Taxation (Budget Measures) Bill

I move, That the Taxation (Budget Measures) Bill be now read a third time.

I want to thank the members of this House for considering and debating this bill under urgency. The high cost of living is one of the most pressing issues here in New Zealand today, and we know that Kiwis are doing it tough. That is why this coalition Government has delivered this important Budget bill, because it delivers responsible tax relief to hard-working New Zealanders who are trying to make ends meet in the face of ever-increasing inflation.

The bill is being considered under urgency because delivering that tax relief is a matter of urgency. Kiwis need support now more than ever, and we need to ensure that hard-working Kiwis are keeping more of what they earn. We are doing that by increasing the bottom three personal income tax thresholds, which will allow people to make sure they keep more of what they currently earn before moving into higher income tax brackets. Many New Zealanders have been pushed into higher tax brackets due to inflation and wage growth, meaning they have been paying and are paying more and a greater share of their income in tax. This is not fair. They earned that money and they should be able to keep more of it.

A median-income worker—the average rate that they are paying has increased from around 15 percent in 2011 to around 21 percent today. Tax rates that go up as income rises lower the real value of wage increases that people receive. This results in lower incentives to work, save, and invest over time. Without increasing the tax thresholds periodically, bracket creep occurs and financial incentives to work decline. It has been nearly 14 years since tax reduction has been provided, yet inflation has steamed ahead. This is not what we want for New Zealand and our hard-working Kiwis. So we need to take action to address this as a matter of urgency.

That is why we are debating these changes under urgency, and that is why the personal income tax changes and threshold changes will have effect from 31 July 2024, because New Zealanders need that support now. Normally such changes would have effect from 1 April, being the beginning of the income tax year. I know that bringing that change in part-way through the year may cause inconvenience to some, but Kiwis have been waiting 14 long years for this. Every day we delay, people are slipping further and further back economically. So it is important for us to ensure that we deliver responsible tax relief for the squeezed middle sooner rather than later and waiting for the start of the next tax year.

We are reducing the compliance costs and the administrative burden for this change by introducing some of those transitional measures outlined in the bill. The bill, therefore, proposes that the current tax thresholds will apply from 1 April to 30 July 2024 and the proposed thresholds will apply for the remainder of the tax year. To account for the two sets of thresholds being applicable in one tax year, Inland Revenue will need to use composite rates. These are an average of the current and proposed rates and will be applied across the entire year to determine a taxpayer’s annual tax liability. This will be used for Inland Revenue’s end-of-year square-up calculations, which assess a taxpayer’s income against the amount of tax paid over that income tax year. These changes are proposed to help reduce compliance costs associated with taxpayers in making the changes part-way through the tax year. The inconvenience of making a change part-way through the year is outweighed by the benefits they provide to people who are working hard to make ends meet.

In making these changes to the personal income tax thresholds, we are also making consequential changes to other tax types to take into account the changes being made to the income tax thresholds. This bill, therefore, proposes consequential changes to the resident withholding tax, fringe benefit tax, the employer superannuation contribution tax, the retirement scheme contribution tax, and the tax on portfolio investment entity income.

The bill will also restore dignity and the incentive for personal endeavour. People should always be better off in work than on the benefit, but, for people on the lowest incomes, that principle has been eroded. We are, therefore, proposing to extend the independent earner tax credit by lifting the upper income threshold from $48,000 to $70,000. This will help an additional 420,000 people by $20 a fortnight. Increases are also being proposed by this Government for the Working for Families tax credits. These are the in-work tax credits which will see 160,000 families receive up to an extra $50 per fortnight, and the minimum family tax credit which will see 3,000 of those families receive an extra $54 a fortnight. Together, the changes outlined in this bill will see people better off.

Our tax relief package that we have outlined in this bill will increase the take-home income of 83 percent of New Zealanders aged over 15, and over 94 percent of households—1.9 million Kiwi households, on average, will be better off by $60 per fortnight. More than 3.5 million New Zealanders, on average, will be better off by $32 per fortnight. FamilyBoost will also help an estimated 100,000 families with young children. Households with children, on average, will be better off by $78 per fortnight.

This bill will make a real difference to the people of this country. It is a bill which makes well-judged use of taxpayers’ dollars. It encourages competitive enterprise and rewards hard-working Kiwis for their achievement. That is what our economy and New Zealand needs. This is an excellent taxation bill. I would like to thank colleagues in Treasury and Inland Revenue officials for all their work in providing policy advice and for drafting this bill. As the Minister of Revenue, it gives me great pleasure to commend this bill to the House.

This is a sneaky bill. It’s a sneaky bill that, on the face of it, has some tax threshold changes which will make a bit of a difference to some New Zealanders, but in the detail of the bill, as we uncovered through the committee of the whole House stage, there are some fish-hooks, some wrinkles, some traps, some issues that the Minister couldn’t give us the modelling for or the decisions for. I want to go through that so that people are not misled by this bill.

So let’s start with the changes to the tax thresholds. The Minister of Finance was at pains to tell us in recent weeks that the changes made to tax thresholds would be meaningful and would make a difference. I tell you what’s meaningful: the massive job cuts that are going on across the public sector, with 5,000 people out of work. Here’s what’s meaningful: the families who are losing access to prescriptions because that prescription charge is going back on. Here’s another thing that’s meaningful: the families who are paying increased public transport costs, so that’s going to eat up any changes to the tax thresholds. Here’s another thing that’s meaningful: the staggering increases in rates because that Government has refused to engage with meaningful water reform.

People are supposed to be grateful because in the face of these stupendous increases to costs, there is a small change in the tax thresholds. I suspect that when the reality of these changes appears and the amount that comes through, perhaps in August—we couldn’t be sure, because the Minister wouldn’t guarantee that employers could do it—I think people are going to look at what happens in their pay packets and they’re going to say, “Is that it? Is that it?”

