Taxation Principles Reporting Bill

I present a legislative statement on the Taxation Principles Reporting Bill.

ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House and can be found on the Parliament website.

Hon Dr DEBORAH RUSSELL: I move, That the Taxation Principles Reporting Bill be now read a third time.

Madam Speaker, honourable members—well, probably, honourable member Andrew Bayly—I thank you for the debate on this bill. The views expressed are important because the tax system is important to New Zealand. So, just for the sake of clarity, I want to provide you with a very brief recap on the measures in this bill and their objectives.

The bill imposes a reporting obligation on Inland Revenue. The bill recognises that all New Zealanders are equal stakeholders in the tax system, and, as such, Inland Revenue would report to the public on a range of tax system measures against a set of agreed tax principles. These reports will set out facts about the tax system that are relevant to the tax principles so that ordinary people can be informed—not just about call wait times and other administrative matters but about the distribution of tax paid and levels of compliance. The tax principles that will be reported against represent decades—actually, centuries—of experience in considering what are the good features of a tax system. They are crucial hallmarks of a good tax system.

The reporting framework will make a great deal more information about the operation of the tax system available to the public, and will, thus, contribute to an improved understanding of tax policy among the general public. The requirement for regular reporting will allow for observation of trends and provide insights into how the tax system is developing and responding to external challenges.

So the bill proposes that IRD reports annually, with a more comprehensive report produced every three years. These reports will be made available to the public, perhaps on the department’s website or—in terms of the comprehensive report, it may be presented to this House. This reporting, based on core tax principles, will supplement other statutory reporting on the administration of the tax system and the Government’s revenue strategy.

Now, this bill is for the benefit of ordinary taxpayers, ordinary citizens. On behalf of New Zealanders and the Government, I want to thank the Finance and Expenditure Committee for their work on the bill and for their valuable recommendations. I also wish to thank the policy officials and drafters for their work in helping to bring this bill to its third reading, especially Adrian Kelly, Murray Shadbolt, and Josh Fowler; their work is very much appreciated.

And, of course, this bill owes its genesis to the insight of the Hon David Parker, and it is an honour to bring it to this third and final reading, and know that he started this process. I commend this bill to the House.

The question is that the motion be agreed to.

Thank you, Mr Speaker. Well, another dying act of a dying Government in the final days—a new bill. What a great day we’ve had. Basically, we’ve rammed through two water services bills and now we’re ramming through this Taxation Principles Reporting Bill. Hey, we’ve only got three more days left—or four maybe, if you count the last day.

The first question is: why are we doing this? Why are we doing this? No one’s asked for this tax bill. It has come about through the good work and the enthusiasm of the Hon David Parker sitting over there. He had these wonderful ideas when he was Minister of Revenue, until very recently. I was very disappointed to hear that he had relinquished his post because he had a deep departure over that goods and services tax on fruit and vegetables. I understand why he did that—man of principle.

But talking about principle, I know the genesis of this taxation principles bill was that he is a student of this man called Thomas Piketty who, of course, wrote Capital in the Twenty-First Century, published in 2013. Was that the one you were relying on, Mr Parker? I’m looking over there. I’m pretty certain it was. You know, the whole premise of his work is that the return on capital—and he kept talking about return on capital—if it’s greater than economic growth, that leads to inequity. That’s the prime proposition of Mr Piketty.

So it was an important work. In fact, and I mentioned this in my first speech on this bill, the Washington Post did a review of this piece of work. It said, when it was published, that “Piketty’s work was a landmark”—sorry, I’m just going to do a little bit of a quote here—“in economic literature that significantly improved and expanded upon Karl Marx’s ground-breaking scholarship in Das Kapital.” So here we are. Mr Piketty is going to help New Zealand, even though we don’t have communism. Let’s hope even Mr Parker doesn’t want communism—maybe socialism, but not communism in New Zealand. That is what has driven this.

He did accept, when I spoke to him in the Finance and Expenditure Committee, that he actually had a hand in writing some of this. Again, I’ve got to say, I compliment the Minister. There aren’t many Ministers that sit down at the typewriter probably at about 10:30 at night when everyone else has gone home, sit down and start writing about vertical equity and horizontal equity, because he knows that that is the most important thing for New Zealanders.

