Third Readings

At the conclusion of this debate I will ensure that each question is put separately.

, on behalf of the Minister of Revenue: I move, That the Taxation (Maori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill, the Taxation (Annual Rates of Income Tax 2002-03) Bill, the Student Loan Scheme Amendment Bill, and the Child Support Amendment Bill be now read a third time. The bills encompass a wide range of issues that reflect the Government’s continuing commitment to simplifying the tax system, reducing tax compliance costs, protecting the revenue base, and producing a better and more effective tax law through the regular introduction of remedial legislation.

The most prominent feature of the Taxation (Maori Organisations Taxpayer Compliance and Miscellaneous Provisions) Bill is its modernisation of the tax rules that relate to organisations that manage Māori assets held in communal ownership. The new rules will relieve much of the unnecessary complexity and restrictions that the present rules impose upon these organisations. The changes will apply only to organisations that manage communally owned Māori assets whose use and management are heavily restricted by legislation or Government process.

Another important feature of this bill is its further fine-tuning of the relatively new legislation that relates to taxpayer compliance and to penalties for non-compliance with the law. One of the main changes here gives the Inland Revenue Department greater flexibility by allowing it to take into account taxpayers’ good behaviour when it imposes penalties for tax shortfalls. Other related changes include a new penalty on promoters for certain kinds of tax arrangements, and provisions that strengthen and clarify the Inland Revenue Department’s vital information-gathering powers.

The bill introduces two tax simplification measures that will be of special relevance to small businesses. One relates to employers’ PAYE obligations, and the other to the payment of provisional tax. Both involve businesses making use of private-sector intermediaries to help them to meet their tax obligations. The bill clarifies the GST treatment of cross-border supplies of telecommunications services and simplifies the tax treatment of outbound telephone calls. Similarly, it also clarifies the GST treatment of international passenger cruises that visit a number of New Zealand ports.

The bill rationalises several aspects of the law that relates to tax and charities. The changes include an increase from $500 to $630 in the maximum amount that people can claim as a tax rebate for donations to charity. The public-benefit test has been relaxed so that the charitable entities are not automatically excluded from income tax exemption just because their members are connected by blood ties. In a similar vein, the bill accords marae the same status as public halls and churches. The bill also gives effect to the Government’s announcements last year that the crew members of visiting superyachts would be exempted from paying income tax in New Zealand.

Finally, the Taxation (Annual Rates of Income Tax 2002-03) Bill confirms the income tax rates that will apply for the 2002-03 year. I am pleased that the bills have reached their third reading stage. I would like to thank all those who contributed to their passage, the many individuals and organisations that made submissions on the proposed legislation, the officials who worked on the bills and supported their passage, the Finance and Expenditure Committee for its careful consideration of the proposed legislation, and, of course, the fine Minister who steered it through the House. I commend the bills to the House.

National is opposed to most of the provisions of these four bills and will make clear why that is, in these third readings. The first bill I want to address is the Taxation (Annual Rates of Income Tax 2002-03) Bill. I want members of the Government, the Labour Party, United Future, and the Progressive Coalition to understand what they are doing to working people in this country by passing this legislation. With the passage of this bill, they lock into place tax rates that result in working families suffering the highest increase in taxation, since Labour has been in office this last 3 years, of any country in the developed world except the Czech Republic.

If members of United Future are to support this third reading, I want to make sure that they are aware of that—that is, they will lock into place tax rates that have seen the biggest increase, not on wealthy people, on the average production worker, to use OECD jargon. Under the Labour-led Government the increase in tax impost on those people in the last 3 years has been the highest in the OECD, and this bill in front of this Parliament today locks those tax rates in place. What is more, if we look at the combination of effects, the current tax rates that this bill locks in place, plus the tax credit system, we see that some of the lowest-income people in this country face effective marginal tax rates under this taxation regime of 100 percent. That is not just Lockwood Smith making that up; that information was supplied to me by the Inland Revenue Department through official questions through this Parliament. People who earn between $10,000 and $15,000 a year with dependent children, when we combine the effects of these tax rates being confirmed by this bill, plus the family assistance tax credit system, pay effective marginal tax rates of 100 percent.

