Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill

I present a legislative statement on the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill.

That legislative statement is published under the authority of the House and can be found on the Parliament website.

Hon DAVID PARKER: I move, That the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill.

Some of the main features of the bill focus on improving fairness in the tax system. We all use Government services and infrastructure that taxpayer dollars pay for, so it’s only right that all contribute fairly. One of the key features of this bill is to ensure that multinationals pay their fair share of tax. It achieves this by including measures developed by the OECD as part of their drive to reform international income tax—the framework for large multinational companies. The bill allows New Zealand to take part in this global minimum tax of 15 percent, which is being introduced around the world for large multinational enterprises. The objective of this work is to stop the race to the bottom amongst Governments attempting to attract the mobile income of large multinationals by offering low effective tax rates. This initiative puts a floor on tax competition by creating a minimum rate.

The OECD-led work, which is endorsed by more than 130 countries, will help both developed and developing countries raise revenue from multinational enterprises. It will reduce undesirable tax competition between countries without preventing the use of tax incentives by those countries to attract real investment. The OECD has estimated that it will increase global tax revenues from large multinationals by about US$220 billion a year, or 9 percent of their current level. This tax is often referred to as the Global Anti-Base Erosion, or GloBE, tax. It is only payable where profits in a country are taxed at an effective rate of less than 15 percent.

New Zealand already has a 28 percent corporate tax rate and a robust international tax regime, so it’s unlikely that the tax will raise much revenue directly in New Zealand. There are only about 20 or 25 New Zealand - based multinationals that are in scope of the GloBE rules. You have to have a high turnover to be caught up in this. But participation in the system will mean that those New Zealand multinationals can pay any GloBE tax they owe to New Zealand rather than paying that same amount of tax under those rules to an overseas jurisdiction, which would, of course, not be benefiting the New Zealand tax system. In fact, most of the locally based multinationals have told Inland Revenue that they prefer to deal with Inland Revenue in New Zealand alone rather than a range of other tax jurisdictions in respect of this issue. If this legislation was not passed, then those multinationals, once this rule comes into effect, would in effect have to be dealing with those overseas tax jurisdictions in respect of the same issue, which would be more complex for them. The change is estimated to raise about $25 million of top-up tax a year from 2026-27 onwards. It’s a relatively small amount, but it’s about New Zealand doing its right thing by playing its part in this global effort. In its recently announced Budget, Australia is introducing the same GloBE rules proposed in this bill for the same reasons.

Another fairness-related measure in the bill deals with the tax treatment of backdated lump sum, ACC and Ministry of Social Development payments. A person might receive a lump sum of money from those agencies when they should have received smaller regular payments over an extended period of prior years. The tax system currently treats the lump sum as all taxable in the year they receive it. This can mean that the person has more tax to pay on that lump sum than if they had been receiving smaller amounts over the preceding period when they were entitled to it. In some cases, receiving the lump sum pushes the person into a higher tax rate so they receive less of the money that they should have received. From 1 April 2024, people receiving a lump sum ACC payment will pay tax on it at the average of their applicable tax rates over the previous four years, and this then provides a fairer outcome. This has been a longstanding problem causing some people distress, so I’m pleased that we’re able to address it.

As the finance Minister announced yesterday, the bill will also align the top tax trustee tax rate with the top personal tax rate from 1 April 2024. Aligning the trustee and top personal tax rates at 39 percent will make the tax system fairer. It will also slightly improve its progressivity. The change is about preventing high-income earners from circumventing the top tax rate. About 78 percent of trustee income is earned by 5 percent of all trusts, and that becomes even more concentrated at the very top end of those top 5 percent—these really are the big trusts, the super-wealthy. I had a look at the stats yesterday. The bottom, if you like, 50 percent of trusts, by my calculation, on average will pay less than $20 a week extra in tax as a consequence of this measure. The tax shifting, or the income shifting, for tax reasons really is concentrated at the very top.

Inland Revenue has evidence of big shift in income to trusts when it became widely known that the Government was going to increase the top personal tax rate. We said we’d monitor it, and we’re now addressing the issue. I want to be clear that this isn’t targeting the smaller family trust that might own a rental property, for example. These smaller trusts can continue to use existing rules to allocate their income to trust beneficiaries who are taxed at their personal tax rates. That doesn’t change. The Government is also proposing targeted measures to help prevent the over-taxation of trusts in certain circumstances, such as estates and trusts for disabled persons. That’s already a problem in the current system—in some of those situations the effective trust taxation rate at 33c in the dollar is taxing those trusts following the death of someone, at higher than the effective tax rate of the taxpayers that are involved in that estate. The Inland Revenue Department will continue to monitor the use of structures that undermine the 39c personal tax rate. The proposals apply for the 2024-25 and later income years.

The Budget also implements another measure, announced by the finance Minister in his Budget speech yesterday, to assist predominantly women who typically retire with a smaller nest egg than their male counterparts, in part because of their childcare responsibilities. On retirement, women are typically less financially secure than men whose savings on average are higher than women’s. The reason for this, as I’ve said, is that women often take time out of the workforce to provide childcare, and their KiwiSaver contributions dry up. So the Government’s proposing to pay a 3 percent KiwiSaver contribution to the KiwiSaver accounts of paid parental leave participants. The person would need to make their own 3 percent contribution of their KiwiSaver fund whilst on paid parental leave, essentially out of their paid parental leave payment. The proposal recognises the unpaid nature of childcare, the desirability of childcare, but its obvious impact on earning and savings potential.

The bill also implements a measure the Government announced to assist businesses hit by the North Island floods. Some of the businesses receive what is currently taxable income from insurance or compensation for their assets destroyed by floods. The last thing the businesses want to do is to have to pay a tax wedge on that insurance pay-out rather than reinvest it in the asset that needs replacing. So the bill proposes temporary tax relief, allowing taxation essentially, in effect, to be deferred, providing the assets are replaced.

Finally, the bill includes a measure extending the existing five-year income tax extension on the income of non-resident overseas oil rig and seismic vessel operators. This exemption removes the incentives for these rigs and vessels to churn in and out of New Zealand waters within 183 days to ensure the income of those people working on those vessels is not taxable. This would be inefficient and can have negative environmental impacts. I commend the bill to the House.

The question is that the motion be agreed to.

Thank you, Madam Speaker, and a pleasure to be talking on the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill, first reading under Budget urgency. Gee, all this speculation about what Mr Parker would be doing in tax—Wellington was awash with rumours of what he might be doing: pushing up the top tax rate, making the first tax rate free, pushing out the trust tax rate. Gee, there was a lot of speculation. Finally, we heard yesterday the first part of Mr Parker’s programme of tax reform, and no doubt in the next few weeks we’re going to hear some more from Mr Parker—no doubt picking up on Mr Piketty’s reforms of the tax system that he so keenly observes and follows.

Hon David Parker: More phantom policy from the Opposition.

