Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill

I rise to speak to Part 5 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill. Indeed, there is much to say about this part in the bill. There is a great deal of—

💬 Maggie Barry: Something new?

—interest in this part of the bill. Ms Barry asked whether there is something new in this part of the bill. I will be interested to see what she contributes to the discussion on this part of the debate. She has been remarkably quiet up until now.

There have been a number of salient points raised, and many questions asked of the Minister in the chair, but we have noted so far that the Minister in the chair has been reluctant to answer any of them—indeed, reluctant—[Interruption] “Apparently deaf”, says my colleague. We seem to have a new Minister sitting in the chair, the Minister of Defence, so we can try our luck with this one and see whether perhaps he might be willing to answer some of the questions that have been raised earlier around the loopholes that are created, the compliance costs on business, and whether there is an estimate available of those compliance costs. I raise these questions now in passing so that the Minister can perhaps turn to his officials and raise this issue with them, if, indeed, he would like to address those concerns that were raised about further compliance costs and National’s growing record of being on the wrong side of small business.

I want to say more right now about the KiwiSaver clause in this bill. Clause 154 in the bill deals with KiwiSaver. This bill raises the employee contribution for KiwiSaver from 2 percent to 3 percent. In itself that is a 50 percent increase, as my colleague Damien O’Connor pointed out earlier. It is a very modest increase. We know that National has been flip-flopping all over the place on KiwiSaver. I guess we can comfort ourselves that at least this flop is in the right direction. It is only 2 years ago that the Government cut the employee contribution from 4 percent to 2 percent. What this legislation does is increase it from 2 percent to 3 percent, back up again—halfway back up. It went from 4 percent down to 2 percent, and now it goes from 2 percent back up to 3 percent. So we will wait for the next instalment from this Government in terms of its KiwiSaver policy. I have made the point before that the National Government has more positions on KiwiSaver than the Kama Sutra. That is clear. The National Government has cut it previously. It was to have been progressively raised, under the plan that the previous Government had, to an 8 percent default rate of gross income by April 2011 for employees, and a 4 percent default rate for employers.

On KiwiSaver the National Government has discontinued the employer tax credit, and that effectively subsidised employers for the costs of providing KiwiSaver. It has capped the employer superannuation contribution tax-exempt at 2 percent, and previously it was to have been 4 percent. You see, the Government is all over the place. It has been reining it in, and now it is just nudging it up. It discontinued the fee subsidy of $40 per annum, so, again, it was reining the system in, and that is entirely inconsistent with what we see in this bill. That was aimed at ensuring that the accounts with low balances were not eroded through taxes.

The KiwiSaver plan that the Labour Government put together was a good one. It was going to grow savings so that we had money in our economy for investments, and so that we addressed the issue of capital depth that holds us back when we compare ourselves with, say, Australia, which has a $1.3 trillion superannuation fund sitting there—money looking for a home, looking for a place to invest profitably. And we wonder why Australia is getting ahead.

National also repealed the Employment Relations Amendment Act that had aimed to ensure that employer contributions be on top of an employee’s pay. Under National’s changes, employees and employers now have the ability, as part of good-faith negotiations, to contract out of this requirement. It is all about pulling the savings system back. Now, in this piece of the legislation, this piece of tinkering sees the employee contribution rate for KiwiSaver, which the National Government took from 4 percent down to 2 percent, go halfway back up to 3 percent. At least this flop, as I said at the outset, is in the right direction, but all this chopping and changing on KiwiSaver by the National Government undermines Kiwis’ confidence, and that, in itself, does nothing—absolutely nothing—to improve our dire national savings situation.

Labour’s policy, which would look at introducing a universal KiwiSaver, would create an enduring solution and lift our savings rate, and raising our savings is desperately needed. My bill to raise the minimum wage, which will come before the House, would ensure that all workers could afford to pay for compulsory superannuation saving. So if we move towards that, we have got to make sure that people are resourced to be able to afford to make those savings, which will then benefit our economy over the longer term.

