Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill

Thank you, Mr Chair. As we all know, this is the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill. As we’ve said in the first and second reading, National will be opposing this bill because it enshrines higher than required tax rates, but I’m going to talk about that later.

What I want to talk about in my first speech on this bill that we are debating tonight is this outrageous Supplementary Order Paper 248 (SOP) that the Minister has put on the table—what, two hours ago? Maybe two and a half, let’s be generous. For the people who were listening in on TV, when a bill like this goes through a select committee it is subject to intense scrutiny by all members of the select committee to take the opportunity to make sure that the changes, or what’s proposed in the bill, is going to work appropriately, achieves what the intent is, and has the opportunity for people who are most likely to be affected by elements of that bill to have the opportunity to make a submission. Of course, on this bill, we had many submissions because it’s a wide-ranging bill—that’s why it’s called a remedial matters bill, which means it seeks to clarify and fix up a whole range of issues, which it does.

This bill has been going through the Finance and Expenditure Committee for some time, for several weeks, and to have this put on the table tonight, I just find, as part of the process—as a starting point for the discussion around this taxation bill—is not a good place to be. I’m very disappointed in the Minister who is sitting in the chair. So because we haven’t had the debate around this Supplementary Order Paper, I just want to ask the Minister some fundamental questions, because, simply, we have not had the opportunity to ask them.

This bill is about requiring anyone who sells a house to now have to include a statement that includes their IRD number. So the first thing I want to ask the Minister is: what is actually required in the statement? It’s referred to in the SOP. The issue is before a transfer—

CHAIRPERSON (Adrian Rurawhe): Can I just interrupt the member. The SOP that the member’s speaking about is about parts that we’re yet to come to. We’re on Part 1; the SOP is not about Part 1.

💬 Hon Jacqui Dean: Good context, though.

It’s great context for this bill, because this bill, in terms of what it’s trying to achieve, is—I think the most important thing about it is, as I said before, the enshrining of the tax rates and the overarching aspects around that. I think that’s the issue that we have with this bill and that’s why we will continue to oppose it. In terms of some of the elements of the first part of this bill, there is the issue of the rates of tax, and I’ve got an SOP that sets those out which, if the Minister and the Labour - New Zealand First coalition had accepted the National Party’s tax cuts proposed when we were in power, that would have meant that taxpayers in New Zealand would be paying, on average, a thousand dollars less in tax a year. When you put that into the context of what people are paying in increased rents, all those sorts of things—and we know rents have gone up by over $50 a week—this measure alone is very, very significant.

So the current tax rates—where we have a variance is the rate at which the four different personal tax rates cut in. So we still want to see the same four levels, but the thresholds where they cut in are substantially different. I think, particularly, for New Zealanders who—

CHAIRPERSON (Adrian Rurawhe): I’m sorry to interrupt the member, but it’s come time for me to leave the Chair.

Sitting suspended from 6 p.m. to 7.30 p.m.

CHAIRPERSON (Adrian Rurawhe): Members, when we rose for the dinner break, we were debating Part 1 of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill. Andrew Bayly has the call and has 38 seconds remaining if he so wishes.

Thank you, Mr Chair, and I hope you’re going to give me more time than 38 seconds, because I was just starting to get into my stride about Part 1. As you know, this is all about the tax rates that New Zealanders—hard-working New Zealanders—have to pay. This part of the bill, this first part, is about Labour and New Zealand First enshrining higher-than-required tax rates, and this is what I want to talk to you about.

I put a Supplementary Order Paper (SOP) up, No. 250, which is about changing the proposed annual tax rates—[Bell rung] Mr Chair?

CHAIRPERSON (Adrian Rurawhe): Andrew Bayly.

Thank you very much. As I was just saying, I have put up an SOP, No. 250, which says that we will change back to what National proposed, which would have given everyone an over $1,000 saving a year in terms of tax cuts. Of course, as I said earlier, rents have gone up by $50 a week—in fact, slightly more—and the imposition of a whole stack of other taxes would actually go to help if this measure in my SOP was to be adopted tonight, and I hope it is, and I’m hoping the Minister of Revenue is looking carefully at these proposals.

