Taxation (Budget Measures) Bill (No 3)

I move, That the Taxation (Budget Measures) Bill (No 3) be now read a second time.

I’d like to thank the House for considering this very important bill under urgency. One of the reasons for urgency is that the measures contained in this bill will help Kiwi families understand their Working for Families entitlements better and help them avoid debt during these tough economic times. Although the Working for Families amendments would only come into effect from 1 April 2027, Inland Revenue needs to have enacted legislation in place by December in order to ensure the correct system changes and procedural steps are in place to prepare to allow families to begin enjoying the benefits of the change by 1 April next year.

As I outlined in my first reading speech earlier, the detail of these changes will benefit the families who need them most. What matters now is progressing this bill so that the support can reach Kiwi families without any further delay. Kiwis who are feeling the pinch deserve a Parliament that responds with urgency when they need it most.

I would like to acknowledge my Inland Revenue officials for the stellar work they have undertaken during the Budget process, and including my ministerial staff in my office. Therefore, I commend this bill to the House.

ASSISTANT SPEAKER (Teanau Tuiono): The question is that the motion be agreed to.

Thank you, Mr Speaker. Ordinarily, at this time in the progress of a bill through the House, we would have had ample time to discuss the bill at select committee. Now, I absolutely understand that things differ when it comes to the Budget, and, in particular, there can be items in the Budget which need to go through fairly immediately because of the impact on markets, the way it might change people’s behaviour and so on. So, some of the time we absolutely need to be sure that we just keep on moving with a bill. We haven’t had the opportunity, therefore, to discuss a number of these measures. We also haven’t had, I guess, an explanation as to why each of these measures needs to go through under urgency as a Budget measure—and that’s certainly something that we’ll be talking to the Minister about. But it’s not clear that this bill was even needed on Budget night. Maybe the Government felt it ought to have something to legislate for on Budget day otherwise it was just not a very good showing, but it’s not clear to me, for example, as to why any of the measures that are in this bill couldn’t have gone to a select committee for at least some discussion. I think there are possibly some items in the measures that have come before the House that could be tricky.

Just to go through the measures that are sitting in the tax bill in terms of some of the tricky issues, now with the charities, for example, the Government has elected to cap the tax credit for charities—not the credit itself, but the amount for which one can get a tax credit—at $100,000. Now, that’s an interesting move, and as the Minister correctly points out—[Interruption]

ASSISTANT SPEAKER (Teanau Tuiono): Could members down there please keep it down. You’re distracting the speaker.

Thank you. As the Government correctly points out, people are still welcome to give more to a charity; they’re just not going to get the tax credit for it. That’s an interesting way of tackling some of the problems that we’ve seen in recent years around charities, notoriously with the Wright family and the alleged charitable transaction they engaged in with re-setting up the financial structures around the Best Start childcare centres.

Under this particular change, they certainly wouldn’t get a tax credit for what they had done, but that kind of mechanism would not be ruled out by these particular changes. There’s still a little bit of a gap in the charities law there. Now, again, of course, eventually the Wright family was caught, I think, by section GB 1, and so they did end up having to pay the tax, but there was some pretty interesting stuff went on there. This is all on the public record—it’s absolutely on the public record. There are just, sort of, issues that still need to be examined there, and we could perhaps have discussed them at select committee.

In terms of the shareholder loans, there’s a particular mechanism that has been chosen here around how shareholder loans—again, it’s a mechanism whereby shareholders, particularly of very small companies, could make loans to themselves as shareholders or to associated parties and, as I said previously, defer any tax on it in such a way that the tax was never paid.

💬 Hon Simon Watts: Back to the bill, Deborah.

Now, the mechanism—this is in your bill, Minister. The mechanism which they have chosen is to use the financial arrangements rules for these shareholder loans. But, of course, the financial arrangements rules only apply to arrangements over $200,000. Now, perhaps there is something sitting in this legislation that works around that particular rule. It’s something that we could have examined at select committee, and we will certainly want to ask the Minister about it at the committee stage.

In terms of the changes to the family scheme income, given that we have only had access to the bill itself for a couple of hours—it was circulated earlier—and then we have only just now had access to some of the analysis from Inland Revenue, which is generally excellent, about the bill, I don’t know exactly how those family scheme changes will actually work yet. They’re adjustments mostly, in the first, to the residence of a person, so we’re going to judge it by actual residence in New Zealand rather than by tax residency. That looks like a sensible move to me. But in terms of the calculation of family scheme income, that’s important. The more family scheme income a person has, the less they get of the Working for Families tax credits. That’s sensible. The more income one has, the less assistance one might need from the State, so you want those things to change around. But there’s some interesting changes in there around the income equalisation rules and how they are counted for family scheme income—could have talked about that at length at select committee. Again, that’s going to be something—to, I’m sure, the Minister’s great enjoyment—we’re going to dig into at the committee stage for this bill.

There’s lot of work that we still need to go through for this bill, and, alas, I anticipate we’re going to be here for several hours doing that.

💬 Hon Kieran McAnulty: Oh yes.

