Land Transport Management (Regional Fuel Tax) Amendment Bill

The very first clause of Part 2, clause 7, applies GST to this regional petrol tax. If I had a dollar for every time I’d heard a lecture from the Rt Hon Winston Peters on the evils—and that’s the exact word that he uses, the evils—of putting a GST, a tax on a tax, I would be a very wealthy man. In fact I decided to google it because I thought I could remember at least two dozen occasions when I’d heard such a lecture from Winston Peters. Do members know how many times on Google you find Winston Peters damning a tax on tax or a GST on the fuel excise? Would anybody make a bid?

💬 Hon Member: A hundred!

Well, actually, the first time I remember a speech from Winston Peters on this issue was when the GST was introduced, in 1985. So I accept I’m talking over 30 years, but Winston Peters has been consistent, and Mr Google will find 234—234—references to the Rt Hon Winston Peters opposing GST on excise tax.

So, then, I come to clause 7 of Part 2. Just to remove any doubt, let me read to the committee what this section says. It says, for the removal of any doubt, the new regional petrol tax will be considered as the supply of a service for the perspective of GST. Now, I have to confess this is not the first time that Winston Peters has done a double back-flip, but I do challenge the New Zealand First members in the Chamber, maybe just this once, maybe just once in the history of New Zealand First, might it do what its leader says and stand by its principles, stand by those tub-thumping speeches that it’s given up and down New Zealand, saying that a tax on a tax is, to quote Mr Peters, “an evil”—an evil.

Then I want to say one other part, in respect of these provisions, and that is have members opposite given consideration to what this will do for the cost of living? Can I share with my colleagues a fact that I’m very proud of: if you look at every single Government in the history of New Zealand, since this Parliament first sat in 1853, no Government has as good a record on cost of living as the previous Key-English Government. The average level of inflation, the average increase in the cost of living over those years, was 1.6 percent, and that is something I’m enormously proud of. I’ll say this to you: I’ve fought 10 election campaigns; there’s only one of those—only one of those—in which the cost of living was not an issue. How many of my colleagues, on any side of the Chamber, can recall the cost of living being a significant issue in the 2017 election? It was not, and the reason it was not is because every National member, for nine years, regardless of what portfolio they had, was focused on ensuring that we did not impose unreasonable costs on New Zealand households.

So I challenge members opposite and the Minister in the chair, Phil Twyford, to tell us what putting GST on this regional petrol tax is going to do for the cost of living. We all know on this side of the Chamber that this will flow through to the cost of vegies, this will flow through to the cost of bread, this will flow through to the cost of your bus, and this will flow through to every single element of the economy. And here’s the sad fact: not a member of New Zealand First, or the Labour or the Green parties, give a toss for the costs that they are imposing on New Zealand families, and it will be the end of them.

Thank you, Madam Chair. Following on from my colleague’s contribution, I also want to mention GST, because, like Mr Smith, I recall the times when the Rt Hon Winston Peters has railed against a tax on a tax. He does it on rates; he’s done it consistently for years on fuel excise. Here’s his opportunity. Here’s his opportunity to show that New Zealand First does what it says on the tin. He can come down here; he can talk to the Minister in the chair and get a Government Supplementary Order Paper (SOP) in. The way I would suggest, just to help elucidate on what Mr Smith was saying, is zero-rate the GST on the regional fuel tax (RFT). The reason you would zero-rate the GST is because that way you still file it as part of the GST claim, so, therefore, the person could still claim the GST on the other components within the price of the fuel—so on the fuel excise, for instance. If it was to be exempted, if you exempt the regional fuel tax, there is a risk, then, that that might actually prevent a claim on the rest of the GST within the petrol price.

So I would suggest and I call on the Minister: work with your officials, Minister. Put together a Government SOP—it wouldn’t be a difficult one to do. In fact, go a bit further: don’t just zero-rate the GST on the regional fuel tax, be bold. New Zealanders are facing the very real likelihood of further increases in petrol price beyond your extortionate regional fuel tax. They’re facing the real prospect, even outside of the islands of Waiheke and Great Barrier Island, of paying $3 or more a litre. Well, the Government is in a position to help them. First of all, put an SOP in to zero-rate GST on the regional fuel tax, but go further. Look at zero-rating not only the initial excise increases that the Government has planned over the next three years but also the existing excise. Help struggling Kiwis out. Give them an even break, because they deserve it, they work hard, and they’re fuelling your spending plans through the imposition of the tax. Give them a little bit back through a bit of relief on the GST.

