Motions — Family Support Tax Credit—Increase 
Motions — Family Support Tax Credit—Increase 
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Motions 
Family Support Tax Credit—Increase 
Hon Dr MICHAEL CULLEN (Minister of Finance) 
: 
 I move  
That this House endorses the Family Support Tax Credit increase of $10.00 per week per child that comes into force on 1 April 2007 
. This year 1 April will mark an important milestone in the Labour-led Government’s work for New Zealand families. The changes that are happening on that date are not just about talking about issues; they are about addressing them with positive changes to help hundreds of thousands of families and indeed millions of New Zealanders. 
The most important of those changes is very simple. The family tax credit increases by $10 per week per child on 1 April. That will assist some 360000 families by itself. Three-quarters of all New Zealand families with children will be getting assistance on 1 April this year. This is stage three of a process that began in Budget 2004 with an increase on 1 April 2005 of $25 per week for the first child and $15 per week for second and subsequent children. At that point the threshold for family support changed to $27500 and on 1 April 2006 it was lifted to $35000 with a cut in the abatement rate to 20 percent which means that people moving off the domestic purposes benefit for example do not face as high an abatement rate as they once did because indeed there is no abatement on their family support credits until they reach a total income of $35000 a year. 
 What that also means for a person supporting a spouse and two young children is that his or her weekly income now has to reach from 1 April around $800 a week before that person pays any net income tax. In New Zealand the tax-free income of a person supporting a spouse and two children after 1 April is in effect in excess of $40000 a year. That is why New Zealand will have about the lowest tax wedge for the average wage of a person in that position of any country in the world. That is real tax reduction delivered to the people who are most in need of it. 
From 1 April next year there will be regular adjustments to the rates and thresholds for the family tax credit. No longer will it continue to slip behind as inflation eats away at those rates and thresholds. Once the consumer price index reaches a 5 percent increase those threshold increases will be triggered. So in effect both rates and thresholds are indexed from 1 April this year onwards. There is a massive increase also at the same time in childcare assistance and in out-of-school care and recreation rates. 
The total effect of this package is to reduce by something like 70 percent the proportion of children living below the poverty line in New Zealand. That is a massive reduction and moves us back into the league of the northern European States whereas we were in the league of countries like the United States in terms of the incidence of poverty in New Zealand when this Government took office in 1999. This is not just about a quick visit to a poor neighbourhood jacket slung over one’s shoulder to look casual and scattering around a few muesli bars to impress the poor and the television cameras then running away and after running away deciding that one was not going to scatter around the muesli bars any more in any case because one had found out that it was not a very good idea after all—it was tasty at first but turned out to be tasteless after that. 
The fact is that this $10 a week per child tax credit was in the National Party’s election policy to be cancelled—to be taken away—in order to fund tax cuts for those on higher incomes. That is the reality of what National’s great tax cut promise was at the last election. It is a bit like Mr Key on the TV promising to an early childhood centre that it should have 20 hours’ free early childhood education then pointing out that indeed there would be equality under National—nobody would get 20 hours’ free early childhood education. It was not just about some centres deciding they wanted to be much better off and therefore not offering the free hours; nobody would get it at all—zero nothing zilch nada to quote myself in another statement about Mr Key last week. If he has done a U-turn on that I imagine that the next thing we know Mr Key will be getting the television cameras to turn up at about the end of this year to watch him sitting a National Certificate of Educational Achievement examination. The question of course is whether he will get an “Achieved” in that examination. He certainly will not get an “Excellence”; that is for sure. 
The family tax credit and the rest of the Working for Families package is about an active Government that is consciously leaning against the natural trend of our kind of society. In our kind of society inequality tends to increase naturally. We see that here we see it in Britain we see it in Australia we see it in the United States we see it in Canada. It is a feature of many countries that we have great similarities with. It is only if the Government consciously leans against those trends by interventions such as the Working for Families package that we do not see relative poverty rise and we do not see the Government reinforcing the natural trends of a modern market-based economy. 
That is why people on this side of the House are in politics. If there was one thing that drove most of us on this side of the House into politics it was the issue of social justice. Social justice issues led people into this House. [ 
Interruption 
] Naturally enough we hear from a National backbencher that to do something about poverty is to express some kind of greed and envy. The greed that I see is the greed of those who while already on high incomes want policies that will give them more. That is what Mr David Bennett of Hamilton is arguing for in this House at the present time. I bet he did not tell all those academics from Hamilton East that he would be voting in favour of those kinds of measures when he got elected last time around for his one-term visit to this place as an electorate MP. 
That is not all that happens on 1 April. On 1 April we begin 4 weeks’ annual leave for all workers. National Party members expect to have 3 weeks’ leave every time there is an adjournment in this House but they voted against 4 weeks’ annual leave for ordinary workers who could not negotiate that for themselves because they lacked sufficient muscle or sufficient economic power. Well from 1 April all workers qualify for 4 weeks’ annual leave. A Labour-led Government delivered that to New Zealanders. Furthermore the minimum wage goes up on 1 April this year. It has increased by 61 percent since 1999. It has been increased every year by this Labour-led Government at a rate higher than the rate of increase in wages in general. National managed I think one increase to the minimum wage from 1990 to 1999 and if memory serves me right that was only when New Zealand First was in coalition with the National Government. Left to itself it did nothing about the minimum wage and indeed cut benefits to ensure that the minimum wage could continue to fall back in real terms over the long term. 
Again I say that Labour does something about poverty and low wages. Labour members do not just turn up in a street and say: “Oh I’m very sympathetic because for a couple of years I was a bit hard up myself about 40 years ago.” which is what Mr Key does in this particular respect. 
Finally on 1 April this year a married couple on New Zealand superannuation gets an increase of over $20 a week. Superannuation has gone up every year under Labour. Under the previous National Government for 3 years there was no increase in New Zealand superannuation and in the last year of that Government Mr English cut the rate of New Zealand superannuation to pay for the tax cuts he had introduced that year. He cut the rate to 60 percent of the average wage. He shakes his head. He has forgotten. He has a kind of repressed memory syndrome about the National Government from 1990 to 1999. But I can assure him that over the next 18 months we are going to give him a lot of counselling so he can unlock those repressed memories and remember what it was like. 
Hon BILL ENGLISH (Deputy Leader—National) 
: 
 I want to remind anyone who is listening just what an unprecedented event it is that we are dealing with here today. I have been in this House for—[ 
Interruption 
] There is no record of the Government finding itself with so little legislative business that the Minister of Finance has put down his own notice of motion—[ 
Interruption 
] 
I raise a point of order Madam Speaker. The last speaker was heard in relative silence and I would ask for the same courtesy. 
Madam SPEAKER 
: I thank the member but that was not actually true. At times it was really hard to hear the last honourable member. But I would remind all members in the House to please keep the level down. 
Hon BILL ENGLISH 
: I will start again. The action that the Government has taken today is unprecedented—[ 
Interruption 
] 
I raise a point of order Madam Speaker. The Standing Orders are clear about interjections. They are to be rare witty or to the point. Since I started speaking the interjections have been constant. I do not mind interjections but I object to a constant barrage. 
Madam SPEAKER 
: I thank the member but the previous speaker had constant interjections and there was no objection. Certainly it is easy to hear the member. I remind members that if we had interjections only when they were rare and witty we would have none whatsoever. So would the member please continue. It is a matter of debate. 
Hon BILL ENGLISH 
: I want to bring to the attention of those who are listening what an unusual procedure this is. The Minister of Finance has never in this Parliament put down a notice of motion of this kind to be debated. The reason we are debating this motion is not because it is a normal debate of the House and not because it is a snap debate or a general debate; it is because the Government has the shortest least-substantial legislative programme that any Government has had in living memory. The legislative programme fits on one page. Almost all of it has the agreement of the Opposition. We are debating this today because the Government has no vision no plan no energy no legislative programme and—more concerning for the Government—no support. 
Last week Dr Cullen came out and said he wanted an urgency motion to deal with the Government’s anti-smacking bill. What happened then was again unprecedented. In full public view the minority parties pulled apart the Government majority. That was a public exposition of what is going on behind the scenes. The reason the Government has no legislative programme is because it cannot get the support of its supporting parties. When a Government does not have the support of its supporting parties it runs the risk of stopping being the Government because the Government has to carry a majority in this House. 
The Government has now been christened by the media as a “lame-duck Government”. We had a speech from the Minister of Finance who is a lame duck and he will be replaced by a lame duck— 
Hon Maurice Williamson 
: Mallard. 
Hon BILL ENGLISH 
:—Mr Mallard. What will the Government do next? It now has a “smacking bill” that it is backing over which it has no legislative control. I would not mind betting—in fact I think I know— 
Darren Hughes 
: I raise a point of order Madam Speaker. The deputy leader of the National Party has now been speaking for 5 minutes on Government motion No. 1 which asks that the House endorse the family support tax credit increase of $10 per week per child that comes into force on 1 April 2007. But the member has not made any reference at all in his speech as to whether he supports that measure. Indeed his speech has not centred around that motion at all. I would have thought that now he is halfway through his speech we could hear from him as to whether he is in favour of the motion put down by the Minister of Finance. 
Madam SPEAKER 
: Yes the member has had a long introduction. So perhaps he could address the motion. 
Hon BILL ENGLISH 
: Speaking to the point of order I point out that the parliamentary procedure we are involved in today is almost without precedent. It is absolutely within the capacity of someone speaking such as myself to discuss why we are debating Government motion No. 1. In the time you have been Speaker this has never happened. In the time Jonathan Hunt was Speaker this never happened. In the time Doug Kidd was Speaker this never happened. In the time Peter Tapsell was Speaker this never happened. In the time Robin Gray was Speaker this never happened. 
Madam SPEAKER 
: This is a point of order the member is speaking on. 
Hon BILL ENGLISH 
: Madam Speaker are you ruling me out? Am I prevented from talking about why we have the motion? 
Madam SPEAKER 
: I did not interrupt you when you were speaking. A point of order was raised drawing attention to the substance of the motion. I was merely putting to the member that he should at some point in his speech address that motion. Would the member please proceed. 
Hon BILL ENGLISH 
: I will address the motion but not before pointing out to the House that the reason the Government does not have any legislation of any significance on the programme is because essentially it has done what it came to do. There is nothing more for the Government to do. That is why Dr Cullen is now indulging himself in these speeches of high principle. Labour is now developing a martyr complex. It knows that electoral death is looming and it wants to go down feeling principled about it. 
Let us come to the motion. On 1 April families will get $10 per child per week. In fact the Working for Families package is remarkably similar to the package that National put forward in 1996. National’s package increased family support for beneficiaries and working families and it brought in the child tax credit. It was attacked then by Dr Cullen as “a simplistic tangle of bigotry and ignorance … unholy product of National’s deeply held view that everyone on a benefit is a bludger … ill thought through and punitive.” Well he has changed his mind. 