ANDREW BAYLY: Oh, phantom—ha, ha! I’ll tell you what, one of our policies which is not a phantom policy, Mr Parker, is that we want people to keep more of what they earn. That’s why we want to stop them paying more tax so people like Mr Parker, so that Government, that wasteful Government over there, can spend it on all these useless projects that they’ve been doing over the last six years. We just would like a Government that would actually take people’s money and spend it appropriately. Anyway, I’m slightly off the point, Madam Speaker.

ASSISTANT SPEAKER (Hon Jenny Salesa): It’d be great to come back to the bill, thank you, Mr Bayly.

ANDREW BAYLY: Yeah, that’s what I thought you might say.

Anyway, that Budget yesterday, gee. Of course we oppose this bill. We’ve got to oppose this bill, and, of course, most New Zealanders were opposed to this bill, because there’s not a single cent in this bill for the hard-working mums and dads who are out there struggling every day. It’s fine if you want to put your children on a bus or something, but, you know, in Pukekohe not many people want to put their kids on a bus, because it doesn’t go anywhere. So we oppose this.

Of course, this bill reinforces the annual tax and the current tax rates, and, of course, National has, contrary to the Minister’s assertion that we’ve a phantom—we have made it very clear that we want to change the tax rate, reduce it so that New Zealanders keep more of the money rather than going into the Government’s coffers.

Of course, that deals with the greatest theft of them all, inflation, which again has been stoked by this Government’s wilful and unleashed spending, which—even Mr Robertson couldn’t contain himself yesterday.

Tama Potaka: How much?

ANDREW BAYLY: Well, that’s right—blew out the Budget yesterday. Anyway, I think the interesting bits about this—there are probably a couple of bits I do want to cover off on. The first one is the Global Anti-Base Erosion rules that Mr Parker spoke about. We were concerned, and I’ve been particularly concerned, that Mr Parker was going to go down a headlong approach that previously the IRD had been looking at, which was New Zealand imposing a digital services tax. Of course, that had been what had been talked about—what IRD had talked about. We are at least grateful that somehow we’ve been pulled back from the brink of that, because countries such as France went down this route of imposing a digital services tax, and it resulted in retaliation from the US, particularly Mr President Trump, who immediately said he’d slap a great deal of duties on a number of French products, and as a result even a large economy like France pulled back. England tried it and have also now agreed to scale back such an approach of imposing a digital services tax.

So what this bill does, which is a far more pragmatic approach, is to say, look, we will work collaboratively with the OECD and come to a view and work collaboratively so we impose rules alongside all or most of the other countries in the world to deal with the issue of large multinational digital companies, and I think that’s right. A couple of aspects in the bill that we will no doubt canvass in the select committee stage, first of all, is the reference to the OECD rules; it’s just going to be referenced. The OECD rules are about 76 pages long and have a whole lot of commentary, going up to about 220 pages. We are concerned that that would mean that we would lose sovereignty over those types of rules, so we would probably be of the making that they should be much more specific, Mr Parker.

So that’s one of the big issues about it, but there is a backstop in these provisions which means that if there wasn’t sufficient progress by the OECD, then those rules we would revert back to digital service tax on our own. That would be a pretty risky undertaking unless we did it well, because the big issue about the overseas base erosion issues is that companies such as Fonterra, Air New Zealand, which meet the €750 million threshold, might actually get captured by these rules. So we want to make sure that that is very, very specific and well-tailored.

But the second big thing about this bill is increasing the trust tax rate to 39 percent, and, of course, this is an issue of Mr Parker’s own undertaking. He made this problem, because Labour, contrary to what they said they weren’t going to do, shoved up the top tax rate to 39 percent. Of course, even the IRD, at the time they did that last year, in the RIS—in the regulatory impact statement—said this is likely to lead to problems with people using trusts. Of course, Mr Parker—and it’s now clear in the documentation that the Minister’s made the decision to increase this trust rate up to 39 percent. It certainly doesn’t appear to be the recommendation of the IRD. Because Mr Parker shoved up the top marginal tax rate to 39, he was forced to do this—he was forced to.

So now the big issue is, if this all goes through, and I presume because Mr Parker’s got all those people over there and they’re going through—what’s he going to do with the company tax rate; Mr Parker? Are you going to shove up the company tax rate? Are you going to shove up portfolio investment entities (PIEs)? Now we have the biggest separation since 1986 between the top tax rate of 39 and the bottom tax rate of 28 percent for company and PIE rates. I reckon—let’s hope it doesn’t happen, but if Mr Parker was the revenue Minister in the next Government, imagine what would happen. I reckon we’d see company tax rates going up. Yes, that would—

Hon David Parker: More phantom policy coming from the imagination of Mr Bayly.

ANDREW BAYLY: No, it’s not phantom policy, because that’s what’s going to happen, right? That’s what’s going to happen.

So, having now created this problem for himself, he was sort of forced to do this, and the big issue—and, of course, he sort of talked about making some adjustments. I don’t know what the adjustments—it’s not clear in the bill what trusts would be excluded, but there are four examples where this will be much worse for a lot of New Zealanders. The first example is where beneficiaries of deceased estates get given money in their trust, and now it appears that that money has to be paid out within 12 months. In many cases when people die, let’s say mother dies of cancer or whatever, let’s say those dreadful situations—and this happens, unfortunately. People often quite diligently and appropriately leave their money in their trusts until the beneficiaries, their children, get of a certain age. Of course, under this 39 percent rule, they will now be paying 39 percent on that money. That is wrong, Mr Parker.

Second option is where a trust is established for disabled people and you deliberately want to build up a capital structure—and I am listening to my colleague Penny Simmonds, who’s our disability spokesperson. That money will now be subject to 39 percent—that is wrong, Mr Parker. And there are issues about people just using trusts to protect their assets; they are now going to be subject to 39 percent—that is wrong, Mr Parker. These are the types of rules—there are more examples, but I’m running out of time. This is the type of blowtorch we’ll be putting on in the select committee, because we need to protect ordinary New Zealanders against the Labour Party.

I’m very pleased to have an opportunity to correct some of the misapprehensions that have been lobbed at us from the Opposition benches. A speech that was full of mere speculation for a large part of it. The member then continued with speculation and “what ifs” and “what might bes”. It is clear he has not bothered to engage with the bill.

So I want to address, in particular, the issue around the trustee rate and raising the trust rate to 39 percent. The previous speaker, Andrew Bayly, said, “Well, there’s a number of problems with what you are going to do—there’s a problem”. And, in particular, he said that the reason that the trust rate is going up to 39 percent was because we on this side of the House had created a problem by increasing the top personal tax rate to 39 percent, so it was our fault that there was a problem. But I want to say that that is an incorrect idea and it’s incorrect because it misunderstands what trusts are supposed to be used for. It misunderstands the nature of trusts, and I want to take it back quite some distance and talk about where trusts came from in the first place.

Now, Mr Speaker, I know that you in particular will enjoy this story—because you’re a great storyteller—about how trusts came into being. They first sort of came into being as instruments during the Crusades called “uses”. And what would happen was a knight, a lord, a baron would want to head off to the Crusades to save his immortal soul by doing whatever it is he was going to do, but he would be leaving behind his wife, his children, his estates, and, of course, they were being left in a vulnerable position because their protector was not there. So what the knight, the baron, the lord would do, he would assign the use of his assets to a trusted friend. And the trusted friend was to use those assets in order to support the wife and the children, to support the vulnerable. It was a way of protecting the assets in order that vulnerable people would not lose them.

