Wednesday, 2 December 2020

WEDNESDAY, 2 DECEMBER 2020

WEDNESDAY, 2 DECEMBER 2020

The Speaker took the Chair at 2 p.m.

Prayers.

Petitions, Papers, Select Committee Reports, and Introduction of Bills

Petitions, Papers, Select Committee Reports, and Introduction of Bills

SPEAKER: No bills have been introduced. Petitions have been delivered to the Clerk for presentation.

CLERK:

Two petitions of Toni Boynton requesting that the House amend the Local Electoral Act 2001 to make the process for the establishment of Māori wards and constituencies for district and regional councils the same as the process for establishing general wards and constituencies

petition requesting that the House conduct an inquiry into bullying within the medical sector with reference to any disproportional application of the Health Practitioners Competence Assurance Act 2003 by the Medical Council

petition of Richard Edward Stein requesting that the House urge the Government to fund ustekinumab for New Zealanders with severe Crohn’s and ulcerative colitis

petition of Anmar Taufeek requesting that the House urge the immigration Minister to increase resourcing so that the time taken to process visitor visa applications for culturally arranged marriages can be reduced

petition of Claire Bleakley requesting that the House urge the Minister for Food Safety to advocate for regulation, safety trials, and full labelling of GM and gene-edited food in the review of the Food Standards Australia New Zealand Act

petition of Diane Hunt requesting that the House urgently amend the Sentencing Act 2002 and the Parole Act 2002 to automatically decline parole eligibility for offenders convicted of the murder of police officers, and

petition of Olivia Rollo requesting that the House urge the Government to extend the roll-out of free period products in schools to include reusable period products.

SPEAKER: Those petitions stand referred to the Petitions Committee. Ministers have delivered papers.

CLERK:

Minister of Climate Change, Vote Environment, report in relation to selected non-departmental appropriations for the year ended 30 June 2020

Minister for the Environment, report in relation to selected non-departmental appropriations for the year ended 30 June 2020

Accident Compensation Corporation

Annual Report 2019/20, and

Service Agreement 2020/21

report of the Attorney-General under the New Zealand Bill of Rights Act 1990 on the Taxation (Income Tax Rate and other Amendments) Bill.

SPEAKER: I present the 2019-20 parliament sector annual account of the Office of the Clerk of the House of Representatives and the Parliamentary Service. Those papers are published under the authority of the House. A select committee report has been delivered for presentation.

CLERK: Report of the Business Committee, recommended sitting programme for 2021.

SPEAKER: That report is set down for consideration.

Oral Questions

Questions to Ministers

Question No. 1—Prime Minister

1. Hon JUDITH COLLINS (Leader of the Opposition) to the Prime Minister: Does she consider a $195,000 increase in the price of the median house since October 2017 a sign of a Government that is “absolutely committed to resolving the housing crisis and taking a multitude of steps and levers to make that happen”, as she stated in her speech in the 2017 Address in Reply debate?

Rt Hon JACINDA ARDERN (Prime Minister): Like many New Zealanders, I am concerned by increasing house prices, which is why we as a Government are absolutely committed to making progress on housing. I take as a sign of that commitment the fact that since 2017 there has been record new home construction, with 37,725 new homes over the last year. First-home buyers are 25 percent of purchasers in the third quarter of 2020, the highest levels since CoreLogic’s series began in 2005. Since 2017, we stopped National’s sell-off of State homes, and we added 6,000 new public homes in the last three years. We developed the National Policy Statement on Urban Development to substantially increase development capacity—as much as 40 percent in some local authorities. We established a progressive homeownership scheme, increased the First Home Grant, made the First Home Loan scheme more accessible, and, of course, started KiwiBuild. We passed the healthy homes standards and introduced fairer tenancy laws. But we also acknowledge there is more to do.

Hon Judith Collins: Is she aware that her three-year increase of $195,000 is a greater increase than was experienced over the entire nine years of the last National Government?

Rt Hon JACINDA ARDERN: I reflect the fact that in the last month—in the last month alone—we’ve seen significant increases. Before September, we were looking at an annualised increase, according to CoreLogic, of roughly 4 percent; under the last National Government, it was 9 percent. But what you will not hear from this Government is any acceptance that escalating house prices at that rate are acceptable, and that is the most significant difference between a Labour Government and a National-led Government.

Hon Judith Collins: Does she consider her policy of extending the brightline test from two years to five years has been successful in reining in house prices?

Rt Hon JACINDA ARDERN: Well, firstly I’d say that I can only assume that the motivation of the National Government at the time in introducing it was for that purpose. We do not, as yet, have the advice from officials to tell us whether or not it has contributed to what we were seeing around speculators buying and flicking houses, but we have asked for that advice, and I’m sure we’ll be sharing it in good time.

Hon Judith Collins: Does she now, three years after extending the brightline test from three years to five years, think that the answer to house price growth is a further extension of the brightline test?

Rt Hon JACINDA ARDERN: I acknowledge that, actually, the extension of the brightline test—I can’t ascertain from the member’s question whether she supports the existence of it or not, given it was her Government that introduced it—was never the only thing that we did. We banned foreign buyers in our residential housing market. We closed tax loopholes. We, for instance, have recognised in an economic downturn—unlike the last National Government during the global financial crisis, where we saw housing construction halve, we have created an underwrite scheme to try to keep that development going. We have never ever focused on one single response, because if there was one single answer, someone would have resolved this underlying issue by now. We, however, at least in the last term started to make headway.

Hon Judith Collins: Does she believe it would be fair to say that increasing the brightline test a second time is doing the same thing expecting, somehow, a different result in house prices?

Rt Hon JACINDA ARDERN: The very reason we have asked for analysis in this area is because we are exploring every opportunity to try to stabilise the housing market in this current environment. Again, I notice the member is raising that one example, because, to be honest, it was about the only thing that the National Government did in office to make the situation better. They did plenty of things to make it worse.

Hon Judith Collins: Does she agree with the Governor of the Reserve Bank that “High house prices … largely reflect structural and regulatory issues … In particular, land use restrictions, such as urban planning rules”?

Rt Hon JACINDA ARDERN: Well, that is the reason that we, of course, developed and introduced the National Policy Statement on Urban Development, which is focused on making sure that local government are obliged to release land for population growth. It also means that we will see greater intensification along transport routes. We want decent planning for new housing. We also don’t want to see those escalating land prices based on what we have had around urban metropolitan limits.

Hon Judith Collins: With all the things that the Prime Minister’s listed today as the actions that she’s taken in relation to housing and house prices, why is it that house prices have risen so much more under her watch than under the nine years of a National Government?

Rt Hon JACINDA ARDERN: Firstly, I reject the premise of that question. Secondly, again, it was only several months ago we were talking about a potential crash in the housing market. We are now looking globally at a significant issue in house prices. I refer the member to two articles, one listing that “Low interest rates and changing preferences explain housing’s strength during the pandemic”—that’s an article on the international situation around housing—and also “Monetary policy, fiscal measures, and buyer preferences explain the unlikely boom”: “Why, despite the coronavirus pandemic, house prices continue to rise”. This is an Economist article about the global situation, not just New Zealand.

Hon Judith Collins: Point of order. I seek leave to table a report from the Real Estate Institute of New Zealand showing the house price increase under the current Government as compared to the previous one.

SPEAKER: Order! Is there any objection to that document being tabled? There appears to be none.

Document, by leave, laid on the Table of the House.

Question No. 2—Finance

2. GREG O’CONNOR (Labour—Ōhāriu) to the Minister of Finance: What recent reports has he seen on the New Zealand economy?

Hon GRANT ROBERTSON (Minister of Finance): Today, ASB have produced their quarterly economic forecast for New Zealand, entitled A demonstration of resilience. It states that they now expect that the economic decline as a consequence of COVID-19 to be “around half the decline we anticipated”. They state that this reflects the level of Government support, the quick exit from lockdown, and continued consumer spending. As ASB has put it, “Fear of losing jobs has quickly given way to fear of missing out on a bargain or some fun.” Their quarterly report also states, “[New Zealand’s] economic activity bounced back remarkably quickly once alert level restrictions were gradually eased through May and June, and by July the [New Zealand] economy almost felt like business as usual.” While there are many New Zealanders who continue to struggle with the impacts of COVID-19, the New Zealand economy is recovering.

Greg O’Connor: Has the Minister seen any reports on small-business activity?

Hon GRANT ROBERTSON: Well, yes, I have. I’ve seen data from Xero’s Small Business Insights report, that analyses trends from small businesses across New Zealand. Their latest data shows the number of jobs in small businesses across Aotearoa grew 1.4 percent during the month and they’re now above pre-crisis levels. Craig Hudson from Xero noted that “With the exception of hospitality, jobs in all industries across the country have recovered to, at or above pre-crisis levels. The manufacturing and retail industries in particular have seen good recovery during the month.”

Hon Julie Anne Genter: Is he concerned by reports from Westpac chief economist Dominick Stephens that suggest putting up the top tax rate to 39 percent without implementing a capital gains tax will further increase house prices and thereby inequality?

Hon GRANT ROBERTSON: I’ve seen a range of views on that matter, including from Dominick Stephens. What I can say is that on this side of the House, we believe that it is the right measure to see those who earn the most in our economy pay a little bit more to ensure that we can go on with our COVID recovery and continue to provide health and education services.

Hon Julie Anne Genter: Has he seen data from the OECD that house price increase over the past year in New Zealand has been many times higher than in comparable countries that also happen to have capital gains taxes or other types of asset taxes?

Hon GRANT ROBERTSON: Well, I’ve actually seen conflicting advice on that matter, particularly in terms of recent months.

Question No. 3—Finance

3. ANDREW BAYLY (National—Port Waikato) to the Minister of Finance: Can he confirm that during this term of Government there will be no other changes to tax beyond the new 39 percent personal income tax rate?

Hon GRANT ROBERTSON (Minister of Finance): As has occurred under every Government, Inland Revenue makes constant changes to tax, including whether it’s updating their own systems or making the tax system more accessible, easier to navigate, or fairer for taxpayers. In the last term of Government, this included 1.4 million automatic tax refunds, lifts to thresholds for provisional tax, depreciation deductions on non-residential buildings, and loss carry-back and loss continuity policies. I am somewhat surprised that the member would not want tax changes that make it easier for taxpayers—

SPEAKER: Order! Order! The member’s answer was, first of all, longer than necessary and, second, went into an area a long way away from an area he’s responsible for. The member is not responsible for Mr Bayly.

Andrew Bayly: Will he rule out increasing the trust tax rate during this term of Government?

Hon GRANT ROBERTSON: As we stated during the election campaign, we will not be increasing the trust rate as part of the piece of legislation that is before the House, but, as we said at the time—as we said at the time—if we see evidence of people misusing trusts, we will act on that.

Andrew Bayly: Does he agree with the revenue Minister’s comment yesterday that David Parker would consider increasing the tax rate on trustee income?

SPEAKER: Order! I’m going to ask the member to quote accurately. I can’t believe that David Parker would have said that.

Andrew Bayly: Are you saying—I wasn’t giving a direct quote—

SPEAKER: Yes.

Andrew Bayly: And you’re saying I need to?

SPEAKER: Yes. Well, if the member is quoting, he’s got to quote accurately, and, while David Parker makes unusual comments, I don’t think he ever says it, “David Parker said this …”

Andrew Bayly: So does he agree with the revenue Minister’s comment yesterday that he would consider increasing the tax rate on trustee income?

Hon GRANT ROBERTSON: In my last answer, I just said, if we see evidence that trusts are being misused, then, yes, we would consider that. That’s exactly what we said in the election campaign.

Andrew Bayly: Why is he seeking advice on possible tax changes when he has categorically ruled out making any changes?

Hon GRANT ROBERTSON: What we sought advice from Treasury on is what we can do to dampen the excessive demand in the housing market. That is what a responsible Government does.

Andrew Bayly: Would he consider it to be a broken promise if he were to increase other tax rates, considering the Government has promised that there will be no other changes to tax beyond the new 39 percent income tax rate?

Hon GRANT ROBERTSON: The premise of the member’s question is completely incorrect.

Andrew Bayly: Point of order. Could I ask for elaboration because—

SPEAKER: The member can—it’s a question. [Interruption] Hang on, the member has asked, can he ask for an elaboration. The answer is yes; he’s just got to ask for it.

Andrew Bayly: Can the Minister further elaborate on what he means by that statement?

SPEAKER: Probably “will” the Minister rather than “can”.

Hon GRANT ROBERTSON: I certainly can, and just to pick one example in the tax policy that the Government is implementing, we actually want to make sure that multinationals pay their fair share. Apparently the opposite side doesn’t care about that.

Question No. 4—Energy and Resources

4. ANAHILA KANONGATA’A-SUISUIKI (Labour) to the Minister of Energy and Resources: What action is the Government taking to reduce fossil fuel use by large industrial users?

Hon Dr MEGAN WOODS (Minister of Energy and Resources): Last month, I joined the Prime Minister to announce the launch of the first round of the Government investment in the Decarbonising Industry Fund. The Government recognises the importance of reducing greenhouse gas emissions from process heat, and the introduction of this fund represents a win for our climate and a win for our recovery. The fund operates as a partnership between the Government and business to accelerate the decarbonisation of industrial process heat and thermal energy used to manufacture products in industry. Process heat makes up around a quarter of New Zealand’s energy-related emissions and over 50 percent of process heat is fossil fuelled, mainly by gas and coal. This fund will be key to reducing those emissions in the years ahead. The $70 million new fund will allow businesses to invest in energy efficiency, the application of innovative technologies, and fuel switching, with the ultimate goal of accelerating decarbonisation through the lowering of emissions.

Anahila Kanongata’a-Suisuiki: Why is it important to decarbonise industrial users in New Zealand?

Hon Dr MEGAN WOODS: For New Zealand to achieve its ambitious climate goals, we need to tackle the issue of emissions from our large industrial users. The interim Climate Change Commission recommended a focus on lowering emissions from process heat as a priority for decarbonising our economy as we continue our transition to a low-emissions future. The fund would be used for upgrading transmission or distribution network connections which would facilitate the electrification of industrial process heat to enable the deployment of energy efficiency and electrification technologies in industry. By targeting process heat produced by New Zealand’s largest energy users, we can accelerate the uptake of electrification and other technologies that will dramatically lower emissions and bring with it the benefit of clean-energy jobs.

SPEAKER: Question No. 5—

Anahila Kanongata’a-Suisuiki: Pātai tāpiri.

SPEAKER: Just to make it clear, the first answer was far too long. The second answer answered the question in about the first 20 words and the rest of them answered a whole pile of other questions, which were not asked. I think the member has had her time.

Question No. 5—COVID-19 Response

5. CHRIS BISHOP (National) to the Minister for COVID-19 Response: Why has the report of the COVID-19 Surveillance and Testing Strategy Group not been considered by Cabinet yet, and what is his best estimate for when the report will be made public?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): In answer to the first part of the question, because my office only received the final draft of the report last week. In answer to the second part of the question, the release of the report will depend on the decisions that Cabinet takes in response to it.

Chris Bishop: Why did he say on 3 November, then, “Obviously we needed a chance to digest that and consider it, and in this post-election period, that is what we are doing and we will certainly be releasing it.”, when he says he only received the report last week?

Hon CHRIS HIPKINS: I did receive earlier drafts, and I made it clear when I received the earlier drafts. I asked the review panel to go and consult with the Ministry of Health before the report was finalised, and they did that.

Chris Bishop: Have all recommendations of the report, even if they were in earlier draft versions of the report, that were received by him been implemented?

Hon CHRIS HIPKINS: No, not yet. Those are some of the things that Cabinet has to make decisions on.

Chris Bishop: How many recommendations did the report make, and which of the recommendations does he consider to be the most pressing and urgent to implement?

Hon CHRIS HIPKINS: The report concluded overall that the testing that Cabinet had mandated was being undertaken. They made some recommendations around how the reporting and monitoring of the testing could be improved. Obviously, people are affected by that; therefore, I asked them to consult with the people who are most affected, including the Ministry of Health, which they have now done. Cabinet has not had a chance to consider the report and to consider the decisions that it may take. Given that there will be people who will be affected by that, the member will understand that I’m not going to go into great detail about that until Cabinet’s had a chance to make decisions.

Chris Bishop: Is it his expectation that Cabinet will consider the final report received by him before the end of the year, and, if so, when can the public expect the recommendations of the report to be implemented in the new year?

Hon CHRIS HIPKINS: In answer to the first part of the question, yes. In answer to the second part of the question, as I indicated in my primary answer, release of information around that will depend on the decisions that Cabinet takes.

Question No. 6—Education

6. JO LUXTON (Labour—Rangitata) to the Minister of Education: What steps is the Government taking to ensure that school students are able to learn in warm, dry, and modern classrooms?

Hon CHRIS HIPKINS (Minister of Education): The election delivered a clear mandate to accelerate our economic recovery and build back better, and part of that is prioritising construction projects in schools. Around 7,500 students are set to benefit from the Government’s latest investment of $164 million to build new classrooms and upgrade schools around the country. I am very proud of the work that we are doing to lift the quality of the classrooms that our students and our teachers spend so much time in.

Jo Luxton: Will this investment have any impact on employment opportunities for New Zealanders?

Hon CHRIS HIPKINS: Yes. The package will help to create and sustain more than 3,000 jobs. The Ministry of Education and schools will be engaging with local builders, plumbers, carpenters, roofers, electricians, and other local businesses throughout this process. This investment in schools is backed up by our plan to make training opportunities more readily available as well.

