Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill

This House is actually contemplating something that is extraordinary in a First World democracy. What the Government is seeking to do is to introduce a bill, the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill, arising from an agreement that it has not got. You would go a long way around the First World and not far in the Third World, or parts of the world, to find where that happens—where you bring legislation into Parliament, and an agreement is required to give the legislation effect, yet you have not got an agreement.

There are all sorts of members over there who claim to have experience in life, in law, in business—in all sorts of areas. They are sitting there condoning this appalling public policy. They have not got a murmur or a syllable to defend themselves. I ask Mr Bennett over there, who is nodding his head as he is wont to do, and as some do when they grow old before their time—there he is, nodding his head—whether the Government has an agreement on this. No. So what is the basis for the law that we are being asked to pass? He does not know, because it has not got an agreement. I find that hard to believe, and so will everybody watching Parliament today. Everyone watching Parliament today will say “Mr Peters and New Zealand First can’t possibly be right. Surely a sound Government would not do that.” But I am afraid to say that it is true.

The Minister for Senior Citizens’ only great glory is pursuing the SuperGold Card that New Zealand First started—and the only time she ever gets a cheer is when she says she is adding to that. I praise her for it. It is not enough, of course, because it is under threat, as everyone knows. Everyone knows that it is under threat. The Minister for Senior Citizens should sit back and tell us when we ever pass bills requiring an agreement, without first having the agreement.

Can I ask you this. If I am somebody who was born in New York 55 years ago, and I am living, for example, down in Queenstown or on Waiheke Island in the country that I adopted, that I gave sovereignty over me, that I promised I would be a good citizen of—New Zealand—why could I not expect that country named New Zealand to protect me like it would any other person living here legally?

💬 Hon Amy Adams: What about if you’re Chinese, Winston?

The Foreign Account Tax Compliance Act is not with China, Ms Adams. The Foreign Account Tax Compliance Act is with the United States. I know that party over there. Every time its members see Uncle Sam, and Uncle Sam asks for something or says jump, they ask “How high?”. I was around dealing with the United States before she ever got to Parliament, so let us not have any arrogant argument. That is a lawyer over there. She has got a law background. Maybe she should tell us more about her own family’s investment interests in parts of the South Island that are affected by the Resource Management Act. Maybe we should hear more about that, and probably we will in this campaign.

💬 Hon Amy Adams: Oh, come off it!

Oh, no—come on! That is what we will do. Come on is what we will do in this campaign, and real strong. I know that the Government members are going through their polling. They know that this rubbish in the papers yesterday and today is meaningless. I know how nervous they are. I know how many people in the National Party talk to me on the quiet, trying to get some sort of understanding. But our party is beyond being bought, unlike so many around here. Everyone knows that.

One last thing—I again ask these people, for whom democracy is of such little moment, where in the First World of democracies, like Australia, the United States, Canada, or Britain, you would ever be contemplating what we are doing here. The Congress of the United States in 2010 passed a law. It is now June 2014. We have not got an agreement, but the Government is ramming this bill through Parliament, which is why one party, New Zealand First, will not sell itself out. We will not buy it. We will not back it.

Kia ora, Mr Assistant Speaker. Ngā mihi nui ki a koutou. Kia ora. New Zealand First is not the only party opposing this bill. You have also got the Green Party, because although it is called the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill, what this bill should be called is the “National Party (Oil Drilling Subsidies) Bill”. I want to get on to the Foreign Account Tax Compliance Act provisions that the honourable member, Winston Peters, just touched on. But at this bill’s heart is an extension of $5 million in subsidies for one of the world’s wealthiest industries, the oil industry. This Government wants to fork out $5 million of taxpayers’ money for the oil industry, to see more oil drilling, risking more oil spills, and seeing more greenhouse gas emissions. That is not a good idea for New Zealand. This is not the way to build a richer New Zealand and lift our kids out of poverty.

