Smith NickHon Dr NICK SMITH (National—Nelson): Thank you Madam Chair Williams. The first point I want to make in debating Part 1 of this bill is how unusual and how lucky the Government is to be in a financial position where we are able to introduce such significant increases in income for New Zealanders.I just ask the committee to reflect for a moment. Can any member of this committee remember a time when an incoming Government has had the sort of fiscal room to increase family incomes as much as this incoming Government? I do note my colleague Bill English is in the Chamber. Has there been the courtesy of either the new finance Minister or any member of the Government acknowledging the wise stewardship that actually puts us in this privileged position where we can increase the income of New Zealand families?The second really important point I want to make is that we should not just be focused on how we spend but actually on how we structure our tax and our family support packages to ensure that we continue to grow the economy. What really upsets me in this part is the degree to which we are going to increase the marginal tax rates and remove the incentives for New Zealanders to create wealth.If we look at a person on the average wage under the current law they'll be paying a marginal tax rate of 17.5c. What members opposite with this part are saying is that they want to take another 12.5c and remove the incentive for average Kiwis to go out and do another hour of overtime and the small-business person to create an extra hundred bucks of wealth. What this party is doing is removing the incentives to create wealth.Let's just add it up. What members opposite are saying with the combination—Greg O'Connor: No they have to do the overtime. They have to to be able to afford the food. That's why they're taking the overtime.Hon Dr NICK SMITH: No I say to the member over there you are taking incentives away from people who want to get ahead. Let me just explain it to him. What you're doing is you are saying you're going to put up not just the marginal tax rate; you're also going to put up the abatement rate. In fact if you're on the average wage and you add up this new tax rate you add on to it the 25c in the dollar abatement for anybody with children you add on to it the ACC income levy and you're effectively saying to someone on the average wage Go out and earn an extra dollar and we're going to take 70c off you." Earn an extra dollar and they're going to take 70c off you if you add these tax rates the student loan abatement and the family support abatement.I simply say to the members opposite: what they do not get is that spending is easy; creating wealth is more difficult and with this part of the bill you're actually creating the ingredients in which you are taking away the incentives for New Zealanders to get ahead.And then the third part is this: a key part of New Zealand's competitiveness story has been the simplicity of our tax system. You talk to those from Australia you talk to those from Europe and you talk to those from the US and what they say is great about New Zealand is a simple system that provides incentives to work and what we see in this part is a hotchpotch that takes our system backwards. There's been a pretty broad consensus over the last 25 years that a simple tax system is a good one and between the measures to bump up the tax rates to introduce these new baby bonus - type provisions the provisions for heating allowances—why not just let Kiwis keep more of what they earn? Why do we want to make a tax system with all these fiddles these bells and whistles that might Mr Robertson get you a cheap headline during the election campaign but fundamentally undermine the quality of public policy in New Zealand our tax system and our benefit system that means more money spent on bureaucracy less people understanding how it works and basically making our country poorer as a consequence. That's why we should oppose this part."