Benson-Pope David: General Debate 
Benson-Pope David: General Debate 
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Hon DAVID BENSON-POPE (Minister for Social Development and Employment) 
: 
 I am delighted to have the opportunity today to talk about Labour once again delivering on its promise to people in New Zealand. The Working for Families package is delivering targeted tax credits to Kiwi families to help them raise their children. Almost three in every four New Zealand families with dependent children will be entitled to family assistance tax credits from 1 April this year. Not many New Zealanders will think that is anything but fantastic news. It is just plain dishonest for anyone including the Opposition to suggest that those families are getting welfare or becoming beneficiaries. 
Ninety-nine percent of that $1.6 billion package is being delivered to families by way of the tax system. Families will access their tax credits from the Inland Revenue Department which will calculate and pay their entitlements. At the last election Labour put it to the electorate that by targeting families through the tax system we have the best chance of helping Kiwis create strong families and healthy confident young people. The electorate agreed and on 1 April Labour will deliver in spades. 
Let us take the example of a couple earning the average income for families with dependent children because that gives a pretty good idea of the amount of tax relief the average New Zealand working family can expect from 1 April. A family with two teenaged children aged 11 and 16 that earns $67000 a year and pays $350 a week on its mortgage will from 1 April 2006 get an extra $68 a week in the hand from the family assistance tax credits. From 1 April 2007 that amount will increase by another $20 a week to $88 a week when family assistance increases again. 
The good news gets even better. Almost all families with children that earn less than $70000 a year will become eligible for family tax relief. Many families earning between $70000 and $100000 will also be eligible. Around 85000 more families will become eligible from 1 April this year as a result of this tax relief package. 
In total 350000 families will be receiving family tax relief in 2006—because Labour wants all New Zealanders to have a stake in the future. Working for Families is the most effective way to target and support our New Zealand families and their children. It also reflects a common approach internationally. Supporting families and children via tax credits is a widespread approach in the OECD. Australia’s annual spend on family tax credits is $15 billion and 82 percent of Australian families with dependent children are supported in this way by their Government. 
New Zealand tax credit income limits are now comparable with Australia’s. Families are eligible for the family tax benefit up to a combined family income of around A$90000 depending on the age and the number of children. For a New Zealand family with three children that amount is up to $93760. The UK also operates a system of tax credits that is very similar to ours. It provides assistance to help beneficiaries and working families with the cost of raising children through a child tax credit which is similar to New Zealand’s family support. Around 85 percent of families are eligible for that assistance. 
We can contrast this system with across-the-board tax cuts which deliver the highest gains to people with the highest incomes regardless of whether they have children. Tellingly it is lower and middle income families who get much much less from a tax cut. Targeting through the tax system is fairer and more cost-effective than having general tax cuts because it ensures that families with the greatest need get the most support. That is why the Government has invested in a 3-year communications campaign to make very sure that newly eligible families know their eligibility and know how to pick up their entitlements. 
In addition to helping working families through targeted tax credits the Government is also improving the incentive for families to find work and to stay in work. Under Working for Families a new in-work payment will be introduced to provide more support to working families with dependent children to make work pay and to make it more worthwhile for unemployed families to move into work. This means that rather than making more New Zealanders beneficiaries the Working for Families package has by design set out to contribute to fewer families being reliant on community support. 
To work out how much tax relief a person is entitled to is easy and people can check by visiting the calculator on the Inland Revenue Department website or simply by ringing 0800 257 477. The Working for Families package is delivering targeted tax credits to Kiwi families in order to help them raise their children. Labour once again has delivered on its promise.