When we are looking at the tax code—and we in the Green Party support tax reform—we should be looking at how we reduce the burden on Kiwi families. We should be looking at how we send the right economic signals through our tax system. How do we actually address tax avoidance, which the Foreign Account Tax Compliance Act tries to address? But when you look at it, there are massive privacy concerns. The fact is that the treaty has not even concluded its negotiations, yet here is the little old New Zealand Parliament signing up to a treaty that has not even been concluded. This treaty deals with 70,000 foreign-born residents in New Zealand. If they are American citizens and they have more than $10,000 in their bank account, they have to register in the US. It raises significant privacy concerns, surveillance concerns, and is an exercise in extra-territoriality. It is a big risk, and the fact that the treaty has not been concluded should, I think, raise alarm bells.

When we are looking at the tax code, let us look at the avoidance issue. Let us look at the economic signals we are sending through our tax system. But let us also look at how we can make it better, and that is why the Greens are proposing a capital gains tax on the family home. We want to see investment go to the productive sector, not into the skyrocketing Auckland housing market, driven on by speculators. At this election the Kiwi public has a clear choice. On the one hand is a party for the speculators, a party that wants to see more money being invested into housing—not to improve it, but to speculate. On the other hand, this side of the House wants to see investment in a productive economy and investment in an innovative economy. This is how we are going to see a richer New Zealand—a smart Green and innovative economy, and a carbon tax cut along with a capital gains tax on the family home are critical parts of that.

It is quite a surprising situation. When we are talking about tax reform, as we are with this legislation, it is not the National Party and it is not the ACT Party talking about tax reduction; it is the Green Party. It is the Green Party that wants to take $2,000 off the bottom tax threshold. It is the Green Party that wants to see a 1 percent business tax reduction rate. It is the Green Party that wants to ease the burden on New Zealanders. And who do we want to see paying? We want to send a message to the polluters, through the tax system, to invest in smart Green innovation. At the moment, National members, and the member sitting there barracking out, are quite happy for the taxpayer to pick up the tab to the tune of hundreds of millions of dollars to subsidise polluters. National wants to subsidise polluters. It is subsidising polluters, and it is doing that right now through our emissions trading scheme. It is time for a carbon tax cut and a capital gains tax really focused on avoidance.

But let us get to the issue at hand, which is fossil fuel subsidies. This bill extends the non-resident offshore oil rig tax exemption—$5 million of taxpayers’ money is going to foreign oil companies. This Government is pouring tens of millions of taxpayers’ dollars down these failed oil wells. It is National that gave a $25 million seismic survey subsidy, handed out on a platter, to the fossil fuel industry. It is National that presides over $46 million per annum in tax breaks for the most wealthy sector in the world—a sector responsible for the spike in carbon emissions, a sector responsible for a great deal of harm around the world. And it is National that wants to extend the $5 million non—resident oil drilling ship extension.

This is not the way New Zealand should be going. We should be embracing a smart Green innovative economy, and building a richer New Zealand. This is what the experts say. This is what the evidence suggests when you look around the world. This is what the brute economics is. While National stands up for the oil drillers and wants to see more fracking, drilling, and mining, and they want to see Denniston expanded, we are offering a real choice. It is a choice that is going to see more workers employed, more profits staying in New Zealand, and a more sustainable economy.

This bill is part of a long list of fossil fuel subsidies that you see under National. Globally, the International Energy Agency estimates we could have $610 billion every year subsidising fossil fuel globally. The international experts from the United Nations environment programmes and the International Energy Agency are all calling for reform, because that $610 billion, of which New Zealand is a component, could be better spent on lifting people out of poverty, giving people real energy choices, and building a resilient energy system powered by clean energy. Although Treasury is opposed to extending this, the OECD is opposed to it, and the International Energy Agency is calling for fossil fuel subsidies, National wants the taxpayer to face the risk.

I challenge any National member to go out to the election, go out to the constituents, and go out to the voters and say “Do you want us to keep propping up and subsidising with your money the fossil fuel sector—the oil drillers risking our beaches and our treasured wild places?”. Go on. Ask your voters and constituents whether that is what they want to see hard-working taxpayers’ dollars being spent on. I bet your bottom dollar that taxpayers do not want to be forking out for this. We want to see kids lifted out of poverty. We want to see our wild places and our animals protected. It is a clear choice we are seeing, and this bill is symptomatic of the clear choice we have this election. On one hand, that choice is a Government that is quite happy to risk the last 55 Māui’s dolphins by offering oil permits over their sanctuary, a sanctuary that is hardly providing sanctuary if the Government is quite happy for seismic surveying to subsidise the oil drilling industry to drill more wells. This is a Government that is quite happy to prop up the likes of Tīwai, and get it to stay in New Zealand for only a couple years.

