Taxation (Disaster Relief) Bill

I move, That the Taxation (Disaster Relief) Bill be now read a second time. I want to thank all members and all parties for their cooperation in dealing with this bill expeditiously. I think members understand the necessity to get this bill through the House quickly.

The bill is very specific in its focus. It gives the Inland Revenue Department greater legislative flexibility to deal with business taxpayers who were badly affected by last month’s severe weather and who, as a result, may be having problems in meeting their tax deadlines. The taxation Acts already provide a number of discretions that can be applied when taxpayers are involved in adverse events. The Inland Revenue Department has said that it will use the full flexibility that the legislation allows if tax obligations remain outstanding as a result of the floods, and will remit penalties as appropriate to the extent that the law allows. However, the floods and high winds that occurred in February were so extreme that it is necessary to legislate to provide flexibility beyond the norm. We are not speaking here of adverse events that may occur every few years, which the present taxation rules cater for pretty well, but of events that are predicted not to repeat themselves again for 100 years—though, having said that, I am conscious that 100-year events have a tendency to come back after a couple of years and then not to appear for a long time thereafter. We saw that with the Clutha flooding not so long ago.

The bill not only relates specifically to the recent events but also covers similar natural disasters in the future. It allows the Inland Revenue Department to remit use-of-money interest on tax payments that are late as a result of the flooding and bad weather, whether that is because taxpayers’ records have been destroyed or because they cannot gain access to their records or did not have time to pay their taxes because of higher priorities created by the emergency. The change is necessary because under current law the Inland Revenue Department does not have clear authority to remit use-of-money interest in those cases, although clearly it can remit penalties arising from the late filing of returns and from late payments. The bill also allows the Inland Revenue Department to accept estimates of provisional tax that are late because of the floods. The problem with business taxpayers here is that they want early refunds of overpaid provisional tax. They had to re-estimate their income for the year and file that information by the due date of their third instalment for the year, which was 7 March for most taxpayers. The bill will also amend the law to allow the Inland Revenue Department to accept verbal applications for remittance as well as written ones.

In relation to future disasters of this sort, the bill specifies several criteria for qualifying for relief. First, a state of civil defence emergency must be declared in relation to the event. That does not mean, however, that the relief will be limited to those who live in the emergency area; all significantly affected taxpayers will qualify. Second, the Governor-General must specify by Order in Council that the event is significant enough to justify invoking relief. Third, the taxpayers concerned must be significantly affected by the event. Finally, the taxpayers concerned must apply for the relief. That may seem overly bureaucratic, but I am sure members will be aware that even in such extreme circumstances some people sometimes find loopholes in the law to exploit, even when they should not be qualifying for this kind of relief. The qualifying hurdle has been set high because use-of-money interest is a very important concept in the administration of taxation law.

Just as there was a great deal of cooperation and coordination on a national level when the disaster occurred, so we have had significant cooperation from several agencies in preparing this urgent legislation. In particular, I want to thank the Institute of Chartered Accountants of New Zealand and Federated Farmers of New Zealand, who helped to form a quick tax response to the disaster. I acknowledge that a tax response is, for the present, of relatively low importance to people who may have lost their livelihoods and are more concerned about immediate problems. However, the measures introduced in the bill will help to reduce some of the worries that people will face in the coming weeks and months, as they deal with the situation that has occurred to them.

I also acknowledge that I have received a specific set of recommendations and requests in relation to these sorts of issues from Mr Gerry Eckhoff. In acknowledging that they are issues that do not need to be dealt with immediately in this particular bill, I undertake that I will refer those matters to my officials for consideration as to whether we should try to introduce them by means of the next major tax bill, due to be introduced soon and passed by the end of this year.

Again, I thank all members for their cooperation. I also want to apologise to the member following me; I have to leave the Chamber for a somewhat delayed meeting. I commend the bill to the House.

While the Minister remains in the House—I say that at the risk of breaching the Standing Orders—I thank him for the introduction of this Taxation (Disaster Relief) Bill. It will bring some aid to the many people in the lower North Island who are feeling, as the Minister put it, substantial pressure in several areas. The flexibility afforded to the Inland Revenue Department by this bill will go some way towards assisting those people, as constituents of mine have told me at various meetings around the electorate over the last 2 weeks. The bill is a helpful step in the right direction, and the National Party will certainly be supporting its speedy passage through the House.

At the risk of trying the patience of the Speaker, I wish to say a few quick words about the scope of the disaster in my first opportunity to do so in the House, when referring directly to the bill.

💬 Mr SPEAKER: I have talked to the member about this and I have agreed that this may be the case. If any other speaker wants to talk about the scope of the disaster, that will be fine.

The local people of Horowhenua, Rangitikei, Wanganui, and the surrounding districts have responded with extreme selflessness and dedication to fellow members of their communities. The agency relief and flexibility afforded to those members by the Government has been excellent in terms of the way in which local people have carried it out. Federated Farmers have done an outstanding job in the districts of organising, particularly, the collation of information from various farming districts and farms throughout the region. Federated Farmers, as I say, deserve the thanks of the House, as does the Defence Force, which did a very good job in the initial stages.

