16 years to equality with the rate of a first child aged 16 years and over.” So that was an explicit recommendation by the expert advisory group, and that is something the Government has picked up. It was, however, only one of three recommendations in that one section alone. One of the extra recommendations was “subsequently and incrementally, raising the rates further for children aged 0 to 5 years …”.

So what the Children’s Commissioner report said was that initially, yes, we do need to get those children under 16 at the same rate as those in the last 2 years of that payment. Good, because, actually, we just need a higher rate generally.

But then they said to let us not be under any impression that means that children cost the same amount or have the same needs through every stage of growth, and, in fact, if you are going to target anywhere, target under-fives. That is what the expert advisory group said. Labour listened to that advice, and that was why we produced an alternative in the form of Working for Families.

The Government has given an extra $9 here, to every child under the age of 16—the first child. Our argument was that from zero to 3, a child is not only in their most important developmental years, but, actually, the parents’ options for work are limited—which is why 60 percent of our families living in poverty are those who are sole parents and on benefits, because the options for work when you have got a child aged zero to 3 are incredibly difficult because of the costs of childcare. It is very simple. That is why so many of our sole parents move off benefits after their children are the age of 3.

It all makes sense. That is why we targeted that support from zero to 3. That is what Best Start was about. What I would implore the Government—you have taken one small element of a really comprehensive set of recommendations, and you have taken that one element and you have implemented it. Good; we acknowledge that with our Supplementary Order Paper. But do not forget the rest of what was recommended. When you look at the relative focus and the relative priority that the Government has placed on that recommendation—$373 million versus the $1.9 billion; what is that a ratio of—that has gone into the tax bracket changes, it shows that you just did not get the priorities right.

We could have been debating here a package that would have been much more comprehensive and would have been able—because I can tell you; I have costed the Best Start package. It is even cheaper than what the Government has done with—

Chris Bishop: Oh, you’ve costed it?

JACINDA ARDERN: Oh, absolutely we costed it. It is part of our policy. It is cheaper than the $373 million that went into the age-range change. So I would really implore the Government—if you are serious about some of these recommendations, then the Best Start package would have been the way to tick off not one but two of the recommendations from the expert advisory group. It was at a much higher rate because it acknowledged where the harshest penalties and those harshest levels of poverty were.

I implore members of the Committee to look at our amendment—the fact that it acknowledges where there is good in this Budget, but acknowledges that $1.9 billion is a poorly targeted spend in the rest of that bill.

Hon DAVID BENNETT (Minister of Veterans’ Affairs): Thank you, members of the Committee, for your discussion this morning. I just want to clarify a few points that have been discussed by members of the Committee.

Grant Robertson: I’ve got my pen ready.

Hon DAVID BENNETT: Yes, Mr Robertson. The first point is around the accommodation supplement. Many speakers have mentioned that today, and have argued that it is a subsidy for landlords, and that is what the argument has been. The accommodation supplement changes are not proposed as part of this bill.

The CHAIRPERSON (Hon Trevor Mallard): And that is just exactly what I was about to point out to the member. So he is not going to talk about them.

Hon DAVID BENNETT: No, I am just making sure that other members do not either.

The CHAIRPERSON (Hon Trevor Mallard): That is my responsibility, Mr Bennett.

Hon DAVID BENNETT: Yes, so they are done by Order in Council. What is in this bill, though, are the personal income tax threshold changes. If we look at those changes, currently the thresholds include the $1 to $14,000 range, and that now becomes the $1 to $22,000 tax bracket, at the rate of 10.5 percent.

The advantage of that is it is nearly a doubling of the lower current bracket, to $22,000, which is to the advantage of all taxpayers but especially those in the middle of the taxpaying base, because they have the most to gain. Middle income earners actually have the biggest gain as a percentage.

If you look at the next stage of the tax bracket, where we are looking at $22,000—previously it was $14,000 to $48,000. Now it is $22,000 to $52,000, and that is at 17.5 percent, so that is another gain for middle income taxpayers in New Zealand. The real heart of this Budget is the gain for middle income taxpayers in New Zealand.

Grant Robertson: I thought it was low income people.

Hon DAVID BENNETT: It is middle and low income, but middle income taxpayers benefit very much from this Budget, and that is something that many New Zealanders have been looking forward to as well.

The CHAIRPERSON (Hon Trevor Mallard): The Minister will sit down, just because you did not sit down last time when I stood up. I have been listening to this debate for some time from my room. I have been in here now for a relatively short time. We have had one speech that was completely on the topic—that is, whether this particular change meets the objectives agreed to in the second reading of the bill, or addressing the amendments. This is not a debate about the Budget, who wins, who it is aimed at, or at the politics. It is a technical debate now, and the Minister will remember that, as will other members who are coming afterwards.

Chris Hipkins: I raise a point of order, Mr Chairperson. I would just like to draw your attention to previous debates under urgency following Budgets, in which members have been given some latitude in bills that have been progressed under urgency after a Budget to give some reference to the Budget. That has always been the practice of the House. This is the ninth Budget that I have been here for and this the ninth set of urgency where members have been given latitude to discuss other aspects of the Budget.

The CHAIRPERSON (Hon Trevor Mallard): Thank you, Mr Hipkins. Members have been given latitude for an hour and a half so far on this part.

Aupito William Sio: I raise a point of order, Mr Chairperson. I just listened to your ruling, and in light of that can I ask you to consider, based on Standing Order 376, that the regulatory impact statement for this bill has not been tabled. I think, under that ruling, that statement should be tabled given that we are in urgency and given that we do not have the benefit of having this bill being considered by the general public. So in order for us to be able to use information and to specifically refer to clauses, based on your ruling, I would ask that that regulatory impact statement be tabled unless it is a secret.

The CHAIRPERSON (Hon Trevor Mallard): Can I just check the Standing Order that the member was referring to? I think the member said 376, which was “Documents quoted by Minister”. I have got in my hand a disclosure statement and regulatory impact statement for the bill, which the Clerk has just given me from the Table. So I am not quite sure what I am meant to rule on.

Aupito William Sio: The regulatory impact statement. We just looked earlier and there were no copies of that available for us.

The CHAIRPERSON (Hon Trevor Mallard): Well, I am sure, having seen members look, the very efficient staff of the place have replenished the supplies. Clearly it is a document in lots of demand.

Grant Robertson: Currently there is now none because you have got the only one.

The CHAIRPERSON (Hon Trevor Mallard): If anyone really wants it, they can have this one. I would tend to say from the—no, I am not going to put a value statement on it. Right, back to David Bennett.

Hon DAVID BENNETT: Just in summary, since the Chair has made it clear that we are not talking about the accommodation supplement or the wider aspects of this Budget, but looking at taxation in this area we see that this Budget has a lot of strength for our communities going forward.

JAMES SHAW (Co-Leader—Green): I would like to speak to a couple of the amendments—first of all, the amendment in Marama Davidson’s name, which would bring forward to 1 July this year the effect of the Working for Families changes. I just wanted to say why we feel that is necessary—and I just wanted to acknowledge and appreciate the support for that amendment from New Zealand First. The reason is that what we are trying to do is to ensure that families who have missed out on the gains of productivity and economic development over the course of the last 8 years receive that support as fast as is possible. It is in line with the amendment from Jacinda Ardern to distinguish between the Working for Families reforms in this bill and the tax amendments in this bill as well.

I think one of the scepticisms on this side of the Chamber is that this entire package is really designed by someone who is both the Minister of Finance but also the campaign manager for the National Party’s re-election campaign. So this package has been designed, really, for political purposes rather than to support families who are really doing it tough in New Zealand. So Marama Davidson’s amendment here would ensure that the benefits to those families that this package is at least theoretically designed to support actually do start to support them before the election happens rather than afterwards, when as we know anything could happen.

I just wanted to table that amendment, and then turn back to Jacinda Ardern’s amendment on separating out the Working for Families components from the taxation components of the bill. I wanted to pick up on some comments by Alastair Scott, who spoke earlier about the taxation components and the thresholds there. I think he revealed, really, what the National Government’s motivation is here, because the majority of his comments spoke to why it is that people should get a tax cut rather than focus on whether or not the package, as designed in this bill, is actually going to support families who need it most, which is the stated intention of the bill—whereas the comments that I heard were saying: “Well, actually, if you ignore what the actual bill says its intention is, then actually the real intention is to offer a tax cut.”

The Government’s own fact sheet that was distributed yesterday, which this bill gives effect to, has been quoted a couple of times, and I think a few people have sort of lost the thread on this. If you look at the tax component, which is why that needs to be separated out, then it is actually a regressive tax package. If you look at families who are earning $24,000 a year or less, when you take the tax component and the removal of the independent earner tax credit (IETC), then those families receive $5.34. That is their average change, as marked out in the Government’s information sheet. For families that are on $127,000 or more, the benefit from the tax package and the IETC change actually means that they are $33.22 better off every week. So as a result of this they are actually six times more well-off than families who are earning $24,000 a year or less. That is why we are so concerned that, yes, while obviously it is good that families on those very low incomes will receive $6.10 more in Working for Families that they do not currently get, and that is obviously very helpful, they will also get an additional $3.81 from the accommodation supplement, and that is very helpful. But the combined effect of all of those things is that families on $24,000 a year or less will receive $15.11 as a result of the changes in this bill, whilst families who are on $127,000 a year or more will receive more than twice that, $33.22 a week in the hand. I believe that is why the Committee should support Jacinda Ardern’s amendment to separate those two things out because what we want to do is we want to make sure that those people who are up for increases in Working for Families support and the accommodation supplement support actually do receive those. That is critically important, and it is critically important that they receive those as soon as possible, which is why Marama Davidson’s amendment is also important, whilst we can then separately debate how you design a tax package that is actually progressive rather than regressive.

