Taxation (Budget Measures) Bill

Members, we now come to the debate on clauses 1 and 2, the title and commencement.

I move, That debate on this question now close.

Thank you, Madam Chair. I just find that extraordinary that the first thing a member of the Government can do is stand up and seek a closure without giving the Opposition so much as a look-in. It just reflects very poorly on this Government.

In fact, there is a matter that I wanted to just raise with the Minister around the commencement, because the commencement, in fact, is quite a complex piece of legislation. It’s quite unusual. Clause 2(7) and (8) both relate to section 44(2) of the Student Loan Scheme Act. It’s a really awkward—and I actually raised this with the Minister and he sort of batted me away by saying it’s about it being five years long, and I had to dig around and actually find what he meant by that. And what he actually meant—and it would have been helpful if he’d been a bit clearer—is that clause 44(2) commences on 1 April 2025 and then clause 3, in fact, which commences on 1 April 2030, which is an extremely long commencement date, has the effect of returning to the status quo ex-ante.

Now, I’ve got a number of questions around that. The first is: why on earth—I mean, what kind of bizarre drafting is that? I know that the IRD draft its own bills, but, firstly, a commencement that is more than five years away is not good legislative practice—

💬 James Meager: OK, let’s go, let’s have a look at that.

No, have a look at the legislative design—

💬 Hon Members: That’s a leadership tie.

Mr Meager, if you’ve got something to say, just stand up and take an actual call. The fact of the matter is it’s very poor legislative practice to have an amendment that—and the other thing is, you know, we were genuinely perplexed by this, and it’s a strange bit of drafting where you actually have to cross-refer to the commencement to understand it. And it would be very useful to have some sign-posting going on there with it.

I guess the other question is: why is it that he’s chosen this five-year period? In our view, on this side of the Chamber, we don’t think the cost of our student loans should be increased for our overseas New Zealanders. But, at the same time, why are you time-binding it? Because, in fact, it would be a much easier thing to do to manage this in a quite different way—leave it there until you need to revisit it, because it may well be that in five years’ time, the rate is adequately set at 1.74, and that, in fact, the policy reasons for the change, at least in your mind, still exist. So why is it that you’ve got this very strange change and then repeal in the same—it’s, essentially, a kind of sunset clause. It would have been much easier, in section 44(2), to actually sit there and say that, for five years, the rate is 1.74, after which it reverts to 0.74. That would be a much cleaner and tidier way to do it, rather than actually having this kind of circular framework there.

So, in terms of that commencement, I’m not sure I’ve ever seen anything which does an effective repeal by having two commencements for different subsections—it seems a very extraordinary way to do it. So, as I take my seat, I’d be very interested to know the Minister’s response to that.

Thank you very much, Madam Chair. Look, I won’t indulge on why that member in particular is generally perplexed—probably something that’s outside of the scope of the bill, but it probably would be worth further consideration at another point. The changes in regards to clause 2 in terms of the commencement date are as has been outlined. There are two aspects. We are making a change to bring in a change in interest rates, which will occur on 1 April 2025 in order to increase it. And then on 1 April 2030, we are reverting back and removing that 1 percent increase.

The purpose of the overarching adjustment to deal with the increase in the interest rate is to deal with the unique timing circumstance in regards to the interest rates and the inflationary environment. On this side of the House, we are hopeful and working towards a fiscally sustainable plan that will reduce inflation, and I appreciate, again, that might not have been the case on the other side, but that is what we do think, and we do believe that in five years from now, that will provide adequate time for what we’re seeing in terms of a unique circumstance to no longer be the case.

In regards to reducing the time of this House in the future, having that clause, in effect, revert back, avoids the need to have to come back and waste this House’s time.

Thank you, Madam Chair. First of all, I would like to thank the Minister of Revenue for being able to be available through this whole process. I have a question around the commencement date, and I know that we talked about it before as part of Part 5. But I want to just check in terms of the commencement date—and this is clause 2. I’ve got two questions. Let’s start with clause 2(6), which says, “Sections 41, 42, and 43 come into force on 1 April 2021.”