Under this arrangement, we propose that the first rate of tax—and this is the current schedule: it goes from zero dollars to $14,000, which incurs the lowest rate of tax, at 10.5 percent. These are the students—many of us have sons and daughters that study—or people going back to study and retrain. These are the people—low-income people—that we want to make sure keep the tax. It’s also a lot of the superannuitants.

We have proposed, under the SOP, increasing that minimum threshold, not from $14,000 but increasing it up to $22,000 at the same rate—10.5 percent. That’s a huge saving—a huge saving. When you think about it, a single superannuitant basically gets $23,000 from the Government to help them when they are in their retirement, and this would basically mean that all superannuitants would remain at the lowest tax rate of 10.5 percent, not the $14,000 threshold that this Government is now wanting to impose.

Then, the next level is 17.5 percent. Of course, under the existing rules, anyone earning between $14,000 and $48,000 incurs a tax rate of 17.5 percent. We propose lifting that from $22,000 to $52,000. Again, when you think about the average wage in New Zealand, probably in the order of about $65,000 or $68,000 now, this is significantly helping those people who are not earning substantial amounts of money. They’re the people we want to make sure keep their tax—that they don’t have to pay tax at source; they keep the money in their pocket—and this is what the SOP is about.

Then, the threshold of $52,000 to $70,000, which is similar to the existing arrangements and no different for those high-income earners—everyone over $70,000 would be taxed at 33 percent. So the whole purpose of the tax cuts was, in fact, all about looking after the most vulnerable, the lowest paid, the lowest income earners in New Zealand and actually really giving them something significant back in their pocket.

I think when you think about this Government, it rakes in about $73 billion a year from tax, half of which broadly comes from taxpayers, of which half of the personal tax—25 percent of total tax—comes from the top 11 percent of all taxpayers. Unfortunately, the Prime Minister didn’t know her facts today when she was asked. But the issue around this is looking after the personal tax take and making sure that we are looking after these people. But this Government wants to impose more taxes on people.

This is one of the elements. There’s a whole range of other taxes—another six taxes that this Government has imposed since coming into power in 2017, just a little over 19 months ago—and I think too much tax has been taken from people’s pockets. We don’t support that, and I really, really worry for how this Government is going around. You know, they talk about increasing the minimum wage and that sort of stuff. We were trying to increase that as well, but there’s no use—[Interruption] We raised it every year: 50c on the dot, same time every year, and everyone knew it. We didn’t come along and say to business, “We now want you to pay the increased minimum wage in hefty blocks.” when they didn’t even have a Budget or know it was coming. That’s called uncertainty. That’s why business confidence is declining in this country. That’s why you’ve written off $3 billion of economic activity—or roughly about $600,000 per person in New Zealand of economic activity has just been wiped because of silly questions and interjections like this. This is a good SOP. I support it, even if it is my own.

Thank you, Mr Chair. I want to take a call in support of Mr Bayly’s Supplementary Order Paper (SOP)—a very good SOP it is—but I want to explain, before I do, why I’m interested in taking this call.

The tax system is all about fairness—and I think it probably is all about fairness. I agree it should be fair, and I think that one of the problems we have in this country, in my view, is that our low-income earners pay an excessive amount of tax for the amount of money they earn. Now, the reason I say that is because they’re subject to GST like everyone else, they’re subject to a whole lot of other taxes—fuel taxes and every other tax that comes along—and the one way we can relieve some of that tax is through individual tax rates. That’s the reason I support Andrew Bayly’s SOP—and a very good SOP it is, too.

But I think the issue that we need to investigate a little bit further is the way we develop policy that then enables people at the lower end of the income scale to, I guess, firstly, retain more of their income, and, secondly, aspire to earn more as they move forward. I don’t think for a minute that subsidising people’s way of life is the ideal method of doing it. I think we’re much better to reward them through a tax system that enables people who don’t earn so much money to find themselves much better off, and at least they’ve got the dollars they’ve earned. They can then take them out and spend them, rather than taxing them and then finding a way, through Working for Families or whatever, of putting the money back in their pockets. I don’t think that’s a logical way of dealing with these things at all.