Just returning to Marama Davidson’s amendments, some people will ask: “Why 1 July rather than say today?”. That is simply a pragmatic measure. The problem that we have got, of course, with the IETC, the tax system, Working for Families, the accommodation supplement, and so on is that it is a mind-bogglingly complex tax and welfare system that we have created over the course of the last two to three decades in this country, really, since the Bolger Government introduced the IETC back in the 1990s. It actually takes quite a long time for the Inland Revenue Department and the accounting profession to get their heads around these kinds of changes, as demonstrated by the A1 sheet of paper that the Government distributed yesterday that had the combined effect of all of these changes.

So we felt that while we wanted to make sure that families did start to receive their Working for Families benefits before the election, it would actually make sense to give the IRD, essentially, you know, a month or two to adjust to that. But the point about the complexity is that there is an argument, again, for why it is that the Government needs to go back to first principles, particularly on the tax component of this, because it has created such a complex system, with people who are falling through the cracks—and I know that we have referred earlier in the debate to families who do not have even one parent who is in any form of work, and thus are really falling through the cracks as well. There is an argument there for a more universal, much simpler to administer, and much cheaper to administer system.

So I would like to ask the Minister whether he would be prepared to bring forward the start date to ensure that, you know, the families who are really doing it tough actually start to receive the additions that are outlined in clause 6 of the bill, and also whether he can speak to why it is that the threshold changes have been designed in such a way as to deliver the greatest benefit to those families with more than $127,000 a year of family income, rather than those who are on $24,000 or less.

In relation to that, there have been some comments made by Government members earlier about comments made on this side of the House referring to those on incomes of more than $50,000 a year as wealthy. I mean, I do not think anybody here is claiming that. That is simply the median income. But if you are referring to a family that is earning $127,000 a year or more, then, yes, that is starting to creep into the higher-income brackets. It is hard to justify, in my mind, why it is that families that are earning more than that number would be receiving $33.22 benefit out of this, rather than families who are on $24,000 a year or less, who are receiving only $15 in total, and in fact only $5.34 from the tax changes that are being debated in the bill. With that, I would just like to support both of those amendments and ask for the support of the House to bring both those amendments through.

CHRIS HIPKINS (Labour—Rimutaka): I recall the Minister in the chair, the Hon David Bennett, boasting in the House back in 2009 about how a party cannot promise tax cuts before an election and then not deliver them after the election. That is quite interesting, because if we refer to clause 33 of the regulatory impact statement, which talks about reprioritising the independent earner tax credit, it actually repeals one of the few elements of the National Government’s 2009 tax cuts that actually survived. The vast bulk of the tax cuts it promised people before the election and then delivered after the election were subsequently repealed. One of the things that survived was the independent earner tax credit, which they are now repealing in order to pay for a different tax cut.

So it is worth looking at who is affected by the repeal of the independent earner tax credit, because it is around $520 per annum that goes to around half a million New Zealanders who qualify for it. Those are individuals earning between $24,000 and $48,000 a year, and do not receive a benefit or Working for Families or superannuation. They are the people to whom the Government is giving with one hand and taking with another.

So it is worth remembering what the justification the National Government put forward in 2009 was for introducing the independent earner tax credit in the first place. Its argument at the time was that the previous Labour Government—the “nanny State”—had given all of the money to families and not enough to people without children and, therefore, they were justified in giving money to people who did not have dependent children, who were independent workers, who were on relatively modest incomes, and who were not benefiting from things like Working for Families or who would not be well recompensed through the Government’s across-the-board tax cuts that it was introducing at the time. It used that as justification for establishing the independent earner tax credit.

So we come to today and to the justification that the Government has put forward for repealing it, and whether that squares up with its justification for introducing it. So let us look at the minimum-wage worker—say, a hospitality worker, someone waitressing in a restaurant, a cleaner working overnight, or a packer in a warehouse who is earning a minimum wage; they will get from the Government $11 a week in a tax cut, as a result of other changes in the Budget. But then they will have $10 of that $11 taken away from them in the repeal of the independent earner tax credit. So, if the Government’s goal back in 2009 was to say to single people, or people without families and without children, that they were going to be important to the Government and that they were worthy of some financial relief and some financial reward as a result of the Government’s package, what has changed between now and then?

What the Government is actually doing is leaving those people worse off, effectively, than they would have been if it had stuck with its 2009 policy. So I would like some explanation from the Government about that, because I could go back into the Hansard in the corridors and I could find all of the things that it said back in 2009 about why the independent earner tax credit was the only fair way to deliver to those people who fell into that category: that across-the-board tax cuts would not target them sufficiently and that Working for Families ignored them. These were all comments made by then National Government Ministers and MPs, including the Minister in the chair, who is on record as saying some quite inflammatory things at the time about the need—

Grant Robertson: No!

CHRIS HIPKINS: No, I know. It is hard to believe, I know. It is also hard to believe the Government has left him in charge of passaging this legislation through the Committee, but that is an issue for another day. But the Government members are on record as saying that this was the only fair way of targeting those independent earners, and so why is it that they are now doing away with it?

In the regulatory impact statement—I go back to that—it says here that one of the justifications that they use for removing this tax credit is that a significant number, “nearly two-thirds of recipients receive the credit as a lump sum”—[Interruption]

The CHAIRPERSON (Hon Trevor Mallard): The member will take a seat. I am now going to formally reprimand the Minister in the chair for comments that he is making to the Chair as to what the Chair should and should not be doing. If he does it again, I am warning the Government, it will have to find another Minister to sit in the chair.

CHRIS HIPKINS: One of the justifications that the Government has put forward in the regulatory impact statement for repealing the independent earner tax credit is that nearly two-thirds of the recipients of that tax credit receive that money as a lump sum, “indicating a low degree of recipient hardship”. [Interruption] Mr Chair, I should get my 30 seconds back—

The CHAIRPERSON (Hon Trevor Mallard): I will run it a bit longer, because—

CHRIS HIPKINS: I should get my 30 seconds back. If the Government is going to apply that, is it going to apply that to all of the other tax advantages that people get as a lump sum? For example, for people who own rental properties who claim all of that money back as a lump sum, are they going to be repealed as well? The fact that someone claims their money as a lump sum does not mean they do not need the money. So if that is the only justification the Government can come up with for repealing the independent earner tax credit, why is it not going to apply that standard across the board? Why only to low income earners, in a Budget which this Government says is supposed to target low and middle income earners?

GRANT ROBERTSON (Labour—Wellington Central): I do want to pick up where my colleague Chris Hipkins left off, and talk about the repeal of the independent earner tax credit, which is a critical element in this part of the bill. I want to start doing that by making sure that everybody understands what it is. It is very easy, in these debates, to be talking about a technical name like the independent earner tax credit and not giving people a full understanding of it. It is a $520 per annum maximum payment that goes to around half a million individuals earning between $24,000 and $48,000 a year, if they do not receive a benefit, Working for Families, or superannuation.

If you boil that down, what that was really about—when we go back to 2009—was, as my colleague Chris Hipkins has said, how do we do something for single people? But it had quite a specific purpose. It was actually a continuation of the idea that there were costs associated with going to work. That is actually what it was about.

It is a modest payment, at 10 bucks a week. It is a modest payment, but it recognised that, you know, it is a contribution to a bus fare or a contribution to some of your petrol costs. That is what it is saying. It is saying: “You’re in work, and we want to make sure being in work has some additional value to you.” That is where it came about.

So the Government’s logic today—and it is very confused. I mean, we still have not really gotten to the bottom of this. We have got the Minister’s speech that says that this independent earner tax credit is claimed by only about one third of eligible recipients; we have got the Family Incomes Package at a Glance document, which says it is 32 percent; and then we have got the regulatory impact statement, which says that it was claimed that around 80 percent of those eligible for the tax credit claim it—highly confused positioning here by the Government.

Actually, it was trying to downplay in the Budget speech the importance of this tax credit to a number of people. That downplaying carries on in the regulatory impact statement, on page 23, when it does its analysis of what it calls “reprioritising” the independent earner tax credit. It has its objectives—is it going to improve work incentives? Yes. Is it going to improve incomes for those in financial hardship? The Government say yes, and that is technically true. It is technically true, by one dollar. It is technically true, by one dollar, because that is the impact that it has had by making other changes to tax rates in this part of the bill. That is $10; it gives $11—one dollar better off. I think this is actually not very accurate, what is here. Marginal—one dollar wiped out under any circumstances whatsoever.

I have not heard a justification from the Minister in the chair, David Bennett, or from any Government member today for why they are getting rid of this. Why are they getting rid of something that they brought in in 2009 that recognised the costs of going to work? Those things have not gone away. Those things are still there, and yet that benefit has been taken away.

So I would like a member of the Government to get up on their feet and tell us why this is consistent with the objectives that they have said they have got within the regulatory impact statement. If that is the justification, that by one dollar they have improved those outcomes, well, I think that is pretty misleading. I do not think that is what most New Zealanders would believe was improving those outcomes.