It’s going to make no real difference to them. Here’s why: there are the changes in the tax thresholds, but then the majority of the weight that is lifted in the alleged amounts that families will get is done by the childcare rebate. That’s the biggest change that’s coming through. Again, on the face of it, it looks like a good measure—on the face of it. But when we dug into it during the committee of the whole House stage, we found that there were all sorts of problems.

We found that, instead of the rebate from childcare just blowing through the system on a fairly automatic basis, families were going to have to collect receipts from childcare providers, send them into IRD, and then get a refund into their bank account in an incredibly clunky process. I recall being the mother of young children, juggling getting the kids to and from childcare while I was managing my job, managing all the juggle with my husband. It took a lot of work. Adding an administrative burden to that seems simple to those who sit in a job where all sorts of things are done for them, but, for busy working families, that is an administrative burden. We know it’s even more of an administrative burden for our Māori families, for our Pasifika families, for our rural families. They have given with one hand but made it so difficult for the families who are going to benefit from it.

Then we found out something really interesting about that childcare rebate: that it abates. When the family income is $140,000, the rebate starts to abate and then it fully abates by the time the family income is $180,000. That is an incredibly steep abatement range. What it does is it increases people’s effective marginal tax rates.

So I asked the Minister and I said, “What is the effective marginal tax rate for someone who perhaps earns $100,000, paying a tax rate of 33 percent at that rate, maybe has a student loan, and then is going to get this childcare rebate abating as well, by the time they’re at $140,000?” He couldn’t tell me. He had not done the modelling on the effective marginal tax rates. It was a lazy move and it should have been done. All it would have taken is sitting an official down with a spreadsheet for an afternoon. They could have done it, but they had not done it, so we don’t even know what the impact of this is going to be on individual earners.

Let’s carry on to the tax credits. So there are changes to the minimum family tax credit and the in-work tax credit. Again, on the surface it looks pretty good—

💬 Hon Member: $50.

—and, of course, it will help some families—

💬 SPEAKER: Look, that’s enough.

—but there is a massive fish-hook in there which the Minister did not address. I refer the House back to the regulatory impact statement and the crossover between the minimum family tax credit threshold and the Working for Families abatement threshold. I’ll read it out: “As the minimum family tax credit threshold increases annually, it is … forecast that on 1 April 2027 it will overlap with the Working for Families abatement threshold.” This will mean that Working for Families customers will face effective marginal tax rates of well over 100 percent. That is a problem that the Minister and the members on that side of the House have not grappled with. They have set up a situation where people are going to face an effective tax rate of over 100 percent. It’s a problem they need to deal with. That was a lurking problem in this bill.

Then we get on to Part 4 and the changes to the fringe benefit tax (FBT), employer superannuation contribution tax (ESCT), and portfolio investment entity (PIE) rates. That was one of the sneakiest changes of all—one of the sneakiest changes of all. Those FBT and ESCT rates are set in relation to personal income tax rates. The cost is borne by the employer, but the rates are set in relation to personal income tax rates. Those changes to FBT and ESCT rates will not come into effect until 1 April next year. So from 31 July this year until 1 April next year, employers will be over-taxed on FBT and ESCT. The alleged party of business has put this in place—the alleged party of business.

Then the Minister told us that this was because the compliance costs would outweigh the tax. So, in effect, the Minister, on behalf of businesses, made the decision for them. He made the decision that employers would choose to pay more tax instead of incurring more compliance costs. Here’s the problem with that: in the FBT regime as it stands, there is a choice for employers. They get to choose whether or not they will pay some more compliance costs, do some more calculation, do some more work, or pay more tax. The concept of a choice is already there, but the Minister has denied that choice to businesses and he has just laid some extra tax on them. The alleged party of business has done that. I say that that is not a business-friendly move.

Then there’s the PIE rate, and this is the most disgusting change of all. Instead of aligning the PIE rates for low-income earners with the personal income tax thresholds, that party is going to over-tax low-income savers on their investment returns. That party is taxing our lowest-paid workers more on their KiwiSaver—that is absolutely outrageous. Just to top it all off, right at the end of the bill, they whack another 1 percent on overseas student loan borrowers. Now, that might not sound like a lot, but there are already huge burdens for young people who are trying to travel, trying to work, trying to get their careers going, and now they are loading extra interest on them, putting some more costs on.

That’s why I say that this is a sneaky tax bill. They are touting it as offering people more money in their back pockets, but as they allegedly give with one hand, they take, take, take with the other. They undermine the way we live in New Zealand, they undermine the support we give to each other, and the worst impact of this will be on low-income earners. That is an outrageous thing to do and I cannot believe that they would be proud of this. We could have teased these problems out in a proper select committee process, but now we can’t even address them. It is outrageous that they have done that. It’s outrageous that it has been done under urgency, and it is outrageous that the time for the debate was cut short. This is an outrageous bill and the National Government should be ashamed.

💬 SPEAKER: Just before I call the member, can I remind members that this is a third reading. It’s not a discussion across the House, and interjections should be as rare and reasonable as possible.

E te Māngai, tēnā koe. Tēnā koutou e te Whare. Here’s what this bill does: it gives very modest tax cuts to obscure the fundamental unfairness of our economy and our tax system. Just to lay that out and lay it there for all who may be following along at home: we had, about a year ago, a report from the IRD which told us that the top 311 families in this country hold more wealth combined than the bottom 2.5 million New Zealanders. [Interruption]

💬 SPEAKER: No, sorry. I don’t mean to interrupt the member, but discussions need to be quiet and not audible. Please carry on.

CHLÖE SWARBRICK: Thank you, Mr Speaker. To that effect, the subsidiary papers from both Treasury and IRD spoke to the fact that this is not an accident; it is a consequence of a tax system that sees those at the top pay an effective tax rate less than half of that of the average New Zealander.