Ha, ha! However, what I do especially want to go back to is, as I said, not so much what is in this bill. The measures that are in this bill, we think, at first reading—or the second reading now—we can sensibly support. They look, on the whole, to be sensible measures and measures that we can support. However, we’ll reserve our final call on that for after we’ve worked through the committee stage.

It is the measures that are not in the bill, or the measures which the Government announced today, said they were great measures, talked about them in their Budget materials, had material up on the Inland Revenue website about it, but those measures have not been included in the tax bill. I’m talking about the measures such as the changes to the FIF—the foreign investment fund—rules. Now, they promised in the analysis that’s on the Inland Revenue website there that they would be looking to extend the recent revenue account method changes to the FIF rules to all FIF taxpayers. It looks like quite a good move. But if we’re going to put these types of measures—which are not time-sensitive, except for maybe the family scheme rules—into the tax bill, why not that measure?

They announced today a set of changes to the fringe benefit tax rules—some particularly interesting changes around how we calculate the use of vehicles for fringe benefit purposes. Now, having spent quite a bit of time teaching my students how to manage those calculations for vehicles, and it was fearfully complicated, the particular set of changes that the Minister has said he’s going to put through look pretty good. So why not have them in this bill now—why not now—along with all the other things that he’s putting through here that could have done with some time in select committee? Now, maybe there’s some consultation—more consultation needs to be done around that—but why not in this bill? It could have been done.

There’s a whole set of measures that have been announced today, which the Government has taken credit for today, which are not in this bill, and, conversely, opposed to that, it’s not clear as to why these particular measures that are in the bill needed to be in here. It’s not clear why the charities measure needed to be in this bill. Why do we need to go into urgency? Why do we need to spend our time here all through Friday and on into Saturday debating this bill when it need not have been done? It could have gone through an ordinary tax process.

Those kind of unexplained absences are, in fact, I think, emblematic of this Budget as a whole—this Budget that doesn’t do anything for the ordinary people of New Zealand; that doesn’t help out the people who are doing it tough at the moment; that, in fact, looking at some of the legislation that’s coming down the track, actually makes things harder for some of the poorest people in New Zealand. My leader today characterised this not even as a “Robin Hood” Budget. It’s a Budget that kind of makes things work by making things worse for the poorest people in the country. That’s shameful. A tax bill of gaps, just like this Budget of gaps.

Kia orana, Mr Speaker. I rise to take the second call on the debate on this bill—first one in the second reading. This bill is not huge. Ironically, in the first reading speeches, we had Government coalition members who were speaking about tax initiatives announced in the Minister of Finance’s Budget speech that are not contained in this bill at all. In fact, that was the only thing the ACT member referred to and the only thing the New Zealand First member referred to, other than waving around some propaganda from a fake union charity. Then the Government members, basically, didn’t take calls. It’s unclear if any of the Government members, aside from the Minister, know what’s in the bill or—are obviously not going to contribute to the debate around it. It is Budget night. They’ve got a lot of bills they want to ram through. They know that the Opposition is going to try and apply scrutiny, as is our role in a democratic system. The fact that these bills are bypassing the select committee process means they will not be subject to much scrutiny.

So that’s what’s going on, if anyone at home is watching. We’re debating a bill that we only just saw about an hour or two ago. Just for the benefit of Government members, the bill does not contain any changes to fringe benefit tax nor any changes to the foreign investment funds, but it does contain changes to the amount that one can claim as a donation tax credit. It does make changes to Working for Families, and it does make some changes to the student loan scheme, which seem to be pretty inconsequential and related to the Working for Families changes, but we still need a little more time, and we’ll probably dig into that during the committee stages, which will come up after the dinner break. It changes treating outstanding loans from businesses to shareholders as income when the company goes into liquidation, and we feel that is a fair income tax on those people.

Limiting the donation tax credit to $33,333 per financial year will really only affect the wealthiest people. We have seen, and it was in the regulatory impact statement, that there are issues with the donation tax credit being misused for aggressive tax planning, or—what’s the word for it? It’s not tax avoidance; it’s, like, the legal thing you do—tax minimisation? The legal thing super-rich people do when they’re greedy and they don’t want to contribute their fair share to our beautiful nation.

💬 Dan Bidois: Everybody does tax minimisation.

Oh, here we go! Dan Bidois say’s everyone does it—everyone does tax minimisation. That absolutely expresses the values of the people who are currently in Government. They think it’s a good thing to be greedy and to not give forward and contribute to our beautiful country. That’s what they stand for: not paying their fair share. To be honest, I donate a lot to charities, and so does my partner and we never, ever, ever claim the tax credit. Why? Because we actually want to pay tax, because we actually believe that—why would we bother with going through this paperwork to try and save some money when that money is money that can contribute to things that we all buy together?

That is the fundamental difference in the worldview of people in the Green Party and people in the Government parties. They don’t believe in public good—they do not believe in public good, unless it’s a motorway. There’s 100 percent socialism for highways—they’re very happy to throw that on the credit card and make future New Zealanders pay back their insane highway plans, but when it comes to paying our public servants to do important work to help people that is the most important, they’re against it.