It is worth taking up the point that the Minister made about the scale of this disaster. It ranges from severe crop damage on the flats of Horowhenua through to the Manawatu area, to some of the most vicious scarring of the hill country in areas like the Turakina Valley and Whangaehu that I am sure members who have viewed that damage will ever see in a lifetime. It has been interesting to watch the reaction of members of the community, who have acted in a dedicated and supportive way towards each other. I am aware of visits from members of Parliament from across all parties in this House to the disaster-affected areas. It is worth saying this to members. In case they have not seen one particular area of Whangaehu, I will take a moment to describe to them what it is like. The best way to describe that area is to say that it is like a moonscape of mud. It is simply kilometres and long stretches of nothing but brown, cracked mud over what was previously lush, green farmland.

The people in that area of Whangaehu are holding up well, but the damage to their crops and stock is difficult to describe due to its quantum. I have seen reports in the local media of the Ministry of Agriculture and Forestry’s first indications of the extent of the damage, when it indicated 5,000 sheep had been lost. One farmer I spoke to last week lost 3,000 sheep himself, so those first best-guess estimates of the Ministry of Agriculture and Forestry are way off the extent of the damage that is being felt in the district. Another farmer I spoke to had had several hundred lambs drowned as he tried to move them from the paddocks, where peril was looming, into the woolshed. They were freshly shorn lambs, and several hundred of them drowned. So to say at this early stage there were only 5,000 sheep lost is, I can assure the House, way off the mark. The crop damage that has been done, particularly to the younger farmers in the area who have all their capital invested in those crops, is horrendous. Various stories that have emerged of several big chunks of herds of cows being swept out to sea, and then having to be shot from a helicopter 2 days later as they were still swimming 2 kilometres from the shore, will give members of this House some idea of the scope of the disaster we are dealing with. So it is fair to say that a qualifying event under this bill must be extreme, as the Minister pointed out. I think that is fair enough, but let me say to any members of the House who may doubt it that this disaster has been extreme in every sense of the word.

There have been offers of assistance from all over New Zealand. Southland farmers have phoned to say they remember how people from the district helped them in 1984. They are very keen to help, and have asked what they can do. Those types of offers show something of the spirit of New Zealanders. The warehouses in Feilding are full of donated goods. Pallets and pallets of brand new goods are being deposited there every day, and there is a whole warehouse full of clothes and other household items. That just goes to show a fraction of the generosity that is being shown from throughout the country.

Like my colleagues across the House on the Government benches who have had a lot to do with meeting local people during this disaster, I do worry that now the initial adrenalin rush has worn off we are entering into a very difficult phase in this disaster indeed. We are entering a phase where people are now beginning to appreciate the actual long-term impact of what has occurred, rather than just working through the initial adrenalin rush to save families and homes. Now we see grief and concern for the economic viability of some of the affected farms and properties pouring out at public meetings throughout the Horowhenua, Rangitikei, and Wanganui districts. I know my Government colleagues have attended a number of those meetings, and I know they will be experiencing the same outpouring of concern that I am experiencing.

This bill does go some way towards assisting the affected farmers. Even though the Minister himself acknowledged it was a small, token gesture, frankly, the fact that those people have one less thing to worry about is a very positive thing. I am delighted that all parties in this House will be supporting the speedy passage of this bill. I hope that the bill will go some way towards dealing with issues of use-of-money interest, remittance for fines, and the like that the Inland Revenue Department could otherwise impose. I notice in a late letter from the Minister of Revenue that, in the circumstances, the Inland Revenue Department will accept verbal applications, as well as written ones. I think that is important, as many people do not have access to fax machines and the like. Frankly, some of the people in some parts of my district have only recently had their telephones reconnected, and at this point they have more important things on their minds than providing estimates of provisional tax.

It is left to me to say one thing further, and that is to thank all those members of Parliament from across the House who have extended to me, as a representative of the people of Rangitikei, their good wishes and offers of help. Many members from all parties have done that, and I wish to put it on the record that I truly appreciate that, as we enter this difficult time in the recovery process. The heavy grieving begins, quite frankly, and I look forward to the Government’s substantive response by way of an aid package to be announced in the next few days, I understand—I hope.

I commend this bill in the spirit in which it was brought to the House, and I ask members, as they make a contribution or listen to the contributions of other members to the debate on this bill, to take some time to think of the people who have suffered huge financial and emotional losses during the last month.

I want to take a brief call, because we are approaching the dinner hour and I do not want to cause the interruption of the next speech. I commend this bill to the House. The Government has responded very carefully and wisely, and with a long-term view, to this disaster. I think the use of the word “disaster” is entirely appropriate. It is not being used in an emotive sense at all, because anybody who has visited the huge geographical area that has been so adversely affected could not help but use such a description.

This bill will provide practical relief for the businesses that have been so adversely affected. As one of the MPs who represent the affected area, I am delighted at the flexibility that the Government and its many agencies have applied. As the agencies and organisations are now moving into the next stage of recovery, I am pleased at the comments that have been made by people as I have moved around not only my electorate but other electorates in close proximity. People have expressed their appreciation of the tremendous assistance they have received from Government agencies. Their praise makes one feel very humble. When we look at the dreadful situation that they are living in, and will have to live with for a long time, it is humbling that they still have enough heart and compassion to commend agencies for the support that has been given to them.

I want to place on the record my appreciation of the outstanding service that all the Government agencies have provided to people. A resolution to that effect was passed at the regional chiefs meeting in Feilding on Friday—a meeting of mayors and chief executive officers in the central district. All of their areas have been affected by the recent floods, and their resolution was to the effect that they commended the Government for its outstanding response to this disaster. I was very pleased and humbled to hear that passed while I was at the meeting.