All Governments will come under significant pressure around tax, because, effectively, it affects people’s pockets on a daily basis. But the thing that really intrigues me about the tax system is that the tax system, for most people, is to some extent invisible, in that the money is taken off them through various methods, and particularly PAYE, and they don’t really know it’s gone until they get to the end of the year. Of course, the Inland Revenue Department has now come up with a new scheme of contacting every taxpayer in New Zealand, and, of course, people are going to become much more aware of their tax situations as a result of that. Whether that’s good or bad, I’m not so sure, because if you look at the way rates are dealt with through councils, everyone’s hugely aware of the rates they pay councils and they complain about that endlessly.

I think that the new method of drawing attention to people’s tax rates and the amount of tax they either pay at the end of the year or get sent back to them is going to significantly impact on the attitude people have towards tax. That might not be a bad thing, because if people knew how much money they were paying in tax or were conscious of it—I shouldn’t say “knew”, because many of them will. If they were conscious of how much money they were paying in tax on a monthly basis or a weekly basis or, in fact, a fortnightly basis, they’re going to pay a whole lot more attention to the activities of the Government. Now, that might actually, if you take it to its extreme, engender more interest in politics, which wouldn’t be a bad thing maybe—although some politicians might not like that either, because they would be under a bit more scrutiny than they otherwise would be.

But we have a tax system in New Zealand, which—you can argue whether it’s fair or not. That’s an argument—and both sides of the House will agree or disagree on many parts of that. But I do think that it does penalise our lower-income earners, and it does—as people creep up the income scale, the tax rates have not moved in a manner that was appropriate. That’s the basis of Mr Bayly’s Supplementary Order Paper (SOP), aside from the fact he wants to change the whole structure of the Government’s tax regime, which wouldn’t be a bad thing.

But I think that it’s important that people, as I said a little earlier, retain as much of the income as they can that they earn themselves, rather than having to go out and look for accommodation supplements, or supplements for large families and small families. I think we’ll be much better if they are enabled to keep the money they earn. The other factor in that of course is that if people earn more—and we have seen some in the last seven or eight years in New Zealand; we’ve seen a significant increase in the amount of money people are able to earn—putting a whole lot of people into a tax rate that they weren’t in before, so they consequently pay a lot more tax. We’re seeing that as a consequence in Inland Revenue’s tax take on a weekly or monthly basis. So it’s made quite a significant difference.

So for that reason, Madam Chair—Mr Chair. Sorry, Madam Chair—Mr Chair. That’s the second time you’ve been called that in the last two speakers! I apologise but for that. For that reason, I support Mr Bayly’s SOP, and I don’t support the bill, and this particular part of it.

Thank you very much, Mr Chair. There were a couple of comments made by the previous speakers that just cannot go unanswered, so let me start. First of all, Mr Bayly’s Supplementary Order Paper (SOP): now, this is about adjusting the tax rates. Now, the cost of this is literally hundreds of millions of dollars. So let’s theoretically assume that Mr Bayly’s SOP was to go through. The question that I would ask the member is where would this money come from? So what would Mr Bayly do? Would he say, “OK, what we’re going to do is we’re not going to invest in 1,800 more police. We’re going to leave the police static.”? Or would he say, “The $1.9 billion we’re going to invest in mental health—no, we’re not going to invest in mental health.”? Or would he perhaps say, “Teachers—the teachers don’t deserve the $1.5 billion tax cut. So we’re not going to give them that.”?

So it’s all very well saying we’re going to give Mr Bayly and Mr McKelvie and myself and Mr Carter and everyone in this House a tax cut. But the question then has to be asked: if you’re going to give money to those who don’t necessarily need it—let’s be honest—where are you going to get that money from? That side is always talking about fiscal prudence. That side has always talked about paying down Government debt, and that is one of the good things about Mr Robertson’s Budget. He kept that debt pay off projection exactly where it should be. The fiscal accountability rules; he stuck to them.

