Roy Heather: Questions for Oral Answer — Questions to Ministers Question No. 3 to Minister 
Roy Heather: Questions for Oral Answer — Questions to Ministers Question No. 3 to Minister 
[Volume:617;Page:13319] 
11.  
HEATHER ROY (ACT) 
 to the  
Minister of Finance 
: Following his reply to written questions Nos 6532 and 6535 does he believe it fair that a hard-working family earning $50000 a year is less than $7000 a year better off than a family earning $25000 a year and will his Budget widen or narrow this gap? 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I do not accept the implication in the question that a family earning $50000 a year is hard-working but that a family earning $25000 a year is not. From the Government’s perspective both are hard-working families both are supporting two children and both will gain significantly from the Budget. Details will be released tomorrow. 
Heather Roy 
: When thinking of those two families—one on $25000; the other on $50000—what is fair about the 72 percent effective tax rate that the higher-earning family pays on its extra $25000; and when will the Minister act to address that unfairness? 
Hon Dr MICHAEL CULLEN 
: The first principle the Government follows is to try to ensure that people have an adequate level of income and that there are also adequate incentives for being in employment. The high disincentives created by the bleeding out of assistance mechanisms is a consequence of the present scheme of family support which was designed by ACT’s founder Roger Douglas. 
Sue Bradford 
: Does the Minister believe it is fair to discriminate against children whose parents are on the same or a similar income just because one set of parents is on a benefit or on accident compensation and will he remove that discrimination in the Budget package tomorrow? 
Hon Dr MICHAEL CULLEN 
: The member will have to wait until tomorrow to get the details of the Budget package. She will realise that the present child tax credit is $15 per child. There are some families with as many as 10 or 11 children. It would be very difficult to remove that measure entirely without making a lot of families very much worse off. 
Hon Richard Prebble 
: Will the Minister clarify his remarks regarding “hard-working” families because what incentive is there for families with two children to earn $50000 a year—that is a take-home pay of $38584 after tax—when if they halved their hours of work to bring their income down to $25000 a year those families would be topped up by the Government to a take-home pay of $31668 which is just $6916 different from that earned by working twice as many hours; and how will his Future Directions package address the unfairness of that situation? 
Hon Dr MICHAEL CULLEN 
: Fairness is always in the eye of the beholder. I point out to the member that people who want to deliberately reduce their income by lowering their net income to only about $600 a week to support a family with two children probably have rather different standards of living from those that he has and I have. 
Sue Bradford 
: Does the Minister agree that providing family support family assistance and the accommodation supplement is a major form of Government subsidy to New Zealand business that is conveniently forgotten when submissions are made on things like employment relations law; and what is his Government’s approach to the old idea that there should be at least some employer responsibility to pay wages at a level sufficient to support a family? 
Hon Dr MICHAEL CULLEN 
: I think that by and large it is really impossible to expect employers to pay people more because of their family responsibilities. It does have to be the responsibility of the State to address the levels of income adequacy in that respect. The family on $25000 a year—which is under $500 a week—ends up with a net income in excess of $600 a week in the situation described by the member because of the family assistance and accommodation supplement provisions. I make no apology for that fact or for the fact that such families will make significant gains out of the Budget package tomorrow.