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

I move, That the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill be now read a third time.

This bill is broad in scope and proposes several initiatives to make the tax system simpler and fairer and to improve the integrity of our tax system. First and foremost, the bill enables the efficient collection of GST on low-value imported goods. Right now, customs does not usually collect GST on imported items that are worth less than $400, simply because it is uneconomic for them to do so. So this is not a new tax; it’s simply that we now have the ability to collect it. The technology has matured to the point where offshore suppliers and market places of low-value goods can use their ICT systems to collect GST and remit it directly to inland revenue (IR), and this is what this bill proposes and enables.

This is but one of several improvements to cross-border taxation that the Government is leading in a globalised 21st century system. Maintaining and improving the integrity of our tax system is a major focus of mine. This Government has already passed legislation to reduce base erosion and profit shifting activities of multinationals, and we’ve begun consultation on the best way to tax offshore digital and social media giants who supply services to New Zealand.

We’re not alone in this endeavour, and this issue is exercising the minds of tax experts all over the OECD and, hopefully, it will end up in a consensus agreement. But collecting GST on all imported goods is one of the more critical pieces of the puzzle. The tax system must keep pace with a globalised world where more and more people purchase goods and services online and from offshore suppliers. By not collecting revenue on a growing trade sector, more and more of the tax burden falls on wage earners and business owners. So as well as protecting the revenue base, this is also about fairness—fairness to local retailers who have to pass on 50 percent extra to consumers when their offshore competitors don’t. It is simply not fair that offshore suppliers have an immediate 15 percent competitive advantage against bricks and mortar retailers who are doing the hard yards in our towns and cities around the country. The sooner this measure comes into force the better for retailers and the greater the integrity of the tax system. But offshore suppliers need time to ensure that their systems work, which is why last week Cabinet agreed to push back the start date two months to 1 December 2019.

Australia has required offshore suppliers to collect and remit GST on low-value goods since July 2018. So this is not a step into the great unknown for these large multinationals, and, indeed, many other jurisdictions are considering similar rules. It’s a sensible and predictable response to changes in consumer behaviour and the global market place. Again, it’s about companies paying their fair share—nothing more, nothing less. New Zealand is still one of the first countries to implement the system for collecting GST on low-value imported goods, ahead of the EU, whose proposed rules are due to apply from 2021.

As well as these new rules to broaden the GST tax base, this bill makes several other improvements to our tax system, which I am pleased to summarise. This Government has committed to a number of policy measures aimed at making the tax system fairer and improving housing affordability for owner-occupiers by reducing demand from speculators and investors and removing tax incentives that exist in the property market. We’ve already increased the brightline period from two years to five years, and yesterday I announced that a new measure would be added to this bill to require nearly all buyers and sellers of property to provide their IRD number as part of the transaction process when they are selling their main home.

Previously, those buying or selling their main home did not have to provide an IRD number. This is a small change which will provide the Inland Revenue Department with better information and make it easier to identify taxpayers who are buying and selling property. In fact, about one-third of the people currently transferring their main home already disclose their IRD number on the property transfer form, even though they are not currently required to do so. Taxpayers are accustomed to disclosing their IRD number when they open a new bank account or start a new job, so this is not a big ask for them to also provide this when buying or selling a property. However, significantly, it will enable inland revenue to better identify those who may be buying and selling property with the aim of making a profit. This was a recommendation of the Tax Working Group.

I was told by a property investor friend of mine that this is one of the largest rorts in the property investment sector. His advice to me was to require people to put down their inland revenue number and IR will stop a number of the rorts that are occurring at the moment, because, of course, if there was no IRD number, then the inland revenue does not have the information. So, again, it is about maintaining the integrity of the tax system.

In addition, this bill also proposes ring-fencing losses made from residential rental properties. This means that investors will no longer be able to offset tax losses from their residential properties against their other income—for example, salary or wages or business income—to reduce their income tax liability. This measure will make the tax system fairer and level the playing field between property investors and owner-occupiers.

Of course, I understand that people will still invest in property, but we want people to invest in property for the right reason—i.e., a balanced portfolio or whatever, as opposed to simply tax structuring. Currently, first-home buyers can struggle to compete against investors who have part of the cost of servicing their mortgage subsidised by reducing tax on their other income. The loss ring-fencing rules will address this unfairness and improve affordability for first-home buyers, making it easier for them to transition from rental properties into their own home.

Earlier this year, we passed new legislation to better enable the flow of information between Government agencies while protecting the privacy and rights of individuals and businesses. We also introduced short-process rulings, so small businesses and individuals can more easily obtain binding advice from the inland revenue to help them get their tax positions right the first time. There are still binding rulings, of course, but these are expensive and often out of the reach of the vast majority of the small to medium sized enterprise (SME) sector, so this is just another measure this Government has put in place to help the SME sector and enable it to get the tax obligations and responsibilities right.

But there is more we can do to improve the administration of the tax system. Sometimes tax law does not align with intended policy outcomes, and that can be a barrier for both taxpayers and the inland revenue. The proposed new processes in this bill will allow for an Order in Council or a legislative exemption to be made to align the law with the intended policy outcomes. There are safeguards to ensure no one is disadvantaged by this proposal, including it being optional for taxpayers to apply in all circumstances. Changes made using these powers cannot apply for more than three years either, which should be enough time for changes to be made to primary legislation, considering it takes about two years, on average, to pass remedial legislation. This proposal has the benefit of reducing taxpayer compliance costs by providing certainty earlier.

We also are proposing to give the Commissioner of Inland Revenue the discretion to consider a wider range of information in order to grant the victim of a sexual offence permanent exemption from paying child support. In some cases, the person offended against finds themselves in a situation of having to pay child support for a child born as a result of sexual violence, which is absurd. The proposal, therefore, is to loosen the requirement that there be a conviction, and to allow the Commissioner of Inland Revenue to consider other information when deciding whether or not to grant an exemption.

Let me give you a very brief praecipe of how this came about. As the Minister of Revenue, I have received about three letters from women who conceived as a result of rape. They did not report this rape; therefore, there was no conviction, and they were being chased by inland revenue to pay child support. I thought this was hugely unfair, and I required my officials to undertake a process to change the law. So those who say that writing to an MP or a Minister makes absolutely no difference—well, they are wrong, because in important issues, a letter from a constituent can make a huge difference and can actually get the law changed.

A couple more points. I’m pleased that this bill will enable entities to retain their tax records in Te Reo Māori. This, of course, has been an operating practice among some Māori organisations for some time and it is the inland revenue’s operational practice, but this Government believes that codifying the practice is an important recognition of the language of our tangata whenua.

These are the main features of the bill, and it is a bill which makes the tax system fairer. So I commend the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill to the House.

Thank you, Madam Speaker. I rise to take a call on the most recent tax remedial matters bill we have before the House, and as this House will know, these bills do come before the House, roughly, twice a year. They are, as usual, a collection of a range of taxation matters that need to be addressed, and quite often, they find wide support across the House.

There is a lot in the tax system that when we come to review it—whoever is in power—through the select committees, we find commonality on, and that is certainly a good thing that I want to see continue to happen. But in this case, National will continue to oppose this legislation, because while there are a number of matters in the bill that we do support and that we see merit in—and, in fact, a number of matters that began life and their policy development under our Government, and so of course we support them in principle—there are none the less significant matters of concern for us that mean we will not be supporting this legislation, as we have not since its first reading.

The clue, a little bit, is in the name in that the bill talks, of course, about confirming the annual taxation rates, and it should be no surprise to anyone in this House or, indeed, to anyone listening to these debates from home that National and Labour have a very, very different view around taxation and around how much tax New Zealand families, individuals, and businesses should be paying. That is at the heart of many of our economic differences, and on this side of the House, of course, we are very much of the view that the annual rates in this bill are set at a grossly out-of-date threshold rate. They should be adjusted for inflation, as they were in 2017, before this Government cancelled those changes. It is wrong to lock in, again, those rates that now date back to 2010, which are seeing inflation erode the real value of those thresholds, so that very soon the average wage earner will be paying a top tax rate, and that is simply wrong. National will not continue to see taxpayers miss out year on year as inflation, effectively, means the Government increases their tax every year.