So what this bill does is it changes the way that the key principles have overseen the tax system across many jurisdictions. I talked about it earlier, about Adam Smith’s 1776 book which became a hallmark, a fundamental plank to how tax systems were set up in countries. There were four elements. The first one is equity and fairness, the second one is certainty, the third one is convenience of payment, and the fourth one is effective tax administration. Subsequent reviews in New Zealand—some commissioned by National, some commissioned by Labour—have all reinforced those four principles because they are simple, but hey, that’s not good enough for our good man Mr Parker, who came up with these additional ones and then, more importantly, more significantly, introduced a new term called “economic income”. As I said before, economic income, by definition, is the way that entities account for changes in the value of a given asset in the market. It generally recognises unrealised gains in addition to recognising realised profits.

So New Zealand has a system. It’s all about taxable income made up of accessible income and deductible expenditure. What we’ve now introduced in this tax reporting bill—IRD will have to sit down once a year and write a report saying that we want not only to talk about whether our system is capturing those key things and how it’s going about that, but also now moves it into the area of unrealized gains. Of course, that is what the Labour Government has been pushing now, the last election, probably the election before that, and it certainly will in this election. The issue that they want to impose: a capital gains tax in New Zealand. This is a quiet, surreptitious way of introducing it into the system of the IRD to make sure it’s reporting on this very issue.

Now, tax policy is the responsibility of the Government of the time. The current Government, the Labour Government, has chosen to take itself down a certain tax path and that is what it does, and we respect that as the Government. If we are lucky enough to be elected in October, we will choose to go down a different path, which is we want to make sure that more people keep more of their money in their back pocket, and that is simply what people choose to support when they come to election time. That is called democracy. This is something that is trying to embed in the system something that the Labour Government wants to make sure is continuously captured around unrealised capital gains, or, in other words, a capital gains tax. We do not accept it. National does not accept it. We do not believe this bill is necessary. We will repeal it. It’s a waste of time. But anyway, the Labour Government’s going to ram it through tonight anyway.

As the Minister, the Hon Deborah Russell has said, this is only about a reporting framework. It’s not about new taxes, it’s not about interfering in people’s lives, but it is about reporting on the actual outcomes of the tax system in a robust and complete way.

The member Andrew Bayly is correct that the Adam Smith principles go way back when. But, of course, since then there have been reports in comparable jurisdictions to New Zealand—including the Mirrlees report in the United Kingdom, the Henry report in Australia, and, in New Zealand, reports going back to the McCaw report, followed by two reports that McLeod was involved in, Sir Rob McLeod, followed by the Victory University report, followed by the Tax Working Group that the Hon Sir Michael Cullen chaired—that have elucidated on those principles. They are better described, and I think the expert advice that the Finance and Expenditure Committee had from Sir Rob McLeod was that the principles were appropriate: horizontal equity, efficiency, vertical equity, revenue integrity, compliance, administrative costs, certainty and predictability, flexibility, and adaptability.

Now, it’s interesting to hear from Andrew Bayly—because he doesn’t actually object to the ones that go to efficiency. He is just fixated on people not being able to understand what the actual outcomes are for New Zealand in respect of horizontal equity and vertical equity. Those are the things that the National Party dislikes light being shone upon.

Until the high-wealth individuals report was done earlier this year, New Zealanders did not know that that cohort on average had $256 million of net assets each, yet paid a tax rate of under 10 percent per annum on their effective economic income. Now, Mr Bayly translates that to a statement by the Labour Party that says all unrealised gains should be taxed. That’s never been the proposition from the Labour Party, and indeed the questions that were asked by the Opposition spokesperson on finance, Nicola Willis, in the House today illustrate why this is so necessary. She peppered the Government with questions purporting to say that we have a capital gains tax on the family home. This is one of the ways in which the right always manage to obfuscate on the actual effects of tax rates.

So that’s why this tax principle in respect of horizontal equity says that there are important areas where exemptions to taxing economic income are justified in pursuit of wider social outcomes. For example, not taxing the imputed rent or gains on an owner-occupied house. So this principle would put beyond doubt that, in the view of this Government, you should never tax the family home, whether it’s on capital gains—and yet that party is voting against it. Why is that party voting against it? Because there are other parts of this bill that really worry them, which is shining the light on the true state of affairs in our tax system.

