'THE NATION'

PETER DUNNE
Interviewed by SEAN PLUNKET

SEAN United Future Leader joins me live now from Wellington with the art of income splitting. Mr Dunne good morning to you. A cornerstone policy, it always has been for United Future. Two years into this term and you're getting it introduced into the House. Is this just window dressing given that no one else seems to support it particularly other than the Maori Party?

PETER DUNNE – United Future Leader
No I don’t think so Sean, in fact the genesis of this has been quite long. During the term of the previous government I put out a government discussion paper on income sharing and how it might work, and that attracted pretty widespread support, about 92% from memory of the submissions favoured it. The bill that I've introduced just recently builds on that. I expect when it goes to a select committee there’ll be a substantial level of support for it, and the issue that will then arise will be a much wider debate I think about the treatment of household income for tax purposes, how you better support families, and I'm looking forward to this having quite a big consideration at the select committee and we'll see what happens from there.

SEAN Okay I know you say there's widespread support for it though, but Treasury says it’ll cost 500 million a year, IRD 450 million dollars a year. We've looked at many commentators who've said it doesn’t work, it's not fair. The Attorney General’s put out a report that says it breaches the Bill of Rights and is not equitable. Do you consider that to be strong support for the idea?

PETER Well let's just take each of those in turn. The 450 million dollar figure assumes every eligible family takes up income sharing. This is a voluntary scheme, I don’t expect that to be the case. I expect the actual cost to be considerably less in reality. As for the Attorney General’s comments, they would be precisely the same comments that were made at the time that Working for Families was introduced, and any other form of social assistance package, because any form of social assistance automatically discriminates either against one group or for another group. So I'm not particularly worried about his comments in this respect, I think they're just consistent with the way the Bill of
Rights operates. But as I say when it comes to the test and we hear what the people of New Zealand think as we will through the submission process, I think you'll see very strong support.

SEAN Okay, I want to bring the panel in now and Brian Fallow, I know you’ve written about this issue. What would you say to Peter Dunne when he says there is support for it, and not everyone will take it up. Do you believe that?

BRIAN FALLOW – New Zealand Herald Economic Reporter
Well even if they don’t and it's going to cost a pretty penny, and the first test is in these hard times, you know why would the rest of the members of the Cabinet say okay cog up to half of the allowance for new spending in a budget, it just saves us the trouble of thinking of things that we might spend that money on. It's not well targeted as an exercise in providing what was it, better support for families, it ignores solo parents and their kids for a start.

SEAN Peter Dunne that’s a very good point he makes. How do you convince Bill English that this policy you know a cost of 500 million, let's say even it's 250 million dollars is a goer then a lot of experts say it's not well targeted?

PETER Well firstly it takes its place in the queue with every other measure that’s being proposed, I accept that, and we'll argue the case on its merits. Secondly I'm proposing if the bill is passed that it takes effect from the 1st of April 2012, so there's actually at least a year’s cushion in terms of that impact, and who knows what the budget situation might look at that time. Can I just pick up Brian’s other point about the absence of solo parents and sole income parent households from the scheme, yes that’s true but don’t forget that there are a number of other things that they qualify for that other families don’t qualify for. So you’ve gotta see the income sharing package really as part of the suite of measures that we put in place to assist families in New Zealand, not the sole measure.

BRIAN Yes but if you look at where child poverty is concentrated, it tends to be in beneficiary households, they already many of them miss out on Working for Families. You would further entrench that. Effectively you're using the tax code for social engineering, you approve of a certain kind of family unit, you disapprove of others. That’s the message that you're giving isn’t it?

PETER No I don’t think so Brian, I think what income sharing is about is saying that in two parent households however they are constructed, there are two partners making a contribution to the upbringing of that household. Use the analogy of the corner dairy. If the couple was running a corner dairy, they could income share between them, and they do. The most basic business in New Zealand if you like is running your household. So why can't the same principle apply? And I think it's also about valuing the contribution of the stay at home parent.

SEAN I think Brian’s also saying it's a middle class taxcut and I imagine if you looked at the people of Ohariu Belmont a lot of them would benefit from it, isn’t it really just for you, you know an electoral tool in terms of keeping support?

PETER Well there are 8300 and something families in Ohariu that would benefit from it. There's around 310,000 families across New Zealand that stand to benefit should they take it up. About three quarters of children in New Zealand would be the beneficiaries of that. I think it's a pretty mainstream approach, but as I say it's voluntary, it's an option, it sits alongside all of the other measures, and I think the important point is once we get into the public discussion, the relative cost of income sharing versus Working for Families, versus the suite of other measures will come on to the table, and I think we can have a very rational debate at that time about appropriate priorities.

SEAN Jock Anderson do you think there's ever been a voluntary taxcut that hasn’t been taken up by everyone who's eligible?

JOCK ANDERSON – NBR Reporter
I can't think of one, but I think there's one important point here, and that is Mr Dunne’s obviously banking on the fact that not everyone will take this up because obviously the cost is going to be horrendous. So I'm thinking Mr Dunne what mechanisms have you got in place to make it difficult for people to actually take this up, so that you can ensure that not everyone will actually take advantage of this? There's going to be some very intense regulations surrounding this obviously.

PETER That’s a very devilish way of putting it Jock. Actually what we're doing is making this an end of year tax credit, so one will claim it at the end of the year rather than progressively. The cost of administering the system is pretty minimal, it's only around a couple of million dollars, so there's no great difficulty in doing that because we're paralleling this structure with Working for Families so precisely the same provisions and procedures would apply. As to is there a devilish plan to get people not to take it up, no there's not, there's a very simple answer to the question, it's called choice, and I think people welcome the opportunity to have some choice, and I think parents who will be calculating whether they stand to benefit or not, will be quite pleased with the idea that at last someone’s saying, you’ve got a choice to make here.

SEAN Peter Dunne I think you very much and indeed your colleagues in parliament will have the choice on whether or not to support that change.

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