Unfortunately, it’s not an isolated case from this Government. We have seen this, as a Government, so that it feels like every day. I accept that it’s not every day, but, certainly, a large chunk of what this Government has done has been to introduce and put up taxes. That is not necessary. It is a burden on New Zealand families, who are struggling with the cost of living, and it is entirely to fund a programme of wasteful, untargeted, and unaccountable programmes. That’s because the Government overpromised in an election campaign, made promises it could never meet—

💬 DEPUTY SPEAKER: Could I just remind the member who’s interjecting that he’s interjecting from a seat that’s not his own. That is, in fact, closer, which is against Speakers’ rulings.

💬 Hon Ruth Dyson: But he moved for the company, not for the advantage.

💬 DEPUTY SPEAKER: Oh well, then, he should be quiet.

Oh then, he should have sat up here! This is a Government that has promised far more than it could ever deliver. It got into Government, has had an internal “Oops!” moment, and is now trying to rewrite history around these things being a legacy of what they were left. What this Government was left was a strong economy, strong forecast surpluses, low debt, and an economy that was set to grow strongly over future years. What they’ve done in that time—and why they need these higher taxes—is they have slowed down the economy, they have cut business off at the knees, they have put up the cost of living on New Zealanders, they have frittered the surpluses they were left, and they have still failed to deliver on promises. That’s why this bill is locking in tax rates that are far higher than they should be and than they need to be, and this side of the House will not support them.

The bill also deals with the ring-fencing of tax losses on rental properties. I find it outrageous to hear the Minister of Revenue saying “This is all about fairness.”, and we hear this a lot from this Minister. When he’s got no defensible position, he just says “Well, it’s about fairness.”, and looks as if that should be the end of the reason. But that doesn’t stack up. It doesn’t stack up when Mr Nash’s definition of fairness is seeing rents going up by $50 a week to the vulnerable people of New Zealand, who can’t afford it, and this bill will make that worse.

💬 Hon Stuart Nash: No. Our Families Package have given them $75 a week.

Treasury’s own advice—and I know the Minister thinks he knows more than Treasury and everyone else, though maybe he does on the cyber-security, but that’s another matter. But Treasury have told them that this will put rents up even further, and what does this Government say? “We don’t care. We want the tax.”—that’s Labour’s definition of fairness. Well, on this side of the House, we don’t think it’s fair to see rents go up $50 a week for those who can afford it the least. That’s what this bill will do.

Now, it’s not about fairness when this is the only asset class that this Government is worried about ring-fencing—it’s the only asset class. So if an orthopaedic surgeon wants to own good-looking racehorses, they’ll get a tax deduction. They can set off that loss against their orthopaedic surgery and that’s all fine. But if a mum and dad go and buy a rental property to park a bit of money in, somehow that’s outrageous and needs to be stopped. Well, that isn’t fairness. That is ideological, it is punitive, and it will punish the very people that this Government callously pretends to care about.

Do you know what else this bill does? It brings these changes into effect far sooner than they should be. Now, I acknowledge the Minister, at the very last minute—even though officials told us it couldn’t possibly be done—for pushing out the start date by a couple of months for the low-value goods in the GST, and that’s certainly a step in the right direction. But it’s not enough, Mr Nash. It’s not enough. The change should have started at the beginning of the next tax year, as is convention, but this Government is so money-hungry, it wants that money now. So it’s starting in December instead of April because they are so desperate to get their hands on even more of New Zealanders’ money.

On the ring-fencing, it gets even worse, because the change is retrospective. This is a Government that cares so little for good practice and good policy, that cares so little for the people of New Zealand who earn that money, that in this bill they’re passing retrospective tax law that already applies from 1 April this year. It took effect in April this year, even though here we are nearly at the end of June and it’s still not law. That’s how money-hungry and conniving and desperate to get their hands on your money this Government is.

It’s not for fairness—it’s not for fairness. Fairness would see tax rates continue to move with inflation. Fairness would see a Government that cares about keeping rents low. Fairness would see a Government that doesn’t pass retrospective tax law. Fairness would see a Government that treats investing in all asset classes in a similar way. That’s not what this bill does, and that’s why we don’t support it.

There is one item that I can concur with the previous speaker Amy Adams on: when she identified that there is indeed some public expenditure which may be wasteful. Well, based on the quality of the arguments in this debate, there can be no doubt that the salaries paid to some Opposition members are vastly wasteful in terms of the productivity that that money produces for the public welfare of New Zealand.

What we heard from the previous speaker was the same stale old argument from the National Party about tax—the same stale old argument that they’ve sustained themselves on for years and years. Really, it is quite extraordinary, when most New Zealanders are absolutely aware of the pressing needs for investment in our social infrastructure, in our hard infrastructure, to make this a country in which the people of our country have decent housing, in which our kids can go to good schools, in which our hospitals are well cared for and don’t have sewage running down the walls, in which we have an efficient transport system, and in which we have enough police to keep our communities safe. I think for most New Zealanders, the choice is very clear—that they want to see investment in those public services and infrastructure which benefit all members of our community over and above tax cuts, which will disproportionately benefit people on salaries of the kind that members in this Chamber enjoy. So I utterly reject all of the arguments made by the previous speaker. It is a stale and old argument, the singular obsession with reducing income tax rates at every turn.

Of course, from time to time, income tax rates need to be adjusted, and that is not something that this Government rules out in perpetuity. But when one looks at the pressing needs in our communities today, this Government very clearly stands on the side of New Zealanders who say that they want investment in public services for the many rather than tax cuts for the benefit of the few. So on those grounds, I absolutely support this bill and the provisions which set in place the income tax rates for the year coming forward. No doubt all members of this House will enjoy a vibrant debate about tax policy as we head into 2020 and the election campaign next year.

Of course, Madam—of course, Mr Speaker, this bill is not entirely—that was such a smooth transition—about just setting the annual rates for the year ahead. Actually, on that count, may I just acknowledge the Minister of Revenue for ensuring that this bill setting the annual rates for the 2019-20 year has been processed through the Parliament in a timely fashion. I remember the cycle of tax bills in the last couple of years of the previous Government, one of which only passed in, I believe, March of the year, when, in fact, it had to be passed by 1 April in order to ensure that the forward appropriations would be lawful. So that’s a sign of a Government that’s running well and a Minister who’s on top of his game.

More broadly, I think we can say because we have a Minister who is running a busy tax programme, we’ve already seen action to ensure that taxation on multinationals is tightened up so that everyone who’s operating in this country pays their fair share and contributes to the public good. We see a very busy tax programme that’s moving forward and we see some very important measures in this Budget, which are about implementing that tax programme and about ensuring that we have a fair and level playing field for all New Zealanders.

Indeed, I actually think that most members of this Chamber, across both sides—although we would differ sometimes in the interpretation of this—would agree that one of the important tenets of an effective tax system does come down to that principle of there being a level playing field, that we don’t favour one group of people or one particular kind of activity over another. It’s in that regard that I think that the changes that have been made in respect of bringing low-value imported goods into the GST net are very, very important.

I do note that this is one of those provisions that has pretty broad support, actually, across the House—and let’s be clear: some of this work began under the previous Minister of Revenue in the previous Government, the Hon Judith Collins. I do think that the House is a little bit the poorer tonight for the fact that—well, to date, anyway—that member hasn’t had the opportunity to contribute to this debate. She usually does speak in the tax debates and makes a good contribution as someone who knows the subject matter and someone who was a previous Minister. I’ve noticed this week that she is speaking publicly a little bit less. I think it would be great if she was able to contribute in this debate, because she has something to add. I know that this is a change that she does support, and I believe she would have some warm words to say about the work of the current Minister—

💬 Hon Ruth Dyson: Who’s that?

—the Hon Stuart Nash. I’m talking about the Hon Judith Collins, a member who, you know, despite policy differences, we on this side of the House admire as a competent person who does speak her mind and has some clear political principles.

But coming back to the current Minister the Hon Stuart Nash, this is his bill and he’s picked up that piece of work in terms of making sure that low-value goods imported into our country—mainly through online shopping these days—are treated on a level playing field. This is an issue that has been bubbling around for a really long time, and it’s become more of an issue as more of us do our shopping online. Groups like Retail New Zealand have spoken very strongly about this, for example. The lack of a level playing field now is most evident, of course, because you know that if you go down to the local bricks and mortar store at your local mall or on the high street and you buy any kind of good, you will pay 15 percent GST on that. With a few clicks of the mouse, potentially you can find that same good online, buy it from a purchaser who hasn’t necessarily invested in that hard infrastructure and supported the jobs in New Zealand, and you don’t have to pay GST on those low-value goods at the moment. So this provision simply ensures that person A who buys that good from the local store, and person B who buys that same good from a retailer or a market place online, are treated in the same way and both purchases have 15 percent GST applied to them. It is level playing field stuff. It is fairness stuff. I believe that most members of this House will support that.