But we have a choice as a Government. Mr Robertson had a choice as the Minister of Finance. He could give Kiwis tax cuts, and let the social infrastructure erode even further, or he could—and the Prime Minister—say, “What we need to do is rebuild the foundations of our community, of our society, pay more teachers, pay teachers more, more nurses, more police”, and this is the decision that this Government has chosen. We would rather invest $1.9 billion in mental health and get that right than give Mr Bayly a tax cut. That is a choice we have made, but I’m really interested to know what choice Mr Bayly would make in terms of where that money would come from.

The other thing I would say is Mr McKelvie talked about the fact that we need more money in the pockets of the most disadvantaged in our community. Well, Mr McKelvie, the OECD came up with a report—it’s called Taxing Wages 2019—and this report found that a family with one worker earning the average income with two children pays almost no net tax in New Zealand once transfers like Working for Families are included. It also showed that on the average tax rate, a single worker without children earning average income is lower in New Zealand than all other OECD countries. So I suppose what I’m saying is we don’t pay an onerous amount of tax here, compared to all the other OECD countries. We don’t have a payroll tax, we don’t have capital gains, we don’t have Medicare levies. In fact, if a taxpayer really wants to know how much tax they are paying, it is very easy to find out. IR’s Business Transformation, release number three—you go in there, you type in your Inland Revenue number, and any taxpayer can find out exactly how much tax they’ve paid.

So it is incredibly transparent, and, in terms of how much money the Government is spending, all you need to do, Mr McKelvie—and I would recommend this; you would find it interesting—is grab a hold of Mr Robertson’s Budget, and take a look and see where the money is going. What you’ll find: the money is going into mental health. The money is going to law and order. The money is going to education The money is going to sexual and family violence. The money is going into Oranga Tamariki. The money is going into Whānau Ora. We can tell you in black and white where this money’s going. In fact, in the last three weeks, every coalition Government member has stood up and has enlightened the Opposition to exactly where the money is going, and that is to building social infrastructure.

So I am very interested in Mr Bayly’s SOP, because I just want to know where the money is coming from—where the money is coming from. I can enlighten the member that from all the polling—this is historical, it’s just within this country—if you ask the taxpayer, “Do you want more money in your back pocket?”, most of them will say, “Yes”. But then you tell them “But if that happens, that means less police, less doctors, less nurses, less social workers”, and the vast majority say, “No. I’d rather pay for social infrastructure.” In fact—

💬 Hon Ruth Dyson: But it’d be “fewer police”, wouldn’t it.

Well, we want more police.

💬 Hon Ruth Dyson: Yeah, but it would be “fewer police” rather than—

It would be “fewer police”, not “less police”, you’re dead right. Lucky Trevor’s not here!

💬 Hon Ruth Dyson: That’s right, yeah. Under National, it’d be fewer.

Ha, ha! So I remember a street corner meeting I had before the election, and a gentleman came out and said, “You know what? There’s a tax cut, but if we look around here, and everyone in the suburb contributed, that would mean one more nurse, one more teacher, and one more police officer for the suburb we live in, and that is where I would rather my tax money was spent.”

Thank you, Mr Chairman, and, following the Minister of Revenue, it’s a little like taking candy from a kid. The Minister asked, “Where’s the money coming from?” The money’s coming from the poor, overtaxed taxpayer. The second question the Minister asked is, “What expenditure would you cut?” I’ve only got one that’ll give us $3 billion: take away the Provincial Growth Fund, which is Shane Jones’ slush fund. That’s $3 billion alone. The Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill has some good points in it, but National will oppose it, simply because the tax rates are too high.

Mr Nash has just invited me to look at the Budget recently delivered by the Minister of Finance, and I am going to refer, in some detail, to the Budget Economic and Fiscal Update 2019. I doubt whether the Minister’s got his head around these figures, but, on page 26, core Crown tax revenue—it states that by 2022-23, core Crown tax revenue is expected to reach $105.6 billion. That is $25.4 billion higher than in 2017-18, and that’s the problem with setting the tax rates where the Government’s proposing to do it. Over the next five years, we see a massive increase in tax being taken off New Zealanders, and most of it is coming from what they call source deductions, otherwise known as PAYE, and that’s forecast to grow by $10.8 billion over the forecast period. That, the Hon Stuart Nash, is why these rates need to come down.

