Dunne Peter: General Debate 
Dunne Peter: General Debate 
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Hon PETER DUNNE (Leader—United Future) 
: 
 Listening to the exchanges that have just been going on between Mr Peters and Ms Dalziel I am reminded of the proverb “Absence makes the heart grow fonder”. I want to talk this afternoon about the report that was released by the OECD last week which has been widely reported for one element of what it said but largely ignored for another. I refer to the report about the state of families in New Zealand and particularly to some of the comments that were made by Dr Adema the author with regard to the domestic purposes benefit and getting people back into the workforce. 
Although that report provoked a predictable chorus from those who say it is time to cut the domestic purposes benefit the real point it was making was that in our system at the moment there is significant disincentive for the second earner in a family to get back into the workforce. If one takes a long-term view about the structure of both families and our tax system and also about the structure of our workforce then addressing that issue relating to the second income earner becomes critically important and is far more important than whether we reduce the domestic purposes benefit. 
United Future has campaigned for some time for the policy known as income-splitting. In many senses that policy goes to the heart of the concern expressed in that OECD report. The problem we have at the moment is the anomalous situation where if a couple are involved in running a business—be it a farm a corner dairy or something more expansive—they can assign their income to each other and be taxed accordingly. But where they are running a household as equal partners even though one might be the sole income earner or one might be a substantial income earner and the other a small part-time income earner they are unable to make that assignment. 
Earlier this year a lot was made of the Gilbert family in Waihi—a family earning around $55000 a year and complaining quite legitimately of middle-class squeeze. Under the income-splitting policy that we propose if that $55000 were being earned as a single income and assigned between the two partners then that family would be a minimum of $45 a week better off given current tax rates. If the tax rates changed or reduced then that benefit would increase. 
Many people and I have talked to a large number mainly women in this category of being the second-income earner are desperately keen to get back into the workforce but are nobbled by the high cost of childcare. So they go to work to pay the childcare to go to work to pay the childcare and it becomes a vicious circle they do not break out of. 
Let us assume that that family in a few years’ time has had a net salary increase in terms of either the part-time work or the full-time work of up to around $65000 a year—getting close to what is actually the current average household income. The benefit to them from an income-splitting policy is in the order of $75000—I mean $75 a week. I wish it were the former but that is somewhat a slip of the tongue. Earlier in the House this afternoon in attempting to debunk that argument the Minister said the problem was that if they were earning the same amount there would be no benefit. 
Yes he is absolutely right but that misses the point of the policy. The Treasury review in 2000 also missed the point. Where there is an equality of income there is not a problem. The tax is the tax is the tax! It is where there is that inequality or where that single income is being spread over a household that the problem arises. If one talks to people about the concern and the incentive that they have to get back into the workforce that is the area of concern and that is why income-splitting is a fair policy. It does recognise the equal contribution that both parents make to the household whether one is working in the workforce and the other is working in the home. It is a practical policy that can be implemented at a time when the Government is taking $4.5 billion more in tax than it ever budgeted to. A policy that costs $500 million a year is very practical and very much in the interest of New Zealand families and we promote it.