Smith NickHon Dr NICK SMITH (National—Nelson): I want to question the Minister in the chair Grant Robertson on how many people with this package are going to be caught up in the ridiculous position of facing a more than 100 percent—Hon Steven Joyce: Or even 90 or 80.Hon Dr NICK SMITH: Sorry? Or even 80 or 90. But I think everybody in this committee would say it is ridiculous if people when they earn more end up worse off.So I just want to give the Minister in the chair a practical example. Let's say you've got a teacher they're earning $80000 a year they're living in Auckland and as a consequence of the generous new Government they get an increase in their teacher salary of $5000 a year or $100 a week.What this part does firstly is it says they're in the top tax bracket. So out of that $100 a week they're going to lose $33 in tax. And then as a consequence of the Working for Families abatement they're going to lose another $25 of the $100. And then as a consequence—quite likely in Auckland; we know they're facing rental costs—they face an abatement of their accommodation supplement of $25 per week. And then with this Best Start they face an abatement of $21 per week. So they get an increase in their pay of $100 a week but the Government takes $104 off them. Now how can that possibly be good policy? And actually it could be worse than that. If they've got a student loan they'll actually have another $12 a week that they'd need to contribute there and if we want to throw in the ACC levies then that puts it up—they'd actually earn an extra $100 a week and the Government takes $116 a week off them.Now can the Minister in the chair please explain as to how that's good policy? How would we possibly want people who are getting $100 a week extra—Darroch Ball: You're making it up.Hon Dr NICK SMITH: —ending it up—well the member says Which part?".Darroch Ball: No. "You're making it up." is what I said.Hon Dr NICK SMITH: Oh well the member says I'm making it up. Is it true that they'd lose $33 worth of tax? Yes. Is it true that they would lose $25 a week from their Working for Families? Is it true under the parts of this bill they'll lose $21 of their Best Start? Is it true that they will also lose $25 on their accommodation supplement? Well if I add 33 25 25 and 21—that comes to 104. Do you know why I know it's correct? Because the regulatory impact statement for this very part says—we're warned by Treasury "Some people will face over 100 percent abatement on their extra earnings." Is this scenario somehow unrealistic? Well actually $80000 a year is not an unreasonable income.Now even if it's 80 percent I remember debating in this House saying that having a marginal tax rate of 66 cents in the dollar completely destroyed the incentive to work and actually I give credit to the Labour Government that realised that and made reforms. What I am shocked by is that after 25 years of a broad consensus in this Parliament that there needs to be an incentive to work there needs to be an incentive for people to earn a higher income—and I just want to know from Winston Peters of New Zealand First when did he tell New Zealanders that he was going to be taking $116 a week off somebody who earns an extra $100 a week? How is that Mr Peters going to provide an incentive to work? Why would you want to be part of a policy that actually is going to undermine the capacity for us to grow the wealth of this country?The bottom line of what these provisions mean is that people have a disincentive to work. You're going to have the ridiculous situation of the employee turning up to the employer and saying "Hey you know how I work 35 hours a week? I've worked out I'm actually better off if I only work 30." or the person ridiculously saying "Hey I don't want the pay increase because this bizarre Government is actually going to make me worse off." My challenge to the Minister in the chair: please explain Treasury's comment that a group of families will face an abatement regime over 100 percent and why on earth would we want to do things like introduce a Best Start payment and not go with the amendments of Mr Joyce for a more sensible regime."