Taxation (Canterbury Earthquake Measures) Bill

I move, That the Taxation (Canterbury Earthquake Measures) Bill be now read a first time. This bill is necessary, because our tax laws were never designed to cover such extraordinary circumstances as have befallen the people of Canterbury in the last few months. The bill provides relief and support through the tax system to both the people and the businesses of Canterbury as they seek to recover from the earthquakes. This bill will provide income tax and gift duty relief on trading stock that a business has donated from 4 September 2010 up to 31 March 2012 for the purpose of relief from the adverse effect of the Canterbury earthquakes. This relates to those situations where a number of businesses have provided trading stock from their own businesses to assist those affected by the earthquake and to help with the necessary recovery efforts. Ordinarily, such donated trading stock would attract tax, as a person disposing of trading stock for less than market value is deemed to have disposed of that stock at market value. This is an anti-avoidance measure, and although there are good reasons for its existence in normal circumstances, this bill provides for tax relief for such donations in relation to the earthquakes.

Similarly, the bill proposes making tax-free certain welfare contributions provided by employers to their employees within 8 weeks of either the original 4 September 2010 earthquake or the 22 February 2011 earthquake. Many employers have responded with praiseworthy charitable instincts to provide their employees who are affected by the earthquakes with a range of welfare benefits, including cash, goods, and accommodation. Current tax law often treats such benefits as income, and therefore tax would be payable on those benefits at this time. Imposing such tax, however, on welfare payments to these people in these extraordinary circumstances seems quite inappropriate, and it would result in arbitrary outcomes, depending on the nature of the benefits provided. The Government is proposing several parallel tax exemptions, using the Ministry of Social Development’s job loss cover payment, which was at the rate of $400 a week tax-free for 8 weeks, as a basis.

Another measure the bill proposes is a practical one to extend the availability of the redundancy tax credit, which had been due to end on 31 March, to 30 September this year. Members will recall that the redundancy tax credit was repealed following Budget 2010, but had been extended following the September 2010 Canterbury earthquake. The tax credit was designed to ensure that people were not moved into a higher tax bracket due to their receiving a redundancy payment. This extension is not limited to redundancy payments resulting from the Canterbury earthquakes; the provision is being generally extended.

The bill also provides reassurance to families who rely on Working for Families tax credits. The definition of “income” for Working for Families was broadened from 1 April this year to include cash gifts, the payment of expenses, and certain other payments. This could also include donations of cash or provisions to support a relative who had been affected by the earthquakes. The amendment proposed in this bill would apply in relation to an event that meets the criteria for an emergency event, including the Canterbury earthquakes. Under the amendment, the Commissioner of Inland Revenue will be authorised to recognise the emergency event and to ignore the support provided by relatives to affected families when determining Working for Families tax credits. I point out—because I know that at least one party in the House has raised this as an issue of concern already—that the definition of an emergency will be that contained in the Civil Defence Emergency Management Act 2002, and the discretion being applied to the Commissioner of Inland Revenue will be in relation only to the particular event, not to whether a particular payment made in response to that event qualifies.

By removing unnecessary obstacles and tax compliance burdens at this challenging time, the changes the bill introduces are designed to help the people and the economy of Canterbury recover. The Government has been committed from the outset to providing assistance to the people of Canterbury, and this bill follows measures already in place. Members will recall, for instance, that on 28 March this year the Commissioner of Inland Revenue was granted, through Order in Council, the discretion to extend statutory tax dates, so that businesses are not unfairly penalised for failing to meet tax obligations. In addition, further earthquake-related depreciation changes will be brought to the House for consideration later this year. Those measures and the measures contained in this bill are practical ones. They are designed to provide much-needed help through the tax system and a measure of certainty to the people of Christchurch and Canterbury generally, as they recover from the appalling events that they have been subject to in recent months. The aim, fundamentally, has to be to help those earthquake-stricken residents and businesses of Canterbury get back on to their feet, and to help the people of Canterbury and the region as a whole play again in the future, before too long, the dominant role they have played in large areas of national life in the past. With a great deal of pleasure, I commend this bill to the house.

The Opposition of course supports the Taxation (Canterbury Earthquake Measures) Bill. Those of us who are from Canterbury, and those members of Parliament—there have been many—who have visited the province in recent days, weeks, and months will know of the devastation that still exists in many parts of the province. We should acknowledge again the tragedies that occurred more recently, on 22 February, and leading from that the devastation that has occurred in the Christchurch central business district, in the outer suburbs in the east, in the electorate of the member for Port Hills, and through Lyttelton, Sumner, and that area, and in my own electorate, specifically in Kaiapoi. And latterly in my patch, in a superficial way, there has been damage throughout not only many parts of the rural area but also the northern part of Christchurch, and equally in the Selwyn district, which was at one point the epicentre, as it were, of the original quake.

Kiwis across New Zealand, and in Canterbury specifically, have shown a huge generosity of spirit. It was inspiring to those of us who were there and had been working in that area to find just how generous folk were. It was amazing. As a member of Parliament, a city councillor, or anybody else in a position of influence, in these times of crisis one realises how generous people actually are, and one realises the privileged position one is in, because it gives one an ability to ring up all sorts of strange individuals, entities, and corporates and ask for help. I know personally that when I approached—as other colleagues have done in their patches—companies and individuals for food, shelter, and all sorts of commodities and assistance, in the vast majority of cases the folks who were asked to assist did so immediately.

