Media statement
Embargoed until 1pm
Tuesday 2 December 2008

Hon Peter Dunne MP,
Leader, UnitedFuture,
Minister of Revenue,
Associate Minister of Health

Address to Rotary Club of Central Wellington, Whitby Restaurant, James Cook Hotel

I am pleased to here once again, to continue the tradition of a post-election address to your club.

In 2002 and 2005, I came here after UnitedFuture had signed confidence and supply agreements with the Labour-led government of the day.

Today, I come here having entered into a confidence and supply agreement with a National-led government, something I will say a little more about shortly.

Whatever else may be said about the 2008 General Election it would be wrong to describe it as one of UnitedFuture’s more stunning successes – it clearly was not.

But it would be equally wrong to see it as a death throe.

While it was undoubtedly a setback, it was most certainly not a swan song.

And the reason for this is simple.

There is still a place in New Zealand politics for a party committed to the enduring liberal principles of freedom of expression, conscience and belief, which promotes economic and individual freedom but accepts these must be tempered by social responsibility, and which regards families and communities as the basis for a thriving society.

There is still a place for a party that speaks for those many thousands of politically dispossessed New Zealanders who see the National Party as simply too conservative, the Labour Party as too focused on promoting the power of the state, and the rest as too hard-line or extreme to be a credible political home.

And there is still a place for a party that is proud to seek New Zealand’s future as the best multicultural country in the world, and is unafraid to promote the political and constitutional changes necessary to achieve that.

While the UnitedFuture flame may flicker faintly at the moment, it will continue to burn, so long as there are people keen to see these values and principles represented on our political spectrum.

For my part, I am committed to doing all I can to fan that flame, and to rebuilding UnitedFuture accordingly.

But holding firm to time-honoured principles and values about liberty and opportunity will not be enough by themselves to recapture the public imagination.

There needs to be a readily identifiable cause that excites and motivates people to invest their political support.

UnitedFuture’s cause has always been families and communities.

Indeed, I am extremely proud of the fact that while we were ridiculed by some in 2002 for daring to place family issues on the political agenda because they were potentially too divisive, by 2005 and since, family issues have become so mainstreamed that every party now goes out of its way to parade its family friendly credentials.

But because of this, our continued advocacy for families has led far too many New Zealanders to the apparently unshakeable conclusion that we are talking about traditional families only, and that we are therefore no more than a stalking horse for the religious right, and all the prejudice and intolerance that implies.

This is reinforced by the plethora of wealthy, right wing, moralistic lobby groups that have appeared in recent years with their strident advocacy of a very rigid, narrow definition of what constitutes a family, and their denunciation as anti-family of anyone who does not subscribe to their view, or see family issues as narrowly and rigidly as they do.

I believe too strongly in the importance of family as the basis of our society to yield to these extremists, or to buy into their game in any shape or form.

And I will not allow my commitment or sincerity to be judged by their unctuous sanctimony.

Family life in New Zealand is simply too important to stand or fall on the form a family takes, or whether parents are allowed to beat their children, and it is time we stopped viewing the role and importance of families in such a narrow and prescriptive light.

After all, the mind-numbing humbug about what are real families and what are not did nothing to save the life of little Nia Glassie.

Families are the primary and most powerful nurturing unit for our children, but like all of us, they come in many shapes and sizes.

We have got to reclaim the debate away from the extremists, and accept the challenge of doing all we can to help all our families function effectively in a modern, pluralistic society.

UnitedFuture will take up the cudgels on behalf of real New Zealand families once again, by focusing on the issues that affect them, not by preaching to them about how they should be living their lives.

During my almost 25 years in Parliament I have been driven by a determination to see that every New Zealand family and every child gets at least the opportunities I got growing up in the 1950s and 1960s to be the best person I could be.

But I have wanted more than that for my own children, and in time for my grandchildren.

I want to see their horizons continually expanded and barriers shattered, so that the word “can’t” becomes redundant in our language, and where every person, regardless of their background, race or creed has the opportunity to enjoy all that is good in our country.

While John Key and I come from different political traditions, I share his sense of aspiration about what New Zealand can become, which is why I am pleased to be working alongside him as a Minister in his government.

In a word, I want to see New Zealand families and communities unleashed – freed from the constraints that currently stifle too many of their opportunities, and emboldened to achieve.

I see the work I will be involved in as a Minister and through our confidence and supply agreement contributing to that goal in the following ways.

I am delighted that the government – as part of its agreement with the ACT Party – has adopted as a medium term objective UnitedFuture’s policy to standardise the top personal tax and the trust rate with the new company tax rate of 30%.