I recall a few years ago, actually, in this debating chamber, as we were debating, I believe, the introduction of the new top tax bracket at $180,000, that I had an interjection, a heckle, thrown at me from the Hon Andrew Bayly, who said that there is such a thing as legitimate tax avoidance. That has rung in my head every single time that we have come to debate tax in this House, because that is what we do here. We set in place rules that enable people—particularly, at present, those at the top—to arrange their affairs in such a way as to avoid paying their fair share of tax.

What was one of the first things that this Government decided to do—under urgency, no less—just before Christmas? Well, it was to repeal the underlying legislation that enabled that reporting which gave us that data which showed us how unfair the tax system is. It’s almost like they’ve got something to hide. So the question needs to be: what cost do these modest tax cuts come with? The reality is that they come at the cost of more expensive public transport across New Zealand; they come at the expense of prescription fees for New Zealanders; they come at the cost of lower-quality school lunches. If the trajectory of decisions from this Government follows conservative decisions in the past, we’ll, effectively, be starving the school lunches programme to be able to, in future, argue that it is ineffective and then cut the funding for it. Mark my words.

These tax cuts also come at the cost of cancer drugs, which the Government also campaigned on and promised would be delivered, but they have decided to fund these trickle-down tax cuts instead. These tax cuts cover the cost of climate action. I find no tiny bit of irony in the fact that the revenue Minister also happens to be the Minister of Climate Change proposing this, knowing that it comes at the cost of the integrity of the emissions trading scheme—i.e., the very system that this Government is placing all of its eggs in the basket of in order to drag down our emissions curve. It also comes—these trickle-down tax cuts—at the expense of pest-free Aotearoa.

It’s not too hard to fire up the shredder, but it is difficult to confront the dual crises of inequality and the climate crisis and to deal to them with evidence and the policy that is necessary to confront both of those crises. The sentiment that I have heard out there from New Zealanders—and all of us would have seen news reports—is that these tax cuts for most people, yeah, they feel better than nothing, but that they mean absolutely nothing in the face of costs going up. So this Government is also simultaneously making decisions to increase costs, notably by some of the decisions that they’ve made in these trickle-down tax cuts. That $2.9 billion tax cut for landlords—guess what! Our central bank says that that is only going to serve to drive up the cost of housing. We also have some analysis from Treasury that shows that this Government’s decisions are going to increase the costs of rent.

It’s also going to come at the cost of our long-term challenges, not only the climate crisis but the $200 billion hole that we face in our infrastructure deficit. That is not even starting on the child poverty report, because I think this is a really, really important question to put across to members of the three Government parties today. I’d encourage them to look into this four-page mockery of a child poverty report and to look to the final page, on page 4, where it shows us a graph—the second graph there—of after-housing costs and the measure and the metric for child poverty as a result of the decisions that this Government is making, namely their tax changes; their trickle-down tax cuts.

What this shows us—and I really, really, really hope that the Government members reflect on this because we all often say when we’re having debates in this place that the reason that we come here is because we all, apparently, believe in the same things; we all, apparently, believe in the same values; we all, apparently, believe in ending child poverty; we just disagree about how to get there. What this graph bears out on page 4 of this child poverty report is that, as a result of Government decisions, more children will be in poverty as a result of the Budget that they are passing and the legislation that they are passing through under urgency, of which these trickle-down tax cuts are a part.

Not only that but they’ve also decided to slip in increases for costs to those who go overseas with student loans in the form of their interest rates. They’ve also—and this is a really interesting one that was teased out through committee of the whole House—through their FamilyBoost measure, can in no way, shape, or form guarantee that the gap is not going to be filled with for-profit providers simply price gouging. I’d also note, ACT Party members, that your deputy leader decided to, throughout the election campaign, rail against this FamilyBoost policy for exactly that same reason. That can be found in the media archives.

Today, 63,000 New Zealand children woke up in poverty. What these trickle-down tax cuts are going to do, amidst the backdrop of a Budget which continues to entrench a deeply unfair and unequal economy, is make more children poor. I find it really interesting as well, if we flick through to page 2 of this incredibly light child poverty report: it says here in the second paragraph under the Government’s approach to child poverty, a key driver of child poverty is living in a benefit-dependent home. Causation is not correlation and correlation is not causation. Indeed, there absolutely is a correlation between the fact that children living in poverty do overwhelmingly live in benefit households. But the reality of the situation is that the reason that those children are in poverty is because we force those in benefits to live in poverty.

So I’d just ask us to unpack, actually, the very notion of child poverty, which is a really interesting rhetorical device used by those in the social sector to campaign for our country to care about poverty as an issue. Because it just so happens to be the case that we don’t tend to empathise with adults in poverty; it seems to be contrary to the notion of the hard-working New Zealander—every politician’s favourite voter—because it is the case that we are quite comfortable in this place, under successive Governments, punching down and blaming people for living below the poverty line.

At the end of the day, all this Taxation (Budget Measures) Bill delivers for us is trickle-down tax cuts that continue to entrench a deeply unfair and deeply unequal society and economy, which the Government knows and has the data and the evidence—that they promised us they would care about—will put more children in this country into poverty as a result of their decisions. Frankly, I think that that is something to be ashamed of.

I would also reflect on the fact that the finance Minister, in many of the papers released alongside the Budget, cherry-picked statements from the IMF and the OECD in order to rationalise Budget decisions. But she intentionally neglected the top-line ask—the plea—from both of those international entities for our Government and our country to sort out our tax system; to finally, once and for all, put a tax on capital gains so that we level the playing field, so that we stop seeing money ploughed into unproductive assets, namely housing.

Unfortunately, what we see here today in this Budget from this Government is no ambition, no aspiration, next to no meaningful evidence base for anything that they’re doing. In fact, if they were to look at the evidence, they’d see that it’s making those in this country far worse off. For that reason, the Greens cannot support it.

Thank you, Mr Speaker. I rise to talk to the Taxation (Budget Measures) Bill. Firstly, before I talk about the bill, I just do want to congratulate the Hon Nicola Willis on handing down the Budget. This is my first opportunity to speak since the Budget was delivered yesterday. I do want to congratulate her on delivering the Budget and working constructively across the coalition to actually put it together.

