Taxation Principles Reporting Act Repeal Bill

I move, That the Taxation Principles Reporting Act Repeal Bill be now read a third time.

Madam Speaker, honourable members, I thank you for your time in considering this bill under urgency. As we’re under urgency, I will provide a very brief recap of the bill that we are considering today.

The Taxation Principles Reporting Act Repeal Bill does what the name implies. It has a simple purpose, and once that purpose has been fulfilled, it writes itself out of the history books by repealing itself.

But as humble and self-fulfilling as it is, it is a very useful bill with some noble objectives. It frees future Governments from the restrictive descriptors of tax principles set out in the Act, and it allows them to describe for themselves what they see as good tax system. It allows them to pursue the tax policies they were elected to carry out. It is saving taxpayers money and compliance costs by stopping them from having to provide unnecessary information to Inland Revenue, and it will stop Inland Revenue from having to devote precious resources to preparing reports on the tax system in relation to certain tax principles. Those resources could and should be better used, including actually collecting tax. This, then, is a very worthwhile bill.

I would like to thank the tax policy officials and legislative drafter for all their work in preparing this bill so quickly. I commend the Taxation Principles Reporting Act Repeal Bill to the House.

The question is that the motion be agreed to.

Thank you, Mr Speaker. This week, under urgency, we have had fair pay agreements taken away. We have had 90-day trials put back in place. We have had the Clean Car Discount taken away.

The Government has not proposed any new or original policies. It has not come with anything positive to this House. Instead, it has taken away, removed, repealed, destroyed. That’s their agenda—that’s their agenda.

Hon Grant Robertson: That’s all they’ve got.

Hon Dr DEBORAH RUSSELL: It’s all they’ve got. And now they’ve done it on this bill. This bill takes away the Taxation Principles Reporting Act, an Act which would simply have given us more information about our tax system so that as citizens we can make good judgments.

You know, the previous speaker, the Minister, Simon Watts, said that the descriptors were “restrictive”, that Governments should be allowed to “set principles for themselves”—that’s an astonishing thing to say—and that it would “free” Governments to set their own tax policies. Let’s work through that. Governments are still—always have been—free to set their own tax policies. What this bill would have done would have enabled some judgments to be made about those tax policies using descriptors that are long established and widely agreed as the appropriate descriptors and the appropriate principles to use for assessing a tax system. But this Government is too scared to allow that to happen.

It is a real shame that this bill is going through. I’m going to end with a quote from the submissions on the original bill from a submitter who actually said this would be a good policy to pursue. This submitter said—I’m going to reveal the name at the end; this is a surprise for the end of the year—the organisation “has a keen interest in tax policy, including a comprehensive submission to the 2018-19 Tax Review as well as submissions and feedback to Inland Revenue on more technical consultations” on the area. This submitter “supports the concept of increased information about the operation of the tax system and reporting of tax information against core taxation principles. We also broadly agree with the list of seven principles listed in Schedule 1 of the Bill.” This submitter agreed with the Taxation Principles Reporting Act.

The chair of that submitter is now in this House as an ACT MP. Federated Farmers thought this was good policy, and that Government has rejected it. What a sad note on which to end the year.

E te Māngai, tēnā koe. Tēnā koutou e te Whare. I just wanted to continue in the vein of the Hon Dr Deborah Russell and say that it’s gutting that this is where we end the year in the House.

Merry Christmas to the workers who have had their opportunity to engage in sector-based bargaining stripped away from them, again under urgency, oftentimes in the dead of night, without the opportunity for meaningful consultation or engagement at select committee. Merry Christmas to the workers who will now be going into their new jobs with the opportunity to be fired at will under the first 90 days. Merry Christmas to the climate, which will be, you know, facing more oil and gas poured on the climate crisis. Merry Christmas to the climate with the Clean Car Discount being repealed, one of the most successful climate change policies that Governments have seen in decades, without any commensurate policy put forward to replace it.

Merry Christmas as well to renters who, under this Government, will potentially see their rent skyrocket between 15 to 20 percent, based on estimations from the likes of economist Bernard Hickey, based on this Government’s work programme to remove and roll back interest deductibility rules and otherwise.

