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

When this bill was last being considered, we had reached Part 5. The Hon Damien O’Connor had the call. He has 25 seconds remaining, if he so wishes. I call the honourable member the Rev. Dr David Clark.

Such full recognition. I rise to speak to Part 5 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill. I think it is probably appropriate, after such a pause in the proceedings, to remind members what Part 5 of this bill contains. The bill as a whole, we know, is essentially tidying up a range of tax measures. Labour will ultimately support it. There is little to disagree with in the bill. There are some things that we think are fairer than others, but on balance this bill is aimed at ensuring that loopholes in the tax system are tidied up. It does nothing adventurous. It certainly does not introduce any pro-growth tax measures.

As we come to this part of the bill, we see the provisions in clause 154, “Contribution rate”—that will give effect to the changes in KiwiSaver that are promoted in this bill. They are very modest changes; certainly changes that are in the right direction. Labour welcomes National’s road to Damascus experience on KiwiSaver. It is far from a universal scheme, the kind of scheme that we would need to see our economy grow. We know we need more savings. We know we need pro-growth tax policy. We know we need proper monetary policy that would make sure our export industries are supported.

This Government seems to be firmly and actively pursuing policies that involve it sitting on its hands rather than actually making changes that would support business. It talks a big game, but we see again in this legislation very little change. It is designed to maintain the status quo, to ensure that new loopholes are not seen or spotted or exploited. That effort we must commend, but we must also note that there is no real change of any significant proportion that is going to make our economy run better than it is now. That is why we know that many New Zealanders are finding times tough. They are disappointed in the efforts made by Mr Key. Even those who supported him are now saying that they are disappointed, they feel let down, and the economy is not growing, so we understand their need to let out those feelings, those of us who have a different vision, who believe that the Government can do something to create jobs, and who believe that positive things can be done—as opposed to this Government, which just says “no”, “can’t”, and “won’t”, and will not change.

Our Government, a Labour Government in the future, would make the changes that would grow the economy. We would be more vigorous in our approach to KiwiSaver. The change proposed here in clause 154, “Contribution rate”, is: “In section 64(1)(a), in the words before the subparagraphs, ‘2%’ is replaced by ‘3%’.” This is the big change in this part of the bill—2 percent is replaced by 3 percent.

💬 Hon David Cunliffe: And it’s reversing one the other way.

My colleague is quite right. The Hon David Cunliffe points out that this is a reverse of a change. This is the reverse of a change that this Government made.

💬 Hon David Cunliffe: Go big, National.

It is a timid reverse. It is a flip-flop, but it is—

💬 Hon David Cunliffe: It’s a half reverse.

It is a flop, I guess. This flip is in the right direction. The Government cut the minimum contribution rates for employees and employers to 2 percent. The Government is the reason that this 2 percent is in the legislation in the first place. The rate had been progressively raised to an 8 percent of gross income default rate for employees by 2011, and a 4 percent default rate for employers. But this Government took it and capped the employer’s superannuation contribution tax exemption at 2 percent, where it was 4 percent. So the Government took it from 4 percent to 2 percent, and now it is taking it from 2 percent back up to 3 percent.

💬 Dr Rajen Prasad: Flip-flop.

Whoa, there we go. It is a flip-flop. It is progress. It is reversing out of a change it has made, but it is hardly visionary stuff. It is hardly visionary stuff. It is what we have come to expect from this Government.

💬 Dr Rajen Prasad: It’s damaging.

It is the kind of thing that we have come to expect. It is actually damaging. My colleague Rajen Prasad points out that this is actually damaging to confidence in the scheme, this kind of trading. This kind of change does erode confidence in the scheme. It follows along similar lines.

The Government also previously discontinued the fee subsidy of $40 per annum. Again, it shows that it does not really have confidence in the scheme. Well, it does. Maybe it has a little bit more now. Maybe it has 3 percent confidence rather than 2 percent. It has got that little bit more confidence. We could say that it has 50 percent more confidence than it had before, but it is half of what it was previously, when it was 4 percent.

We see a Government that is switching around with small numbers in this part of the bill. It is trying to address KiwiSaver. It is certainly a move in the right direction, but it is not bold enough. It will not change the fundamentals. It is not going to be the savings policy that cracks it, that reverses this trend—this increased unemployment, the thousand people a week leaving for Australia, and the worst economic record of any Government in 50 years. These are not the changes that will actually make that difference.

If we move further through Part 5 we have the clauses on unsuccessful software development, and we see that these are designed to ensure that people feel comfortable investing in software development and are not placed in a position where they are carrying too much risk and are then unable to make the confident business decisions they need to make to develop new technologies that will take our country forward.

