Taxation (Budget Measures) Bill (No 2)

Members, we come now to the debate on clauses 1 and 2, “Title” and “Commencement”.

Thank you, Mr Chairman. I’m speaking to an amendment to clause 2, “Commencement”, that will be tabled in a couple of minutes—and here it comes. What this amendment does is it asks that the commencement of the sections that are to do with the Investment Boost be delayed for implementation to 1 April 2026, and the reason for this is because the Government needs time to understand the fiscal risks of what has been put in place.

What has become apparent is this is an uncapped expenditure. It’s listed on page 89 of the Budget Economic and Fiscal Update—the BEFU. What that says is, “The fiscal and economic impacts of Investment Boost are significant and have been based on some assumptions and judgements which have a degree of uncertainty. The modelled impacts use aggregate macroeconomic data as an input together with assumptions on coverage within the tax base, and forecasts of growth in investment. Variations in any of these factors can materially affect the fiscal and economic impacts of the policy.”

I think that over the last 24 hours, it’s just become apparent how broad this category is. It has been confirmed by the Minister of Revenue this morning that everything is into it. What was put in the committee last night is that if someone wanted to bring in a billion-dollar oil and gas rig, they would be eligible for a $200 million tax break without the Government taking any equity share in this. In fact, the Minister, who is bringing another subsidy for the oil and gas industry, was talking yesterday with great pride about how this is a return to Muldoon-style co-investment with industry.

But what has also become apparent—and we’ve seen arguably the country’s most senior tax accountant, John Cuthbertson, this morning saying, “I think everybody is somewhat surprised at the breadth of this particular tax break that is in that.” He is described as being bemused at the inclusion of things like company cars and office buildings, which aren’t even eligible for depreciation these days but are included within this, and the very uncapped nature of this and the fact that the Government doesn’t have a handle on what is going to happen if costs blow out on this.

What we’re seeing is that businesses are being told that they can start spending from yesterday and, basically, they’ll be able to claim this 20 percent. But the Minister of Finance, the Minister in the chair, or indeed the Government has not been able to explain to anyone what happens if costs blow out on this. Is everybody who files, using this, guaranteed that they are going to get it no matter what the costs blow out to?

What everybody is suspecting is that the Government is going to have to do some latter-day patch-up on this and actually put some parameters around this, because, as we’re seeing, it is in the specified fiscal risk section of the BEFU. The Government needs to actually go and do the work around understanding what the cost to New Zealand is going to be. What is the pressure that it is going to put—and the risk that it puts—in terms of Crown expenditure?

That’s why we’re bringing this amendment saying to let’s defer the implementation of this so that the Government can actually go away and do the hard work that is required to get a handle on what the expenditure is going to be, because there have been many questions put to the Government over the last 24 hours. They haven’t been able to answer them, and what we do need to understand is what happens if this does blow out. What is going to happen: are there just going to be cuts elsewhere to pick up the slack on this, or is the Government going to come in and put parameters around it—which would mean that people that have, rightly, gone out and invested, thinking that they were eligible for this 20 percent break, will no longer be eligible, and they’re going to get a nasty surprise when they go to claim their 20 percent. For that reason, we are asking that the Government give the thought that should have been put into this before a policy was announced.

Thank you, Mr Chair. I have a number of questions for the Minister of Revenue regarding clause 2, “Commencement”, as well as clause 1, “Title”. I’m also just noticing that the clock hasn’t quite adjusted yet, but I’m going to start anyway.