Penny Simmonds: And that’s what it’s used for now.

Hon Dr DEBORAH RUSSELL: And indeed that carried on. People being people, they were called uses back then and they were put to all sorts of uses which really undermined the Government of the day and eventually Henry VIII abolished them. But they came back in the form of trusts, and trusts do have a very specific purpose—it is in order to ensure that assets, that activities belonging to vulnerable people, are not exploited; that we support vulnerable people. That is what trusts are supposed to be used for. But, as it turns out, in many places around the world, and particularly in New Zealand—we seem to have a fetish for trusts—what is done with it is it is used to shelter income. It is used to ensure that, instead of genuinely passing over the benefits of a trust to vulnerable people, income can be cycled through a trust and can be sheltered from taxation.

So we have changed the way that trusts are used. That is where the problem is created. And it is absolutely fascinating because we know, as the Minister told us, that trusts have been used in many ways to avoid paying income tax. We know that about 78 percent of trustee income tax is earned by 5 percent of the top earning income trusts—78 percent of trustee income. It’s not to do with protecting vulnerable people. It’s not to do with ensuring that someone can—it is all to do with avoiding taxation. That is the problem that we are fixing. So that is exactly what we’re doing there. Now, the previous speaker asserted that we had actually created a real problem for exactly the people that trusts were supposed to expect—people with disabilities, testatory trusts, and so on. There is a specific carve-out in the bill. We are actually going to protect those trusts where people are using them for the genuine purpose for which trusts were supposed to be established. So there is a carve-out there and I know the member Penny Simmonds will be delighted to hear that and will support that carve-out. So there is a carve-out for testatory estates. There is a carve-out for vulnerable people. We’ve actually paid attention to that particular issue.

Then the member speaking previously said that one genuine purpose of a trust was to protect assets. Protect assets from what? That “protecting assets” will be preserved. What is being changed is that people will not be able to flow income through a trust in order to avoid paying the top income tax rate. That is exactly the purpose of what is going on here. And then the previous speaker continued to engage in speculation about what might possibly happen to the company tax rate given that that was now going to be left sitting at 28 percent and the trustee rate was going to come in at 39 percent. We already have pretty significant rules in place to ensure that that 28 percent rate is not exploited by people who have a higher personal income tax rate.

I just want to point out to the members on the other side and, in particular, to the previous speaker, that one very standard way and one way that is still completely possible for people to pay an appropriate rate of tax, to not pay the 39 percent on the trustee income, is to actually allocate the income to the beneficiaries of the trust. So if the income from the trust is allocated to the beneficiaries of the trust and those beneficiaries have a lower tax rate—so, for example, if the income from a trust is allocated to a beneficiary who is on the 17.5 percent tax rate, then that is the rate of tax that is paid. All that has to be done is that the trust has to be used for the purpose for which it was established to flow the income through to the beneficiaries, and then the beneficiaries pay that tax rate. It is simple. It is simple to not pay the 39 percent rate as long as the trust is used properly and the income is flowed through to the beneficiaries of the trust.

Now, in the case where the beneficiary of the trust is on the 39 percent rate, then it’s all standard. But if the beneficiary of the trust is on a lower rate, then that is the rate that is paid. So it is a very simple measure and it is sitting in the law already. So the scaremongering from the Opposition over this rate is absolutely absurd. It is based on speculation and hyperbole and it does not attempt to address the fundamental problem that is sitting in our tax system around the fairness of taxation. And, in fact, what they are doing is undermining a very small measure that we are taking in order to enhance the fairness of the tax system, the tax system that supports all New Zealanders. I commend this bill to the House.

What is really disappointing about that contribution of the last speaker, the Hon Dr Deborah Russell—and I must say, it was a lecture, actually, in most elements, which is not uncommon for that Minister of the House; I don’t know why my colleagues are laughing when I say that. But what the Minister does not understand, in regards to this specific carve-out around disabled beneficiary trust, is that when a disabled person reaches the age of 65, they no longer receive the supported living payment. That is the threshold in which this carve-out will not apply.

This Minister is so out of touch on the detail that she has ignored the fact that disabled people over the age of 65 will be not carved out of this legislation. They will be impacted, and they demonstrated through that change that they are a heartless Government. They are a heartless Government to those thousands of individuals over the age of 65 who are disabled and who rely on this. But, no, in their haste to try to push through this legislation, which personifies the way in which this Government operates, they leave elderly people with disabilities in the cold. That is the cold hard reality of this Government. I only hope, like she said with the census when it didn’t get to 90 percent, “I’ll put my career on it.” Remember that? How’s that going, Minister? But we’ll get back to the bill.

The Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill is a complete wasted opportunity. It is so disappointing that, time after time, we come to this House and this Government failed to use the opportunity that is presented in front of it to actually do something positive for hard-working Kiwis across this country. The annual rates section of this bill does nothing to consider the appropriateness of the thresholds of taxation on Kiwis. It does nothing in order to provide relief to those Kiwis which are dealing with a cost of living crisis. This Labour Government’s policy has created the cost of living crisis that Kiwis across this country are facing. This Government is accountable for the pain and suffering of Kiwis across this country. When will those members take accountability for the actions that they have done that is causing people in this country to be suffering the way in which they are? They will not, but in 153 days from today, New Zealanders will have an opportunity to reflect and tell this Government that they have not listened.

DEPUTY SPEAKER: In the meantime, you’ve got the opportunity to talk about the bill now, Mr Watts.

SIMON WATTS: Thank you very much, Mr Speaker. I appreciate that guidance. Let’s talk about the trustee tax rate. The trustee tax rate—a Government that said they would never increase taxes before this election. What have they done? In this bill, they’ve increased the trustee tax rate. I went to school; I wasn’t an A-grade student in everything, but I can tell you what, when someone says, “I’m not going to increase taxes.”, and 72 hours later, they increase taxes, will I trust them? No. Will Kiwis trust you? No—and “you” as in the context of the Labour Party.

So trustee tax rate—the issue with this: the unintended consequences of this change have not been thought through. What consultation has been taken in regards to increasing the trustee tax rate? Any idea? No? Not much—not much. But that’s not out of sync. The elements around the lack of consultation will mean that these proposals around the increasing of the trustee tax rate are going to cause unintended consequences, and that is going to have a significant implication.

The other thing is—which, again, for most people out there that have a degree of understanding around the topic—that this Labour Government’s policies have created the environment in which they have basically had to undertake this change in policy. The increasing of the personal tax rate to 39 percent created a differential between the corporate tax rate and the personal tax rate. Historically, 6 percent differential was the gap; they’ve opened it up to nearly 11 percent. Do you know what people do when there’s such a big gap? They think, “Well, you know what? I’m seeing all my tax money being wasted on $52 million bike bridges. I don’t really feel like it’s the best use of my tax money going into their big empty bucket, which goes on wasteful spending.” So they use, and rightly so—and it is absolutely within the law—trustee mechanisms to deal with that.