There are two solutions that have been offered. One is the excellent Supplementary Order Paper 250 by Andrew Bayly, where he’s suggesting a change to tax rates immediately. If that was to be successfully passed in this House, then National would be happy to support the bill in total. There is another solution, and that was the one advanced by the Hon Simon Bridges earlier this year, which is to stop the bracket creep by linking the threshold to the Consumers Price Index. What Mr Nash’s just talked about is the very generous pay settlement recently to teachers, but what that does is put just every teacher on to the highest tax bracket: at $70,000 the tax rate then is 33c in the dollar—that’s marginally above the average wage in New Zealand—and that, Mr Nash, is just stupid. By all means look at Australia, look at England, and look at other countries where they have a higher tax rate for high earners, but don’t go round arguing that earning $70,000 a year means you’re a high-tax income earner and, therefore, should be on the highest rate. So it is time to look at this huge increase in taxation that’s occurring under this Government’s plan over the next three years or four years because it simply isn’t justified. The only excuse for these extraordinarily high tax revenues over the next five years is that this Government is a tax and spend, borrow and hope Government.

We will have the chance later to be talking about the expenditure of the Government, but a lot of it is shoddy expenditure around things like the Provincial Growth Fund and other measures that are done simply to buy a coalition Government and support from New Zealand First. That’s what it’s all about. But in the meantime, New Zealanders are paying far too much tax. Mr Stuart Nash jumps to his feet, tries to justify it, asking us as Opposition members to name one item we’d take off the agenda to pay for the tax cuts, and I’ve given him the one that I’d suggest. Take away the Shane Jones slush fund, where he travels round the country making announcements, looking for photo opportunities, largesse to every province in New Zealand, but most of it going to Northland where he and the Rt Hon Winston Peters live. And if they think that’ll buy them success at the next election, I tell Mr Nash now: New Zealanders are not that gullible.

Thank you, Mr Chair. I thought I’d take the opportunity to respond because that was a welcome opportunity for the Minister as to where we might find the money to pay or allow lower-paid people to keep more money in their pocket. I think that’s a great suggestion. I just want to correct the Minister because he inferred that people that earn more than $70,000 were going to get a whole lot of money and get welcome breaks. As the Minister, if he looks at my Supplementary Order Paper (SOP) 250, the top two tax rates, in fact all the four tax rates, stay the same; it’s just the threshold at which they change. But the last one: anyone over $70,000 under the current Labour Government arrangements will still have to pay tax at 33 percent. Under my SOP 250 using our National Party tax rate, anyone over $70,000 will still have to pay 33 percent.

So this is not about helping the rich. This is about helping at the lower thresholds those people who don’t earn much money in New Zealand, and that’s what it’s about. If you talk about fairness and equity, Minister, that is exactly what tax should do. That means don’t rip the money out of the pockets of taxpayers, especially when they can’t afford it, and then try and hand it back through increasing the minimum wages, all those other accommodation supplements, and all that sort of stuff. What you’re actually better to do is leave that in their pockets from the start. That means they have more money to spend on the first day—they don’t have to go through a mincing machine which might go through some of the ministries to be able to reimburse them for that money. But that is what it’s about.

Where do you find four billion bucks? Well, as Mr Carter very succinctly described, it is the Shane Jones slush fund that most people, I think, are now getting a bead on and seeing how unproductive and wasteful that expenditure is. If that was driving economic growth, and that means sustainable economic growth with new jobs and investment in businesses that are going to employ a lot of people, we’d all say that’s a great outcome. But unfortunately what we’ve seen is just a whole lot of disparate announcements, money thrown at things, very little job creation, and probably just going to get blown, and unfortunately not create the sustainable businesses that we want. So there’s $3 billion. We’ve got a billion that was given to the Deputy Prime Minister for carpets and curtains in Sweden, ambassadorships, and things like that. Then we just had another billion dollars into rail. So there’s $5 billion.