This is a Government that this week, embarrassingly, had the first Environmental Protection Authority case declined. Remember that it was National’s Simon Bridges who went on television and said “I support the Trans-Tasman Resources proposal. I support more ironsands mining on New Zealand shores.” It was Simon Bridges who said that. He said he wanted to see this project go ahead. And it was Steven Joyce who was quite happy to front up again with taxpayers’ dollars, playing fast and loose with taxpayers’ dollars. It was Steven Joyce who offered up to $25 million to this foreign offshore oil company with Dame Jenny Shipley on the board. He offered it $25 million. But you know what? The project was so bad. The company had not done its homework. The risks were so great that even National’s Environmental Protection Authority had to decline it. That was the first one ever.

What you see is, on the one hand, the marine environment being the winner—the humpback whales and the Māui’s dolphins, which live nearby, are the winners—and National being the loser, because it is National that supported the proposal. It is National that said that this company had done its homework, yet the Environmental Protection Authority said the company had not done its homework. And it was National that was quite happy to throw taxpayers’ dollars at it, yet the Environmental Protection Authority said it was not going to happen.

So let us focus on a smart Green innovative economy. Let us build a clean-energy economy for New Zealand. This is a $22 billion annual economic opportunity. Investment New Zealand says that there is a $150 billion export opportunity in cleantech and green energy by 2030. That is what we want to embrace. That is why we are going to the election saying we will get to 100 percent renewables. That is why we are saying we are going to help Kiwis with more insulation under their roofs and with solar panels on the tops of their roofs through our low-interest loans. We are going to give Kiwis a fair deal, a fair and reasonable price, when they export surplus electricity to the grid. It is the Greens who are going to help those Kiwi start-ups and investments through the Green Investment Bank. It is the Greens who are going to send a proper economic signal through the tax system, through the carbon tax cut, to save Kiwi businesses and families’ money and to see a clean-energy economy.

This is why I am very happy to be standing here opposing this bill, because there is a better pathway to a richer New Zealand, which the Green Party is championing. This is what I think New Zealanders want to see. When we go and ask the public whether they want to keep subsidising the polluters, the oil drillers, the seabed miners—no. They want a fair go, a proper economic system that has leadership and vision and looks to the future. A smart Green innovative economy is a richer economy leading a richer New Zealand, and that is what we are going to continue to champion. Kia ora.

Mr Assistant Speaker, thank you for the chance to take this call. Particularly after that Green speaker, Gareth Hughes, there are a few things that need to be put on the record to get them straight. The first is actually around the Foreign Account Tax Compliance Act. The intergovernmental agreement has been signed, so when the Opposition, the Greens included, say that it has not been, that is just patently untrue. The intergovernmental agreement for the Foreign Account Tax Compliance Act has been signed.

We heard too just a bit earlier about the iron sands decision by the Environmental Protection Authority and how this is a defeat for the Government. This is a win for the Government in so far as we are the ones—in fact, it was my ministerial colleague sitting here in front, Amy Adams—who put in the system, unique for New Zealand, and for the first time these very decisions have to go through the Environmental Protection Authority.

We are thrilled that this decision is going through and that there has actually been a process to review this. Again, let us not shy away from realising that before the National Government, there were no protections of this sort. So when people think about the environment, they can rightly think about the National Party and its incredibly proud record here.

We are also hearing this discussion around clean, green energy. Well, there is good news for the Greens here as well. Since 2008, when only about 65 percent of New Zealand’s energy was clean and green, under a National Government that has risen to 75 percent. It has increased under a National Government because we too believe in smart, green technology and have been happy to embrace that.

