Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Bill

on behalf of the Minister of Revenue: I move, That the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Bill be now read a first time.

💬 DEPUTY SPEAKER: Ah, no—second time.

Second time.

This bill is about supporting New Zealanders through tough times. COVID-19 has been tough on all of us—[Interruption]—except for that lot. For low and middle income families who have to provide for children and for many sole parent families, it can be tougher still, which that lot doesn’t seem to recognise. Reducing child poverty is a key priority for our Government and our aim to improve child wellbeing and lay the foundations for a better future. Increasing support for low and middle income families to help cover the basics is the fair thing to do, and it is the reason why the House is considering this bill under urgency.

The changes we are proposing contribute to the welfare overhaul work programme, which lays the foundations to achieve the Government’s vision of a welfare system that ensures people are treated with dignity and can live in dignity, and that means that they have an adequate income and standard of living and can participate meaningfully in their communities. This bill will increase the family tax credit (FTC) rate by almost $15 per week for the eldest child in a family and by $13 per week for subsequent children from 1 April 2022. This family tax credit increase combines a $5 per week per child increase on top of the Consumers Price Index (CPI) increase for the family tax credit scheduled for 1 April 2022.

The bill also makes two additional Working for Families increases on 1 April 2022, providing for a scheduled CPI index increase for Best Start from $60 to $65 per week, from $3,210 to $3,388 per annum, and an increase to the minimum family tax credit threshold from $31,096 to $32,864 per year. People currently receiving a family tax credit or Best Start payment will be better off with this change compared with what they receive now. The changes are targeted towards the lowest-income families, so those with a family income of less than $40,000 benefit the most, with an average increase of $26 per week.

We also want to ensure that we provide support to those that most need it; so the bill provides for an increase of the abatement rate for the family tax credit and in-work tax credit from 25 percent to 27 percent, with the abatement rate being the rate at which these tax credits reduce once a family has income over $42,700. This change means those on the lowest incomes will receive the most, and no one will be worse off compared to what they receive now.

In addition to the Working for Families tax credit increases, the bill also makes a minor remedial amendment updating the CPI measure used for the indexation of FTC and Best Start tax credit rates. As a result of the Working for Families changes in the bill, it’s estimated that a further 6,000 children will be lifted out of poverty. That’s in addition to the up to 33,000 children who will be lifted out of poverty by the increase in benefit levels earlier this year. These are solid gains for people in lower-income brackets.

Turning now to business support, the Resurgence Support Payment (RSP) scheme continues to provide financial support to businesses affected by the COVID-19 pandemic and helps to save jobs. It is a good scheme and one which has been a valuable aid to our economy. We want to ensure that we can continue to provide this support; so we need to adjust how the RSP scheme is activated. The legislation relating to the RSP scheme contains specific references to supporting eligible businesses if there is a resurgence in New Zealand of COVID-19 or an escalation in COVID-19 alert levels. The shift from the alert level framework to the COVID-19 Protection Framework, as well as a shift of focus from elimination to an approach based on minimisation and protection, means we need to amend the current legislative framework.

The proposals in this bill are aimed at adapting the RSP’s legislation into the more flexible COVID-19 support payments framework. The new framework will retain the overall objective of supporting eligible businesses affected by COVID-19 restrictions but will not be specifically linked to the alert level framework or limited to an escalation in COVID-19 alert levels. Instead, the amendments will allow the Government to be responsive and provide support to businesses in a variety of scenarios. The amendments will allow Inland Revenue to make payments to eligible persons financially affected by a public health measure, business circumstance, or any matter related to COVID-19. The Governor-General will be able to authorise payment by Order in Council, and, just as with the existing RSP provisions, the new COVID-19 support payments framework will provide that the activation criteria, eligible persons, circumstances of the payment, and calculation of payment amounts may be set by Order in Council.

This bill is about alleviating financial stress. It helps keep businesses afloat by ensuring that vital COVID support payments can continue to be made, and it ensures that families are better off. It is a bill that recognises the reality of today’s economic conditions and the role the Government plays in helping to relieve some of the financial stress. I want to thank the House for giving this bill its urgent attention, and I commend the bill to the House.

The question is that the motion be agreed to.

Thank you. I think I want to start off by saying I’m actually finding the debate today incredibly disrespectful to business people in Auckland, the Waikato, places like Queenstown, Rotorua, who have suffered incredibly over the last 18 months. We’ve got a bill that’s being rammed through under urgency, and yet we’ve got a stream of Labour members standing up and talking about the impact on how this is going to solve poverty for New Zealanders. That is certainly part of the bill, but I would suggest to you that that is not why we’re doing this under urgency. When I listen to Dr Duncan Webb, who’s the chair of the Finance and Expenditure Committee (FEC), and other members of the committee who stand up and speak for less than, or about, a minute on this bill that is being pushed through, rammed through under urgency, I think it is absolutely a gross misuse of this House—to callously disregard the debate about this bill, which is about looking after New Zealanders going forward, and particularly those people who have suffered incredibly. In total, in the first reading of this bill, of the members—and we think there’s six—the members would have spoken for no more than a combined total of eight minutes.

