Russell Deborah; Menéndez March Ricardo; Watts SimonHon Dr DEBORAH RUSSELL (Labour): Oh thank you Madam Chair. I want to revert to something that my colleague the Hon Ginny Andersen was discussing and take the question a step further. Now in her call the Hon Ginny Andersen was talking about the interaction of the minimum family tax credit the in-work tax credit paid work all the sorts of sources of income and tax credits that people interact with and she was concerned that people wouldn't know what their entitlements were. I realise from my previous time in a similar role to the Minister in the chair Simon Watts—that often people who are getting minimum family tax credit and sort of wavering between benefit and paid work they do go through complex calculations. One of the standard ways they work out whether or not to take on those extra few hours of work is that they ring up Inland Revenue and they ask questions of the call centre and they go through that whole process of engaging with Inland Revenue directly in order to ascertain what their entitlements are.So given these changes to tax thresholds the in-work tax credit the minimum family tax credit and so on which are really quite complicated and what we anticipate will be the number of people who really don't understand what they're going to get my first question in this regard is to what extent the Minister has as a matter of prudence I guess ensured that Inland Revenue is resourced—I do have another question Minister; just hold your fire—in order to handle all those incoming queries. Now obviously there's the tax calculator on the website but that probably won't work for the people who we're talking about who are making that very marginal decision about whether to take on more work or to continue as they were and so on. So there will be some pretty complicated stuff going on in that regard. So just a resourcing question there.There is another point here that I do wish to consider and it's one that we were working on when we were in Government and I'm sure the current Government is continuing to work on and that's the people who end up in debt to Inland Revenue—sometimes to the Ministry of Social Development (MSD)—because they've gotten their numbers wrong or they don't understand the complexity of the law. So they get too much of a tax credit—their Working for Families tax credits get overpaid and they end up in debt. Now some of the time this is pretty easily sorted with the end-of-the-year tax calculation and so on but again for these families who are in a pretty marginal state who are on pretty low incomes then getting too much Working for Families tax credits creates a problem for them because they then have to start paying it back on an already marginal income.Now the standard strategy for a lot of families is just to when they're claiming those tax credits overstate their income and that means that they get a lower tax credit during the year and they get the difference sorted out at year end. It's a good strategy I know particularly for lots of families where their income is earned from a business or something where the flow is a little bit uncertain and it gets sorted out that way. But these families who are really marginal they actually want their tax credit as they go. They need that money on a week-by-week basis so they are actually more vulnerable to falling into debt if they don't get those tax credits right.So again it comes down to a resourcing issue for the Inland Revenue Department and do they have people on hand to help with that? But also has the Minister given any consideration to ensuring that families don't end up in debt to Inland Revenue to MSD as a respect of getting the tax credits wrong? And is there any ongoing work in that regard to ensure that when these tax credits and the tax threshold changes flow through to people they get the right amount and not more than the right amount so that they don't end up in debt which then just creates a further burden for them?RICARDO MENÉNDEZ MARCH (Green): Thank you so much Madam Chair. I wanted to expand on and bring some lines of question on clause 27 in relationship to the increase of the in-work tax credit. I particularly wanted to focus on whether the Minister has sought any advice from the Ministry of Social Development particularly around whether the increase to the in-work tax credit would widen the wealth and income gap between those in work and those out of work. I wanted to particularly I guess get an analysis from the Minister about whether there's any concerns that that increased income gap between those on the benefit and those in employment would have negative impacts. I mean the regulatory impact statement (RIS) on the in-work tax credit changes talks about how the effectiveness of this tax credit has diminished over time particularly when it comes to people being able to take up and stay in employment.I wanted to ask whether the Minister knows where that assertion had come from and whether there was any research around the effectiveness of the in-work tax credit at all in its effectiveness to support people into employment because I mean one thing is to have a value statement and an assumption that if you have this tax credit people will take up employment; the other one is actually having that based on any substantive research. So that's my second question: what research has the Minister seen that substantiates the statement in the RIS that the in-work tax credit supports people into employment?We've talked about how the in-work tax credit is seen as make-work pay but that takes me to my third question which is whether he considers caregiving as work and labour that actually deserves to be remunerated as such. Right now the way that the in-work tax credit is laid out completely ignores caregiving responsibilities that sit outside of employment relations. So my third question is whether he has a view on whether caregiving is work; if not why not? At the moment that line of work which the Greens do consider to be work that is currently undervalued and under-resourced fails to be acknowledged in the in-work tax credit. So when we're thinking about for example caregivers parents people who support disabled people—they're not eligible for this payment. They don't benefit from the increase in this payment and those who may be receiving a benefit for example to do that work which the Government doesn't officially consider work will continue falling behind compared to those who will benefit from the in-work tax credit.The other question that I had—and I wanted to pick up on where my colleague Francisco Hernandez took over from—was whether he actually had any information around the people who will have an increased effective marginal tax rate as a result of the changes outlined in Part 3 and whether he could give us or whether he even received a breakdown on who these people are. I think it's one thing to have in the regulatory impact statement a kind of broad assertion about how some people will have a higher effective marginal tax rate but as I said I'm starting to get really concerned around the robustness of the work the Government undertook to put forward these tax cuts the inability for the Government to actually give us a population breakdown on how these changes will benefit or widen issues that already exist.So to recap I'm interested in whether he's received any advice around what the gap will be between those out of work which includes many disabled people and those who will receive the increase in the in-work tax credit; whether he's engaged with the Minister for Social Investment in this; a breakdown in the population groups who will have a higher effective marginal tax rate as a result of these changes; and whether the Government and whether the Minister himself considers caregiving to be work and if not why not? So far these changes will widen the gap from those who have primarily caregiving responsibilities as opposed to those that are in paid employment.Hon SIMON WATTS (Minister of Revenue): Just in response to the member's question I mean Part 3 is a very tight section but I will provide a little bit of context outside of that just to elaborate. So as part of this process Inland Revenue and officials have engaged extensively with the Ministry of Social Development throughout in regards to the interaction with this point. The point of this payment is to incentivise people to leave the benefit and get into work and I think that's a pretty sensible objective. The reality is—and the member may want to reflect on why this was the case—that this has not changed or been adjusted since Budget 2015. So what we're in effect doing is making a change to reflect that implication to incentivise moving from benefit to work and provide that benefit to nearly 160000 households. That is good news and should be something that should be celebrated. So I'm looking forward for the member to support this aspect.