It is sending extremely confused signals to New Zealanders about what this National Government values. Does it value people being in work? Does it value giving a contribution to the costs of being in work? It seems from this that it does not. It seems from this that it would rather say: “No, we’re going to take that money off you. We’re not going to give that as a recognition.”

I know a lot of New Zealanders, single people, who did not get any benefit from Working for Families and they have started to get pretty annoyed about that, because they have costs too—not as big as for people who have children, absolutely; but they have costs as well—and now the Government comes in and says “You know what? We’re just going to get rid of it.” A bit of shuffling money around, and a claim that it is actually going to reduce hardship, when in fact it is not.

So it is time for the Government to get up and explain to New Zealanders why that part of this bill is a good idea, because, otherwise, New Zealanders who are in work are going to feel cheated by this—and rightly so. Their costs have not changed, yet the Government has decided that it is going to pull the plug on it. I have not heard a case made by any member of the National Government today on this. It is about time they got up and said why they defended this. Otherwise, this is just an exercise in the Government saying “Trust us; we know what we’re doing.”, and we know that is not possible.

JAMI-LEE ROSS (Senior Whip—National): I move, That the question be now put.

The CHAIRPERSON (Hon Trevor Mallard): No, this is a major piece of the bill—a lot of money involved.

MICHAEL WOOD (Labour—Mt Roskill): I want to pick up and develop some of the points that have been made around the independent earner tax credit by some of the previous speakers, and then speak to some of the tabled amendments. The reason I think we deserve some real scrutiny over the independent earner tax credit at this Committee stage of the debate—and, of course, this refers to the changes in clause 5 of the bill—is that it is actually one of the hidden secrets of this Budget. It is not a small thing—it is not a small thing. This is a tax credit that goes to 500,000 New Zealanders. It is worth $220 million a year, and it is being stripped out of the Budget by this bill. The other reason it is important is because of the people whom it actually affects.

Let us talk about who those people are. It is in the information that the Government has taken out. The people whom this affects are the battlers. They are the battlers whom the Labour Party represents, and has always represented. The Government claims to represent them, but it is kicking them in the teeth right now. It is people in that income band—the second quintile—between $24,000 and $51,000, and if you look at the Government’s own information, these are the people who are most impacted by the removal of the independent earner tax credit. They are people who are going out there, working in jobs that do not pay them too much, often struggling to get by but doing their very, very best. This is one of the small things that we did—that the Government did—back in 2009, as my colleague Grant Robertson said. We said to those people that we are on their side, and we are going to help them with some of those small expenses.

If we actually look at the distributional gains, as are affected by this tax package, those are the people who are most heavily impacted. Those people in that $24,000 to $51,000 range once you take out the accommodation supplement—as, Mr Chair, you have said we should not be considering it in this debate—are $12 a week better off as a result of this package. People in the top quintile are $33 a week better off. So people in the top quintile are three times better off under this package than those battlers earning between $24,000 and $51,000 per year. Yet we have heard from the National Government that supposedly this is a good way of targeting the Government’s resources to help those who need it most. Actually, the benefit is targeted at those who need it the least.

Moving on, there are some interesting things that come up in the regulatory impact statement, and it would actually be good to hear from the Minister in the chair, Scott Simpson. One of the slightly surprising things, and it is really dissonant with what we have heard from other Government speeches, is that as a result of these changes—and I am looking at page 31 of the regulatory impact statement—“Hours worked are estimated to reduce in total.” The actual analysis that has been done by officials says that the impact of taking away the independent earner tax credit, for those who receive it in full, is a work disincentive. It is pretty obvious, when you think about it, why that is. It is because people who are in work get the independent earner tax credit—it is there in the name. When you remove it, it is not a big disincentive, but it is some disincentive to work. That is completely contradictory from everything else that we have heard from the Government.

The other useful bit of analysis in the regulatory impact statement is actually in the modelling—the modelling that has actually been done of this package. Let me just read it out. It is very direct. It says that “Around 85 percent … of families benefit from the tax, IETC and FTC changes.”—and, of course, that benefit varies from quite a lot to not very much at all, as we have heard from Grant Robertson. “The average gain is $26 per week. Around 65 percent … of families with … income less than $48k gain, and all families with income above $48k gain.” So I would like to hear from the Minister how he explains that this is a targeted package, when 35 percent of people below $48,000 get nothing and everyone above $48,000 benefits from this package.

Further to that, what the regulatory impact statement tells us—and this is on page 32—is that, actually, there are around 3,000 families who lose financially out of this package. Funnily enough, in Mr Joyce’s speech and all of the National Government speeches we have heard over the course of this debate, we have heard nothing about the 3,000 families who actually lose money out of this package. This is not the Labour Party position; it is here in the regulatory impact statement. The losses are not likely to be large, I will concede that. But, combined with the fact that we know that we have got many, many people who, as a result of the loss of that independent earner tax credit, get a tiny, tiny benefit—maybe a dollar a week—plus at least 3,000 families who are worse off, I would like to hear from the Minister, once again, how he justifies that as an example of targeting resources to those who need it the most.

Finishing off, I am obviously supportive of Jacinda Ardern’s tabled amendment, and also Marama Davidson’s, which will bring forward the one useful thing in this package—the family tax credit—to 1 July. Thank you.

STUART NASH (Labour—Napier): I would like to talk about Part 1, clause 8(5). This is “How movement in CPI determined”. Now, the reason I have some concerns about that is that the Consumers Price Index (CPI) is obviously a very important part of determining what happens with a whole lot of indices and where they go in dollar terms, etc. But when I read this, it says the number that “For the purposes of subsections”—blah, blah, blah—“a movement in New Zealand Consumers Price Index over a period is determined by comparing the following numbers:”. What it does is it talks about the CPI, for example, “the number that, when … started, was the most recent quarterly index number of the New Zealand [Government] Price Index all groups …”.

But what it does is exclude cigarettes and other tobacco products. The thing I do not understand is that if we are going to have a CPI that excludes certain items, then why would we actually just confine that to tobacco and cigarette products? I doubt it is because we have got a whole spate of robberies in South Auckland at the moment that are caused, some say, by tobacco and cigarette products. But if we look at various sectors of our economy, then I would have thought that what you would also do in this, if we do not want to queer the proverbial pitch—why would you not exclude house prices, for example? House prices are all over the place. We have had house-price inflation that has been as high as 20 percent in some areas, and now we are here—it is flattening out. You could argue that in the CPI calculation here that house prices do not actually mirror what is going on in the general economy in a way that even tobacco prices do.

It may be—and I am not too sure why, and the Minister in the chair, Scott Simpson, is a very intelligent man and he could probably elaborate on this, because I am a little lost on this. Why would we exclude just cigarettes? It could be because Parliament actually has the ability to regulate, at any point in time, on cigarette prices. We have done this. I think the last time we had urgency or we actually went into—is it called “super urgency”, the really high form of urgency?

Chris Bishop: Extraordinary.

STUART NASH: Extraordinary. Thank you very much, Mr Bishop. It is where we just ram it through straight away because we know that if we do not there could be some gaming going on or some leveraging going on or arbitrage. So we knock it through before anyone knows what has happened.

I wonder whether tobacco is excluded because Parliament has the ability to do that, or I wonder whether it is excluded because the Government actually is thinking about doing this again and it knows that an increase in tobacco is not because of what is happening in the general economy, it is actually because the Government has decided to push through legislation. It can do that of course when the economy is booming and the CPI is rising, or when the economy is on a downer and CPI is dropping. But, in fact, what happens with tobacco is that it increases against all the trends. So I am not too sure whether that is the reason or not.

But if that is the reason, then I think what you could argue is that anything that the Government has the ability to regulate—i.e., increase prices on—you would exclude. We could do this with petrol pricing, for example—petrol prices or alcohol is another one. There is a call at the moment from some quarters to increase excise tax on alcohol, which being from Hawke’s Bay—wine country—I would hate to see. But why would we not exclude something like alcohol? Why would we only exclude tobacco? It could be that that is a historic thing and it is there because way back in 1957 when Nordmeyer included the price of tobacco and alcohol, they said: “OK. When we’re doing the CPI in legislation, we must exclude tobacco.” I am not too sure, but because it is in the legislation there will be a good reason, and we know that. But I am just not too sure what it is. So perhaps the Minister could let us know why the Government has excluded tobacco and other products and whether it is simply because of that ability to legislate the price up and down, and it usually is up. Or is it because we want to discourage people from buying tobacco and so a lot of programmes in place may, in fact, again distort the cost of tobacco from the CPI?

I must admit, it does seem strange. When we are talking about general indices through any legislation, let alone this piece, I cannot remember another time when we have actually excluded something as overtly as this. We often do have debates in the Finance and Expenditure Committee about whether house prices should be excluded, because they do make up such a big part of CPI and household pay. The CPI is, of course, the Consumers Price Index. Housing can have quite a distortionary impact on the economy. But it is a good question that I would not mind having answered.

KRIS FAAFOI (Labour—Mana): Thank you very much, Mr Chair, for giving me another chance to speak to Part 1 of the Taxation (Budget Measures: Family Incomes Package) Bill. In an earlier contribution I did start talking about clause 5 but after a gentle breeze of barracking from the other side of the Chamber I was distracted and went on to other issues and was suitably sat down. So I want to get back to clause 5, which, in essence, gets rid of the independent earner tax credit (IETC). I want to ask a question of the Minister in the chair, Scott Simpson, around this clause, as to the words spoken by the finance Minister in his speech.

