Goods and Services Tax (Removing GST from Food) Amendment Bill

Kia ora, members. The House is resumed. Just before the dinner break, we were debating the Goods and Services Tax (Removing GST from Food) Amendment Bill.

Thank you, Mr Speaker. The ACT Party will be opposing this bill today. This is poor policy for many reasons, but not limited to the constant legal battles and lobbying as to what might be considered fresh food or not—

Hon Dr Duncan Webb: You’d know about lobbying!

SIMON COURT: —as seen in other countries like the UK and Australia. Dr Webb, no one has to lobby the ACT Party with good ideas, OK? Let’s just be clear about that. Giving a tax cut to some of our highest-earning duopolistic companies, the supermarket companies, it’s clear the full savings won’t be passed on to consumers. All the evidence says that. Opening the floodgates next to what else could be GST-exempt—once you exempt GST on a few items, what next? Dental treatment? Wheelchairs? There’s no longer a justification against any further campaigns to remove GST from items on the basis of necessity.

The beauty of New Zealand’s GST scheme is its simplicity, something mentioned by extensive reviews of the UK system—

Rawiri Waititi: Stinks of privilege.

SIMON COURT: —and this is at risk by giving certain goods GST-free status. The gentleman says that campaigning for a single GST applying to everything stinks of privilege. Well, when you look at removing GST from food, what might be the implications, Mr Waititi? Food for human consumption: live animals intended for human consumption at the place of purchase is one of the definitions. I didn’t realise people ate live animals at the place of consumption, but maybe they will if your bill was to pass. What about any ingredient or any other constituent of food and drink, anything intended to be mixed with or added to food and drink? Does that mean the tonic that I add to my gin? Mr Waititi, your bill is flawed—it is flawed.

Who would be the main beneficiaries? Well, consumers might have cheaper food at the margins, but supermarkets would, effectively, get a 15 percent income tax cut, and, of course, all the lawyers who would make a big business arguing what is food, Mr Waititi. The costs to the Crown’s tax revenue would be significant. New Zealanders would get a short-term reduction in the price of food rather than any real addressing of the underlying concerns, which are the competition issues which increase our food prices.

One way we might address competition issues is through reform of the Resource Management Act to remove some of the economic tests that would currently apply if you wanted to open a new supermarket down the road where there’s an existing supermarket. Did you know, Mr Waititi, that if you want to get a resource consent to open a supermarket—

ASSISTANT SPEAKER (Teanau Tuiono): If the member could direct his comments to the front, to me.

SIMON COURT: Certainly, Mr Speaker. Did the Speaker know that if you wanted to get a resource consent for a supermarket down the road, you would have to prove that your new supermarket, Mr Speaker, would not interfere with the business of the existing supermarket?

Hon David Parker: That’s not correct.

SIMON COURT: That is completely nonsensical, Mr Parker, and you know it. What did the Tax Working Group, led by that great champion of financial stability former finance Minister Michael Cullen say about it? He said, “only 30 per cent of the benefit of removing GST from fruit and vegetables will be passed through to consumers in the form of lower prices, with supermarkets keeping the rest.” In 2009, France reduced their VAT rate on restaurant service from 19.6 to 5.5 percent, but only 45 percent of that rate cut ended up being passed through to lower consumer prices. In 2010, in Germany, the VAT on hotels, guest houses, and campsites was reduced from 19 to 7 percent, but only 28.4 percent of those savings were passed through to consumers.

This policy, Mr Waititi, Mr Speaker, is nothing but an act of desperation from a visionless, TikTok-driven party—absolutely empty of ideas, no idea how to deliver real value to New Zealanders. ACT will not support this TikTok-driven bill.

On the subject of TikTok, the Hon Shane Jones—apologies, Hon Shane Jones; I had to.

Some people who desire to be stars are better staying behind the stable door. In the animal kingdom, a mayfly is an insect that lasts for one day; it is born, and then it perishes, and that will be the outcome for this bill—it will be addressed, it will be voted upon, and it will go the way of the mayfly.

But we should acknowledge the honourable member and the Māori Party for bringing to the attention of the House the importance of the cost of living. It may actually have occurred to them that so much of what they’ve had to say has been copied out of the New Zealand First manifesto, because—now, let me think. Please highlight that the Māori Party, like magpies, have sought to take shiny items from the New Zealand First manifesto. But manifestos are dynamic; they evolve, they change depending on the vicissitudes and the challenges of the time, and we have inordinately serious challenges of an economic character, which is why we need to draw the line at supporting legislation that is vague. It’ll be virtually impossible to ascertain is cocoa chocolate, is chocolate cocoa? It could be that in Australia, there are distinctions, but we’ve been advised on numerous occasions that their GST is not as clean and it’s not as rational as ours.

