3. JOHN KEY (National—Helensville) Link to this
to the Minister of Finance
What is the highest annual income a family could earn after 1 April 2006 and still receive a payment under the Working for Families package?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
That depends on the number and age of children in the family.
Gerry BrownleeI raise a point of order, Madam Speaker. The Minister certainly addressed that question, but the Standing Orders require him when addressing a question to give an answer that is in the public good if he can. A maximum figure exists, and he knows that—a maximum number of children, and a parameter around the circumstance that creates that figure. He was asked to give it. It may be embarrassing for him not to know it, but if he does know it and has it in front of him, he most certainly should tell the House.
Hon Dr MICHAEL CULLEN Link to this
Somebody may conceivably—I did not mean that as a pun, sorry—have 20 children. At that point that person would get significantly more than somebody who has two children.
Madam SPEAKERI hate to tell the Minister this, but one could not have 20 children and still be within the eligible age group, but anyway—
Is the purpose of his Government’s TV commercial depicting a family living in an $800,000 house in New Zealand’s wealthiest suburb, with parents who think it is value for money to text their teenage daughter sitting 20 feet in front of them and listening to her iPod that dinner is on the table, to ensure that these needy families enrol in his “welfare for everyone” package; if not, what is its purpose?
Hon Dr MICHAEL CULLEN Link to this
It seems extraordinary to me that a member who proposed tax cuts that do not reach their maximum amount until one earns at least $100,000 a year now objects to the possibility that somebody on $100,000 a year with kids will get targeted tax relief. Let me add that it may be news to the member but there are things like reconstituted families in New Zealand, and it is quite possible that one could have 20 children under the qualifying age. That may be beyond his dreams in life, and it is beyond my expectations, wishes, or even fears, but it can happen.
Steve ChadwickHas the Minister seen any reports suggesting alternative approaches to targeted family tax relief? [ Interruption]
If those members wish to remain here in question time, would they please be quiet. Members are entitled to have their questions heard in silence.
Hon Dr MICHAEL CULLEN Link to this
I have seen reports of a package that would have a two-income family with no children and a combined income of $150,000 receive over $120 a week, but, under the same package, a two-income family on $50,000 with children would get only $16 a week, and the cost would be $11 billion over 3 years. That was the National Party’s tax package. [ Interruption]
I hate to tell the seals that the numbers are not correct. Is it still the aim of the Working for Families package to make work pay and to address poverty, as he would recall was stated in 2004; if so, is he surprised to find that a recent Treasury report from officials from Treasury, the Inland Revenue Department, and the Ministry of Social Development states that the extension of Working for Families has very mixed work incentives and will not do anything to alleviate poverty, because, as we all know, the extension of Working for Families is focused on higher-income families, and, as a general rule, those living in $800,000 houses in Epsom are not deemed to be in poverty?
Hon Dr MICHAEL CULLEN Link to this
The purpose of this programme is certainly not simply to deal with issues of poverty, though we make no apologies for reducing by, I think, something like two-thirds the number of children living in poverty in New Zealand, as a result of this package. If, of course, the member in his house worth however many million dollars is saying that living in a $800,000 house in Auckland makes someone one of the super-rich, then I think he should do a bit more door- knocking.
Rt Hon Winston Peters Link to this
In respect of the comments of the Minister of Finance on a report of a $11 billion tax package over 3 years, did that tax package go with a proposal to borrow to make it possible; if that is the case, how irresponsible is that?
Rt Hon Winston Peters Link to this
I will rephrase my question. In respect of those reports of $11 billion over 3 years in respect of a particular party’s tax package, was it also in the report that such a proposal would require significant borrowing to enable those tax cuts to happen; and how irresponsible is that?
Hon Dr MICHAEL CULLEN Link to this
The package that I referred to was predicated upon increased borrowing. That was admitted at the time.
Hon Dr Nick Smith Link to this
I raise a point of order, Madam Speaker. I listened very carefully to the ruling you gave less than 10 minutes ago. In that ruling you said quite specifically that Ministers could comment on quotes of members of the Opposition but not on their policies. It seem extraordinary that we have now had three answers from Dr Cullen that breach the very Standing Order and Speaker’s ruling that you have just given. I wonder whether the same rules apply to the Deputy Prime Minister as to others in the House?
Rt Hon Winston Peters Link to this
Madam Speaker, you have just addressed that in your first comments this afternoon, when you said that reports of another party’s policy coming to a Minister’s attention could be mentioned in an answer. I am asking about the 2005 policy that National Party members campaigned on. They designed a plan to borrow significantly to give tax cuts. They admitted it then; why do they not admit it now?
The key issue is that the reports and the quotes that are sought must be within the Minister’s responsibility. It is not the Minister’s responsibility to comment on another party’s policies.
Rt Hon Winston Peters Link to this
I raise a point of order, Madam Speaker. What was asked of the Minister in an earlier question was whether he had received any other reports. The Minister got up and rightly said that, yes, he had—he had heard of one that involved tax cuts of $11 billion over 3 years. I am just asking whether, as part of that package, borrowing was involved to enable it to happen—and, of course, it was.
The first point is that this question is a long way from the original question that was set down on the sheet, which deals specifically with the Working for Families package. We know that Dr Cullen has mentioned the figure that Mr Peters now mentions, and we know that that clearly is the Government’s plan for the day. But perhaps we could get to a point where Mr Peters might modify his question by asking whether Dr Cullen has seen a named report—and perhaps he could name it, given that he has seen it—in which these two matters were traversed. That may get us closer to it. But I suggest, Madam Speaker, that the question as it stands, and as it has been amended, is a long way off the wicket when you line it up against the original question.
