Volume 617 Week 58 - Thursday 27 May 2004 
Volume 617 Week 58 - Thursday 27 May 2004 
[Volume:617;Page:13385] 
Thursday 27 May 2004 
Mr Speaker 
 took the Chair at 2 p.m. 
Prayers 
. 
Appropriation (2003/04 Supplementary Estimates) Bill 
Procedure 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I hereby present the Supplementary Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2004. I move  
That this paper be published 
. 
Motion agreed to. 
Appropriation (2004/05 Estimates) Bill 
First Reading 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I move  
That the Appropriation (2004/05 Estimates) Bill be now read a first time. 
Bill read a first time. 
Budget Statement 
Budget Debate 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I move  
That the Appropriation (2004/05 Estimates) Bill be now read a second time 
. 
Budget 2004 is the fifth budget I have had the honour of presenting to Parliament for its consideration. This continuity of fiscal management has allowed a consistency of approach which today’s budget reinforces. 
Throughout those five budgets there have been six themes: predictable stable and prudent management building fiscal strength for the long term; expanding the role of government in supporting economic development; rebuilding capacity in the core state sector; strengthening social provision in particular in health education and housing; maintaining the revenue base while progressively simplifying the tax system; and providing greater security and opportunity especially for low to middle income New Zealanders. 
All five budgets have been prepared against a background of international economic uncertainty. From the tail end of the Asian financial crisis the story has been one of uncertainty driven by international terrorism war actual or feared disease outbreaks economic stagnation and uncertain progress on international trade liberalisation. To describe the government as somehow lucky over the last four and a half years is to take a view of the world which penetrates barely beyond our own shores. 
This uncertainty to some extent continues. Events in the Middle East point to continued conflict. Most of the major European countries show only limited signs of economic recovery. Terrorism seems to be spreading rather than being contained. 
Against this the United States economy is growing strongly the Japanese economy is looking more vigorous than at any time for well over a decade the Australian economy continues to move at a reasonable pace and China’s growth remains very high. 
Over the next year assuming no serious worsening of the international situation this growth in our major economic partners should assist to begin rebalancing the New Zealand economy. Over the last year economic growth has been substantially higher than forecast in Budget 2003 largely driven by the domestic sector. The strong New Zealand dollar – the mirror image of the effect of the large American double deficits on the greenback – has placed pressure on the exporting sector to the considerable concern of the government and exporters. 
This pressure has now partially abated. With strengthening external markets strong commodity prices sound fiscal management at home more flexible monetary policy and some weakening in domestic pressures growth will after continuing to moderate over the next year or so then begin to pick up in a more balanced fashion. 
Budget 2004 forecasts growth for the year to March 2005 of 2.8 per cent falling slightly further to 2.5 per cent for the year ended March 2006. Growth will then pick up to 3.4 per cent for the following year. From that point on the forecasts return to Treasury’s current assumption of medium term growth of 3 per cent. By the end of the period the current account deficit is forecast to improve having peaked at just over 6 per cent of GDP. 
It is interesting to note that the forward fiscal forecasts for Budget 2004 are similar to those in last year’s budget though the outturn has been substantially better. 
That has been a feature of this government’s fiscal and economic management. We have consistently outperformed our own forecasts. Over the last three years we have also outperformed most of the rest of the developed world. In 2003 New Zealand’s economy grew by 3.5 per cent compared with the average of 2.2 per cent for the OECD as a whole. This success by New Zealand businesses New Zealand workers and the New Zealand government needs to be celebrated especially given the tendency in some quarters to be in a permanent Cassandra-like mode predicting gloom and doom amidst the evidence of success. This has been a conflict between practice and outdated theory – and the former is clearly proving a superior guide to performance. 
There are extreme ideologues who in order to feel comfortable need to see policies that make most people miserable. The government has been guided by the belief that economic progress cannot be achieved by the waging of near permanent war on the hopes and aspirations of most New Zealanders. 
The fact is that the government can point to considerable success in its economic programme. This can be measured not just in crude Gross Domestic Product terms but also in those indices that measure the outcomes of economic policy which contribute to wellbeing. New Zealanders rightly believe that success is defined as much by quality of life a better environment and more effective health and education services as by narrowly defined economic performance. 
Mr Speaker Budget 2004 continues the six themes I referred to earlier. The significant change this year is that our outstanding success in providing predictable stable and prudent fiscal management means that we are able over the next three years to commit very substantial additional resources to enhancing security and opportunity especially through the  
Working for Families  
package being announced today. 
The key fiscal objective we set for ourselves early in our first term was to keep gross sovereign-issued debt below 30 per cent of GDP on average over the economic cycle. When we took office it was in fact 33.7 per cent of GDP. By the end of this fiscal year on 30 June it is expected to have fallen to 24.7 per cent. 
This overachievement is in part a consequence of growth being consistently better than forecast. Under these circumstances the government has demonstrated the discipline to bank the surpluses for the future. This has been against a strange coalition of forces calling for substantial tax cuts and/or expenditure increases at the expense of future generations. 
Given this achievement the government is now in a position to redefine its long term debt objective to express its continued commitment to prudent fiscal management. The new long term objective will be to manage total debt at prudent levels with gross sovereign-issued debt as a percentage of GDP slowly reducing over the longer term and passing through 20 per cent of GDP before 2015. 
Over the next three years largely as a consequence of the investment in the  
Working for Families  
package the gross sovereign-issued debt to GDP ratio will decline more slowly. At 30 June 2005 it is forecast to be 22.6 per cent of GDP. But thereafter the rate of decline slows so that at 30 June 2008 it is forecast to reach 21.8 per cent of GDP. In nominal terms gross sovereign-issued debt will rise by $2.3 billion over the forecast horizon (30 June 2004 to 30 June 2008). This emphasises there is very little room on the basis of these forecasts for any further substantial fiscal loosening. 
Two things flow from this. The first is that any such loosening – whether by way of tax cuts or by way of expenditure increases – would place significant pressure on monetary policy with the likelihood of higher interest rates. 
The second is that if such increases are to be avoided then substantial reductions in revenue over the forecast horizon would need to be matched by substantial reductions in expenditure. As a number of countries notably the United States have demonstrated more than once in the last twenty years there is no such thing as a free lunch in fiscal policy. 
This relative tightness around fiscal options over the next three years may seem to be at odds with the forecast surpluses. For the current 2003/04 year the operating balance is forecast to be $5.9 billion or 4.3 per cent of GDP. Looking forward the forecast surpluses for 2004/05 are $5.7 billion 2005/06 $5.0 billion 2006/07 $5.1 billion and $5.4 billion for 2007/08 an average of 3.4 per cent of GDP. 
These are as I said just sufficient to reduce the gross debt to GDP ratio from 24.7 per cent as at 30 June 2004 to 21.8 per cent at the end of the forecast period on 30 June 2008. 
This small reduction can be reconciled with the large forecast operating surpluses through a clearer understanding of how these surpluses are calculated and what other elements have to be accommodated before calculating the gross debt outcome. 
The primary element that has to be allowed for is capital expenditure which is not financed off departmental balance sheets. This includes two especially large elements which under standard accounting rules are treated as capital expenditure: transfers to the New Zealand Superannuation Fund and student loans. On top of these are very substantial capital expenditures in Defence Health Corrections and Education. 
Other significant elements include equity injections to Crown entities. In years of slower growth in particular as over the next two years there is no reason why all of these injections or advances for student loans should necessarily be funded out of current operating revenue so that the small rise in nominal gross debt is not of concern to the government. But it would be most unwise to fund the bulk of such expenditure from borrowing particularly as we approach the beginnings of the demographic transition. 
Mr Speaker the increases in spending committed to in Budget 2004 are significantly higher than in previous years. New operating spending totals around $2.4 billion in 2004/05 rising to $3.8 billion in 2007/08 with the increase largely reflecting the phasing in of the  
Working for Families  
initiatives. As we have achieved significant policy goals in Budget 2004 prudent management at this stage would suggest that new operating spending in next year’s budget should be limited to around $1.8 billion and to $1.6 billion in each of the following two years. 
These figures represent the forecast headroom at this point for additional new spending. This does not include the great bulk of ongoing expenditure built in to baselines. Total core Crown operating spending for the current year is forecast to be $42.2 billion or 30.6 per cent of GDP. By 2007/08 this will rise to $52.7 billion or 31.6 per cent of GDP. 
A key element of capital expenditure are the transfers into the New Zealand Superannuation Fund. Next year 2004/05 the transfers into the Fund will be $2.1 billion and at 30 June 2005 the Fund is forecast to total some $6.3 billion. By the end of the forecast horizon 30 June 2008 the Fund is forecast to total $15.5 billion. By that stage I anticipate that the success of the Fund and its key role in securing the future of an adequate level of New Zealand Superannuation will be sufficiently clear that even my political opponents are likely to refer to it by its proper name. 
The Fund Guardians effectively took over control of the Fund on 30 September last year. They adopted a policy of moving from a cash portfolio to a fully invested portfolio by the end of this financial year. During the first period of investment they easily exceeded their target rate of return. 
One of the criticisms of the Fund that has been made is that at peak it will only pay for a small proportion of New Zealand Superannuation. In fact the latest estimates indicate that the relevant figure is 36 per cent. If we applied that figure to the current married couple rate of New Zealand Superannuation that would equate to $138 per week. It is clear that large numbers of superannuitants would be faced with severe poverty if their current superannuation were lowered by that amount. Thus those who call for the abolition of the Fund need to be clear how the fiscal hole in the long term is to be filled. Certainly any alternative proposal which uses the Fund’s assets to reduce taxes or increase expenditure has little or no fiscal credibility in either the short or long term. 
The growth of the New Zealand Superannuation Fund means that net debt including the Fund assets is forecast to be down to 8.7 per cent of GDP by 30 June this year. By the end of the forecast period this will fall to zero highlighting the fact that financial assets will equal gross debt. This is in many respects as important a measure of the overall fiscal strength of the New Zealand government as gross debt. 
Mr Speaker Budget 2004 contributes further to the government’s role in supporting economic development. $500 million over four years of additional spending has been devoted to specifically economic development initiatives. 
We are increasingly a confident and dynamic people. We want to see New Zealanders being the best they can be. Our policies are about encouraging more of the smart creative thinking and the innovation that are so much part of the Kiwi approach. 
We enjoy a unique and enviable lifestyle. A well-managed economy underpins that. We have invested in ideas people and networks. 
The more we are linked into the rest of the world the more we will prosper. We need deeper and richer links with other countries. The pursuit of a single market with Australia is part of that. So is the pursuit of a free trade agreement with China. 
Such deeper and richer links will help us find more buyers for our products and increase the value and quality of our exports. They will bring in more offshore investment knowledge and expertise to help our companies grow. They will help us develop smarter ideas improve our education system and fill gaps in our workforce. 
Budget 2004 provides $35 million over four years to enable New Zealand Trade and Enterprise to provide assistance to exporters to find markets and strategic partners. 
There is also funding of $26 million over four years for sector focussed development and funding of $42.6 million over four years to fund more offshore companies to partner growing New Zealand companies by deepening Investment New Zealand’s offshore representation and expanding the Strategic Investment Fund. 
Additional assistance of $40 million over four years will be provided to the education sector to develop stronger relationships offshore both to protect and to promote New Zealand education and to give our system the benefits of greater international input. 
Funding is provided for New Zealand to participate in the massive 2005 Aichi Trade Expo with associated funding to help us develop commercial and other opportunities in Japan that will arise during the six month long Expo. 
Innovation is a key part of the government’s economic drive. It is clear that increasingly many of our new business products and processes will arise as a result of links between researchers and industries firms and individuals. 
Budget 2004 provides extra money to promote industry/research collaboration and linkages across disciplines; to promote increased international collaboration amongst scientists; to support the foundations for future innovation in core industries; and to improve the flow of knowledge and ideas between firms and research institutes. 
There is an increase of funding of $212 million for the Research Science and Technology system over the next four years. Just over $50 million is allocated in 2004/05. 
The largest increase in funding goes to Research for Industry which rises by $17.3 million in 2004/05 and $19.2 million in each of the following three years. 
The most important barriers to higher rates of sustainable growth relate to skills and productivity. While there are signs of longer term increases in labour productivity growth it remains a key factor placing a ceiling on our ability to grow faster. 
The government is providing practical support to improve workplace productivity. The Workplace Productivity Group – which arose from a tripartite initiative between government Business New Zealand and the Council of Trade Unions – has now been set up. In addition there are three specific initiatives in Budget 2004. 
The first is direct assistance to small and medium sized enterprises to help them self-manage workplace employment issues and health and safety following a successful pilot last year in three communities. 
The second is a linked employer-employee database to provide new and improved statistical information to assist business planning. Stage one was released in October last year and funding is now provided for stages two to four. 
The third is a contingency fund to assist workers and businesses to promote and share good practice workplace relations and productivity examples. 
In the post-school environment the rapid expansion of industry training continues. Funding is provided for both an increase in the average industry training subsidy and a further 500 Modern Apprenticeship places by June 2006. 
The ability of migrants with skills to match better the needs of the New Zealand labour market will be enhanced with increased English language training and more focussed career services. 
Employers’ ability to find staff to fill their skills gaps will be assisted through targeting marketing and promotion about work opportunities in New Zealand to suitable prospective migrants and through linking employers and prospective employees through a new talent database on the Internet. 
Over the last four years the government has moved progressively to improve its capacity to deliver a range of assistance to the business sector. In my first budget funding of $68 million was provided for Trade New Zealand and $36 million for Industry New Zealand. Support for New Zealand Trade and Enterprise in 2004/05 will be $216 million an increase of over 100 per cent and further substantial increases will be considered in the context of Budget 2005. 
Other major initiatives to underpin improved economic performance in order to achieve the government’s social and economic goals are occurring outside of the context of Budget 2004. These include a review of the Resource Management Act the development of a package to promote exploration for oil and gas the finalisation of the structure of the electricity market and consideration of further mechanisms to support both new businesses and the growth of existing businesses. Announcements on many of these will be made over the next few months. 
Mr Speaker Budget 2004 continues the rebuilding of capacity in the core state sector. The most affected agencies are the Ministry of Foreign Affairs and Trade the Department of Child Youth and Family Services and Corrections. 
This continues the work the government has engaged in to restore realistic baselines for departments. Looking forward we wish to explore ways where such baselines can continue to be realistic over the long term while still maintaining pressure on departments to make the most efficient and effective use of public resources. 
For Budget 2004 an output pricing review has led to an increase in Corrections funding of $30 million for the coming year rising to $40 million in out years. 
The Ministry of Foreign Affairs and Trade has an increase of $19 million for 2004/05 rising to $28 million in out years. The baseline review of the Department of Child Youth and Family Services sees a lift of up to $61 million in 2004/05 rising to a maximum of $66 million in out years. Overall operating funding for Child Youth and Family Services has risen from $231 million in 1999/2000 to $477 million for 2004/05 an increase of 106 per cent. 
Defence Revenue and Customs also receive substantial baseline increases with the Defence increase being mainly due to addressing regular force pay relativity and Air Force staffing levels. 
Mr Speaker a Labour/Progressive government will always seek to place great emphasis on strengthening social provision especially in health education and housing. 
Health operating spending continues to grow at well in excess of the rate of government spending in general. Total operating expenditure for 2004/05 is $9.4 billion compared with $8.6 billion in the current year. 
Budget 2004’s health package makes a further substantial advance towards the government’s goals for a fair comprehensive and efficient health system. District Health Boards will continue to move towards their Population Based Funding share. 
From the public’s perspective the most important advances will again be in primary health care. Funding is provided for the Care Plus programme for high users of primary health services. From 1 July lower cost primary care visits and $3 prescription charges will apply to all over 65 year olds enrolled in any Primary Health Organisation. Already 3.1 million people are enrolled in PHOs. 
Specific funding will be provided to increase the numbers of major joint replacements in order to reduce waiting lists for orthopaedic surgery. Fully implemented the new programme which doubles the current number of publicly funded operations will cost up to $70 million a year. 
One element of health spending will peak in 2004/05 and then decline. That is the funding for meningococcal vaccination which from 2005/06 onwards will move on to a steady state path. 
Two existing programmes will continue to be implemented. The extensive programme to upgrade and rebuild public hospital facilities will move forward with projects currently underway or planned extending from Kaitaia to Invercargill. 
The Mental Health Blueprint will also advance another stage. Over the four years an extra $250 million will be spent in this area. 
Housing spending will be further boosted in 2004/05. Apart from the housing aspects of the  
Working for Families  
package further injections are made to Housing New Zealand Corporation (HNZC). 
Total capital injections for housing activities in 2004/05 are $232 million. This combined with HNZC funding will enable an overall increase in housing stock of 1054 the modernisation of 728 units the reconfiguration of a further 20 improvements to 108 properties through the Healthy Housing programme and continuing refurbishment of former Auckland City Council units. Total expenditure on housing is estimated to be in excess of $1.5 billion with around half of this spent on the Accommodation Supplement. By 30 June 2005 it is anticipated that the total housing stock held by HNZC will be 66314 houses. This compares with 61512 at 30 June 1999 with plans at that date to shed a further 19200 houses according to the Housing New Zealand Asset Management Plan. 
The Budget 2004 education package includes a new funding and regulatory system for early childhood education; further investment in quality teaching and additional resources for schools; additional funding for tertiary education institutions to implement the fee/course costs maxima out to 2007; increased funding rates for industry training; and a package of student support initiatives incorporating an increase to the student allowance parental income thresholds. 
Budget 2004 sees a significant additional investment of $2 billion operating spending in education over the next four years bringing the total annual operating expenditure to $9.2 billion by 2007/08. This continues this government’s commitment to lift education standards so that all young New Zealanders get the chance to aim high and succeed. 
The many initiatives include increased operational funding for schools as well as increased funding to support secondary qualifications. Significant investment in modernising schools is occurring to provide a better equipped learning environment. 
The most important part of Budget 2004 for education is major new investment in early childhood education through the provision of free early childhood education and increased funding to support quality early childhood education services. 
This will help give our children a crucial head start to go on and do well later in life. The government is committed to ensuring that every single child regardless of background is given the chance to reach his or her full potential. 
Over four years the government will inject an extra $365 million into early childhood education. Compared with government spending in 1999 by 2007/08 the Labour-Progressive government will have increased spending in this most crucial area of education by 79 per cent. 
From 1 July 2007 three and four year olds will be entitled to 20 hours free early childhood education per week. Other initiatives in the  
Working for Families  
package will further encourage and support participation thus making it easier for parents to return to the paid workforce. 
The additional spending also supports the implementation of the Strategic Plan for Early Childhood Education which is designed to lift the quality of staff and therefore the education provided. 
This budget fulfils an important aspect of our election promises to tertiary students. From the beginning of 2005 we will for the first time in thirteen years lift the ceiling on parental income that allows students under 25 to qualify for an allowance. An allowance will be available to any eligible student whose parents earn less than $62148. 
Furthermore the eligibility test will be adjusted annually by the rate of inflation. This means we will not get back into the situation we inherited where eligibility rates were slowly eaten away by inflation over time. 
We have also needed to change some of the other eligibility rules to comply with the New Zealand Bill of Rights Act. 
This budget also sees another year of significant investment to support the government’s youth transitions goal that by 2007 all 15 to 19 year olds will be engaged in appropriate education training work or other options that will lead to long-term economic independence and wellbeing. 
Central to the $57 million package in this area is the formation of a Youth Transitions Service to improve the co-ordination of post-school local support services for at risk young people. The Service will roll out into 14 priority areas over three years with a focus on at-risk 15 to 17 year olds. 
Alongside this Budget 2004 provides pilot funding to 75 schools for senior school students to prepare learning and career plans increasing funding for the hugely successful Gateway programme to expand to decile 6 schools by 2008 and additional funding for STAR. 
In Budget 2003 tertiary education funding rate increases were announced for the 2004/06 triennium. This year ahead of the implementation of the Funding Category Review the government has agreed to a further one-off increase of 0.9 per cent for 2005 only bringing the total increase for 2005 to 3.2 per cent. 
In the area of industry training funding rates will be lifted over the period 2005/07 as part of the move towards a single funding rate for all Industry Training Organisations. This will entail an average funding rate increase of 7.7 per cent at a cost of $25 million over four years and will ensure that ITOs covering 71 per cent of trainees receive an increased funding rate. 
Mr Speaker Budget 2004 provides the resources for the government to continue its programme of tax base maintenance tax reform and examination of ways in which tax changes can contribute to economic growth. 
A high priority for the government is to ensure that everyone pays his or her fair share of tax. Over the last year officials have been reviewing the tax laws applying to banks to determine whether they are sufficiently robust. 
The stimulus for the review has been the fact that the strong upward trend in banks’ accounting profits has not been matched by the growth in their taxable profits and hence tax paid. 
Legislation to address any weaknesses in current tax rules applying to banks may be included in the taxation bill introduced later this year. A consultative process involving the banking industry and tax practitioners is underway. 
The government is reviewing the tax depreciation rules to see if there are ways of reducing tax biases within the rules and to resolve practical problems with their operation. 
The current rules relating to deductions for depreciation of assets were introduced in the early 1990s. I am concerned that they may be biased against investment in assets that have shorter lives so the review is concentrating on that area. 
An officials’ paper will be released shortly. The paper will also discuss whether the current depreciation rate for buildings is appropriate and the growing practice of recharacterising rental houses into components to take advantage of high depreciation rates. Officials will report to the government in time for proposals to be included in the taxation bill later this year. 
The current rules for taxing savings both in the domestic and international context are complex inconsistent and potentially unfair. Such an environment is not conducive to savings. 
Working closely with the savings industry is an important next step towards the objective of improving significantly the tax rules around saving. Last year at the request of the industry officials and industry representatives began the process by considering a risk-free rate of return method of taxation as one possible approach. 
The government will be working with the private sector to develop this broad proposal as well as consider other options to reduce the many boundaries that are created by the current domestic and international tax rules for savings. 
In December last year the Periodic Report Group indicated that there is value in promoting greater use of work-based savings schemes as a way for New Zealanders to save. 
We have already announced the establishment of the new public service superannuation scheme but there is more to do. The government has recently established a Savings Product Working Group that will report by the end of August on ways to overcome barriers that might be inhibiting the use of work-based schemes. It is my desire to reach a point where all employers offer access to such a scheme. 
Much is still made by some of the central importance of lowering the headline corporate tax rate. At 33 per cent New Zealand’s rate is scarcely out of line with the OECD average of 32.3 per cent. 
It is true that in New Zealand company tax receipts are a somewhat higher proportion of total tax revenue at 11.3 per cent compared with the OECD average of 9.4 per cent. The difference is less marked if based upon proportion of GDP at 3.8 per cent versus the OECD average of 3.5 per cent. However the often quoted comparison Australia is even higher at 14.9 per cent of total tax and 4.5 per cent of GDP. 
That is despite the fact that Australia like much of the rest of the OECD also has substantial payroll taxes and a general capital gains tax. Thus when companies retain profits that normally leads to capital gains on shares. These gains are taxed in most countries but not New Zealand. This substantially reduces the effective overall tax rate on business in New Zealand compared with Australia and other countries. 
Moreover New Zealand’s lower top tax rate than most OECD countries and its imputation system (which not all countries share) mean that the effective top tax rate of 39 per cent on dividends paid to shareholders compares with 48.5 per cent in Australia an OECD average of 50.7 per cent and a United States figure of 70.3 per cent. 
These facts make it impossible to substantiate the view that the corporate sector is overall more highly taxed in New Zealand than elsewhere in the developed world. In fact the reverse is clearly the case. It can also be argued that the mix of tax on the corporate sector is more economically efficient than in the great majority of the developed world. 
If however the peak business organisations and others wish to argue that the key objective is to achieve a substantial lowering in the headline rate since they argue this is all that counts in terms of international perception then it is incumbent on them to accept a trade-off in terms of suggesting other elements which are near-universal elsewhere. 
This will mean that the proponents of lowering the headline rate will need to decide whether in fact such a trade-off outweighs the undoubted loss of efficiency and clarity in the system. I remain extremely sceptical that this is so. 
Certainly the logic would suggest that small marginal changes in the company tax rate will make little or no difference. Perhaps the best solution is a combined effort to promote the very real advantages of the overall New Zealand structure compared with countries such as Australia which still leaves room for argument as to the virtue of lower tax rates as long as it is accepted that means lower expenditure including in those areas crucial to business success. 
Mr Speaker the fundamental purpose of the tax system is to raise in the fairest and most efficient manner possible the revenue to meet the government’s spending programmes. From time to time the opportunity arises for an initiative beyond the scale of the usual annual spending initiatives. 
Thanks to the combined effects of the government’s fiscal prudence and New Zealand’s economic success such an opportunity is now available. Even so the fiscal headroom available in 2004/05 is limited and the  
Working for Families  
package is phased in over three fiscal years. 
The government’s  
Working for Families 
 programme makes tangible our commitment to ensuring that economic growth is pursued for its capacity to provide greater security and opportunity for all. It means greater ability to participate in the New Zealand lifestyle for many who find that difficult. 
Working for Families 
 has three key aims: 
to make work pay by ensuring that people are better off by being in work and are rewarded for their work effort  
to ensure income adequacy with a focus on low to middle income families with dependent children to address issues of poverty especially child poverty and  
to support people into work by ensuring people get the assistance they should to support them into and to remain in work.  
These objectives are achieved in a number of stages beginning in October this year and concluding on 1 April 2007. 
Nearly 300000 households will receive direct assistance by 1 April 2007. Over 60 per cent of families with dependent children will benefit from the combination of increases to Family Support a new In-Work Payment the increase in Family Tax Credit and changes to abatement rates and thresholds. The average gain for these families is $66 per week. Households in the $25000 to $45000 a year income range will benefit on average by around $100 a week. 
The estimated cost of the package including implementation costs will be $221 million in 2004/05 $664 million in 2005/06 $900 million in 2006/07 and $1.1 billion in 2007/08 and out years. 
Working for Families 
 is an expensive package because unlike the efforts of the government in the early 1990s it does not seek to make those on modest incomes feel better off by pushing those below them further into poverty. Using a poverty value measure of 60 per cent of median household income there is expected to be a 30 per cent reduction in child poverty by 2007/08. Using a 50 per cent measure the expected reduction is 70 per cent. 
Let us consider a few cases. First a family with two children on a single modest wage of $30000 a year will be better off due to the family assistance measures alone by $40 a week from 1 April 2005 nearly $95 a week from 1 April 2006 and nearly $115 a week from 1 April 2007. 
These figures exclude gains from changes to Childcare Assistance and the Accommodation Supplement. These will increase the gains for many substantially. 
Or take the case of a couple with two children working 60 hours per week between them earning $37500 per year and paying $69 a week in childcare costs. 
From 4 October they are $42 a week better off because of childcare changes. This rises to $82 a week from 1 April 2005 $88 a week from 3 October 2005 $143 a week from 1 April 2006 and $163 a week on 1 April 2007. 
A couple with four children in central Auckland with a gross rental of $350 per week and a low single wage of $12 per hour will benefit by $10 per week on 1 October 2004 because of changes to the Accommodation Supplement. Their gains will increase to $93 a week from 1 April next year $124 per week from 1 April 2006 and $164 a week from 1 April 2007. 
A good example of how the package works is to compare two sole parents living in Christchurch each with two children under 16 paying $200 a week in rent but with one on the Domestic Purposes Benefit and the other in paid employment earning $30000 a year with one child in fulltime childcare. 
By the end of the package’s introduction the beneficiary family will be better off by nearly $37 a week. But the working mother and her children will be better off by nearly $129 a week. The rewards for paid employment are increased by over $90 a week. 
A final good example would be a family with four young children on a single income of $55000 a year. Such a middle income family will be much better off. From 1 April 2005 they will get an extra $70 a week rising to nearly $110 a week on 1 April 2006 and nearly $150 a week on 1 April 2007. 
It is interesting to compare the gains for this family with other options which have been suggested. A 20 per cent flat rate of tax at a fiscal cost of somewhere around $5.5 billion a year would deliver a gain of just $39 a week. On the other hand the Minister of Finance with no dependent children would gain over $600 a week. 
A universal family benefit of $15 a week for the first child and $10 a week for each subsequent child would deliver $45 a week much less than the  
Working for Families  
package and with no increased rewards for employment. 
These very substantial increases in the incomes of ordinary New Zealanders in the  
Working for Families  
package are achieved by the following: 
an increase in the Family Support rates of $25 per week for the first child and $15 per week for each subsequent child from 1 April 2005  
an increase to $27500 a year of family income from 1 April 2006 in the threshold at which Family Support starts to abate and the replacement of the two abatement rates with a single rate of 30 cents in the dollar  
a further increase in Family Support rates of $10 per week per child from 1 April 2007  
the introduction from 1 April 2006 of an In-Work Payment for families with dependent children of $60 per week plus an additional $15 per week for the fourth and each subsequent child. The Child Tax Credit will be abolished subject to certain grandparenting provisions  
eligibility for the In-Work Payment will extend to those in receipt of New Zealand Superannuation or Veterans’ Pension with dependent children who meet the work hours requirement and those on accident compensation who would have met the same requirements  
the rates and thresholds for Family Support and thresholds for Childcare Assistance will be adjusted regularly from 1 April 2008. Each adjustment will occur on any 1 April after the cumulative CPI increase has reached 5 per cent  
Childcare Assistance thresholds will be increased by about 50 per cent on 4 October 2004  
Out of School Care and Recreation Subsidy rates will on the same date increase to match Childcare Subsidy rates  
all Childcare Assistance rates will increase by 10 per cent on 4 October 2004 and a further 10 per cent on 3 October 2005. These increases will be in addition to annual 1 April adjustments in line with the CPI  
the removal of the abatement of Accommodation Supplement for beneficiaries on the first $80 of non-benefit gross income from 1 October 2004 and greater access to Accommodation Supplement for non-beneficiaries  
the creation of a new Accommodation Supplement area on 1 April 2005 with various increases in the maxima payable and  
increases in Orphan’s Benefit Unsupported Child’s Benefit and Foster Care Allowance from 1 April 2005.  