That means that as they seek to earn another dollar above $10,000 they pay the lot—that is, every cent of the extra dollar they earn goes to the Government. That is what we are locking in place with this bill. It is not good enough. It is just shameful for a Labour-led Government to treat our lowest-income earners in that way. The Hon Paul Swain, who just led the third reading for the Government, would not even know about that. That shows how little the Government cares about what it does to working people. This bill locks into place those tax rates that have seen the highest increase in taxes on the average working person in this country—that is, the highest increases in the developed world except the Czech Republic—while Paul Swain’s Government has been in office. That is, the Taxation (Annual Rates of Income Tax 2002-03) Bill. The Taxation (Māori Organisations, Taxpayer Compliance and Miscellaneous Provisions) Bill also introduces very controversial legislation into this country. It introduces a special low tax rate of 19.5 percent for Māori authorities. It has been argued by the Government during the Committee stage of this legislation that that is not a racist measure. It argues that the special tax rate is based on the income level of the beneficiaries of Māori authorities. That would be a valid argument if it applied to other organisations, such as Pacific Island trusts. If the Government’s argument were valid, it would extend the special tax treatment to the beneficiaries of those trusts, as well, because of their low level of income. But the Government is not doing that. This legislation is racist, because the only people who can benefit from the special low tax rate are Māori people. Although I have nothing against Māori people—some of our finest citizens are Māori people—it is wrong to divide this country down racial lines. No one likes paying high taxes.

💬 Mahara Okeroa: I do; I would.

Dr the Hon LOCKWOOD SMITH: Did the member say he likes paying high taxes? I can promise him that most of his Māori colleagues do not enjoy paying high taxes. When this legislation goes through, we will see accountancy firms kept very busy, as Māori businesses seek to reorganise themselves to benefit from the special low tax rate.

I accept that the status quo is unacceptable. At present, if a Māori authority distributes profits, it pays a tax rate of 33 percent, like any other business. It achieves the same imputation credits for its recipients, which is the same as any other business. If the authority retains its profits, it pays a tax rate of 25 percent on those profits. The problem is that if those profits are not distributed within 4 years, then a double taxation can occur, because the 25 percent is not refunded. That is unacceptable. National fully accepts that the status quo is not satisfactory. However, we do not accept that that unsatisfactory situation, where some Māori authorities can pay double taxation, should be remedied by the introduction of racist legislation, which splits this country down racial lines.

During the Committee stage, I challenged members of the Government, and those members supporting the Government, to find me a non-Māori New Zealander who could benefit from the special low tax rate. Gordon Copeland claimed he had found a minister of Irish descent—he did not say he had no Māori blood in him, but he did claim that he was a beneficiary of a Māori authority. I am not sure how that can be if he is not of Māori descent, though I pointed out to the House that he may not be the only Māori who claims Irish or Scottish descent when that is convenient to him. The Rt Hon Winston Peters is well known for claiming Scottish descent at times when it suits, and claiming Māori descent when it suits, as well.

National says that it is wrong. We will oppose this legislation because it is racist, and New Zealanders object to that. It divides this country. PricewaterhouseCoopers told the select committee it will be very busy, as Māori businesses seek to re-establish their affairs to benefit from the favourable tax treatment. Chen Palmer and Partners told the select committee it was contrary to the New Zealand Bill of Rights Act. It told us that, in the fishing industry alone, there will be a $70 million windfall for Māori businesses involved in the fishing industry. The select committee did become concerned about the potential competitive advantage that some businesses could achieve, which is why the select committee recommended that wholly-owned subsidiaries should not be able to access the special tax rate, but it will not be difficult for them to rearrange their affairs so that they can. Moreover, we know that some of the major farming businesses in this country will pay a tax rate of 19.5 percent once this passes, while other dairy farmers will pay a 39 percent tax rate. Whatever way one looks at it, it is wrong for one race of people in the same business to pay twice the tax rate that is paid by another race of people in this country, who are in the same business.