One of the other aspects I have been pleased to see is that we have looked outside the square a little in our response to this disaster. We are acknowledging openly, perhaps for the first time, that a degree of psychological support will be required for people in the long term, as they come to grips with the enormity of the situation. Dr Gordon, a post-disaster specialist, has come over from Australia, and is assisting people to cope in the long term, as they learn to live with the magnitude of their loss. If I have heard the term “flexibility” once, I have heard it a hundred times in the last month, as the Government has encouraged all its agencies to be flexible in their response to this situation. The recruiting of people like Dr Gordon is an example of the flexibility that has been applied.

The amount of assistance required is huge, and it will be ongoing for a long time. I am very pleased to support this bill, and welcome the universal support for it in the House.

Likewise, New Zealand First supports this bill. We are pleased to do so because we have an understanding of farming and of people in the provinces. They are hardy people, and they will recover from this catastrophe, as all people do, but that is not to say that they can recover without some help and understanding from the Government, and, in particular, from Government agencies.

New Zealand First—and this is not to make political capital—has always believed that help can be provided to different industries through the taxation system. We have seen—and any farmer will tell us—that it is an inequity that when people face periods of drought, flood, pestilence, or anything else, and have to divest themselves of stock or plant, or both, in the short term, the money they receive shows up as a huge increase in their income for that year, making it very difficult to even out their taxation. They may well get the tax back a couple of years later, but that does not help them in times of crisis. I can see from my farming colleagues’ nods that even if they have not been in that situation themselves, they certainly understand it. So I think it is great that, in this instance, we are seeing some understanding in terms of taxation, and are seeing instructions, from the Prime Minister down, that people in the departments should use their initiative and be flexible. Above all else, that is what needs to happen.

My leader will berate me when I say these next words, but I have not been to the disaster area. That has been deliberate, because I think that the time immediately after disaster strikes is a time when Government members, Ministers, and people directly involved in departments should go to that area. The last thing people need is a person like myself trundling around. But I will go, and I will take a great interest in this area, because I do realise, as other speakers have outlined, that resowing, replanting, rebuilding, and all of those things have to be done.

Sitting suspended from 6 p.m. to 7.30 p.m.

R DOUG WOOLERTON: I have taken on board the words of a local member, Simon Power, who said that once the initial heartbreak and grief of the local people, and the outpourings of sympathy and the donation of some millions of dollars from the rest of New Zealand, were over, a period of grieving—I forget the exact words Mr Power used—would set in and the real grief, the sense of real loss, would come to pass. I said earlier that I had deliberately not been to the area while people were in emergency mode, but I will certainly be visiting in future to see the replanting of pastures and crops, and to pass on to people the sympathies of my party and myself. I think that is the appropriate thing to do.

I understand what Mr Power is saying. He gave a warning to the Government, and I think that is fair. The Government, whether or not it needs the warning, certainly understands that it cannot sit back now. As far as farms go, and businesses, and people’s lives, they need to be rebuilt, they need to be made productive again, and the hurt and the tragedies that have been experienced need to be put right. So the Government’s job, really, is just beginning, and it is great to see the House, across parties, endorse the help that is being extended, to whatever degree, with this bill.

Millions of dollars will be needed—not only in the lower North Island but in other parts of the country. In the break I was talking to my colleague Gerrard Eckhoff about the situation in Otago, where people have just finished experiencing their worst drought in, maybe, history—certainly, in living memory. To then have other parts of the country, some not so far from that Otago area itself, hit by floods is rather ironic. It is a weather pattern we expect to see in our dry neighbour, Australia.

I endorse Mr Power’s comments, and say that the Government’s work is just beginning. I want to put on record that I will be visiting the area, on behalf of New Zealand First and out of my own interest, to pass on our sympathies to people there, and to watch the rebuilding and whatever steps the Government takes to put money and resources into the area to get it back to how it was previously. We endorse and support that wholeheartedly. I do not think there is much more I can constructively say, except that it is right to bring this bill to the House. New Zealand First has supported taxation incentives since its inception. This legislation is not seen as an incentive, yet that is what it is. It is help that is sorely needed, and we support it wholeheartedly.

The Green Party is very pleased to support this bill. We extend our sympathy—our deepest sympathy, in fact—to all of the victims of the flooding, both in Picton and in the lower North Island. We are very conscious of the personal devastation suffered by many people, particularly farmers, and we applaud what the Government is doing. It is not nearly enough for a lot of people, I know, but it is something, and it is something constructive. The Government’s move is to reduce the financial pain by deferring taxation, such as provisional tax, and other penalties that other members have already detailed.

As a farmer myself, I am very aware of the relationship that exists between farmers and their land. It can be a very moving experience to realise the dependence one has on the land one farms. In particular, livestock farmers have a very deep relationship with their animals, and awareness of a mutual interdependence between their animals and themselves. The loss of any animal can be quite devastating for a farmer, and can cause grief—sometimes quite profound grief. That is particularly true for dairy farmers, though I am not one myself, and never have been. I say that because they come into contact with their cows twice a day for most of the year and they establish very close relationships, even when there are large numbers of cows.

