Estimates Debate — Finance and Government Administration Sector

Members, we come now to the votes in the finance and Government administration sector, B.5, volume 5. The question is that Vote Audit, Vote Communications Security and Intelligence, Vote Finance, Vote Internal Affairs, Vote Office of the Clerk, Vote Ombudsmen, Vote Parliamentary Service, Vote Prime Minister and Cabinet, Vote Revenue, Vote Security Intelligence, Vote State Services, and Vote Statistics stand part of the schedules.

Thank you, Madam Chair. Can I just begin my contribution by acknowledging the members of the three select committees who have contributed to the Estimates reports in the finance and Government administration sector. Those would be the Governance and Administration Committee, chaired by Brett Hudson; the Intelligence and Security Committee, chaired by the Rt Hon Winston Peters; and the members of the Finance and Expenditure Committee, which I understand is being chaired very well these days.

💬 Hon Ruth Dyson: Name him.

That would be undignified, Ruth Dyson. I want to touch on a number of the key votes that came up in the hearings that contributed toward these reports, starting with Vote Finance.

We had a good examination of the Estimates with the Minister Grant Robertson. Just starting off with the appropriations in Vote Finance, one of the notable sets of numbers that came before us is that there’s been a reasonably significant increase in the appropriation to Vote Finance, increasing from something like $5.1 billion to $6 billion in the 2018-19 year, and we had some good discussion about the reasons for that. There were, obviously, some overs and unders, but the two main drivers of that were, firstly, the Government’s renewed commitment to contributing to the New Zealand Superannuation Fund, which is an additional $1 billion of appropriation which comes through this vote; and, secondly, increased capital spending to support the anchor projects in the Christchurch rebuild.

We had quite a good interchange on the committee, just getting to grips with where that additional spending was. There was a bit of a lack of clarity about whether the additional $300 million Christchurch accelerator fund was new spending or whether it was, perhaps, a different name for old spending, and we confirmed, through a conversation with the Minister, that that was $300 million of new spending that would be coming in, additional to the cost-sharing agreement that’s supporting other capital rebuild in Christchurch.

Moving on to some of the other key features that came through in this vote—bearing in mind that the Finance and Expenditure Committee, at the same time, also examines the Fiscal Strategy Report and the Budget Economic and Fiscal Update (BEFU), which is presented by the Secretary to the Treasury. The key numbers in there, which I think will be of interest to the House, were that we have a projection of 3 percent growth over the next few years. That’s Treasury’s estimate of the growth track, and they reported—and this is reflected in the select committee’s report—that that’s been largely underpinned by a combination of private spending, increased Government spending, and also increases in residential and business investment.

There was a good discussion with the Minister about how he envisages that we can uphold that growth rate into the future, and what the Minister identified—and, again, this is reflected in the report—is that his intention is that there is a shift toward supporting growth through higher labour productivity rather than population growth. The BEFU—which, again, is produced by Treasury and is part of this report—reported that the fiscals are looking strong. They noted a growth in revenue coming across all of the key parts of the tax base.

I just want to jump over here to the Vote Revenue hearing at this point, which we, obviously, had with Minister Nash. Some of the key highlights there were the intention to introduce the research and development tax credit. That’s going to be an additional billion dollars in forgone revenue over the last four years, but he reported that the intention of that is that stimulates some of that higher labour productivity I referred to before. In terms of the work that’s going on in the BEPS—that’s the base erosion and profit shifting area—the projections that we got through there, in the hearings, are that we can, potentially, expect about $200 million of extra revenue coming in through making those multinational corporations pay their fair share.

Really interestingly, we had quite a good conversation with Minister Nash about the IRD’s Business Transformation project. He reported that we’re now seeing 86 percent of taxpayers doing their returns online. The good thing about Business Transformation, in terms of the Estimates, is that we’re getting much, much tighter reporting. We recently had the legislation go through that means we’re shifting to pay-day reporting. What the Minister discussed with us in the hearings is that this means—and this was in response to questioning—that we are actually, effectively, going to get to the point of abolishing secondary tax by 1 April 2019, in the forthcoming financial year, because, effectively, people will be able to get tailored tax rates and automatic refunds.

The thing I just want to finish on is across two of the reports in this sector—that is the Vote Finance report but also the Vote State Services report. We did hear from Ministers about the wish to have far more linked up activity between our Government departments over the coming year, to really work toward supporting the well-being of all New Zealanders, because, in the end, every single dollar that we spend through these Estimates is about supporting the well-being of our fellow men and women in this country. Thank you, Madam Chair.

Thank you, Madam Chair. It’s a pleasure to be talking on this Estimates debate, the finance and Government administration sector. When you turn your mind back to the occasion where the leader of New Zealand First stood in the Legislative Council Chamber and announced that he was going to go with Labour, thereby anointing the Rt Hon Jacinda Ardern as the Prime Minister, it was intriguing that he spent much of that speech talking about the impending doom of the economy. Many of us thought it was actually an irresponsible stance to take, but, after some reflection, I think the point of that speech and that introduction, in anointing this Labour - New Zealand First coalition, was that if you can influence something, you can actually set about achieving that outcome. Unfortunately, the Labour - New Zealand First coalition seems intent on achieving the outcome that Mr Winston Peters spoke of, about a declining economy.

So the travesty about this is that when this Government came into power, it was one that inherited large surpluses that had been ground out after years of managing an economy during very difficult times, and we were just starting to see the benefits that all New Zealanders had helped to achieve. We had seen a capital expenditure programme that was really starting to bite and a huge programme that was going to take us forward. We were seeing an economy that was generating 10,000 new jobs every month, and we saw a country with relatively modest debt levels of just over 24 percent to GDP. So that was what they inherited, with a global outlook that was improving, with New Zealand at the leading edge of economies around the world.

