Taxation Principles Reporting Act Repeal Bill

So the question is that Part 2 and clauses 1 and 2 stand part.

Thank you, Chair. Acknowledging the question from the Hon Barbara Edmonds, the point that I was referring to in regards to principles being included within the annual report is that the elements of tax principles are embedded within a whole variety of information within the annual report. What we acknowledged on a prior question around a succinct list or categorisation of that, that does not exist. But the inherent nature of tax principles, as it is, was embedded within that report. If the member wants to propose any other ideas on how they believe that might be useful, as I indicated to the prior speaker in the member’s party, then they’re most welcome to get in touch.

I just wanted to say that I’m appreciative of the Minister engaging in this back and forth. I think it’s a really important and constructive process for us to have in lieu of having a fulsome select committee process here as we pass this under urgency.

So a few more questions for the Minister following his answers to my questioning just before. He noted that he has not seen that report and he does not intend to see that report. But with your leave, Madam Chair, it does not feel as though the actual question which I asked—which is whether he has seen any advice, any correspondence, any memorandums, or had any conversations with officials about where in the work programme that report is actually at. Because the Minister, as the Hon James Shaw said before in the second reading of this bill earlier today, can decide that he wants to hear no evil, see no evil, speak no evil, but it doesn’t necessarily mean that it doesn’t exist.

So my question to the Minister remains: does he have any idea where in the work programme this report is, given that under the law as it currently sits on the statute book, this report is due out on 31 December, in 10 days? Two of those days are Christmas and Boxing Day—public holidays—two of those days are weekend days, and the other days, we would assume, will largely be taken up by the holiday of the public servants who largely work in these white-collar jobs where most people will be on break from tomorrow, which would lead us to the inevitable conclusion that this work should already be done.

If the Minister is to say, potentially, that he doesn’t know that, then I would then say that that begs the question of what on earth else is happening with Inland Revenue (IR) that the Minister is not aware of. So the core question is whether the Minister has had any engagement with his IR officials about where this work programme is currently at, because based on the law as it currently stands, it should be near publication.

The second question—because I think there’s been some really important and valuable engagement and discussion around the fact that he still believes that there needs to be some form of reporting against some form of taxation principles. Again, we’re still kind of left in the dark as to what that may or may not look like. Which of the seven principles within the taxation principle reporting legislation as it currently stands, again, does he or does the Government disagree with? Because throughout the Finance and Expenditure Committee process a few months ago now, a rigorous process with dozens and dozens of submitters that we heard from with an independent adviser, who advised us that these tax principles were commonly known, to the extent that they didn’t actually require descriptors within the legislation itself, the National Party and the ACT Party, throughout that process, didn’t disagree with any of those seven principles, which leads us to the conclusion that they agree with the importance of those seven principles, the likes of equity and vertical integration and otherwise.

So that kind of begs the question: why is it that they are now revoking the reporting against those principles which they agree upon? And that begs the question which the Hon James Shaw put before of whose interests does this bill serve? Because it’s definitely not the interests of a general public who deserve to be informed about the functioning of our tax system.

Because if I may make the point, and not to belabour it, we operate in a dearth of evidence in this country when it comes to making meaningful public policy decisions, not just in the tax arena but also actually when we’re talking about housing policy. We actually don’t even know how many landlords there are in this country. We have to scrape to get the data from Land Information New Zealand, the Companies Office, the Ministry of Business, Innovation and Employment bond lodgement data, and a range of other areas to try and pull together any meaningful insights. I had thought that this legislation, as it sits on our books, would have been a really useful potential bipartisan accord to move towards consistent reporting, which can inform a better public debate and a stronger democracy as a result.

So those questions, if I may repeat them, are: where in the cycle or in the work programme is that report at, or is it simply a matter that the Minister doesn’t want his officials to tell him? And secondarily, what of the seven principles does the Minister or the Government and its three parties inherently disagree with?

Thank you very much, Chair. I acknowledge we are getting close to Christmas and we’re getting a little bit off-piste on some of that, and some repetition as well in regards to some of these questions, but I will be free and frank, again, in terms of the position around what I’ve said. The requirement on that report is by 31 December, and I acknowledge that all Government departments and all public sector workers are under significant pressure, and at this stage, that is the time at which they would deliver the report, and I have not received the report. The reality of what we are doing in terms of the repeal is going to be the fact that that reporting is no longer required, and that is as simple as that.

In regards to the principles point—and I was in the Finance and Expenditure Committee along with the member as we worked through this bill—the reality is that there isn’t consistent agreement by parties around the principles in the tax principles, and that is the reality of where we’re at. The challenge that we have identified is that we believe that the requirements under this Act to report and require IRD in a legislative manner to report on that is not something that we deem as a priority or necessary. That’s why we’re repealing the Act.

The Hon James Shaw, but I’m just looking for very new information and very new questions.