It is abundantly clear that the Government currently bollocking at me has absolutely no vision, because what we have seen over the past two weeks is that they have instead simply fired up the shredder. There is no creativity, no meaningful policy pathway that we have seen to build an Aotearoa New Zealand that is inclusive, that is equitable, and that ultimately provides that pathway for the upholding of people and the planet.

So to the bill, which we haven’t had any real meaningful opportunity to talk about, given that the Government actually engaged no external submitters, no external stakeholders, despite accusing the former Government of undertaking no meaningful engagement. And then, obviously, it completely bypassed the select committee process by which we may have had a more meaningful and informed opportunity to shape up this legislation into something that any of us could be proud of.

This bill, as has oftentimes been said throughout all stages, actually doesn’t change our tax system. It doesn’t fix the inequities that have been long baked in, as well elucidated in the high-wealth individuals report from IRD with subsidiary papers from Treasury at the beginning of this year.

This is a really important and fundamental point, because it leaves us with the state of the economy as we presently have it. And I’ll bring it back to this graph from Max Rashbrooke [Holds up document], which, obviously, members of the Opposition would prefer I put down in the same way that they’d like to bin the report which officials have largely worked on. Just for those following along at home, this is really, really important to outline here. This is based on substantive survey data—the distribution of wealth that New Zealanders believe would be ideal. It looks equitable. It looks as though everybody has the opportunity to start at the same point in the starting line. The second bar is what New Zealanders think that the distribution of wealth in Aotearoa New Zealand is. And you can see a substantive divergence there. New Zealanders actually do assume that right now we do have an unfair and inequitable distribution of wealth that is far from what they think that it is, or rather what they believe it is, ideal to be.

But then we get to the third point of the graph around what it actually is, and it’s there you can see where the disproportionate wealth and power in Aotearoa New Zealand is held. And that is the core point that we are debating today, because that wealth aggregation doesn’t occur in a vacuum; it occurs

as a result of a tax system which many New Zealanders, per that graph, assume is unfair—and as the high-wealth individuals report from the Inland Revenue Department told us was unfair. Because we see that the top 311 families in this country pay an effective tax rate less than half of that of the average New Zealander.

Hon Member: They worked hard, and they succeeded.

CHLÖE SWARBRICK: I dare members of the ACT Party who are presently heckling about how those 311 families worked hard to tell us that the bottom 2.5 million New Zealanders who hold less wealth than those 311 families combined—I dare you to tell those New Zealanders that they did not work hard. Because, in fact, what we see is that our tax system, as again borne out in those subsidiary papers from Treasury on that IRD report—those New Zealanders do work hard, but we have a tax system that disproportionately taxes work over wealth, and that puts us as an outlier in the OECD. We are one of the only countries that we compare ourselves to that does not have a capital gains tax, a stamp duty tax, a wealth tax, or any form of taxation that is meaningfully targeted to address those inequities.

The other point on this bill is that this report is already done, and this was largely canvassed throughout other parts and debates in this bill. Because we know that under the law as it currently sits on our statute book—as it currently sits, actually, until we get to the point of this bill being passed under urgency in the next hour or so—IRD are required to publish a report on 31 December. And as I’ve said during the first reading and the second reading and committee of the whole House—and it bears out putting on the Hansard once again—that is 10 days from now. In those 10 days we have two public holidays in the form of Christmas and Boxing Day. We also have two weekend days. That takes away four days. That gives us ostensibly six working days. But we know that IRD officials, as with most public servants and white collar workers across this country, are probably on holiday from tomorrow. And the inevitable logical conclusion that that brings us to is that this report is done. And that then begs the question of why the Government is keen to bin it. Because we’ve been told that the reason that we are rushing this through under urgency today and through midnight last night is because they need to get it done before 31 December, when that bill is due to be published.