And where have we got to now? Well, in only a matter of months, we’ve seen that this Government has set about reducing, through their actions, the number of new jobs created. So we were at 10,000 jobs a month; now we’re at 4,000 jobs, which means those many New Zealanders who want to get a good job, want to get paid a decent wage, have less opportunity to be able to do that. We now see GDP rates below where they were before. We were at the leading edge, over 3 percent of the OECD; now it’s below. My prediction is the finance Minister will see us down below 2.5 percent before the end of this year.

We’re going to see debt levels decrease. They already have, as a result of some flow-through, but they will increase under this Government in the short term. So why is that going to occur? Well, we’ve seen the $1 billion—the billion bucks—that was given to Winston Peters to spend on the cushions and curtains of a new diplomatic post overseas. We’ve seen the $3 billion given to Mr Shane Jones to go and spend what he might do, around New Zealand, often with little business case support. Then we’ve seen the $6 billion for transport jobs and projects ripped out of the regions, diverted into a couple of trams in Auckland, principally with some safety improvements. That’s the travesty, the impact that it’s going to have on regional rural New Zealand. You know, if you said, “Oh, well, let’s go and take some of that money and spend it on investment, and good investment.”, then you’d have more of an argument, but, unfortunately, we don’t, because a lot of that money is also going to go to tertiary education.

So we’re going to see debt levels go up by $10 billion over the next three or four years, and, on top of that, the other $6 billion that’s going to go into off-balance-sheet items. In effect, there’s going to be $16 billion in more debt put on by that Minister looking across from the other side of this Chamber, who is going to put it on this economy in the near term, which, of course, we’re going to have to pay, as the New Zealand Government, in the form of interest, and, over time, repay it.

And so we’re seeing less money go into health spending than we put in the 2017 Budget, less money going—[Bell rung]—to education, Mr Chair. Although, I will note some money went into the Ongoing Resourcing Scheme funding.

CHAIRPERSON (Adrian Rurawhe): Are you seeking the call?

But we have—

CHAIRPERSON (Adrian Rurawhe): Are you seek—

Why are we now—

CHAIRPERSON (Adrian Rurawhe): Order! Are you seeking the call?

I am seeking the call.

CHAIRPERSON (Adrian Rurawhe): OK. I call Andrew Bayly.

Thank you. But what we’re seeing is the declining confidence in New Zealand, and that is a travesty. And why is that? Labour reforms—labour reforms—cutting across businesses. We’re seeing reducing immigration, but where are we going to see it? People don’t know. People don’t know. Are we going to see it in our skilled category? Outside of Auckland, if you say that you’re going to reduce good skilled immigrants to New Zealand, you are going to impact on the way businesses are going to be able to operate. Then we’re going to see the welcome mat for foreign investment coming into New Zealand pulled, and we’ve already put that sign out.

And, of course, what I think we are going to see is the decline in housing, and already we’re going to see it, because, unfortunately, I think Mr Twyford is meeting a market where the well-resourced developers are now stopping because they see too much risk in this economy. They see too much risk with this Labour - New Zealand First - Greens coalition. They are the ones who are stopping now. The proposition that the Government’s going to sidle up to those developers in financial difficulty and work with them—I can imagine it: “We’re from the Government. We’re here to help.”; those famous words. That’s why I think Mr Twyford’s running into trouble, and, unfortunately, this economy is running into headwinds, and it’s sad to witness in only a few short months.

Thank you, Mr Chair. Well, that was the “Hoola from Hunua”. What a lot of rubbish—loud rubbish, I’ll give him that.

CHAIRPERSON (Adrian Rurawhe): Order! No nicknames. Proper names, OK? Kia ora.

Thank you, Mr Chair. That was a lot of hot air from the member from Hunua, Mr Andrew Bayly. I must say that it was highly inaccurate as well, and in that it’s deeply disappointing, as he well knows, because he sat on the committee opposite me and heard those figures monthly and quarterly. Employment is higher; unemployment is lower than it has ever been. So to say that jobs are falling is simply wrong, and I am disappointed in the member in scaremongering in that way. To say that less has been spent on health is simply false. Whilst the National Government didn’t settle the claim of the care workers and we have had to make up for their dilatoriness in that respect—that’s not proper accounting. The fact of the matter is there’s more being spent on health now than there ever has been. And do you know what? The fact of the matter is we’re not scaring off foreign investment; what we’re doing is we’re setting our house in order. We are saying that investment in residential houses in New Zealand is for New Zealanders, and at the very same time, as the member well knows, we are making sure that investment into forestry in New Zealand is encouraged and engendered, and that’s a great thing.

So, look, after all that hot air what I want to do is turn to some of the great things that we’re doing. I just do want to say one thing for Christchurch because we did look at Vote Prime Minister and Cabinet, where the budget for the Earthquake Commission inquiry is coming from, and I know that the people of Christchurch are impatient for this, and one of the reason this hasn’t happened yet is because of this very debate—that we need to pass this legislation and this appropriation so that this can happen. But it’s very clear that it will happen. The appropriation is there, over $2 million for that inquiry—an inquiry that is desperately needed because things have gone wrong there, and we need to know what, and for the people of Wellington and the rest of New Zealand, we need to make sure that that very important entity is in shape. So that inquiry is happening. The appropriations are there. The Department of Prime Minister and Cabinet are managing the process of appointment, and I was very heartened to hear that.