I recall a chap called Dave Pilkington, who runs a vegetable pack-house in Belfast. In the days after the initial quake I rang him. He is a packer of vegetables; he is not a producer of vegetables, so he does not own them. The call had gone out from the Kaiapoi rugby clubrooms that there was a need for vegetables for the food bank. I recall ringing Dave, who is the president of the Belfast Rugby Football Club—a great humanitarian and sporting aficionado—saying that the folks needed some help, and asking whether he could provide anything. He said: “Well”—I could hear him scratching his head—“I do not actually own the vegetables; I pack them. They are owned by others. Give me 5 minutes.” He rang back and used some interesting and colourful language that, when translated, meant “To hell with it. I’ll sort it out.” Within a couple of hours a couple of truckloads of potatoes, carrots, and goodness knows what else turned up. I just raise that from personal experience as an illustration of how generous people are. I do not know how Mr Pilkington organised payment for that. I have a strong suspicion that it came out of his own pocket, because he is a generous guy.

I return to the bill. We support the bill. It would be a tragedy, I think, if somehow the generosity of employers—and many and most employers were very generous in providing goods and services, a bit of top-up money, time off, and all sorts of other assistance to employees—fell within the net and was penalised through the tax system. I am pleased to see that the bill looks to future-proof, as it were, for future events. We hope they will not happen. We hoped that after the 4 September earthquake we would not experience a further major event, but tragically we did. Certainly, for those of us who live in Canterbury, we are now all quite used to the aftershocks and the shakes that occur. People are under an extensive amount of stress. I think it is noteworthy, as we proceed through this bill, that this measure will take away a wee bit of stress. It is another little brick in the wall, if you like, to take another worry or another bit of stress off the shoulders of people. As I say, it cuts down a bit of red tape, as well. It cuts through that. It takes a weight off the mind of those people who, especially in respect of their employees, went the extra mile and were generous.

It is worth noting, as we reflect on this bill, that all of us probably through our respective electorate offices, from talking with Government agencies and non-governmental organisations dealing in the social sector, and dealing with the welfare and care of people, are aware that for folks the battle is not over. In fact, for many it has just started. Thousands of people in Canterbury are living in difficult conditions. I know that my colleague Lianne Dalziel, who is not here at this point—and I say that out of respect for her—would want it noted that in her area of the eastern suburbs of Christchurch there are people who are racked and stacked, if you like, six or 10 deep, within their houses, and who are without lavatories and without some of the necessities of life. I think it is worth, within the context of this bill, noting that for the record. The battle, for these folks, will be a long one. This bill goes some way, as a contributing factor, towards easing their struggle. They seek a pathway to get their lives back, their jobs back, their kids back into a routine, and their houses back. They face a winter, as we do in Christchurch and Canterbury, that will be cold. There have been some difficulties with home heating.

I note in passing, given the lack of contention about this bill, as opposed to the previous one, that the money that has been put aside, or committed to, by the Government is $5.5 billion to assist Canterbury in its recovery from the earthquake. We welcome that, as the people of Canterbury would welcome it. We do not know whether it is enough. Possibly none of us know whether it is enough. It has to be a case of whatever it takes to get our problems resolved. Christchurch is an engine room for this economy. It is our second-biggest city and Canterbury our second-biggest province. Given that the Government now has its own department, it has wartime powers, effectively, to cut through all sorts of red tape and get on with it, as the Minister for Canterbury Earthquake Recovery is fond of noting, and given that it now has a bucket load of cash, we look forward to the hastening of the recovery. There should be no excuses. The people of Canterbury would expect that, and this bill is part of it. There should be no more delays. There should be an increased pace in respect of the recovery process, leading to people getting back to a normal and fruitful life. This is critical.

I suspect that the folks in Canterbury who are listening to this debate may not, as with the previous bill, take a lot of notice. Again I say that not out of any disrespect. They are focused on the here and now. It is difficult for people who are in grave difficulty within their homes, and who face a high degree of uncertainty in terms of their livelihoods. We know that by 31 May the business support package comes off. We know that there are 67,000 - odd employees who are depending on that, and that businesses are in dire straits and on their knees. We do not know what will be put in place to replace that package. If people are sitting in a house that has no heating and no toilet, have kids whose lives and education have been disrupted, and have lost their job or have the uncertainty and inability to predict whether their job or business will be there, then life ain’t too great for them at this point or for our communities. This bill will go some way towards easing that. People should not have to be looking over their shoulder, saying: “Hang on. Do I have tax liability because I was generous?”. I am pleased, as I say, that the Minister for Canterbury Earthquake Recovery has put in a future-proofing provision so that if we find ourselves in difficult circumstances, whether it be the difficulties in Hawke’s Bay or caused by the tornado on the North Shore, if it is warranted and if the circumstances fit within the definition, then the Commissioner of Inland Revenue can move and, if you like, with the flick of a switch can put these mechanisms in place. I think this will encourage people, not that they need it, because they are Kiwis and Kiwis are always generous, to continue with their generosity and look after their fellow man or woman.

We support this legislation. It is common sense. It will reduce the burden, the worry, and some stress on our people. But I just say in passing, and I am sure the media somewhere are listening, that the battle for Cantabrians goes on and the focus on that for the rest of the country should not be forgotten. We support the bill.

I fully and totally acknowledge the sentiments and the tone of the previous speaker, Clayton Cosgrove, and of the Minister of Revenue, who moved the first reading motion on this bill. It is interesting that there can be such a response to all things taxation, which is generally somewhat boring. I know it has made us all excited over the last day or so.

The previous speaker noted that New Zealanders are generous, and when we listen to the radio or to those in this House, it is interesting to note the change in tone as we all focus on what is a human tragedy, an economic disaster, and a very, very high mountain that has been put in front of our country for us to climb.

I note, sadly, that the bill is future-proofed, but we note that that is quite prudent. Let us hope we do not have to use the key items in the bill—the taxation parts of it, and the friendliness of them. Let us hope we do not have to use those in the foreseeable future. I think we may find that the entire House is getting behind this bill. I fully acknowledge all members of the House, and the Minister of Revenue for putting this bill together in a rapid response to help our friends, our whānau, our family, and our fellow New Zealanders in Canterbury.