My question to members of the Government is: what are you so scared of? Because we heard from the Minister during committee of the whole House, and, actually, as reflected in the regulatory impact statement from his officials, that there is an intention to actually increase the level of reporting within IRD on the efficacy of our tax system. So there is still an intention to do some form of ambiguous reporting, and we’re not quite sure what it is going to look like, yet we’re repealing this principles-based legislation based on, again—and I take here from our independent adviser on the bill who said, and I quote, and this is from Sir Rob McLeod, not somebody who I don’t think anybody in this House could allege of being ideologically driven,“I would omit the descriptors because the meaning of each design principle is sufficiently well understood on their own.”

So we’re left with a situation with a report which is due to come out in 10 days, under the law as it currently sits on our books, and a Minister who says that we’re doing this in order to reduce waste of resources, but those resources are already spent. Again, it bears worth putting on the record that those resources are 2.5 fulltime-equivalent (FTE)—i.e., 0.06 percent of all of the FTE that operate within the Inland Revenue Department—and a Minister that is saying that he intends to continue doing some form of reporting, which we have no meaningful clarity over.

So we should have and we could have had a process, if the Government had decided to let this report come out—as it, again, still to this point, is due to in the next 10 days—where they could have said, “Hey, look, New Zealand, here’s the issues that we have with the format of this reporting as it has been put out.” But we’re not going to be able to have that meaningful debate, because in the dark of the night this Government has decided to shred that legislation, pushing through midnight and urgency last night.

And it really bears pointing out again that this is a Government who has utilised rhetoric such as the importance of data and evidence but is deciding to shred a framework which would have enabled us to have precisely that. We don’t live in a game of Monopoly; we live in a democracy where, when we are informed by evidence and data, we have the opportunity to make informed decisions about the economy that we want to live in. Because the question for the Government and for the Opposition, and indeed for our Parliament, should be: what kind of economy do we want to build? Because it isn’t handed down to us on concrete tablets from a deity in the sky; it is a man-made concept with structures, rules, and regulations that we put in place to try and achieve outcomes that we put down on paper in these laws.

And I have just got to say, having heard the inconsistencies logically in the Speech from the Throne a few weeks ago, where this Government was talking about the wants to have more affordable housing while doing policies and putting forward policy prescriptions that they know demonstrably will do the opposite of that; saying that they want to have a higher-wage economy while doing the opposite of what Australia does with a fairer tax system, a capital gains tax, and sector-based bargaining which they repealed under urgency, this Government really has us all questioning what their priorities are and who they serve. We oppose this bill.

Mark Cameron: Mr Speaker, well I don’t know how I compete with the theatricality—

SPEAKER: I haven’t called the member—just a little bit of order would be good. I call Mark Cameron.

Thank you, Mr Speaker. Well, you’ve taken my momentum away about all the oxygen and theatricality of the former member’s speech. I just want to congratulate her on all of her efforts, and highlight the fact that fallacies don’t cease to be fallacies just because they’re the fashions of the left—the green and the red team that we’ve had now six years of.

I commend the bill to the House. I think it’s a good piece of legislation and I want to congratulate the former Minister, or the said Minister, for all his endeavours. Thank you very much.

There’s been a lot of hyperbole and tilting at windmills here, but one of the things about select committee, of course, is that the legislation which is being repealed has effectively just been through select committee earlier this year. So there have been submissions on it. Those submitters have had different views, and, obviously, there was a minority opinion from what is now the Government side, saying we don’t like that piece of legislation.

IRD are quite clear that they started off saying that they thought the legislation makes sense, and then they’ve come to the view that maybe it doesn’t make sense and they can actually do it a different way. If you look at the regulatory impact statement, that is exactly what they say.

I just want to finish off by saying that the issue of trust members raised—and I think James Shaw misquoted what I was trying to say. The key point here is that what people really want to trust is how we spend their money and how much Government reaches into their pockets to take their hard-earned money and spend it on something the Government thinks is a good idea. That really is the key issue. It’s not so much about understanding the tax system; it’s understanding how we spent their money and knowing that we spent their money well. I guess that is the challenge. I commend this bill to the House.

Why, thank you, Mr Speaker. Can I just start this intervention by saying one of the few things that I do like about urgency debates is that you actually sometimes do get a debate rather than just people coming into the House and making statements then buggering off again. So I will, in that spirit, pick up the point that Andy Foster just raised, which is that he said that people want to have trust and confidence in how we spend their money. In a previous part of this debate, I agreed with him on that point. But they also want to have trust and confidence that the tax system is fair and transparent, that when we say we’re spending their money—whose money? Where is it coming from, and how much proportionately are people paying?

