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

Members, we now come to our final debate, which is on clauses 1 and 2, the title and commencement.

Thank you, Madam Chair. Well, we are nearing the end of this one. I want to talk about the commencement date—in fact, I want to talk about both, but I’m just going to deal with the commencement date. Look, I think the recurring theme in the debate this afternoon, and going on tonight, and same with the earlier COVID bill that was passed via urgency, is that it is absolutely imperative that the Government lets business owners, their staff, and people, in general, know, as soon as possible, what the new arrangements will be under the traffic light system. That’s just such a big issue.

Madam Chair, I know you were here for a large part of the debate, the heart-wrenching stories, the businesses that are crashing, and the unknown now and the uncertainty and the lack of clarity is just unbelievably bad. As many of us in the House here represent electorates that span areas and represent business owners who are doing it so tough now, I just think the commencement of this bill is a vital part of making sure that we bring to a conclusion, as soon as possible, the long-lingering process that the Government loves to do, which is to make announcements, then delay, make more announcements, and then finally trickle out a bit of information. We just can’t go on. We’ve got eight days; in fact, in a couple of hours—an hour and a half—it’ll be seven days until the new arrangements have to come into force. We have only got one more parliamentary day—tomorrow—where this bill can be passed, and all this is last-minute, harried stuff.

So the bill here, in clause 2(1), proposes that “This Act comes into force on the day on which it receives the Royal assent, except as provided in this section.” Subclause (2) makes reference to the fact that “Sections 10, 11, 12, and 14 come into force on 1 April 2022.” Look, my strong plea to the Government, and I’m looking at the Minister and I’m grateful that he stayed for the debate tonight and has participated actively, is that this bill needs to come into being and people need to know when it is. I’d like to propose that it comes into being by close of play tomorrow, 25 November, because then people at least have certainty that if you’re going to pass this piece of legislation—and the Government is hell-bent on doing that and has the numbers to do it and is ramming it through under urgency—then, at least, put these people out of their misery by actually making sure that this bill comes into force quickly.

I am reminded of my eagle-eyed colleague Chris Bishop, who, quite rightly, identified, which no one else seemed to have identified, that the commencement date on the COVID management bill, which was debated last week—identified the potential that, actually, by waiting for the Royal assent to be signed and the bill to come into play after being signed would, in fact, have meant that it was post the date of implementation, and, therefore, compromised the bill itself. I think that we know we are down to seven days and an hour and a half, I just think that it is inappropriate to let anything like this slip and linger, and that’s why I would highly recommend that a specific date be put in here that means that the Minister can make sure his officials are on to the job, that we don’t have a muck-up like we had last time and another shambolic example of the Government trying to do this last-minute, harried stuff and to make sure that people know what the certainty is around it. That is my strong urging.

I’d very much welcome the comments from the Minister on this issue and whether, in fact, he is open to setting a specific date, or whether, in fact, he’s made any provisions for the Governor-General to sign the bill, and, if so, when and how, and how long after that are we expecting to find the detail that this bill enables.

We’re not expecting any delay for the Governor-General to provide the Royal assent.

💬 Andrew Bayly: Do you know that? Have you made arrangements?

Ha, ha! Well, I saw the Governor-General earlier in the week. I’m sure she’s in town. And I’m confident that there’s no faster way to bring this into effect than the date on which Royal assent is provided.

I just have a few comments to make, and maybe put some propositions to the Minister about the title and commencement of this bill. First of all, the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Bill really should be amended to mention inflation being out of control, because that’s the real reason for the Working for Families tax credits bill, and only tangentially related to COVID-19. But in fact, actually, now maybe the relationship was a bit stronger than we thought. You see, the problem is that we have had a Government that has relied on cheap money to hide a multitude of sins in its COVID-19 response. Its hesitation, its failure to order vaccines, you name the failing, and it has been covered and subsidised by cheap money that has suddenly run out. And the reason it’s running out is that the Reserve Bank is having to raise interest rates. We saw that today—mortgage rates going up 25 basis points, and the speculation was it could have been 50. It has a big effect on people paying their mortgages. And the reason that’s happening is that that ocean of cheap credit that the Government has used is now pushing up the prices that people pay at the pump, at the supermarket checkout, on their rents, when they go to Mitre 10 to buy building supplies, you name it—wherever you go prices are going up and people are feeling it, and that’s this is necessary.