Mr Bayly seems worried that there’s going to be some enormous compliance burden. You know, the study that was produced by the Treasury at the same time as the high-wealth individuals study didn’t rely upon any data of an individual nature. It relied upon survey data through the household economic survey, which the member doesn’t seem to complain about—the household economic survey, which looks into the affairs of people in all stratas of society and which we know is very accurate for nine out of the 10 deciles studied or 18 out of the 20 ventiles studied, as per the Treasury study. They did that on the basis of that information, without having to go to individuals. They then make adjustments to it based on their understandings of other data sets. But they’re not going into individuals and doing as we did with the high-wealth individuals research project, and that is not going to be repeated often.

But that sort of study is necessary occasionally because we know that those survey measures of wealth don’t work at the top end, as evidenced by the fact that the high-wealth individuals study found that the average wealth in that cohort was $256 million per person, including all their trusts and company interests, whereas the household economic survey has only ever found two people with assets of more than $20 million, and I think the figure was something like $36 million. That’s the highest net wealth ever found by the household economic survey. Yet this survey of the high wealthy showed that the average of this cohort was $256 million.

Chlöe Swarbrick: They’re scared of data.

Hon DAVID PARKER: It’s just data—it is just data. The idea that the National Party on that basis would oppose this legislation, when we know that the absence of data has made for a barren and ill-informed debate on taxation in New Zealand, misrepresented by the National Party, as they did this very day in respect of the taxation of the family home in the questions by Nicola Willis—another example just today of why we need this legislation and another example of why the National Party hates it, because this pulls the plaster off. It shows transparently what’s actually going on over time. This is a fantastic bill.

Dr Emily Henderson: Long overdue.

Hon DAVID PARKER: It’s long overdue and I commend it to the House.

Thank you, Mr Speaker. Well, I rise to speak in opposition to the Taxation Principles Reporting Bill, and I apologise in advance that it won’t be nearly as animated as my good friend and colleague Andrew Bayly or, in fact, the Hon David Parker were. I have to say that’s the most animated I have seen them. How two men can get so excited over tax is a little difficult for me to see.

But we do oppose this bill because it is simply a bureaucratic make-work scheme, and National will repeal this bill. Goodness knows, this Government, with 14,000 more bureaucrats in place, knows how to make a make-work scheme for bureaucrats, although, sadly, a good number of them are communications staff. But we won’t go any further down that track tonight.

We all know that a good tax system—at least, I did enough in my Accounting 101 to know—should be fair and it should be simple and it should be transparent and administratively easy and adequate to service the country’s revenue needs. But this is where it does get a bit sticky: is that adequate to service the country’s revenue needs when there is a fiscally disciplined Government, or is it adequate to service the country’s revenue needs under an addicted-to-spending Government such as this current Labour Government?

Politicians don’t really need a tax principles Act to tell them that a tax system needs to be fair, simple, transparent, and administratively easy, and—as I’ve already traversed—with the subjectivity of being adequate to service the country’s revenue needs, tax policy does inherently have value judgments. So National doesn’t need a tax principles Act and a bevy of IRD staff running round gathering information.

Actually, I was very interested in the Minister’s description of a high-wealth project. It seems very much more like a high-wealth witch hunt. However, National doesn’t need a tax principles Act to tell us our principles on tax. Our principles on tax are really simple: New Zealanders should pay less tax and keep more of their own money because they spend it better than a Government does.

Quite aside from this bill being unnecessary, it’s also got some significant flaws. It doesn’t provide any details on what the framework is and it doesn’t give any real idea as to what this could be. It doesn’t indicate any level to what degree of reporting there will be.

Let’s be very clear on this one: everyone is agreeing that a good tax system—and I will keep repeating it—is fair, simple, transparent, and administratively easy, but this bill is a bill that a Government would introduce to make the most of misleading claims found in an IRD report. Some people call it a high-wealth project; many of us call it a high-wealth witch hunt. It allows a Government to introduce taxes on the back of misleading claims found in an IRD report on the 311 wealthy families in New Zealand. It’s almost “Shame on them! How dare they be wealthy?”

So this bill lays the framework for a capital gains tax. The Hon David Parker might have had the capital gains tax rug pulled out from under him at this point, but the public should be under no illusion: this bill lays the framework for a resurrection of a capital gains tax.

The public know that Labour can’t be trusted on tax. It was a very, very marginal call for the Hon David Parker to use the IRD, funded by taxes from the public of New Zealand, to investigate the affairs of wealthy New Zealanders and then use that information to inform the Labour Party tax policy.