From my own personal experience I can still recall the pangs of grief, guilt, and self-criticism I felt some years ago when I lost about half a dozen prime cows to milk fever. It was a preventable thing, I suppose. Had I been a better farmer, they would have not have been lost, but they were in magnificent condition one day and dead the next morning. So I can only empathise with farmers who have lost entire herds of cattle or flocks of sheep. I express my sincerest sympathy to them.

The emotional cost of an event like this is really enormous, but it is not just an emotional cost—there is a financial cost, as well, and I am pleased to see that the Government is aware of the short-term costs that build into long-term problems for farmers. It may not be immediately obvious to urban dwellers, but the impact on farmers of natural disasters can take many years to work through. It is not just a matter of getting the insurance company to come and replace the carpets, of tidying up the mud from the lounge, or of spending hours fixing the fences. It is a loss of a source of income as well as a monetary loss in the short term.

I am particularly aware that in places like the Manawatu many farms have very high-quality pasture covered by many centimetres of pretty infertile mud. That in itself will take a long time to work around. Obviously, in the very short term there is no immediate feed for farmers’ stock. In the longer term, there is no feed to be made into hay or silage for winter feed for that stock. So the floods had a dramatic cost and impact on farmers.

But I guess it is the plight of dairy farmers that, again, I particularly want to refer to. I find their loss really most poignant. I am very aware of the story related by Landcare Research. The Primary Production Committee had cause to have dinner with the Landcare group just recently, and its members related the story of how many of their quite extensive herds of dairy cattle were simply swept away. Water came up, and cows in water are basically like 44-gallon drums with legs. Although they can swim quite well, they also float extremely well, so they were just picked up and carried away.

In Landcare’s case, the short-term grief was at least mollified to a degree, because a lot of the cows swam to shore and were not swept out to sea, but I am very conscious of other farmers whose entire herds were washed out to sea. One of my colleagues talked earlier about how the animals were shot out at sea, because there was no way of saving them. As a farmer, I can only grieve in thinking about stories like that.

Replacing a dairy herd is a slow process. Replacing any kind of cattle or flock of sheep is a slow process, as well. It is not just a matter of identifying and buying new stock. Cows in particular are extremely social animals and they take time to settle in if they have been brought to a new property. They tend to be much rougher on fences on properties they do not know. If a farmer were bringing cows from a variety of sources—as would be the case if a big herd of cows in the Manawatu were being replaced—there would be social conflicts within the various subgroups of the herd.

Anybody who knows about dairy cattle will know that cows have a pecking order, and that they always go into the milking shed in a particular order and come out in a particular order. There is a very strictly regimented regime within the social hierarchy of those cows. They not only take time to adapt to their new social environment, they also take time to settle down physically and start producing milk.

After a disaster such as the one we have had in the lower North Island and around Picton, farmers have not only lost their houses, but a lot of their possessions, stock, pasture and fences have gone. They are really up against it. I have not noticed too many of the banks holding back on their mortgages in the way the Government is trying to help at the moment. We would live in a much happier country if the banks could do that. At the end of the day, a bank is rather like a partner on a farm—it does none of the work, but is always there with its hand out first when the money is being given away.

It is not just the fact that short-term income is affected, so is capital stock. One can probably afford to lose one’s profit for the year—the stock that is, in effect, harvested, such as the culled cows and prime steers that have got to a certain point before being sent to the market. Farmers can afford to lose a year’s income, but if they lose their capital stock as well, then it will take a very long time to recover. They are not only losing their profit, they are losing their cash flow.

Most people will be aware that provisional tax payments are made for the year ahead, in which no income has been earned. Provisional tax is based on the past year, so in a disaster situation like we have at the moment, income for the past year might be quite healthy, but income might be zero—or, even more likely, negative—for the coming year. If farmers have to pay provisional tax on the basis of a good income for the last year, and are paying from a negative income for the coming year, then they are in a very tight spot. I applaud the Government for intervening in that scenario and saying it would taihoa on provisional tax. I guess at some stage it will be paid, but in the short term let us forget about it. We really do support that initiative.

I would also like to take the opportunity to commend Federated Farmers. Their behaviour and performance in the lower North Island is very reminiscent of the way they behaved during the Boxing Day fires in Marlborough a couple of years ago. Their support for the farming community there was exemplary. I resigned from Federated Farmers some years ago because of their attitude to genetic engineering, and I still cannot bring myself to rejoin. That said, I cannot help being impressed by the way the organisation gets in behind the farming community at times like this.

Without wishing in any way to diminish the pain farmers are feeling, I want to give one very gentle message to the Government. Actually, there are two. The first is that inappropriate land use exacerbates the problem of flooding. In clear-felled forests, for instance, the rainwater runs off more quickly. It erodes more and is more turbid, so there are greater floods. We need to think about appropriate land use and not clearing too much at any one time.

The second point is that the unseasonality and severity of the storms we suffered last month are a stark reminder that global warming is a reality. It is something that we have to address upfront and stop pretending that it is not happening, because it really is. It is something that we have to address now.

In closing I would like to reiterate my sympathy, that of my Green colleagues, and, I am sure, of all members of the Chamber. The sympathy and good wishes of the Green Party go out to the affected farmers and their families. I want to let them know that our thoughts are with them. Like Doug Woolerton, I have not been there, but I will go in the very near future. The Green Party has great pleasure in supporting the passage of this bill.