We are not going to roll back this tranche of Working for Families. We are not going to deprive those families of the cash benefits they can get. Have they not waited so long? That is why I get irritated with Dr Cullen’s crocodile tears today. He has had 7 years of the biggest surplus New Zealand has ever seen and it took until today before he said—[ 
Interruption 
] Well 12 months ago he said that the people who had loyally voted for him every year could have it. Then there were his crocodile tears about the minimum wage. I want to ask the members opposite this question. If they think the poor and low paid are so badly done by why is it that in the health sector they have left the lowest paid on the lowest pay? Why is it that the home-care workers and the rest home workers have had nothing but the high-income specialists—the high-income medical specialists—have had 20 to 30 percent pay increases? Why does the member for Otaki not get up and tell us that? 
The problem with this package—[ 
Interruption 
] Oh now they feel guilty about leaving the home-care workers on $11.50 and putting the specialists on $300000. Well I bet the home-care workers will never forget that. They will never forget it. So much for the principled martyrdom of Dr Cullen who has gone off to draft a speech for his very last Budget. 
The problem with this Working for Families package is twofold. In 1996 National’s package was intelligent because it increased payments to families but dropped core tax rates. That meant that people’s marginal tax rates did not go up much which meant they still had an incentive to do another hour’s overtime because they did not face marginal tax rates of 60c and 65c. People on the Working for Families package who do another hour’s overtime lose at least 60 percent of their extra dollar and that is what is wrong with this package. 
We will not vote for this motion because if the Government had developed an intelligent package that phased in overtime it would have lowered core tax rates so that families were not punished by having most of what they earn in an extra hour taken off them. National will not roll back these payments but neither will we support a Government programme that has put hundreds of thousands of middle New Zealanders who are on incomes of up to $100000 on the highest marginal tax rates they have faced in 20 years. 
But the most important thing that has happened today is that the Government has effectively ended its term as a Government. It has run out of legislation. The pot is now so dry that the Minister of Finance had to move his own motion which has never been done so that he could have a debate on it. Why? It was to take up time. This is March. We have almost a whole parliamentary year ahead and the Government has nothing to do. That is electoral death. 
The one thing they do have to do is the smacking bill and the member for Otaki is getting smacked in his electorate for doing that—so is the member for Northern Maori and the United Future and New Zealand First members. How will they survive the smacking bill? How can they possibly lend support to a Government when that piece of legislation is obliterating their party base? If United Future and New Zealand First want to go down with Labour that is fine but I would say as a member who thinks that sometimes those parties are quite sensible: “Don’t do it. Do not go down with a Government that will drag you to certain electoral death.” I invite those parties to vote against this motion as well. This is a Government that has done what it came to do; it is time for it to go. 
BARBARA STEWART (NZ First) 
: 
 The Hon Brian Donnelly and I will be splitting this particular call. New Zealand First welcomes the increase in payment of $10 per week per child that comes into force on 1 April. We welcome it for a whole number of reasons. The first is the poverty factor. Recently a number of reports have raised the issue of increased poverty affecting New Zealand families. This increase in payment will do something about it. In this House we all say that the Government should address the role of poverty and this is part of one of the measures. 
I looked at a 2006 Ministry of Social Development report on the issue and it states: “Having a low living standard limits a person’s ability to participate in wider society curtails their quality of life and can have negative long-term consequences across a wide range of social and economic outcomes.” The same study noted that between 2000 and 2004 there was an increase from 16 to 17 percent of families with a market income defined as having low living standards. Under this increase 360000 families will benefit. That is a significant number. So the increase in payments from 1 April will help improve the living standards of lower-income working families and will have flow-on effects for their health and their well-being which is something that we in this House all want. For example $10 a week is the equivalent of additional loaves of bread or litres of milk which for a lower-income family will definitely make all the difference. 
When we look at improvements in the living standards of lower-income working families it follows on logically that we need to improve our appalling child poverty statistics. It is absolutely essential that every child in New Zealand has the fundamentals he or she is entitled to: adequate food being able to participate fully in education—and all the factors that surround this such as school trips school books and school fees—going to the doctor when their parents believe it is necessary and being able to afford the necessary medication. The list goes on and on. For children a good start is so essential. 
The second reason we support this increase in payment is that we want people to be encouraged to move off a benefit and into paid work. It is claimed that the family tax credit is there to support families moving off a benefit and into work and to ensure that those doing paid work are better off as a result of being in the workforce. That is a laudable aim and it is something we want to see. We can only hope that the increase in the payment as of 1 April does result in more people moving off a benefit and into paid work. We know that families with parents working are far better off than families where parents are at home and receiving a benefit. It is also necessary to ensure that people are better off by being in the paid workforce and we have already heard that the increase in the minimum wage from 1 April will also help. 
New Zealand First recognises the importance of the early years and we will always support policies aimed at the optimum development of children. We say that a good start is essential and that actions speak louder than words. What we are seeing today is action and we definitely support that. 
Hon BRIAN DONNELLY (NZ First) 
: 
 I would just like to remind the members of the Opposition who were giving me a bit of a hard time before that I had plenty of pressure put on me in 1998 by the likes of Wyatt Creech Don McKinnon Jenny Shipley Doug Graham etc. asking me to remain as a Minister and stay with National. I did what I thought was right and I will continue to do what I believe is right in this House. 
New Zealand First has always been an advocate for children and there is no doubt that the Working for Families package has positively impacted on families and family life. I want to give the experience of my own family. My youngest daughter has a beautiful young child and her partner works in a factory and works long hours. He is not on a high salary. This couple does not waste money. They do not go to the pub or out to the pictures. They live in a modest rental property etc. The money that comes to them through Working for Families is absolutely critical. I want to make the point that every cent of that money that comes into their household goes on my grandchild. Believe it or not—and I did not realise this until I had grandchildren—it costs so much more money to bring up a young child these days even just to get the basic equipment that is now required. So on behalf of my family I want to thank Labour for what it has done. It certainly has made a difference to my youngest grandchild. It is good that they will have another $10 a week after 1 April. 
I do not necessarily believe that this is the answer to the problem. I think the answer to New Zealand’s problem is the fact that our wages are not high enough. We need to drive our wages up. That is why New Zealand First put into its confidence and supply agreement with the Government that we would drive the minimum wage up to $12 per hour. As Barbara Stewart mentioned on 1 April something else will also take place—that is the minimum wage will go up by $1 which will once again drive up wages. 
I say that because looking back my father was an M5—married with 5 children. He would not have actually paid very much in tax but he never ever would have brought home more than he earned and that is unfortunate. With the system of tax credits etc. that we have that problem is reduced. 
 New Zealand First believes that the Working for Families package is absolutely critical at this point in time for us to be able to get our families out of poverty. It is not the long-term answer; the long-term answer is getting the wages up but we readily admit that that is not a possible solution within the next year or so. Therefore we need the quinella of approaches to be able to achieve that purpose on behalf of New Zealand. One of the things that New Zealand First believes—and I certainly believe—is that the quality of the future we leave to our children will be determined by the quality of the children we leave to the future. We will not be able to leave quality children to the future if we are trying to drag them up in poverty. Thank you Madam Assistant Speaker. 
METIRIA TUREI (Green) 
: 
 The Green Party will be abstaining on this Government motion No. 1 because although the Working for Families extension does provide much-needed additional assistance to at least some families on low and middle incomes it still fails to assist those families in New Zealand who are most in need. 
Firstly I want to draw the House’s attention to the very confusing changes in terminology that have just been implemented by the Inland Revenue Department. The overall regime formerly called family assistance is renamed Working for Families tax credits. The former family support tax credit is now called the family tax credit. Just to add to the confusion the former family tax credit—which is a different entitlement from the new family tax credit—is to be renamed the minimum family tax credit. Perhaps the Minister of Finance or the Minister of Revenue could explain to the House the reasons for these changes in terminology. 
My take on them is that they are bound to cause confusion and that the confusion will result in those people who have entitlements under the regime not receiving those entitlements. The wording of the motion itself would indicate that even Dr Cullen is uncertain of the current terminology because the term “Family Support Tax Credit” is no longer used on the Inland Revenue Department’s website. Furthermore the various components of the regime abate at different rates resulting in very complex effective marginal tax rates yet the department’s assessments just give an overall figure of entitlement rather than a breakdown of the entitlement into its components and then details of the abatement regime for each component. 
So a family with a Working for Families tax credit entitlement faces a major exercise in working out exactly how a potential change in its income will affect its entitlements. In terms of the substance of the Working for Families tax credit regime I acknowledge that it has alleviated hardship for some families and that the increase that is the subject of this motion will likewise alleviate hardship for some families. However the regime itself has fundamental flaws. Some of those flaws may have been able to be corrected had the Government allowed a public submission process in consideration of the legislation by a select committee but the package was rammed through this House under Budget urgency with no opportunity for public input on some of its more controversial aspects such as the discriminatory in-work tax credit and the replacement of the discretionary special benefit with the new rules-based temporary additional support. 
The Green Party’s primary concern about the Working for Families tax credit regime is that the people who most need assistance from it are provided with the least assistance by it. Middle-income New Zealand families will do well from the scheme while those on benefits—especially those receiving the temporary benefit special benefit or temporary additional support—will receive the least from it. 
The living standards report in the Ministry of Social Development’s  
Social Report 2006 
 revealed that between 2000 and 2004 while the proportion of the population in hardship remained about the same the number of those in severe hardship actually increased by 3 percentage points during that period. Working for Families tax credits will do little to alleviate the severe hardship of that sector of the population. Primarily they are beneficiaries and the in-work tax credit will not be available to them simply because they are beneficiaries. This not only is discriminatory on the basis of employment status but also unfairly denies assistance to the sector of the population that has the greatest need. 
This discrimination is indicative of the flawed ideology of this Government—and frankly of the previous National Government which I might add introduced the in-work tax credit’s equally discriminatory predecessor: the child tax credit. It is indicative of an ideology that places little value on the unpaid work of those who choose to care full time for their children to care for their elderly or disabled relatives or to work voluntarily for the benefit of their communities. 
When the previous National Government introduced the child tax credit Annette King who was then in Opposition was reported as saying: “It is no wonder that we do not value the work that is done in our homes because we dismiss it and give it no economic value at all. That is disgusting. To divide children into those whose parents are good parents because they work and children who are bad because their parents do not is absolutely disgusting.” I agree with the Minister but how the worm has turned. 
The in-work tax credit aside the parts of the Working for Families tax credit regime that are available to those in the most severe hardship are offset by reductions in the special benefit or the temporary additional support and consequently this group gains nothing from the increases in the newly named family tax credit. 
Then we have the minimum family tax credit—the renamed former family tax credit. This continues the worst aspects of Roger Douglas’ original guaranteed minimum family income scheme which was described by economist Brian Easton when it was introduced in 1988 as “technically incompetent fiscally explosive and socially reactionary”. The minimum family tax credit has an effective marginal tax rate of 100 percent effectively locking those who for reasons of disability or lack of educational attainment cannot work in any but the lowest-paid jobs. They are therefore forced into a permanent poverty trap. However much more they earn they will have no more dollars in their hand while their earnings remain below the minimum family tax credit threshold. 
