Labour to prioritise families and scrap Budget tax cuts
Labour is promising to scrap National's Budget tax cut plan.
Instead it will funnel the cash into higher Working for Families payments and extra help for those with young children.
It's a package it says will deliver up to $48 a week extra to middle income families.
It would also reinstate the independent earners tax credit, which was dumped in the May Budget, but keeps in place National's big boost to the accommodation supplement.
The flagship policy, announced by leader Andrew Little in Auckland on Tuesday, aims to contrast Labour's targeted help for middle income families with the extra cash the wealthier receive under National's tax package.
It includes a winter energy payment for beneficiaries and superannuitants, announced by Labour on Monday.
That would be paid between May and September and give $450 a year to a single person and $700 to a couple or a person with dependent children.
It comes as Labour was rocked by a new TVNZ poll on Monday that showed it falling to just 27 per cent against 47 per cent for National and the Greens and NZ First each on 11 per cent.
Leader Andrew Little said the "targeted Families Package" would cost $890 million in 2018/19, but scrapping National's tax cuts would free up $1.5 billion.
"This creates more than $2b over four years of net savings. These savings, together with new spending to be set out in Labour's Fiscal Plan, will be prioritised towards rebuilding New Zealand's social foundations by investing in essential public services and our future infrastructure needs."
The package would give more than 70 per cent of families with children a bigger income boost than the Budget 2017 package.
"By not spending $1.5 billion a year on tax cuts, Labour is able to do more for lower and middle income families and people in need, while investing in the priorities Kiwi families care about: housing, health, education and infrastructure," Little said.
He said the September election was a clear a choice between Labour's priority of investing in services for those in need and boosting the incomes of low and middle income families against National's priority of "an election tax bribe aimed at those at the top" which gave a disproportionate amount to the wealthiest households..
"At a time when we have crises in mental health and housing, now is not the time for tax cuts."
Every family receiving Working for Families would get more with Labour, and 30,000 more families would be eligible for the payment.
"Families on middle incomes will receive up to $48 a week more in Working for Families with Labour's package than under National, plus Best Start payments of $60 a week for children under three." The Best Start policy would cost of $303m in 2018/19
Nearly 60,000 families a year would be eligible for the $60 a week payment for each baby. Families on low and middle incomes would continue to receive the payment until their child turned three.
Little said the winter energy payment would help a million people keep warm in winter. Together with grants for insulation and heating upgrades, it would help them avoid getting sick.
But National's campaign manager Finance Minister Steven Joyce said Labour wanted to take $2.5 billion from Kiwi families from next April, when National's package takes effect, with a "pale imitation of the Budget's Family Incomes package".
He said Labour planned to tax more with one hand and give a bit back with the other hand.
"And in their desperation to avoid shifting tax thresholds, they've dreamt up an even more confusing array of new and old subsidies while taxing low and middle income people at ever higher rates as their wages grow."
He said someone on the average wage would face an annual tax hike of $1100, while Labour would fork out a $3000 annual baby bonus for a family earning $150,000.
It had come up with "a convoluted spaghetti of entitlements that will confuse everyone, and provide a future of ever higher tax rates for hardworking Kiwis as their wages rise".
Labour's key changes to the Working for Families payment are:
* Increase the family tax credit base rate for the eldest child from $5878. National has promised to increase it to $5303.
* Adopt the Budget changes to the family tax credit for subsequent children and the new abatement rate.
* Lift the abatement threshold from $35,350 to $42,700. National plans to cut it to $25,000.
The other main points of the package are:
* A $60 a week payment for each child in the first year after paid parental leave ends, which will be extended to age three for low and middle income families. It will be abated at 20.8c in the dollar on household income above $79,000.
Releasing the policy, Labour gave examples of families who would benefit.
* An Auckland family with a six and a ten year old, with one income of $90,000, would get $49 a week more compared with $22 a week under National, on top of an $80 accommodation supplement under both parties.
* A Wellington sole parent earning $45,000 a year and with a two year old would be $107 a week better off against $9 a week under National on top of a common $55 accommodation supplement.
* A Christchurch family with a $16 year and a household income of $70,000 would be $25 a week better off, compared to $1 a week worse off under National before taking into account a $55 accommodation supplement under both.
* A Hamilton family earning $55,000 with a four year old and a baby would get $129 more against $39 more under National on top of $55 a week accommodation supplement under both parties' policies.