We’ve just had a fill-in Minister speak and open the second debate who couldn’t even get the 10 minutes on his second reading speech. He didn’t even know it was the second reading; he kept talking about the first reading, right? And he stands up there, delivers a speech which he reads off notes prepared by some lackey, and doesn’t really understand the bill. We have the original Minister who was responsible talking on this bill, and, unfortunately, what we’re missing in this debate is high quality debate around why and what the merits of this bill are, and putting forward both the view from the Government side as to why we should be doing it under urgency, and, of course, the Opposition and what our position is. What we’ve got is flaccid Government members sitting in the House, not participating in this debate and just talking about a rote thing that someone’s prepared for them, just talking about the benefits of increasing Working for Families. We acknowledge that. We acknowledge that the bill—

💬 DEPUTY SPEAKER: Well, that’s good, because you’ve just spent three minutes telling us about that. How about talking about the bill?

So we acknowledge that—that the bill does increase some of the Working for Families benefits, and that is fine. But to sit there and then say that’s going to lift a whole lot of people out of poverty is an outrageous assumption, and I’ll tell you why. If you increase the benefits in line with inflation, that doesn’t help anyone. It doesn’t help anyone; it just keeps pace with the costs of living that they face. It doesn’t do any real improvement. The only improvement is the extra $5—$5!

Then we heard the Minister, in his opening speech, say it’s going to lift 6,000 people out of poverty, and then everyone else on the Labour side started talking about 3,000. Obviously, the officials who wrote their prep speeches, their prep notes, didn’t actually listen to what the Minister said. You can’t even get the figure right! So let’s assume it’s 3,000 people. I don’t believe a $5,000 increase in benefits per week is going to lift anyone out of poverty, particularly when you’ve got inflation going like this. It’s 4.9 percent. Even their Reserve Bank—and I heard one of the members talking about the inflation projections—they expect it to increase further.

That means, every day, working families are going to fall further behind. This is not going to get them out of poverty. This assumption that you’re going to lift all these people out of poverty is an incorrect assumption. I listened carefully to my colleague the Hon Louise Upston, who said that, back in 2017, the Prime Minister proudly announced that she was going to lift 100,000 people out of poverty—100,000 children. And what’s the result today? Fifteen hundred. Fifteen hundred—1,500. And you say you’re going to lift 6,000 or 3,000—whatever figures you want to quote—today as a result of a $5 net increase. That is wrong. You are wrong in your assumptions, and it’s a silly proposition to be making.

But the much more important reason why we are debating this today under urgency, as we have with the previous COVID bill, is that this is a way of slipping through a new arrangement that is meant to support struggling businesses, business owners, and their employees through a most difficult time. It all comes off the back of a new traffic light system that 65 percent of New Zealanders do not understand—65 percent do not understand this system, and, by the way, it comes into play in eight days’ time. It’s outrageous. It is outrageous that we’ve got a bill that is meant to be what’s called an “enabling bill” to allow these changes to take place. We’ve known all about this. We had Grant Robertson and the whole array of Ministers making this announcement on 22 October, over a month away, and then, because tomorrow is the last day of Parliament before we have a recess, before they have to announce something next week, we have to ram this through. How incompetent can you be as a Government? That is outrageously incompetent. Outrageous.

Then we’ve got members on the other side from the Government who don’t even know what’s in the bill. It is a shocker. And then, Dr Duncan Webb, professor of laws of taxation, this is a tax bill. Speak up, Dr Duncan Webb. And what about the other members of the FEC? Some of them actually know something about it. Stand up and fight for what you’re putting up today, because this is what you’re meant to do as Government people, right? This is a weird, weird, weird situation.

So we’ve got this thing that’s going to come into play in eight days’ time and we know nothing about what is the new form of payment. Well, I heard the step-in Minister, in his speech just before, talk about a new form of payment. Well, is it based on a drop in revenue? Because all those struggling businesses in Auckland, Queenstown, the Waikato, Rotorua—wherever, right?—if the Government is going to change the arrangement and say it’s not based on a drop in revenue, I think that’s pretty major. But, of course, have we got clarity on that? No! No, we haven’t got clarity on that. We don’t even know what the new payment system is! At least the Minister could have outlined what it was, what the new transitional payment arrangement was. What is it going to be based on? What is it? How are you going to pay it? Are you going to pay it weekly? Are you going to pay it fortnightly? Who are you going to apply to? What businesses? What sectors? The Minister of Finance got asked that today. He couldn’t even talk about that. He couldn’t even tell us which areas are going to be in red next week, which are going to be in orange, which are going to be in green. It is just chaos.

If you own a business and you’ve spent the last 18 months to try and keep it alive, try and retain your employees in your business, and you’ve had to mortgage up against your house, and you’re in your late 50s and you’ve mortgaged yourself to the hilt, what you’re now looking at is a situation going into a bleak Christmas. Do you continue to keep that business alive or do you commit yourself to not at 65 retiring but possibly working quite late into your 70s so that, when you do retire, you’ve got some money that you can retire on. That’s the type of choices we’re talking about. This is what this bill is about, changing that framework. And yet there is not a skerrick of detail in it, and that’s why the Government members can’t talk on it. But you need to stand up today and give confidence to those hard-pressed business owners and their staff, because they’re the ones hurting. This bill is meant to be dealing with it, and you’re not in this bill. This bill does not provide any clarity, any confidence to them. It is an outrageous bill to be pushing through in urgency.