There are a large number of detailed changes associated with these moves. These include significant simplification of the benefit system by shifting the child component of main working age benefits into Family Support and stricter controls on hardship assistance. A major publicity campaign will be undertaken to ensure people are aware of their entitlements. 
Mr Speaker this is the largest single package of changes to the benefit system and assistance for families since the benefit cuts of 1991. I am grateful for the support committed to the package by United Future which will ensure nearly 300000 families are better off. 
This government was not elected to slash the incomes of the poor any more than any previous New Zealand government in living memory actually was. But unlike our predecessors we intend to act according to the expectations of the public in that regard. 
Great care has been taken in assembling this package to identify any possible individual losers and to ensure there are none. For many on benefits with children the total increases in income due to the various measures taken will easily exceed the size of the benefit cuts that occurred in 1991. 
But for those in employment the gains are very much more substantial and extend well up the income range. In particular the incentives for moving from benefit into employment are significantly increased. 
That is particularly so with the introduction of the new In-Work Payment on 1 April 2006 which will also for the great majority of families be simpler to understand and administer than the current Child Tax Credit. 
Budget 2004 makes work pay. It builds further on our previous work in building the skills we need for a successful dynamic economy. It provides further assistance to New Zealand businesses. It puts in place processes to assist in lifting productivity and savings. It boosts research science and technology. It reduces the costs of tertiary education. It builds a stronger primary health care system and addresses particular needs in terms of orthopaedic surgery. It salts further money away for the future to ensure the baby boomer generation can have a decent retirement. 
And it does so while maintaining our reputation for fiscal prudence and for steady predictable management. 
Mr Speaker Budget 2004 delivers on the programmes and promises taken to the people in 2002. It is not a budget for the few or for vested interests. It is a budget for the many and especially for those for whom a Labour-Progressive government is the best hope for the future. 
Debate interrupted. 
Procedure 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I hereby present the Budget 2004 Speech the Fiscal Strategy Report and Economic and Fiscal Update the Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2005 and the Departmental Forecast Reports and Statements of Intent 2004. I move  
That these papers be published 
. 
Motion agreed to. 
Budget Debate 
Dr DON BRASH (Leader of the Opposition) 
: 
 I move  
That all the words after “That” be omitted and the following inserted: “this House has no confidence in the Labour-led Government because it has squandered New Zealand’s greatest ever opportunity to invest in policies which would restore this country to the levels of prosperity enjoyed by Australians; because it has chosen for New Zealanders policies which promote dependence rather than independence; and because after five years of over-taxing hard-working New Zealanders it has embarked on a programme of cynically-timed election year giveaways to many of those same New Zealanders funded by their own taxes.” 
Perhaps unusually for a Leader of the Opposition I want to begin my speech by saying there are some things in this Budget with which the National Party agrees. For months we have called for relief for low and middle income New Zealanders. For months we have called for the encouraging of people off benefits into employment. For months we have recognised that providing more support for childcare and early childhood education would be highly desirable. For months it has been clear that we need more vigorous steps to reduce waiting lists for elective surgery. To the extent that those priorities have been addressed by this Budget we agree with the objective if not always with the method of delivery. 
But beyond that we can see little of merit. This Budget is at its core a belated series of bribes cynically timed for maximum political effect which fails totally to lift New Zealand’s living standards towards those in Australia. To begin with it is worth noting that the relief for low and middle income families has come in the second Budget of this Government’s second term—in Dr Cullen’s fifth Budget. All through that period New Zealanders have been over-taxed so that Dr Cullen could boast of ever-larger surpluses. Those surpluses represent the extent to which New Zealanders have been over-taxed. Not until this fifth Budget has he seen any merit in providing some relief from that over-taxation. 
Why the long delay? It was because until a few months ago the Government was confident that it could win another term without providing help to the families that need it. Suddenly the Government is contemplating the possibility that it might lose the next election and it thinks that dishing out the dosh is the best way of trying to shore up its diminishing electoral support. But it is even more cynical because much of the dosh will not be delivered until shortly after the election. So the Government is trying to imply that people who want to have that extra help will need to vote Labour in case a National Government comes to power and blocks that extra help. This is a vote-buying exercise of the same character as the policy U-turns that have been typical of this Government in the last few months with school closures the Resource Management Act treaty issues the seabed and foreshore and the age of consent. 
Secondly it is important to remember that the Government itself has no resources to assist anybody. Any assistance it provides to some New Zealanders first has to be taken away from other New Zealanders. Of course for the last 5 years the Government has been taking it away from most of us. Over that period the Government has increased the top tax rate and has increased taxes on cigarettes alcohol and petrol. These and other tax increases now raise more than $1 billion a year and as a result the average household has paid an extra $2600 in tax since this Government came to power late in 1999. In addition the gradual inflation of money incomes into higher tax brackets has added a further half a billion dollars a year to the Government’s coffers. 
For the 1999 election the Labour Party promised that only 5 percent of taxpayers would be adversely affected by its proposal to raise the top tax rate from 33 to 39 percent. Today some 12 percent of all taxpayers are paying tax at the rate of 39 percent including almost 20 percent of full-time taxpayers. One-third of all taxpayers are already into at least the 33 percent tax bracket and more than half of all full-time taxpayers are in that situation. 
 When GST is taken into account more than half of all full-time taxpayers face tax of over 40 percent on additional income. At last low and middle income families with children have some prospect of relief—300000 families in all—but only by 2007. What about all the other hard-working New Zealanders? What about the young couples who are working hard saving hard towards their first home and deferring having children so that they can get the mortgage down—doing the responsible thing? There is nothing for them. 
What about the middle-aged couples who having raised and educated their children are trying to put something aside for their retirement? There is nothing for them. What about the single person who is trying to get a small business off the ground who employs three people and would like to employ one more? There is nothing for him or her. 
There are 1.5 million households in New Zealand. The Budget tries to buy the support of just 300000 of them—one household in five. The other 1.2 million households keep on paying tax and are not even asked to be patient. There is no suggestion at all that this Government has the slightest intention of reducing personal tax rates or the company tax rate at any stage at all. The Government just intends to keep on raking it in and dishing it out to those who it hopes will vote it back into office. In the fundamental sense this is a Budget that punishes the most hard-working the most responsible and precisely those citizens who are determined to ensure that they stand on their own two feet. 
It is perhaps most worrying of all that there is no indication that the Government expects any increase in New Zealand’s trend growth rate. Dr Cullen is fiddling while growth slows. When the Government was first elected it talked about getting New Zealand’s per capita income back into the top half of the OECD within 10 years. In the Speech from the Throne in August 2002 the Government again indicated that it saw “its most important task as building the conditions for increasing New Zealand’s long term sustainable rate of economic growth.” The Government no longer talks of getting to the top half of the OECD within 10 years. It suggests it will do it “over time”. The reality is that it has abandoned the objective as too hard but has not had the intestinal fortitude to tell New Zealanders. 
The Budget documents project that growth will be markedly slower on average over the next 10 years than it was over the last 10 years. This has to be the great tragedy of the fifth Labour Government. It has squandered a unique opportunity to lift our relative living standards to close the gap with Australia and to create a place that our most able innovative and enterprising people want to return to. When the history of this Government is told this will surely be its epitaph: “They dropped the ball.” 
This Government has been the beneficiary of some of the best growth in the last 40 years. That good growth has nothing whatsoever to do with anything the Government itself has done. In part the good growth has been the result of the economic reforms of previous Governments—the policies that this Government has tried desperately to brand as failed. When talking to overseas fund managers Dr Cullen usually admits this himself. In addition the Government came to office at the end of 1999 at a time when the economy was already growing at almost 5 percent per annum. The exchange rate which had started falling in 1997 was falling towards its lowest level in history in late 2000 providing a huge boost to provincial New Zealand and indeed to all export industries. 
Then just as the exchange rate was stabilising and beginning to appreciate the world witnessed the tragic events of September 11 2001. What had been a net outflow of long-term migrants from the country of some 10000 people a year in the 2 years to June 2001 turned into a huge net inflow in the next 2 years. So a domestic building boom followed the strong growth in export industries. On top of this central banks around the world dropped interest rates to levels never seen before sparking a worldwide boom in property prices with New Zealand included. So none of the reasons for recent strong growth had anything to do with policies adopted by this Government. It just reaped the benefits in the form of unprecedented Budget surpluses and strong employment. 
So what does the Government do? It sprays money around to a small minority of households that it hopes will vote for it in the next election. By doing so it converts families that earn as much as $70000 into beneficiaries dependent for part of their income on the grace and favour of the Government thereby further entrenching a debilitating culture of dependency. 
The Government has promised to spend more on health while providing no assurance that further spending on health will actually deliver the shorter waiting lists improved medical services or the improved medicines that all New Zealanders deserve. We know that in the 3 years to 2002-03 Government spending on health rose by 22 percent. 
 Over the same period the number of elective operations and the number of total operations actually fell by 3 to 4 percent. Between December 1999 and April this year the number of people drawing the sickness benefit and invalids benefit has gone from 86000 to 113000—an increase of 31 percent. Simply adding more money to a centrally directed bureaucratic and top-heavy health sector will not deliver the outcomes that all of us want to see. The Government proposes to spend money on a whole raft of programmes designed it says to help business and exporters and to help grow the economy. But in every survey of business opinion the business community gives the Government the same message: it should get rid of the obstacles to growth reduce compliance costs fix the Resource Management Act stop pushing up the costs of operating a business through passing legislation like the Holidays Act and the Employment Relations Law Reform Bill and cut the company tax rate so that all businesses—and not just those favoured by Mr Anderton—can grow and prosper. 
The business community can see that in the last 5 years 21 of the 30 OECD countries have reduced their company tax rate—but not this Government. Back in April 2000—more than 4 years ago—Dr Cullen said that his Government would like to reduce the company tax rate “as fiscal conditions permit”. Perhaps he thought he had to say that to his audience which was in Hong Kong and for whom a 33 percent tax rate seemed inordinately high. Perhaps he thought he could say that in Hong Kong without anybody reporting it back in New Zealand. 
The Government’s Budget seems likely to do nothing to curb the culture of extravagance and waste that has grown up in the last few years: the hip hop tours the gross abuses of the tertiary education funding system that my colleague Bill English has highlighted in recent days and all the rest. There is plenty of money for dopey polytechc courses a bigger bureaucracy and to bribe public servants into joining unions but not enough money to clear the backlog of drug-testing so that the makers of methamphetamine can be prosecuted. There is not enough money to clear the growing backlog of court cases and not enough money—or the will—to keep violent offenders in jail. There is not enough money to treat cancer patients in New Zealand. 
We know that between 1997 and 2000 the number of people employed in what Statistics New Zealand calls “Government administration and defence” decreased by nearly 8 percent. In the 3 years from 2000 to 2003 on the other hand the number increased by over 10 percent and we know that the extra people were not employed in the armed services. The Government is employing more public servants to take money from us so that it can employ more public servants to give it back to us. 
Tragically for hundreds of thousands of New Zealanders and their children the Government is giving it back to us with no expectation or no insistence that we will help ourselves. The Government has provided some carrot to encourage people off benefits but has removed the stick. There is no strong pressure for people to get off their backsides and get jobs despite a desperate shortage of employees in most parts of the country. There is no adequate policing of people moving from the unemployment benefit to the sickness benefit. There is no adequate policing of the domestic purposes benefit; a situation that creates strong financial incentives for a woman not to name the father of her child or children and not to get married. 
Being soft on welfare may sound a kind and compassionate thing to do and it may make the Government feel good but it certainly does not help those locked into a life of dependency deprivation and degradation. 
Two years ago Dr Cullen said that it would be clear by the middle of this year whether New Zealand was on track to lift its growth rate so that it could gradually get back into the top half of the OECD. Well the middle of 2004 is just 1 month away and this Budget makes it clear that Treasury sees no prospect of any lift in our growth rate. In its report last December the OECD suggested that the slide in our relative living standards which was a feature of the 1970s and 1980s had been arrested but “a further acceleration—necessary if New Zealand is to move back into the top half of the OECD ranking as the government is intent on doing—is still not in sight.” 
Dr Cullen cannot be expected to carry all the blame for this deplorable situation. The Prime Minister and other Ministers must share the blame. But as Minister of Finance he must bear primary responsibility for the Budget’s failure to give most hard-working New Zealanders any tax relief its failure to reduce the company tax rate and its continued waste of taxpayers’ money on extravagant and possibly fraudulent programmes. 
 It is little wonder that that same document itself makes it clear that there is no prospect whatsoever of achieving what the Government claims to be its highest priority: namely raising the living standards of all New Zealanders to those enjoyed in other developed countries. Never before had a Minister of Finance and a Government faced such an opportunity to invest wisely in the future of our country. Never before had a Minister enjoyed such capacity to say to hard-working innovative New Zealanders that he saw them as the key to unlocking the country’s potential and that the Government would back them. Never before had a Government enjoyed such an opportunity to say to the half million New Zealanders living abroad—the children and grandchildren of those still living here—that they could have a great future back home. But this Government did not see this Budget as a Budget of opportunity. Asked to choose between self-reliance and dependency it chose the latter. Given the chance to chart a bold and better way forward it had no answers. The clear and overwhelming message in this Budget to all those who believe New Zealand can do better is that the only way to achieve that is to bring about a change of Government in the next election. 
Rt Hon HELEN CLARK (Prime Minister) 
: 
 The only squandered opportunity in sight today was that sad speech. I agree with the Minister of Education: sack Richard Long if that is the best he can do! Where was the policy? Where was it? A response to the Budget is the Leader of the Opposition’s opportunity to set out what he would do. Well I do not know whether I missed something but I must have missed quite a lot. He failed to do that. Most conspicuously he tried to paint economic success as failure when the facts tell a completely different story from that uninspiring dirge. 
I think future Opposition speakers from the National Party should explain one thing: why is it that when Labour supported by United Future puts up improvements to family support family tax credits and child tax credits that is a bribe but National’s tax cuts are not a bribe? Explain that to me! I will credit the National Party with one single policy—not that it was outlined today. The single policy is tax cuts—voodoo economics. The National Party would cut taxes while also doubling defence expenditure cutting expenditure on health education and superannuation bringing back user-pays and privatising. What does all of that do for New Zealand families? Absolutely nothing! The message today is that a Labour-led Government lifts families up; National impoverishes families as it did all the way through the 1990s. 
I congratulate the Minister of Finance on his work in bringing this Budget together. I thank all the Ministers who have contributed to the very significant new initiatives in this Budget—and there are many significant new initiatives. I am very proud of this Budget. I am proud of it because like every single Budget delivered by this Labour-led Government over 4½ years it delivers not to elites but to heartland New Zealand—to our families our superannuitants our workers and to those who need the care and support of all of us and get no sympathy from right-wing parties in this House. 
The Budget does not deliver just by spending on important initiatives; it also delivers by keeping a very firm hand on economic management and this Government with the Minister of Finance in charge of the economy has consistently done that through 4½ years. Obviously what is delivered in this Budget today could not be delivered without economic success. The facts are that under this Labour-led Government economic growth has averaged over 3.5 percent. The facts are that under this Labour-led Government unemployment is at its lowest level in 16½ years. Since Dr Brash likes international comparisons how about our having the fourth-lowest unemployment rate in the Western World? The figures on unemployment speak for themselves. In the March quarter of 1999 under a National Government the figure was 7.2 percent; in the March quarter of 2004 under a Labour-led Government the figure was 4.3 percent. In May 1999 under a National Government close to 144000 people were on unemployment benefits; in May 2004 under a Labour-led Government there were under 68000. That is well under half. 
What is there about that strong economic performance that the National Party does not understand? This is not about squandering opportunity; this is about creating opportunity steadily over 4½ years. From the beginning this Labour-led Government has undertaken to invest the fruits of growth right back into meeting the needs of heartland New Zealand and building a stronger economy. That has been done over 4½ years and it is what this Budget delivers. The earlier Budgets built the platform for stronger economic performance and we began making huge investments in education and skills training including apprenticeships for school leavers. We boosted spending on research and development and I am proud to say that today’s Budget takes the total increase in the Government research and development spend to 45 percent over our five Budgets. That is a staggering figure. We developed Smart Growth strategies working alongside our regions industries and companies to boost economic performance. We changed the immigration policy to recruit more migrants who could meet labour force needs. As unemployment continued to fall those Jobs Jolt policies kicked in to get even more people off benefits and into work and those policies are working. 
From our earliest Budgets we also began very badly needed reinvestments in public and social services and infrastructure. I can say today that for one of those core services the Department of Child Youth and Family Services over the period of this Government with this Budget its expenditure is doubling—and it needed to double. We redistributed to meet the needs of our families superannuitants and workers. Our Budgets have delivered on every one of our election pledges—namely to lift the rate of superannuation to bring back income-related rents for State housing to make tertiary education more affordable and to drop waiting times for treatment in our public health system. All of those things have been delivered on. As well we have invested heavily in education overall in mental health and primary health-care in State housing and in core services like our police. Two years ago a new policy—paid parental leave—helped our working parents to have time at home that they needed with their new babies. 
All along the Budgets of this Government have struck a very careful balance—a balance between investing back into growth people and services while maintaining a solid operating surplus. It is that balance that continues in this Budget today. We will invest back into growth people and services as much and as fast as we can afford and we will invest where it is needed most—not where it is needed least like the tax-cuts policy of the Opposition. 
The big focus of this year’s Budget is on New Zealand’s working families. They have been helped in many ways by our previous Budgets. But for this Budget it has long been our goal to directly improve the household income of our low and middle income families. That is not best done by across-the-board tax cuts. The major beneficiaries of across-the-board tax cuts will always be the top income earners. So how do we help in this Budget? We help by lifting family support lifting the family tax credit changing abatement levels replacing the child tax credit with a large in-work payment for our working families and increasing the subsidies for childcare and for accommodation costs. 
What does this mean for New Zealand families? It means there is a substantial redistribution upwards of wealth in their favour beginning in this financial year and continuing to build over a 3-year period. What a contrast with the big redistribution downwards of the National Government when it took office and cut the incomes of our poorest people! As the Minister of Finance has outlined this Budget means a lift for more than 300000 families—that is over 60 percent of families with dependent children in this country. Who could say that they are not the most deserving New Zealanders? They are the most deserving of a lift in this Budget right now. We know that for our families in the $25000 to $45000 per annum bracket it will deliver an average of around $100 a week in the pocket over the 3 years in direct family assistance. That does not include any gains that may come from accommodation supplement improvements and the childcare subsidies. I am proud that this Budget will significantly drop child poverty. This country should be ashamed of the levels of child poverty reached as a result of the 1991 benefit cuts. 
The fact is that higher incomes and better opportunities off shore in the past have been reasons for our people to leave our country. A low-income low-skilled low-value low-growth economy was a crippling burden on our people’s aspirations. The National Government has to take a lot of responsibility for that. We have set out to change those features of the New Zealand economy. Our economy is growing well and better than those of most Western countries. Our unemployment is lower now than that of most Western countries. Our skills levels are rising and our economy is moving up the value chain. None of that happens by accident. It happens because a Labour-led Government has smart policies. 
The real test of policies is when the benefit is felt in the pockets of our families. This Budget delivers directly a growth dividend to our low and middle income families. It makes them more financially secure. It means they can look ahead to the future with confidence they can better meet their commitments and they can afford some extras for the kids and why not? The Minister of Finance has set out a number of scenarios of how families will benefit. There is one clear message today to New Zealand’s low and middle income families: Labour delivers to their family. That is the message. Families are better off with Labour and they are better off because Labour both runs a strong economy and invests everything it can back in its people 
and its services and in growing the economy. Our pledge to New Zealand families is that we will keep on delivering in that way so that our families can get ahead. 
I think it is very important to emphasise that making work pay is central to this Budget. Yes families on benefits will gain but the biggest gains come to those who are in work and those who move into work. It has long been said that many low-income families with kids are little or no better off in work than on a benefit once one takes a number of costs—abatement rates and so on—into account. There was a different approach to increasing the gap between work and benefits and that was the 1991 Tory approach which was to slash the benefit. Our approach is to make work pay by lifting the incomes of New Zealand’s working families. The message of this Budget to our families is clear: they will be better off when they go to work. 
And we want them to go to work. With low unemployment and skills shortages our country needs more workers now. In particular we need to boost the numbers of women in the workforce. Our country falls well behind top OECD countries in the proportion of women at work. Of course top OECD countries have long done much more to support their working parents and our Government is taking steps to see that this country catches up. A big step forward was taken with the introduction of paid parental leave. This Budget provides for the scheme to be extended this year and next. 
 It also makes very big improvements to childcare. The rates of childcare subsidy are increasing significantly and many more families will be eligible for the subsidy. Overall at least 28000 more families with 33000 children will benefit with gains of about $23 a week per child on average from next year. As well dramatic improvements in early childhood education are signalled. From mid-2007 3 and 4-year-olds will be entitled to have 20 hours’ free attendance at community-based early childhood services. Our kindergartens have long been free and this extends that tradition to other community-based early childhood education and care. We are investing in quality. We are investing in quantity. We are investing a spectacular $365 million more over 4 years in early childhood education. 
I am proud of what our Government is doing in this Budget for families for children and for education because I know that taken together these changes mean more opportunity higher living standards and more Kiwis in work and paying their way. That is a fantastic output from this Budget. 
There are many other significant initiatives in the Budget presented by the Minister of Finance. I announced yesterday with the Minister of Health a doubling of the number of major joint operations to be undertaken in this country over the next 4 years. That will take our rate of intervention for those operations to the same level as that in the United Kingdom and above that in Australia. Now orthopaedics are going to be able to meet the same targets we are meeting in many other areas of surgery. This is very big news for older New Zealanders who have the major call on these kinds of operations. We know how painful and distressing bad hips and bad knees are and how they destroy quality of life and limit independence and mobility. We know the whole new lease of life that comes from being able to have these critically important operations. Our senior citizens deserve no less. 
The other good news for our older New Zealanders in this Budget is the commitment to the New Zealand Superannuation Fund. We in the Labour Party believe in saving now to save New Zealand superannuation for the future. That is why there is another $2.1 billion going into the fund this year. That fund is essential to the future security of income for older Kiwis and this Labour-led Government is totally committed to that. 
Over 4½ years we have worked in many ways to make tertiary education more affordable and for this second term in Government we signalled we would move on student allowances and that pledge is honoured in this Budget today. We will be spending another $110 million a year on student support. That will mean more move from partial allowances to full allowances more who got nothing will get partial allowances and some who have been getting partial allowances will get a higher amount as well. That is delivering on commitments made at the last election. 
Time does not permit me to go into many other areas of the Budget. I note though that it does provide over the 4 years for close to half a billion dollars more to go on strengthening the economic performance. Investments there will range from spending on skills to developing export markets to increasing the research and development spend to attracting quality offshore investment to growing our companies to increasing the value of our industries and to negotiating the very best trade rules we can for New Zealand. 
I say with confidence that this Budget will take New Zealand even further ahead. It is a Budget that is good for families. It is good for the economy. It is a Budget that keeps a balance between economic and social investments. It keeps a strong operating surplus. It is a Budget that is all about growth and opportunity. It is a Budget for getting Kiwis back into work and making work pay. I say it is a Budget that only a Labour-led Government in New Zealand can deliver and I am proud of it. 
Mr SPEAKER 
: Before I call the next party leader I want to say that an undertaking was given which I appreciate that party leaders’ speeches will be heard in silence. I think that is important. 
Rt Hon WINSTON PETERS (Leader—NZ First) 
: 
 We gave no such undertaking and I do not mind if people wish to interject while I am speaking. 
I want to tell New Zealanders today that they have just heard it. They have just heard another duel of wits between unarmed economic opponents—two tired old parties that have run out of ideas or to paraphrase a former United States President they have sort of lost that vision thing. There are the same old economic arguments one with a socialist twist and one with a reactionary twist from Treasury. Budgets are supposed to be a time when Governments account for their stewardship and the economy and they outline plans for the future. All we have had is leaks and leaks; all the spin and all the hype. 
That is why I want to move the following amendment to the amendment:  
That the amendment be amended by omitting all the words after the word “House” and inserting the following words: “has no confidence in the Labour minority Government and records with regret that this Government has failed to provide leadership and policy to enhance New Zealand’s export performance and per capita incomes has failed to address New Zealand’s burgeoning balance of payments deficit has failed to deal with escalating crime has failed to provide sufficient numbers of police has failed to deliver a first world health system has failed to curb the burgeoning Treaty of Waitangi industry has done nothing to stop excessive immigration and does nothing to lay the foundations for building a better more prosperous nation for future generations of New Zealanders.”  
What we have heard today is the back-end of a month of leaks and propaganda. This is a Budget to buy votes not a Budget to build a better future for this country. It is a pork barrel Budget aimed at one thing—just keeping oh so definitely political power. It is a cynical statement signed by a cynical group of people. If a public company in this country had published such a document it would be tagged by the auditors. 
The Government boasted of a $7 billion surplus but then it could not prove it had one. Where is the money? Where is the cash? What does a surplus in New Zealand mean any more and what does it mean these days? In the real world people would be saying that it was cooking the books—it was doing an Enron. This duplicity simply would not be tolerated in any other First World country. Worst of all not only does it give false hope to naive National which is calling for extravagant tax cuts for all its rich mates but it gives ordinary people false hope that this Budget will deliver something of substance to them now. This is not a Budget of opportunity. It is simply a Budget for opportunists—political opportunists—and it showed today in the way Government members cheered every small thing that would take away people’s self-reliance and independence. 
Here is the truth. The same slide to dependency that began in 1984 will continue while prospects for real growth and real returns diminish. The core of this Budget and all the hype proves it. It is not about self-reliance. It is about how they can control people’s lives. The Government seems content to let our economy drift along aimlessly on the backs of people importing. It is about people importing this economy and about consumption rather than a prosperous way to the future. 
This Government does not guarantee better educational standards better health services better housing services or ensure that New Zealanders are in real First World jobs with prospects for a real future. The people of this country—the working families—want hope. They do not want slogans. They want something back from their investment— 
R Doug Woolerton 
: They don’t get anything here! 
Rt Hon WINSTON PETERS 
: The member is right. They got nothing back today other than “if you vote for us we might give you this.” They see a Government that has taken them for granted these past 4 years and is now saying: “We will give you a little back but only if you vote for us.” 
 Labour today lost the plot as it has these last 6 months. After all this is taxpayers’ money that it is talking about. It is hard-earned and ordinary people who pay First World taxes expect to get First World services. Let us ask ourselves some simple questions: will this Budget bring First World incomes from better salaries and wages for New Zealanders? 
Hon Members 
: No. 
Rt Hon WINSTON PETERS 
: No it will not. It tries to do that by welfare. Does it seek to make New Zealanders self-reliant and independent of Government? No it corrodes self-reliance and corrupts independence of will and action. Is this Budget pro-business? 
Hon Members 
: No. 
Rt Hon WINSTON PETERS 
: No it simply does not care about an environment to nurture and sustain business and small business in particular. Is the Budget pro-development and pro-infrastructure? No. It is pro-consumption. Apparently in New Zealand we are supposed to eat our way to health. That is the new strategy. Is the Budget pro-education and pro-student? 
Hon Members 
: No. 
Rt Hon WINSTON PETERS 
: No. We live in a society where students sometimes graduate owing over $3000 for every year they have lived—$75000 $80000. What does the Government do? Nothing. This is a high-cost high-tax Government that taxes New Zealanders more than any other Government in our history. The figures prove it. People must be asking themselves where the real Budget is that we never heard about today. Where was it in the telephone books of information? 
R Doug Woolerton 
: It wasn’t here before. 
Rt Hon WINSTON PETERS 
: I will tell members where it is right now. It is right here. It was hidden in telephone books of hype and spin but we have found it. We have the hidden Budget right here and we will present part of it on behalf of the long-suffering New Zealand taxpayer and citizen. First of all there are tens of thousands of unwanted overstayers and at least one convicted million-dollar terrorist living here legally at the taxpayers’ expense. I have here a cheque from the real Budget which goes to Ahmed Zaoui and his associates. As members can see it is a blank cheque. It is for the lifetime support of Ahmed Zaoui Mrs Zaoui Uncle and Auntie Zaoui Grandpa Zaoui and all the other friends relations and bogus asylum-seekers refugees and flotsam that have arrived here in the past 4 years. Labour says: “Te Papa. Make our place your place and we won’t spare the expense.” 
The next cheque is for a one-way ticket for the fat cats and their fellow travellers on the treaty gravy train. I have a few of these cheques. This is the secret Budget. We say to the fat cats in the treaty gravy-train industry that they have been making millions milking grievances whilst genuine Maori claimants miss out. Under both National behind me and Labour they have made buckets of cash whilst the Maori they claim to act for are lucky to get a kia ora or a “kia oree”. We say that they might have a ticket to ride but the last train to the Waitangi station has just left. 