In my remaining moments, I point out that some of the amendments to the Tax Administration Act deserve comment, as well. With the passage of this legislation, we will give the Commissioner of the Inland Revenue Department the opportunity to demand 100 percent of tax in dispute. We will establish a new system of tax pooling, and stuff relating to PAYE intermediaries, which makes some sense, but the tax pooling could be resolved if the Government would only address the use-of-money interest issues. There is a real problem around PAYE intermediaries—what happens if an intermediary goes bust? The liability for the tax payable is still with the taxpayer, even though the taxpayer may have paid the intermediary. The Ministers who have been in the chair did not answer those questions during the Committee stage.

Finally, we have no problem with the introduction of promoter penalties. But, again, the Government has not answered all the issues around that. What will happen when a tax adviser advises on a tax scheme, and the taxpayer has settled with the Inland Revenue Department, which then says the scheme is not valid? The scheme promoter could get caught with having no say in the settlement of the dispute with the Inland Revenue Department, and face huge penalties. The Government did not perform well during the Committee stage of this legislation.

United Future is pleased to lend its support to the third reading of the bills. The present taxation regime for Māori authorities is fundamentally unjust. Some distributions from those authorities are subject to double taxation, as both the organisations’ income and the distribution to the members are taxed. That same situation used to apply in an even more fundamental way to taxation on New Zealand companies. In those days, they were also subject to double taxation. But all that was rectified by the introduction of the imputation system, which now ensures that a credit is given back to shareholders, so that the income stream is taxed once, and once only.

The new Māori authorities taxation regime works in exactly the same way. The only difference is that, whereas the average New Zealand shareholder in a company has a marginal tax rate of 33c in the dollar, 90 percent of the beneficiaries of Māori authorities have a personal tax rate of just 19.5c in the dollar. That is why that particular rate has been chosen. It is quite clear from the evidence presented to the select committee that if we do reach the happy day when the average Māori authority beneficiary has a tax rate of 33c in the dollar, or, even better, 39c in the dollar, then the Māori authority rate will go up to those levels. Again, United Future categorically rejects any suggestion that these principles are based on race. In fact, they are the same for all New Zealanders. It must be remembered that if the personal tax rate for beneficiaries under Māori authorities is 33c or 39c in the dollar—and that is true for 10 percent of them—then they will pay tax at those rates. The competitive argument that has been rehearsed again by the Hon Lockwood Smith was well dealt with in the select committee and put to bed. In my opinion, there is no basis whatever to that argument.

I would like the House to take note of the general tone of the comments made by John Tamihere about the need for all of us to focus on how on earth we crack the problem and lift the Māori citizens of this country from the bottom of the heap, up through the tax bracket until they indeed come to that more normal situation—that is, with their tax rates in line with the rest of the population. That is a tremendous problem for this country. I hope we will not continue to be mealy-mouthed about simply correcting an injustice that has the outcome of putting just a few more dollars into the pockets of the members and beneficiaries of Māori authorities. Surely we want them to get fair and just treatment. They are the group that need it most.

But I am not voting for the legislation on that basis; I am voting for it on the basis that it is a fair and consistent tax treatment, and in reverse of the angle taken by National—that is, unless this is done for everyone else it should not be done for Māori authorities—I take the other view. I believe that this is the first step, and I will be pushing the Government to say: “Yes, we’ve now got this in place; let’s extend it to superannuation funds. Let’s extend it to family trusts and other similar organisations.” I am with National in terms of that objective, but I choose a totally different route to get there, and I am not prepared simply to catch votes by falsely claiming that this has anything whatever to do with race. It does not.

For the rest, United Future welcomes the provisions of this legislation as they relate to charities, to tax pooling, PAYE intermediaries, depreciation rules and amalgamation, GST treatment of telecommunication services, and superyacht crew tax exemptions. All these provisions will reduce compliance costs for taxpayers and introduce greater fairness and equity into the tax system. Accordingly, we are in the rare situation with this legislation of being able to say with confidence that all the affected taxpayers, saving only those dishonest people who wish to evade their legitimate tax obligations, will be well pleased with its outcomes. I guess we cannot often say that about a tax bill, but we can on this particular occasion.