I think it would be a real shame, it would be remiss of this committee, not to put something about out of control inflation as a result of the Government’s lackadaisical COVID response into the title of the bill. That would more accurately reflect what is going on here. And it hasn’t just been monetary policy that has led to that inflation. Ironically, it’s very much connected with the intention of this bill, which is, of course, to splash more cash by making adjustments to the amount of money that is able to be paid out. It’s also the fiscal stimulus that’s been going on. You know, we’ve had a bigger fiscal stimulus, the Government borrowing, taxing, spending, spending more than it takes in to try and stimulate the economy. Well, the Secretary to the Treasury, Caralee McLiesh, is on record as saying that New Zealand had the second-biggest taxpayer funded stimulus in the OECD, behind the United States. And old “Sleepy Joe”, he may not get up early in the morning, but he sure knows how to deficit spend, I tell you. He is getting out there; $1.3 trillion. I don’t even know, I mean—

💬 Hon Louise Upston: How many zeros is that?

Well, Louise Upston from Taupō asks “How many zeros?” Well, it’s less than a billion. You don’t need a billion zeros to make a trillion, but it’s pretty close. So I can tell Louise Upston that it’s a lot of zeros. And old “Sleepy Joe” up there, he’s got the printing press going. So they spent more money in terms of taxpayer stimulus getting through COVID than New Zealand, compared with GDP. But, of course, that speech by Caralee McLiesh was given prior to the latest lockdown, so it’s quite possible that New Zealand now has the largest fiscal stimulus as a percentage of GDP to get through COVID. So we’ve been protected, or at least the Government so far has been protected, by these oceans—the literal oceans, the Pacific Ocean, the Southern Ocean, and the Tasman Sea, have kept COVID out of New Zealand, or at least helped to a large extent.

Then there’s oceans of monetary policy stimulus and oceans of fiscal stimulus. But, unfortunately, they are now washing away New Zealand’s quality of life and standards of living with massive increases in the cost of life in New Zealand—the cost of COVID catching up with people, making it necessary for the Government to splash even more cash, putting in place a bill like this.

So in terms of the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Bill, I say that it might have been smarter to put something about managing the inflation caused by the Government’s mismanagement of COVID in the bill. I also think it is somewhat offensive that the word “taxation” is in there, because while taxation may well be used along with borrowing and money printing to fund the provisions in this bill, a much better way to give relief to people who are really struggling with the cost of life would have been to reduce the amount of tax people pay in the first place, rather than robbing Peter to pay Paul and giving it back. But that’s not what this bill does. And so I think the title, by including taxation, is actually quite offensive to hardworking, taxpaying New Zealanders who get up, make the kids lunch, go to work, and have a third of their income taken away throughout the year by tax. There’s no relief for them, as such, in this legislation, and that’s why I’m not sure it’s—

CHAIRPERSON (Hon Jenny Salesa): Order. I call on the honourable—

Anyone but me! Madam Chair, thank you. Well, that’s an unexpected but not unwelcome development. As I was saying, when it comes to taxation, it’s important that New Zealand is a place, if we’re going to recover from COVID, that is tax-competitive. The tax measure that really matters for New Zealand is how we compare with our Pacific neighbours. Often, when people do comparisons of taxation, they try to compare New Zealand with a lot of stagnant Western European welfare States which haven’t really had a lot of growth and aren’t really going anywhere. In fact, when you go to Europe, you understand why so many people move to the New World—wonderful places such as New Zealand.

Again, this legislation is not going to give any kind of relief against the inflation that taxpayers are feeling. Funnily enough, while this legislation is going to adjust the brackets for people entitled to get tax credits—people who need to be given money, transferred money—it’s not going to do anything for people who are going to find the main effect of inflation is that their purchasing power is eroded to the extent that their wages also adjust to keep up with the increased money supply. They’re not going to find that they’re in a position where they get more money after they pay their taxes. The reason for that, we all know it, is that fiscal drag, fiscal drift, fiscal creep—call it whatever you will—means that as inflation comes along, in order to buy the same stuff, people need to earn a larger amount of cash, and with tax brackets being what they are, a higher portion of their tax is paid at higher tax rates.

Now, you know, this is called a taxation bill, and I think that’s inappropriate, and, arguably, offensive to people who actually work hard to pay tax, because there’s no real change to taxation in the bill. It’s all about transfers, and those are a totally different concept. I think we need, if we’re to succeed, to first agree and understand what we mean with the terms that we use. When we have a bill that says it’s about taxation but it’s really about handing out money that’s being taxed, but to a large extent, under the current Government, through COVID, borrowed and printed, that’s not actually very helpful for the New Zealand public who want to have clarity and understanding of what this Parliament is up to.