In this legislation we also have clauses in Part 5 to do with software development. I will turn to Part 5. Here we see clauses to do with KiwiSaver and then, further on in the legislation, in clause 163 we have “Unsuccessful software development” and the treatment thereof and a tax exemption. Some of my colleagues have already been wondering aloud in debates on previous parts of the legislation—but that was not the time to have the debate—about how unsuccessful software development could occur in terms of the Inland Revenue Department, which has a poor track record: $21 million was invested in a project to try to get the first of the reforms done within the Inland Revenue Department, and a portion of that was written off because it was unsuccessful. Now we are told that this $1 billion or $1.5 billion rebuild of the Inland Revenue Department computer system is coming up. We do not have a time frame for it. We have a Prime Minister who says we should not be held to ransom by not having an effective tax collection system. Our current one was built in 1992. But we have had no progress and no confidence that this problem is really being addressed. John Key’s Valentine’s Day promise to look at our software system, at the software for tax collection, the computer system that the Inland Revenue Department has, has not been realised. It is looking more and more like a promise in vain, much like many of the other promises to grow our economy that Mr Key has made as leader.

In and of itself this deduction for unsuccessful software development may encourage some businesses. I am not sure how this would affect, say, Mr Dotcom. He has come into the debate lately. He has had many successful, as I understand it, software developments in his time, but were he to have an unsuccessful one, I am not clear from my reading of the legislation—and perhaps the Minister would like to take a call on this—whether that would apply to him as a resident who is not a naturalised citizen of New Zealand. I invite the Minister to take a call on that in due course. I am sure other speakers will come to the issue of software development, because it is a pertinent theme and one of the slightly larger aspects of the bill in the context of very much a tinkering approach to tax change. I am sure other people will come back to it.

There is a further point if we go on to clause 170, if I may. Clause 170 talks about “Certain repairs to fishing boats” and the way in which the law applies to them in respect of the tax treatment. We have clause 170(1): “In section DO 2(1), ‘Part 4 of the Shipping and Seamen Act 1952’ is replaced by ‘Part 10 of the Maritime Transport Act 1994’.” There is some tidying up going on there, but there are other questions that spring to mind. The provisions that apply to the repairs for fishing boats—how broad is that category? Do those provisions also apply to, say, cabbage boats? If someone had come down the river on the last cabbage boat and they needed repairs to their cabbage boat, would these provisions in the law apply to that? Is a cabbage boat a fishing boat in this respect of the law? I think that is a legitimate question that the Minister in the chair might like to address, because I am sure there will be people who might ask that question. They might claim they did not come down the river on the last cabbage boat, but a lot of us suspect that they actually did. They may just not remember it, I guess—that is the point—if their memory is failing about what boat they came down on, about what river they were actually on when they were coming down, and about whether there was a helicopter at the other end to meet them once they had come down the river on a cabbage boat to look at claiming for—

I am sorry to take a call away from my friend Dr Clark, who seemed to be on a roll here, but I want to address my comments to Part 5 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill and in particular to clause 154, just to say that what clause 154(1) and the subsequent subclauses represents, essentially, is the cynicism of the National Party and the National Government when it comes to savings. Really right from the time when it became Government, it has had its nibs into a very successful saving scheme. In a sense, it has wanted to do what it has always done to Labour Governments’ savings schemes, which is to destroy them—

💬 Darien Fenton: Wreck them.

—and wreck them. That is all it is: wreckers when it comes to—

💬 Colin King: Just robbing Peter to pay Paul.

Well, I say to the member, if the member feels so strongly about any provision in this bill, then the member might like to take a call. No member of the Government tonight has taken any call on the Committee stage of this bill. What is that about? Are they ashamed of the provisions of this bill? Are they ashamed of the provisions about KiwiSaver here? Is there nothing for them to defend? Or do they think that they can sit here and treat this Committee in the arrogant manner, snipe away with the smart little inane comments that they have made all evening, but do nothing to debate the substantive provisions of this bill? At least I hope that when I am sitting on that side, I will defend what the Government is trying to propose. I say the same to the Minister in the chair, the Minister of Defence. None of the members this evening has taken a call to answer any questions. I know the Minister thinks that may never happen, but never say never, Minister, and I think the Minister knows that.