I just want to add one further point. Lockwood Smith raises legitimate concerns about the present mix of tax rates, family credits, and so forth for low-income earners. He raises a legitimate point in saying that they have, in some circumstances, a marginal tax rate of 100 percent. I am therefore pleased to hear the Government say that it is committed to working hard on that very problem next year. Concerning the tax rates themselves, I also agree with the National Party that we should, at the very least, even though the Government is committed to progressive tax cuts, be adjusting those for the effect on the consumer price index. I am pleased to have gone along with it this year, because we actually came into Parliament as a party for the first time after those rates had already been set and were applying from 1 April 2002, but I give notice, as I have already done, to the Minister of Finance, that we will be on his case about seeing that adjusted, and I would ideally like to see that done in this year’s Budget. So with those explanations and reservations, I have great pleasure in signifying our support for the third readings of this legislation.

I am glad to speak to the third reading of this legislation—not because I am supporting it, but because I have an opportunity to speak out against it on behalf of my New Zealand First colleagues, and especially on behalf of my leader, the Rt Hon Winston Peters, and myself. We are both members of the Finance and Expenditure Committee.

I want to start by answering a question or two—not that I was asked the questions—raised by Gordon Copeland. He said that the current situation was unjust. Just like Lockwood Smith, we believe that the current situation in respect of the income level of Māori organisations is unacceptable. We have no problem in accepting that, but we do have a problem in allowing a tax regime to be implemented based on race, and if we look at the legislation, we see that that is exactly what it does. New Zealand First is not only concerned but also alarmed that one section of the New Zealand community is receiving an advantage over other groups.

We expressed a minority view in the committee’s report because of our concern, and I want quickly to read to the House what New Zealand First said in its minority report. We said that New Zealand First members do not endorse the proposed basic rates of tax for the 2002-03 tax year, and are opposed to what we see as a race-based tax law. New Zealand First and National had the same views on that. We also said that much of our consideration of the original bill focused on amendments to the tax regime as it applies to Māori authorities. The legislation introduces to the Income Tax Act 1994 a new definition of “Māori authority”, and also reduces the tax rate of Māori authorities to 19.5 percent. It is basic footy in my mind. How can that not be a race-based tax? Also, clause 68(2) of the original bill amends the tax rate reducing the income tax rate for Māori authorities to 19.5 percent, which is equal to the lowest income tax rate for individuals. This amendment is intended to reflect the fact that 90 percent of those individuals who receive benefits from Māori organisations pay tax at the lowest basic rate.

My question to the Government and to parties that are supporting this bill is this: why does everybody not get taxed in the same way? Why do we not fix this anomaly? Why do we not fix this problem? We accept that the status quo is unacceptable, we accept that the current situation is not right, but we are saying: “Why don’t we make this available to all New Zealanders?”. I think it is kind of sad to have to stand in this Parliament and raise such a basic question.

Last week, or 2 weeks ago now—it was before the adjournment—Tony Ryall was talking on this legislation. He asked a question of the House. It was another basic question. He asked why Māori organisations get a favoured tax rate. Mahara Okeroa answered in his own words. He said: “Because we are Māori.” That is what he said. That is what you said, mate; it is true, is it not?

The ASSISTANT SPEAKER (H V Ross Robertson): Members must be referred to by their proper names. Speaker’s ruling 6/1 in the Supplement to Speakers’ Rulings states that members must be referred to by name, title, or portfolio.

Thank you, Mr Assistant Speaker, for that guidance One day I might even read that.

In the second reading debate of the original bill, New Zealand First put forward an amendment that would have amended Part 2 so that all sections of the New Zealand community that can take advantage of the proposal relating to a basic rate of tax of 19.5 percent were treated in the same way. As a party we cannot support the legislation in this form, and it was sad to see that amendment defeated. This legislation is unfair. It is a race-based tax system. There are no two ways about it. We cannot get away from that fact.

The people I have talked to on the street tell me so, and some people whom I know quite well, who own businesses and so on, just cannot believe it. They are quite well informed as to what is going on; they have not heard just a couple of sound bites on television. They are business owners. They are people who have an interest in tax. They have been looking at this and they are concerned, as well. They cannot understand why this precedent is being set, and it is a scary precedent to set.

I reiterate that New Zealand First wants to treat all New Zealanders equally. That is why we prepared an amendment to give effect to that view. I was very glad that National and ACT supported us in that effort.