Jo Luxton: Can he identify the schools that will benefit from this investment in the North Island?

Hon CHRIS HIPKINS: Yes, I can, and there’s heaps of them, but I’ll name just a few, including Greytown School in Wairarapa, where I announced the package, who are having a 100-year-old five-classroom block replaced, and they’re getting four additional classrooms; Ormiston Primary School; Kauri Flats School; Browns Bay School—to name just a few.

Jo Luxton: Can he identify schools that will benefit from this investment in the South Island?

Hon CHRIS HIPKINS: Once again, there’s plenty, but I’ll just name one, which is that we are going to be building a new primary school in Rolleston East.

Question No. 7—Climate Change

7. STUART SMITH (National—Kaikōura) to the Minister of Climate Change: Will New Zealand fulfil all of its obligations under the Paris Agreement on Climate Change and achieve its 2030 target to reduce emissions by 30 percent below 2005 levels?

Hon JAMES SHAW (Minister of Climate Change): Thank you, Mr Speaker. I’ll answer the first part of the question in a minute. I wanted to say first that—in reference to the second part of the question—there are a number of ways to achieve that target. The first is that we would reduce our domestic emissions; the second is to draw down carbon dioxide from the atmosphere in the form of forestry; and the third is to use international units that have environmental integrity. This Government is absolutely committed to achieving that target, as was the previous National Government that set the target in the first place. In answer to the first part of the question, there are four primary obligations under the Paris Agreement. They are to have a nationally determined contribution (NDC) and to report progress towards it—we do have a nationally determined contribution and we are regularly reporting progress towards it. I’ve also asked the Climate Change Commission for advice on whether the existing NDC is consistent with the 1½ degree pathway, and that may lead to a revision to the NDC next year. The second obligation is to make and carry out plans to adapt to the effects of climate change. We have recently published a national climate change risk assessment. We’re developing in response to that a national adaptation plan, and I intend to introduce an adaptation bill into the House in the term of this Parliament. The third obligation is that, as a developed country, we should provide finance to assist developing countries both with mitigation and adaptation. New Zealand has committed to delivering at least $300 million in climate-related support from 2019 to 2022, and we are well on track to meeting that commitment.

Stuart Smith: Does he agree with James Shaw, leader of the Green Party, when he said, “Using international units was a costly way of buying our way out of our obligations”; and if so, will we meet our 2030 target without using international credits?

Hon JAMES SHAW: Yes, I do. The previous Government, when they set up the nationally determined contribution in 2016, modelled that up to 85 percent of a nationally determined contribution would be met with offshore units. And, of course, the member will remember that at the time there was also some controversy about the fact that there were what was known as dodgy hot air units floating around inside the New Zealand system as a result of changes to the emissions trading scheme that that Government had introduced. In fact, most of the work that this Government did in the last term on the emissions trading scheme was designed to ensure that that could never happen again. It is our intention to meet the target to the maximum extent by domestic action. When the NDC was introduced, there was a shortfall of 200 million tonnes of greenhouse gases that would have to be met offshore. We’ve managed to lower that, according to the most recent projections, to a gap of about 106 million tonnes, and we will be introducing further policies next year to reduce that gap even further.

Stuart Smith: Does he agree with James Shaw, leader of the Green Party, when he said New Zealand’s Paris target was “woefully inadequate”; and if so, will he submit a new target, as requested of all parties, by the end of 2020?

Hon JAMES SHAW: I did ask the Climate Change Commission for advice on whether our nationally determined contribution is consistent with a pathway for keeping under 1½ degrees of global warming above pre-industrial levels. The reason I ask that is because I agree with James Shaw, the co-leader of the Green Party, about the inadequacy. But we do want to take the best scientific and economic advice that we have on that. Unfortunately, because we were only able to set up the commission a year ago, that advice won’t be available to us until May of next year; so we won’t be submitting a new NDC at the end of this year. But if there is a revision as a result of the advice, then that will be lodged before COP 26 in Glasgow next year.

Stuart Smith: Why, after three years in Government, if he believes our target is not ambitious enough, has he not increased it; and why doesn’t he have New Zealand on track to meet its existing target?

Hon JAMES SHAW: Well, we have had a lot of work to do to repair the damage that was caused by the previous National Government in their nine years in office, because we had—that Government, when it lodged that target, had absolutely no plan to achieve that target, and I would imagine a little later on today we’re going to hear a great deal from the Opposition about empty statements and commitments with no action behind it. And I would just ask the members of the Opposition to reflect on what they did to meet the target that they set, because the answer to that is absolutely nothing.

Stuart Smith: Is the declaration of a climate change emergency a last-gasp attempt to be invited to the UN top table on climate in Glasgow?

Hon JAMES SHAW: Well, my understanding is that we have actually received an invitation and the Prime Minister is considering a response.

Hon Stuart Nash: Does the Minister, in terms of decarbonising our society, support a wood-first building policy for State sector construction, and will he be encouraging the private sector to follow suit, especially if they want State sector tenants?

Hon JAMES SHAW: Well, my understanding is that Cabinet has recently committed to ensuring that Government buildings are built, to the maximum extent possible, out of the most sustainable materials available. Of course, as we well know, wood is one of the most—if not the most—sustainable building materials available at the moment.

Question No. 8—Transport

8. SHANAN HALBERT (Labour—Northcote) to the Minister of Transport: What progress has been made on the Auckland Transport Alignment Project?

Hon MICHAEL WOOD (Minister of Transport): I’m pleased to report progress has been made on the Auckland Transport Alignment Project as part of our Government’s plans to deliver better transport outcomes in our biggest city. On Monday, the upgraded Ōtāhuhu Station was formally unveiled. This $50 million investment in the city’s transport network includes construction of a third platform and passenger access at the station, 1.3 kilometres of new track alongside KiwiRail’s Southern Line, four new crossovers to allow trains to switch between tracks, signals, and a new overhead line to power trains. I note that one of the advances that the current Government has made over and above the previous Government is that we’ve actually funded the Auckland Transport Alignment Project.

Shanan Halbert: How will these upgrades improve public transport in Auckland?

Hon MICHAEL WOOD: These upgrades are critical and will provide additional capacity to allow trains to run more often and faster when the City Rail Link (CRL) opens in 2024. Together, along with New Zealand Upgrade Programme projects like the third main line, it will allow us to double the capacity of Auckland’s rail network. For commuters, it has the potential to slash their commute time to the central city in half. For example, from Ōtāhuhu to Britomart, it can be 30 to 40 minutes; after the CRL, it will be around 20 to 30 minutes. Ellerslie to K Road will go from 36 minutes, currently, to 17 minutes, approximately.

Shanan Halbert: What other progress has been made on the Auckland Transport Alignment Project?

Hon MICHAEL WOOD: Good news: a number of projects have progressed. Some recently completed projects include, in Ōtara, safety upgrades, including a new roundabout at the entry of Hayman Street and new pedestrian islands; at the notoriously dangerous Dairy Flat Highway / Coatesville-Riverhead Highway intersection, a new $10 million roundabout, right-turn bays, centre median safety barriers, side barriers, and intersection upgrades; pleasingly, in Mount Roskill, a safer communities project, including new footpaths, speed tables, as well as 11 raised pedestrian crossings that will help kids to cross the road more safely; on Waiheke, the first electric buses have been rolled out; and construction continues on job-creating projects like the Eastern Busway, State Highway 20B improvements, the Puhinui interchange, Old Māngere Bridge replacement—

SPEAKER: Order! Order! Enough.

Question No. 9—Housing

9. NICOLA WILLIS (National) to the Minister of Housing: How many motels, if any, has the Government purchased or leased in the past three years for public housing purposes, and how much does the Government currently spend per day on motel accommodation for people in housing need?

Hon Dr MEGAN WOODS (Minister of Housing): This Government has made a firm commitment to ensuring all New Zealanders have a warm, dry home. We are rebuilding the State housing sector with new public and transitional housing, and while this happens, we use motels as interim accommodation for people who would otherwise be sleeping rough, in campgrounds, and overcrowded situations. Between 2018 and 2020, three motels were purchased for use as transitional housing. The Ministry of Housing and Urban Development also has one direct leasing project. Through Vote Housing and Urban Development this Government spends approximately $142,761.75 for 924 contracted transitional housing motel units. I am proud of the work that this Government did to ensure that we tackled homelessness during the COVID-19 lockdown, and we still have 1,067 motel units supporting people identified as homeless during that lockdown period. Their approximate spend is $154,715 per day for these motel units. However, this is not our long-term plan. Our Government has a plan to move people out of homelessness and motels and into publicly owned, fit for purpose transitional housing. When we came into Government there were—

SPEAKER: Order! Order! The member has answered the question.

Nicola Willis: Does the Government have any plans to purchase more motels for use as public housing?

Hon Dr MEGAN WOODS: Our plan to address the housing crisis is to only ever purchase motel units if they make the best housing solution sense. We are only using purchased motels where they are gutted, they are refitted, and they are fit for purpose for people to live in. And the ones that we have purchased—for example, I don’t want to see families unable to send their kids to school with a lunch because a motel unit only has a beer fridge and a family cannot budget through that. So, we will only buy motels when it makes good housing sense.

Nicola Willis: Does the Government have plans to purchase more motel units for public housing?

Hon Dr MEGAN WOODS: I think the member is getting confused between transitional and public housing. These are two quite separate things. Transitional housing is sometimes done through motel units. It is not our preference to do that. And—if I had completed my answer—when we came into Government, there were 1,718 transitional places, of which there were 293 motel units left by the previous Government. There are now 3,653 transitional housing spaces. We have funded through each of our Budgets permanent, publicly owned transitional houses which are fit for purpose for families to make their lives in. That is our preference—not motels—for kids to grow up in.

Nicola Willis: Is it correct, as reported, that the Government has renewed an attempt to buy up freehold titles to motels across the country for public housing?

Hon Dr MEGAN WOODS: Of course, the purchase of motels for public housing was not new. While we have purchased three during our time in Government, in a six-month period between 2016 and June 2017, the previous Government purchased four. Our intent is actually to add to the housing supply by adding long-term, publicly owned transitional homes. We will only purchase motels where they can be refurbished to be made sense into transitional housing spaces.

Nicola Willis: Will the Minister rule out purchasing any more motel units for use as public housing; or is it her intention to continue spending an average of $154,000 per day housing New Zealanders in temporary motels?

Hon Dr MEGAN WOODS: It is certainly not our intention to continue spending that money housing New Zealanders in motels. This is why we had commitments in Budget 2018, we had a commitment in Budget 2019, and we have had a commitment in Budget 2020 around finally funding transitional housing in a meaningful way in this country. The party that that member is a member of did not even start addressing homelessness till 2017, after nine years in Government. They need to hang their heads in shame.

Nicola Willis: Does she agree with the Hon Grant Robertson’s reported comment that “we did end up having to use motels again, but we continue to want to move away from that.”; and if so, can she provide any evidence that the number of people living in motels has reduced since Labour came to power in 2017?

Hon Dr MEGAN WOODS: I’ve always found it’s good practice to agree with the Minister of Finance, and of course we do want to move away from using motels, but what we will not tolerate on this side of the House is people living on the street and people living in cars. And that is why, during the COVID lockdown, we made it our business to make sure that everybody could shelter safely. So, if we’re faced with a choice between people living in cars or on the streets, we will do what is needed to give those New Zealanders a pathway to housing. But we are a Government that has shown a commitment to tackling homelessness. It is a pity the previous Government did not.

Question No. 10—Prime Minister

10. DAVID SEYMOUR (Leader—ACT) to the Prime Minister: Does she stand by all her Government’s policies?

Rt Hon JACINDA ARDERN (Prime Minister): Yes, in particular the Government’s policy response to COVID-19, which supports our economic recovery while keeping New Zealanders safe. This includes our announcement this week to keep the business debt hibernation scheme open until 31 October 2021, our wage subsidy policy that supported around 1.7 million workers and 250,000 businesses, our small business cashflow scheme, our policy to invest in apprenticeships and workplace training, and delivering on our commitment to support workers with 10 days’ sick leave through the increasing sick leave amendment bill. New Zealand’s economy is recovering better than we expected, with GDP and unemployment exceeding expectations, but the impacts of this pandemic are far-reaching, and we continue to work to support businesses, employees, and keep New Zealanders safe.

David Seymour: Does she also stand by a policy of reviewing the Pharmac model, with a view to changing its underlying legislation, as she and all party leaders promised on the campaign trail?

Rt Hon JACINDA ARDERN: Yes, I stand by what I said on the campaign trail, which was to provide a forum for us to look at the Pharmac model. I didn’t give specifics beyond that, but that was intended to make sure that we are getting the best value and, of course, the best medication we can for New Zealanders in a system that has served us well and must continue to have separation from politicians, I think, to continue to be effective.

David Seymour: Why did the Speech from the Throne mention the word “health” 13 times but “Pharmac” or “pharmaceuticals” never?

Rt Hon JACINDA ARDERN: Look, there will be a raft of things that are part of core Government business that may not have been mentioned in the Speech from the Throne, but as I’ve just confirmed in my answer to the member’s supplementary question, I do intend to follow through on what I said prior to the election campaign. It’s something that I’ve already spoken to officials about.

David Seymour: What conversations has the Prime Minister had with those officials, and did they give an indication of when the public might expect to see such a review completed?

Rt Hon JACINDA ARDERN: No, at this stage I can’t provide the member with a specific time line, but I have said that we need to instigate that work and it needs to be part of our Government work programme.

David Seymour: How can people who have been saying on the steps of Parliament “We can’t wait.” have confidence that a review of Pharmac is a priority for her Government, having just watched her performance over the last few minutes?

Rt Hon JACINDA ARDERN: They will know that by the fact that we now have a Pharmac budget over a billion dollars, and that is because of the consecutive increases that we made to the Pharmac budget in the last term. What was put to me during the course of the election campaign were ongoing questions around, for instance, the transparency of Pharmac’s purchasing model and so on. I do want people to have confidence in a system that I believe, by and large, serves us very well. I believe looking into Pharmac in that regard should help bolster the confidence people can have, but I will always stand very strongly on the principle of political separation from pharmaceutical purchases.

David Seymour: Can the Prime Minister promise that there will be legislative change to the statutes underpinning Pharmac this term of Government?

Rt Hon JACINDA ARDERN: I will not pre-empt a piece of work that I have pledged to undertake by making any assumptions about what it will find.

Question No. 11—Commerce and Consumer Affairs

11. NAISI CHEN (Labour) to the Minister of Commerce and Consumer Affairs: What is the Government doing to protect New Zealanders from unaffordable loans?

Hon Dr DAVID CLARK (Minister of Commerce and Consumer Affairs): The Labour Government is committed to protecting Kiwis from high-cost loans and unaffordable debt. Last year, we got started by taking the bite out of loan sharks, and now we’re making the rules clearer for all lenders, to protect Kiwis from unaffordable loans. This morning, I announced new rules that will require all lenders to make the same detailed inquiries to understand people’s objectives and financial circumstances before approving a loan. The aim is to ensure borrowers are given only loans that are suitable for their needs and that consumers won’t be burdened with debt that they cannot afford to repay without significant hardship.

Naisi Chen: How does this build on work to crack down on loan sharks?

Hon Dr DAVID CLARK: I do want to acknowledge the work that my predecessor, Minister Faafoi, did to take the bite out of loan sharks by making changes to the credit contracts legislation, which put a cap on interest rates, a cost-of-credit cap on high-cost loans, and made sure that mobile traders comply with responsible lending rules. This is the next step, which creates specific requirements for all lenders. Before approving a loan, lenders must make consistent inquiries now about the borrower’s needs and objectives to help ensure the credit product is suitable, and they also need to verify the borrower’s income and expenses, to be satisfied that the repayments are unlikely to put the borrower into significant hardship.

Naisi Chen: What difference will this make for people in vulnerable financial positions?

Hon Dr DAVID CLARK: This morning, I heard from Sariah at the Newtown Budgeting and Advocacy Service, which sees hundreds of people each year in financial hardship due to unaffordable loans, and I heard some of the stories. During the consultation, in fact, previously we heard about many New Zealanders struggling with unaffordable loans, including the superannuitant who had got herself into debt through needing repairs to her car for her warrant of fitness. She’d taken out a loan with a private loan agency with a 26 percent interest rate. We also heard about a client who applied for a $1,000 consolidation loan but got offered $10,000, which he took, and he is now struggling to meet repayments. These new rules are about ensuring that situations like these are prevented from the start. It’s about having the right safeguards in place before Kiwis take out loans they cannot afford.

Question No. 12—Workplace Relations and Safety

12. JAN LOGIE (Green) to the Minister for Workplace Relations and Safety: Will the advice he is seeking “to ensure that the Covid Leave Support Scheme is meeting its objectives” include whether the leave support scheme should be extended and expanded before the summer holiday period?

Hon MICHAEL WOOD (Minister for Workplace Relations and Safety): My focus is on working with other Ministers to ensure that the leave support scheme is working as effectively as possible to ensure people who need to self-isolate as a result of COVID-19 are supported. Ensuring the scheme is working effectively is a priority, and so if any changes are agreed upon, I’m sure that we will look to implement them as soon as possible, but I’m not imposing any arbitrary time lines on that.