We heard about the dolphins, of course—the Māui’s dolphins. For those who read the scientific journals, the debate continues about the different subspecies of Hector’s and Māui’s dolphins, but we heard yesterday from Nick Smith that it has been something like 30 years since there has been a specified sighting in the area that has been discussed, so we need to get to the facts.

Finally, particularly in relation to the Greens, there is this constant belief that you can drive the economy on the fuel of slogans—that if we just keep walking around saying “clean, green technology”, somehow everything will be fine. The trouble we have is that when we turn to the Greens and ask them what an example of this smart, green economy is, there are not really any answers. Again, it seems that the Greens believe that you drive the economy on the fuel of slogans, and that is unfortunate, because ultimately—

💬 Julie Anne Genter: Ha!

We just heard again a scoff, but, of course, no answer to what that is, though I did see there was a plan the other day to have 3D printing. I suppose it has something to do with Russel Norman’s desire to print cash—if you do it in three dimensions, you can triplicate the process. Of course, the oddity of the release of the plan is that the plan was to create a plan to create a plan to look at 3D printing—very, very odd.

The Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill is about taxation and annual rates. The National Government is continuing its tax approach. I think it is useful to point out for the House, because there has been a lot of debate over recent days, that 50 percent of the tax in this country is paid by the top 12 percent of earners, so I think it is important to put it into context. The corollary to that, of course, is that more often than not families—say, mum and dad and two kids earning the average wage—are almost tax neutral. In other words, they pay ultimately no tax because of the array of support that is in place, and I think it is important to note that to fill out the picture. This is a good bill. It is a necessary bill. It makes some minor changes around some things like employee allowances and, as the title notes, also around remedial matters. I will not go into those details, but I commend the bill to the House.

I came into this Parliament motivated by a concern about the growing gap between rich and poor. This bill, the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill confirms the 2010 tax changes made by the National Government. It confirms measures that have grown the gap between rich and poor in New Zealand. The 2010 tax package saw the top 10 percent of earners get over 40 percent of the value of the tax cuts. The bottom 20 percent got less than 2 percent of the value of those tax cuts, and any benefit they got was swallowed up in a GST increase to 15 percent, which went through at the very same time.

This is the sobering reality. We have a Government opposite that is content to protect the interests of the wealthiest few New Zealanders—the top 1 percent of earners—while the rest of New Zealand is going backwards. Today, in this bill, we are being asked to support these changes that will drive the gap between the very wealthiest and the rest of New Zealand. Here we are in this Parliament passing those changes through again. This is the most uncomfortable bit about this bill.

The bill will proceed anyway. The bill has the support of the National Government and its allies—those who have kowtowed the whole way through, content to see that gap between the very wealthiest and the rest of New Zealand grow and grow and grow. We have to pass tax bills because they make sure that the laws line up, that the taxes can be collected, and that New Zealand can continue to support schools and hospitals. But we must note that that support is dwindling. In real terms, support to health and education is dropping.

If we look at the health sector we see year upon year upon year the real value of support to that sector dropping and we know it. All of us in our heart of hearts know it. We see people come into our constituency offices with children they cannot feed properly. This is an outrage. This is an absolute outrage.

💬 John Hayes: A good concession speech.

Members opposite might find that amusing. They might find that a reason to make jokes—cheap shots. The people who are starving are not people who can defend themselves easily. But we on this side of the House have a view that New Zealand should have a much more positive future. We would like to see a New Zealand where everyone can get ahead; a tax system that is fair, that rewards everyone for the effort that they put into our society; a New Zealand that makes sure that everyone pays their fair share and that everyone gets the benefits of that to get ahead.

That is the New Zealand we would like to see on this side of the House. It will be a more positive New Zealand. It will be a New Zealand for everyone, not just for the very wealthy few. These people on the opposite side of the House do not even interest themselves in tax avoidance. We do not see any real measures here that are going to crack into that. We know that the Government does not even have a measure for tax avoidance. It could be a billion dollars a year—quite likely. That would mean that in 5 years’ time, if it caught all the tax avoidance that was going on, it would not have needed to do its asset sales programme. But it is just not an issue for Government members. They are content to preserve the interests of that wealthiest few. That is why they do not want a capital gains tax.