I want to speak briefly on one of the other major changes in this bill: the provisions around the ring-fencing of tax deductions on rental properties. This ensures that those deductions can’t be used to reduce income, to be offset against other forms of income. The deductions can still be carried forward, they can be applied to other rental properties, but they can’t be used to offset other forms of income. We know that the current provisions, which do allow that to happen, effectively, give those who are investing or speculating in the property market certain financial advantages over the young couple who are turning up to try and buy their first home. This is about a level playing field as well. We want that young couple—the owner-occupiers, whoever it is—to be on a level playing field. We don’t want them to be out-competed by investors or speculators because they have an inbuilt advantage through the tax system. That is not something this Government supports, and that is why we have moved on this issue.

I’ll repeat something that I said in my earlier contributions on this bill, and that is that this Government has been taking a sustained approach on this issue. Last year, we increased the brightline test to five years, and there was much hissing and screeching about that, about how ineffective that would be. We’ve made sure that foreign speculators aren’t allowed to be swooping up those houses for investment purposes to the detriment of Kiwi people who want to buy their own home. These measures are beginning to make a difference. We’re seeing a stabilisation of house prices in major markets like Auckland. We’ve seen the proportion of first-home buyers actually begin to go up after crashing for about nine years under the previous Government, to the point that we got to in 2017 when we had the lowest rate of home ownership since 1951. That was the record of that previous Government. So this Government is very proud of the fact that we are taking decisive steps on this issue to actually give those Kiwis who want to get into their own home a fair go.

This is a good bill. It addresses a number of matters in our tax system. I just want to touch, finally, on one other change that the Minister spoke on—with a bit of passion, actually—in his address. Those are the provisions allowing the Commissioner of Inland Revenue to have some discretion in exempting a small number of people, mainly women, who have been victims of sex offences from having to pay child support. I think virtually all of us in this House would agree that it is unconscionable that we would have victims of serious sexual crimes who were put in that position because of an inflexibility in our tax laws. It’s something that would be difficult to actually legislate around, but I think that most of us in this House know the competence of the Inland Revenue Department and believe that it’s an appropriate area for them to have some discretion to ensure that tax is implemented fairly in that respect, which is the fundamental principle of this bill, which I do commend to the House. Thank you.

Oh, thank you, Mr Speaker. Here we are, speaking on the third reading of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill. I was just wondering whether that former speaker Michael Wood wanted to say anything more, because we were missing so much. First of all, we were lacking enthusiasm—enthusiasm for this.

This bill just demonstrates why this Government in power right now is a problem to ordinary New Zealanders and to business people alike. That Government over there is overseeing the greatest haul of new taxes and tax revenues over the next few years than we have seen for a long, long time. We’re going to be seeing our tax take of this Government rise from about $84 billion to over $105 billion in four years’ time—a massive increase, absolute massive increase. Then we’ve seen the Minister of Finance, also during that intervening time, increasing debt by 10 billion bucks—10 billion bucks. That doesn’t take into account the off-balance-sheet borrowing that the New Zealand Transport Agency and other Government entities might be entering into. This is a Government that just wants to rake money in from ordinary New Zealanders, and that’s why we’re not going to support this bill, because the main thing about this is enshrining higher than necessary tax rates for the coming year.

That’s why I put up a Supplementary Order Paper (SOP) 250, an SOP that would have meant that New Zealanders would have kept, at the time they’re paid, money paid to them by their business owners or employers or whatever it might be. Whatever the source of that income, they would have kept the money in their pockets—an extra 1060 bucks a year—1060 bucks. Most of that, in my SOP, was about looking after the most vulnerable and the lowest paid of all New Zealanders. That’s where we want to make sure that people retain more money in their pocket—not to take it off them and then pay it back to them in the form of a benefit.

Yesterday, I found it fascinating. I found it fascinating because, when I started talking about it, subsequent speakers would get up and say, “Well, look, you know, we’re increasing minimum wages”—well, of course, the employer pays for that, not the Government—“and then we’re going to give back even more through Working for Families”—one of them said that yesterday—“and accommodation supplements.” Well, actually, I think there’s another way of looking at the equation. Why don’t you just let people keep the money in their pocket at the time when they’re paid? Why do you have to put it through that mincing machine and then pay it back in the form of a benefit? How degrading. Just let people have the money at the source. That’s why my SOP was about putting in place the new revised lower tax rate for the lower paid, the most vulnerable, in New Zealand.

I think this is what people talk about when they talk about a regressive tax. That is the one that hurts the poorest and the most vulnerable members of our society. I think if the Government could say, “Right, we’re raising another $25 billion of tax over the next four years. We’re taking on account another $10 billion of extra debt—that’s $35 billion, roughly—and we’re going to spend it on really good stuff like roads, like infrastructure, and like all that sort of stuff.”, we’d say, “Well, it’s not a bad proposition.” But what have we got?

One of the members from the Government side said—in fact, it was a Minister—“You tell me how we’re going to stop all that. How are you going to fund all these things, like infrastructure?” Well, it’s a very clear proposition. All you do is stop the $3 billion fund that Mr Shane Jones has got his hands on, which I know the Hon Paul Goldsmith has been honing in on in terms of the efficiency of that spend. You stop the billion dollars you gave to Winston Peters for the great new ambassadorships and spending on curtains and carpets in Sweden and all that billion dollars he got again in the latest Budget for his railway line in Northland—we all know what the purpose of all that is. That’s the answer: if you’re going to take in money, make sure you spend it wisely. Unfortunately, we’re not seeing it from this Government.

Now, I just want to turn on to a digital tax, commonly referred to as the “Amazon tax”. I want to make sure that everyone is very clear: the New Zealand National Party supports this tax. As the chair of the Finance and Expenditure Committee—and I think the Minister, on earlier occasions—has acknowledged, this piece of legislation had its genesis under the Hon Judith Collins. What we want to do is make sure we support our retailers at all levels. Of course, when GST was brought in all those years ago, no one thought about online trading of goods, and, of course, time has moved on. This legislation is about protecting retailers, and, of course, it requires overseas suppliers—or offshore suppliers, to use the technical term—to register for GST if they sell more than $60,000 of goods to New Zealand and to account for GST for items less than $400, which previously were largely not subject to GST.

The issue we have with this—and, again, I put in an SOP yesterday that we debated, SOP 251. During the select committee stage, we had a number of powerful submitters who came and said, “Look, we are large multinational online platforms.”—eBay and Alibaba are a couple of examples—“To do the programming changes, it’s going to take time.” There are requirements to be changed in Australia as well. They said, “We do want to comply with the requirements, but we need time to put it in place.” We had a lot of debate in the committee. The officials said it should be 1 October. We, particularly on this side of the House, said it needed to be more reasonable. That was very hotly debated, and, ultimately, at the end of the day, the select committee agreed on 1 October.

Suddenly, at the last minute, we had a Minister intervene and jump over the top of the select committee and change it to 1 December. That cut across the whole select committee process, in my view. But, more importantly, I do not think we’ve actually ended up with the most appropriate date, and there is a risk—there is a risk—that some of those online trading platforms will not be ready on the due date, and that’s what the SOP was about.

The other aspect—and this is a bit that we really do have a problem with—is around the issue of ring-fencing of tax losses. I think speakers have talked about it before. In New Zealand, we’ve got a trillion-dollar property market—40 percent of it is owned by ordinary mum and dad investors. They’re not sophisticated people, in many cases, and—as I said yesterday in the debate—many wealthy people do not want to own lots of rental properties. These are ordinary people who choose to put their spare cash into an investment they can go and see and that they feel like they’ve got a better association with. In most cases, they are great landlords. They look after their property, which is their main investment, and they look after their tenants. I’m not saying for a moment that there are not poor landlords. But, again, we’ve got a Government who keeps slicing and dicing away at those ordinary New Zealanders who have chosen of their own volition to make a large investment in a property. We’ve seen all the changes that have gone through—the brightline test, and all those sorts of things—that will have an effect on them, but this bill is a further step in that direction.

