Taxation (Budget 2021 and Remedial Measures) Bill

Can I thank the members for their attention in the committee stage and their questions—particularly the Hon Michael Woodhouse, as he helped the House get their head around the complex provisions in respect of the very minor corrections being made in respect of the penalties for overdue child support payments.

I really don’t have anything else to add to the earlier speeches. There have been legislative statements already filed, there has been no amendment to the bill during the committee stage, and the speeches that have been given in earlier stages of the debate aptly described the legislation from the point of view of the Government.

ASSISTANT SPEAKER (Hon Jenny Salesa): Minister, my apologies: would you kindly move the taxation bill?

I move, That the Taxation (Budget 2021 and Remedial Measures) Bill be now read a third time.

The question is that the motion be agreed to.

Thank you, Madam Speaker. Well, we learnt a lot tonight. We learnt a great deal in the debates on this bill. We firstly learnt that the Labour Party have dropped any pretence of democracy. They’re all socialists. They all stood up one at a time proudly saying, “I’m a socialist.” And why wouldn’t they?

💬 Chris Bishop: Anna Lorck didn’t.

It is—well, I wait for the call from Anna Lorck, because—

💬 Anna Lorck: I’m a socialist!

Wa-hey! Thank you very much. There we go. Indeed, why wouldn’t they? It’s actually on the Labour Party website, under their values, that they want to educate—this is one of their values: it’s “To educate the public in the principles and objectives of democratic socialism”, and then “and economic and social cooperation”, as if socialism and economic cooperation are one and the same thing.

Actually, you know, we really need to remind ourselves what socialism is. It’s the public ownership of the means of production. So what they want to do is nationalise our businesses. It’s a long game, it’s a quiet game—or at least it was a quiet game until tonight; they’re singing from the rafters now. That’s probably what 52 percent in the polls gets one.

💬 Chris Bishop: Anna Lorck owns a small business.

Well, there we go. Well, she should be donating it to the State. I can’t believe she hasn’t already given it to the State. So there we go. The socialist rhetoric is rising, and it will keep going.

Well, on the other side of the House, we actually believe in private property rights. We believe in aspiration, in innovation, in personal responsibility, in getting ahead, and in making a good life for one’s family, to the degree possible, independent of unnecessary intervention from the State. That’s the difference between two sides of the aisle. Actually, we’ve got the Greens on this side of the aisle—well, I think we need a third aisle, because what we learnt also tonight was that the Green Party can’t make a decision on one of the core principles of Green Party policy and value. They’ve abstained from this bill. I could not believe my ears: something that will improve the lot of low-income New Zealanders, and they abstain. They cannot support it—absolutely outrageous.

The third thing we learnt was that, under a Labour Government, no Kiwi can ever expect tax relief, because they give no time to even debating the merits of threshold changes, of lowering the top tax rate, or of reducing the gap between the income tax rates that most New Zealanders pay, 17.5 percent and 30 percent—didn’t even want to discuss it, and the reason they don’t want to discuss it is because of envy. They couldn’t possibly allow a tax threshold change that would benefit the vast majority of middle New Zealand because upper-income New Zealanders would also get it. Well, that’s what a progressive tax system is. It is not possible to give relief to middle-income New Zealanders without giving relief to all New Zealanders. Remember, they are meant to be governing for all New Zealand. Why not govern for the small number of people that pay the lion’s share of income tax in this country?

The next thing we learnt was that the housing crisis has been solved. Remember what Minister Parker said in his second reading speech: he told us the housing problem is solved. No wonder, because Grant Robertson told him in the Budget speech. Despite all of the out-of-control inflation in our housing market at the moment, which is currently at about 17 percent, they’re going to magic it down to 0.9 percent—never mind the fact that the foreign buyer ban, increasing the brightline test, threatening to remove the interest deductibility, and a raft of other measures have not done one jot to control house price inflation in this country, and probably had the opposite effect. They think they can magic house prices down to 0.9 percent.

