Labour leader Andrew Little denies crack in Labour-Greens relationship after different stance on Budget

Labour leader Andrew Little speaking during the Budget debate. PHOTO/Getty

Labour leader Andrew Little says the different positions of Labour and Greens on National's budget package for families is not a sign of a crack in the parties' agreement to co-operate.

Labour and the Greens have similar views on National's "Family Incomes Package" on tax cuts, Working for Families and the Accommodation Supplement but the Green Party is supporting legislation to pass it while Labour is opposing it.

Greens co-leader James Shaw said they were not big fans of the tax cuts and it was a fine line, but the changes to Working for Families and Accommodation Supplement would benefit about 50,000 children in severe hardship and the party could not ignore that.

However, Little said Labour would not support it because the tax changes were poorly directed and gave too much to higher income earners rather than those on very low incomes.

He said the Greens were an independent party and could take their own position, but he was confident they would manage collective discipline if in Government.

"I wouldn't read too much into it. You can vote different ways.

"They've made their political judgment on the basis of this Budget at this time. Both our parties have a clear agreement about the level of discipline required in fiscal management and if we have the privilege to form a Government I am very confident we will maintain a collective discipline arrangement."

He confirmed Labour had not known the Greens intended to support the legislation until debate on the bill was underway, but said the Greens had indicated earlier they were comfortable with some shifts in the lower tax thresholds.

The party's Memorandum of Understanding includes a "no surprises" element and the two parties have also signed up to a fiscal responsibility code, pledging to exercise restraint.

Little said Labour would now go and decide what it would offer by way of a families package, including the fate of its 2014 Best Start policy which included a near-universal payment for newborn babies.

It would also decide what, if any, aspects of National's package it would pick up. Little said the tax cuts were poorly directed and while National's Working for Families changes were better targeted there was "just not enough put into it".

"You can expect we will have a better package that is better targeted and focused on low and middle income earners."

However, he would not rule out retaining some form of tax cuts. "We'll have to look at the elements - the tax, the Working for Families. In the end the objective was low and middle income earners."

National's package was worth about $6.5 billion over four years and Little would not say if Labour expected to spend the same or more of that. "We have to have a look at the numbers and we want to have a package that genuinely benefits low and middle income earners which yesterday's clearly doesn't do."

He said Labour also believed more was needed in education and health.

National's package includes tax threshold changes which will deliver tax cuts of up to $20 for workers earning more than $14,000 a year as well as increases to workers and beneficiaries getting Family Tax Credits and the Accommodation Supplement.

The tax cuts package is worth abut $2 billion while the Working for Families and Accommodation Supplement increases will cost $300 million to $400m a year.

Little said that showed Finance Minister Steven Joyce's claim it was targeted at low to middle income workers was "spin".

"No one will say those on lower incomes who have benefited don't need the extra cash. Of course they do, and they need it now - not next April.

"But a property speculator on $200,000 a year gets two times the tax cut that their middle-income tenant gets. That's not a tax package that's targeted at low to middle income New Zealanders."

National's package puts Labour in the position of having to tell voters whether it will cancel National's tax cuts or not if it is in Government after September, as the tax cuts are not scheduled to kick in until April.