Changes from the brightline test, from two years to 10, and removing the interest deductibility are things that show the public they can’t trust a Labour Government on tax. In fact, those changes were done in a Supplementary Order Paper—they never went near a select committee.

So we know there are fundamental differences between a Labour Government’s attitude and a National Government’s attitude towards tax. It’s very simple: Labour want more tax—they love tax. They want more of hard-working New Zealanders’ money. They will tax anything that moves; in fact, they’ll tax anything that doesn’t move. They love tax—it’s in their DNA.

A National Government wants less tax. A National Government wants hard-working New Zealanders to—[Interruption] You’d like me to?

DEPUTY SPEAKER: Stick to the bill.

PENNY SIMMONDS: Stick to the bill—thank you very much, Mr Speaker. So it’s very simple: National doesn’t support this bill. We consider it is laying the foundation for simply taking more tax off New Zealanders. It isn’t necessary. We oppose it and, of course, we will repeal it.

Any political party that was interested in fairness and interested in evidence-based policies would love this bill, because this bill puts evidence into the conversation. That’s why it’s being done. Ordinary New Zealanders know anecdotally, they feel that somehow there’s some unfairness in the tax system, and the thing that was revealed in the work led by the Hon David Parker this year was to show the anomaly between the richest 1 percent of New Zealanders paying an effective tax rate of 8.9 percent while most of the rest of New Zealand pay around 22 percent. Now, I don’t call that fair.

The National Party likes to call it fair, and you have to wonder why. If they are scared about putting sunlight on to data, which is what we do for every other policy base that we do in this House—we rely on information and real data—why are they scared to put this tax principles bill through? That’s the question. For too long, there have been assumptions around the tax system, there has been an approach to policy which is pretty much on guesswork, and, finally, we have the intellectual rigour and the data to be able to support an informed debate. That’s all this bill is—no more, no less. We’ve heard unequivocally from our Prime Minister, and again from the Hon David Parker today: there is no intention to put a capital gains tax on the family home. This is simply about transparency and data.

My question to ordinary New Zealanders who might feel that they’re paying an unfair amount of tax compared to the top 1 percent is: what is the National Party, what are the Opposition benches afraid of in this bill?

Thank you, Mr Speaker. I rise on behalf of ACT in opposition to this Taxation Principles Reporting Bill at its third reading.

Can I make a couple of observations about procedure around the bill? One of them is just the amount of time that members have spoken. We had, of course, the learned Deborah Russell, who I think may have written a book about tax—I guess everyone has their own interests—and she managed to squeeze out a full three minutes as the Minister responsible for the bill. Then David Parker, who of course is the brains trust and intellectual architect—he managed to squeeze out four minutes out of the allowable 10.

But then there’s Andrew Bayly. He almost got to 10 minutes, but he didn’t actually talk about the bill. Then there was Penny Simmonds—I think she may have got to 10 but I was asleep for the middle eight so I don’t know if she talked about the bill, but certainly not in the first minute or the last minute.

Penny Simmonds: Unkind!

DAVID SEYMOUR: Well, in fairness, the member Penny Simmonds says I’m being unkind. Of course, it is possible the middle eight minutes are interesting. I wasn’t conscious for it. Why is there so little to be said about this bill?

I think the reason is that it is a complete nothing. It’s an exercise in bureaucracy that has been poorly conceived, poorly put together, and actually doesn’t achieve any real outcomes. It’s a bill for people watching along at home—because no one, as far as I’m aware, has really summed up what this bill is about—that requires, as the name would suggest, tax principles reporting. Every year, as an interim measure, and every three years, as a final measure, the commissioner of IRD—in practice, their staff—is required to produce a report on the tax system, commenting on a range of different attributes that people who study these things think are important for a tax system.

So every year—and then in a more fulsome way every three years—the Inland Revenue Department is required by Parliament to report on whether there is horizontal equity, whether or not there is efficiency, whether there is vertical equity, whether there is revenue integrity, compliance and administrative costs, certainty and predictability, and flexibility and adaptability. So in other words, what Parliament is doing tonight is requiring more paperwork to be produced by the IRD.

The question is: what benefit will this bring for people sitting at home who will now, as a result of this law, have to pay for this particular law? Well, they’ll be given a report that somewhat measures how New Zealand’s tax system, at any given time, measures up by those parameters, but it’s of almost no use whatsoever.