In terms of the commencement date, I echo what the previous speaker, the Hon Dr Megan Woods, has mentioned. Particularly, we’re looking at clause 2(2) on the coming into force on 22 May 2025. Understandably, in this House, we’re still on the 22nd, but outside of this House, it’s already on the 23rd. So the idea of the fact that we are making a retrospective application of the legislation never really sits well in the context of how we do things in this House. But I want to check with the Minister: what is so urgent that that date can’t be the day of Royal assent, and it has to be yesterday? How many people have applied, or is the Investment Boost eligible for, that were required to start yesterday and not the day of the Royal assent? I think, constitutionally, that raises a really interesting issue in terms of the retrospectivity of the commencement date. And I wanted to check if the Minister would consider my amendment, which is just to bring it in line to say that, “You know what? Two days doesn’t really affect things all that much.”, unless it’s something that we miss, which we didn’t cover in this debate—in which case, would the Minister consider my amendment, which changes the day of Royal assent?

The second question is around clause 2(4), coming into force on 1 February 2026. I guess some of the other dates—you know, limited understanding of the taxation system, I admit—but 1 July 2025, in terms of the Budget year, and 1 April 2026, in terms of the financial year, that makes sense. But 1 February 2026 as a date doesn’t seem to make that sense and does seem to have a level of opportunity to it in terms of the rate reduction that is going to be introduced. I also have an amendment on this, which I wondered if the Minister would consider.

But finally, going on to the title of this bill, and I understand that the title is “Taxation (Budget Measures) Bill (No 2)”. But, in fact, “Budget Measures”—although it is somewhat a loose description of what this bill does—doesn’t actually capture some of the specificity, as we have discussed throughout this debate around the Investment Boost, around KiwiSaver, around the rate reduction of KiwiSaver, family credits, Best Start. So I have some amendments on this as well, if the Minister wouldn’t mind considering.

But I think, fundamentally, something that we have heard the Minister say over this—and then when we are having this debate under urgency, which means that we didn’t hear from the New Zealand public, and indeed, as we see in the regulatory impact statement, we only heard from three agencies and not even all of the agencies, such as the Ministry for Foreign Affairs and Trade—is the fact that this Budget, we simply do not know this bill, we simply don’t know all of the fish-hooks around it, but it seems to be something that is primarily going to benefit, yet again, the wealthy of this country, as opposed to people who are working and the lowest-earning New Zealanders in Aotearoa New Zealand. So I wonder if the Minister would consider my amendment to the title, which is to replace “Budget Measures” with “National Is Rich and They Are Sorted Bill”? I think this is a more accurate description based on what the Prime Minister himself has said publicly, so this is just an extrapolation of that.

Alternatively, I wonder if the Minister would consider—because the Minister, right at the end of answering my question for the previous part, made it into a thing, where he was like, “If the Greens really care about 16- and 17-year-olds, they will vote for this bill.” But I would challenge that Minister to say that if the Government really cares about 16- and 17-year-olds, they will allow 16- and 17-year-olds to vote. So if they do not allow 16- and 17-year-olds to vote, then what we are doing here is we’re asking the 16- and 17-year-olds of this country to pay for this country without the eligibility to vote under our fundamental constitutional arrangement in the New Zealand Bill of Rights Act. If that is the case, would the Minister consider my amendment, which is changing “Budget Measures” to “We Want 16 and 17 Year Olds to Pay for the Country Just Not to Vote”?

Well, thank you very much, Mr Chair. I won’t be responding to what are not serious suggestions in regards to the title and in regards to clause 1.

In regards to questions regarding the commencement date, and the recommendation by the senior Labour front bench member the Hon Megan Woods that we should look to delay initiatives that will bring economic growth to this country, the answer is no. We will not delay initiatives that will increase economic growth, by a year. And there is no cap or limit, other than the integrity measures outlined in the context of this bill, therefore, there cannot be any cost blowout in the context of this. This will significantly increase economic growth. For the benefit of the member: an increase in productivity leads to increases in income. Increases in income lead to increases in tax revenue. Productivity is good for an economy. Economic growth is good for an economy. This Government does not at all accept any initiative to delay such benefits that will benefit the good people of New Zealand.

