Key John: Budget Debate 
Key John: Budget Debate 
[Volume:618;Page:13562] 
JOHN KEY 
: No that response came days later and he really had to think about that one. The response was: “That was a bizarre and unusual set of circumstances.” He said that a family earning between $38000 and $70000 with two or three children is a bizarre and unusual set of circumstances. Even Sean Plunket was lost for words at that one. When I managed to point out to Mr Maharey that there are actually lots of families in New Zealand with two or three children and that about 80 percent of them earn between $38000 and $70000 he was absolutely lost for words. His next response reported in the newspaper was “So what.” It does not matter whether 90c or 100c in every dollar is given away it will not do anything. 
The Prime Minister said that people would act irrationally. It does not matter that they will lose every dollar of their overtime. It does not matter that people will not bother to retrain to get a higher job. It does not matter that it will not be worth people’s while to take on extra responsibilities in their work or that maybe their spouse or partner will get a part-time job. The Prime Minister told us that the people in that group would act irrationally and just ignore those things. 
Well let us consider that just for a moment because it is exactly the position that beneficiary families in New Zealand faced some years earlier and it was for a very small part of their income. What was the behavioural outcome? The behavioural outcome was that they did not move from welfare to work; they stayed on welfare. We know that the Government recognised that the problem was so severe that it was the aspect of the Budget that it actually changed. The Government recognised that in the beneficiary community of New Zealand where there were effective marginal tax rates of about 90 percent it was a huge disincentive for people to move from welfare to working but somehow the Prime Minister wants us to believe that working families that earn between $38000 and $70000 and have two or three children will act irrationally. The people who are acting irrationally in this situation are not the working families of New Zealand it is the Prime Minister the Minister of Finance and the Minister of Social Development and Employment who think that New Zealanders will not recognise that situation. 
This was one of the most poorly devised Budgets in New Zealand history. It is true that a lot of people were facing this situation earlier but it was for a small amount of their income not a large amount. In many instances it was a situation that could have been addressed with a well-thought-out Budget but that was not the case. 
I want to talk about two other aspects of the Budget that are important. The first is the area of childcare and childcare assistance. I ask members to think about a particular situation. As a result of the Budget in certain instances the subsidy payment was increased to certain working families in New Zealand. That meant that if the childcare subsidy was $3 an hour and a family was paying $8 an hour—a $5 difference—that has now gone to $4 and the gap has narrowed. What is the likely response to increasing the subsidy? I will tell New Zealanders what will happen. The providers of those services will increase their prices. Exactly the same problem will happen with the accommodation supplement in many cases. A lot of that benefit will not stick with the working families and the families in need it will move to the landlords and to the people providing the accommodation. 
A lot of the Budget has been taken up by the very poorly designed Working for Families package. The package has now been orphaned by the Minister of Finance. He no longer cares or wishes to discuss it because it has a design fault similar to some of those buildings one sees in London. He did not bother to talk too much about the fact that $7.2 billion worth of increased expenditure will take place in our State sector. There will be $7.2 billion worth of bloating in our civil service but will we get a better return? If we are going to get a better return why has the Minister of Finance written to the Minister of Health to ask her why despite the fact that billions of extra dollars have been put into health fewer operations are happening in New Zealand today than when the funding was so much lower? The solution is not more money all the time the solution is often more efficient government. The solution is having the right controls. The solution is making the Government care about the way it spends money—the way that hard-working New Zealanders are expected to care. This is an overtaxing Government that takes a lot of money off households. The Government does not want to tighten its belt but every other New Zealander must.