There is another member of New Zealand First here, Edwin Perry, and he is the chairman of a trust, as I have said before. He has got 80 beneficiaries in his trust—4,000 acres. He has had the message—and other members and other people from Māori trusts have said this to me or to our party and other members of the New Zealand First caucus—that the current situation is not acceptable and that Māori do not want to be treated in a different way from anybody else. They are aware, Mr Perry is aware, and the Rt Hon Winston Peters is aware, that a regime that encourages dependence and different rules is not going to help.

It is simple. If parents give children everything they need, if they buy their children a car when they leave school—and that is not wrong, depending on one’s view on that—and if the children do not want to work or contribute to society, because their parents are constantly giving them money and everything they need, they are not going to get anywhere in life. They are not going to make it further. They are not going to step forward in life. I have seen this with very close friends of mine. One child was given everything on a silver platter and the other, with the same parents, was not. Who has advanced and excelled? The child who was not given everything on a silver platter.

We also asked some other questions on this whole issue of taxation of Māori organisations. I will mention a question that we asked different submitters to the Finance and Expenditure Committee. One of the questions I asked was this: “Are there any elements to the Government proposal in this regard that cause you or your clients any real concerns?”. I think that the other members on the committee, from both sides of the House, and whatever their views are, will agree with me— because it was a fact—that people had concerns about this. Chen Palmer and Partners in its written submission stated that it felt like a breach of the Human Rights Act. That is exactly what it is. I thank the House for listening.

I support this legislation.

Jill Pettis’ speech might have sounded like 10 minutes of waffle, but it was only 3 seconds long when she said that she supported this legislation. I thank the Hon Paul Swain for pointing out to us, and to the people of New Zealand, that her 3 seconds did sound like 10 minutes of waffle. But I say that was one of the more insightful comments that I have heard from Jill Pettis in this House.

I will cut to the two main issues in this legislation. The first is that it introduces two tax rules for New Zealanders, and they will be based on race. I know my colleague Mr Gordon Copeland has discovered an Irish priest he thinks can somehow benefit from these tax rules for Māori, but he has not yet presented this Irish priest and the priest did not present himself, as I understand it, to the Finance and Expenditure Committee. I look forward to meeting that guy. But it does not seem to me to say much in favour of this bill that an Irish priest can also rort the system and get in as a Māori authority. That seems to me to be wrong.

💬 Mahara Okeroa: No, he can’t.

Is that wrong?

💬 Mahara Okeroa: Oh, absolutely.

Mr Okeroa says Mr Gordon Copeland has it wrong, and no Irish priest will be able to take advantage of these rules.

💬 Mahara Okeroa: A Māori Catholic Irish priest, yes.

A Māori Catholic Irish priest could, but an Irish Irish Catholic priest could not. And there we have it! Does Mr Okeroa, with his contribution to this great House today, not explain this legislation perfectly? That is, there will be rules for Māori Irish priests but not for Irish Irish priests. That is what that Government MP has just said. Dr Lockwood Smith heard him, as did the people at home listening to this debate on their radios.

The ASSISTANT SPEAKER (H V Ross Robertson): The member may not refer to radio listeners.

I do apologise to them. We all heard it. Everyone who is listening to this debate heard that our tax laws are to get down to making fine distinctions about whether one is a Māori Irish priest or an Irish Irish priest. I am pleased to report that although I am not a priest, I am, according to the Minister of Māori Affairs and his associate Minister, Ngāi Tahu, so I do believe that I will be in for a lower tax rate of 19.5c in the dollar as soon as I structure the house at home and my affairs as a marae. And as soon as we structure our business as a Māori authority, we will be in like Flynn at the 19.5 percent rate.

💬 Mahara Okeroa: Hurry up, hurry up.

The member says “Hurry up”. I am as busy as I can be already, unlike that member.

I say to this House that that provision a disgrace. The idea that we should have two tax rules and distinguish amongst people’s tax payable on the basis of their race is wrong. It is divisive and wrong, and an insult to New Zealanders, Māori and non-Māori alike. When they went off to fight wars side by side, the bullets coming over the top did not distinguish whether people were Māori or Pākehā. Those bullets took everyone out. And when those people took their pay, the Army did not distinguish whether one was Māori or Pākehā—everyone received the same. So I ask Mr Okeroa why we cannot, in our tax rules, have one law for all New Zealanders? Why does Mr Okeroa not take a call and explain why there should be two tax rules? I would like to hear the reason for that.