Well, thank you, Madam Chair. I’m specifically asking the Minister to expand on a point he was just saying. He’s now said that the Government disagrees with at least one or more of the principles in the existing Act. And so my question then is: why not amend the Act to reflect the principles that they prefer to base the tax system on rather than repeal the Act and have no information available? So that is my first question, because my understanding, Madam Chair, is that that is new information to the committee, because previously in the debate, the kind of general understanding has been that, actually, no one on the Government side had stated a disagreement with the principles, but the Minister has now stated a disagreement with the principles that are in the Act, so my question then is: why, which ones, and why would the Government simply not amend the Act rather than repeal it?

I have another question, which is to come back to the reasons for the repeal. At question time today and in previous stages of the debate, I’ve heard a number of different reasons, and I think it would be helpful if the Minister would give us the actual reason or the official reason. So in an earlier stage of the debate, the Hon David Seymour said that the purpose of the repeal was to cut costs at IRD and then return that money to New Zealanders in the form of tax cuts, which is where my question then is: if that was true, of the 2.5 fulltime-equivalents (FTEs) that are resourced for this, if we were to divide that by the five million New Zealanders, how much money would each New Zealander receive from the 2.5 FTEs whose salaries would be returned to New Zealanders?

The Hon Nicola Willis at question time today said, “No, that wasn’t the reason for the repeal”—that Mr Seymour’s reason was not the reason. Her reason was that the Government didn’t want reports. And I wanted to check for consistency with the coalition agreement that the decisions of Government would be based on facts and evidence and how repealing an Act that provides facts and evidence is consistent with ensuring that decisions are built around facts and evidence. How are we going to make decisions around the shape of the tax system if we don’t understand it and we don’t have any data or evidence about it? So I would like an answer around that.

My third question is around openness and transparency. So my question is: will New Zealanders have more or less information about the tax system as a result of the repeal of this Act, and how is that consistent with the commitment to openness and transparency in Government? Because the Government, to my knowledge, are still signatories to the Open Government Partnership, and this suggests that the Government is acting inconsistently with that.

So those are questions that I think are new or have not been addressed by the Government during the debate so far, Madam Chair, that I would be quite keen to get some insight on from the Minister.

My fourth question during an earlier stage of the debate was that one of the speakers, Andy Foster from the New Zealand First Party, said that the purpose of repealing the Act was to build trust and confidence in the public. And I’d like to hear from the Minister how having less transparency around the tax system builds trust and confidence, if that’s an official line of the Government, or if it was just a view of one of the MPs of one of the parties. So it would be useful to understand how having less transparency leads to more trust and confidence in our public institutions.

Given that the Government has got a commitment to focusing relentlessly on living costs, I’d like to understand how the repeal of this Act helps to cut living costs for New Zealanders.

Thank you very much, the Hon James Shaw, for those questions. I’ll work my way through them as they were asked.

The first aspect in regards to the decision around principles and whether those that submitted to the select committee were unilateral in their support and agreement for the way in which those principles were defined was not the case. There was divergence in terms of the views of those principles, and there was divergence across tax experts and members of the public in regards to that. And that is what was conveyed, and that is the reality. Any time spent on preparing these reports that would be undertaken if the Act wasn’t repealed, in our view, is a waste of time and money. Any resources within our Public Service should be focused on higher priorities aligned with Government priorities, and hence the basis of why this bill, which is only 60 words in its entirety, taking out the headings, is quite straightforward.

The last aspect in regards to the member’s questions around openness and transparency—as I’ve outlined on probably three occasions now and I’m now repeating, the Inland Revenue does, in what I think is a good way, produce a lot of reporting already on a wide variety of its operational and policy activities. The annual report is a summarisation of that information and is comprehensive. There are mechanisms to request and ask for more feedback and different views of that perspective, and I, again, would reinforce and encourage you to provide that feedback. From my point of view, I am very confident that the Inland Revenue Department, being one of the most highly performing departments that I’ve had the experience of dealing with, does uphold the important principles of being open and transparent in terms of its policy and its operational effects.

I move, That debate on this question now close.

The Hon Dr Deborah Russell’s tabled amendment to clause 1 is out of order as not being an objective description of the bill.

The Hon Grant Robertson’s tabled amendment to clause 1 is out of order as not being an objective description of the bill.

The Hon Dr Duncan Webb’s tabled amendment to clause 1 is out of order as not being an objective description of the bill.

The question is that the Hon Barbara Edmonds’ tabled amendment amending the commencement date to 1 January 2024 be agreed to.

The question is that the Hon Dr Deborah Russell’s tabled amendment amending the commencement date to 1 January 2027 be agreed to.

The question is that Arena Williams’ remaining tabled amendments be agreed to.

The question is that Part 2 and clauses 1 and 2 stand part.

The committee has considered the Taxation Principles Reporting Act Repeal Bill and reports it without amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

The bill is set down for third reading immediately.

Third Reading