He also told us that child poverty will decrease as a consequence of this bill. Well, if only that were true, because they came to Government promising to alleviate child poverty. It’s the very core of the ministerial responsibilities of the Prime Minister. But more and more children are becoming poorer and their families are becoming poorer as a consequence of the policies, the failed policies, of this Government, and nothing in this bill and nothing in this Budget is going to change that, because it’s creating a cycle of dependency that we will take years to break away from.

Those are disappointing elements. Those are the really, really regretful parts of what we’re doing here. We could be passing legislation that is aspirational for New Zealanders, that is fostering innovation, that is fostering enterprise, that is growing jobs. But instead, we are increasing the minimum family tax credit because we necessarily increase benefits because the cost of living for the lowest New Zealanders is out of control, and they know that that’s what is necessary. They’ve done nothing else in this Budget—nothing that would grow the economy, that would reduce our debt, that would give our children a reason to stay in this country, and that is a very, very sad thing. So we will support it, but we wish we were supporting much, much more positive legislation.

Tēnā koe, Madam Speaker. It’s a funny old day, isn’t it, when you get a moaning old speech like that and he then says “but we’ll support the bill” and sits down, not having mentioned the bill once in the entire speech.

I’m very proud of what this Government is doing in supporting the most needy New Zealanders and, at the same time, giving New Zealand the assets and the infrastructure to be prosperous and to succeed. This is a bill that is one small step in that direction. I absolutely support it. I commend it to the House.

National is supporting this bill, the Taxation (Budget 2021 and Remedial Measures) Bill, and we’re supporting it for the simple reason that we believe in the principle that work should pay. This bill provides financial support to low-income working families who are not receiving a main benefit and ensures that those working families are always better off than they would be should they choose not to work and instead be on the benefit. That is a principle that we think is important, and so it is for that reason that we’re supporting this bill: because it maintains that gap between those who are not working and are receiving a benefit and those who are working. So we support it for that reason.

We have noted that this is a change that has been made every year since about 2006 in order to allow for changes in benefit rates, benefit abatement, and minimum wage changes. In this case, we’ve been informed by the Minister that around 4,800 families will be impacted to the tune of approximately $10 a week. We have noted, on this side of the House, that that is a small number of working families, and we know that the number of working families across our country who are doing it tough is much larger than that. We acknowledge those families in this House because the context in which this bill is passing is one in which New Zealand families have faced some of the biggest hikes in living costs that some of them will have ever experienced.

A particular aspect of the debate tonight has been around housing costs, because we know that rents have gone up under this Labour Government $100 a week. So even for these families who, as a result of this bill that we’re passing tonight, will have an extra $10 in their pay each week, that will, in most cases, not go anywhere near far enough to cover off the huge hikes in rent that they have faced and may continue to face.

My colleague Mr Woodhouse spoke about the reply from the Minister on this issue, and I do want to mention it in this third reading speech because it was quite extraordinary when the Minister, in explaining this Government’s housing policy, said that “housing policy is now working” and then went on to explain that, actually, everything’s fine because houses are being consented and because he’s read a Treasury forecast that house prices won’t increase so much in the next year.

These were incredibly heroic comments in one sense, because they betrayed an optimism that I would suggest is out of keeping with the facts. But, in another sense, they were actually quite tragic comments because for a Minister to stand in this House and claim that housing policy is working when, at the same time, there are more than 4,000 families raising their children in motel rooms seems a little bit rich—for the Minister to say that housing policy is working when we have families up and down this country, whether they’re receiving a tax credit, whether they’re receiving a benefit, or whether they’re just receiving wages, who have faced such huge hikes in their rent that there is very little left at the end of the week or who have been completely locked out of what used to be a commonly held aspiration of owning their own home. But that Minister and the members opposite say, “Don’t worry; it’s all working now. We’re perfectly content with the situation.” We on this side of the House put on the record, in this bill, that we are not content with the situation and we don’t think that housing policy is working.

The other area that we have canvassed in this debate is the other costs that working families face. It’s pretty relevant, because, of course, what we’re doing here with this piece of legislation is we’re acknowledging that, when you adjust one thing, other things get affected. You need to be worried about incentives. You need to look at the interaction between income, costs, benefits, the way the State impacts on a family’s pay packet overall. We note that this Government has taken policy action after policy action that has had callous disregard for the impact on a family’s costs, and therefore the amount of money they have to make choices with each week. So, while this bill is a small step in the right direction, we’d suggest that some other steps, when it comes to things like caring about the price of electricity, caring about the price of fuel, and considering the impact of actions on costs across the economy, are also necessary.