💬 Dan Bidois: This is off track.

I think it is all very relevant to my speech. I say to the Government speakers—who are all welcome to take a call and speak about the detail of this bill—I’d love to hear you take a call. Other than Minister Simon Watts, no one is taking a call.

💬 Hon Cameron Brewer: You don’t give this speech in Seatoun.

Seatoun—we’ve got Government members referring to my beautiful electorate, Rongotai. It is wonderful, and there’s a lot of people there who used to vote National. They don’t anymore. A lot of people in Rongotai used to vote National—who won the party vote?

ASSISTANT SPEAKER (Teanau Tuiono): Can I ask members not to conversate across the Chamber, and just a reminder that interjections should be rare.

And pithy, right, Mr Speaker? Witty?

ASSISTANT SPEAKER (Teanau Tuiono): Rare and pithy—pithy would be helpful.

Apologies, Mr Speaker, I did get sidetracked—that was my fault. I got sidetracked by the interjections and heckling from the Government benches, so I’m going to come back to this bill, which is one that we’re going to support, but we’re going to have to dig into the detail at the committee of the whole House stage because this is not going to a select committee.

Going back to the issue around tax credits for donations: what it says in the regulatory impact statement is that the donation tax credit can be misused for aggressive tax planning, and donors can receive tax credits well in advance of funds being applied to charitable purposes, or derive private benefit, for example, through loans received back from the charity. Inland Revenue has observed an increase in such behaviour, which may be facilitated by New Zealand’s comparatively generous settings. I think that’s interesting. I think IRD has done a good job here, and I commend Minister Watts on bringing some sensible changes to the House on Budget night, which might limit the cost to the Crown.

We want that public money to be going to the genuine, public good purposes. That brings me to the other side of this, which is, as Labour members—I think it was the Hon Megan Woods—mentioned during the first reading speech, that there could be some concern that this will discourage charitable giving, and that charitable giving is needed now more than ever because the Government has been cutting funding to things like food banks and other core, public good purposes that are carried out by charities. I work with many of these charities in my electorate, Rongotai, and Wellington Central, like DCM—that’s the Downtown Community Ministry—who do some of the most important work dealing with people who have it the toughest. They’re people who have mental health issues, trauma, substance abuse issues, who might be homeless, we’re trying to get them off the street, and they’re trying to help them. I went to a beautiful chess day—they have a chess day once a year in Wellington—and played chess, and it was a fantastic opportunity to engage with people who, honestly, are living life in a much more precarious way than I am, and my family. I’m so lucky.

One of the things I would like to see is core Crown funding, from a fair tax system that is raising more revenue from those people who are trying to minimise their tax, and actually investing that in those core services that protect people; that mean that people are fed; that they’re getting the support services they need to deal with trauma—some of that trauma maybe came at the hands of the State in State care—that they are getting the treatment that they need to get off the addictive substances. All of that has to happen in a context where they have both safe, warm, dry, affordable homes—like a home they don’t have to pay for, a Housing First home—and they have access to those social support services.

We love the work that many charities are doing; we don’t want to see charitable status used by the ultra-wealthy to minimise their tax and to avoid contributing to things that are in our public interest and common good. Because those people, they could be any of us. People fall on hard times. Maybe they were born in a situation where their parents had suffered trauma, they suffered trauma, maybe at the hands of the State as a result of colonisation, and they just need some help. That could be any of us—that could be any of us.

The difference is that those members opposite, they like to believe that people in bad circumstances are there because they are bad, and that somehow those people pull themselves up from their own bootstraps thanks to their $200,000 loan from their parents to buy their first home or whatever it is. The world is not fair, but we can make it fair—the world is not fair, but we can make it fair, and this bill is just the tiniest, tiniest little move in the right direction, some little tweaks around the edges from this tax bill. We could be doing so much more on this Budget day, and we will next Budget day.

I’m glad to rise and take a call, and I’d like to speak to the virtues of allowing overseas aircraft to be used in New Zealand in a sensible way—especially for the good people of Ikaroa-Rāwhiti, where they will now be able to get their produce to the world, jobs, they’ll be able to import produce, fish, anything that needs to get out. They’ll get the money for that, they’ll be able to buy stuff in, and I’ll tell you what, the tourists will come in, there will be jobs, there will be improvements, all thanks to this Minister. Thank you.

ASSISTANT SPEAKER (Teanau Tuiono): Just to note that everybody’s really excited—it’s the Budget—but try not to talk across the Chamber. There are two hallways where you can have a chat.

I might attempt something that’s maybe a little more dull, but not to everybody. I just want to congratulate my colleague Dr Dan—Dr? OK, you’ve been lifted up, Dan Bidois—for all the work that he did in the Finance and Expenditure Committee in trying to get the new part of the Reserve Bank of New Zealand, the prudential committee, under way.

