Taxation (Budget 2021 and Remedial Measures) Bill

Kāti rā, tēnā rā tātou, ata mārie.

[If I may, greetings all, and good morning.]

The House is resumed. Members, when we adjourned last night we were debating the third reading of the Taxation (Budget 2021 and Remedial Measures) Bill. We are up to call number eight, which is a Labour Party call. I call Arena Williams.

Good morning, Mr Speaker and members of this House. It’s a brilliant day in Wellington and a Pink Shirt Day, acknowledging bullying in our schools. I acknowledge everyone here who has taken the opportunity to wear a pink shirt, and I will be donning one when I go back to my office.

I want to give a very short contribution on a very short bill, which contains amendments to the Income Tax Act 2007 and the Child Support Act 1991. The amendments to the Income Tax Act 2007 relate to an increase in the minimum family tax threshold. These changes are an important part of this Government’s plan and what we heard in the Budget yesterday. But it relates more broadly to the Government’s plan. Since 2017 it’s made changes which would see 109,000 families with kids better off by $175 per week on average. That’s an incredible change since that time, and these changes will do their part to do that.

What’s that going to mean for New Zealanders? Well, I know in my electorate of Manurewa this is going to be a massive investment in those families who need a Labour Government the most, and who need our representation here in this House. I’m proud to represent that community of Manurewa today.

Now, a quick note on the minimum family tax credit, for those who are new to this debate who might be following along, as a consequence of the benefit rate increase announced yesterday, the threshold for the minimum family tax credit is also being increased to ensure that on an annual basis, eligible low-income families continue to be better off in work receiving that tax credit than they would be on a benefit. We’ve heard contributions from that side of the House that we haven’t addressed the need for people to be in work, and this bill is an important part of doing that and making sure that families who are working can get ahead in this country and are incentivised to do so. I’m proud of that, and I want to speak to the people at home who are confused about that: that is simply not the case. By raising benefits we do, in fact, increase everyone’s ability to live a good life in the way that they conceive of it and to live with dignity and respect in our communities. That is why I commend this bill to the House.

This call is a split call. I call Simon Watts, five minutes.

Mr Speaker, a very good morning. Everyone’s looking bright-eyed and bushy-tailed on this Friday morning. What a morning it is.

I tell you what, I’m going to talk today about the Taxation (Budget 2021 and Remedial Measures) Bill third reading. A couple of key changes in this Act, as we’ve discussed. We’ve heard a little bit of an overview over there. The minimum family tax credit going up by $520; we support this. The child support amendment—look, we’re fixing a number of mistakes made in this legislation, obviously, that’s needed to be done, so National supports this.

I want to cover three key areas this morning, because, I must say, last night in committee stage was an interesting process. I just wanted to reflect a little bit on that. And I’m so pleased to see the member for Wairarapa in the House, because he gave an absolutely stunning overview of champagne socialism. He was articulating how proud and all that they were and, I think, what that really reflected to us in this House is this Government wants to control—big Government is a cost and it’s negative on productivity.

What also was interesting was from the Greens. I must say, the Greens—I wasn’t too sure where they stood on this. They were abstaining from the vote, which basically means they refused to vote to support a minimum family tax credit increase, which seems at odds with where they’re coming from.

💬 Hon Simon Bridges: Hey, one question, is the member proud to be a socialist?

Absolutely not.

Look, the bill enables us, I guess, to reflect on the Budget. Look, I think we all woke up this morning and we were having a bit of a think about, well, what actually happened yesterday. I must say there was a little bit of good commentary.

But getting back to the bill: billions borrowed for benefits, a band-aid for Pharmac, no boost for business—and Business New Zealand’s comments about yesterday’s Budget: “a Budget that missed an opportunity for growth”. The Employers and Manufacturers Association: “No great benefits for business”. So I must say, a bit of a resounding comment around the feedback on yesterday’s Budget—which relates to this bill—that there was nothing there for business.

A little bit of conversation around the bill that we went through yesterday, because we spent quite a lot of time going through correcting a mistake. Let’s get it right. The child support aspect of the bill was correcting an error that was made. Nothing more than sloppy drafting of legislation. And, you know, the time that we have in this House matters and using that time to correct stuff like that is a missed opportunity. I’ll cover that a little bit later. The impact of that mistake was going to have sizable system ramifications for the Inland Revenue Department. So I don’t think that we can sort of brush it under to say that it wasn’t of significance.