A top personal tax rate of 30% not only means more money in the hands of taxpayers, thus benefiting households, but also helps ensure our tax system remains internationally competitive, and makes it easier for us to retain more of our best and brightest in this country.

It will need to be accompanied by corresponding adjustments to other tax rates - UnitedFuture’s suggestion is for a 10% rate on the first $12,000 of income; 20% up to $38,000, with the 30% rate applying beyond that.

Aligning the top personal rate, the trust rate and the company rate will also simplify the system and remove avoidance opportunities where taxpayers on the 39% rate shift income into trusts and pay only 33%, or seek to restructure themselves as companies paying only 30%.

I have already asked officials to consider how this medium term objective can be achieved, and UnitedFuture’s policy implemented.

Associated with this basic reform of the income tax rates scales is the question of income splitting for parents with dependent children, an option UnitedFuture has long promoted to give greater recognition to parents as equal partners in raising their children, and to give parents more choice about their working arrangements.

Put simply, income splitting is where the total taxable income of a household is split equally between both partners, and they are taxed separately on their share of that income.

For example, in a household with a sole income earner of, say, $60,000, that income would be split in half between both partners for tax purposes, so that instead of one person paying tax on $60,000, there would be two people paying tax on $30,000, which is somewhat less.

If one person was earning $60,000 and the other person $20,000 on a part-time basis, the split would be two lots of $40,000.

During the term of the last government, as part of that confidence and supply agreement, I released a government discussion paper proposing a voluntary income splitting scheme for parents with dependent children up to the age of 18 years.

Over 90% of the submissions received on that discussion paper supported the proposal.

Now, as part of the new confidence and supply agreement, I will be introducing legislation, probably in 2010, to provide for the establishment of such a scheme in New Zealand.

The government has agreed to support the introduction of this Bill, and will reconsider its position after it has been considered by a select committee.

Income splitting is not a new concept – it has been around the New Zealand tax system for many years, having first been proposed by the McCaw Committee way back in 1982.

It is commonplace, albeit in many different forms, in a number of European countries, as a way of addressing the position of second income earners in households, something the OECD noted in 2004 was an unresolved problem in New Zealand.

To those critics who claim income splitting is an old fashioned policy, out of step with the reality of New Zealand families today, some 2006 Census figures are a telling rebuke.

There are presently 425,000 two parent New Zealand families – around 287,000 (or 68%) of those have dependent children under the age of 18 years, and would be eligible for income splitting.

So this is very much a mainstream family policy, recognising the role of parents and giving them some additional choices – and it is on the political agenda now, only because of UnitedFuture’s advocacy.

In this regard I note the new Minister of Social Development’s reported acknowledgement that income splitting may be a way of addressing her concern about parents being forced back into the workforce before they are ready, and she is absolutely right.

Around 90% of New Zealand businesses are small enterprises, employing ten people or less.

Many of these are family businesses, where a couple may have laid everything on the line financially to set up the business, or where the partner at home is the one doing the books, and dealing with the paperwork.

Compliance costs and endless form filling are the bane of their existence, and often impact adversely on the quality and quantity of their family time.

Much of this is generated by the tax system – every time a new policy is introduced, like Working for Families, Kiwisaver, or the soon to come Independent Earner Rebate, there is an inevitable compliance consequence for employers.

While that often cannot be avoided, it is important that the incidence of compliance costs be reduced as much as possible by raising compliance thresholds, streamlining payment timings, and encouraging electronic filing arrangements.

Legislation I introduced to Parliament earlier this year, and which I expect to be reinstated when the House resumes, makes a number of significant changes to existing GST and PAYE thresholds, and tidies up a number of other anomalies.

They are positive changes, arising out of recommendations from the government’s Small Business Advisory Group, and I have already discussed with the Prime Minister and the Minister of Finance the scope for further changes, in the context of the government’s proposed recovery package for the current international crisis.

What is important to me in this process is certainly streamlining to the greatest extent we can compliance issues from a business efficiency and continuity perspective, but more fundamentally recognising the impact on families and the quality of family life of ever mounting compliance costs.

I commented earlier on the diversity of New Zealand families today.

Families Commission research released earlier this year shows that about 76% of New Zealand couples are married, and around 20% are living in de facto relationships, but perhaps most importantly, that a significant number of these relationships are re-partnerings.

At least 20% of children under the age of 17 are being raised in blended families which has huge ongoing implications for the workings of our Child Support scheme.