The other item I want to talk about in this part is clause 5, the “Additional information: RFT schemes”—the reporting which the agency has to make to Government, to New Zealand. If you look on the face of it, it looks pretty simple—

💬 Hon Ruth Dyson: What clause?

—just telling what the RFT is meant to do, the project that it’s being used on, but I think there’s an essential ingredient that’s missing from these items. The essential ingredient is about the quality of the spend. What it isn’t doing is it isn’t tracking—

CHAIRPERSON (Poto Williams): Order! Could I just ask the member to tell me what clause he was—

Clause 5, new section 34B, “Additional information: RFT schemes”. Sorry, not clause 5, it is clause 10(5), sorry.

CHAIRPERSON (Poto Williams): Thank you.

Clause 10(5), new section 34B, “Additional information:”. It’s about the agency reporting to Government and therefore to New Zealand. It does report on what the tax is being spent on, what’s in the programme, but what it doesn’t do is report on either the quality of the spend or the benefit realisation for the programme that is being signed off for the tax to apply to. I think it’s actually important that, because so many of these projects can last a great deal of time—span, indeed, multiple years—the agency is showing to Government and to New Zealand that the programme, the project that hard-working taxpayers’ money is funding, is, indeed, on track to deliver the benefits it said it would, and, in particular, that the quality of the project as it was first signed off still applies.

There are clauses within this bill that allow for amendment to the regional fuel tax if new circumstances come to light. So what might start off as 5c a litre—I could laugh at that, because I doubt that any one of them will come in at less than 10c a litre—because the Minister has the power, via an Order in Council, to increase the RFT over 10c a litre anyway, then the variance provisions that exist in Part 1 of the bill could mean that the fuel tax could be increased part-way through the project, and therefore the whole quality of that project should be reassessed.

So I call on the Minister—a simple SOP, a simple change to this to make sure you’ve got quality, items of quality of spend, and the anticipated benefits tracking so that through the lifetime of the project, you can give certainty to Government and certainty to New Zealanders that the taxpayers’ hard-earned money that is being fleeced from their back pockets is at least going to deliver the benefits for which it was anticipated. I think that will be a very wise thing to add.

Thank you, Madam Chair. Kia orana to you. May I begin the first of these contributions on Part 2 of this bill by endorsing the comments of my very good colleague the Hon Dr Nick Smith. I was a little alarmed when he spoke of the vast benefit of his experience, of fighting 10 elections, to realise I’ve fought nearly as many as he has and yet I still haven’t been here for anything like half the time. But I’m learning, and I’m catching up, and I’m hoping that if I spend as long here as the Rt Hon Winston Peters, I just might, finally, match his record.

I do want to associate myself seriously both with his comments and the comments that Brett Hudson has just made. I was very encouraged to see Jenny Marcroft with her head down as Mr Hudson was speaking, because I assume—

💬 Hon Dr Nick Smith: She’s embarrassed.

No, I assume—well, she may have been, Dr Smith, but I wouldn’t possibly wish to comment on that. More importantly, however, I think she was taking on board the advice we were both giving her: that, as a very diligent—and I know she’s a well-intentioned New Zealand First member; clearly she was, indeed, writing that amendment, as was being suggested to her. I look forward to reading it, and, in fact, I’m happy to pledge my support for her amendment, as long as it is tabled with the wording that has been suggested that essentially says the New Zealand First Party should finally be true to its principles.

💬 Hon Ruth Dyson: Give Part 2 a go.

Yes, I am talking about Part 2, Ms Dyson, and I want, in particular, to say I’m pleased to see that the Minister in charge of the bill, Phil Twyford, is still in the chair, because I’ve got a couple of questions and a couple of points I’d like him to comment upon.