Actually, what we have seen is an erosion in recent decades of trust and confidence in our Governments and in this Parliament, because we have consistently passed laws that have increased wealth disparity in this country and created a multi-generational underclass and a multi-generational class of people whose wealth is inherited rather than earned. What we do know—the very few things that we do know about the tax system in New Zealand—is that it currently reinforces that. So the Act that is being repealed simply provides some transparency and builds trust and confidence, because it means we’re all operating off the same set of information about the nature of the tax system.

I wanted to respond to some of the back and forth with the Minister in the committee of the whole House stage immediately preceding. One of the things that the Minister said was that if New Zealanders want this information, they can get it through the Inland Revenue system of annual reporting. One of the other things that he said is that the purpose of the repeal is to focus Inland Revenue’s resources on the things that this Government prioritises. But if New Zealanders want to intervene in the annual reporting process and get the information that was provided by the Act, then the same amount of resource—in fact, probably more—will have to be deployed responding to the requests of New Zealanders who want that information. So it will save no resource, other than making it harder for New Zealanders to access the information that the Act provides for, right? It’s an inconsistent argument. It doesn’t reduce the amount of resource that Inland Revenue will have to devote, but it does make it less transparent and less accessible for New Zealanders.

Again, the arguments that the Government side have laid out during the course for why the Act is being repealed are spurious. They’re so thin. They’re wafer thin. And the next question that I’ve got is: why the urgency? Why is it such a rush? Why is it so important, so desperately important, that we repeal an Act that provides transparency about the tax system at this point?

It’s because they don’t want to know. They do not want to know what the reports provide. The Minister himself said that regardless of the amount of work that Inland Revenue have already put into the first report this year, he doesn’t want to see it. He’s not received it. He’s not asking for it. Any work that they’re currently doing will have to get binned. Even though the report is due, effectively, tomorrow in real terms, he doesn’t want to know what’s in that. He doesn’t want New Zealanders to know what’s in that, because they already have a pretty good sense that it’ll just show the same thing that we’ve already discovered through other work that Inland Revenue have done, which shows that we have a deeply unfair and unproductive tax system in this country.

That’s why they want to repeal the Act, that’s why they want to repeal it under urgency, that’s why they want less transparency in the tax system—because the interests that that Government serves do not want New Zealanders to know where the money comes from that pays for the public services that the Government provides. They don’t want to know and they don’t want New Zealanders to know, because all it would do would be to inform us that we have a system where the wealthiest New Zealanders pay less as a proportion in their tax base than other New Zealanders. [Interruption]

All of these people on the other side are sitting there going, “No, it’s all to do with hard work. It’s merely a function of hard work.” Well, let me tell you something. The wealthiest New Zealanders pay less proportionate tax than the people who clean the offices of the members present. You try and tell those people who come in here in the dead of night to vacuum their floors and clean their desks and empty their rubbish bins that they don’t work hard and that those people should continue to pay more tax as a proportion of their wealth and income than the wealthiest New Zealanders. That’s what they’re saying. That’s what they’re hiding in repealing this Act.

The interests that they are serving are the people who made the largest donations at the last election, which were the millions of dollars that went from the richest New Zealanders to the parties that formed the Government—millions and millions of dollars in donations from the wealthiest New Zealanders—on the basis that those tax affairs would be covered up again and we would continue to operate in the same darkness that we have for a very long time.

So you really have to wonder, when the parties of Government got up to say during the course of the election campaign that they would be relentlessly focused on reducing the costs of living to New Zealanders, how much does the repeal of this Act reduce the living costs of New Zealanders, given that there are 2½ fulltime-equivalent resources devoted to it? If you divide those 2½ people by the 5 million New Zealanders, how much will our living costs go down by repealing this? It is completely inconsistent to say that average New Zealanders will see their cost of living go down by having a less transparent tax system.

