Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill

I note that the title of the bill is the “Taxation (Annual Rates for 2021–22, GST,”—which I assume is an acronym for goods and services tax, although I’m aware the accessibility criteria that are described for better public communication suggest that acronyms aren’t helpful for people to understand. People would hear the words “GST”, hear those sounds, “GST”, often; they might not realise that it’s a tax on goods and services.

Then we come to “and Remedial Matters) Bill”. Now, I have undertaken a large number of contaminated site remediations in a previous role, before I came to Parliament. But there is nothing that can remediate this bill, except a change in Government, a complete change in direction—

💬 Barbara Edmonds: Point of order. As you know, we are debating the title clause of this bill. The member is going into policy discussion, which I think is much more wide than the title of the bill.

💬 Andrew Bayly: Point of order, Madam Chair.

CHAIRPERSON (Hon Jenny Salesa): Let me deal with this point of order before I take your point of order.

💬 Andrew Bayly: Mine is related to it.

CHAIRPERSON (Hon Jenny Salesa): Andrew Bayly.

💬 Andrew Bayly: Speaking to the point of order, I just note now that this is the second time the same member has stood and tried to advise the Chair of what should be debated and what shouldn’t be debated. That is not the role of the member, and I just urge the member to stop interrupting the debate and the flow of debate from the honourable member, because it’s disruptive. That’s what I’d suggest.

CHAIRPERSON (Hon Jenny Salesa): I’d like to urge all members that have taken a point of order on this issue that I’m the sole judge when I sit here. I do not need assistance in this regard.

Thank you, Madam Chair. Look, we are debating the title of this bill. That’s why it’s important; because the people of New Zealand, who will be watching this evening’s 6 o’clock news and potentially hearing about the passage of this bill, the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Bill, which is a mouthful—in fact, it’s more than a lungful—will be saying, “Well, does this mean that I’ll have more money in my pocket?” Does the title of this bill, these words, mean that, actually, all the problems with the taxation system—for example, the bracket creep; the fact that most of the tax appears to be paid by a very small number of people; the fact that the taxation system means that people who are earning below a certain threshold would be reluctant to take on more overtime, reluctant to work an extra day, reluctant to take on a second job so they can save money for a deposit for a house—will be remediated by this bill?” This bill doesn’t remediate any of those matters.

So if we’re thinking about whether the title of this bill is appropriate, I would contend, in fact, that the title needs remediation. The title does not actually reflect what is needed from the taxation system in New Zealand, or, in fact, what this bill purports to do.

I just want to go back to the point I made earlier when talking about liable parents, for example. Now, the Minister made a point that, in fact, there is a process to stop the clock if you think that you’ve got a change in circumstances—you’ve lost your job, for example. But what it doesn’t do is allow circumstances from months or a year prior to be taken into account. The backdating that the Minister and I were discussing only actually applies to taking more money from a liable parent.

So, again, if this is going to be a remedial matters bill, what would be helpful is if the bill remediated some of the unfairness with the tax system that unfairly penalises people who accept they need to do their bit by contributing through the taxation system to social services and to things that can’t otherwise be provided by the private sector, which is the only reason that people should be paying tax—to fund things that only the private sector cannot possibly provide. In fact, that’s what needs remediation. What’s set out in this bill—and, in fact, what the title describes—doesn’t remedy the most basic things about our taxation system, such as if you’re a liable parent and your business loses money throughout the year, you still have to keep paying your liable parent contribution until the following financial year. Your circumstances may have changed, but the liable parent doesn’t get to stop the clock on what they’re paying. But a backdated assessment can still ping them for more money.

So it’s all one way in favour of the Government. That’s what needs remediation.

💬 Hon David Parker: The Government doesn’t get the money.

And Minister Parker, sitting there in his seat, is commenting about who gets the money—it’s also not clear who gets the money. Because even though a receiving parent may, in fact, not be entitled to the money—and that might be discovered through an assessment—the money has already been paid by the liable parent, so one can only assume that the money sits in Inland Revenue’s bank accounts and it will wash up at the end of the year. It’s handed over to the revenue Minister to distribute to projects that he finds favour with and that his Government actually thinks are more important than New Zealanders having the money in their back pocket to spend on things that are important to their families.