Thank you, Mr Chair and thank you, Minister, for letting us know your theory of change, which does sound quite a lot like trickle-down economics. I have a suggestion for a new name for the Taxation (Budget Measures) Bill (No 2). I would not do something frivolous because that is against Standing Orders, so I wouldn’t consider calling it the “Taxation (Paid for by Women) Bill”, or I wouldn’t suggest the “Taxation (Corporate Welfare) Bill”. However, I would like to seriously suggest—following on from some of the other comments—that we just change it to the “Interim Taxation (Budget Measures) Bill” because we have not seen a cost-benefit analysis on any of the three initiatives that have been proposed by this bill.

This is a committee stage; there has been no select committee. One would expect at least a CBAx to be able to test the risk appetite of the Government, the questions around blowout, and the very tenuous links—and this has been brought up by the Minister of Revenue himself in his last contribution and I note how engaged the Government members were—that this is going to help increase productivity and facilitate economic growth.

Now, the economic growth that I think he is alluding to is 1 percent over 20 years, which is hardly ambitious. But in terms of increasing productivity, there is no nexus between the capital investment and the level of productivity that the Minister is claiming is going to lead to the economic growth. Maybe that evidence is there, but we have not seen the cost-benefit analysis. So we do not know whether his assertion is something that can be validated; what the risks are; and also all those questions that have been raised in previous contributions about the equity impacts on marginalised communities, on women, on Māori, and so on. Without that CBAx and without that analysis having been done—and I’m assuming it hasn’t because we have asked repeatedly for that at each stage of this discussion—then it would appear that there are going to be unintended consequences and there is going to be a fix.

So I would ask the Minister, please, if we can call it the “Interim Taxation (Budget Measures) Bill”, then if he could please commit to coming back with the CBAx—maybe today even—so we could finalise it after the analysis has been done and those checks can be done to ensure that there are not going to be changes. Because if I was a betting woman, I would say we will be back here very soon, wasting the House’s time trying to make the changes that will flow from the CBAx that we have not seen.

A regulatory impact statement is available for the member, which will support understanding of the matters raised. Disclosures by officials and analysis, including risks, are included within that document, and I’ve noted that before.

Just before I take the next call, we’ve had a couple of good general debate - type speeches relating to a topic, but we’d now really like to get a little bit more specific, please.

I really want the Minister of Revenue to take this point on board; so far, he hasn’t. We do not know how much this is going to cost. We have been warned by senior tax accountants, by senior thinkers about our economy that this could blow out. It is listed in the fiscal risks that this particular partial expensing could blow out. So here’s the sequence of events: it blows out—seeing as the Minister likes to talk sequences of events—it means the fiscal deficit becomes greater, the need to borrow becomes greater, the Minister then has to come back and change the rules retrospectively. What does that then do to investment certainty? What does that do to investment growth? The Minister needs to take this suggestion very, very seriously that we delay the commencement of this bill.

We agree, Minister, economic growth is a good thing; increases in wages are a good thing; making our country more productive is a good thing. The thing is, there is massive uncertainty around this measure. Any wise investor will be holding their breath for a bit until the Government comes back with a little bit more certainty about it. Take the time, Minister, defer the start date of the partial expensing until 1 April 2026.

I move, That debate on this question now close.

Thank you, Mr Chairman. I thank the Minister of Revenue for his response to my amendment to clause 2, and he raised some very interesting new information to the committee, in the course of his contribution in response to my amendment to clause 2 of this bill.

When asked about how the Government was going to deal with the cost blowout—which has been, in the last 24 hours, very clearly signalled as a risk—the Minister said, and the Minister can correct me if I’ve got the wrong end of the stick, but to paraphrase, it seemed to me that he was saying that there was going to be increased revenue as a consequence of the changes, because of the increases to productivity that partial expensing would bring into play. So, therefore, he did not see a risk to the commencement date, as specified in clause 2 of the bill, being where it is in the text and the reason why he should not support the amendment for us saying that we’d like to have a bit more of a look at it.