You know, these errors, because of the fast pace at which these guys are trying to operate, without the attention to detail, can have significant risks and implications for our Government departments. And don’t get me wrong. Those Government departments are under a lot of pressure at the moment because they’re getting a lot of talk and not much direction from this Government.

So in summary: every moment in this House matters. I think I’d made that point around the correction of the mistakes. A missed opportunity to fix congestion in Auckland. A missed opportunity to build the second Waitematā Harbour crossing. A missed opportunity to deal with the healthcare workforce crisis in this country—4,183 vacancies in this country, and what did they get from this Budget yesterday? They got an additional $15 million.

💬 DEPUTY SPEAKER: You realise this is not a Budget speech?

Absolutely, Sir. I do appreciate that. I was just making the context around the errors in the bill. I commend this bill to the House.

The member opposite, Simon Watts, wanted to know what happened yesterday. Well, I’ll tell you what happened yesterday: we secured our economic recovery. Yesterday, we created the opportunity to lift between 19,000 and 33,000 of our children out of poverty. In my electorate in Taieri, the median income is $29,700. These changes will make an incredible difference to the people who live in the South. I am so proud of this Budget, I am so proud of the ability to be able to stand in support of this bill, which will enable us to increase benefits by $20 a week from 1 July this year, and then further increases from next April. This is a proud day for me.

I am so grateful on behalf of our constituents in Taieri to be able to take a call on this, support this, and say to those on the other side that we are securing the economic recovery of New Zealand. I commend this bill to the House.

I am so proud to be here to stand in support of this Taxation (Budget 2021 and Remedial Measures) Bill, which raises the benefit level and is going to benefit so many of our people. If you want to talk about this not just in terms of the impact it is going to have on the lives of those people for whom 20 bucks, come the middle of this year, and another raise next year—the impact it’s going to have on them. It is also, to talk over the other side of the House, talking about the impact it’s going to have on our whole society. Frankly, if we don’t get used to raising the living standards of those at the bottom of our country, then we may as well get used to raising our fences, because we either create an inclusive society or we create one that is divided, angry, and no way for a Kiwi to live. I am so proud of this bill.

I remember what it was like when the “mother of all Budgets” came in. I remember the immense impact it had on my clients in the Family Court. I remember seeing, for the first time in my life, children with mouths full of rotten teeth because their parents couldn’t afford the costs. I am therefore so proud to see that we are raising the benefits for those on the lowest incomes, not just because of what it will do for them but what it will do for our whole society.

I am also absolutely thrilled to see that we are adjusting the tax threshold for the working families, because, as the Prime Minister said yesterday, it’s not just about the making of dignity and good lives for those on the benefit; it is also about continuing to incentivise work. I am absolutely thrilled to commend this bill to the House.

It is utterly ridiculous for that speaker to stand up, express great pride in the undoing of a Budget that was delivered 30 years ago, without recognising that it was the six years prior of utter debacle inside a Government that was the cause of that Budget’s delivery. Everyone knows that in 1990, the Labour Government at the time delivered a Budget that had, apparently, a surplus of $89 million—a wafer-thin surplus of $89 million. Then upon coming to Government, the opening of the books exercise that took place at that time—because we didn’t have the fiscal responsibility Act back then; we just had a Government able to do whatever it liked. When the books were opened, that $89 million surplus was almost a billion dollars of deficit, and you had the country’s largest banking institution teetering on the edge of failure, which would have taken most of the business community, most of the jobs in this country with it. So don’t come in here lecturing about how wonderful it is that we’ve gone back to the future in this sort of way. Because when you look at this Budget, you can’t help thinking that the next six years might look like those six years prior to the 1991 Budget.

While this bill does deliver an additional $10 a week to people earning on low incomes so that they can have a minimum income, effectively, of $31,096, the reality is that that $10 for working New Zealanders is just as little as 20 percent of what the Budget itself delivers for non-working New Zealanders. That’s an interesting sort of trend, if one were to think about what that might mean if this sort of logic was applied over a longer period of time.

When we were discussing this last time, through the committee stage, there was much claiming of how wonderful all this was, as if the march of time did not have some inevitable effect on incomes as it does on everything else. So there’s nothing particularly special about this. We’re supporting it because we want New Zealanders who are in work to have a clear differential between those who are not. But, more importantly, we want a better environment to get those New Zealanders who are not in work back into the workforce.

I think there is a glimmer of hope here, inside the Government’s own statistics, where they’re saying that if you look back to 2020, payments in this regard were $2.189 billion. But in this current year, it’s going to be $2.130 billion. So here we have a larger payment with a lower quantum. That must mean that there is a very heroic assumption about people’s incomes rising in this country. That’s the only way that works—if incomes rise.

