Smith NickHon Dr NICK SMITH (National—Nelson): Thank you Madam Chair Tolley. I want to ask the Minister in the chair Carmel Sepuloni whether she thinks it's good public policy for people to be worse off as a consequence of getting a pay increase or working harder. I want to draw her attention to the regulatory impact assessment and it says this: The introduction of Best Start and its abatement at 21% will increase disincentives to work for a group of families … [it] means that some families receiving Best Start [will] face an effective marginal tax rate of over 100 percent."Hon Members: What?Hon Dr NICK SMITH: Of over 100 percent. Now in my constituency office so often I meet with New Zealanders. They work in fish factories they work in the fruit industry in Nelson and they come to see you as a constituency MP frustrated by the complexity of Working for Families the accommodation supplement and the tax system which is made worse and more complicated by this bill. But the part that they just find unfathomable is that they go work an extra five hours a week and then they find out they're worse off. We are setting up a situation where when the boss comes along to a worker and says "Look you're doing a great job. I'm going to give you another $5000 a year or another $100 a week."  and—Hon Andrew Little: Oh yeah? Which boss is that?Hon Dr NICK SMITH: —the worker Andrew Little is going to say "No please don't increase my wage. I'm going to be worse off." Really? Is that what we somehow believe in this Parliament is going to make us a—[Interruption] What is the member's objection? Does the member think that's a good thing? Well what happens if the boss comes along and says "Would you like to take some extra responsibility and earn another $3000 a year?" What this bill's going to do is actually mean that a worker will say "No the Government's going to take more money off me than what that pay increase will provide for me."I just remind the Parliament of the journey New Zealand's been over. Remember the debates where actually members opposite in the Labour Party said that an economy would never grow when you are having the marginal tax rate of 66c in the dollar that once existed in our income tax rates? Yet what we are doing with this bill is exactly that for a whole lot of middle-income families. These are families where the combination of the average person on an average wage is going face a higher tax rate. They're going to face a higher abatement rate for their Working for Families and now with Best Start we're going to make people worse off when they earn more as a consequence of an abatement and tax combination that is more than 100 percent. Why does it matter? Because this Parliament can spend weeks—months—arguing about how we should divide up the cake and how much individual groups should get and that's a zero-sum game. What this Parliament should be focused on is how we grow the cake how we provide the incentives so that all New Zealanders can grow and be better off. So I want to know from the Minister in the chair why on earth this Parliament would want to pass changes in tax and entitlements that have abatement regimes of over 100 percent where people are going to be worse off as a consequence of increasing their earnings. There is only one outcome from this I say to members opposite and that is that people do what is absolutely logical: not earn not work not contribute not grow the economy—Hon Andrew Little: There's the National Party right there.Hon Dr NICK SMITH: —and we are all poorer as a consequence. I challenge Mr Little who's interjecting: please explain to me how with what Treasury says about the part of this bill where we are going to get marginal rates of tax of over 100 percent we can possibly defend that as sensible policy for New Zealanders. I'm just not looking forward at all to my regular session with constituents when people come to me and say to me "I've got a pay increase. I'm worse off. How can that be?" I just want the Minister or a member opposite to explain the logic of why on earth we'd want to do that."