So what the Minister, as a result of increasing the personal tax rate, has caused is a significant differential. That has therefore meant that trustee element has been utilised. And now it’s like “Whoops-a-daisy, now I have to increase the trustee tax rate.” Well, I tell you what, and Andrew Bayly mentioned this before, going on the thematic of, “We’re not going to announce any new taxes before the election”—which was a complete load of bollocks, because they’ve just done it today. But ignore that, let’s just say that was a bit of an oversight, like the KiwiSaver tax—remember that one that the Minister threw through but the Cabinet were asleep that day, which is probably every other day. But the thing that’s going to happen—the corporate tax rate is the next thing that’s going to go up, isn’t it? Because now we’ve got this 28 percent, and the Minister’s going, “Gee, we’re spending a lot of money. We’re spending a lot of money. How are we going to pay for it?” Well, we’re going to the only way the Minister—and his colleague Grant Robertson—knows: to feed that addiction to spending, let’s tax people more. So they’re going to increase the corporate tax rate probably next. They’ve created this; all their policies have created this scenario. For most people, it’s like that’s no surprise, but anyway.

Let’s have a talk about the OECD, just for those at home thinking, “Gee whiz! I wish he’d talk about the OECD provisions in this tax bill.”, because that is the most exciting part, and the Minister, I know, does find these provisions—26 abbreviations in the bill in regards to that section. When you have to do 26 abbreviations on any type of policy, you are pretty much trying to say, “Who the heck is really going to get this?”, and the reality is, not too many people.

The other little detail in there is that processors and submitters in regards to this have a bit of an issue around the ceding of sovereignty to the OECD. These points don’t seem to be referenced in the regulatory impact statement (RIS) or the disclosure note. So I think that will cause concern for a few people out there. What are the rights that the Government is, in effect, ceding over to the OECD in regards to these clauses around OECD Pillar Two global things?

Hon David Parker: None—none.

SIMON WATTS: The Minister’s saying “None”. Well, why didn’t you say that in the RIS? A nice simple question, we can go into committee stage now, if you want, Minister. No, we’re not going to do that—you don’t want to do that because you know what’s going on here.

DEPUTY SPEAKER: No, I don’t know anything. You’re talking about the Minister.

SIMON WATTS: Thank you, Mr Speaker. I acknowledge that. Let’s get a little bit in—because we’re running out of time, and, as usual, I could do with another 10 minutes. We won’t have that today, but there will be plenty more opportunity when this gets to select committee, won’t it? I’m glad at least the Minister has decided to put this to select committee—

Chlöe Swarbrick: Great committee.

SIMON WATTS: —unlike the other bills pushed through under haste. I’m hearing my colleague here from Auckland Central—

Chlöe Swarbrick: Great committee.

SIMON WATTS: Great committee, and, yes, the Finance and Expenditure Committee is a great committee.

Anna Lorck: Love those doughnuts.

SIMON WATTS: A lot of collegial behaviour. Doughnuts; we’re going slightly—this is doughnut economics from this Minister. How about that?

Let’s get back to the bill, ladies and gentlemen. So we talked about the fact that this bill has not used the opportunity in front of us to adjust the annual tax rate to make sure that those rates are applicable and provide relief to hard-working Kiwis. It would have been very simple, ladies and gentlemen, to be able to make those changes in this bill. It would have brought back a little bit of credibility that this Government is actually listening to the pain that hard-working middle-class families across this country are feeling at the moment. But, no, they have demonstrated through this bill that they are not willing to listen, that they are not willing to deal with the underlying issues that our communities are facing, that they’re not willing to deal with the core drivers of the cost of living crisis, and the core drivers of the cost of living crisis is this Labour Government’s policies. Do not believe them when they talk about other factors.

But, in 154 days, ladies and gentlemen, this Government will be held to account, and I’m pretty sure that Kiwis are going to do the sensible thing.

Point of order. I seek leave for Simon Watts to take another 10-minute call.

DEPUTY SPEAKER: I’ll take that as a frivolous point of order.

MATT DOOCEY: I’m putting it to the House, Mr Speaker.

DEPUTY SPEAKER: Is there any objection?

Hon Members: Yes.

Thank you, Mr Speaker. I will try to keep my comments brief, because the last thing we need is a great deal of repetition, although we’ve just had a lot, and a little bit of it needs to be corrected, because it’s clear that members opposite are struggling with some of the simpler points in the bill. The Hon Deborah Russell gave a very erudite explanation, I thought, of why the trustee tax rate is increasing to 39 percent, and members opposite seem not to have listened particularly closely to that. She explained that there is a very legitimate and straightforward way to not pay the higher tax rate, and that is to allocate income that has been gained in that trust through to beneficiaries.

The rule is there to address distortions in the tax system that have been observed, and I would have thought members opposite, who I do believe support a broad-based - low rate tax system, would have wanted a system that does address distortions in the tax system. But perhaps because a large volume of those distortions are driven by the behaviour of the mega-rich, they may be taking a different view, but they’re being a little bit shy about putting that point up front. We know that the vast majority of trusts will be almost completely unaffected by this legislation, and so most Kiwis that are operating trusts for legitimate reasons will not have any real effects from this legislation.

I want to speak very briefly about the KiwiSaver top-ups for child carers taking paid parental leave. The latest report on this matter is from the Retirement Commission, Te Ara Ahunga Ora. The Retirement Commissioner engaged actuaries to work out the difference in retirement savings, and it’s true that males’ retirement savings balances currently are around 20 percent higher than the average balance for females in the KiwiSaver scheme. It’s not a small amount. This measure in the bill, and this Budget measure, will actually be very good—particularly for women, who are more inclined to take parental leave than men—in addressing that gender gap that we see in retirement savings. I think it is a real shame that members opposite want to oppose women having KiwiSaver balances that are closer to those of men. I think it’s actually quite shameful that you might want to oppose that measure.

By opposing this bill, the members opposite are also opposing multinationals paying a minimum rate of tax. New Zealand is joining global efforts just to make sure there’s a minimum rate of tax paid by multinationals. They’re also opposing a measure that’s really taken as a compassionate measure around ACC and Ministry of Social Development lump-sum payments to reduce the amount of tax paid on them for people who don’t have a great deal of income over the years. They’re also opposing implementing changes to the trustee tax, and tax relief for flood-hit businesses.

So I think that is where I really want to leave this contribution. I do want those following the debate at home to be considering the kinds of things this National Opposition is opposing because they like to make politics on tax bills. These are measures that will benefit many New Zealanders around the country, and I think it should really give everyone pause for thought that we have an Opposition that wants to oppose these very sensible, sensible measures of change in our tax system.

Thank you, Mr Speaker. The only crusade in this House today is the pursuit of higher taxes by this Government. The policy objective of this bill is to set the rates of income tax for the 2023/24 tax year. We have in our position the holy water and the stake to the heart of Thomas Piketty in the ACT alternative budget, which gives New Zealanders a fair go and gives them an alternative to vote on against this high-raising taxing Government. Then we will see where the public fits.