Labour will introduce research and development tax credits so those innovative firms that are making change, that are innovating, and that are creating export businesses can get ahead, because we know that is real money coming into the economy, which can support those public services that we all want. Nobody wants to see their neighbour’s kids not able to afford shoes to go to school. Nobody wants to see that. People care and Labour will support that kind of innovation that leads to that wealthier society.

We want pro-growth tax reform. We want a capital gains tax that pushes money out of the speculative housing sector and toward the productive economy. We want to introduce monetary policy that actually puts more money into Kiwis’ pockets, not into the banking sector. We want to introduce a universal KiwiSaver that facilitates that. We want to introduce a power policy that sees businesses paying more than $500 a year less on their power bills.

We want to make sure that our housing sector is properly looked after, that we actually have the houses necessary to house New Zealanders so they are not living in garages or in overcrowded housing conditions. We want a Government that puts people first. This Government is refusing to do that. It is putting through, year after year after year, the same taxes that confirm the growing gap between rich and poor, and it does not care. Members opposite are gesturing; they do not care. For them it is not an issue as long as the wealthiest few continue to get ahead.

In this legislation there are a couple of other anomalies I want to address. We have community housing entities that are, in this legislation, given a new framework. We have the Minister deciding who has charitable status and who does not. The Minister will have a wide-ranging discretionary power to approve or not approve charitable exemptions. The delegation to the Minister of the effective right to confer lower taxes on some and not others is bad law, plain and simple. Some taxpayers get a tax cut and some do not, and it is up to the Minister to decide. That is bad law. Geographic location will be taken into account, and household composition and income.

There is a bunch of criteria, but it was too hard, and part of the reason it was too hard was that this Government pushed the submission period for this bill through over the summer. New Zealanders were enjoying their well-deserved break at the end of the year when the bill was put through its consultation period. The Government did not want to hear the feedback. It did not want to hear why its bill was inadequate. The accountants and the tax firms told the Government “We’ll be back here sorting this law out later.”—and we will. We know that parts of this law will have to be amended, and that is because of the process this Government has run. All it was concerned about was pushing through these changes to give the Minister extra powers, and that is not good enough.

On this side of the House we do not want this kind of New Zealand. We want a New Zealand that does give everyone the chance to get ahead and to get a job, and we want tax policies that actually encourage employment growth. We want a monetary policy that gives the independent Reserve Bank the right to have other targets—not just interest rate targeting but, actually, employment targets. We want a Reserve Bank that has on its board representation from a variety of sectors. We want a Reserve Bank that makes sure that economic growth is in its sights, not just interest rates. Plenty of other countries do that; why not New Zealand?

We want tax policy that makes it easier for people to put money into productive investments rather than speculation in the housing sector. We want all of these other things looked at. We want to be a bit more hands-on, not just take our hands off and say “The growing gap between rich and poor is inevitable. It’s something that will just happen. Let’s just pass another set of these tax settings. Let’s just wash them through for another year. Let’s just watch that gap between the very richest few and the rest of us grow bigger and bigger. Let’s watch the capital accumulate for that top 1 percent.” That is what this Government is doing.

We used to be in the top third of the OECD in terms of equality. Now we are in the bottom 40 percent. It is very hard to get back from there, but a capital gains tax will start to set us on that track. It will not only help us grow the economy, which of course we want in order to afford those public services, but actually help to reduce inequality. It will help to cut down on tax avoidance, which we know is crippling New Zealand.

Last year the Inland Revenue Department found that 107 out of 161 high-wealth individuals, who control more than $50 million worth of assets in New Zealand, declared that their personal income in the last financial year was less than $70,000—

💬 Carol Beaumont: Unbelievable.

—unbelievable—the starting point for the top tax bracket. So these people were saying they had net worth over $50 million but they did not have earnings that put them in the top tax bracket. That is completely implausible, but for this Government, that is no concern—it is no concern at all. It passes the rates on to another year—another year, they go on. A Labour Government will bring about positive change. We will have tax policy that grows the economy, that puts people first, that grows employment, that actually makes a difference for Kiwi families, that makes housing affordable, and that will be positive for New Zealand.