The other matter that has been debated as this bill has progressed under urgency tonight is that concept of making work pay. What we on this side of the House have said is “Yes, let’s make these threshold adjustments. Let’s make sure there are those gaps. Let’s acknowledge that actually supporting people’s incomes, supporting their choice to be working, supporting them to have dignity in that and to have enough income for their families is a good thing.” In doing all of that, let’s also acknowledge—and I’m sure members opposite would agree with this concept—that, yes, it’s one thing to lift benefits, and we acknowledge that for families on benefits it is tough. It is very tough. But I wager that, if you were to say to a typical family on a benefit, “What would you prefer: an increase to your benefit or a good-paying job?”, the answer would be, nine times out of 10—maybe 99 times out of 100—“I want a good-paying job, and I want the independence that comes with that. I want the dignity that comes with that. I want the aspiration that comes with that.”

And so it is always incumbent on every Government not to simply prioritise increases to thresholds, increases to benefit payments. That in itself is not enough. What Governments must always do as well is prioritise job creation, prioritise ensuring that we have the productive base within our economy not only to create more jobs today but to ensure that there are good-paying jobs for the future and to ensure that we are putting our economy in a state that means it can compete with the rest of the world, because the world does not owe New Zealand a free lunch. The world isn’t sitting by and saying, “Don’t worry, if you guys don’t want to compete, that’s fine.” No. The world is going after it, and we need to go after it too, so that our kids and the children of today’s beneficiaries have better opportunities than today’s beneficiaries, so that they have the opportunity not only just to get a job but to get a good-paying job.

What we have pointed out is this bill is all fine and good, but we are alarmed by the absence in their Budget today and in this Government’s agenda of a pathway to prosperity. What we’re seeing from the Minister of Finance is a much more passionate desire to look backwards 30 years—to look backwards 30 years at past grievances. They are much happier to do that than to look ahead 30 years and think of a vision for how this country can be many, many times better. We on this side of the House say Governments need to focus on making sure that our country has a pathway to productivity, to prosperity, so that every New Zealander, no matter what circumstances they are born into, can be confident that this is a country that will give them a job, that will reward them for hard work, that will reward them for achievement, and that will ensure they can meet their aspirations that they will be paid well and that they will have lives of dignity. And it will take much more than the Taxation (Budget 2021 and Remedial Measures) Bill to achieve that.

I’m going to keep my contribution really short—short like the bill; short as it is only four pages and corrects a drafting error in the Child Support Act, and sweet in the sense that it changes the minimum family tax credit threshold as a consequence of the awesome Budget benefit rate changes that happened earlier today. I commend this bill to the House.

Kia ora, Madam Speaker. As we wrap up this debate on the Taxation (Budget 2021 and Remedial Measures) Bill, I want to acknowledge that throughout the debate the concept of good socialist policy has been thrown around as if it was an insult. What we’ve seen, though, is an acknowledgment by all sides of the spectrum that people on low incomes are struggling, whether they’re in paid employment or otherwise. I think it’s a disservice for us to not acknowledge that people outside of paid employment also deserve to live with dignity. And in the nature of this bill, I think the main concern is the response by several members that people outside of paid employment do not deserve livable incomes. The Green Party believes that everyone has a right to have enough income to thrive, not just to survive.

The question here, as well, around the minimum family tax credit, the threshold amount, is that ultimately it provides OK incomes for some. We may be talking about people who don’t want to go into paid employment, and that’s used as a scapegoat by members to my right, but the truth is that the people who lose by having a policy that discriminates against unemployed people are the children of unemployed people. Why should we be punishing children because of a policy that has chosen to punish those that are unemployed? And those people that are unemployed, often it’s not just because they want to be in that situation. Often there’s just no employment that meets their aspirations. Often they’re actually already doing meaningful productive labour in their communities, via caregiving, via volunteering, and we should be recognising that labour and valuing it as such. So the issue that we take with the minimum family tax credit is the fact that children and whānau who are living on income support ultimately are discriminated against, and those families deserve to have livable incomes.