Over the last three years I have put in place a number of measures aimed at making it easier both for Inland Revenue to keep track of liable parents with outstanding obligations, and for parents themselves to enter into payment arrangements with Inland Revenue to prevent ever-mounting penalty interest bills.

I have also met with my Australian counterpart to discuss how we can cooperate more closely, given the free flow of people between our two countries, and the similarity of our systems.

Whatever way we look at it, the Child Support scheme will always be controversial – it is the very nature of the beast.

Custodial parents will always feel they are getting insufficient support from their former partner; non-custodial parents will always feel that they are paying too much money, and getting very little in the way of access to their children in return.

And where separated parents do make a genuine effort to share parenting between them in the interests of their children, the system can often be too rigid in recognising their efforts.

In part, this stems from the fact that, unlike Australia, we have never attempted to quantify the cost of raising a child so that our payment formula is more reflective of actual costs.

Earlier this year I asked the Families Commission and my own officials to look at this issue, including how the Child Support scheme can better reflect shared parenting arrangements, and I am expecting to receive their advice shortly, and to develop proposals for the government accordingly.

My bottom line here is simple: no child can determine the circumstances in which they are raised, but every child has the right to the affection and attention of both their parents, and the state should not stand in the way of that, except for the most obvious and exceptional of reasons.

One of the strongest nurturing experiences for our children is being able to spend time with their parents enjoying our country’s great outdoor heritage.

It might be fishing off the wharf, or at the lake, or tramping in the high country, but is an almost quintessential feature of New Zealand life, that we are in danger of losing.

That is why UnitedFuture has always had such a strong interest in the outdoor recreation sector.

It is not, as our critics sneer, because we are captives of the “huntin’, fishin’ shootin’” brigade – although we do appreciate that hundreds of thousands of New Zealanders enjoy these activities – but simply because we understand the strong role that access to the great outdoors has played and continues to play in the lives of so many families.

During this term of Parliament I will be advancing our plans in this area and working closely with outdoor recreation interests to ensure that not only are their concerns effectively represented, but also that the opportunities for New Zealanders to enjoy what our environment has to offer become more accessible.

Our confidence and supply agreement also signals our ongoing interest in issues surrounding the care of the elderly and those with disabilities, and the continuing role of the community and voluntary sector.

I have already written to the Minister for Senior Citizens proposing a change in the way that the annual increase in New Zealand Superannuation is calculated so that it is based on a prospective assessment of likely movements in the cost of living for the year ahead, rather than retrospective compensation for the year past.

UnitedFuture also wants to see a greater focus on aged care policy, and more support for rest homes in particular, and I will be focusing more attention on the issue of respite care, particularly in cases where elderly parents are being cared for by children who are now elderly themselves.

We have a comprehensive disabilities policy, developed in consultation with many of the major groups, and I have already approached the Minister for Disability Issues about ensuring that the recommendations of the recent select committee inquiry into the operations of the New Zealand Disability are implemented.

The elderly and the disabled are amongst the most vulnerable groups in our society, and our commitment to their wellbeing remains a yardstick by which our compassion as a nation should be judged.

Community and voluntary groups have long been in the forefront of advocacy and care for the marginalised in our society, and their contribution to health, education and welfare service delivery across the board fills a gap government services could never bridge, if it was left entirely to them.

UnitedFuture has long supported the contribution of the community and voluntary sector, and the role of philanthropy generally, which is why I was pleased during the last term of Parliament to make all personal and corporate charitable donations eligible for a tax rebate, by abolishing from 1 April this year the income limits that previously applied.

And it is why I currently have legislation before Parliament providing for a voluntary payroll giving scheme from 1 April next year, under which employees will be able to make regular donations to the charities of their choice each pay period and claim the deduction at that point, rather than wait for the end of year rebate.

During the coming term of Parliament I will be proposing further initiatives to boost the culture of giving, including allowing charities to access imputation credits.

Added to this are my ongoing responsibilities as Associate Minister of Health with regard to the implementation of Medicines New Zealand, the national medicines strategy I developed in the last term to give New Zealanders access to safe, quality and affordable medicines that meet their needs, and delivering on the confidence and supply agreement commitment to the greater use of private hospital surgical capacity to reduce elective surgery waiting lists.

Finally, and above all else, I am the Member of Parliament for Ohariu.

I humbly acknowledge with profound gratitude the loyalty and the support the electorate has given me on nine occasions now, and I heed its message.

My priority has always been to be the best representative I can be for Ohariu, and I am determined to redouble my efforts in that regard, on behalf of all the people who reside there.

After all, home is where the heart is.

It is going to be a busy three years!

ENDS

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