Education is very important in New Zealand. It is so important to the future of this country that this Government is giving it away. Here is the cheque I am referring to: it is a never-ending cheque to tens and tens of thousands of foreign students whilst New Zealand students suffer in their own country. In keeping with Labour’s global one-world vision and on behalf of taxpayers the Government is donating much of our tertiary education system to foreigners. Why have 100 New Zealand graduates when we can have 100000 foreign graduates courtesy of the New Zealand taxpayer? The Government says to those young New Zealanders trying to get an education: “Tough get another loan! The banks are open get another loan!” We say that education should be an investment not a cost. It should be an investment in New Zealand not in Asia or anywhere else. We owe our young people better than that. 
Another group in our society has been given a big boost by this Budget today. 
R Doug Woolerton 
: Who’s that? 
Rt Hon WINSTON PETERS 
: It is the violent offenders the drug dealers the fraudsters the rapists and the predators in our society. They have been given a great deal today and that contribution is tangible support of this Government’s motto: “Crime does pay”. 
R Doug Woolerton 
: What about the victims? 
Rt Hon WINSTON PETERS 
: Well if by some freakish accident offenders do go to jail there is extra money to pay for State-recruited “comfort women” to provide all the comforts of home. Jails used to be a place where we punished people; now they are State-run motels with a bit on the side inside. There is no amount on this cheque but it is a “get out of jail free” pass and here it is on the back. [ 
Interruption 
] Especially from the poor boy. 
Marc Alexander 
: I raise a point of order Mr Speaker. I notice that the Rt Hon Winston Peters is actually signing the cheques he is holding up. It is his signature that is appearing on the cheques. 
Mr SPEAKER 
: That is not a point of order and the member knows it. I will adjust the member’s speaking time. 
Rt Hon WINSTON PETERS 
: They do not miss much in the United Future party. They never miss a trick—until it comes to coalition negotiations then it is roll over play the poodle put out the welcome mat and become a doormat. 
I cannot let this chance go by without thanking Australia our nearest neighbour for trying to maintain a First World health system for New Zealand. It would be churlish not to mention it. Our next cheque is made out to the Australian health system and it is coming out in large doses. It is supposed to be a secret but the real reason this Government bought back Air New Zealand was so that it could fly our sick people to Australia—planeloads of them thousands and thousands of them. The cancer patients will be followed by the heart patients then the ear nose and throat patients then cataract surgery patients to name but a few. 
 This in a once-great country is acceptable to those people on the Government benches because they think that by reason of their social engineering they will make it back into office at the next election. It is a fact that it is soon to become Government policy that all sick people will go to Australia and then New Zealand will be disease-free. I bet Don Brash is killing himself that he did not think of that first. 
But he and Simon Power have also run up a fair-sized account with Uncle Sam. National has an account rendered to pay for nuclear policy and defence advice to Don Brash and Simon Power. New Zealanders will have to pay if National ever gets the chance to be in Government. We know that National would sell this country out. The price to pay is New Zealand’s nuclear-free legislation and our ban on nuclear ships. However this is a price we are not prepared to pay. New Zealand is not prepared by any means to pay the cheque National has made out to Uncle Sam. We will have this cheque stopped tomorrow before either Uncle Sam or Don Brash get it. To be honest this cheque will be stopped—to borrow a very secret phrase—before lunchtime. 
Whilst we are on the subject of collecting let me present a cheque to the police and transport Ministers on behalf of all New Zealand motorists who are using our roads today. This cheque is to pay for the doubling of the size of our police force so that it catches real crime and to send the traffic tax-gatherers back to the Land Transport Safety Authority for the rest of their days. We in New Zealand are sick of watching criminals getting away and winning and going free and crime paying whilst the police hide in bushes with speed cameras. New Zealand First will change all that. After the next election the police will wage war on criminals not on little old ladies going to church. 
We cannot let this occasion pass without acknowledging each and every New Zealand taxpayer. They work hard they pay their taxes and they hope they will get a return on their investment in the State. New Zealand people expect to have a decent health system a decent education system a welfare system if things go wrong a roading system that can carry some cars and a rail system that functions. New Zealand taxpayers give the New Zealand Government billions of dollars and we say it is time they got something back. So here is a cheque for one trillion dollars for the long-suffering hard-working New Zealand taxpayer. Unfortunately there are parties in Parliament that have no intention of giving the taxpayer a fair go and they still are in the majority so I am going to cut up this cheque I am holding. That is the way it is so bad luck to the ordinary taxpayers! 
There are some in Parliament who believe that the needs of the rich and powerful are more important than the needs of ordinary people. We say to the elderly people of New Zealand to New Zealanders who are anxious about their incomes and disturbed about the standard of their health care who are fretting for their safety in their own homes and are concerned about their security hang on because help is on its way. 
We say to the students who have left and are leaving our universities with debts three times their age with more debt than their parents have—parents who have jobs while they are without a job—hang on because help is on its way. 
We say to the hard-working families—families where a working spouse is no longer an option but compulsory who are doing their best to bring up their children whilst they make ends meet and who are now being forced even more to rely on welfare and Government handouts—do not give up yet. 
We say to the small-businessmen and women who pay their hard-earned taxes whilst coping with every type of unnecessary compliance cost who carry all the risks and have to suffer the ignominy of having a group of pseudo-academics telling them they know best do not throw in the towel. Help is on its way. 
We say to exporters—the most critical part of our economy the most vital people in this country who look every day at their opponents abroad with envy at all the help they get from sympathetic Governments while they get nothing—do not stop competing and do not feel that no one understands your plight. Hang on because help is on its way. 
We say to the tens of thousands of Maori those who are great citizens who work hard and contribute to this once-great nation only to suffer the paternalism and the scorn of some within this House who treat them with pervasive unworthiness to be strong—kia kaha. Do not slip back now. Hang on help is on its way. 
We say to every New Zealander who is a patriot who still believes in New Zealand despite all the evidence to the contrary who is alarmed at the state of economic decline as we slide into the Third World—and our per capita incomes prove it—that sometimes it seems as though nothing can be done. But do not abandon all hope; do not abandon ambition. Hang on because help is on its way. 
For in this Parliament there is a party that understands their hopes and dreams and believes that New Zealanders and their former glory can be regained. Do not abandon the good fight because at next year’s election—and every poll from hereon will prove it—New Zealand First will become the next Government. That Government is committed to putting New Zealand and New Zealanders first. 
ROD DONALD (Co-Leader—Green) 
: 
 On behalf of the Green Party I would like to congratulate the Labour-Progressive Government on its Working for Families package. It is 5 years late it does not go far enough and it discriminates against some children because of the origin of their parents’ income. But it is worthy of support and it certainly defines the difference between Labour and National. The last major welfare reforming Budget was in 1991 when National cut the benefits of those who were already on the lowest incomes and abolished the universal family benefit. Today’s Budget goes some way but not all the way towards reversing those cuts and addressing the poverty they compounded. National and its sometimes ally ACT still have blind faith in the ability of the marketplace to meet everyone’s needs. Of course that is nonsense. This package shows that Labour not only accepts that the State has a responsibility to look after its citizens but is finally taking serious action to do so. Although we are angry that past Budget surpluses have been built on the backs of kids living in poverty and we would have liked more money to be used right now to end that indictment we are pleased to hear Dr Cullen’s predictions that today’s package will significantly reduce child poverty and we hope it will prove to be so. This is definitely a Budget for families and we applaud that. 
It is also good news that there are measures in the Budget that will make the transition from a benefit to paid employment easier. A likely consequence of those initiatives is that the labour participation rate will increase which ironically undermines one of Michael Cullen’s arguments in favour of the New Zealand Superannuation Fund—that is that there will not be enough future workers to support us when we retire. I accept the Government’s assurances that no one will be worse off as a result of these reforms despite the base rate of some benefits actually dropping. What we are concerned about is that beneficiaries without children will hardly be better off. Ever since National slashed the benefits 13 years ago beneficiaries have been struggling and they all deserve at least an extra $20 a week each. 
We are also concerned that the in-work payments obviously discriminate against the children of families whose parents rely on a benefit whether it is the domestic purposes benefit the unemployment benefit superannuation or the student allowance. We understand the intention of the payment which recognises that going to work involves extra costs such as transport and clothing but we echo the concerns of the Child Poverty Action Group which urged the Government not to punish children because their parents were getting State support. The Government has partially recognised that discrimination by extending the in-work payment entitlement to those on accident compensation. Yet it has not extended the payment to parents in full-time study even though they face equivalent extra costs to those in the workforce. 
I would particularly like to congratulate the Government on ending the ridiculous situation whereby as soon as beneficiaries started jobs their accommodation supplement was cut. That was an extraordinary disincentive to make the transition to employment and the new situation will be welcomed by those who receive an accommodation benefit. But it leaves a big question mark over why the Government has not changed the abatement regime for those beneficiaries who are not getting an accommodation allowance. Being able to earn only $80 a week before one’s benefit starts to be cut is no incentive to get a job. 
Three important initiatives are missing from today’s family package. The first is a universal child benefit which should be paid to every primary caregiver regardless of family income. A universal child benefit is still needed in New Zealand despite the increases in family support announced today. Unless everyone gets a universal benefit we are concerned that not all families will get what they are entitled to under family support because they are not aware they are eligible and more important that some families will get more than they are entitled to because they have underestimated their incomes and will then be faced with an unaffordable debt at the end of the tax year. 
There is also good and bad news for students in this Budget. I would like to acknowledge that 43000 students will be better off as a result of the parental income threshold being increased. On the other hand the Government is taking the extraordinary step of axing the accommodation allowance for married students under the age of 25. Are they now expected to get divorced and go back to living with their parents? If the Government is serious about investing in people and if it wants young New Zealanders to be committed to our country rather than to take their talents and energy off shore it should make the student allowance universal. Instead it is forcing students into debt—a debt that has now reached $7 billion and has more than doubled since Labour came into office. What is more as a result of the Future Directions package students will have to borrow more because it will be harder for them to get any work when they are not studying as more beneficiaries will now have a greater incentive to enter the workforce. For that reason alone this Budget should have included a universal student allowance. At the same time that the Government is sending a signal that it is worth going to work it should be sending a signal that it is worth getting a tertiary education or training. We should be telling young New Zealanders that we value them that we want them to contribute to society and that we will support them during their studies. 
There is no such thing as a free lunch; the question is whether students pay now or pay later. The Green philosophy is that we are all better off if we know that our society will support us when we are young old or sick and that in turn we are expected to contribute to the community chest when we are well and working. We are concerned not just about the plight of individual students. We are concerned about the impact that student debt is having on the whole economy and on our society. Young couples with student debt are putting off buying their first homes because they cannot bridge the deposit gap and meet mortgage repayments. They are also putting off having children because they feel they cannot afford to. That is a ticking bomb that will explode when those couples retire. They will still be paying off their mortgages or trying to pay market rent out of their New Zealand superannuation but they will have no private savings to back them up. In some cases they will actually still be paying off their student debt as well. Meanwhile there will be fewer of the new workers Dr Cullen needs to pay taxes because those families have delayed having children. 
While we support the family package the question needs to be asked: is it the best long-term way to ensure families have enough to live on? I said at the outset that the State has a responsibility to look after its citizens. I also maintain that employers have a moral responsibility to pay their staff a living wage. Even before today’s package the Government was paying over $750 million in the form of family support tax credits subsidies grants and allowances to people in the workforce. Today’s package increases that level of support considerably. There is a strong argument that that is corporate welfare because it subsidises employers who pay their staff less than it costs to bring up a family in decency. That is why the Government should be lifting the minimum wage to at least $10 an hour and taking the lead on the matter of pay equity by implementing it in the public service—starting with nurses right now. 
I can understand why some business people would oppose that when they face increasing competition from sweatshop imports. It is simply not fair that the Government on the one hand increases the minimum wage introduces 4 weeks’ annual leave and sets good health and safety standards and environmental conditions for New Zealand businesses and their staff and on the other hand forces those businesses to compete with importers who can buy goods that are made in appalling conditions by sweatshop workers. More and more companies are simply giving up. Yesterday’s announcement by Sunbeam that it is closing its electric blanket factory in Palmerston North with the loss of 122 jobs is yet another example of a company shutting its New Zealand manufacturing base and shifting production to China. Many more will follow if the Labour Government succeeds in its attempt to negotiate free-trade agreements with Thailand and China and forces through its unilateral tariff cuts. Its making work pay strategy will also fall flat if the only jobs available for beneficiaries are those working at the checkout or waiting on tables because our manufacturers have disappeared off shore. Despite those concerns the Green Party will be supporting the future directions legislation when it is introduced under urgency later this afternoon. 
 We are less impressed with other aspects of the Budget and we remain fundamentally opposed to the Government’s policy of allowing the commercial release of genetically engineered crops in New Zealand. Therefore I move  
That the amendment to the amendment be amended by omitting all the words after the word “has” and inserting the following: “no confidence in the Labour led minority Government because despite there being some positive initiatives in the budget its continued failure to take adequate measures to protect New Zealand from the release of genetically engineered organisms exposes our health our environment and our economy to significant and quite unnecessary risks 
.” Keeping New Zealand GE free is as fundamental to the Green Party as keeping our country nuclear-free. The Labour Government of the 1980s was propelled into legislating against nuclear weapons and nuclear power by public opposition to their use. My greatest disappointment in this Labour Government is that it has refused to listen to overwhelming public opposition including opposition from its own supporters to genetic engineering. Despite Labour’s intransigence we remain optimistic that New Zealand will stay GE free. There is no sign of any company being foolish enough to apply to commercially release a crop here and the GE industry is in worldwide retreat because nobody willingly wants to buy its products. Monsanto’s decision to shelve its GE wheat marks the beginning of the end for GE food crops. 
Genetically engineered organisms are only one of the threats facing our economy our society and our environment. Today’s Budget does little to prepare New Zealand for many of the predictable and not-so-predictable challenges ahead.  
The Day After Tomorrow  
may only be a film but the environmental backlash it portrays is very real. Man-made climate change has already been held responsible for the growing number of extreme weather events. To its credit the Labour Government has acknowledged the need to tackle that global problem by signing up to the Kyoto Protocol. On Tuesday Dr Cullen said in the House that it was very important for members to address the issue of climate change because it may well have an impact on the economy. Despite increasing evidence that that is the case today’s Budget does little to either future-proof the economy or improve the way we treat the environment. In fact some policies such as making our economy more dependent on exports make us more vulnerable rather than more self-reliant. Only the ACT party rejects the reality of climate change. That issue is too serious to wait until the biggest offender the United States of America takes off its blinkers and commits to reducing its use of fossil fuels. 
The other reality is that fossil fuels by their very nature are finite. New Zealand knows that very well as we face up to the Maui gasfield running out 70 years before it should have run out because the Government at the time squandered that precious resource. It is not just environmentalists who are sounding warnings. The chief executives of the big oil companies have made it clear that the world demand for oil is about to exceed supply. Yes there is still a lot of oil in the ground but we are consuming four barrels for every one that is discovered. Soon we will not be pumping it out of the ground fast enough to fill our tanks. The rapidly expanding Chinese economy is speeding up that depletion. As we import more and more goods from China it is using more and more oil in manufacturing transport and travel. The impact of an oil crisis in New Zealand will be dramatic. The latest trade figures announced today show that the cost of crude oil and petroleum imports is up 84 percent compared with April 2003. We are on an unsustainable path of fossil fuel - dependent economic growth and free trade is driving us faster towards the edge of the cliff. 
New Zealand can and should change course before it is too late. The celebrated scientist Professor James Lovelock one of the first researchers to sound the alarm about the threat from the greenhouse effect said on National Radio yesterday that New Zealand could be the first place in the world —after Iceland that is—to get all its energy from renewable sources. The Green Party and its predecessor the Values Party have been pushing the message of energy efficiency and renewable energy for over 30 years and we will keep pushing it until those in power listen or until we have the power to make the necessary changes. This Budget was an important opportunity to protect New Zealanders from sharply rising energy costs by investing in demand management solar power and wind power. The arguments for investing in sustainable energy now in order to insure us against a bleak future are compelling. Last year’s dry winter and this year’s South Island transmission shambles are warnings of what lies ahead which is why the Greens are disappointed that the Government has not taken heed of those warnings by seriously investing more on energy security in this Budget. 
Of course it is good news that there is an extra $2.6 million to assist low-income families to make their homes more energy efficient and $200000 to encourage greater use of solar water heating. But those amounts are so pathetic that I am sure the Minister is embarrassed to claim them as victories for sustainability. They pale into insignificance against the $1.2 billion that Meridian Energy was planning to spend on its destructive Project Aqua scheme. What is needed instead is for the Government to take a lead by immediately calling for tenders to install solar water heating in all Government buildings where it is cost-effective to do so. A 5-year programme to put solar panels into State houses hospitals prisons schools and office buildings would not only reduce energy demand but save the Government money. Free solar hot water would also cut the power bills for State house tenants. While we obviously support the Working for Families package it is an end-of-pipe solution to the problem of income inadequacy which will only get bigger as power prices inevitably rise. A more creative solution would be to help people to reduce their energy costs. The scaling-up of the manufacturing and installation industries resulting from such an initiative would bring down the price of solar heaters for private homeowners and landlords. The Government could also support “solar mortgages” to enable homeowners and private tenants as well as the whole country to get the benefits of upfront energy savings while paying off the capital cost from those savings. Exactly the same approach could be taken to insulating homes so that they are warm dry and healthy. 
The Government has also missed the opportunity to seriously invest in sustainable transport infrastructure in the Budget. We acknowledge and support the Government buy-back of the rail track and the commitment to spend $200 million on fixing the mess caused by the private operators and we are obviously very pleased to have jointly developed and to be now implementing the New Zealand Transport Strategy with the Government. But what we want now is an integrated and a safe responsive and sustainable land transport system and New Zealand - owned and operated coastal shipping services. What we do not need is to pave paradise and put up a parking lot. The National Party’s solution to New Zealand’s present and future transport problems seems to be to build more motorways and to create more congestion. The Greens hate traffic jams. We hate people being stuck in cars when they would rather be at work at school or at home. We want to ensure that businesses can get goods from one end of the country to the other efficiently and in particular we want to solve Auckland’s traffic gridlock. National’s vision for Auckland’s transport is simply a repeat of the 50-year-old motorway madness that created the present problems. It would be an economic suicide note for Auckland at a time of worsening climate change oil depletion and rising concern about air quality. National has not noticed this but the rest of the world has realised that more roads means more cars more pollution and more congestion. 
Instead New Zealand needs first-class public transport services in the cities and throughout the country and we need a first-class rail freight service in order to get heavy freight off the roads and back on the track. We therefore call on the Government to make extra capital available to fix buckled rail tracks faster than it is planning to do to expand Wellington’s commuter rail for example by double-tracking where it is needed and electrifying the track north of Paraparaumu and to commit to stage 2 and beyond of Auckland’s commuter rail network. Transfund New Zealand should also be pushed to fund the rail projects such as spur lines and freight transfer stations that are waiting on its books. We know that the alternatives to roading scheme has $31 million in that fund but it is still not being spent. We welcome that money and we welcome the extra $22 million for passenger transport but we urge the Government to stop Transfund from dragging the chain on rail and to give Transfund a clear message that it is time to act. 
Dr Cullen will ask where the money is to come from for that. He will not be surprised to hear me answer that first up it should come from his beloved New Zealand Superannuation Fund. I know he has been crowing that the fund has done well in the last quarter but I remind him that the net market values of the international equity investments of the New Zealand Superannuation Fund were still worth $31 million less at the end of March than they were when they were first invested in October 2001. In other words gambling our retirement on the international sharemarket is a risk and the more that is gambled the bigger is the risk. What is the use of owning shares in companies like Enron and WorldCom when our motorways are gridlocked our trains do not run on time and the lights go out at night? 
Does this Budget prepare New Zealand for the day after tomorrow? No it does not. The Government needs to kick its fixation with economic growth and instead to focus on sustainability self-reliance and the quality of life. Even Dr Cullen acknowledges that New Zealanders rightly believe that success is defined as much by their quality of life a better environment and more effective health and education services as it is by a narrowly defined economic performance. If he really believes that why is there not a serious increase in funding for biodiversity in the conservation vote? Instead total biodiversity funding has been cut in this Budget at the very time when the Department of Conservation is struggling to fund its new Operation Ark programme for protecting threatened species. There is not a single new environmental initiative in the Budget. Dr Cullen may have rescued some of our children from poverty but he has failed to provide them with a sustainable future. 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 We in the ACT party urge Parliament to reject the Labour Government’s Budget and we do so because we believe that this Budget will come to be seen as a turning point where the New Zealand economy instead of taking the upward road to economic prosperity and growth turned away to a path of tax spend and bust. This Budget fails on a number of grounds. It is unfair. Socially it traps New Zealanders into a low-growth low-income Third World future. Economically it is unsound. The Budget is a return to the tax spend and bust policies of the Muldoon years which eventually took this country to the edge of bankruptcy. The Budget will not make us a Third World nation immediately but over time that will be the consequence. 
This is a tax Budget not because of what it does but because of what it does not do. The Budget does not repeal any of the stealth taxes the Labour Government has imposed. The biggest were the two increases in fuel prices but the most insidious tax is fiscal creep. The refusal of the Minister of Finance to change the taxation thresholds has meant that inflation has pushed people into higher and higher taxation brackets and the 39c in the dollar taxation bracket illustrates my point. The Labour Government was elected with the credit card promise. That is the one where Helen Clark—with her digitally perfect teeth—stated: “No rise in income tax for … 95 percent of taxpayers …”. That is the Labour Government’s taxation pledge. This year 20 percent of all full-time workers will pay the 39c in the dollar taxation rate. In the year Labour came into power the total raised from personal income tax was $15.8 billion. This year’s Budget plans to raise $21.25 billion. That is the biggest increase in taxation in New Zealand’s history; it is an increase in income tax of $5 billion or one-third. Taxation from all sources has also risen thanks to the stealth taxes by a third. That is an extra $11 billion in taxation—an increase from $33 billion a year to $44 billion. 
The Minister of Finance himself boasts that this is a spending Budget—tax and spend. According to Statistics New Zealand there are 540000 families in New Zealand with dependants. Around 150000 of those families are benefit-led families. That leaves 400000 working families. The Budget is unfair because although eventually 300000 families will benefit only 150000 of them are working families. One does not have to be an accountant to work out that the majority of working families in New Zealand—some 250000 working families—will get nothing from this Budget. Most households have no dependent children so they are just bystanders in this Budget. Their only role is to pay Labour’s taxes so that the Government can bribe the electorate at the coming election. There are around 1.5 million households in New Zealand; 1.2 million households will receive nothing from this Budget. That is simply unfair. 
Dr Cullen boasts in the Budget that: “Great care has been taken in assembling this package to identify any possible individual losers and to ensure there are none.” Well he cannot have looked very hard. A family on $60000 a year with one child gets nothing. Treasury says that in this country the average two-parent working family with two children earns $72000 a year. Under this Budget average New Zealand working families are the losers; they get nothing and they get nothing next year. They have to wait for the following year for the election of ACT into Government to get a break. This Budget discriminates against hard work and enterprise. It is actually a welfare Budget—welfare wins taxpayers lose. Welfare wins because welfare beneficiaries will get an increase in April next year. Working families for reasons not explained by the Labour Government have to wait until April 2006—it is a wait of 1 year if one is a social welfare beneficiary but of 2 years if one is working to get the new family tax credit. 
I predict that this Budget will have many unintended consequences on our society. The unintended consequence of the new family tax credits and accommodation supplement is—as Green Party members themselves can work out—that it subsidises employers. This measure will encourage employers to pay low wages. It will encourage people who are in work to keep on receiving low wages because they will lose so much if they get a pay increase. The Labour Government is subsidising a low-wage economy. Another unintended consequence of this tax-and-spend Budget is that the Government is encouraging low-income families to have more children. The Budget discourages work because the effect of increasing one’s income is to lose very valuable subsidies. If people are poor the way to increase their income is to have more children. Why is Labour being so socially irresponsible? The reason is simple: the Government’s motivation is not Future Directions; it is future elections. Labour’s own polling shows that the new Maori Party will devastate its electoral base. It is a fact that most Maori families will benefit substantially from this Budget if only because the average number of dependants in Maori families is higher than in the average New Zealand family. But the average New Zealand family of European descent will receive nothing from this Budget. 
The future for both Maori and non-Maori is not in welfare and dependency. It is in having the independence that comes from a strong economy. This Budget will do absolutely nothing to stop the alarming trend of large numbers of skilled New Zealanders migrating. We already know that this year 70 percent of the doctors graduating from Otago University will leave New Zealand. This Budget will encourage that trend. Economically the Budget is unsound. It will not encourage investment growth or jobs. Treasury’s own forecast of the effect of this Budget is that future growth will slow from today’s 2.8 percent rate to just 1.6 percent next year and then to 1.57 percent in the year following. That is the Government’s own forecast. Then we have Dr Cullen saying that there is no evidence that taxation cuts promote prosperity. He can produce no research to support that assertion. When Dr Cullen was out wooing business he said—and he is on record as saying—he would lower the taxation rates when “fiscal conditions permit”. Well we have a $6 billion surplus. 
Dr Cullen is wrong to say that taxation cuts do not work by claiming that when the top personal tax rate was reduced from 66c in the dollar to 33c in the dollar it did not produce an overnight economic boom. The fact is that that cut did work. Despite making the move from being one of the most regulated nations in the OECD—from a system of massive Government subsidies—the New Zealand economy bounced back. Dr Cullen was a junior finance Minister in the then Labour Government and I am sure he was as astonished as the rest of us when we discovered that we were collecting as much income tax from the 33c in the dollar rate as we had been collecting from the 66c in the dollar rate. That is why Roger Douglas recommended the income tax rate be lowered to 24c in the dollar. 
I ask whether Treasury agrees with Dr Cullen’s analysis of the effect of taxation cuts on the New Zealand economy over the last 20 years. We know that Treasury does not. On 22 April of this year the Secretary to the Treasury John Whitehead released a paper titled  
New Zealand Economic Growth: An Analysis of Performance and Policy 
. While it is somewhat dry I recommend that MPs read that document. Treasury in that report states: “Since the early 1990s New Zealand's average per capita GDP growth has increased relative to the OECD mean.” So much for the claims about the failure of the policies of the 1990s! Treasury puts New Zealand's superior economic growth down to a range of policies including such things as labour market reform but it also includes the taxation cuts. With regard to taxation the report states: “A foundational principle for a taxation system that seeks to support economic growth is that it should be ‘broad based - low rate’”. Paragraph 175 of that report states: “… moving to a flat tax rate for both personal and corporate tax rates is likely to have the greatest impact on economic growth”. 
That is precisely the position that the ACT party has been advocating for more than a decade now. The fastest and biggest impact on growth is a low flat rate of taxation. The McLeod Tax Review was set up by Dr Cullen who handpicked its members and wrote the terms of reference. It had the best experts the Government could find in New Zealand and overseas. What did the McLeod report state? Did it agree with any of Dr Cullen’s statements? No it did not. It concluded that a low flat rate of taxation was the best option for New Zealand. 
Hon David Cunliffe 
: They had been smoking. 
Hon RICHARD PREBBLE 
: In that case the member should not have paid them $2 million for the report. In this Parliament the ACT party has always been the voice for sound economics. 
A $6 billion surplus represents a once-in-a-lifetime opportunity to put New Zealand on to a growth path towards becoming one of the most prosperous nations on earth. That is the opportunity that Dr Cullen has today—not because of any actions he has taken but because of the actions of Governments and New Zealanders over the last 20 years that have put this country into a position where the Minister of Finance now actually has an opportunity to take a new direction and path for New Zealand. And what does he choose? He decides to go back to the failed policies of tax and spend of the past. Let us just consider this. Answers to written questions from Dr Cullen have stated that the cost of going to a flat rate of taxation of just 20c in the dollar for both companies and individuals would be $5.45 billion a year. That is $500 million less than the surplus and it is a figure that assumes no change in economic activity. 
As Government members often like to point out I am a director of a number of companies. We directors look at investment opportunities and we look at the rate of return after tax taking into account the risks that are involved in any new project. I am looking at an export opportunity at the moment that in the business plan would pay for the total investment in 3 years. Yet we are very reluctant to give it the green light because there are always risks. A 20c in the dollar flat taxation rate would mean that that project would pay for itself in 2 years and we would certainly give it the green light. There are thousands of projects like that sitting on the boardroom tables of New Zealand—or more accurately sitting on the kitchen tables of New Zealand because that is where most business decisions are made. At a 20c in the dollar taxation rate thousands of projects would get the green light. Just as important it would encourage New Zealand entrepreneurs who have been driven overseas by a high taxation rate to return. In its rich list the  
National Business Review  
has to include New Zealanders who are overseas because there are just not enough rich New Zealanders left in this country. I say to the socialists on the Government benches opposite me that those who returned would then spend their GST and invest in this country and that would have a huge impact on New Zealand. 
We could implement a 20c in the dollar flat rate of taxation without making any cuts to any Government expenditure and we could do that tomorrow. None of those figures take into account the dynamic effects of doing that. Our own New Zealand experience is that cutting the top rate of income tax from 66c in the dollar to 33c in the dollar resulted in more income tax being paid within 3 years. I tell this House that if the top rate of personal tax was reduced from 39c in the dollar to 20c in the dollar and if the company rate of tax was also reduced to 20c in the dollar within 3 years we would be receiving the same taxation revenue that we get today. However New Zealand would be a very different country and a much more prosperous nation than it is currently. 
