2. Dr RUSSEL NORMAN (Co-Leader—Green) Link to this
to the Minister of Finance
Does he agree that due to inflation, no new spending in the upcoming Budget is the equivalent of a cut in real terms?
Hon BILL ENGLISH (Minister of Finance) Link to this
It depends on which part of the Budget—and I am not trying to be clever about it. Some services will continue to get somewhere near an inflation adjustment, such as health and education. Inflation adjustments will continue to be made to income support programmes such as superannuation and benefits, which are very large components of the Government’s annual Budget. There will be services that will have no increase in spending, and that means they will be cut in real terms. We have a strong expectation that everyone supplying public services needs to focus on providing more services for less money, and that is not a new message.
Focusing on just one of the programmes that the Minister has identified, how does he intend to cut $250 million from Working for Families without affecting middle-income earners, when he himself pointed out in 2008 that: “Taking higher-income families out of WFF saves very little money,”?
As the Government has signalled over the last month or so, we have been looking at whether it is possible to restrict the very broad scope of Working for Families to higher-income families. The member may well be right that savings from that are not significant.
Is it not the case that in order to save $250 million from Working for Families, a number that he has floated previously, he would have to cut well into the middle-income brackets, possibly removing all or some of the entitlements to families on a combined income of more than $60,000?
I am not sure where the $250 million figure came from. The member will just have to wait for the Budget to see what progress the Government has made. As I think I said in the House yesterday, there is unlikely to be radical changes to income support programmes, including to Working for Families.
Hon David Cunliffe Link to this
Will he therefore rule out cutting Working for Families for someone on the average wage of $50,000 a year?
The member will just have to be patient. He can be reassured that the Government is taking a very considered approach, and we will continue to protect the most vulnerable and help New Zealanders through recession.
Does he agree that the alternative to his Government’s spending cuts and Labour’s proposal to increase debt is actually a third option, which is to introduce a small temporary levy to fairly spread the cost of earthquake recovery across a large number of New Zealanders who could afford it?
That is the alternative, and I want to compliment the Greens on taking a principled position over the levy, unlike Labour members, who are not quite sure where they are going on it. The Government has outlined the reasons why it does not prefer to put a levy in place.
Hon Phil GoffCan the Minister of Finance confirm that John Key promised that “there will be no changes at all to Working for Families under an incoming National government …”, and does he intend to honour that promise?
The Government will continue with the same approach it has had since it came into Government, and that is to protect the income support measures that were put in place. We have in past Budgets trimmed those at the edges, because we believe that we need to stop the rapid rise in the cost of those measures, because that would be unsustainable.
I raise a point of order, Mr Speaker. The question was very straightforward. I asked whether he can confirm that promise was made and whether he intends to honour it. That answer did not answer either of those questions.
Mr SPEAKERThe problem is that it might sound like there is a simple answer to the question, but I think the Minister did address the question the member asked. Clearly, decisions have not yet been made. He has made that very clear in his answers. Decisions have not been made on the matter, and I cannot force him to be more precise when decisions have not been made. That is the dilemma I have as the Speaker.
I raise a point of order, Mr Speaker. My supplementary question asked whether he can confirm that promise was made. That decision has been made and either he can confirm it or he cannot, or he does not know. Any one of those answers would have done. But no effort at all was made to address any of them.
The member will reflect that there were two parts to the question he asked, and the Minister is obliged to address only one part of a supplementary question. The second part asked whether that alleged promise is to be kept, and the Minister pointed out that decisions are yet to be made. I cannot force him to be more precise than that on a question like that.
In considering his options of how to pay for the earthquake, what would hurt a family with an income of $60,000 a year more: permanently losing all or part of their $100 a week Working for Families payment, or temporarily paying $3.50 a week in an earthquake levy?
With regard to an earthquake levy for the kinds of numbers we are talking about with the Christchurch earthquake, there would have to be a pretty significant levy for quite a long time. I would not want to contest the member’s numbers, but my guess is that it would be a lot higher than $3.50 a week. With regard to his issues around Working for Families, the Government will make decisions based on the merits of those programmes, on fairness, on the amount of debt the Government has, and on other spending priorities.
Is it not true that the bill for the earthquake recovery will be passed on to New Zealanders one way or another, and that the most compassionate way to pass on the cost is to spread the burden across a large number of people, each paying a small amount, rather than concentrating the burden on a small number of working families that are already struggling to make ends meet?
I can assure the member that nothing contemplated about changing Working for Families would go anywhere near paying the earthquake bill, so equating the two is simply not correct. Paying the bill will be spread across all New Zealanders in a number of forms, ranging from the Earthquake Commission levy, higher insurance premiums for homeowners, and higher debt obligations that will have to be met by taxpayers today and in the future.
I seek leave to table a document prepared by the Parliamentary Library that seeks to identify where Working for Families would have to be cut in order to save $250 million.