So the Budget itself, because it’s important to put this in the context before going to the bill, has unveiled weaker profiles for budget balances and upward trends in debt and bond issuance, largely driven by higher Government spending. There’s been lots of pictures of cute little toddlers and mums in the newspapers today, but the media has failed to see that we are spending more, which means we have more debt, and now we will have higher interest rates. This bill contains a major tax change, whether the Minister wants to admit it or not. Labour’s build-back project has left us all waking up this morning across the country to a situation where taxes have gone up $86 billion, 40 percent. We can’t keep doing this and we have to actually get to the stage where some serious pragmatic decisions have to be made.

Mums and dads who have a house, who have a rental property and family trusts and a bank account that’s earning a little bit of interest and rental income—these are not mega-rich people. I don’t know what this is being discussed for in terms of targeting the mega rich, but the real damage here is to the 400,000 registered trustees, people who are waking up this morning trying to explain to their kids and partners what this means. In lunch arenas around Auckland today, the tax lawyers and tax accountants will be contemplating a decision that was clearly premeditated. It’s sad when the economic hitmen and hitwomen that usually come into our country are sitting in our front benches and doing these sorts of perverse distortions of people’s wealth.

Just to get on to the bill, the rules, as my colleague has said, on the Tax Administration Act, around Global Anti-Base Erosion are very complicated, and it does need a glossary to understand the 26 abbreviations. Submitters have strongly advocated the position of the Government ceding sovereignty to the OECD. We will not be ceding sovereignty to the OECD in anything, and this may be a legitimate exit route for some of the economic managers in the Labour Party, but it’s certainly not going to be the destiny of this country where we allow super-national organisations to tailor our tax policy in a way that can’t be explained.

You know, quite clearly, the material that’s been given us, the disclosure notes, hasn’t stated if there are any New Zealand Bill of Rights Act issues. The Justice website hasn’t been updated to cover this bill, and it includes a short statement about the legislation design and advisory committee who have agreed that New Zealand should just incorporate OECD rules into our legislation, with no further explanation analysis. This bill gives the Governor-General the power to decide when the legislation applies from. How can this be happening in a modern democracy?

Moving on to the many New Zealanders who have a family trust, they’re going to be really unhappy to learn that the Budget has increased their trustee tax rate from 33 percent to 39 percent, with effect from 1 April 2024. For a Budget that was badged with no major tax changes, this feels like a major change for the 400,000 trusts registered in New Zealand. The trust has gone out of trusts when it comes to the economic management of New Zealand’s tax policy. This move follows the introduction of significant disclosure requirements, which trustees will have recently grappled with in their 2021-22 tax returns, and support for the change comes in the following comment in the Budget press release: “Ministers made clear then that if analysis indicated high income earners were circumventing the rate through the greater use of trusts, the Government would move to address this issue. New information from the Inland Revenue has shown an almost 50 percent spike in income subject to the trustee rate, from $11.4 billion in the 2020 tax year to $17 billion”.

Given this statistic predates the trust disclosure data, which has just been collected, it’s not clear what the real purpose of the disclosure rules was, and the decision to increase the trustee rate hasn’t been based on that data. The increase in income in 2021 is hardly a surprise, as a natural and expected reaction is to increase the personal tax, and something that Inland Revenue has indicated they didn’t have a concern with. The Budget press release attempts to suggest this change wouldn’t materially impact most trusts, with the comment that only a small proportion of trusts will pay most of the additional tax. The top 5 percent of trusts with some taxable income in the 2021 tax year accounted for 78 percent of all trustee income. That’s $13 billion out of $17 billion. This is estimated to raise only $350 million per year. The fact that the majority of trusts will not be paying the majority of tax will be of little comfort to the significant number of trusts held by regular New Zealanders, with a marginal tax rate of 33 percent or lower. The change to the trustee tax rate is included in legislation on this table. Thankfully, it will be subject to a select committee review and lots of questions will have to be asked then.

Moving on to other policy aspects—we’ve touched on the *Global Anti-Base Erosion rules, but the lack of consultation means that we don’t understand the consequences. The taxation of back-dated lump sums—we’ve been through the detail and it seems sensible and overdue. The payment of KiwiSaver contributions to paid parental leave seems fine. The taxation rule over relief—it’s sort of fine but complicated and based on the Christchurch earthquake rules. Schedule 32 of the overseas donee status seems fine, and extending the tax exemption for non-resident offshore oil rig and seismic vessel upgrades, which comes up every few years, is important as otherwise oil rigs wouldn’t come here or they will change a lot more. On the remedial matters, generally these seem fine but haven’t been looked at in detail.

The main home exclusion construction period is just an example of how these rules are punitive. The flooding tax relief remedials we support, and we support the targeting of helping the female population with regards to KiwiSaver.

So we would say this is a major tax change. There’s more spending, more debt, by this Government, which means that they have to pursue more revenue. However, the beneficiaries—and if you are a retiree or a superannuitant today, you’d be seriously annoyed with this Government, because any little small piece of revenue that you’ve got above your pension is now suddenly going to be taxed at a higher rate.

Hon David Parker: That’s not correct.

DAMIEN SMITH: It is correct.

Hon David Parker: That’s not correct.

DAMIEN SMITH: So let’s challenge that in the committee and let’s have a look at that.

So we, the ACT Party, do not support this bill. The Government is now planning to borrow $10 million more than forecast by the half-year update in December, just six months ago. And this is all inflationary. There’s no free lunch except if you’re sitting over in the Beehive and the balance payments record at $34.6 billion is blowing out. So there’s two tribes emerging now: if you’ve got children, you get benefits plus interest and inflation; if you’re on the other side in the productive economy, you get inflation, and you get higher interest rates and higher taxes. Even though little things have been handed out for childcare, this Budget has meant that every household is now $11,000 worse off and further in debt as a nation.

E te Māngai, tēnā koe, tēnā koutou e te Whare. It probably makes sense to start my contribution by just referring to some of the comments made by the ACT Party speaker Damien Smith, just before he sat down, about the productive economy. We have extensive research in this country, not least in the recent IRD and Treasury reports, released last month, that show us that, in fact, we have tax and trust settings in this country which are actually anti the productive economy. They are channelling and funnelling resources and capital into unproductive assets where they sit and they accumulate more and more of that untaxed wealth. These are the fundamental premises that we’re talking about when we’re talking about this Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill, to bring it back to the legislation.

So to bring it back to the legislation is to talk about the tax settings that we have available to us, and obviously this being a piece of legislation debated under Budget urgency. We’re talking about the revenue that the Government is affording itself to pay for the things that all of us need. And I found it really fascinating listening to the Leader of the Opposition, Mr Luxon, on the radio, on RNZ, on Wednesday morning, when he said, “We have to grow the economy, and if we do that, we grow the tax base, and growing the tax base helps us to pay for things.” He was so close—he almost got it. He was nailing it, and then he understood and he outlined explicitly that taxes pay for things, and Governments of all stripes do that taxation based on the values and the ideologies and the things that we believe in about how our economy should best be geared.

