Burns Brendon: Taxation (Budget Measures) Bill — In Committee 
Text is incorporated into the Bound Volume 
Burns Brendon: Taxation (Budget Measures) Bill — In Committee 
[Sitting date: 20 May 2010. Volume:663;Page:11156. Text is incorporated into the Bound Volume.] 
BRENDON BURNS (Labour—Christchurch Central) 
: 
 I am very pleased to speak on Part 2 of the Taxation (Budget Measures) Bill. My colleague Stuart Nash chose a Rolling Stones analogy for this Budget and this bill in terms of saying it did not give people satisfaction. There are other Rolling Stones songs that are equally appropriate. One is “Paint it Black” because this is a “black” Budget and bill for many New Zealanders at the lower end of town. Another song is “Gimme Shelter” from the top tax rates—and in the words of another song “Gimme my money back”. If members recall there is a Rolling Stones album called “Voodoo Lounge” and this bill is about voodoo economics. President Reagan believed that if he cut the top tax rate suddenly there would be a new surge of economic growth that would pay those funds back. We will see the borrowing of half a billion dollars in order to pay for tax cuts at the top end of town. “Jumping Jack Flash” is another Rolling Stones song. Jack Flash is very happy. He is jumping because he is receiving the benefits of this Budget. 
Let us turn to Part 2 of the bill which has two changes. The one that I want to speak in support of is the integrity of the Working for Families package and the efforts of the Government to remedy the problem arising from some people offsetting investment losses such as losses from rental properties against their taxable income for the purpose of increasing their Working for Families entitlements. There are no problems from this side of the House with that change in the bill. 
But the other change relates to the indexation of the Working for Families abatement rate. The party opposite used to rail about the impact of fiscal drag on working people and say we needed to adjust the rates so that people would not have their incomes eroded by inflation. Yet here were are heading into an inflationary period that Treasury estimates will hit darn near 6 percent and we see this bill de-index the abatement rate for Working for Families. 
Those working New Zealanders who— 
Hon Dr Wayne Mapp 
: There is a tax reduction instead. 
BRENDON BURNS 
: They will get tax reductions instead? Oh wonderful! I ask Mr Mapp whether those reductions will not be affected by 6 percent inflation or by the July increases in power and petrol prices as a result of his subsidies in the emissions trading scheme. 
In this part of the bill we see a move to stop indexing for the impact of inflation on the abatement rate. There is no surprise about that coming as it does from the party opposite. Was it not the Prime Minister who described Working for Families as communism? “Communism by stealth” was the phrase that he used. Well excuse me if I am a mite suspicious of Part 2 when we are seeing very stealthily the de-indexation of the abatement rate at a time of high inflation and at a time when it is most important that Working for Families continues to rise with inflation. Yet this bill does absolutely the opposite of that. It will stop the inflation indexation of the abatement rate and that of course will mostly come at the expense of lower to middle income families who are the major beneficiaries of Working for Families. 
Yes as the bill acknowledges there are people who are perpetrating rorts and maximising their exposure to Working for Families and this part attempts to close off that. We have no difficulty regarding that. But de-indexing from inflation at a time when we are expecting by Treasury estimates to see inflation go to 6 percent in the year ahead is being done at absolutely the wrong time. It is being done because this Government really has no commitment to Working for Families; it regarded it as a terribly awfully socialist policy. The fact is that Working for Families has lifted many thousands tens of thousands of New Zealand families out of poverty and it sees many families not pay tax because they are on low to middle incomes and have a number of children. Those families deserve to be supported. We are supposedly a Parliament a Government and a nation that wants to protect and preserve families and their integrity. 
The changes in Part 2 are around the integrity of the Working for Families package. I applaud the changes that will mean that people cannot rort Working for Families. But at the same time this part clobbers ordinary working families because at a time of such high inflation we will see an end to indexation. This will simply be one of those exercises that this Budget repeats time and time again: it gives with the one hand and it takes back viciously with the other. It takes back viciously with the other because we will see an end to the indexation of Working for Families at a time when inflation will go through the roof. That is wholly inappropriate. Members opposite should be screaming against that change.