The main document explaining the government's policy is "Tax Reduction and Social Policy Programme: Details" issued by Bill Birch in February this year. This report states that the aim of the tax cuts and social policy programme was "to assist, strengthen and empower low and middle income families".

Bonnie Robinson, the executive officer of the NZ Council of Christian Social Services says that the details of the tax cuts, after analysis, show that the aim of helping `low and middle income families' is not being well achieved.

Robinson: "Households who will do best out of the programme are high income, dual earner households with or without children. Couples with no children living at home in the top 20% income group will receive much bigger gains on average than families in any other income group.

"Although the programme is designed to focus on families, the share of gains which will go to households with children is not much different from the distribution of parents in the overall population, so the overall impact of the package in redistributing income from non-child households to households with children will not be very great."

The NZ Council of Christian Social Services commissioned Dr Paul Dalziel, senior lecturer in Economics at Lincoln University, to examine the details of the tax cuts package. Dalziel: "The programme is extraordinarily inefficient in the pursuit of its stated objective, because its designers have failed to target carefully the programme's benefits to its intended beneficiaries." In his report, Poor Policy, Dalziel shows

over 60% of the assistance in the programme will go to households in the top 40% of NZ's income households.

over a third of the assistance will go to the top 20% income households.

only 38% will be received by households in the bottom 60% of income households.

only 7% of the programme's total benefits will be received by households in the lowest 20% income households.

Bill Birch has criticised the methodology of Dr Dalziel's analysis, saying that Dalziel had not distinguished households from families. A `household', says Birch, could include single people, extended families, sole parents and flats. Bill Birch says that low and middle income families would benefit more than high-income families with the same number of income-earners and children.

Dr Dalziel has since reworked his calculations to take into account the distinction. He says that the results still show that the real target group of the package was middle and high-income earners regardless of whether they were responsible for children. He says that for every dollar of the cuts, 40c will go to households that were not families, and 31c to families in the top income brackets ... leaving 29c for families on low and middle incomes. Dalziel: "A successful target of 29c in the dollar may well be the most inefficient social policy initiative we have had in NZ, ever ... and it is totally inappropriate to describe it, as the government does, as `a major new investment in the future of low and middle-income families'."

Dr Dalziel reports that the cost of the government's tax package in 1997-98 is expected to be $2.65 billion, of which $2.13 billion or 80% was in tax cuts. Only $0.325 billion will be made available for family tax relief.

The Treasury paper reports that the highest 20% of income group pays 49% of the income tax collected, while the lowest 20% of income group pays 4% of the income tax.