So what’s outlined in this legislation: well, as others have well canvassed, the key kind of thing here is the raising of the trustee tax rate to 39 percent. That, of course, is to bring it into line with the top income tax rate of 39 percent. Actually, funnily enough, as members of the Opposition themselves have raised, this is all about making sure that we address potentially distortionary impacts in terms of where people are putting their money in order to potentially avoid paying taxes. And, as we canvassed just yesterday in the House as well—actually, Andrew Bayly put it best a while ago in one of the many debates that we’ve had this term on the state of taxes and the economy and productivity and otherwise, where there is, and I quote, “such a thing as legitimate tax avoidance”. That is the inherent problem—the way that we have set up our economy, our tax, and our trust rules, such that people can get around the system, and those who have the most resources end up paying far less than is fair but also far less than they should be in terms of just actually an equivalence with the average New Zealander.

Another really important thing in this legislation is the establishment for multinationals headquartered in Aotearoa to be required to pay a top-up tax to the IRD if their effective tax rate is lower than 15 percent. This, of course, is part of an international push by the OECD to implement a set of rules to stop a race to the bottom in corporate taxation. Also, really peculiar points from the Opposition there about how we’re somehow ceding our sovereignty to the OECD. I thought the whole point of tax systems being aligned internationally is that we actually ended up with far better coordination and, again, not being one of those countries that people come to in order to avoid taxation—taxation which, and it appears there’s at least consensus across the House, helps to pay for the public infrastructure, the public services, and the public good that all of us need and use and that keeps this country going.

Another really important component of this legislation is around changing the tax treatment of backdated lump-sum ACC and Ministry of Social Development payments. This is just, effectively, about ensuring that there is an equivalence too, were there to not be a lump-sum payment but those payments were properly paid out, that somebody is not getting taxed higher on them, and therefore that we don’t end up with a situation where they have lower contributions than would have been fair had those been paid out properly in the first place. It’s just about fairness.

Another really important component, as, of course, canvassed by speakers, is the Government matching the 3 percent contributions to KiwiSaver made by those on paid parental leave. Here I need to shout out to my Green colleague the Hon Julie Anne Genter, who, in her capacity as the Minister for Women last term, I believe had some conversations with Government colleagues about initiating this process of work. And, as others have alluded to, we see particularly disproportionate impacts on women who do take paid parental leave and aren’t able to make those contributions when it comes to retirement savings in particular.

As others have, and, Mr Speaker, I hope you’ll allow me to reflect on the broader context that we are debating in this legislation and therefore in this Budget as we sit under Budget urgency on not this Friday but Thursday, given that we’re stuck in Thursday, as far as the House rules go—

DEPUTY SPEAKER: Well, we’ve been fairly broad to date, Ms Swarbrick, so we’ll start moving towards the bill.

CHLÖE SWARBRICK: Mr Speaker—absolutely. The point, though, is that this legislation concerns the taxation rates that the Government is setting, that it is addressing some of the distortionary impacts inside of our current tax and trust system, but that there are other places that they could go. This exists within the context of the Government releasing, just last month, those IRD and Treasury reports that tell us about the fact that the wealthiest 311 families in this country pay less than half the effective tax rate of the average New Zealander. So, to the core premise and principle of this bill—that is, increasing fairness and equity of our tax system—there was an opportunity to go far further.

The majority of New Zealanders agree, as reflected in the Newshub poll this week, where we saw that 52 percent of New Zealanders want to see this Government, or would support this Government, implementing a wealth tax, something which the National Party seems to think that the Labour Party is cooking up—I think that would in fact be Green Party policy, but, none the less, we would hope that the Hon David Parker does do those things that the National Party thinks are currently being cooked up, because the majority of New Zealanders agree and support it, and it would enable us to grow the tax base to pay for things that all of us need to see.

Some economists estimate that we have a deficit of approximately $100 billion in our public infrastructure. We will always be playing catch-up unless we address these things. In this country, every 40 or so years we have a form of economic transformation. In the 1930s and 1940s, we instituted the welfare State, and we paid for it by imposing greater taxes on those who had profited handsomely during a time that was incredibly challenging for many. In the 1980s and 1990s, there was a concerted effort to shred that social contract, and my colleagues in the ACT Party seem to be advocating for the continuation of that shredding of the social contract.

I just finally do need to address the point that was also made about this apparent or supposed attack on landlords in this country. And, again, it’s a constant refrain that we hear from members of the Opposition, whenever we’re talking about fair tax—

DEPUTY SPEAKER: Yeah, well, just talk about how that appears in the bill.

CHLÖE SWARBRICK: Mr Speaker, it—

DEPUTY SPEAKER: Because that’s what we’re here to talk about, Ms Swarbrick.

CHLÖE SWARBRICK: Understood—

DEPUTY SPEAKER: I’ve been fairly indulgent to date, so just—you’ve got two minutes left. So let’s just—when you bring a point like that up, just relate it to the bill.

CHLÖE SWARBRICK: Mr Speaker, appreciate the fact that others have been raising far broader points throughout this debate, and in responding to those points, I think it’s well within my remit as a member, but, none the less, the Greens will support this bill. It can and should go a lot further, because, as the Minister well knows, there are far bigger distortions in our tax system, which result in unproductive outcomes, and I look forward to submissions from the general public at the Finance and Expenditure Committee.

As the chair of the Finance and Expenditure Committee, I really welcome this bill, because it is about fairness. I know all New Zealanders share the belief that the tax system should be fair. That is what makes for economic stability. It is what makes for social cohesion. It allows us to get on with having a First World country where everybody knows that the tax system that is treating them in a particular way is treating their neighbour and their neighbour’s neighbours and people in other suburbs the same way. That is the basis of our tax system.

But what is particularly good about this bill is it is great news for women. It is great news for women, because it is enabling women who are choosing to stay at home, look after their children, and provide around reproduction, not just production—they are able to contribute to their KiwiSaver and the Government will now top them up by 3 percent. That is going to have a massive impact on women, and, even better, if we think about it in the context of the early childhood education changes that have been announced in the Budget, that means that when they do choose to go back to work, they will save up to $133 per week if they put their children in childcare from the age of 2, due to those extensions.

The second reason this is good for women is because of the changes to the trust tax laws—mainly because the 311 families that the previous speaker, Chlöe Swarbrick, alluded to, the beneficiaries of those very, very wealthy trusts, are mainly men. So it is good for women to know that the increase of what should be taxed flowing through to trusts in order to avoid the 39 percent threshold—it is good for women to know that that will now be taxed fairly.

The third reason is around the Global Anti-Base Erosion (GloBE) rules. Now, this is only going to bring in a small amount to New Zealand, because we already have a 28 percent corporate tax rate. But the benefit of this is around the coalition of the willing, globally, to ensure that it is not a race to the bottom, and that race to the bottom affects women more. The opportunity cost for women in the countries where that tax is not collected is that those countries tend to use consumption tax. Consumption tax is regressive and it impacts more on women in a double-edged sword, because women are more likely to be purchasing for their families as well.