There is an alternative to the work-first approach and the complex confusing and discriminatory mix of income support payments and tax credits that are supported by both Labour and National. Unfortunately the Green Party is one of the only parties in this Parliament that supports this alternative. It is an income-based support system based on simplicity sufficiency and universality. We can start by increasing the minimum wage. There will be some increase now but we advocate for an increase to at least $13 an hour in contrast with Labour’s promise of $12 an hour. Who knows what National’s policy on the minimum wage is? At one stage its leader Don Brash did not want to have any kind of minimum wage at all and its track record on increasing the minimum wage when it was in Government was equally ridiculous. So this is just common sense frankly. If people earn more then they will be less reliant on State assistance which is in reality a massive subsidy to employers. 
The Greens would set main benefits at a level that people can actually live on—and I would be interested to know just how many members of the current Parliament have ever been beneficiaries and understand how difficult it is to live on the benefit. We would make benefits sufficient to meet all beneficiaries’ basic needs and index them to a fixed percentage of the average wage. Increases in benefit levels have progressively failed to keep up with increases in the average wage. This has been another reason for the increased reliance of beneficiaries on very complex targeted assistance such as special benefit or temporary additional support—those ones with the 100 percent marginal tax rates. 
We would also abolish the discriminatory in-work tax credit and incorporate it into a universal child benefit. Many of the families of MPs here would have been recipients of a family benefit years ago. Yet when my colleague Sue Bradford attempted to introduce a member’s bill to this House that would have brought in a very modest universal child benefit the Labour-led Government vetoed it without its even being allowed to go to a select committee for the public to make submissions on it and for a discussion on the issue to be heard. 
Despite the concerns that I have outlined the Green members of this House acknowledge that the assistance in the Working for Families tax credit system does provide some assistance to some low and middle income families. But until we have a system that is simple universal and sufficient; that does not require enormous complex machinations by families to understand what they are entitled to; and that is not discriminatory on the basis of a family’s income source we simply cannot support this motion. Thank you. 
HONE HARAWIRA (Maori Party—Te Tai Tokerau) 
: 
 Kia ora Madam Assistant Speaker. Kia ora tatou te Whare. My mum reckons that any legislation that comes into force on April Fool’s Day has to be a joke—and both Shane Jones and the Hon Parekura Horomia agree that my mum is always right. Mark Twain also made the comment that April Fool’s Day is the day upon which we are reminded of what we are on the other 364 days. So naturally when we saw this Government motion No. 1 suddenly pop up on the Order Paper we wondered whether Dr Cullen had been working overtime to make sure that his joke got online by this Sunday—except that it is not a very funny joke. 
 The Maori Party supports anything that will help families in need and to put more money into the pockets of families with children to support is a worthwhile notion. The problem is that this initiative comes to the House hidden beneath a whole stash of complicated tax and social welfare legislation that most Kiwis simply cannot even understand let alone get benefit from. This motion follows hot on the heels of the KiwiSaver Bill the taxation of portfolio investment entities the introduction of foreign tax regimes the establishment of social security reforms and a 2700-page Income Tax Bill that rewrites income tax legislation. The hilarious explanatory note of that bill states that the objective is to reduce compliance costs by producing tax legislation that is clear uses plain language and is structurally consistent. Yeah right! 
The truth is that out in the real world families are already finding the criteria and requirements for family tax credits to be too confusing. Yet now they are being asked to wade through a quagmire of new legislation and compliance terminology and get up to speed with a whole new vocabulary including family support tax credit child tax credit family assistance credit family plus family credit abatement in-work payment family support family tax credit parental tax credit social assistance payment and family scheme income. It is not as if any low-income worker or beneficiary in my electorate—or any other electorate for that matter—will be able to understand any of that. 
The hardest thing is that this gets even worse. If we log on to the Inland Revenue Department website we see that from now on payments will be called Working for Families tax credits and that the department is also changing the names of the payments that make up those Working for Families tax credits. So people who thought they had sussed out Working for Families will now have to go back to school and start all over again because what was once called family support is now called family tax credit what was once called in-work payment is now called in-work tax credit and what was once called family tax credit is now called minimum family tax credit. How ridiculous is all of that? It kind of makes one want to know what poverty will be called from now on—possibly “a negative financial tax credit” or some other foolish phrase. 
But wait for it; it gets even worse. There are now different truths about how much the family support tax credit—I think that is what it is called rather than a family tax credit—actually is and for whom. There are now different names and different amounts if one’s eldest dependent child is aged 16 to 18; if one’s dependent children other than one’s eldest are aged from 16 to 18; and if one’s dependent children other than the eldest are aged from 13 to 15. It goes on and on. I would like to try to summarise what this motion will mean for all the real people out there—I am talking about the people for whom this is supposed to be of help. 
The Government has changed the name from family support to family tax credit. I know a name is supposed to be just a name but it would have helped if the Government had talked to those who will be most affected—real families—to see whether it makes any sense to them or even whether they understand what the changes will mean. It is not just a matter of a name change; the Government’s proposal actually adds another complicating layer of confusion to an area that is already confusing. People had become used to family support which has been in place for some time and they had finally worked out how it applied to every child regardless of whether the parents were in paid work. However the family tax credit used to refer to payments for children whose parents were in work. But this will now be the term for family support because family tax credit has now become the minimum family tax credit. If that is confusing for you Madam Assistant Speaker or anybody else in this House we really have to guess what that will mean for the people out there on the street. 
Another obvious outcome of the confusion is that families will find it more confusing to apply for and even more difficult to get. The whole tax credit system is marketed towards working families but the newly termed family tax credit which used to be family support actually applies to all families. People who were entitled to one benefit or another will now miss out because they will not understand what benefit they should be getting. This means that people who know that Working for Families means “Beneficiaries not Welcome” will be cut out from this new model because they will not know that they are entitled to a tax credit. We already know that whenever complicated new beneficiary laws are introduced Maori are the group most likely to miss out because they simply do not know whether they should be getting it. 
Another important outcome of the confusion is that by using a name like family tax credit which meant one thing but now means another it becomes very difficult to get any coherent analysis of the changes for beneficiaries during that whole transition period. The Government has bracketed together three separate parts—minimum family tax credit which used to be family tax credit; in-work tax credit which used to be in-work payment; and family tax credit which used to be family support—and lumped them all together into one Working for Families tax credit. That means that families do not know the values of the separate parts and that they will not be able to work out what they should get. So those families will miss out on benefits that they had previously received because they will no longer know how to apply for them. 
The point about this whole April Fool’s Day motion is that instead of simplifying an already complex area the Government’s proposals will simply make it even harder to understand. The real joke is that those in greatest need—the beneficiaries who will be bypassed by this legislation—will be even worse off after 1 April than they were before. If that is the joke then the comedian deserves to be shot. Kia ora tatou. 
GORDON COPELAND (United Future) 
: 
 I rise on behalf of United Future to say that we will be endorsing as a party the increase to the family support tax credit of $10 per child per week which will come into force on 1 April 2007. To remove the confusion in the mind of the previous speaker Hone Harawira I make it clear that whether people come from a benefit family or a working family they will if they qualify receive on 1 April 2007 another $10 in the hand if they have one child $20 in the hand if they have two children $50 in the hand if they have five children and so forth. 
Michael Cullen in his speech mentioned that this was an expression of social justice and that is exactly right. This is a way of ensuring that no one in New Zealand with dependent children falls below the poverty level. As I will mention later in my speech this Working for Families package and the $10-a-week increase goes a long way towards achieving that goal. 
The description “social justice” brought to mind the fact that we could also use Michael Joseph Savage’s expression and say that this is simply applied Christianity because the whole idea of caring for one’s neighbour and of ensuring that a community supports its most vulnerable members—its poorest members—is indeed a core gospel value. 
In my first year in Parliament I remember speaking with the Minister of Finance about the need for the Government to provide tax relief for families with dependent children. I mentioned to Michael Cullen that people earning even say $50000 a year with five dependent children were certainly not well off. In fact people on that rate with five dependent children would be struggling and finding it extremely difficult to make ends meet. I know that because a number of families I am in contact with are in that situation. 
Subsequently therefore in its Budget bids for both 2003 and 2004 United Future suggested to the Government that it should bring in a tax credit system for families that had three particular design features. The first of those was that there should be specific recognition of the number of children in the family. That suggestion has been picked up on. The second was that there should be a clear gap between working families and benefit families both to incentivise work and to recognise the extra costs that arise when people enter the workforce. That has been picked up as well. The third was to ensure that the family support system in New Zealand moved closer to—and was therefore more competitive with—that which exists in Australia. That has also been picked up in the Working for Families package. Therefore we as a party were delighted when the Government announced in the 2004 Budget that it would be introducing this Working for Families package and we were equally supportive when just prior to the 2005 elections it decided that it would introduce this extra $10 per week per child which is to come into force from 1 April 2007. 
This will be of fantastic assistance to 360000 families in New Zealand who have dependent children. I hear so many favourable comments and reports from those young families—whether they have preschool or school-age children—who are just delighted with the extra financial assistance they are receiving under this package. They tell me that it has made a huge difference to their household incomes and sufficient household income for United Future is a core policy goal. It is of central interest to us because we believe that a family’s net income after tax needs to be sufficient for that family to meet its basic household needs—be they food clothing accommodation housing education health or transport. Those are the minimum things we want every single family in New Zealand to be able to afford to a reasonable level. 
Our vision for New Zealand does not include child poverty. When I came into Parliament 28 percent of all New Zealand families were according to most measurements living in poverty. Almost one out of every three of our children were in that situation. By 1 April 2008 that number of children will be down into single-digit territory—the best estimate I have heard is about 7 percent or less. In simple terms it means that basically through this excellent package we have shifted about 21 percent of our children from poverty to above the poverty line. 
I would have thought that that was something every party in this Parliament would recognise as a core Kiwi value and would support. I must say I was very disappointed that when Bill English was making his speech he said that National would not roll back this $10 a week but—when he finally got to it—he said that his party was not going to endorse this motion. National will vote against this motion—that is National is against this extra $10 a week per child. I am very very disappointed frankly to hear that because I would have thought that under the more pragmatic leadership that John Key has introduced to that party National members might just say: “Hey—are we in 2008 going to take this money back off people or not?”. Obviously they have decided they will. From my point of view that will be a backward step because I would not mind working with National after 2008 if that is what the electorate decides. But I tell you what if I am we as a party will not be going along with taking this money back from people who by then will have built it into their family budgets the repayment of their mortgages and all those other costs. It would be just crazy to take it away. 
What we do need to do is overlay this package with income splitting. I think Metiria Turei talked about home-care people and so did Bill English. Income splitting is the way we can recognise the tremendous role that a stay-at-home parent not on an income plays in the life of this nation. As I think Maurice Williamson said during the smacking debate bringing up kids is the most difficult and the most important job in the world and it is time we gave some tangible recognition to people who take time out of the workforce to do that fundamentally important work. Income splitting does that; it also addresses the effect of high marginal tax rates for people. The examples that National members have given are of those very high effective marginal tax rates normally involving single-income families. If we overlay income splitting on those we would find that the problem more or less disappears. 