We like the idea of spending on social policies. We like to see nurses and people employed and paid reasonably; all that sort of stuff. That’s not the cost. This is about more efficient spending. As my colleague just said, this issue is around tax, spend, and borrow, so as he quite rightly pointed out, the tax revenue of this Government, under current settings with no further taxes, will go from roughly $72 billion or $73 billion to just under $100 billion in the next four years. Even in the last 19 months, this Government has imposed new taxes, six of them worth a current value of about $2.6 billion already, although I may be slightly out with my numbers with their recent tax changes rushed through at their Budget, and under urgency, of course.

But the other thing, I think, Mr Carter didn’t refer to is the borrowing. So whilst this Government is going to rake in basically another $18 billion of tax over the next four years, at the same time, the same projections that Mr Carter is looking at, the debt of this country is going to increase by a further $10 billion. So that’s, effectively, $28 billion of additional tax and debt that has been taken off New Zealanders and posed as a liability on New Zealanders; that is not a good thing. That is why this SOP 250 is an appropriate thing.

This is about looking after the most vulnerable New Zealanders. I think that it’s time for the Government to actually recognise that at some point this fiscal creep, which they call fiscal creep, is where people increase through into the next upper bracket of tax payment simply through inflation—is a pernicious thing. It’s one, of course, of the big issues that we’ve announced as a policy already, which is to make sure they’re inflation linked, and this SOP 250 is a way of dealing with that pernicious outcome where people are getting forced into the top taxpaying route.

I’m just going to take a very short call just to highlight a couple of things that the previous speakers have highlighted. The Rt Hon David Carter suggested that we have a much higher tax bracket for those earning a lot of money. Now, I don’t see that on Mr Bayly’s Supplementary Order Paper (SOP) 250. Is that going to be part of National policy? Are you going to put it at 45 percent at $150,000? The member did say “Look at Australia.”, and Australia, I think, has 45 percent at $175,000 or $150,000. So that mightn’t be a bad suggestion. I look forward to that being in the National Party tax policy heading into the next election. We may be seeing it earlier under an SOP coming in the next hour

The other thing I would say is I challenge both those members to come to Hawke’s Bay and to talk about Mr Jones’ fund as a Northland slush fund. What happened in Hawke’s Bay over the last couple of weeks is the Provincial Growth Fund actually opened up the Napier to Wairoa rail link that was closed in a slip, and the previous Government refused to fund it. There’s a business case from Wairoa to Gisborne, which is going to open up that side of the rail link. I can tell you the companies and the businesses up there that need to send their produce to port can do it on rail to Tauranga—it’s a long way—or on rail to the Port of Napier. It’s a hell of a lot cheaper and we take a whole lot of trucks off the road. That is about economic growth, that is about creating jobs and opportunities in our regions. So I completely refute—completely refute—the suggestion that Mr Jones’ Provincial Growth Fund is not adding value because in Hawke’s Bay it is absolutely adding value.

I can also say as the Minister of Fisheries there’s about seven projects so far, totalling about $10 million, into aquaculture. This is adding substantial value into an industry which has been undercapitalised—it’s been undercapitalised. There’s going to be jobs, there’s going to be growth, and there’s going to be economic development.

I think this is fantastic, and to say what we’re going to do is say no to the regions—no money for the regions because Mr Bayly wants a tax cut—it doesn’t work that way, I’m afraid, Mr Bayly. We believe in the regions. We’re backing the regions because we think that it’s not just open roads that need funding; we think it’s about provincial New Zealand also needing a hand.

The other thing I would say is the way things work in this country, it’s about targeted relief—it’s about targeted relief. So I remember when Working For Families came in; I think the former Prime Minister John Key—did he call it “communism by stealth”? Is that what it was?

💬 Hon Ruth Dyson: That’s right.

