Budget 2017: Labour-Greens alliance split

In a surprise move, both the Green Party and New Zealand First have voted in favour of the National Government's Budget.

Labour, on the other hand, voted against Steven Joyce's first Budget as Finance Minister, which sees changes to tax thresholds, Working for Families and a boost in the accommodation supplement put money in the back pockets of many low- and middle-income earners.

Speaking to The AM Show on Friday morning, Labour deputy leader Jacinda Ardern called the accommodation supplement a "subsidy for landlords" and only a short-term fix.

"A lot of the pressure that has come on families has come as a result of increasing housing costs, increasing rents. That accommodation supplement's going to get gobbled up pretty damn quickly."

During Thursday's post-Budget debate in Parliament, National's Auckland Central MP and Education Minister Nikki Kaye said she was "absolutely shocked that the Labour Party could even consider voting against this".

Greens co-leader James Shaw called the Budget a "highly flawed piece of legislation", but his party fell in behind it "on the basis that when it comes to people who are on low incomes, something is better than nothing".

"The fact that people who are, you know, earning low incomes are getting $5 a week back is why we are voting for this bill, because $5 a week when you have so little is absolutely necessary."

Steven Joyce delivers his first Budget (Reuters)
Steven Joyce delivers his first Budget (Reuters)

New Zealand First's Richard Prosser said it was "irrelevant" that high-income earners would also be getting a boost, since "people who are at the lower end of the scale who will be getting another maybe only $11, maybe $5, maybe $20, maybe $30, maybe $41 a week, for those people that is an important increase - and it is one that we are not going to stand against".

Mr Prosser argued though they'll get fewer dollars in the hand, as a proportion of their income, low-income earners would be getting a bigger windfall than people like him.

Housing Minister Nick Smith interrupted Mr Prosser to say millionaires "will not get the family support increases", which set off Labour's David Parker.

"Oh, poor multimillionaire, with numerous houses rented out to people, who is receiving the accommodation supplement for every one of their houses in Auckland! Oh, the poor multimillionaire!"

The accommodation supplement - a subsidy for landlords?

Mr Shaw also singled out the accommodation supplement boost as an acknowledgement from the Government that it has failed on housing.

"It is also, from a use of taxpayer funds, essentially money moving directly from public hands and into the private sector, because it is moving into the hands of motel owners and private landlords," he told Parliament.

"If the Government was focused on actually building houses and keeping them in public hands and putting those people into public housing then that money would come back and the measures in this bill would not be necessary."

Lack of housing boost concerns

Also speaking to The AM Show on Friday, Salvation Army social policy director Ian Hutson said Mr Joyce's first Budget was a "good first step", but he too pointed out the lack of action on housing.

"Maybe in the short-run [increases in the accommodation supplement will be] a good thing, but in the long-run we think because of the shortage of supply of houses, a lot of that money's going to dissipate over time. We don't think beneficiaries in the long-run are going to gain so much from this."

Prime Minister Bill English applauds his Finance Minister during Wednesday's debate (Getty)
Prime Minister Bill English applauds his Finance Minister during Thursday's debate (Getty)

Despite being the only major party to vote against the Budget, Ms Ardern admitted it does have some pluses - mainly changes to Labour's own Working for Families scheme.

"There's lots of clever politics in this Budget, and I would expect no less. Steven does run the campaign for the National Party as well."

If Labour wins the election, she said they'd do similar things with Working for Families, but the rest of Mr Joyce's package would be out the window.

"$1.9 billion in tax cuts which amount for most families between $10 and $20 a week when we're so underfunded in health and education, that's where we have concerns."

'Definitely not carrots'

After eight years of tight Budgets from now-Prime Minister Bill English, Mr Joyce told The AM Show for the first time they've had "fiscal room to actually do all the things we've wanted to be doing for a long time".

He rejected suggestions from host Duncan Garner the tax cuts are an election year bribe.

"They're definitely not carrots," he said.

Deputy Prime Minister Paula Bennett, appearing alongside Ms Ardern on The AM Show, said it showed the National Party was not out of touch with the average New Zealander.

"We care about this stuff as well. They try and paint us as the ones who don't care about those families that are struggling.

"We've said it consistently, and now we've got that room to do it, we're putting the money where it's needed most."

'One Dollar Bill'

Labour Finance spokesman Grant Robertson begs to differ though. During the debate in Parliament he claimed to have received an email "over the dinner break" from someone who stands to gain a single dollar from the tax shuffle.

"They are One Dollar Bill," he said. "They are the person who got the independent earner tax credit with $10 taken off them today. Eleven dollars, that is the big promise from the National Party for this person - $11 per week - but we are taking $10 per week off. They are One Dollar Bill.

"How is that fair? How is that a fair tax package to put in front of this country?"

If National is in government after the September 23 election, expect the changes to kick in April 1 next year. It would take another Christchurch-sized quake to get the Government to reconsider the lolly scramble, Mr Joyce said.