What it does is that it will require tax losses when a property is sold—by those mum and dad investors—to be contained and can only be used against future losses or profits on future sales of property. Now, in many cases these people only own one property, and sometimes they want to exit the market. In those cases, those losses will be stranded and will not be able to be utilised by investors, and that goes against all the principles of taxation. This is another way, of course, for this Government—which has already imposed seven additional taxes since it came into power. This one’s going to raise another $190 million for this rapacious Government, and what it’s down for—$300 extra that is going to be imposed on renters. Another $300, and we already know rents have gone up by $50 a week—$50 a week.

ASSISTANT SPEAKER (Adrian Rurawhe): Order! The member’s time has expired.

Well, I’m not sure what “rapacious” means, but I think we’ll own that with a badge of pride if it comes from Mr Bayly. Aren’t they lions in Opposition? Aren’t they absolute lions in Opposition? They had all the time in the world to do all the things that they’re talking about now and they did none of it. They did none of it. In fact, they did exactly the same things as we’re looking at doing, in terms of excise tax on fuel as we look to pay for vital infrastructure. So don’t come at me with these crocodile tears, the National Party. You had your chance and you did nothing.

We are a responsible Government and we do realise that we have inherited a massive infrastructure deficit. We’ve got—the hospital, in fact, in Dunedin, down our way, a very, very good and much-needed build. One of the stats that I always find absolutely extraordinary, when the Hon David Clark talks about investment and health infrastructure, is that in 2015 and 2016 the number was zero—a big fat donut. We didn’t invest a single cent in rebuilding our hospitals and, henceforth, we inherited hospitals with sewage running down the walls.

ASSISTANT SPEAKER (Adrian Rurawhe): Now can you come to the bill?

So that’s in terms of where we’re setting these—

💬 Matt King: That is rubbish and you know it.

ASSISTANT SPEAKER (Adrian Rurawhe): Order! I’m going to give a warning to both Mr Patterson and Mr King. When you use the personal pronoun “you” or “your”, you’re including the Speaker into the debate, and I’m warning both to cease.

Thank you, Mr Speaker—taxation rates within this Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill. Of course, no talk about infrastructure—of course, the rail network that we are investing in the Budget just gone and, Mr King, we will make Northland reach its potential. Our social services, our mental health services—we can’t do these much-needed things without raising some revenue. The reason why there’s a lift in tax overall, in terms of the quantum, is, actually, because we’ve got a growing economy. When you’ve got a growing economy, when you’ve got growing wages that are rising faster than inflation, you do start to raise more revenue and it does start to give you some options. We can rebuild our public services, our police force, and our teachers. We can start to address the pay claims that have been languishing for years and years and we can have a military that doesn’t have 60-year-old planes breaking down all over the place.

So this is an important piece of legislation because it does allow us to do the things that we need to do for this country. So the bill—

ASSISTANT SPEAKER (Adrian Rurawhe): Order! I’m going to ask the member to speak specifically to the bill. It’s a third reading on the bill as accepted by the committee of the whole House. Those points that you’ve been raising are not in the bill.

Thank you for your guidance, Mr Speaker, on that. There’s two significant changes in this and, of course, the GST being collected on international transactions is absolutely essential for our small businesses. Particularly in our regional economies and towns, they’re not often big businesses; they are often very small and just struggling to eke out a living. They are at a 15 percent disadvantage against online retailers and many of the massive outfits like Amazon that are coming to New Zealand. We need to level that playing field. It’s actually just a sense of fair play, a fair go. New Zealand First, as a very egalitarian party, absolutely stands behind our small businesses and giving them a fair go against these international traders. Of course, there are 26,000 of these small businesses and they employ 62,000 people, so it is a really important part of our economy and we should not be handicapping them. We’ve had the IRD—we’ve had some work on the computer system here that’s allowing us to do a lot of this work and I see, just reading through the papers, that we’re getting a 10-to-one return on the money that’s been invested there. These IT upgrades have been valuable; it means we’re actually able to be a lot fairer because we’re collecting the tax that we’re supposed to be getting and we don’t have to be raising rates to get it.

So there has been some comment that we have delayed by a couple of months, and it was suggested by Amy Adams that we should put that out to the end of the financial year. But why should we put it out to the end of the financial year if we are in a position of bringing it before Christmas so our retailers are back on a playing field in their absolute peak season? We should be doing that, and we are doing that, and the Minister should be congratulated. I note that in Australia, where they brought this measure in, they have raised four times the anticipated revenue, so it does show you how big the online part of commerce is now. We’re putting our main street, mum and dad retailers back on an even footing.

Then, of course, we look at this ring-fencing of the losses, and I don’t share the view that was put forward by the previous speaker, Mr Andrew Bayly. I think that you shouldn’t be able to write off these losses. If you’re making investment for the tax deductibility or because it’s tax efficient, then, probably, it’s not the best investment in the first place. It should be cash-flow positive, and if it’s not, then you shouldn’t expect the taxpayer to subsidise a poor investment or an over-leveraged position.

We’ve got a massive—about $260 billion, I think, in residential property. It is actually a huge structural risk to our economy, the amount of money we’ve got lent into the property market. So I think a measure like this that makes people invest wisely, not investing for a tax break or a tax subsidy, essentially works out as a sensible measure. It’s good for the investor, actually, to take that away. It doesn’t encourage them to over-leverage; it makes them choose their investment on its merits. Housing affordability has been one of the huge issues and I’m absolutely staggered that we get, in Auckland particularly—we’ve had house prices at a million dollars. We have had a Government, previous to ours, that has not taken any action at all—been asleep at the wheel at that point and let prices get to a million dollars. How on earth does a family on an average wage afford to buy a million-dollar house? Keith Holyoake used to talk about New Zealand being a property-owning democracy, and that was one of the great fundamentals of our society. We are trying to bring that back.

As Mr Wood mentioned in his contribution, we’ve got the highest proportion of first-home buyers in the market now. We’ve taken the overseas speculators out—81 percent decline in overseas buyers of housing in our property market—which is giving our people and our first-home buyers and our young families the chance to have their own home and a stake in our country.

So we think that ring-fencing losses is just another part of the measures that we’ve been bringing forward—of course, the extension to the brightline test to stop flipping properties, or at least dissuade people from doing that, by making that taxable if you’re doing that, essentially, for income. It was at two years; it’s gone out to five years. That’s just another measure that we’ve taken as part of a package, and I think Minister Nash is doing a great job in that revenue space. He is making it a much fairer and more balanced taxation system that’s collecting from a broader base so that we can afford the social services that we would aspire to; so that we can afford to have a First World public health system and upgrade our rail, have planes that are not 60 years old, and have some respect out in the international community; so that we can afford to have our diplomats out there negotiating trade deals—all these good things that we are able to do, and we are doing as a Government with a measured and balanced taxation policy and settings.

We certainly have no hesitation here in New Zealand First in commending this bill to the House. Thank you.

Well, it was fascinating just hearing a New Zealand First member saying that we should be happy to be paying taxes so that they can give money to new diplomats in order to bring about trade deals, when New Zealand First have voted against most of the trade deals they have come across, and they’ve always been implacable opponents of trade. So that was a very interesting observation there from the member on the other side of this House.

So here we are; we’re in the third reading of this taxation bill. It’s the annual rates, and the first point, of course, is that these annual rates that are being put in for income tax have not been adjusted for inflation. So, every year, the Government is sneaking a little bit of extra money from Kiwis in order to feed the beast—the tax beast. Most other areas of Government are adjusted for inflation. If you’re on a benefit, you get an adjustment for inflation. If you’re in many employment roles, you get an adjustment to your income for inflation. But we’re not adjusting the tax rates for inflation, and so the effect of that over time is that we end up paying more tax.

💬 Dr Duncan Webb: That’s not in this bill.

Pardon?

💬 Dr Duncan Webb: It’s not in this bill.

Well, that’s the point I was making.

💬 Dr Duncan Webb: So talk about something that is.

I can talk about whatever I like, thank you, Mr Whatever Your Name Is from the other side. What we’re talking about here is the fact that the rates that are listed—10.5 percent up to $14,000. So the first $14,000 you earn, you’re paying 10.5 percent income tax. From $14,000 through to $48,000, you’re paying 17.5 percent—a pretty low rate—but when you hit $48,000, you start paying 30 percent of your income in tax, and if you hit $70,000, you’re paying 33 percent.