I want to know why the Minister of Finance said in his speech yesterday afternoon that the independent earner tax credit is claimed by only about one-third of eligible recipients during the tax year. I am not saying that that is factually incorrect, but the Minister of Finance chose expressly to use those words, instead of the wider fact that is revealed in the regulatory impact statement from our officials around the independent earner tax credit. It says that it is estimated that around 80 percent of those eligible for the tax credit actually claim it, and, of those, 60 percent claim it after the end of the tax year. The words that the Minister of Finance chose to use yesterday—and I am trying to answer the Minister’s question for him—were chosen specifically, I think, to minimise the impact of removing the tax credit, which is, effectively, done in clause 5.

I think we have to ask the question: why did the Minister of Finance try to minimise the effect of that? When you put that into the context of some of the other tax changes that were made in the Budget—as has been mentioned a couple of times already in this debate—someone who is single and on the minimum wage will get about $11 of tax benefit from the Budget. But, in essence, because clause 5 has been put in by the Government, the benefit of the $10 a week that that person would have got under the independent earner tax credit has gone.

We may be talking about the independent earner tax credit here in the Committee, but those who are listening or watching at home might not know a lot about it. So, helpfully, the officials have put a little synopsis together on page 3 of the regulatory impact statement. The IETC is available to those individuals who earn between $24,000 and $48,000, as an incentive to work. So I think that would put that range around about low to middle income. The Minister of Finance chose to minimise the real benefit of the IETC because the removal of it, in clause 5, really does hit low to middle income earners. So my question to the Minister in the chair at the moment is—and we have had a bit of confusion as to what the right figure is; the Minister of Finance said 32, the officials say 80—why did the Minister of Finance choose to say those words yesterday, and try to minimise the effect of removing the independent earner tax credit?

Someone at home who is getting the independent earner tax credit might have thought that the $11 that they get through the tax cuts is $11 on top of what they are getting through the independent earner tax credit, therefore thinking: “Hey, that’s not so bad.” But the actual effect of the entirety of clause 5 and whatever else is included in this Budget is that that person is actually only $1 better off. I think I may have done a favour for the Minister in the chair as to why the Minister of Finance yesterday used the words that only 32 percent of eligible people who could get the IETC claim it in that year. It is clear from the regulatory impact statement that 60 percent of people who are eligible actually claim after the tax year. So it is actually something that is used quite extensively by people with low to middle incomes—that bracket between $24,000 and $48,000 a year.

The officials tell us that the cost of it is $220 million per annum. So when the Minister says “Oh, it’s only a third of people who claim it.”, he is trying to say that it is really not a significant issue for low to middle income earners. But at a cost of $220 million a year—a benefit of $220 million a year to those people—removing the independent earner tax credit—

JAMI-LEE ROSS (Senior Whip—National): I move, That the question be now put.

The CHAIRPERSON (Hon Trevor Mallard): I will call Grant Robertson. I warn members that we are getting very close to the end. There was nothing novel in the last speech.

GRANT ROBERTSON (Labour—Wellington Central): Well, the last speech was non-fiction rather than fiction—I will give you that. Mr Chair, this is my fourth contribution on Part 1, which means you will not give me any more, regardless of whether or not it is novel, new, different, or anything else. I want to take this opportunity to speak about something I have not spoken about in my previous three calls, which is the tabled amendment in the name of my colleague Jacinda Ardern.

This amendment, effectively, creates a Working for Families package that I think has support across the Committee. It is very important that people watching and listening to this debate understand the impact of the amendment that Jacinda Ardern is putting forward. All New Zealanders understand that people on modest incomes with one, two, three, four children are doing it tough at the moment. They have seen their rents go up. They have seen their cost of living go up—be it petrol, be it groceries. They are finding it hard to make ends meet, and we, as a Parliament, at a time when the Government is running large surpluses, should be doing something about that. A portion of what is in this bill today does that—only a small portion, only one-seventh of the whole of the Government’s package actually goes towards Working for Families, another seventh for the accommodation supplement, and five-sevenths for these unfocused tax cuts. What Jacinda Ardern is attempting to do here is to actually make sure that we do simplify Working for Families—we support that—and also improve the amount of money people are getting through the tax credit.

What her amendment also does is remove the clauses that change the abatement rates and the abatement thresholds for Working for Families. I know this, again, is quite a complex technical area for people to be able to understand. Essentially, what the Government has done in this bill is said: “When you’re earning income, we’re going to reduce the point at which you start losing your Working for Families entitlement.” Up until now, if you have been earning up to $36,350, you are cruising along fine and you get your full entitlement to Working for Families. The moment you cross that threshold of $36,350, it starts reducing. What the Government is saying today is: “Well, we don’t want so many people to get Working for Families, so we’re going to reduce that threshold to $35,000, and then, just in case we haven’t reduced and constricted Working for Families quite enough, we’re going to increase the rate at which you start losing your entitlement.” That has, up to now, been 22.5 percent, and it will go up to 25 percent. Essentially, the impact of that change in this bill is to say you are going to lose more money faster in Working for Families.

That plays out when you look at the Budget across the out-years: $373 million on Working for Families in 2018-19; $318 million a year for Working for Families in 2019-20; and $310 million dollars in 2020-21. It is going down. The amount of money the Government is putting into Working for Families—the very thing it said this Budget was about—goes down because the Government is changing the abatement rates and the threshold at which it starts abating. We do not support that bit of the Working for Families package, and Jacinda Ardern’s amendment specifically deals with that by saying: “Let’s not make those abatement changes.”

The effect of this amendment is to say that, yes, we should simplify the categories within Working for Families. There are too many of them, and it is quite complex when people move in and out of different income levels. Yes, we should recognise that there are greater costs at different age groups. I heard Jacinda Ardern earlier today reference the independent panel that the Children’s Commissioner put together—good on the Government for picking that up. Well done. But doing that and then taking away with the other hand, via these abatement changes, is simply not fair. I am urging all members of the Committee to support Jacinda Ardern’s amendment. It will create a fair Working for Families package. Not a sufficient one—I want to make that very clear. The Labour Party would be focusing our resources more on getting support to those families. But at least that would be something the House could walk away from this urgency debate saying we all agree on.

However, if the amendment does not pass, we will, in effect, be reducing the entitlement to Working for Families across the years. Unfortunately, that is the record of this National Government. It is what it did in 2011, and it is doing it again now. Government members want to dress it up as supporting working families. The reality is that they are not, but if they do support Jacinda Ardern’s amendment, then they would at least have gone some way towards supporting working families.

JAMI-LEE ROSS (Senior Whip—National): I move, That the question be now put.

The CHAIRPERSON (Hon Trevor Mallard): Is anyone else going for the call?

The question was put that the following amendment in the name of Jacinda Ardern to delete clauses 4 and 5 be agreed to:

to delete clauses 4 and 5.

A party vote was called for on the question, That the amendment be agreed to.

Ayes 45

New Zealand Labour 31; Green Party 14.

Noes 74

New Zealand National 58; New Zealand First 12; Māori Party 2; ACT New Zealand 1; United Future 1.

Amendment not agreed to.

The question was put that the following amendments in the name of Metiria Turei to clause 7 be agreed to:

in clause 7(1) replace “$35,000, 25 cents” with “$50,000, 5 cents”; and

in clause 7(2) replace “$35,000, 25 cents” with “$50,000, 5 cents”.

A party vote was called for on the question, That the amendments be agreed to.

Ayes 45

New Zealand Labour 31; Green Party 14.

Noes 74

New Zealand National 58; New Zealand First 12; Māori Party 2; ACT New Zealand 1; United Future 1.

Amendments not agreed to.

The question was put that the following amendment in the name of Jacinda Ardern to clause 7 be agreed to:

delete clause 7.

A party vote was called for on the question, That the amendment be agreed to.

Ayes 45

New Zealand Labour 31; Green Party 14.

Noes 74

New Zealand National 58; New Zealand First 12; Māori Party 2; ACT New Zealand 1; United Future 1.

Amendment not agreed to.

The question was put that the following amendment in the name of Jacinda Ardern to clauses 9 to 18 be agreed to:

delete clauses 9 to 18.

A party vote was called for on the question, That the amendment be agreed to.

Ayes 45

New Zealand Labour 31; Green Party 14.

Noes 74

New Zealand National 58; New Zealand First 12; Māori Party 2; ACT New Zealand 1; United Future 1.

Amendment not agreed to.

The question was put that the following amendments in the name of Richard Prosser to clauses 15, 17, and 18 be agreed to:

in clause 15, after subclause (12) insert:

(13) The rates in Schedule 1 must correspond to the movement in the New Zealand Consumer Price Index where—

(a) the total percentage increase in the movement in the New Zealand Consumers Price Index measured from that applying on 1 April 2018 is 5% or more; and

(b) the total percentage increase in the movement in the New Zealand Consumers Price Index measured from that applying on the date and all subsequent dates when the requirement to make the immediately preceding adjustment arose is 5% or more.

in clause 17, after subclause (8), insert:

(9) The rates in Schedule 6 must correspond to the movement in the New Zealand Consumers Price Index where—

(a) the total percentage increase in the movement in the New Zealand Consumers Price Index measured from that applying on the date and all subsequent dates when the requirement to make the immediately preceding adjustment arose is 5% or more.

in clause 18, after subclause (2), insert:

(3) The rates in Schedule 31 must correspond to the movement in the New Zealand Consumers Price Index where—

(a) the total percentage increase in the movement in the New Zealand Consumers Price Index measured from that applying on 1 April 2018 is 5% or more; and

(b) the total percentage increase in the movement in the New Zealand Consumers Price Index measured from that applying on the date and all subsequent dates when the requirement to make the immediately preceding adjustment arose is 5% or more.