One of the other great joys of the select committee was the Estimates for Vote Revenue, which might seem unusual, but in fact what it does show is how important revenue gathering is. I was very heartened to see that there is effort, there are funds, there are resources being put into making sure that everyone pays their fair share of tax, including, in fact, funds to make sure that debts that haven’t been paid, where assessments have been made but there hasn’t been the resources within IRD to go back and collect those funds—that the resources are there now. That is expected to reap $183 million in additional revenue, and I’m very glad to see that.

Of course, we know about GST collection in offshore retailers; that’s a great initiative. It’s one that’s had a bit of a rocky road in Australia, with the Amazon reaction, but I’m very confident that the Minister of Revenue is managing that well and that, in fact, we will see not only proper revenue gathering for offshore sales in terms of GST but equal treatment for our retailers. I think that’s very important, because we don’t want someone to be getting things tax-free offshore and giving offshore retailers the edge over our own domestic retailers, who are doing the decent thing and paying their GST on time and appropriately.

As has been mentioned already, I must mention the removal of secondary tax. This is really important, because what we do know is that people who pay secondary tax are frequently low-income people who are having to work more than one job. There are two really good things here—firstly, it means that people will get their entire after-tax pay in their pocket at the right time, and the second thing is this: the tax agents out there who are making easy money on the churn of tax returns won’t be making that money any more, because the tax system will make them redundant. That’s in fact a good thing. What is means is that people will simply get their pay and they won’t have to pay for getting their tax return done. So to the Minister of Revenue: well done for one of many great initiatives.

Thank you, Mr Chair. I’m happy to take a call this evening in the Estimates debate for this year, as we review, particularly, the finance and Government administration sector of the Estimates. I don’t think there’d be any great discussion or debate around the House that when you are fortunate enough to hold the Treasury benches and when you are fortunate to have the role Mr Robertson has as the finance Minister, you’ve got a couple of core responsibilities that the country looks to you for. The first of those is to ensure that you make the most of the assets and the income of the Government for the well-being of New Zealand. The second, I would argue, is that you have a role to ensure that you’re providing a platform for the economy to continue to grow well into the future. I have to say that looking at this first lot of Estimates from this new Government, this first Budget for Mr Robertson, it is a fail grade on both of those headings.

We are seeing from this finance Minister, who’s talked up his fiscal responsibility and tried desperately to paint himself as some sort of fiscally cautious finance Minister who the business sector has nothing to fear from, that despite having inherited a very strong and very well-performing economy, growing surpluses—in fact, even bigger than was anticipated certainly pre-election and even post-election—and money coming in all over the place, and yet we are seeing, already, more taxes, more debt, broken promises, and a slowing economy. That’s the message, isn’t it: more tax, more debt, a slowing economy, and broken promises. That’s what this finance Minister is delivering to New Zealand so far.

Even though the Government wants to brush over this and say, “Oh, well, you can’t really read too much into that.”, over the next 15 years Mr Robertson is planning to run cash deficits in 14 of them. For 14 of the next 15 years, the Budget documents show us, this Government is intending to spend more than they earn in residual cash terms. Now, that is not fiscally prudent. That is why we’re going to see Crown debt continue to rise in nominal terms despite a strong economy—despite a strong economy. So my question to Mr Robertson is if you’re borrowing money in the good times, if you’re racking up debt when there are big surpluses, when times are good, when there isn’t a fiscal shock, is the Government simply conceding defeat that debt will always go up? I think that is a low set of aspirations for this economy.

If you look at how the Government is setting those fiscal conditions for our strong economy—well, I just heard the speaker who resumed his seat trying to discredit Andrew Bayly for talking about the decreasing rate of jobs. Actually, Mr Bayly is absolutely right. When you look at the number of new jobs being created, it has more than halved under this Government from what we saw under the last years of our Government: 10,000 new jobs a month created under the National Government; so far, under this Government, 4,200 a month—less than half the rate of new job creation. Is that any surprise when you have a Government that is so dismissive, so unconcerned about how many jobs there are in the economy? They wiped out the oil and gas exploration sector—8,000 jobs; $2.5 billion—without Mr Robertson even bothering to get Treasury advice on how that might affect the economy.

This is not good economic management. It is not good economic management to be putting up the cost of living on New Zealanders, particularly some of our poorest New Zealanders. When you’re ramping up fuel taxes, when you are ramping up energy costs over time, when you are ramping up the cost of the rental market, all of that flows through to the cost of living. Petrol prices don’t just affect New Zealanders at the pump; it affects them in the cost of every good that is transported across New Zealand—every piece of food, every piece of furniture, everything that they acquire. The cost of living is going up; job creation numbers are going down; the economy is slowing; we have more taxes already and more coming; and we have an economy that is showing very clear signs of slowing growth. What do we hear from the Government? “Well, all of the experts are wrong. They don’t know what they’re talking about. Business doesn’t know what it’s talking about. Only we in the Labour Party know anything about these things. Everyone else is wrong. We’re not interested in what they’ve got to say. We’re right. We don’t want to talk to anyone.” That sort of hubris, that sort of—

💬 Brett Hudson: Arrogance!

—arrogance and dismissiveness will break this economy.

Mr Chair, thank you very much. It’s a pleasure to take a call on the Estimates in this space, particularly, for my case, on Vote Finance. The thing I want to do is project a more positive image of New Zealand than what we have heard for the last five minutes. For the last couple of weeks, in the recess, I’ve been going around the country, talking about the very matters that are contained in the Vote Finance Estimates: the Budget that we have put forward and the economic outlook for New Zealand. I’ve got news for the Opposition. Out there, in the provinces of New Zealand, in Christchurch and Auckland—

💬 Brett Hudson: Confidence is low.