Jan Logie: Does he believe that, as a matter of workplace health and safety and general public health, everyone who displays COVID-19 - like symptoms should get a test and self-isolate while waiting for test results?

Hon MICHAEL WOOD: Yes. That is consistent with the health advice and the steps that we can all take to continue the elimination of COVID-19.

Jan Logie: Is he aware that the COVID-19 Leave Support Scheme is very limited in coverage and doesn’t include most workers awaiting a test or test results; so the thousands of seasonal horticultural, retail, and hospitality workers employed this summer, who we’re all going to be engaging with, will have no financial support to stay home while experiencing COVID-19 - like symptoms?

Hon MICHAEL WOOD: Yes, I’m aware that the COVID Leave Support Scheme is not comprehensive. What I do note is that—and it’s important to clarify this—the scheme, effectively, is an income supplement to employers to support them in providing employees with adequate leave. The Government continues to encourage employers and employees to work together effectively so that people stay away from work when they are sick, and one of the reasons that we are continuing to review the scheme is to make sure that we’re providing support where appropriate.

Jan Logie: Does the Minister recognise the workplace health and safety and public health risk of a significant proportion of the workforce not having guaranteed access to paid sick leave during a pandemic?

Hon MICHAEL WOOD: I believe and the Government believes that adequate paid sick leave is an important part of our system in ensuring that people are kept safe and that we stop the spreading of bugs and infections in the workplace. That’s one of the reasons why the Government’s moved to extend paid sick leave in the House today.

Jan Logie: Why have these changes not happened already, when we’ve experienced already a workplace-related cluster resulting in our largest city moving to alert level 3?

Hon MICHAEL WOOD: I’m in my first month as Minister in this portfolio, and I’ve already asked for advice—

Chris Bishop: You’re not doing very well.

Hon MICHAEL WOOD: —so that I can work with other Ministers to ensure that the scheme is working as effectively as possible.

SPEAKER: Order! I’d prefer no comments on my performance, thank you, Mr Bishop.

CLIMATE CHANGE

Declaration of Climate Emergency

Rt Hon JACINDA ARDERN (Prime Minister): I move, That this House:

declare a climate emergency, following the finding of the Intergovernmental Panel on Climate Change that, to avoid a more than 1.5°C rise in global warming, global emissions would need to fall by around 45 percent from 2010 levels by 2030, reaching net zero by around 2050;

recognise the advocacy of New Zealanders in calling for action to protect the environment and reduce the impact of human activity on the climate;

join the over 1,800 jurisdictions in 32 countries to declare a climate emergency and commit to reducing emissions to avoid a more than 1.5°C rise in global warming;

recognise the devastating impact that volatile and extreme weather will have on New Zealand and the wellbeing of New Zealanders, on our primary industries, water availability, and public health, through flooding, sea-level rise, and wildfire damage;

note that climate change is one of the greatest challenges of our time, that the Government has made significant progress on meeting that challenge through the Paris Agreement and the Climate Change Response (Zero Carbon) Amendment Act 2019, and that New Zealand has committed to taking urgent action on greenhouse gas mitigation and climate change adaptation;

acknowledge the core tenets of New Zealand’s response by establishing emissions budgets that set us on a path to net zero by 2050, setting a price on emissions through the New Zealand Emissions Trading Scheme, transitioning to a low-carbon economy and planning for climate adaption;

implement the policies required to meet the targets in the Climate Change Response (Zero Carbon) Amendment Act 2019, and to increase support for striving towards 100 percent renewable electricity generation, low carbon energy, and transport systems;

seize the economic opportunities that a clean, green reputation provides;

create green jobs in the low-carbon economy while managing risks for workers and communities currently reliant on carbon-intensive sectors;

recognise the alarming trend in species decline and global biodiversity crisis, including the decline in Aotearoa’s indigenous biodiversity, and acknowledge New Zealand’s strategic framework for the protection and restoration of biodiversity Te Mana o te Taiao;

note that the Government will take further steps towards reducing and eliminating waste; and

show leadership and demonstrate what is possible to other sectors of the New Zealand economy by reducing the Government’s own emissions and becoming a carbon-neutral Government by 2025.

I think the first and most important point to make is that this is a declaration based on science. The United Nations’ Intergovernmental Panel on Climate Change, the pre-eminent scientific body in the world on this matter, has determined that in order to avoid a disastrous 1.5 degree Celsius rise in global temperatures and beyond—a rise that would see increased risk to human health and livelihood, civil unrest, mass drought, disease, loss of lands and homes, increased fires, increased tropical storms, mass human displacement, and globally exhausted resources—we must act with urgency to ensure global emissions fall to net zero by 2050.

This is a declaration grounded in a deep sense of responsibility—responsibility that we all must feel, but particularly given that we, as New Zealanders, are members of the Pacific. In 2019, I visited Tokelau, a rare privilege. A population of only 1,500, only accessible by boat—and so perhaps, therefore, their story is not often shared. But there I physically observed newly built coastal walls that were already toppling over from the assault by the sea. Those walls had been erected to prevent a seaside burial ground that had been there for many, many years from being inundated—to protect it against significant erosion. Those walls were already failing.

Tokelau is not alone. The Pacific Islands Forum has called climate change our greatest threat—their greatest threat—and that is why the goal to limit temperature rises to 1.5 degrees is embedded in our legislation. That’s not something that every nation has done, but we have, because anything more than that means consigning the Pacific—it means consigning our region—to a devastating reality that if we are responsible members of the Pacific, we cannot and will not accept.

This declaration is an acknowledgment of the next generation: an acknowledgment of the burden that they will carry if we do not get this right and if we do not take action now. When I visit schools, when I read children’s letters, I’m often struck by how deeply personal the climate crisis is to them. We cannot underestimate a generation, full of angst and anxiety over the reality of climate change for them and their generation. And it is up to us to make sure that we demonstrate there is a pathway, there is a plan for action, and there is a reason for hope. For them, it is instinctual. It is tangible. It is real. It is about the country they will inherit and it’s about the burden of debt they will inherit unless we make sure that we demonstrate leadership on this issue.

This declaration is about our global responsibilities. As a nation, it is not in our nature to turn our back on a problem, and it’s certainly not in our DNA to ignore a sense of responsibility and obligation. On climate change we will only make progress if we absolutely accept that collective action is required. If any nation falls short, we all fall short. So, importantly, this is a declaration that records the formal importance of our intent as a nation and our intent on the global stage. It’s a declaration that now serves as a directive to all aspects of the public service around the urgency that we as a Government require and the urgency that we require around action. It acts as a catalyst for change.

It’s a declaration that says we must get our own house in order. It serves as the clearest of signals to the private sector, and I acknowledge significant action has been taken by many in the private sector. Many are taking action now, demonstrating leadership. But to others, I say there is no more runway to push back on. Globally, we have entered an age of action, and that includes the private sector as well.

So, with action in mind, today, as a Government, we are also announcing the Carbon Neutral Government Programme that requires Government organisations to be carbon-neutral by 2025. We must get our own house in order. How can we stand and take a leadership position amongst the private sector unless we take the same action that we expect of them? It will require Government agencies to measure and reduce their emissions, and if they are unable to achieve carbon neutrality, they must offset. They will be required to develop emissions reduction targets and plans. They will be required to individually report to Parliament on their emissions. Ministers will be held accountable. And from 2025, as I’ve said, if they do not reach their own targets, they will be required to offset. This means they will have to act differently. They will have, also, a major financial incentive to do so.

There are three specific elements to our plan around a carbon-neutral Public Service. First, we will phase out the use of coal boilers in the State sector. We’ll prioritise getting rid of the largest and most active boilers, using the $200 million State sector decarbonisation fund to replace them with clean alternatives. There are over 200 coal boilers still in the State sector; that needs to change. Secondly, we’re requiring mandated Government agencies to only purchase electric vehicles (EVs) or hybrid vehicles. If electrics are not appropriate for their specific needs, then there is a specific operational requirement that they must go through in order to demonstrate why. We are also requiring them to optimise their fleet at the same time. The Energy Efficiency and Conservation Authority estimates that we can reduce the size of our fleet by up to 20 percent. We’ve also allocated $20 million from the State sector decarbonisation fund to co-fund the cost of EVs and charging infrastructure. We spent the better part of last term putting in place the infrastructure that would enable this transition to happen. Thirdly, we are putting in place an energy efficiency building standard on all mandated agencies who occupy office space over 2,000 square metres.

So let me be clear. This is a declaration that will need to be supported by ongoing, continual action and activity. It sits behind the work that we did in our first term of office: our plan to plant one billion trees; our ban on new offshore oil and gas exploration; our goal of 100 percent renewable electricity generation by 2030, and we are already under way investigating a scheme that would allow New Zealand to have, essentially, the battery that helps us overcome dry years to reach that 100 percent renewable goal; our record investment in rail, trains, buses, walking, and cycling, and now we are moving to decarbonise that public transport fleet, too; our $100 million Green Investment Fund; our world-first partnership with farmers to reduce primary sector emissions; and our intention to make action on climate change an integral part of our COVID recovery so that we don’t only build back our economy, we build it back in a sustainable way with a focus on carbon neutrality.

We issue declarations sparingly. The reason we have done this today is that those cases where we do issue declarations are often where there are threats to life, threats to property, or civil defence emergencies. If we do not respond to climate change, we will continue to have those emergencies on our shore. I do want to acknowledge, as I conclude, the Minister of Climate Change and the Green Party, endless advocates for activity in this space that we will continue to work in partnership with. But I encourage every member of this House to take the issue of climate change with the utter seriousness that it deserves. Vote in favour of this declaration today. Be on the right side of history. Be part of the solution we must collectively deliver for the next generation.

SPEAKER: The question is that the motion be agreed to.

STUART SMITH (National—Kaikōura): Thank you, Mr Speaker. I welcome the opportunity to debate the Government’s decision to declare a climate change emergency. National is fully committed to efforts to address climate change. We are committed to the Paris Agreement and to achieving net zero emissions by 2050, but declaring a climate emergency is nothing but virtue signalling. Symbolic gestures just don’t cut it—by declaring a climate emergency when there is consensus on what needs to be done. We need to drive our emissions down. A climate emergency won’t change our approach to this. Last year, National supported the Climate Change Response (Zero Carbon) Amendment Bill. The bill put into legislation a goal of reducing emissions to net zero by 2050, and it established the Climate Change Commission. Lower emissions is the organising principle of the Climate Change Response Act, as it should be. To lower emissions we need an effective plan based on practical sensible solutions, not extreme policies such as declaring a climate change emergency.

The test for this Government is: do their policies reduce emissions effectively? Only effective policies can help keep temperature increases to 1.5 degrees Centigrade, as required by the Paris Agreement, and deliver net zero emissions by 2050. The task before us is monumental. Net zero emissions in 30 years is hugely ambitious, especially for a country that earns half of its income from the primary sector. We simply cannot sink investments into ineffective policies. New Zealand will run out of money long before it reaches its targets if we commit to policies that simply don’t work. Our policies must lower emissions or be dropped.

What does a commitment to effective action look like in practice? Well, we see the solution in three parts. First, we must test every policy. We must know how many tonnes of greenhouse gas as a policy we take from the atmosphere, taking into account downstream effects to decide whether to go on with the policy or not. Every policy should be tested and each policy should be tested again after it is launched—and not just once but regularly, because reducing emissions is not just where to cut emissions but how much. For every policy the first tonne of cuts is usually the cheapest. Further cuts in emissions become more expensive. Each policy has a point at which the next tonne is no longer competitive with other sources. Our ambitious targets mean we need to know when each policy has reached those critical points.

The second aspect of effective action is that policies should demonstrate a minimum level of effectiveness before they are funded. In practice, minimum effectiveness will be a cap on the number of dollars the Government will commit to spend on a policy to cut a tonne of emissions. Policies that do not reach the minimum threshold of effectiveness should not be funded and the money saved should go to other more effective policies. This cap would certainly rule out the Government’s 100 percent renewable electricity goal, which actually has been costed at around $1,280 per tonne. New Zealand can make great progress towards emissions targets simply by redirecting spending from bad policies to better and more effective options.

Third, effective action means we must look at all of our options for reducing emissions. We must consider those options on a level playing field. That means accessing options on their merits according to whether they cut emissions and at what cost. The test for how we reduce our emissions should be based on not preferring one technology over another or whether it is in the right sector. Right now, across Wellington, hundreds of officials across four agencies are all working on one thing. They are writing rules on how we should live our lives. They want to tell you what car you can drive, what days you can drive, the size of your house, how much energy you can use and where you buy it from, and how many flights you can take. They have a name for this programme. It’s called transition, or transformation, and it’s hiding in plain sight. Official and Ministers refer to it all the time.

Just recently the Governor of the Reserve Bank delivered a speech called “Progressing climate action by driving transformational change.” Last year, the Minister of Energy and Resources gave a speech to the gas industry forum called, “Towards zero carbon.” In it she said—and I quote—“As we reckon with our global confrontation with climate change, it is clear the old ways or running our economy and paying our way in the world will need to change. We are on the precipice of a major economic transformation. … we need to change our economy at a larger scale and at a faster pace than that of any economic transformation in … history.” The Government has never made the case for transformation. It has not said what it means. It has not demonstrated it is necessary to cut emissions. It has not shown its benefits justify its costs.

There is no mention of transformation in the purpose statement of the Act or the targets of the Act. As I’ve noted, the legislation does say that our goal is to lower emissions, not transformation. The case for transformation must be made. It cannot be assumed. Yet it is being assumed. Transformation is being treated as though it follows directly and automatically from climate change. It does not. National believes that success means delivering on our emissions targets without sacrificing the things that help make life worth living. Success means meeting our responsibilities fully and genuinely while still driving the car we want, still leaving the heater running on a cold day, and still taking that once-in-a-lifetime overseas trip. Success means not having the climate change Minister telling us how to live our lives to cut emissions—because that means failure in every sense.

Command and control over every part of our life means not only losing the material things that we all enjoy; it also guarantees failure to meet our emissions targets. We cannot cut emissions as effectively and affordably from the top down. With all due respect to James Shaw, the surest way not to make real progress on emissions is to put control of a massively complicated problem in the hands of someone who’s never more than three years away from an election.

We have to be smart enough to not even try that approach. Sadly, for all this talk from this Government about a climate crisis, it’s doing nothing more than making it up as it goes along. They’ve chosen to fly blind. They’ve hardly even checked the cost effectiveness of their introduced emissions policies. This is inexcusable when there is so much at stake. Whatever happened to this generation’s nuclear moment? If the Government is serious about climate change, it must be transparent and well organised with its analysis.

To summarise, National is committed to doing what works on emissions. That is what our legislation and our international agreements require. Doing what works is the only way we can achieve our targets, and it will save us from big government trying to rule our lives. National believes we can fully meet our emissions obligations if we’re prepared to look at the options based on whether they’re affordable and effective. National believes that if we can meet our targets without changing our lives, we should, and we can if we are prepared to do what works to lower emissions. Declaring a climate emergency is nothing but a hollow symbolic gesture if there is no intention to act in the best interests of New Zealanders. Thank you, Madam Speaker.

SIMON COURT (ACT): I’m proud to stand here today on behalf of the ACT Party to offer a different perspective, a pragmatic and constructive approach to mitigate climate risks, because declaring a climate emergency is simply a triumph of politics over practical solutions—slogans over substance.

As an environmental engineer, I understand natural processes, and I also know that human activity has a significant impact on climate and the environment. So the question is: what are we going to do about it? Declare a climate emergency. And now? Well, local government are already putting in place plans to mitigate climate change risks, to respond to sea-level rise. Local governments are already putting plans in place with infrastructure, rezoning land, and to reduce building risks. The climate change Minister has the emissions trading scheme (ETS) and the Climate Change Commission. That Minister has the power to set the price of carbon through the ETS. He could set it at $50 a tonne or $100 a tonne—whatever price he chooses. That Minister has the greatest influence on the behaviour of business and consumers than any other Minister in Government.

So ACT says that to declare a climate emergency is nothing but a stunt. It’s not a solution because the people with the real solutions to mitigating the risks from climate change and adapting are business people, are scientists, are engineers. Those people have the solutions. They should be incentivised to deliver their solutions, not punished for being in business, punished for providing people with jobs and incomes.

If the Government wanted to do something tangible, it wouldn’t just tell civil servants to carbon zero; it would take ACT’s recommendation to amend Parliament’s sitting hours. Stop flying MPs all over the country, wherever they like, whenever they like, because MPs are the only people in the world with an unlimited travel budget to fly anywhere they like, whenever they want, on the taxpayer. No business would accept its staff jumping on a plane on a whim—no business in New Zealand would. ACT believes that politicians should lead by example when it comes to climate change. So ACT proposes to change the parliamentary calendar. Currently MPs sit three days a week for 30 weeks a year. We could sit for four days a week—imagine that—for 23 weeks a year. That would reduce the number of flights taken by MPs and carbon emissions by around 25 percent, and it would not only reduce emissions; it would save taxpayer money.

ACT believes that New Zealand must play its part on climate change and that the response must be simple to administer, politically durable, and effective. New Zealand will only prosper if we match our goals with actions, and actions which actually benefit the environment and climate. But if the Government forces through much deeper emissions cuts than our trading partners and sets more aggressive targets than other countries, we will simply impoverish ourselves. We will push vital economic activity to other countries. That is why ACT proposes New Zealand ties our carbon price to that of our top five trading partners. We can remain competitive as a trading nation. ACT believes New Zealand should do its part, through innovation led by business, engineers, and scientists, not through slogans and PR stunts. Thank you, Madam Speaker.