But what are the other ways that we can actually deal with the problem? I think this is where the Māori Party is woefully short of anything that can be contributed, other than the predictable narrative that it’s all the fault of Captain Cook. So let’s focus our attention on what the specific interventions are that can be done and actually remind our own people, in terms of te ao Māori, who come from a rich tradition of ahuwhenua—of agriculture—who come from a rich tradition of food gathering, who come from a rich tradition of food production, much of which has been allowed to slip away as the sense of agency has been stripped from modern Māori, that many of them have been conditioned to look to the tax system, to look to Parliament, to look to Wellington to address a number of the challenges of how to eat in a healthy vein, how to look after themselves, and how to make smart choices about lifestyle. Regulation, tax system, and Parliament will never address or never replace the sense of responsibility. Of course, that’s actually what rangatiratanga means: taking responsibility for the lifestyle choices that you decide to make. Don’t bother looking in dusty heaps of manuscripts in museums or old photos on the wall of the marae; think about the people today and what responsibilities they have to ensure that their tamariki, their family, and their own sense of ownership to grow your own kai, to support kaupapa such as māra kai and mahinga kai.

Now, in the month of April, I will be returning back to Tai Tokerau, and the thick end of a quarter of an acre of not only kūmara but native peruperu potatoes—a number of names that I won’t repeat in the Whare because they could be misconstrued, but that’s a small example of how there’s a practical response to relying on convenience food. Don’t make it easier; make it more challenging for people to stand up and take responsibility for lifestyle choices. It’s not the total answer, but it’s a key answer in the sense that the Māori Party is focused on the ability of whānau to feed themselves and clothe themselves. When you bring a child into this world, it is your responsibility primarily to look after that child. Secondly, don’t look to the State or don’t deploy weapons of colonisation to overlook the fact the responsibility is not the tax system, the responsibility is not Wellington. For those reasons, the GST amendments proposed in this bill are going the way of the insect known as the mayfly: haere ki te pō.

I would like to begin by acknowledging the reason that this bill was brought to the House, and that is the desire of Mr Rawiri Waititi and the Māori Party to address the cost of living, to find some way of helping with the cost of living. We’ve been promised help with the cost of living, but it hasn’t eventuated yet. And, of course, we do need some way to help people, but we do not think that taking GST off kai is going to get the right result.

I just want to take the House through some numbers and some evidence on this, to explain why we think there are better ways to address the cost of living. So, back in 2018, in the midst of all its paperwork, the Tax Working Group did produce a background note on GST, and, in it, it very explicitly examined the possibility of taking GST off kai, and looked at some of the numbers. They estimated which households would get a benefit from it. Now, by the time that’s adjusted for food price inflation since 2018, there’s been about a 28 percent food price inflation. A decile 1 household—so that’s the lowest-wealth 10 percent of our households—would, in today’s terms, get maybe about $19 a week benefit from taking GST off kai; a decile 2 household would actually get $18 a week; and a decile 3 household would get $23 a week. That’s the kind of benefit that would flow to low-income households from taking GST off kai. But a decile 8 household would get $46 a week, and a decile 9 household would get $53 a week, and a decile 10 household would get $68 a week. The benefits of this change would flow primarily to high-income households. That’s the evidence of the Tax Working Group in 2018.

In fact, that group suggested the better way to help low-income households to meet the cost of living was through targeted means—and these are some of the means that we had put in place in the Government—such as indexing benefits to wages, such as providing lunches in schools, such as providing low-cost public transport. Maybe it’s even things like money for rural roads. There are better ways to spend that money.

The actual fiscal cost of doing this, of taking GST off food, would be—again, in today’s terms—about $3.3 billion to $3.9 billion. That $3.3 billion is the $2.6 billion that the Tax Working Group estimated back in 2018, adjusted for food price inflation since then. The $3.9 billion is a library re-estimate. That’s a lot of money. That’s $3.9 billion in any fiscal year, and that could be used for a lot of purposes, and specifically directed towards low-income families.

So because the benefit-flows from this bill, alas, go mostly to higher-income households, and because the way of helping lower-income households could best be achieved through targeted measures, the Labour Party does not support this bill. That’s our primary reason.