The first is that under clause 7(3), “After section 5(6B), insert:”—and in the third line there we’ve got a line that I think might be a drafting error, and I’d like the Minister to have a look at it and clarify. What we read there is “for a supply of services in the course or furtherance of a taxable activity carried on by the New Zealand Transport Agency”, and I wonder whether that word “on” is really meant, or whether it should, in fact, be the word “out”. If it should be “out”, then I would suggest that “on” needs to be taken out, and we need to consider an amendment, because I worry very much that sloppily drafted legislation can have all sorts of unintended consequences, beyond the fact that this is already a bill that is clearly going to hurt New Zealanders the length and breadth of the country.

If it is not a drafting error, could I ask the Minister, please, to explain to us what “carried on by the New Zealand Transport Agency” means, because when I think of the expression “carrying on”, it normally means playing up, acting the goat, doing all sorts of strange things, and I can’t imagine for one moment—even though that may be the way most members of Government parties carry on in their activities outside this Chamber—that they intended to write that into the legislation.

I’d also like to have a look at section 5(6BB)(b), inserted by that particular clause 7(3): “any amount of RFT rebate paid under section 65X … to a registered person is treated as being consideration for a supply of services in the course or furtherance of the registered person’s taxable activity to the extent to which the RFT rebate relates to fuel used by the person for, or available for use by the person in, making taxable supplies.” Well, thank you, “Sir Humphrey”; I’m sure we’re all absolutely clear about what that means. Could I ask the Minister in the chair, please, to tell us in English: what on earth does that mean? In particular, if we’re going to be passing clauses of this type into legislation, making them the law of this land, we all ought to be able to understand exactly what it means, and, in particular, we need to know why it is necessary. I assume, from the fact that the Minister is at the moment busily texting one of his officials to find out the answer, we’ll get that fairly soon, but could he please explain to us: what does that mean?

I also would like to talk, if we go over the page on to page 28—and I must admit I initially thought, “Well, there are far fewer pages in Part 2 of the bill. We might not have as much to talk about.” But, in fact, I think that one of the most insidious aspects of this bill is to be found in clause 10(5), inserting new section 34B, “Additional information: RFT schemes”. There we read, “The regional council of an RFT region”—not “of the Auckland region”; “of an RFT region”. So if anybody listening to this debate around the country tonight was in any doubt whatsoever that this doesn’t just apply to the Auckland region, there, I’m afraid, their hopes are dashed, because where it refers to “an RFT region” it is quite clearly the Government’s intention that this is coming to a place near you, New Zealanders. Every one of us is going to be affected. They didn’t tell us that at the outset. They’re sneaking it in. It’s a particularly nasty, sleazy way of dealing with this issue, but here we’ve got the proof: any “RFT region”.

I’m glad that we’re having this debate and examining in great detail—and I say great detail—the GST elements of the regional fuel tax, because I know Phil Twyford gets worked up and very unhappy when we talk about the fact that this legislation is full of misleading statements. They said one thing in an election, but they’ve come to the Parliament with something different. If there’s anything that highlights misleading statements out there, it’s the fact that they keep saying, “Regional fuel taxes are only 10c a litre”—or actually that they’re not putting 25c a litre’s worth of new taxes out there for New Zealanders. The reality is these taxes that they say are only 10c a litre are 11.5c a litre. This is an 11.5c a litre regional fuel tax. Phil Twyford, through this legislation, isn’t getting just the power to put 10c a litre on taxpayers in Auckland; he’s giving himself the power to put fuel taxes on motorists in regions around the whole country, not at 10c a litre but at 11.5c a litre. And so I hope that the members opposite are more honest with their voters and with the public out there when they’re talking about regional fuel taxes, because it’s not 10c a litre. It’s got GST. Let’s stop misleading New Zealanders about how much they’re paying.

We also need to remember that anything that they put in place when it comes to taxes is cumulative, and when it comes to GST and comes to all of the other taxes that they’re wanting to put on to motorists, it all adds up to 25c a litre. I’m also pleased that we’re giving a lot of consideration to this particular part, because clause 10 in there, inserting new sections which would make amendments to the Local Government Act, has a lot of information in there that we should be debating, and we should be coming up with new ideas about what councils should be reporting on. I’d like to signal this side of the Chamber is working on some new amendments, because we quite enjoyed the hour’s worth of voting on Part 1, and we think it’s—

💬 Hon Ruth Dyson: You didn’t win a single one.