The ACT party, New Zealand First, and the National Party stand for the rule of law and one law for all, no matter what the colour of one’s skin is, or one’s ethnicity or religious belief. I am shocked to hear that United Future does not agree with that position. [Interruption] Those members think they have sorted things out for the Irish Irish priest, but as we have heard from Mr Okeroa that will not happen—not if Mr Okeroa has his way—unless the priest is a Māori Irish priest. I have not worked out how much of a Māori an Irish priest has to be in order to get to pay tax at the 19.5 percent rate.

Let us look at the second problem in this legislation. Mr David Carter and Dr Lockwood Smith will remember—Mr Craig McNair was not born at the time—that in the last parliamentary term we had an inquiry into the Inland Revenue Department.

💬 David Benson-Pope: What about an inquiry into Pipitea Street? That would be a good inquiry.

Mr David Benson-Pope wants to have an inquiry. Do members know what I love about it? I love these guys. There was an inquiry, and it has cleared us. I would like to say those members can say the same about Te Māngai Pāho, about Mr Dover Samuels and Mr John Tamihere, and about the Minister, Parekura Horomia, but unfortunately the Government does not conduct inquiries into those things, does it? The Government does not want to inquire into Te Māngai Pāho, so those members should just pipe down and concentrate on the tax issues.

This legislation, I am afraid, will affect Māori and Pākehā alike. The issue is this: the committee in that inquiry was stunned to learn that the Inland Revenue Department can just construct a debt against a taxpayer. It can just announce a debt, and it is up to the taxpayer to prove that he or she does not owe it. So, we heard the Inland Revenue Department admit that it had announced that taxpayers owed a million dollars. The rule then was that the department could demand that half the debt be paid immediately, before the taxpayer had a chance to go to court to prove that he or she did not owe it. So a taxpayer could become bankrupt before he or she got to court, because the tax department had the power to be judge, jury, and executioner, with no law.

We said on the Finance and Expenditure Committee, to a person—and I am sure if Mr McNair had been born and had been there he would have said the same thing—that that was wrong. This legislation has come back to the House, and it does not provide that the tax department can demand half the money upfront. We agree with that. We should give the taxpayer his or her day in court; Mr Copeland agrees with that. But then the commissioner, at his or her discretion—which means, I think, everyone whom the commissioner delegates that power to, which is every officer—can say he or she has looked at Mr McNair and Mr Copeland and at the debt that the department has constructed against them with no evidence, and has determined he or she thinks the assets are not safe. The department can then make that taxpayer cough up on the spot, not just 50 percent but 100 percent—plus interest. But the department has not gone to a third party, like a court, to prove its case. That happens before a case is heard. Now can members imagine that? When there is a taxpayer against whom the department thinks it might lose its case, it can wipe him or her out on the spot.

We should not entrust that sort of power to any human being, yet here we are entrusting it to the Inland Revenue Department. And this House is doing it. I do not blame the Inland Revenue Department; it is this House that is agreeing to that. What is Mr Copeland’s defence? He says the Inland Revenue Department will use that power only in special circumstances. What is a special circumstance? Is it when Rodney Hide or Gordon Copeland leaves Parliament? Is it someone whom members of the Inland Revenue Department do not like? Is it someone whom they do not like because they ate that person’s hamburgers, which made them sick, who will therefore be wiped out? Why should the Government not have to prove before the courts that a taxpayer owes it money before it can take that money or bankrupt that person by demanding it? Is that not a simple proposition for people here to get their heads around?