There are some other reasons as to why we cannot support the bill. But rather than going through them, I do just want to express one regret that this evening we’ll be voting against the bill, in that it doesn’t get to select committee. I think there is actually an unexamined assumption around taking GST off some products and not others, and that is that it is difficult to do and it has very high compliance costs. Now, certainly that’s the argument that’s always put forward when this is suggested, but I do think that’s an unexamined assumption since GST was first put in place on 1 October 1986. I think it would be worth examining that assumption again thoroughly. The Tax Working Group did a bit of work on it, but I would like to see some work put into that at some stage, because I can see why people do get upset and feel that we oughtn’t have tax on a necessity like food. So perhaps we should be looking at that at some stage. However, as I said, that’s a regret that we’ll be voting against this bill, that we won’t be able to test that assumption. But what we will always support is assisting low-income families, and that is our major reason for turning this particular bill down.

Well, I welcome this opportunity to be able to speak against this bill. There’s been a lot of conversation and discussion tonight around the cost of living crisis, because we are in a cost of living crisis. Our economy is fragile and we need to strengthen it and get it back on track. On this side of the House, we do that by being good fiscal managers and managing the books properly, looking at productivity, and realising that, in New Zealand, we actually have an effective, simple, fair tax system that we do not need to change by removing GST from food.

But there are other ways we do need to change it, and that is to ensure that hard-working New Zealanders can keep more of what they earn. On that side of the House, they have used hard-working New Zealanders as a bottomless ATM. Well, we have stopped that. We have put a stop to that, already making announcements to get rid of the ute tax, the fuel tax, and we’re bringing back the brightline test back to two years and restoring interest deductibility, because these are practical solutions, practical policies that are going to get this economy back on track by focusing on less tax and more productivity to strengthen our economy.

But, today, we have had a bill that has been introduced to this House, which is once again going to treat New Zealanders like a bottomless ATM machine—we absolutely oppose this bill. Taking GST off food will cost the Crown about $2.6 billion, it is estimated out there. In a cost of living crisis where there’s been a lot of spending, we need to bring it back; rein it in.

When we look at this, it’s not actually the ones that are the most deprived that are going to get the most benefit out of this bill, because the research has proven that the administrative costs and the complexity means that it could be that the supermarkets are going to be the ones that, basically, benefit from this—and not directly going into the consumers’ pockets, where it needs to be going. So this actually raises concerns about the effectiveness and the justification of this spending. It is not the way to reduce the cost of living. The way to do that is by directly assisting hard-working New Zealanders with tax relief, which we will see more of later this year.

But removing GST from food will bring a whole lot of administrative costs. I think it was interesting that the member the Hon Dr Deborah Russell earlier spoke about the Tax Working Group—I mean, we don’t really like to bring up those working groups; there was quite a few of them. But this particular one did make some quite interesting comments around GST. Basically, they said that it was a bad idea. We should be looking at that and taking that advice, because it is a bad idea, where we would see more administrative costs, more complexity, and that money not actually going into the pockets of the people who really need it, because the ones that would benefit more are the ones that are going to be spending more on groceries at the supermarket, not the ones that aren’t going to be spending as much. So, broadly, it is not a good idea.

I come from a region which produces a lot of food: Tukituki, Hawke’s Bay. It’s the food-producing region of New Zealand. But the way to bring food prices down is to get on top of inflation, strengthen the economy, and make it easier for the businesses to produce the food—that is, less red tape, less regulation, so that we can actually bring the cost of food down. At the moment, we are seeing inflation high, but we need to bring that down. So we need to refocus our priorities on strengthening the economy. It is not removing GST off food. It is a bad idea—that is what the tax groups have recommended. So, today, I do not support this bill.

Tēnā koe e te Pīka, thank you very much for the opportunity to take this call. I’m really pleased to have it, because this is a bill which is about what we should be talking about in this Parliament: about bringing down the cost of living for people, about our tax system, and about the ways to make it fair.

I have here a proposal that Labour members seek to work on with members of the Government, with all parties around this House, on a select committee inquiry into food pricing, because every member of this House has given a speech tonight which has identified a huge problem and a weakness, a structural weakness, in our economy about the price of food. We need to be able to dig into those details. We need to understand why the price of food and the profits that supermarkets are making do not match up, and why New Zealanders are paying more than their international counterparts for food. We need an enduring solution to the high prices that New Zealanders are paying, and we need that to be cross-partisan and something we can all dig into. I welcome support of all parties to open this inquiry at a select committee level about why it is that New Zealanders are paying too much.