The real security for New Zealand families comes not from tax spend and bust Budgets. It comes from the prosperity hard work and enterprise of our people. New Zealand did not need a tax-and-spend Budget. New Zealand does not need more welfare. We certainly do not need a “welfare wins taxpayer loses” Budget. This Budget is not a Future Directions package. We all know that this Budget is a future elections bribe package. A $6 billion surplus is a once-in-a-lifetime chance for a prosperity-creating taxation cut that would put New Zealand back into the First World where we belong. That is why the ACT party will support the amendment moved by the National Party and that is why we urge the Government’s minority partners to turn down this Budget. Why do we not turn down the Budget and have an election? Let us find out whether New Zealanders want to spend the taxpayers’ $6 billion surplus on yet more welfare or whether the taxpayers of New Zealander want to see a prosperity-creating taxation cut. That is the challenge and the ACT party is quite prepared to take it up. 
Hon PETER DUNNE (Leader—United Future) 
: 
 When the Leader of the Opposition began his speech today and moved his motion of no confidence in the Government he indicated that one of the reasons he did so was that—and he said this several times—for months the National Party had been advocating this position or that and that for months the National Party had been concerned about the plight of middle-income earners etc. I say to the Leader of the Opposition that for years I have been concerned about the plight of middle-income earners. For years I have made speeches in this House often as a lone voice about the plight of middle-income earners and for years I have urged successive Governments to provide a better deal for middle New Zealand. Now here is a Budget that starts the process of delivering that better deal. 
The point I begin on is this: the divide that has been drawn between the parties today is not so much one on whether the resource is there to pay for this better deal but on the way the better deal should be delivered. For too long middle New Zealand has been quiet uncomplaining and perhaps compliant in terms of the way it has been dealt with by successive Governments. It is the group of people that pays all the taxes but seldom gets any of the benefits. Now after 20 years those people are saying it is time they received a dividend. Where I think other parties are missing the point in this debate is that New Zealanders are not a dogmatic people. They are not a profoundly ideologically driven people and they are getting just a little tired of seeing the debate about their future always being promoted in terms of this ideology or that ideology. What they are most interested in is where they fit into the equation. That is why I am delighted to see a Budget that for the first time in a generation puts the concerns of decent New Zealand families upfront. 
It has been a dramatic transformation over a relatively short period of time. Two years ago the Budget of the then Labour-Alliance Government did not mention the word “family” once. Last year 15 specific family initiatives were introduced—a number as a result of the negotiations between the Government and United Future. This year just 2 short years later we have the most dramatic family-friendly Budget in a generation. I think that middle New Zealand and those families earning a combined income of up to around $80000 a year who will all benefit in some shape or form from this Budget will not be as interested in the arcane arguments about whether it is delivered through the taxation system or any other system as they will be in the fact that at last they will get a dividend for the hard work of economic reform under successive Governments in the last 20 years. That is what the debate should be all about. Around the world today economic and political debate is shifting away from the abstract and moving much more towards how the gains that are being produced benefit societies and communities. Perhaps it is a result of September 11 but certainly there is a much greater recognition abroad today that the purpose of Government and society and of all those abstract terms like “economic growth” “performance” “employment” or whatever term is used is to create better conditions for families to get about their business. That is the core point of this Budget. 
I do not necessarily think the Government has got it absolutely right in terms of the way this assistance will be delivered. I think there are some issues regarding sequencing and timing but frankly they are secondary to the fundamental point of doing something positive for New Zealand. There are about 480000 families in this country with dependants. Over the course of the programme that this Budget introduces just over 300000 of those 400000-odd families will benefit. That is a hugely significant part of social progress. I think it is mean-spirited to be arguing about the mechanisms when families out there today will be looking bluntly at the dollars and what they mean to them. Some issues here need to be taken further. But as I said I am pleased to see the attack made on dealing with the circumstances of middle New Zealand families in particular. I am delighted that as a result of the discussions we were able to have with Dr Cullen Mr Maharey and other Ministers the package is perhaps a little broader in its intent than was first intended. That is good and positive. I am also pleased to see some movement in some other areas. 
It is significant that an initiative promoted by Gordon Copeland last year which received some limited recognition in last year’s Budget has been picked up to a much greater extent in this year’s Budget. It is the basic and sensible point of indexing a lot of the payment rates to movements in the rate of inflation. Part of the difficulty that we have experienced for so long with abatement rates on all the various forms of payments that have been made has been that the gap between their introduction and their review has been years. Consequently it often becomes too costly to keep up with progress. I am rapt that Dr Cullen and the Government have now agreed to index those payments. That will make matters significantly easier not just for Governments in the future but also for those who benefit from those forms of assistance. We see a significant example of that in the big problem the Government still has with tertiary education and student loans in particular. It is good to see that the threshold at the top end of about $50000 has been raised to $62000 in terms of family income before the under-25 parental income test threshold applies but the problem is that that cures about 10 years of no movement. I sincerely hope we will not see another 10 years go by before that aspect is addressed again. 
There was a cryptic line in the Budget that we ought to be aware of. Dr Cullen made reference to the fact that there would need to be some consequential changes to the provisions of the Human Rights Act. I think that is a matter of grave concern and is one area where the Government may need to think again about the impact of its policies. I say that because that reference related to the fact that under the Human Rights Act married students without dependants under the age of 25 who are currently exempt from the parental income test now apparently ought to be included under that test. We will have the absurd situation whereby a couple of married students who may well have been married at 18 and at the age of 24 are living their own separate lives will still be subject to a parental income test as to whether they can get student allowances because of the provisions of the Human Rights Act. That is absurd and I give notice that that matter will need to be reviewed before we go very much further down the track. There are other issues that need to be dealt with in that area. Part of the problem that could be addressed is the 25-year-old age limit itself. I would have liked to see some movement in bringing down that threshold age because that would have had a significant impact as well. That is work to be done in the future. 
There are a number of other initiatives contained in the Budget that I am very very pleased to see. I say that from the focus of wanting to see a Budget that makes New Zealand a better place for our families and for those who are raising children. We know of the stresses and the pressures that our young people face today and in that context the move to increase the Social Workers in Schools programme is a good one. It is perhaps a commentary on the state of our society that we need to even contemplate such initiatives but I am delighted to see that move is being extended. I know my colleague Judy Turner who pushed for that will be equally delighted. I know too that she will be pleased to see the Government has made significant movements in terms of increased funding for mental health support with a $200 million increase over the next 4 years. My colleague Marc Alexander will perhaps rest a little easier at night and maybe leave Phil Goff alone just temporarily with the increase of $4.4 million for restorative justice and the additional $1.5 million for victims’ rights but I suspect that will only embolden him to try for more gain in that area for the victims of crime in the future. Another initiative that we spoke of last year which we are delighted to see carried through in this year’s Budget is the continued increase in the schools operations grant and we are particularly delighted to see the increase in support to the New Zealand Qualifications Authority in terms of its administration of the examination system. All those measures contribute to making the system that affects a number of our children and our families more user friendly more positive and more geared towards their needs. In a period where we have gone through a long stage where Budgets were often quite abstract from the reality of most people and the moves that were introduced seemed to be at such a high level that for most people they had no immediate impact the sorts of basic measures that this Budget building on last year’s Budget introduces are positive and they will be welcomed by many many New Zealanders. 
It would be wrong to conclude that this Budget is an end in itself. From listening to the debate I think there seems to be a feeling that the Government has somehow missed an opportunity as if this is the only opportunity that will exist for any Government to make significant social change. I believe that is a wrong and false attitude and it is perhaps symptomatic of the thinking that has led us to see a series of stop-start measures over the last 20 years or so. One of the issues we do need to consider in the light of the current debate about the most effective way of assisting our families is whether our existing taxation system delivers to them in the most fair and equitable way. United Future has long argued and will continue to argue for the concept of income splitting for taxation purposes. We have argued for income splitting because it will allow people a fairer slice of the action if one likes by recognising the concept of household income. Ironically of course we used to recognise household income as the basis of our income tax system. We only moved away from it in 1957 not for any sound policy reason but because the PAYE system was introduced and there would have been difficulties in administering source deductions because of differing incomes. 
The issue of income splitting is still very much on the agenda and it also recognises a key element as far as we are concerned: that people ought to have choice about their circumstances and how they apply them. I believe that is one of the areas that perhaps this Budget is a little light on but it does not mean that the issue cannot be recognised for consideration in the future. The issue is really about recognising the equal role both parents have in the construction and rearing of the family unit and in the running of a household. Particularly for the parent or partner who chooses to stay at home and therefore loses the ability to earn income income splitting is a way of recognising that contribution much more powerfully. It is very interesting to note in the context of the current debate that a certain article in the  
Sunday Star-Times 
 a couple of weeks or so ago has engendered how many people have raised right up until this morning’s  
Morning Report 
 the notion of income splitting as being the way ahead and the way we ought to proceed. That is a matter that the Families Commission which will be opening its doors in just a few short weeks will want to put high up on its agenda and start to do some good sound policy work on and to make some recommendations on to the Government in the future. 
Where we are today and where this Budget is so important and so valuable is that we have shifted the debate—and I take particular delight in the fact that we have had influence with the Government in doing that—and we are now unashamed as a country it seems to focus on what is good for New Zealand families. We used to be a little embarrassed about doing that because our circumstances were all different and we therefore thought that perhaps to talk about my circumstances as opposed to the next person’s circumstances might be a little unfair or a little inappropriate. We have moved away from that and that is good. We are now in a position where all the issues can be debated thoroughly openly and fully. I acknowledge the work that the Progressive party leader has done in terms of the drug and youth suicide funding that is in this Budget. We thoroughly support that again because it is part of the much more upfront recognition of those issues and how they can be dealt with. We do not want to see this Budget lead just to a self-centred argument about how much money has gone into my pocket as opposed to the next person’s pocket and so on and so forth. We do not want to see the sort of mean-spiritedness that seems to bedevil that type of debate. We want to see a much more fundamental assessment about how Governments in the future use their resources garner their policies if one likes and work to achieve economic growth in the interests of prospering this society and its families. 
I want to conclude by drawing an analogy to the Irish argument which many people still like to laud as being a great example of a way to move forward. What the Irish have done is particular to their own circumstances but the point of comparison for us is this. The Irish have actually set some national objectives that are not too ambitious. But in terms of Ireland being a great place to raise a family the Irish have outlined the sorts of policies that they need to achieve that and have then worked through to the economic policies they need in order to achieve the growth required to fund the social programmes. It is a seamless approach. This Budget lays the groundwork for that type of approach in New Zealand. There is still a way to go. We want to work with the Labour-led Government in the lead-up to next year’s Budget to start to take this focus one step further. As I said at the beginning this Budget is a dividend for low to middle income families and for middle New Zealand in particular for over 20 years of hard work. I want to see the gains that are made for those families in this Budget become a threshold for the future that we can build on. I want us to build a more constructive society where we can truly hold our heads high and say we have done what we have done for the benefit of all New Zealand families and all New Zealand families will be better off economically and socially as a consequence of those moves. If the Budget achieves those objectives then this will have been a watershed in our social economic and family development. 
Hon JIM ANDERTON (Minister for Economic Development) 
: 
 Firstly I congratulate Dr Michael Cullen on this his fifth Budget. The financial management of the two Governments in which I have had the privilege to serve with Dr Cullen has worked towards and resulted in unemployment falling to the lowest level in New Zealand in 16 years—4.3 percent. I am very proud of that figure. In the 1990s the level of unemployment never dropped below 6 percent. When Don Brash was the Reserve Bank governor he used to predict in his forecasts that the unemployment rate of around 7 percent would stretch out forever. He seemed to accept that level of human trauma with equanimity. The number of people receiving the unemployment benefit has more than halved since this Government came to office and 193000 more New Zealanders now have paid jobs than in 1999. When I came into Government I said that my top priority was jobs and that remains my top priority today. I also have to congratulate Michael Cullen on producing Budgets that have enabled that outcome to take place. 
This year’s Budget ensures that a better income for families in need is the top priority for assistance. People have said: “Why wasn’t it done earlier?” and I want to deal with that matter. The truth is that when one is increasing the income of the most needy families in New Zealand by up to $1.2 billion or $1.3 billion that money has to go into the baselines of income support; otherwise one is giving with one hand one year and taking away the next. So one had better make sure it is sustainable. It is only the performance of the New Zealand economy and what this Government’s policies have done for it that enables the kind of certainty that this income support package indicates. 
The only uncertainty is whether the National Party if ever elected would remove it. I think it is important for National members to say something about that. Mr Brash indicated when he started that he supported some of these policies but he ended up looking as though he did not support them at all. The question is whether the National Party is going to go on the road between now and the next election and say it will abandon these policies. If National members do not say that then what on earth have they been saying up until now? I cannot understand and I would like to be made aware by subsequent National Party speakers what its position is. 
This year’s Budget ensures that a better income for families in need is the top priority for this Government. The Progressive Party is committed to ensuring that no one lives in poverty. We are proud to support these initiatives which are of course designed to reduce hardship for the least affluent families and particularly for New Zealand children far too many of whom have been living in an environment of poverty for too long. 
I emphasise that the value of this Budget in transforming the industrial base of the New Zealand economy is part and parcel of the ability of this Government to now make these commitments because this Budget takes as its predecessors have a comprehensive approach to economic development. It is focused on strengthening and deepening New Zealand’s connections to the world economy. In other words it helps us do a better job in selling New Zealand and its production to the rest of the world. It moves us into high-value high-skilled production that customers overseas want to buy. That is the only way we are going to ensure prosperity for all New Zealanders into the future. There is $500 million over 4 years in this Budget to help unleash New Zealanders’ creativity and talent. 
I do not think the House fully understands the importance of the economic development work that this Government is doing and has done. Our broad approach is not limited to the economic development portfolio; it goes across the board including commerce small business finance education science and technology immigration education and so on. The National Party spokesperson on finance calls it corporate welfare so presumably he will advocate to get rid of all of that. I look forward to the National Party telling exporters that it will axe the $35 million provided in this Budget to help find New Zealand markets and strategic partners for New Zealand businesses. Is National going to say that? 
Simon Power 
: Put your back into it! 
Hon JIM ANDERTON 
: I look forward to the National Party members putting their backs into telling New Zealand businesses that they will abandon policies for the improvement of business in New Zealand and for our export community in particular. 
An example of course of the difference between what was done before and what is done now can be seen in the forestry and wood-processing industry and what happened when New Zealand Trade and Enterprise and myself as the Minister for Economic Development went to Europe. We identified Denmark’s furniture-manufacturing industry as a partner in wood processing in New Zealand and that led to significant investment by Zenia House in wood processing and furniture manufacturing of a high quality in New Zealand. The result of that commitment is going to be a very significant investment in jobs and high-value furniture manufacturing in regions in New Zealand. 
I look forward to the National Party telling industry it would cut those programmes that are aimed at improving the capabilities of our managers for example. When the Information and Communications Technology Sector Task Force which the Government initiated last year looked at the future of that industry it determined that it wanted a hundred companies to grow into a hundred million-dollar-a-year companies. The task force identified that one of the biggest obstacles to doing that was the shortage of managers capable of taking a company to that level. So the Government in this Budget is playing its part by providing a significant increase in investment to boost management capability. If the former bond and currency trader who is now the National Party’s deputy spokesperson on finance thinks that is corporate welfare then I invite him to tell industry that National will cut it. I would like to read the speech he gives when he does that—because we cannot cut the tax rate and increase the assistance we are giving to businesses in this country to grow. 
The Government is investing in science and technology and in the education sector. We are supporting the hothouses of innovation and improving their links with the world to help connectedness and New Zealand innovation. 
The performance of this Government in accelerating the economy proves that every economic idea that National and ACT stand for is wrong. The economy has withstood the tech-wreck the United States recession severe acute respiratory syndrome a drought a flood commodity reversals and countless more. Those events used to be the kind of excuse the National Party Government used for not being able to do anything about the future of the New Zealand economy. Members will remember the Asian financial crisis the drought the BNZ issue and all the other excuses it came up with to explain what was wrong with the New Zealand economy and why it could not possibly do anything to fix it. National members claim that it is just coincidence or luck that we have actually been able to fix the economy now. How was it that in 9 years they never got any coincidences or any luck? I cannot believe that we got so lucky and they were so unlucky for so long. 
Maybe there is another explanation for the poor economic performance then and the sound economic performance now—that is that they are over there and we are over here. I think that is a much more simple and plausible explanation than anything I heard from the National Party Government during its term of office. The economy is doing better because Michael Cullen did not blow his budget in the earlier years of this Government on tax cuts that we could not afford. We have improved New Zealand’s economic performance so that we can now afford the social dividend to the families of New Zealand that they so richly deserve. 
Today even after all those floods and pestilences the regional economy of New Zealand is defined as being sharp focused and growing—in every single region. Even the Manawatu with its flood problem has dropped only marginally and even then it has still grown by 3.9 percent. How is that for: “Oh we had a flood. We can’t do anything.”? I mean—really! We have to ask ourselves. At the Smart Business business development celebration in the Manawatu this week every speaker commented on how welcome it was that this Government partners industry and partners the region and people said that without that assistance they would not be where they are today. 
I think fundamentally it is about time we got some acknowledgment that the old ideas—the ideas of Governments staying out of everything not partnering businesses regions and families and not being prepared to get involved in the community of New Zealand and be on its side—have ended and I congratulate Michael Cullen on that. I know that my colleagues are very proud as I am of this future-looking Budget and how well it will serve the interests of New Zealand and its people. 
DARREN HUGHES (Junior Whip—Labour) 
: 
 I move  
That this debate be now adjourned. 
Motion agreed to. 
Urgency 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 I move  
That urgency be accorded the introduction and passing of the Future Directions (Working for Families) Bill and any bills into which that bill may be divided.  
Urgency is moved in order that certainty can be provided for both the system changes that come into effect on 1 October and the fiscal consequences of the measures contained therein. 
A party vote was called for on the question  
That urgency be accorded. 
Ayes 70 
New Zealand Labour 51; Green Party 9; United Future 8; Progressive 2. 
Noes 47 
New Zealand National 26; New Zealand First 13; ACT New Zealand 7; Independent: Awatere Huata. 
Motion agreed to 
Future Directions (Working for Families) Bill 
First Reading 
Hon STEVE MAHAREY (Minister for Social Development and Employment) 
: 
 I move  
That the Future Directions (Working for Families) Bill be now read a first time. 
 This bill contains the Working for Families package the biggest change to New Zealand’s social assistance system in over a decade. It is the culmination of research and planning. By 2007 it will invest $1.1 billion a year in around 290000 New Zealand families. This bill is further evidence of this Government’s commitment to improving the lives of low and middle income families with children. It provides more support to working families will make people better off in work and ensures that families have enough income for an adequate standard of living. 
The bill increases the rates of family support substantially. Next year family support rates for the first child increase by $25 a week and by $15 a week for other children. Two years later these rates will increase by a further $10. The orphans benefit the unsupported child’s benefit and the foster care allowance rates also increase next year by $15 a week—and as a quick aside can I say that I hope it is at least something for those grandparents who are raising children and who have been raising this issue with us. 
Family income assistance will have a simpler more generous abatement system letting working families keep more assistance for longer. Family tax credit will increase to ensure that families do not have less income when moving off benefits into full-time work. It will provide a higher guaranteed minimum level of income than currently—up to $17 from the current $15 and those figures are net. 
A key factor contributing to inadequate family income has been a declining real value of family income assistance. This bill ensures that family support is regularly adjusted to maintain its worth for families. A new in-work payment for parents not on benefit will replace the child tax credit. The in-work payment is more generous than the child tax credit. It will be worth up to $60 a week for many families and be worth even more for large families. Sole parents must work at least 20 hours a week and couples at least 30 hours a week jointly to qualify. 
The in-work payment will have wider eligibility than the current child tax credit including people receiving New Zealand superannuation with dependent children working the required hours like many grandparents raising grandchildren. Families currently getting the child tax credit who are ineligible for the in-work payment will still get the child tax credit; but as family entitlements change the child tax credit will gradually be phased out. The in-work payment will have the clarity and the work incentive effect that the child tax credit lacks. 
Housing costs can be and are a major burden. To make housing more affordable this bill increases the accommodation supplement. It lets people keep more assistance and updates accommodation supplement areas from three to four. Auckland will be divided into two areas with a higher maximum rate for central and North Auckland. Other areas are grouped into areas with a higher maximum rate. For example Nelson and Queenstown are now recognised as needing a higher accommodation supplement. 
These changes will improve housing affordability for people on low and middle incomes living in locations where housing costs have risen sharply. Beneficiaries in work will keep their entire supplement no longer losing up to $20 a week. The amount of housing costs low-income workers must pay before they get help will be reduced and for low-income earners the level where their supplement begins to abate will be raised. These changes will help families and assist couples and single people. 
Working for Families makes quality childcare for low and middle income families more affordable. For many families the cost of childcare is a significant barrier to employment yet eligibility rules have not changed since 1992 and the cost of childcare has outstripped annual adjustments in rates. Working for Families raises childcare rates and increases the income limits so that more families qualify. It aligns out-of-school care rates with those for preschool care increasing them by a further 10 percent this October and a further 10 percent again in October 2005. This bill puts childcare assistance in legislation recognising its importance to many families. Childcare coordinators will help families access childcare assistance and other assistance. Higher family support and accommodation supplement rates will help families who have difficulty meeting their essential costs. Changes to special benefit next year will reflect this but no family will lose more special benefit than they gain in family support. In fact absolutely no one will be financially disadvantaged as a result of Working for Families. 
Complex rules in delivery systems work against parents moving off benefit into work. We need a simpler system that supports people into work. The changes in this bill form part of ongoing reform of the social assistance system. The child component of main benefits and student allowances will become part of the family support system. All support for children will be paid primarily through one payment—family support. This makes the assistance readily transferable between benefit and work. The removal of the child component will coincide with family support increases early next year providing a significant boost for families with children. 
A temporary additional support benefit that is easier to administer and understand replaces the special benefit for people who are unable to meet essential costs from their regular income and resources. The invalids benefit rules also change. People receiving the invalids benefit will with their case manager’s agreement be able to work 15 hours or more a week for up to 6 months to see whether they can sustain employment. They will not lose their benefit entitlement—though of course their benefit might reduce depending on their earnings and if they leave the benefit but need to reapply later they will not face a stand-down unless they have higher earnings meaning that they can switch on and off work and back to the benefit without any penalty. 
The evidence speaks for itself. A couple with three children living in Auckland on the North Shore earning $52000 a year and paying a mortgage of $385 a week will be about $170 better off in April 2007 than they are now. 
 A domestic purposes benefit recipient with two children living in Christchurch will be better off by about $36 a week. An equivalent sole parent working earning $30000 per year will be $128 better off in April 2007 than now. The message is very clear: this Government wants to ensure that adequate income goes into households so that children have the kind of environment they need in which to grow up and flourish and we want to ensure that work pays. At the heart of everything we are doing here is to advantage people as they move into the workplace retain earnings and get on with their lives. I cannot imagine anyone in this House wanting to oppose this bill but I am looking forward to hearing the debate and alternatives put forward as people move smoothly towards what I think will be overwhelming support for what we are trying to achieve. I commend this bill to the House. 
KATHERINE RICH (National) 
: 
 One of the things I do agree with the Minister for Social Development and Employment about is that the evidence speaks for itself. So far the evidence is that the Government has got it wrong. [ 
Interruption 
] Government members may laugh. 
Government Members 
: Say it again! 
KATHERINE RICH 
: If Government members quieten down they might hear something. They might hear that the Minister has scuttled back up to his office and found that in fact he has got some of his figures wrong. In one of the “Working for Families” sheets—and this has kindly been confirmed by Mandy at the 0800 number that the Minister has kindly set up—there is a scenario that is wrong and misleads New Zealanders into thinking they will get more from this Budget than they actually will. I suggest that the Minister should go back to his office and check his figures to see what other errors are there. 
This legislation provides no vision for New Zealand. The only future direction signposted by this legislation is further welfare dependence and overtaxation of hard-working New Zealanders. Since when has making hard-working New Zealanders dependent on welfare constituted a grand vision for this country? Michael Cullen is happy to extend the tentacles of the welfare State into once-independent homes but one of his predecessors Michael Joseph Savage will be shaking his head up there as we speak. He would be shocked at the idea that people who earn $80000 a year are in a line for welfare support. 
Another former Labour Prime Minister Peter Fraser would also be appalled. He was concerned that some people thought the welfare system would provide them an armchair ride to prosperity. If one believes that then Michael Cullen has not only reupholstered the chair he has added a couple of cushions. The benefits of this Budget go to one in five households the majority of which are supported by welfare. The remaining households—1.2 million of them—will get nothing. 
Extending the welfare roles is no vision for this country. Making middle-income Kiwis more dependent on Government handouts is no vision either. 
New Zealanders will see this Budget for what it is—a cynical attempt to buy votes. It is a lolly scramble but people will get their lollies in a few years’ time. It is: “Vote for us next year and we will deliver the lollies.” If this is not a lolly scramble about buying votes then why did it take the Government 5 years to get as far as this? Thanks to the best economic conditions in a generation this Government has enjoyed healthy surpluses for 4 years but it has not bothered to recognise the needs of people and to use those surpluses to meet them. Now we have the cynical multibillion-dollar handout most of which will come into play next year the year after or the year after that. 
Yesterday Labour congratulated itself on increasing funds for hip and knee operations. That self-congratulation offered no consolation whatsoever for those New Zealanders who have been waiting in pain for such surgery over the last 5 years. [ 
Interruption 
] 
Madam DEPUTY SPEAKER 
: There is too much noise. There is just too much interjection. 
KATHERINE RICH 
: This Budget is a cruel hoax for hard-working New Zealand families. The money being handed back to them is the money they earned in the first place but lost due to overtaxation. I think that this Budget will backfire on the Government. New Zealanders can see through this cynical lolly scramble and see this Budget as a desperate attempt to claw back support and retain power. If it is not about buying a third term then why have the spend-up now? Why did this not happen years ago? Government members have no answer to that. 
This Government patronises New Zealanders and expects them to be grateful. Why should middle-income New Zealanders be grateful for being made more dependent on the State and joining the ranks of many of those who are already trapped by the benefit system which rather than empowering people actually entraps them? Why should they be grateful for receiving their own money in the first place? People seldom feel good about receiving State handouts. They feel good about providing for themselves and their own families through their own work. 
It is adding insult to injury to overtax people then place them in a position of dependency in order to get their own money back. It is obscene. People feel good about being independent and providing for themselves and their families. New Zealanders do not want handouts. They want to keep their own money that they have earned. Marilynn from Waihi said that this morning on  
Breakfast 
. People want a fair deal. They recognise and accept that there will always be those in the community who need support and help and they are happy to pay for that through their taxes. But they are not happy to have their hard-earned cash churned by a Government bent on creating larger numbers of dependent New Zealanders in order to meet some failed ideology—some dream of controlling everybody’s life. 
It is a sad comment on this country that educated professional people with good jobs cannot get by. They cannot because they are overtaxed and they are continually required by the Government to carry a growing number of State-dependent New Zealanders. The burden continues to fall on hard-working Kiwis paying that top tax rate. Labour promised that 5 percent of New Zealanders would pay that top rate. It is now 12 percent of New Zealanders and we are not talking about the wealthy or the elite. We are not talking about property moguls or millionaires. Many of those guys now pay their tax in other countries because they have left New Zealand. We are talking about teachers policemen and the other middle-income Kiwis who keep this country going. 
This Budget is not about making New Zealand a place where our children can see a future. This Budget is not about growing New Zealand’s economy or creating opportunities it is about redistributing income. 
Hon Dr Michael Cullen 
: Oh no! 
KATHERINE RICH 
: I say to Dr Cullen that I do not think a teacher on $55000 is wealthy. I do not think a policeman earning $60000 is wealthy but Labour does. Labour thinks that that person is part of the elite and should be taxed accordingly. This Budget overtaxes the increasingly poor to give to the poorer. I say shame on the Labour Government for robbing growing numbers of hard-working New Zealanders of their independence—of their ability to take care of themselves and their own families by their own efforts. Even that family in Waihi wants to retain a greater amount of the money they earn. They do not want to be dependent on the Government for just another welfare handout. 
Since his time in Opposition Steve Maharey has talked about the universal benefit. Where is it? Michael Cullen talked about it in 1990. Where is it? Where are the changes? There is very little to crow about. There has been no talk today in any of the speeches about the rising number of people on sickness benefits and invalids benefits which by Treasury figures will grow at an alarming rate by 2007-08. 
 Labour in its term in office will be adding nearly 32000 New Zealanders to the invalids benefit and up to 19000 people on to the sickness benefit. That sort of increase cannot be explained away by looking at expected rates of disability and illness in our community. 
There is nothing to crow about in the Budget. The Minister wants to overlook the fact that he got some of his figures wrong in the first place. If he got those figures wrong how can we rely on the other figures that are in the pack? It is an absolute sham. It is a lolly scramble but people will get their lollies in a couple of years’ time. Gee that is really generous! But the thing about this Budget and one of the key themes that I think it is important to remember is that it makes some people who earn up to $80000 dependent on the State. Michael Joseph Savage will be turning in his grave. This Government has made families whom he would have thought of as hard-working independent people now dependent on the State. 
This is going to backfire on the Government because the main beneficiaries of this Budget are beneficiaries already. There is no vision in making welfare a more attractive part of this country. It is a sham it is a cruel hoax and nobody will get any benefit for some years to come. 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 That truly was the voice of the “rich” broadcast live to New Zealand. That member is the last member in this House who should be getting up to talk about welfare dependency. She is the only person in the country I know who earns over $100000 a year and who got paid parental leave at the full 100 percent rate of her previous earnings. She then opposed the paid parental leave legislation. 