So by New Zealand playing its part in the global economy and ensuring that our GLoBE rules accord with the OECD, we are not ceding sovereignty, as Damien Smith so bizarrely alluded to; we are actually ensuring that there is an ethical framework globally around tax which doesn’t disadvantage poorer countries and which, particularly, doesn’t disadvantage the women in those countries. This is a great bill. It is about fairness, and it is particularly good news for women. I commend it to the House.

Thank you, Mr Speaker. Well, another wasted opportunity on this bill. We listened to the Budget yesterday and there was nothing in there for hard-working, taxpaying New Zealanders. We’ve got a Government over the other side of the House that’s addicted to spending, and this bill further inflates that. There’s no measures in here to give anything back.

Kiwis are struggling. We’ve got a cost of living crisis; we’ve got runaway inflation; we have had no tax relief in six years for any hard-working taxpaying Kiwis. For all of those Kiwis at home looking at this Budget hoping for a bit of a break, hoping for something back, hoping that their lives might be made a little bit easier—what did they get? They got nothing. In fact, they’re going backwards; they’re losing money. They are going backwards under this Government as inflation, day by day, takes money out of their pocket.

Now, we heard the Minister earlier saying there was going to be no new tax, as well, in this bill—there is. There’s an increase to the trust tax rate. That’s another broken promise by this Government. We’ve heard people on the other side of the House, we’ve heard Chlöe Swarbrick, we heard Te Paati—

Chlöe Swarbrick: Swarbrick.

SAM UFFINDELL: People get my name wrong all the time, my apologies. We heard Te Paati Māori yesterday saying that they’re going to be introducing—or very keen on—a wealth tax, and that’s what you run.

This Government has been saying that there will not be a wealth tax. There will be a wealth tax if Labour wins the election, because it will be a requirement in coalition agreements with both the minor parties. What is that going to look like? Is that going to be a land tax that comes out every year, or are people going to have to shell out $20,000 because they own a property worth $1 million? No one knows what that’s going to look like.

Kiwi families are really struggling, and they are going to struggle even more under this Government. We saw recently there was a tax review. Now, I just want to talk to that because that’s building the foundations for what is going to be a wealth tax. They looked at wealthy New Zealanders and they said they’re paying under 10 percent tax. They’re looking at unrealised capital gains, and there’s no system that ever looks at taxing unrealised capital gains. Then they compare that with your average New Zealander, and what do they look at for that? They looked at PAYE income only and took no consideration of whether they owned a house or whether those people had unrealised capital gains as well. It is an apples comparison with oranges, it is totally disingenuous, it is gaslighting, and it’s setting the way. David Parker won’t announce it, but the Greens and Te Paati Māori will ensure there is a wealth tax under this Government.

Now, we would present an alternative view of this bill. We would make sure that we deliver tax relief to hard-working, taxpaying New Zealand families. We would increase tax brackets in line with inflation. It’s not going to make anyone wealthy, but it will make it a little bit easier for them to get ahead. And under National, when we come into office, someone on the average wage would be $800 better off every year; the average family will be $1,700 better off this year.

Back to the bill. Thank you, Mr Speaker. You didn’t have to say it—you used your hand signal, so I appreciate that. I knew what you were meaning.

We did note around gender equity—around boosting KiwiSaver payments for paid parental leave. Look, I think that’s a pretty good step to take. I think that it actually does address some issues that females face when they’re spending time out of the workforce bearing and rearing children. So you always have to throw the Government a bone, and I will on that front. But that’s about where it ends.

When your normal family’s looking at this, they’re getting poorer every day. They’ve had the prices of fresh fruit and vegetables up over 20 percent. They’ve got big mortgage payments coming up. They’ve probably just re-fixed from 2.25 to 6.35 percent. That’s going to punish them. Nicola Grigg knows it’s going to punish them, I know it’s going to punish them, and this Government is doing nothing to address the cost of living crisis.

National has a plan. We’ve got a well-costed, well - laid-out plan. People have got a very stark contrast when it comes to 14 October. Are they going to vote for the National Party, who is going to put money back in their pockets, that trusts them to spend their money better than the Government does? Or are they going to vote for Labour, who keeps taking money away, thinks they know how it should all be spent, doesn’t give a damn for your average family out there that’s doing it really tough, really hard to make ends meet, gives them nothing back—nothing back for your average, hard-working taxpayer?

They’ve got a very stark contrast and some very clear choices, and I have confidence that the wise people of New Zealand will vote accordingly. I oppose this bill.

I’m pleased to take a call in support of this bill. I’m going to just focus on one issue, and that is the support to Kiwis wanting to take parental leave. It was described by Sam Uffindell, the last speaker, as a female space, but I’m not quite sure that that’s entirely what it is any more. I hope that all parents will take the opportunity for parental leave.

When I was having my own children, there was absolutely no support. I got no support because I’d moved into a job, and it meant that we were absolutely—we had no money in the bank account. When I had my first baby, we had to borrow $500, and so I’m really pleased to see this happen.

The stats show that, at the moment, the average savings for a male at 40 in the KiwiSaver scheme is $43,000 and the average savings for a female at the same time is $36,000. There it is—a stark contrast.

Once you start seeing where that money goes, it’s a significant gap at that point when you retire, and I’d just remind the public that the New Zealand National Party would like to move that retirement date up, and so people would actually have longer until that time happens. They’ll be working longer, and that is also something that our party—the Labour Party—is committed not to have happening. We’re actually keeping that at 65 years, which makes a big difference if you’re in work and in manual work, etc.

So I just wanted to focus on that one thing—that’s the gap. That gap will be closed by this. This will be a big help in terms of closing that gap. That’s incredibly important for people who take on the parental leave responsibilities for their children, and that’s better for our children and our families and New Zealand.

Thank you, Mr Speaker. We’ve heard that the National Party is opposing this bill. There is an important part of this bill which talks about the tax rollover relief in response to recent flood events. The bill would mean that the rollover would ensure relief for assets destroyed or made economically useless by the flood and by the cyclone. Now this bill, the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill, ensures that the proposed rollover relief will be to defer the recognition of income from the receipt of insurance proceeds for destroyed assets, provided that there is a commitment to rebuild or replace the destroyed revenue account buildings or depreciable assets.

So for the National Party to stand here today and say they oppose this bill when this is something that is so significant for Hawke’s Bay, it just shows how much noise and negativity the National Party is prepared to play for politics. Now, this noise that’s been coming from the National Party reminds me more that, actually, the National Party loves tax. They love tax so much and talking about tax so much. And, as a business owner, I can remember very, very well when the National Party said they would not increase tax, and they came straight in and increased GST. That’s what the National Party does. You can never ever trust the National Party on tax. They love tax, and they’ll tax New Zealanders till the cows come home. Thank you; I commend this bill to the House.

Kia ora, and thanks for this opportunity to speak on the taxation bill in the name of Minister Parker. Yesterday, we expected that the Budget would bring a plan for economic growth, some fiscal discipline, and, importantly, some tax relief. Today, I cannot see any of those three matters being satisfied. Instead, we will keep on spending—now nearly $1.2 billion extra weekly than the Government did in 2017.