In this bill we’re talking about a new prudential levy on banks and other financial institutions that will support the function of this prudential oversight. If we flip across now to think about company loans to shareholders, this is exactly the type of thing, and the outcome of that good work, where we are able to take that Reserve Bank and the prudential committee to look at those things and provide us oversight for them. I welcome the debate on this particular part of the bill for the rest of the night.

I’d also like to just congratulate many involved here, including ourselves You know the old John Maynard Keynes saying that “if the facts change, I change—what do you do? Well, fees-free for tertiary—yep, facts change. We found out really that wasn’t so great. Doubling Trades Academy? That’s right in our lane. Thank you very much.

Thank you, Mr Speaker. I would like to note how excited the House is about a bill that everyone is actually supporting, technically, and how much argument there has been across this particular bill, even though we’re all actually voting for it. The Greens, as my colleague Julie Anne Genter has already articulated, will be supporting this bill.

I was actually in the Budget lock-up earlier today, at 1 p.m., and it impressed on me the need to actually read what’s happening on this bill and read the Budget really carefully, because I’m hearing speeches from members during the appropriations debate and now during this debate, and they’re seeing all sorts of things that aren’t actually supportable by the evidence. Look, the members opposite like to accuse the Greens of wanting to defund the police and they’ve bragged about how much they’ve increased police funding in this current Budget, but if you actually look in the Estimates of Appropriations, if you actually look at the line (M51) (A28), if you look at the policing services there’s actually been around a $50 million cut to policing. So this coalition is actually defunding the police. It’s richly ironic, and they’re not giving the police the pay rises that they need.

Look, back to this bill, and I really appreciate how my—[Interruption]

ASSISTANT SPEAKER (Teanau Tuiono): Can we keep the chatter down? It’s been difficult to hear the speaker. But just as a reminder, this is the Taxation (Budget Measures) Bill (No 3), and so it would be good to focus on that.

Yes, Mr Speaker. I was returning to the bill and I wanted to thank my colleague Cameron Luxton for mentioning the aircraft tax changes. He said that he was going to explain it, but, unfortunately, he didn’t actually explain what the changes meant to the aircraft leasing situation. I’m hoping he will elucidate on that during the committee of the whole House, because it really is unclear to me what the changes are actually doing. Like I have to admit to you, Mr Speaker, I’m not quite sure what dry leasing is. I would love to hear an explanation of what dry leasing is from the member or maybe the Minister during the committee of the whole House stage.

That does bring up another question, and this is a question that’s already been raised by my colleagues and comrades in the Labour Party, which is: why bring this bill under urgency? I mean, it does make some good changes. We don’t dispute that. We appreciate the helpful, minor tinkering it does around the Working for Families scheme. Those are all good, positive changes. But why rush through under urgency when it could have been done through a normal select committee process? It just speaks to the wider trend and the wider thread of this Government, which has really used urgency quite a lot during this term, the most out of any Government, I believe, according to an analysis from Newsroom—

💬 Tamatha Paul: More than the last 40 years combined.

More than the last 40 years combined, according to my colleague Tamatha Paul.

I wanted to also return to what this bill does and doesn’t do. I’ve already described it as “helpful tinkering”, and I stand by my description of that because helpful tinkering would be fine if we weren’t in the middle of the biggest fossil fuel crisis that we’ve ever had, if we weren’t at the highest level of unemployment we’ve ever had, if we weren’t facing an explosive cost of living situation—helpful tinkering would be welcome. The reality is that helpful tinkering isn’t enough and it doesn’t meet the gravity of the situation. It’s not what New Zealanders actually expect. It’s not something that meets the current moment.

I want to really emphasise the desperation that I see and that me and my colleagues see across the community at the moment. Just a month ago, or maybe it was a couple of months ago, it was really sad but it was also a privilege at the same time to be launching a report on the reality of student poverty today. And in that it showed that student food bank usage in Auckland had quadrupled since 2022, and doubled in Dunedin since 2022. The helpful tinkering that it does do here, including changes to the student loan scheme, isn’t going to help these students. In fact, the wider changes that the Government has made around the Budget to the Fees Free scheme that was articulated by the previous speaker is actively not going to be helpful.

So, yes, even though we do support this helpful tinkering around this bill, we do wish that it was more ambitious. Thank you.

I’d like to use my time in this second reading 10-minute call, to say that I look forward to deliberating further in committee of the whole House.

Nothing says centrepiece Budget legislation more than the chair of the Finance and Expenditure Committee, Ryan Hamilton, taking a two-second call on the first piece of legislation that has come to the House.

Now, it is hard to believe we’re at legislation piece No. 1. The piece where there should be Government members fizzing with pride about the legislation that they are bringing to the House, to implement a Budget they can get behind. Collectively, besides the Minister, there has been less than two minutes contributed by Government members. That’s how proud they are of the legislation that is coming to this House, they can’t even talk about it; it’s not even something they can muster more than a sentence about.

