Russell DeborahHon Dr DEBORAH RUSSELL (Labour): Thank you Mr Chair. I think that's appropriate Mr Chair and I thank you for your ruling in that matter. It is a shame—James Meager: Stay standing.Hon Dr DEBORAH RUSSELL: You're welcome to take a call.Look I want to carry on with discussing these effective marginal tax rates (EMTRs) in particular following on from what my colleague Mr Hernandez was talking about. I want to draw the Minister's attention to page 10 of the regulatory impact statement (RIS). It's got something quite alarming in there. So this is the regulatory impact statement on the $25 per week increase the in-work tax credit—it's really all the adjustments to the Working for Families tax credits. So it's not just the in-work tax credit; it's also the minimum tax credit and the independent earner tax credit and so on. So they all kind of fit together. But there's a really difficult overlap between the minimum family tax credit and the in-work tax credit and all the various sorts of tax credits that are available. In particular I want to look at the issue around the impending overlap of the minimum family tax credit threshold and the Working for Families abatement threshold. Now the minimum family tax credit is a really small tax credit. It only applies to a few people—or a few families. But the minimum tax credit is designed to ensure that between the operations of benefits from the Ministry of Social Development and tax credits and income earning and the complicated interweaving of all those different measures we have in place it tops up a family's income to a minimum level to ensure that a family who is in work—as in work" as defined—actually ends up a little bit better off even if only a tiny little bit better off than a family on benefit. So that's the idea of the minimum family tax credit.But it is continuing to go up as benefits increase because of the operation of wage increases or Consumers Price Index increases because that's how we set our benefits each year. That means that the minimum family tax credit threshold is going to have to increase over time. So that's one aspect of it. But then over time all these Working for Families tax credits they abate. So once you earn a certain level of income those Working for Families tax credits start to abate.Here's the problem—and I'm going to need to seek a little bit more time to explain this Mr Chair but sooner or later that minimum family tax credit threshold is going to cross over the Working for Families abatement threshold. It's set out really clearly in the RIS. It says that "As the [minimum family tax credit] threshold increases annually it is forecasted that on 1 April 2027 it will overlap with the [Working for Families] abatement threshold."Mr Chair I'd just like to carry on with this call if I may because this call is—I've just got to get through the problem. So if I can just carry on—thank you Mr Chair.This means that Working for Families customers will face effective marginal tax rates of over 100 percent so an EMTR an effective marginal tax rate of over 100 percent. So in layperson's terms what that means is that if that family earns an extra dollar then $1.10 might be taken off them in abatements. All right so that's kind of worrying. So when the EMTRs go over 100 percent there is then no—well why would you do the extra hour of work if more is going to be taken off you than you get paid for the work in the first place?So what it means is—as the regulatory impact statement goes on to say—that "[minimum family tax credit] recipients who are some of the lowest income working families would face decreases in their income as they work additional hours." So as a result of the changes that are going through in this tax bill we are now facing this very real problem at 1 April 2027.So it just means that the policy intent and it's set out in the regulatory impact statement is they would owe—you know they conflict. On the one hand we're trying to encourage low-income families into employment. On the other hand we're going to abate away every single dollar they earn. The problem is going to come about because of the way that tax credits have been changed about in this bill. Minister it's a real problem. I'd like to hear some of your thinking on it."