A party vote was called for on the question, That the amendments be agreed to.

Ayes 57

New Zealand Labour 31; Green Party 14; New Zealand First 12.

Noes 62

New Zealand National 58; Māori Party 2; ACT New Zealand 1; United Future 1.

Amendments not agreed to.

A party vote was called for on the question, That Part 1 be agreed to.

Ayes 88

New Zealand National 58; Green Party 14; New Zealand First 12; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 31

New Zealand Labour 31.

Part 1 agreed to.

Part 2 Amendments to other enactments

GRANT ROBERTSON (Labour—Wellington Central): Part 2 deals with the Tax Administration Act in large part, and, in particular, I want to focus on the repeals within Part 2 for the Tax Administration Act of—and this is going to really excite people who are out there listening—section 24B(3)(ab). I am sure all members of the Committee will be intimately familiar with section 24B(3)(ab)—

Chris Bishop: Not as closely as you.

GRANT ROBERTSON: —of the Tax Administration Act. Chris Bishop, the chair of the Finance and Expenditure Committee, actually goes to bed at night and reads the Tax Administration Act, such is his dedication to this task. But for the benefit of the Committee, what section 24B(3)(ab) of the Tax Administration Act does is—and you are going to love this as well, Mr Chair—it sets in motion section LC 13 of the Income Tax Act.

The reason I mention that at the start is to indicate what the subject matter is of what appears to be a very dry thing. What that is, is the tax credit for independent earners, which has been the subject of significant debate in Part 1. Here in Part 2, what is happening is that that is being operationalised. So, effectively, Part 1 has made a policy decision to get rid of the independent earner tax credit and Part 2 is operationalising that. It is worth reading what is being amended via repealing section 24B(3)(ab) because it actually describes the kind of person who was getting the independent earner tax credit—the kind of person to whom the National members today are saying: “You don’t deserve that any more. You no longer deserve that support for the costs associated with going to work.”

So let us just talk about who that person is under this section of the Income Tax Act. That person, in a tax year, is not receiving an income-tested benefit, is not receiving a veterans pension, is not receiving New Zealand superannuation, and is not entitled to a Working for Families tax credit—essentially, a single person. And that is made absolutely clear by paragraphs (e) and (f) of section LC 13(1), because you cannot be a spouse, civil union partner, or de facto partner of a person who is entitled to a Working for Families tax credit and you cannot be receiving an amount of money outside of New Zealand, and various other rules there.

So we just want to be absolutely clear. What is happening here in Part 2 is we are saying to a group of people—single New Zealanders largely, who are not in receipt of benefits, who are not getting Working for Families—that this is a benefit that you got because there are costs associated with going to work that have increased for a single person. I know from talking to people around New Zealand that this was a real bugbear for them. They felt that in respect of all those Working for Families changes, while they recognised that having children is expensive—which it obviously is—not all of those costs disappear when you do not have children; for example, the costs associated with transport to and from work. It is one of the really interesting things in our society that there are huge costs associated with just getting yourself to your working day, and for people who are affected by the changes that we are seeing here, they are losing out significantly as a result of this change.

The second part of section LC 13 affected by the paragraph that is now being repealed under Part 2 here deals with the amount of money. This is something that has come up previously in Part 1, and actually helps explain in many ways the concern on this side of the Chamber about the removal of this. The “Person’s credit”, as defined in section LC 13(4) of the Income Tax Act, is “if the person’s net income for the tax year is equal to or more than $24,000”. So that is the point at which it kicks in, and it is $520 a year.

One of the reasons the Government has given for repealing this is because not a lot of people take it up on a week-by-week basis, and that means they do not really need it. I mean, that is essentially what the Government has been saying here—that there is quite a low uptake of people taking it up on a week-by-week basis, and most of them take it up only as an annual amount. Well, that is not surprising. The amount of $520 in one lot—good, useful; having to go through the process of applying for it on a week-by-week basis at $10 a week is not something that is going to excite people. But at $520, as specified in section LC 13(4), referenced by section 24B(3)(ab) as is being repealed in Part 2, actually it does account for a lot.

There is, in section LC 13(5) of the Income Tax Act, full-year abatement, and that is, essentially, at the point at which someone’s income reaches $44,000 for the tax year, 13 cents for each complete dollar of the excess gets abated. Then in section LC 13(6) is the credit period months, and that is the number of whole months in the credit period. In other words, it is an annual payment. I do think there is a fair bit of disingenuous writing that has gone on in the regulatory impact statement around this independent earner tax credit, because actually justifying withdrawing a tax credit on the grounds that people take it up on an annual basis rather than week by week is pretty weak justification. That does not mean that people do not want it. It does not mean that people do not need it, in terms of how they get by on a regular basis. It just means that the tax system and interacting with IRD via the Tax Administration Act, which is being amended here, is actually quite complex and quite difficult. Nobody really wants to be on the phone with the IRD any more often than they have to be, and this process that is here actually allows people to take it up on an annualised basis.

So, I think, unfortunately, from the Labour Party’s point of view, we are not going to be able to support these amendments in Part 2 either, because they actually operationalise the very things that have concerned us in Part 1—in particular, in this case, the removal of the independent earner tax credit, which leaves those people, as a result of the other changes covered in this part, $1 a week better off. That cannot be the benefit for those people of the massive surpluses that this Government has.

In the time remaining to me in this call, I just want to refer to the other amendments, under clause 20 in Part 2, and they are the ones that make these threshold changes. So they make the threshold change for the bottom tax threshold to go from $14,000 to $22,000 and then they make the other one, the second threshold, go from $48,000 to $52,000. They are the two main changes under clause 20(3) and (4) of Part 2. Let us be absolutely clear: the net effect of passing these changes to the Tax Administration Act is that if you earn less than $14,000 a year, you get nothing from this tax package. The Minister in the chair, Paul Goldsmith, frowns and makes some kind of movement with his face. He can stand up and tell me if I am wrong about that, that under the tax changes—the very thing that we are debating here; this is the Tax Administration Act—if you get $14,000 a year, or you earn less than that, you are no better off, no better off. Do you know, there are 800,000 New Zealanders in that group—800,000 New Zealanders are getting absolutely no benefit—

Hon Jo Goodhew: What’s their average age, I wonder?

GRANT ROBERTSON: Well, I wonder too, and perhaps Jo Goodhew would like to take a call and get up and tell us why it is that no one under $14,000 gets anything, because this is a Government that has told us: “This is all about low-income New Zealanders. We want to give low-income New Zealanders a fair go.” Nonsense. This is a $1.9 billion package that gives nothing to someone who earns under $14,000 and gives all of us 20 bucks a week—all of us 20 bucks a week. How is that fair? That is not fair. So these threshold changes that are being made now under Part 2 here are actually creating an unfair tax system, and that is why the Labour Party cannot support these.

If this was really a package about supporting working families, then we would be targeting the best way we know to do that, which is through the Working for Families system. So the amendments here in Part 2—clause 20 and clause 21, which move the thresholds around—operationalise an unfair, irresponsible set of tax cuts. This Government has squandered a great opportunity that it had. It has squandered the opportunity of actually delivering to New Zealanders strong social services and an income boost for working families.

Part 2 of this bill, unfortunately, is just as bad as Part 1 because Part 2 is the part of this legislation that sets in stone a tax system that is now going to be less fair than it was yesterday. There are other improvements we would be making if we were putting forward legislation around this today, changing the balance within the tax system, but right now, today, we have a piece of legislation in front of us that actually makes for a more unfair tax system and an irresponsible tax cut when there is so much more that needs to be done to improve the social services of New Zealand. The Labour Party will not be supporting Part 2 of this bill.

Hon PAUL GOLDSMITH (Minister for Tertiary Education, Skills and Employment): I wanted to respond briefly to the comments of the previous speaker, Grant Robertson, who seemed to be trying to imply that anybody earning less than $14,000 will get nothing out of this Budget.

Grant Robertson: No, the tax package.

Hon PAUL GOLDSMITH: The tax package. Well, what we are talking about here is the Budget—

Grant Robertson: No, it’s not. It’s Part 2. It’s about the tax package.

Hon PAUL GOLDSMITH: —yes—and Part 2 of this bill. But the context of that is that everybody—what we are focusing on is lower-earning families with higher housing costs, so people who are struggling with—

Grant Robertson: This bill is about tax changes, and they get nothing.

Hon PAUL GOLDSMITH: Yes. If they are struggling with housing costs, they are going to achieve much greater support through the housing accommodation supplements, as well. So, yes, if you are earning below the tax threshold, you will not be getting any changes from the tax system, but there is a broader contribution that is being made through this Budget. I would just like to say that this is possible only because of the strong economy and the good—

The CHAIRPERSON (Lindsay Tisch): Come back to the bill.

Hon PAUL GOLDSMITH: —guidance of this Government, generally. So I wanted to make that point just to correct a sort of misinterpretation or the mis-impression that could be gained if anybody was listening to this debate and thought that just because an income earner was below $14,000, there was nothing for them in this broader package.