But we’ve got a Government that’s gone out to the whole State sector and said, “Nothing for the next three years. You’re flat.” And wouldn’t you think that that might translate to the private sector? So there is a deliberate Government policy of income suppression, but in this bill, the heroic assumption that incomes are going to go up somehow against that sort of prediction.

When you look at the stats—and the Minister pointed us to these stats on page 128 of the Budget Economic and Fiscal Update document—2022 sees the payment drop to just over $2 billion. Well, what does that mean? It means less people are picking up this sort of support. The only way they pick up less support is by earning more, earning more in an environment where the Government is saying “Nope, no more pay rises.” Then when we have a really good close look at it, we see that by 2025, it’s blown right out to over $2.2 billion. So they don’t even believe in their own fiscal forecast the outcomes that they’re predicting for the next couple of years. I think that is a cruel hoax on the people of New Zealand who do have hope that our economy will recover and move forward.

The speaker before, saying that “We’d laid the groundwork for the recovery of the economy by increasing benefits and by increasing family support payments.” misses the point—that is, from the economic activity, the productive side of the economy that those things are affordable. So I really do have great concerns that the Government has gone out with a big flag, saying “Look how good we are. Look how wonderful we are. We’ve got a great battle going on against poverty in this country.”, but no army behind it to make it work.

I appreciate that this is not a Budget speech and I don’t want to incur your wrath by straying too much further into these things. But I know, the whole concept of this being a cornerstone of that Budget is completely ridiculous. As I said before, the march of time always has consequence. If it didn’t, then nothing would have changed since 1990. But it has and it does, and the base level of what we now consider to be the baseline for existence in New Zealand—$31,000—would have been a massive income back then, a massive income. So don’t make out that this is something special; it’s not. It’s just part of an obligation that a Government in a country like this takes on.

Rather than take more of the House’s time, let me simply say, we support this because we do want to see the incentive at a higher level for people who are in work to stay in work and to progress in their work. We do think that incomes for New Zealanders are too low. We’ve said that for a very long time. But you only get that increased income by increased productivity within the economy, increased activity in the economy and better prices for commodities—all of that sort of thing. That’s what creates jobs; it’s what creates higher income—no question.

So it’s unfortunate, then, I think, that that’s the part that’s missing in this particular debate. The other side have concentrated on how wonderful it is that they’re doing this, without any real explanation of where all the money comes from, and then, of course, presents the utter contradiction in the Budget Economic and Fiscal Update.

Can I simply conclude by saying that we’ll support it because working New Zealanders deserve it, in an environment such as we have at the moment. Can I just say too, if you look at what this means for people—an extra $10 a week, so that your income comes up to $31,096. Yesterday, interest.co.nz published a very interesting article, and it’s worth a look, because it talks about the underlying inflation that exists in the New Zealand economy. That’s a big, big challenge. For people on that sort of income, they’re not too worried about mortgage rates, other than the fact that those mortgage rates affect their rental rates. There’s no doubt there’s been enormous rental pressure in the last couple of years. But the most interesting thing about that article was it took a basket of ordinary, regular, everyday-use grocery items and compared it, price-wise, over a period of time, and came up with the conclusion that there is an underlying inflation, particularly in that sector, of around 7 percent—7 percent soaks up a lot. In $100, it’s $7, and this gives people $10 over and above about $30,000 a year. So it’s not a great value to them, as far as moving forward is concerned. It just barely holds people to where they are at the moment.

With that, I’ll conclude my remarks.

E te Māngai o te Whare, tēnā koe. You know, I’ve heard from the other side this morning just a whole bunch of grumbles and sadness, particularly from the member from the North Shore. Now, the reality—and I take Mr Brownlee’s point that there’s nothing special in our announcements yesterday and in this Budget, but the reality for the North Shore community: 10,000 people will have their benefits lifted—10,000 people on the north shore of Tāmaki-makau-rau. Now, that is very, very important to acknowledge. That’s 10,000 people that are getting a lift of $20 coming up in mid-year and then increasing from there thereafter. But that money—and people forget—that may not be much to us is spent in our local businesses on the North Shore, across Auckland, and across Aotearoa New Zealand. People forget those key important points.

This Budget is about securing our recovery, and the step today in this taxation bill, and why I’m supporting it in the House today, is because we want to secure our recovery. I’m proud to be a Labour member. I’m proud of this first Budget and the investment in our people, and I commend this bill to the House.