For one thing, it’s not actually necessary to pass a law to make it happen. Any Government at any time—so long as they are in charge of IRD, which they are—could request that the IRD evaluate the tax system according to these metrics. What’s interesting is the current Government’s been in place for six years. As far as I’m aware, they haven’t actually taken the time to produce these metrics in any kind of methodical or regular way. So you have to ask yourself, why is it necessary to pass a law for every future Government to do something this Government itself didn’t do?

There’s another interesting thing about how this law came about, and it’s this. There’s a set of rules that are used called the Generic Tax Policy Process. When a Government goes about making tax laws, it is supposed to use the generic tax policy process. The reason that it does that is it’s nice to think that a Government would actually consult all the people affected in an open and equitable and transparent way; get the information from the community about what people want from a new law; and, ultimately, produce tax law that is, well, actually, funnily enough, all the things listed in this bill.

What’s interesting—and it’s been noted by people such as Chartered Accountants Australia and New Zealand, people that actually do this stuff every day, complying with the tax system. Well, the Chartered Accountants Australia and New Zealand point out the enormous irony that the bill that’s about how the tax system should be managed—the principles of taxation in New Zealand and reporting on them—did not use the Generic Tax Policy Process in its own formulation. What they did, instead, was they asked a couple of stakeholders—one of them was CANZ, the Chartered Accountants Australia and New Zealand—to give their view. It was basically inside baseball and the people that were consulted complained that it was just them that were consulted. They said, “Actually, you should have done a more fulsome process.”

That would have been desirable because actually they wanted—or Labour, I assume, would like to create a system of tax principles reporting that has broad-based support from parties across Parliament that everyone can sign up to so it somehow lifts good tax policy above politics. I would assume that’s what they were trying to do. But the problem is that they didn’t even use the correct process for making tax policy in the first place. As a result, it has very little subscription from this side of the House.

One of the results of that—as I’m sure you, like me, are lamenting this time of year is the very, very trickling end of the Bluff oyster season. Well, this bill will last about as long as a Bluff oyster in the sun. Because it’s going to be passed tonight—rushed through under urgency by this Government that knows the writing’s on the wall—and then it’s going to be gone. Because the Government will change and this will be repealed to save the Inland Revenue Department money from not having to produce these reports that have no value. The people on the left know that’s going to happen. That’s why we’re here, sitting till midnight, because they’re rushing as many laws through as possible before they are gone forever, as some sort of desperate last gasp monument-building to this failed Government. But don’t worry, Mr Speaker, this—Madam Speaker, I see you’ve changed—this law [Interruption]—nothing wrong with that, don’t laugh—this law is going to be gone.

Another reason why it should be gone is that it doesn’t do even really basic things. For example, it produces a series of tax principles that it wants reporting on. But as submitters on the bill pointed out, it didn’t actually give any kind of prioritisation. So if you don’t know whether efficiency or vertical equity or horizontal equity is more important than one or the other, or which of the seven or eight principles are most important, then every report is simply going to say that a tax system has somewhat complied with a bunch of principles, but there’s trade-offs between them and you can’t satisfy them all. So without any sense of framework of what should be prioritised, it’s not going to provide any useful information; it’s just going to be a nothingness.

Of course, if there were to be values and priorities put into them, future Parliaments would reserve the right to ignore those values and priorities because here in a parliamentary democracy, people actually—

Helen White: Yes, that’s the point: you get to choose. You just know what you’re doing.

DAVID SEYMOUR: Helen White’s got something to say. What was that?

Helen White: You get to choose, but the public will know what you’re doing.

DAVID SEYMOUR: That’s what Helen White’s saying. But of course, as we’ve already traversed, if Helen White had been listening, then she would know I’ve already said any Government, at any time, could produce a report on these principles. Therefore, the law is completely unnecessary. Her own Government hasn’t done it for the last six years, so they obviously don’t think that it’s important either. However, I’m pleased to see that Helen White has used her short time in Parliament to get no good at heckling whatsoever.

The question that people really have is why is Labour doing this? Why are they putting more cost and more money, more bureaucracy onto the taxpayers of New Zealand for no good purpose whatsoever, that will produce no value, that couldn’t have been produced otherwise if people wanted it—and people don’t want it, because Labour aren’t doing it. They’re here ramming it through under urgency with minimal debate. They can’t even be bothered debating it themselves. Three minutes from the Minister in charge, four minutes from the intellectual architect of the bill—

Hon David Parker: Six! Six.