STUART NASH (Labour—Napier): I would like to talk to clause 24 in Part 2 of the Taxation (Budget Measures: Family Incomes Package) Bill. This is the amendment to the Customs and Excise (Tobacco Products—Budget Measures) Amendment Act 2016, which has obviously just been brought in.

What it does is it repeals section 8 of this very small Act, but the thing that surprises me is that I am not too sure why it is relevant to this specific taxation bill, and that is what I am struggling with. I mean, I am not a particularly smart man. I am from the regions, of course, and so I know that Minister Paul Goldsmith, being from Epsom, is a lot smarter than all of us, and so he will probably be able to stand up and let me know.

What the Customs and Excise (Tobacco Products—Budget Measures) Amendment Act does is it actually sets the rates around which tobacco will increase by on various dates. Basically, what it does is it increases the rates by 10 percent on 1 January 2017, 2018, 2019, and 2020, and if we have a look at section 8—the bit that is being repealed—it actually does get quite complicated. What it does is it talks about applications of Orders in Council with regard to the Income Tax Act, as well as some other Acts. If we reference the Income Tax Act—this is section MF 7—it is about Orders in Council and what can be achieved by Orders in Council around moving the level of excise duty on tobacco.

But the interesting thing—and this is why I am a little bit bemuddled here, a bit confused here—is that the definition in section MF 7, “Orders in Council”, of the Income Tax Act, which this bill is repealing, talks about movements in the Consumers Price Index, which is fine. We get that, and that is quite important when you are indexing certain products, because the Consumers Price Index is, in fact, the index that is used to determine what is happening to prices right across the region. In fact, a lot of benefits—including peaches, I think—are actually indexed to the Consumers Price Index. But the interesting thing here is, in fact, that when we talk about the Consumers Price Index in the bill we are currently debating, it specifically excludes cigarettes and tobacco products. But when we look at the definition of the Consumers Price Index in the Income Tax Act, all it talks about is “correspond to the movement in the New Zealand Consumer Price Index that has not yet been taken into account by an increase:”.

The reason why that is of interest—it is technical; I am the first to admit that—is that in the Income Tax Act itself, which is, I think, one of the largest pieces of legislation currently on the books, there are absolutely no exceptions when it talks about the Consumers Price Index. Yet in this piece of legislation there is an exception. I am not too sure why we have done that, and I have argued that perhaps there are a number of exceptions if you really want to go—not you, Mr Chair; if Parliament or the Government really wants to get finicky or to make social change or to determine behaviour, because we all admit in this House that we will do anything to ensure that people do not take up smoking or that they can give up smoking. Perhaps that is the reason why it has been included in the definition of the Consumers Price Index as per this bill, but I do not know why we are deleting section 8 of the Customs and Excise (Tobacco Products—Budget Measures) Amendment Act.

I am wondering whether it is one of those things the Government has just decided to sneak in that has no actual relevance to the bill that we are debating, which often happens. It does not mean this is the right place to do this and it does not mean it should be passed under urgency—of that, there is no doubt—but I just cannot understand the logic around excluding tobacco from one measure of the Consumers Price Index in one piece of legislation, but then not having any reference to that at all in other pieces of legislation that, I would argue, in fact carry greater precedence in terms of the amount of time they were consulted.

As someone who has sat on the Finance and Expenditure Committee for 5 years, I think we all agree that there is nothing worse than legislation on our books that uses different definitions for the same term. In fact, in the Law and Order Committee, which the Chair and I are on at the moment, we are debating a different definition used in a bill we are considering versus an Act that went through Parliament, I think, earlier on this year. So to have a definition of the Consumers Price Index that is different from a definition in the Income Tax Act—I am not too sure why.

The question was put that the following amendment in the name of Jacinda Ardern to clauses 19 to 23 be agreed to:

delete clauses 19 to 23.

A party vote was called for on the question, That the amendment be agreed to.

Ayes 44

New Zealand Labour 31; Green Party 13.

Noes 74

New Zealand National 58; New Zealand First 12; Māori Party 2; ACT New Zealand 1; United Future 1.

Amendment not agreed to.

A party vote was called for on the question that the amendments in the name of Richard Prosser to Part 2 be agreed to.

BARBARA KURIGER (Junior Whip—National): I raise a point of order, Mr Chairperson. Sorry, Mr Chair, can you please repeat—I just got a phone call at that point. Sorry, it is 58 votes opposed. Sorry, I just wanted to hear the—yes, that is OK.

The CHAIRPERSON (Lindsay Tisch): It is important when we come to votes that we actually get our positions very clear, and I was having difficulty actually hearing what you were saying other than—I know you were voting against, and that is why we are going forward with this process. But we actually need to make sure—we are in a voting process—that we actually get the votes correct. So it is 58 opposed from the Government, is it?

Barbara Kuriger: Yes.

The CHAIRPERSON (Lindsay Tisch): All right.

The question was put that the following amendments in the name of Richard Prosser to clauses 20, 21, and 22 be agreed to:

in clause 20, after subclause (6) insert:

(7) The rates in this section must correspond to the movement in the New Zealand Consumers Price Index where—

(a) the total percentage increase in the movement in the New Zealand Consumers Price Index measured from that applying on 1 April 2018 is 5% or more; and

(b) the total percentage increase in the movement in the New Zealand Consumers Price Index measured from that applying on the date and all subsequent dates when the requirement to make the immediately preceding adjustment is 5% or more;

in clause 21, after subclause (11), insert:

(12) The rates in this section must correspond to the movement in the New Zealand Consumers Price Index where—

(a) the total percentage increase in the movement in the New Zealand Consumers Price Index measure from that applying on 1 April 2018 is 5% or more; and

(b) the total percentage increase in the movement in the New Zealand Consumers Price Index measured from that applying on the date and all subsequent dates when the requirement to make the immediately preceding adjustment arose is 5% or more; and

in clause 22, after subclause (2), insert:

(3) The rates in this section must correspond to the movement in the New Zealand Consumers Price Index where—

(a) the total percentage increase in the movement in the New Zealand Consumers Price Index measured from that applying on 1 April 2018 is 5% or more; and

(b) the total percentage increase in the movement in the New Zealand Consumers Price Index measured from that applying on the date and all subsequent dates when the requirement to make the immediately preceding adjustment arose is 5% or more.

A party vote was called for on the question, That the amendments be agreed to.

Ayes 56

New Zealand Labour 31; Green Party 13; New Zealand First 12.

Noes 62

New Zealand National 58; Māori Party 2; ACT New Zealand 1; United Future 1.

Amendments not agreed to.

A party vote was called for on the question, That Part 2 be agreed to.

Ayes 87

New Zealand National 58; Green Party 13; New Zealand First 12; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 31

New Zealand Labour 31.

Part 2 agreed to.

Clauses 1 and 2

JACINDA ARDERN (Deputy Leader—Labour): It is my real pleasure to stand and give an address on the title and commencement date for this bill. I think we have argued fairly consistently, despite the title of the Taxation (Budget Measures: Family Incomes Package) Bill, that actually if you take some elements of this bill and analyse them independently, it is very, very clear that there are winners and losers as a consequence of the amendments that the Government has tried to make today. It is very clear that those on the minimum wage who do not have dependants lose out from this package. Look, perhaps the emphasis on families is something that the Government has been very deliberate about, and I will come to whether all families are covered by this package, but it is very clear that there is a group of New Zealanders who are increasingly left out by this Government. It is those who are on low wages who do not have dependants—that will often mean that they are young people in minimum wage jobs—who will really be struggling and will continue to struggle after this legislation passes. In fact, I can see over here that a dollar sits—

Grant Robertson: Oh, there it is. We were looking for that.

JACINDA ARDERN: Ha, ha! We have been looking for that. A dollar is sitting by Andrew Little’s chair, and that is because yesterday he placed emphasis on the fact that someone who is in a minimum wage job—as Grant Robertson has pointed out, perhaps the cleaner in his office—who is earning a small wage will lose the independent earner tax credit that exists currently, because of these changes, and the small $11 increase they receive will, therefore, diminish down to just $1. So this package, very clearly, is not about those income earners in New Zealand. Those are the people who lose out.

Equally, though, I would not want there to be an assessment because this bill is called the “Family Incomes Package” bill that all families end up winning out of this bill. In fact, I would suggest that a more accurate name for the title of the bill would have been the “Taxation (Budget Measures: Some Families’ Incomes Package) Bill”, because those families who have one child and who earn even less than the median income—from memory, from about the $45,000 mark you end up being worse off as a consequence of this package. In fact, the Government is determined that abatement should kick in at $35,000. Families living on $35,000 with kids do not feel wealthy in New Zealand, and yet that is the message that this bill sends. Clearly, it is the “Some Family Incomes Package”; it is the “Less-than-median-income Incomes Package”—wordy, I know, but more accurate—“for Families”.

I think probably, also, it would be fair to acknowledge in this bill—the Minister in the chair, Paul Goldsmith, got caught out when trying to rebut Grant Robertson, because, of course, he was trying to argue who was better off overall, whereas it is very, very clear that you do have to take into account the context and the vibe of the thing to really assess who is going to be better off.

Kris Faafoi: Context and the vibe.

JACINDA ARDERN: Ha, ha! The context and the vibe—because, actually, taken as individual entities in this bill, there are distinct losers and distinct winners. It has simply been our argument that we could have done better if we really wanted to target that support.