So that really is the way that United Future believes we need to move post-2008. Quite early in 2008 well before the election the Minister of Revenue will be bringing out a discussion document on income splitting so that New Zealanders will have an opportunity to have some input into that. We will be asking for public submissions. I think also that that will really inform New Zealanders of the way that could transform household income. As I mentioned earlier it is a core value of United Future. We want to see every family in the country having a core income that could enable them to provide fittingly for themselves and for their dependants. 
I want to mention just one other issue in the last couple of minutes I have. National labels this package as welfare and the Government labels this package as tax credits. United Future is in the centre. We say that in fact there are—I will get the numbers right—around 196000 families who will not receive welfare through this package but who will receive a reduction in their income tax. They will pay the same amount I know but they will get a credit back. So effectively there is a bit of churn which is undesirable in some ways. But those 196000 families will actually be getting tax relief through this package. Then a further 164000 families will receive an increase in their benefits. It is quite correct for those 164000 families to say that they are welfare recipients. That is their status now and it will be after this extra $10 goes through. But for 196000 families it is actually a tax credit and should be described as such. 
Accordingly it is United Future’s position that we should actually call this package a tax reduction and family income package. That describes exactly what it does. It reduces taxes for 196000 families and gives additional income to a total of 360000 families. In United Future’s book that has to be a good thing for our society. It increases social cohesion. It is social justice in action; it is applied Christianity. Thank you. 
Hon DAVID BENSON-POPE (Minister for Social Development and Employment) 
: 
 I will begin by reading a letter that I will ask for leave to table at the end of my comments. It is a letter from someone called Jenny to the Prime Minister received just last month. I will read only excerpts from it. “Dear Prime Minister I just want to say I am forever grateful to your Government for that package. Working for Families has meant the difference to me and my son in being able to eat decent food and not having to stress any more about when I can juggle the budget in order to buy food. This might not seem much to someone who has never had to struggle”—[ 
Interruption 
]; yes I am not surprised that National members do not like hearing this—“but I can tell you from me it is huge. Thank you so much for looking after the families in this country. I really appreciate it. Kia kaha and please carry on for a fourth term. I think you and your party are fantastic.”—signed “Jenny”. 
Hon Maurice Williamson 
: Signed “Your loving daughter.” 
Hon DAVID BENSON-POPE 
: I did not actually write it I tell Mr Williamson but I have to say that not many people out there in New Zealand are writing letters to the National Party about its attitude to this policy. As I said I will ask my colleagues for leave to table that letter at the end of my comments. 
So what is the Working for Families package that Jenny is so appreciative of? Well it is targeted tax credits mostly and it is targeted tax credits that are directed towards Kiwi families to help them raise their children. As of 1 April it will be affecting almost three in four of all New Zealand families with dependent children and as speakers before me have commented that is around 360000 families New Zealand families. What is it costing? It is an investment really of $1.6 billion per year to help families raise their children. This year is the only year it will cost $1.6 billion because of course one of its many advantages is that these payments are indexed. So next year it will cost more and the year after it will cost more than that. What better contribution could we make to the future of this country? 
So a family with two teenage children aged say 11 and 16—a family earning around $67000 in total and paying $350 per week on its mortgage—from 1 April will get an extra $88 a week in the hand from family tax credits. In fact almost all families that have children and earn under $70000 a year are eligible for these tax credits. Many families depending on the number of children they have that may be earning jointly between $70000 and $100000 are also eligible. So I take the opportunity to encourage people to make sure they check their eligibility. 
Families earning less will get more. That is a bit different from the flat-tax promise that the National Party had on the table at the last election. Its promise was that people earning more would get more and those attitudes have not changed. But they are not Labour Party attitudes. Our policy is about targeting money to people on lower incomes—the people who have the greatest needs. One of the key factors of this policy is the fact that Dr Cullen referred to earlier and I will repeat it that families that have children and earn less than $35000 a year will effectively be paying no tax at all from 2008. We believe that is the most effective way to target and support our families and children. It is also an approach that is common internationally. 
Dr the Hon Lockwood Smith 
: What marginal rate will they pay? 
Hon DAVID BENSON-POPE 
: The only thing in this House that is marginal is Dr Smith and his policies. 
This is the most effective way to target and support New Zealand families and children. It is also a tax credit approach that is widespread in the OECD. 
Before I come back to some of the impacts of the other 1 April changes I would like to share with the House the reasons so many people are supportive of this policy direction. The first couple I want to talk about are Josephine and William. I can tell Mr Harawira that they live in Northland. 
Hone Harawira 
: They work in my kura. 
Hon DAVID BENSON-POPE 
: They do indeed. Josephine and William have four children aged 3 5 11 and 12. They do indeed work at the kura in Kaitaia the member referred to where Josephine is the receptionist and William is the caretaker. Josephine works 30 hours a week and William works 20 hours a week. Together they earn $610 per week. They are currently receiving the following amount in extra assistance from Working for Families. The accommodation supplement sees them receiving $42 per week. Their childcare allowance amounts to $66.20 per week. Their family tax credit is $203 per week and their in-work tax credit is another $60 per week. On 1 April they will be getting an extra $40 a week in family tax credits. So the total amount that Josephine and William will be getting from Working for Families is $411.20 per week. I say to the member that I bet that Josephine and William do not think that $411.20 a week is an April Fool joke. I bet that Josephine and William do not think they are worse off than they would have been if a National Government had given them the $10 that National promised them at the last election. 
I would like to move down the country to Auckland. Aveael has one son aged 2. Whilst on the domestic purposes benefit she used the training incentive allowance to help her train as a lawyer. She is now practising in a small law firm in Auckland earning $576.92 per week. She is currently receiving the following assistance from the Working for Families package. She is getting $125 of accommodation supplement. She is getting $120 for 45 hours of childcare allowance. She has a family tax credit of $72 and she is receiving a $58 in-work credit. She will also get the extra $10 a week of family tax credits on 1 April. So the total amount of Working for Families money that she receives will be $385 per week. I bet your boots that Aveael does not think the Working for Families increase is a 1 April joke. I bet your boots that Aveael knows she is a lot better off on targeted tax credits of this sort than she would have been with the $10 tax cut that National offered her at the last election. 
I also want to talk about Raewyn and Bruce. Raewyn and Bruce have three children aged 9 6 and 3. Raewyn works part-time as an early childhood teacher and Bruce is a youth pastor at the Papatoetoe Baptist Church. They live in South Auckland. They are currently receiving the following support. They get a childcare allowance of $30 a family tax credit of $36 and an in-work tax credit of $60 and having three children means they will get an extra $30 a week of family tax credits on 1 April. So the total family tax credit package that Raewyn and Bruce receive will be $156 which is just a tad more useful to them than the $10 the National Party promised them at the last election. 
Let us just have a look at what the National Party has said about this initiative. John Key said: “National doesn’t support the current Government’s ‘Working for Families’ package …”. Well that is obviously news to his co-leader Bill English who just half an hour ago said that National would not roll back these social support initiatives. What another wonderful example of the left hand not knowing what the right hand is doing. What else does the so-called leader of the party say? John Key said: “Working for Families also imposes high effective marginal tax rates on families. These are a disincentive to work overtime and at weekends and for partners to seek part-time work.” 
Well Mr Key should tell that to Josephine and William Aveael Raewyn and Bruce and to Natasha whom I have not had time to describe to the House. John Key continues: “Policies that turn every second family with children into State dependents might be a result the Labour Party is comfortable with but simply put National is not. National doesn’t support this policy.” What National supports is flat-tax cuts so that its mates like people sitting in this Chamber get $150 or $200 a week in tax cuts but working New Zealanders get $10 a week. 
I do not know about the National Party but working New Zealanders are not stupid. They know the huge gains that are visible and that will become even greater gains as part of these Government initiatives. 
Just in case people are not sure what the National Party thinks about anything—and no one would be surprised at that—let me repeat a quote I have used before in the House. It is from an interview with the Leader of the Opposition published in a magazine earlier in the year. This is a quote from John Key: “… while I’ve used a slightly softer tone in the last few weeks than maybe Don did … fundamentally we” —the National Party—“are still going in exactly the same direction with values that line up with where we think New Zealand is heading.” What can New Zealanders expect? With this Government in power they can expect this package to continue. 
TIM GROSER (National) 
: 
 Two quite separate issues face this House in relation to the motion. One is a substantive question about tax policy design and the use of tax credits—I will come to that presently—and the other is an overtly political question that is raised by this extraordinary move to put on notice the motion that is before us today. On the substantive question I want to address not the misrepresentation of National’s views we have just heard from the Labour Party but Mr Copeland’s obvious concern as he feels the squeeze that no doubt all third parties are feeling when this Government’s popularity slowly wanes and he looks towards a political future perhaps with National. I say to Mr Copeland that he should not be concerned. He should listen explicitly to what my deputy leader the Hon Bill English has said. We have used tax credits as part of a system of tax policy. We recognise that families have special needs. We will unquestionably use tax credits for families in some way in the future. That is not the question at issue. 
But what this debate and those simplistic answers from grateful Labour Party supporters illustrate is that the Government has not got its head around the truly important issues of the detail of policy design. It may well be that Government members do not really comprehend how effective marginal tax rates will work in practice. It may well be that the large majority of New Zealand taxpayers would not understand the term “effective marginal tax rate” but I tell you what in due course they will understand how it cuts in at middle-income levels without any question whatsoever. When two partners have a conversation about whether one of them should take a job under certain scenarios it may absolutely follow from the way in which this tax policy structure has been put forward that they may collect only 30c in the dollar. That is when middle-income New Zealanders will understand—without necessarily knowing the term for it—what effective marginal tax rate policy actually means and what bad and sloppy design of tax policy actually means for them in terms of their future. That is coming around the pike. But on the underlying issue raised by Mr Copeland I say that yes National understands that families have special needs. We will cater for those special needs. We will use tax credits as we have in the past but in a more coherent way than this current package represents. 
The second issue is a political issue and it is this extraordinary motion. We can look at it in two ways. One way is to look at it in the way that Mr English did when he opened up debate from the National Opposition which was to put it in the context of this Government. We can look at the Order Paper as a signal of third term - itis and as a signal of a Government that really no longer has anything useful to say to the New Zealand people. Looking down the list of issues—all of them worthy—on the Order Paper we see the Oaths Modernisation Bill Conservation (Protection of Trout as a Non-commercial Species) Amendment Bill and we must not forget the Palmerston North Reserves Empowering Amendment Bill. All of the bills are worthy in their own right but frankly 10 or 15 years from now when we look back these bills will be seen as irrelevant scribbling in the margins of New Zealand political history. They will perhaps be remembered only by some unfortunate MA thesis writer doing her or his thesis in political studies or history and trying to explain why the Labour Party did not succeed in attaining a fourth term because it ran out of steam. I suspect that they are about the only people who will be interested in this essentially trivial agenda the Government is trying to convince the New Zealand people addresses the real issues facing New Zealand. It is for that strategic reason that the National Party although reaffirming the proper role of tax credits for families in the system will oppose the political purpose behind this motion which is to conceal the reality that the Government has lost the plot. It has run out of steam. It no longer knows what to do with the privilege of running the country. For that reason we will oppose the motion. 