I also want to acknowledge my leader, actually, one of the Associate Ministers, David Seymour. I know he diligently worked on the Budget, particularly around the savings measures. These tax cuts that we’re going to talk about have been made possible by actually doing a line-by-line review of Government spending, and taking out a lot of waste. So I think that Kiwis wanted us to make sure that the Government is actually spending money on things that can deliver outcomes, getting rid of wasteful spending, and that’s what this coalition has done. I know Mr Seymour has done his part in delivering that.

We’re very happy, in ACT, to be supporting these tax changes. As Minister Watts said earlier, it’s been 14 years since we’ve delivered any tax relief in this country. There’s this handy little brochure here which actually points out that 83 percent of New Zealanders will benefit from the changes that we are going to pass today. Rather than being trickle-down, this is actually direct tax relief. People are getting to keep more of the money that they work hard for every day—they’re going to keep more of that.

It is true that ACT actually had some different tax proposals. We would have probably liked to have seen a simpler tax system. But this is heading in the right direction. I want to also acknowledge the finance Minister did acknowledge that ACT has other proposals, and we’re going to continue to work constructively in Government to have those proposals worked on, and we will be continuing to execute that.

I want to refer to a couple of things that have transpired in the debate. Chlöe Swarbrick talked a lot about a few things. One was interest deductibility and unrealised gains. My colleague Andrew Hoggard is an economist and he’s very happy to sit down with Ms Swarbrick and talk about what unrealised gains are and why it is inappropriate to actually do a calculation on those, and also how interest deductibility works and why that is an appropriate business expense.

I also want to address the Hon Deborah Russell. I actually agree with the Hon Deborah Russell on something. A lot of acronyms have been thrown around—FBT, PIE, the IETC; lots of acronyms. The Hon Deborah Russell is right: our tax system should be simpler. We shouldn’t need all these acronyms. We shouldn’t need all these carve-outs. There should be a simpler tax system. Again, we’re happy to work with the Hon Deborah Russell, exploring that as ACT’s proposals continue to percolate through the Government.

In the meantime, I just want to finish by saying that this is going to give some relief to the cost of living pressures that Kiwis are facing. It’s going to return some money to the back pockets of Kiwis. We’re also attacking Government spending, which, again, is going to bring pressure down and we’re going to see this economy turned around, more people in jobs, growth, and that’s what we’re about in ACT. We want to grow the economy so that every Kiwi has a great opportunity to grow up, earning the kind of income they want, doing the kind of job they want, raising the family the way that they want, and actually contributing to our society. So I commend this bill to the House.

Once again, I rise on behalf of New Zealand First in support of the Taxation (Budget Measures) Bill, and I’m going to keep it brief. This bill is going to make a difference in the lives of many hard-working New Zealanders, and that is why we will continue to deliver on what we campaigned on. That is why I’m very happy to commend it to the House. Thank you.

💬 Hon Dr Duncan Webb: I seek the Māori Party call, Mr Speaker.

Just one moment—thanks very much for your advice, but I’m in the middle of ruling, so if you just let me do that before you offer your opinion, I think we’ll make better progress. So we have a similar split in the 10th call, which is Labour and National speaking; it’s Labour and Te Pāti Māori on this one. I think if we were to say that if Labour swapped in this place with Te Pāti Māori and took a 10-minute call now, that would most likely leave a 10-minute call for National at 10. So with a 10-minute call—and I hope this doesn’t prove too difficult or too much strain, but I’ll call on the Hon Dr—

Ricardo Menéndez March: Point of order. Just confirming that the sixth slot will still be a split call, with the Green Party having a five-minute second call.

No, the Green Party doesn’t—oh, the Green Party has the sixth one. Oh, I see the problem. OK, in that case, the Green Party should’ve taken the first five minutes in this. So, look, it’s messy because the party hasn’t got a representative here for a speaker at the moment—and that’s not implied criticism or otherwise. I think, in that case, we’ll take a five-minute call from Ricardo Menéndez March.

Thank you, Mr Speaker. This bill has been called “sneaky” by some, and I think, actually, it goes beyond being sneaky; it’s a bill that is cruel, and it speaks to the values of the National Party and its coalition partners. This is a trickle-down bill that ignores those doing it the toughest, that gives cake for those at the top, and breadcrumbs for everyone else, and people deserve far more than those breadcrumbs. We should not settle for people having a handful more dollars each week when we know we can make it a political reality to ensure that everyone can live well and not in poverty.

It was really telling in this third reading debate when the Minister, the Hon Simon Watts, talked about hard-working Kiwis as the people who this bill was targeting, but, actually, some of the people least benefiting from this bill and, in fact, left out entirely in portions of this bill are caregivers who do caregiving full time, who won’t be receiving the boost to a bunch of income top-ups such as the in-work tax credit, for example, because this Government, and successive Governments, have determined that full-time caregivers are not doing so-called work. The Green Party says an end to this nonsense argument that caregivers are not doing work. Caregiving is work. It’s time for the Government to stop putting it about to all the labour that comes across our economy that actually sustains all of us and yet is not considered important because it is not under an employment agreement. Caregiving, volunteering—and the reality that people deserve the dignity of living well.

This bill has to be taken in the context of the cuts to all the other subsidies that will make life more expensive. The reality is that this bill is coming in the context of subsidies for transport being ended, resulting in higher transport fares for people; an end to the subsidies for prescriptions, which will make access to medicines more expensive. It comes with the introduction of greater powers for landlords that will make it easier to evict people, putting people into situations where they’ll need to access emergency housing in distress. So, while they may be celebrating the breadcrumbs that they’ve thrown out to our communities, they’re also making life more expensive for the majority of people. But it is absolutely no surprise. This Government never claimed to be on the side of the many; they’ve made it abundantly clear that they’re here for the wealthy few. The Green Party will continue fighting to ensure that we have a Government that makes the tough political choices to actually end poverty, to tackle the climate crisis, and to deal with our biodiversity crisis.