I would argue that the bill should also, in the title, capture the trade-offs that are made in the way the Government has pitched its spending. We have reiterated this many times: $1.9 billion of spending does come at a cost elsewhere. It seems timely to me that I just had someone from my electorate contact me today to say that they had just sat through a day of workshops on fundraising for their local school—a day of workshops on fundraising to provide basic needs for their local school. That individual in question might get 20 bucks out of this Budget, but you can bet your bottom dollar that that 20 bucks will go into the next school fair, or go to the next gala day, or go to the next set of raffles in order to support schools whose operational funding has been frozen for too long. This bill should be titled the “Budget Trade-offs Bill”, the “Pay with One Hand, Receive with the Other Bill”, because disproportionately we have affected those who do not need it and we are taking from those who do.

On the title and commencement—oh, but wait, there is more, Grant Robertson—if the Government really meant it, it would bring it in earlier. It would bring it in earlier. New Zealanders will be waiting until well after an election cycle, in which case Labour will be in office and we need not worry. So all will be well—that will be a Government that will spend wisely.

The CHAIRPERSON (Lindsay Tisch): I am going to call—

Grant Robertson: What’s-his-name.

The CHAIRPERSON (Lindsay Tisch): James—James Shaw.

JAMES SHAW (Co-Leader—Green): Why, thank you very much, Mr Chair!

The CHAIRPERSON (Lindsay Tisch): I am giving you a platform.

JAMES SHAW: I am glad that my previous contributions have been so memorable. I would like to continue where my colleague Jacinda Ardern was leaving off there, to do with the commencement date that is outlined in the clauses here. This is a piece of legislation that drops in, literally, only 120 days before the election day itself, and so it is entirely probable that there will be a change of Government before the commencement date that is outlined here in this legislation.

As this whole package, to which this bill gives effect, was drafted by someone who wears a number of hats—one of which is Minister of Finance, another of which is campaign director for the National Party—it is a highly political and politicised document. If we wanted to actually ensure that the bill does what it says it is intended to do earlier on in the objectives, which is to support families and family incomes, then we would ensure that its start date would be before the election and not to take place after the election.

I would propose that the commencement date—rather than being on 1 April 2018 as outlined in clause 2(2), (3), and (4), with section 24 coming in May 2016 and clauses 2(2) and (3) being 1 April 2018—changes to 1 July 2017. That would ensure two things: it would ensure that the families who absolutely need the support that is available—paltry though it is through this bill—would actually start to receive it before the election. But the other thing is that by having it be on 1 July, it would give the Inland Revenue Department and the tax and accounting profession in New Zealand time to adjust their own systems in what is, frankly, a fairly mind-bogglingly complex set of interrelated tax and benefit systems here.

I know that that is a tight deadline for both Inland Revenue and for private and public sector organisations to adjust, but I think that just over 2 months should suffice. I think it is important that we send a very clear signal that, actually, we should take what it says in the bill as being the primary purpose and actually give effect to it as fast as possible, if the Government is absolutely honest that the intention here is to ensure that families who are really doing it tough in New Zealand and primarily receive the benefit of those changes to Working for Families, then actually start to receive that boost to their income as fast as possible, because they have waited for 8 years for anything.

In fact, in 2013 Working for Families expenditure peaked and has been steadily declining since, because families have been slowly moved off the Working for Families system by this Government since 2013, but are not out of hardship. They are actually in increased hardship as a result of actions that this Government has taken over the course of the last few years.

I think if the Government is sincere—and it keeps telling us in this debate that it is sincere—that the intention here is that those families receive that benefit and that it is designed to lift New Zealand’s hardest-up children out of poverty, then it should act on it as fast as possible and not wait to kick it off until well after the election—in fact, over a year down the track. So it is on the commencement date that I propose that we make an immediate change.

Hon PAUL GOLDSMITH (Minister for Tertiary Education, Skills and Employment): It is the usual practice when tax changes are brought in that they start on 1 April the following year, and that is the process that we are following this time. I will just comment on the statement that the member James Shaw made that it was highly probable there would be a change in Government. I reject that assertion. I think it is very unlikely, because this Government is one that is delivering for all New Zealanders.

GRANT ROBERTSON (Labour—Wellington Central): That is an interesting matter—an interesting matter was introduced to the debate there by the Minister in the chair, Paul Goldsmith. I do not know. I am backing the overwhelming logic of James Shaw’s contribution there that, actually, a change of Government is extremely likely. Mr Goldsmith at that point will have to consider his future. Perhaps he should run a little bit harder in Epsom—you know, really try to become an MP. He might actually enjoy that.

I am rising, actually, in support of the amendment in the name of Marama Davidson, who is attempting here to change—sorry, I will just get the right bits of paper—clause 2 and bring into force the clauses of the bill that deal with the calculation of the family tax credit from 1 July 2017 rather than 1 April 2018. I understand the point that the Minister has made that there is a process, a sort of regular turnover of when tax changes are made. That is fine, but the reality is that if the Government is serious about supporting working families, that support does not start next year. It should start right now. Here is the last chance for the Government in this debate to show that this package is not a straight-out election-year bribe. Here is the chance, because if it was not, the Government could say: “You know what? We agree. Working families deserve that now. We are going to legislate it. We are going to do it now.” But it is not. That is one of the many reasons that the Labour Party is opposing this legislation.

It is not a real commitment to supporting families, and so Marama Davidson has an amendment that says: “Let’s do it from 1 July. That gives the Government a couple of months to get things sorted, to make sure that it has got all the systems in place, so let’s push the button and give working families something.” This would be the opportunity for the Government to do that, but it is not doing it. It is not interested because it is not about working families; it is about an election. It is about a Government with so few ideas about how it can improve the country that it has got this one, and it is going to push it out to 1 April 2018 and say to New Zealanders: “You only get this if you vote for us.” Well, that is not true. There will be support for working families in New Zealand from a different Government, from a Labour-led Government. I am sure the Greens, and New Zealand First, even, would support getting that money to the families who need it now—getting it to the 800,000 New Zealanders who earn below $14,000 a year, who get nothing out of this package.

The Working for Families changes here are modest. They are extremely modest, and, in fact, in some senses they restrict the way that Working for Families works. But the actual increases to tax credits, which is what is dealt with in terms of the amendment that Marama Davidson has put up, are ones that we do agree with. We do support those, so let us do it now. Let us actually show our commitment as a Parliament to saying that working people deserve a fairer share in the prosperity of New Zealand. But the National Government is not going to do it, because it does not actually believe that. It does not actually believe in giving people a fair go and a fair share in the lower and bottom end of our income scale, because that is not what it is about.

This is a package that is firmly and squarely directed at playing clever politics. Is it clever politics? I do not actually know that it is. I think, when I go around New Zealand, that what most New Zealanders say is that they want to see a housing market where people get a fair go, where first-home buyers can buy their property, and where we do not have people who are homeless. I think they want a health system where they actually can get the care they need, and I see this morning GPs are saying prices are going to go up because of this Budget, because not enough has been invested in health. That is what people want. And they want to make sure we have got an education system that is a truly free education system for our school students and that provides support for students to be able to be part of a new economy.

Simon O’Connor: I don’t think that member understands capitation in health.

GRANT ROBERTSON: That is what New Zealanders want, and yes, they will accept that there should be some family income support. Well, do it now. Simon O’Connor seemed to have a bit to say there. Get up, Simon O’Connor, and tell me why working people do not deserve these changes to come in from 1 July this year. If you do not, you are showing once and for all that this is an election-year Budget. It is not a Budget that is about what is best for New Zealand; it is a Budget where Steven Joyce is trying to work out what is best for him in his role as campaign manager. We are not going to be part of that on this side of the Chamber. What we want to do is actually improve the lives of working New Zealanders. If National wanted to do that as well, here is its final chance on this bill: vote for the amendment.

KRIS FAAFOI (Labour—Mana): Clauses 1 and 2 are always the title and commencement. It is an opportunity where we get to offer some alternative titles for the bill. The bill as it stands is called the Taxation (Budget Measures: Family Incomes Package) Bill, which I think is entirely inaccurate. I think we should consider changing the name of the bill to “Taxation (Budget Band-aid Measures) Bill”, because that is all that is offered within this piece of legislation. To some degree the band-aid is also very old and very septic, because if you look at it for those who are the most in need, who are in the most pain, there is little, if anything, available to them in this “band-aid Budget”. There is nothing in the short term that is going to help them in any way—to help them in their plight—and if you look at what it offers to those on the highest incomes, there is five times more for them in this Budget.

We have talked about the independent earner tax credit. That was another measure that this Government put in, again as a band-aid, but in this piece of legislation it is removing that band-aid—a very important band-aid for those people who are independent and earning between $24,000 and $48,000, giving them access to $10 a week. The Government has removed that and tried to convince those people who have got that tax credit that they are much better off because the Government is giving them $11 but taking away $10. That is a pretty poor band-aid for people who are earning the lowest incomes in New Zealand.

Then we have a look at the tax changes within this bill. The lowest quintile—the lowest 20 percent of earners in the country—will get about $5 a week under the Government’s changes. That is not anything to sniff at for people, but when you look at the context, as the Minister said earlier, the top quintile—those earning the most—will get $35 a week. That is five times more than the people who are at the bottom end of the income-earning bracket, who are struggling to make ends meet, who are struggling to even dream of owning a home, and who are probably on a Housing New Zealand waiting list. They get $5, and those people who earn at the other end of the spectrum get $35 a week.

