Smith Lockwood: Motions — Family Support Tax Credit—Increase 
Smith Lockwood: Motions — Family Support Tax Credit—Increase 
[Volume:638;Page:8348] 
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.