In the quiet moments I have in Parliament—they are few, but occasionally they happen—I sometimes reflect on whether one can have some impact or make some sort of difference, or on why one comes to Parliament. Thinking to myself about this, after talking and listening to the very wise words of all the speakers I have heard so far, I realise it is important that we make a contribution.

Certainly, as a rural person I believe that the voice of rural New Zealand is not heard as much as it should be, so it is very gratifying to hear members from all parties speak with real understanding of the issues that are out there for so many who have been affected by this rather catastrophic event in the lower North Island.

As a farmer of 30-odd years thinking closely about the impact the floods have had on the communities in the lower North Island, I start to think back on my own experience of going through one in 200-year floods, a year apart, in Southland. We have gone through numerous droughts, and many of us in Roxburgh would say that the last drought was probably the worst in living memory. Now it has all changed and the grass is growing again, which is fantastic.

I cannot help but reflect on a neighbour whose property was totally burnt out back in 1999, and the impact it had on just a handful of farmers. It was not a disaster in a regional sense—although it could have been—but it affected those farming families immensely, and one particular family no longer farms because of that fire. I also think of those in isolated areas who lost 200 to 300 cows smothered in snowfalls. That does not make the headlines in the New Zealand Herald or in the North Island newspapers, but the impact on individual farmers and families is huge.

If I might come back to the bill—which is perhaps rather unusual—the impact of taxation over the next few years on affected farmers in the North Island, and those who have gone through significant capital loss and expenditure, is very profound. I know, for example, that when stock that has been lost is replaced—whether it be cows, sheep, or a market garden—the costs are huge. The impact of the Inland Revenue Department and its legitimate—nobody doubts that—requirements can be very deleterious. I say to Dr Cullen and the Labour Government: thank you for hearing the pleas of so many.

Not just rural or provincial New Zealand but the whole of the New Zealand community recognised the devastating impact of the floods on so many of our families and knew full well that they could be next. That is why some of us—I donated a cow or cow equivalent—helped, just in a small way, to make things a little easier, especially for sharemilkers who have all their capital tied up in a breeding herd.

Doug Woolerton and Ian Ewen-Street have referred to the enormous loss caused by the floods—not just in a financial sense, but in a personal sense. Farmers do not just lose a source of income when they lose stock, but almost part of the family. I guess one needs to be a rural person to understand that in any very real way.

I wrote to Dr Cullen today and expressed some concern that the bill as it stands does not go far enough. I do not want to sound churlish or ungrateful, but there are other elements that we need to think about. I suggest that the Inland Revenue Department—and, indeed, the Minister—needs to think about the anomalies that those sorts of situations throw up when cash donations are made, or in kind, such as hay. We need to think about whether those sorts of deductions are tax deductible.

I hasten to add that my comments do not relate to my personal contribution, but more to the longer-term impacts on those who generously give very substantial sums of money in some cases. We need to understand exactly what the implications are. We know of situations where culverts, sheds, etc. that are depreciating on an annual basis over a 20-year period have been washed down the river and totally lost, and we need a system that allows people to write those off immediately and start again.

There are some real issues there, and I am very grateful to the Minister, Dr Cullen, for his indication that there will be legislation addressing that issue—in the not too distant future, one would hope. I fully accept that the immediacy of this bill, in terms of payments to the Inland Revenue Department—whether it be GST, provisional tax, or whatever—is necessary. Hence the House, I am delighted to say, has set aside a time in which to address this very important issue.

It would also be fair and reasonable for me to say “Thank you” on behalf of Federated Farmers, who have been hoping for almost 10 years that a Government, no matter whether that Government be National, Labour, or ACT—and an ACT Government is not too far away—will address that issue. We appreciate the fact that that is now being done.

💬 Hon Dr Michael Cullen: It is a one-in-100-year event.

I will just carry on. Sadly, it does sometimes take catastrophic events to get the Government to hear the pleas of the people out there in the provinces. The catastrophe of the last flood has been so grievous for so many. Mr Woolerton referred to the “scarring of the hillsides”. The reality of that is brought into stark focus, whether one is flying over the area or driving through it. We know it will take some time for the country to recover—but recover it will, as will our families.

I believe it was Mr Woolerton again who pointed out that after the immediacy of the event—with the television cameras, the Iroquois helicopters flying over, and everybody saying: “Gosh, isn’t this dreadful? Look at all this silt on the flats”—it will be over the next 3 to 7 months, or even the next year, that understanding of the situation and help will be needed. I also pay homage to the job that Federated Farmers have done over this time.

If members will forgive me, I would like to finish on what I think is quite a nice note. I have no wish at all to be flippant, but this is a nice little story of a dairy farmer who woke to find 80 bucket-reared heifers marooned. He did not know how to get them across the water, so he tapped the bucket and started calling to them, and, one by one, they leapt into the water and came to him. He got them on to some high ground and thought he had saved them.

A couple of hours later, the farmer was mortified to see an Iroquois coming down—the pilot had apparently thought the group of heifers was a group of people huddled together—and the heifers plunging straight into the river again. He thought: “Oh my God, I’ve gone from saving them to losing them again.” Two hours later, he got a ring from a fellow down on the coast, who said: “I think I’ve got some heifers of yours. They’ve got your earmark on them. There’s a dozen or 15—hang on, there might be 20—no, looks like about 40, actually.” He rang the farmer back about half an hour later to say that there were 80 of his heifers on the farm, right on the beachfront. The whole lot were safe.

