Brash Don: Questions for Oral Answer — Questions to Ministers 
Brash Don: Questions for Oral Answer — Questions to Ministers 
[Volume:618;Page:13545] 
3.  
Dr DON BRASH (Leader of the Opposition) 
 to the  
Prime Minister 
: Is she concerned about the impact of the Budget on work incentives for middle-income families given her statement that “when you have you know targeted assistance like this you always end up with you know abatement levels”; if not why not? 
Rt Hon HELEN CLARK (Prime Minister) 
: 
 High effective marginal tax rates are a characteristic of targeted assistance systems and have been a feature of New Zealand family assistance measures for many years. The point of the Budget measures for working families is to ensure that people who go to work are better off than those who do not—an objective the National Party has supported in the relatively recent past. 
Dr Don Brash 
: Does she accept that the Budget makes the problem of high effective marginal tax rates much wider with thousands of families that annually earn between $38000 and $70000 losing over 89c of every extra dollar they earn in 2007 after tax and abatement of family assistance are taken into account; if not why not? 
Rt Hon HELEN CLARK 
: What I acknowledge is that the Budget shifts the inherent issue of effective marginal tax rates further up the income scale. I note for example that in the 1990s the marginal rate for single parents returning to work was 90c in the dollar. What the Budget does is shift the effects further up. 
Sue Bradford 
: Has the Prime Minister ever heard the leader of the National Party raise any concerns about the well-being of low-income families in relation to abatement levels or their level of income overall or does she believe that only those families earning $55000— 
Mr SPEAKER 
: The first part is out of order because it is about something for which the Prime Minister is not responsible. However the member can carry on with the second part which she had just got to. That will be the question—the second part which the member had just started. 
Sue Bradford 
: The second part of the question would fall into the same problem. 
Mr SPEAKER 
:Well it still counts as a question. 
Hon Peter Dunne 
: Where does the Prime Minister draw the line between the adverse impact of high marginal tax rates in terms of increasing the income range at which targeted assistance is made available and the fact that a consequence of this package may well be to encourage more people back into the workforce—where is the balance between the two issues? 
Rt Hon HELEN CLARK 
: The key thrust of these measures is to get people off benefits and back to work. Therefore we have to ensure that people who are working for relatively low incomes are better off. That is why they get a boost. But of course with any of these targeted assistance measures at some point they abate out having the acknowledged effect of an effective marginal tax rate. We do not have any evidence to suggest that people will be dissuaded from working if they are in those upper-middle incomes that hit the higher effective marginal tax rate. 
Hon Dr Michael Cullen 
: Can the Prime Minister confirm that the clearest alternative to such a package is the payment of universal family benefits of this kind of size; if so is she able to inform the House of when New Zealand last had a universal family benefit? 
Rt Hon HELEN CLARK 
: Rather a long time ago and it was paid at rather a low level. The reality is that a National Government I think got rid of such a universal benefit. Of course to pay it at a level that was meaningful in terms of raising the incomes of low-income families and taking children out of poverty would involve a huge sum of money. 
Stephen Franks 
: Why did she not ensure that her Government’s Budget instead of having these high abatement rates treated husband and wife families with children as the true economic partnership units they are with income sharing; is the reason perhaps that it was not suggested by anyone with sufficient political clout? 
Rt Hon HELEN CLARK 
: No that is not the reason. My advice is that income splitting would not have delivered anything like the gains for working families with children that this package delivers. 
Dr Don Brash 
: Is it true that in contrast to the Budget’s “making work pay” slogan these extraordinarily high marginal tax rates do not make it pay for these families to work more do overtime or take a promotion; and what does she make of the indifference of her Minister for Social Development and Employment who dismissed this information with the comment “So what?” 
Rt Hon HELEN CLARK 
: As I said earlier there is no evidence whatsoever that high effective marginal tax rates would cause middle-income families not to want to go to work. I can say that with unemployment at 4.3 percent any such person turning up to register for a benefit will be told where the job down the road is. 
Rt Hon Winston Peters 
: Can the Prime Minister tell the House whether she has received any reports in respect of a potential ACT - National Party Government and its policy towards the ordinary and lowly paid New Zealanders given that one of the provisos would have to be that we have a general flat rate of tax of 20 percent? 
Rt Hon HELEN CLARK 
: The advice I have received is that say the family in Waihi with four dependent children and one income of $55000 a year—which is going to be better off by $149 a week under our package—would be delivered $39 under the 20c flat tax policy of ACT which presumably is supported by National at a cost to the taxpayer overall of $5.5 billion. Our very effective measures which take children out of poverty cost $1.1 billion a year. 
Dr Muriel Newman 
: In light of the advice that she has received about abatement levels what is the highest rate of effective marginal tax that a New Zealand working family might pay under Labour’s 2004 Budget? 
Rt Hon HELEN CLARK 
: I do not have that precise information in front of me but I would be surprised if it were much higher than the 90 percent it reached under Bill Birch. 
Sue Bradford 
: If the Government is concerned about taking children out of poverty why must we wait another 3 years for the spending of the full pot of $1.1 billion? 
Rt Hon HELEN CLARK 
: Because this Government runs a strong Government fiscal position and we would not do any poor family a favour if we spent at an unsustainable level. What I am finding rather amusing at the present time is the National Party joining up with some in the merchant banking community to claim that we should be borrowing a whole lot more so that we can cut taxes for their rich friends. 
Dr Don Brash 
: If high effective marginal tax rates are of so little consequence why has she spent so much time lauding the Government’s success in lowering effective marginal tax rates at the lower end of the income scale? 
Rt Hon HELEN CLARK 
: Precisely because I think both the member and I would agree that it is a very good thing to get people off benefits and into a job. 
John Key 
: Can the Prime Minister confirm for the House that even Labour under its own Budget plans will be borrowing in the years ahead? 
Rt Hon HELEN CLARK 
: It would be nothing like the borrowing that would come with the tax slashing for the rich that would come from those parties opposite!