DAVID SEYMOUR: He’s now saying six minutes. See, inflation is everywhere with this Labour Government. Because just a short time ago he told me it was four minutes; it’s now six minutes. It’s like a crowd at a Labour Party meeting. It grows in the telling every time it’s mentioned.

Nevertheless, I finish by saying this bill is opposed, and it won’t last. In fact, it won’t last as long as a delicious Bluff oyster left out in the in the July sun. It’s going to be gone, gone, gone. A waste of Labour’s time, but no more waste of IRD’s money. Thank you, Madam Speaker.

E te Māngai, tēnā koe, tēnā koutou e te Whare. Just in response, initially, to the points made by the last speaker: if the length of speeches in this place were a determinant of their quality, their substance or their meaning, we really are in the “Upside Down”. Back in the 19th century, we were told, in places like this, in Houses of Parliament across the world, that the introduction of PAYE and of itemising income was going to result in the sky falling in, and those who are wealthy or on high incomes hiding those incomes to do everything that they possibly could to avoid the way that the tax system was going to change. And, of course, it has become a norm for us now to expect that good tax systems across the world see their citizens and their residents, their taxpayers, itemising that income and PAYE being a norm.

We’re hearing exactly the same things from members of the Opposition right now when it comes to the determination of economic income—that doing this itemisation, that providing the sunlight on these datasets and this evidence is somehow going to result in the sky falling in. My question for the members of the Opposition is: “What are they so scared of?” Because if, as they just themselves said—the member Penny Simmonds, and I quote, that “This lays the foundation of a capital gains tax.” We heard similar intimations in the previous readings of this bill, that it’s going to lay this foundation for this mystery tax that is going to come out of nowhere. If it’s laying the foundations for a tax change then surely they understand that what we are looking at here is an evidence base that would rationalise that necessary change mandated by the New Zealand public who would find the impetus for that change on the basis that things are presently deeply unfair.

I just can’t understand what we are hearing from members of the Opposition on this because they have not once gone into any level of detail about any of the seven principles that they oppose. In fact, the greatest level of opposition and detail that they’ve provided, as did the ACT member, is that they are opposed to or somehow don’t quite understand how the trade-offs are going to be reported against. And once again, I would make it just abundantly clear, as the bill itself does, that it is not the role of the IRD to point out where those trade-offs should be but to make explicit that there are trade-offs and that that becomes a political decision.

Of those seven principles—of horizontal equity, the extent to which people with similar levels of economic income—well, you’ll find that it’s defined in the bill, if any of the members of the Opposition would like to read it in contributing to the debate tonight. Then we have efficiency, we have vertical equity, we have revenue integrity, which the member Penny Simmonds also somehow seemed to be really in favour of but hadn’t read the bill, which is actually going to be ensuring that we are reporting against precisely that which she said was really important. We have consideration of compliance and administrative costs. We have certainty and predictability and flexibility and adaptability.

New Zealanders have long had a suspicion that our tax system is unfair but as the former Minister of Revenue, the Honourable David Parker, just laid out, prior to the high-wealth individuals report and project by IRD, and supplementary papers from Treasury, we did not have any meaningful data or insights into the levels of income held at the top end of town, and particularly on that economic income. And what we have with those 311 families surveyed in that dataset are families with an average income of $276 million combined. Prior to that—

Hon David Parker: Wealth, not income.

CHLÖE SWARBRICK: —wealth, rather; wealth between them. Prior to that, we had not previously seen any meaningful data collection of income above or twice, I believe, above $20 million. Again, I would implore members of the Opposition to point us to which of the tax principles they are opposed to because, in lieu of being able to do that, we can ascertain that they believe that these principles are important, which then leaves us with the question of why they are opposed to seeing those tax principles reported against and that information inserted into the public sphere. The only conclusion that you can draw from that is that they want to keep things secret. They don’t want New Zealanders to know this stuff because they don’t want to see the logical and evidential foundation laid explicitly and clearly for that capital gains tax or that wealth tax that they are so ideologically and dogmatically opposed to, regardless of the evidence which, evidentially, they are intent on suppressing.