I just want to reiterate that nobody is arguing that actually having productivity measures for the country is good; what we have questioned through the course of this debate is whether we’ve looked at all of the options. But now what we’re really concerned about is the suggestions that we’re seeing emerge in the media that the Government may have to come back and narrow the parameters of this measure because of the risk that it poses. This isn’t just Labour saying this; this is a range of commentators that are sharing this concern that there will be businesses that go out, from today, and expense things, rightly thinking that they could claim 20 percent. The Minister is saying that there’s no need to worry about that—and he’s introduced in the debate on this part of the bill—because there will be increased revenue. Now, what we’ve been told in other documentation with this bill is that we can see a 1 percent growth in GDP over 20 years.

I’d like to know from the Minister: what is the modelled increased revenue per year that is going to come because of the lifts in productivity in this bill, and how is that being shown to mitigate the fiscal risk that has already been clearly signalled in the Government’s own Budget Economic and Fiscal Update? The Minister must be basing his claims on some modelling and some knowledge, so I think the committee needs to hear that.

Scott Willis—on title and commencement.

Thank you, Mr Chair. It is a relief because this is the first time I’ve been able to take a call on this bill, and I have had a number of questions that I have wanted to put to the Minister of Revenue. I know we’re on the title and commencement and I do have a suggestion for the Minister, and, in relation to that, one of the questions I wanted to put to the Minister was in relation to the Investment Boost. I wanted to ask whether the Investment Boost would apply to installing, for example, in at-home businesses solar panels, batteries, and electric vehicle (EV) chargers—whether that would apply.

What I have seen in the bill so far is that it certainly does apply to things that the Minister believes will boost economic growth, such as oil and gas exploration, and this is something that really relates to the title that I think is most appropriate for this bill, because we are seeing a Government that is designing policy that wants to take us to a world where we will not be able to provide for our future. This is really where the Government is heading.

My proposal for the Minister—and I hope the Minister will take this seriously, because it is seriously intended—is that in clause 1, “Title”, we replace the words “Budget Measures” with the words “We Love Oil Rigs” and that would make the title the “Taxation (We Love Oil Rigs) Act”.

This is an attempt to accurately describe the Government’s purpose in this bill and this Budget—

💬 Francisco Hernandez: And this Government.

—and this Government—and to make sure this is on the record, and if we really want to get to the guts of it, Minister, we should say it like it is. We should say it like it is. This is about expanding our fossil fuel dedication. This Government has its head in the sand on climate. [Interruption]

CHAIRPERSON (Greg O’Connor): The members opposite might like to save their voices for a closure motion, and I might be able to hear something.

I’d quite like the Minister to consider whether we want to have accurate naming, and, if not, why not. So if the Minister could give me a response, that would be really appreciated.

I have another suggestion following the Minister’s response, and I’m looking forward to hearing from the Minister. I’d like to discuss this further, and perhaps the Minister might also like to respond to my question that I didn’t get to ask earlier, which was around the Investment Boost. Does that apply to homeowners who have installed solar panels, batteries, and EV chargers? Does it apply—so the Minister might want to reply.

I move, That debate on this question now close.

Arena Williams’ tabled amendment to clause 1 to change “Taxation” to “KiwiShaver” and Reuben Davidson’s tabled amendment to the amendment to insert “Close” before “KiwiShaver” are out of order as not being serious amendments.

Arena Williams’ tabled amendment to clause 1 to change “Budget” to “Austerity” and Reuben Davidson’s tabled amendment to the amendment to insert “Cruel” before “Austerity” are out of order as being merely an attempt to criticise the bill.

Arena Williams’ tabled amendment to clause 1 to insert “Cutting” after “Budget” and Reuben Davidson’s tabled amendment to the amendment to insert “Deeply” after “Cutting” are out of order as being merely an attempt to criticise the bill.

Arena Williams’ tabled amendment to clause 1 to insert “Blown” before “Budget” and Reuben Davidson’s tabled amendment to the amendment to insert “and Bungled” before “Budget” are out of order as not being serious amendments.

