Prime Minister Christopher Luxon will face questions from Green co-leader Chloe Swarbrick and Labour leader Chris Hipkins in Parliament as the Government prepares for the Budget and deals with news of state-sponsored espionage by China.

It comes as the government comes under pressure for its cuts to the public sector and questions around its tax cuts programme ahead of the May Budget.

Tomorrow Finance Minister Nicola Willis will deliver the Budget Policy Statement, setting out the broad parameters of the Budget spending allowances, after weeks of warning about the “challenging” economic times.

Willis is also expected to be asked by Labour’s finance spokeswoman Barbara Edmonds about job cuts across multiple government departments in a bid to find savings, and assurances the front-line will not be affected.

Willis has also been under fire about changes to a disability allowance after the Whaikaha - the Ministry of Disabiled People ran out of funding. She said this morning the government had agreed to top up the funding to allow the allowances to continue and she had asked for a review of why the ministry ran out of the funding early in most years.

Luxon questioned on landlord tax breaks and disability allowance cuts

Chloe Swarbrick has this afternoon tackled Luxon in the debating chamber about the Government’s priorities, asking about the move to restore interest deductibility to landlords, and if he stood by his claim it would ease rents.

She also raised plans to review the food in schools project, and other moves – asking whether they would be better use of the money being used on interest deductibility.

Luxon responded that the move would put downward pressure on rents, saying the previous Labour Government had been warned that it risked increasing rents when they had removed interest deductibility. He pointed to rent increases since then, saying they had gone up $170 a week on average, and said he made no apologies for trying to ease that.

Labour leader Chris Hipkins has asked Luxon about cuts to disability allowances, asking if he had been told about the changes to the allowances prior to them being announced and if he had confidence in disabilities minister Penny Simmonds.

Luxon replied that he was unaware of the changes prior to them being made, but the Government had since taken steps to rectify the problem.

Luxon said Simmonds had apologised for the ministry and the Government had moved to ensure any future changes to entitlements would be brought before Cabinet before being implemented.

It has also provided more funding to enable the allowances to continue as normal until the Budget, and was reviewing the way the allowances were being spent.

The changes to the allowances blindsided the Willis and Luxon, who had not known in advance that the use of the allowance would be restricted because the Ministry had run out of money for it.

Asked by Hipkins whether he still had confidence in Simmonds, if he had moved to ensure all decisions in her portfolio had to pass through Cabinet, Luxon said he had “complete confidence” saying she had apologised and taken steps to set the matter right.

“They [the changes] were poorly communicated and did not go through Cabinet,” Luxon said of the ministry’s handling of the initial changes.

Disabilities Minister Penny Simmonds has defended a move to halt funding for equipment such as insulin pumps through the disabilities minister, saying that Health NZ and Pharmac provided funding for such equipment so it should not be done by the disabilities ministry.

However, she said the ministry had been told to continue funding such equipment in cases where it was already doing so until a government-ordered review was done into the best way funding was organised.

Labour’s disabilities spokeswoman Priyanca Radhakrishnan read out letters from people who had been affected by the changes to disability funding in question time, asking why the government was now looking at changing the funding model.

Simmonds said the ministry – which is a new ministry – had been inadequately funded by the previous government, which had meant the new government now had to top up its funding.

She said it highlighted why a review of its responsibilities and what it funded was needed, as the new government was doing.

Government back-office staff cuts

Labour’s finance spokesperson Barbara Edmonds took aim at National’s cuts to the back-office staff in government departments, asking whether Willis considered the Inland Revenue staff charged with processing up to 7 million invoices a year for National’s childcare rebates to be “back office”.

Willis said she did consider them to be back-office workers, and said National had said it expected the bureaucracy to be more efficient in how it did its work.

Asked about National’s commitment not to weaken the frontline as a result of its cuts, Willis said part of the changes the Government was making was to try and get the public service delivering better. She said it was committed to protecting the front line.

“We are not going to ban ourselves from looking at better ways of doing things,” Willis said.

Earlier, in response to questions from a fellow National MP about National’s childcare rebates Nicola Willis had said Labour had “sour grapes” about the policy, which would help more than 140,000 children in about 100,000 families and childcare centres were already working on making it easy.

“Childcare is one of the biggest costs for families. According to the OECD, childcare costs in New Zealand are among the highest in the world at 37 per cent of household income.”

She said the rebates would help ease that cost, which could act as a barrier to returning to the workforce.

Childcare rebates

Yesterday, Luxon and Willis made the first proper pre-Budget announcement, the plan to offer childcare rebates of up to $75 a week, benefiting more than 100,000 families of which 22,000 are expected to get the full rebate.

Willis said this morning that one major early childhood education provider had already been in contact to say they were working on a system to provide one invoice to parents every three months to make the process of applying for the rebates easier.

“They’re even seeing if they can go one step further and make the claims on behalf of parents. So as we anticipated, early childhood centres are really motivated to make this as easy as possible for parents.”

The Government has chosen an opt-in scheme which requires parents to apply for a rebate, rather than wait for up to two years – the time Inland Revenue advised it would take to set up a system to make the rebate automatic.

Labour leader Chris Hipkins said the scheme was less generous than Labour’s move to extend 20-hours free to 2-year-olds, which National had repealed in its first 100 days.

Willis said the overall aim was getting “cash into bank accounts” and households would be better off than if they were not.

“That’s what mums and dads have told us they want. They don’t want middle-men and rinkydink schemes, they want money in their bank accounts and the scheme provides it.”

It follows a morning in which the government revealed that the GCSB had identified Chinese state-sponsored actors known as Advanced Persistent Threat 40 (APT 40) as being behind “malicious cyber activity” targeting New Zealand’s Parliamentary Counsel Office and the Parliamentary Service in 2021.

The GCSB has confirmed data relating to New Zealand MPs was stolen, but it was not of a “strategic or sensitive” nature.

The government has said it is not looking to introduce sanctions against China, despite it being the first time New Zealand’s Parliament has been targeted in such a way.

Foreign Minister Winston Peters had directed the Ministry of Foreign Affairs to speak to China’s Ambassador Wang Xiaolong this morning. In a statement, Peters said the officials had urged China to refrain from such activity in the future.

The Chinese Embassy is yet to respond publicly. The news follows reports of United States, British and Australian officials filing charges, imposing sanctions or calling out Beijing over cyber-espionage that allegedly hit millions of people, including politicians, academics and journalists.

China had responded to the claims in the UK as “completely fabricated and malicious slanders”.