Workers on the average wage are at the centre of a political row after figures show thousands of dollars in pay rises have been whittled back to a few hundred by higher taxes and inflation.
A "Joanna Average" is at the centre of the tussle, with National's figures showing she is only $500 a year better off than seven years ago once inflation and higher taxes are taken into account - despite her earnings increasing from $33,968 a year to $44,123 a year. Her earnings mirror the average fulltime wage.
Labour does not dispute the figures, but has put forward its own calculations suggesting Ms Average is better off than National suggests - but only if she has children. And it says National's figures simply underscore the importance of keeping inflation under control. The row comes as National raises the stakes over tax cuts, with Australia looking to slash taxes by a further NZ$40 billion.
Prime Minister Helen Clark told Parliament yesterday that tax cuts would be addressed in next year's Budget. A rise in tax thresholds is among the likely options.
"Bracket creep" has pushed greater numbers of workers into higher tax brackets as pay packets have filled out. Labour's Ms Average is a mother in a two-parent, single-income household with two children under 12. She works more than 30 hours a week and earns $41,000.
National's Ms Average also works fulltime but doesn't have children. Under its scenario, Ms Average earned $33,968 in 2000 and paid $6624 in tax. In 2007, she earned $44,124 and paid $9430 in tax. National says that is a 42.4 per cent increase in tax paid, due to her pay rises pushing her into a higher tax bracket. Inflation accounted for the loss of $6842 more in spending power - leaving Ms Average $506 a year better off.
But Labour says its Ms Average fares better than that because she gets cheaper doctors' visits, interest-free student loans and cheaper early childhood education. But the biggest factor is Working for Families, which means that, in effect, she pays no tax, Labour says.
