Prebble Richard: Future Directions (Working for Families) Bill — Second Reading Instruction to Committee In Committee Procedure 
Prebble Richard: Future Directions (Working for Families) Bill — Second Reading Instruction to Committee In Committee Procedure 
[Volume:617;Page:13511] 
Hon RICHARD PREBBLE (Leader—ACT) 
: 
 As a number of members have criticised contributions I have made I want to speak to the Budget. Firstly I say to Mr Paul Adams that he was a better motorcar driver than he is a parliamentary speaker because he has actually given a very good argument against the Budget. He is absolutely right: this Budget will lead people into dependency. 
I want to pick up on a point made by Dr Cullen who I see is now the Minister in the chair. He said that as a result of the changes in Part 2 the incentives will be there for people to move off dependency and into work and that this Budget will achieve that. Well last week I gave an example to the House of a family on $50000 a year deciding they would like to have more free time and reduce their income by half—to $25000 a year. In gross terms that is a 50 percent split from $50000 to $25000; but if we look at what it means to that family right now as a result of Government subsidies and the like we see that the $50000 family moves to an income of $742 a week. However the $25000 family does not move to an income that is half of that; it moves to an income of $609 a week as a result of the various incentives it gets. So does this Budget actually restore the incentive for that family with two children to remain on an income of $50000 a year? No it does not. 
It is true that as a result of this Budget families with two children will eventually—in April 2006—have a weekly income of $839. That has gone from a gross income of $962 because they will still have to pay tax but they will get some money back in the credits and end up with $839 a week. But if they halve their income if they decide to take half of their time off do they end up with their income being halved? No they do not. Their gross income is $487 and through these subsidies it increases to $746. So they are only $91 a week poorer by working half the amount of time. 
When we look at this Budget and the logic of it we see that people who have two kids and earn $50000 ought to halve their income and the amount of work they do because the Government will give them so much in the way of subsidies as a result of their reduced income that in real terms 20 hours a week becomes worth a heck of a lot more than $91 bucks. I tell Dr Cullen that that is the problem with this Budget. That is the reality. People will look at this Budget and realise that it is saying to them: “The Government wants you to have a low income. The more you lower your income the more money you will get from the Government.” That is what should be upsetting Paul Adams and United Future because although they identify that this is a bit of a trap they say they will vote for the bill. That is what is wrong with these tax credits. 
Politically this Budget will work against the Government. I will explain that to Dr Cullen because this is not the first time I have seen this sort of Labour Budget. I pulled out some comments that were made about David Caygill’s Budget in 1989. People described it as a “Michael Joseph Savage Budget”. Did it work? No it did not. This Budget will not work either because firstly most people on benefits do not intend to stay on them—they will not give the Government any thanks for this Budget—and secondly people do not intend to stay on low incomes for the next 2 years so they can take advantage of all these handouts. Some people might end up still being on low incomes but if we are talking about their intentions they will be against this. 
Of course as has been pointed out the majority of working families get nothing from this Budget and the vast majority of New Zealanders get nothing. I have given one example but I would like to talk about what is really wrong with this Budget.