It is unusual, having had such heated debate over the Government’s slashing of KiwiSaver, to now move into a bill on which, I guess, the entire Parliament will agree. It is a better way in terms of our stress levels, and in terms of our ability to have a good and productive weekend. It does not reduce, of course, the anger, frustration, and literal pain that so many people will now go through, though, as a result of the Government slashing KiwiSaver in the Budget yesterday. But I add my support to the support already expressed by my colleague the member of Parliament for Waimakariri, Clayton Cosgrove, for the Taxation (Canterbury Earthquake Measures) Bill 2011. I commend the Minister of Revenue, the Hon Peter Dunne, who is part Cantabrian and part Wellingtonian. He resides in Wellington at the moment, but I guess by the end of November he might be returning to his home base in Christchurch for some well-earned retirement time. I commend him, though, for introducing this bill.

It is a bit of a shame that the bill is so late in coming to this Parliament. The first major earthquake in Christchurch was in September last year. That was 8½ months ago, so we now have legislation that not only is quite late, and therefore for a lot of people will be past the time when it would have most benefited them, but, very unusually, contains retrospective taxation provisions. It is pretty unusual for this House to have introduced such legislation, let alone for the entire Parliament to have agreed on it.

One of the questions I will be asking the Hon Peter Dunne, when we move to the Committee stage later on tonight, is exactly what data the Inland Revenue Department provided to him during the preparation of this legislation, and what understanding he has gained about the size of the issue the Inland Revenue Department is facing in terms of people who, between 4 September and now, would have committed actions that will now be covered by this different taxation provision. I will be asking those questions. The officials can start preparing the answers now to advise the Minister; I am giving the officials a bit of an advance shot on those ones, but I have some other questions I will be asking the Minister, too.

This bill is supported, and its passage will be unusual in that not only will it be supported but it will go through all stages of the House in one go—we will do the first reading, the second reading, the Committee stage, and the third reading sometime between now and tomorrow or whenever the House rises. That is unusual, but it still does not mean that we should not give the specific provisions quite a lot of detailed attention in the Committee stage. I know that people are keen to get home, but I hope that people like Craig Foss, who has a lot of experience in taxation legislation by virtue of being the chair of the Finance and Expenditure Committee, will take seriously a situation when we have retrospective tax legislation, and when we should pay as much attention to the detail as is possible and sensible. I certainly hope the Minister takes those issues seriously, as well, during the Committee stage.

There are four primary points in this legislation. They all relate to tax issues, and they are all specifically tied to actions that have occurred as a result of the Canterbury earthquakes. As I said earlier, the legislation is retrospective; it dates right back to 4 September 2010. The bill exempts from tax the gifts given by employers to employees in the first 8 weeks after either the 4 September 2010 quake or the 22 February 2011 quake. I do not know why the Boxing Day quake is not counted as a separate event; that is another issue. The dates are obviously different in that regard, but it was actually a separate and significant event. During the Committee stage I will ask why we did not count that earthquake, as well. People who were in Christchurch on Boxing Day will share their experiences for anyone who doubts that it was anything other than a significant event.

The second point is that the legislation allows the Commissioner of Inland Revenue to declare an emergency event, during which time contributions to aid families will be excluded from a personal family income scheme. As Craig Foss noted in his contribution, this legislation is future-proofed. I share his view: we do not want to have another such incident, but it is really good that the Hon Peter Dunne thought of that in advance and said we should not have to put through such legislation again in the future. Instead, we should say that this legislation can be triggered if any comparable event occurs in the future.

The bill delays the removal of tax credits, for people receiving redundancy payments, from 1 April 2011 to 1 October 2011. I certainly support that provision; it is a good one. But, again, during the Committee stage I will be stating that if it is good enough for people who lost their jobs as a result of the earthquake to have fairness accorded to them—and I welcome that—I do not understand why it is not good enough for workers who have lost their jobs in other circumstances to have fairness accorded to them, as well. We should not have unfair provisions on our statute book, at all, so it will be an opportunity for the Minister to extend that provision much more broadly.

The fourth point covered in this legislation is that it creates tax exemptions for businesses donating trading stock to people affected by the earthquakes. Those are substantial changes, and on behalf of my constituents I join the other Canterbury electorate MPs in welcoming that support for Cantabrians. Many people whom I know saw the events of both September and February on the news, watched it for a few days, and felt horrified. Then they watched what happened in Japan and thought that that was worse, and it was. Then they forgot about Canterbury. In fact, quite a lot of people are surprised when I tell them that it is not all fixed. People in our city have lost family members, have suffered significant injury, and have lost friends and colleagues. Many have lost their jobs and their homes, and many people are looking towards winter with a great deal of despondency, because it will be, for many, a long, cold, hard winter. This package will give those people the feeling that Parliament is a little more relevant to their lives than sometimes they would think, and that people in Parliament do give a toss about how things are going in Canterbury. I hope it is with a totally united voice that we can welcome the support that the Hon Peter Dunne has introduced into this legislation.

But this bill cannot be the end of the support. We know that in the Budget yesterday a packet of money was given to Canterbury. The specificity—or lack of it—was quite frustrating, and many people are saying they do not know whether it is enough; we do not even really know what it will be used for. The scale of the gap in support is not yet determined. I certainly welcome the amount of funding in the Budget. I am not in total agreement with the way it has been given, and I hope the fact that Canterbury’s support is so significant does not cause resentment from other people around the country.