—Blenheim, Hamilton, and, Queenstown, confidence is high, Mr Hudson, because businesses are getting on with the job, as opposed to the negative, backward-looking approach that we’ve heard from the Opposition tonight. When I was in Hamilton and Cambridge talking to the business people of the Waikato, they were excited. In Cambridge, they were saying, “Unemployment there is 3 percent—3 percent in Cambridge at the moment.” I recognise that for many employers finding skilled staff remains the big challenge that they’ve got in an environment like that. We need to work hard, and the Government is working hard, on investing in skills and training and making sure educational opportunities are available—apprenticeships, workplace training—and we’re doing that, but at the same time businesses are getting on with the job and they are very, very pleased with what they are able to do. We want to work with them, and we are working with those businesses to ensure that that carries on and is spread right around the country.

It’s really important to remember that among the doom and gloom scenarios that the National Party is determined to put in front of New Zealanders, the consensus economic forecast released this month by FocusEconomics tells us we have 3 percent growth on average. That’s good. That’s solid growth. We want to keep that trend going. What we don’t need is the negative approach and the lack of positive, forward-looking, 21st century solutions for the economy that come from the National Party. On our side of the fence, we’re focused on a more productive economy, a more sustainable economy, and a more inclusive economy.

I just want to pick out two points that came from the Finance and Expenditure Committee and I thank them for the work that they did in assessing the Estimates. The first of those is around—and it was a point made just now by Amy Adams—the impact of the Government’s decision to end new offshore oil and gas permits off the Taranaki area, and, indeed, around the rest of the country. Ms Adams just told us that that has lost 8,000 jobs. That is completely untrue, because no current permit is affected whatsoever. There will be no change in that number of jobs whatsoever today from what there was before that announcement was made.

It is that kind of exaggeration and scaremongering that does no credit to the National Opposition. They will be judged for that, because that decision was about actually having a plan for an economy for the middle part of the 21st century—a sustainable economy: one where we transition away from an economy that relies solely on raw commodities, solely on selling houses to one another, and on population increases; and shifts to an economy where we support and protect the environment, where we invest in clean energy, just as we’re doing through the Green Investment Fund in this Budget, and where we invest properly in the regions of this country, just as we’re doing through the Provincial Growth Fund. That’s what a modern economy looks like. It is one where we’re focused on making sure that our productivity and our sustainability work together, and where we look forward rather than in the rear-vision mirror as the National Party would like to do.

The last thing I want to talk about in my contribution is around what will come next in terms of Vote Finance, and that is the well-being Budget and the use of the Living Standards Framework. That’s how we’ll really create a modern 21st century economy—by looking at our success across the board, not just at narrow measures. GDP’s a good measure of activity in the economy, but it does not tell us about the overall success of New Zealanders. We need to measure our success against a range of indicators, from the way in which we live as individuals, as communities, and how we protect the environment. Next year’s Budget will be a world first in looking at well-being and overall lifting of living standards. That’s the kind of forward-looking, positive thing that we can do, not the carping and negativity that we constantly hear from the National Party, and are about to hear right now.

After that contribution from the member who’s just resumed his seat, Grant Robertson, I could say something nice about that.

💬 Hon Member: Well, you could.

I could. And I will try. The only thing nice I could say is that it reminded me of all the humility of Michael Cullen, but none of the talent. So I can’t. I mean I’m not going to lie. And I think that’s actually the kindest thing I could say—and also none of the humour, frankly, because humour requires wit.

As for these Estimates, I think one of the most concerning things is that so much of the Government’s books and plans require the economy to continue to grow and for people to continue to make sufficient profit in their businesses that they are paying taxes. That is actually a requirement for all of the fiscal outlook that we’re looking at in the Estimates documents. We see that there should be extra growth: $9.9 billion in growth and a source for deductions in the next few years; extra growth and revenue in GST; extra growth, a $3.5 billion increase in corporate tax due to expected growth in corporate profits. Not a lot of detail as to where those profits are going to be made, how they’re going to be made, and why they should be made, given that the increase in cost to business, and, also, the increase in the cost of living for people who are on salary and wages is going to continue to increase.

It’s pretty clear to those of us who have now seen the results of some of the extra taxes put on, particularly in the Auckland region around fuel tax, that the cost of living for New Zealanders is going to rise under this Government. That means, actually, that people will effectively be getting either a tax increase—you could look at it like that—or they will be getting a wage cut, because their wages will not go as far as they did last year. That is one of the big concerns that I have for people in New Zealand who are saying, “Oh, look, we were being told that the economy’s going to grow, that there’s going to be more of this and more of that.” Well, tell that to the 140 workers that The Warehouse has just said are going to be made redundant. Tell that to those people. Tell that to the people who are not going to get opportunities because business confidence is low.

We’ve just heard Grant Robertson saying that business confidence was really high in Cambridge. Well, I’m sorry, that’s not what I’m hearing everywhere. What I’m hearing on all the surveys and what I’m hearing from business owners is that they are really worried about the way in which this Government is spending their money, and that this Government is looking to tax them more.

This Tax Working Group is going to come up with a capital gains tax. It’s going to come up with taxes that some of our people have not even thought about because what they’re doing is looking for every single way that they can to get every scrap of money out of people that they can. That really does concern me because what it means is, with most businesses in New Zealand being small business, those businesses who are actually now experiencing a lack of confidence—that they delay or they stop taking decisions to employ staff.

The people who are going to be the most hurt by this are the people who are the most vulnerable staff. So the people without experience, the people with a lot of experience, the people who are having to do two jobs, or the people with disabilities—they are the people who are going to be the most hurt by decisions that make employers stop and think and say, “Can I take a risk on this employment, or can I afford this person next year?” Those are the people who will be most hurt.