So my question to the Minister of Revenue is, I guess, two-pronged—one and one. It’s the retrospective nature of this clause coming in, and I guess No. 2 is more around the semantics of whether it is general practice for us to use a simple present tense in that case, and not a past tense—a simple past or a present perfect. So I would like to get some clarification on that from the Minister. The second question I have is around—

💬 Hon Jan Tinetti: They don’t teach grammar in schools these days!

My background is in linguistics—I’m sorry! The second question is around subclauses (7) and (8). As part of Part 5, we talked about the fact that the student loans are going to be for a five-year period. I would like to have some clarification from the Minister—and, in particular, for subclause (7), where it says that it comes into force on 1 April 2025—on whether there has been any discussion or any modelling done on why that was pushed out to 2025, as opposed to 2024 or 2026 or any of the other dates. So clarification on those two points would be great.

Thank you, Madam Chair. I do want to speak to the commencement clause, and, in particular, I want to speak to this because—well, I think we really need to understand what’s going on here.

We had a discussion when we were on Part 4—now, Part 4 comes into force on 1 April 2025, and it’s the part that contains all the measures around taxes like employer superannuation contribution tax and fringe benefit tax, and so on; compared to Part 3, which comes into force on 31 July 2024, and, of course, again, various clauses and things like that. There’s all sorts of different dates floating around in this bill. I think, because of the complexity of all the different sorts of dates floating around in this bill, we had this quite extraordinary way of structuring the bill. And it really comes into close relief when you look at this commencement clause.

The bill was structured in this extraordinary way, where instead of structuring it, as is usual in a tax bill, with Part 1 dealing with amendments to the Income Tax Act, and Part 2 might be the amendments to the Tax Administration Act, and Part 3 might be—all those sorts of things, which would be a pretty standard way of dealing with a tax bill, kind of thematically—this bill is structured in a way I’ve never seen a bill structured. It’s structured according to the commencement dates. So Part 1 is all the amendments which come into force on 1 April 2024. Part 2 is all the amendments which come into force on 1 July 2024. Part 3 is 31 July 2024. Part 4 is 1 April 2025—so a really interesting set of commencement dates, and a very interesting way of structuring the bill.

Now, Madam Speaker, I’m sure you’ve seen commencement clauses for tax bills before. You’ve sat in that Chair for long enough to see some tax bills go through—well, in this House certainly—and they are deeply, deeply complex clauses. Other members of the House will have seen tax bills as well. They are very, very complex clauses. I guess that’s why this bill was structured that way. But I do want to ask the Minister, if the Minister could clarify, why not just the standard commencement clause that goes through and lists each part, part by part?

It’s an extraordinary way to structure a bill. It may be an effective one. Does the Minister intend to do this with future tax bills, or is it just that there’s a particular reason for doing it with this tax bill, to have this very unusual way of structuring the bill itself? And it does, as I said earlier, become highlighted when we look at the commencement clause—so just a word from the Minister on his intentions with respect to future tax bills and why this one was done this way.

I move, That debate on this question now close.

The question is that

Arena Williams’ tabled amendment to clause 1 to insert the words “broken promises” is out of order as not being an objective description of the bill.

The question is that Arena Williams’ tabled amendments to clause 2 to adjust the commencement dates to 31 July 2024, 31 October 2024, 31 October 2024, 31 April 2027, and 31 July 2040 be agreed to.

The question is that Arena Williams’ tabled amendments to clause 2 to adjust the commencement dates to 1 July 2024, 1 October 2024, 1 October 2024, 1 April 2027, and 1 April 2040 be agreed to.

Mr Speaker, the committee has considered the Taxation (Budget Measures) Bill and reports it without amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

This bill is set down for third reading immediately.

Third Reading