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Order! Before I take the next call, can I just advise members of the gallery that they may not take part in this debate and to hear the rest of the debate in silence.

Hon JAMES SHAW (Minister of Climate Change): Thank you, Madam Speaker. Look, I’d like to just start my contribution to this debate with a few ripostes to some of what I’ve heard before, such as the recent plan to reduce New Zealand’s total greenhouse gas emissions by reducing the number of flights that members of Parliament take. I mean, if there was ever a virtue signalling, that would be it. I also would like to mention what it is that some of our trading partners are doing, because one of the things I just heard was that we should tag our ambitions to the ambitions of other countries around the world.

There’s been a lot of movement on that recently. Every single G7 nation now has a net zero target for 2050—including all emissions, including biogenic methane—and are therefore more ambitious than New Zealand’s targets are, ourselves, that we were able to get through this House last year. Even China now has a net zero target for 2060. So, actually, we are now in the position of having to play catch-up to some of the world’s largest economies. I look forward to the wholehearted support of the ACT and National parties as we do try and meet the rest of the world on that.

I would like to start by just acknowledging what I thought was a mostly thoughtful contribution from the new National Party spokesperson on climate change, Stuart Smith, and I want to congratulate him on his first appointment. I do want to say, the National Party—I want to acknowledge the contribution that they have made over the years and in their time in Government. I know I had a go at them at question time, but it was the National Party that took us into the Paris Agreement. I acknowledge the presence in the Chamber of the Hon Simon Bridges, who was there for that. It was the National Party who lodged our nationally determined contribution under it. It was the National Party who voted for the Climate Change Response (Zero Carbon) Amendment Act.

It was the Hon Steven Joyce who set up the Productivity Commission report that turned into this Government’s climate action plan that that National Party then voted against every measure of. That National Party rejected the idea of a feebate scheme for electric vehicles, which was one of the recommendations of the Productivity Commission report that the Hon Steven Joyce set up. I want to say, if they think that this declaration is devoid of substance, then I look forward to their full-hearted support of every single policy that we introduce over the next three years to actually put some substance into this and to reduce our greenhouse gas emissions. You want to put your money where your mouth is, folks.

Look, I want to point out some of the things that the Prime Minister mentioned about the machinery of Government here. We have been reluctant to declare a climate emergency that would just be empty words. It has to have substance. The Prime Minister and Cabinet have decided that there was going to be some machinery of Government that gets organised to make sure that this happens, because we have seen jurisdictions—some local authorities here in New Zealand, some jurisdictions overseas—that have made these declarations without providing substance. The Prime Minister is going to chair a committee of Ministers to make sure that Ministers and their agencies are accountable for all of the actions in the climate action plan; we’re directing the Public Service to prioritise the actions that are in the climate action plan; everything that Stuart Smith said that he was worried about, about the lack of a plan—we have a plan.

We’re now organising the Government to ensure the delivery of that plan, in line with the fact that we are saying that this is an emergency that has a level of equivalence to any civil defence emergency. It’s not a civil defence emergency, of course, but it is the cause of more frequency and more severity than every single civil defence emergency that we have, except for earthquakes. Therefore, we need to treat it as an emergency with the same level of seriousness that we would treat any civil defence emergency. The response is different from a civil defence emergency of course; if you declare a civil defence emergency, there are certain authorities and powers that go with that. In this case, we need to make sure that we have a long-term approach, a just transition, an approach that includes mana whenua, and businesses, and communities, and enterprises all over the country. This is not just an emergency here in Aotearoa, although the effects are being felt here.

The Prime Minister referenced the Pacific Islands, and I do want to say that the effects are being felt there much more severely, much more early, than they are being felt here. The Cook Islands believes that up to 25 percent of its annual budget is used in dealing with climate emergency responses. It is an absolute responsibility that we have to declare this emergency and to back it up with substance, with action. Finally, I’d just like to acknowledge the presence in the Chamber of many of the people who have held vigil: Ollie Langridge, Fridays for climate, the tens of thousands of people who marched before COVID on the school strikes for climate—this declaration is for you.

DEBBIE NGAREWA-PACKER (Co-Leader—Te Paati Māori): Kia ora e te Māngai o te Whare, tēnā koe. Ko te mahi o te kaitiaki i te mana ō Papatūānuku, ō Ranginui hoki, tae noa ki ā rāua tini tamariki-mokopuna nei e whāngai nei i a tātou o te ao mārama nei, he mana tuku iho ngā iwi me ngā hapū i ēnei ngā mana atua me Te Tiriti o Waitangi. Mā ngā iwi me ngā hapū e whakahaere, e kai hoki, kia ora ai a Papatūānuku me ana tini uri-mokopuna, tatū mai ki te tangata.

[The role of protecting Papatūānuku (Earth mother), Ranginui (Sky father), and their multitude of descendants that sustain us, in the world of light, is a responsibility that is passed down through the generations to the tribes and sub-tribes that descend from the gods and through the Treaty of Waitangi. Tribes and sub-tribes will continue to do our part to manage, protect, and conserve Papatūānuku and her descendants, including humankind.]

I rise on behalf of Te Paati Māori to support this motion to declare a climate emergency. For tangata whenua, this motion is well overdue. Tangata whenua have known long that our environment is totally out of balance, and for decades have understood the urgency of dealing with climate change.

In 2018, the Intergovernmental Panel on Climate Change—IPCC—released a landmark report that made it clear that there were only 12 years left to limit climate catastrophe. There is no time for inaction or delay. We have an obligation to our rangatahi to unite and to do everything as kaitiaki to protect our taiao and our whānau from the climate crisis in the short time that we have left.

For years, Rawiri Waititi and I have both been fighting for climate justice. In 2010, Te Whānau-a-Apanui worked to successfully stop Petrobras from deep-sea drilling in the Raukūmara Basin, and for the past seven years, my Ngāti Ruanui iwi have been leading the campaign against seabed mining off the South Taranaki Bight in the exclusive economic zone (EEZ). Our commitment to our people is that we will be unashamedly, unapologetically champions for climate justice and will push for policy outcomes that reduce emissions.

It was deeply disappointing to see the report that Aotearoa is being threatened with being left out of the climate leaders’ summit because New Zealand Governments have had great rhetoric on climate change but have failed to implement policies that actually reduce emissions. Declaring a climate emergency is a positive step, and many of the policies set out in the Speech from the Throne are a good start, but we must be bolder. We need tangible policies that reflect the urgency of this emergency.

During the election campaign, I announced Te Paati Māori’s policy that proposes transformative climate action, including ending new onshore oil and gas permits and withdrawing existing onshore and offshore permits, with a target of decommissioning sites by 2030; putting in place a nationwide ban on seabed mining within the EEZ to withdraw existing seabed mining permits; establishing a $1 billion scheme for Māori-owned community energy projects for whānau energy and efficiency, creating jobs; immediately bringing methane into the emissions trading scheme and phasing out synthetic fertilisers by 2025; and establishing a $300 million fund to support Māori farmers to transition towards regenerative and value-added agricultural models. We must restore balance with the natural world and regenerate our whenua, our wai, our moana, and our precious indigenous taonga species.

We look forward to working with MPs across the House to get these and many more policies across the line to ensure Aotearoa plays a leading role on the world stage in protecting Papatūanuku and taking real climate action. That is the climate action our mokopuna will be proud of. Nō reira, tēnā tātou katoa.

Hon KIRITAPU ALLAN (Minister of Conservation): It is with a deep sense of honour, privilege, and an overwhelming sense of obligation to future generations that I stand in this House as a member of this Government in affirmation of this Government’s declaration of its action on climate in declaring a climate emergency. There are many people in this House that have dedicated their lives to the mana and the restoration of that mana of Papatūānuku. I have heard passionate speeches in this House today that speak to the guts of what this declaration is. It is a clear recognition that climate change is the defining long-term issue of our generation.

This is an affirmation that this House has heard the call of our rangatahi, of our taiohi, asking that we turn our minds and make a declaration that climate change is in a state of emergency. This is an affirmation that we have heard the calls of our friends, our relations from throughout the Pasifika nations, asking that we declare that the climate is in a state of emergency. We have heard the call from our scientists for generations that have been stating on the best basis of the science available to us that our climate is in a state of emergency. And I want to acknowledge the leadership of the Rt Hon Jacinda Ardern, who said only three years ago, when she stood at the Throne for the first time as our Prime Minister, that this, climate change, is the nuclear moment of our generation. And there was a call that went up and down the nation in affirmation of those words, because we know that climate change demands a complete change in the way that we have done things.

I hear the spokesperson, the new spokesperson, for the National Party say, “But we want to continue to drive the cars that we want to drive.” Well, actually, no longer can we just live a life of status quo because Papatūānuku is demanding something more of us. So this declaration is not without meat on the bones. This declaration comes with a clear indication from this Government that we will do things better. We have just heard from the Rt Hon Jacinda Ardern that by 2025 the public sector is expected to become carbon-neutral. Chucking my Minister of Conservation hat on—I was sitting next to my colleague the Minister of Forestry. We are both here to help the Public Service in any way we can to help the Public Service achieve those goals.

There is a huge impact on our conservation values. Many of Aotearoa’s plants, our birds, our bats, our insects, our reptiles, our fish—they are not found anywhere else in the world and they are all at risk right now from the impacts of climate change. This is time we cannot get back. Climate change poses much more risk to entire habitats being lost from extreme flooding or fire to changes in the range of distribution of pests. For only a couple of weeks now, I’ve held the portfolio of Minister for Emergency Management. My colleagues from the National Emergency Management Agency across the country have had to adapt radically the way that they are responding to emergency management issues because there has been an uptake as a consequence of climate change.

I have no idea why the Opposition may laugh and jest at these things, because these are having real-life, tangible impacts in rural communities, in urban communities. Our future generations have asked us, “Please, House of Representatives, please hear our call for urgent action.”, and I am so proud that we have a Government that will take bold action that is required. Last year, we had floods in the Far North and in the deep South. In my home patch of the East Coast, we’ve got Edgecumbe and Tolaga where our coasts are eroding. This declaration of a climate emergency is a declaration for those future generations and I thank you all, those rangatahi, for bringing that call to this House. Tēnā koe.

Hon SIMON BRIDGES (National—Tauranga): There are many wonderful things about the modern world that we live in. One of the bad ones, though, is that if you say something with enough feeling these days, it’s somehow automatically true and valid, whether you’ve done anything about it or not. Emoting is mistaken for actual actions. Feelings and chats like the Prime Minister’s very diplomatic language, the dialogues we have—they are mistaken for outcomes. Well, when I was growing up, there was a saying: actions speak louder than words. Let your deeds do the talking. In three years on climate change, nothing’s happened. Literally, James Shaw passed a law to set up a committee. It’s what we’ve done. We voted for it—I mean, it’s a nice committee. It’s a structure; I accept that. There’s been an oil and gas ban which has, perversely, resulted in more coal imported into New Zealand and emissions going up. Literally, I defy the members on the other side to tell us one other thing in three years that has happened that has made a difference.

It’s not surprising, therefore, that in the last three years, emissions have gone backwards. They’ve gone up. They criticised our target when Tim Groser and I went to Paris and signed the deal, but emissions have gone up. We’ve had emoting, we’ve had feelings, and we’ve had nothing else. I don’t like to be cynical but hold huge hope for the next three years. What’s so frustrating is, as Stuart Smith has said, the actions we should take are practical and, with respect to the Prime Minister and the Labour Party and the Green Party, they’re obvious. But Government’s not interested in the practical, sensible stuff right before its eyes.

In the last National Government, I was for a time Minister of energy, a transport and associate climate change Minister. I wanted to be climate change Minister, but Paula Bennett stole it off me when she worked out I wanted it. I had in my office, in the—

Hon Aupito William Sio: She’s gone now.

Hon SIMON BRIDGES: Well, you know, there’s always a chance to have a little resentment about something, right? Let’s be honest. I had a chart, a pie chart, in my office—very large—and it literally just divided the emissions of New Zealand up into sections. My portfolios made up half, broadly speaking—the maths isn’t exactly right. A quarter is transport, a quarter is energy, and, of course, the other half is, effectively, the primary sector. In energy, the reality is it’s not electricity. We’ve got the gains from that at 85 percent renewables in electricity; 65 percent—85 percent while National was in office.

Hon Marama Davidson: Yeah, we still need the rest of energy.

Hon SIMON BRIDGES: By the way, it’s going backwards now, Marama Davidson. It’s at, I think, 82 percent, and I blame your gas ban for that. The Government’s mucked around with the market in that area.

I know David Parker’s keen and other Ministers are keen on this idea of an Onslow project: effectively, a Muldoonist think-big project which will waste several billion dollars—they say four; I’d say more—on a project that really isn’t where the real game is, because we’re so close to 100 percent in electricity anyway. We’d be better, frankly, to put the money into incentives for electric vehicles in this country than do the Onslow project. But the real answer is, well, part of it in energy is in industrial heat, and I acknowledge the Government’s doing some things—some timid things, some cautious things, but some things there.

Then you’ve got a quarter in transport. Nothing’s happening—nothing. We went into election 2017 with a number of rail projects: electrification, third main line—none of those things have started. In fact, in electric vehicles, the only things today the Government is doing are things that I talked about and had planned for. Then, in primary production, here’s a practical solution: rather than talking down to farmers, how about updating our biotech regulations, investing in technology and innovation so that, actually, we meaningfully do something about emissions in this country. Today, we’ve got an emergency where all we do is chat. Actions speak louder than words.

Hon NANAIA MAHUTA (Minister of Foreign Affairs): Tēnā koe e te Kaiwhakawā. Tuatahi, tēnei ka whakaarohia ki te kaupapa kei mua i te aroaro e pā ana ki tō tātou taiao me ā tātou nei hiahia ki te tiaki i a Papatūānuku mō te āpōpō te take, nō reira ka tīpako tērā kōrero nō tōku tūpuna “E kore tēnei oranga e huri ki tua o āku mokopuna”.

[Firstly, I consider the matter that is before us at the moment—our environment and our desire to protect Papatūānuku for future generations. Therefore I will use the words of my ancestor to make the point “This way of life will not continue beyond the days of my grandchildren when we shall reach salvation.”]

Can I just say that today is the kind of day where you want to debate the issue of a climate emergency, because we know that the more we do now, in some very practical ways, the better the future will be for many of our children around New Zealand. There’s a Chinese proverb that says that the best time to plant a tree is 20 years ago; the next best time is today. So what we’re doing is stating very clearly that a climate emergency declaration is our opportunity to put a stake in the ground and say we must do more.

In fact, we have done a lot in the last three years. So I just want to respond to some of the remarks of the previous contributions, because when we announced that we would undertake an effort to plant more trees—one billion trees by 2028—there was a whole lot of guffaw on the other side of the House, but that was an opportunity for us to again create jobs, contribute back to the environment, and make a big difference in this area. Stopping new offshore oil and gas exploration permits—again, a clear signal that we were drawing a line in the sand about what would not be sustainable or in the best interests of our kids going forward into the future. We weren’t going to leave that to chance in terms of regional economies; we’re going to help them transition into this new future a low-carbon economy and what they could do to generate jobs by regions, and Taranaki has been the focus.

Our goal of 100 percent renewable electricity generation by 2030, I believe, is something that has created a lot of excitement throughout the country. When we look at local community projects that are now starting to be generated, we can gain much encouragement from that. Our investment in rail trains, public transport, walking, and cycleways again signals a very strong intention. Can I just go to my own region in the Waikato. We are positioned between Auckland and Tauranga port; having rail from Auckland to Hamilton is a significant opportunity to get trucks off the road and the passage of goods by rail, thus reducing emissions—again, a significant contribution just in the last three years.

The 100 million Green Investment Fund, Jobs for Nature, our world-first partnership with farmers to reduce primary sector emissions, and the launch of Te Taiao, Fit for a Better World, to signal that we are leaning into this space of doing more—actions speak louder than words, and we are demonstrating that we are committed to action.

The Prime Minister’s announcement today is to say very clearly that we must lead by example. So the public sector must absolutely demonstrate that they will make the changes that can influence further change, potentially in the private sector. I’m so proud of phasing out the use of coal boilers in the State sector, ensuring that we move the Government fleet towards electric vehicles so that we can gain greater efficiencies in the way that we—our people—in the Public Service move around the country, and ensuring that we’re putting energy efficiency building standards on all mandated agencies of the offices that Government services occupy. They are all practical things and steps that send a very big signal.

Just this time last year, round about, I was in Napier, and young children were marching to the local community centre around climate change. I was actually at a Society of Local Government Managers conference, and at the time several local authorities had already called a local climate emergency because fires, flooding, droughts—all these natural hazards that were impacting on our day-to-day lives—were very real challenges. Local governments are stepping up to the plate because they know something needs to be done. And here we have today the Prime Minister calling a climate emergency, not for any political reason, but, actually, because our kids deserve it. Their kids deserve it, and if the lot on the other side really, really wanted to work with us, we could all do something tangible together so that all our kids will have a better future than what they’ve inherited.

