Christopher Luxon holds post-Cabinet press conference.
Prime Minister Christopher Luxon has announced a Working for Families change, increasing the Family Tax Credit by $8 a week.
The change is actually required under the law. Whenever inflation runs above 5 per cent a year, a Government is required to adjust tax credit levels for inflation.
The changes will take effect on 1 April 2024.
Luxon made the announcement during today’s post-Cabinet press conference.
The Family Tax credit is the main Working for Families tax credit and is received by most of the more than 300,000 people who receive the tax credits.
The change takes the Family Tax credit rate from $136 a week to $144 per week for the eldest child and from $111 a week to $117 a week for each subsequent child.
Luxon said they were starting the 100-day plan with a “laser focus” on bringing down the cost of living.
The best start tax credit rate increases from $69 to $73 a week after tax.
Finance Minister Nicola Willis said the Government’s mini Budget would be released on December 20 alongside Treasury’s HYEFU.
It will outline actions the Government is taking around fiscal discipline.
All three parties were committed to “better value for taxpayer money”.
This would see a much more disciplined approach to Government spending.
Prime Minister Christopher Luxon, left, and Minister of Finance Nicola Willis, right, speak at the post-Cabinet press conference in Wellington. Photo / Mark Mitchell
Willis said she was concerned by the size of the financial “challenges” left by the outgoing Government.
These included risks referred to previously, but where the true scale and urgency had not been made clear, including commercial sensitivity.
Some of these risks were much larger than suggested.
Willis said she was also surprised by the number of Government programmes with funding set to expire. She believed this was “disingenuous” as it made the books look better than they really were. Willis said one example was a “massive fiscal cliff” in Pharmac funding.
The sum was likely to approach many billions of dollars over the forecast period.
Willis said they were also looking at amendments to the Public Finance Act.
She also announced that legislation would be introduced next week to return the sole focus of the Reserve Bank to an inflation target.
Willis said she was accusing the previous Government of finding “clever work arounds” to make the books look better than they were.
One of these issues was to short-term fund programmes rather than the full forecast period, such as with school lunches and for Pharmac. These examples were made known in the pre-election fiscal update, but Willis said they were discovering more such instances she did not know of before.
Willis said she wanted the law changed to ensure programmes with short-term funding were well highlighted.
She confirmed she did already know about the time-limited funding. But she said the issue was the “sheer scale”.
Asked if it was not her job as finance spokeswoman to have done this work, Willis said she agreed but future governments needed to be more upfront.
Willis said she could still deliver planned tax cuts.
Willis said they were still providing guidance to the public sector around the scale of the cuts needed.
Prime Minister Christopher Luxon and Minister of Finance Nicola Willis, pictured, speak at the post-Cabinet press conference in Wellington. Photo / Mark Mitchell
Labour’s finance spokesman Grant Robertson accused Willis of trying to create a “desperate diversion”, claiming it was because she could not find a way to pay for her tax cuts programme.
He said every government made decisions about the length of time they funded various programmes, sometimes because it was a one-off project, or to trial a programme or approach before longer term decisions were made on it.
“I certainly didn’t invent time-limited funding, I inherited plenty of it when I became Minister of Finance.”
He said lunch in schools had started as a time-limited programme during Covid-19, but had since got support from both sides to continue it. On Pharmac, he said the time limited funding was to align Pharmac with the three-year funding phase for the wider health budget.
He said some of the examples Willis had referred to as buried were actually clearly stipulated in the Budget.
“She’s been in the job of Opposition finance spokesperson for close to two years and she can’t read and understand what is in the Budget document.”
He said deciding what should get funding and what should stop in each Budget was the job of a finance minister. He said the Budget itself contained the list Willis wanted of all of the areas there was short-term funding.
Luxon was unable to give timeframes nor firm commitments for pledges outside of the 100-day plan, such as lowering the bowel cancer screening age to 50 and increasing defence spending to 2 per cent of GDP.
On repealing Fair Pay Agreements, Luxon said it would help with the cost of living by helping businesses improve productivity and give workers more “flexibility”.
On Waka Kotahi already having changed its name back to the New Zealand Transport Agency, Luxon deferred when asked what the speed of the change said about the Government’s priorities. He said they were committed to promoting te reo Māori.
On protests from Māori tomorrow moring which are tipped to cause gridlock on key roads during rush-hour, Luxon said everyone was entitled to the right to protest and encouraged them to be respectful and lawful.
Luxon said he didn’t actually know what the protests tomorrow were about.
He said the Government was deeply committed to improving outcomes for Māori, many of whom had gone backwards under the previous Government.
Luxon said they had only been in Government a week and he wanted iwi to understand they were deeply committed to Māori.
On receiving the “Fossil of the Day” award at COP28, Luxon said he was not embarrassed.
The award was given to the Government for its plans to reverse a ban on new offshore oil and gas exploration.
On reversing the oil and gas ban, Luxon said a big part was the country would continue to need gas.
They wanted to accelerate towards renewable energy but needed transitory energy, and gas was better than burning coal.
Luxon confirmed he intended to go to Waitangi for events next year.
He said their accusations about the Government books were serious and they truly believed while the previous Government had followed the law they had not followed the spirit.
Luxon confirmed that when the RMA laws are reinstated it will be done with the original Treaty principles clause.
He also confirmed Gerry Brownlee would be nominated as speaker.
The announcements come as Te Pāti Māori works with Māori organisations and iwi across the country to organise a national day of protest action tomorrow in response to what they claim is the Government’s “assault on tangata whenua and Te Tiriti o Waitangi”.
It coincides with the opening of Parliament tomorrow, where all the MPs are required to swear an oath of allegiance.
Te Pāti Māori says the protest will result in gridlock on the main highways heading into Auckland’s city centre, likely causing millions of dollars in lost productivity.
Luxon will also be speaking after yesterday having to admit he had incorrect misinformation a week ago when trying to defend his Government’s plans to scrap Labour’s smokefree policies.
Luxon said that plan would have seen only one store being able to sell tobacco products in all of Northland and it would become a target for crime, when in reality Labour’s plan was for 35.
He said on Sunday he was not deliberately trying to mislead the public.
Leader of the House and senior minister Chris Bishop then repeated the line yesterday morning in an interview with Jack Tame on TVNZ’s Q+A, despite Tame pointing out multiple times that official documents stated there would be 35.
“There’d be one store in Northland, that’s my understanding, yes,” said Bishop.
Luxon admitted the Government had got its numbers wrong.
“The deal is pretty simple in New Zealand. Yes you get access to help when you need it, but it’s not a place you park up for for life.”
Public sector Pharmac board chair boss Steve Maharey “saw the writing on the wall” Luxon said when he quit last week, calling Maharey’s decision “entirely appropriate” in lieu of National’s planned Pharmac shakeup.
“I’m sure there will be others considering their futures,” Luxon said.
