Fenton Darien: Budget Debate 
Fenton Darien: Budget Debate 
[Volume:663;Page:11316] 
DARIEN FENTON (Labour) 
: 
 I am pleased to support the amendment proposed by our Labour leader Phil Goff as outlined on the Order Paper. I can tell the previous speaker Simon Bridges that over the last week since the Budget was announced Labour MPs have been out there talking to a lot of people in the community. It is fair to say that people are absolutely underwhelmed by this Budget. They are underwhelmed and they are deeply concerned. 
John Key called the increase in GST in the tax package a tax switch but for middle and low income earners it is a tax swindle. The truth is that most New Zealanders’ tax cuts will be wiped out by inflation of nearly 6 percent and most Kiwis will not be compensated for the GST rise that this Government has introduced. The Government knows that. That is based on their own numbers but they are not admitting it. They are not fronting up to the New Zealand public. They need to start telling the truth about this Budget. 
On the North Shore where I work—people have a view that it is a very affluent area—I came across a family with two young kids. Even after the wage increases factored in for the next year they will end up being $55 a week worse off after the GST increase and the cuts to early childhood education. 
The tax cuts are not only a tax swindle but also unfair. They fail John Key’s fairness test because one-third goes to the top 5 percent and 15 percent goes to the top 1 percent. The people in the middle and at the bottom are going backwards under this Budget and the people on the bottom—people on unemployment benefits and on the minimum wage—will get a pay cut. But of course that has happened before. In the next year as inflation goes up to record levels and with it the cost of food petrol power childcare and accident compensation levies we will see just how awful the swindle is. 
This is also a Budget of broken promises. John Key told New Zealand that he would not raise taxes. He was unequivocal about that. He stated: “National is not going to be raising GST. National wants to cut taxes not raise taxes … If National was to do a half-decent job it wouldn’t need to either raise GST or raise taxes.” 
Hon Lianne Dalziel 
: Well they can’t be doing a half-decent job then. 
DARIEN FENTON 
: No that is true. National is not doing a decent job and John Key has broken that promise. 
The second part of the broken promise is that the tax cuts are funded by borrow and hope—debt that will mount up for the families of today and tomorrow. We will all pay for this Budget for years to come. 
Another broken promise in this Budget is the promise not to cut public services. There are cuts in this Budget all right. The Budget is $300 million short in health. There is $400 million coming out of early childhood education. There are cuts to housing cuts to other parts of education and cuts to funding for non-governmental organisations and of course there is the gutting of the accident compensation scheme. I want to know who voted for those cuts in the last election because National was not up front about those. 
I met Mr John McGill of Northcote this week who is in his 80s. He has had his home care cut to half an hour a week even though he has recently had cataracts removed from his eyes. He also has a shoulder injury which the Accident Compensation Corporation is refusing to treat because it is age-related. Cuts to home care is another broken promise and people are being affected by those things right across the country. 
National said that it would not increase taxes but for a particular group of workers not only will they have to pay extra GST but also their tax has been increased. I am talking about workers who are made redundant through no fault of their own and who are lucky enough to have redundancy compensation in their employment agreement unlike the many that National refused to support a couple of weeks ago when it would not agree to having minimum redundancy notice and pay. 
Until this Budget if workers were made redundant from their job—and that happened to tens of thousands of Kiwi workers last year—they got a 6 percent rebate on the tax on their redundancy payment. That rebate was based on a flat rate of 6c in the dollar for redundancy pay of up to $60000. It meant for example that if a worker was paid $20000 in redundancy pay then he or she was entitled to a flat rate rebate of 6c in the dollar which came out as a $1200 rebate. That rebate has been cut by this Budget. 
The reason redundancy payments were treated differently is that they are there to compensate for lost earnings until a worker can find a new job. But because redundancy payments can be large one-off payments they can push the annual earnings of workers into a higher tax bracket meaning that those workers end up paying more tax than they should. That is unfair and it is not the intention of the income tax system. But the National Government is so mean that it will raise taxes for redundant workers who get compensation. 
Paul Quinn 
: Oh mummy mummy mummy! 
DARIEN FENTON 
: That is what the Government is doing I say to Mr Quinn. He can make silly noises but he should go and talk to workers who have been made redundant in the area where he works. 
Until 1992 the tax rate on redundancy payments was 5 percent. The previous National Government upped that rate and in 2007 Labour changed the situation so that it was much fairer for workers who get redundancy compensation. Of course National voted against that—[ 
Interruption 
]; listen to National members braying—without ever admitting that it just does not believe in fairness for workers. 
As I have said redundancy payments are different. They should not be taxed. The Government should not be increasing tax on redundancy payments. That is really really mean and I want to know exactly why the Government has proposed it. It is a shameful and sneaky tax increase. It is a mean little part of the Budget but I am not surprised. The National Government is not interested in Kiwi workers. It does not care about what happens to them when they lose their jobs. 
Hon Lianne Dalziel 
: I thought we were catching up with Australia. 
DARIEN FENTON 
: Well that is true. But Australia has redundancy compensation and fair tax—that is interesting. 
This is a Budget of lost opportunities. The Government’s tax cuts will make it harder for Kiwis to get ahead. The Budget fails to deliver on better jobs and better wages. 
One thing that the Budget did was to dump the Skills Strategy. There is nothing in this Budget about jobs and skills. 
There is absolutely nothing in the Budget to address the wages problem. We have a wages problem not a tax problem. Fiddling with the tax system will not improve our wages. Even the increase in the number of placements in the Job Ops scheme in the Budget was just a drop in the bucket. We are talking about 60000 young people who are out of work and we will have a few thousand job opportunities which have a little barb attached to them as well. Until now a job could not be accepted under the scheme if the employment agreement attached to the job contained a 90-day employment trial provision. Paula Bennett and Kate Wilkinson came to this House and said that the Government would not have the 90-day trial provision in the Job Ops scheme because those jobs were on fixed-term contracts and that would not be fair. But now those Ministers have changed their minds. In a move that is completely unfair to young job seekers the Government will open up the 90-day trial period to jobs under the Job Ops scheme. That is unbelievable. 
Let us tell the truth about the Job Ops scheme. It is a scheme through which people get 6 months’ temporary employment. I do not know how many of those people get permanent jobs—I suspect it is very few—and now under the Government’s change to Job Ops those workers will be at risk of having even less than 90 days’ employment. This is a taxpayer-subsidised scheme. Taxpayers subsidise employers through it so there should be a high level of scrutiny over the way that workers are treated particularly young workers who are in their first employment opportunity. 
I am very disappointed with the move to open up the 90-day trial period to jobs in the Job Ops scheme. I want to know why the Minister has changed her mind and I will certainly be asking about that. I suspect that the Government is readying itself to open up the 90-day trial period to all workers. I think we will see that happen. But this move does not make sense. It is completely unfair. The jobs are for 6 months only. The change is highly suspect and I am deeply worried about vulnerable young workers. They will be going into this scheme without knowing their rights and they will be getting dumped in less than 90 days while the taxpayer is subsidising the employer. 
Hard-working Kiwis will be worse off under this Budget. I say that is a shame.