This bill comes in the context of the increase to baseline benefits we saw in this Budget, which we believe is a step in the right direction. But, like, many front-line groups who have been really authentic and honest with us, they’ve told us that the increases to benefits don’t go far enough so that our families can thrive. So we hope that in future Budgets we’ll be discussing a similar bill with a much different threshold because benefit levels have been increased substantially so that no one needs a food grant in order to survive.

I’m thinking right now, as we wrap up the debate, of all the front-line advocates who work really hard, day in day out, to get people’s full entitlements at Work and Income, people who work so hard to just get a food grant because we’ve kept incomes so low. So while this bill won’t provide livable incomes for all and continues a discriminatory policy, we will continue campaigning for an income support system that provides livable incomes for all and that it’s unconditional. The Green Party will continue working hard to offer our support to Labour to enact genuine bold socialist policy. Kia ora.

I rise on behalf of ACT in opposition to this Taxation (Budget 2021 and Remedial Measures) Bill. This is a piece of legislation that raises the threshold for people receiving the minimum family tax credit, and it’s been done to reflect the fact that this Budget this Government brought down, which ACT also opposes, has raised benefits so much that, if this change wasn’t made, there’d actually be a group of people who would find it was not only of marginal benefit to actually work, actually they would be worse off if they went and worked. That’s why this is necessary.

It was really interesting in the committee stage to find out how many people are affected by this change and what sort of income changes they get if they actually go from being on a benefit to working. Because unlike the Green Party, the ACT Party believes in human action. We believe people actually make choices, that their actions can make a difference in life, and that they respond to the incentives they face, including those created by Government policy. We actually see each person as a thinking and valuing individual with agency, not just fodder for the great social engineers, the philosopher kings of society. We analyse, “Well, how many people are affected?” Well, about 4,800 people, the Minister told us, would be affected by this change. That’s the number of people whose after-tax income is between about $30,500 and about $31,096. Those are the people who are affected by this legislation, because the amount that their income gets topped up to, if they work 20 or 30 hours a week—and the 20 or 30 depends on whether they are single or have a family—the people that work the necessary number of 20 or 30 hours, depending on their family status, they will get topped up to the new level of $31,096. There’s 4,800 people who are between the old threshold and the new threshold who are going to be affected. That’s what we learnt.

Then I asked the Minister, “Well, you know, what happens for people who are currently at the old threshold earning, say, $30,000 or $30,600 and if they get offered extra hours or a small pay increase that would increase their income up to $31,000?” Well, the answer is they will get no extra benefit from their extra work, because their incomes now are going to be topped up to $31,096 anyway. Not necessarily a reason not to do it or to be against it, but it’s a really interesting discussion because it shows that one of the impacts of the welfare system that we have is that a lot of people find themselves in positions where, actually, the effect of doing more work is that they are very little better off.

We heard that somebody who gets $375 a week on a benefit, if they were to go and start working, then they’d basically be getting an extra $8 or $9 for every hour that they went to work. So you start to understand why the changes that this Government is making to benefits are going to have the effect of giving people more money, but they are also going to change the incentives and change the amount of work that people do. That’s why, among other things, I think the Treasury’s forecasts of 4.4 percent unemployment in a couple of years’ time are rather heroic.

Besides that discussion that the committee stage had about the effects of benefits on people’s incentive to work, it’s also really interesting—we heard from the Minister that it’s people’s after-tax income that will be topped up by this minimum family tax credit. You know, what’s interesting is actually how much tax a person earning $31,000 pays. People might be astonished to know. I mean, I just did a little bit of work on it: on your first $14,000, you pay 10.5 percent. Well, that’s $1,470. On your remaining $17,000 or so, you’re going to pay 17.5 percent income tax on your money. That gives you about $3,010 if you’re earning 600 bucks a week, 30 hours a week minimum wage, which is the threshold to qualify for this thing. That means someone on $31,200 is paying $4,480 in income tax.