We know that since both major incidents, since 4 September and 22 February—and the Boxing Day earthquake—Cantabrians have been overwhelmed by offers of support not just from people in their own city who were not as badly affected, and who were in a position to help, but also from people around the country and, indeed, around the world. This legislation formally recognises that the gifts given and the support offered were a huge help, not only in practical terms but also in emotional terms, for people in Canterbury, and it recognises that the Government can do its bit by removing the tax burden that may have been attracted as a result of that generosity. It is entirely appropriate that the Government looks at that generosity and says it is fantastic. That is how Kiwis around the world, people from other countries, and people from within Canterbury itself have responded to other people’s need—with support, generosity, and offers of help. The Government has said that that is a fine thing, and now the Government, as a result of that generosity, wants to do its bit, as well, to make sure we do not slice off a bit as tax take. It is a good bill, and I support its progress.

The Green Party is very happy to join all parties in this House in supporting the Taxation (Canterbury Earthquake Measures) Bill, which will give a degree of relief in varying ways to the people of Canterbury. It is, of course, sorely needed.

Under the bill, welfare contributions by employers to employees will not be subject to income or fringe benefit tax for the 8 weeks after the earthquake. It would be perverse in the extreme to consider putting a tax on the goodwill of Canterbury employers, on those who unselfishly contributed to the well-being of their employees at a time when there was acute hardship and suffering. The contributions that employers made to their employees were in varying forms: in cash, in accommodation, and in goods. None of these wonderfully generous contributions ought to be subject to penalty, given the circumstances of that giving. That is why we support the rather unusually retrospective tax provisions in this bill.

However, we record our concern, yet again, at the circumventing of the democratic process in getting this bill through Parliament. Because the bill was actually tabled on 4 May, there would have been ample time to have a select committee hearing. People asked that there be a select committee process and there would have been ample time, since 4 May, to have allowed a select committee process even of a week or two. But yet again it seems as though we have just got into the habit of circumventing the democratic process, by rushing through the House this sort of bill—everything to do with Canterbury—circumventing a select committee, and putting the House under urgency when, as in this case, there was no need. The bill was tabled on 4 May and it is now 19 May, so there would have been time to allow the people of Canterbury to have some say and to make some submissions on this bill.

I would also like to record our concern that in the regulatory impact statement that accompanies this bill the Inland Revenue Department talks about the fact that the very constrained time frame the department said it had, had “severely limited the depth of research and analysis that had been able to be undertaken.” The department goes on to acknowledge that a significant degree of uncertainty is involved where fiscal cost estimates have been made. That is a little bit of a concern. The whole thing has been rushed. The department also goes on to say that there have been difficulties in accurately estimating the amount of employer welfare support, the proportion of that support that would be treated correctly for tax purposes, and so on and so forth.

I just want to record a bit of concern there, but principally we want to express our concern that every bill in respect of Canterbury has been introduced under urgency, without a select committee process. In fact, ironically, it goes right back to the first Canterbury legislation that circumvented democracy, which was the legislation before this House to get rid of Environment Canterbury. That democratically elected regional council was wiped out under urgency—well, the democratically elected representatives were removed, under urgency, in 24 hours. Once again, there was no ability for a select committee and no ability for the people of Canterbury to have their input. Then we have had a succession of bills relating to the Canterbury earthquake that have, once again, circumvented the democratic process and given what can be described only as Draconian powers to the Minister for Canterbury Earthquake Recovery, namely Gerry Brownlee.

The other thing I want to mention is that we are delighted to support the bill, which does, as I say, provide some relief to the people of Canterbury in varying ways. But the bigger question remains about the rebuild of Canterbury. We still cannot understand, 1 day out from the Budget, why this Government refused to introduce an earthquake levy. The people of New Zealand have made it clear in polls and in many ways that they are only too happy to contribute to an earthquake levy—a tax to help with the rebuild of Christchurch. But the Government refused to introduce a levy and instead, effectively, we will be borrowing to enable the Canterbury rebuild. We think this is extremely unfortunate. I suspect the reason is that the Government likes the idea that we are financially stretched, because then that gives its members the excuse to go out, wring their hands, and say that they simply have to sell off all the remaining assets of New Zealand—our State-owned assets, etc. It gives them that excuse.

The other option is to increase revenue through things such as having a Canterbury earthquake levy and other suggestions we have made, such as a capital gains tax other than on the family home. But no, the Government wants to get rid of debt without increasing revenue at all. We see it also here in Canterbury. That is a fundamental problem that will come back to haunt us. Yes, it is all very well that we have these inflated Treasury estimates of growth in the economy, but most people are saying that they are completely unrealistic, so what will happen then?

I come back to this bill. We are very pleased to support it. We want to put on record our regret that yet again it has been introduced under urgency. Yet again, we are not allowing the people of Canterbury to have a say on this bill, which will affect them in varying ways. Yet again, we have abandoned the select committee process and we are ramming this bill through the House. This seems to be becoming a pattern in this term of Parliament. It is an extremely worrying pattern. It is almost like we are abandoning the habit of democracy, the habit of having a select committee process, and the habit of allowing people to be heard. I hope we do not get into the habit of just constantly ramming things through, when it comes to Canterbury, without respecting the democratic process. Thank you.

I am pleased to stand and speak to the Taxation (Canterbury Earthquake Measures) Bill to discuss the proposed measures to deal with taxation issues arising from the earthquakes that occurred on 4 September 2010 and 22 February 2011 and affected the entire Canterbury region.

This bill is absolutely necessary to enable the communities of Christchurch to respond to, and recover from, the impacts of the Canterbury earthquakes. There are dual purposes: the restoration and rehabilitation of communities left shattered by the natural disasters, and the rebuilding of the Greater Christchurch area. The Māori Party has actively supported the rebuilding of the Māori community in Ōtautahi. In doing so, we have been very aware of the impressive iwi contribution to the recovery effort of this scale. Iwi organisations sent donations and people to support relief efforts, including rōpū from Te Arawa, Tainui, Ngāti Rārua, and Ngāti Whātua. Enormous containers of supplies were distributed from Pipitea marae here in Wellington. In short, there has been a systematic effort by iwi to support relief and reconstruction.