This is the third and final reading of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill. Having heard that previous speaker, Dr David Clark, though, listeners could be forgiven for thinking that that might have been a leadership campaign speech. He spotted a gap, he spotted an opening, he took the opportunity—goodness knows why.

But, actually, we are talking about this taxation bill, an omnibus tax bill that is about fine-tuning the tax system. Prior to that, we had two other Opposition speakers who were mistakenly lamenting the lack of a signing of an “IGA”—an inter-governmental agreement—which had, in fact, been signed. There was a press release put out last week that said it has definitely been signed. The “FATCA”—which is actually the Foreign Account Tax Compliance Act, which is US legislation—led to the inter-governmental agreement. It actually makes it easier for New Zealand financial institutions to comply, and thereby it actually reduces the additional costs being passed on to New Zealand customers. That is a good thing. We have fewer costs and less compliance for New Zealand taxpayers. Surely that is a good thing. I commend this third and final reading of the bill.

Tēnā koe, Mr Assistant Speaker. I participated in the debate on the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill at the Committee stage and caught up with what it is about. I think that my colleagues David Parker and David Clark have outlined very clearly Labour’s view of this bill. Although we are supporting it, we have legitimate concerns and questions that have been asked throughout the process and also concerns about what is, essentially, a missed opportunity and a bill that entrenches inequality and unfairness.

I want to comment on a couple of things that have not been mentioned in the speeches. The first is the late amendment, which was included during the Committee stage, about the tax treatment of non-resident foreign fishing crew. I do not have any big problem with that, but surely there are more pressing issues around foreign fishing crew than putting something like this in a tax bill, not least of which is the damage to our international reputation. I would be really keen to know from the Government whether it intends to pass the legislation called the Fisheries (Foreign Charter Vessels and Other Matters) Amendment Bill, which is on the Order Paper and is supposed to address this appalling abuse that we have seen in our waters.

There is report that has just been published in the last couple of weeks by Stringer and Simmons around the Shin Ji scandal, one of the fishing vessels in New Zealand where the crew walked off the boat after alleging a range of abuse: sexual and violent assault, restriction of movement, physical and sexual violence, intimidation and threats, retention of their identity documents—hanging on to their passports—withholding of wages, debt bondage, and abusive working and living conditions. That article was originally written as a confidential report for the Department of Labour for the Shin Ji investigation, but the Government did nothing other than admit it had dropped the ball. I understand that the writers offered to take the investigators to Indonesia to facilitate the interviews and gather evidence from the crew, but that was declined.

I think that in this Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Amendment Bill there is a tiny, little change in respect of the tax treatment of foreign crews, but what we are not dealing with is the unacceptable situation where we have impoverished and destitute workers who have now returned to Indonesia and who have still not been paid their wages. I hope that the Government can muster the numbers to get that bill through. Mind you, we are running out of time, but I would have thought it was a priority to get those people their pay.

💬 Dr David Clark: Let’s hear from the next speaker.

Yes, it would be interesting to hear from the next speaker whether that bill is going to be passed before the House rises. I have also expressed the Labour view, during the Committee stage, that the National Government is applying inconsistent rules in this legislation. This bill deals with the tax treatment of employee accommodation for workers who are required to work away from home. We support the clarification of these rules—we do not want to see workers disadvantaged—and of course we want to see that happen, but there is inconsistency in that we have another bill, which, luckily, will not be passed before the election, where workers would lose their meals and rest breaks. It was John Banks who saved the cup of tea. Thank goodness for John Banks; he saved—

💬 Carol Beaumont: I bet he’s happy about that legacy.

Yes. So that bill will not be passed, but I am talking about the inconsistency between this bill and the other legislation. During the Committee stage of the bill the Minister of Revenue agreed that migrant workers who come to New Zealand and are provided with temporary accommodation in the Christchurch rebuild would be covered as well. That is good, but the irony is that many of these workers cannot get paid what they are entitled to. They have been brought here by immigration advisers who charge them obscene amounts of money, and have had their pay cut when they got here. There is case after case after case now of migrant workers who have come to Christchurch and cannot get paid properly. I think that getting tax relief on their accommodation might be a little bit low down on their list; they are struggling to feed themselves at the moment.