But coming back to clause 154, here is the big flip-flop. Those members have tried to destroy—I think this was socialism by stealth, was it not?

💬 Darien Fenton: No, that was Working for Families.

Oh, there was something else. But they are certainly against it. They did not vote for the KiwiSaver scheme and they have tried to destroy it right from the time they have come into Government. So it is a Labour idea, and here they are. They previously destroyed KiwiSaver by reducing it to a half, and now they are slowly clawing it back and trying to reinstate it.

But in the meantime, years have been lost in the savings record. The Government is very, very quick to talk about the importance of saving, and it is very quick to say “Isn’t the country doing well in its savings now?”. Well, it is no thanks to the Government.

💬 John Hayes: Oh, rubbish!

These are the policies put into place by the last Labour Government, and that is the benefit that that member’s Government is reaping now. At least the member might be intellectually honest enough to actually say that. He could take a call and say “Ah, we’re all about that, and that’s why we’re making these changes now.” The Government does not really have a savings plan of its own. It is mucking around with Labour’s savings plan, which is working now, so the Government has no choice but to slowly increase that—slowly. It has no ideas of its own.

The cuts to KiwiSaver have been significant. The Government has reduced it and it has retarded the ability of the scheme to contribute significantly to the savings programme of this particular country. These provisions begin to put a little bit back in, but the Government has done so much damage to it. So it should explain why it was against the scheme right from the beginning. Why did it reduce it to half and is now increasing it by a quarter, again? It knows that it was a great scheme. It knows it was working well. It knows its potential to assist the savings record of families and the future ageing population of New Zealand. This is what is going to save this country. That is no thanks to the members opposite and no thanks to the Government of the day. So perhaps they should apologise. They should just say “Sorry, we screwed up. Sorry, we made a mistake.” Now is a good time to acknowledge that this was a good idea, and that the previous settings were just fine.

I cannot remember, but can anybody on this side of the Chamber remember any scheme that this Government has come up with in the last 4 years that actually increases savings or increases the development of this country? Is there any? There certainly have been none. The Government believes that trickle-down will actually do everything. In fact, it will not. But if the members had the courage of those convictions, they would take a call, and yet they all bow their heads and they all snipe away at the comments from this side of the Chamber, because members on this side feel passionately about the tax system and about the savings record of this country. That is why we have taken so many calls and why we are prepared to stay here and debate the points that are being made. But, no, there is nothing from the other side of the Chamber. There is no acknowledgment. There are snide comments about the chattering classes, but no real programme, no real defence—

💬 John Hayes: Not snide comments.

Well, I say to Mr Hayes, please take a call. Please explain his Government’s views on this. Please explain to the Committee why these provisions are provisions that National has brought in and why it made the changes in the first place, and why now it is increasing it, and how long it will be before the settings go back up to 4 percent, where the settings were previously.

💬 John Hayes: Oh, bear of little brain!

The member has no answer. The member has nothing but a cynical approach to a major bill before the Committee.

💬 John Hayes: Everybody except you understands why.

Well, take a call. Take a call and explain.

💬 John Hayes: I don’t need to. We all understand what we’re doing.

There is no law that the Government members have come up with that they should not be able to stand up and defend, and defend as often as necessary. But that member takes no opportunity. The member’s colleagues take no opportunities to defend the Government’s particular provisions in this bill.

💬 John Hayes: “We won, you lost.”

Well, that is just so simple. That is so simple, and that member forgets. “We won. You lost. Therefore.” What is Mr Hayes saying to the country? That the National Party won, so everything now has got to follow its particular recipe, even if it is going to fail, even if it is unsuccessful? There are these constant shifts that they make with good policy settings, and just to give an impression that this is progress fools nobody, Mr Hayes—nobody. So let us just have some real debate. If there are some real points the members want to make, they should make them, but there is nothing.

What other provisions do in Part 5 is improve that. I think the Finance and Expenditure Committee probably did great work on this particular bill—

💬 John Hayes: It did.

