5. TE URUROA FLAVELL (Māori Party—Waiariki) Link to this
to the Minister of Finance
Does he agree with Dr Stephen Poletti from Auckland University’s economics department that Budget 2008 continues to leave behind the 150,000 children and their parents who have the greatest needs in the country, when he states that “There has been no base benefit increase, and the in-work tax credit still is denied to the children who are in most hardship.”; if not, why not?
Hon Dr MICHAEL CULLEN (Minister of Finance) Link to this
No; one, those people on benefits have annual adjustments on 1 April, which does not apply to many low-income earners; two, all 150,000 children and their parents benefit from the indexation of Working for Families tax credits and the bringing forward of those tax credits; and, three, the in-work tax credit, surprisingly, is for those in work.
Te Ururoa Flavell Link to this
Does the Minister agree with Gordon Campbell that the reduction in the amounts allocated for sickness benefits, widows benefits, unemployment benefits, and, most significantly, special circumstances, which has been undertaken in a climate of ongoing neglect of beneficiaries, is the kind of tight-fistedness to the most needy that is shameful for a Labour Government; if not, why not?
Hon Dr MICHAEL CULLEN Link to this
The projections for some benefits show the numbers falling and therefore a reduction in expenditure on those benefits—that is a matter for some celebration. We now have 145,000 fewer people on working-age benefits than we had in 1999. This Government believes that is a remarkable success, not a sign of failure.
Charles ChauvelHas the Minister seen any proposals to change the structure and the design of the tax cuts announced on Thursday?
Hon Dr MICHAEL CULLEN Link to this
I have seen an awful lot of proposals. I heard a proposal from Dr Pita Sharples for a zero tax rate after $25,000 a year. That would cost $8.5 billion a year. It would make it rather difficult to afford anything for beneficiaries at that particular point. Then I have seen proposals from Mr Key that clearly imply the cancelling of the second and third round of increases to the bottom threshold to redistribute that money to those on higher incomes. Finally, I have seen suggestions of cancelling employers’ contributions to KiwiSaver to give further tax cuts.
Gordon CopelandDoes the Minister accept that the tax threshold movements in Budget 2008 would need to move to $47,000 for 33c and to $74,000 for 39c if adjusted for the movement of 23.8 percent in the CPI since 1 April 2000, and that the actual movements of just $40,000 and $70,000 from 1 October therefore leave about 1 million taxpayers paying more tax in real terms than they did in 2000?
Hon Dr MICHAEL CULLEN Link to this
No. The full effect of the tax adjustment from 1 October is as follows. For those on the top tax rate, the amounts at that top tax rate are about the same. The change for those on around $50,000 a year is that the package gives $10 a week more. For those on $30,000 a year, on the implementation, the package gives $20 a week more. This package does more than indexation but is biased towards those on lower incomes.
Te Ururoa Flavell Link to this
Does the Minister consider that an investment in the elimination of child poverty will have compounding benefits to the whole of society that would be seen in improved health, educational performance, family well-being, and employment prospects; if so, why has his Budget done little, if anything, to eliminate child poverty?
Hon Dr MICHAEL CULLEN Link to this
This Government has taken tens of thousands of children above the poverty line through the Working for Families package because the first large increase in those payments went to all children of low and modest-income families. The $10 a week increase on 1 July last year went to all low-income families, including those on benefits. The indexation to the tax credits goes to all low-income families, including those on benefits. Of course, with a movement in the threshold, that does not apply to those who are already below that threshold but affects those above that threshold. That is the inevitability of moving thresholds by indexation.
Te Ururoa Flavell Link to this
What has happened over the weekend for him to change his mind and suggest that he might now help those single beneficiary families in hardship when the Budget he announced last week left them out?
Hon Dr MICHAEL CULLEN Link to this
Nothing; that work was already under way before the Budget announcement by Treasury looking at where the largest pressure points were.