NICOLA WILLIS (National): I rise to speak in opposition to this motion, because I think we should be straight with New Zealanders. This declaration will have no measurable impact on global climate change. I know it, the Prime Minister knows it, and I reckon even Chlöe Swarbrick knows it. It won’t take a single car off the road. It won’t reduce the methane from a single cow, nor remove a single tonne of carbon dioxide from the air. The motion before us employs all the implied drama of the word “emergency”, but it does so with zero practical effect. It is, unfortunately, yet another collection of words in place of the sincere policy and concerted action New Zealand must take to drive down our emissions.

Let’s reflect on the history of political statements about New Zealand’s climate change ambitions: a carbon-neutral nation, the world’s first truly sustainable nation, the nuclear-free moment for our generation, and, today, the declaration of a climate emergency. It is time we realised that these carefully worded ambitions are no substitute for meaningful policy reform.

So let me be very clear, and I say this especially for those who might try to use this debate to mislead New Zealanders: there is no doubt that climate change is the greatest environmental challenge of our time, nor do I doubt that it will be the greatest challenge environmentally for my children’s time to come. When our kids look back on this moment in history, they won’t judge who was on the right side or the wrong side by what words were spoken; they will judge us by our actions.

I am very firmly of the view that climate change threatens our world and our communities, that the production of greenhouse gas emissions by people is its cause, that New Zealand must act to reduce our emissions, and, of course, that Parliament has a solemn responsibility to take steps to achieve that.

Of course the National Party is on board with the global mission to reduce greenhouse gas emissions.

Kieran McAnulty: Really?

NICOLA WILLIS: Yes, it is a mission we share with New Zealanders up and down the country. I remind this House, as my colleagues the Hon Simon Bridges and Stuart Smith did, that the previous National Government signed the Paris Agreement, we supported the zero carbon Act and the creation of the independent Climate Change Commission, and we continue to promote sensible policies to reduce greenhouse gas emissions. But it is not at all clear how this declaration will take us a single step further forward.

Traditionally, of course, New Zealand has declared emergencies in the context of our Civil Defence Emergency Management Act, and it’s instructive to look at the special powers that that Act brings forward: powers to remove vehicles, to evacuate premises, to make rescues, to remove dangerous structures, requisition equipment, restrict access to public spaces—all of these and more. The emergency declaration today is completely empty of any such powers.

Is it any wonder I feel cynical? Because let’s remember, this is a Government that again and again has reached for the easy gestures of political symbolism and yet time after time has failed the hard test of policy delivery. My suspicion is that the Government intends this motion to distract from its record, its failure to stabilise let alone reduce domestic greenhouse gas emissions; to distract from its failure to accelerate electric vehicle take-up, its failure to reduce reliance on coal-fired energy generation, its failure to accelerate breakthrough technology that would reduce not only our agricultural emissions but agricultural emissions throughout the world, its failure to produce a meaningful plan to implement our existing emission reduction targets; to distract from its preference for policies that fit in neat phrases like “100 percent renewable energy” but that are not approved by the independent experts and that result in renewable energy use dropping to 82 percent.

My sense is that New Zealanders do expect more from our Parliament on climate change, but they are not asking for more flowery words. They want sensible, carefully thought through policies that will move our country forward. So let’s spend less time on meaningless declarations and much more time on the hard work of actually reducing emissions.

Hon AUPITO WILLIAM SIO (Minister for Pacific Peoples): Congratulations, Madam Speaker, on your election. I want to say, in response to the previous speaker, Nicola Willis, words matter. Words matter as well as commitments. My elders would say, “E pala maʻa ae le pala upu.”—meaning “Rocks turn to dust but words will always remain.” This declaration is important words. This declaration is an important commitment, is another step on top of everything else that we have introduced since coming into the administration. It is another step towards helping New Zealand transform into a nation of low-level emissions.

In order for us to do that, it requires us to act at the scale of the Industrial Revolution and at the speed of the Digital Revolution. It isn’t just one thing; it is many things, and already we have shown and demonstrated the One Billion Trees programme; stopping new offshore oil and gas exploration permits; our record investments in rail, trains, buses; and our world-first partnership with farmers to reduce primary sector emissions. Fact: the Earth is warming. Fact: oceans are rising. Fact: the ice sheet melts continue. Fact: our climates are getting hotter, wetter, and drier. These are absolute facts, and it’s happening right now. So this declaration of a climate change emergency is an important stake in the ground. It sends a signal, it declares our commitment, but it also will inspire others. I saw earlier young people up there in the gallery. I hope it will inspire young people to do the right thing. It is a declaration that is based on science, and it is not a statement of aspiration but a statement of fact.

One only needs to look around the regions. We see coastal erosion. Our climate change advisers have advised Parliament about what is happening around our coastal regions. Our stocks and our livelihoods have been destroyed. Floods—all of those things are happening around us. We don’t need to look very far. Homes have been destroyed. Local councils can’t figure out who to pay for that. Livelihoods, jobs, are at stake, and even lives.

I want to acknowledge the indigenous perspective that has been introduced in the debate here, because that’s important. From a Pacific perspective, climate change is a consequence of the failure of the market. They know that since the Industrial Revolution, the rich and wealthy have gotten richer—more wealthy—while the poor become poorer. And since the Industrial Revolution, they have seen how the costs of pollution have been socialised and the benefits have been privatised. Tuvalu, Kiribati, Tokelau, the Marshall Islands—those islands are fighting for their lives. They’re fighting for their homes. So this statement is New Zealand putting a stake in the ground, acknowledging that indigenous knowledge has a thing to say—about whanaungatanga. We are family and, therefore, we have a duty of care, a responsibility not only for our own population and future population but for the population of the vast Pacific Ocean.

So I want to stand here and acknowledge the leadership of the Prime Minister when she said that this was a nuclear-free moment for her generation. We’re not going to resolve this overnight. It’s going to take time, but the steps that we have taken, the commitments that we have made as a Government—and that side did commit to the carbon-free emissions goal last year, so I don’t know what’s going on there. I think the true leader ought to step forward. The one who should be the spokesperson for climate change should step forward and stop messing around.

A party vote was called for on the question, That the motion be agreed to.

Ayes 76

New Zealand Labour 64; Green Party of Aotearoa New Zealand 10;

Te Paati Māori 2.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Motion agreed to.

Address in Reply

Address in Reply

Debate resumed from 1 December.

Hon Dr MEGAN WOODS (Minister of Housing): Madam Speaker, I would like to begin, as is customary in this debate, by congratulating you on your election as a presiding officer of this House, along with your colleagues. We look forward to a productive three years with very fair rulings from the Chair. But congratulations.

I would also like to take this time to acknowledge all of the new members of Parliament who have come to this House in 2020. Being elected to represent your community is a huge honour, and the sense that I’ve got from all the new members of Parliament that I have met is how seriously they do take this responsibility. So I wish all of those members of Parliament well. I would especially like to acknowledge the 23 new Labour members of Parliament that we had elected at the 2020 election. I think it’s fair to say this is a phenomenal group of people, and as I have had the joy of listening to the maiden speeches, I have been filled with the sense that this is a group of people that have a sense of purpose, an understanding of why they have come to this House, and what it is that they want to achieve.

It’s fair to say that 2020 has been the most unusual of years, and I think, as we look forward to its end, it is worth us as New Zealanders reflecting on what a fortunate position we are in as we look around the globe, as we look in communities that are facing a Christmas that is not going to have the liberties that we have here in Aotearoa New Zealand. That was the result of the collective efforts of all New Zealanders, and I think that is something, as we approach the end of the year, that we should all truly celebrate: the way in which New Zealanders rallied as a group of people, as communities, to protect each other and to ensure that we could all stay safe. This was, of course, an election that occurred in the context of this. I think what we’ve seen, as the result that was returned showed, is that New Zealanders voted for stability and certainty at this election, at a time of uncertainty around the globe.

I think that the Address in Reply debate can often seem a strange debate. It is a debate when stump speeches seem to be dusted off again after a few months or a few weeks since the election campaign, but they can be a time to reflect on what it is that the House can achieve over the coming three years. We know on this side of the House that with our result comes a huge responsibility. We know that we are in the middle of a global pandemic and New Zealanders have put their trust in us. We know that overseas, the health and economic outlooks continue to worsen. Here in New Zealand, our Government’s commitment is to remain focused on keeping New Zealanders safe while minimising the ongoing economic impacts that the virus has wreaked on communities all over the world.

We campaigned and were elected on a five-point plan for economic recovery that will help New Zealand bounce back, and what we can never lose sight of is the opportunities that lie in front of us to build back better. I think the debate that we’ve just had over the climate emergency puts into perspective what we can achieve, what we collectively can achieve, and the opportunities that have been given to us to ensure that out of 2020 we emerge with a renewed vigour around addressing one of the greatest threats to our planet, and that is human-induced climate change, something that we have to have a commitment to addressing. It means that we do have to look to these long-term challenges.

So, while as a Government we’ve got to have the plans in place to ensure in the short term New Zealanders can pay their mortgages, they can pay their rent, they can put food on the table, it is our responsibility as a Government to make sure we are never taking our eye off those long-term challenges that confront us as a country, off the challenge of climate change, how it is that we decarbonise our economy and our society, how it is that we address these problems that are decades in the making, such as housing affordability, and what we need to address these questions. Let’s be honest: these are not issues or problems that are easy; they are complex and they are difficult and they cannot be solved overnight, but we laid the foundations for change in our first term, and we are heading in the right direction. We have a programme of work that will build on this and will never take our eye off those long-term challenges that are confronting us. But, most of all, we will be a Government for all New Zealanders.

If we think about those challenges that lie ahead of us—to keep New Zealanders safe from COVID-19, to accelerate our economic recovery, and to lay those foundations for a better future—we can see that we have an exciting three years ahead of us, a truly ambitious programme of work that we can all collectively band together and get excited about. When we think about how it is that we continue to keep each other safe as we exist as a group of islands at the bottom of the South Pacific, in a world that is being ravaged by a virus, we need to stay ever vigilant. We are committed to that elimination strategy. Although there were questions about it when we started out at the beginning, in our hearts we knew that our best economic response was always going to be the best health response. This is what happens when you put people at the centre of your decision making. [Coughs] Can I get water? This is what happens when you make sure that, actually, you are caring for your people. So that is the approach that we will continue to do. We will be flexible. We will continue to learn. We will continue to take the opportunities—[Drinks water] for a sip of water—to retain and to continuously improve our multiple lines of defence against the virus.

The first line of defence as an island nation has to be our border, and we will continue to strengthen this, to have robust protections in place, such as testing, infection control measures, and supporting quality staffing. On that, I would like to offer my sincere thanks to the many thousands of people who are staffing our borders. This is not easy work. This is hard work. It is under a scrutiny that many of these often minimum wage workers did not know they were entering into. I think 2020 has been a year when as a country we’ve come to reflect on how much we do rely on some of those workers that we pay the least: our supermarket workers, our cleaners, those that make sure that we are kept safe. So I hope that is something that we can take from this most unusual of years.

But we must also accelerate the recovery, and what we have seen and what all the economic indicators are showing is that nothing is as bad as those initial forecasts were harrowingly showing us they could be, that we have put people, we have put jobs, we have put jobs, and we have put jobs at the centre of everything that we have done. We were not prepared to have a stand-off approach, to put our hands in the air and say, “What will be will be.” What we were prepared to do was make sure that we were looking out for our people and that we were investing in our long-term problems, we were investing in infrastructure, we were investing so we could keep New Zealanders in work.

We are proud of the results that we have achieved, and we are looking forward to continuing that ethos in how we govern for the next three years. That is the trust that has been put in us by the election result. This is the trust that we will repay to all New Zealanders. This is the job and the challenge and the opportunity and the responsibility that lies ahead of us, and one that we take seriously.

CHRIS BISHOP (National): Mr Deputy Speaker, can I firstly, sir, congratulate you on your election to this august office. We in the National Party are looking forward to working with you. This Government has a big mandate—the biggest mandate any Government has ever obtained under MMP. It was once said by Sir Geoffrey Palmer that it would, basically, be impossible for a Government to ever govern alone under MMP. In fact, the system was specifically designed to stop that happening, but yet here we are. The Labour Party has 64—it will be 65 once Phil Twyford is sworn in—seats, and we find ourselves here in the National Party in Opposition with significantly reduced numbers. And we take that message on board seriously. We do. Because the voters in a democracy are always right. By definition, they are always correct, and when the voters send a party from 56 seats after the 2017 election to 33, you have to respect that result, and you have to take it on board and listen to what the voters are saying.

So we respect the mandate of the Government. We respect their big mandate. We respect the fact they have 65 seats, and we respect the fact that they’ve added to that with the Green Party, but with a big mandate comes a big responsibility. New Zealanders are not going to accept the politics of excuses that we saw for the last three years. They are not going to accept blaming National for the nine years, and the long nine years, and all the tired rhetoric about that. They are not going to accept the fact that National was in Government and did or didn’t do a good enough job. They are going to expect the Labour Party to lead. They are not going to accept blaming Winston Peters, because Winston’s gone. He’s not in Parliament any more, and the Labour Party will not be able to blame New Zealand First for not being able to get through all of the progressive policy they want. They have the numbers. They have the Greens there, if they really want to blame really dumb stuff on them, but they have the numbers and the mandate. So we will expect, as a Parliament, action on the things that the Government says it cares about: housing, child poverty, climate change. They’re the things that New Zealanders care about, too. No more excuses.

The most remarkable thing about the Speech from the Throne was its timidity—its vaulting lack of ambition. It’s almost as if the Government has decided it’s all too hard. Let me compare the Speech from the Throne in 2017 to 2020. In 2017, the Prime Minister talked about an ambitious programme: “In our society today, no one should have to live in a car or on the street. No one should have to beg for their next meal. … That kind of inequality is degrading to us all.” And then the kicker: “This will be a government of transformation. It will lift up those who have been forgotten or neglected … This will be a government of aspiration.” Fine words.

What happened in 2020? We need to “do more and go further”. We need to “pursue progress”. We need to “lay the foundations for a better future”. This is all about stability and certainty. It’s like a speech written by committee, which I suspect it was—written by bureaucrats, and not particularly good ones, rather than the Prime Minister seeking to lead. A vaulting lack of ambition—no mention of “ambition”, in 2020’s version of the speech. No mention of “aspiration”. The only time “transformation” is mentioned is in the context of these Orwellian industry transformation plans that the Government is going to impose on industries—as if the Government’s always had a great idea about how to transform an industry to higher productivity and higher growth.

And why has the Government dialled down the rhetoric? Why have they gone from “transformation” to needing to “do more and go further”? It’s because, well, the rhetoric was fine and the intention was good; in the first three years, the results were terrible right down the line. One hundred thousand homes—they don’t even talk about it any more. KiwiBuild was not even mentioned in the Speech from the Throne. It’s not even talked about any more, because we know it was a disaster. Sixteen thousand were meant to be done in the first term. In Lower Hutt, they promised 400; they didn’t do a single one. One billion trees—not mentioned, again, in the Speech from the Throne—36 million done in the first three years. Light rail was a complete joke: meant to have been rolled out by 2021, finished—complete—from Mount Roskill to the CBD. They do not even have a business case by the end of 2020. No consents, no plan, no funding, no costings—nothing. Not even a completed draft business case. And poor old Michael Wood, the new Minister of Transport, has inherited a complete lemon from Phil Twyford.

Child poverty—the reason the Prime Minister came into Parliament, she says—material hardship got worse from 2016-17 to 2018-19. Fees-free gave a lot of money away to kids in tertiary education, but the numbers went down rather than up. When they first got in, the target was to raise the number of students receiving tertiary education, and then the numbers went down. So what did they do? They changed the targets. Instead, the target was literally, “We will measure success by how much money is spent, rather than how many kids actually get into tertiary education.” What an indicative sign of the Government’s priorities. The Prime Minister says child poverty is why she’s in politics. That’s why she’s here: to eradicate child poverty. And what was the first thing, the first multibillion-dollar spending commitment of the last Government? Not child poverty. Not the hard social reforms to end the enduring misery of kids who grow up in appalling State houses, in appalling misery. Not any investment into that. Not using data and analytics and the best minds that we developed in National in Government—not that. The first investment was to pay kids from Remuera free money to go to Auckland University and get a law degree for free. The most regressive policy the Government could come up with: that was what they did.

And so we are going to expect more over the next three years. So we welcome the departure of New Zealand First from this Parliament, and the Government is going to have to dial up the rhetoric and they’re going to have to do something about the enduring social problems facing this country. Housing is going to be a major centrepiece of the next three years. We’ve already seen the numbers on the social housing waiting list—20,000—and I think it is appalling that we live in a country where kids grow up in motels. We saw Nicola Willis question the public housing Minister, the Minister of Housing, on it today.

Hon Poto Williams: I think National started that.

CHRIS BISHOP: Yeah, yeah—absolutely, absolutely. Absolutely. It’s wrong that kids grow up in motels, and it’s wrong the Government pays for people to live in motels, but what I want to know is: what is the Government doing about it that will make things better? Because I’ll tell you what, extending the brightline test from five years to 10 years will do nothing to eradicate the social housing waiting list. It will do nothing about lowering rents. In fact, it will raise rents. It will send more people into social housing. It will make it harder for people to get on the housing ladder.

What will make a difference? Things that the Government has put in the too-hard basket. Things like smashing the Auckland Rural Urban Boundary, which the Government said they’d do, in 2017 in the Speech from the Throne, and never did. Well, now you’ve got the opportunity to do it. Things like strengthening the National Policy Statement on Urban Development, which was a good thing the Government did, but it comes in too late to grow for density. Bring it forward further. It comes into effect in 2024; start it in 2021 or 2022. Things like working with Kāinga Ora to allow capital for community housing providers, and actually funding housing infrastructure, both on the edges of our cities and inside our inner cities as well. There’s a lot of things the Government has put in the too-hard basket that they could do.

