Government’s $6.5 billion sweetener for voters

The Government has set a $6.5 billion bait for voters in a Budget that delivers tax cuts of up to $20 a week to most workers as well as big increases in Working for Families and accommodation supplement for families struggling to meet their costs.

However, for some the Government has given with one hand only to take with the other — leaving them with little or no gain.

Finance Minister Steven Joyce said his first Budget would benefit almost all workers and an estimated 1.3 million families.

From April next year, the bottom two tax rates will lift from $14,000 to $22,000 and from $48,000 to $52,000.

The change will give tax cuts totalling $2b a year of between $11 and $20 a week to all workers earning more than $14,000.

As well as the tax cuts, there were significant boosts for those with chil- dren aged up to 16 on Working for Families, and average increases of $35 a week in the accommodation supplement, which had not changed since 2007.

Those with large families and high costs could get up to $80 a week more.

The total package is expected to cost $6.5b a year.

However voters should not spend up large in anticipation — the tax cuts are not due to take effect until April next year and Labour leader Andrew Little would not rule out cancelling them if Labour was in Government after the September election.

Little said it was a clear pitch by National to try to win an election, and noted it was crafted by Joyce, who is also National’s campaign chairman.

Labour is the only party opposing legislation to introduce tax cuts and the low-income support. The Green Party and NZ First confirmed they would support it for the help it gave to lower income earners. The Greens’ support comes despite co-leader James Shaw describing the Family Incomes Package as “just another tax cut for the wealthy in disguise”.

Co-leader Metiria Turei said: “What we are seeing in this legislation is a very meagre opportunity to provide additional funding to the families that need it the most.”

But Little said Labour would not support it because it delivered an average of less than $5 a week to households on less than $24,000 but more than $30 to those earning more than $127,000.

He said there was nothing of substance to address the most urgent issue — the shortage of housing — and criticised the 1.3 per cent school operation grants increase as totally inadequate.

“[This] is not a Budget for the future, it’s a Budget for September 23.”

It was almost impossible to find a loser — but for some the Government took as much as it was giving.

Middle-income earners at the top of the Working for Families ladder will be affected by the decision to lower the abatement threshold to $35,000 income and speed up the abatement rate from 22.5c in the dollar to 25c.

The Government also announced it was doubling the cost of the EQC levy, which will add to insurance costs.

The low-income help earned National rare praise from the Child Poverty Action Group which said it was encouraging but more was needed. Spokeswoman Susan St John said the Working for Families boost was a “long-awaited” change that signalled some relief for those low income and beneficiary families which got family tax credits. However, the tax cuts offered nothing for beneficiary families and the package would also lift only 35,000 children out of housing poverty, less than half of those suffering hardship.

Salvation Army social policy director Ian Hutson said the Budget did not deliver on social housing, but the increases in the family tax credit and accommodation supplement would help vulnerable working families.

He was pleased the Government had listened to pleas to alter the bottom thresholds rather than the top.

“The imbalance in New Zealand society between the ‘haves and havenots’ has been increasing over the last five years. This Budget is a step in the right direction.”

Property Investors’ Federation head Andrew King was also pleased with the increase in the accommodation supplement, saying it would reduce overcrowding and missed rent payments.

Not a Budget for the future, it’s a Budget for September 23. Labour leader Andrew Little