The Prime Minister is not right when he talks about the decisions in this Budget being tough. In fact, they just continue what successive Governments have done, which is to enable inequality to continue to increase. We’ve seen report after report showing how child poverty measures will stagnate—that this Government isn’t taking the tough choice of ending poverty once and for all. And my colleague Chlöe Swarbrick was right in calling out the nonsense from Government reports that talk about how one of the key determinants of child poverty is living in a household that relies on a benefit, because it is a political decision to set those benefits below the poverty line. People did not grow up in poverty out of inertia; they grew up in poverty because the Government and successive Governments of blue and red stripes have set benefit levels way below the poverty line. They refuse to tax the wealthy few to ensure that we can lift people out of poverty and have refused to recognise the inherent right that people have to a life with dignity.

This Government has also turned its back on disabled people, many who live on income support, many who will be some of the least proportionately benefiting groups out of these tax cuts. The reality is that you can’t fund Whaikaha and then, on the other hand, remove supplements to minimum wage extensions and exclude disabled people on income support from many of the elements of this bill. Our communities deserve far more than a Government willing to hand the future to those already doing it well and the wealthy few. We deserve a Government that is committed to making the tough choices of ending poverty, tackling the climate crisis, and not continuing with this proven trickle-down economics that has only increased inequality and made life worse for the majority of people.

Just before I call the next member, we have a situation where a party has indicated they wish to share a split call. That is allowed, except that it is on the basis that it is notified. It wasn’t notified. So, in order to maintain a degree of fairness about that, we will have the splits as they are determined already, excepting that the Māori Party call on this split goes to the Hon Dr Duncan Webb.

Thank you for the indulgence, Mr Speaker.

This Taxation (Budget Measures) Bill is a centrepiece of this Government’s Budget. What it amounts to is a borrow-and-burn Budget. These tax measures are costing the Government $3.6 billion. Where’s it coming from? Where is the $3.6 billion coming from? This Government is now borrowing—borrowing—more money than any other Government before. The debt—there’s going to be $9.2 billion in financing costs. The suggestion that this Government is not borrowing for its tax package is absolutely laughable. There are two sides of the ledger: one of them has got “borrowing” on them, one of them has got this tax package on the other. The $3.2 billion has to come from somewhere. If you didn’t spend $3.2 billion on this tax package, that’s $3.2 billion that you wouldn’t have to spend.

We know what’s going to happen. I’ve seen the Minister of Finance say with a straight face, an expressionless face, that this won’t be inflationary. But the fact is that when you put $3.2 billion into the economy, it is going to be spent. That is economic vandalism. That is borrowing and burning. What’s more, they say, “Don’t worry, we’ve found money. Somehow, we’ve magicked up some money by doing things like cutting unnecessary programmes.”—stealing from the climate fund. You know, the country is burning, and you’ve just thrown some gasoline on it. It’s absolutely outrageous. “Oh, we’ve found something to cut. Let’s take a sandwich out of the kids’ school lunches.” You know, that’s basically what they’ve done. Those school lunches—I hope everyone in this House has gone and seen them—are good, healthy, balanced lunches with a with a range of food. Not anymore. It’s going to be a Marmite sandwich. That’s not a healthy school lunch—

💬 Carl Bates: My kids love them. A good Marmite sandwich—my kids love them.

His kids love them—that’s what we’ve got. You know, that’s great for you, but what I aspire to is giving kids lunches which are fully rounded and nourishing. This Government is cutting lunches in half. [Interruption]

💬 SPEAKER: Yeah—that’s enough. Just carry on; we’ll just have a bit of quiet. Thank you.

And, of course, free prescriptions. This is how he finds money—a mostly five-buck surcharge. Those members—that Government—wants to cut that five-buck surcharge, knowing that our most needy New Zealanders will walk past the pharmacy because they haven’t got the five bucks to pay for their medicine, to pay for their antibiotics for their lung infection, to pay for their pain medication—all of those things that not only make their lives better but also make them less costly to the New Zealand Government in the long run. So I am surprised and appalled that that is the approach being taken.

Chlöe Swarbrick made a good point. Child poverty indicators—if you have a look at the child poverty report that came out, which is premised on this Budget and these tax measures, the child poverty measures are going up. Child poverty is increasing. That is the choice that this Government is making—that children will be in material hardship. They choose that because they want to buy some lollies with the grocery money, effectively. They want a sugar hit, and that’s what they’ve done with this tax package. We know what child poverty leads to—we know. There’s actually a reason why they’re spending hundreds of millions of dollars building prison beds whilst child poverty is going up—because the two things are linked.

So this is a Budget which isn’t fiscally responsible, which is needlessly increasing debt, which is inflationary, but what is worse is that it’s harmful to our most vulnerable New Zealanders. It’s a shameful Budget, and it’s a dark day where I stand here and watch that Government vote in favour of it. Thank you, Mr Speaker.

Thank you, Mr Speaker. As the nearly quarter of a million hits on the tax calculator website have shown today, Kiwis are very eager to see this Taxation (Budget Measures) Bill be passed. So it’s with great satisfaction that I commend it to the House.

It’s a pleasure to—[Interruption]

💬 SPEAKER: Sorry, before you start—we’ll start you again. Look, as I said earlier, this is not a conversation; rare interjections only. I call on the Hon Dr Ayesha Verrall.

