Adams AmySecond ReadingHon 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 $1836.64 a year and Labour is opposing it. It will also reduce by about 50000 the number of children who are living in families receiving less than half the median income—50000 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 $22000 a year and just over $20 a week for anyone earning more than $52000 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 $24000 and $48000 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 $35000. 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 $35000 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 136000 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.