They’ve said that they don’t want glossy reports. They don’t want that kind of thing. But at the same time, they’ve said that they’re going to be a Government that’s based on facts and evidence—but only facts and evidence that are convenient to them and the people that support them. They’re not interested in facts and evidence that are inconvenient to their political agenda. It is as ideological a Government as one I have ever seen. It is not based on facts and evidence at all. It is based entirely on serving the interests of the people who put them into power.

So when you come to the question of trust and confidence, there is no reason why New Zealanders should have trust and confidence in this Government, when one of its very first acts—other than making bus fares more expensive for our poorest New Zealanders; other than making it more expensive to decarbonise as a country; other than to make it more fragile for people to walk into employment, on the basis that they could get fired for no reason within the first three months of that employment, on the basis that they’d make it harder to actually bargain for better wages, so that’ll drive wages down, as it always has demonstrably over the course of the last three decades.

I can see the Minister asking me to move on and to speed up, because he wants to go home for Christmas. He wants to get out of here and he wants to go home. But it is his responsibility that this bill is in the House and it is his first act as a Minister of Revenue that we are debating this, and all he wants for Christmas is a little less transparency. All he wants for Christmas is to repeal an Act that made it obvious what the state of our tax system is in this country, and then he wants to get out of here and go home and have it all be done by Christmas so that people forget about it and don’t worry our pretty little heads about the fact that the status quo is being preserved and the poorest New Zealanders will get poorer and the wealthiest will get wealthy under this Government. Because that is exactly the agenda that they have outlined in the first three sitting weeks of this Government.

New Zealanders can look forward to a lot more than that. They’re putting it through under urgency because they want to get it out of the way. They want to do the stuff that’s unpopular, they want to clear the decks, and then they want people to forget about it. Well, we won’t forget about it. We will continue to hold them to account for their inequitable and unjust policies for the entire time that they remain in Government. The signals that they have sent to New Zealanders about what their priorities are and whose interests that they are serving over the course of the last three weeks, and in particular over the last set of bills that we have debated in the course of this week—it is a cruel Government. It is a Grinch-like Government right before Christmas for the vast majority of New Zealanders, except for those people who backed them in the election campaign.

Thank you, Mr Speaker. There must have been some really bad lobster over in Doha. This is a great bill and I commend it to the House.

I’ll just take a short call in this third reading, to say that there’s nothing that quite sums up this Government but to be finishing with a petty, backward-looking piece of legislation that does the opposite of what it purports to do.

So throughout the quite long debate that we’ve had on this bill, what we’ve been able to establish is that the Minister of Revenue thinks that there should be some principles, doesn’t quite know what they are, thinks that they’re in the annual report—which they’re not—and opposes a bill that actually outlines some principles.

We believe that a tax system should be fair. We believe that a tax system should be progressive. We believe that a tax system should be open and transparent. And that’s what the National Government is finishing their time with, in this year—is to take away transparency. We will see more of that, I’m sure. I oppose this bill.

I’d like to commend this bill to the House.

Thank you. What I’ve watched over the last day is what I would describe as wilful blindness. What we are going to have is the non-information of people in an area where we desperately need information. But also, we have a responsibility to the New Zealand public to make sure that if we’re taking their hard-earned money, we know that we are doing so fairly. That is what the Government is turning its back on today. What a sad day it is, and what a lot of work we’re going to have as Opposition, and what a lot of fun we’re going to have pointing out what a lacklustre Government we have, one that does not give us vision, does not give us hope. We’ll see you here in the new year. Happy New Year.

This is an excellent bill and I commend the bill to the House.

In the spirit of Christmas, A Christmas Carol comes to mind today, and when I think of Ebenezer Scrooge, I’m not going to cast aspersions on the misers on the other side of the House. When I think of Ebenezer Scrooge, he saw the light, and the ghost of Christmas Past, which is that this Government brought in the principles to make the tax system fairer. But the Christmas present that that Government is giving is, basically, removing the transparency that the New Zealand public can depend on to ensure that the incidence of tax is fair.

Therefore, I do not commend this bill to the House. But I do want to wish you, Mr Speaker, manuia le Kerisimasi ma le tausaga fou. That’s the end of this speech.