Communism by stealth. And then his Government actually adjusted the thresholds because he saw it was actually working, and it was targeted, and it provided relief to those who really needed it. This is what this Government’s done; it’s not saying, “Tax cut for everyone. Tax cut for the very wealthy as well as the poor.” It’s saying, “To those for whom life is a struggle, we will help you out. We will help you out. We’ll give you the winter warm up, for example—we’ll give you the winter warm up because we know it’s hard work.” It’s about targeted relief for those who really need it. Whereas Mr Bayly—I don’t think Mr Bayly needs a tax cut. I could be wrong—I could be wrong. I don’t think that Mr Carter needs a tax cut or Mr McKelvie needs a tax cut. I don’t think Mr Scott needs a tax cut. Maybe I’m wrong. But there are Kiwis for whom life is a challenge, and it’s this Government’s role to make sure that they have the ability to live with dignity. That is why we have a targeted funding scheme, to help out those people, as opposed to just a carte blanche tax cut for everyone.

Now, Mr Bayly’s SOP is actually out of order, but that’s beside the point. We think we’ve got it about right. We are continuing the tax rates as they’ve been for about the last seven or eight years, as that member’s Government had. As I said, Governments have choices, and we have made the choice to rebuild New Zealand’s social infrastructure and to ensure those for whom life is a challenge have the money to live with dignity. That’s a choice this Government has made. That is why we will not be supporting Mr Bayly’s SOP, that says a tax cut for everyone and no targeting. Thank you.

Committee stage is normally a chance for the Opposition to ask questions of the Minister, but when you’ve got a Minister as weak as this, that he’s got—I keep asking questions of the Opposition. Let me take a chance to respond to his questions, answer them for him, before I put six very specific questions to him. First of all, on this side of the House, we’re not advocating to put tax rates up at all. They don’t need to be. What we are saying is stop wasting money. The second question he asked is around Hawke’s Bay and the recent announcements of the slush fund of Shane Jones. Might I point out that in amongst those announcements was money for water, irrigation, infrastructure, water storage. We had a perfectly good scheme which the Labour Government immediately disbanded as soon as they came in, on the basis it was a subsidy to farmers. I don’t think many farmers in the Hawke’s Bay will miss the inconsistency there.

Now, let me get to the very specific questions I want to ask of the Minister, because I see he’s got some beavering, eager officials there to help him with these questions. I want to know how many taxpayers now are in the bracket of $70,000 or more, paying the top tax rate. A simple question to ask: how many are there? I then want to know how many he predicts will be there in 2020—how many more taxpayers will move into the tax bracket between 2019 and 2020, when tax revenue goes from $84.7 billion to $89.2 billion? My third question, then, is how many more are they budgeting will move into the top tax rate in the year 2020 to 2021, when the tax revenue goes from $89.2 billion to $95.1 billion? My fourth question is how many, then, taxpayers move into the top tax bracket of $70,000 between 2021 and 2022? I point out to the Minister, because he won’t be familiar with his own figures, the tax income, core tax revenue, in 2021 is $95.1 billion, going to $102 billion in forecast 2020. My, I think, fifth question then, or sixth, takes us to the next financial year. What is the additional number of taxpayers who move in the 2022/23 year into the top tax bracket of $70,000, when the tax revenue increases from $100.2 billion to $105.6 billion? For the Minister to now start to realise the extent of this bracket creep that’s occurring—when you can look at their own Budget Economic and Fiscal Update figures and see that Crown tax revenue increases by around 25 percent from the 2022/23 year as compared to the 2017/18 years.

So there are some quite specific questions from the Minister that we expect an answer to. This is the opportunity where we as Opposition normally use committee stages to ask questions of a Minister to ascertain the Minister’s proficiency, his capability. He can use it, if he likes, to ask questions of the National Party as to what our tax policy will be when we become Government after election 2020. If he’s that worried, I can give him some hints now, but it certainly won’t be maintaining the tax rates that this Government’s maintaining, because we won’t need the sort of income that this Government needs, because we won’t be wasting money around the regions like Mr Shane Jones is at the moment. So some quite specific questions. I’m looking forward to the answer, the Hon Stuart Nash.

💬 Andrew Bayly: Oh, you’re going to answer the question?

Yeah, he’s on his feet.

💬 Andrew Bayly: Mr Chair?

Are you seeking a call?

💬 Andrew Bayly: Yes please.

