Budget 2010: Average family loses $55 a week - Goff

Phil Goff tells Parliament the top 1 per cent get 12 times the income tax cut of the average earner. Photo / Mark Mitchell

It's jam for everyone - except when you factor in the highest rate of inflation in 20 years and fee rises for early childhood education, in which case it's only jam for the wealthy.

That's the blunt assessment from the Labour Party, which is rubbishing the Budget and Government estimates that the average household will be better off from the tax cuts.

"It's a tax swindle," said Opposition leader Phil Goff. "This is a Budget, Mr English, that looks after you and your mates on your level of income.

"The top 1 per cent of income earners will get 12 times the cut in their income tax than the average earner."

Labour has crunched its own numbers and says that when inflation and a rise in early childhood education (ECE) fees are taken into account, the average family will be $55 a week worse off.

Mr Goff said people on an average income would be $30 a week worse off under the Budget tax changes.

Inflation would be 6 per cent, the highest rate in a decade, because of the changes, he added.

The model assumes a combined gross income of $76,000 with a tax cut of $25 a week, and two children attending a high-quality early childhood centre that was previously fully subsidised.

Even with an annual wage rise of 2.6 per cent, the family will be worse off because of ECE fees - assumed to be $23 to $31 a child - and a price rise of 5.9 per cent (inflation plus GST rise).

Inflation is forecast to drop to 2.4 per cent after next year.

Mr Goff said the changes to early childhood education would see either higher fees or a loss in service quality.

"This Budget is not just a Budget of broken promises, it is a Budget of lost opportunities. That is a disastrous failure to invest in the future of our country, which is our children."

He attacked the Government for trumpeting the $2.1 billion being put into health over the next four years - $300 million short of what was needed just to maintain current service levels.

Act Party

The party supported the Budget, in particular $2.4 million to set up the Productivity Commission, which was part of its confidence and supply agreement with National. But leader Rodney Hide continued his attack on the Government's Emissions Trading Scheme. "We've got a new car, peak performance, new tyres, a tank full of gas and any aerodynamic impediments removed, but someone has locked the handbrake in place. That handbrake is the Emissions Trading Scheme," Mr Hide said.

MAORI PARTY

With $286 million secured for the party's pet projects, the Maori Party was crowing loudly - even if Hone Harawira, who spoke out against a rise in GST, was conspicuously absent from the Budget debate yesterday. The money will go to projects including re-integration houses based on Maori culture and values, kura kaupapa Maori, boosting Treaty of Waitangi claims and Whanau Ora. The challenge was for Maori to see the Budget as a complete package, rather than just a rise in GST.

GREEN PARTY

The Budget does nothing to promote clean-tech or high-tech industries, but is simply borrowing for tax cuts that favour the wealthy. Co-leader Russel Norman said enforcement of current tax rules was better than aligning the top tax rate to the trust rate, which will just see tax dodgers pay the same tax rate without having to dodge any more.

UNITED FUTURE

Leader Peter Dunne attacked the tax dodgers who pay only a slice of the income taxes they should. He praised the changes that would see nearly three-quarters of taxpayers pay 17.5c in the dollar income tax. The rise in GST would be fully compensated by tax cuts and other increases. "Let's contrast that with the last time the Government raised GST," Mr Dunne said. "Then it was raised with six weeks' notice. And no compensation."

PROGRESSIVE PARTY

The rich will take their tax cut and then decide whether to buy a Mercedes or a boat, party leader Jim Anderton said. The poor will look at the rise in prices and decide what they can afford to eat. CEOs will get $6000 extra a week, but the supermarket worker's extra $5 will be swallowed by price rises from the highest inflation in 20 years. "The Budget says: Don't worry about an increase in GST and rising food prices. You might not be able to afford to buy more food, but just think of the GST you're saving by not eating," Mr Anderton said.