The Minister also justified the Government’s changes to accommodation payments under the Recognised Seasonal Employer scheme, where we bring in thousands of workers from the Pacific—mostly from poor villages—who come to New Zealand to harvest our fruit and vegetables. Jonathan Coleman, the immigration Minister a few years ago, actually cut the entitlement for those workers by making accommodation part of the calculation of the minimum wage instead of being additional to it, as it was under Labour’s scheme. He cut—

💬 Carol Beaumont: They keep mucking around with the minimum wage.

Yeah. He cut their pay. How mean can we be? We have an industry—an entire industry—in primary production that is reliant on poor workers from the Pacific to come and pick our fruit, vegetables, and grapes, yet National thinks it is OK to cut their pay so they do not even receive the minimum wage. They receive minimum wage including accommodation.

💬 John Hayes: That’s not true.

It is true. It is true, absolutely. You go and ask Minister Coleman. Then, as I have mentioned, there is the Government’s determination to cut meals and rest breaks. John Key has said that he will go out there and campaign on those changes. Bring it on, I say. Just how lucky can you be? I know that Labour will campaign on them as well, and I know what working Kiwis are going to say about those changes.

So we are still paying the price in this bill for this Government’s approach, where it is one rule for the top earners and another one for everyone else. It entrenches the tax changes brought in in 2010. They were unfair then, they are still unfair now, and they have added to the growing inequality. The gap in take-home pay between someone on $30,000 a year back in 2010 and someone on $150,000 a year grew by $102 a week as a result of those income tax cuts, compared with $16.15 for someone on a lower income, if they were lucky.

The cut for the higher incomes was not just greater but proportionately greater, so we have actually broadened and strengthened the income inequality there. The after-tax income available to someone on $150,000 a year increased by 5.9 percent—for people on $150,000 a year—yet those who were on lower incomes got nothing like that, of course.

There were a whole lot of other things, like the top 1 percent of incomes got 9 percent of all taxable income and 14 percent of the tax cuts. The top 10 percent got 34 percent of all taxable income and 42 percent of the tax cuts. Of course, then we had the GST bomb. John Key went to the last election and promised people that he would not increase taxes. He increased GST, and, of course, who were hit by that? Who were hit by that? The lowest-income earners, who have to spend every penny they earn and do not have the luxury of shopping around and choosing. They spend every penny they earn and they are paying more tax than he promised they would have to pay.

The bill does nothing to deal with tax fraud, and we have canvassed that. I think it is very disappointing that we are not seeing action in this bill to really do something about inequality in this country—income inequality and tax inequality. As you have heard my colleague David Clark spell out, Labour has a very positive programme for tax change—a fair tax system that includes a capital gains tax. We will stop the tax subsidies to speculators, who are just making it impossible for young Kiwis to buy a house. We are going to reform taxation around trusts. We will ensure more fairness between those at the top, middle, and bottom of the income scale through tax reform. What is more, we will substantially reform tax and simplify it for small business. I do not hear the National Party talking about that. This Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill is a missed opportunity. We could have done so much more.

As the sun comes up, it also sets, and it is certainly setting on the last speaker, Darien Fenton, and her party. I would simply like to point out to that member, who was not at any of the Finance and Expenditure Committee meetings that discussed the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill, that, in fact, a person and their partner with two children collecting an income of about $50,000 or below pays no tax at all.

💬 Hon Amy Adams: Zero.

None, zero, zip. This bill clarifies the tax treatment of employer-provided accommodation, accommodation allowances, and other payments provided by employers to employees to reimburse them for expenditure incurred. It will bring clarity for many taxpayers and minimise compliance and administration costs for many businesses and organisations. That is really good.

Can I please also challenge the comments made by the last speaker about the regional employment scheme by saying that people there are not paid the minimum wage. If that is the situation, those employers are operating beyond the law. They certainly do not do that in my electorate, because I keep a very close eye on them. When an employee is expected to work away from home or from their workplace for up to 2 years, employer-provided accommodation will be tax exempt. This exemption will be provided for 3 years for employees working on capital projects, and there is a separate transitional rule operating down in Christchurch.