In the immediate aftermath of the quake, marae opened their doors to all people in search of refuge, food, and accommodation. The marae in Ōtautahi became command centres for different agencies: Māori sectors of the police, the Fire Service, health providers, Te Puni Kōkiri, Māori media, Ngāi Tahu, and so on. Seventy Wātene Māori assisted police and non-governmental organisations with checking on people in the hot spots. In other rohe, Takitimu, Te Arawa, Tai Tokerau, whānau arrived either in transit or returning home to an uncertain future. And of course this weekend we are gearing up for the global telethon being led by Māori Television: Rise Up Christchurch—Te Kotahitanga. I was really moved by the words of Māori Television chief executive, Jim Mather: “Rise Up Christchurch—Te Kotahitanga will inspire and unite New Zealanders across the globe to support the people of Christchurch as they ‘Rise Up Christchurch’ from this challenge that Papatūānuku has presented,”.

This bill, then, the Taxation (Canterbury Earthquake Measures) Bill, falls well within the context of the leadership that Māori communities and whānau have already shown leading up to this point. We must ensure that the Canterbury Earthquake Recovery Authority learns from this lesson and leans on this leadership. And we can apply that same thinking to the proposed measures to deal with taxation issues arising from the earthquakes. A focused and timely recovery of Greater Christchurch and its communities will be assisted by all of us pitching in. So we support the intention of this bill to exempt from fringe tax and fringe benefit tax certain welfare contributions made by some employers to their employees in the 2 months after each of the two big earthquakes; provide income tax and gift duty relief to businesses that donated trading stock, with the intention of helping alleviate the impact of the Canterbury earthquakes and their aftershocks from 4 September 2010 to 31 March 2012; provide a discretion to exclude from the “other payments” category of income for Working for Families certain payments made to people adversely affected by the Canterbury earthquakes and similar events; and extend the redundancy tax credit by 6 months, to 30 September 2011.

These proposals will work in a number of ways. It is proposed that a tax exemption applies where targeted welfare in the form of cash, including pro rata payments to Canterbury staff, and/or goods and services have been provided to known staff. Some employers have provided emergency accommodation for their staff. It is also proposed that this be tax-exempt. Some employers have made welfare contributions that fall into sundry benefits available to all staff, and targeted welfare to known recipients. It is proposed that these welfare-type benefits be tax-exempt for compliance and equity reasons, where they are unclassified benefits that are generally available to all staff and provided in the 8 weeks after both the Canterbury earthquake and the Christchurch one. These benefits have an obvious welfare intention.

In essence, this bill is both pragmatic and technical in its application. Having said so, however, I would be very interested to learn from the Minister what the response of mana whenua has been to the provisions included within the bill. In a recent submission to Parliament, Te Rūnanga o Ngāi Tahu stated: “Like the Crown and local government, we are a perpetual presence with histories, aspirations, and accountabilities to contribute to the recovery and rebuilding of Christchurch.” The Māori Party has therefore been very pleased that Te Rūnanga o Ngāi Tahu is explicitly stated as one of the entities that the Canterbury Earthquake Recovery Authority must work alongside, and that Ngāi Tahu and other Māori will be included in the community forum.

Mana whenua must remain an essential part of the recovery strategy and have help to lead development of the central business district recovery plan and other statutory plans. To this end, whether it be about employer welfare contributions, targeted welfare, tax relief for donated trading stock, tax relief for other categories of income for Working for Families, or a redundancy tax credit, such details should still benefit from ample consideration with Ngāi Tahu as to their application.

We support the measures included in this bill, and we believe that they represent a commitment to doing whatever it takes to give the people of Canterbury every opportunity to respond to, and recover from, the impacts of the Canterbury earthquakes. We are happy to support this bill.

I am very happy to take a call on the first reading of the Taxation (Canterbury Earthquake Measures) Bill. It really is quite heart-warming and humbling to stand in the House and hear support from all parties, and to hear the kind words of members from all around the country expressing their support for the people of Canterbury. As my Cantabrian colleague the Hon Ruth Dyson mentioned in her contribution, all of the Canterbury MPs are certainly very grateful for what this House and the Government have done to support them. This bill is another example of that support.

The context in which we have to look at this bill, and measures like it—although obviously it sounds trite to say—is that these were an extraordinary set of events. They were like nothing else we have ever experienced. Proportional to the size of our country, the earthquakes were one of the biggest events of this type that any of us can remember. Normal rules just cannot apply. We cannot look to address and deal with this issue by using our normal parameters. The flavour of all of the legislative response we have made to the Canterbury earthquakes was that they are too big and too serious, and we have to look at them through a new, one-off purpose-built lens. Really, this bill is the taxation continuation of that line of thought.

It simply would not be right to penalise people, or to apply a financial cost to people, who simply have reacted to need as they saw it. That is what happened in Canterbury after both of these earthquakes. There was tremendous need, and people just reacted. They just did what they saw they could do to help. That is an amazing thing to watch and to be part of. It really gives me incredible hope for the future of our country. It gives me incredible pride in our people. When something like this happens, there is no distinction, division, race, age, or barrier. It is simply a case of people helping people. This bill is about saying that where people have helped each other in this time of need, there is no way that we as a Government will now say we will assess them for gift duty on that help, or look at the tax implications of the stock that they put aside for welfare.