I’m very pleased that unemployment is low. It was low last year too, after nine years of a National-led Government. It was much lower than it was when we came into Government, but, also, interest rates were low last year. They were low last year, and they were low for the last five or six years. In 2008, they were 11 percent for house loans; now they’re about 5 to 6 percent—that’s the difference, and a lot of that has got to do with how much money Government borrows and Government spends.

This Government is on a pathway to higher interest rates for ordinary Kiwis who have bought their first home. This Government is the Government that will actually make business harder for people and harder for employers to take on more staff. This is the Government that is putting up the cost of living, and which will continue to rise, particularly around things like electricity that they’ve been big lions about in Opposition. But I think we’ve got electricity prices going up next year, and it’ll be the fault of this Government.

Thank you very much, Mr Chair. That was a most interesting speech from the last member, the Hon Judith Collins. Certainly, as a former Minister of Revenue, she made a whole lot of assumptions which then she drew into a whole lot of conclusions which are just simply not true.

What we did do is we’ve set up the Tax Working Group. This was not a tax working group based on Labour Party membership; these were the smartest brains in the country on tax, and what we did is we asked them: please have a look at the tax system and see if it meets the test around integrity; see if it meets the test around balance and around fairness. Hopefully revenue-neutral—this is not about raising a whole lot of money; this is not about screwing New Zealanders. In fact, it’s quite the opposite: this is about seeing if, in fact, the fairness and the integrity and the balance of the tax system is working in a way it should in the 21st century.

Now, if Ms Collins knows something that I don’t, then it would be great to hear it, but, certainly, we haven’t had any reports back from the Tax Working Group around what they are thinking. So for a former revenue Minister to hypothecate—well, no, to hypothesize, I should say; talking in tax terms!—on what might come out and therefore what may happen is just simply incorrect.

And I would have thought—I would have thought—that that Government would be keen to understand, be keen to know that the system is one of integrity, is one where it’s balanced, but, most importantly, is one that is fair for all New Zealanders. That’s what we all want—a tax system that’s working for everyone. So we are looking forward—as the Minister of Revenue, I am really looking forward to seeing what the Tax Working Group comes up with.

In terms of revenue, there has been a lot of work going on. We’ve passed the base erosion and profit shifting (BEPS) bill. This is one—again, when I talk about fairness—that ensures that multinationals are paying their fair share of tax. There is no one who will disagree with that. We all believe that multinationals should pay their fair share of tax; the BEPS bill has been passed.

We’re talking about R & D tax credits. Budget 2018 sought about a billion dollars to ensure that productivity in this country increases, and how do we do this? By giving those who have the ability to really drive productivity—the small to medium enterprises that the last member was running down. We believe that if you enable and empower the small to medium businesses to invest in R & D, then you will grow productivity in this country enormously. We’re not about picking winners; we’re saying to companies that if they want to engage in research and development, if they really want to take charge and drive research and development in a way that’s going to lift productivity, then we’re going to back you. We’re right behind you. A billion dollars we’re putting into this, and the Liam Dann article in the press over the weekend actually said something needs to be done, because what the last Government did in the last nine years certainly didn’t work.

What we’ve also done is we’ve said we want everyone to pay their fair share, not just multinationals, so we’ve allocated another $31.3 million to the IRD so they can go after people who aren’t paying their tax. And an interesting stat: there are about 100,000 overdue business tax returns. Everyone should be paying their fair share. We don’t think anyone should be paying more than they should or less, just your fair share, so we’ve given the IRD money to go after those who actually aren’t complying—most important.

I suppose one of the most important things that’s happening in Inland Revenue at the moment is Business Transformation. This is the largest State sector project on the go at the moment, at about $1.8 billion, and it’s brilliant. It is changing the way that New Zealanders will interact with Inland Revenue. And, you know, it is not without risks—at the moment, they are running two systems in parallel—but what it will do and what it is doing is making it easier for New Zealanders to comply with their tax obligations; making it easier for New Zealanders to actually interact with Inland Revenue.

Stage 2 is being rolled out. Stage 3 is in planning. Stage 3 will actually ensure that New Zealanders do not have to pay secondary tax. Stage 3 will ensure that, in fact, refunds will be delivered in a timely manner so New Zealanders don’t have to always go to IRD or be proactive. Inland Revenue is going to be proactive around the way that they deal with New Zealanders. It is transformational. Thank you very much.

Thank you, Mr Chair. It’s a pleasure to get up and make a contribution to the finance and Government administration sector. I just want to make a comment around the contribution made by the Minister who’s just resumed his seat, Stuart Nash, around the R & D tax credit. I’d invite him to take a call and explain to the committee how those small businesses, particularly start-up businesses, of which 50 percent at some time during the course of the month go into debit—so they go into the red, generally about the time when they have to pay their accounts and they are waiting for their debtors to pay them—are ever going to fund R & D research. How are they ever going to do that? If the very reality of small business in New Zealand is that what small business needs is access to good-quality capital to grow their businesses, how is an R & D tax credit ever going to be of any use to them?

So is it the case, then, that Labour are looking after the big end of town of business, who, perhaps, arguably don’t necessarily need R & D tax credits? It’s just a question I ask, and the reflection, I would say, to do with that is that maybe they’re not as well connected to the business community as they think they are. And that, perhaps, is also borne out by the fact that as business confidence is tanking, the Government seems to be taking on this “Pollyanna-ish” attitude that “All is well, all is well. Don’t worry about the business confidence surveys. You’re being too negative.”