Then we heard from members of the Opposition that they are going to be repealing this if they manage to be in a position to form the Government. To that effect, I just have to reflect on one of the sentiments that’s never left my mind since it came out of the mouth of Andrew Bayly in a tax debate that we were having a few years ago when he said, and I quote, that “There is such a thing as ‘legitimate tax avoidance’.”, end quote. It’s the quiet part said out loud. We have a tax system that enables the wealthiest in this country to continue to arrange their affairs, their assets, and their wealth in such a way that sees them, as reflected in the high wealth individuals report, paying an effective tax rate less than half of that of the average New Zealander.

So those suspicions that New Zealanders have held for a really, really long time have been confirmed in that high wealth individuals report, and here we have a piece of legislation which will provide us with a reporting framework, sustainably into the future, to enable us to continue to have that evidence-informed debate and, God forbid, a long-term dataset for us to continue having that evidence-informed debate into the future.

This is precisely the kind of thing that any good lawmaker with integrity and with a willingness to look at the evidence to produce public policy should be in favour of. I don’t really think that there’s much else to say here but, as the member David Seymour was saying before, apparently the quality of our contributions are measured by the amount of time that we consume on the clock. But all I’ve got to say is that I don’t know what the National and ACT Party are so afraid of beyond the evidence, which makes it crystal clear that tax settings in this country are unfair, and the fact that when the majority of New Zealanders see that laid out clearly, concretely and tangibly, they will demand change, and that change will not look like the propositions from the National or the ACT Party.

As Jeanette Fitzsimons, the founding co-leader of the Green Party once said, “Sunlight is the best disinfectant.”, and I want to applaud the former Minister of Revenue, the Hon David Parker, for the amount of work that he has done here, laying the foundation for institutional change in reporting and in transparency, which means that we can have better public policy in this country once and for all. Because I don’t know what the point of this place is without that.

One of the most important things we do as parliamentarians is we tax people. It’s a very serious thing, because people work really hard, and the lower their income, then the more the responsibility is on us to make sure that we what we are doing is fair and reasonable.

What this bill does is it shows us the effect of our tax policies. It shows us whether they’re fair on people, whether they’re a reasonable way to tax our hard-working citizens—and there is absolutely nothing wrong with that. In fact, you’d think it would have been something that we’d been doing for a very long time.

I would wonder at anyone who suggests that it’s a waste of money to report what is actually going on in this country with regard to such an obligation. The parties on the other side of this House ought to be ashamed, because these are our people, these are our country people, and they deserve a fair tax system, but, more important, they deserve to know what is happening in their country and who is paying tax—and if they know, you shouldn’t be afraid if what you are doing is actually fair and honest and consistent with these principles, should you?

This bill is a wonderful thing because it brings our system into the sunlight. It shows us what we’re doing. Then, yes, we can have a conversation, but, if, as the other party suggests—if it were elected we know what would happen: this would be buried, because the last thing that they would want is for New Zealanders to know what was going on in this country with regards to wealth.

The next call is a split call. I call on Chris Penk for five minutes.

Thank you very much, Madam Speaker. Well, there’s been a lot of heat but very little light from the other side of the House. I have listened as carefully as I can imagine doing to understand what the point of this legislation is. It doesn’t actually do anything. The best thing that can be said for it, as we have heard from the other side, is it doesn’t raise any taxes. Well, thank goodness for that—finally, something with the word “tax” in it that doesn’t increase the burden of taxation on the average hard-working New Zealander. It also doesn’t lower taxes, mind you, so there’s no relief in sight for the long-suffering taxpayer either.

So the only thing that it does do, if anything, is enable reporting, we’ve heard, or perhaps require reporting. Well, it’s not necessary to enable reporting, because reporting is a thing that can take place anyway. We’ve heard from the other side about this great information-gathering exercise.

Chlöe Swarbrick: Come on, Chris—you’re smarter than that.

CHRIS PENK: I’m not smarter than this, Chlöe Swarbrick, so there—gotcha! We can make light of this, but the point is that enabling reporting is not needed. A witch hunt or a fishing expedition or an information-gathering exercise can take place. It already has taken place quite recently as that; we’ve heard that as part of the justification for this legislation. So do we need it to require reporting? Well, no, because a Minister of the Crown, be it the revenue Minister or anyone else, can require Government agencies to do it. That’s the point of their being.

Chlöe Swarbrick: That’s not for ever, though.