Let us look beyond that to the context of what we really would expect the Government to be doing and what we really would expect if the Government were trying to put forward a coherent view that would tackle the real long-term structural issues facing this country including the issue of comprehensive tax reform. We know that this Government has ridden on the coat-tails of hard decisions taken earlier which created a tripling of New Zealand’s average growth rate. [ 
Interruption 
] Members opposite do not want to hear that because they have somehow amazingly convinced themselves that New Zealand’s improved economic fortunes began on the day Labour was elected to Government for the first time. The doubling of New Zealand’s per capita income and the tripling of New Zealand’s real GDP long-term growth rate are consequences of people taking real decisions to stabilise the macroeconomic policy framework to reduce unemployment from a high of 11 percent—23 percent for the Maori population—in the early 1990s and actually to come to grips with the fundamental issues facing this country. The Government has ridden on the coat-tails of some successful but hard-won policy change. 
Its first response has been then to introduce a welter of blather about knowledge wave economies and the—now to be late lamented—growth and innovation framework. Now it is about economic transformation. Essentially that is the same thing; it is to talk talk talk the language of economic change but just to fix political problems as they arise. This is so ably demonstrated by the particular motion before us today. We are seeing the wrapping of New Zealand in a blanket of mediocrity which is not addressing the long-term fundamental issues facing this country. 
It is not addressing the reality that we have for example a revolving-door policy on migration by which roughly 72000 people—on the basis of the last annual statistics I have in my head—came through. They have moved to New Zealand to become New Zealand citizens—and we welcome them—but we have had about exactly the same number moving out of the country. These people are not moving out because they are looking for higher unemployment benefits or better tax credit schemes; they are moving out because they no longer fundamentally believe that the New Zealand economy can offer them and their families the best route to personal advancement. 
Somewhat under half of the one million New Zealanders who live overseas live in Australia. They are automatically disqualified from the unemployment benefit for a stand-down period but that does not stop them from getting off their back seat and moving across the Tasman to take advantage of the higher level of real wages that is available there for them. We have a situation even at the middle level of the workforce. I remember a figure being given for fork-lift drivers’ earnings in 2005 converted to Australian dollars and applying then. The average fork-lift driver in New Zealand was earning A$10 less than his or her counterpart in Australia. New Zealanders are moving to Australia fundamentally because our productivity growth rate has slowed down. 
We have heard from various speakers today the continued plea for higher minimum wages. Minimum wages address—and this is arguable—an equity issue. They will actually do nothing in the long term to address the real issue facing this country which is the need for higher real wages. The only route to higher real wages is through higher sustained productivity. The big news in the last month—admittedly it might be to a minority taste but again people will work out for themselves what it means when they see their wage packets 10 years from now—is the slow-down in productivity growth. 
During question time I thought Dr Cullen was very ill-advised to correct our questioner who made the point that labour productivity of growth rates were the slowest since statistics were first recorded in 1988. Dr Cullen said: “The figure the member cites is labour productivity not total factor productivity”. Some people use the term “total factor productivity growth”. The answer there is even worse. The position in respect of labour productivity slow-down—to 0.4 percent in the latest statistics that are available—was accompanied by an increase in capital per worker. The consequence I say to Dr Cullen is that the really important measure of multifactor productivity—and I agree that this finally is the really important measure—actually declined from memory by somewhat over 1 percent compared with a long-term positive increase in multifactor productivity of around 1.5 percent. This is not some fine academic point. In the long run our ability to sustain higher productivity growth will be the difference between New Zealand moving forward and its becoming a backwater. 
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. 
RUSSELL FAIRBROTHER (Labour) 
: 
 This morning at 7 o’clock I was in Napier at a breakfast attended by about 120 builders— 
Hon Clayton Cosgrove 
: One hundred and fifty. 
RUSSELL FAIRBROTHER 
: —150 builders from Napier. We were attending a breakfast hosted by the Hon Clayton Cosgrove. Three significant things emerged from that breakfast. 
Hon Member 
: Did they know who you were? 
RUSSELL FAIRBROTHER 
: No one asked where “Candy Floss” was I say to members. Three things emerged from that breakfast. One was that there was a sense of well-being and satisfaction with the Government’s apprenticeship training scheme. There was considerable pride that this Government had reinstituted apprenticeship training schemes. The builders there were very defensive of the integrity of that scheme but that is not what I want to talk about. 
The second thing that emerged from that breakfast was that the 150 builders are enjoying a prosperous successful stable economy. We had first-class tradespeople and first-class businessmen who could plan for their futures. They could employ staff they could seek to employ qualified staff and they could look ahead 10 to 15 years. 
I spoke to a builder who had moved his business from Auckland to Napier to build prestigious homes and who specialises in coastal and elevated properties. This is a builder who is employing a number of people with considerable pride and confidence that under the economy of Dr Michael Cullen he has a future in Napier as a very successful businessman. But that is not what I want to speak about. 
The third thing I want to speak about is that during this breakfast it became immediately apparent that each one of those builders who employs staff and is confident of his or her future in Napier because of the economy of Dr Michael Cullen and this Government is very delighted that the family in Marewa with two adults and four children aged between about 3 and 12 or 13 are getting another $10 a week from 1 April bringing their total tax relief to $303 a week. This will put money in the pockets of families and will enable the builders and the real estate agents the land agents and the travel agents and all those who contribute nothing but take commission from the economy to take a bigger bite with greater satisfaction. 
 The family in Marewa that receives $303 a week from tax relief under the marginal tax deductions of Tim Groser or Heather Roy would have been $293 worse off. That would be $293 out of the economy which those builders were looking forward to putting towards building a prosperous future. So the 150 builders at the breakfast this morning had a spirited range of questions for my friend the Minister for Building Issues Clayton Cosgrove. The questions were spirited but underlying them was a confidence a satisfaction that this is a Government that provides a stable economy low unemployment and puts money back into the pockets of those who will spend it in the economy that these builders work in. The families the mums and dads with children can now afford to upgrade the quality of their house. They can afford to make improvements to their homes in Marewa and can afford to look forward to a sound future. That is why this is a debate of high principle as outlined— 
Hon Maurice Williamson 
: Ha ha! 
RUSSELL FAIRBROTHER 
: Don’t you laugh. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: The member by using “you” is bringing me into the debate. 
RUSSELL FAIRBROTHER 
: I am sorry Mr Assistant Speaker. You were not laughing but you should have been. Maurice Williamson was laughing. 
Hon Maurice Williamson 
: What is this member doing speaking if it’s a high-principled debate? 
RUSSELL FAIRBROTHER 
: The high principle was introduced by Mr Bill English who introduced the Opposition attack in this debate. There was an irony about the “high principle” reference because Mr Bill English accused Dr Cullen of coming to this Chamber to waste time and speak about high principles on what he said was a wasteful motion. It is ironic that he should criticise our Minister of Finance for addressing matters of high principle but it is increasingly ironic that the debate that is so heavily criticised by the National Party is about putting more money into the pockets of those who count—the mums and dads with children. This extra money enables normal families to buy an extra litre of milk an extra loaf of bread and to keep one parent at home if he or she decides to help with raising the children. 
In February this year I was at the Eastern Institute of Technology orientation in Napier. This is one of this country’s leading technical training institutions. At that orientation I was approached by a number of people but I want to mention two. One was Sue who came to me and said: “Russell I want you to thank Dr Cullen for enabling me to study for my nursing degree because no longer do we both in our household need to work in order to raise our children. With Working for Families I can afford to enter into full-time study.” She said: “If it was not for Working for Families I would not be at the EIT orientation speaking to you today.” She was thankful and grateful. 
But the other matter was also interesting. I was approached by another lady whose name I will not mention who told me that she and her husband had moved back to New Zealand from Canada where they had been living for 15 years. The Government’s Working for Families package meant they could move back to Napier and with interest-free student loans she could embark upon a long-postponed course of study. She said to me: “Would you please thank your Government Helen Clark and Dr Cullen”— 
Hon Maurice Williamson 
: I’m sure she did! 
RUSSELL FAIRBROTHER 
: She did indeed. I want to tell the member that on Saturday I was at Boundary Stream celebrating 10 years of a mainland island. A scientist came up to me and said: “Would you tell Helen Clark how well she’s done for us in the United States.” I did not know this man at the time but he said to me: “Would you tell Helen Clark how well she has done in the United States.” Napier is a town that is proud to have a Prime Minister such as Helen Clark. 
But I return to the debate and to the family that moved back to New Zealand from Canada so that the wife could take advantage of our interest-free student loans and our Working for Families package and engage in a long-postponed course of study at the Eastern Institute of Technology. This is the real working side of Working for Families. We have had the patronising approach and productivity arguments from the inherited voice of the Werther’s Originals TV ad Tim Groser. 
There was a time 30 years ago when that same Tim Groser stood on a platform at Victoria University and made a case for zero GDP growth. Back in his student days he argued that the biggest evil in this country was having increasing GDP growth. Boy have not times changed! The voice has not but the thought processes have. Are they an improvement? No they are not. 
I want to move on to talk about the families in Napier that can now afford to go out and buy an extra bottle of milk and an extra loaf of bread and can afford for one parent to stay at home so that children have somewhere to go. I want to talk about the kids in our area of Napier who are now 14 15 16 and 17. These are the kids who sometimes cause problems to the police. Why? Because there is a breakdown in parental structure and control. 
Those children were born immediately after the Ruth Richardson “mother of all Budgets”. Those children are of the time of the slashes to benefits. Those children are of the time of high unemployment. Those children are of the time of the breakdown in families because of the stresses of low incomes into the family household. Today those young teenagers have no structures they have no need to return home at an appointed time at night after attending a noisy party because their parents have forsaken the control from the structures that were eroded by the vicious attack by the principles that Heather Roy referred to reflected in Ruth Richardson’s “mother of all Budgets” back in 1991. 
The party opposing this motion is the party that wants tax cuts. The parties supporting this motion are the ones that want healthy families. They want families with healthy incomes and families that have time to plan their social environments as well as their working environments. The 150 builders at the breakfast in Napier this morning were all very confident about their futures. Not one of them asked my friend the Minister for Building Issues how they would be in 5 years’ time. They want to train new employees. They want to train new carpenters. They want to move their businesses forward knowing that it is going to happen. They were talking with confidence of 10 to 15 years. This is a Government that brings in policies such as Working for Families and redirects the money by way of tax credit to where it counts—to the mums and dads of Marewa Onekawa Maraenui Taradale and Greenmeadows who go out to work and also raise their children. I support this motion. 
Hon MAURICE WILLIAMSON (National—Pakuranga) 
: 
 All I can say after listening to that speech is how perverse the voters of Napier must be. We have just heard from Russell Fairbrother about how much the voters of Napier think this is a great Government. He said that everywhere he goes—to the Eastern Institute of Technology or to the breakfast for 150 builders—that is what everyone thinks. Well what happened at the last election? Napier was the safest Labour seat in the country—a seat that Labour had never lost for any reason—and a seat that good old Geoff Braybrooke used to hang on to by a majority of 15000 to 20000 and that member lost it. That member lost Labour’s safest seat. I have to say that if I ever lose my seat which is a similar Tory safe seat I will be so ashamed that I will walk on that day. That member comes into the House and says that everybody he talks to is in support of the Government so the loss of the seat can only have been a personal vote against him. It could only have been the result of a sheer abhorrence of the individual member if everybody in Napier thought things were going so swimmingly. 