And this is the centrepiece legislation. This is the first piece of legislation that’s been brought to the House in this Budget that sets the story of what a Government is doing, because Budgets sell a Government’s vision. Buried in those lines, and every one of those spreadsheet line items, is the vision of a Government. What we have here could be best be described as a hodgepodge omnibus bill. This is not a bill that gives any vision; this is something that was quickly thrown together because someone in the Prime Minister’s office panicked and said, “Oh my God, we’ve got no legislation to bring on Budget day. There’s nothing there. There’s nothing that we’re actually doing. Someone, quick, find some legislation.”

What have we got here? We’ve got the bill and it seems to becoming quite a focus of it around the tax exemption for aircraft asset leasing. The dry leases for asset leasing. Now, obviously my colleague Cushla Tangaere-Manuel is going to have many questions on behalf of the people of Ikaroa-Rāwhiti because a point she makes very well, there may be that—and Cameron Luxton can claim—so produce can get out of the East Coast. But the problem she highlights is there’s no funding for the roading to get that produce to the airports to get it out of the East Coast.

The question this Government will have to address is why—[Interruption]

ASSISTANT SPEAKER (Teanau Tuiono): Members—members, interjections: rare and infrequent. I don’t want a barrage of commentary from the side of the House. And if you’re going to do an interjection, at least make it funny, mate.

Well, Mr Speaker, I think some of those members should use their pent-up energy and take a call. They should actually get on their legs and say something about the centrepiece legislation that they have such pride in; obviously they want to. The whips should let them off the rein—let them take a call, have a say on this legislation.

We are supporting this, but the question we have for the Government is: why is this taking such a priority? When we look at the material that the Inland Revenue—and the Inland Revenue puts out very good legislation, a lot of very good information with the legislation that it introduces. It tells us that the current settings, “When a New Zealand business leases assets … it typically has to withhold non-resident contractors’ tax if the lease income is taxable in New Zealand.” Now, reading that out took the tone down, I noticed that; it’s a way to soothe the House—read out Inland Revenue advice.

The question is: why is it only applicable in this very narrow set of circumstances. What is the thinking of the Government behind it? What is the vision? What is the story they’re trying to tell New Zealand about what they see for New Zealand?

One of the other changes in this legislation, which we’re picking through the information that has been laid on the Table, is changes to the charitable donation tax policy settings. This is one we do have serious questions about this. As I indicated in my first reading speech, there has never been a time when New Zealanders are relying on charity more. We want to make sure that this is not going to have a dampening effect on people giving to charity. On a day when it has been announced that New Zealand has the highest level of homelessness in its entire history, down to this Government’s policy settings, that we’re not also going to damp down on what they are increasingly relying on, which is charities.

When I look through the regulatory impact statement, and we’ll be going through these in very fine detail, I do see on page 13, paragraph 41, “Owing to Budget convention, no direct public consultation has been undertaken on the problem definition, the proposed options, and the preferred solution.” Not only has the problem definition not been tested, but we haven’t tested the proposed options and we haven’t tested the proposed solutions. The question is: why aren’t these going to select committee, even if it was only for a few days? I would genuinely be interested to have a talk to NGOs, to get the read from a number of charities, about whether or not they perceive this as being a problem. I do not understand why it not going there.

One of the other changes that this law is making is improving taxation of loans made by companies to shareholders. The regulatory impact statement, in diagnosing the policy problem here, has some very interesting information. One of the things that the Inland Revenue data is showing is that, for the income tax year ended 31 March 2024, 119,000 companies were owed nearly $29 billion by shareholders who were natural persons or trustees. This is a staggering amount of debt that is being lent to companies in this way, and there is actually some good information in this regulatory impact statement. I imagine we’ll be hearing from the Minister a lot, when he’s in the chair, what the ill is that this is trying to put right, and make sure we’re not creating loopholes where loans are being used as a form of tax avoidance. When we consider $29 billion of finance going in through that route, it is a problem that we need to turn our mind to. Again, I ask the question: why under urgency? Why is it a piece of the Budget legislation? And why are we not testing something as important as this through a select committee process? This, to me, seems like an important issue that this Parliament should absolutely be turning its mind to, and that we should be doing that and we should be making sure there is robust questioning—that we’re pushing the problem around and considering it, because it is a serious issue.

The other issue that we have been raising through this is that, by convention, when tax changes are announced in a Budget, they’re legislated. Now, there is a number of tax changes that have been announced today that are not being legislated; they’re not in here. We had one the New Zealand First members take a call and talk about the bank levy that’s being introduced. It’s not in this legislation. We don’t have legislation for that, and that is a real question: why is that not there? When is this money expected to come in? Is it because it got caught up in such coalition friction that ACT stopped anything meaningful happening with it? Is this the reason why we’re not seeing legislation? They couldn’t even get it through the Cabinet process in that way?

What is truly puzzling is that you have changes to fringe benefit taxes announced and we’re not seeing those legislated in this omnibus, hodgepodge piece of legislation, which is throwing together the way in which we deal with the taxation of dry leases on aircraft, along with changes to how we calculate when a person is away and whether a volcano is stopping them from getting back to the country! We are also looking at charitable donations. Why wouldn’t you put fringe benefit tax changes in here too? The question we will have for the Minister is: what is the timeline? We don’t know when that legislation is coming. Are people going to change their behaviour? The reason we have the convention of legislating tax changes and their being well signalled is so that there is no retrospective treatment of them and that people can start to get their house in order and start to work within those rules. For the Minister: like, when is it those changes around the vehicle mainly for private use, the vehicle for business use, and there is a number of permeations that go through that. Where’s that going to come through?