Tēnā koe, Mr Speaker. I’ve got, really, one thing to say to Mr Bayly about that speech: please don’t shout so much. Your colleagues need hearing protection; it’s quite harmful. But, look, the fact of the matter is that this bill is going to enable this Government to continue to support business the way that it has to date. The fact is that we want to be able to remain nimble and alert, and so this is exactly the right situation to create powers so that we’re not constrained, that we don’t have to follow a strict, constrained regime of payment. We can look where they’re needed, when they’re needed, and how they’re needed, and that’s what we’ve done to date. So we’ve been able to adapt the Resurgence Support Payment so that it’s not a one-off; it’s regular. We’ve been able to extend the wage subsidy and increase it, and a whole lot of other measures which have supported all of those businesses which are so important to our economy. This bill is an important part of moving that forward into the traffic light framework. It’s absolutely going to work, it’s the right thing to do, and I absolutely commend it to the House.

Thank you, Mr Speaker. I heard it said once that one day in Government was better than three years in Opposition. I must say whoever said that was not a member of the 53rd Parliament of New Zealand, because I aspire to be a Minister again but, in the meantime, I would much rather be over here, debating the real issues, than the lily-livered cannon fodder for the Government that sits on those backbenches. I cannot believe the intellectual firepower that is the Finance and Expenditure Committee’s Labour members being so badly wasted in this bill debate.

Dr Webb comes up with one minute and one second in the first reading and one minute 20 in the second to tell us what? Who knows. At least in the second reading he said, “Well, it’s going to be, next week, the way it is today.” Well, that’s not true, because we’re debating a bill to change it, only we don’t know what we’re changing it to. We don’t have any details of what the business support payments are going to be from next Friday. I would have thought that Barbara Edmonds might have knocked on the door of the Minister of Revenue, being the good former IRD staff member and tax lawyer that she is, and said, “Give me something to work with. Give me some sort of message that I can give in the one minute and 20 seconds that I’m going to speak in the first reading.”

Ingrid Leary transfers from Waiheke Island to represent the good people of Taieri in order to do what? Spend one minute and something saying very little or nothing. And I’m not quite sure what Helen White did in a previous life. I think she’s a lawyer as well; I’m sure she was a very good one. I bet she wishes she was back there now rather than standing up and spending one minute and four seconds making no contribution whatsoever to such an important issue. Even the Minister moving the second reading couldn’t be bothered getting a new speech. He dusted off the speech read by the Hon David Parker and then couldn’t even make the change from “first reading” to “second reading”. That’s the laziness, the ambivalence, and the disrespect that we’re seeing by the Labour members for this House, for democracy, and for this Parliament. I’m deeply, deeply disappointed.

So let’s just actually drill into what some of the issues said. I found Greg O’Connor, the ultimate strawman arguer, to be all over the place on this. We heard seven or eight speeches from Labour members saying how important this was and how it wasn’t needed, but the good people of Ōhāriu apparently have got the opposite problem, because they can’t get labour in the construction industry. Well, that may be the case, and very nice though Ōhāriu might be—I used to live in Johnsonville many, many years ago—it isn’t a tourism hotspot. It isn’t a centre for international education. It isn’t a place where there are high levels of staff who are affected by this, although many of them live there and work in other places. He’s talking to the wrong people, because there is pain out there. And the Government says, “Well, the way to do that is to provide more business resurgence payments.” And that, essentially, is what the Minister in his—I say “second reading” loosely—speech talked about when he said, “It’s about alleviating financial stress.” Well, the best way to alleviate financial stress is to stop businesses and their staff from getting in that situation in the first place. Former Prime Minister John Key very often was quoted as saying, “Don’t judge a Government by how much support they give to people who are poorly off; judge the Government by how many people they put into poverty and how many people they take out of poverty.” That’s the key to this. That’s what we should be debating here.

Now, I want to talk about Jan Logie’s contribution, and it’s going to be a slightly oblique walk-around to get back to the point, which is: we don’t know what level of business support is going to be provided through this bill. We did in February when we first passed a similar piece of legislation, albeit it wasn’t in the bill. The Minister did offer it. Now, I don’t think Jan Logie and I are too different in our aspirations for all New Zealanders. We actually want every single New Zealander to live their best life—actually, I would say, independent of unnecessary influence by the State. And when people do fall into hard times, it is incumbent on the State to do two things: to support them on that journey and to lift them back out of those hard times. Now, how we do that, we may differ in our political philosophy, but I think, in terms of our goal, we have very similar aspirations.

But I was fascinated by Ms Logie’s comments around—I think, in response to me or David Seymour in the first reading—what we can do to lift businesses out of the rut that they’re in and actually get out of their way and allow them to trade. I think that was pretty much what I said. To which Ms Logie was critiquing on the risks that that poses—the risks that someone might die. And I think that’s a tragedy—I agree with Mr Seymour’s commentary on that. But here’s the point, and I think a number of leaders—the Prime Minister, the Leader of the Opposition, Mr Seymour—have all struggled with media questions about how many lives are we prepared to lose by relaxing restrictions that have been on our country. And I think that’s a really important question, but I refuse to answer it until all of the cards are on the table—until all of the impacts of the decisions Government have made are in the calculus.

Now, I used to work in the health sector and I’ve got qualifications in health service management. When we think about decisions, policy decisions, we talk about—health policy makers talk about—quality adjusted life years, disability adjusted life years; that’s a common currency for assessing whether an investment in a certain drug will have an outcome and reduce morbidity or mortality, or increase. And so, yes, having no lockdown would have caused a high level of death and serious illness, and we didn’t do that. Total lockdown may save all lives—probably not, but it saved a hell of a lot of them. But here’s what we don’t factor in and what we need to talk more about: what about the non-COVID health issues? What about what Dr Chris Jackson called the non-COVID cancer casualties when he came before the Epidemic Response Committee last year? What about the diabetes, the heart disease, the mental health issues on our business owners, on people in financial stress? The poor educational outcomes. The developmental delay of our pre-schoolers. What about our secondary schoolers who are leaving now without a leavers dinner, without a graduation ceremony, without the school formal or ball in the middle of the year? What about the people who are on IVF treatment at the moment—or who aren’t, because of the cancelled elective treatments in our DHBs? I’ve read research that has said that the costs in non-COVID health and societal effects are five times greater than the costs of lockdown.