So I would suggest that rather than calling it the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Bill, it perhaps should be called the “Transfer (COVID-19 Support Payments and Working for Families Tax Credits) Bill.” If we were to call it that, we would be giving people a much clearer understanding of what this legislation is really being put in place to do. It’s not to give relief to taxpayers. It’s to actually transfer money to deal with the cost of living, even though, ironically, a lot of the current cost of living pressure is being created by inflationary pressure, which, of course, today is now resulting in the Reserve Bank raising the official cash rate. That, of course, is what has come out of the Government’s very slow dealing with COVID-19, cushioned by cheap monetary supply.

So you’re starting to see what a more accurate description of this bill might look like in the title. It wouldn’t have “taxation”; it would say “transfer”. So it would be the “Transfer (Out of Control Inflation Compensation COVID-19 Support Payments and Working for Families Tax Credit) Bill”. That would certainly go a long way.

But there’s another element to this, which is the really poor management of COVID. So it could be the “Transfer (Out of Control Inflation Caused by Printing Money to Deal with Lackadaisical Response to COVID-19 by the Government of the Day COVID-19 Support Payments and Working for Families Tax Credits) Bill”.

💬 Hon Michael Wood: This is Churchillian.

That would start to get a lot closer. There’s the great relief of young Napoleon from Mt Roskill calling it Churchillian. He’s finally come out to play. It’s a shame there’s only eight seconds left, but I have to say, it’s a great relief to hear young Napoleon from Mt Roskill—[Time expired]

I move, That the question be now put.

I too want to raise some concerns in the debate on the title and commencement about the title of this piece of legislation, because it doesn’t really reflect anything in terms of what this bill covers. If you take it section by section, if you looked at it in terms of a taxation bill, most people would be expecting that it would be about tax rates and the collection of tax.

The second part of it is around the COVID-19 support payments, and the frustration for many that have been watching this debate will be “What are they? What are these support payments?” So when this traffic light system comes in, what support will be available for businesses that are being hit exponentially with lockdowns? Whether it’s those in the tourism industry in the mighty Taupō, David Seymour, which I know you enjoy so well; whether it is travel agencies, or hospitality, there are some industries that have been hit particularly hard. When the traffic light system comes into place, businesses will want to know what support is going to be available.

So it is interesting in this bill that it has been talking about the resurgence support payment, but many have been asking me about the wage subsidy, so where does the wage subsidy sit in this? So, first of all, in the title of the bill, it refers to the COVID-19 support payments, and yet there is no detail about what that would look like, whether it is targeted, at what traffic light colours it would come in, and just how are specific industries—Taupō is the events capital of New Zealand, extraordinarily hit with both the alert level system and, potentially the traffic light system as well. I think the Government’s forgotten that many events are—

💬 Hon Michael Wood: Point of order. Madam Chair, I’m aware it’s a very interesting night in the National Party, but I am finding the mid-back bench conferencing that’s been going on for a long period of time quite distracting from the address being made by the Hon Louise Upston.

And he was so riveted! I am flattered. I’m flattered by the member that he was so riveted by the speech around the title and commencement, and so clearly understanding the points that I was making that the title of this bill does not accurately reflect, for one moment, what is in this bill. And that’s before I’ve even got to the third part, which is, of course, the Working for Families tax credits. So anyone who read that would be getting excited, thinking perhaps there is a significant increase in the Working for Families tax credits. Well, actually, no, there’s not. The cost of living is going up, and the Consumers Price Index (CPI) adjustment, which is due on 1 April, would have been happening anyway, and yet here’s a piece of legislation about which my colleague from the ACT Party, as a new MP, quite rightly said, “Why are we debating this in urgency?”

And it comes into effect—because these are the 1 April changes that were planned anyway and were going to be coming into effect on 1 April. So we’re spending time in urgency now passing legislation around a bill that’s called the Taxation (COVID-19 Support Payments—when we don’t know anything about the support payments—and Working for Families Tax Credits) Bill, that actually only adjust the CPI, plus $5 a week, and the Government would let people know with their grand headlines and their press releases that people were going to be getting significantly more amounts of money each week, which is, clearly, incorrect.