That is no thanks to that member. But it did begin to look at provisions around a simple process of stopping contributions, once the 5 years is up. I mean, here is the select committee doing the work of the design of this bill that Government Ministers, etc., should do, but no members on the other side of the Chamber have taken a call to defend the provisions. No member on the other side of the Chamber has got up to actually counter argue the points that this side of the Chamber has put before the Committee in this debate—none.

💬 John Hayes: That should tell the member something. No substance to them.

We just had another one from the member. It is something—he mumbles away, and only the two people sitting beside him could hear. It was not important enough that the Committee needs to hear it or the country needs to hear it. Those members have no defence. There is nothing that they want to say. It is almost as if National has come up with it, the select committee has done its work, and therefore we should go from there.

So I think that is contempt. It is contempt of the processes of this House. I may be new to this House. I am only in my second term, but I find that quite contemptuous that Government members would not defend the very provisions that National has come up with and the very ideas that it thinks are important, particularly when it comes to something as important as KiwiSaver. There is universal agreement that here was a programme that was well designed, well-thought-out, and set for the long term. But what does the Government do the moment it comes in? What is the first thing it does? It cuts it. That is what it knows: cut, slash, and burn. It has done it here, as well. In the last Parliament, that is what it did. Now it is having to retrieve some of that, but again there is no apology. I say to Mr Hayes and his colleagues that this is not new. This is what National did to the fourth Labour Government’s scheme—the scheme that the Kirk Government put in. It was a great scheme, and if that had been allowed to stay, can you imagine where New Zealand would be today? But there is no credit to that side of the Chamber for destroying something that was good in 1975 and destroying something again that was good, with the KiwiSaver scheme. So those members should take responsibility—maybe the next member will take a call. Thank you.

Thank you, Mr Chairman. Indeed, I relish the opportunity to take another call, and on Part 5 of this bill, the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill. “Consistently inconsistent” is, I think, the term we used on the previous part. Actually, I do not mind if I am a little consistently inconsistent myself in that I am in two minds when it comes to clauses 154 to 157. That is about the 50 percent increase in tax that is being imposed through this.

I guess, if I can be inconsistent, I suppose, firstly, I would have to praise this. I have to say that this is a good move, because it is increasing the contribution to KiwiSaver. But then I have to be inconsistent and say that, unfortunately, it seems to run counter to everything else we hear from the National Party in this House, which is that tax is the root of all evil, tax is the beginning of the end, and the more we reduce it the more the economy can grow. That is what we hear. It is ideology from idiots. We keep hearing it. I would have to say that one of the classics is Mr Colin King sitting over there, because as a traditional farmer he believes that without truly analysing it.

We need to pay taxes to invest in good things. This 50 percent increase in taxation being imposed by the National Government here is actually a good thing, because it ups the level of contribution to KiwiSaver, a scheme that Mr King and many of his colleagues would have called communism. Mr McKelvie would have said the same thing—KiwiSaver was communism, forcing people to do what they did not want to do with their money. That is what many of the farmers around the place think, because they have listened to the drivel coming out of the National Party for years and years and years.

Farmers understand smart investment when they see it. They also understand the value of KiwiSaver and of investing in our future. If we had not been sucked in, as selfish idiots, back in the 1970s and had not listened to and believed Robert Muldoon in wanting to have our cake and eat it too, we would have a sound superannuation scheme and be a whole lot better off. We would be right up there with the Australians in terms of the level of investment income. But, dare I say it—and I am a farmer, from a farming background, but a Labour Party farming background, thank God, which has given me, hopefully, a little bit more wisdom—the traditional farmers like Mr McKelvie and Mr King there, who got sucked into Robert Muldoon, thought they could have their cake and eat it too, so they voted him in and voted superannuation out. Later, under Michael Cullen and a Labour Government, when we finally got brave enough and got to the point where we could afford to start investing in real superannuation again, the National Party, of course, opposed it time and time again in this House.

💬 Dr David Clark: They’re still in their Muldoon mode.