Interestingly, there has been, no doubt, some confidence eroded in that sector recently with the Government’s spying illegally, we understand, on Kim Dotcom as he went about his software development business in his own private home. So there is a certain contradiction in here. We see the Government’s actions on the one hand dealing in an illegal way with a resident of New Zealand who is going about software development, and then on the other hand in this bill we have a measure designed to encourage software development. You know, we are seeing a little bit of tinkering here and there. We will see the Government, no doubt, reverse this decision in a wee while. We would not be surprised—

💬 Hon David Cunliffe: Half.

—or half reversing it, as it did with KiwiSaver. It will probably say that mildly successful software development will develop some kind of bonus, but completely unsuccessful will not.

We will see some amendment in due course if it is consistent in its inconsistency—

💬 Maggie Barry: Asset sales.

—but there is not much more in here than tinkering. Maggie Barry is suggesting that we bring asset sales into this debate because her Government wants to sell off the assets, and 80 percent of New Zealanders oppose that. In this bill I do not see a relevance to asset sales, other than perhaps, I guess, we might see software development as developing new assets, the kinds of assets that might be profitable and, therefore, something the Government might like to hock off if it owned any share in them, if it was to be consistent. But, again, we are seeing an inconsistent Government that is tinkering through this bill.

Clause 165 deals with livestock valuation, and I would be interested if the Minister in the chair can explain, because I am just not certain, whether this is relevant to the provisions and changes around putting livestock into one class, either as capital or revenue items, in different years in order to—

💬 David Bennett: They’re already capital.

—change the tax treatment. That may have been covered previously. Mr Bennett is shaking his head. I am sure he will take a call and explain in due course whether clause 165 has any relevance to that measure, because we have not heard anything from the Minister in the chair yet.

Clause 170, in Part 5, talks about certain repairs to fishing boats. I speculated in a previous call about whether that might also be expanded to cabbage boats, and whether there are any repairs provisions in respect of cabbage boats. But we are not quite sure what cabbage boats are. We know that Mr Banks is fond of referring to them. He is fond of discussing cabbage boats coming down rivers, and whether he was in the last one or not—

💬 Dr Megan Woods: Not from watching fireworks.

Well, you would not watch fireworks, my colleague Megan Woods explains, because it would be a dangerous place, and then you might need this provision for repairs to fishing boats or cabbage boats, as the case may be. We know John Key would probably not have been in that cabbage boat that went down the river where the fireworks were let off, because he seems to not know—he tells us today that Kim Dotcom was a resident of New Zealand. Finally—

It was not that long ago that New Zealanders were told by the National Party to “Wave goodbye to higher taxes, not your loved ones.” Does anyone remember that? Do you know what? National lied. It lied. What have we had since then? We have had the income gap with Australia widen from 30 percent to 35 percent. We have had the numbers of young New Zealanders—

💬 Michael Woodhouse: I raise a point of order, Mr Chairperson. I delayed, somewhat, on the basis that you were going to pull up the unparliamentary comment by that member. I would ask that you do so now and that he withdraw it.

The CHAIRPERSON (H V Ross Robertson): I was actually thinking about it at the time. The member knows that you cannot use the word “lie”, because it actually reflects on all of the House. I ask the member to desist.

Mr Chairperson, I certainly take your guidance on that matter, notwithstanding the fact that it was a factual statement, and the delivery—[Interruption]

The CHAIRPERSON (H V Ross Robertson): Order! To the member on my right, you cannot use a live microphone. I just ask the member to go straight to the debate. Thank you.

There is no doubt that New Zealanders have not waved goodbye to higher taxes. That is clear from this bill, the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill, which deals with GST, because GST went up, not down, for all New Zealanders. The tax package of which it was part, which was promised to be fiscally neutral, was not. I am not sure what you call it when you campaign on moving in one direction and then you do the exact opposite. It is, should we say, an anomaly, a discontinuity, an untruth, perhaps, in the eye of the beholder.

This bill shows not the ineptitude of the current Government, not the abject failure of the current Government, but the errant timidity of this Government. Surrounded by lay-offs from manufacturing plants each and every week; surrounded by unemployment that is going up, not down; surrounded by a median income that has fallen 3 percent since it took office—

House resumed.

The Chairperson reported the National War Memorial Park (Pukeahu) Empowering Bill without amendment; the Customs and Excise (Tobacco Products—Budget Measures) Amendment Bill without amendment, and that the Committee had divided it into seven bills; progress on the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Bill; and no progress on the Legislation Bill.

Report adopted.

The House adjourned at 9.57 p.m.