So why do I raise that in the context of this bill? It’s because we need to reinforce that the gold standard is to safely—so the rhetorical question is: what’s the right level of business resurgence payment? I would say: zero. I would say: get the building blocks in place faster than we have to enable businesses to open sooner than they have and more freely than they have, vaccinate quicker than we did, use rapid antigen tests where we haven’t, and get rid of the traffic light system. That’s what will alleviate the financial stress, Mr Sio, and Ms Logie will quite rightly say that will come at a cost—a cost in the morbidity and mortality due to COVID, but it’ll come at a hell of a benefit to all those non-COVID things that we haven’t even bothered to measure, according to Treasury. When Cabinet considers lockdowns, it hasn’t considered the cancer, the diabetes, the heart disease, the mental health, the educational outcomes, the social outcomes, and the social isolation of our elderly. These are real costs, and the best way to fix them is to enable people to get back to their normal lives—as much as the new normal will look like—faster than we are.

And that’s the shame of this Government’s response. They did well last year. We’ve said that repeatedly. But resting on their laurels, and thinking their best in class, and not dealing with those things, and not having an open conversation with the country, who are very smart about these things, because they live these issues every day, has, I think, been a neglect, and that’s a terrible shame. We shouldn’t be debating this.

Thank you, Mr Speaker. I’m going to spend my time to answer a couple of the questions that the other members on the other side of the House were firing at us on this side. I’m sure the Minister will also cover a lot of it in the committee of the whole House. I don’t need to shout to make my point across. Perhaps if they spent more energy actually reading the bill, the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Bill, the Tax Administration Act (TAA), the documents that came with the bill, then their own questions would be answered if they actually read it.

So, to their question “What does the grant look like? Who receives it? When do they receive it?”, the Tax Administration Act that this bill is changing, Section 7AAC, that particular section never had that information. In the primary legislation, it allows for an Order in Council, which then covers that information. So, therefore, Treasury said that this bill, for those changes, didn’t need a regulatory impact statement (RIS). The reason why it didn’t need a regulatory impact statement was because it was minor—it was technical. So, therefore, the policy hasn’t significantly shifted. Therefore, those questions about the “who, what, when, why” will still be covered in an Order in Council just like it is currently under the TAA.

The second question around urgency, “Why do you need urgency?”, it’s right throughout the disclosure statement. It says on the back page—easily said on the back page—it needs the preferred option to include an urgent primary legislation prior to December 2021. That is to allow for sufficient time for the IRD and the Ministry of Social Development (MSD) to implement the necessary system changes. Why do you need the urgency for the COVID protection framework? It comes in two weeks’ time. So, if you don’t put this legislation in, if you don’t have it ready for the COVID protection framework, businesses will have nothing—absolutely nothing. Because there is no grant framework that comes with it.

So, therefore, if you don’t support this bill, you don’t support businesses, you don’t support Māori, Pacific people, women, family, and children, and that’s why I commend this bill to the House.

Thank you, Mr Speaker. I rise to take another call at the second reading of this bill, the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Bill, and it’s hard not to respond to my new best friend: the Hon Michael Woodhouse—it was news to me, but it’s nice to have that friendliness—around his promotion of, I guess, consideration in saying, “Well, what about the counterfactual in terms of deaths?” and the research that he had been reading.

I think, you know, the evidence I’ve seen is that New Zealanders have actually been very pleased with the response up to this point and the very low rates of COVID, and we’re struggling at the moment, to be honest, because of that earlier success, and the shift to an endemic presence of COVID in our communities is, frankly, frightening. You know, the Greens wanted us to hold on to actually elimination for longer and kind of double down on that to see if we could get rid of it, and part of that is because of the inequities around the vaccine roll-out and the history of flu in this country and what that has meant for Māori and for marginalised communities. When we talk about “Yes, there might be some lives lost, but what does that mean in terms of this and this?”, we’re talking as if it’s a generic population, and it’s not. This terrible disease impacts different communities more profoundly and they are more at risk, and that requires us to take a precautionary and responsible approach, and that, for the Greens, needs to be up front.

In terms of “What are the other costs?”, we’ve also seen that the member the Hon Michael Woodhouse didn’t seem to account for the impact of long COVID as well, which the science is just catching up on but has to be part of that thinking, because the impacts of that are really severe. It’s not just about people getting this disease and, tragically, dying or getting better, or just not, you know, being sick; this goes on for a very long, long, long time and will have lifelong impacts for some people. So that also has to be part of the equation. The latest numbers I heard internationally were that the underestimation was about five million people had died just of COVID, or is about four million—like, underestimates—but eight million had died in terms of the health systems’ inability to respond to other illnesses. This wasn’t just about responding to COVID; it was about our health system being overwhelmed and not being able to respond to those other needs.