Mr Speaker, thank you. It’s a pleasure to follow that fulsome contribution from the chair of the Finance and Expenditure Committee. This bill enacts elements of the Budget that takes New Zealand backwards. It borrows billions for the tax cuts that are contained in this bill. The tax threshold changes will result in far less for New Zealand families than was promised. The question that all New Zealanders are asking today was answered by Andrea Vance in The Post today. The question was, “Was it worth it?” She says, “For a pensioner couple, getting $4.50 a week … probably not. The minimum wage earner pocketing 30 cents, surely not. The singleton, earning $55,000 a year, receiving $51 a fortnight, arguably no. [For] The patients relying on funding for 13 new cancer drugs, almost certainly not. And for future generations saddled with $50 billion of debt, definitely no.” It is clear that many things that are good about life in New Zealand are being sacrificed on the altar of saving Nicola Willis’ political credibility because she committed to tax cuts. Commentary in the New Zealand Herald today says, “There is absolutely no doubt”—says Matthew Hooton—“no doubt that New Zealand is borrowing for tax cuts.”

I want to touch on whether or not this is worth it, and I want to focus on one particular policy initiative: the free prescriptions. Now, that was a policy brought in at last Budget that had tremendous impact in New Zealand, keeping people out of hospital, making sure that the many people who have to forgo their medicine because they cannot afford it, who otherwise end up in hospital for treatment, can get the treatment they need. There are many people who need multiple prescriptions at a time and they depend on that support. The pre-election promise from the Government was that that policy would be used to fund cancer medicines. But what happened doesn’t add up. No, they’ve scrapped the free prescriptions and they’ve also not followed through on the cancer medicine treatment.

Another area: free public transport support for working families has been lost. That contributed quite a bit—it can add up to about $25 a week for some families when they’ve got kids who were getting the free public transport subsidy. That was meaningful impact on the cost of living. Similarly, people’s hope for the better future, for being able to purchase their first home, lost with the cancellation of the First Home Grant. So it seems that this Government is taking with one hand and giving a few scraps in return, and certainly no meaningful action for those that they call the “squeezed middle”. But there’s more to what’s lost in this Budget than just the ins and outs on the daily budget sheet for the average family; there’s also the services that many New Zealanders depend on. This Budget was funded, in part, by the loss of 5,000 jobs across New Zealand’s Public Service. In health, we’ve lost the people who monitor whether our health system is doing a good job or not, we’ve lost the people who will be there to protect us in the next pandemic, we’ve lost advice, and we’ve lost people who work on regulation—things like protecting kids from vaping—and on and on and on.

In education, people who see if those school lunches are, in fact, nutritious—they might provide some inconvenient advice—they’ve been fired. People who protect the borders of our communities, in Customs, keeping meth and other drugs out of our country, and people who keep harmful pathogens out of the community at biosecurity—they’ve been fired in order to fund the tax measures in this bill. At Oranga Tamariki, the people who make sure that the management of children is supported by good legal advice when they’re in State care—they’ve been laid off. There’s been lay-offs at ACC, the agency that helps New Zealanders rebuild their life after an accident—in particular, people at ACC in the injury prevention unit have been fired, meaning that the overall efficiency of the programme is reduced. In the Ministry of Social Development, people have been fired to fund these tax cuts—they’re often the ones transforming the systems that people interface with when they go to get their entitlement. Department of Conservation funding has received a real cut as well as a result of these changes to the tax thresholds, where the only people celebrating are not people; they’re ferrets, because it’s a great day for pests in New Zealand, given all the cutbacks that we’re having to the measures to preserve our environment.

The childcare rebate is a poorly designed piece of policy, though the intent to make sure that parents have support when they’re having their children in care is a good one. The requirement to mean that parents have to pay for their care upfront will be a barrier to many on the lowest incomes accessing the support that is intended to be provided by this bill. It’s a few years since I was a parent of a preschooler, but I remember well the lack of time to do anything for myself, the sleep deprivation, the overwhelm, the household work, the piles of washing, the relationship difficulties that you have when you’re managing all this extra work in your household and your career commitments. Yet the Government decides it’s helping to put a little bit more of red tape and admin in the way of those families as they try and access support. I don’t know why they would design a policy like this in the modern world.

Finally, I want to talk about the changes to the student loans—and this is where the bill gets truly, truly sneaky. This was not canvassed in the run-up to the election that this type of a change would be made. But it is of a piece with the type of initiative that this Government has sought to bring forward to tax people who are not New Zealanders, or at least not in New Zealand. We know that the foreign buyers tax was the Government’s first effort to raise revenue of people overseas, but that was scotched by New Zealand First. The international visitor levy is another one where they’re trying to put more costs on people coming to New Zealand.

And this one has snuck through: the student loan increase in repayments for New Zealanders overseas. Now, this one is on New Zealanders who are overseas who are having to pay back their student loans. For some, it will cause additional hardship and it may well cause our well-trained people not to return to New Zealand. When I think about the situation in our health system where it’s normal for many of our well-trained people to go do a fellowship overseas, get the skills they need, and come back to New Zealand—they’ll be facing additional costs as they seek to do that, and then the barrier to returning to New Zealand where we can use their skills seems even higher. I think this is a concern that that side of the House should take more seriously as we face the highest ever level of immigration from this country.

In the last year, 52,000 New Zealanders went overseas; 39 percent of them are aged 18 to 30—precisely the people who would be impacted by this. We know that they’ll be looking around, looking at the rising projections for unemployment in New Zealand; seeing the country they love go backwards on climate, backwards on race relations; a Government that likes to kick trans kids in the face every now and then if it suits them politically; challenges in homeownership in this country; and putting an additional burden on them in their student loan repayments. What positive agenda does this Government have for those New Zealanders who we would like to return to New Zealand! So this is a “broken promises” Budget. We all remember Christopher Luxon in the leaders’ debate saying that New Zealanders will get $250 a fortnight with the tax changes. Well, this bill shows that it is barely anywhere near that for the majority of families. It shows very little happening for the squeezed middle, and, in fact, there are more costs being put on to people as free prescriptions and public transport subsidies are rolled back.

Also, for seniors—I mean, it was incredible how short the New Zealand First seniors spokesperson’s call was, given that it must be of some embarrassment that seniors will only get $4 a week with these—

💬 Arena Williams: $2.20!

