Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Bill

I have been keen to speak about this part of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Bill right through the debate. Members opposite have held me back on various occasions, saying that the place for the debate on the delay of child support legislation is in Part 3 of the bill. I see that the Minister of Revenue, who has resumed responsibility in the chair, is indeed the Minister currently responsible for the bill. No doubt, that is an indication that he is preparing to defend this embarrassing—embarrassing—back-down, as the Minister responsible for having backed out of the commitments he made to try to make the tax system fairer for those who deal with the child support system.

Those of us in electorate offices already know that the child support system, payments, and so on cause a great deal of anguish. The anguish, of course, originates often in very unhappy family situations, where relationships have broken down. But often that pain is exacerbated by difficult arrangements, or arrangements that have been agreed on but not met, and so on. It is the stuff that electorate offices around the country deal with and that members of this House make their best efforts to resolve in a fair manner according to the law. Nobody will ever be entirely pleased with the child support arrangements. There will always be people who are better off or worse off as a result of changes.

It is fair to say that when we debated these changes in the select committees that have debated them in recent years in the term of this Parliament, we have thought about the issues of what is the fairest way and what is the trade-off with complexity. There is no doubt that the new formula the Government introduced is more complex. It is complex because the Government believes that that is a way to reach a fairer outcome, or that is the rhetoric that it has put forward. There is also no doubt that this is a big shift in responsibility on to, often, the mothers, the primary caregivers, who are likely, in many cases, to receive less support in terms of the childcare they give and the funds they are entitled to. But, regardless of all of that debate, the Government then put forward a proposal to implement a new formula. It acknowledged that along the way there would be a high cost involved in retraining staff in the use of this formula. How it expects ordinary New Zealanders to understand it is not clear, but the Government said that it was fairer. It said that it was willing to spend a whole lot more money in the bureaucracy in order to train officials around the country to use the new formula, all on the basis that they would implement these changes to our child support systems.

Then, just a few days short of Christmas, we had a press release, out of the blue—and “blue” is the right word—from the revenue Minister, announcing that the child support overhaul would be delayed. The Minister, if I can quote him, said: “… Inland Revenue has informed me”—indicating, of course, that the Minister was unaware of where the legislation soon to be implemented was at this time—“it needs more time to implement the new scheme to the high standard that the government expects”. Well, these are wise words. These are high-sounding words. But, actually, let us not forget that the Minister is responsible for the implementation of this legislation. He is the one who brings this bill to the House and says we need to make changes in this Parliament to make the system whatever he wants to make it—fairer or reasonable, or whatever the line is that he is pushing. Parliament spends quite a lot of money, effectively—in terms of all the salaries for the support staff and so on in this building—passing law. And then, in this case, we have a Minister coming back to say: “My department has just informed me that the legislation soon to be introduced cannot be introduced.”

It is the second time changes have been delayed. The Finance and Expenditure Committee held back the changes previously, and now we have a situation where the Minister is pushing them out yet again. The change affects over 200,000 children in New Zealand. Many, many families will have taken legal advice on the basis of anticipating these changes, as to what it will mean to them. And then, on top of that, many of them will have taken financial advice—[Bell rung] Mr Chair.

The CHAIRPERSON (Lindsay Tisch): Dr David Clark. Part of what you are talking about is in Part 2, and we have already—

Sorry, this is Part 3.

The CHAIRPERSON (Lindsay Tisch): I know.

This is expressly Part 3 that I am talking about.

The CHAIRPERSON (Lindsay Tisch): Well, part of what you have been saying has been on Part 2, so can you be specific on Part 3, and draw my attention to where—

Part 3 of the bill is about the Minister’s Supplementary Order Paper 413. I am debating the Minister’s Supplementary Order Paper 413.

The CHAIRPERSON (Lindsay Tisch): OK.

Thank you, Mr Chair. I should have perhaps been more explicit in that regard. You are quite right. So the Minister’s Supplementary Order Paper introduces these delays, which will see 210,000 children affected. Many families will have taken both legal advice and then, subsequently, financial advice because their personal circumstances will have changed as a result of the proposed changes to be implemented. Now the Minister, announcing a few days before Christmas, has told them that they must again seek advice because the changes will not take place now; they will take place later.

This affects not only the obvious 210,000 children in the kinds of ways that one might expect in terms of primary care arrangement, who owes what to whom, and so on, but also in ways that members of the public may not be aware of unless they are facing the circumstances themselves, in terms of whether they are responsible for payments for teenagers attending educational institutions. That has changed from one minute to the next with this announcement from Mr McClay. It is not only embarrassing for the Government that it has passed this legislation and is now rapidly backing out of it because it cannot implement it, but also horrific for these families who are often in straitened circumstances, dealing with difficult relationships, to discover that they now have to rearrange their affairs, take further financial advice—which often, in many cases, they will barely be able to afford—and perhaps additional legal advice, in order to rearrange their affairs once again for a delay. This Minister must take responsibility for this embarrassing back-down by the Government, this embarrassing change.

Of course it was doing it because it wanted to avoid another Novopay-style debacle. This Government has spent $50 million, let us not forget, on international consultants in trying to get the system right to cope with this change. We have been told in the select committee that $50 million had been spent already on international consultants, who have come back with the decision that in principle—in principle—the system needs to be upgraded. We knew that 5 years ago, but in principle the system needs to be upgraded so that changes can be made that will affect this kind of legislation, which is before the Committee right now and contained in Supplementary Order Paper 413.