Hon Dr MICHAEL CULLEN Link to this
It seems to me that we have to be fairly careful here. Let me take two hypothetical questions. First, has the Minister seen the report of proposals by Federated Farmers to exempt farm dogs from proposed microchipping? I am sure the Opposition would wish that question to be asked and answered. Second, has the Minister seen reports by the National Party supporting the exemption of farm dogs from microchipping? Are we now to say that we cannot answer the second question, because the National Party said it—but we could answer it if Federated Farmers had said it? That would become an absurdity. I am not responsible for National Party policy, but I am certainly responsible overall for taxation policy, in conjunction with my colleague Mr Dunne, and I am responsible for commenting on any proposals that are put forward for changes to the taxation system.
Yes, and, of course, if opinions are sought, that is perfectly acceptable within the Standing Orders.
Except, Madam Speaker, you are also, surely, constrained by the intention of the primary question in the first place, which asked about the Government’s Working for Families package. To allow the question to be turned round, and have the Minister who is proposing the package answer questions about what he may or may not perceive to be an alternative to that package, is a heck of a long way off the mark from the first question.
It still relates to the package, though. As long as it relates to the primary question, it is in order. But I agree that one cannot extend it too far. Can I ask the Minister to address the question, please.
Perhaps the member would like to rephrase the question in a manner consistent with the comments that have been made.
Rt Hon Winston Peters Link to this
I will ask the question—[ Interruption] Well, if you do not like your policy, do not go campaigning on it. [] That member is the biggest lightweight there has ever been in this Parliament.
Rt Hon Winston Peters Link to this
Did the Minister, who in answer to an earlier question referred to $11 billion of tax cuts—at the highest level, a cut of $120 a week for somebody on $150,000—also learn that that total cost of $11 billion would require borrowing by a Government to enable such a tax policy to work?
Well, Madam Speaker, I will put it to you this way. That question asks the Minister of Finance to comment on a hypothetical figure of $11 billion of tax cuts. We would assert that that figure is quite wrong, that those figures are wrong, and that the report itself came out of the Labour Party research unit and nowhere else. Dr Cullen has now been asked to comment on, effectively, a Labour response to an initiative moved by the National Party in the election. That has nothing to do with the actual programme that the Government has coming into place on Saturday. I think it is quite wrong of you to allow this question to be diverted to a point where the Minister of Finance, rather than answering questions about his own policy, is now reflecting on a Labour report about whether the Opposition’s policies going into the last election were affordable.
I thank the member, and I have some sympathy for him, but unfortunately hypothetical questions have been permitted since 1995. If members would like the Standing Orders to be changed, then I invite them to refer the matter to the Standing Orders Committee. It was a hypothetical question. Would the Minister now please address the question.
Hon Dr MICHAEL CULLEN Link to this
It is my understanding that that package implied a significant amount of borrowing—some billions of dollars—and my position as Minister of Finance—[ Interruption] It was $3.5 billion of additional borrowing, to be precise, and that was accepted at the time and appeared in the publication, in the original version of the policy. But my view is quite clear: while borrowing can be justified for some capital expenditure, borrowing for tax cuts is particularly stupid fiscal policy.
If members wish to remain in the Chamber for question time, they will not interrupt members who are asking a question. Everyone is on a last warning.
When will the Minister finally admit the truth, which is that Helen Clark ordered the extension of this welfare package to higher-income New Zealanders, not because she thought that group needed saving from poverty or from food banks, but, rather, because she had seen Labour’s own polling that National’s popular tax message threatened her own political survival, and, by the way, she could not trust her Minister of Finance, who had made such a botch-up of Budget 2005?
Hon Dr MICHAEL CULLEN Link to this
It seems very strange that I am still here, and so, of course, is the Prime Minister, and that member is still on the Opposition benches! The main purpose of the extension of Working for Families was to lift significantly the threshold at which abatement began, and at the same time lower the abatement rate. The effect of that was to apply significant additional incentives for moving into paid employment, because in fact there was a much smaller reduction in earned income as a consequence of the change to the package. Secondly, in New Zealand we have a very poor level of horizontal equity in our system compared with many other countries, and improving that situation can be achieved only by pushing the Working for Families package further up the income scale. I invite members opposite to go knocking on the doors of families who are on $80,000 and have two or three kids, and tell them that they should be paying the same net amount of tax as a single person earning $80,000 a year.
Is it a coincidence that the Working for Families extension is being rolled out on April Fool’s Day, and did the Government choose that day because it is treating as fools the literally hundreds and thousands of low and middle income New Zealanders who are not eligible for Working for Families who will see their taxes used to prop up families earning as much as $142,000 per year—the needy families that Helen Clark has identified in the extension of her package—and can he now understand why those very-low-income single earners are a little miffed about all this?
Hon Dr MICHAEL CULLEN Link to this
Not particularly, no. Of course, the reason why the date is 1 April—as the member could know, if he had spent a little longer in this country—is that that is actually the beginning of the tax year.
Does he think the architect of New Zealand’s welfare State, Michael Joseph Savage, would ever have foreseen a time when a family in the top income decile with all the toys, from iPods to a $4,000 fridge, would be considered in dire enough straits to be eligible for a welfare handout?
Hon Dr MICHAEL CULLEN Link to this
Yes. Mr Savage and of course Sir Walter Nash—particularly Nash—introduced a universal family benefit in 1946.