We have heard from me and from the qualified lawyer Mr Dail Jones that the department can use a Mareva injunction, whereby if the department does think that a taxpayer will do a runner it can go to the High Court, like any other litigant. It can say to the court that it thinks that person will do a runner, and ask it to put an injunction on that person. That request is tested by a third party. Presumably if the department has a good case, the High Court judge will agree with it. But why should we give that arbitrary power to any civil servant? Why is this House doing that? Why are Mr Gordon Copeland and Dr Michael Cullen doing that? We heard from the Hon John Tamihere that the Government is doing that in order to get at my mates. That is what we heard him say yesterday. What sort of power and what sort of threat are we signing up to? Will fictitious amounts be demanded from people who are friendly with Rodney Hide, in order to destroy them?

We on the Opposition side of the House in the ACT party, in the National Party, and in New Zealand First say that this legislation is racist. We say that it is an abuse of power—

The ASSISTANT SPEAKER (H V Ross Robertson): No, the member must not use the word “racist.” It has been ruled out of order in this House. The member must withdraw.

I beg your pardon, but it has not.

The ASSISTANT SPEAKER (H V Ross Robertson): The member should look at Speaker’s ruling 6/5 (Supplement).

It is tax law based on race, which where I come from has a peculiar word that up until now Speakers have—

The ASSISTANT SPEAKER (H V Ross Robertson): The member must withdraw and apologise for the use of the word.

I withdraw and apologise. I raise a point of order, Mr Speaker. My understanding of that Speaker’s ruling is that it is up to the Speaker to decide whether describing a policy as racist is likely to lead to disorder.

The ASSISTANT SPEAKER (H V Ross Robertson): That is right, and I have just done that.

I raise a point of order, Mr Speaker. What you told the House was that the use of the word was not allowed, and that is not actually correct. The word is allowed if the Speaker thinks that it will not lead to disorder.

The ASSISTANT SPEAKER (H V Ross Robertson): I thank the member for drawing that to my attention, but I would also like him to look at Speaker’s ruling 6/5 (Supplement). It states: “If the word ‘racist’ is used in an insulting or demeaning way to any person or party, it is out of order.” I have made my decision.

I raise a point of order, Mr Speaker. It would help if, when you make a ruling, rather than saying it is not possible ever to use that word to describe a bill, you explain that you think it will lead to disorder. To say that we can never use that word to describe a policy or legislation is not in the Standing Orders.

The ASSISTANT SPEAKER (H V Ross Robertson): I thank the member very much. I appreciate him drawing that to my attention.

I rise to speak about what is probably the most controversial aspect of this legislation, and to support the comments of Gordon Copeland, because I think he has it on the nail. This is not racist legislation. It cures an injustice that has been there for a long, long time. Until this legislation is passed into law Māori authorities experience double taxation. They and their members are taxed at higher rates than any other sector in society, notwithstanding that 90 percent of their members have a marginal tax rate of 19.5 percent. To the extent that any individual is in the top 10 percent and gets a tax advantage, it is only one of timing, because at the end of the year that person has to pay the balance of his or her tax. I commend this bill to the House.

I have been sitting here wondering about the Irish priest, and I think I know why Gordon Copeland cannot present him. That priest is very, very busy in the confessional box. I suspect there are many, many occasions when the United Future members of Parliament line up and say they think they have let the people of New Zealand down. Those people campaigned on the basis of their commitment and principle. They were to come here to Parliament and keep the Government honest. I listened to the speech of Gordon Copeland, as he tried to justify this legislation. He attempted to argue—with huge difficulty, I acknowledge—that this was not a tax rate based on race. But Gordon Copeland could not successfully argue that. To David Benson-Pope, who continues to interject, I say it is a sad day—

💬 Clayton Cosgrove: It’s been around for a long period of time.

Clayton Cosgrove thinks he knows the law. He says it has been around for a long period of time. Why are we changing the rate now to 19.5 percent? Why is this legislation before the House today, if this has been around for a long time? The answer is that these guys today, if we pass this legislation, will give a special tax rate of 19.5 percent. I say to Clayton Cosgrove that that rate has not been around for a long time. I say to him that, as the chair of the Finance and Expenditure Committee, he should have known that.

I go back to the comments of Gordon Copeland. He may well have forgotten this, but I sat in the House when we did the Committee stage on this legislation, and he interjected—it will be recorded in Hansard—that Māori deserve to have a special tax status because they were here in New Zealand first. That is what Gordon Copeland said in this House.

💬 Dail Jones: Are you sure he said that?