Katherine Rich 
: I raise a point of order Madam Speaker. Dr Cullen is misleading the House. I did not get paid parental leave through the Government scheme. I think everybody knows that is a fib and he should withdraw and apologise. 
Hon Dr MICHAEL CULLEN 
: Speaking to the point of order the point I was making was that the member continued to draw her full parliamentary salary and then opposed paid parental leave for others. 
Madam DEPUTY SPEAKER 
: Unless the member is raising that as a matter of privilege the issue of misleading the House is a debating point. 
Hon Dr MICHAEL CULLEN 
: We have some questions for the Opposition. Will Opposition members vote against this bill? Yes they said. Oh make my day they have done it! Oh good. Firstly Opposition members will vote against an extra $100-odd a week in the hand for struggling working families on $25000 $30000 $35000 and $40000 a year. Why? Because they will not get any of it. It is as simple as that. If we had made sure that they got the money they would have voted for it because that is the Tory view. 
Secondly since the bill will pass will National repeal it if it becomes the Government? Dr Lockwood Smith is a man with no vested interest in families with dependent children. Will he repeal this legislation if National becomes the Government? He looks baffled by that suggestion. He has only been here for 20 years and he does not know what “repeal” means. Will National repeal it before lunchtime? No National members will be true Tories. They will have their lunch first and repeal it after lunchtime. We know that is what a National Government would do given half the chance. 
What were the alternatives? The alternatives were tax cuts. How do we deliver a benefit of over $100 a week in the hand to a person on $30000 a year with two children? She is only paying $100 a week in tax at the present time—or just over. So the first $30000 of income would have to be completely tax-free. How much do members opposite think that would cost? It would cost billions and billions and billions of dollars. 
Who would get the biggest gain? Well I would do extraordinarily very well out of it. I would get $300 a week out of doing that unless of course we raised the marginal tax rates on higher incomes and put up the 39c rate. What would we get by lifting the threshold on the top tax rate from $60000 to $70000? Nothing for those earning under $60000 and the princely sum of under $12 a week for all those earning $70000 a year and above. The fact is that we cannot deliver gains of $100 a week $120 a week and $140 a week to people who are struggling in this life because they do not pay enough tax to make it possible to deliver it that way. 
What has come through in this debate already is the terrible prejudice that National Party people have. It came through from the ACT party in question time yesterday. We have the hard-working family on $50000 a year and the family employed on $25000 a year. The National Party seriously believes that one’s income is an absolute reflection of how hard one works. Look at those members opposite! How hard does Pansy Wong work? I have never seen her working in the entire time she has been in the House. On the rare occasions she was working no one understood what she was doing at the time. There is no such relationship. 
Some of the hardest-working people in this country who do jobs that nobody in this House would want to do earn $25000 $28000 and $30000 a year. These people are below Dr Lockwood Smith’s horizon. His lofty gaze never comes down to their level. He assumes that somehow they are lazy incompetent people. They happen to be a large proportion of our population. They happen to be the strata of society I am proud to have come from. Just because I now earn over $200000 a year as Minister of Finance I am not turning my back on them—unlike members opposite a few of whom came from similar backgrounds and who argue for tax cuts just for them and nothing for struggling families. 
Those members wonder why there are social problems. They wonder why kids are going astray. They wonder why people are struggling when too many of our families do not have enough money when too many children are being raised in poverty. National would say that they should get off their butts and just earn more. They should have chosen their parents better as so many Tories do so that they could have inherited wealth instead of having to struggle up through the ranks of society as so many others have to do. 
We make no apology for putting more money in the hands of families who need it. That is what we were elected to do. We make no apology for the fact that families on $50000 and $60000 a year with two or three children will get some extra money in the hand as well because it can still be a struggle bringing up families on those sorts of incomes when modern rents modern mortgages and modern costs have to be paid. 
What National has never explained is why cutting the rate for those at the very upper end of society takes a higher priority than low to middle-income working families. Dr Smith has this strange belief that somehow or other the whole engine of the economy will move into a new gear if he plays a lower top tax rate. I have not noticed in the increase from 33c to 39c that the entire upper levels of New Zealand society—especially those who earn $200000-plus a year—have downed tools and stopped working. All the ones who promised to go to Australia have not gone. I still see them at every meeting I go to. They are still earning vast sums of money. I do not want to hear from them in the next few days that they regard it as improper that people on modest incomes should receive some assistance. 
But what we have done is increased the gains through employment compared with being on the benefit. We have not done it by swiping $25 a week from beneficiaries as the National Party did—pushing more people into poverty and into despair. We have done it by giving a helping hand so people can earn more by going out to work. By actually being employed they earn more as a consequence of this package. 
National members will vote against that because with that $1 billion they would prefer to buy a tax cut. What could they do? For $700-odd million of that they could cut the top rate of tax to 33c. That does nothing for the majority of New Zealand families with dependent children. They like to use an average based on the mean which is biased hugely upwards by the wealthiest families in the country. The median income for a family with dependent children in New Zealand is not $60000-odd a year; it is $49000 a year at the last measure. Therefore cutting the top tax rate would benefit well under half of all families with dependent children and most of those would get next to nothing out of it either. So where is the justice in that? Where is the reward for effort in that? Where is the commitment to the future of New Zealand in that particular approach? 
National has managed to summon up the courage to say it will vote against the bill—big deal—but it has not managed to get to the next step and say that if it became the Government it would repeal this legislation take the money away from the families that would get more and redistribute that money upwards to those at the top end of society. Because that is the logic of what Kathryn eponymous Rich said here this afternoon. It is what she believes ought to be done: this money should not go to low and middle-income families; this money should go to her and her ilk—on a combined family income of God knows what. I suspect it would be well in excess of $200000 a year. 
Well I am sorry. The evidence is that people at those sorts of levels in New Zealand have done pretty well in the last 5 or 10 years all by themselves through the workings of the markets. The people who have not done so well are those low to middle-income families. They face costs like childcare for going to work and this Budget and this bill will benefit them. 
If National wants to go to the hustings saying “We’ll be better for pensioners” when it cut the pension and “We’ll be better for everybody else” when it cut benefits and wages and reduced conditions of employment and if it wants to redistribute this package upwards to those who are least in need then I urge that party to really “bring it on” because I am looking forward to that fight so very very much indeed. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 In case there is anybody out there listening I just say that Parliament is debating the Future Directions (Working for Families) Bill. There might be someone listening. One never knows. It is Budget day so people could well be sitting there listening. This is a bill— 
Hon Annette King 
: The last one just turned off. 
PETER BROWN 
: Now now; the Minister could be a little bit kinder than that. It is Budget day. I inform listeners that this bill has just been presented to the House and nobody on the Opposition side of the House has had a chance to read it in any in-depth manner. We have just quickly gone through it. I inform people out there that the general policy statement in the explanatory note states: “The Bill’s main objectives are to—make work pay for parents who move off benefits into work:”. That is a commendable aim an absolutely commendable aim. It goes on to state in the next bullet point: “increase family income to significantly address issues of income adequacy:”. That is beyond question a commendable aim. The next bullet point states: “address accommodation affordability by responding to the increased cost of housing:”. That is another commendable aim. Those are three commendable aims. Then it states: “make childcare assistance an integral part of the social security system in recognition of its importance to many families:”. That is four commendable aims. And the fifth aim is to “take steps to simplify the social security system.” There are five commendable aims. 
How can New Zealand First vote against five commendable aims? Well we cannot; we will support this bill. [ 
Interruption 
] But I will tell members over there on the Government benches before they get too overjoyed that this is a lousy way to do politics or to play politics. We sat in this House on Monday and we all said nice things about the House and how important Parliament is to ourselves and to the country but to present a bill that the Opposition has to read and learn about in 10 seconds flat is to treat Parliament with contempt. That is not a fair go. This bill does not need to go through in such haste or in urgency. It is a “Treat Parliament with Contempt Bill”. 
It is a guilty bill because the Treasurer over there—or does he call himself the Minister of Finance or Treasurer or both or everything; he is “Minister of Everything”—has so much money that he does not know what to do with it. He has to give some away. Actually I think on reading this bill that he is giving it to the right people which is why New Zealand First will support it. We do not believe that the Minister of Finance should sit on piles and piles of dollars—billions and billions of dollars—through applying some sort of ideology. We support some of that money going into the pockets of New Zealanders and this bill does that. 
But have we got it right? Has the Government got it right? So many bills go through in a fast-track sort of way with little or no consultation or scrutiny by Parliament that I almost guarantee there is a major muck-up in this bill. But in the few moments I have had to read it and digest it I cannot find it. 
So we will support the first reading of the bill and will go through it clause by clause I hope when we come to the Committee stage. But I say to New Zealanders out there particularly to family New Zealanders—and New Zealand First does know what a family is unlike some people on the other side of the House— 
Hon Richard Prebble 
: They have an academic knowledge. 
PETER BROWN 
: Oh they have an academic knowledge yes. But we actually know what a family is and how important families are to New Zealand— 
Hon Annette King 
: They studied for it. 
PETER BROWN 
: They have a degree in it have they? This is getting me worried. I hope this money is going to the right people. New Zealand First would have appreciated more time to be able to digest this bill and what it is all about but we recognise that the five aims are all worthwhile. 
Hon Annette King 
: Read them out again. 
PETER BROWN 
: I will read them out again for the Minister: to “make work pay for the parents who move off benefits into work:”—a good aim—and to “increase family income to significantly address issues of income adequacy:”. That is an excellent aim. To “address accommodation affordability by responding to the increased cost of housing:” sounds like a good aim. [ 
Interruption 
] No let them enjoy the moment because I have the feeling—[ 
Interruption 
] Three fingers eh? 
Hon Steve Maharey 
: Yes three! 
PETER BROWN 
: The member has five “fingers” here. To “make childcare assistance an integral part of the social security system in recognition of its importance to many families:” is a good aim as is to “take steps to simplify the social security system.” That is a good aim. But it is the Government’s process that we object to. We think that pushing this bill through in the dark of night under urgency is unnecessary. I think there are plenty of people in this House who would support those aims and we would have liked to have some input into them. We do not want to see a mucked up bill come in that adversely affects New Zealanders; we want the truth to emerge and what has been promised here to be delivered on. 
Hon Annette King 
: Can you read the five again? 
PETER BROWN 
: The Minister wants me to read the five again? I am getting a little bit exhausted. Does she think there might be someone else on the end of the radio now? 
Hon Annette King 
: I am just enjoying it. 
PETER BROWN 
: Ha ha! There is a better way of looking after this country than introducing this knee-jerk sort of Budget which flashes out the money and the lollies. There is a better way of doing it—a planned economy. To be without a plan is to plan to fail. But we would sooner have this money in the pockets of New Zealand family people than have it sitting in the little chest that Dr Cullen goes and sits all night playing Scrooge with. We would sooner it were in the pockets of families. Therefore New Zealand First will—I was going to say support this bill going to the select committee but the Government has abolished the select committee process on this bill. To hell with democracy! The Government is just imposing itself here. Right or wrong we are being imposed on. Well the Government has the aims right but it has the process wrong. 
Hon Annette King 
: One out of two isn’t bad. 
PETER BROWN 
: That is about the measure of it: one out of two—half of it. New Zealand First will support this bill as it is. We will try to examine it in detail as we go through the debate in the House but that is a pretty tall order because I suspect there will be some major errors in it. However I do not want New Zealanders to suffer. Here is an opportunity to give some of Dr Cullen’s money back to them and we will not stop that occurring for anything. 
 In the unlikely event that this bill is right when we lead the next Government we will not be repealing it. But I have my doubts that it is right—[ 
Interruption 
] Do members want me to say that again? When we lead the next Government if this bill is correct we will not be repealing it. We will support the progress of this bill but if we find something wrong we will highlight it hard and long. We hope for the good of New Zealanders that the Government has got it right because it would be the first time that this Government has done something once and done it properly. We say it is better that the money is in the pockets of the average New Zealander of family people than in the pockets of the wealthy—so let us hope that the Government has got it right. We will be monitoring it carefully. 
We will support this bill. 
SUE BRADFORD (Green) 
: 
 The Future Directions package announced today in Dr Cullen’s Budget represented by this very sudden bill is a mixed blessing. There is no question that the Green Party welcomes the steps that the Labour Government is taking to seriously address issues of endemic child poverty. It is a relief that after 4½ years in power it is finally taking action and beginning a major redistribution of resources towards families and children that was so badly needed after the structural adjustments and widening gap between rich and poor over the last two decades. The Green Party will be supporting this bill. 
We do not want to be ungracious about it but at the same time I will take this brief opportunity to point out a few of our concerns with the legislation. We are quite disturbed by the underlying attitudes represented here which basically say that it is much better for any parent even a sole parent with young children to be out there in the paid workforce rather than staying at home and carrying out the even more important job of being a good mother or father in some cases. I have a strong sense today that Labour is actually strengthening that dangerous moral imperative that first emerged in the 1990s with the Shipley Bazley and Rankin reforms. The imperative says that really all parents including single parents should be contributing to the formal economy as a priority rather than nurturing their babies and children. This bill has as its focus “making work pay”—a slogan used again and again to bolster an acceptance by society that anyone on a benefit should get off it as quickly as possible even if it is to the detriment of parent and child and even if there are still hundreds and thousands of other people still out of work; and that somehow the children of beneficiary families deserve and need less money to live on than the children of parents in paid work. 
I believe the State should be neutral on whether single parents should have to work and should also accept that it is not a bad thing if one partner in a two-parent beneficiary family works as a full-time caregiver for their children rather than being work tested forced out to work or as with this legislation financially penalised for not going out to work. This is not to say that we do not support any measures to help beneficiaries with the transition between benefits and work. There are huge and accumulated problems with wage rates that are too low to support many families a variety of punishing abatement regimes and the indubitable burden of extra costs incurred when people first start work after being on a benefit. However we believe that the way to deal with the transition is not by continuing to entrench the disparities between beneficiaries and working families on the same or similar incomes thereby penalising the children but rather through direct support of the working adult and their needs. 
I will turn now briefly to look more specifically at a few aspects of the bill. First of all there is a lot of detail that will be done by regulation. The Green Party is concerned by the increasing tendency of this Government to put the detail of so much new policy into regulation rather than doing it through the means of Parliament and the select committee process which this bill will not have the privilege of going through. There is a lot of detail that will be done by the regulation review process and we will be watching that closely. 
This bill does begin the simplification of the benefit system which the Minister has been promising for the last 4 years but I would like to reiterate that the Green Party would rather have seen at this time a whole rewrite and review of the Social Security Act—we would like to see the Government start again. The Social Security Act has been with us since 1964 and it has been amended over and over again as this bill does yet again. After 4½ years of work by the Ministry of Social Development on benefit reform we would have thought that this would be a prize opportunity to undertake the whole process rather than continuing to do it bit by bit. 
We are pleased however that this package takes us in the direction of simplification. We are very pleased that the inflation indexing which this bill promises with the family assistance will happen. It is high time. But we note that although this bill brings family assistance up to date families in the end will be only as comparatively well off as is equivalent to the position in 1992. It does not really keep pace in the way that we would like to see it do. 
We are also concerned about what is happening around the special benefit which has been a problem area for a number of years for the Government and for beneficiaries. Detailed provisions on this are to be done by regulation and again we will be keeping a close eye on where this goes. The accommodation supplement is also improved in this bill which is a good thing for everyone who is in the position of needing an accommodation supplement right now but in the end we would like to see the accommodation supplement abolished. The only way that will happen is if we have enough housing in this country and if we do not have a situation where so many people are forced in the end to depend on the State to provide a subsidy that in effect goes both to the landlord of the accommodation and to the employer at the other end. 
Although the Budget is increasing the number of State housing units that will be available it is only by a very small amount. It will actually mean that State houses as a proportion of the total housing rental stock will continue to decline. In the long run the accommodation supplement is not the answer. 
In conclusion I would like to reiterate that despite our concerns and reservations about some aspects of this legislation this is a commendable Budget initiative that families have been waiting for since 1991 when National’s benefit cuts and the Employment Contracts Act deepened a whole generation’s plunge into poverty. No one will be worse off as a result of this package and I am grateful for that. Many many families will be a lot better off over the next 4 years and into the future. I have a concern that in the summary of the Government’s new spending on the Working for Families package it appears that the rate of spending goes up only very slowly. In 2004-05 it is $170 million and spending does not go up to over $600 million until 2005-06 so the wait for substantial gains will be quite long for some people. But good on the Labour Party! The Green Party will be voting for this bill and we are pleased to see that such a big step has been taken. 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 I rise to speak on behalf of the ACT party. ACT will be voting against this measure. We say to the House that it has no redeeming features. 
Hon Maurice Williamson 
: None. 
Hon RICHARD PREBBLE 
: None whatsoever. What it does show is that the package that has been put in front of the House is a welfare Work and Income package and not one for working families. 
Hon Steve Maharey 
: Rubbish! 
Hon RICHARD PREBBLE 
: The member calls out “Rubbish!”— 
Hon David Cunliffe 
: He said “Rubbish!” It is. 
Hon RICHARD PREBBLE 
: That shows that Mr Cunliffe did not bother to get briefed on the Budget or alternatively did but did not care about this interesting detail in the Budget. I ask the House why we are having to sit in urgency. There is only one reason we have to sit in urgency and that is in order to bring measures in. What are we bringing the measures in for? Are they being brought in for working families? When we actually look at the Budget we find that the position of working families does not change as the member says. The reason for the urgency is that on 1 April 2005 family support which will go to welfare beneficiary households will increase. It is regarded as so important to suddenly do something for Labour’s welfare base that the House will have to sit in urgency! 
 If members think that is not correct they can look at page 5 to see that the current benefit rate structure will change. Who will get the increase but domestic purposes widows unemployment and sickness beneficiaries. Invalids benefits domestic purposes benefits and caring for the sick and infirm; that is why we are rushing this measure through. But members have heard leaks from statements Dr Cullen has made to this House. He said that the purpose of this Budget—and I guess he claims the purpose of this bill—is to help working families and members are starting to say how urgent and necessary that is. I heard the Green Party and I think the New Zealand First Party say they all thought that that was well worthwhile. So let us see when the new in-work benefit starts. 
Hon Maurice Williamson 
: Midnight tonight? 
Hon RICHARD PREBBLE 
: The member asks whether it is midnight tonight. Under urgency that would be a reasonable assumption. 
Hon Maurice Williamson 
: Is it? 
Hon RICHARD PREBBLE 
: No. Is it 1 April 2005 when the Government’s welfare beneficiaries get a massive—one cannot call it a pay increase because they do not work—increase in their benefits? No it is not that. I would like to hear from the next Labour member why the date is 1 April 2006. Why do working people have to wait 2 years? Every single member who votes for this bill is saying to every working person in New Zealand who gets the increase: “I thought it was so important you should wait 2 years.” Of course what those members will probably say is: “Look don’t complain because most working people got nothing.” 
Gerrard Eckhoff 
: That’s right. 
Hon RICHARD PREBBLE 
: That is right. Statistics New Zealand says there are 550000 working families in New Zealand with dependants and the Minister tells us that eventually in 2 years’ time 150000 working people with dependants will receive some money. The 150000 beneficiary-led families will have it paid early and that leaves—and I know that everyone on the other side of the House has done the calculations so I want them to forgive me for pointing it out just in case they have not—250000 working families in New Zealand with dependants who if members support this bill will get nothing. 
Dr Cullen told the House that he had gone through the Budget carefully to make sure there were no losers. Where was Mr Cunliffe when those calculations were being done? He occasionally visits the New Lynn constituency—not often as he does not want to stay there—but he occasionally comes to visit us in New Lynn. How is it that he did not point out to Dr Cullen that the majority of working people in the New Lynn constituency will be losers in this Budget? Their only role Mr Cunliffe is to be bystanders and to pay for this largesse that the Labour-Progressive—and I suppose United Future doormat—Government will be supporting. I thought the United Future Party supported families. But no United Future will apparently vote for this package so those members support this increase in welfarism. They support making New Zealanders more dependent. 
Let me give this example. [ 
Interruption 
] No the member should listen to this. If one takes the example of a family with two children on a moderate income of $50000 a year and work out where it will be after this Budget in 2 years’ time it is true that it will get a slight increase in its position. But the family’s net position is that as taxpayers they will pay more to the Government than they receive back. But if that family on $50000 a year decides to halve its income to $25000 and have 20 hours off then it qualifies under this Budget. What happens to its real net income? It is only $4500 worse off than if it was earning $50000 a year. 
Hon Maurice Williamson 
: No! 
Hon RICHARD PREBBLE 
: Absolutely! In fact it might be worse than that. I have not been able to quite work it out but there will be a new special accommodation allowance for parts of Auckland—which may or may not include the New Lynn electorate; I suspect it does. I think that under the accommodation allowance the difference between earning $25000 and $50000 a year after all payments would probably work out at around $80 a week. That is a huge incentive not to take overtime or work extra but to go to the boss and say: “Look I would rather work 30 hours a week than 40 because 10 hours a week is worth more to me than being paid $4000 a year.” Of course it is because one could probably go off and do a bit of— 
Hon Maurice Williamson 
: Moonlighting. 
Hon RICHARD PREBBLE 
: —moonlighting. But I would not suggest that any New Zealander would do that—even though theInland Revenue Department says that moonlighting in New Zealand is worth somewhere between $6 billion and $10 billion a year in the black economy. This bill will see the biggest boost to the black economy ever. If one has children the only way to get ahead is to first breed because the more children one has the more money one gets—it is much easier than working hard. The second thing one should do—under this bill—is to reduce the number of hours one does and then take up a cash job like mowing lawns or something similar. 
I say to members opposite that that is what they are doing. This is a bill to take us on a low-wage Third World economy path. There are no redeeming features in this bill. This is nothing compared with the huge impact that we would have on the prosperity of New Zealand and the prospects of every New Zealand child if there were a 20c flat rate of tax—which we could have had. Instead what we have is the sight of members of Parliament after having taken $6 billion of the taxpayers’ money from them asking to be praised for having given some of it back. State radio asked me today: “Isn’t it fair enough for the Labour Party to be helping and looking after its people?” and I think that shows exactly the level of morality of this Government. It should not be looking after its people; it should be looking after all the people. It should be looking after the nation instead of being a narrow partisan Government which is way behind in the polls. 
Hon David Cunliffe 
: They are all our people. 
Hon RICHARD PREBBLE 
: I say to Mr Cunliffe the Liberal Party in Australia put forward a benefit breeding programme where the Treasurer said: “This is a policy that is going to encourage people to have kids.” and what happened to that party’s popularity? It went into free fall. The only thing stopping this Government from going into free fall is one cannot really go into free fall when one is already under 38 percent—but one can still fall; that can still happen. I say to Mr Cunliffe that he can look for— 
Hon David Cunliffe 
: What’s your support—1 percent? 
Hon RICHARD PREBBLE 
: No since I have quit the leadership it has gone up by 50 percent—so I am looking for great things. 
GORDON COPELAND (United Future) 
: 
 United Future will be supporting this bill. We could do nothing else given the fact that Dr Cullen and the Government have seen fit to introduce measures almost identical to those United Future has sought in working towards the implementation of the Future Directions (Working for Families) Bill. Just to back that up I want to read almost verbatim from the letter and notes I wrote in October last year when we were in dialogue with the Government about what should be included in this year’s Budget. 
Our party decided to put to the Government that it should be a priority in this year’s Budget to address the issue of family support. The first thing we said we were looking for was a complete overhaul of the family assistance system. This bill does that. We wanted to do that by making a significant overall increase in the assistance given to beneficiaries and low-income working families with specific recognition of the number of children who would be dependent on the family income. This bill delivers that. 
We wanted to see a simplification of the system by the amalgamation or elimination of the present segmented family support child tax credit and parental tax system. We predicted that this would be likely to require a downgrade in the level of the benefit for those who were not in the workforce but a downgrade that would be more than offset by the increase in child benefit payments. That is exactly what this bill does. We sought a widening of the after-tax income level between families on benefits and working families in order to incentivise and encourage participation in the workforce. This bill delivers on that. 
I should add that the 1991 benefit cuts that were rushed through in great haste by the National administration of the day did not adequately address the way the accommodation supplement and other things were rebated giving very perverse outcomes and very high effective marginal tax rates to many families that were endeavouring to do what we all want them to do—to move from benefits into the workforce. 
We wanted to ensure that all families entitled to support actually received it and we are delighted that the Government has signalled that it will be undertaking a major marketing campaign to ensure that all families that should benefit from these measures will do so. 
We also asked the Government to make sure that we retained some relativity and comparability with Australia for the very important and inevitable reason—and in many ways unfortunate reason—that some New Zealand families are relocating to Australia because that Government is giving better assistance to families than they can receive here. 
One of the things I am delighted to see in this bill is that benefit levels will now be indexed. Every time the consumer price index moves by 5 percent or more the relative level of benefits and other assistance to families will move in tandem with it thus retaining in real terms the benefit we seek to deliver to those needy low and middle-income families. 
I remember very well having a conversation with Dr Cullen before the Budget in 2002 on the whole question of indexation. As a result of that conversation members may recall that in last year’s Budget we began at long last to index those families at the upper end of the scale in terms of income. Last year’s Budget delivered $59 million in family assistance to those families which would not have happened had United Future not been in Parliament to advocate for their situation and to bring that reality to the attention of the Government. 
I remember saying to Dr Cullen that if a family had for example four children then even at an income of over $50000 a year it would still be struggling to make ends meet. I had no idea at that stage that just a couple of weeks ago we would see in the  
Sunday Star-Times  
the big write-up and all the publicity given to the McLachlan-Gilbert family which is in exactly that situation. It proves the point once and for all that even at that level families continue to need direct support from the Government. The reality is that it is expensive to raise children. We need to take that fully into account and I am delighted that in this Budget the cut-off point for a lot of families is as high as $70000. For those with quite large families it goes up even further than that to maybe $80000. We welcome that very much indeed. 
I also want to say that the fiscal stimulus that will be delivered to the New Zealand economy through the Future Directions (Working for Families) Bill is timely. No less an authority than the Reserve Bank has said that this is the right way and the right time to give some fiscal stimulus to our economy because it is going slightly off the boil at the moment and therefore can take that stimulus without any adverse effect on monetary policy. That is very very important indeed. What could be more important right now for this country than to put additional funds via fiscal stimulus into the pockets of those people who most need it? 
The unfortunate reality for New Zealand at this point in time is that children and poverty go together. If we think for a moment about how the money that will be delivered through this bill will be spent it becomes obvious that this is exactly the right thing to do at this point in our history. The money will be spent on food on clothing on school uniforms and transportation to and from school on mortgage repayments on rent and I could add the odd treat by way of family outings and family holidays. I wonder how many families in this country have not had a decent holiday together as a family for some years. It is very important that we give such encouragement now to those intangible but very important aspects of family life. Who knows? Maybe a family will even be able to get a newer car—probably a second-hand import but still a step up. 
The basic and fundamental thing is that through this Budget our kids and their mums and dads will benefit. They will be able to spend more money on their families. In truth this is not just expenditure on our families; it is also an investment in the future of our nation. Indeed I suggest to the House that the measure of a nation and of a society’s greatness is how it caters for and looks after its children. It should be the No. 1 priority. 
United Future is delighted that this bill will significantly and substantially reduce the level of child poverty in this country. For too long we have allowed children and poverty to go together in our nation. In many analyses people have said that if we look for the cause of poverty in our nation at the moment we will see that it is related to children. Those with children are the poorest members of our society and the more children they have the poorer they become. Why? Simply stated it is because a single income—paid very often to a working family—just does not give them enough to look after their children and give them the benefits we want them to have. I for one do not want to live in a country that is prepared to allow its children to live in poverty. We need to give every child the best possible opportunity for a great start in life. 
I was very offended by Richard Prebble’s nasty reference to “breeding”. I find that deeply deeply offensive. 
Hon Richard Prebble 
: Why? 
GORDON COPELAND 
: Because children are our greatest blessing and our greatest wealth. They are not just our present reality but also our future. 
Hon Richard Prebble 
: Why do only the poor have them? 
GORDON COPELAND 
: That is nonsense. I can tell the member that many people who probably earn a lot more than he does actually rejoice in large families and I know lots and lots of couples who place a high priority on that. Has he so quickly forgotten the McLachlan-Gilbert family that was written up in the  
Sunday Star-Times  
just a couple of weeks ago? Did he not see in those photographs the kind of situation that all of us would like to see for our families? 
In summary this is a great bill. I know I will be disappointed but I came here tonight—not having heard the National and ACT speakers—in the hope that this bill might have the support of all parties in the House. If any party does not vote for the bill let members of that party—here and now during the first reading—stand up and tell the people of New Zealand that they intend to repeal it if they ever become the Government. Let us get really honest and down to basics. They should have the courage of their convictions. If they are not going to vote for this bill they should undertake to repeal it. I say to members of the National Party—some of whom are saying right now on the radio that they cannot make their minds up about the bill—that they should get off the fence and vote for the future of New Zealand by delivering some much-needed assistance to struggling families. 
Sitting suspended from 5.59 p.m. to 7.30 p.m. 
LINDSAY TISCH (Junior Whip—National) 
: 
 I seek leave for the 11th call in this debate to be a split speech between New Zealand First and National with New Zealand First having the first call. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Is there any objection to that course of action being taken? There appears to be none. 