This is the sort of thing that everybody can see the wisdom in. Across the House we have certainly heard that widespread support. It is just another way we are working to help Canterbury in every way we can. I thank the people from all over New Zealand who continue to understand that we need special circumstances at this time, and I thank them for their willingness to do what they can to continue to support Canterbury as it goes through this terribly difficult period of rebuilding. I commend the bill to the House.

We are certainly having an afternoon of two halves. Anyone who has been following the debate on television will know that we have debated in urgency one piece of tax legislation that has been vigorously opposed by the Opposition and the Greens, and that we are now debating another piece of tax legislation—the Taxation (Canterbury Earthquake Measures) Bill—that we absolutely support. So we have chalk and cheese here. I suppose this is a classic example of how all parties in this Parliament work together when New Zealanders, in a time of need, expect Parliament to work together, to not be churlish, and to stand up for their rights and for what is right. That is what the Taxation (Canterbury Earthquake Measures) Bill represents.

As we know, tax legislation can be very complex. It can also be very complicated. Tax legislation can be used in a number of ways, but as this legislation stands it is being used to provide short-term relief and respite in a time of need. As Amy Adams said, and as both Clayton Cosgrove and Ruth Dyson have outlined, these are unusual times. The last time there was an earthquake of this size and magnitude in this country it happened in Napier, the city I come from. Over 250 people died in that earthquake. It was an event of enormous magnitude. It was not until the earthquake in Christchurch that we saw the same level of devastation in this country that we saw in 1931. I said to one of my colleagues that the irony is that probably 3 weeks before the Christchurch earthquake I was sitting on stage commemorating the 80th anniversary of the Hawke’s Bay earthquake. Two weeks later we had the Christchurch earthquake.

When my colleague Brendon Burns came to Napier he spoke to the people of Napier. There is a guy there called Robert McGregor, who is in charge of our Art Deco Trust. Robert McGregor is acknowledged not just in Napier and New Zealand but globally as a real expert on how to reconstruct a city, on how to build it up again, and on what needs to be done. He is also an expert on the history of Napier. Brendon and Robert had a great talk about how Napier did it. We are talking about an event 80 years ago, of course, and society has changed.

💬 Brendon Burns: Hardly yesterday for some of us.

Yes, it is hardly yesterday. We can still learn lessons from the past. There is no doubt about that, and I think Brendon took some of those lessons back.

The ASSISTANT SPEAKER (H V Ross Robertson): Use the member’s full name.

Brendon Burns took some of those messages back.

💬 Brendon Burns: A very good member.

Brendon Burns is a very good member. In fact, I think the people of Christchurch Central are very lucky to have an MP like Brendon Burns, someone with a cool head and nerves of steel, who can assess a situation and work incredibly hard in the most trying of circumstances. I know that when Brendon Burns and his wife, Philippa Burns, came up to Napier for a bit of a rest and to talk to Robert and look at what Napier had done, he said it was the first time in months that he had been able to get away and have a decent sleep. Having not lived in Christchurch I cannot understand the stress that the earthquake placed on the people of Christchurch, but from talking to my colleagues I realise that that stress was absolutely enormous. The way Brendon, Ruth, Clayton, and Lianne have dealt with the stress—

The ASSISTANT SPEAKER (H V Ross Robertson): You must use members’ full names or titles in the Chamber.

The way that Brendon Burns, Ruth Dyson, Clayton Cosgrove, and Lianne Dalziel have coped with the stress and have really advocated incredibly hard for constituents in very trying times has been admirable. There is no doubt about that.

This legislation, I think—and I am happy to be corrected—sets a precedent in terms of getting legislation through in a hurry to alleviate the stress and suffering of New Zealand citizens. I am not too sure whether I am right there, but I believe I am right. Just a small note of caution here: we must ensure that this precedent is not abused. I do not think it would be, but when one sets a precedent, there are flow-on effects. We need to make sure that it is not abused, and I doubt that it will be. I say that constructively; I am not saying that negatively. I am just saying that we all know that the magnitude of this has been significant, so if this type of legislation is ever considered again, then we must be sure it is for an event that actually warrants it. That is all I will say on that.

There are a couple of questions. I think my colleague the Hon Ruth Dyson has raised a couple of those questions, and I will mention them as I go through the bill, or maybe even in the Committee stage. Although we support this bill wholeheartedly, we would like a couple of these questions answered, just so that in our minds we know that this is robust legislation, and that it really does serve the people of Christchurch, because that is the most important thing.

💬 Hon Clayton Cosgrove: Canterbury.

Sorry, Canterbury. How this legislation came about is that after the earthquake on 22 February many individuals and businesses donated money or goods, or supplied them at less than market value—and I think Clayton Cosgrove gave a classic case of that—to those affected by the Christchurch earthquake. Normally, under law those people who supplied the goods would have to pay gift duty, or, maybe, fringe benefit tax, or other forms of taxation that go with the giving of gifts to people.

As I think Ruth Dyson mentioned, this is retrospective legislation—well, of course it is retrospective, because the earthquakes have happened. One of the important reasons that this legislation is going through is, I am assuming, that a lot of people—Clayton Cosgrove talked about some of them—forgot about process and did not understand gift duty rules. They just got up and helped. They went into their warehouses, they went into their stores, and they asked themselves what they needed to do to help the people of Christchurch. They did not give any consideration to gift duty or that sort of carry-on. They might not have even accounted for that stock; I am not too sure—and that is one of the questions we will ask. They might not have accounted for that stock. They might have just lifted the stock, given it out, and helped people who were in need.

At what level do those people have to account for their stock? That is one of the questions we will ask. They are not liable for gift duty, but I know, for example, that there are goods that are zero rated for GST, and we will have to account for those. I am keen to know—and, hopefully, the Minister of Revenue will be able to tell us—at what level people who have given items will have to account for them. Will they have to put a return in, even though there were no fiscal implications for the people themselves?