Now, I said I wanted to talk about tax, and I am keen to get into that tonight because this is a bill which would seek to change our tax system in a couple of ways, which my colleagues have discussed tonight. Because tax is important, if you want a New Zealand where every person is living the kind of good life that they envision for themselves, no matter who they are, where they’re from in the country, and for that to happen, we need high-quality public services that are accessible to everyone and that work for everyone, that meet them where they are at. To be able to do that, to have the kind of social welfare system which catches people and it’s a genuine safety net, to be able to have a healthcare system which is responsive to people’s needs, to have the transformative social elevator that is education in New Zealand, we need to be able to raise taxes from a broad base. And in New Zealand, we are not doing that in the way that we should be doing.

The Māori Party’s bill tonight is a great opportunity to be able to talk about whether their solution would do that. Labour members do not think it would do that in the way that we would hope to, because it would result in less tax take, because Labour has always believed in a progressive tax system and has been committed to a fair, transparent one that promotes social equity, sustainability, and long-term economic growth. That kind of tax system would levy everyone fairly and progressively. It would levy more tax to pay for the kind of redistributive politics that Labour and the Māori Party champion in this House for everyone to be able to access. We should not, in the kind of economic environment that the National Government is promoting, be promoting a tax cut, which this is. Instead, we need to be talking about how we levy everyone fairly to pay for those social services that people deeply rely upon, that our whaikaha families and their carers rely upon and need, that Ministers need to be able to go to the Budget and say we need more money to pay for these social services that mums and dads around the country are crying out for today because they are being taken away from them. That is the kind of tax system that we need to be talking about.

But we also need to have, at a select committee, cross-partisan agreement about the fact that, yes, the Māori Party have raised that our people, everyone in New Zealand, are paying too much for food. The answer is not that the Government shouldn’t take its share of food, that we should not pay our way as part of a goods and services tax that is levied very cheaply across everyone, and includes people like tourists and visitors to this country who wouldn’t otherwise pay tax. We need to be having a conversation around why it is possible for super-profits to be made in our grocery and food sector, that New Zealand has one of the least effective markets for consumers of groceries in the world, that our supermarkets—which are, in fact, Australian supermarkets—are 20 times more profitable than their European counterparts, which exist in a much more competitive market. We need to take those issues seriously, and that’s why we should be debating that at select committee.

It’s not the solution to the problem to take tax off things like food and grocery; it’s the solution to actually look at why the duopoly and luxurious market conditions that the supermarkets enjoy have been able to go on for so long. Labour began this work; if we had been able to finish that work, we would be in a different situation than we are today. We need to keep going on it, and it cannot be something which is treated as a political football. So I welcome every party in this House’s support when Labour members present to the select committee our food pricing inquiry.

I stand in front of all of you today to oppose the Goods and Services Tax (Removing GST from Food) Amendment Bill in its first reading. At its first glance, and I invite you to read the title again, it sounds like it’s making an attempt to address a pressing issue, which—every single member tonight and this afternoon has addressed it, too—is to provide financial relief for the high cost of living pressure in our country that our people are experiencing. I must put out loud and clear—and, eventually, in black and white in the Hansard—that this member’s proposal to amend our current effective, fair Goods and Services Tax Act is ambitious; however, it is very dangerous to New Zealand’s tax system, not only just now but also in the long run.

I don’t believe any member in this House or any families in New Zealand watching TV right now or online watching would disagree about the reality we are in, which is the high cost of living pressure and crisis that we’re in. All of our families experience and feel the financial burdens and pain when they go into a supermarket, having to choose between an apple or a banana, or having to choose and downgrade for a different brand of products. Do you know why the people of New Zealand have made their choice in October 2023? It is precisely because they’ve lost hope for the last Government, who had tried for six years—six years—to do something for New Zealand, but they didn’t. So the people of New Zealand actually made their choices by voting for a National-led Government to bring our country back on track, to bring down the cost of living, to bring down inflation, to fix the economy, to grow our economy, and to get our country and our people back on track.

I am definitely opposing this amendment in front of you today because this amendment simply does not address the intention to help cost of living pressure for any of New Zealand’s families, not in the short term and definitely not in the longer term. My first reason is very, very simple. This amendment to the House today to change the current tax code in order to charge GST according to the different products and kinds of products in the market simply is just not going to work. It’s going to be an overhaul of word games. Let me ask who in this House—members and Speaker—needs a new definition of what “food” is. We know what food is. We don’t need a separate tax definition to tell us what food means, so I am opposed to this overhaul of word game that the member is proposing.