Hon ANNETTE KING (Minister of Health) 
: 
 I rise to support the Future Directions (Working for Families) Bill. The name says it all. It is about the future—the future today the future tomorrow year in and year out. This legislation is about what this Government will do for working families in New Zealand and I give it my wholehearted support. 
Peter Brown read out the five objectives of the bill and said New Zealand First could not vote against it. I do not need to repeat those five objectives. They were clearly put by an Opposition party member who could see through the National Party rhetoric and the ACT rhetoric and would support a good bill in this Parliament. That is Parliament working at its best. Members will find that the overwhelming majority of members of this Parliament will support this bill. I predict that somewhere around 82 votes will support this bill. Does that mean most parliamentarians are right or wrong? In terms of a parliamentary majority it means most members in this House recognise legislation that will help families not only this year and next year but into the future. 
But that will happen only if there is a Government that supports the measures in the bill. The truth is out. The dried arrangement who is the Leader of the Opposition was on  
Holmes 
 tonight. I have never seen a more wooden performance in my life. He said that if people voted for Labour they would have these measures but if they did not vote for Labour they would not have them. Well there it is; it is out there. These measures will be gone “by lunchtime” should the National Party in coalition with the remnants of ACT—should ACT members get voted back in after Richard Prebble leaves—get back in Government. The truth is out: if people vote for National all the benefits in this bill will be gone. 
I know that New Zealanders are not silly. They will be listening to this debate. They will be weighing up the options. They will be looking at what the bill does for them and their families and they will be saying that the National Party has no commitment to families unless they earn heaps of money. If families earn heaps of money then National will give them more because it thinks those are the people who vote for it. National thinks that a family that earns $20000 $30000 $40000 $50000 or $60000 a year is not a hard-working family because if it was really hard-working it would earn more—it would have the ability to earn more. Who would be mowing those members’ lawns and looking after their gardens? Who would be taking away the rubbish they throw out every week? Who would be looking after their kids? Who would be teaching their kids? Who would be the nurses in the hospitals? Those people earn under $60000. They are the sorts of people who look for some payback in a Budget. 
I find it very interesting that it was OK for National when it was in power to give money back to families through family tax credits and family support. That is how it gives money to families—through tax credits and family support. Those people were not called beneficiaries when National gave them money but they are called beneficiaries when Labour gives them money. What hypocrisy! How can those people not be called beneficiaries when National puts money into tax credits and family support but the minute Labour puts some real money into those areas those people become beneficiaries? Well that two-faced approach can be seen through. National members cannot say that when National does it it is OK—it is good—but when Labour does it it is bad. If those people are called beneficiaries now they should have been called beneficiaries under National and that is the truth. 
So National should either face up to the fact that it would do something for families through a mechanism that gives them money or just admit that it would give money to the rich through tax cuts. Michael Cullen made it clear that if a Government wants to put that sort of money into families’ pockets it would have to exempt tax on families’ incomes up to $30000—no tax at all. That would mean I got a big tax break. That would mean that Maurice Williamson got a big tax break and John Key etc. etc. I listen to Maurice Williamson; he has always been an honest man. He has said that is excellent; he has said that it would be very good if he got a tax cut but not good if people who need more money got a tax cut or got more money in their pockets. 
I ask National this: is it all right to tax people and give them hip operations? Those members say it is not all right to tax people and give the money back to them in family support or family tax credits but is it all right to tax them and give them hip operations? Don Brash said in his speech that for months National had been advocating for families that for months it had been advocating for more operations. So we are allowed to tax and put that money into operations but we are not allowed to tax and put that money into families. That is a double standard. If we say the money belongs to the people—that taxes come from the people—we should then decide how to get the best benefit for the people. Well we say there is a lot of benefit in taxing people and giving them hip operations knee replacements and so on. We believe that is good expenditure of money. 
In fact one of the things I like about what this Government has done is that we say there are things we can do for families in terms of income and there are also things we can do for particularly our older people through operations like hip and knee replacements. We have said let us improve that; based on evidence based on research and working with the sector let us improve access to those operations so that our older folk have a better quality of life. The payback is that our older folk have a better quality of life; they are able to be mobile to go out and enjoy their grandkids. That is the sort of payback that should go back to our older New Zealanders. Their children have grown up but in terms of taxing people and putting that money where it is needed that is good use of money and that is what this Government has done. [ 
Interruption 
] Maurice Williamson does not want a hip replacement at the moment but I do not think he would want to pay $20000 or $30000 for a hip operation or a heart operation. Mind you he probably has private medical insurance but when he reaches 65 and his premiums are doubled or trebled he might not be able to afford that operation. Then of course he will not be a hard-working New Zealander so he will not deserve it. 
I found Richard Prebble’s speech one of the most interesting and one of the most disgusting. One of the things he said is that this Budget encourages breeding. Well it is absolutely certain that man has never had a baby. I do not know whether he has ever fathered a child. If he had he would know that one would need more than a few dollars to want to have a baby. I can see my colleague from New Zealand First nodding her head; she knows what I am saying. Any member who says that this Budget encourages people to breed is very very strange indeed. I do not know what sort of other inducement those members need to do other activities but I can assure members— 
Gerrard Eckhoff 
: I raise a point of order Mr Speaker. Reference to the childless status of members of this House is not exactly encouraged. I recall not so very long ago the childless status of our Prime Minister being talked about in this House. The comments of the Minister are quite inappropriate. She should withdraw and apologise. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I say to members that disparaging remarks about members are made all the time in this House. It is the personal reflections that we have to be concerned about. 
Hon ANNETTE KING 
: I do not know who has fathered children in this House and who has not. There was no reflection on Mr Prebble. I do not know whether he has fathered children. He may well have fathered many of them. After all another thing he said was to ask why the poor had children. I presume there was a time when he was poor. I presume that for most people—those who were not born with a silver spoon in their mouth—there was a time when they were poor. I believe that most people who have families do not have a lot of money when they are 20 25 or 30. They are buying a house and setting up their home. They have mortgages kids to pay for and clothes to pay for. They are not usually wealthy. Most people are not rich when they have families. Richard Prebble made the very strange comment: “Why do the poor have babies?”. Maybe that is something he can ponder into the future because he certainly will not be around very much longer to be able to make such stupid comments. 
I believe that this is an exceptionally good bill. It will give support to families that need it. But all that I have heard from the Opposition is knocking and nagging. We believe that Opposition members are the knockers and the naggers of this Parliament. There are plenty of knockers and naggers over there. Could they please give us just one policy? 
JOHN KEY (National—Helensville) 
: 
 What an incoherent rant from the Minister of Health. How out of touch she is telling the Hon Richard Prebble that people will not have a few more babies for a few extra bucks. Did she not notice the Australian Budget where it had a baby bonus payment of $1000? Has she not noticed the Italian Budget which pays people $1000? Mark my words it will be a Labour Government one day that will come in here and tell the people of New Zealand that they have to have more kids and that they have to have one for the country. A Labour Government will be paying people $1000 and the Minister of Health will be blushing even more than she is now. 
Did anyone see Michael Cullen on the  
Holmes 
 show tonight? What a disgrace! All that nasty envy was oozing from the Minister of Finance. He tried to convince the people of New Zealand that this was not just an envious sort of hopeless Budget. The House does not have to take my word for it that this is not a good Budget. Members do not have to listen to me even though I know it is a terrible Budget. We will talk about that and the Future Directions package in a moment. 
Let us listen to the people of New Zealand who were asked: “Does the Budget do it for you?” 
Hon Maurice Williamson 
: What did they say? 
JOHN KEY 
: If the Budget does it for them in the same way as they will vote when the polls are out there will be a difference in this Parliament in 2005. The Labour Party will look like United Future. That is how many seats the Labour Party will get. A total of 1802 people said that it did it for them. 
Lindsay Tisch 
: How many? 
JOHN KEY 
: Eighteen hundred and two—that is about 20 percent of all people who bothered to ring up said that the Budget did it for them. A total of 8349 people said that it did not do a thing. Excuse me for being a bit of a mathematician but one in five is exactly the same number of people who will get something out of this Budget. Michael Cullen has degrees from every university across the country. One would think he would be able to add the figures up and work out that when one in five New Zealanders are given something—when he takes $1.5 billion worth of extra taxation from people every year because of all the tax he puts on them and then gives them $220 million back—no one is surprised that one in five think this is a good Budget. 
It is a disgrace. It had so much hype it was embarrassing. Yesterday the  
New Zealand Herald 
 was ashamed of itself. It wrote a story saying that people earning $80000 a year would get something in the Budget. The  
New Zealand Herald 
 was not lying. Those people will get something—but in 2008. If they have four kids they will get $25. Thanks very much! In the interim they will have paid thousands of dollars more. If that is the secret to success in our country I will be glad when the Labour Party looks like United Future because there will be nine members too many. That is the answer. 
Hon Maurice Williamson 
: Gives us those numbers again. 
JOHN KEY 
: The result of the  
Holmes 
 show poll was that 80 percent of the country said that they had had enough of this Government. 
If the Future Directions and Working for Families packages make such a good Budget and will fix welfare in this country can somebody in this House just answer me one question? I only have one question for Mr Maharey. If this Budget is doing so much for families who are on benefits is moving them on from being beneficiaries and is the saviour of our country can he just tell me why Treasury is telling us that beneficiary numbers will rise in New Zealand after this package and that it will cost $4 billion more. That is what Treasury has told us after looking at it. Not only has Treasury slammed the growth rate but it has said that 3.6 percent for the last decade— 
Hon Steve Maharey 
: I raise a point of order Mr Speaker. The member invited us to answer a question so I thought we should answer that question. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: That is not a point of order and the member is not yielding. 
JOHN KEY 
: I see the embarrassment of members on that side of the House. Government members are very quiet over there. The Minister of Health—[ 
Interruption 
] 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I say to members that behaviour in this House is beginning to slide downwards. It is time for us to look at the standards of conduct we expect in this House. I suggest members look up Speaker’s ruling 56/1 which states that interjections are to be rare reasonable and relevant. Chaos may be the parent of creation but not in here. 
JOHN KEY 
: This is a bizarre Budget if I do say so myself. It is a bizarre package. Over the last 5 years the Hon Dr Michael Cullen has taken money out of the pockets of working New Zealanders so fast one would think he were an octopus. He has had eight hands in there taking money from everywhere. Now under the hype the octopus has said he will give a little bit back to people and that they should be grateful and thank him for it. Quite frankly those one in five people who will get something probably are grateful but it is the other four out of five people who will get nothing. 
Let us just look at the Working for Families package for a moment. The Government is going to encourage New Zealanders to get off benefits by giving them an in-work payment. 
Jill Pettis 
: Has the member sold those ornaments on the mantelpiece yet? 
JOHN KEY 
: No and I do not intend to. Let us look at the in-work payment for just a moment because it is a very interesting point. If it is such a great strategy for getting people into work—and we support in-work payments to encourage people to be active in the workforce—why is it to be applied only to people who have children? What happens to beneficiaries who are on their own—beneficiaries who do not have kids? Why is it not good enough for them? Why do people have to have 3 4 or 5 children? Why is it not good enough for hard-working people? 
Tonight so many New Zealanders have had their hopes dashed by this Government. The hype machine has been working. The Government has been trying to learn from Don Brash and Government members have their backs to the wall. They have 12 months before “situations vacant” becomes a very relevant part of the newspaper. They have 12 months to go. They are on the slippery slide if I do say so myself. 
They are looking at themselves but they cannot work out why it is all not working. It is because four out of five New Zealanders will get nothing out of this Budget and they are genuine New Zealanders. They are young people who have come out of university saying: “I’m going to wait before I have a family because I want to pay off my student loan.” Other New Zealanders are saying: “I want to wait before I have a family so that I can put a deposit on my first house.” They are older New Zealanders who know that New Zealand superannuation is not enough and they are trying to save a little money to pay for their houses. But there is nothing for them in this Budget. There is nothing in this Budget at all. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I remind members on my right that running commentaries are out of order. There will be a few yellow cards going out very shortly. 
JOHN KEY 
: The Government has had months to work on this package but what do we find? One of the five examples from the taskforce is wrong. We looked at it in the lock-up and we said that the numbers were wrong. And if they are wrong in one of the five examples they could be wrong in all of them. [ 
Interruption 
] Perhaps I could tell the member how they were wrong. There was an example of a 16-year-old who for 3 years would stay 16. It is absolutely hilarious. The Government has had months and months to get it right. It has hyped it up and now it has dashed the hopes of New Zealanders. It really is a very very sad day for the Government. 
We on the Opposition side see a Government that has been snatching taxes off people. We see a Government that we thought was going to have the biggest lolly scramble in history and sure enough it did but it could not even get the numbers right. It could not even work out that all New Zealanders deserve a return for their hard work—all those New Zealanders out there who contribute and work hard. 
They listened to Jim Anderton and he has sold them the biggest pup in history. He said: “Give them corporate welfare. We’re giving them welfare in other places so give them corporate welfare.” That is what he told Helen Clark. “They will absolutely love it.” Lo and behold Federated Farmers were the first people off the block and they came out and said they did not want corporate welfare. Exporters up and down the country do not want corporate welfare. They have said they do not want those handouts; they want tax cuts. They want to have a grade equivalent to Australia and genuine legislation that will help them do their business. They do not want Jim Anderton his scissors and his camera and all the rest of it. They do not want that. This Budget is a complete failure. 
Hon TREVOR MALLARD (Minister of Education) 
: 
 I think we have just seen why Don Brash is not prepared to hand over the finance spokespersonship. We have heard from the man whom Maurice Williamson’s good friend Michelle Boag got into Parliament on a promise that he could be the spokesperson on finance. Then they got Don Brash in as well on a late run. 
What we have heard from the member who just resumed his seat—the member who popped into Parliament from his second or third country house in Helensville—was embarrassing. That member thought about doing some work earlier in the afternoon decided against it and then decided to pop down to Parliament for a bit of fun and make the sort of speech that really is embarrassing. Frankly I am embarrassed. I was here to rebut the attack on this legislation from John Key but I sat here for the entire speech and tried to work out whether he was for it or against it. 
Hon Maurice Williamson 
: He’s against it. 
Hon TREVOR MALLARD 
: He is against it. That is good—progress from Maurice Williamson. They are against it. I could not tell from listening to John Key. I am told by the member for Wanganui that ornaments on Mr Key’s mantelpiece could buy a house in Wanganui. That is why he does not understand this piece of legislation. He is spouting on about a poll on a television channel that is overwhelmingly watched by Tories. 
John Key 
: What? Television One? 
Hon TREVOR MALLARD 
: Television One—the channel that is overwhelmingly watched by people in the upper-income groups the people who can afford to spend 99c each time 100 times in half an hour to respond to a poll. They are the sorts of people who respond to that. Maurice Williamson I can see has repetitive strain injury in his finger from using his cellphone to ring up. 
Hon Maurice Williamson 
: Not from my cellphone. 
Hon TREVOR MALLARD 
: He used his office phone to ring up Paul Holmes time and time again. Even Richard Prebble who every now and then is a lot of fun—he gets excited—knows not to rely on polls that people have to pay to enter. Except for the ACT polls of course for the leadership. Rodney Hide is buying it pretty well at the moment but let us leave that to one side— 
Darren Hughes 
: He got 99 percent of the vote. 
Hon TREVOR MALLARD 
:In the ACT party I think they are desperate to find anyone to vote. I have never seen people who are less willing to talk about legislation and the issues and want to speak more about their leadership. 
Let us get to some of the issues in this bill. At this point I want to congratulate my friend Steve Maharey on the work he has done in this legislation. It is fair to say that there are often tensions between education and the labour market in deciding to work in the early childhood education area. Sometimes they can work against each other. Moving quality up in early childhood education costs but this Minister has made sure that people with three children—maybe with only one of them in early childhood education—and with incomes of over $60000 are getting support. 
National is opposed to families earning over $60000 and with one child in early childhood education getting support for that. Shame on them! Why do they care so little for the children of middle-income New Zealand? Why do they hate them so much that they say that they should not get support for their children to get quality early childhood education while their mothers and fathers go out to work? I do not understand why Tories attack middle-income New Zealanders so much. They do not care about them. They do not understand. Maybe my friend the member for Wanganui is right— 
Hon Maurice Williamson 
: She’s not your friend. 
Hon TREVOR MALLARD 
: She is a very good friend of mine. 
Hon Maurice Williamson 
: She’s not your friend. 
Hon TREVOR MALLARD 
: She is a very good friend and colleague. But the point I am making is that maybe she is right when she looks over there at David Carter Lockwood Smith and John Key and says they just do not understand where middle-income New Zealand is at. They do not understand the people who have to think about whether they can afford 99c to ring up Paul Holmes or whether they can afford to have their kid in an extra hour of childcare this week while they go to the dentist or the doctor. Those are the sorts of people who win out of the legislation we are debating and the Tories opposite just do not care about them. 
I think it is sad exceptionally sad that they are not commending this Government for the quality and the fairness of the package. For all their talk about the importance of work and getting people into work they are opposing the legislation that is most likely to do it. If we were outside the House they would be called hypocrites. We cannot use that term in here and I will not but I want to make it clear that these people are saying one thing yesterday and another thing today. They say they want New Zealanders to work. They say they care about early childhood education but when it comes to their votes it becomes clear to us that the people sitting on the opposite side of the House cannot make a sensible decision. 
 Do members know what is the best thing they could do? My old friend Maurice Williamson I am sure would have given them this advice. I have a lot of time for Mr Williamson on occasions. He knows a bit about parliamentary tactics and he would have told them: “When you are on a loser cut it short. Just say ‘yes’ quickly get it over with shut your eyes and get on to the new business.” When that is happening and one is being stuffed in a political sense at that point it is better to say: “I accept it. We are losing on this particular case. I want to move forward get it over with and get on to somewhere where it might be more enjoyable.” Because what is clear to me is that members opposite have not been thinking carefully about the political tactics here. They want to stretch it out. When one is being done over it is better not to extend it. 
Members opposite need to think very carefully. They need the votes of people in the $25000 to $60000 income group—not the $80000 not the $1-million-a-year people whom Mr Key is worrying about. It is the people in the $26000 to $60000 group—the families of New Zealand—and what they have given them tonight is two fingers. 
BARBARA STEWART (NZ First) 
: 
 As my colleague Peter Brown pointed out New Zealand First will be supporting this legislation—the Future Directions (Working for Families) Bill. We need families to survive as strong families are the basis of society and we have all debated that many times in this House over the last year. 
We are tired of reading negative reports on the state of New Zealand families. All the recent reports on New Zealand families the UN report and the Child Poverty Action Group report state that New Zealand needs to take urgent action to enhance the lives of its children and those of its families. Many children live happy and fulfilling lives in their families but the less fortunate live in poverty and face violence and discrimination. All of these issues can be addressed by the Government and this legislation should do that. 
When there are figures that are internationally comparable New Zealand always stacks up really poorly. We have a large gap between rich and the poor and we have many children living in poverty. We have high rates of death from causes such as infant deaths and sudden infant death syndrome. We have a large gap too between children who do well in school and children who do poorly. We have a high rate of youth suicide a high rate of teenage mothers and so forth. By international comparisons we could and should be doing a lot better and this legislation will hopefully do that. 
The Agenda for Children came out 2 years ago but last year’s Budget contained nothing to implement that agenda. It promised to end child poverty but there was nothing in that Budget to improve the situation of poor families. These families have had to wait until this year’s Budget and we hope they will benefit. 
I was really pleased to see on page 23 of the explanatory note of this bill two internationally recognised income poverty measures with thresholds set at 50 percent and 60 percent of median household income and that the Government estimates after full implementation that there will be a 70 percent reduction in child poverty at the lower threshold and a 30 percent— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I am sorry to interrupt the honourable member but it is a convention in this House that members should not conduct conversations in the House unless it is necessary to do so and then only so as not to disturb the proceedings. I urge restraint on members to respect the contributions of another member. It is good conduct common courtesy and good form. 
BARBARA STEWART 
: In looking at page 23 of the explanatory note I see that the Government estimates that after full implementation there will be a 70 percent reduction in child poverty at the lower threshold and a 30 percent reduction in child poverty at the higher threshold. We hope this reduction in poverty actually occurs and no one can argue that it should not. We in New Zealand First will be monitoring that very carefully. 
New Zealand First is really pleased to see that some of Dr Cullen’s pot of gold will go to families. We want to see families prosper and we want the worthy objectives at the start of the commentary which my colleague Peter Brown pointed out actually achieved. We hope this bill is right and that there are no errors in it as we have not really had a chance to thoroughly read its 50 pages. 
We always say that the wealth of our nation can be seen in our children. Our children at the moment do not reflect a prosperous nation. Hopefully this legislation should reverse that trend. We want to see changes to the state of our families. We want to see work pay for parents who move off benefits into work. We want to see family income increased to significantly address the issues of income inadequacy and we want to see childcare assistance an integral part of the social security system in recognition of its importance to families. We want to see accommodation made affordable by some way of responding to the increased cost of housing. This bill outlines these things in its objectives and we want to see them implemented. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 This carry-on in here tonight reminds me of that song that goes: “Oh what a circus what a show!”. What is so ridiculous is that the House is in urgency tonight passing legislation that does nothing until October. Most of it does not happen until April next year and some of it does not happen until April 2007—but they have to pass it in urgency tonight! Why? Because they want to give publicity to this outrageous package. 
Do members know what is outrageous about it? This is the greatest con-job that has ever been imposed on the honest working people of New Zealand. What Steve Maharey Michael Cullen and Helen Clark are doing is taxing hell out of honest working families; taxing them blind. They do that with the right hand and then with their left hand—the left hand being a Labour Government of course—they come back and say: “We’re going to give you this money. What a great Government we are we’re going to give you hard-working families this money.” The con-job is this. The money belongs to those families in the first place. This disgusting Labour Government of Clark Cullen and Maharey— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The member will use the members’ full names. 
Dr the Hon LOCKWOOD SMITH 
: Oh sorry—Steve Maharey. They think they can con New Zealanders by taxing them blind on one hand and giving their own money back to them with the other— 
Hon David Carter 
: There’s a time delay. 
Dr the Hon LOCKWOOD SMITH 
: My colleague points out that there is a time delay. They take the tax today and they give some of it back to them in 2007. This is the greatest con-job ever perpetrated on New Zealanders. It is no wonder the  
Holmes  
poll showed that fewer than one in five New Zealanders support this Budget. 
What some of those Labour members opposite do not seem to understand is the problem they have created. They are turning hundreds of thousands of working New Zealanders into beneficiaries. Before this package started we already had 194000 working families whose employers deducted $695 million in PAYE from their pay of which this Government pays $685 million back to the same families. That already happens right now. The Government takes $695 million in PAYE off 194000 working families and gives it all back to the same families. That will now be far worse. At the moment 194000 families are involved in that absolutely crazy churning. Now that the Government is going to impose this Future Directions (Working for Families) Bill at least another 100000 families will be taxed by the Government on the one hand then on the other hand the Government will say: “Aren’t we wonderful to give some of it back to you later on.” 
I have to say tonight that I was blown away by the arrogance of Dr Michael Cullen. He said that if the Opposition thought it could deliver this through the tax system the only way was to give a $40000 tax-free zone and that was stupid as it would mean a huge fiscal cost. Dr Cullen is an intelligent guy but his arrogance is such that it is blinding him. He might be a Commonwealth scholar but he is not the only one in this Parliament. The low-income working families of New Zealand deserve help and they deserve support. National would deliver that to them without turning them into beneficiaries. If Labour members had half a brain they would see that tinkering with the system is not the way to fix it up. There are far better ways to deliver to low-income people than this con job. 
Hon RUTH DYSON (Minister for ACC) 
: 
 I can understand the member becoming slightly hysterical during his 5-minute presentation this evening because it must be quite distressing if one is required as an Opposition member to explain to the House and indeed the country what the Opposition has against hard-working families in New Zealand getting the financial support they deserve. I cannot understand the Opposition. I cannot understand what Dr the Hon Lockwood Smith has against hard-working families in New Zealand and I sympathise with him for being required to stand in this House and oppose the legislation. That is why I understand that he had to become hysterical in order to get up enough passion to oppose something that nobody in his or her right mind could possibly oppose. 
First of all I want to thank the Minister responsible for this bill Steve Maharey for his vision of social development in our country for his commitment to working that vision into the reality of this legislation and for his sheer hard work in ensuring the legislation is introduced tonight. I also give credit to the Minister of Finance and the Prime Minister for leading this major investment in social development and in our families. They deserve it. They have probably been waiting for too long but we have delivered in a way that is affordable and sustainable and they deserve this legislation to be passed and progressed. 
I also thank and acknowledge the officials who have worked tirelessly to ensure that the detail of this legislation has the attention paid to it that it deserves so that we can progress it now and give our families the respect they deserve. 
I have known for a long time that both Richard Prebble and Maurice Williamson are frankly poll-driven fruitcakes. I understand that. Everyone accepts it as a fact. Richard Prebble and Maurice Williamson have always been warmly regarded as poll-driven fruitcakes. They do not have any principles they do not have any values they do not have any vision they do not have any commitment and now they are totally relying on the  
Holmes 
 show to elevate their blood pressure to a level at which they have both been able to participate in the House tonight. It was extraordinary to hear both of them speak. 
Hon David Carter 
: What happened on the  
Holmes 
 show? 
Hon RUTH DYSON 
: I do not rely on any poll for my principles and my values. I never have and I never will. I know that working families in New Zealand deserve our support and I know that underneath it all so does Mr Williamson know that but it is his job as an Opposition MP to come along here and scrape whatever barrel he can find the bottom of in order to oppose it. 
The National Party’s policy is to oppose this bill. It opposes making work pay for parents who move off benefits into work. National members oppose that. They think that parents who move off benefits into work should not receive any financial recognition for that. They oppose increasing family income to address issues of income inadequacy. Why would they oppose that? Exactly. There is silence. There is no good reason at all. They oppose addressing accommodation affordability by responding to the increased cost of housing. Why would they oppose that? Exactly. There is no good reason at all. They oppose making childcare assistance an integral part of our social security system in recognition of its importance to families. Why would they oppose ensuring that childcare assistance was more accessible and affordable to families in New Zealand? There is no reason at all. 
They oppose simplifying the social security system. There is no logic in their opposition. There are no principles or values in their opposition. There is certainly no vision or commitment at all to any alternative. 
This bill recognises that low and middle income earning families in New Zealand work hard and that we should give them more support not less. The National Party and ACT policies state that we should not support those families with better childcare assistance we should not support them with better accommodation support and we should not look at family incomes to address inadequacies. That is what those parties say. They do not care about hard-working low to middle income families. I imagine that when one is earning well over $120000—or $1 million as the previous speaker acknowledged he was earning—it is a bit hard to imagine how a two-income family can survive on $30000 a year. It is hard for them to imagine how that family has to choose between the dentist and buying a new pair of shoes. That is what a number of low and middle income working families in New Zealand have to decide week after week and some have to go to a food bank or to Work and Income New Zealand to get special assistance. 
That is the real world of working families in New Zealand. That is the issue that this bill is addressing and it is the issue about which the National Party is saying: “We don’t care about them. We don’t think they deserve to get more support. We would have this bill gone by lunchtime.” So the National Party would reverse the changes. If National were ever the Government and if it were a particularly busy morning in the House it would have this legislation reversed by lunchtime. Then it would give tax cuts to people in this House—to people earning well over three times what people who are supported by this legislation are earning. 
Hon Matt Robson 
: John Key needs a tax cut. 
Hon RUTH DYSON 
: I think John Key earns a tax cut every day of the week—not. He does not deserve a tax cut. He does not deserve any financial support in comparison with the people who are getting support through this bill. Of course we would love to give everyone in New Zealand a tax cut but if it comes to priorities and what is more important in terms of driving our economy and assisting people who have income inadequacy that is the area of support that should take priority. Tax cuts to people who do not need them versus direct financial support to low and middle income working families just do not stand up at all. People who earn less in a year than those members opposite spend over a weekend are being denied that financial support by their opposition. 
 There is no logic to it. It is not even ideological. John Key can keep enjoying himself laughing at his own opposition to this but we do still have families in New Zealand that have to make the sorts of choices I mentioned. They have to think about whether they can afford to take their middle child or their youngest child to the dentist whether they can afford to buy a pair of new shoes or whether they can afford to buy gumboots to go out on the farm on the weekend and visit the farms of some of the members opposite. They do not own the farms but they might be able to visit them collect the eggs and work part-time for them. 
I want to draw the attention of the House to one particular aspect of the bill that relates to invalid beneficiaries. It is on page 11 of the explanatory note. People on invalids benefits in New Zealand—[ 
Interruption 
] 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I am sorry to interrupt the honourable member. Can I just say regarding interjections that the rules permitting interjections are predicated on the assumption that the person being interjected on has the call. Interjections are not permitted at all when they are directed at a member who does not have the call. It is happening too often and too frequently. Please show some courtesy to the member speaking. 
Hon RUTH DYSON 
: We have a number of people on invalids benefits in New Zealand. They are on invalids benefits because they are not able to work for 15 hours a week or more. Our social security system has lost touch with advanced technology with growing expectations and with growing demand from people with disabilities in New Zealand who now know they have a right to support and a right to employment. Our benefit system in the past has denied them that and in fact has offered financial disincentives for people on invalids benefits to work. This bill fixes that problem. This is a major and positive step forward for people on invalids benefits who previously have said: “How can I work? I will be financially worse off if I do.” 