Now, with each passing year, as inflation increases earnings and growth, it means that more people are pushed into those higher brackets. So a bigger part of your portion—say, if you’re earning $60,000, you’ve gone up $5,000 over a couple of years, then more of your income is going to be paid at that 30 percent rate. And that happens right across the economy and adds substantially to the amount of tax New Zealanders are paying. If you look at it over three or four years, it runs to thousands and thousands of dollars of extra tax for the average New Zealand family. And that’s why Simon Bridges, our leader, has indicated that we’re keen to adjust those rates for inflation, and this bill is a missed opportunity from this Government that says that it’s interested in the wellbeing of New Zealanders but in reality has a very old fashioned view of the world, which is take more, tax more, spend more, and expect people to be happy.

If we look at the broader message of this Government, it is that they’re going to spend a lot more, which is what we’re getting for all these taxes. They’re spending an extra $3.8 billion in this Budget just passed—$3.8 billion; just think of that. The previous Government was spending about an extra $1 billion in each Budget, so they’ve almost quadrupled the rate of new spending. So they’re going to spend a lot more over time, but the problem is that the economy is slowing very sharply. If you’re going to spend more but the economy is growing slower, the inevitable consequence of that is that, down the line, they’re going to have to put up taxes even further or they’re going to have to increase debt. Neither of those things is great for the long-term future of this country.

So here we are; we’ve got this tax bill, which fails to take the opportunity to adjust those tax rates for inflation, meaning that we’ll be paying more tax. So the obvious question is: well, what are we getting for it? What are we getting for all this tax that we’re paying? And I think New Zealanders are waking up to the fact that it’s a bit of a mixed bag there. When people looked at the Budget, of course, everybody probably agreed that we should make more investment in mental health, and that’s something that we would certainly have done if we’d had the opportunity to form another Government, as we were planning to do with the very many projects that we had under way. Not so convincing is the $3 billion that Shane Jones spends in the Provincial Growth Fund, for example. Sure, you’ll find some useful things if you spend $3 billion, but there’ll be an enormous amount of waste, and we’ve seen that with the infamous mulching of the trees up at Ngāti Hine and many other examples. Then, if we think of the free fees: $2.8 billion gone to not having an extra single student coming along—in fact, fewer students—and this year they’ve had to admit that they’re not going to spend all the money, because rather than the lift of 80,000 new students, they just didn’t get them.

It’s that kind of poor-quality spending that is the underlying driver of the need for this increased taxation that we’re seeing. And, ultimately, the thing about tax is that the more you do of it, the more impact you have on economic growth. Our friends over in the Greens have always clearly understood that if you want to reduce smoking, for example, if you put up the price through taxes and excise, then you will discourage people from doing it. But they have never followed that same logic when it comes to taxing income and work. They refuse to see that connection, but we do, and we do recognise it.

💬 Hon Andrew Little: What a stupid argument.

It’s not a stupid argument. I’d be very keen for the member—

💬 Hon Andrew Little: Employment is growing. People are paying taxes. It works.

Eh? So the higher the rate of taxation on work, according to the other side, has no impact on people’s inclination to do it. Well, we all have decisions to make—

💬 Hon Andrew Little: The member is better than this—the member is better than this. Make a sensible argument.

Is the Speaker going to let me—or do I have to sustain such a barrage from the other side while I’m trying to give a reasoned and careful and considered speech on a topic?

ASSISTANT SPEAKER (Adrian Rurawhe): Well, if you’re asking me for a ruling or a comment on it, there was a direct interaction between you. So my encouragement to both members is for the member on his feet to carry on with his kōrero.

Thank you very much. The member over there is renowned for being quite loud, and so I momentarily lost my train of thought.

💬 Clayton Mitchell: Did you have one?

ASSISTANT SPEAKER (Adrian Rurawhe): Well, I had one. Thank you.

The second point I was making was in relation to the changes around the ring-fencing of rental losses. This is a complicated area, and there are plenty of people who—we all agree that reducing the cost of new housing so that New Zealanders don’t have to have so much of their wealth and income devoted to housing is absolutely a massive issue for the country and one that we need to be focused on. We heard a lot from this Government talking about the fact that they were going to reform planning laws, and we heard a lot from David Parker on this topic and many others, and we haven’t seen anything on that score so far whatsoever, but they certainly have come quickly with the taxes and the ring-fence is—well, you can argue about whether it’s a sensible thing to do. The general rule in our tax law is that you are able to write off expenses against income, and so this sort of changes that basic rule.

The only point I would make to the Government is you just do need to be careful of the context here, because there have been a significant number of things since this Government came in that have added significantly to the costs and reduced the potential profitability of renting properties. One short-term consequence—and, you know, these things will sort themselves out over time—is that there could be fewer properties. People could withdraw from the market. Nobody’s forced to rent out properties. It’s not compulsory. So people can sell their houses to other people, and you might find that a young couple buy their house, which is a wonderful thing, but if it was being rented out to five or six university students, for example, then that does have a consequence for the overall housing stock. If there is a shrinkage in the amount of houses available for rent, then that can have a real consequence in terms of rental profits in the short term.

So that is one of the most founding, basic principles of good government, is that one always has to be careful of unintended consequences from whatever legislation that you bring in. So this is one where we’ll be watching with great interest, and deeply concerned, because, like I say, if you’re concerned about improving the affordability of housing, which we all are in this House, then most people will agree that an important part of that is getting on with the planning legislation. Like I say, notwithstanding all the talk prior to the election and all the promises of Phil Twyford to do radical reform—

ASSISTANT SPEAKER (Adrian Rurawhe): Order! The member’s time has expired.

Oh, I thank you, Mr Speaker. It is a great pleasure to be standing on behalf of the Green Party and support it here at the third and final reading of the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill. It is actually on some of these remedial matters that I want to draw the attention of the House, because this bill does a number of extremely good things that I don’t think have had enough coverage in the debates at each stage of the House that this bill has gone to. I just want to draw attention to those things, because there are people out there who might not know about this who, I think, would want to know about this.

So first of all, university students and students of polytech who have got student loans—one of the things that this bill does, scooped up in the innocuous title of “remedial matters”, is it actually makes it easier for people to manage their loan repayments, because there was a technical confusion in the way that the student loan borrowers were set up to be eligible for interest-free loans, where they ended up having to get charged interest. Then, that got written off at the end of the year, and, you know—sort of one of those hopeless bureaucratic situations where you ended up being liable for something that you shouldn’t be liable for and it made life a bit difficult. This bill cleans all of that up and makes all of that go away and makes life easier for tertiary students with loans. So that’s a good thing.

The second so-called remedial matter—and this, given the attention that we have got as a Government, as a country, on domestic and sexual violence, is actually in this tax bill. It cleans up an inequity, where someone who ended up giving birth to a child as a result of sexual violence historically ended up being liable for child support payments as a result of the act against them, which is completely iniquitous. This bill removes that. So it creates a child support exemption for victims of a sexual offence. That is a really good thing. Those kinds of issues don’t often come through in tax law, but here we are cleaning that up in this bill.

Another thing that this bill does that I think is fantastic is it allows tax records to be held in Te Reo. So if you’re Māori and you speak Te Reo and you want your interactions, your tax records with the Government, to be held in Te Reo, they can now be as a result of this bill. Frankly, the struggle that we have as a country to become a properly bilingual country—you know, I think that’s fantastic. One of those, you know, remedial matters—seems small, but, actually, I think is certainly of symbolic importance to the people that it affects. So I like that.

So those are three really significant things for students, for victims of sexual and domestic violence, for Māori. Together, that adds up to quite a lot of people. This bill does something for those people, makes their lives easier. It also, of course, deals with some part of the problem that we’ve got with the imbalance in the economy around investment properties. This is specifically around the ring-fencing of losses on properties. I know that the Opposition have put a lot of time and attention on this particular provision of the bill, but given that they’re also reluctant to allow for capital gains tax to be applied to investment properties or anything like that, and given that they’re constantly complaining at question time about GDP per capita and lost productivity and all of that kind of stuff—which is, in part, a function of the massive overinvestment that we have in the speculative part of the property market, that diverts capital, obviously, to where it’s easiest to make money and away from the productive parts of the economy—you start to see the inconsistency in this argument.