Madam Government chief whip—it’s probably something that she’d quite like to repeat, as well. But that clause making changes to the Local Government Act around what councils should be reporting on in their annual report is very important, and the very reason why it’s so important is because this legislation—giving power for taxation—is not just an Auckland issue. It’s something that voters and the public around the whole country will need more information on, because they were misled into thinking that this bill was only around Auckland, when it’s not. And so for councils and regions in the future, when the Labour-led Government puts in place regional fuel taxes on every—every—region around the country, which they’re legislating for, it’s important through these particular reports that will be produced by local government that we see hard evidence about why it’s important for those regions.

I say it can be funded elsewhere. I say it can be funded in a different way. I say that the Government has the ability to fund transport infrastructure without the need for regional fuel taxes. But if there are going to be regional fuel taxes in regions around the country that weren’t expecting to have to pay more taxes thanks to Phil Twyford, that weren’t expecting that they’d have to pay fuel taxes higher than 10c a litre because the Minister is writing regulation-making powers that give him the ability to put fuel taxes at a much greater rate than 10c a litre, they deserve to have this information.

But, in fact, the information that is there in those local government reports should not just be limited in the way that’s in this bill; it should be quite expansive. Now, a debate that we’ve had a lot in this Chamber, through questions, and a debate that we’ve had in select committee is around the issue of price spreading. So I say that local governments, which pride themselves on being involved in every nook and cranny they can possibly find out there in their region, should be looking intensively at the issue of price spreading. They should be looking at the issue about affordability as well and how it’s going to impact the lowest-income people the most.

Because I know those people that are elected to local councils, whilst we expect them to stick to core services mostly, they like to spend a lot of time caring about well-being and the cost of living and all of those other issues that affect the people in their area. So I say that when it comes to regional fuel taxes and when it comes to local government annual reports, they should be looking seriously at the cost and the impact on people that the Twyford taxes are going to be putting on people in their particular regions. When it comes to local government caring about the well-being of individuals and how they reported it, I think they should be looking at, for example, South Auckland, where the people who are the lowest-paid people in the country, the people that—[Time expired]

Thank you, Madam Chair. It gives me pleasure to speak to Part 2 of this bill, and I want to come back to a comment that was made by the Hon Dr Nick Smith, “pay more and get less”. And for the people that I represent, that’s exactly what these changes mean: $5 billion taken out of the State highway network, most of it into Auckland; a new tax that we’re told is mostly for Auckland, but if you read the legislation it can be rolled out anywhere in New Zealand. And who I want to represent are the motorists and the constituents that are actually going to be paying for these costs.

I want to specifically talk about transparency, because, actually, this is a 10-year tax. Once it comes in, it is in there, boots and all—tax and the GST committing everybody who buys fuel in that particular area for 10 years. It’s clear in this part of the legislation, as the Hon Tim Macindoe said just previously, that it can be used anywhere in New Zealand.

So I want to come to a specific clause in Part 2, which is clause 10(5), which inserts section 34B, which is about additional information required for regional fuel tax schemes. It says in subsection (1), “The regional council of an RFT region, in its annual report, must report on—(a) the revenue from an RFT scheme paid to the council by the Agency; and (b) how that revenue was applied by the council, including to which projects and for what purposes (for example, capital expenditures, debt repayment, operational expenditures); and (c) progress with respect to the programme of capital projects supported by the RFT scheme.”

I acknowledge the Minister of Local Government here as well. I’m yet to read and yet to see less than 1 percent of the population I formally represented ever read an annual report. We are making a tax here for 10 years that everybody’s going to pay, and all we ask the council to do is simply report it in a document. To the Minister, I say that I actually think we need to do more, and I propose an amendment in my name, which amends section 34B, in clause 10, by adding new subsection (3), which says that regional councils are required to write to all electors annually, after their annual report, to inform them on the progress of the RFT scheme in their region.

I do that because I note that every piece of expenditure in this particular Parliament is looked at annually, every piece of expenditure in a local authority is looked at annually, and every three years, every ratepayer in that local authority gets to look at the long-term budget, yet in this case, all the legislation currently provides for is that we write it in an annual report. I don’t think that goes far enough.

With taxation come some obligations, and the obligations are that members in our community need to understand in a very direct way how their money is being used. We insist on that in consultation requirements under the Local Government Act, and we insist on it, actually, in this parliamentary process. Yet here we have a taxation regime that largely says, “Set it in place, get some community agreement at the start, get ministerial agreement, and then leave it for 10 years, and simply report.”