So we will be holding them to account on housing, we will be holding them to account on child poverty, and we’ll be holding them to account on education, because the interesting thing about education in this country is we’ve doubled expenditure on education in the last 10 or 12 years and our Programme for International Student Assessment scores have gotten worse. So we are going to be challenging, in the National Party, some of the long-term issues facing this country over the next three years, and the question for this Parliament is: is this Government, with its big mandate, its big progressive majority, up for that challenge?

Hon POTO WILLIAMS (Minister for Building and Construction): Tēnā koe e te Mana o te Whare, and can I add my congratulations to those already expressed to you on your elevation to Deputy Speaker. I am enormously proud of having been part of the presiding officers’ team and working alongside you, and now I see that you are going to conduct your role with great mana and integrity. I look forward to being in this House when you are presiding.

I had the privilege and honour this morning of spending some time with the family of Constable Matthew Hunt, and today I want to spend part of my time just acknowledging those who have passed—particularly those who have passed in the line of duty—and Matthew Hunt was one of those. His mother and sister came today to present a petition to ask Parliament to examine our laws and our penalties when someone loses their life in the line of service. That’s appropriate, and I know that the select committee process will be robust around that. So I want to acknowledge that and him and his service—a fine man, who served the New Zealand Police service and our country really well.

But I also, at the same time, want to acknowledge that there is another group of people who are feeling some mamae at the time, and that is those people who were impacted by the effects of the impacts of March 15, and the fact that the royal commission of inquiry into the mosque attacks is due out shortly. I send my aroha to the Muslim community and also to the people of Christchurch and to the people of Aotearoa who were impacted on March 15, and what may be re-triggered with them when the commission of inquiry comes out. So I send my love and say that we know that there will be some questions to be answered in that document and that I, for one, am putting my support to ensuring that we address the concerns that those families and those people have.

I want to couch that, too, in a bit of a story. I remember March 15 very clearly because Speaker Mallard came to Christchurch and we happened to be in Linwood, at Linwood school, on the morning of the attacks of March 15, about 150 metres away from the Linwood Islamic Centre. We finished at about 12.30, and Jan Logie and I actually went to the Square in Christchurch to attend the School Strike 4 Climate—thousands of children marching through Christchurch, singing, protesting, shouting their commitment to a better world for themselves. It’s very strange to me in my mind that the two events conflate, but I think there is something in that: that the huge tragedy that we experienced on March 15 also signalled the huge tragedy that could occur later if we don’t do something about stopping the warming of our planet.

I tell this story as a person from the Pacific who has a heritage homeland under threat, and our young people will not sit by and allow us not to do something about it. Now, this is one of the key planks of the work that this Government wants to do, because we know that this stuff takes time and that, if we don’t start now by making bold commitments, we will not live up to the expectations of our young people.

I look across the House at our fabulous class of 2020—both sides of the House. I want to congratulate you all on a fine campaign and passage into this place, because you will carry the work of some of us who will move on from this place at some time in the future—you will carry that forward. So remember: this stuff takes a little bit of time, you know, but unless you keep your foot on the pedal and unless you keep going with this, momentum stops.

To my colleagues from the class of 2020, don’t worry about them, OK? [Gestures across Chamber] Our mahi is to keep positive, to live the values of our work and our party, and to keep moving forward, OK? Ka pai. We can do that, right? Right.

Hon Member: We’re always here for you, though.

Hon POTO WILLIAMS: And if there are other friends who want to join that journey, that’s really cool, too.

There’s so much work to do. The Speech from the Throne gave us a couple of really clear steers. COVID-19 response—and I have to congratulate what our Prime Minister and our Government did. I am so proud to be a New Zealander. I am so happy to live here. I’m a little bit sad for my Australian kin, who can’t come home easily, but I am so happy at our response. We have pursued elimination and, so far, we’ve been pretty darned successful. I think about the Saturday afternoons that I enjoy, going down to the local parks and watching the kids play sport—you know, where else are they doing that around the world? I think about the international sport that we’re going to be hosting over the summer. Where else can that happen?

Now, our COVID response has been great, but we have an opportunity now in our recovery plans to build back better, and we are going to do that, because we’ve got a massive programme of infrastructure that is going to fix the hospitals, build classrooms in schools, it’s going to support infrastructure for transport, and it’s going to create jobs. It’s going to create so many jobs, we actually have to plan for training people to take up those opportunities.

Now, I think that’s fantastic. I think it’s fantastic that we’re looking at training people in trades. We have doubled the numbers of people in apprenticeships, and 16 percent, I think the number was that was quoted—16 percent of those are women. So that, for me, signals our thinking has changed. We are planning for the future. We are planning to ensure that we’ve got great facilities. We’ve got jobs, and jobs for those people who could be the most impacted by all of this—Māori, Pacific, and women—and I’m enormously proud of that.

I just want to mention one particular project, because all politics is local. One particular project got off the ground because of our support for local infrastructure and shovel-ready projects, and that is the money that went into support the nine projects in New Brighton, a little corridor of community projects that run down the New Brighton beach. Two surf clubs, a bridge club, a community centre, a tennis club, a multipurpose sports arena, a butterfly garden—all part of the shovel-ready projects. They came together as a collective of people, they created local jobs, they created interest and vibrancy, and they built our community there in Christchurch, and I’m really proud to have been a little, little, small part of that.

You know, I want to come back to where I started this speech, on that support for those who have lost their lives. I just want to say that what I’m enormously proud of is the fact that this Government has decided to make a ministry for those who are impacted by family and sexual violence, and I’m so proud that the Hon Marama Davidson has been the first Minister of that ministry. We are now taking the issue of family harm so seriously, we are committing to it by putting the resources of the joint venture—all of the justice sector Ministers—and heading that with an enormously capable woman, who will lead a great ministry and, hopefully, will really come to address the issue that impacts our community most, which is family harm. So I’m enormously proud, and I will be wholeheartedly supporting that work.

I am so proud to be part of this Government. I’m so proud to support our new members and our class of ‘17. We’ve still got some stellar stars in that class of ’17 coming through, too. But thank you very much, Mr Speaker. I look forward to the maiden addresses coming later in this debate. Thank you.

TODD MULLER (National—Bay of Plenty): Thank you, Mr Speaker. It’s a great privilege to rise and speak for the first time in the 53rd Parliament, and I acknowledge you for becoming Deputy Speaker, and for all those new and returning for the great privilege that it is to serve this great country.

Well, there’s a fair amount of water that has gone under the bridge since the last time I stood up in this House—for this country, for this Parliament, for me personally. Certainly, my own personal challenges have been well traversed, and I do not intend to go through that in any detail this afternoon, but I do want to put on record some personal acknowledgments. To those colleagues on both sides of the House that reached out with personal messages of support and care, can I thank you for your compassion, because it had a huge impact on myself, my wife, and my family and reminded us as a family that there is something that unites us all in this House, regardless of political view, and that is care for each other. I just want to acknowledge that here today.

To those thousands of New Zealanders who emailed me and messaged me and text me and many, many of them who have come and given me a hug and I don’t know them from Adam, can I thank you for your concern and your care and your willingness to have the confidence to share with me some of your own journeys. Some of the letters have been incredibly moving and profound. In fact, to be honest, a lot of them started with “Dear Todd, I’m never going to vote for you. I don’t like your colour”—your team’s colour—“but, you know, I admire some of the things that you have said.” That has had, like I say, a huge impact. I just want to acknowledge those who are listening, be you a farmer or whatever your circumstances are. Be assured that in me you will have someone who will attempt to give voice to some of the challenges that you are living to ensure that this Parliament as a whole commits the appropriate resources and care to ensure that there is an environment that says it is OK to put your hand up if you’re struggling personally.

I have a great privilege of representing the community of the Bay of Plenty, who gave me great support in this last election and expect me to be an advocate for them in this House, to, as my colleague Chris Bishop said in his superb speech earlier, keep the feet to the fire of this Government in terms of their commitments.

Already this Government has failed on many aspects of their promises to our community, because if you look at the Speech from the Throne from the lens of a community that I represent, when this Government talks about $42 billion in infrastructure and at the very same time delays again the Tauranga Northern Link despite the fact that the previous Government had it out to contract, and now it is not going to be started until the end of next year; when you talk to the community of Tauranga about housing when the very housing development at the bottom of the Kaimais has been constrained yet again because State Highway 29 isn’t even in their long-term plan for investment; when you talk to the school principals, yet again there is a Government that is giving true meaning to hollow words. The empathy, the way intent is emoted, is world class; the delivery falls very, very well short, and it is my intent, to the very best of my ability, to be able to hold this Government to account to ensure that the people of the Bay of Plenty actually get the support they deserve for a city of 150,000. Wellington, it’s time to wake up: Tauranga is not the sleepy little city that it used to be. It has 150,000 people, and it deserves some recognition and investment from this Government as opposed to warm words.

Mr Speaker, it’s nice to see you in the Chair, and can I also acknowledge you personally for your support of me over the last few months.

To conclude, because I understand I have to stop at about 4.30 to let the newbies have a go, I do want to say a few words about trade. There have been few times since 1972, when the UK left us in the lurch, that trade has been as front and centre and so critical to our collective prospects as it is today. As an export-dependent nation, we sit astride enormous potential and enormous peril. We have deeply held New Zealand values, we have deeply valued trading relationships, and we have deeply entwined personal, cultural, and familial ties. They are and will be greatly tested in the months and years ahead. We must be seen as a country and a Parliament that can navigate such issues and tensions with humility, consideration, and deftness.

It is within this context—and I see my opposite, the Minister for Trade and Export Growth, sitting opposite me—that if ever there is an issue that calls for the best of us and bipartisanship in its most comprehensive form, in my view it is trade, and it is trade today. We need to work together for the interests of this country, and bipartisanship goes both ways; so I offer to the Minister a willingness to work with him through these issues, because they are significant and missteps are easy. The impact on this country, our export relationships, and our ability for our communities, be they large or small, to be successful in the 2020s depend on us navigating these very rough seas well. I firmly believe that, if we do that with a considered and collective voice, we can do that better, but the ball is in the Minister’s court. I offer it in good faith, but I would hope to see that reflected back in a genuine sense. I found, when that was offered in the context of climate change in the last term with the Hon James Shaw, that the level of engagement was at a level, from my perspective, that was both surprising and, I think we would say with all fairness, quite constructive.

The National Party, as Chris Bishop, I think, so superbly said earlier, acknowledges the fact that you won and we lost, and we will reflect deeply and are reflecting deeply on what that means for this party and our views and how we articulate what we think is best for this country over the next 10 years. For those of you who have been—and I’ve seen it happen—unable to resist the pot shots of success, be assured that every one smarts, every one we receive hits, but you are up against your traditional foe. We are the National Party, and we will return, because we will bring—[Interruption] And the mocking starts, but just—

Hon Aupito William Sio: Welcome back, Todd.

TODD MULLER: —be assured, Mr Sio—and you’ve been a great amplification of that humour—every single laugh hits, every single one smarts, every single one makes us redouble our effort to ensure that the people who believe in centre-right values have the party they expect in Parliament and the party they expect in Government come 2023. Everything we do—everything we do—over the next three years will be with those people in mind, the people in rural New Zealand, in urban New Zealand, who, fundamentally, expect a National Government to give voice to their aspirations, to their families’ aspirations. They expect the best of us, and be assured the National Party will bring it over the next three years. Thank you very much.

SPEAKER: I call Angela Roberts to make her maiden statement.

ANGELA ROBERTS (Labour): Tēnā koe, Mr Speaker. Ehara taku toa takitahi, engari taku toa i te toa takitini.

[Mine is not the strength of one, but of the many.]

These were the words with which Hēnare Hūtana, the Post Primary Teachers Association’s kaumātua, sent me to this House. He told me that I do not stand as an individual; I stand here representing the people. So why do I stand? And what gives me the courage to take this stand? As a teacher of the arts for more than 20 years, I’m reminded every day that it is our artists, whether they be playwrights, songwriters, painters, carvers, or dancers, who have always been the ones to hold up a mirror to our society. They bring us joy; they bring us tears. They expose us to our own ugly underbelly, and they bring us hope. They give a voice to the voiceless. They send us away with another perspective.

But it isn’t the artists who can change the world; only we the people can. Ru Mundy, one of Aotearoa’s finest young protest writers, brings the voice of a future generation to us in a song full of sadness and regret. When thinking back on “Love in the Time of Coral Reefs”, she asks, “Do you remember when we still had time, if not to reverse things … at least not to cause worse things, and we decided not to, it was easier not to.” These confronting words that came from a future full of so much loss. Coral reefs, permafrost, polar bears, the land, our Island nations, equality, and affordable housing brought me to tears. And no, Ru, I haven’t got the T-shirt yet. And she brought me some action. It is for our children and their future that I stand.

I was born beside the Wairau, but I’ve been lucky enough to spend much of my life in Taranaki. It is beautiful, a deeply spiritual, exciting, and tranquil place to be. The story of my little settlement is typical of many. While it’s always been a place of bounty, colonial settlement and land confiscation have left their scars. It was once a thriving township with a school, a pub, a dairy factory, a saddlery, and even a train station. Over the years, we’ve seen valiant entrepreneurs come and go: butchery, furniture maker, sports store, petrol station, and cafes. I remember the shock of going for a run late last year and seeing the local community hall being put on to the back of a truck. Along with it, the clubrooms for the disbanded cricket club, and a few months ago the reality of COVID-19 saw the local cafe closed for good.

Austerity hits our rural communities hard. When cuts are made, often decisions are based on economies of scale, on bang for buck, and the impact can be brutal. Ambulance services, police stations, tertiary education, the postie, mental health, maternity and primary healthcare services, public transport, banks, decent connectivity, and pothole-free roads—the list goes on. Austerity to rural communities means death by a thousand cuts. Rebuilding our rural infrastructure has started, but we must do more to ensure access to quality healthcare and education, modern infrastructure, decent jobs, and healthy homes.

Our nation thrives when our farming communities are flourishing. It is for our rural communities that I stand. My understanding of the challenge of achieving climate justice is intensely local. As I’ve said, I’ve spent much of my life in Taranaki and, as an economics teacher, a member of a rural community that has until now thrived because of the energy and dairy industries, clearly appreciate how hard it will be to find a consensus around how we reset our economy and build a sustainable future.

Our farmers are doing amazing things, taking real action to strengthen our biodiversity and restore our river catchments and build sustainable practices across the food and fibre sector. Their contributions to projects such as Taranaki Taku Tūranga - Towards Predator-Free Taranaki are immeasurable, although you could argue that the 10,000th trap to hit the ground this week is a pretty good measure. We need to embrace and support the approach of the Taranaki 2050 Roadmap, the first attempt at building consensus and taking real action on sustainable development and decarbonisation, so we do not just survive but thrive. The rest of the nation would do well to follow this lead if we have any hope of reaching our sustainable development goals. It is for those who are striving for climate justice that I stand.

During lockdown, while most of our team of 5 million were doing their bit and staying home, the lights in my neighbours’ milking sheds still flicked on at 5 every morning. The shelves continued to be restocked overnight in our supermarkets, and for more than eight months we have had a huge committed team of workers at our borders and in managed isolation, in incredibly trying circumstances, to keep us all safe. Our students, despite the challenges presented by studying in isolation and sometimes, like the rangatahi in my community, without any reliable connectivity, carried on with their mahi for all of our futures. It is for those who give their all for the team of 5 million so that we in New Zealand have the best chance on the planet to build back better that I stand.

So what gives me the courage to take this stand? I’ve spent most of my teaching career focusing on two subjects that I’m really passionate about: drama and economics. While some might suggest that this is an odd combination of skill sets, it could quite possibly be one that suits me well in this House. Economics has had a bad rap; not surprising when you are clear about what capitalism has done to our planet. In my economics classroom, I have been liberated by my students as they challenged the assumption that our Curriculum brings to their desks—that the market is the natural place to start, even when we are looking at the way to resolve the immense challenges that our society faces, such as climate change, inequality, and housing affordability.

Our young people are fabulous. They are ambitious for us, curious, and really happy to challenge the status quo. Why not look at something other than capitalism? Why not try a different approach? They aren’t bound by precedent or ideology, and they’re enthused by different world views and fresh ideas. They’re inspired by doughnut and circular economics, socialism, and Te Ao Māori. They are confident that there are ways to make decisions about how we use our resources more wisely, that enable humanity and our planet to flourish. We need to be brave and take a fresh approach to how we view our economy, so that Papatūānuku and humanity are at the heart of our decision making. It is my students and the progressive thinkers who are fighting for climate justice and social justice that give me courage.

Not only do we need progressive economics but also a return to a progressive education system. Our curricula—Te Marautanga o Aotearoa, Te Whāriki, and the New Zealand Curriculum—are the envy of the world, progressive and wide ranging, but in recent years teachers were constrained by the narrow drive for literacy and numeracy standards, and this meant there was little space for knowledge or creativity, for science, the arts, or New Zealand history—all the things that inspire our students to learn and grow. But there is hope. Again, it is helpful to look to artists for guidance. In 1946, Clarence Beeby, the Director-General of Education, under Fraser’s Labour Government, appointed Gordon Tovey to try to establish the intellectual respectability of the “frills” of education. Tovey delivered not only arts and crafts to our tamariki but also firmly embedded ngā toi and enabled students to gain an appreciation of art from both a Māori and Pākehā perspective. He ensured that Māori carvers and painters became an integral part of our public education system. By the mid-1960s, despite controversy, he ensured that New Zealand students and teachers were aware of and participating in their bicultural heritage for the first time.

