Turei Metiria: Motions — Family Support Tax Credit—Increase 
Turei Metiria: Motions — Family Support Tax Credit—Increase 
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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.