I don’t think that goes far enough when we’re going to charge motorists up to 11.5 cents per litre, without the Governor-General’s agreement to go higher. Fuel excise taxes are going to go up by 12c in the next three years. And I actually think this is a big, and now a growing and bigger, part of people’s lives, and they need to be informed, just like any other business or any other local authority would, on the impact on them, because, in my view, when you tax people you have an obligation. You have an obligation to show them how it’s being used and whether it’s still appropriate, and I remind this committee that things actually change. If there was a great global crisis you might want to actually adjust some of that stuff. People might want to have an understanding. So I think it behoves this committee to consider my amendment—and I’m asking the Minister to seriously consider it—to that provision in order to allow the communities that I represent, who will be funding this tax, to have very detailed and personal information.

Thank you, Madam Chair. They call themselves the Government of transparency—the Government of transparency and accountability. They say that they’re happy to be accounted for their actions and their performance. But we look at new clause 34B, “Additional information: RFT schemes”, and there are simply three paragraphs in subsection (1): (a), (b), and (c). They have to report on the revenue, how that revenue was applied by the council—well, let’s hope it’s applied to the capital project—and they have to report on progress. And that’s it. There are no key performance indicators. There is no measurement against any business case. There’s no reporting on whether the project is ahead of schedule or behind schedule, or whether the costs are blown out or in favour. Where is this transparency? Where is this accountability? I tell you, if you turned up to a board meeting at any half-decent company in the country and you said, “Well, I’m just going to report on the revenue, where I’ve spent it, and the progress.”, you’d get kicked out. This is not a—but it’s quite difficult, I guess, to report on something that is so vague.

If I can just reflect back to what it would be reported against, because the content requirements for a scheme are so vague it’s laughable. If I can refer to new section 65E(a), (b), (c), (d), (e), (f), and (g), which are the content requirements for a project—I’ll just read very quickly. Paragraph (a) starts with the word “describe”. Well, that’s very nice—nice and fluffy. Then paragraph (b) starts “with regard to the programme,—(i) state its objectives; and (ii) describe … (iii) explain”—explain—“(iv) explain why it is desirable”. Well, how concrete is that? How measurable is that? How accountable is that?

Paragraph (c) starts with “for each project in the programme,—(i) describe”—again; here’s another one in subparagraph (ii)—“describe”—and “explain” in subparagraph (iii). Once again, in subparagraph (iv), there is “set out … [a] completion date;”. Well, there’s something concrete that we can measure it by. In subparagraph (v), “state the amount of capital expenditure”—that’s fairly concrete; then: “(vii), state the amount of debt repayment [and] (viii) specify”. But the requirements for the project are so vague, it’s difficult to report on. It’s difficult to be transparent, to be fair to those who are running the project.

So my point here is that there is a lack of transparency. There is a lack of accountability. There is a lack of detail in clause 10 under Part 2, inserting new clause 34B in schedule 10 of the Local Government Act 2002.

The second part of my contribution I would like to relate to the GST, and here is an opportunity for the Government—and the Minister has already acknowledged that this tax is regressive. It is regressive. It hurts those who can least afford it. It hurts those who are in inefficient cars. It hurts those in rural and regional New Zealand who have to travel long distances. So what a great opportunity to exempt this regional tax from GST. Now remember, of course, that this regional tax goes to the regional council. It’s not a central government tax; it goes to the regional council. But, hello, central government has decided to treat it as a service and to dip their hands in and take the GST component, because, well, you know, they sort of can. It’s just a tax that they’ve got an opportunity—you know, it’s like offering lollies, and why wouldn’t you take them?

So central government has taken the opportunity not to acknowledge the regressiveness of this tax, not to support provincial New Zealand, and not to support those who can least afford it by making sure and ensuring the GST is on this tax that the Government is not even collecting. It is a regional tax. So if it’s a regional tax, why is the central government getting involved by taxing and applying GST? It doesn’t make sense.

It’s a regional tax. Let the regions tax and take the money, if they must—the 10c—but it’s double-dipping. It’s a tax on a tax. It’s central government taking and adding to a tax which is not relevant to them. Therefore, what a great opportunity for the Minister to exempt the GST.