Arena Williams’ tabled amendment to clause 1 to replace “Budget Measures” with “Anti-savings Plan” and Reuben Davidson’s tabled amendment to the amendment to replace “Anti-savings Plan” with “Cuts for Kiwis” are out of order as not being serious amendments.

The question is that Arena Williams’ tabled amendment to clause 1 to insert “Pro-wealth” before “Taxation” be agreed to.

Reuben Davidson’s tabled amendment to Arena Williams’ amendment to clause 1 to replace “Equity Optional” with “Equity Busting” is out of order as not being a serious amendment.

The question is that Arena Williams’ tabled amendment to clause 1 to insert “Equity Optional” before “Budget Measures” be agreed to.

Dr Lawrence Xu-Nan’s tabled amendment to clause 1 to change “Budget Measures” to “National is Rich, and They are Sorted” is out of order as not being a serious amendment.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 1 to change “Budget Measures” to “Investment Boost and Other Matters” be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 1 to change “Budget Measures” to “Family Credit Abatement and Other Matters” be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 1 to change “Budget Measures” to “Best Start and Other Matters” be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 1 to change “Budget Measures” to “KiwiSaver Adjustments and Other Measures” be agreed to.

The Hon Julie Anne Genter’s tabled amendment to clause 1 to change “Budget Measures” to “Taking Money from Babies to Give Tax Breaks for Utes” is out of order as not being a serious amendment.

Ricardo Menéndez March’s tabled amendment to clause 1 to change “Budget Measures” to “Manifesting Trickle Down Economics” is out of order as not being a serious amendment.

Ricardo Menéndez March’s tabled amendment to clause 1 to change “Budget Measures” to “Hoping Businesses’ Savings are Passed Down as Wages” is out of order as not being a serious amendment.

Teanau Tuiono’s tabled amendment to clause 1 to change “Budget Measures” to “Let Them Eat Cake Budget Measures” is out of order as not being a serious amendment.

Celia Wade-Brown’s tabled amendment to clause 1 to change “Budget Measures” to “Let Them Buy Yachts Budget Measures” is out of order as not being a serious amendment.

Steve Abel’s tabled amendment to clause 1 to change “Budget Measures” to “Robbing from the Poor to Give to the Rich” is out of order as not being a serious amendment.

Steve Abel’s tabled amendment to clause 1 to change “Budget Measures” to “Petroleum on the Nature Bonfire Budget” is out of order as not being a serious amendment.

Scott Willis’ tabled amendment to clause 1 to change “Budget Measures” to “We Love Oil Rigs” is out of order as not being a serious amendment.

The question is that Francisco Hernandez’s tabled amendment to clause 1 to change “Budget Measures” to “Budget Measures: Income Tax Amendment, KiwiSaver Act Amendment, Tax Administration Act Amendment” be agreed to.

Scott Willis’ tabled amendment to clause 1 to change “Budget Measures” to “No Upper Limit to Climate Disasters” is out of order as not being a serious amendment.

Lan Pham’s tabled amendment to clause 1 to change “Budget Measures” to “We Forgot Nature Is The Foundation of Our Economy” is out of order as not being a serious amendment.

Dr Lawrence Xu-Nan’s tabled amendment to clause 1 to change “Budget Measures” to “We Want 16 and 17 Year Olds to Pay for the Country Just Not to Vote” is out of order as not being a serious amendment.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 2(2) to change “22 May 2025” to “the day of Royal assent” be agreed to.

The question is that the Hon Dr Megan Woods’ tabled amendment to clause 2(2) to change “22 May 2025” to “1 April 2026” be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 2(4) to change “1 February 2026” to “1 April 2026” be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 2(5) to change “1 April 2026” to “1 July 2026” be agreed to.

The question is that Dr Lawrence Xu-Nan’s tabled amendment to clause 2(6) to change “1 April 2028” to “1 July 2028” be agreed to.

Mr Speaker, the committee has considered the Taxation (Budget Measures) Bill (No 2) 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