Not only do we need to find space in the Curriculum for the building of a wide range of knowledge but also to improve the support for our teachers and schools to build their capabilities in te reo and tikanga Māori. Teachers have overwhelmingly expressed their desire to learn te reo, honour the diversity of identity in our schools, and to truly meet our obligations to Te Tiriti and tangata whenua. They are ambitious for their students. There has been a commitment to supporting this critical mahi, but just like with the implementation of a stronger New Zealand history curriculum, the reforms of NCEA and the greater focus on supporting our most vulnerable learners, the current heroic model isn’t sustainable. Better resourcing is needed. It is those wonderful kaiako who give their all for our students who give me courage.

I love the union movement, and especially my former union, the Post Primary Teachers’ Association Te Wehengarua. I was privileged enough to serve on the PPTA’s national executive for over 17 years, including four as president. Those years taught me how productive a process of robust, intelligent, democratic debate can be, that a worker’s voice and Te Ao Māori are integral to both problem solving and innovation, especially when courage and imagination are required. My comrades give me courage.

I need to acknowledge what might well be the smallest and mightiest campaign team in New Zealand history. My first question to Mel Dorian, our Labour Electorate Committee chair, when I called her a few short months ago, was “How can I help? Can I deliver some pamphlets or something?” Well, I hope you’re OK with what that something turned out to be, Mel! It’s amazing what can be achieved when you bring together a farmer, a student, and a unionist. Paul, Ben, and Mel organised and grew a movement across Taranaki-King Country, a place where it was always assumed that there wasn’t one to be built. It was so exciting to be talking to people inspired, like I was, by our Prime Minister’s leadership, who felt safe and hopeful. I am humbled and grateful that New Zealand voted for a Labour Government with such confidence—so much confidence that a teacher, a unionist from rural Taranaki can be the first-ever 65th member of a Labour caucus, in this 53rd Parliament. It is my party and my community—those who are so ambitious for our future—who give me courage.

My family has taught me so much about the value of hard work. My mum, Jenny Roberts, taught me what a truly good employer looks like. She always treated her people with dignity. They were never seen as a cost but always as an investment. She spent decades not just training apprentices in their craft but supporting them as they grew into adults with patience and kindness. She had the vision and fortitude to fight to retain and strengthen an apprenticeship system when the national structures were collapsing. My dad taught me that some of the most impactful work that we can do is outside of the workplace, in our community. There are generations of cricketers—good cricketers—who have been fortunate enough to have Barry Roberts’ patient hand guide their batting and talk them through the intricacies of that beautiful game. My brother, Greg, a man of the land, reminds me daily of the value of loyalty and perseverance in our work.

I was born into a family of workers, but I married into a family of unionists. My in-laws, Bev and Dan Anglesey, were not people to just sit back and complain about the state of the world. When they saw rights being trampled on, if they saw injustice, they spoke up, stepped in, and took action. Pick your battle—Springbok Tour, Clancy Action Group, or the TET share distribution. Dan was a union delegate for the boning floor at the Waitara Freezing Works before my husband was born, and was president of the local Labour Party. Politics was always the topic of conversation at Dan’s table. I had the great privilege of spending many hours on Sundays, after one of Bev’s amazing roasts, talking to him about politics, unionism, and being reassured that we are right not to become cynical, to keep up that good fight.

I need to acknowledge my husband and our children. Ian is my rock, but he also makes sure I don’t forget to laugh—usually at myself. And as for James and Sarah, when you meet them, you are filled with hope for our future. They are smart, they have huge hearts, they are impatient for true social and climate justice, and they fill our house with music. Thank you for bringing me such joy every day. It is my family that gives me courage.

I started with an artist to help me to explain my reasons for taking a stand; so I think it only appropriate I look to another one for my final dose of courage—Billy Bragg, a songwriter who has inspired so many of us with stories of hope, where the power of organised workers clearly enables progress to be made for all of us. To be in a union means much more than that; it includes our efforts to collaborate, to listen to and truly understand each other. It is a collective approach—community, iwi, farmer, youth, employer, and worker. Achieving a sustainable, timely, just, and equitable transition of our lives and rebuilding our economy is the most important work to be done for our nation, our children, and our planet. So to Billy for the last word: there is power in the factory, power in the land, power in the hand of the worker, but it all amounts to nothing if together we don’t stand. There is power in a union. Kia kaha, kia māia, kia manawanui, tēnā koutou, tēnā koutou, tēnā koutou katoa.

[Applause]

VANUSHI WALTERS (Labour—Upper Harbour): Ahumairangi maunga, mihi mai, karanga mai, tātou ngā māngai o te motu. Ngā kaitiaki o ngā tika tangata, Te Āti Awa tangata, tēnā koutou, tēnā koutou, tēnā tātou katoa.

[Ahumairangi mountain, greet us, welcome us, the representatives from throughout the country. To the protectors of human rights, the tribe of Te Āti Awa, greetings, greetings, greetings to one and all.]

Vanakkam. My congratulations, Mr Speaker, on your reappointment. I want to acknowledge your guidance through the induction, and I look forward to your guidance this term.

There’s a moment just as you wake. It doesn’t happen every morning, but on those mornings when something significant has changed in your life, there’s an inch of time after waking, when you take a breath before the cloak of your new identity washes back. It was there the morning after the election, with warp speed - like force, and left me awash with gratitude for the trust placed in me as the first Labour Party member to hold the Upper Harbour seat. I can’t claim the privilege of being the first MP of Sri Lankan descent. Thanks to the speedy work of the Parliamentary Library, I quickly discovered that that privilege belongs to the Hon Annette King. However, I am the first Sri Lankan - born member of New Zealand’s Parliament, and I’m incredibly humbled to be joining a values-based, not to mention enormous, Labour caucus. I’m also proud to serve under the leadership of the Rt Hon Jacinda Ardern, or, as my kids call our extraordinary Prime Minister, “your work friend”. She’s someone I deeply respect and admire.

That experience of the inch of time and the rush of a new cloak of identity have become markers for my memory. I felt the rush waking up as a six-year-old in an apartment at the crest of The Terrace, connecting with the fact that I was now not only a Sri Lankan but also a New Zealander, my family having arrived in 1987. I felt the rush waking up the morning after my mother told me Richard de Zoysa’s story. Richard was my father’s second-cousin, a journalist in Sri Lanka, killed in 1990 as a result of his courageous criticism of the then Government. The cloak that morning arrived like a wave of outrage. Surely people weren’t being tortured and killed by their own Government, and if they were, the cloak demanded I do something about it. It was a story and a feeling that began a 27-year journey in human rights advocacy for me. There is still so much to be done for human rights protection in many countries around the world because “Maṉita urmaikaḷ aṉaivarukkum sontmāṉatu”, “Mānava himikam siyallanṭama ayat”, which means, in both Tamil and then Sinhala, “Human rights belong to all”.

The rush of the cloak was there when I first nervously woke up as a qualified lawyer. It was there the morning after my father, Jana Rajanayagam, had several strokes and heart attacks, after being the finance manager of the Upper Hutt City Council and then the North Shore City Council. In an instant, he was physically unable to work and, thankfully, received Government support through those tough times. I remember when I woke several years later, the morning after he died. The cloak didn’t rush back that morning but arrived in slow motion, with a new kind of inescapable weight. The inch of time and the rush of a new identity was there the morning I woke up, after two hours of intermittent sleep, and looked at the most miraculous thing—our first baby, and then our second, and then our third. The cloak on those mornings carried vibrant new colours. I never could have imagined that inch of time and the rush of the cloak as a marker of the human experience we all share.

I look around at the diversity in this Parliament, which will serve us so well this term, but, oh, as well as our beautiful differences, we share so many remarkable similarities in human experience. During my time in community law with Amnesty International and at the Human Rights Commission, I’ve had the privilege of hearing many people’s stories. I often think about their mornings—what it might feel like to wake and take on the cloak of parenting and advocating for a child with special needs or to wake and connect with the prison walls around you. In recent days, I thought about what it’s like for those who wake and reconnect with their health status, with their immigration status, with their employment status. We might not be able to relate to the weight of all the cloaks others wear, but that we can relate to that feeling from the inch of time to the rush of the cloak—it’s our door to connection, conversation, understanding, and respect. In this House especially, we have an obligation to consider deeply the impact of everything we stitch to, or fail to stitch to, the cloaks that New Zealanders wear.

There is another experience we all share, and it’s something described well through a conversation two of our boys had in the backseat of the car. We had just come home from a concert and the conversation went a bit like this. Elliott: “Did you feel it?” Luka: “Feel what?” Elliott: “The electricity.” What they were discussing was that feeling you get when you hear that special piece of music or you’re watching that movie and the storyline and music rise to catch your heart. We’ve all felt it; some of us get to feel it often. I’ve felt it marching with women’s rights activists in Nepal and Manila, watching a mum catch her breath with pride as her daughter speaks quietly but with conviction about being discriminated against during a mediation. The electricity didn’t seem to stop when I stepped on board the majestic Rainbow Warrior II for an interview as a climate campaigner. It was there, buzzing through a pile of hundreds of letters that sat on the floor of a hotel lobby in Mexico, saved by a former prisoner of conscience, sent by strangers to win him his freedom, and they had. It was there with unhelpful giddiness when I walked in to sit my final exams at Auckland University and then at Oxford.

The electricity danced across the room in Johannesburg as young human rights activists talked, cried, and shared visions of hope about the future of human rights. It was there, embodying possibility, listening to stories about my great-grandmother Naysum Saravanamuttu, the second woman to be elected to the State Council of Ceylon in 1931. This is a feeling we should all have, in the work we do and in the relationships we hold. This is the great ambition for all New Zealanders: not only to ensure that we look out for each other when times are tough, and we must, but to support and connect people with the things that will bring that electricity. Young people should know that, as we address the challenges of the coming years, there is a place for their hearts as well as their heads and their hands in the future of employment.

When I was a young person, I went to hear Dame Cath Tizard speak at a women’s rights conference. She talked about visiting a primary school where a five-year-old boy put up his hand and asked, “When you were young like us, did you want to be Governor-General?” She replied “No” and asked him: “Why? Do you want to be Governor-General when you grow up?” To which the little boy spat out, “No. I’m not a girl.” While Dame Cath was New Zealand’s first female Governor-General, to this little boy she was the only one he’d known. The story has always reminded me that not only can great change happen in one generation but, time and time again, it does, and there is much that still needs to be done.

We have an obligation to continue to address racism and discrimination. Where voices aren’t represented at decision-making tables, we have an obligation to shake the tables. We must not only hear the loud and organised but fiercely listen for piercing silences and work to bring the marginalised and disempowered from the periphery to the centre. We have an obligation to protect all human rights, including economic, social, and cultural rights, and, because rights are meaningless without the ability to access them, we have a connected obligation to ensure sound access to advocacy and to the courts. We have an obligation to do more, and then more again, to address climate change. We have an obligation, as we turn the corner towards the 200-year anniversary of the signing of Te Tiriti, to fulfil its articles. We have an obligation to examine the edges of policy and law, where education impacts justice, where justice impacts employment, and where employment impacts health, and to design bridging policy solutions that recognise lives aren’t lived in select committee silos; they’re just lived. This is how we really disrupt the churn of poverty.

For a month at the start of 2017, I went to work barefoot. I had heels in my bag, just in case I had to explain why the general manager of YouthLaw Aotearoa hadn’t bothered to construct an entire work outfit, but, other than that, I went barefoot. The intention to connect more meaningfully with where I was and the bare foot worked. I thought more carefully about the land, the building, the community, and I noticed things on walks I never otherwise would have taken. I say this to perhaps warn the wonderful people of Upper Harbour that you may see me doing the same over the coming years. Don’t worry—there’s a method to what might seem a bit of madness.

Upper Harbour, what a huge privilege to have your trust. I intend to be a strong voice for you on the things that matter, including transport, community safety, housing, employment, and supporting our small and medium sized businesses.

To Rhys, my husband, I suspect there aren’t enough thankyous for all that’s to come. I’ve learnt and loved so much because of you—the way you slow your pace to keep company with the slowest walker; the way you sit in silence considering a question with care before you respond; and for all you are to our family, including the dad jokes, the music, the calm sea. To our boys, Elliott, Luka, and Sacha, for the electricity and brightly coloured cloaks you’ve brought to our lives, thank you. To my family and friends, thank you, but especially to Amiy, my mum, Prithiva Ferne Rajanayagam, for the visible support and for all the invisible support that makes standing here possible.

My deepest thanks to Claire, Jesse, and Antonia for nurturing the seed of an idea. To our Upper Harbour team, especially to Andy Hopkins—where are you?—Jan, Dev, Lise, Chris, Ros, Brad, to Leata, Meresereisa, Leilua, Mark, Marion, Craig, Jade, Vivian, Robyn, Noy, Shane, Brooke, and Brendan, thank you. To Sir Bob Harvey, Chris Carter, and Lal Senaratne, my thanks for your mentoring and your belief in me and the campaign. I want to make special mention of my early mentors: Lecretia Seales, whose keen intellect was matched by her courage; Margie Taylor; Ced Simpson; and Pakiasothy Saravanamuttu, all of whom have had a significant impact on the decisions I’ve made in my journeying. To the Parliamentary Service staff and all who work in these buildings, who play such a critical role in our democracy, this work we do is only possible because of your hard work here and, I suspect, often your good humour.

Finally, to my parliamentary colleagues from all walks of political thought, I suspect there’ll be times when we glance across the room and connect unexpectedly on a value that brings all of us to this place. We have a collective obligation to nurture that. While the reality of politics is our corners and a three-year term—at least for now—the truth of sustainable and significant change requires that we hold on to those moments of connection and construct some political scaffolding around the values and ideas we all need to take root and to grow for Aotearoa. Tēnā koutou, tēnā koutou, tēnā tātou katoa.

[Applause]

TANGI UTIKERE (Labour—Palmerston North): Kei ngā mana, kei ngā reo, tātou e noho tahi nei, tēnā tātou katoa. Te Āti Awa me Toa Rangatira, tēnei au ka mihi, tēnā kōrua. Tihē mauri ora.

[To the leaders, to the spokespeople, to those of us here today, greetings. Te Āti Awa and Toa Rangatira, greetings to you both. Greetings to all.]

Mr Speaker, firstly, I wish to acknowledge and congratulate you on your election to the office you now hold. I look forward to the guidance and support that you will provide to me as a new member of this esteemed House. I also wish to acknowledge Rangitāne, my local iwi in my electorate, and specifically greet kaumātua Wiremu and Trieste Te Awe who are in the gallery this evening, ngā mihi nui, ki a korua. I am humbled to rise as the new member for Palmerston North, a city that I am very proud to call my home. I want to thank the constituents of Palmy for putting their trust in me to represent them for at least the next three years.

It’s fair to say that at the start of this year, it was not my expectation that I would be a member of Parliament. My campaign run was much shorter than others, and I must apologise to my parliamentary colleagues in that I joined the campaign much later in the piece. But I wish to acknowledge their hard work and I congratulate them on their election as members of this House. My arrival here is due in no small part to a fantastically well-organised party campaign under the leadership of our Labour leader and Prime Minister, the Rt Hon Jacinda Ardern, and at a local level due to the sterling efforts of my Palmerston North - based team, many of whom are in the gallery tonight. Candidates are often never easy to manage, but particularly when you inherit a new one less than eight weeks before the scheduled general election. So to my campaign manager, Lorna Johnson, and the wider team, my gratitude and thanks to you all for making it a flawless transition and for the electoral success that the team delivered.

It is particularly special that tonight I get to deliver my maiden statement alongside other new members of Labour’s Pasifika caucus. So to Barb, Neru, and Terisa, faamalo fa‘afetai lava. And of course, my entry to Parliament has doubled Labour’s Cook Island caucus. So to my Kuki Airani colleague, the Hon Poto Williams, kia orana. I also wish to acknowledge my Palmerston North colleague Teanau Tuiono on his successful election as the Green Party’s first Pasifika member.

Convention seems to dictate that I acknowledge the work of my predecessors, and I certainly wish to do that. Over the last 40 years, there have been four MPs for Palmerston North, the Hon Joe Walding, the Hon Trevor de Cleene, the Hon Steve Maharey, and the Hon Iain Lees-Galloway, all from the New Zealand Labour Party. Prior to their entry to Parliament, they all had a history of service to the electorate and a prerequisite that seems to have stood them in good stead for their connection to the local community, and certainly a characteristic that I wish to continue. I want to acknowledge their collective service to the constituents of the city over that time. In particular, I wish to acknowledge one predecessor who is present here today, and that’s the Hon Steve Maharey. Steve’s 1999 campaign was my first, so he is partially responsible for my involvement in politics. I am deeply honoured that his footsteps—but with my footprints—are ones that I wish to follow, even if it is some time since he left this House.