As I said, I can understand why the R & D tax incentive, in terms of the cashing out of that, is not being legislated, because you can do it already, but when are they going to extend this to mining, which they announced today? It’s not in this legislation. There is a number of things. There is the non-resident contractors’ tax modernisation, the financial arrangements to support migrants, and the foreign investment fund changes. Now, I know this is something that the Government has had many people asking it to change. These are questions we will be asking as this bill progresses.

This bill makes practical and sensible changes to our tax system. To the previous speaker, the Hon Dr Megan Woods, who just sat down: it’s coming; the fringe benefit tax legislation is coming later this year. Watch this space. I commend this bill to the House.

Tēnā koe e te Māngai o te Whare, otirā, tēnā anō tātou katoa.

Kei te tūmeke tonu awau ki tēnei āhuatanga. Ko tēnei te kaupapa mahi tuatahi o tēnei Kāwanatanga i muri i tō rātou pūtea i tēnei tau. Ahakoa ngā taumahatanga o ngā tāngata, ngā whānau puta noa i a Aotearoa, ka tīmata rātou i tēnei pūtea i roto i ēnei āhuatanga, arā, ngā kaupapa tāke.

Ahakoa kāore te nuinga o ngā tāngata o Aotearoa e paku aro ki ēnei āhuatanga, kei te aro nui rātou ki ō rātou ake pūtea, ki ō rātou ake kāinga, ki ō ratou ake hauora, ki ō rātou ake mātauranga, ki ō rātou ake tamariki, mokopuna, kuia, koroua hoki. Heoi anō rā, i tēnei wā, ka huri au ki te reo tuarua.

[I am still shocked at this circumstance. This is the first task of this Government after their Budget this year. Despite the hardship of the people, of families throughout New Zealand, they start with this Budget and this issue—tax issues.

Even though the majority of New Zealanders pay heed to this issue, they are focussing largely on their own budgets, homes, health, education, children, grandchildren, and the elderly. However, at this time, I will change to the second language.]

Once again, I reiterate that I am shocked that this is the first matter of business for this Government while whānau across Aotearoa are struggling. Heoi anō, I want to revisit the removal of barriers for aviation companies.

As I said, we do support this bill to the committee stage, and those of us who live in the regions, and there are many of us across the House, naturally, want to remove any barriers that can fly people to regions across Aotearoa—for me, the airport being beautiful Tūranga-nui-a-Kiwa Gisborne. Gisborne takes us to some of the most beautiful parts of Aotearoa, as we all have in each of our respective centres of the universe.

Do you know where else Gisborne takes us, Mr Speaker? State Highway 35—State Highway 35 that was not mentioned in today’s Budget. We talked about resilience. We talked about connectivity. The member opposite wants to talk about all the amazing produce getting out of Ikaroa-Rāwhiti. Well, how about thinking about all of Ikaroa-Rāwhiti, not just the ones you know? Think about the ones you visited recently who are cut off and remain vulnerable every day, not just so they continue to contribute to this economy, which we know is thriving—the Māori economy is thriving. Think about that before you go around purporting to understand Ikaroa-Rāwhiti in its fulness. That’s a positive: removing that barrier from the aviation sector.

Another thing that I’d like to talk about is the Working for Families aspect of this bill—for those who don’t know, an amazing initiative introduced by the Labour Government under Helen Clark. At the time it was introduced, for my own sister, this represented a really good opportunity for her, being the sole breadwinner and wanting to transition back to work. This meant she could. As I said, many whānau throughout Ikaroa-Rāwhiti and throughout Aotearoa utilised this as a way to stay in work, get back into work, and advance their careers while still supporting their families. While we support the increase of the minimum payments you can earn outside your benefit, the reality is, if you’re looking at this bill and the overall impact it’s going to have on the quality of life of people throughout Aotearoa—who are still, with this increase of $3,000 a year, going to be struggling to afford the very basics.

We know of people around Aotearoa who actually enter into this scheme with the best intentions. They go in thinking they’re doing the right thing. Next minute, they find out they’ve overpaid, and then they’ve got to repay a debt. One of the things we must make sure, when implementing these changes in any parts of our system that are designed to support families, is that whānau understand the process and are supported to navigate it so that they meet all the criteria and are not having to pay back money in the aftermath.

My closing remarks for this contribution to this bill are that, in a time when whānau are facing more cuts, more pain, and more costs, this Government is prioritising this hodgepodge bill that is going to have very little relevance to everyday Aotearoa. Tēnā koe e te Māngai.

ASSISTANT SPEAKER (Teanau Tuiono): Members, the time has come for me to leave the Chair for the dinner break. The House will resume at 7.30 p.m.