I wasn’t hearing that reflected in the “We shouldn’t have a resurgence payment. It should just be open.”—like open, open, open, as if there is no threat that comes with that. And so I think that’s quite out of step with most New Zealanders’ thinking, to be honest. And though that is not the core part of this bill—actually, I agree with the previous speaker, Barbara Edmonds. A lot of my time won’t be spent on the resurgence payment because, actually, this bill is just a very minor change to that, because all of that sits within Order in Council at the moment, and that will remain in that context. It’s really about recognising that we’re shifting from a tiered response to a traffic light response.

So I would like to spend the rest of my time talking about the Working for Families aspects of this, and I do have to now take issue with the Minister, who, in his second reading speech, said that this was about, I think, implementing, he said, the Welfare Expert Advisory Group’s recommendations. Well, that would have been nice, but, actually, if I read directly from the Welfare Expert Advisory Group’s recommendations, they say, “We take the view that the Family Tax Credit should move closer to being universal, available to all except high-income families. The rationale for this is that all of society benefits from the next generation and should contribute to the costs.” They called for the abatement rate on the family tax credit to be reduced from the 25 percent that it is now to 10 percent, and this bill increases it to 27 percent. This bill puts in place, I think, a 57 percent effective marginal tax rate for families earning $48,000. That’s not a wealthy family when you’ve got kids to care for in this world where rents are what they are, let alone the cost of living.

I also want to talk to the point about “No one will be worse off.”, and the numbers of people that we’re hearing who are going to benefit from this policy. I just really want to speak to the feeling that that’s misrepresenting this, because the inflation adjustments were locked in—so, in effect, this legislation and what is up to the Government and what the Government is doing has nothing to do with that. So we’ve been hearing those numbers of—what is it?—$14 per child and $12.83 per child. Actually, the majority of that was locked in from previous decisions and has nothing to do with this Government’s decision. It really is a $5 per child increase because the rest of it had to happen anyway. So it feels a bit—there’s a word that I’m not allowed to use. To be honest—it sounds like that word but means something the opposite. So to be suggesting that the numbers are higher and that large numbers of people are going to benefit—and I also want to point to what the regulatory impact statement tells us: the rate change will be $5 per child; there will be the increase of the abatement rate to 27 percent; between 4,000 and 6,000 children might be lifted from poverty. And there is a footnote to those numbers of lifting children from poverty saying that there is really significant statistical uncertainty with those numbers. So we cannot rely on those numbers.

And then it tells us there will be 223,000 winners from this and they will gain an income from an average of $8. So that to me, if the Government was being upfront about what’s happening, would be what they would be telling us, and that is a story to tell, and that is consistent with what they’re doing. But it also tells us that, because of that change to the abatement rate, 91,000 families will be worse off than what they would have been without this bill, without that change, and they will be worse off by an average of $6 a week. And that’s those people who are working, who we want to be encouraging and supporting to be able to manage their life as a family and work, because that’s tough. Childcare, transport, just the logistics of time—it is not an obvious thing and it is not right for all families to be in paid employment as opposed to being at home caring for their kids. That is not an automatic “Yes, this is best for children.” It is only best for children if you get enough financial benefit from that work to be able to make that juggle and the welfare of your kids better off. So pulling money back from those families earning over $48,000 a year is counterproductive and goes against the Welfare Expert Advisory Group’s recommendation.

I also just want to touch on—like, the Prime Minister wants New Zealand to be the best country in the world to bring up kids. Our tax credit rate is so much less support for low-income families than even Australia’s, and I don’t think of Australia as a radical country. A low-income family in Australia, even with these changes, will be over $7,000 better off through tax credits than our families, than our children, when we are supposedly aspiring to be the best country in the world to bring up kids. But this Government is not getting behind that. They’re not putting the money where their mouth is, and they need to change that.

It’s time for me to leave the Chair for the dinner break. The House will resume at 7 p.m.

Sitting suspended from 6.03 p.m. to 7 p.m.

I was reminded of when I first came to Parliament and was watching people’s maiden speeches, and watching the then MP, now Prime Minister, Jacinda Ardern talk about her one goal in Parliament and how, if she didn’t achieve it, then she should go, which relates to this bill today and the support payments around child poverty. It was a pretty substantial statement to say that her main goal was to lift everybody out of poverty that needed to be lifted, and, to this date, it still hasn’t been achieved. And, in the bill today, there is not much progress on that, where we can only see, of the 100,000 people she promised to come out of poverty, that maybe 1,500 people will benefit, with a net increase of $5 and a loaf of bread to support their families and to actually look at the cost of living index, which, with inflation rising 5 percent, means that, no matter what is paid under this scheme, the families will not be better off.

So we suggest that, if this bill does go ahead, which we will not be supporting in the ACT Party, we have a post-enactment inquiry of the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Bill, including a public submissions process to get to the bottom of how we lift all these and rise the boats with regards to families and people in situations which have become even more extreme in New Zealand. In the ACT Party, we believe the best way to do that is to create opportunity, to create a tax break that allows people to get thousands of dollars as opposed to $5 in a period. And we also believe that creating these opportunities is the only way forward, under a new Government.

Something happened today and yesterday that I think has set a rot in with regards to passing laws in this country. Passing under urgency bills like this has brought this House into disrepute. It’s brought our perception as MPs into disrepute as well, and it means that the confidence in the public about our willingness to solve issues around giving business confidence with support packages, where they have moved on and are doing their own thing, and also us supporting people with disadvantaged families, has become almost a lost cause in the minds of New Zealanders.

