Taxation (Cost of Living Payments) Bill

Members, we come now to Part 2. This is the debate on Clauses 7 to 9, “Amendments to Income Tax Act 2007”. The question is that Part 2 stand part.

It might assist the committee if I explain this short part. It has two provisions. One is to say that the cost of living payment, when received, is tax-exempt; so there’s no tax charged on the payment received. That’s clause 8 of the bill. And then clause 9 says that it doesn’t affect other payments like Working for Families.

To the Minister, you’ve just pointed out that this is a very brief amendment and that the payment is tax-exempt, but are taxpayers exempt from having to fund this payment? All of those taxpayers who are not eligible for the payment are not exempt from the cost of making the payment.

So I’d like the Minister to consider the impacts of this piece of legislation, which has been brought to the House under urgency tonight, whether taxpayers are exempt; whether, in fact, those even receiving the payment, who are taxpayers, are exempt? If the money has been borrowed and appropriated from the COVID response fund, which was borrowed to respond to the COVID pandemic situation when New Zealand’s borders were closed, where aircraft had stopped flying to New Zealand, which meant that the Government at the time had to say, put funds into Air New Zealand to make sure there was cargo coming, is it appropriate that this payment, this one-off $350 payment—which amounts to less than a dollar per day over a calendar year.

Now, when I was a young person and I used to watch television, ads would come on the television, and they would say—they would say—please donate money to this poor country where people earn less than $2 a day, and yet this payment is for a dollar a day, which wouldn’t have even solved poverty in an impoverished, starving country in the 1980s.

So a dollar a day, let’s just consider the $350 payment, which the Minister says that people who receive it will be exempt from paying tax on. So let’s assume that that’s your starting point, Minister. These individuals who receive the payment will live in a country called New Zealand, which has borrowed tens of billions of dollars to fund the COVID19 response. That’s where the money has been appropriated from. That money was intended to deliver shovel-ready projects, most of which the shovels are still sitting in the shed, clean and shiny, apart from the ones which potentially Minister Wood or Minister Parker or Minister Robertson—if he’s here—have held for a moment, just long enough to get their fingerprints on the shaft while the shovel touched the ground so they could get that photo op for the shovel-ready projects.

But let’s just come back to what the COVID-19 response fund, which this is appropriated from, was for. It was to respond to COVID, and it was borrowed. So it would appear by your statement, Minister, that these payments are tax exempt, ignores the enormous debt elephant in the room that this Government has created, which is that even the taxpayers who receive this payment will be liable through their future taxation to pay the interest on the COVID-19 debt, to pay that interest potentially for decades as these bonds mature over time, and at a much higher interest rate, no doubt, than the Government assumed they could borrow the money from when they took it from the air or hit print over at the Reserve Bank and created the money out of thin air, that money that has since created an inflation pressure that is common to all countries around the world which have used money printing to generate some kind of revenue for their Governments at a time when they weren’t collecting money from normal business activity. So to say that it’s exempt from tax, Minister, appears to be missing the point that every taxpayer who receives it and everyone who doesn’t will, through their taxes, pay for it in the future through the interest on the COVID-19 debt that that Minister, who is part of this Government, is responsible for incurring on behalf of New Zealanders. So I want the Minister to explain how taxpayers are not going to pay for this.

And, Minister, considering that and considering what other options the Minister had—as I pointed out before, at the current inflation rate of 6.9 percent, the cost of living increase for a New Zealander on $70,000 a year is over $4,000. So does the Minister seriously believe that this $350 payment, less than $1 a day on an annualised basis, is going to make any difference whatsoever in the quality of life, in the wellbeing, and the family circumstances of people earning the average wage in New Zealand? If he can get up and explain this then, then the ACT Party might potentially support it. But at this stage we wouldn’t.

The latter part of that contribution related to Part 1, so I won’t respond to it. The earlier part was repetition of the same point made by his colleague in respect of Part 1, so I won’t repeat my answer.

Thank you, Madam Chair. So would the Minister care to explain, in terms of Part 2, clause 8(cb): “a payment under the cost of living payments scheme, as defined in section 3(1) of the Tax Administration Act 1994:”, which he described as not being subject to taxation for those who receive it, does not have a tax implication for all New Zealanders who will have to pay back the debt that this Government has incurred, the debt that the COVID-19 response fund represents, which the Minister has called on to use not to save New Zealand from COVID-19, not to protect us from COVID-19 coming across the border or to make sure that freight and logistics can move stuff in and out of the country—would the Minister care to explain how, while taxpayers who receive this payment are not required to pay tax, in fact, they don’t have any future tax obligation to pay for this one-off payment? Minister, could you please explain that in terms of Part 2 of the bill?

The clause is very clear. It means what it says, which is that the payment when received by someone is not taxable.

I move, That the question be now put.

The question is that Part 2 stand part—sorry; a bit of late-night confusion. I was putting the question; so I will continue putting the question. The question is that Part 2 stand part.

Members, the time has come for me to leave the Chair. The House will resume at 9 a.m. in the morning. Good evening.

Sitting suspended from 9.56 p.m. to 9 a.m. (Friday)