I want particularly to congratulate the Minister on this initiative for thousands of people around New Zealand who are on invalids benefits. This says to them: “Our future contribution in the paid workforce will not only be literally valued but it will be financially recognised as well.” I know that many people will be wanting to take advantage of this change. This bill is designed for people on invalids benefits for people on sickness benefits for people on other benefits and for our low to middle income working families. 
The National Party and the ACT party can oppose it as much as they like. They do not represent working families in New Zealand. They do not speak in this House for working families in New Zealand. They deny them the financial recognition and support they deserve. It is those people who deserve a voice in this Parliament and who deserve the financial support that our situation can afford to offer them. 
A party vote was called for on the question  
That the Future Directions (Working for Families) Bill be now read a first time. 
Ayes 82 
New Zealand Labour 51; New Zealand First 13; Green Party 8; United Future 8; Progressive 2. 
Noes 29 
New Zealand National 24; ACT New Zealand 4; Independent: Awatere Huata. 
Bill read a first time. 
Points of Order 
Messages from Governor-General 
Mr Speaker read to the House a message from the Governor-General recommending an appropriation for the Future Directions (Working for Families) Bill. 
LINDSAY TISCH (Junior Whip—National) 
: 
 I raise a point of order Mr Speaker. How can this bill be appropriated when we have not even had the vote? We still have the second reading the Committee stage and the third reading to come. I seek your guidance. It might be that we do not pass this bill. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: It is my understanding that the Governor-General has to make the recommendation before the bill is passed and that is the reason why it has been done as it has. 
GERRY BROWNLEE (Deputy Leader—National) 
: 
 I raise a point of order Mr Speaker. This is Parliament. It is not the play place of the Governor-General and it is not the place for a Government just to ride roughshod over the process that occurs here. I wonder whether you might be able to tell us of another recent occasion where the moneys for a purpose were appropriated immediately after a bill’s first reading. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The money is not appropriated at this stage. It is recommended and it always has been that way. 
GERRY BROWNLEE (Deputy Leader—National) 
: 
 I raise a point of order Mr Speaker. I cannot recall an occasion after a first reading when the first thing the Speaker did was to stand up and say: “I have a message from the Governor-General.” The Governor-General must of course have extremely fleet feet if she was able to get that message to the Chair in such a short period of time. Leaving that aside I cannot recall a time when such a recommendation has been made so quickly. It makes a complete mockery of the whole process that is occurring this evening. The Government has said: “Here is our centrepiece of legislation and we want the nation to know what it’s all about. We want to clear up some of the clear misconceptions that people must have got when they voted in the  
Holmes 
 poll this evening.” However it would seem that the Government has organised for the Governor-General to send down her recommendation on the basis that it does not matter what Parliament might conclude as the bill will be funded anyway. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Can I just inform the House that the Governor-General always makes a recommendation before the passing of a bill and the Government can procure a message at any time. This is perfectly normal. 
GERRY BROWNLEE (Deputy Leader—National) 
: 
 I raise a point of order Mr Speaker. I wonder whether you could tell us at what time today the Government sent the message to Dame Silvia Cartwright telling her that she needed to make this recommendation. The House only started working on this bill at 5 o’clock today. Certainly a few hours have since passed but it seems rather unacceptable that the Governor-General should be making a recommendation to the House about 30 seconds after the bill has passed its first reading. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I thank the honourable member for his contribution and say that it is only a recommendation. At what time the Government makes a decision with the Governor-General is a matter for the Government. The House can always reject the bill. At what time the Government receives the message is no business of the Speaker. 
GERRY BROWNLEE (Deputy Leader—National) 
: 
 Can you tell us whether it is usual for this to happen—firstly that the recommendation is announced to the House immediately after the passing of a first reading; and secondly can you tell us why the House has to know this if in fact it is only a recommendation that does not have to be listened to? Are we now in the position where we can debate the Governor-General’s recommendation? 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I say to the member that it is my understanding it has always been done this way. It is perfectly in order. The Constitution Act requires it to be so. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 I raise a point of order Mr Speaker. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I have already made a ruling. This needs to be something new. 
Dr the Hon LOCKWOOD SMITH 
: I want to raise a slightly different issue. In my experience in this Parliament which does go back some years this procedure is normal if something is required by midnight tonight for example or before Parliament sits tomorrow and there will be a law change say that involves an appropriation. That is obviously where we need that kind of recommendation from the Governor-General. There is no opportunity subsequently for it to occur before expenditure may have to take place. 
What troubles the Opposition on this occasion is that no expenditure is required for months on this bill we are passing. There is absolutely no requirement whatsoever for any such notice from Her Excellency the Governor-General and we are curious to know why this should be. In my experience this is somewhat unprecedented. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: I reiterate what I said before: it is only a recommendation. That is all it is and the House can always reject the bill. It has been done that way in the past and will continue to be done that way because it is part of the Constitution Act that requires it to be done so. 
Future Directions (Working for Families) Bill 
Second Reading 
Hon STEVE MAHAREY (Minister for Social Development and Employment) 
: 
 I move  
That the Future Directions (Working for Families) Bill be now read a second time 
. I have listened with interest during the first part of what passes for a debate. It is a pretty one-sided debate because this is how it has run so far. Mrs Katherine Rich having worked her way through the argument about whether she was paid parental leave—whether it was via the paid parental leave provisions or by using her salary—then went on to advance what I think was one argument which was that we ought to have made tax cuts. If she has a look at what that means she will see that most of the people who will gain from this package—say a family on $30000—simply would not have got anything. In fact they would have been in a negative position by an across-the-board tax cut. So I hope the National Opposition carries on advancing that argument throughout the rest of this debate. 
National members have so far told us that they are not voting for in-work payments families childcare and all the things in this package but they have not told us that they will repeal the legislation. I do invite the next National Party speaker to put on the record should by some mistake—because I cannot think of any other way it would happen—National become the Government led no doubt by Peter Brown and New Zealand First I am sure whether it would repeal the legislation. Let us go to the election knowing very clearly that the National Party position is not only to vote against kids work and all the things in this legislation but it would actively stop people getting the money that is in there. Let us hear from the National Party on that. It is the courageous position to take. It is the one Gerry Brownlee would take if he were leader because there is no subtlety about Gerry Brownlee. He would be up on his feet thumping and telling us that repeal was the option. I am sure that if he speaks next he will tell us that. 
I was moved by Peter Brown’s speech today. It had sheer clarity as he led us through the five basic principles that drive the legislation the National Party opposes: making work pay and moving parents off benefits increasing family incomes increasing accommodation affordability increasing childcare assistance and simplifying the system. As he nobly led us through that and as the National Party sat next door saying it did not support any of those things I was moved by his speech which was later reinforced by Barbara Stewart’s speech that said the same thing and that also made the very telling point—[ 
Interruption 
] We are worried about poverty on this side of the House whether or not National is worried. John Key for example would not know poverty if he drove past it in the Mercedes. He does not realise but Barbara Stewart does that this legislation will reduce poverty by 70 percent—and it will. She said that was why she was voting for it. Simon Power does not want to vote for something that will reduce poverty amongst children in New Zealand but Barbara Stewart does. Lindsay Tisch does not want to support anything that overcomes poverty but Barbara Stewart does. 
Gerry Brownlee 
: I raise a point of order Mr Speaker. I just ask you to consider whether the content of the Minister’s speech is appropriate for this debate. There have been numerous personal reflections which I do not think do him a lot of credit and it would be unfortunate if the standard of debate in the rest of the evening were to be lowered to a constant toing and froing of what are simply personal reflections as opposed to the merits or otherwise of the bill. We do understand the Government’s embarrassment over this bill but surely its members could mount some defence of it. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Again I thank the honourable member for his contribution. The use of personal reflections under Standing Order 116 is a matter I have taken into consideration during the course of the speech. Disparaging remarks occur quite frequently in this Parliament but it is the personal reflection that is out of order. No objection was made by Mr Key and therefore the robustness of this debate gave me the indication he did not object. 
Hon STEVE MAHAREY 
: I always welcome what Sue Bradford has to say. She is a person who has done the hard yards and she tells us the Greens want to support this bill because they too want to do something about poverty childcare and so on. Richard Prebble not surprisingly gave the most lucid opposition to this bill—unlike the National Party which still does not seem to be able to do what the ACT party can do and actually make its mind up on the issue. The ACT party would vote against it would repeal it and does not want to pass it. Basically that party wants to give massive tax cuts. That is a clear position tonight. United Future will vote for it. Its members said they would vote for it. 
John Key the pretender to the throne raised a whole series of points on that side of the Chamber. For example he asked us why Treasury reports show benefit forecasts still going up. I tell the member that Treasury always has those forecasts going up and the Government always comes in underneath them. We will carry on doing exactly that into the future. 
The last speaker was Lockwood Smith whose only major contribution that I could see was to tell us that he used to sing a song called  
Oh What a Circus 
 which I suppose was from one of the pantomimes he was in when he was young and as a music lover I greatly appreciate being reminded of that song by him—but I cannot remember anything else he said. 
The interesting thing about all of this is what National members—who are basically the only people with a wavering quivering position on this bill suitable to the party and who honestly do not quite know what to do with it—are voting against. They are voting against housing becoming more affordable in October this year because the accommodation supplement abatement thresholds will change. They are voting against that first of all. I want to ask whether the National Party does not want to improve the abatement thresholds so that people attain more money when they go to work. Does it not do that? Well we will see. On 4 October this year the subsidy for out-of-school childcare rates will increase. People will get more money for that and will not have to pay so much. So on 4 October the National Party will not want that. 
Hon Richard Prebble 
: Another crap— 
Hon STEVE MAHAREY 
: Well Mr Prebble at least says: “No I don’t.” all the time whereas National members all sit there like stunned mullets saying they really do not know what to do with this bill. It sounds pretty good stuff to them but they are trying to sit there and pretend they want to vote against it. 
In December this year the invalid benefits will change so that more invalids can go to work for over 15 hours stay in employment try out whether it works and gradually work into a job. [ 
Interruption 
] I ask Mr Brownlee whether he is against that—against the notion that invalid beneficiaries can get into work. National complains all the time about the numbers going up but it never has a policy about how to reduce them. We have a policy about how to reduce the numbers. 
Does Simon Power want to vote for more invalid beneficiaries to go to work or is he content to be part of the process of sitting back and just seeing those numbers carry on rising? I ask that member what he reckons. Do we want to say to the  
Manawatu Evening Standard 
 that Simon Power does not want to see invalid beneficiaries get a chance to go to work and retain more income? He does not want to vote for that. Well I suggest he try this: on 1 April next year family support benefits unsupported child benefits and orphans benefits will all be extended to 260000 New Zealand families. Now I ask Mr Brownlee whether we will hear him in the Christchurch  
Press  
saying: “I don’t want anyone getting more family support. That is awful. They’re going to be reliant on the State. They’re going to have money coming into their households. I don’t want it.” I am expecting to see that headline in the Christchurch  
Press  
next year. 
Gerry Brownlee 
: I raise a point of order Mr Speaker. It may have escaped the Minister’s notice but the bill actually provides for the repeal of family support later in the— 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: That is not a point of order. The member is very experienced and he should know better. 
Hon STEVE MAHAREY 
: Will Mr Brownlee also have a headline in the Christchurch  
Press  
that says: “Grandparents raising grandchildren are not going to get another $15 a week because of the changes in this bill on 1 April next year.”? Is Maurice Williamson intending that the people of Pakuranga will hear from him: “I don’t want to see anybody get that money.”? 
Let us move on to the accommodation supplement areas. We have increased the amount of the accommodation supplement in places like Nelson for example. So will Nick Smith now having insisted time after time to me that the cure for the housing problems of Nelson would be an increase in the accommodation supplement courageously say in the Nelson newspaper that he no longer wants it? He has argued and pleaded for the Nelson people to have a higher rate of accommodation supplement and the Government is giving it to them but Nick Smith—and he can take the next call and tell us what he thinks—will be in the paper saying: “No thanks I don’t want that. I didn’t mean that at all. I’m going to vote against an increase in the accommodation supplement for Nelson. I don’t want it.” This is Pythonesque. We will get to the point where like John Cleese he is saying: “What has the Labour Government ever done for us in Nelson? It has put the accommodation supplement up it has put the family support up it has changed things for 260000 people but we do not want it. Do not give it to us. We will campaign every time the Labour Government tries to give more money to people.” 
John Key will drive his Mercedes down to the newspaper offices and ask to be put in the newspaper requesting that on 3 October next year childcare and out-of-school care subsidies are not increased and that he does not want 28000 more families getting more money. 
Gerry Brownlee 
: When? 
Hon STEVE MAHAREY 
: Mr Brownlee is so anxious that I want him to start voting against these measure from 1 October this year. I want to see all those courageous people on the other side of this Chamber who are voting against the legislation out there saying “No thanks”. 
Hon MAURICE WILLIAMSON (National—Pakuranga) 
: 
 What a very sad time it is for the New Zealand Parliament! I can remember a time about 14 years ago when the “mother of all Budgets” was read in this very Chamber. The front row of the Government defending that Budget consisted of the Prime Minister Jim Bolger the Deputy Prime Minister Don McKinnon and the Minister of Social Welfare Jenny Shipley. The entire Cabinet sat on the benches; those members were there to defend a Budget that had to be done because the Labour Government that had gone out of office the year before had wrecked the economy and had left no option. What do we see in the front row tonight? We have Steve Maharey we have I hate to say Matt Robson—I am sorry about that—and I can see Marian Hobbs as well. That is all that is left here defending the absolutely indefensible. 
Two or three questions need to be asked. By the way let us clarify the National Party position because members want it clarified: we are voting against this legislation. We do not say that we will repeal it; what we say is that we will replace it. We do believe that there needs to be assistance to some people within the community but what this bill is doing—members talk about Monty Python; this Budget should be called the “Python Budget”—is taking huge sums of money billions of dollars from ordinary working New Zealanders to make a surplus and Michael Cullen somehow gloats that he is a great Minister because he has taken so much money off ordinary New Zealanders. I do not think that is anything to gloat about or even to start to gloat about. Then he says that in a couple of years’ time—after the next election that is—he will give some actually quite a small sum of it back to a certain group of people who could be classified as predominantly but not solely Labour Party voters. That is why the poll tonight on  
Holmes 
 showed that for every one person that loves it four hate it. That is 20 percent in favour which is about where the Labour Party is polling at present as far as I can remember. Twenty percent love it and 80 percent hate it. 
I got really scared yesterday when I saw the panic that set in when Labour realised that the last Colmar Brunton poll on Sunday night showed it was dropping even further in public opinion and falling behind. We had this enormous announcement that anyone who wants a hip replacement or knee surgery can have it. I hoped that Labour would not drop any further in the polls or it would become compulsory to get a hip replacement and have one’s knees done. It was the most desperate move of a Government that is in trouble. 
And what is this measure? This is the exact same move. This is not an attempt to relieve the burden on ordinary middle-class New Zealanders. No this is saying “Why don’t we tax the hell out of all New Zealanders as hard as we can then put some crumbs back on the table of one in five families?”. For that reason alone the National Party I am proud to say will both vote against this bill and when the new National Government is elected next year—and from the way it is going if Labour keeps falling like it is it will be a majority sole National Government which will not even need to look at coalitions because that is how bad that lot is—replace it with a properly targeted package of assistance for those hard-working middle-income families who have been beaten around. 
So what do the Labour Party members do tonight? They try to personalise this by referring to some of us. I admit that every one of us in Parliament is at the high end of income earners but that is not what we are talking about here tonight. No one is talking about giving tax breaks to people earning over $100000 which includes every one of us in this House. [ 
Interruption 
] Exactly. There are a couple of questions that I still have not heard an answer to. 
Lindsay Tisch 
: I raise a point of order Madam Speaker. The outrage from the other side of the House is completely unacceptable. It comes from a certain sector that tonight has been very vocal. I ask that you direct that member in particular the senior Labour whip to tone down her comments. 
Madam DEPUTY SPEAKER 
: I think there has been a fair bit of cross-interjection. I think it does need to be toned down a bit so that the speaker can be heard. 
Hon MAURICE WILLIAMSON 
: I am very very comfortable with Labour’s opposition tonight because I have never seen such a limp-wristed hopeless pathetic attempt to justify something. On the night of the Budget those benches should be packed and those members should be crowing about what they have done. 
But there are a couple of things I want some answers to and I think this is really important. I think New Zealanders will see this Budget for what it is by this one issue alone: every time I have been in this Parliament under urgency on a Budget night it was to pass legislation that affected people as of midnight that night. That is why we go into urgency. The clock stops we stay on today’s date and we do that because we are making changes to the tax system—we are making changes to petrol tax we are making changes to benefit schemes—as of midnight. My question is and I have heard it asked many times so far whether this bill changes anything as of midnight tonight. 
Opposition Members 
: No! 
Hon MAURICE WILLIAMSON 
: All right that is clear. The answer is no. So do the changes happen tomorrow? No. In the weekend? No. In a week’s time? No. It does not have any impact until October. This bill could have been done in the normal time frame that every other bill is done in. So why would the Government call urgency? Because it thought that it had this neat momentum that it was on a roll with the Budget. 
John Carter 
: What did the  
Holmes  
show say? 
Hon MAURICE WILLIAMSON 
: Mr Carter should not feed me these lines; it is too good to miss. What I loved tonight is that this poll was from the television channel that is charter-funded. We are talking about the “bean-sprouts and batik brigade” channel the “sandal-wearers and kaftan-wearers” channel—Television One. Hardly a Tory would watch Television One the State channel. And what did the poll show? I have heard this Labour Government often refer to  
Holmes  
polls saying for instance: “We saw on the  
Holmes 
 poll last night that the Government is moving in the right direction.” In the first 3 years to give those members some credit it was pretty hard to lay a glove on them. But tonight when that  
Holmes 
 poll showed that only one in every five New Zealanders— 
John Carter 
: No! 
Hon MAURICE WILLIAMSON 
: That is right—one in every five. Guess what? It is an incredible coincidence. Members should guess what the coincidence is and see whether they can spot it. This Budget favours one in every five families and the vote tonight in New Zealand was that one in every five supports it. I tell this Government that at the next election it will get one in every five votes. In fact I think it will be lucky to get that because a few will bail out on the way. But to be fair—[ 
Interruption 
] That is right—one in every five votes. That is what the Government will get because this is a cynical move and it is seen by the public as a cynical move. 
Let us get this very clear: this is not giving people anything. What it is doing is letting them have back a small amount of what was taken from them in the first place. Anyone can be a Robin Hood. Anyone can rip money off people then say: “Guess what I’m going to be kind. I’ll give you back a bit.” We accept there needs to be a targeted assistance programme we accept the focus needs to be on getting people back into work but we think this is the biggest miscue that has ever been made—and so does that Government because if it thought it was right we would see that front bench riddled with all its senior Ministers. They would all be taking the call and defending it but they cannot defend the indefensible. 
My last question to those members is this: if this is such a great scheme how come 5 years have gone by—5 whole years—and they ask whether the National Party would repeal it? It is just a disgrace. 
RUSSELL FAIRBROTHER (Labour—Napier) 
: 
 After that lamentable effort from that senior member on the furthest back Opposition back bench I say bring back Bill English. One can now see that he had great judgment. He had the judgment to send that member to the furthest back seat of the back bench that he could imagine. Members can see why—10 minutes of wasted time in this House and not once did he dare to address the bill. I guess that is because the Government used words with more than four letters in it so he cannot understand what it says. 
This is a bill New Zealand will welcome and the National Party will regret because those members could never have thought of it. That is because it is good news for every honest hard-working family in New Zealand and that party would not even know what that was. Regarding that last effort for that speaker to have spoken it with a straight face he would need to be a contortionist. This is a bill that brings the family centre stage. [ 
Interruption 
] I have just had a jury verdict that says: “Eleven for one against (National). We’ll have another ham sandwich thank you.” This bill brings the family centre stage in the New Zealand economy and social setting. That is a new idea for National is it not? Fancy those members putting families at centre stage instead of the tax break for the wealthy! This bill should be named the “Working for Families Bill”. Well what is it named? It is named the ”Future Directions (Working for Families) Bill”. How ironic that a bill that does so much for so many people and that makes this country get on to its feet again is named the “Future Directions (Working for Families) Bill”. No wonder the last speaker did not bother to read it. No wonder we have allowed him until October to read and understand it. On 1 October that member will come grovelling to these benches and he will be the last speaker saying: “Oh I wish I’d read that bill before I wasted 10 minutes of this country’s time.” 
I want to talk about a great electorate that has working families—unlike the electorate of the last speaker whose constituents sip lattes and send out overdue-mortgage notices. Napier is an electorate of working families. This is a good bill for the Napier electorate because it is an electorate of working families. The suburbs of Bay View Ahuriri Marewa Onekawa Maraenui Greenmeadows and Taradale are family suburbs. [ 
Interruption 
] I say to Mr Brownlee that a family is that special thing we have in New Zealand that has a mum and a dad and kids. Mum and dad love each other they love their kids and the kids return it. That member may not know much about that but he should listen to this debate and he will have his eyes opened—and keep other things zipped up. There are suburbs with the real stars and with their share of families on benefits—Marewa Bay View Onekawa Maraenui Greenmeadows and Taradale—and moving those families from the benefit to the workforce is one of the best things we can do for the suburbs of Napier. Before today and before 1 October it has been a hurdle to get off a benefit no matter how much it was screwed down by the previous Government because moving from the benefit to a wage often meant a drop in income—but no longer because henceforth one is encouraged to work. One is encouraged to get off the benefit and get into a job. 
And we can offer jobs. For the next 4 years or so experts greater than the members opposite could even imagine predict that the unemployment rate will be below 5 percent which means our families will have income earners. The intent is to get them off the benefit which is not understood by the intellects on the other side of the House. We will move to an economy that is sound. So this bill is good news for New Zealand good news for the suburbs of Napier and good news for Napier. 
Hon Maurice Williamson 
: Get out of making excuses for criminal behaviour. 
RUSSELL FAIRBROTHER 
: Speaking about criminal behaviour I think the previous speaker would know about that. Anyone who has studied it both close up and far distant would know that most criminal offending comes from those who are in poverty. That is well documented. Those people know there is a correlation between families under financial stress and family dysfunction. That is well known to those who bother to meet with families. The correlation between child health and poverty has been glaringly obvious to all but those who talk about tax cuts for the rich. We cannot ignore that correlation. 
This bill increases family income. We recognise that family income inadequacy has a significant impact on the welfare of our society. This bill addresses that issue by lifting the levels of family income so that families can move forward. Families in Napier who are endeavouring to survive can now lift their heads. The electorate that I represent will march forward from tomorrow morning. The workers in its suburbs can go off to their workplaces knowing that this bill places the family in the centre of our consideration. This is a bill for children. It is a bill that lifts the place of children so that they can have families who care and love for them. 
So I recommend this bill to the House. I endorse this bill and I wait to hear one single argument from the members opposite as to why this bill is wrong—an argument from ex-bankers ex-lawyers ex-accountants ex - money-sellers. I want to hear what they have to say about it. This is a bill that is working for New Zealand and working for families. 
PETER BROWN (Deputy Leader—NZ First) 
: 
 This bill addresses some serious issues. Right now as we speak there are some New Zealanders and New Zealand families suffering and they need some financial help. New Zealand First is prepared to support that and help them. 
But we have found two errors in the bill already. The first is in clause 2 “Commencement”. It is obviously a mistake for it to state that the bill will be brought in in 2005 so we will put an amendment in my name to delete this clause. [ 
Interruption 
] No I am warning that we are going to put one in. I hope the National Party will support it because it is a quite serious issue. If the Government is bringing in under urgency a bill like this to give financial assistance to families then clearly it would want it to happen immediately. It has made a dreadful mistake. 
Hon Richard Prebble 
: Having a bit of a change are you? 
PETER BROWN 
: No we are simply making a change. 
Hon Richard Prebble 
: He listened to my speech where I pointed out the mistakes and he’s changing things. 
PETER BROWN 
: I am saying now that we will move an amendment and if the member is at all sincere then he will support it. We propose to omit clause 2 and substitute: “This Act comes into force on the day after the date on which it receives the Royal assent.” It is as simple as that. In other words if members are to sit here until 10 o’clock tonight and all day tomorrow in urgency we might as well do it for some immediate effect—not for something for the year 2005. I think the National Party has suddenly realised there is some merit when we are in urgency in doing something positive. 
Hon Maurice Williamson 
: We just might think about this one. 
PETER BROWN 
: I invite the member to think about it. It is all very well our rowing about this thing but there are people out there suffering now. [ 
Interruption 
] Oh I am coming to the doormats. Is the member talking about these doormats or those doormats? There are so many doormats around that I am not sure which one the member means. We are coming to the doormats because— 
Hon Maurice Williamson 
: What’s the difference between a doormat and a laptop? 
PETER BROWN 
: That is too technical for me. I am just a simple sailor. We will move an amendment and I hope members will support it. Clearly the Government will because if it wants to help people it will want that help to take immediate effect. I am hoping United Future will but one never can tell. We will move another amendment too because I was told that Larry Baldock on behalf of United Future went on Radio Rhema yesterday the Christian radio station— 
Hon Maurice Williamson 
: And the Prime Minister? 
PETER BROWN 
: No he was with our young guy Craig McNair. I told Craig McNair not to be too vicious—to take it easy. Larry Baldock said there was much merit in the definition of “family” in Craig McNair’s Commission for the Family Bill and that had we previously put it up in the House his party would have supported it. Craig McNair pointed out that we had done that. So we will add the definition of “family” from that bill: “A family is defined as a family group including an extended family (a) in which there is at least one adult member; and (b) in which the members have a biological or legal relationship.” [ 
Interruption 
] The title is the “Future Directions (Working for Families) Bill”. We think it only appropriate that a proper definition of the family should be in the bill. Unless members want to accept the liberal definition currently in the Families Commission Act which I cannot readily find— 
Hon Maurice Williamson 
: Just make it up! 
PETER BROWN 
: I should just make it up. The definition in that Act is very liberal. I have given the United Future members the opportunity to put their money where their mouth was yesterday on Radio Rhema. Surely Larry Baldock would not tell Radio Rhema one thing and then when there is an amendment to have an appropriate definition of “family” in this bill vote against it. 
Hon Maurice Williamson 
: Of course he would! 
PETER BROWN 
: He would not. He is a man of honour. We are all honourable people here. We do not go on Radio Rhema and tell porkies do we? Never! I know that the National Party will give me hell because I am bailing the Government out. I am giving it the chance to get this bill right and have it come in on the right date which is after it receives the royal assent. I know that the Government will take that seriously and I know that Larry Baldock would not dare say one thing on Radio Rhema then vote against it in the House. That would be a mortal sin would it not? I would have thought it would be terrible. 
Simon Power 
: Who is Craig McNair? 
PETER BROWN 
: He is the youngest most enterprising MP in this Parliament. He is one of the most sincere people members will ever be privileged to meet but Mr Power does not keep that sort of company does he? I do; it rubs off on me. I meet all these sincere people and there is none more sincere than Craig McNair. Whilst we are talking about him I was proud to sit in this seat when he took on the whole House the other day on the Commission for the Family Bill. I have never felt prouder. I have felt pretty proud listening to Winston Peters but when that young guy spoke and took on the House on his own I felt really proud to be part of his team. That is who Craig McNair is. I tell members that he is very much up-and-coming. That is enough about Craig McNair; I will get back to the bill. 
We want this bill to come into immediate effect. We support it but we want it to come in immediately and we will be moving amendments in the Committee stage accordingly. We know there are people out there who are hurting. We know that this bill will be of some assistance to them. The aims in this bill are worthwhile. As I say we looked through it and found two errors and no doubt we will find a few more. [ 
Interruption 
] The second one was the definition of the family. Even Mr Williamson would agree that the definition in the Families Commission Act is not adequate. We are talking about the Future Directions (Working for Families) Bill. 
Hon Maurice Williamson 
: The Mafia would qualify wouldn’t it? 
PETER BROWN 
: It just misses including a gang as a family but two prostitutes living with their pimp would be a family under the definition in the Families Commission Act. We cannot have that in this bill so we will put up an amendment to reflect that. 
I finish by saying there are some good aims in the bill. It deals with payment of funeral grants where there is a surviving spouse or children children’s funeral grants accommodation supplements disability allowances and all the social security payments in schedule 2. Well they should come in immediately. I think Mr Maharey is nodding there. We will bail the Government out and give it a chance to get it right. We told it earlier on: “Do it once and do it right.” and this is its opportunity. We will be studying this bill as it goes through the Committee stage and amending other sections as we find fault. I hope we do not find too many but there are two for a start. My throat is getting sore so I will conclude by saying that we support this bill and we will be moving two amendments at least when we get to the Committee stage. Hopefully there will not be too many more but we will be advising members accordingly. We look forward to the unanimous support of all parties. Members should have a little bit of compassion. If the bill is to pass let us get it right. Let us get the date right; let it apply urgently—when it gets royal assent. 
SUE BRADFORD (Green) 
: 
 I would like to take a relatively brief call on the second reading of the Future Directions (Working for Families) Bill to raise a few issues in particular before we go into the Committee stage. My first concern is related to the proposal that appears to replace the special benefit with a new measure called temporary additional support. It looks as though the current discretionary regime will be replaced by a rules-based system operating through regulation. That takes some of us who have been around for a while back to the ill-fated attempt by National to do the same thing with its social welfare reform legislation in the mid-1990s. That bill met with massive opposition from beneficiary advocacy groups and community social services organisations generally and eventually even the Nats backed down on it. 