This is jolly good legislation, completely misrepresented by the last speaker. I commend it to the House.

I rise to take a short call. I am speaking on the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill, which is an omnibus bill that deals with the Income Tax Act, the Tax Administration Act, the Goods and Services Tax Act, and the Child Support Act. I was not on the Finance and Expenditure Committee, so I am not going to go into the detail of some of the more technical matters—things like the tax treatment of black hole expenditure, the Foreign Account Tax Compliance Act, or even things to do with deregistered charities. But what I will talk about is around employee allowances.

First of all, can I say that many of the changes in this bill are about tidying up some of the petty rules that had been implemented under the former Minister of Revenue Peter Dunne, including things like the tax on plain-clothes police officers and accommodation tax on earthquake rebuild workers. Some of these changes are actually to tidy things up that the Government itself, with one of its shonky support partners, got wrong. I think it is fair to say that in dealing with tax, others—my colleagues Darien Fenton and Dr David Clark—have talked about some of the elements of tax policy.

I want to keep some of this simple. One of the groups of people who pay tax in this country who do not ever get to not comply, who do not ever get to not pay what they are due to pay, is, of course, wage and salary earners. Wage and salary earners, low and middle income New Zealanders, pay their tax. It is taken out before they receive their pay. They pay their tax. They pay their share. In fact, as my colleague Darien Fenton said, under this Government they ended up paying more GST, which, again, they cannot avoid. When they buy their food and when they buy the basic things that they need day to day, they pay their tax. They cannot avoid it, unlike the multimillionaires who avoid tax; those whom Dr Clark talked about who, in fact, have massive assets, and yet supposedly have incomes of less than $70,000 a year. This is just ridiculous. The fact of the matter is that you know people who control more than $50 million worth of assets have personal income of less than $70,000 so they do not pay tax. And then, of course, there are all of the other devices that those at the top use to avoid paying tax—things like company structures, trusts, and overseas bank accounts.

Why is that not something that the Government deals with in its tax reform? Why is it that there is plenty of scrutiny on beneficiaries and beneficiary fraud—and none of us would support people ripping off the system—but the same scrutiny is not put on those at the top? Those who have benefited significantly from the actions of this Government, those who got massive tax cuts while low and middle income New Zealanders actually had to pay more tax—why is it that there is not a focus on those people at the top who got the big tax cuts and many of whom are ripping off the system, unlike ordinary New Zealanders being paid wages and salaries, buying items with GST, and using all of their income, in fact, to survive?

I regularly visit budget services. I just want to say to people like Bill English who say that inequality is not getting worse in this country—Bill English says it is not getting worse—well, you tell that to the budget services. They can tell you how many more people they are seeing whom they would call the working poor. Forty percent of the people they see are actually in work and cannot make ends meet. They are the people who have been harmed by the tax policies of this Government. They are the people who have been harmed by the fact that this Government has no plans for our economy to strengthen our economy and to provide decent jobs that pay wages that people can actually live on. These are some of the structural challenges that we should be dealing with, but the Government just sits on its hands—business as usual, looking after its mates—and has no ideas. David Clark did a very good job of outlining the comprehensive and positive plans that Labour has to change those structural problems in our economy and have a brighter and more positive future.

The Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Bill has gone through the whole process of Parliament and is well canvassed by all political parties. We had the Committee stage this week so what it stands for and everything is pretty well known. It is turning into a bit of a tax debate here today—

💬 Hon Maryan Street: It is a tax bill.

—a wider tax debate, but I would just like to remind New Zealanders of two things. The Labour Party will go for a capital gains tax and that will hurt the productive sector of New Zealand. The Green Party is looking for a carbon tax, which will hurt the productive sector of New Zealand. It is not a tax break for New Zealanders. Remember, it is just shifting the tax burden. That is all it is doing. New Zealanders are smarter than that. They know that we have to earn our way in the future going forward, and they will support neither of those two policies. Thank you.