The other thing that is most important—and it is most important with any tax legislation—is the integrity of the tax system. The integrity of the tax system is something that Labour has been talking about in the House for probably most of this week, actually, and just because this is a bill that helps with the relief of citizens in need, that does not mean it does not have to meet that integrity test. That integrity test is vital.

One thing I would like to point out is that if an employer has given an employee money or goods, it does not mean that the employee is exempt from their own income tax. The employee still has to pay income tax, as does everyone else around the country if they are getting paid income. Again, I hope the Minister of Revenue will take some calls on this during the Committee stage, and we can bring up questions then.

There are a couple of other outcomes that are most important, and one of them is to ensure that the tax treatment of goods donated as part of the Christchurch earthquake relief is appropriate. I would never suggest that someone would donate inappropriate goods, or that it would be done in an inappropriate manner. What I am saying is that it must be considered to be appropriate, and this is what this legislation covers, and, again, it comes down to the integrity of the tax system.

Also, the revenue base must remain sufficiently intact. So, for example, this legislation does not exempt employees from paying income tax. It does not do that. Of course, one of the most important things this legislation does, and one of the most important things that any piece of legislation does, is provide a level of certainty. I suspect that what happened a day or two, a week or two, or a month after the earthquake is that people got up and just gave a whole lot of stuff. Then at some point they probably went to their accountant, or they were having a couple of beers with their lawyer, or their next-door neighbour—

💬 Hon Ruth Dyson: No, wine with their lawyer.

OK, wine—whatever. They were having a drink—it was probably a stiff whisky—and they were told: “Goodness me, do you know the tax implication of what has happened?”, and they said: “Oh, shivers! That’s the last thing I was thinking about.” That is why the Inland Revenue Department received a lot of calls. We think this is a very good legislation, and we commend it to the House.

I thank all members of the House for the way in which they have approached the Taxation (Canterbury Earthquake Measures) Bill. First of all, I thank my National colleagues who have dealt with the issues on the ground in Christchurch. We have a number of members in the House who have led the way for their region, and, through the leadership of the Hon Gerry Brownlee, the National Party, and the Government, have delivered for the people of Christchurch. On the other side of the House we have a number of members also from Christchurch who have been very diligent in advocating for their issues in their areas, as well. The way that they are contributing to this bill tonight shows their interest and their desire to make sure that we get the best result for Christchurch that we can. In the end, I think that everybody around the country has seen the need and desire to support Christchurch at this time, and we wish everyone the best on Sunday in the fund-raising effort to help to do that.

This bill is something that should not take long to go through this House, but that does not take away the magnitude of what we are doing here. This bill represents a time when New Zealanders came together to support fellow New Zealanders in their time of need, and it is something that we need to do in this House from time to time. It represents the role of the Government. The bill has some technical taxation elements to it, relating to areas such as effective contributions for the family scheme income, the redundancy payment tax credit, the donated trading stock, and welfare contributions by employers to employees. In the end, this is a bill that is in the best interests of Cantabrians. It shows the support that this Parliament can provide for all New Zealanders at this time through the Budget, and we support this bill going through the House.

I will continue in the bipartisan spirit that has been displayed by this House; I think it is truly appropriate. I thank my colleague Stuart Nash for his fulsome acknowledgment of the role that I played, but I also acknowledge all of the Canterbury MPs on both sides of the House and our Green colleague Kennedy Graham for the work that they have done, and Rahui Katene too for her work on behalf of the Te Tai Tonga electorate and the Māori community in Christchurch. I think we have served our communities well through what has been the most extraordinarily difficult time. Of course, we are not out of the woods yet. Obviously, the winter is upon us and that will present its own challenges to us as a city, but Parliament has shown that at times like this we can come together in the best interests of our communities.

To give an example—picking up on the comments of the member for Hamilton East—on Monday night a exhibition opened in Hamilton of photographs taken by Fairfax photographers, including some from the Waikato Times photographers who came down to cover the enormous event of 22 February and its aftermath. One of those photographers is a chap called Chris Hillock, a very fine and award-winning photographer for the Waikato Times. His mother, Maggie Hillock, who happens to be my campaign manager, suggested the idea of having a photo exhibition, which was backed by the Waikato Times—by Fairfax. Again, in a bipartisan spirit, I note that even though the exhibition was suggested by a Labour member and organised by the former MP for Hamilton East, when the photograph from the exhibition appeared, it was of the current MP for Hamilton West. It is a good example of the bipartisan spirit that is serving Canterbury well at this time. Of course, over the weekend we will also see a huge global telethon supported by Māori Television in order to raise funds for our city and region in the wake of the enormous disaster of 22 February.

The Taxation (Canterbury Earthquake Measures) Bill is a measure that assists in respect of donations that have been made by employers to their employees in the wake of the quake, so that those donations do not affect the employees’ eligibility for Working for Families and other benefits. The amount that Working for Families pays in the Canterbury region is in the order of $300 million a year. Those payments are very welcome, and they are enormously important to the more beleaguered communities, although the payments were spread across the income spectrum. Some of those who have benefited most from Working for Families are in the hard-hit eastern suburbs of Christchurch, including in parts of my electorate in Avonside and Richmond. This bill means that those employees will not have their eligibility for Working for Families payments affected by payments that employers might have given them in the wake of 22 February. That is very welcome.

