Taxation (Budget Measures) Bill (No 3)

Committee of the whole House

Madam Chair, this is a very short part, too, and not a lot to—

💬 Dr Lawrence Xu-Nan: Very interesting.

—I’m sure it’s very interesting, Dr Xu-Nan, and there’s not a lot to discuss in it, but I do want some clarification here from the Minister of Revenue. The major change here is some amendments to the Student Loan Scheme Act. What it does is it says that the Governor-General may add a statute or remove a statute from Schedule 3, clause 5(2), and then, in Schedule 3, there’s a new subclause (2) coming in. There’s a whole set of Acts that are referred to—the Arbitration (International Investment Disputes) Act, the Consular Privileges and Immunities Act, the Pitcairn Trials Act—which can be taken in and out of Schedule 3, clause 5(2). This can be adjusted by Order in Council.

Now, this seems like a reasonable mechanism for when we’re doing this, but this is adjustments to net income for the purposes of section 73 of the Student Loans Scheme Act. There’s a lot of to-ing and fro-ing and back and forth between schedules, clauses, and what this net income means, and the impact of this. So, obviously, this is just tidying up some issues in the student loan scheme, and it looks like it’s fairly—I shouldn’t say low level, because it matters to the student loan borrowers, but I wonder if the Minister could just explain what the impact of this is and how it affects student loan borrowers.

Committee of the whole House

Thank you, Madam Chair. I do have similar questions to the Hon Dr Deborah Russell, but, first of all, I think one of the things that I’m seeing here is that a lot of these are taken from Schedule 38 of the Income Tax Act. I do have questions because, currently, this bit in terms of Order in Council, I agree it does offer some flexibility. However, what it doesn’t specify—and we see this being quite a common practice when it comes to secondary legislation—is that the Minister must notify publicly or, in this case, with the student loan scheme, possibly in the Gazette, as soon as practicable if any of what we’re seeing in subsection (1), with the addition and the removal of a statute, has been done. I think that’s an important element, and, again, like I said, we do see this in other legislation, most recently in the Education and Training Act.

I wanted to check: this is to do with the exemption of income and this has come down to the family scheme income. I do want to draw the Minister’s attention to clause 27(2). As the previous speaker, the Hon Dr Deborah Russell, pointed out, there are five Acts being referred to. I presume that these five Acts have been selected because they are the income that is exempted as a part of a family scheme income, or income from tax. I understand the Consular Privileges and Immunities Act, the Diplomatic Privileges and Immunities Act, and the International Finance Agreements Act—should they get any form of income as a part of that?

What I don’t understand is in subclause (2)(a) and (e). The Arbitration (International Investment Disputes) Act is predominantly about a convention on the settlement of investment disputes between States and nationals of another state that was opened for signature in Washington in 1965.How is that in any way related to an income exemption from tax? Presumably, in that particular Act, it does mention certain awards. Are we saying that any awards as a result of international investment disputes are exempted income as part of a student loan scheme? I’m just a little bit perplexed at how that all ties in together.

Even more peculiar is the Pitcairn Trials Act. Now, that is legislation that allows the trial here in New Zealand to take place, as a part of what we saw in terms of the broader Pitcairn trials in the early 2000s. In there, at least in the legislation itself, it doesn’t actually specify any form of income or award. It is a mechanism to allow trials to be conducted, which we saw in 2005 with, I think, six people who were sentenced on 41 charges as a result of what we saw earlier, but, again, it doesn’t mention anything in terms of income. I’m curious as to why these five in particular have been included as a part of this.

Committee of the whole House

Thank you very much, Madam Chair, and for those tuning in this morning, they probably are quite surprised that we’re talking about the Pitcairn Trials Act and the Arbitration (International Investment Disputes) Act as part of a tax bill. We are at Part 2 of consequential amendments, and we are now getting very, very, very much into the detail.