We actually believe that, in eight days’ time, we’ve got a situation where nothing much has really changed, and these have been passed under urgency without any consultation with the Opposition parties, which would have been easy to sit down and resolve. This seems to be a growing trend with regards to COVID matters and COVID bills, and doing it under urgency just makes it worse. So when do we stop doing it under urgency? When do we build in proper time frames? When do we build in proper regulatory statements, cost-benefit analysis that actually works, and when do we start getting real about the fact that it’s not enough just to keep saying no, but we actually need to work as a Parliament to solve these major structural issues that just aren’t going away?

So, with regards to the bill itself, it is something that is not quite necessary right now; life would go on without this, and whether “Dr No”—Dr Parker—respects this or not, the recommendations here are an admission that we are moving into a new zone of COVID management, which requires more sophistication, requires more ability to look at the macro levels of poverty and actually achieve something that is long standing as we walk through this COVID-mare. We are wanting to create opportunities for families that isn’t just giving handouts, and people are insulted by the quantums of money. They don’t know why this is happening and coming through, but it’s certainly not making an impact when a petrol tank has gone up $20 from where it was two to three months ago.

So we would actually like to be able to sit down with this Government in the future and actually work out what is the best scenario. But why not get the public in to talk about this, and why not get businesses in to talk about this and wrap them in a process that actually builds confidence and stop talking to a few pet groups like BusinessNZ, talking to associations that are, really, just there to reinforce the status quo, and actually have a democratic Parliament where the people have their say about these matters and actually want to be involved with the solutions as well.

So we believe that we need to get thinking really hard and fast about the amount of debt that we’re racking up and the value that we’re getting. The solution long term is not just to keep handing out money, but it’s to create value for money and opportunities that, even if it’s thousands of dollars as opposed to single dollars, the country can look itself in the eye and say, “Yeah, that is contributing to economic and particular value.” and to family and households, enjoyment for children or parents.

One of the things that we would ask—the whole issue of urgency under COVID—is that a special taskforce be set up to talk between the parties and actually give people a head’s up that allows not this standoff that’s happening across the House today but something that’s more integrated, something that’s more sensible. We are in a pandemic, and we need confidence that everybody steps out of this building into constituencies with solutions that appear sensible and actually add value to people’s lives.

We will not be supporting this bill, but we will actually want to work in the best spirit that we can. One of the things we’d like to do is just really look at the whole Working for Families tax credit system and really start a new process and add some sensibility into it.

I’m rather surprised to hear from that member, Damien Smith, who I enjoy sitting on the Finance and Expenditure Committee with, telling our Prime Minister off for her ambition to lift children out of poverty. I do not apologise for absolutely supporting that ambition; that is why many of us on this side of the House are in Parliament. That member knows, as well, that Treasury has spoken to us recently in very glowing terms about the Government’s handling of the pandemic and the economic response.

This piece of legislation must be considered in terms of the trends and what this Government has done over a period of time to support our most vulnerable. It is not about the small, incremental changes; it is about what has happened since we’ve been in Government. Since 2017, changes to the welfare payments and tax credits have lifted the incomes of 100,000 families and whānau with children by $175 a week. That is no small measure. That makes a real difference, and I absolutely commend this bill to the House.

The Hon Todd McClay—five minutes.

The last speaker in the debate, Ingrid Leary, misunderstood my colleague from ACT, Damien Smith, and what he was saying. He wasn’t being critical of the Prime Minister for her ambition to lift children out of poverty; he was being critical of her because she’s put more children into poverty than she actually has lifted out.

So we just heard a hundred and something dollars—$175—a week more for an average family since Labour came to Government. What they didn’t tell you is that, if you look at what’s happened to rent and mortgages and the cost of food and the cost of petrol and the cost of almost every single thing in the country, that family that the Government has not helped with lower taxes when they work so they can keep more of what they earn and spend it on things that they want—no, no, the $175 that the Government took off hard-working Kiwis in tax to then give back to those families to tell them they’re better off and they should be grateful—are worse off because all of their costs have gone up.

There is such a thing in the country today that has not been here for as long as I can remember: the working poor—people who get up every day and drive our trucks; and they go to our factories, they go to our shops, and they work hard, work hard to earn money, to pay their bills and pay for their family. They are poorer today than they were when Labour came to Government, because the cost of living has gone up so very much. It has nothing at all to do with COVID. The Government would love to blame everything on COVID: “Because of COVID, we have to do this. Because of COVID, we have to borrow $97.5 billion and use some of it for the arts and a little bit more for cameras on fishing boats.”! Everything that the Government has done, they say, is because of COVID. But, to mum and dad at home who are the working poor, who are paying their tax and they can’t afford to pay their bills—and for some of them that are having to choose to pay the bills rather than buy the food for the kids—the Prime Minister is ambitious for them, but she is costing them dearly, and there are more children in poverty today than there were when the Prime Minister took this on as one of her ambitions.

We support businesses in New Zealand. We want them to be able to get out and to trade their way out of the mess that Labour has created. We want them to know with certainty what the plan is. We don’t want the Government every single day to come up with another COVID rule, a restriction, or another change, because nobody in the country, particularly the Prime Minister, actually knows what’s going on. We actually believe that, if 85 percent of the population are vaccinated—higher in many parts of the country—actually the Government’s foot can come off the throat of small business and of households so they can start trading their way out.