So this is not a “Budget Measures: Family Incomes Package”. It is a band-aid, because the Government is trying to appease people who are hurting now and is not addressing the fundamental reasons why they are hurting. This Government has not done that for the last 8½ years. It has not addressed incomes, and it has not addressed the three most important issues that New Zealanders are most worried about, around health, housing, and education. There is nothing in this Budget to make it any easier for a low-income family or a middle-income family to be able to buy a house—nothing in these Budget measures whatsoever.

The CHAIRPERSON (Lindsay Tisch): Come back to the bill.

KRIS FAAFOI: That is right, because this is a band-aid bill. It is not dealing with the fundamental issue here. There is serious pain and ailment with families, and this Government has delivered this Budget, which is a band-aid. It is doing nothing fundamental to deal with the issues that affect families around housing, around health, and around education.

The CHAIRPERSON (Lindsay Tisch): Come back to the bill.

KRIS FAAFOI: That is why this is a band-aid bill: because nothing has been done in those areas. We get a little bit of tax change. We get a little bit of “giveth”, a little bit of “taketh”, and some good work under Working for Families, but we get nothing fundamental in this bill to help the families whom it claims to help. How can it, when the bottom 20 percent of earners get $5 a week and the top get $35 a week? Yesterday at 2 o’clock in this Chamber the Minister of Finance stood up and said that this is a Budget about low and middle income earners. Well, that is a facade, and every other Budget that this Government has delivered has been a facade. The Government is offering tax cuts to those who earn a lot, and failing to recognise that there is serious need in the areas of housing, health, and education—

The CHAIRPERSON (Lindsay Tisch): Come back to the bill.

KRIS FAAFOI: —and that is why this bill fails to address those issues. The title of this bill should be “Band-aid”, because it is a short-term measure to try to address some fundamental issues that this country faces. This bill fails to address them and because of that this Budget has failed, this Government will fail, and on 23 September there will be a change.

MICHAEL WOOD (Labour—Mt Roskill): I have been thinking about the title of this bill, and I think that instead of titling this bill the Taxation (Budget Measures: Family Incomes Package) Bill, it would be more accurate to title it the “Taxation (Missed Opportunities) Bill”, because what we faced this year coming into this Budget was a real opportunity.

New Zealanders have worked hard; New Zealanders have sucked up a lot of downward pressure on their incomes over the last 9 years, and here was an opportunity for this Government to actually do something about the problems that we face in our country and to do something to realise the opportunities that we have. The thing is, you can do that through the tax system. The tax system is absolutely integral to people’s incomes; it is absolutely integral to the economic signals that we send; it is absolutely integral to the way that people invest in our economy and behave. But this bill—and it is becoming typical of this Government—simply fiddles around the edges. So what are the problems that we face and how has this bill addressed them?

Well, let us look at some of the family income changes that are proposed in this bill. If we look at the core changes around the tax system, this is where the rubber really hits the road: $1.9 billion of income tax changes in this package. It is five-sevenths of the total amount of money that has been reallocated within this package. But do you know what? For 35 percent of wage and salary earners earning under $48,000, it delivers nothing. It gives something to every single wage and salary earner over $48,000, but for those under $48,000, 35 percent of them receive absolutely no benefit from this. That is a missed opportunity because, by the Government’s own account, those are the people who need support and who need a bit of backing, but they are getting nothing. Worse than that, we have got 3,000 families—and this is in regulatory impact statement—who are actually worse off as a result of these changes. Well, surely that is a missed opportunity as well, given the surpluses that this Government has got to do something good with.

In these changes we could have had a real focus on people’s housing needs—a real focus on them. Instead, we got a bit more money going into the accommodation supplement. But, actually, that does not even go near to making up for the fact that the accommodation supplement has been frozen for the 9 years of this Government. So the increases that the National Government is crowing about only go part way to filling up the fact that people have been receiving less of an accommodation supplement than they did 9 years ago. Nine years ago the average rent was $450; it is $690 now. None of these changes, even combined in the best-case scenario, go any way towards meeting that.

As my colleague Kris Faafoi mentioned before, there are huge missed opportunities in terms of looking at a fair distribution within our tax system in this bill. We know that there are inequities at the moment, but what does this bill do? It actually makes them worse. Of that 1.9 billion—it is a lot of money—how much of it goes to people in the bottom half of income earners? It is the same amount as goes to the top 10 percent of income earners. That is the way that we are distributing income in this tax bill, and that speaks to a massive missed opportunity to help those who really need it.

Finally, I turn to the commencement date. I really want to pick up on this because I have heard time and time again from the National speakers in this debate about what an important set of changes this is and how much difference it will make in people’s lives. I can guarantee you that I can go back through Budget speeches and Budget bills year in and year out when this House has voted to bring changes in before the first of April next year. We heard from the Minister in the chair, Paul Goldsmith: “Oh that is just the way that we normally do things.” If this is so important, and if you have got such a competent revenue Minister in Mrs Collins, surely she could crack the whip and get IRD to take out the Working for Families family tax credit changes in here—which are good and are helpful, with a few issues around abatement rates—and bring them in earlier as per Marama Davidson’s amendment. That is one good and useful thing we could do, and we have heard no explanation whatsoever from this Government about why those people have to wait a whole other year past the next election to get any relief from this bill. Thank you.

JAMES SHAW (Co-Leader—Green): I just wanted to pick up on what Michael Wood was saying then about comments that Minister Goldsmith had made earlier that the convention in tax law is for it to take effect on 1 April the following year. He did not actually provide any reason logistically why you could not vary that. The excise tax on tobacco, for example, can kick in immediately, and we know that the convention there is that when you do things like increase excise taxes and so on, you do that immediately after the Budget so as to try to avoid people modifying their behaviour in advance of it coming in. With the inverse—which is what you have got here, and essentially it is a reduction in income taxes—the only logistical reason why you cannot bring that in any earlier is the amount of time it takes for the Inland Revenue Department and for different organisations to work those changes through their payroll systems and so on, which is why Marama Davidson’s amendment to the clause is that the date of commencement should come forward to 1 July.

We are not suggesting that it comes forward immediately. That would be impractical, simply because the Inland Revenue Department and different organisations would not be able to adjust their systems in time to deal with it, but we think that just over 2 months is actually not an unreasonable period of time. It is tight, but it is doable. So I would like the Minister to address not what the convention is but why there is a logistical reason why we cannot bring this forward and make sure that the families whom this bill says it intends to reach and intends to support start receiving that support as soon as is practically possible, rather than waiting more than a full year for the introduction of this—and waiting for the election. This really does speak to the sincerity of the Government in its intention when it comes to the purpose of the bill. The commencement clause actually is relevant to the actual purpose of the bill here, and I do think that the Minister needs to address why it is that he thinks that it is not actually practical to do it any sooner. Simply relying on or hiding behind convention does not cut it.

A party vote was called for on the question, That Clause 1 be agreed to.

Ayes 86

New Zealand National 58; Green Party 12; New Zealand First 12; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 31

New Zealand Labour 31.

Clause 1 agreed to.

The question was put that the following amendment in the name of Marama Davidson to clause 2 be agreed to:

replace “clause 2(2)” with:

(2) Part 1 other than section 6 comes into force on 1 April 2018.

(2A) Section 6 comes into force on 1 July 2017.

A party vote was called for on the question, That the amendment be agreed to.

Ayes 55

New Zealand Labour 31; Green Party 12; New Zealand First 12.

Noes 62

New Zealand National 58; Māori Party 2; ACT New Zealand 1; United Future 1.

Amendment not agreed to.

A party vote was called for on the question, Clause 2 be agreed to.

Ayes 86

New Zealand National 58; Green Party 12; New Zealand First 12; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 31

New Zealand Labour 31.

Clause 2 agreed to.

House resumed.

Bill reported without amendment.

Report adopted.

Third Reading

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

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

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

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

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

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

Hon Jacqui Dean: Oh, don’t be harsh!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ALASTAIR SCOTT: —income as a result of those accommodation allowances.

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

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

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

I want to speak directly to the last sentiment that—

Hon Maggie Barry: That made no sense.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Hon David Parker: After the election.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

MAUREEN PUGH (National): Thank you, Mr Assistant Speaker—

Hon David Parker: So they get away with it.

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

Hon David Parker: Point of order, Mr Speaker.

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

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

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

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

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

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

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

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

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

MAUREEN PUGH: Ah, the bill—the taxation bill.

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

MAUREEN PUGH: Right—thank you, Mr Assistant Speaker.

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

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

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

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

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

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

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

Kris Faafoi: I hate that.

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

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

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

Chris Bishop: You opposed it at the time.

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

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

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

Peeni Henare: $1.

MICHAEL WOOD: One dollar a week.

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

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

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

The ASSISTANT SPEAKER (Hon Trevor Mallard): No.

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

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

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

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

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

Hon Maggie Barry: Thanks to National.

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

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

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

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

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

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

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

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

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

The ASSISTANT SPEAKER (Hon Trevor Mallard): Order!

MICHAEL WOOD: —better than this tax bill.

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

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

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

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

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

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

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

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

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

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

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

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

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

A party vote was called for on the question, That the Taxation (Budget Measures: Family Incomes Package) Bill be now read a third time.

Ayes 86

New Zealand National 58; Green Party 12; New Zealand First 12; Māori Party 2; ACT New Zealand 1; United Future 1.

Noes 31

New Zealand Labour 31.

Bill read a third time.

The House adjourned at 3.21 p.m. (Friday)