I want to say today that my “gast” is completely “flabbered”. I am flabbergasted. I have been in this House for as long as you Mr Assistant Speaker—for 20 years—and I have never seen an Order Paper have as its No. 1 item a self-congratulatory notice of motion about how well the Government is doing. I want the people who are listening to this debate today to know that this debate is not about passing any family tax credit provision Working for Families provision or any other taxation legislation. We are not doing that today. Any members of my adoring drive time audience in Auckland who listen in to the radio regularly need to know that this debate is not about a bill. It will not matter whether people vote for or against the motion because the regimes have all been put in place after previous debate in this House and through legislative change. No for the first time in my knowledge of this Parliament we have a Government that is so bereft of any ideas that it has come up with a motion to congratulate itself. 
I could not believe that so I got out the Standing Orders. There is a very good section at the back that states the time each debate can take. I thought that that would be interesting to read because I did not know how long a Government motion debating timeslot was—how long each member could take and what the maximum time for the debate was. I know what the timeslots are for the general debate and for the first reading of a bill but I did not know about those for a motion. As I went through pages 119 120 and 121 of the Standing Orders I read about every sort of debate we can think of that this House normally has. I read about how many minutes each speaker gets—the first speaker gets this many then subsequent speakers get that many—and about the limit for the debate. But I could not find the speaking time for a Government motion. 
So I asked the Clerk. David McGee knows these things; he knows everything. He said that if I looked at the section entitled “General procedures” I would find a heading “Debates not otherwise provided for”. That is what this is today: a debate not otherwise provided for. That is how important this debate is. That indicates how many debates like this that there have been in the past. We have to look under the heading which I should have spotted “Debates not otherwise provided for”. 
What is going on here? I was a Minister in a National Government for 9 years and I tell members that the hardest thing I did during those 9 years was to go to the legislative committee every week—the Hon Lockwood Smith will remember doing this—and fight like stink to try to get some of our legislation into the House. There was so much legislation and there were so many bills in the backlog that Don McKinnon who used to be in charge of that committee used to say he knew I wanted to bring my maritime transport bill into the House. He would say he was sorry but I could not do so because there was no slot available. Dr the Hon Lockwood Smith would have rued the day too when he was trying desperately to get legislation into the House. What does a legislative committee meeting look like now? Do the members have a cup of tea and some biscuits? I bet there is not even a legislative committee now or if there is that the committee sits around and has a chardonnay and something to eat. 
A self-congratulatory Government notice of motion has got to the top of the A4 page that is all that is left of the Order Paper. Clayton Cosgrove will know how important some of the stuff is that is left on the Order Paper. I should hang on though because one of the items left on the Order Paper is Government notice of motion No. 2. So not only do we have this precedent but it will be repeated in the form of another self-congratulatory motion at some stage in the future. There are other things on the Order Paper like the Conservation (Protection of Trout as a Non-commercial Species) Amendment Bill. I understand that that is a very important bill. I know that most of the people in Pakuranga run down the street trying to touch the hem of my garment and asking me to please make sure that the Government gets the Conservation (Protection of Trout as a Non-commercial Species) Amendment Bill passed through. But not one person has ever in my life asked me to please get the Government to move a motion in the House that is self-congratulatory about something it has already done. 
Let us think of an analogy to this motion. Let us think about a sporting analogy. How would we feel if the Warriors after they won a match had a separate day when all they did was to give speeches about how well they had played the day before? 
Hon Mark Gosche 
: That would be good. 
Hon MAURICE WILLIAMSON 
: Mark Gosche says that that would be good. No sportspeople in their right mind would spend a whole day telling everybody how good they were. They would get back to the training room and the weight room and get ready for the next match because as in any other field of human endeavour one is only as good as one’s last match. But that is not the case with regard to this Government. It has nothing left. That is what I want the honourable listeners to know about this Government motion. We have an Order Paper with nothing on it and a Government that has totally lost its direction and now the only thing the Government can do is to move as the No. 1 item on the agenda an unprecedented motion that says how good it is. 
I can see this becoming very much a trend. I think we should have motions to celebrate the second anniversary of such things and the third anniversary. Then we could bring in a whole lot of other things. We could celebrate the anniversary of the leaking of the local loop unbundling papers and have a motion in another year’s time to celebrate the 2-year anniversary of that. How bizarre will it become? Members in this House are all paid high salaries the running of this place costs a fortune and we are here using up those salaries and the time of this House to pass a Government motion. Let me read it for people; let me show them how vitally important it is. The motion stands in the name of the Minister of Finance the Hon Dr Michael Cullen. It states: “That this House endorses”— 
Sue Moroney 
: What’s your policy? 
Hon MAURICE WILLIAMSON 
: No I say to Sue Moroney it does not say: “What’s your policy?”. She should read it. It states: “That this House endorses the Family Support Tax Credit increase of $10.00 per week per child that comes into force on 1 April 2007.” In other words that increase is done and dusted; it is coming in no matter what happens.  
We should be debating the issues that this House should be focused on. The Minister of Health is in the House; we should be hearing from him as to whether he is prepared ever to let Dr Tony Bierre after what was found out about his behaviour near a contract again in respect of the Auckland District Health Board. At question time the Minister would not answer that. We should be using this time in the House to scrutinise people like Damien O’Connor about the corruption in the Department of Corrections and so on. But we have a Government that is all about care with no responsibility and absolutely no blame. That is what is going on in this regime. Now there is a smokescreen. Now the Government when it gets into real trouble moves a motion like Government motion No. 1 on the Order Paper and has it debated.  
I hope the news media absolutely cane the do-nothing Government because in the past if any self-respecting executive had come to this place with an Order Paper as thin as this one with nothing left the conclusion would be that the Government had run completely out of steam and had nowhere to go from there and that it was time to get the Government out. That is very clearly what this motion says to the country. It says the Government has nothing left but the Conservation (Protection of Trout as a Non-commercial Species) Amendment Bill and another notice of motion that is on the way to fill up the agenda even more. A 4-week adjournment is coming up when Labour members will all be off on their 4 weeks a year— 
Darren Hughes 
: It’s 3 weeks. 
Hon MAURICE WILLIAMSON 
: Actually I say to Mr Hughes that if an adjournment goes from a Thursday through to a Tuesday and has 3 weeks in the middle he will find if he adds it up that it comes closer to 4 weeks than to 3 weeks. 
Darren Hughes 
: We start on Monday here. 
Hon MAURICE WILLIAMSON 
: Oh yes. The member says he starts the holiday on Monday. The member started on his holiday at about Christmas time and he will not go back to work until the following Christmas. 
This motion is an absolute outrage. I have never seen one like it before and I cannot believe this Government has moved it. 
SUE MORONEY (Labour) 
: 
 I think we have just heard excuse No. 500 as to why National made no investment in infrastructure in the whole decade it was in power. Maurice Williamson just told us that he did nothing while he was the Minister of Transport because he could not get his legislation on the Order Paper. That must be the best excuse I have heard yet as to why National did absolutely nothing about the state of our roads and our public transport in the whole decade it was in power. But now I know. 
Why does National not like this debate? Every single member of the National Party who has participated in this debate has said that he or she does not want to be debating this issue. The clear reason why those members do not want to debate this issue is that this debate gives a clear demonstration of which parties support families and which parties do not. Come election time everyone says they support families. When people want families to vote for them suddenly everyone is in support of families. But this is the debate that will really flush it out. Which parties actually vote for those types of policies that are of good practical use to families and which parties do not? I know that the National Party is not supporting this motion. I do not know what the National Party has against families but just as it will not support the 20 hours’ free childhood education policy it will not support this motion. What has the National Party got against families? 
 But to understand why we are debating this motion we need to go back a little bit because there is a context all around this. We could not be debating this motion at all if we did not have the successful economy that has been built around the term of this Labour Government. We do have that very successful economy and what we are debating now is the motion that says that some of that economic benefit will go to working families. 
I remind people in this House who may have forgotten because it may be some time since they have been involved in that period of time when they raised young children that all New Zealanders who have been involved in this process do know that raising a family is the time of most financial pressure in our lives. As we move through that whole age demographic raising a family has to place the most financial pressure on a person over the course of his or her lifetime. This measure will ensure that we can take that financial pressure off families because with the complexity of raising children these days families need as much pressure taken off them as possible. This measure actually reflects not just slogans and not just feel-good messages about families; it is good practical support that this Labour-led Government is bringing in for working families. 
The best thing about it is that the extension of the Working for Families package gives families options. Those members opposite who want to argue that somehow this Government is forcing issues upon families really have difficulty debating this particular motion because this measure gives families lots of options. It gives them the option to increase their income as working families. But if they wish to do so they could use this package to maintain their income and reduce their working hours and therefore spend more time with their children and that is good news for families. 
But it is not the only good news for families that is coming up on 1 April. Another initiative by this Government that will ensure that families can spend more time with their children is the 4 weeks’ paid annual leave as a protection for all workers. This is a great initiative for families. It means not only that workers will have more time for rest and recreation but that those families who do have young children or even older children can spend much more time during school holidays with their children—again another very family-friendly initiative from the Labour-led Government. 
Another time of financial pressure that springs to mind for me if we look over our lifespans—and again on 1 April this area will be further alleviated—is the period of time when people are in retirement and reliant on New Zealand superannuation for their income. On 1 April the rate of superannuation is increasing and that is good news for older families. 
The effect of these impacts—all these different initiatives—coming from yes a very busy Government despite what Maurice Williamson just tried to say in squaring off for his lack of performance when he was last in Government is bringing in an absolute wrap-around effect. It gives a combined effect that is a significant improvement to people’s lives. I want to tell members about a couple of real people—real-life instances I have come across recently that demonstrate this wrap-around effect that a number of different policies will have come 1 April. 
I want to tell members about a woman I talked to at a meeting in Cambridge last night. She talked to me about the effects of the policies that are coming in on 1 April from this Labour-led Government for her family. She said that her son and his family benefited greatly from the Working for Families package. The new initiative will make a real difference to the income of their family and therefore take significant financial pressure off. She then went on to tell me how she was a recipient of the rates rebate scheme brought in by the Labour-led Government. She then went on further to say how both her and her sister were going to also enjoy the increase in superannuation—again coming in on 1 April. 
So that is just one example of the combined wrap-around effect that Labour-led Government policies have in making a very real difference; it is not a bumper sticker slogan not shallow promises but good practical effects for people in their everyday lives. 
I give yet another example: just last week I was on a worksite in Matamata at a place called Metso Minerals which employs around 140 staff. For a town the size of Matamata that is a very large workplace indeed. When I met with the staff and talked to them about some of the initiatives coming up they thought it was almost too good to be true. They checked with me: “Is this really going to happen? Is this really what we’re going to get?”. I could give them in writing and verbally the information that confirmed it for them. The Working for Families package for those people was going to make a significant difference. 
