Roy Heather: Motions — Family Support Tax Credit—Increase 
Roy Heather: Motions — Family Support Tax Credit—Increase 
[Volume:638;Page:8339] 
HEATHER ROY (Deputy Leader—ACT) 
: 
 I rise on behalf of the ACT party to speak on this motion. Mr Tim Groser who has just taken his seat is absolutely right when he says this is an extraordinary motion. The timing of this motion is absolutely no coincidence. There is very little if anything of any consequence on the Order Paper. The Government is presented with a runaway public debate that Labour finds itself completely on the wrong side of. Today’s debate on family tax credits is just another attempt to distract Kiwis from the unpopular and undemocratic anti-smacking debate which has Labour in real trouble with families and with some of its own caucus. This is an attempt by the Labour Government to say it cares about families. Many people could be forgiven for saying: “Yeah right!”. This minority Labour Government says that it cares about families that we should not let anyone smack their children and that it knows best how to raise children. Labour says it knows what is best for families so people should just listen to it. 
Why has this motion come before the House today? It is because the minority Labour Government is in real trouble with Kiwi families. Helen Clark has lost her gamble of pushing through the unpopular anti-smacking bill under urgency. Her response and that of the rest of the Labour Government—those members who are chipping away across the other side of the Chamber with nothing valuable to do except to hit hit hit other members of this House—is to try to buy off voters with their own money. Today’s debate in Parliament on this motion is just a cynical reaction to a poll-driven crisis. 
 A fair Government would let all workers keep more of what they earn. But this Government plays at being Robin Hood while taking so much of what Kiwis earn that it would make the Sheriff of Nottingham blush. All Kiwis should pay less tax; that is what they want. A low flat-tax rate would let people keep what they earn and let them take control over their own decisions. 
I have a number of points to make about this motion and I will go through them one by one. Firstly ACT believes that lower flat taxes are the only fair form of taxation. Mr Benson-Pope spoke in this House earlier and said the National Party is the only party that supports a flat-tax rate. Actually he was wrong; he forgot to do his homework before he came here. The National Party—quite rightly—did want to lower tax rates at the last election and I believe it still does want to do so but it was the ACT party that wanted a flat-tax rate. So Mr Benson-Pope should do his homework next time before he comes down to debate in this House. People should be able to keep what they earn and to take control of their own decisions. 
Secondly I say incentives matter to people. Incentives make a difference to the way people behave so we need to get marginal tax rates down. High marginal tax rates discourage entrepreneurship they discourage savings and they discourage investment in work. 
Dr the Hon Lockwood Smith 
: Labour doesn’t understand that. 
HEATHER ROY 
: That is right. It is way over the heads of those people over there. They do not understand that which is why we have this ridiculous motion here today. High marginal tax rates encourage tax avoidance and tax evasion and we should not forget that. A taxpayer’s marginal tax rate is crucial because it is what we get to keep of any extra income generated that determines whether we go to the trouble to earn money in the first place. High marginal tax rates are notorious for their destructive effects particularly on families who are doing their best to earn provide for their children and just get on with their business. 
Working for Families is of course nothing more than a meaningless slogan of the Labour Party for taking the hard-earned cash of New Zealand workers and then making them feel grateful and say they thank the wonderful Government very much when they get a bit of that cash back. What a caring Government we have! Working for Families is nothing more than a tragic example of middle-class welfare and income churning. When it was first put forward I—had I been the sole breadwinner in my family with five children and on a backbench MP’s salary—would have been eligible for Working for Families. I would have received $22 a week for my family. I do not need that. I go out and earn for my family; I earn plenty for my family. That shows the ridiculousness of that package. Working for Families has encouraged middle-class welfare and income churning. The Centre for Independent Studies has just released a study on the appalling effects of churning on the New Zealand economy—[ 
Interruption 
]—and obviously that member over there on the Government benches has failed to read it but I doubt whether he would have understood it if he had read it in the first place. 
The public spending of money is inevitably less efficient than letting individuals spend it on themselves. I have several points under here too. Firstly there are administrative costs. Transferring money on the scale that Working for Families does is like using a leaky bucket because it requires a large bureaucracy to collect the tax to churn it through the system and then to redistribute it to all of us. In order to cope with that extra spending the number of people employed in the public service has had to increase by 27 percent since 1999. There has been an increase of 27 percent since 1999. Secondly there is the economic cost of high taxation which should not be forgotten. Taxation affects the behaviour of individuals and alters their decisions on things like employment and investment. It goes back to the incentives I was talking about previously. Those dead-weight losses are a major handbrake on economic growth. Economic growth is around 1.4 percent at the moment compared with the 2.9 percent average for the OECD countries. We are said to be rich but we are not even treading water at the moment—we are moving backwards. Equity was mentioned by the previous speaker Tim Groser and I entirely agree with his comments. Churned spending does nothing for the poor and the disadvantaged in our society—not a thing. By definition the spending goes straight back to the person who paid the tax. 
This is an extraordinary motion and this has been an interesting debate. Metiria Turei and Hone Harawira both made some very interesting and valid points in their speeches. They both pointed out that there have been a vast number of complicated changes to the terminology used by the Inland Revenue Department around Working for Families. The Minister of Finance Michael Cullen has even managed to use outdated terminology in this motion. We now have Working for Families tax credits which were formerly described as family assistance. We have the minimum family tax credit and we have the family tax credit which was previously family support. The list goes on and on. 
But that is typical of this Government. Its members say the Working for Families package should be really complicated with a lot of really complicated terminology put into it so that they can confuse people. Government members think that if nobody has any idea what is going on then perhaps people will not even bother to find out whether they are eligible for the tax credits the family assistance or the family support—whatever it is that we are calling it today. Government members think that if they confuse people then maybe they will not bother to find out about whether they are eligible. The changes are just an Orwellian ploy from Dr Cullen to rename all benefits as tax credits. It makes them sound a bit like tax cuts really does it not? But no they are called tax credits because Dr Cullen’s focus groups have told him that those words sound better than the word “benefits” to the general population. 
I have a message for Dr Cullen. New Zealanders want tax cuts. New Zealanders want tax cuts; they do not want benefits. People do not like to be dependent on the State for their income and they made that perfectly clear at the last election. It would be far easier and much fairer if we had a single rate of taxation for all New Zealanders so should we not be promoting that? For those reasons ACT will be opposing this motion.