Well, the business confidence surveys, one after the other, after the other, after the other, are tanking. I’d like to see some acknowledgment from the Government that all those business surveys aren’t as wrong as they seem to think they are. Regrettably—regrettably—we will find out in due course, won’t we, as the cost of living just keeps increasing; our GDP keeps decreasing; and our economy slows, as it is already doing. Unfortunately for the people of New Zealand, we will find out in due course.

The other feature of this debate which I found really interesting is the pride with which Government members and Ministers say, “I’ve got more money.” We heard it from the Minister of Defence: “I’ve got more money.”, he said. “I’ve bought some more planes.”, he said. Well, he might have got the money but it is not his money and that is something that this Government has very quickly forgotten. It’s not their money. It is taxpayer money and how are they going to get that? I know, they are going to tax people more. So it’s the same old Labour Government we’ve come to know: more tax, more spend; more tax, more spend.

Meanwhile, there’s a bit of a starve going on in some of the votes that are just quietly tucked away in this Estimates document. I refer to Vote Internal Affairs, where it is noted that “The department has initiated a Stewardship and Organisational Sustainability Programme to prioritise its spending and identify trade-offs necessary to address [certain] pressures.” What? What the? I thought that this was a Government that was going to spend more and support the agencies of Government and New Zealand—except when it comes to the Department of Internal Affairs. And why does that matter? It is because one of those points where cost pressures are being felt is that one thing that Internal Affairs can do to boost profitability and sustainability and growth: RealMe. But it’s starving RealMe. What’s RealMe? It’s an ID which will make life a whole lot easier for individuals and businesses in New Zealand. What are they doing? They are quietly starving Internal Affairs. So I just have a view that this Government speaks out of both sides of its mouth.

Just finally in my last few seconds, what is it with the cancellation of the parliamentary accommodation strategy? What is it where we have forgone $3.5 million because the Speaker of the House changed his mind about a very good, very long-running programme around the redevelopment of the parliamentary precincts? It was $3.5 million—gosh, this Government is absolutely washing in cash if it can afford to make that kind of financial decision.

Mr Chair, thank you. I appreciate getting the call on this. I wish to direct the attention of the committee to page 123 of the reports of the select committees—

💬 Michael Wood: I don’t think they know where that is.

I don’t think they do know where it is, or if they’ve actually read it. They can’t have read it because they have clearly not taken on board this critical sentence: “The BEFU states that the fiscal outlook is ‘strong’ over its forecast period.” The fiscal outlook is strong—remember that word “strong”.

In terms of fiscal outlook, people say “What’s this word ‘fiscal’? What does it mean?” Roughly, it talks about the cash flow of the Government. Roughly, it talks about the tax revenue of the Government—what’s coming in. And we know, if you just read a little bit further, that there’ll be $9.9 billion growth in source deductions—that’s deductions from wages and salaries. There’s going to be $5.7 billion extra in GST revenue, there’s going to be $3.5 billion extra in corporate tax. But we haven’t changed the tax rates.

Where that is coming from is from growth in the economy. It is from the salary and wages of New Zealanders going up. It is from turnover in goods and services going up. That is why GST goes up. It is from business profits going up. That is why we are getting those increases in tax revenue—because this is a strong and growing economy with GDP forecast to grow at 3 percent over the forecast period. So the doom and gloom coming from the negative Opposition benches is just a put-on. When you read what’s actually in the reports, we are doing well, we are tending this economy well, we are in a strong financial position.

Now the previous speaker, Jacqui Dean, raised the point that this money doesn’t come out of nowhere. It is, in fact, taxpayers’ money. I put it that in fact on this side of the House we are using that money as responsibly as we can. We are doing our best to be prudent and to use the money that comes to us from taxpayers to grow the economy and to strengthen New Zealand. So what are we doing? Well, amongst other things, we are paying down debt, and in fact over time we will get debt reduced to 20 percent of GDP.

Now, the Opposition spokesperson for finance has some quibble about nominal debt, but any competent finance spokesperson would know that the standard figure that we use for measuring Government debt is not nominal debt but debt as a percentage of GDP. It is an extraordinary thing for her to do to focus on nominal debt. Surely she should focus on the standard figure that standard economists use—that is, debt as a percentage of GDP, and we will have it paid down to 20 percent of GDP. Now, that is low by international standards, it is low by standards in the OECD, and we’ve had calls coming into us—people saying, “You should borrow more.” But we are a responsible Government. We know that New Zealand is a small country, that we are exposed to more risks than larger countries and larger economies are, that we must be prudent to ensure that, as happened the last time when a financial crisis hit, we could actually withstand it. And it is thanks to the prudence of Michael Cullen that we were able to withstand the global financial crisis.

And let’s talk about some of the other sorts of risks that we can face. If you look at page 125 of this report, you’ll see that this Government has had the prudence to set aside money to deal with Mycoplasma bovis sensibly, carefully, devoting resources to it. That’s exactly the kind of prudent management we need to engage in with taxpayers’ money. You will see that we have made provisions for pay increases for nurses and teachers, because for nine long years of the National Government they were starved. Now, we won’t be able to fix that up in one hit, but this Government is making prudent accommodations—gardening the economy to ensure that we can pay our critical workers a decent wage. We are committed to doing that.

So what you see on this side of the House is a Government that is taking its responsibility seriously, a Government that cares about all New Zealanders, a Government that is devoting its resources to investigating some of the critical issues like child poverty, devoting money to try to fix some of those problems. We will not talk this down in negative doom and gloom. We look at our strong financial position, and we believe we can do it.