They are, and, of course, they have sold this idea that you can have your cake and eat it too—we can sell off our assets and have this wonderful country going forward. That is ideology, continued ideology, from the National Party. The other one is the mantra that with lower taxes we will all be better off and the economy will grow. Yet it is increasing taxes 50 percent here, which I think is a good thing. So I am a bit inconsistent myself—I accept that.

What Part 5 is also doing is increasing a fee from $50 to $150. Fancy that—a 200 percent increase in a tax, a compliance cost, the thing that the two farmers over there have rallied against and campaigned against and ranted and raved about. Yet here they are, part of the Government, and I bet those two members are going to vote for this piece of legislation, which, in clause 172(1), increases the fee in regulation 9(1)(a) from $50 to $150. Let the country be aware of what is happening under the nose, under the direction, of the National Government.

There is another one. That is right: it does not stop there. There is another regulation that allows for an increase in fee from $30 to $75. That is a 150 percent increase. Can I say that there are literally dozens, if not hundreds, of these little increases right across the National-ACT Government’s oversight and governance of this country. And people wonder why their costs are going up.

I go back to another part of Part 5 and ask a question, and hopefully the Minister in the chair, the Minister of Defence, might get up and answer this. When I first came into Parliament in the 1990s, when National was in Government, I have to say, one of the most common issues raised in my electorate offices was that of child support. It is, unfortunately, one of the challenges in New Zealand society. This Government is moving on that, it says. It is going to force solo mums and solo parents back to work. [Interruption] Thank you, Mr Chair, but it does relate to child support because I am asking questions about what this might mean, the changes here, for those—and I will quote from the amendment to the Child Support Act—“to whom section 33A of the Tax Administration Act 1994 applies”. My guess is that this does alter the taxation regime relating to child support or the liabilities of each or both of the parents. I would appreciate some explanation on it. I know there is a review under way. I do not know what this part relates to. I have asked my colleague, who has not been able to clarify it. Maybe the Minister will.

The point I am making is that it is, rightfully, one of perhaps the most responsible areas of legislation that we should get right, and that is to ensure that every child in this country has the right level of support from either or both parents—enough support to make sure that they get a fair go. I think that is the simplest way.

There are amendments occurring here in this piece of legislation. The vast majority of people who may still be awake, who might have their TVs on and are trying to work out what is going on here, will not know, perhaps, what we are changing here. But can I say if there is a consistency here, it is that if you are a poor solo parent the chances are the National Government has kicked you in the guts once again. Most changes—

💬 Colin King: Tell us about the $8 billion we spend looking after those people.

That member will not admit it, but he knows it is true. Most changes that have occurred from this Government have been about kicking solo parents.

💬 Colin King: Get out of the West Coast and into the real world.

Oh, they get a bit touchy here because they know it is true. They know it is true. That is right. GST has increased. Here we are, and the beneficiaries, the same solo parents, the parents whom child support applies to, are being told “one strike and you’re out”. Of course, as a criminal you can have three strikes. Funny, that. Three strikes for a criminal; one strike for some poor person who is trying to bring up their child, who has to be on a benefit to try to protect their child. This is outrageous. This is Toryism to the core, and it is about time we got it right.

The Chairperson is rightfully pulling me back into the Child Support Act. I do not know what this change means. It is a technical change written into this piece of legislation, and I am concerned that it might make it harder, and that each and every one of us as MPs, on both sides of the House, might be asked at a clinic on a Friday—we usually have them; I do not know about the National members—what is going on here. I would just like to hear an explanation from the Minister, who I am sure has a handle on what is happening here. He probably believes he is doing the right thing, but if he looks at the National Government’s record, it is not.

In conclusion, I have to say that the changes here to KiwiSaver, in my view, are an increase in taxation. National, when opposing us in the implementation of KiwiSaver, railed and ranted against what we were trying to do. It then cut the contribution, of course, and it is now lifting it again.

House resumed.

The Chairperson reported progress on the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill and no progress on the Airports (Cost Recovery for Processing of International Travellers) Bill and the Legislation Bill.

Report adopted.

The House adjourned at 9.56 p.m.