Injury Prevention, Rehabilitation,and Compensation Amendment Bill

There is a certain truth about the schedules. Here we have amendments to the third schedule of the Customs and Excise Act, related to the so-called Injury Prevention, Rehabilitation, and Compensation Amendment Bill. The theme of this debate this afternoon has been whether this bill in any way reflects the ability to achieve what its title is all about—injury prevention, rehabilitation, and fair and adequate compensation. The schedules, which are clearly and squarely related to the excise theme that runs throughout this bill—the tax—clearly show that it has nothing whatsoever to do with the parent bill’s basic aims or purposes. That is a hugely worrisome revelation.

As I said earlier on in relation to the components of the 39c plus GST per litre that is taken from petrol, it is very interesting that individuals such as Paul Adams of United Future have also picked up the key point that there would have been no need to alter those schedules in the first place if the modelling the Government had chosen was a competitive model, because, undoubtedly, the costs—if any—would have gone down. Instead, we have seen them consistently go up, and we have once again seen the Labour Government use euphemisms when it is really taxing the people of New Zealand.

More importantly, the Government had the opportunity to use the 18.5c component that went to the Crown account to bring some degree of equity into the reasoning behind this bill. That option was very much backed by submissions from the Automobile Association, Business New Zealand, and, I am sure, from Federated Farmers. All of them are aghast that this Labour Government has increased the amount allotted to accident compensation by over 100 percent, when the opportunity was there to take this motor vehicle excise duty across from the Crown account.

Again, that is an opportunity lost, but it is even more of an opportunity lost that this bill has not used realistic relative rating in terms of assessing the amount. For instance, the Government has totally ignored third-party risk. Mr Rennie, a leading barrister involved with accident compensation reform, pointed out that if, for instance, a bus driver drove over a bank and injured 40 passengers, the funds would come from the employer’s levy, but the funds for the 40 people injured would come from this part of the levy, which is totally inappropriate. The signals this bill has perpetrated are totally inappropriate in terms of realistic risk rating, and, as Business New Zealand said, they absolutely do not reflect commercial actuarial reality. That theme runs right throughout the bill that this Labour Government has perpetrated—a lack of reality and a grab for tax.

I too would like to move onto the schedules, and I do have some questions for the Minister. I would like to commend the Chair, Mr Ross Robertson, on the way he is looking after the Committee. I recently spoke to pupils at the Ruakaka primary school, and I promised them that members of Parliament would be on their best behaviour while in the House, and you are certainly helping them to do that, Mr Chairperson. I am glad that is now recorded in Hansard, as I promised. Thank you for that, and for resolving the issue around the “ghost” section—section 75A of the Customs and Excise Act 1996.

Part A of the schedule concerns goods manufactured in New Zealand. It concerns motor spirit with a Research Octane No. less than 92—that is, regular grade. People will know that I am the member of Parliament for Whangarei, and that the Marsden Point oil refinery resides in that electorate. I am well aware of what they are doing there to ensure that they produce petroleum products that do not hurt our environment, but are still very good products for motorists throughout New Zealand to use.

I have a question for the Minister about these rates of duty. Members will see the four columns, the first being headed “Excise item number”. I am referring to Part A, “Goods manufactured in New Zealand”, and I am referring to excise item No. 99.75.15C. That particular number refers to motor spirit with a Research Octane No. less than 92. That is regular grade, and the unit column is per litre—and we have been talking about the increase to 5.08c per litre tonight. The last column is the “Rates of duty” column, and it states: “36.2c plus 8c per g of Pb”. I assume that that is lead. A litre of petrol, I take it, weighs less than a kilogram, would that be right? Yes, one litre of water weighs one kilogram.

💬 Hon Harry Duynhoven: No!

Harry Duynhoven does not realise that one litre of water weighs one kilogram. He should be ashamed of himself. The Minister in the chair, Judith Tizard, should know that one litre weighs one kilogram, at 273 Kelvin. Per gram of lead, one litre of petrol would weigh roughly slightly less than one kilogram.

What I want to know from the member is how many grams of lead, per kilogram roughly, are in one litre of petrol? If there is an additional 8c per gram of lead, and there is substantial lead in one litre of petrol, I would like to know—and I am sure other members would like to know—how much that puts up the price to consumers. I ask the Minister in the chair to answer that question. How many grams of lead are in one litre of petrol; therefore how much is contributed by the lead content? I assume that is some sort of penalty. I have already given the Minister a brief lecture on how much the petrol should roughly weigh. If she could work that out and report to this Committee, I would very much appreciate it.

Interestingly enough, these levies, or what we call taxes, which have been increased by this Labour Government, will contribute to accident compensation. When people read Part A and Part B of the schedule, they might not realise that the Accident Compensation Corporation already has about $3.5 billion in reserves. It is worth questioning whether it would get a better return by investing some of that money in road safety initiatives—that is, in the fence at the top of the cliff—rather than billing New Zealanders more levies.

This is the part of the bill that actually tells us the numbers—that is, by how much the levies, the rates of duty, will be increased. Effectively, it means that instead of paying 2.3c a litre tax on petrol, everybody will be paying 5.08c a litre, so this Labour Government is increasing the tax on petrol at this particular moment in time by 120 percent. Theoretically, the idea is that it will go into helping to run the Accident Compensation Corporation. I say that this Labour Government has got this whole thing completely wrong. The Accident Compensation Corporation does not need the money now; the corporation has plenty of money to fund itself at the moment. The motorists of today are having to fund the tail of accident compensation in the future, and that is very unfair on the families and small businesses that are struggling at the moment.