I also acknowledge the extraordinary outpouring of donations from the business community in the wake of the 22 February earthquake. I made it a practice on an almost daily basis, from about day three or four, in to go to the civil defence headquarters, open the boot of my red beetle, and fill it with goods that had been donated by companies from the length and breadth of New Zealand and, in fact, from further afield. I know that amongst the consignments I put into my boot was Australian-made Banana Boat sun cream, and it was very welcome. The weather was still hot, and people obviously were sometimes choosing to spend a lot a time outdoors because of the damage to their homes and businesses, so that sunscreen was amongst the goods I took on a daily basis to the community groups, trusts, and organisations that were helping people.

Torches had been donated, there were batteries, and there was water by the pallet-load, because large parts of the city lost potable water for some days after the quake. There was flyspray, which was quite useful for some households, and a great quantity of rubber gloves and face masks. I have to confess that I still have some rubber gloves and face masks in the garage at home, and I hope that they might be useful at some other point. I did not know quite who to give them back to once the need had passed, but I guess they might be of some use later in the year if we have an outbreak of flu or anything similar.

Those things were donated generously by businesses across New Zealand. This bill is, in part, making sure that those businesses will not have to pay tax on the goods they have donated to people affected by the quake. It is another indication of the national response. We have felt enormously heartened. It goes on. As I mentioned, there was the photo exhibition opened as recently as Monday night of this week, and an appeal to raise funds for the people of Canterbury will be launched this weekend on Māori Television, with global support. Thinking of the comments made by a colleague from the Taranaki - King Country electorate earlier in the House during the debate on a previous bill, I acknowledge the role Fonterra is playing in supporting that enormous fund-raising initiative.

The only disquiet I would express about this bill is its timing. As we have seen, a regulatory impact statement was prepared by Inland Revenue Department officials. I note that they concluded the statement and submitted it to Cabinet on 17 March—St Patrick’s Day, if you like—3 weeks after the quake, yet the bill was introduced on 4 May, some 7 weeks later. I suggest that the lead time indicates that it might have provided the opportunity for us to scrutinise the legislation, which is what we in this House would have preferred. With all due respect to the officials, issues can often be picked up by the combined intelligence that comes through having the select committee process and having public input into it. It is really the best way through.

A pattern is emerging here. I note that a Canterbury ram should be a sheep or a sports team; it should not be a Government habit in respect of legislation introduced to the House.

💬 Hon Clayton Cosgrove: There’s a few old wethers over there; a few two-tooths.

Despite the temptation and the presence of some members opposite from rural electorates, I will not pick up on the sheep analogies that my colleague the member for Waimakariri is starting to develop. I make the point again to the Government, while trying to respect the bipartisan nature of the bill, that where it is at all possible, there should only be compelling circumstances in which legislation is not subject to the scrutiny of a select committee. The select committee process truly adds to our knowledge and to the rigour of the bill. It also means that we avoid two things. Firstly, it avoids the prospect of Parliament having to come back to legislation because it was pushed through under urgency, without any consideration. That is the process; that is what we should be following. Secondly, it also means that the fish-hooks in the legislation can be picked up there and then. Those are the benefits of the select committee process.

As Labour members have made clear, we are keen to see the Taxation (Canterbury Earthquake Measures) Bill progressed. We will support it through all its stages. We have some concerns about the urgency that is being applied, but this bill makes absolute sense for Canterbury at this time. Canterbury is still very much a community in need. We acknowledge that other Budget measures have provided the funding to pay for 60 percent of the restoration of Canterbury’s infrastructure. That has come through in earlier legislation than the Budget. This bill is an accompanying measure, if you like. We are still nowhere near to being out of the woods in respect of the challenges we face as a community and as a city and a province, and we will need every ongoing effort.

One of the things that I think we need to do, if we are to use urgency, is to connect it to the rebuild of Christchurch. My colleague Stuart Nash mentioned the Napier example. On a final comment and note, Napier rebuilt its central business district in 2 years flat—2 years flat—from absolute desolation. Everything was razed by the fire that followed the quake. Napier had an interim “tin town”, where the commercial businesses were able to operate. That was a fantastic initiative. More building was done in Napier in those 2 years than in the whole of the rest of New Zealand. We need a sense of urgency, not in the sense of a bill being pushed through the House under urgency, but in the sense of the rebuild of Christchurch. I ask members to give their support to that urgency in respect of Christchurch’s future.

Malo, Mr Assistant Speaker Robertson. I thank you for the opportunity to take a short call on the Taxation (Canterbury Earthquake Measures) Bill. In other speeches this afternoon, we have heard widespread support for the bill. I do not wish to dwell too much on it. I will say that it receives support not just from our Canterbury MPs but also from those across the country. As was witnessed in the aftermath of both earthquakes affecting the Canterbury region, the country and, indeed, the world responded in a compassionate and caring way. It is really about supporting and rebuilding Canterbury. Christchurch is New Zealand’s second-largest city. It is an important part of the economy and our country. Certainly, it will not just be the Government’s role to rebuild Christchurch and Canterbury.

The private sector has played a major part in the rebuild. I acknowledge the speaker opposite, Brendon Burns, who conceded that point, because we do not often hear positive things about the private sector from members opposite. So I thank Mr Burns for at least conceding that point.

There is a telethon on this Sunday, and, again, people will be asked to dig deep to support that. There are also a number of fund-raising measures across the country. I will be attending one in my local electorate of Maungakiekie. The Royal Oak Racquets Club will hold a breakfast, with a number of auction items. I know that there is a nice bottle of wine from the Prime Minister for auction next Friday morning, and we will be doing our part in Maungakiekie to support the people of Canterbury.

This bill is part of a number of measures that this Government has taken to respond to the catastrophe that occurred in Canterbury and Christchurch. It supports the Budget measures that were announced yesterday. This Government is committing $5.5 billion over the next 4 years to the reconstruction and rebuilding of our second-largest city. I support this bill, and I am happy that members all around this Chamber are supporting this very good cause. Thank you.

Bill read a first time.

Second Reading