In summary, what you are seeing play through here is that the Student Loan Scheme uses the concept of adjusted net income in that legislation, and by repealing Schedule 38—which is what we’re doing in this bill—it means that certain income under other listed Acts, such as the Pitcairn Trials Act and other items that have been noted by the member, will not apply for Working for Families. However, these Acts are still relevant to the Student Loan Scheme Act, and so we are simply, by doing this, moving the relevant provisions out of the tax Act and putting them into the student loan legislation. That’s what’s going on in regards to that quite detailed question from Dr Lawrence Xu-Nan.

In regards to the questions from Dr Deborah Russell—and, as she’s acknowledged, there’s not too much in this area—the family scheme income that is referenced in other legislation—I’m referring to consequential amendments, clauses 25, 26, and 27—they are referenced in other legislation, and the consequential amendments of that are required to be reflected in the proposed changes. Schedule 38, which currently applies for family scheme income purposes, which is requiring certain salary and wages that are exempt from income tax under the Acts to be included in family scheme income calculations—the removal of this requirement means that Schedule 38 will no longer apply to Working for Families. That’s the key thing we’re doing in this part of the Act. It is in the detail, but it is required.

Committee of the whole House

Thank you, Madam Chair. I am interested in this part of the bill. In particular, I’m just curious because these, as I understand it, are administrative provisions to enable the student loan scheme, but the power to forgive or repay student loans is actually an administrative power. I guess my question to the Minister of Revenue is a really short one: in terms of the decision of this Government to do away with the third-year fees-free, is that encapsulated in this piece of legislation, or is it in fact part of the delegation of the Minister of Education to the Tertiary Education Commission (TEC)?

It’s important because, obviously, whilst these provisions empower the Inland Revenue Department to do the administrative work behind it—which is, essentially, to provide the rebate—the financial decision appears to be a decision made by the Minister delegating power to TEC, in terms of what it does with its funds. If the Minister could explain where that financial power comes from and the interface with the tax Act, that would be really good.

Committee of the whole House

The aspects that we are discussing here relate to Working for Families. There is no interaction with the points that the members have noted; they are out of scope. We’re talking about the Working for Families portion.

CHAIRPERSON (Maureen Pugh): As we say, it is a very small part, but I will explore Dr Lawrence Xu-Nan’s next question.

Committee of the whole House

Thank you. This is a very short question, and Madam Chair, this is my final question. This is still clause 27(2). I understand what the Minister is saying—that we’re taking it out of Schedule 38 and putting it in the Student Loan Scheme Act because it might still have some relevance to the student loan scheme.

Can I just check, again, when it comes to subclause (2)(a) and (e), in particular, are they still relevant to the student loan scheme? This is wholesale copy and pasted from Schedule 38. Was there any exploration as to whether those two actually still are relevant?

Committee of the whole House

Yes. I answered that in my response to the last question. While they will not be relevant in the context of Working for Families, they are still relevant in the student loan scheme. Some of those Acts may have income that is derived that is relevant for student loans. That’s why we’re moving it to the student loan Act.

Committee of the whole House

I move, That debate on this question now close.

A party vote was called for on the question, That debate on this question now close.

Ayes 67

New Zealand National 48; ACT New Zealand 11; New Zealand First 8.

Noes 55

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15; Te Pāti Māori 4; Ferris; Kapa-Kingi.

Motion agreed to.

CHAIRPERSON (Maureen Pugh): Mariameno Kapa-Kingi’s tabled amendment inserting new clause 29 is out of order as not being in the correct form of legislation.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 26, new section 215A, inserting new subsection (1A) be agreed to.

A party vote was called for on the question, That the amendment be agreed to.

Ayes 55

New Zealand Labour 34; Green Party of Aotearoa New Zealand 15; Te Pāti Māori 4; Ferris; Kapa-Kingi.

Noes 67

New Zealand National 48; ACT New Zealand 11; New Zealand First 8.

Amendment not agreed to.

Part 2 agreed to.

Committee of the whole House

Clauses 1 and 2

CHAIRPERSON (Maureen Pugh): Members, we come now to clauses 1 and 2, the debate on “Title” and “Commencement”.