What is worse about this particular bill is that it comes under the label of an accident compensation bill. This bill is a tax-increase bill, and the Labour Government was elected on a bandwagon of saying that it would be open, honest, and transparent.

💬 Jill Pettis: Talk about the schedule.

I ask that member over there why the Government did not put into the title of this bill the fact that it is a tax-grab bill. That is what the bill is all about.

The schedule tells small business that its petrol charges are going up. What we do know is that small business is finding it so hard to get by, and the first thing it has to do is pass that cost onto the consumer. What it means is that the numbers in these schedules will simply be another cost on New Zealand families. Only an anti-business Government would actually consider that that makes sense when we have a downturn coming. Most of the people of New Zealand realise that a downturn is on the horizon, and here we have a bill that is putting up the cost to motorists throughout the country—that is, ordinary families with their ordinary cars. More important, it is everybody who has anything to do with transportation, so anybody who buys a loaf of bread will find the cost of bread going up because the cost of petrol is going up. That means that that cost will eventually be passed onto the consumer, so we can expect price rises for bread, milk, cheese—for everything that consumers in New Zealand buy.

The real problem with accident compensation is that it is a monopoly run and controlled by the Government, so we get the Government in here today putting up the levies on petrol and accident compensation without any problem at all. It is one hand feeding the other hand; it is the two arms of the Government conspiring against the ordinary families and taxpayers of New Zealand.

It is interesting to look at the issue of accident compensation. Labour has already increased levies for the self-employed by 40 percent since it has been in power. The wage-earners’ levy has increased by 10 percent, motorbike levies by 57 percent, and car ownership levies by 14 percent, and now we have the third increase in the price of petrol. This increase is going to accident compensation, and it is a 120 percent increase. I say to the members sitting opposite that that is shameful, because it will hit the very families who are struggling harder than anyone else to get by, and that is the group that the Labour Party tries to pretend it is representing. I say that this heavy-handed tax grab is not needed, and it should not be taking place now. I think it is disgraceful that the Labour Party is once again increasing the taxes on New Zealand families.

What did Labour say when it came into Government? It said no tax increases on anybody who earned under $60,000 a year. What have we had? We have had 25 different tax increases since Labour became the Government. I say that that is an absolute disgrace, because most of those tax increases have been by stealth. I wonder whether listeners realise that Labour has collected an extra $9 billion in stealth taxes since it was elected.

I move, That the question be now put.

This brings us to the end of the debate on a tax that the Opposition will not be supporting—for the reasons we have been articulating during the Committee stage. When we look at the schedules, we see that it is nothing but a tax increase and a “tax by stealth”, as the ACT member has just said. If we were to take into account how much money is collected now to meet the accident compensation levies, it is 39c per litre plus GST. Of that 39c, 2.3c per litre is going towards accident compensation. That amount will be increased under this bill to 5.08c per litre. That is a 120 percent increase, and it cannot be justified at all. There is also the 18.5c per litre that goes to land transport funding, and another 18.5c that goes to the consolidated account. The argument we have put up is simply that the tax has already been collected. If more money needs to go into the accident compensation account, it should come out of the consolidated account, and it can be moved across for that purpose. But, no, this Government has gone out and said: “ We’re going to increase the taxes.”

What is very concerning about this bill—and it is a point I have raised in previous debates—is that it provides that the Government does not have to come back to the House to have future increases scrutinised. The Government can do it by regulation.

💬 Dr Muriel Newman: Very bad.

It is very bad. It is absolutely intolerable that the Government can increase that tax in future without having to come back to this House for the matter to be scrutinised and debated. There is no transparency; no accountability. That is what this Government is imposing on everybody who drives a vehicle.

This tax will hit those on fixed incomes—the mums and dads at home, and people who are retired. They do not have the means to go out and earn extra income to be able to pay a 120 percent tax increase. We have seen this done before in the term of this Government. Other tax increases have come in, and Muriel Newman alluded to some of them. The income tax rate for those earning over $60,000 per annum went from 33 to 39 percent. The fringe benefit tax increased from 49 percent to 64 percent. The income tax for trusts in respect of minors went from 19.5 percent to 33 percent. We saw the tobacco excise tax increase from $7.30 to $8.20.

We saw the increase in the petrol/diesel road-user charge, and what a debate that was! We saw the alcoholic beverages tax go up, and that was the issue we debated until 5 to 5 in the morning. The Government said that tax was supposed to target binge drinking and under-age drinkers. But, once again, it mostly hit those who like a port or a sherry at the end of an evening. The accident compensation levies for self-employed people increased. Then just the other day we heard about the flatulence tax that will bring in $8.4 million. In the schedule of the bill, we see this tax increase in the accident compensation levy. National certainly opposes that increase.

Interestingly, in the New Zealand Herald today, there is an article by Colin James under the headline: “Clobbered by the sneaky taxes we don’t see coming”. The tax we are talking about today is one of those sneaky taxes.

I move, That the question be now put.