Cunliffe David: Taxation (Income-sharing Tax Credit) Bill — First Reading 
Cunliffe David: Taxation (Income-sharing Tax Credit) Bill — First Reading 
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Hon DAVID CUNLIFFE (Labour—New Lynn) 
: 
 I rise to take a call on behalf of the Labour Opposition on the first reading of the Taxation (Income-sharing Tax Credit) Bill. I will take this opportunity to recognise and acknowledge the effort that the Minister of Revenue the Hon Peter Dunne who has just resumed his seat has put into this issue over a number of years. The consultation on this issue was first undertaken under the previous Labour-led Government and it has to be acknowledged that this has been a passion of the Minister over a good part of his parliamentary career. 
I think it fitting that the House acknowledge that the intentions of this bill are good. Certainly I would not demur from the Minister’s statement that the raising of children is the most important function that any of us could undertake. I say further that the pressures upon families in our country at the moment are intense. They are intense because New Zealand has found itself caught in the grip of a world recession which it is struggling to emerge out of and many of our families have seen their principal income earner face enormous challenge and wage restraint. Jobs have been lost there are 160000 unemployed and only today we learnt that the latest GDP growth figures were only one-quarter of those forecast by the Reserve Bank. Growth is collapsing. Our economy is in trouble and our families are in trouble so no New Zealander would demur from the idea that it would be a wonderful thing if we could give some relief. That is why we will be making announcements over the next week that will contribute to that goal. It is no surprise that in the consultation undertaken on this bill 90 percent of respondents thought it would be a wonderful idea to receive a $500 million tax windfall. What I want to know is who the 10 percent are who did not want it. 
Amy Adams 
: The childless. 
Hon DAVID CUNLIFFE 
: Perhaps it was the childless but one can hardly be surprised that people were enamoured of the idea of receiving free money. But in all seriousness this I guess is where we part company with the Minister. 
If one is concerned about addressing the issue of child poverty in New Zealand—which is where this is fundamentally headed—then the Labour Party believes there are much much better ways to achieve that goal. Indeed we are working on breakthrough policy in that area in order to bring it to the New Zealand public at the 2011 election. Certainly there are better ways to provide flexibility for families and partnerships as to how they structure childcare. It was Labour that brought in paid parental leave and it may be possible for us to look at making extensions to the current level of paid parental leave. I commend my colleague Sue Moroney for her work in that regard and for her development of a member’s bill in pursuit of that idea. It may also be possible for us to extend the 20 hours’ free early childhood education allowance that the previous Labour-led Government brought to New Zealanders. Both those measures would be done at significantly less fiscal cost than the $500 million price tag of the measure that is contained in this bill. Most important either of those measures or thirdly a restructuring of the tax and benefits structure around the lowest-income New Zealanders including beneficiaries would achieve better health and social well-being outcomes at a lower fiscal cost than this bill proposes. 
I have to take issue with the Minister when he said that any measure that affected the taxation of families would have a similar result which is that the more one earns the more one gains from the tax change. This is capped so that the benefit of the tax splitting—and I do not think it is particularly appropriate that we use the word “sharing” because that is a kind of “touchy-feely” spin-filled word; it is actually income tax splitting—goes up to a threshold of $140000 a year. The effect of that is that the closer one is to the $140000 threshold the more tax remission one gets. But the needs of the children are greater the lesser the income one gets. That is perverse. It is the children of the poorest who are struggling the most yet this tax benefit goes mainly to the children of the middle class. They may be the Minister’s constituency but they are not the area of greatest social need. 
The next problem is one of design. This is a cumulative effect. It comes on top of two previous sets of tax changes that already favour the upper middle class. Firstly we had the reduction by the incoming National Government with indecent haste of the 39c tax rate to 38c. That was a windfall to upper-income earners including—to be fair to the Minister—people earning over $140000 and in Budget 2010 we have seen the reduction of that income tax rate extended all the way to 33c. Although there may be some design advantages in equating it with the trust tax rate it cannot be removed that this again is a windfall to the top income earners. In fact a full third of the tax remission goes to the top 5 percent of income earners. I will say that again: a third of the tax remission goes to the top 5 percent of income earners in the Government’s plan. 
Hon Dr Nick Smith 
: What about the GST? 
Hon DAVID CUNLIFFE 
: The member raises the subject of GST. Well here we go again because I am bound to remind the House and the New Zealand public that if the Government was so convinced that there was a net benefit to ordinary New Zealanders after the tax switch and after inflation then it would have had the moral courage to put the inflation impact in its online tax calculator. But did it? No it did not. What did the Budget documents tell New Zealanders about the net impact of the tax switch and inflation? Well there is one number: 5.9 percent inflation next year—and with that figure it takes until 2014 two elections away for an average or minimum wage earner to break even. Well that will be joyfully received in the hills and dales of Remuera but it will not be so well received in my electorate of New Lynn nor I would say even in the Minister’s electorate of Ohariu. 
Paul Quinn 
: What about in your household at St Marys Bay? 
Hon DAVID CUNLIFFE 
: My very proud electorate of New Lynn I say to Mr Quinn I am very happy to say has returned me to Parliament for three consecutive terms and I am now enjoying a fourth term. So it cannot be random can it I say to Mr Quinn. Something must be happening out there in order for the good people of New Lynn to do that. In fact Mr Joyce is rushing to New Lynn tomorrow as it happens to celebrate the opening of the railway station that Labour paid for. How tremendous it is for him to grace us with his presence to kiss the babies cut the ribbon and open the railway station. All the hard work was done by Michael Cullen along with if I might add this the dutiful efforts of the MP for New Lynn. Merry Christmas New Lynn. There is $300 million worth of first-class infrastructure brought to the area by the previous Labour-led Government and how very nice it is of Steven Joyce to come and celebrate with us in our humble community. We shall roll out the red carpet for him; he can be assured of that. 
I come back to the bill. I acknowledge the Hon Peter Dunne who is one of the longest-serving members of this House. I believe that he is a member who has his heart in the right place. We do not demur from the intent of this bill and we do not demur from the idea that every Kiwi child needs to be given a helping hand and a fair start. But if we had $500 million to spend in pursuit of that aim we would not spend it on the provisions in this legislation. Nor would we do that following the two consecutive tax changes in two consecutive Budgets that have already delivered a windfall to the upper end of taxpayers and unfortunately that is what this bill does up to the point of $140000 a year. The returns increase up to that point and then flatten off. Labour will be bringing forward to the public of New Zealand policies that are better designed more far-reaching and have more impact on the position of the children of the poor. Labour will bring to the electorate a new opportunity for every Kiwi child to get ahead for every Kiwi family to have the pressure reduced and for those who have had it the toughest the relief will be most tangible. Thank you.