So introducing loss ring-fencing I think is very significant. It actually helps to start to say, “Look, if you’re going to be a property investor, you actually start to need to treat that properly as an investment and to run it as a business and not just to use it as a tax write-off.” To me, that’s not about revenue raised or anything like that, although I know that the Opposition have raised points that they see this as some kind of tax grab. For me, that’s actually about rebalancing the economy away from the speculative part of the economy and towards the productive part of the economy. It’s not going to do it by itself. It’s an important part of the jigsaw puzzle, but I think it’s significant.

Of course, finally and related to that is this piece that was introduced during the committee stage, which was making it compulsory for IRD numbers to be supplied on transfers of a main home. Again, I think that’s just one of those things where, just for the integrity of the tax system, applying one rule across all of those transactions, whether it’s for your main home or for an investment property or anything like that—it just kind of makes sense to do that, and helps to maintain the integrity of the system.

So I think that for all of the complaints about whether personal tax rates should be any different or whether we’re being too hard on property investors or anything like this, this bill actually does a number of things that make life easier for, actually, in many cases, people who are amongst some of the more disadvantaged or excluded people in our society, and communities in our society.

So I know that the Opposition have said that there are things in this bill that they support, but I just want to bring attention to those things, because, honestly, if you’re Māori and you think that you ought to be able to hold your business with the Government in your language, you’d have to be wondering why the National Party were voting against that. If you were a student and you wanted your interactions with the Government to be less bureaucratic and smoother, you would have to wonder, “Why is the National Party voting against my ability to have a less bureaucratic interaction with the Government?” If you’re a victim of sexual and domestic violence and you think that you shouldn’t be liable for something that occurred as a result of your victimisation, you’d have to wonder why it is that the National Party are voting against those things. If you’re a young couple and you actually want to get into—

ASSISTANT SPEAKER (Adrian Rurawhe): Can the member refrain from bringing me into the debate? “You”—when you say “you” or “your”, you’re speaking to me.

Yeah, no, I understand, Mr Speaker. I’m just trying to work out the—

ASSISTANT SPEAKER (Adrian Rurawhe): Even if they are true.

—alternative sentence construction that would enable me to—

💬 Dr Duncan Webb: “One”—“one”. “If one is”.

If one—if one is—oh my God. We’re really getting royal on this, aren’t we? If a person—

💬 Hon Andrew Little: “If someone”.

If someone—thank you—is getting started in life and wants to actually get to buy their own home and so on, that someone would have to wonder why it was that the National Party was voting against their interests. If someone is a small-business person who is in the retail business and is selling books and small items, one would have to wonder why it was that the National Party—the so-called party of business—was voting against small businesses in New Zealand and in favour of Amazon, given how little tax Amazon pays in this country.

So for all that we can argue about whether individual personal tax rates should change and any of those things, this bill delivers for students, for Māori, for small businesses and for retailers, for victims of domestic and sexual violence in New Zealand, for people who are trying to get on to the property ladder, and for people who are trying to rebalance the economy away from speculation and towards the productive part of the economy. That’s what this bill does, and the National Party are voting against all of those provisions because they can’t stand the fact that tax rates this year will be the same as tax rates last year. That is mindboggling to me. It is absolutely astonishing. I think it is out of character for the National Party to be voting against the interests of all of those people.

So, on the other hand, I think all of those things are good things. For those reasons and for many more, I commend this bill to the House.

It’s a pleasure to follow on from the Hon James Shaw, and let me take this opportunity of explaining why National will oppose this legislation, the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill. He has correctly pointed out a number of smaller remedial matters that are good in this bill. The reason National will oppose the bill is simply because of Part 1, which establishes the huge tax take that this Government’s intent on taking from New Zealanders. So if Mr Shaw was prepared tonight to remove Part 1 from the legislation, he may well get National Party support for the balance of the bill, but I doubt whether that’s going to happen at all.

Let me explain quite clearly why I oppose this legislation and the tax bill part of it, Part 1. It is because this legislation will soon be seen as a lost opportunity. The economy in this country is in decline. I know that Labour members and Green members and New Zealand First members refuse to recognise that, although I did note today the Prime Minister herself has acknowledged that the economy is now declining. She then goes on to say the reason for the decline is entirely because of offshore factors—that other economies around the world are declining, and that will have an effect in New Zealand.

There is another argument, advanced by many commentators, that the reason the New Zealand economy is in decline is because of the anti-growth policies that have been enacted by this Government over the last 18 months. Now, I will suggest to the House tonight that the truth is somewhere in between. The reason the economy is in decline is certainly because of the Government’s focus on anti-growth measures, its focus on making sure it’s making it a lot harder for businesses to do business here in New Zealand, and it is certainly a factor of the overseas trends. But one easy way to stimulate the economy would actually be to provide tax relief at this time. If the Government won’t look at that opportunity, then I think not only is it establishing tax rates that continue—we’re seeing now more and more people, via bracket creep, move into the highest tax rate: $70,000 and everybody’s in the highest tax rate. I took the opportunity of asking the Minister when he was in the chair last night, how many people that is. He had no idea. I find it incredible that a Minister of Revenue can sit in the chair through the committee stage and not be able to answer a simple question as to what numbers of taxpayers are now in the highest tax rate.

The effect of cementing these tax rates in is this massive increase in tax revenue over the next five years. We currently, in 2019, are predicting tax revenue from GST and from corporate tax and from personal taxation of $84.7 billion. Over the next five years, that amount grows by a staggering 29.9 percent. That figure balloons out to $105.6 billion, and that’s one of the major reasons why this economy is in decline. No Government member has acknowledged that massive ballooning of tax take that’s in the BEFU—in the Budget Economic and Fiscal Update—page 26. We had a discussion at the Finance and Expenditure Committee today and, again, Labour members around that select committee table are in absolute denial of the huge increase in tax that this Government’s ramping up with this bill.

There are a couple of other issues that I want to discuss around concerns for this bill. I agree—and, in fact, most National members have mentioned in their contributions tonight that we agree—with the move to put GST on to the internet shoppers. In fact, the preparatory work for this was done by the previous National Government under the then revenue Minister, the Hon Judith Collins. But what I do strongly disagree with is the date by which Amazon, TradeMe, eBay, and other suppliers are meant to concur with this legislation. It came into the House and was meant to be applied from 1 October. They all said, “We want to comply. We will comply. We’ll collect the GST via systems that we’ll adapt to do that job. We’ll remit it to IRD here in New Zealand, but we need time to set it up.”, and they suggested that that should go through to 1 April. The Government gave them an extra two months, under pressure from National members around the select committee. So we’ve moved it from 1 October to 1 December. That still, in my mind, will make it difficult for companies that want to comply, and the alternative if they haven’t set up the systems to comply is to simply not make available those internet goods to shoppers from New Zealand, disadvantaging New Zealand consumers.

The third aspect that I worry about with this bill is the ring-fencing on rental properties. Again, it’s because there’s this instinctive lack of knowledge of what ma and pa, small mum and dad investors, do when they purchase a rental property with the sole intention of making some money over a period of time but making it available to the rental market. I’ve heard speeches from the Hon James Shaw tonight, from the chair of the Finance and Expenditure Committee, Michael Wood, and neither of them can refer to these people as investors without also referring to them as speculators, and that’s what’s driving this particular move. Labour, New Zealand First, and the Greens see all these small-time mum and dad investors in small rental properties as speculators. Most of them aren’t. They buy their property. They probably spend some money renovating it to get it up to standard immediately. They then go through the hassle of getting a stable tenant into the property, and for the first year or two may well make a loss. The advantage to them of doing that had previously been they could write that off against other income. The Government is going to stop that, and that has an effect that’s already being seen by these smaller investors keeping out of the market, meaning less properties are available for rent, and that’s why we’re seeing rents go up a staggering $50 a week. Here, these people who are renting properties can ill afford the rents as they’re established now, and this move will only see rents increase still further.

The final aspect that I want to address in my contribution is the Supplementary Order Paper (SOP) that the Minister of Revenue tabled in the House late last night, which makes adjustments to the Land Transfer Act, and members have described it as simply requiring purchasers and sellers to give their GST number. I have no problem with that aspect of it at all. The part that I am particularly worried about is that in this particular SOP that’s been tabled, there’s now a definition as to the main home transfer, and a definition that says that a seller must prove to IRD they’ve lived in that house 50 percent of the nights that they’ve owned it. I think that will be absolutely impractical to do. I sense what they’re trying to do is close a loophole around people arguing when they should be paying the brightline test tax that it’s actually a personal dwelling. Then, if that’s the case, close the loophole properly. But I think, actually, they’ve created in this legislation a massive difficulty for people to prove—I can think of somebody who’s, effectively, a travelling salesman, who might spend four or five nights a week away from their principal dwelling, now not being able to say it’s a principal dwelling because they didn’t spend 50 percent of the nights, and they might own that property for, say, 10 years. That person is going to have difficulty proving what is generally a principal family home to be a family home because of this legislation. We could have fixed these sort of anomalies if Mr Nash had allowed this SOP to go before the select committee, and that’s why tax legislation requires the work of a select committee. To put it into the House late last night and expect it to be passed without discussion will be foolhardy.