So that’s just one example of where the title of this bill fails to live up to actually what New Zealanders need and even to describe the contents of the bill accurately. It is not a remedial matters bill; it is, essentially, a cover-up for the fact that this Government proposes to take billions more in taxation from New Zealand workers, New Zealand businesses, and spend it on its projects, because it thinks that its projects, whether they be green projects or whether they’re funding possum control, for example, are more important right now. While they might be a priority for the future, more important right now for New Zealanders is having the money in their pocket.

Thank you, Madam Chair. I’m happy to take a call on the title and commencement clauses of this bill. I would question why it’s been called the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill, because it clearly feels like there has been something of importance left out, and that is that a substantive part of this bill is anti-landlord. This is the “Anti-landlord Bill”. This is not just the taxation annual rates, GST, remedial matters, and everything else; this bill is specifically anti-landlord of the Government, and that’s what they should be upfront about, and call it the “Anti-landlord and Anti-renters Bill”.

The changes that are in this bill don’t just go some way to imposing more costs on landlords, who provide rental accommodation up and down New Zealand, but they also hurt the people that the Government says will be helped with this law change, which is directly the renters. I noted that IRD, when they were tasked with advising the Minister on these changes last year, said that these changes will impose up to $4,000 of added cost on landlords per year, and they’ll put upward pressure on rents, and will stifle future growth and development in property.

For that reason, this bill shouldn’t read: the “Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill. It should be quite clear that the purpose behind a lot of what this bill was was to scapegoat landlords, blame the housing crisis on them and not the insane amount of regulations that this Government puts through, which doesn’t help building and development in New Zealand.

We should actually be upfront with the problems that we face in New Zealand, and the problems that are caused by this Government, and bad regulation and bad lawmaking, and just say it for what it is: this Government is failing at problem definition. It’s passing laws that don’t make for better public policy or a better New Zealand. It’s passing laws that are divisive and hurt a group of people who are trying to make a nest egg for their own future financial security, and, in the meantime, they’re going to be hurting the renters, they’ll be hurting the first-home buyers, that this Government says it will be tilting the housing market towards, and we should just say what this bill really is: it’s anti-landlord, it’s divisive, and it hurts renters. And that’s what this bill should actually be called.

I move, That the question be now put.

Thank you, Madam Chair. Just for the sake of talking about the bill’s name, the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill, I think the member Mr Court alluded to the word “remedial”. He is quite right when he references this, and I go back to, and I will contextualise why I’m going to bring clause 202 in. When it speaks to that regulations provide for the establishment of powers and procedure of the cooperative dairy companies, income tax appeal authority—well, that gives them the right to appeal parts of that legislation, and by the very nature of the word “remedial” it seems that this piece of legislation removes that reality.

Thank you, Madam Chair. Just want to return to the title of the bill, and the false premise that this is a remedial matters bill. And I want to use an example here of a clause relating to research and development—clause 142, which proposes an extension of time for businesses or a person to file a supplementary return for the 2019-20 income year—that it is extended to 31 August 2021.

Now, I thought that must have been a typo. I thought that somebody drafting this bill must have been looking at last year’s calendar. And then I thought, “Crikey! Maybe this is remediating something that a whole of people don’t realise needed remediation but that the Minister’s worked out, if he doesn’t cover this one off, maybe the Government or Inland Revenue will be liable to pay people back.”

So when we’re thinking about remedial matters, if you’re going to be remediating things so that that was going to give taxpayers a chance to put their affairs in order—because the last couple of years have been extremely disruptive for families—for people whose income is taxed through the PAYE system and who get their pay cheque every two weeks and don’t have to worry about filing a tax return, a lot of this stuff doesn’t have too much of an impact on them, although, obviously, they’ll see a lot less money in their bank account as the tax rates go up, but they don’t have to do much about it—it’s just taken from them.

But if you, say, were a business and you wanted to claim research and development tax credit, under new section 33F, in clause 142, it turned out that the extension of time was to 31 August last year; not this year. It doesn’t give people more time to put their affairs in order and remediate matters—as the bill said, remediate matters; remedial matters—that might have got a bit out of order during the period where people were in lockdown.