It is very difficult to regulate for the totality of human existence and if a regulatory regime is introduced there will always be people who fall through the cracks. Because the special benefit is a benefit of last resort that leaves no assistance available for those whose circumstances just happen to fall outside those that are contemplated by the officials who are drafting the regulations. No matter how well intentioned this Government might be—and overall I believe it is with this bill—I still think it is dangerous to do away with the discretion around the special benefit. Beneficiary advocates have lobbied hard over the last few years as I am sure the Minister is all too well aware to persuade the Ministry of Social Development to hang on to discretion and to train its staff to exercise it properly. It is a great pity that it appears we are to lose that unless other things happen first like the lifting of benefits to levels that mean there will be much less need for third-tier assistance. 
In a similar vein it is also of concern that the temporary additional support being proposed presumably by regulation also will be capped at 30 percent of the main benefit. That takes no account of the fact that the exigencies of human existence are infinite and that at times people can find themselves in extraordinarily difficult circumstances through no fault of their own. While I accept totally that the State cannot and should not ever be expected to automatically be capable of picking up all the pieces of people’s lives I believe that ideally Work and Income staff should retain the ability to make fair judgment calls based on the realities of the situation rather than being completely constrained by regulation. 
However taking a longer-term perspective the Green Party would in the end prefer to see the need for third-tier benefits done away with altogether; but that is dependent on the total reform of the welfare system a bullet Labour is not yet prepared to bite as the Budget and this bill make very clear. We look forward to the day when the Social Security Act of 1964 will be thrown out completely by a Government that is willing to start over with an income support framework based on principles of sufficiency simplicity and universality. Meanwhile it is no good getting rid of third-tier assistance while benefits are still too low for people to live on and it is no good working towards universality if what that means is basic levels are reduced to the lowest common denominator; for example limiting everyone to the rate of the unemployment benefit. I am grateful that the Labour Government has not headed down that particular path with this bill and that Labour is evidently committed to making sure no one will lose as the different stages of the legislation are gradually implemented. 
The second area I will quickly touch on is the question of how the package does and does not affect beneficiaries who do not have dependent children. Apart from increases in the accommodation supplement which will apply in a highly variable fashion according to circumstance beneficiaries in this category face an uncertain future especially with the eventual loss of the special benefit as well. For example the Wellington People’s Resource Centre believes that a single person with severe disability and low-housing costs could well end up worse off as a result of those initiatives. I would be interested in the Government’s response to that given its assurance that no one will lose out as a result of the changes announced today. 
My fear is for single beneficiaries with high needs but low living costs which is a situation for many people in this and other cities. At the same time I also recognise that the benefit system with all of its layers and its some 35 different forms of assistance continues to be used really as a way to subsidise the inadequacies of a health system that often does not treat people well or in time whether they have physical or mental health problems. The Green Party applauds the Budget gift of more money for joint operations but this does not solve the much deeper crisis embodied by the fate of tens of thousands of people on a sickness benefit or invalids benefit who are simply not well enough to work but would love to do so if they could regain their health sufficiently to be able to take on employment. 
Finally I reiterate some frustration on the part of the Green Party—and I have heard this shared by other members in the House tonight—that substantial increases in support for families will take so long to roll out. The people this bill is aimed at helping—low to medium income families—need support now not later. It would have been great if Dr Cullen could have seen his way clear to using some of his windfall to put a little more than $170 million into this package for the 2004-05 year. I know that a billion dollars or even $500 million for this year would have looked uncomfortably like a serious election bribe but in fact that is what the 30 percent of the country’s children who live in poverty need now and not later if it is to be done at all. This legislation and the family directions package are to be welcomed for the enormous step they make towards restoring a greater degree of equity in our society. I am just sorry that we could not have done it a little more quickly and with less discrimination against beneficiaries and their families. 
GERRARD ECKHOFF (ACT) 
: 
 I have seen something today that I have never seen before either in this House or outside it. I saw two grey-haired gentlemen stand up for the Government. I saw two sugar daddies. We all know what a sugar daddy is. He is somebody who accumulates wealth in order to receive favours when he dishes it out a little later. Both Dr Cullen and Steve Maharey epitomise the sugar daddies of this Government. Often members of the ACT party are criticised as people who advocate for the rich and who do not understand what it is like to be poor. I am delighted to be an advocate for the rich. I have been a beneficiary. I have been to the public trough and dined there for years. Then my colleague Mr Prebble took away my supplementary minimum prices and I was no longer a beneficiary. I had to learn to stand on my feet and do members know what happened? The farming and rural industry has thrived to the extent that this Government has not even mentioned it either in this bill or the Budget. That is what happens when people are taken out of dependency. 
Members of this Government probably will not understand that but there are some really frightening statistics that I want to touch on this evening. In 1970 27 working people supported one person on some form of Government support. That was a ratio of 27:1 in 1970. Thirty years later the ratio has gone down to four working people supporting one person who is on some form of Government support. My question this evening is: where will we be in a couple of years? Where will the ratio be? Will this Government be happy when the ratio is 1:1? 
Dr the Hon Lockwood Smith 
: Look over there. 
GERRARD ECKHOFF 
: I ask Government members to face me and answer my question. Will they be happy when the ratio is one productive person—one working person—to one beneficiary? That is the direction in which that package and this Budget are taking us. 
One thing I want to say about the Minister of Finance this evening is that he is a man of his word. I shall read to members this evening the words of the Minister of Finance in his maiden speech: “I am proud of the fact that my secondary education was not paid for by the taxpayers of New Zealand but by the farmers of Canterbury and Hawke’s Bay. I ripped them off for 5 years then and I shall get stuck into them again in the next few years.” I have to say that the honourable member has kept his word. He is getting stuck into the lucky ones who have some form of discretionary income. 
I have heard members of the Government United Future and the Greens say that they do not mind paying tax. They think it is appropriate that those on a reasonable income—a back-bencher’s or Cabinet Minister’s income—should pay tax and more tax. I invite members of the Greens United Future and the Government to open their wallets or to take their chequebooks out of their pockets or wherever and write a cheque for the consolidated account right now. If they enjoy paying tax and want to pay more nobody on this side of the House will stop them. I shall pause for a moment and look around the Government the Greens and United Future to see how many of those members are prepared to write out a cheque. I do not see any. Lianne Dalziel is writing out a cheque. How the mighty have fallen. It will bounce. I want a cheque that will work. That is one of the great problems we face in this country. 
The Government purports to understand the less well off and the poor in this country. 
Hon Richard Prebble 
: In an academic sense. 
GERRARD ECKHOFF 
: That is exactly right. Mr Prebble has stolen my thunder. The Prime Minister and Dr Cullen have studied poor people. They went to university and studied the less well off. They have read books about the poor and those who are on some form of Government assistance. That is the extent of the Government’s understanding of those at the bottom or near to the bottom of the socio-economic scale. What is so frustrating for the public of this country—and it is frustrating—is that this Government wants to patronise them forever. They do not want patronage from this Government. They want opportunity. 
Essentially this Government is robbing Peter to pay Paul—the old adage—but it even has a twist on that one. It is robbing Peter to pay Peter. It is taking money away from the earners and putting it through the Government coffers. We economists call it the churn factor or transaction costs. The Government is taking the money away from Peter churning it through the Government system taking off at least 20 percent then deciding who it will give it back to at some later stage. 
The  
Holmes 
 poll tonight showed very clearly that people have had absolutely enough. When people were asked to vote on whether this Budget did it for them 8400 said no and a mere 1800 said yes. They probably got a free phone call from the Government. But that result is quite astounding. Here we have the Government’s flagship. Today was the great launch of the Government’s flagship. This is how it is going to win the next election but 8400 were agin it and a mere 1800 were in favour. It is quite extraordinary. 
Very clearly this Government is in a desperate situation. This bill is a desperate measure driven by desperate people. The truly desperate people in this country are people like Marilynn McLachlan and Tony Gilbert who were featured in the  
Sunday Star-Times 
 a few weeks ago. They are the desperate people with four children who cannot make ends meet under 5 years of this Government. It is only a year ago that the Government said that if people earned $55000 a year then they were rich. The Government has now turned around 1 year later and said: “Oh gosh we got it wrong. I’m sorry folks. We’re going to have to take your money away from you again and give you a bit back after we filter it through our own processes. Once we take off for ourselves whatever it is we want we’ll give you a little bit back.” 
I would have thought—and I think that Mr Brown’s amendment is a good one—that it should be immediate. If the Government is so concerned about the less well off then it will be immediate. The truth is is that it will be October then April and then 2007. Such is the Government’s concern about the less well off it is saying: “Wait 2 years. Wait until after the next election and then we will give you some of your own resources back.” That is an outrageous situation. The members of the public who rang the  
Holmes 
 show this evening clearly understood the largesse of this Government. 
LARRY BALDOCK (United Future) 
: 
 I rise with pleasure on behalf of United Future to speak to the second reading of the Future Directions (Working for Families) Bill. I begin by commending the Minister Steve Maharey and many of the staff behind him who have worked very hard on this legislation and on this package which will make a difference to families in New Zealand. 
So far this debate has lacked some of the seriousness it deserves. Some members have surely made comments that they could only be joking about. As the well-known saying says: “It would be funny if it wasn’t so serious.” Families have been forgotten year after year in New Zealand. It has become harder and harder to face the costs of raising children. Our free education system has somehow become more and more expensive with uniforms camp costs school donations etc. which are things only parents know and understand about. Those costs are borne every year by parents. 
This bill is called the Future Directions (Working for Families) Bill which begs the question of who has been working for families over the past 20 years since 1984. Who has been sticking up for families in this Chamber over the last 20 years? We in United Future are very happy to know that the launching of the Families Commission which will begin to advocate for families in New Zealand is only weeks away. We can only reflect on what a difference there would have been in the last 20 years if there had been a Families Commission during the 1980s and the 1990s. We would not have had a situation developing like we do today where couples under more and more stress are waiting longer and longer to begin to have families. 
Earlier tonight the Hon Richard Prebble made the most derogatory statement I have heard for some time. He said the poor would breed more as though that were a crime. I remind him and other members of the House that the United Nations declaration in 1948 stated that every man and woman would have the right to marry and raise a family and to have an income that would be able to sustain that family. It was not a right given just to the rich. It was a right given to every man and woman in this country and in the world to raise a family and to be able to support that family. 
I am glad personally that the poor do have children. My parents were poor and I am very glad that they decided to go ahead and have children. Maybe the honourable member Richard Prebble’s parents were poor also. I do not know. But I am sure many other members in this House had very humble beginnings and we are glad that their parents had the courage to still go ahead and do one of the greatest things any couple can do in the world—that is to raise children. So many great men and women whom the world admires have been born into poor families often number 10 of 13 or number eight of 10. No one should ever talk about the poor breeding like rabbits. It is a disgusting term. I have heard the rumour that the Gilbert-McLachlan family from Waihi are ACT supporters. I cannot understand why they would be. As they look at those four great kids they are trying to raise I can only imagine how they might feel tonight knowing that the leader of ACT has said that they are breeding like rabbits. 
Hon Richard Prebble 
: No I didn’t! 
LARRY BALDOCK 
: He said that poor people would breed more because of this bill. We had better hope that this bill and the Budget today do encourage more couples to take the steps of faith they need to have children and to embark on the greatest adventure and ambition—to be parents. 
Our future as a nation is dependent upon families. During the century we now live in we will see according to demographers the world population decline. That is something many people have not yet begun to get their heads around. We in United Future are not speaking up for families because of some warm fuzzies we have about families but because it is essential to our survival as a nation and for Western democracy and our civilisation. Either we support families and spend on them so they can be strengthened or we spend more and more each year on the costs of family breakdown. We already spend $6 billion in this country on family breakdown. How can we mock spending the kind of money that is being released in this Budget to help build stronger families in this country when we know it will make a difference? 
We need families to succeed: we need wealthy families to succeed and we need poor families to succeed. When Richard Prebble is old and infirm—no one should say that that has come already—and in some private hospital somewhere and he looks out from under his blankets to see who is taking care of him it will probably be the child of some poor family whose parents had the courage to still go ahead and have children because that is the most important thing we do. In Richard Prebble’s ideology and theory that child’s parents should not have ever had kids. They should not have bred as he said so derogatively. 
United Future welcome this bill and the assistance it will provide for families. Perhaps as important as the financial assistance that this bill will give is the encouragement it may send to low and middle income families that finally someone in this place is working for families. 
They have been forgotten by the previous two Governments. It is commendable that New Zealand First the Greens United Future Labour and the Progressives are putting aside petty politics to support this; although Peter Brown disgraced himself earlier and began to engage again in petty politics by taking cheap shots at a definition of “family” that he knows makes no sense whatsoever. The only thing he should put into his mouth according to my dear mother would be some soap right now to wash it out. 
I believe that all of us—New Zealand First the Greens the Progressives and ourselves—would have recommendations to make to Labour as to how this package might be delivered differently but the point is that it is time for us to stand together for families and deliver something for them. I would have liked to see the assistance begin now not in April and October next year but at least we are beginning and that is the important thing. This is not a time to let ideology get in the way of addressing the concerns of good working families in this country. 
So United Future will be very pleased to support this legislation and we commend it to the House. As we go through the Committee stage may we give this bill the respect it deserves. 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 I raise a point of order Madam Speaker. I raise this point of order under Standing Order 106 “Misrepresentation” which states: “(1) A member who has spoken to a question may speak again to explain some material part of the member’s speech which has been misquoted misunderstood or misrepresented in the same debate.” I cannot speak in this debate because the ACT party does not have a place but I have now heard two United Future members state to the House that I made statements that poor people should not breed. In fact most of the member’s speech was devoted to that. 
I have gone back and checked my  
Hansard 
 to see whether I made any such statement. There is no such statement in the two representations I have made today and if the member wants to know exactly what I did say I replied to an interjection from Mr David Cunliffe: “I say to Mr Cunliffe the Liberal Party in Australia put forward a benefit breeding programme where the Treasurer said: ‘This is a policy that is going to encourage people to have kids.’ and what happened to that party’s popularity? It went into free fall.” I do not see how those words can be interpreted as me saying to this House that poor people should not be able to breed. 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 That is not how that Standing Order is interpreted. The member knows very well—he has been here a long time—that when he uses that Standing Order he has to quote the words that were used— 
Hon Richard Prebble 
: I just did. 
Hon Dr MICHAEL CULLEN 
: —no—and to state that those words were incorrect and not then to engage in an argument as the member did subsequently. 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 I quoted exactly from my  
Hansard 
: “I say to Mr Cunliffe the Liberal Party in Australia put forward a benefit breeding programme where the Treasurer said: ‘This is a policy that is going to encourage people to have kids.’  and what happened to that party’s popularity? It went into free fall.” I am saying to the House that nowhere in my speeches have I said what both United Future MPs have repeated to the House—that I made a statement that poor people cannot breed. I just say to the House that I come from a genuinely poor family and I find the United Future party’s attacks on me to be outrageous. 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 That member knows very well how that Standing Order has to be applied: he merely states what was claimed to be said. He then says what he said and nothing more than that. He does not engage in further argument as he has now done twice. 
Madam DEPUTY SPEAKER 
: Speaker’s ruling 35/1 states: “A member who has been misrepresented must wait until the end of the speech of the member concerned before rising to make an explanation even though the speech in which the misrepresentation is alleged to have been made has been interrupted by the adjournment on a Friday and is not concluded until after the resumption of the debate on the following Tuesday.” The point is that the misrepresentation Mr Prebble has alleged could have been dealt with in debate and should— 
Hon Richard Prebble 
: I’ve got no call left. Don’t be ridiculous! 
Hon Dr MICHAEL CULLEN (Leader of the House) 
: 
 The member raised a perfectly legitimate point of order which was to say that he was misquoted in debate. The remedy a member has under the Standing Orders is to simply rise state what the misquotation was state what the actual statement was and that is the end of the statement the member may make. He may not engage in further argument which is to engage in further debate at that point. It is sufficient to simply state what was said rather than what is claimed to have been said. That is the Standing Order and the ruling on that matter. 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 I actually agree with Dr Cullen’s interpretation of the Standing Order and that is what I believe I did. I think we can now proceed. 
HELEN DUNCAN (Labour) 
: 
 Budget day 2004 is a great day for New Zealand and particularly for New Zealand families. The Working for Families package that is at the centre of the measures announced today will make a huge difference in the lives of low to middle income workers. These people are the big winners from today’s Budget and I think that is just great. More than 60 percent of working families will be better off as a result of this Budget. Those in the $25000 to $45000 income range will be better off by up to almost $100 a week. The average increase will be $66 a week—a hugely significant increase that will make a real difference to the standard of living of these families. 
As the advertisements say: “But wait there’s more.” Increases to childcare assistance will provide an average $23 a week per child and even that is not all. Increases to the accommodation supplement will give an average $19 a week more. This money is going where it will do the most good and make a real difference. It is not going into the pockets of the well-off as tax cuts do. No this money is going to help the Kiwi battlers and to fight child poverty. If as the Prime Minister said we use the measure of 50 percent of median income as the threshold the percentage of children lifted from poverty is a staggering 70 percent. I think that is fantastic. 
The Budget helps families in other ways too. As someone who has a keen interest in education I am delighted with the wonderful improvements in the provision of early childhood education. The rates of subsidy will increase significantly and lots more families will be entitled to receive the subsidy. At least 33000 children will benefit from this provision. 
There is another improvement that will be very much appreciated by New Zealand parents. Up until now free early childhood education has been provided only through the kindergarten service. But this Labour-led Government is extending this to all community-based childcare centres. From mid-2007 all 3 and 4-year-old children will be entitled to 20 hours of free education. I know that will be appreciated by parents and I also know it will ensure that quality early childhood education and care is available for all children. That will provide a great start for those children and as research shows it will benefit them right through their educational lives. 
Of course the National-ACT Opposition does not like this bill! It does not want to help low and middle income families. It only wants to give tax cuts—tax cuts that deliver the most to those who need it least. Those members want to look after their mates on the high incomes. They do not care about hard-working low-income New Zealanders. The National-ACT Opposition also wants to cut the corporate tax rate so that overseas investors are better off and more money flows off shore. Well how sensible is that? 
I tell those members that this Labour-led Government cares about hard-working New Zealand families and we are going to look after them. The Future Directions (Working for Families) Bill is great policy and I am proud to be part of a great Government that is making a huge improvement in the lives of New Zealand families. 
I want to thank Dr Michael Cullen and the team of Ministers who have produced the best and most forward-looking Budget we have seen in New Zealand for decades. It is brilliant and I am proud to be a part of this Government. 
KATHERINE RICH (National) 
: 
 That member says this is a great day for New Zealand. Well I wonder which alternative universe she has been in over the last few hours. Obviously she did not watch  
Holmes  
where it was quite clear that most New Zealanders looked at this Budget and realised the emperor had no clothes and there was nothing in the Budget for them. Steve Maharey must be absolutely gutted. This was supposed to be the great day for the launch of the vanguard of Labour Party policy. This Budget was supposed to be the flagship of Labour Party policy and what did we have? We had had a comedy of errors. The day just has not gone Labour’s way. It started off at about 11 o’clock when at the Dunedin lock-up the representatives of the social services sector were accidentally locked up 2 hours before any of the Budget presentation. People turned up at 11 o’clock thinking that they were going to have a presentation from the Minister with all sorts of coffee tea and savouries and were told that nothing would happen until 1 o’clock. Well boy were they annoyed! The Labour Party has made itself a laughing stock by forcing some very productive people in my city to sit around and twiddle their thumbs. They said ladies and gentlemen that the savouries were not even very good either. That was 2 hours of wasted time. 
The second part of the comedy of errors was of course some of the information that was put out with the Working for Families Budget special. I want to turn to the example of Aroha and Robert. Aroha and Robert earn $37000. They have two children one aged 4 years and the other 16 years. The piece of paper I am holding states that in 2007 they will be better off by $163 a week. The problem is that the Labour Party forgot that 16-year-olds actually age over the years: that 16-year-olds actually become 19-year-olds by 2007 and are not eligible for those particular parts of the benefit. I would like to thank Mandy at the 0800 number for Working for Families who did some homework and realised the scenario was wrong. Well if that is wrong what else in there is wrong? We wonder what other misleading information is out there. I think New Zealanders can see through the Budget and that is what we have seen tonight. 
Only one in five families will benefit from this Budget and that is why we have seen only one in five people ring up the  
Holmes  
show—probably most of them from Michael Cullen’s office. The Government must be absolutely gutted. Here we have the flagship Budget—the big day when people were all going to become excited and everyone was going to love the Government and be grateful to it—and New Zealanders have seen right through it. Members on the Government side of the House thought they could flash all that cash around handing back the money taken from hard-working taxpayers and somehow supposed taxpayers would be grateful for that. That shows the arrogance of Government members. They think hard-working New Zealanders should be grateful for getting their own taxes back. That is why Don Brash called the Budget a cynical ploy and a cynical attempt to win votes. Otherwise why did the Government not do it in its first 5 years in office? And why do some of these things not come in until 2007? 
In fact the important issue today is why we are here in urgency. We are not passing any legislation that requires a change to be made overnight. We are not changing the taxation system. 
Hon Dr Michael Cullen 
: It’s about time you did some work young lady. 
KATHERINE RICH 
: I say to Dr Cullen that some of these changes do not come in until October. This urgency is all just part of the performance to give the impression that we are doing something urgent and important. It seems the only thing the Minister is worried about is that people may go out and sign up on a benefit before midnight. If we look at the people who will benefit most from this measure we see most of them are already dependent on the State. 
I say that making more New Zealanders dependent on the State is no vision for New Zealand and that making more middle-income New Zealanders reliant on the Government for a State handout is no vision for this country. Even the mother in the family from Waihi said she would prefer to have her money back in the hand than to receive a handout from the Government. That is one of the things this Government has not quite got. People want to be able to make their own spending choices not the spending choices directed by this Government. The free childcare package was launched today with much fanfare. It was bit like paid parental leave actually. The Government launched it thinking that everyone would be excited about it but there are thousands of families who will miss out. The free childcare is only available to families who go to community-based early childhood education. 
Hon Maurice Williamson 
: How many do that? 
KATHERINE RICH 
: It is about 40 percent of the early childhood education providers. Parents like choice. They like the idea that they can determine where their children will go to for early childhood education be it kindergarten Montessori a community centre or a private centre. Ideology has driven that provision. That is why the 20 hours of free childcare is not available to parents who have their children in private facilities and that is a joke. 
It is an arrogant assumption that New Zealanders will be wildly grateful to the Government. I think we have seen tonight that New Zealanders can see through this Budget. They can see it is a cruel hoax and they will not benefit from it. Four out of five families will be no better off as a result of this Budget. The Government thought those four out of five families would somehow be grateful for the benefits that will accrue to the other one out of five families. It does not work that way and New Zealanders can see it is a cruel hoax. It is income-churning at best—taking the money off families by overtaxing them for the last 5 years just to hand that money back so this Government can determine the spending decisions of New Zealanders and continue its social engineering agenda. That is what this Budget is about. This measure is not about welfare reform; there is very little in it to do with welfare reform. Where is the miraculous universal benefit that Michael Cullen has been talking about since 1990 and that Steve Maharey said would be in place by 2002? It has not happened. Every time the Social Services Committee asks about that they say they are working on it. The Budget documents today stated they are working on it. I think the Minister has worked out that it is a helluva lot more complex than he originally thought. 
The incentives announced today make welfare more attractive for some people. What we have seen today will entrench welfare dependency further in this country rather than reduce it. That is why this Budget is a cruel hoax. Future Directions goes in the wrong direction. That is why in terms of replacement legislation National has its own ideas on how to take people from welfare and put them into work and on how to support those families. National’s ideas will be far more effective than some of the trash that has been served up today. This is a cruel hoax. The  
Holmes 
 poll was a good indication of how most New Zealanders see this Budget and Dr Cullen must have been very upset to see that flat in the face on television tonight. It will be interesting to read the editorials and the letters to the editor. We will see more New Zealanders realise the emperor has no clothes. 
Hon MARK GOSCHE (Labour—Maungakiekie) 
: 
 I was hoping that somebody out there might be listening to my speech but after that performance from Ms Rich there is no show of that. People will all have turned off their radios and gone back to bed and I do not blame them for doing so. They have just heard the revisiting of the class wars: the rich versus the poor. National Party members will abdicate responsibility and will all resign and let Paul Holmes run the country by telephone poll. That would be a lot cheaper than having those members over there on the Opposition benches being paid for doing nothing. So it is probably not a bad idea for them to rely on the  
Holmes 
 poll to come up with their policies. There was not one idea in the 10 long minutes of that speech on the bill from the Opposition spokesperson on social welfare. At least we know what the ACT party believes in. At least we can argue with its members about what is better for people based on ACT’s policy of a 20c in the dollar flat taxation rate. But with National we have a leader who— 
Hon Dr Michael Cullen 
: 11percent for that family in Waihi. 
Hon MARK GOSCHE 
: It would be 11 percent. Well that would pay for a lot of health services! People would not have to worry about getting their hips and their knees replaced. They would never get anything replaced under a National Government with an 11 percent taxation rate to give to the family in Waihi what this Government has given it. 
It is no wonder Don Brash is scratching his head and trying to figure out what to do. He has already committed the National Party to a policy of no tax cuts—none at all. The National Party says it will look after low to middle income workers but it does not have any policy that could be described as saying how it will do that. At least ACT says that on a 20c in the dollar flat taxation rate that family in Waihi would be $39 a week better off. The ACT party will go out there and sell that. Its members will say if people vote for ACT it will give them $39 a week. ACT will tell people not to vote for Labour because the miserable people in Labour will give them $150 a week which they do not need. ACT will say it is much better to have no health services and no education services and to be given 39 bucks for that as against the Labour - Progressive Coalition Government’s giving people $150. ACT will have to take another  
Holmes 
 poll on that one to see whether it has it right. Maybe ACT will figure out that it is wrong but we do not know that. 
Maurice Williamson will tell all the people in his electorate he is opposed to people getting $150 a week. He will tell them he knows what is best for them and they should not receive more for their accommodation supplement. Maurice Williamson will give them nothing. If people vote for Maurice Williamson he will give them nothing. But he will tell people not to dare to vote for the Labour - Progressive Coalition Government’s Budget. The National Party talks about ideology. Talk about dumb! National members are going to vote against this bill on the basis of ideology because it gives workers families and children over $50 a week when they are promising them nothing and ACT is promising them 39 bucks a week. I do not think I have to speak any more because those people over there on the Opposition benches have said it all for us. 
LINDSAY TISCH (Junior Whip—National) 
: 
 I seek leave for the eleventh call in this debate to be split between New Zealand First and National with National having the first call. 
Madam DEPUTY SPEAKER 
: Leave is sought for that. Is there any objection? There is not. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 Let me first make it very clear that National cares deeply about low to middle income working families. And let me point out how much Dr Cullen and Labour care about them because the families who are most disadvantaged in New Zealand at the moment are those where there is a couple with one person working on say $10 an hour. After that person has worked for 8 hours in order to get another dollar in the pocket at the moment he or she has to work 49 hours a week. Now has Labour done anything tonight to fix that problem? Labour is to do something in 2006 to help that family. But if Dr Cullen and Labour cared at all about low-income families they would do something tonight to help that family. How is it right for a family after 8 hours’ work at $10 an hour to earn a certain amount of money and not to earn another dollar till the income earner has worked 49 hours a week? The Government is changing the abatement rate. This bill does change that rate but when does it do that? It does it— 
Hon Maurice Williamson 
: Midnight tonight. 
Dr the Hon LOCKWOOD SMITH 
: Not midnight tonight. When is the Government to help that low-income family? In the explanatory note of the bill it states that it will be on 1 April 2006. 
What the arrogant Dr Cullen does not seem to understand is that there are other ways of helping low to middle income families. This is the most stupid way to do so because it turns tens of thousands more hard-working New Zealand families into beneficiaries. That is what is so wrong with this bill. Dr Cullen sits there and says the only way National would do that is by changing the taxation rates which would cost billions and give tax breaks to people who do not need them. All I can say to people like Steve Maharey and Dr Cullen is that they should think a bit more about how they could be innovative regarding taxation. They are clearly so arrogant they have not thought the thing through. There are other ways of delivering support for low to middle income people but to tax them then give money back to them and expect them to think that is great is just stupidity. Yet that is what Labour is doing. It is taxing people more because with bracket-creep low to middle income earners are paying more and more in tax. With all the new taxes that Labour has introduced people are paying more and more in tax and the Government instead of reducing tax says that it will pay that money back. It has even changed the name from tax credit to “in-work payment” or something. I cannot believe that Labour thinks the people of New Zealand will buy that one—that on one hand they are taxed more and then on the other hand a couple of years later they are given a little bit of that money back. The Government wonders why it is that on the  
Holmes 
 show four out of five people do not like it and only one in five says it makes sense. 
The disgrace of what Labour is doing in this measure is that there are low to middle income families that are hurting. They are hurting right now and hurting very much. But the disgraceful thing about this legislation is that the families that are hurting the most will not be helped for a couple of years. That is the disgraceful thing because the abatement arrangements hurt people who are trying to get off benefits the most. That is because of the way the benefit abatement interacts with the family support tax credit and Labour is not changing that till 1 April 2006. That is a disgrace! It shows the Government does not care about the families who are hurting the most. It is throwing out a couple of little crumbs from 1 April next year but is doing nothing serious to help those families until 2006. It is no wonder people are not supporting this legislation tonight. 
Sitting suspended from 10 p.m. to 9 a.m. (Friday)