But then let’s imagine they have a car and they have a tank that’s 60 litres. They only fill it up half every week—30 litres; 95c a litre of tax is to the Government. Well, that means that they’re actually going to be paying—and that’s just the excise tax; that doesn’t include the GST—about $30 a week in petrol excise tax. Fifty-two weeks a year, that’s $1,500 in petrol tax that someone’s paying to half fill their tank each week. And then you’ve got GST. It’s 15 percent on the money they do spend. Now, we’ll guess someone on an income of that level, they’re going to be spending at least half their income on rent—and, thankfully, they don’t pay GST on that—but still, the 15 percent they’re going to pay, that’s $2,250 in GST. I was going to try and calculate how much they’d pay if they liked a cheeky ciggie, but the truth is they won’t be able to afford that at current tax rates, totally out of reach and actually becoming a status symbol because they’ve become so expensive. It’s true. Some people are laughing, but it’s actually a trend amongst younger people. Because it’s so expensive to smoke, they’ve become a status symbol. I’m not kidding. The perverse—

💬 Hon David Parker: Sounds like an Epsom problem.

And David Parker is saying it sounds like an Epsom thing. I can tell you the percentage of people that smoke in the Epsom electorate—or, at least, admit to it to the Government officials—is 5 percent. I don’t know; the member over there, he’s from Dunedin, and I’ve seen a few people having a durry down there. But, anyway, that’s out of the question given the taxes for people on these incomes. But they might like the odd can of Lion Red.

💬 Hon Peeni Henare: Heeey!

That’s right; Peeni Henare, he’s had a few Lion Reds in his time. And it’s not difficult to spot! You know, the excise tax is about $30 per litre on beer. So, if you have 20 beers, that’s a litre of alcohol. That’s $30 excise tax. It’s about 50c a can. If our friend in this example has a dozen Lion Reds each week, they’re going to be paying $300 in excise tax on their beer.

So, so far, we’ve talked about income tax, about $4,500; petrol tax, $1,500. That’s $6,000. GST, $2,250. That’s just over $8,000. We’re off the baccy but we’ve still got the beers. They’re actually paying about $8,500, or nearly 30 percent of their income goes to Government. And that is on a person who’s on a very low income, someone who works 30 hours a week on the minimum wage. So one of the reasons that we need this income tax credit, or at least the reason the Government argues we need it, is actually because so much of people’s money is taken away by Government in tax.

Now, I heard one of the Green members carping away, as they do—as they try and decide whether or not to vote for a bill and then fail and have to abstain—before, saying, “What about all the things you get for it?” And I think people, especially people on low incomes, wouldn’t resent paying so much tax if they were getting a lot of value out of it. But we see so much low quality spending. We’ve actually got a Government that is trying to take us back to the 1970s and have a State-funded train factory in Dunedin. There’s a billion bucks right there. That’s the kind of thing this Government is spending its money on. So you can understand why people have a certain amount of scepticism about paying their taxes, and that’s why this kind of policy is necessary.

I should also just comment briefly about the quality of debate. You know, you’ve got all these larrikins in the Labour Party getting up and saying that they’re socialists. They don’t know what words mean. To be a socialist is to believe that the State should actually own and control the means of production. They don’t believe in that. They all go and—

💬 Anna Lorck: That’s communism.

💬 Hon David Parker: That’s communism.

“No, no. Communism,” he says. “That’s communism.” Communism is socialism organised into little villages. Now, they don’t believe in that, because every single Labour member, I can guarantee you, gets up in the morning and goes and buys a latte or a flat white, probably with oat milk—and it comes from a global supply chain that gets the coffee to the small-business owner—and they happily hand over five bucks that they get paid by the taxpayer to buy their coffee in the morning, and then they come in here and they say they’re socialist. They don’t know what they’re talking about. They don’t know what the words that they use actually mean. The ACT Party opposes this bill.

This debate is interrupted. The House is suspended until 9 a.m. tomorrow. Pō mārie.

Debate interrupted.

Sitting suspended from 9.58 p.m. to 9 a.m. (Friday)