$2 each a week. This is a “broken promises” Budget. This bill does nothing to take New Zealand forward; it takes New Zealand backwards. I cannot commend this bill to the House.

I rise to support this bill because it is all about supporting hard-working New Zealanders to keep more of what they earn. After 14 years, they will finally be getting tax relief on 31 July. So I commend this bill to the House.

I call the Hon Peeni Henare for a split call.

Tēnā koe, Mr Speaker, and thank you for the opportunity. I just wanted to address one thing: there are a number of grumbles in the House about some of our colleagues who haven’t been here through the debate. I just wanted to acknowledge this morning the passing of Rawiri Waititi’s father, which is a sad time for him; he’s lost both his parents now in the last six months. So I want to acknowledge him; he will be returning to his marae, Kauaetangohia, in the coming 24 hours. So I just wanted to farewell him. Haere e te matua. Haere, haere, haere.

Now back to our bill that we have in front of us here today. I stand in opposition to this bill. You know, I don’t claim to be a tax expert, but most of our whānau out there just want to know the simple things. They want to know: will they be able to get ahead? They want to know: is the cost of living going to ease so that they can support their families? They want to know that systems are simple in order for them to get on with their daily lives so they can be productive. What I’ve heard throughout this entire debate, and it was a robust debate—and I want to acknowledge the speakers on this side of the House, in particular, who went through this with a fine-tooth comb and challenged the Minister on so many aspects, and couldn’t get an answer.

So let’s paint it quite clear. For our whānau out there, what’s happening today is the tax threshold changes. Everyone has said, on that side of the House, that you’re going to be better off. Well, what’s clear to me—and as I look through those threshold rates, I look and see who’s really missing out. Well, I can tell you, and the regulatory impact statement supports this: Māori are missing out. Pacific peoples are missing out. Families in low socio-economic communities are missing out. They are the ones who need it the most. They need the support the most, and what we’ve heard throughout this entire debate is that that support is being stripped away, “But that’s OK because we’re going to give you a pittance in your pocket!”

Not only that, though, what I heard, in particular, in one part of the debate was “Oh no, that’s all right. We’re going to give it back to you but you have to work for it again. You’ve got to go through the administration of making sure you can get a rebate for a child.” Now, that’s just absolutely ludicrous and absurd. I heard some of those kōrero from the other side of the House, saying, “Oh, well, you know, if they want it badly enough, they’ll go and do it.” This is to my point. Our people want to know that the tax system is simple, easy to understand, so they can get on with their daily lives. That’s not what’s happening here in this bill.

We also talked about a number of other reasons why people are leaving this country. Well, I say, “Gidday, mate!”, because a lot of our people are leaving this country simply because the cost of living burden is just far too great. What was advertised in the entire election was that relief was going to be given to them, they’ll have more in their pocket, they’ll have more to spend in our local economies, they’ll be able to stay here and support their families. Well, record numbers are going to Australia; record numbers are heading to greener pastures so that they can get the necessities of life: better healthcare, better support in education, better support for their families. This bill does not do that for our families out there. It might do it for the privileged, the wealthy few, it does it for the people at the top of the ladder, but it does not do it for the people who need it the most, and that’s the point that I need families out there in our communities, our hard-working families, to get through tonight. That is, it does not support them.

When the tax thresholds come into enforcement, they’re going to look at their pay packet and say, “Well, is that all? Was that worth it? Did we make the right choice at the election?” My point to them is, well, sadly, the election was the election, but they get a choice again in the future. They get to choose whether or not they back better healthcare. They get to choose whether or not they back better education outcomes. They get to choose whether or not the cost of living crisis will be eased so that they can look after their families and they can do all the aspirational stuff that we talk about in this House, where, at the moment, they’ve been stripped of that aspiration.

They’ll have a choice to make in the coming years, and I encourage them to have a good hard look at what’s in this bill, have a good hard look at what was left to them at the end of the day, in their back pocket, and I’ll remind them that it was bugger all. And when they’ve been given a little bit, as my colleague has rightly said, they’ve been given a little something with one hand and I can say that they’ve been punched in the puku with the other, because you might get a little bit more in the pocket, but you’ve got to pay more because subsidies for transport have gone, you’ve got to pay more because healthcare’s going up, and that’s just not good enough.

The community aren’t silly; they’ll see this bill for what it is. They’ll see this tax movement from this Government and what it’s for, and they’ll make a better decision into the future.

It’s really challenging, while we listen to the drivel from the other side that’s been there for six years. I’m so glad we’re bringing back reading, writing, and maths, because there’s one thing they don’t seem to understand: you don’t borrow to fund tax cuts; you let people keep more of their own money. I know they think it’s funny. It’s ironic. Actually, it’s about reducing your spending. It’s something you didn’t learn, and that’s why you’re now in Opposition.

And while the member Chlöe Swarbrick yelled at us for nine minutes in her debate, she didn’t properly read the regulatory impact statement from the Inland Revenue Department, which says it is estimated that the tax package, which includes a $25 increase to the in-work tax credit, will reduce child poverty by around 14,000, plus or minus 6,000—so that’s 20,000 to 12,000 children. We’re reducing child poverty. So maybe it’s time that you went back to school and did your own reading, writing, and maths. I commend this bill to the House.

Thank you very much, Mr Speaker. If this Budget was so good and if it really delivered what the Government is saying it is, don’t you think they’d want to speak for a bit longer than a minute and a half to talk about it? But they don’t, because right throughout this debate—the first reading, the second reading, and the committee of the whole House stage—all their claims have been unravelled.

You know, the rules of Parliament are quite restrictive, and there are certain words that you cannot use. You can, however, use a combination of words to describe things. There is a word for when people say one thing and do another, there’s also a word for saying something that isn’t true, and there’s also a word for saying something and then ignoring that and then not doing that thing, and all of those situations have occurred in this Budget. What summed it up quite nicely was that very brief contribution there, from Ryan Hamilton, that said that you can’t borrow to give tax cuts. Well, you can, because that’s what they’ve done. What they have done is they have committed to tax cuts which, in turn, have reduced the Government’s revenue, and then borrowed to fill the gap. They have borrowed for tax cuts, despite the fact that in their Budget at a Glance, it says, “Tax relief is fully funded”. But it’s not.