CHRIS PENK: That’s the point of having elections. It’s not for ever, no; we have elections and people can stand for election and they can say that they stand for certain things. As the member of the House is very fond of saying—and she’s right in this—everyone’s got an ideology, there’s politics in everything, and so there should be. We can all be judged on that. We can turn up to the New Zealand people every three years, we can say this is our tax policy, we can say, “Vote for us or don’t vote for us on that basis.” We don’t need a law that says it’s going to be enabled or required that we’re going to have a measuring against these principles. By the way, earlier in the debate—

Chlöe Swarbrick: Which one don’t you like?

CHRIS PENK: Which one don’t I like? My argument is that there’s no need for this legislation. As it happens, there has been a good discussion when—I’ll choose my words carefully—we’re not allowed to refer to the absence of members in the House. Earlier this evening, there was a good discussion about certain principles that were less favoured by Andrew Bayly, our spokesperson in that regard—I’ll defer to him; I don’t know these things quite so well myself, but, I mean, it seems obvious that we can have these debates in a rational environment, in a political setting such as this, and if we have an election, and there’s nothing to stop us getting the data.

Anyway, I’m wasting my time being heckled by Chlöe Swarbrick, because the general public have got a pretty good understanding. I don’t buy the argument that we need this to somehow educate the public. They’ve got a good instinctive feel for tax policy. They know what they like; they know what they don’t like. The Government doesn’t even agree with itself, and it certainly doesn’t agree with its so-called coalition partners or support or whatever—some support they provide. They’re all at sixes and sevens—in this inflationary environment, it’s more like thirteens and fourteens, but after tax it’s probably eights and nines.

The New Zealand public understand tax well. They’re going to make sure that the current Government is the former Government very soon, and then they will understand tax a bit better themselves.

Thank you, Madam Speaker. I’m going to begin by commending Minister Parker and Minister Russell for their commitment to informed governance in an enduring way. Good data requires time, that is entirely the point of this bill. But much like my colleague Chlöe Swarbrick, I’m a little bit perplexed tonight. I’m perplexed by the “Nothing to see here behind the curtain” sort of conversations that the Opposition members have been having this evening. But I’m also perplexed about what it is they actually believe. I can’t put my finger on it. Is it (a) that regardless of what the data shows, this data should never inform governance thinking, regardless of what it shows? Now, that is perplexing. Or is it (b) let’s not look at the data because that might legitimately inform governance thinking? That they don’t want to do that is entirely perplexing. On this side of the House, data is important. On this side of the House, good governance means eyes open to real data. I commend this bill to the House.

I want to devote and dedicate this very short call to the principle of vertical equity, which is the extent to which the tax system is progressive. Tax is progressive if people with higher levels of economic income—that’s not just earned income from working, but it includes the value of assets—

Chlöe Swarbrick: You’re talking my language.

Hon PHIL TWYFORD: Yup. People with higher levels of economic income pay a higher proportion of that income in tax. A progressive tax system does not mean that every tax is progressive. For example, GST is regressive, relative to income, but the overall system ought to be. In practice, wealthy people should pay no lower an average rate of tax, relative to their economic income, than middle New Zealanders. And that is what they’re afraid of.

Thank you, Madam Speaker. Well, I haven’t taken part in most of this debate up until this hour of the night. I guess, on this side of the House, we get the fact that data is important; recording, measuring, and managing is important. However, the arguments that we don’t buy into over here is we had quite a lecture around fairness before. Fairness is subjective, and fairness is related to ideology. Therein lies the difference between one side of the House and the other.

Yes, Governments need to be informed, but when it comes to fairness conversations, we’re always going to have some sort of differing view around taxation systems. Therefore, the National Party opposes this bill tonight.

I’ve just heard in the House that we can have differences of opinion on what fairness is. It’s something that I think shows such a significant difference between why we need to tax in a way that ensures those who actually earn more pay a better, fairer proportion of tax. One thing I’ve also heard tonight, as the final speaker, is that the National Government keeps saying—

Simon Court: Not yet.

ANNA LORCK: National Opposition keeps saying—but when they were in Government, they increased GST. They said they wouldn’t, they gave New Zealanders a so-called “tax cut”, and then they went back on their word. They said they wouldn’t do anything anymore, and they taxed New Zealanders more GST. That speaks volumes about what the National Party really plans for New Zealand. They cannot be trusted on tax. They will tax, tax, tax Kiwis all the way if they ever—ever—get into Government. I hope they don’t.

I declare the House in committee for consideration of the Land Transport Management (Regulation of Public Transport) Amendment Bill.