I understand this is a split call. I call Willow-Jean Prime—five minutes.

Tēnā koe e Te Māngai o Te Whare. Āe, kua hōmai ki ahau he rima meneti ki te kōrero e pā ana ki tēnei pire. I te pānuitanga tuatoru o tēnei pire.

E hiahia ana ahau ki te kōrero e pā ana ki tētahi wāhanga e kaingākau ana ahau. Arā, ko te wāhanga e āhei ana ngā tāngata te pupuri, te tuku rānei, ō rātou kōrero tāke ki te Tari Tāke i roto i Te Reo Māori. He mea nui tēnei. He aha ai?

Tuatahi, i whakamana Te Reo Māori hei reo motuhake, reo whai mana i roto i ngā ture i te tau 1987. Ahakoa tēnā, kāhore anō ngā ture tāke e whakamana ana i ngā tāngata e hiahia ana ki te tuku ō rātou kōrero tāke, ki te pupuri ō rātou kōrero tāke, i roto i Te Reo Māori. Ahakoa tēnā, korekau he ture e āhei ana te tangata ki te mahi i tēnā. Kua whakaāe te Kaikōmihana Tāke i tō rātou hiahia ki te mahi tērā mahi. Ahakoa tēnā, ko te kōrero ō Te Tari Tāke, me ngā kaimahi, me Te Minitā anō hoki, arā, Te Hon Stuart Nash, kua tae te wā ki te whakamana tērā i roto i ngā ture mō te tāke, ne. Nō reira, e tino tautoko ana ahau i tēnei kaupapa.

E mōhio ana tātou, he nui ake, he tokomaha ake ngā tāngata e mōhio ana ki te kōrero Māori, e kōrero Māori ana, ia rā, ia rā. Ko ngā tamariki ō te kōhanga reo tērā. Ngā tamariki ō te kura kaupapa, te wharekura, kua tupu ake, kua tupu ake, kua whai mahi e utu tāke ana. Kua tīmata ngā pakihi. Tēnā pea e hiahia ana rātou ki te pupuri ō rātou kōrero tāke, ki te tono atu ō rātou kōrero tāke i roto i tō rātou ake reo, arā, te reo rangatira, Te Reo Māori.

Ko tētahi o ngā rautaki o Te Kāwanatanga anō hoki ko Te Maihi Karauna. Ko te tino whāinga o tērā rautaki—hei te tau 2040, tēnā pea 1 miriona tāngata e mōhio ana ki te kōrero Māori. He wāhi kōrero Māori. Ko te tūmanako anō hoki, ko te whāinga anō hoki—neke atu i te 150,000 e mōhio ana ki te kōrero Māori, neke atu i te 15 ō rātou tau.

Mehemea ka tutuki ēnei wawata o Te Kāwanatanga, ko ēnei tāngata e mōhio ana ki te kōrero Māori, tēnā pea e hiahia ana ki te whakamahi i tēnei kaupapa i roto i ngā ture tāke. I roto i Te Tahua Pūtea he nui ngā moni e tuku atu ana ki te tautoko i ēnei rautaki.

Nō reira, ki taku whakapono, ka tutuki tērā whāinga ō tātou ā tōna wā.

I te wā kei ahau, kia whakamutu ake i aku kōrero, e mōhio ana ahau he nui ake ngā pakihi Māori, ngā ūmanga Māori. I kite ahau i tētahi rīpoata mō tēnei mea te Māori economy, me kī, i puta mai tētahi o ngā kamupene. Neke atu i te $50 piriona ngā rawa kei ērā o ngā kamupene. Ko taku hiahia, ko taku wero ki ngā ūmanga Māori, ki ngā pakihi Māori, nā te mea kei roto i tēnei ture te āheitanga ki te tuku atu i ngā kōrero tāke, ki te pupuri i ngā kōrero tāke, me mahi pērā. He tono, he wero.

He wero anō hoki—he tino harikoa ahau, i kite ahau i te kōrero o Te Kāwana, o Te Pūtea Matua o Aotearoa, arā, te Reserve Bank—he rautaki reo Māori anō hoki tō rātou, nō reira e mihi ana ki te kāwana, a Adrian Orr. He wero tēnei ki ngā rōpū pērā i ngā kaitatau Māori o Aotearoa, Te Hūmeka, Te Awe, Te Kūpeka Ūmaka Māori ki Ārai te Uru—ngā pakihi Māori katoa. Anā, whakaarohia mehemea ko koutou tērā ka tāea te tuku atu ō koutou kōrero i roto i tēnei pire.

[Thank you, Mr Speaker. Yes, I have been allocated five minutes to address this bill in its third reading.

I would like to speak about an aspect of this bill which is very dear to my heart. I am talking about the section which deals with the ability of a person to record or to submit a tax return to the Inland Revenue Department in Māori. This is important. Why, you may ask.

Firstly, the Māori language was afforded special, official status in legislation passed in 1987. Despite that, there has been no official recognition put in place to specifically allow a person to submit a return, or to keep tax records, in Māori. Neither has there been any legislation allowing a person to do that. The Commissioner of Inland Revenue has the power to allow those who wish to to so do. Nevertheless, the Inland Revenue Department, its staff, and its Minister, the Hon Stuart Nash, have realised that it is time to formalise it in tax law. Therefore, I am very keen to support this.

We are all aware that more and more people are becoming proficient at speaking Māori and do so, daily. There are those from kōhanga reo, from kura, and from wharekura, who grow up, get a job, and pay tax. Some start a business. It is quite possible that they would like to keep tax records and to submit tax returns in their own language, in Māori.

One of the Government strategies is Te Maihi Karauna. One of the principal goals of that strategy is that by the year 2040, it is hoped that 1 million people will know how to speak Māori. A Māori speaking country. Further to that, the goal is that at least 150,000 of those who do speak Māori will be 15 years or older.

If the Government’s aspirations are realised, it is likely that these Māori speakers will want to use their Māori language in their tax dealings. There is provision in the Budget to support the ambitions of the strategy.

Therefore, I firmly believe that these goals will come to pass in due course.

In the time that I have remaining, I would like to conclude my speech by speaking to the increasing number of Māori firms and businesses. I have seen a report on the Māori economy which was produced by one of these firms. The value of these businesses is more than $50 billion. I would like to issue a challenge to those Māori firms and businesses to take advantage of the provisions set out in this law and to proceed to keep tax records and to submit tax returns in Māori. That is my challenge.

I have another challenge as well. I was very glad to note from the statements by the Governor of the Reserve Bank that they have a Māori language strategy, so I am pleased to congratulate the governor, Adrian Orr. The challenge goes out to groups like the Māori Chartered Accountants of New Zealand, to Te Hūmeka, Te Awe, Te Kūpeka Ūmaka Māori ki Ārai te Uru—all Māori businesses. Think about what it would be like if it was you who took advantage of what this bill provides for.]

Aroha mai, kua pau te wā mō tō kōrero.

[I’m sorry, you are out of time.]

Thank you, Mr Speaker. I rise tonight to oppose the Taxation (Annual Rates for 2019–20, GST Offshore Supplier Registration, and Remedial Matters) Bill. Now, I did enjoy Mr Shaw’s contribution before, talking about some of the less controversial aspects of this bill, but I do want to turn to the two main provisions of this bill, and they’re the reasons that we oppose the bill on this side of the House. Now, the first one of those is for a new tax which relates to ring-fencing of losses of rental properties and amounts to about $190 million.

Now, I’ve just come off the phone, before I came down into the House, with an owner of a rental property, and he’s very, very concerned about all the costs that are coming his way under the current Government. A lot of people, I guess, often think “Oh, well, that’s OK, they can afford it. They’re landlords—they’re rich.” Well, actually, it doesn’t work that way in the real world, Mr Shaw. Whenever those costs are put on to landlords, what do you think happens? The rents go up. Now, that’s because they have to retrieve those costs from somewhere, and so of course they’re going to have to pass it on to those who are staying in their properties, and Labour just doesn’t understand that, unfortunately.