CHAIRPERSON (Adrian Rurawhe): I call Andrew Bayly.

Oh, thank you, Mr Chair. Sorry, I just wanted to give the Minister an opportunity to answer those very well-formulated and interesting questions, because I’m sure the Minister will know those numbers offhand. I hope that he does, because, as we know, 11 percent of taxpayers pay roughly half of the 48 percent collected in personal tax—

💬 Stuart Smith: What percentage?

Half—25 percent of the total.

💬 Stuart Smith: That’s what, 11 percent?

Yeah, 11 percent. So it’ll be interesting to see the Minister’s response. But, of course, I’m sure he would know the numbers, because he is the Minister of Revenue. But the whole issue around this—I think my good colleague the Rt Hon David Carter makes a very strong point—is collecting and making sure that people keep the money at source, and I think that’s a very important point. The thing I find most troubling about the Minister’s response is it’s always about how we can hand money back to people. He talked about Working for Families, he talked about benefits. The reality is—and this is what the Supplementary Order Paper (SOP) was about. It was actually saying, look, putting it through a big mincing machine and handing it back to people who need it—there’s an easier solution. That is to let the vulnerable and the people that earn the least amount of money to actually keep that money at source. Don’t tax it from day one. Let them keep it. That’s a way that people can manage their affairs better. They have the money when they need it, when they earn it, not when they get it handed to them a month later or under some constraint that the Government puts it through.

That’s the primary purpose of the SOP, and as I said before, and I want to reiterate, my SOP does not change any of the tax rates. It only changes the first two rates, the thresholds at which the higher rate comes into force. It certainly doesn’t allow wealthier people earning more than $70,000 any advantage at all. They will still have to pay tax at 33 percent, the top tax rate, at $70,000.

But I also just want to turn to my second SOP, which is SOP 251, and this is the one—it relates to clause 2(14), to replace 1 December 2019—

CHAIRPERSON (Adrian Rurawhe): We’re yet to come to that debate.

Oh, well, I’m just putting a marker down. I didn’t know whether you were going to take this, because it refers to the first part of the bill, but, obviously, the main section’s in Part 2. So I’m very happy to defer that to Part 2, Mr Chair, but I just wanted to make sure that we had no issue with that.

So, yes, this issue about tax is a very, very, very important thing. As I was alluding to before, you know, this avalanche—and I’ve used this word before—this rapacious Government, who just wants to rip money out of people’s pockets—rapacious.

💬 Ian McKelvie: What does it mean?

💬 Hon Member: Greedy.

Well, I couldn’t say that the Government’s greedy for cash, but I find it slightly troubling, because since Labour and New Zealand First and, I presume, with the support of the Greens—we don’t talk about them. But we’ve had three lots of fuel excise taxes imposed under this Government in the last 19 months. We’ve had an Auckland regional fuel tax: 10.5 percent plus GST. We’ve had the brightline extension to five years. We’ve had ring-fencing of losses, and we’re going to be talking about that later. We’ve got GST on mobile roaming. We’ve got WorkSafe levies, and we’ve got tourism tax. What was that $80 million I think we passed, in urgency, immediately following the Budget?

That’s why we’re so fundamentally opposed to enshrining these higher than necessary personal tax rates, because if you’re going to do all those taxes there, six or seven of them, rake in the extra—it must be near $3 billion. Even though they campaigned on the basis they’re not going to put on any new taxes, somehow, miraculously, they’ve now put in all these new taxes. I don’t know why. Maybe the Minister can explain why you say, before an election, you won’t do any new taxes and immediately after—19 months is not long—you impose all these new taxes. So we want to reinforce that we want ordinary New Zealanders to keep their money. Don’t give it to the Government. We don’t need your money. We are earning enough as a Government, and what we do want is a more responsible Government that doesn’t go and borrow $10 billion.

I move, That the question be now put.

The Minister has informed me that Andrew Bayly’s amendment replacing clause 3, set out on Supplementary Order Paper 250, may have an impact on the Government’s fiscal aggregates. As the required 24 hours’ notice was not given, no question will be put on the amendment.