I listened with interest to Dr Cullen speaking earlier today in this debate about a person with a spouse and two children. As at 1 April that person can now earn up to $40000 before paying any tax. Is that not a great thing? I was able to talk to the people at Metso Minerals about the fact that come 1 April they would through a Labour-led Government initiative get a 4th week of annual leave. They said: “But surely that can’t be paid leave?”. I said: “In fact it is. This is from the Government. Your employer will pay you for a 4th week of annual leave and that is even better for the time you can spend with your families.” They are of course looking forward to July because they were also very interested to hear about the KiwiSaver scheme that is coming up and that will have a real impact in that workplace. These are examples of the types of people who would suffer if National ever got a chance to run this country. 
I just want to refer back to Bill English’s speech earlier where he had the audacity the absolute audacity to take this Government to task about what caregivers in the health sector are paid. For goodness’ sake! By the time Bill English had finished as the Minister of Health the wages had gone backwards in the 1990s. Caregivers in the health sector had lost income. I know this because I was a union organiser in the aged-care sector at the time. I had to deal with the consequences of the Employment Contracts Act being enacted by the National Government and penal rates being stripped off those aged-care workers primarily middle-aged women working in the weekends having their incomes slashed. The audacity of Bill English to say that it is wrong for this Labour Government to keep increasing the minimum wage so that those wages can be increased! I am very pleased to stand up in support of this motion. Thank you. 
Dr the Hon LOCKWOOD SMITH (National—Rodney) 
: 
 The media are starting to refer to this Labour Government the Clark-Cullen Government as a lame duck. It is a dead duck. In 23 years in this Parliament I do not remember a Government that has absolutely so little business to conduct in this Parliament that it debates a motion at the top of its Order Paper. I never ever remember a Government announce that it would seek urgency to pass legislation in the way that the Clark-Cullen Government said it would do in order to pass its anti-smacking legislation—and then it could not even raise the votes needed to get urgency. This Government is a dead duck. A Government that can no longer govern should get out and let the people elect a Government that can govern. 
We are debating this motion whereby Labour is celebrating its family support tax credit increase. I want to test this lame-duck Government to see whether it actually understands the policy it is debating. I will run a test now to see whether there is even a single Labour member in the House who can answer some questions about this policy. The first thing I want to ask those members is this. If a woman or a man is trying to get off the domestic purposes benefit and we take that person over an income range of from $5000 of earned income a year up to $100000—by that time that person has gone right off the domestic purposes benefit—[ 
Interruption 
] I ask Darren Hughes a Labour Party whip whether the tax that that person on the domestic purposes benefit would pay on the next dollar he or she earns in the entire income range of from $5000 a year to $100000 a year of income will ever fall below 50 percent. 
Can any Labour member answer that question? Would the tax that that person—a person with three dependent children going off the domestic purposes benefit—has to pay on the next dollar he or she earns in the income range between $5000 a year and $100000 a year be less than 50 percent? Is there any income where that person would pay less than 50 percent in tax on the next dollar he or she earns? Does any Labour member know the answer to that? Not one of those members can tell us the answer. In fact the answer is that yes there is an income range where such people would actually pay less than 50 percent on the next dollar they earn. 
Let me ask the Labour members the next question. Over what income range would the tax paid on the next dollar earned by a person with three dependent children—a person who is trying to work his or her way off the domestic purposes benefit—be below 50 percent? Can any Labour member tell me that? We are debating Labour’s policy; it is those members’ policy. Surely one Labour member understands the policy. Over what income range would a person who is working his or her way off the domestic purposes benefit pay less than 50 percent in tax on the next dollar earned? Can one Labour member tell me that? Can even a Minister tell me? Can Pete Hodgson a Minister in the Labour Government tell us the answer to that? Not one Labour member can tell us. They do not have the faintest idea of how their policy actually works and they have the audacity to waste the time of this House by debating and celebrating something without knowing how it works. 
Let me tell Labour members how their policy works. I have here a graph. The data on it is provided by the Inland Revenue Department—the Government’s Inland Revenue Department. The question I asked members opposite was to tell me how much tax a person who is working his or her way off the domestic purposes benefit would pay on the next dollar he or she earned over $5000 intervals on incomes of from $5000 a year to $100000 a year. The graph shows that indeed there is an income range within which such people would pay under 50 percent in tax on the next dollar they earn. Do members know what that income range is? It is from $30000 a year to $40000 a year of income—and that income range only. In every other income range from $5000 a year to $100000 a year of earned income a person with three dependent children who is trying to work his or her way off the domestic purposes benefit pays more than 50 percent in tax on the next dollar he or she earns. And Labour says that is great! 
If we listen to those Government members we hear only dead silence now. Not one of them understands how the policy works. Do those members understand that the tax the lowest-income people—people whom they claim to care about; people with three dependent children—pay as they try to work their way off the domestic purposes benefit is over 90c in the dollar? We have heard examples given by David Benson-Pope this afternoon so let me give him an example. People who are trying to work their way off the domestic purposes benefit today may earn $10000 a year through their own work while still being on that benefit. They are trying to earn more for their family. If they work another 20 hours a week at $15 an hour—and of course their increased earnings are $15000; they go from $10000 to $25000 of earned income over the year—does any Labour member know how much those low-income families with three dependent children working their way off the domestic purposes benefit get to keep? Of that extra $15000 of income they get to keep $1694. 
Labour celebrates that; it says that is great for low-income families. It says it cares about them. Those people work for an extra 20 hours a week at $15 an hour and they get to keep $1694 a year. In other words of every extra dollar they earn the Government takes 92c and those families get to keep 8c. And Labour celebrates that; Labour thinks that is wonderful. This data is all from the Inland Revenue Department using the figures after the changes that take effect on 1 April are put in place. And Labour celebrates that. 
Labour’s Working for Families policy was a bribe to middle-income New Zealand at the last election—a disgraceful bribe in order to win votes. It does not do a damn thing for low-income families; they continue to suffer under this Labour Government. The marginal tax rates that most people with families face on the next dollar they earn are in fact over 60 percent on incomes of from $5000 a year through to $100000 a year. If those families have three children the marginal tax rate they face on the next dollar they earn is 60-plus percent except for when they are on incomes within that $10000 income gap between $30000 a year and $40000 a year. 
It is little wonder that 22000 New Zealanders have taken off to Australia in the last 12 months. That is 30 percent more than those who left just 2 years ago. The exodus to Australia is growing because under this Labour Government’s policies people feel trapped. They have no hope when they earn an extra dollar and the Government takes 92c in tax out of that extra dollar earned. Where is the hope for low-income New Zealand families? They leave the country and go to Australia. They get out and this Labour Government bereft of policy and bereft of legislation should get out too. It is time the public elected a decent Government. 
Hon CLAYTON COSGROVE (Associate Minister of Finance) 
: 
 After that vein-popping dissertation from Dr Lockwood Smith we were not sure whether the member had burst or was about to burst some organ in his system. He got so worked up. I am not getting off the subject but for a moment I ask whether members recall that wonderful television series called  
Dad’s Army?  
Members might be able to assist me because I cannot quite recall the name of the old fellow who had gone out to the African wars or whatever who had this wonderful saying. He used to say to Captain Mainwaring: “They don’t like it up ’em—the old cold steel do they? They don’t like the old cold steel up ’em.” Well today in political terms what this motion has done to that party on the other side is to put the cold steel into them. 
I predict that that great genius Lockwood Smith will probably take a point of order just as he does every time I bring this up because he hates it—just as Darren Hughes predicted that the first three lines of his speech would be to quote his 23 years’ lineage in this House. He said he had never before in his 23 years seen this that and the other. That is the man who asks what low-income households should celebrate. I will tell members what they should celebrate. They should celebrate their 9000 sons daughters brothers and sisters who are in apprenticeships today for instance—apprenticeships that that member gutted in 1992 when the National Government abolished the Apprenticeship Act. He is the member who stands before the House and denies—as he does every time I make this speech and I wonder whether he will again because he has never won the point of order when he has made it—that the Apprenticeship Act got abolished and dealt to by him. Not only that; he is proud of it. 
What those 9000 young people should celebrate today is what we have done to give them a chance and a career in trade training. I was with Russell Fairbrother at the builders’ breakfast this morning. There were 150 builders there many of whom have young people working for them and have taken advantage of a modern apprenticeship system that that other crowd sold them out on. Well that silly member over there who should be on heart pills or something else would know if he read the statistics that on the East Coast of the North Island today there are carpenters—young people who are straight out of their time—who are earning $57000 a year. What did they get under that member’s Government? Zip! They got nothing except an abolished Apprenticeship Act which he is proud of. I say to that member that the old cold steel is waiting for him. He may enjoy it of course but it is waiting for him. 
This Government motion No. 1 makes a stark challenge to the National Party because if we look at the figures we see that 350000-plus families out there who were earning on average $88 per week in tax credits before this now earn $98 per week. I am told that Dr Bollard said to the Finance and Expenditure Committee—which I think Dr Smith is still a member of nominally—that before this $10-a-week increase with the Working for Families package there had been an increase in average real wages of 6 percent. Members should mark that. 
Unemployment is down to 3-plus percent—to 3.4 percent or 3.6 percent. Three hundred thousand jobs have been created in the 7½ years that this Government has been in office compared with Dr Smith’s great 23 years in the House. What a history that is! In June 1999 before that member was routed by the people his response to unemployment was the “mother of all Budgets”. To quote Mrs Shipley at the time National’s response to getting unemployment down was: “The Government believes our goal of reducing unemployment must now be matched by clear programmes that attempt to reverse the growing trend of domestic purposes sickness invalids and accident compensation claimants.” In English that means that the “mother of all Budgets” which she cut. So those members’ answer to unemployment was to slash benefits. 
What did it do? In June 1999—when that genius was still a Minister after his 23-year record in the House—unemployment was 7 percent. What is it today? It is 3.4 percent—the second-lowest in the OECD. How many jobs did that genius create over 9 years in office? 
Darren Hughes 
: Zip. 
Hon CLAYTON COSGROVE 
: Zip. How many jobs have been created today under a Labour Government of 7½ years? We have created 300000 jobs. I would tell the member to stick that in his pipe and smoke it. 
I welcome debating that member’s 23 years of lineage in this House against the 7½ years that we have spent creating jobs creating wealth creating growth in the economy giving young people a chance and giving students a chance with interest-free loans—which he hates of course because he brought in the botched student loan system. He hates the fact that a student might get a degree and have a decent shot in life without finishing that degree with a mortgage but without a house. The member of course got his PhD in animal husbandry I think—whatever that is. Some member might be able to assist me in defining what that means. 
Of course the member got his degree under the old system but he does not give a rat’s for what young people might have to go through today—and the facts speak for themselves. I often say in speeches in this House that we cannot treat people and our communities as if they are stupid. Every day that mob over there gets up and tries to seduce people with its 23-year record in the House. Members opposite have a so-called record of achievement such as their 9 years of huge unemployment of benefit cuts of cutting the pension and of abolishing apprenticeships—what a wonderful record that member has in his 23 years in this House. What a superb human being he is! In fact we should go and buy the  
Hansard  
and send it out. What an incredible record that member has! 