Thank you, Madam Chair. I’m happy to speak to Part 2. I’m going to refer to—just a heads-up—an amendment that I had in Part 1, but I’m doing that because I’d like to ask the Minister if he’d have any objection to applying this to Part 2. I am specifically referring to an amendment to the Local Government Act 2002, and it is “In schedule 10, after clause 34A, insert:”, and then they’ve got “34B Additional information: RFT schemes”.

So this is the new clause that I’m referring to. Now, what we’ve got in this clause here is that “(1) The regional council of an RFT region,”—and I pick up on my colleague’s note that that’s very telling; “an RFT region”, so think much wider than Auckland—“in its annual report, must report on—(a) the revenue from an RFT scheme paid to the council by the Agency; and (b) how that revenue was applied by the council, including to which projects and for purposes (for example, capital expenditures, debt repayment, operational expenditures); and (c) progress with respect to the programme of capital projects supported by the RFT scheme.”

Now, what’s not here—and this is what I proposed in Part 1 and am now wanting to know from the Minister in the chair, Phil Twyford, why it could not be here in Part 2—is that the council review the scheme at the same time as each annual council budget. Now, when I say review, I’m not just talking about what is already listed here: review all “in its annual report … report on … revenue … how the revenue was applied … progress with respect to … capital projects”. It’s an actual review—in other words, should the tax still be in place, full stop? At each annual budget for a council, ask the question: should it be in place, full stop? Is there another way to fund this—basic, fundamental questions?

I note that earlier on in the bill, a council must review the scheme—that’s the wording, “review [the] … scheme”—before it proposes to extend or replace it. How about review it just on an annual basis, because we should always ask the question: should it still be in place? So I’d like to hear from the Minister why the fundamental question annually should not be asked: why do we keep doing this, especially when given that these regional fuel tax schemes—plural—will be in place for a long time: 10 years? We don’t want these schemes to get out of sight and out of mind in councils’ worlds. We need them to be annually up to the fore and asking fundamental questions as to their relevance and whether they should still stay in place.

Given the rushed process to even get to this point, do we not think that annually, fundamentally asking whether this should stay in place is the right thing to do? The process to get to here tonight was truncated; it was shortened. The Ministry of Transport said there was no cost-benefit analysis, fuel companies have not had time to accurately quantify the cost of the collection of the regional fuel tax. There’s been a number of things that have been rushed—not just felt rushed but have been rushed—and so, in this instance, let’s annually take the time to ask the question that is so incredibly fundamental.

I want to underscore the fact that this could be in place for a very long time—10 years. When you have something that lasts that long, it is beholden to us as lawmakers and to the power that we’re giving to councils to be very clear with their ratepayers, constituents—whatever terminology we want to use—that this is something that we will ask the question of annually.

So I’d like to hear from the Minister. Again, it’s in that new clause 34B, “Additional information: RFT schemes”, whether there should be—it could be paragraph (1)(d). And wording—feel free to take some of my wording from my amendment in Part 1 in regard to reviewing the scheme at the same time annually in each council budget. Thank you.

Thank you, Madam Chair, for the opportunity to speak on this, Part 2 of the Land Transport Management (Regional Fuel Tax) Amendment Bill, for as long as I can manage ahead of the closing-time bell.

These amendments to other Acts are what we might call consequential amendments, meaning, of course, in a technical sense, that they flow as a consequence of this amendment bill. But they’re also consequential in the other meaning of that word: they are significant. They are significant in lots of different ways, and that is reflected by the fact that they change so many other pieces of legislation.

Colleagues have touched on the fact that these changes are 15 percent more consequential than they would otherwise be, except that GST is applied to this. “A tax upon a tax” is the phrase that’s been used by several other speakers, so there is no need for me to repeat that now.

💬 Hon Ruth Dyson: You just did.

And I think, in my time that remains, if I can manage any more comments without interruption by the Hon Ruth Dyson—

I apologise to the member. The time has come for me to report progress.

House resumed.

The Chairperson reported progress on the Land Transport Management (Regional Fuel Tax) Amendment Bill, and no progress on the Taxation (Neutralising Base Erosion and Profit Shifting) Bill.

Report adopted.

The House adjourned at 9.56 p.m.