I ask the Government members this when they stand up and speak for 30 or 40 seconds on this bill—that’s all the time that they’ve got available to them; 30 seconds to be self-congratulatory about what a wonderful job that they have done, 30 whole seconds as we do this in urgency—can they please tell the New Zealand public why it is that when, for the majority of the country that’s currently under level 2, the Prime Minister’s traffic light system comes in, nothing will have changed other than greater restriction, more cost, and it’s harder for them to run their businesses? How come today somebody can walk into a hairdresser here in Wellington to get their hair cut whether they are vaccinated or not? It’s not so dangerous that they can walk in today, vaccinated or not, and have their hair cut, but, as soon as the Prime Minister puts in the traffic light system that she has just rammed through Parliament in one day, it’s too dangerous all of a sudden! Why is it a Kiwi on 15 January can come home to see their family from Australia if they’re double vaccinated but, on 24 December, it’s too dangerous for New Zealand for them to come back here to see their family on Christmas Day? It doesn’t make sense. It doesn’t add up. It is a policy that’s being made up on the hoof.

It’s worse than that. It’s every time there’s a bit of criticism, the media says something, or there’s a little bit of public movement from their polls or from their working groups that they make a change. And, I’ve got to say, I think mum and dad at home know that the very small amount of this bill the Government is giving them won’t actually help with the large costs going up. In the committee of the whole House stage, we’re going to look at this in quite some detail, because the support the Government wants to give businesses in this is not clear to them. They’re virtually saying, “We can give you support if we feel like it, but we might not, and we want a carte blanche to do so.” And $97.5 billion has been borrowed by this Government to be spent because they say it’s about COVID. It’s these hard-working Kiwis whose cost of living has gone up so much that they don’t know if they can pay their bills who are the ones that are going have to pay that back—and their kids and their kids. It’s so much money. You can’t borrow and spend your way out of a tragedy, the tragedy this Government has created. That’s what they’re trying to do. This isn’t good legislation; it’s bad. We’re voting against it.

Dr Liz Craig—five minutes.

Thank you, Madam Speaker. Reducing child poverty is a big priority for this Government. If you look back, what we see is that child poverty really, really increased really rapidly in the early 1990s, and it’s been slow to come back down. But, once we got into Government, we started to turn that around. Just thinking through the things that we’ve done since coming into Government: Best Start payment for newborn babies, which was $60 a week, and this bill will bring it up to $65 a week; increases in Working for Families; we’ve looked at putting in place the winter energy payment, which means that families can afford to turn the heater on in winter; and we’ve increased benefits, and we’re going to do that again with further increases next year.

So this bill here actually just increases more, in terms of extra little bits for family income, because I think each little bit—what we used to see, historically, is that gradual erosion of family income with a bit taken off here or there. What we’ve been doing since coming into Government is putting extra in across a whole range of areas, which will make a big difference in terms of having enough money in the pocket to put food on the table, to pay for the heater. So I’m really happy to commend this bill to the House.

Kia ora e te Māngai o te Whare. I am delighted to stand up, take a very short call, and bring this bill home in its current reading. For the members opposite to suggest that this means nothing to the average parents trying to make a living, it shows just how out of touch they are. This is incredibly significant. As my colleague Liz Craig has just said, this is one more of the small, incremental changes we are making that make a big difference to the average small New Zealand family. And, what’s more, it makes one heck of a difference to our average employer, because I just on Monday night got off a phone call with about 18 of my local businesses, and this is exactly what they were asking for. This is exactly the certainty they wanted. I commend this bill to the House.

Thank you very much, Madam Speaker. It’s a privilege to speak to the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Bill. Often one would stand up in the House and say either one had been part of the select committee and reflect on some of the submissions and thank those who had been part of the process, or, of course, alternatively, one would say that one hadn’t been part of the select committee process and, therefore, one was at somewhat of a disadvantage compared with one’s colleagues, but at least one had read some of the submissions. I wasn’t part of the select committee process, but then again, no one was! There hasn’t been one. So I’m not able to acknowledge any such contributions, much as I actually would have liked to have heard from the New Zealand people on the subject of the taxation bill.

These are pretty serious matters, and, if the other side of the House believed as strongly as they say they do on doing things that are right for people, perhaps they would not be so afraid of hearing from the people whom they say that they wish to assist. One is put in mind of that classic dictum that there’s no more scary set of words than, “I’m from the Government, and I’m here to help.” Well, no doubt the intention is to help. The intention, as always—or at least is usually the case, we can discern—may be a good one, but that’s not the same as to say that the outcome is a good one. And, in relation to this bill, a number of proposals are made—a number of claims are made in the bill—that I think we can pretty readily stack up versus reality and see that it doesn’t, in fact, provide all the benefits that it claims, and all the benefits that the other side of the House, no doubt genuinely, would like it to provide.

So the first thing I’d say is that often we hear about increases and improvements, and, for example, the Working for Families amendments provide for increases to the family tax credit, Best Start tax credit rates, and so on. There are proposed increases that will apply from 1 April of next year. Well, that’s great, but these will not be increases in real terms if any such increases are swallowed up by inflation. By inflation, of course, I mean not only in the obvious monetary sense with the increase of the Consumers Price Index—and that’s a matter that is bedevilling New Zealand, yes, and other countries around the world, but I’m not particularly taken with arguments on the other side of the House that say, “Well, look how much worse things are in some other countries.” in relation to inflation or national debt or whatever, because the fact of the matter is that, in this House, we should compare ourselves with the best New Zealand that we can be. We should be comparing our circumstances now, as they were, but, more importantly, as they can be if the best possible policy making takes place in this place—and in the Beehive, of course.