This is a very germane point because without a system that can cope with these changes we will see more parliamentary time wasted. We will see more embarrassing back-downs by the Minister of Revenue if the system is not up to scratch. The Prime Minister promised 2 years ago—well, he did not promise; he used some clever words. Let me quote him so that I do not quote him out of context. Two years ago on Valentine’s Day the Prime Minister said that tax policy was being held back because the computer systems “can’t actually support radical changes from Government.” He also said: “You don’t want to be in a position where Parliament is held hostage to a lack of technology,”.

💬 Paul Goldsmith: That’s a voice of thunder!

Those are the Prime Minister’s words, Mr Goldsmith. Those are the Prime Minister’s words. We should be outraged—it is a voice of thunder, because we should be outraged. The Prime Minister said 2 years ago that this situation here should not occur, and I am interested to know what the Prime Minister is doing to hold his Minister to account for this kind of embarrassing back-down in the House that costs millions of dollars of taxpayers’ money to correct as we end up debating the issues again, and that costs many more millions of dollars, I do not doubt, in expenses for those who take financial advice around the country—the inconvenience of having to change financial arrangements, the personal time that is wasted, and the misery that is created by chopping and changing and trying to create a fairer system. Well, it is not fair if it messes ordinary New Zealanders about.

It goes explicitly against what the Prime Minister said. The Prime Minister has thrown $50 million at the problem, but we have got only to the point where we have an in principle agreement that there is a problem and that more business cases will be developed. Well, more business cases and more business cases—we can imagine tens more millions being spent telling us that, more than in principle, it is in actuality that we need to change the system. Well, it is blatantly obvious to ordinary New Zealanders. It is blatantly obvious to us on this side of the Chamber that the system needs upgrading. We want the Inland Revenue Department to get on with it. It needs clear direction and clear support from its Minister, but clearly it is not getting it, because the Minister was not listening to the Inland Revenue Department when it raised this issue with the incoming Minister 5 years ago when National came into Government.

This is a Government that is clearly not prioritising these issues. It is clearly not prioritising creating a fairer tax system for New Zealanders, and so we have this kind of child support issue, which I want to speak a little bit more about the detail of. What we see in new clause 122, referred to in Supplementary Order Paper 413 and covered in Part 3 of this bill, is a change in the dates. Effectively, all of the way through we see the date pushed out by 1 year—consistently throughout. We have this document, which I will hold up for the benefit of those at home. This is the Minister’s Supplementary Order Paper. I have highlighted where it says “Child Support Act 1991”, and there are dates—pages and pages of dates—where we have postponement. We have the Government postponing changes that affect over 210,000 New Zealand children.

I am looking forward to the Minister taking a call to explain this embarrassing back-down, to explain to ordinary New Zealanders why they should have to rearrange their financial affairs once again—where their most intimate and difficult arrangements have been settled and made in the interests of their children—and to explain why they should have to revisit them because of his Government’s inaction on a system it was told 5 years ago desperately needed changing. This Minister is relatively new to these responsibilities. I will give him that, but I will not give him too much slack, because he was the chair of the Finance and Expenditure Committee before that. He knows where these bills come from. He knows their history. He has taken over, and he is also a Minister of the Crown and has the responsibility for sorting this out.

The Prime Minister made a promise 2 years ago that it would be sorted out, and it has not been. This promise that the Prime Minister made needs to be honoured in the interests of creating a fair tax system that can implement the kinds of changes that give New Zealanders security in their future planning for their support payments for their children, for their personal arrangements for their children, and for the futures that those children represent, in theory and in practice. These are the children who will, hopefully, go on into the workforce and be earning a better future for New Zealand when those of us sitting in this Chamber are in our dotage. We depend upon these children, and they deserve the kind of certainty that this Government ought to be able to deliver.

The first system that sits in the Inland Revenue Department, the legacy system, was built in 1992, as we know. It is not new to the Minister. It cannot be new to the Minister. He has heard these things in the select committee. He knows that the system that we are operating on was designed 10 years before Facebook. It was designed before Google, for goodness’ sake! Hardly anybody uses computer software that is that old. This must be a priority, and we must get beyond a simple in principle agreement. We must get beyond spending tens of millions of dollars to point out the blatantly obvious. We must get to a point where this is fixed so New Zealanders can have a tax system that is fair and equitable, and where we can make other changes that will be in the interests of growing the economy.

Pro-growth tax reform is desperately needed. In the Prime Minister’s words, you do not want to be in a position where Parliament is held hostage to a lack of technology. We must move on. We are not the only Western country with a tax system. It is not rocket science. It cannot be rocket science. This Minister needs to step up to the plate, explain the embarrassing back-down by the Government, apologise to those New Zealand families who have been affected—make an apology on behalf of the Government—and lay out a credible plan for fixing this tax system so that we all can have the surety that those things that ordinary Western democracies take for granted, like education systems, health systems, roads, and so on, will be funded into the future because we have a tax system that can actually collect the tax that is due and a tax system that can implement change that is in the interest of New Zealanders.

So I am looking forward to what the Minister has to say. I am looking forward to his apology for this embarrassing back-down, but, more than that, I am looking forward to the Minister outlining a credible plan that details when we can expect a new system to be in place that can cope with changes, that can cope with a capital gains tax—which would mean pro-growth tax reform for New Zealand—that can cope with changes to the child support system in a timely manner as and when they are needed, and that can cope with creating a better New Zealand, which we on this side of the Chamber want to see. It is a New Zealand that is signified by fairness and opportunity for all citizens.

The question was put that the amendments set out on Supplementary Order Paper 413 in the name of the Hon Todd McClay to Part 3 be agreed to.

Amendments agreed to.

Part 3 as amended agreed to.

Schedule 1 agreed to.

Schedule 2