Secondly, I oppose this bill because while it seems like it intends to provide relief for families who go through the pressure and the painful points when they’re in the supermarket, I encourage members and all our voters and constituents watching us to learn from other countries who have already adopted or are adopting similar tax policies. I encourage you to have a look at the UK.

I remember, going through university, that my tax law professor said to our class once, “There are only two things that are certain in this world: death and tax.”, and it should keep it that way—it should be death and tax. Tax should be simple and easy to understand. It should be effective. It should be fair. We do not have to go into the restaurant or the supermarket to understand that “Oh, this is taxable, but this is hot, and therefore this is taxable. But this is cold—oh, I’m sorry, this is not taxable.” This is not the situation and not the thing that New Zealand families need.

I am opposing this bill before the House because I believe a National-led Government has better policies and better tools to bring our country back on track. That includes working on improving the productivity of New Zealand sectors and New Zealand’s workforce. That includes increasing trade, and that is why we are talking actively on free-trade agreements with other regions and countries. We are talking about better technologies, so that our people, our tradies, and our companies can have higher profit return, and, therefore, pay higher wages for their employees. We’re encouraging people to look into baking a bigger cake so that every single New Zealander can have more to share. So, therefore, I oppose this bill.

I do want to acknowledge the Government over the last few speeches—you’ve gone all the way through to the end of them! I must say, under urgency, you might have done a minute or not even a minute. But I think that has to be acknowledged, that, tonight, you’ve gone all the way through to the end of your five minutes or your 10 minutes. Well done—well done.

Pō ngā rā, pō ngā rā. Ka tataki mai te Whare o ngā ture. Ka whiria te Māori, ka whiria. Ngau ōna reiti, ngau ōna tāke, a ha ha. Tē taea te ueue—the shadows fall, the shadows fall. There is chattering in Parliament, and Māori are being plaited as a rope. Its rates and its taxes are biting, ah ha ha. Its teeth cannot be withdrawn. Alas, the kaupapa we talk to this evening.

I heard from this side of the House that $2.6 billion will be lost if we were to take GST off food, but you want to give $3 billion in tax cuts to landlords—absolutely makes no sense to me. This is a call to those who have voted against this bill this evening, to the middle New Zealand, that you continue to seek support by. Just remember that New Zealand wouldn’t be an isolated case to take GST off food; Canada, Australia, Mexico, Ireland, and the UK have all done it. There are examples out there already, but let’s get down to the nitty-gritty.

Our people that walk into those supermarkets are having to return things on to the shelves. They have to choose whether they’re going to fill the car up with petrol or to put food on the table or to pay the bill. It’s a sad situation out there. Under urgency, we have done nothing to close the gap between the rich and the poor. We have done nothing for those who are struggling out there; it’s been to undo everything. But what are we actually doing in this House to start looking after people?

We did a questionnaire on one of my social media pages, where we asked people how much they were paying for GST—what was the average cost that they were paying in a supermarket. The average was $400; $80 a week on GST. That’s $320 a month. That’s $3,840 per year that they would keep in their pocket. That’s seven weeks of free food. That’s what we’re talking about here. This is the reality. You can talk about all the other things you’ve talked about—administrative costs, there’s going to be huge tax implications. Rubbish. If you were to put more effort into chasing down tax evaders who are costing this country $7 billion a year, you’d make a hell of a lot more money than on regressive tax like GST on kai.

What is clear to Te Pāti Māori, and our whānau living in poverty, is that everybody against this bill is blinded by their privilege. So don’t anyone in this House come to us to talk about lifting our people and whānau out of poverty, because today you have committed our whānau to it. This was an opportunity for tangata Tiriti to stand with the only tangata whenua party in this House. So will the real tangata Tiritis please stand up?

We will remember this; our people will remember this. This is a sad day because this Government has got no legislation coming up we’ve heard; and that you have an opportunity—you have an opportunity—to start looking at—not you, Mr Speaker—we have an opportunity to come up with solutions. Not and/or solutions, not either/or solutions; and/and solutions.

GST wasn’t the only back-breaker for this particular issue, on poverty—absolutely not. But it’s the beginning, to look at resetting what a fairer tax system looks like and not continue a regressive tax system that continues to punish the poor; that continues to allow our mothers and our nannies and papas who cannot afford the food in supermarkets to have to put those things back. It’s a sad reality, and this House has turned their backs on trying to close the inequities and the poverty gap for our people. Today is a sad day. Te Pāti Māori can unequivocally say that we are the only party in the middle that is willing to run these types of kaupapa up the guts to ensure that there is a voice for those have-nots. Kia ora tātou.