So, in real terms, the improvement in the situation of families and individuals and businesses is not all that it is claimed in this bill. Of course, inflation in monetary terms, as I’ve talked about, which even in itself is perhaps a limited way of viewing the increases in the cost of living, if we take into account housing costs—which are often excluded from calculations of inflation and yet the most inevitable costs that human beings will have, along with, I suppose, clothing and food, because, of course, shelter is a basic human need. And, of course, housing, whether one is paying rent to a landlord or paying an equivalent amount, perhaps, to a bank by way of repaying mortgage principal and interest in one’s own home—either way, housing costs are a considerable part of any household or individual’s budget; likewise, actually, of course, in the commercial sense, for businesses operating a retail premises. For those costs which have been escalating in the last four years, there has been some criticism—or lots of criticism—and, perhaps, with some justification about the increases in the previous nine years; so, huge extra cost pressures that the bill will do very little to ameliorate. The danger, of course, is not only that it doesn’t keep up with these inflationary pressures but also that, in fact, families and individuals may even fall behind—so, in real terms, not much of an increase at all, and, possibly, even going backwards.

The proposed increases to apply from 1 April of next year: obviously, more than three months away. That’s a lot of extra time for inflationary pressure to continue to push hard up against households and businesses. This is doing a great disservice to Kiwis, who might feel as though they are better off with a greater number of dollars next to their name, but, of course, that’s entirely illusory in the case of increased cost pressures, which are not only in that sort of general inflationary sense but also in specific items with supply shortages around the world. Yes, some of that is to do with COVID-19 and beyond the control of any Government, and, yes, these are global problems to some extent, but the fact of the matter is that, because these are things outside our control, that is all the more reason for the Government of New Zealand to do all the things that are within its control to avoid inflationary pressure. A big-spending Government that does not have sound priorities in terms of return for investment—and I don’t mean that in a cold, hard, calculating way, necessarily, in the balance sheet, but investment in terms of the position of humans and the way that we can create a better New Zealand with infrastructure that we would actually benefit from, not pie in the sky stuff such as the proposed and then de-proposed, “deposed” even, plans for a cycle bridge over the Auckland Harbour, for example.

But I did want to speak, also, about the schemes that are being made available here, because, of course, the largess of Government—by which I really mean, of course, the largess of taxpayers and the funds that they’ve provided to the Government to spend on their behalf, whether willingly or otherwise—is only as useful and only as meaningful as the support actually becoming available actually is. I’d like to give a couple of examples in relation to constituents of mine who have had difficulty accessing the COVID-19 resurgence support payments, because this scheme is specifically mentioned in the bill, and it’s the amendments to that, as well as the Working for Families and so forth, that the bill is concerned with.

The issues faced, for example, by a business that has effectively been continuing throughout a period of time, throughout a period in which a lockdown has vastly reduced the revenue-generating ability of the business, has been denied the benefits that they should have been made available to them under the COVID-19 resurgence support payments. The reason from the officials doing the will of the Beehive is that the business was bought and sold during the relevant period. So the determination from the Inland Revenue Department was that the business was a new business, and because a company had been incorporated and established for the purpose of buying an existing business, a going concern, one which was making a certain amount of revenue that was impacted by the lockdown, the decision—and it’s a real head-scratcher—was that there was no qualification for the payment on the basis that a loss of income hadn’t been established, because it was a new business, when it was exactly the case that it was an existing business, albeit under a new name.

So the implication is that no businesses should be bought or sold, and somehow the good people of New Zealand should have the foresight, literally in the case of this business, of needing a crystal ball. I’m not talking about prudent planning; I’m talking literally to be able to guess, as one would guess Lotto numbers, and with about as much success! So that just seems, to me, extraordinary. The Government needs to have a hard look at the way that they are administering the scheme in a way that actually excludes rather than includes those who are deserving of it and meet the spirit and, I would argue, the letter of the law as it stands.

The other situation is the one of a business that was newly set up around the time of the great lockdown in Auckland. I say it in a way that sort of makes it sound quite historical, as though it’s in the past; it’s very much still in the present up there, I can tell you. For a constituent to have her application denied in relation to her new business because it wasn’t her income-generating ability that had been affected but her capital-raising ability seems, to me, extraordinary. These are, effectively, the same things for a new business. I won’t go into the detail—I don’t have time for one thing, but also not to be too specific in relation to this person’s individual case—but, again, the point remains that the Government has to make available support if it’s serious about doing the things that it says it wants to do in this bill.

I rise in support of this bill. One of the things that I’ve heard repeatedly today is that the Government got it right a year ago but it’s not getting it right now. It’s the very same philosophy that’s the essence of this bill. So rest assured, too, New Zealanders who are listening tonight, this is a response to a change in a system which is changing because the vaccination numbers are up as high as they are. It means that we have another tool in the toolbox. From the end of this week, we’re going to be in a position where, actually, businesses mainly stay open.

Now, some of those businesses will be affected in some more subtle ways. This system that we’re introducing tonight means that those people in those businesses can have a response. Without it, actually, the support that the Government could give would all be hedged around an old system and an out-of-date linguistics. So, right now, this bill is really important to put through to support the businesses that are suffering the most. I recognise that those businesses support workers. I’m very proud of the fact that we have maintained our employment in this country. I support the bill.

I declare the House in committee for consideration of the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Bill.

In Committee

Part 1 Amendments to Tax Administration Act 1994