I remember when the students came. They did not give him the custard pie. I was the chairman of the Finance and Expenditure Committee at the time and the students came in to thank him. They gave him a cake I think at the Finance and Expenditure Committee and he did a runner of course. He did a runner and the students chased him down the corridor with a cake—the debt cake I think it was thanking him for the debt that they had been saddled with. What a great legacy this PhD in animal husbandry has. I say to that member that a heck of a lot of people out there would welcome the fact that we are dealing to child poverty. 
Dr the Hon Lockwood Smith 
: I raise a point of order Mr Speaker. I do not mind the personal abuse at all but maybe the member should get his facts a little bit straight. If he is interested my PhD is actually in physiology. It is in intestinal physiology and I won a Commonwealth scholarship—as did Dr Michael Cullen—to study for my PhD. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Thank you Dr Smith. 
Hon CLAYTON COSGROVE 
: My apologies Mr Assistant Speaker; I am gratified. I did not quite know and I yield to the member’s intestinal physiology. I think that it has something to do with guts—which is something that that party over there never had a lot of. That crew over there never had a lot of intestinal physiology or guts. But of course those members get up every day in this House and try to rewrite history. 
I say today that on 1 April we will give families back a tax credit. We had Heather Roy over there—“Private Roy” or whatever they called her back in the trenches with Captain Mainwaring and the boys and Rodney Hide—say that hang on we should not give people their money back. Then she said that we should give people back their money and she could not quite work it out. The difference between the parties is this. It is the difference between the flat tax and the flat-earth merchants in ACT and the members in the National Party who wanted to borrow $3.5 billion then cut another $3.5 billion out of our public services to give people a tax cut. 
Let us remind people of what they would have got under Dr Lockwood Smith’s intestinal Government—if it had ever got in. We in this House would have got around $98 a week and three out of four people I think it was would have got around $20 a week. So my constituents in Oxford and in Kaiapoi—those working families; those lower-income people and even those middle-income people—would have received just that. A family with three or four kids on $50000 a year—which is not a big salary if one has kids these days given the expenses involved—would have got that. But even middle-income people would have got a whole $20 a week. Dr Smith could have gone and done another PhD. He would not have needed a scholarship in intestinal physiology; he would have been able to use his $100 a week that John Key would have given him—while everybody else got $20—to go and do it and to pay for it himself. He would have had a bit of lose change over to go and buy a few sausages down at the butcher. 
I say that that is the difference between the parties. We believe in targeted tax credits. We believe in taking the money in. Under our system today Dr Smith and I do not get any more dough. I know that it irks him. I know that he could probably spend it on intestinal research; I know he could. And I am sure that I could probably spend $100 extra a week but I do not think that I deserve it and I do not think that he deserves it. I do not think that anybody who is in the top income bracket—the top 5 percent—deserves it but I do believe that three out of four New Zealanders deserve on average the $88 or $100 a week that they will get under this package. I do believe that the lost and lonely who are now being helped with in-work payments to encourage them to get into jobs and stay in jobs will welcome this when they compare the hollow promises from the hollow men who sit opposite pontificate and—in their 23-year record in this House—try constantly to rewrite history. 
CRAIG FOSS (National—Tukituki) 
: 
 I rise to speak calmly and intelligently about Government motion No. 1 unlike the previous speaker who is obviously very very angry. I can understand why he is very very angry because today I believe he visited Napier which was the home of a Labour seat for 54-odd years. It was taken from Labour—earned from Labour—by my good colleague Mr Chris Tremain. I can further see why the member is angry. It is because I guess when he flew up from Wellington he flew over the Wairarapa. He flew over what was another Labour seat that was won by Mr John Hayes a good candidate for National. Mr Cosgrove would have been remembering that these seats were all won in the 2005 election when these extra tranches for Working for Families were on the pledge card. So as the plane flew over the Wairarapa the angry member—who I presume spoke sense somewhere along the way in his speech but I honestly missed it—flew over Tukituki. Well that is the seat that I won which I took from a Labour Minister. It had been a Labour seat for quite some time and again I can just see Mr Clayton Cosgrove’s anger rising as he travelled up the country. Then he landed at Hawke’s Bay airport at Napier. As he got off the plane and Mr Fairbrother greeted him people probably looked away because no one was really quite sure who that gentleman was given he was the MP who turned about an 11000 majority into a vote of 15000 against himself and against the Labour Party. So no wonder the previous speaker was so angry and frustrated. 
I was also interested in the analogy that he was making about  
It Ain’t Half Hot Mum 
 because it reminded me of where the current Government is. It is a bit like  
Dad’s Army 
 because I can just hear the cry of “Don’t panic don’t panic!” from Dr Cullen at the moment as he looks at the polls. Those members look around and try not to panic in the face of the obvious catastrophe coming towards them. 
 I have asked a few seasoned colleagues who have been in the House a bit longer than I have why we are debating this motion. I asked those colleagues whether the Hon Michael Cullen put up the first tranche of Working for Families in the House as a debatable motion. The answer was no. Did Labour put up the student loans package as a debatable motion in the House? No. So we went through the other bits and pieces on the infamous pledge card and not one of them has been debated in the House as a motion. So I cannot quite understand why the most important thing facing this Government that needs to be debated in the House is a bit of self-gratification from a policy on a pledge card that was dubious anyway. Obviously Labour is stalling for time which is quite unusual because a few days ago it was running for time to try to get urgency as it whipped into action on the anti-smacking bill in order to vote for it. 
When the Hon Dr Michael Cullen who was first up spoke to this motion it was very interesting to watch all the list MPs on the Labour side furiously clapping away—working on their list-ranking speeches I guess. Those members seem to forget that around 60 percent of New Zealanders actually voted against this package. The party vote for Labour was nudging 40.5 percent. So around 60 percent actually voted against it. They were right to vote against its implementation and the way it has been executed. The way it works flies in the face of the good solid Kiwi way which is about rewards for hard work. It is about merit pay—work harder and earn harder to be rewarded. 
We need to be clear. This policy drives net family income. It virtually ignores gross family incomes because of the high marginal tax and the way the rebate system works. So another way to read that is that this policy controls net family income. There is nothing that good old-fashioned socialists—like the ones we have running the show at the moment on the other side of the House—like more than control. They want to control the net incomes of New Zealanders. They therefore want to control which way they swing and which way they vote and as we have recently seen they also want to control how we bring up our children. 
I work endlessly in my electorate and in this House to raise incomes for families and for all New Zealanders and to help them to achieve their aspirations to live their dreams and to set their sights wherever they want to be—it is patently obvious that I am fully in favour of this. I am all about empowering families; actually I am all about empowering all New Zealanders. I want all New Zealanders to hold on to more of what they earn. I want all New Zealanders to do their best as they see fit for themselves and their families. Again the way this current mechanism has been put in place is all about control. I want New Zealanders to be able to choose to save if at that time of their lives that is what they choose to do. I also want them to be able to enjoy their income if that is what they choose to do and I also want them to have the freedom to add value to our economy. In short I trust New Zealanders and National trusts New Zealanders to make the best decisions about themselves at whatever time of life they are in. 
Nothing demonstrates more clearly the differences between Labour and National than the way Labour has implemented this policy. This policy is about control; everything this Government is about is control be it in respect of smacking what one watches on TV or what one’s net income is. This was a flagship pledge on the infamous pledge card at the last election. It was one of those slogans on the pledge card which sadly the taxpayer had to fund and pay for. It was also—disgustingly quite frankly—made legal by retrospective legislation that was pushed under urgency late last year. Incidentally as I was writing a few notes I was wondering whether that $800000 had been paid back—there are about 95 days to go—and I am looking forward to the receipts being tabled in Parliament. 
Many studies in the last couple of years and in recent months have shown that there is a growing underclass in New Zealand and a growing poverty gap. Those at the bottom of the socio-economic ladder have suffered more than ever over the last 6 or 7 years. In fact the National leader John Key raised this issue in a recent speech and Prime Minister Helen Clark denied it. She said he was talking nonsense. In fact New Zealanders acknowledged it and they thanked Mr John Key for raising the issue confronting it and starting to offer solutions. 
I guess the celebration of this motion by Labour begs the question as to why on earth $10 a week is necessary in the first place. Why is it needed? Besides the other points I have talked about—control and buying votes—I ask why on earth this is necessary. Well it is very simple actually. Billions and billions of extra funds and extra individual wages and salaries have been taken from the private sector in the form of extra taxation by this Government over the last 8 years—amounting to something like $60 billion that will be wandering through the Inland Revenue Department accounts this year. That is why Labour decided that it needed to give families another $10 per week. Can members not see the obvious—that the money should not be taken in the first place? The Cullen experiment of the past 8 years has failed. 
The ASSISTANT SPEAKER (H V Ross Robertson) 
: Speakers’ rulings 26/6 and 26/7 states that a member cannot be referred to by one name—it is the full name or the title. 
CRAIG FOSS 
: Thank you Mr Assistant Speaker for putting me right. The experiment by the Hon Michael Cullen over the last 8 years has failed. The inflationary pigeons have come home to roost—they are coming right now. Wallets are empty and purses are empty. At the end of the week after paying the bills the only things left in those wallets and purses are numerous credit card receipts and suddenly the equity in one’s house starts to get eaten again. 
The experiment has failed. Costs are through the roof. Rates and electricity are through the roof. Voluntary school fees are through the roof. Interest rates are through the roof. Inflation is through the roof; the inflation rate is now based at 3 percent where once it was virtually illegal to go north of 2 percent. Under Dr Cullen’s experiment in respect of almost all economic measures over the last 5 or 6 years New Zealand has at best stood still and in most cases it has gone backwards. One thing that has also gone through the roof is the currency. The currency at 71-odd cents is absolutely killing New Zealand. Funnily enough New Zealand exporters are currently in Export Year. 
There is absolutely no hope of New Zealand climbing up the OECD ladder if productivity does not improve. As statistics that came out last week showed New Zealand’s productivity is sliding it is disgraceful and it is the worst we have seen in 19 years. In fact the only increase in labour productivity is people working longer hours for virtually the same money. Quite how Labour faces up to its union mates to explain that one I do not know but I guess Mr Andrew Little’s list ranking is probably improving by the day the quieter he stays on this. 
Inflation is absolutely totally corrosive to New Zealand. The inflation rate we now have is the product of the fiscal spend-up and Labour’s taking more than it needed to in the first place by way of Dr Cullen’s experiment. Those who are damaged the most by sliding productivity and high inflation are actually those whom Labour claims to support. Thank you Mr Assistant Speaker. 
DARREN HUGHES (Labour—Otaki) 
: 
 I move  
That the question be now put 
. 
Motion agreed to. 
A party vote was called for on the question  
That this House endorses the Family Support Tax Credit increase of $10.00 per week per child that comes into force on 1 April 2007. 
Ayes 64 
New Zealand Labour 49; New Zealand First 7; Maori Party 3; United Future 3; Progressive 1; Independent: Field. 
Noes 50 
New Zealand National 48; ACT New Zealand 2. 
Abstentions 6 
Green Party 6. 
Motion agreed to.