CHAIRPERSON (Hon Jenny Salesa): Order! I’d like to remind the member that this was the point he made in his first contribution on this title and commencement discussion debate. Please keep it to title and commencement, otherwise we can allow other people to make speeches on this.

Thank you, Madam Chair. So, in terms of the title and commencement, it’s very unfortunate that there are many provisions in the commencement part of the bill which actually relate back to backdating. However, once this bill is passed, organisations and individuals won’t be able to take advantage of the backdating because, in fact, the time for using that provision will have passed. So by the time this bill comes into effect and gets the Royal assent, potentially in the next weeks or months, the time that people could have actually gone back and claimed for research and development tax credits will have long passed, potentially six or eight months in the past.

So the reason why this is called a remedial matters bill is still a mystery—it doesn’t seem to remediate anything. And in terms of the timing—the commencement date of the bill—it appears to be at odds with some of the provisions of the bill that allow for backdating and for extensions of time. Thank you very much, Minister; appreciate a response to that question.

Thank you, Madam Chair. I move, That the question be now put.

Thank you, Madam Chair. I will keep my contribution specifically to the commencement clauses of the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill. It was a huge disappointment for me, when reading through this bill, that there are already commencement clauses in here that have already taken effect, and it does us no good service to be passing laws that have already come into effect.

When the Government announced last year that it was making changes to the brightline test and to interest deductibility limitations—which are specific in this commencement clause, having started last year—we are going against good lawmaking practices which allow people to prepare for the future, to know what the rules of the day actually are so that they can abide by them at any given time. What this does, by putting in place a date that it takes effect on before the law is even changed, is it goes against the rules of making good public policy where, at any given day, you can get up, you can go to the legislation website, you can see the laws of the land that you live in, and you can see what you’re supposed to be doing right, and how you could be going against the laws, at any given time. By putting in place laws that have an effect over a year ago—

💬 Mark Cameron: Retrospective.

—a retrospective change—you cannot allow for a person to know, in black and white, what the laws actually are on any given day. There is the ability for the Government to have actually said, “You know what? We don’t want to pass this bill any more, and we don’t want these laws to commence as of taking effect last year.”, and they’d be able to do that. But, in the meantime, you’d have people up and down New Zealand saying, “Well, I don’t really know what the law actually is any more.” You’ve got governing by PR and press releases on the Beehive website telling me that I’m now in breach of the law, but the law doesn’t exist in reality, so what is right? And I don’t think that is right.

I think the Government should change the commencement dates so that they actually take effect after this law is passed. But I also think they should stop making commencement clauses like this, because this has not only an effect in this bill but it has an effect for all of our laws across New Zealand, because we want people to invest in New Zealand. We want foreign direct investment. We want a stable economy where people feel like they know what the laws of New Zealand will be, at any given time, and going against that means that we are less reliable for people to send their money to. Because, who knows? You might invest in a massive building development tomorrow and, low and behold, the Government comes along and creates a new law from press release and says, “You’re not allowed to build in that piece of land any more.”, but it’s not actually the law. That instability and that uncertainty of what the laws are does not make New Zealand a good place for investment, development, and growth, which we need to make New Zealand a prosperous, growing society where people want to send their money to, and where we can become wealthier as a country and as a nation. That instability means that somebody else could potentially think of sending their money to Australia, or sending their money to the USA, instead of New Zealand, where we desperately need to increase productivity for the wealth of all New Zealanders. 

These laws should not be retrospective. The Government should own up to the fact that they have created laws by PR, rather than actually putting them in black and white so people know what they are any given time, and they should change them—change them for all the people who are blind-sided by the rules that came in last year, and change them so that we have stability for our economy, going forward.

I move, That the question be now put.

The question is that the Minister’s amendment to clause 2 set out on Supplementary Order Paper 134 and the Minister’s tabled amendment be agreed to.

David Seymour’s amendment to clause 2 set out on Supplementary Order Paper 140 is out of order as being inconsistent with a previous decision of the committee.