Now, taxation law was a favourite course at Victoria University law school. I didn’t take it, as I was far more interested in Anton Piller orders and Mareva injunctions, along with human rights. Professor John Prebble, the brother of a well-known politician of this House and the father of a well-known actress, was the eminent tax lecturer and taught the tax basics brilliantly, often with baroque music playing in the background—tax and opera, all in one. Prebble would have given Thomas Piketty a run for his money in any New Zealand tax debate, and the Minister and I would be the flies on the wall for that one.

It was, therefore, illuminating to hear the tax and trust lectures provided by our Government colleagues today. I’d expected to hear about the Quistclose trust and observations around the equity courts as well there too, but, alas, no. We, instead, heard about the knights of the Crusades. Today we have various ministerial knights, and, as the dark knight of Hamilton West, I say it is a very dark night for the average voter.

I also just heard an astonishing observation from my educated Green colleague that taxes pay for things. I always thought people in Government pay for things using taxes. And when the Government wants to pay for lots of unnecessary things, they start chasing hard-working people like Mr Bayly over here for tax.

Now, a core value of the National Party is competitive enterprise and rewards for achievement—work hard; get the rewards. As I grew up in the rural surrounds of Rangitīkei, Mr McKelvie, I saw where hard work took people. It took them to a happy place. People like John McManaway and his whānau in Rata farming dairy cows, people like Shane Ratima, of the local shearing gang in Hunterville. Those who did not work generally found it very hard to be happy or even satisfied; instead they found it very easy to fritter away life and love—ditto 2023, whānau. Our Government is spending over a billion—nearly $1.2 billion—a week more than in 2017, and yet with worse outcomes across health, education, Māori, justice, social development—yada, yada, yada.

The core behaviour of the current Government means that you don’t need to work hard and you still get the rewards. In the words of the famous Budweiser advertisement, “Whassup?” “One tax, two tax, app tax more. Flatulence tax, jobs tax, ute tax more.”

This Government is trying to sneak all sorts of tax past the Opposition goalie. This bill is not about fairness; it is about the subjective views on fairness by the Government. Because if you want to have a real debate about fairness, let’s start that debate. That debate does not start with the Crusades, people. That debate starts with outcomes, and at the moment, we’re not getting many.

It won’t surprise you that the National Party opposes this bill, and so do I. I thoroughly enjoyed the pleasant musings of my uncles Bayly and Watts, and my Chiefs brother Uffindell, last seen chasing the Hurricanes game. There’s no tax relief this week for hard-working New Zealanders—hard-working Māori, hard-working Kiwis, hard-working people in Invercargill, Selwyn, Waimakariri, Tauranga, or Auckland Central. Instead, it’s more tax to feed the ongoing addiction to spending, like $3 billion yesterday for 3,000 houses. Wow! A million dollars a house. It must be in Tukituki or Upper Harbour. There’s not a single cent of income relief in the bread and butter Budget, notwithstanding increased costs of living, the jacked-up interest rates, and the honey and jam given to kapa haka throughout the country—albeit it took my Māori caucus colleagues in Government six years to act like Mr Mistoffelees and conjure an increase to that important take [issue], and all in advance of the election.

Not once in six Budgets has Labour delivered income tax relief, and that is a crying shame. Kiwis have not been rewarded for their hard work through adjustment to tax. Instead, they are given a few more kongakonga, maramara—crumbs—to keep moving. Many of our constituents will get up and go to work next Monday at 8 a.m. through to lunch time on Tuesday—maybe to dinner time on Tuesday—with the knowledge that all the money that they work for in those two days—standing in a pit milking cows, washing down the yards, working at the wānanga to give second-chance learners a go, helping patients who are waiting for hours in ambulances and hospitals, or by driving the Mainfreight truck to the local depot and drop-offs, for the Government to use at that whim. The hard-working people of Hamilton West and sometimes Hamilton East—where’s David Bennett?—tell me that inflation is the thief in the night. I reply that this Government is a thief from the day. Our front pockets have been ripped by inflation and our back pockets by this Government. Kei te hē—it’s wrong.

In October 2023, the blue waka—maybe with friends—will deal with those two thieves, recalibrating the presence of inflation and the role of Government. We will adjust tax brackets for inflation. We have a difference of opinion, Minister, you and I. National believes that the money you earn is your money, and we have the privilege to use that money prudently to provide needed services, whereas this Government believes that the money you earn is actually their money, and you have the privilege to keep some of it for your whānau.

DEPUTY SPEAKER: Mr Potaka, there’s nothing about the National Party manifesto in the bill, so can we just come back to the bill.

TAMA POTAKA: Increasing the tax rate from 33 to 39 percent is yet another tax grab. This is from a team who said, “No, we won’t change tax before the election.” I acknowledge the exclusions and exemptions set out in the bill, and there are some minor items that we can support therein, although I believe they could be explained far more eloquently—save it for the select committee. Note this: disabled over-65s need a carve-out as well.

The change to the tax rate will be taken to select committee, and I can’t wait to be invited to that discussion. I look forward to the Government’s engagement of many iwi and Māori trusts who are very, very happy on 33 percent tax rates, and at 39 percent, let’s see how the Māori caucus fares in front of those kaumātua and rangatira—

Hon Peeni Henare: Oh, come on.

TAMA POTAKA: —given the dire economic situation we have. As a final comment for the lecturer on the other side today, there is a little rule in equity, if you study that, and any student of trust law will know this: come to equity with clean hands. In this instance, the Government’s hands are very unclean with tax dirt. National opposes this bill. Why tax hard-working Kiwis more to justify bigger debt? Why tax hard-working New Zealanders to feed more unambitious spending? The best step right now is to reduce tax and unreasonable spending, and adjust the tax brackets, as National has suggested. Kia ora tātou.

Kia ora. Thank you, Mr Speaker. It’s my pleasure to take this last call on the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill. This bill addresses various tax-related issues with the aim of making our tax system fairer. And one thing I just want to touch on today is one of the features of the bill, the introduction of the global minimum tax of 15 percent for large multinational enterprises. This is an initiative developed by the OECD and endorsed by more than 130 countries. Its aim is to reduce the ability of large multinationals to make different Governments compete against each other to lower their tax rate and leading, essentially, to a race to the bottom.

A recent Oxfam report found that tax competition among countries and the growth in the use of tax havens has meant that States find it increasingly difficult to tax income from capital. Consequently, either tax revenue has declined, or the burden of tax has shifted more heavily on to labour.

Andrew Bayly: Say it like you mean it.

DAN ROSEWARNE: Ultimately, the most harm falls on to the public, Mr Bayly, which has faced the triple impacts of a higher tax burden, declining public goods and services, and having to subsidise corporate profits and private wealth. So, it’s a good bill, and I commend it to the House.

The question is, That the Taxation (Annual Rates for 2023-24, Multinational Tax, and Remedial Matters) Bill be considered by the Finance and Expenditure Committee.

Motion agreed to.

Bill referred to the Finance and Expenditure Committee.