Thank you, Mr Chair. Just before I get on to talking about the reports from the Governance and Administration Committee in this sector, I’d just like to help the member who was wondering why it was that personal tax receipts might be rising in the period ahead. Well, I’d just like to remind her that the reason there might be a bit more personal income tax coming into the Government’s books over the next few months is because they legislated away the tax relief that the National Government put in place for hard-working Kiwis. Not only did they legislate that away but they’ve already imposed additional taxes on those people through things such as the regional fuel tax, so that, Dr Russell, helps to explain why the books might be looking a little bit better for a short period of time.

But moving on to our reports, a number of my colleagues on this side have spoken about what this Government is doing with the surpluses it has inherited. The spending choices they are making, such as the $2.8 billion on fees-free to only deliver 900 fewer students—900 fewer students—than would have been achieved if they hadn’t spent that $2.8 billion at all; the $3 billion on the Provincial Growth Fund, which seems to be dispensed at Mr Jones’ largesse; a billion dollars to the Rt Hon Winston Peters in his foreign affairs portfolio—and that is flowing through, I would argue, in what we heard in our Estimates hearings in the Governance and Administration Committee.

Firstly, for instance, as my colleague the Hon Jacqui Dean pointed out, the Department of Internal Affairs, a department that touches the lives of all New Zealanders multiple times in their lives, appeared before us and confirmed that they see themselves as struggling—struggling in their baselines to meet the commitments of their services. They are struggling, for instance, in passports, to be able to recoup through the passport charges sufficient charges to meet the increasing costs over the coming years, and with no relief or extra funding from the Government to offset that or, indeed, other parts of the portfolio of services that they deliver.

That is a symptom, one could argue—certainly the public may see it as a symptom—of a lack of funds to fund the machinery of government because of the spending choices the Government has made in other areas. That is a point that my colleagues have impressed upon the committee tonight, and I am saying I think we heard it show through very strongly in the Estimates hearings that we conducted.

Another one was the State Services Commission, and this is remarkable for a couple of things. One is that they are clearly being charged with doing more, or taking even a greater leadership role, but they have not had additional funding to help support them to do that—yet again a sign that the Government has placed its priorities elsewhere and does not have the funds left over to actually fund its agencies in their core services, or indeed the initiatives it’s tasking them with undertaking. But it was interesting, actually, for another point, one would argue, because the State Services Commissioner came to talk to us about a change—or the Minister talked to us about a change, moving from focusing on outputs to outcomes, which is remarkable, because I recall that for nine years under a National-led Government it was all about outcomes, not outputs, and certainly not inputs.

He also talked about a joined-up Government—remarkable again, because for nine years the National-led Government talked about breaking down the silos. It talked about clustering agencies in common areas of responsibility, such as the justice cluster, which included the Ministry of Justice, police, and corrections. It also included, to a degree, education and the social welfare department, as well. So that’s hardly a new idea, but at least one could commend this Government in one small way for at least not getting rid of that very sound idea.

The public might very well look at that and say, “If only they’d adopted the same rational thinking with respect to better services targets and, indeed, to health targets.”—then they might actually appraise the work of the Government in these first few months somewhat differently. But certainly the State Services Commission, in doing that role, has not been given any greater funding to achieve its desired outcomes.

The area that did achieve a bit more funding and was under the Internal Affairs vote is racing, but even in racing, where they’ve got a few million dollars for good-looking horses, all the Government is actually doing, we were told, is undertaking a review. More talk, not much in the way of action, but the Government has spent a lot of money—the surpluses that the National Government left them.

Tuatahi, e mihi ana mō tēnei rima meneti kua hōmai ki ahau ki te kōrero e pā ana ki te taha pūtea mō te tau e heke mai nei. E rua ngā wāhanga e hiahia ana ahau ki te kōrero.

Tuatahi, i raro i te Pōti Pūtea, arā te hanga i tēnei kaupapa mō te Anga Paerewa Oranga arā te Living Standards Framework, me ngā haupū rawa, rawa ahu moni, rawa ō-kiko, rawa ā-tangata, ā-pāpori, ā-tūroa anō hoki. Ko tēnei mea he titiro whānui ki ngā mahi a te kāwanatanga. Ehara i te titiro whāiti ana ki te taha pūtea noa iho. E titiro whānui ana mātou ki ngā mea kua tutuki i te kāwanatanga i roto i te tau. Nā, i haramai te Minita mō te Taha Pūtea ki te kōrero ki tō mātou komiti, arā te Komiti mō te Taha Pūtea e pā ana ki tēnei mahi.

Kua mea atu ia ki tana tari, arā ki te Treasury, ki te whakahoro ake, te whakatere ake i tēnei mahi kia puta, tōna tikanga, tōna hiahia, kia puta te tahua pūtea tuatahi mō tēnei haupū rawa e whā ā tērā tau, ā te tau e heke mai nei. Nō reira he mea nui tērā, he tuatahitanga anō hoki tērā.

Tuarua, e hiahia ana ahau ki te tahuri atu ki tētahi atu o ngā kaupapa i raro i te Tari o te Pirimia me tana rōpū whāiti, arā, o te Cabinet. Ko tētahi o ngā kaupapa i raro i taua tari mō te kōti o te pirimia me tana rōpū whāiti ko tēnei mahi mō te whakaheke i te noho pōharatanga o ngā tamariki i roto i Aotearoa nei.