But that’s what this Government does. They put up the cost and they think that it won’t have an effect. They put up the cost in things like petrol taxes, and they don’t think that it’ll have an effect on Kiwi families who are just struggling to get ahead. If you look at the last Budget, if you look at the Budget just announced a couple of weeks ago, there were three new taxes—three new taxes—in the first three pieces of legislation that this Parliament considered after the Budget—three new taxes. Now we’re here again, debating yet another tax increase put forward by this Government, passing another law, another tax, that will hit low and middle income New Zealanders.

I want to come now to the major objection that I have to this bill, which is confirming the rates of tax for the coming year, and this is actually where the real cost is for New Zealand families—the real cost—because as we know, when Labour came into Government about 18 months ago, one of their first actions was to legislate to cancel tax cuts—to cancel tax cuts. Now, those tax cuts would’ve been worth about $1,060 to the typical New Zealand family. Under this bill, under these tax rates that we’re setting today, the typical Kiwi family will be paying $1,060 more in tax.

It’s at a time when families are struggling with higher cost of living; with higher rents, which have gone up by $50 a week already and will go up further under this bill; when families are struggling with higher petrol costs as a result of even more petrol tax that this Government has put on, not just in Auckland but across the country—they’re putting on yet another tax. It also comes at a time when the economy is deteriorating, and we heard today that even Jacinda Ardern, the Prime Minister, accepts that that is happening. Job growth has stalled. Under the previous Government, the economy was creating 10,000 new jobs every month; now it’s negative. Growth in general has halved from nearly 4 percent to a little over 2 percent. It is exactly the wrong time to be putting on new taxes.

But it’s not just this bill that does that. Seven new taxes—seven new taxes—have been brought in by this Government since they came into office a little over 18 months ago. Seven new taxes at a time when families are struggling, seven new taxes on hard-working Kiwi families up and down the country, and we ask: for what? Where has this money gone? There are seven new taxes, including the new taxes and the increased taxes that are contained in this bill. Where is that money going? Well, the first thing it’s going to is to KiwiBuild—

ASSISTANT SPEAKER (Adrian Rurawhe): Can the member come back to the bill. You need to speak to what’s in the bill.

I am, Mr Speaker. I’m talking about the $190 million—

ASSISTANT SPEAKER (Adrian Rurawhe): No, you weren’t, actually—no, you weren’t. You were talking about other matters. You need to address what is in the bill. Thank you.

Happily—sorry, Mr Speaker. The two new taxes that are contained in this bill, the higher income taxes and the $190 million that’s going to come off every renter—where’s that money going? Well, the first thing it’s going into is to KiwiBuild, which is an absolute disaster, which even Phil Twyford now accepts. They’ve completely axed all their targets—they call it a recalibration.

The other thing that this money’s going to, this $190 million contained in this bill in increased income taxes, is to 1,800 new police. Well, actually, where are those new police? We heard today from Stuart Nash that only around 460 new police have come about as a result of—

Order! The member’s time has expired.

Tēnā koe e Te Māngai. I will do my best to focus solely on the bill that is before this House this evening, which is the Taxation (Annual Rates for 2019-20, GST Offshore Supplier Registration, and Remedial Matters) Bill. If there’s anything that this Government is trying to do, it’s that we are tackling the long-term problems facing this country. Now, what this bill does here, in part, is it is going towards fixing some of the systemic issues that we have in the area of housing. I want to commend the Hon Stuart Nash, because what he’s doing through this bill, and what we on this side of the House see as appropriate, is that we are introducing measures to ensure that we no longer are allowing those—no longer allowing those—[Interruption] There we go—no longer allowing those—yeah, God, it’s been a long day, hasn’t it?—folks that have been relying on accruing properties, building up a whole portfolio of properties, to ring-fence losses on those rental properties.

Now, I listen to the Opposition, and they’ve been going on about how we don’t, on this side of the House, understand the difference between speculators and mum and dad investors. Well, what we do understand is that there has been an immeasurable crisis in our housing terrain. I want to reference, in my neck of the woods, a small town up in rural New Zealand—a little town called Ōpōtiki. Now, up there we have—and it’s well known in the community—particular people up in that community that are accruing and accumulating abundant, enormous amounts of housing stock. Much of those houses, they go untenanted. They are very poor quality, they go untenanted, they can ring-fence losses, and I’m talking not just in the 10s or the 20s but far more than that, up into the 50s, I understand.

Now, what we’re trying to do here is introduce a tax system that is fair. What we’re trying to do here is say, actually, the taxpayers shouldn’t bear the burden of enabling some of those people that have sought to rely on, basically, a taxpayer’s tax cut for those that do want to speculate, that do want to ring-fence their losses. Well, we’re getting rid of that, because we say that as a Government that is tackling some of the long-term systemic issues—we are tackling the long-term problems facing the country and, in part, that means tackling our housing situation. But we know that not everything can be fixed overnight, and we’re just getting started. What we’re doing is we’re committed to building a strong economy. So the way, again, that this bill here seeks to do that—what we’re trying to do is ensuring that on all low-value goods, we are ensuring that GST will be applicable regardless of where people are trading from.

It was in 1996 that the GST system was introduced into New Zealand. I was still wearing nappies at that point in time. It’s fair to say that it probably was not anticipated that the nature of e-commerce at that point in time had been anticipated in the way that we operate and conduct ourselves as consumers of products, as traders of products. So last year, we saw over in Australia that they introduced a scheme that would ensure that all low-value goods would have the application of their equivalent of the GST system apply there.

What we are doing is ensuring that all goods under a thousand dollars—that GST will carry through to those goods. Now, that may seem like a minor amendment, but for a tax system that should be fair, that should be equitable—I’m thinking about areas again, back up in my neck of the woods up in Gisborne. I’m thinking about Muir’s bookstore. Now, they have to contend with the likes of eBay, Amazon, and all those. So those large multinationals that aren’t required to put, effectively, 15 percent on their goods but which I, as a consumer, can go online, enter my wee digits in, and in under a week I’ll have that product. Well, my small businesses in the electorate, like we all have, our small businesses in our electorates—26,000 small businesses will benefit. They employ 62,000 people across the country. Now, these small businesses will benefit, unlike what they’re saying in the Opposition over on that side of the House. Actually, what we’re doing by this relatively small measure is ensuring that this tax system is fair, it is equitable, and by the period 2022 and 2023, the estimation is that that will bring $126 million into our economy.

But we are also focused on wellbeing, and we’ve heard a lot about wellbeing not just from our finance Minister but from this side of the House, that it has been a key objective of this Government. One might say, “Well, how is this tax bill bringing about wellbeing?” Well, as my colleague the Hon James Shaw asked of the Opposition earlier, how can the Opposition not vote for a bill that seeks to introduce measures that will, for example, enable the IRD commissioner to allow exemptions for, in most circumstances, women that have been the subject of sexual violation? How would the Opposition not vote for a bill that will give that discretion to the commissioner?

There’s an anomaly right now in the law, and this is something that the Hon Stuart Nash—he was receiving correspondence, and there are a whole range of cases. I mean, look, they’re not in the high numbers, but they are a specific set of cases. He was receiving correspondence that there were young women who had been sexually violated that when they went to give up those children—and sometimes, and in the case I’m thinking of in particular, a 15-year-old woman. Once that child came into the world, it was raised by her mother. There was no ability, by idea at that time, or there was some very limited ability, to be able to provide an exemption for this young woman, who would receive letters from IRD month in month out, saying that she was required to pay child support payments to her mother, who was raising this child, because her own child had been the subject of sexual violation.

This bill, this GST bill, is bringing about ensuring—it’s a relatively simple and it’s a minor amendment, but it is an important amendment to ensure the wellbeing of all of those in our communities that have been subjected to any of those types of sexual violations. But I’m absolutely pleased to see that there has been the inclusion of this type of discretion for IRD.

Now I also want to turn to, in terms of wellbeing, not just through a fiscal lens but, as my colleague—

I’m sorry to interrupt the member, but it’s come time for me to leave the Chair. This bill is interrupted and set down for resumption the next sitting day.

Debate interrupted.

The House adjourned at 10 p.m.