National Party undecided on Working for Families package

By KEVIN TAYLOR, political reporter

The National Party will not rush decisions on whether the Working for Families package will be repealed or changed if it becomes the Government.

Finance Minister Michael Cullen repeatedly challenged National in Parliament yesterday to say whether it would repeal the Future Directions (Working for Families) Bill.

The bill was passed 78 to 26, enacting changes needed to implement the Budget's centrepiece Working for Families package between October this year and 2007.

The package will cost $1.1 billion a year when fully in place, and boost the incomes of up to 300,000 low- to middle-income families by 2007.

National leader Don Brash told the Weekend Herald that he could not yet commit to retaining or not retaining any or all of the package.

Parts of it could be retained in line with National's view that there was a need to provide additional help to low to middle income earners, but the policy work was still to be done.

The party's deputy finance spokesman, John Key, said the legislation might be repealed but it would "no doubt" be replaced by other measures.

He agreed with the use of tax credits for low-income people, because they did not pay enough tax for a cut in the personal tax rate to have any effect. But National thought that for middle-income New Zealanders it was better to leave more in their wallets through tax cuts.

Mr Key has the job of studying the complex and interrelated changes in coming months, and the work could stretch into next year.

He hoped policy decisions could be made this year, although they might not be announced until 2005.

"We are going to go and crunch the numbers - how long that takes I don't know. It's not something we are rushing. They worked on it with a huge number of resources for a long period of time," he said.

"We want to do the due diligence to make sure that when we deliver what we are going to deliver to New Zealand, they can make a good assessment and we can give a good amount of detail."

Dr Cullen told the House during yesterday's debate on the bill that to be an election bribe there had to be an assumption National would repeal the legislation.

"I think that's going to be a pretty good kind of election contest to run between Labour and National come the next election. We can't really wait for that kind of thing to be debated."

At a post-Budget breakfast earlier in Wellington, Dr Cullen again fended off calls for tax cuts.

Such cuts would be "enormously expensive" and deliver little to low- and middle-income families.

For example, a couple with four children earning $55,000 from working would be nearly $150 a week better off when the package is fully in place in 2007.

A 20 per cent flat tax rate would give the family only an extra $39 a week and cost the Government $5.5 billion in lost revenue.