If there was the equivalent of the Advertising Standards Authority here, this should be reported because it is not telling it as it actually is, and there is no greater example of how this Government has let New Zealanders down than in housing. This Government has decided that instead of helping first-home buyers over that line to produce a deposit to buy their first home, it is a better and more pressing priority to do a $2.9 billion tax cut for landlords. In addition to that, this Government has said that it is a bigger priority for them to reduce the brightline test, which will ultimately see houses bought and flicked on much quicker than they would have done otherwise. A really interesting piece of information that came from the Government’s own analysis said that a combination of those two policies—the $2.9 billion tax cut for landlords and reducing the brightline test—will mean that rents will go up quicker and longer, and this is the Government that promised to bring down rents.

Now, what was I talking about earlier, about saying something that isn’t actually the case and knowing that that’s the case? For months, throughout the election campaign and at question time after question time after question time, the Prime Minister sat in that seat there and said to the House and said to the people of New Zealand that the tax cut for landlords would drive rents down. He knows that’s not the case, and now the Government’s own analysis says so. How can Government members stand up for 90 seconds or, in some cases, for quicker than a minute and say that this is a good deal for New Zealanders when they know that it’s not? The piddly, small amount that many, many, many New Zealanders are getting out of these tax cuts will not compensate for the additional costs that they are bearing. It will not compensate for the increase in rents and it will not compensate for the increase in insurance, nor will it compensate for the increase in rates, and every time that ratepayers open their bills and see a rates increase that they did not expect, they can lay the blame squarely on the Government.

Even the Government’s own advice says that, by repealing the water reforms, that has imposed an undue burden on councils, who simply cannot do it by themselves. Their own advice said that repealing the water reforms would cause a significant increase in rates, and later on in urgency, we’ll be debating a bill that does absolutely nothing to reduce rates. It fiddles around with processes to make things that can already happen happen quicker, but it does not in any way deliver lower rates for ratepayers, and that is the thing that is stinging Kiwis the most. It is a massive driver of inflation at the moment. It’s not just ratepayers; it’s renters as well, because, of course, if the costs on landlords and ratepayers go up, so too do rents. This is a fact. It is in their own advice, and it is disingenuous, to say the least, to stand up and crow about how much this Budget is delivering for New Zealanders when many New Zealanders are facing costs that will be far higher than the tax cuts that they receive.

In addition to the increased cost of rents and rates, the housing issue continues. This Government—and this is something that hasn’t been spoken about, and I’d be really interested on their thoughts. Perhaps if they’d contributed to the full time allocated, we might have been able to hear about this. A billion dollars: remember that—it’s a lot of money. A billion dollars they have removed from the maintenance budget of Kāinga Ora—$1 billion—because they want to do what they did last time, and that’s run down Kāinga Ora and then say, “See? The Government shouldn’t be involved in the provision of State housing. We may as well flick ‘em off.” It’s what happened last time and it’s what’s happening this time, and the fact is that in the Budget, in order, in part, to pay for tax cuts, they have taken $1 billion out of the maintenance budget for Kāinga Ora.

The question I have for the members is this: is a leaky roof still considered a roof over the family that is vulnerable and that needs housing? Because, obviously, that is exactly where it is going, and it demonstrates, yet again, that this Government doesn’t care about those that need it. They’ve made the wrong choices and they’ve got the wrong priorities.

When it comes to saying that they would do one thing and then not do something, there is no greater example than their promising vulnerable families who are facing an untimely and early departure of their family members who are suffering from cancer that they, if in Government, would fund prescribed cancer medication. They broke that promise—they broke that promise. They misled New Zealanders. They said they were going to do something that they simply could not do, and then they have the gall to turn around and try and blame us. I couldn’t believe it. The finance Minister was trying today, when she’s come under the pump—it’s quite clear that the message has hit home with the Government that this is a step too far for New Zealanders. To promise people that they would fund cancer medications when they knew they could never do it and they had no intention of doing it—and there are people that voted for that Government solely on that policy—and then to turn around and try and blame us. It was a cynical move, and if there was any credibility left in the finance Minister, it disappeared today, when she made that claim. It is disgraceful.

They should own it. They misled New Zealanders. They promised something that they knew they couldn’t deliver, they had no intention of delivering it—because they can’t; it’s not how Pharmac works—and here they are, turning around, and saying, “Oops, sorry. But, by the way, let’s blame Labour.” Nah—sorry, that’s not going to wash. If you’re going to campaign on something so personal as funding cancer medications for people who are desperate to get as much assistance as they possibly can and who then vote for you on that basis, own it. That was a choice that this Government made. They turned their backs on those people and they should own it, and instead of standing up for 60 seconds or 90 seconds and saying how great this Government is, how about those members using the time to tell those people why they made that choice. That would be the honourable thing to do—stand up and defend the decisions that they’ve made. Defend the decision to back landlords and those that are wealthy instead of following on the promises that they made on funding cancer medications.

And the best that they can come up with—the best they can come up with—is to tell me, “You’re running out of time.” That’s it, and I think that speaks volumes. They’ve been confronted with the truth and they don’t like it. Well, it’s not just us that’s going to confront them with it; they’re going home on Monday afternoon, when this urgency finishes, and they have to face their constituents. I’d rather be us.

A majority of average-income Kiwi households will be better off from 31 July, following the passing of this bill in Parliament later today. This bill gives effect to the coalition Government’s promise to New Zealanders who are suffering with the cost of living crisis. Let me set the record straight: this bill is fully funded so won’t add to inflation pressures. This is what a fiscally responsible Government should do and will do. I’m honoured to be the last member to contribute to this bill. So I’m very proud to commend this bill to the House.