I assure you he said that Māori deserve to have a special tax status because they were here first.

They were here first. They arrived in New Zealand—

They arrived in New Zealand before Pākehā.

💬 Rodney Hide: He didn’t say that!

He did say that. So that is what we are to do: we are to have tax rates now that are determined by the time that one’s heritage has been in this country.

💬 Rodney Hide: I’m from the first four ships.

It is tough luck if Rodney Hide is descended from people on the first four ships. He would have to be descended from people on the first four wakas to be included in this deal. I say to United Future that it should watch the way it is treated at the next election if it continues to roll over and support stuff that I cannot believe it can really accept.

The other interesting comment from Mr Copeland was that he aspires to the day when we will be able to find most Māori authority beneficiaries being on a personal tax rate of 33 percent, and that then we will change this legislation. I make two points about that. Once it is enacted, it will be very hard to change this racially based legislation. The second point I would make is that there is no chance of getting significant numbers of Māori on to a 33 percent tax rate while there is the basic argument raised by John Tamihere, whereby continuing to bash people into welfare dependency will give no chance whatsoever of upping significantly the tax rates paid by Māori.

The other interesting interjection came from my South Island colleague.

💬 Rodney Hide: I’m Ngāi Tahu.

I wish the member good luck. Rodney Hide should rearrange his affairs and get on a Māori authority, and he will save himself a lot of money. The other interesting comment that I must mention was Mahara Okeroa’s contribution, when he yelled across the House that Māori like paying high taxes. That is what he said, and he repeated it today. Why are we giving them a special tax rate if they are so keen to pay a higher tax rate?

💬 Mahara Okeroa: We are restoring our historical situation as has existed with Māori authority beneficiaries for 100 years.

I say to Mahara Okeroa that if Māori are happy and keen to front up and pay high rates, we should let them. We do not need to pass this legislation. Let us see where that man votes shortly.

The justification for this racially based legislation was that most Māori beneficiaries—the ultimate beneficiaries of a Māori authority—are actually low to middle income New Zealanders. Therefore, they will not be taxed at 33c in the dollar, and therefore we will bring in the special proxy rate of 19.5c in the dollar. That was the argument that was run. But let us, for example, take a listed company like Air New Zealand.

💬 Darren Hughes: Very good owners.

The member should stand in the queue tonight. He does not have to go to the airport, because he is locally based. However, if he did, he would stand in the queues now, which are probably half an hour longer than they were before the Government and Michael Cullen became the very good owners of that airline. But that is not the point I want to make. I want to make the point that the 17 percent shareholding in Air New Zealand that is not owned by the Government will, in terms of numbers, be significantly owned by ma and pa investors. I say to Darren Hughes, who now claims that he is a tax expert, that most of those people will not be paying 33c in the dollar as their personal tax rate, so why are we not providing the same 19.5c in the dollar rate for them?

💬 Darren Hughes: Because it’s a new policy.

I will tell that member what my policy is. It is to drive tax rates down and to get the economy performing. And it is nice to get some support for that. It is a simple thing to do.

I am not sure how much time I have left, but that brings me to another point. This legislation also cements in the annual tax rates. Not enough people have spoken about that. Here in New Zealand we had an economy that gave a golden opportunity to Dr Cullen to lock in some sustainably high growth rates, but what did he do? He locked in the tax rates. Mr Hughes is quite right. However, Dr Cullen has not locked in sustainable growth, and that is a hugely missed opportunity that would not have been missed if we had a Government that knew anything about how to achieve sustainably high growth rates.

Only in the last couple of weeks Helen Clark has admitted amnesia, and that she forgot that she ever set a target of getting us back into the top half of the OECD within one decade. That just will not be possible while the tax rate is locked in at 39c in the dollar for people earning $60,000 or more. Sixty-thousand dollars or more is not a high income. To ask people to pay in tax 39c of each additional dollar that they earn above that amount stifles initiative. It is a way to get at successful people. They are the very people that the Government talks about the need to try to assist and encourage, and it is doing nothing but giving them words.

💬 Brian Connell: It’s an envy tax.

He is absolutely right; it is.

Debate interrupted.

The House adjourned at 6 p.m.