So I do think that the title of this bill is misleading, and I do think that, you know, for pieces of legislation like this that affect hundreds of thousands of people, albeit in a minor way, there at least should be wording that reflects accurately what is occurring. The National Party would have preferred to have had legislation called the “Reducing Taxation from Hard-working New Zealanders and Letting You Keep More of What You Earn Bill”. But, of course, instead, the Labour Government wants to simply take your money off you, turn it around, recycle it, put a new badge on it, and give it back to some of you.

Madam Chair, I do submit to you, and to the Minister in charge of the bill, that a more appropriate name and title of this bill—

Order! The member’s time has expired.

I think several words should be in the title of this bill; one is “facilitation”, except that we haven’t really been told what the bill actually facilitates and how it’s to do that, apart from relatively vague comments made by the Minister earlier in the committee stage. The other would be by way of some sort of explanation for exactly what is supposed to happen and why it is that—the words I’d put in there would be “The Bill that Announced What’s to be Announced”, because that clearly also is part of what’s likely to happen in the family tax credit situation.

One of the things that’s come about in the last few hours is that we’ve heard people on the other side of the Chamber say—I heard Greg O’Connor say, “Well, look, $20 a week. It’s not to be sneezed at when these people need it.” Well, no one is doing that, but guess what, Mr O’Connor. There is no $20 a week in this for anyone—not anywhere. It’s less than half that, in fact, for most people. And when you look at just the rise in rent, the average weekly rental rising even in this city about $150 in the last week—$150 per week—and you know that a lot of the people who are in receipt of this particular assistance will be in rented property, then you know that this is nowhere near a catch-up. It is just an announcement for something to be announced, something to make people feel good about where things are going.

The speaker from the ACT Party spoke about the dangers of excessive expenditure when it comes to the so-called fiscal stimulus. Well, no one really would argue at all against some of the assistance that’s been out there over a period of time. No one argues about that. But what is interesting is that if you look at the Statistics New Zealand information about the September quarter—and we heard the Government talking about it today; the economy’s going well, apparently. It grew by some $17 billion in GDP in the year to the September quarter. Well, that’s great. How would you get that sort of growth when we’ve got this COVID thing that we’re trying to deal with and much compromise in the way business activity happens, so much overtime lost by people in their jobs, so much earning capacity for people in their jobs stripped away? This is surely a good result.

But then, you look at the borrowing for the Government and find that in the same period they borrowed an extra $43 billion, taking the total Government debt somewhere close to $100 billion.

💬 Andrew Bayly: $120 billion.

So then you’d say—well, a $120 billion, my colleague corrects me—a huge amount. But in that quarter alone, there is a question, “Where’s that $26 billion gone—between the GDP growth and the borrowing, where’s it gone?”, Michael Wood over there can’t answer. I don’t think the Minister’s going to answer. There’s no chance any of the backbench will answer. Where it’s gone is it’s frittered off on all sorts of other things that the Government sees as sort of important projects all over the place.

Now, we’re bound to get a list of all sorts of infrastructure etc., etc., but most of the infrastructure they talk about is just announced; it’s not even under way. We’ve seen the disaster around the expenditure for the Let’s Get Wellington Moving sort of approach today. Well, that’s classic, isn’t it. It actually achieved nothing, moved nothing, but spent millions of dollars talking about moving things. That’s along with the whole concept of announce an announcement so that when you get the announcement you can announce what the next announcement is going to be about. No real activity. So this bill should be called the “Taxation (COVID-19 Facilitation and Support Payments) Bill Once Everyone Knows What the Mickey Mouse Red, Amber, and Green System Means and the Announcement about Working for Families Tax Credits to Come at a Future Time Bill.” That would be a fair description of what the bill does. It doesn’t actually tell us, though, what’s in the bill. Nor was the Minister able to tell us that today when he was taking various calls.

So, yes, we accept that it facilitates some business support for businesses who are struck down or impeded or otherwise, and other individuals, it would seem, in the same category when it comes to the effects of COVID-19. But no parallel between the current alert system, which has four categories to it, and the new system that has three categories to it. So when will that information be available to the public? Because only at that time will people have the confidence to truly open up their doors, get on with the thing that they’re good at, and start trying to recoup some of the extraordinary investment that they’ve made in keeping jobs open for so many New Zealanders.

I move, That the question be now put.

The question is that Jan Logie’s amendment to clause 2, set out on Supplementary Order Paper 101 be agreed to.

Mr Speaker, the committee has considered the Taxation (COVID-19 Support Payments and Working for Families Tax Credits) Bill and reports it without amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

Third Reading