If I might be forgiven for adding a positive note, some positive elements have come out of these disasters, and rather than dwelling on the huge difficulties, I thought that was quite a nice little story for members to think about—which is certainly not to undermine the huge difficulties that have grievously affected not just farmers but so many people in small provincial towns. I thank the Government and my colleagues for their contributions, and I look forward to the passage of this bill.

February of 2004 will be registered forever in the memory of the farmers and the other inhabitants of the lower North Island. I am as not as young as I used to be, and in my lifetime I cannot remember a February quite like the February that we have just experienced in this part of the world. For many parts of the lower North Island, the rainfall that we had during the month of February broke all records since records were first kept, way back into the 1860s and 1850s. By any stretch of the imagination, this has been a truly disastrous time for people in the lower North Island. A flood is always a devastating experience for people who have their homes, their possessions, and, indeed, the very soil of their farms slip away into the ocean, but on this occasion it was made so much worse because some individual areas and farms had not one, not two, but three floods during the month of February. It is the cumulative effect of that on people’s finances and aspirations—seeing their dreams swept down the river—that has been so completely devastating.

Like the other parties, United Future would like to record its sympathy tonight for the many families that were involved in those events. We recognise the traumatic nature of those events. We wish those families very well in the months ahead, and a speedy recovery from those unfortunate events.

The other side of the coin, of course, is the way in which the New Zealand community has reacted—the tremendous generosity of people that expressed itself immediately in things like the Television One appeal, which received $3 million, and in many donations given to many other organisations and charities such as the mayoral relief funds.

The members of United Future went to the Minister of Revenue and asked whether we could not have special legislation tabled in Parliament that recognised the event and that would allow people to deduct more than the usual stingy $1,900 per annum in donations for tax purposes, recognising the fact that anybody who gives money for flood relief should get a tax deduction for that. We were delighted that that eventually evolved, as officials worked with the Government, to a dollar-for-dollar matching subsidy from the consolidated account to each of those funds that have been driven by the generosity of New Zealanders.

Simon Power and others have mentioned the great outpouring of goods and services that have flowed into places throughout the lower North Island, replenishing all kinds of things—from clothing to food to farm supplies, and so on and so forth. Gerrard Eckhoff and others have also mentioned that cows and other animals have been donated, which I had not realised until tonight. Again, that is an expression of the tremendous sense of generosity that lives in the hearts of Kiwis.

The other thing that is always an amazing example to all of us is the farmer-to-farmer solidarity that emerges on these occasions, not just on this occasion, but on so many other occasions, be they drought, flood, or fire. The farming community of this country has an amazing ability to rise to the occasion and to help out fellow-farmers, and we have seen that happen again on this occasion.

We need to recognise, as others have, that, in spite of our best efforts, there will be very serious financial and other losses for many farmers. Many of the landslips and landslides, and the silt that has covered paddocks, are not covered by any form of insurance. There is no piggy bank that can be called on to offset those losses. Ian Ewen-Street picked up on the fact that here we are in Parliament, putting through a bill—which United Future totally supports—that will give some much-needed relief in terms of provisional tax and interest rates. Ian mentioned that it would be good if the banks were to follow suit, and it reminded me—

The ASSISTANT SPEAKER (H V Ross Robertson): The member will refer to members by their full names.

Yes—Ian Ewen-Street. Members will remember the telethons we used to have where people would make a donation and challenge other people to do the same. Maybe here in Parliament tonight, when passing this bill with, I think, the unanimous support of all parties, we should actually be saying to the banks: “We now challenge you to do the same.” Maybe the banks can look at a bit of interest write-off for these hard-pressed families. With those remarks, I am happy to signify United Future’s wholehearted support for the Taxation (Disaster Relief) Bill.

I rise to give my very strong support to the second reading of the Taxation (Disaster Relief) Bill, introduced by the Hon Dr Michael Cullen, and I do so as a member of Parliament for the Horowhenua district, which has been adversely affected by the floods. I know this bill will be welcomed as one of a range of measures the Government is taking to try to respond to the floods in many different ways. This bill is only one thing, but, of course, because it is being debated in Parliament, we have the opportunity to put on record the sympathy we feel towards victims of the floods and also to recognise the huge community contribution from around New Zealand that has been made to support people through these difficult times.

On the Tuesday night of the floods I travelled to Levin, where the civil defence headquarters was set up, and I saw the photographs that were coming in from the civil defence people from the helicopter early on. The photos showed water right up at the level of the Whirokino Bridge in between Levin and Foxton, and those who know that bridge, where the spillway is, know that it is a huge area, and to see it all filled up with water is something I never thought I would see, having grown up in that area as a boy. When I saw all the water at that level, I knew we were in for a very difficult few days, as that water had to go somewhere, and as the days went on, more and more people were affected across the Horowhenua district. It is only now that we get to turn to looking at some of the structural things we can do to make a difference in that regard.

This bill will allow the Inland Revenue Department to remit the use-of-money interest on tax payments that are late as a result of the flooding, and that could be because records have been destroyed. I have visited milking sheds where the little office the farmer had, where all the records were kept, had been washed away. There are many other priorities that are difficult for farmers to have to deal with as well as the requirements of the Inland Revenue Department, so this bill does give that flexibility, which we have been saying all along is what Government agencies have to do. Local members of Parliament from around the district have been very grateful for the way Government departments really have made the extra effort to see what they can do to be of assistance, and not just have a straightjacket rule-book approach.