Sitting suspended from 6 p.m. to 7.30 p.m.

ASSISTANT SPEAKER (Greg O'Connor): Good evening, members. I hope you all dined well. We are now on the Taxation (Budget Measures) Bill (No 3). We have a split call of five minutes—Nancy Lu.

I cannot wait until we get to the committee stage so we can debate this bill. I commend the bill to the House.

Thank you. I have the community and voluntary portfolio, so I’m going to devote my speech to that particular section of this bill. I want to remind the House that last year, Nicola Willis talked about changing the charity sector in a way that was quite concerning to that sector. It involved taxing the entities that supported those charities—the commercial entities attached—and all that money went back into our charitable sector. So it was our op shops and it was the kinds of things that support that sector to do the amazing work they do when, often, the Government’s fallen down on doing it.

Now, that went through a process of great alarm in the sector, and I met with a lot of the sector at that time. We were very pleased to see the Government back away from doing that, at that time. But it meant that I met with some incredible people working in that sector who really did understand it and were brave about it, and advocated. And for their troubles, tonight they get changes to their sector with no consultation whatsoever, and I have received feedback. Now, the reality is that because we are in urgency after the debate, we are avoiding most of the information that I need to do my job to look after that sector which is so important—to go and talk to the people who know this area like the back of their hands, who know what will work and what won’t.

A week ago, maybe two weeks ago, I was on a political panel in this area. Everyone stood up at that panel—ACT, National, and New Zealand First—and stood there and told us that they believed in this sector. They were there for them. And they did not mention any such changes in the rules for that sector. Now, because I have not had a chance to ask for the comments of the people who have sent me emails, I am not going to say which groups have come to me with their comments. But I can read you the headline from the email I received this evening, and it was from an incredibly reputable charitable sector source. It reads, “This is incredibly disappointing.” That’s what they think about the changes tonight.

There is a group of comments from various people—they are all people who I know and who do fantastic things for New Zealanders. They all talk about the lack of consultation on this issue, and they talk about particularly the issue over capping the amount, but they’re talking about it as doing some real damage. They’re concerned about it backfiring because there will not be the gifting that there should be in the situation. That is something I’d like to explore.

It may be that, in fact, it’s a robust discussion and we end up in a different place, but we’re not having that discussion tonight. We know Nicola Willis last year proposed changes to the sector that turned out to be against any kind of logic and good reason. And what has she learnt from it? Rush them through as fast as you can. Don’t talk to the people that really matter. Don’t talk to those people about what the actual effect will be.

Now, when I was at the political panel a few weeks ago, it was really evident that the difference between my position and that of some of my colleagues on the other side of the House, those in Government, was that I was putting up a proposal for a philanthropy strategy. We have a situation right now where we have a whole lot of people reaching the age where, in their wills, we need to make sure that they leave money to philanthropy, but we also need an ecosystem for philanthropy. It’s going to be incredibly important. It always has been, but it’s a particularly important time, and it’s really important we have a strategy, but we don’t have one. Nothing’s been announced in this Budget that’s a strategy. What we have is a couple of piecemeal takebacks in this particular piece of legislation. And what concerns me is this is absolutely, literally looking the gift horse in the mouth—these are the people who gift to our causes. These are the things that glue New Zealand together, and we’re ignoring it? We’re not having a philanthropy strategy? That just seems to me crazy.

Now, I want to just talk about the regulatory impact statement (RIS) on this, which concerns me. The regulatory impact statement makes the same sort of point. It’s not just the people at the end of my email who are making these comments. They are very clear in this RIS that one of the problems with it is that, owing to Budget conventions, public consultation on this proposal has not been undertaken. And then they talk in the RIS about the possible limitations on their judgment. This is of real concern to me because they say that some of the effects and impacts described may have been understated or overstated. For example, “we have limited information to access whether a reduction in taxpayer entitlements would produce a behaviour response in the following areas”—and then they actually list four areas, and the last one of them is the extent to which the donation tax credit supports giving behaviours by households. They say that it’s suggested it won’t necessarily get passed on. It also says that whether households withdraw or refrain from contributing financial resources to the community and voluntary sector is something that they’re concerned about.

I wonder: why are we here, in urgency, on a bill of this kind, rushing through a change when we don’t know what impact it’s going to have on our sector, which is so critical in New Zealand? I can’t for the life of me think that it is important to do this tonight unless there is some nefarious reason that we don’t want to hear the sector on this, because that’s how we make good law in this country, and we should be proud of it.

I expect urgent legislation on Budget day, but I don’t expect it to be misused to bring about change that is half-baked, that has not been thought through. Why would we do that to a sector that we rely on and that produces so much good for this country and has so much potential in it? Why would we do it, other than to hide from the reality that we don’t have any supportive relationship with that sector, that we’re not really willing to talk about how much that sector produces, and to build a plan with them that works better?

So I see this as a very concerning part of this particular bill. I am extremely concerned when that is the first response I get from the sector to the bill. These are good people. They know what they’re doing. Why wouldn’t we, at the first thing, be talking to them?