Nā kua kite i roto i tēnei o ngā pukapuka e whakapuare ana tētahi rōpū hou i raro i taua tari; ko tētahi rōpū mahi, arā ko te Child Poverty Unit e mahi ngātahi ana me te Child Wellbeing Unit, ā, kua hoatu tētahi moni hou ki tērā o ngā rōpū kei raro i taua tari; tata ki te rua miriona tāra mō te tau e heke mai nei; i ngā tau e whā, tata ki te waru miriona tāra ki te whakatutuki i tēnei o ngā mahi. He mea nui tēnei. He mahi hou tēnei. He tuatahitanga tēnei. E titiro ana te kāwanatanga ki tēnei mea te noho pōharatanga o ngā tamariki i roto i Aotearoa nei; e titiro ana ki ngā mahi kia heke iho ngā nama o ngā tamariki e noho ana i roto i te pōharatanga.

Nā i pātai atu ki tana tari mehemea ka mahi ngātahi tana tari me te tari o te Minita o Te Oranga Tamariki, hei ko tā rātou; āe ka mahi ngātahi ēnei o ngā mahi engari he āhua whāiti te titiro o te Tari o te Oranga Tamariki mō ērā o ngā tamariki kei a rātou ētahi o ngā raruraru, he rerekē ki tēnei mea te noho i roto i te pōharatanga, nō reira he mahi anō tā te Oranga Tamariki, te Tari o te Oranga Tamariki ki tēnei o ngā rōpū hou kātahi anō ka whakatū.

Nō reira, tōna tikanga ka whakahoki mai te kōrero mai i te komiti o te Social Services and Community Committee e pā ana ki te pire o te whakaheke i te noho pōharatanga o ngā tamariki ā te Oketopa i tēnei tau tonu. Mā tēnā ka hanga i tētahi rautaki hei whakatutuki i ngā wawata o tēnei kāwanatanga e pā ana ki tēnei mahi nunui.

[Greetings, Mr Chair. Firstly, I do appreciate the five minutes that I have been given to discuss the Budget for the coming year. There are two parts that I would like to discuss.

The first, under Vote Finance, is the formulation of the Living Standards Framework and the approach to capital—variously financial, natural, physical, human, social, and environmental. This is a broad approach to the work of the Government. We are not taking a narrow view that focuses solely on money. We are taking a more wide-ranging view of the Government’s achievements this year. The Minister of Finance came to speak about this work to our committee, namely the Finance and Expenditure Committee.

He instructed his office of Treasury to expedite work in this area so that, all things going according to plan, the first Budget based on these four capitals will be introduced next year. That is a big achievement and an important first.

Secondly, I would like to focus on work being done by the Prime Minister’s office and her Cabinet. One of the key pieces of work being undertaken by the office of the Prime Minister and her Cabinet is the reduction of child poverty in New Zealand.

We have already seen in this report that a new group is being established under that office; a working group, namely the child poverty unit, is working alongside the child well-being unit. This new group will receive new funding. Almost $2 million has been allocated for the coming year—over four years, almost $8 million will be dedicated to implementing this work. This is important. This is new. This is a first. The Government continues to tackle child poverty here in New Zealand and is looking at how to reduce the number of children living in poverty.

I asked her office if they would be working alongside the office of the Minister for Children and they agreed that there would be collaboration but that the Ministry for Children has a particular focus on children who need special support, which is a little different to children living in poverty, so the Ministry for Children does have its own area of work which is different from that of the newly established groups.

It is expected that the Social Services and Community Committee will deliver its findings to inform the bill to reduce child poverty, by October this year. We can then form a strategy to achieve the goals of this most important area of work.]

Now I will focus on Vote Statistics. It is now clear that Census 2018 has counted only 90 percent of the population and we have missed out over 400,000 people. This is the lowest response rate in 50 years—50 years. The data of over 400,000 people is missing; that is equivalent to the population of Christchurch. So this will have huge implications. But, first of all, it will have implications for the Budget in the coming year because Statistics New Zealand will have to do more work and spend more to make up the shortcomings of the census.

I’m not really surprised by this particular announcement from Statistics New Zealand, simply because I have seen numerous signs of Census 2018 heading towards a disaster. Now, there are many issues there—firstly, the access code. Many people did not receive the access code, although they made repeated efforts request their access code. And also many people in rural areas did not receive the census papers simply because they are living in rural areas and sometimes they do not even have a letterbox. Also, the helpline was not particularly helpful. It was a very frustrating, extremely difficult experience, very hard to get through. Many of my colleagues had tried that. Also, people with disabilities—they did not get enough support. They were not able to complete their census form online.

Then we have commercial accommodations, problems with commercial accommodations, namely those non-private dwellings. In Northland, for example, 822 non-private dwellings had ordered census material but by 12 March, six days after census day, 263 of them still had not received any information, any material. So all these signs indicate that this year’s census was really problematic. It turned out it is, indeed, a shambles.

All along, statistics Minister the Hon James Shaw has been very confident that this census would be a great success, right? All along. On 12 April, I asked Mr Shaw in this Chamber, “How will these many problems affect the integrity and accuracy of the 2018 census?” Minister Shaw replied, “They won’t. We are actually on track to deliver the census exactly according to the plan.” He even claimed that “Census completion rates are never 100 percent; it’s in the high 90s, and it looks like this census will be on track, as with historical trends.”—right? But the truth is that by that time Statistics New Zealand had become clearly aware that there was an issue of low response rates. They made that a priority issue to deal with. So that was actually the case. Then, on 13 June at the Estimates hearing, Minister Shaw continued to assure us, to emphasise, the census was a success. But less than one month later Statistics New Zealand published a low-key press release confirming that only 90 percent of the population were counted in the census. That is really disgraceful. This is really a shambles. There are huge implications for our democracy because our democracy is based on equal representation. Our funding is based on equitable distribution, and the census will not be able to deliver that. Thank you.