The support the community has been able to give has been huge. Manawatu College in Foxton was set up as a place for people around the Motua district to use as a relief centre. A whole army of people came to help out those farmers in the Motua area who had to abandon their homes because they were submerged in water. People came together, from all walks of life, right across the community to see what they could do. They were led by amazing women like Rora Batt, who managed to cook breakfast, lunch, and dinner for farmers.

I went out one day to deliver lunches to farm workers around the district who did not have time to prepare meals. People like that just got on with it—cooking meals, making sandwiches, and providing a place where people could go and talk at the end of the day. It really does bring out that strong community spirit.

Members of the Horowhenua District Council have done a very good job coordinating civil defence, and I am grateful to them for the leadership they have shown. I am grateful also to Federated Farmers. Shelley Dew-Hopkins, I know, has assisted in the Rangitikei, Whanganui, and Horowhenua areas, and has been a very good source of information and support. She has jollied people along when they needed it, but has also been a good face and voice in the media for the needs of the farming and rural community.

In Shannon, Geoff Kane has done a good job, working in with Richmond Ltd, the fellmongery, the largest employer in Shannon. It provides 100 jobs in a low-income town. Two-thirds was submerged in water, which, of course, put those people out of work temporarily. Richmond came to the party and kept the workers on the payroll so they could help with the clean-up. I guess when we see corporations doing things like that, it shows why it is important for the Government and Parliament to enact this legislation to allow the Inland Revenue Department to be equally flexible.

Some individual farmers have been hugely affected, and that is why I stress that this bill can only be one of a range of measures we need to do. I know that at the moment there are discussions about what assistance can be made available financially in terms of which farms can be made economically viable again. A lot of attention has been given to cattle and dairy farmers with a lot of stock, and initially there was huge concern as stock was seen floating down the Manawatu River and so on and so forth. As they have been able to be rescued, our attention now must turn to the crop farmers who, of course, were rather missed out in the initial stages when we were worried about making sure that cows could get milked. A lot of those crop farmers have lost all their economic value. I think of Ian Easton in Shannon, who has lost half a million dollars in spuds, $400,000 in squash, and $400,000 in onions—all gone. It is very hard to try to find that kind of money—over a million dollars—out of one’s back pocket, and those are the kinds of people we need to try to help name. Through no fault of their own, they have had their farms totally submerged in water, and are facing very difficult times as a result.

I am grateful for the work that the local members of Parliament have done in each of their electorates: Mrs Pettis in Whanganui, Mr Power in Rangitikei, and Mrs Turia in her electorate, as well, particularly around the Ratana community. As Mr Power notes, she did a very good job there early on when Ratana was under pressure. The Prime Minister visited many parts of the district, on a couple of occasions. I accompanied her to Scots Ferry, which was a devastating scene, and also across to Feilding. In my own electorate, the Minister for Social Development and Employment, Steve Maharey, the Minister of Civil Defence, George Hawkins, and the Minister of Agriculture, Jim Sutton, all made visits to different parts of the area, and they were very welcome as well.

I am grateful for the way the business community has come together. I think of bigger companies like Telecom, State Insurance, and Wrightson, who have all come in with some big donations, and also of the smaller companies in the towns, like our apparel and textile businesses, who have donated a lot of clothing for outdoor workers. Because people need to have treats, as well, RJ’s Licorice, a very successful liquorice exporting company, has made lots of lollies available, as well, and that has been very welcome. It has been a difficult time, and that is why it is appropriate that we come together as a Parliament, and I welcome the fact that all parties will be supporting this bill. Agriculture is the backbone of our economy, and in rural and provincial seats like the ones that electorate members hail from and have spoken about, we know how important it is not only to our economy but to the rural fabric of our electorates and our communities. That is why I am grateful to members of Parliament for their support for this bill, which is just one measure in the Government’s range of responses to the disastrous floods of February 2004. I support the bill.

I have not had a personal opportunity to visit the flood zones, but I want to reflect on the disaster as it unfolded from my position in my own electorate in Auckland. Two initial thoughts struck me as the floods took place, and then, some time later, a third one. The first of those was the enormity of the devastation in the tragedy that took place. It was not just a small tract of New Zealand rural land. It was an enormous piece. We have just heard from Mr Hughes the number of electorates that it passed over. So it was really a very large disaster, and obviously extremely severe.

The second reflection is the bizarreness of the event in that it occurred in February, the heart of a New Zealand summer. In fact, the first day that floods struck the middle of the North Island, up in Auckland just a few hours away it was a beautiful fine day. It seemed quite bizarre to see what was unfolding on nationwide television in terms of the disaster and for that to be occurring in February. I think Mr Ewen-Street made some valuable comments when he said that there are some unusual things happening in our weather patterns, and I will leave that for another debate.

The third reflection that struck me some time after the disaster was that in many countries when a tragedy of this sort occurs, when a natural disaster occurs, we see the best and the worst brought out in a society. So often when we watch the evening news and see a similar kind of event happening in another country, what we notice as well as all the great deeds taking place are a lot of very unfortunate things occurring, like looting, and the kinds of things we would not expect to occur when there has been a natural disaster in a community. It is one of the things that I think we can all, as New Zealanders, reflect on—just how good a society fundamentally we have. When we have a disaster in our own backyard we do not see the best and the worst coming out in New Zealanders in their efforts, we see only the best.