Now, in a few minutes, we will go through this piece of legislation, and we will end up, in this short evening, in committee stage. I’d also like to know why it is that the Government thinks that I can do my job properly in this kind of framework, on something as important as this. Why wouldn’t we put this into a process where we hear from these people? I just don’t get it, and I will be asking the Minister—but I bet I don’t get a good answer—why wouldn’t we want to build a situation of trust with this sector? Why wouldn’t we want to know if we were getting it horribly wrong?

Why wouldn’t we want to know if we were getting it horribly wrong? So I want to just return to this RIS one more time and talk about the issue about the wider concern about the plan. One of the things that the RIS talks about is that there are other options. There are other options, it says, including multiple rates, removing certain charitable purposes, or introducing a United Kingdom - style gifting aid scheme.

These were considered but not progressed due to complexity or fiscal timing constraints. Fiscal timing constraints? We’re not looking at our system as a whole, looking at the UK gifting system, deciding these things? I’m not saying we need to land there. I’m not saying the Government needs to land there, because it’s a job. It’s negligent not to look at those things before it makes these decisions because those plans—I’ve been to the UK. I’ve seen that work. It needs a decent plan, this area. Thank you.

Thank you very much, Mr Speaker. This is a great piece of legislation. I commend it to the House.

ASSISTANT SPEAKER (Greg O'Connor): I call Rachel Brooking. This is a Te Pāti Māori call—five minutes.

Thank you, Mr Speaker.

💬 Hon Dr Megan Woods: Let no call go to waste.

That’s right. We were on our feet there to talk about what my colleague the Hon Dr Megan Woods has called the hodgepodge omnibus—I nearly said ominous. Is it ominous? I don’t know; the Budget certainly is. I’m not sure about this.

It is interesting that, as Megan Woods said in her second reading speech, this is the centrepiece legislation for this Government’s Budget, and it does not seem to cover that many things.

💬 Steve Abel: Has it got the environment in there?

Oh, has it got the environment in it? No hint of the environment in it, Steve Abel. In fact, we’re not sure why any of it is urgent.

We’ve heard a couple of things already. We know that there’s this $100,000 maximum donation that you can give to get the tax benefit back and that’s 33 percent, so $33,000. We’re not sure exactly why this is in here, and I’m sure we’ll have lots of questions to the Minister about this, and what thought has gone into—well, what if to get around this, you are a husband and a wife or a wife and a wife or whatever arrangements you have and you both then give $100,000? And we’ve also, of course, heard the question, “Is this going to act as a disincentive for people to donate to charities?”, when we know that charities are crying out for donations. Because what happens in this Budget and the last Budget is that services are getting cut—cut, cut, cut.

We know and we keep hearing about the very real need for things like food banks and that they are becoming much more integral parts of our society, and that you have working people using those food banks. That is one line of questioning that, obviously, previous speakers have mentioned and that we will progress.

Another much talked about thing, even in some very tiny, short speeches from the Government side, is this dry lease for the leasing for aeroplanes. This is an interesting thing that maybe not all of us have spent a great deal of time thinking about—dry leases for aeroplanes and parts of aeroplanes, and this is when they are owned by someone who’s offshore. I imagine a company that owns aeroplanes is going to be quite a big company and then New Zealand companies want to loan bits of those aeroplanes or entire aeroplanes, and so there’s a tax exemption for those foreign owners of the aeroplanes—is my understanding. But, of course, the Minister will tell us much more in the next stage of this bill. I am sure about that.

Interestingly, this is retrospective. If you look at clause 2(2)(b), it relates to the aircraft. So that comes into force on 1 April 2026. And for those of you who have not observed, we are in May 2026. We’re almost in June, in fact, of 2026. So it would be interesting to know why that needs to be retrospective. Then we go on and we see that there are changes for a shareholder on an outstanding loan with a company six months after the company is removed from the Companies Register. I have some questions there. Is that just a simple tidy-up? What’s going on with this? And then there are simplifications and changes to Working for Families.

Again, if you look at the bill, at all these bits, they refer to lots of other pieces of legislation. So it’s hard to read on the face of it. So, of course, we’ll have questions to the Minister about that. Are they just really simple tidy-ups or are they something more substantive?

But my question is: is why are we here in urgency for things that clearly are not urgent? If this is all about this Government’s final Budget, I want to ask them: how does this bill make life better for the people of New Zealand? How does this bill improve the productivity of New Zealand? I don’t think it does at all, and there is no reason for us to be here in urgency tonight.

Motion agreed to.

Bill read a second time.

ASSISTANT SPEAKER (Greg O'Connor): This bill is set down for committee stage immediately. I declare the House in committee for consideration of the Taxation (Budget Measures) Bill No 3.

Committee of the whole House

Part 1 Amendments to Income Tax Act 2007

CHAIRPERSON (Maureen Pugh): Members, the House is in committee on the Taxation (Budget Measures) Bill No 3. We start with Part 1. Part 1 is the debate on clauses 3 to 23, “Amendments to Income Tax Act 2007”. The question is that Part 1 stand part.