One thing that is worth reflecting on is the success of the mini-telethon that Paul Holmes undertook on nationwide television. Paul Holmes did a tremendous job of galvanising support and making all of us understand the severity of the situation. I think that telethon—that binding together of financial support from New Zealanders from all walks of life—played in its own way a role in making all members of Parliament come together and understand the severity of this situation.

One of the reasons we are here tonight discussing the Taxation (Disaster Relief) Bill, is that New Zealanders do understand that, whether they are in Parliament, whether they are living in the Rangitikei, the Horowhenua, or some other part of New Zealand. Paul Holmes should take some personal satisfaction that he has played an important role, and all New Zealanders can take some satisfaction that they have been part of a process that will see, as best as can be the case, some relief delivered for those New Zealanders who have suffered as a result of this tragedy.

The last comment I would like to make, in that regard at least, is that just as it brought out the best in New Zealanders, I do believe it has brought the best out in our Parliament. It is not very often that we all agree on supporting one bill. In fact, it is virtually unheard of. When I first came here 18 months ago I considered that a lot more legislation would travel through this House on a unanimous basis. It does not. The fact that this bill has been unanimously supported, and I might add without a great deal of politics, serves our communities well. It shows the people of New Zealand that Parliament can come together when it is reflecting on a situation like this when it really needs to. Parliament itself can take a bow and be proud of the way it has reflected this situation.

Finally, Dr Cullen does deserve some credit for understanding the need for this legislation. There was some discussion that he would be able to administer this relief through section 6A of the Tax Administration Act, and that he might be able to doctor the original legislation. I do not believe that was possible. He took the proactive step of encouraging the Inland Revenue Department to look at the situation, and he has done a good job in this regard.

I want to reflect on some of the specifics of the bill for a moment—not many people have, but I will take a second to put my finance hat on and reflect on one or two specifics, and then call it a night, so to speak. Those who read the bill will notice immediately that the wording about who can enjoy this legislation is quite broad in one sense. They are defined as those affected by extreme natural events. That is a broad definition. I want to dwell on why that might be the case, in a moment.

But it is also worth recording for Hansard that the Taxation (Disaster Relief) Bill is not a specific piece of legislation for the floods that took place in February of 2004. It will obviously serve to help the people affected in those floods, but it is a generic piece of legislation. It could help anyone who is covered under that definition of an extreme natural event. By that we could mean another similar flood somewhere in the country, an earthquake, an outbreak of food-and-mouth disease—

💬 Darren Hughes: In Helensville!

Yes, in Helensville or anywhere, should New Zealand be struck by that particular tragedy. It is also worth noting what the bill will not cover. It will not cover, for instance, an outbreak of foot-and-mouth disease spread by terrorists in New Zealand. That is worth reflecting on—that is not an extreme natural event; it is an eco-terrorist event. It would not affect somebody who suffered loss through a plane hitting a building as happened on 9/11 in the United States of America. That would not be covered under this legislation. So whilst the legislation will cover natural disasters, it will not cover those types of things.

The second situation that is worth talking about is what the bill will do for provisional tax payers in New Zealand. Most New Zealanders might understand that not only is provisional tax a future tax based on prior earnings, but the way that situation works is that the provisional tax payer has two options. The first is to have what is called the natural uplift, which is that the taxpayers pay tax on 105 percent of their previous year’s income on the basis that they will enjoy about a 5 percent growth. I might add that that is better than the Labour Government can currently deliver for the people of New Zealand, which Dr Cullen outlined recently will plummet to 3.5 and then 2 percent in the years ahead. But it is 105 percent of the normal uplift.

The second option is for taxpayers to have an estimate of what they believe will be their income. In the case where they are making their third provisional instalment on 31 March, then P3—the date at which they need to pay that income—is 7 March. That is really the issue we are facing here. Let us take the very simple example of a farmer in the Rangitikei who may have earned $86,000 or $90,000 last year and is faced with a tax bill in the 2004 period of tax on $90,000. He or she would have paid tax on $30,000 in P1, tax on $30,000 in P2, and, had this legislation not been passed, would have paid tax on an income of $60,000 with no ability to claim back, and would have had the loss of use-of-money provision, and would potentially have to pay the third instalment if he or she did not have the time to make payment by 7 March. The second point that is worth noting is the impact that, without this legislation, would have occurred for farmers and business people who act as a collection agency for PAYE and GST.

I want to reflect on one other point, and that is simply this. In terms of the estimate, it is quite true that most of the people who will enjoy the relief provided by this legislation will be those who have over-provided for tax and therefore want to get the money back. But, of course, there would be some other New Zealanders who would be affected the other way where their income may be significantly greater as a result of the floods, and would have under-provisioned in their tax return had they not had this legislation, who have been most affected. Members should not forget, for instance, someone who has been growing flowers, for example, in Rangitikei, and selling those flowers in Auckland. His or her income may, in fact, be lower. This is one of the reasons this legislation has very general provisions and why a great many New Zealanders will be looking for relief under the legislation. National will be supporting the legislation. We have pleasure in being part of the process, and we look forward to it passing swiftly through the House.

Bill read a second time.

Third Reading