Like many others, my life has been shaped by my upbringing and my experiences, which are undoubtedly informed by the generations that come before us. In 1962, my 20-year-old Cook Island grandmother, Vaevae Williams-Hewett, left her village of Nikaupara, in Aitutaki, and at that time she also left her 19-month-old son, my father, with her parents. On 14 May 1962, she took this ticket to the Port of Rarotonga; there she boarded the SS Monterey to set sail for New Zealand in search of a better future for those to follow. In addition to this ticket, she also took with her the hopes, dreams, and aspirations of her family. She arrived in this country, worked hard by cooking and cleaning at the hospital, and every week she would put some money aside to send back to her family in the islands. That was her routine. That was her cultural sacrifice.

Some years later, when my father was eight, he travelled to New Zealand with his grandfather to join his parents. My father arrived and attended primary school in New Zealand, where he spoke little to no English. Every time he opened his mouth to speak, he was punished. This meant his first interaction with the New Zealand education system was deeply alienating, something that he was not keen to develop or explore further. Instead, he was keen to get out of school as soon as he could, and he did. He left school with no formal qualifications, but with a lot of experience.

I’m the eldest of four children, so as the first-born, Cook Island custom dictated that my grandparents gifted me my name. My mother actually wanted to call me Joshua, but instead my paternal grandparents named me Tangi. Throughout school I hated my name, as I always had to explain why someone would want to name their child “grief” or “funeral” rather than the Cook Island Māori translation of—wait for it—“beautiful”. Now, I have come a long way since then and now consider it an honour to carry the name that has been gifted to me. My parents, Sue and Akaari, from a very early age taught my siblings and I the significance of working hard, to never judge a book by its cover, and to value the importance of family.

My mother demonstrates a passion for a sense of community and of supporting those who are more vulnerable than others, particular traits that she inherited from my late grandfather, Ted Thorner. My father demonstrates the trait of integrity. He taught me by his own actions that integrity is something you feel and experience rather than something you specifically define and see, that you do what you say you will do, and that you will treat others as you wish to be treated. These are particular traits that I hope to exemplify as I go about my duties as a member of this House. My parents also knew that education was too important to ignore, so they encouraged their children to be more engaged with education and to do well, something that my siblings and I will for ever be very grateful to them for. So thank you, Mum and Dad.

My introduction to the Labour Party is similar to that of many others. Twenty-five years ago, my Uncle Tai Williams-Hewett took me along to what was my first Labour Party event, at the Terrace End School hall, as part of Steve’s and former MP Jill White’s campaign. I remember the inevitable Labour Party raffle at the door, I remember my first Labour Electorate Committee meeting, and I remember how inclusive the party was to this teenage boy, and that was the start of my involvement with the party. The principles and values that attracted me to join our party more than 20 years ago are the same important ones that underpin the Labour Party today, those of equal access and opportunity, fairness, social justice, inclusiveness, and kindness.

I started my professional career in education as a secondary school teacher of history and social science at Freyberg High School. My relationship with Freyberg has come full circle. I started there as a student, then as a teacher, and finally as a trustee on the school board. In one particular year, my siblings Rachel, Luke, and I occupied the roles of parent, student, and staff trustee respectively, so my family is aware of the value of local communities being involved in the governance of local schools. Freyberg taught me much, and it’s special to have many of my Freyberg connections in the gallery tonight. My early years were also where I established lifelong friendships. My longest friendship stems from form 1 at Ross Intermediate, so to Stacey and your partner Karl, thank you for being here tonight. To Sheree, Caleb, Tanya, and your partners, my thanks for the ongoing support and encouragement you have shown to me over the years. These are the values, observations, experiences, and the people that have guided me on my journey to New Zealand’s House of Representatives.

Justices of the peace (JPs) provide an incredible level of service. In my electorate, the local association has had a focus on attracting younger candidates and those who are representative of a more modern demographic. While successful, there is still much more work to be done. Of course, members play an important role in the JP process and can assist by continuing to nominate candidates who are reflective of their local communities. Through my role as a judicial justice of the peace, I have presided over bail and remand hearings for more than 10 years, and as a visiting justice over internal prison disciplinary hearings for nearly five. My judicial experience has also expanded to include New Zealand’s racing industry, an industry worth at least $1.6 billion annually to New Zealand’s economy, where for more than 10 years I’ve sat on race day and non - race day hearing panels for the Judicial Control Authority (JCA). The JCA is an incredibly slick and professional operation on a relatively shoestring budget and has given me the opportunity to work alongside hard-working colleagues on race courses such as Wairoa, Waterlea, Waverley, and Winton.

It’s through some of these roles and experiences that I’ve seen just how inflexible the criminal justice system can be, particularly for our Māori, Pasifika, and new migrant communities. An ability to access the system is important, but so too is the ability to be an active participant in proceedings, to be aware of what is happening, and to understand the process and the options available to those involved. Prior to my election to Parliament, I was looking forward to taking up a commissioner role with the newly established Te Kāhui Tātari Ture, the Criminal Cases Review Commission. The loss of one’s freedom and liberty is one of the most—if not the most—severe consequences that the State can impose, so there must be a sense of independence, integrity, and fairness in the system. But those judicial tenets of independence, integrity, and fairness must not purely exist; they must also be evident and active in the very police, court, and wider criminal justice processes that New Zealand has in place. The commission, while still in its infancy, is a potential safeguard within the jurisdiction, and I look forward to seeing it over the next few years.

My experience over the last 10 years as a city councillor and then a deputy mayor has been about public service and connections within my community, and I acknowledge council colleagues here today. While my tenure in that role has now concluded, I remain an advocate for the local council’s mantra of Palmerston North being a place with small-city benefits and big-city ambition. The ability to overturn a local council’s decision to introduce Māori wards is an unfortunate provision in local government legislation, and I look forward to the Government looking at options for its removal.

The local government sector faces many challenges. Amongst them is the ability of councils to meet the infrastructure needs of their community within a very tight fiscal envelope. I believe it is the role of the State to actively work in partnership with local government and other providers who have the best interests of the community at heart, but I also believe that enterprise has an ethical and social conscience to think about where it can actively play a part in meeting the infrastructure needs of its local community. However, these partnerships cannot be at any cost to, or at the expense of, local community wellbeing.

We have all lived and we are still living through the most extraordinary period of our collective lives. COVID has tested every agency. In spite of this, Palmerston North’s strengths continue to lie in education and training, logistics and distribution, along with our historical defence connections. Its reputation for innovation, science, and technology marks it as a leader in research and development. It is a city that has a diversified private sector, supported by a strong agribusiness and primary food - producing region, along with a solid public sector. It is a city that is rich in cultural diversity, a welcoming community with more than 130 different ethnicities who choose to call Palmy home. It simply is a wonderful place to represent, and I look forward to advocating for my constituents and for my electorate as a member of the Labour caucus and in Government. I’m excited by the desire for this Government to be one for all New Zealanders, and I am committed to working across the Parliament to achieve that.

Before I conclude, I want to acknowledge the person who is on this journey with me, my partner Te Rei. Te Rei, thank you for your love, for your support, and your unfiltered feedback and encouragement as we embark upon these next steps together.

In conclusion, I look forward to the challenges and I look forward to the journey, but more importantly, I look forward to working as part of a team to ensure that this Parliament is one that realises the opportunities, the dreams, and the aspirations that tīpuna like my grandmother had for those that wish to call Aotearoa New Zealand their home. Nō reira, tēnā koutou, tēnā koutou, kia orana koutou katoatoa.

[Applause]

Waiata

TERISA NGOBI (Labour—Ōtaki): Thank you, Mr Speaker. E ngā mana, e ngā reo, e ngā iwi, e ngā rau rangatira mā, tēnā koutou, tēnā koutou, tēnā koutou katoa. E ngā tāngata whenua, karanga mai, karanga mai, karanga mai. He mihi mahana ki a koutou. E Te Tiriti o Waitangi, nāu te tīmatanga o te Kāwanatanga, mihi mai, mihi mai, mihi mai. Nō reira, tēnā koutou katoa.

[To the leaders, to the spokespeople, to the tribes, to the distinguished ones, greetings one and all. To the tribes of this land, welcome. My warm greetings to you also. To the Treaty of Waitangi, you began our Government, thank you and greetings to those of us here today.]

Faafetai i le Atua i lona faatasi mai, ma faamanuia mai ia te aʻu ma loʻu aiga, paʻaga ma uo. Ou te talitonu i le Atua e fesoasoani mai ma faatasi mai o aʻu tonu e fai, alofa ma fesoasoani mai. My grandparents Bill and Kitty Watters arrived from Glasgow on the Captain Hobson in 1956 with £60 in their pocket, two weans, and the promise of a job. My mum, Sia Watters, née Chong-nee, left Samoa in 1975 to live with her sister here in Aotearoa with the hope of a better life. I am a proud daughter and granddaughter of immigrants.

I come from a Labour Party, union, and service-to-community strong whānau. My dad is a past vice-president of the Service Workers Union and could often be found at the end of a picket line or campaigning for the Labour Party. My mum would often spend her evenings sewing clothes from factory offcuts and deliver these to those in our community that needed it. Mum even managed to make little stuffed toys, which she would take to Birthright, as well as more clothes for babies. Both of my parents reinforced to my two brothers, William and Kieran Watters, and I the importance of having a voice, standing up for your rights, and service to community. Regardless of the colour of your skin, your gender, your age, who you love, how much money you may or may not have, and your level of education, in our household, we knew we had a voice, that it was valid, and we were worthy too.

As a mixed-race Pasifika Scotswoman, I don’t fit neatly into the Pālagi world or the Scottish world. I first noticed this when I was about age nine. The kids at school used to call me “Bounty Bar”—which happens to be one of my favourite chocolates, by the way. They said it was because I was brown on the outside and white on the inside. At college I was encouraged to look only at gateway career options rather than pursue an academic pathway. Despite these challenges, I learnt to walk in both worlds. I have found, for the most part, it is about educating others about what it means to be a proudly indigenous Pacific and Scottish wahine warrior, and never to justify it.

Anahila Kanongata’a-Suisuiki: Kia ora.

TERISA NGOBI: Thank you, Anahila.

As you can see from my upbringing, there is a natural alignment with my personal values and those of the Labour Party, who I am humbled and honoured to represent as the member of the Ōtaki electorate. The Labour Party supports diversity, ensures the rights of workers, and wants all New Zealanders to live their best lives, as do I.

Working at Work and Income as a case manager during COVID lockdown, a kuia told me how grateful she was not to have to sit in the cold with a blanket wrapped around her, and she could now run the heating in her house and know she can afford to pay her power bill at the end of the month, thanks to the introduction of the winter energy payments. I also had a young mum tell me how the increase of $25 to her household meant a packet of nappies, two 2-litre bottles of milk, and she could now put $9 on her son’s uniform account.

Out in our electorate, I have business owners and their employees tell me how grateful they were to be able to access the employment wage subsidy scheme. Without it, they said, their businesses wouldn’t have survived. Furthermore, their businesses were thriving with people spending money locally in their shops.

I am humbled to be part of this first majority Government to be elected under MMP and I believe it is the result and a lot of this is down to the leadership of our Prime Minister, Jacinda Ardern—thank you. I am also grateful that we are able to change history, and now, for the first time ever, a Pasifika woman has been elected to the Ōtaki electorate as part of the biggest intake of Pasifika MPs, doubling last term’s numbers.

When I say thank you to the people of Ōtaki, thank you does not truly show how grateful I am. They voted for diversity, kindness, compassion, and a better Aotearoa for everybody. I will work hard in our electorate and I will pursue the election promises I made during the campaign. I will seek better access to health services, transportation, continue to support our commitment to the four-lane highway in Levin, and add value where I can to reducing poverty and inequalities.

Being born and raised in Levin, with a short stint overseas in the UK working in health and disabilities as well as residential social work, I came home to Ōtaki electorate and continue to live in Levin with my whānau. I missed my church community, St. Joseph’s, the beautiful Tararua maunga, looking out at Kapiti Island, the normalisation of te reo Māori as you walk throughout the electorate, the best bacon and egg pies, and orange chocolate-chip ice cream. But most of all, I missed the community spirit of the Ōtaki electorate that ties us together, from Foxton right through to Paraparaumu.

Our electorate has been grateful for the Provincial Growth Fund that supports much-needed projects in the Ōtaki electorate, such as the Foxton river loop, Taraika, Ōtaki Māoriland, Waikanae riverways, and Paraparaumu Gateway project. This is a great start. However, there is much more that still needs to be done to improve outcomes for the Ōtaki people. Our region has examples of innovative and green projects, such as Energise Ōtaki solar farm, yet just a short distance to Levin, Lake Horowhenua, a taonga to the people of Muaūpoko and the Horowhenua, is highly polluted. This highlights that there is still much to be done to protect and restore our environment.

My time at Oranga Tamariki as a contract manager allowed me to see the incredible work agencies such as Youth One Stop Shop Horowhenua, and Kāpiti Youth Support do, supporting our rangatahi and most vulnerable with a range of health issues, as well as helping them to gain access to alternative education opportunities. Working on these contracts also showed the gaps, and where these groups are underfunded, the prospect of them not being able to continue to provide a full range of services they currently provide to our rangatahi doesn’t bear thinking about.

The Ōtaki electorate has the oldest population in New Zealand—all our kaumātua. It ranks first among general electorates on several age-related issues, yet there is no hospital in this electorate, nor is there public transport to get to either Palmerston North or Wellington hospitals, as our regular rail stops at Waikanae. From Waikanae north, we have one train that does one trip once a day, except for in the weekends. It is also set at around $30 per round trip. This is unaffordable for many of our students, low-income families, and seniors. We need to improve transport infrastructure in the region while also considering options to improve hospital-level services within the electorate. I will prioritise this work with my Government colleagues to address these issues for the people of the Ōtaki electorate.

More support and resources are needed to tackle the high rates of family violence and deep deprivation—especially in the northern part of our electorate—and the lack of affordable housing in the Ōtaki electorate. Last term was a great start in reducing child poverty and inequality, tackling the housing crisis that we inherited from the previous National Government, and putting a real focus on climate change, but much more still needs to be done to ensure the wellbeing and living standards of all New Zealanders are raised. In my time in this House, I will be working tirelessly to progress this mahi.

Mr Speaker, standing here before you as the newly minted MP for Ōtaki, I must acknowledge those who have supported me to achieve this great honour. I would like to start by thanking our Labour members, supporters, and volunteers from all corners of our electorate, from our nannies—who made some of the best sausage rolls I’ve ever tasted, and, as you can see, I’ve tasted loads—our letter-writers, sign-wavers, door-knockers, phone-canvassers, and hoarding teams, to those who gave me a cup of tea and a sympathetic ear. No words will truly express the love and appreciation I have for you all.

Also, the rainbow, takatāpuhi, fa‘afafine communities, Pasifika communities, women’s branches—especially of our Valkyries ladies—union, and Māori communities, with a special thanks to Ngāti Tukorehe.

I have to make special mention of our amazing campaign manager and my beautiful friend, Rebecca Ellery-Winchcombe, and her team, who drove a hard campaign.

Thank you to my Thursday sisters for keeping it real and holding it down for Henry and my babies while I have been away, and to my Watters and Chongnee families for your unconditional love and support. They say it takes a village, and our village is proof of this.

I must also acknowledge those that have passed: my grandad Bill and Kitty Watters, Tom and Trish Waho, Dianne Metcalfe, Grandpa Laulu Viko Chongnee, Uncle Kelly, Uncle Silio, Uncle Taki Chong-nee, and Auntie Anne Watters, who I know would have been with us in spirit—especially Dianne. As much as they say breast cancer took you from us too soon, so did poverty.

I want to acknowledge some trailblazers, role models who have inspired me in my political journey so far: Vui Mark Gosche, Luamanuvao Winnie Laban, the Hon Carmel Sepuloni, and the Hon Nanaia Mahuta. There is so much power in seeing people who look like you, doing the role you aspire to.

Married to an African myself, I would like to thank brother Ibrahim Omer for not only putting your hand up and representing the African community of Aotearoa but for providing my children with a role model that they can look up to.

Fa‘afetai tele lava to the Pasifika caucus, who have been so supportive. As a new person settling in, you have wrapped your support around me and given me invaluable guidance. I would especially like to thank the Hon Aupito William Sio and the Hon Jenny Salesa, who supported the Ōtaki electorate and myself during our campaign.

I also acknowledge the support from other Ministers and MPs who came to the beautiful Ōtaki electorate, especially Deputy Prime Minister Grant Robertson, who gave us a whole day of your very precious time. Also, the Hon Andrew Little and MPs Adrian Rurawhe and Greg O’Connor, thank you for your ongoing counsel.

To my mum and dad, Bill and Sia Watters, for giving me a social conscience and reminding me to use my voice to fight for justice, access, equality, and the rights for all people—I am so proud to be your daughter. You were always opening your doors to those seeking advice on unions and Pasifika advocacy, and sharing what little you had with others. I love you both very much.

Lastly, my husband, Henry Ngobi, and our babies, Azaria, Vito, and Tebasawa. Henry, you are the kindest, most humble, and genuine man I will ever know. You’re an amazing role model to our babies.

Boys, I know this is a big change in our lives, with me not being at home as much. I hope that one day you will understand that Daddy and I are doing this so that the world you grow up in and your friends grow up in will be a better and a fairer place. This is me trying to be the best mum I can be, ensuring the decisions made give you boys the best chance in life. I love you beyond words.

I cannot stress enough how very humbled I am to be part of this progressive Government and the opportunity to make a change for the better for all New Zealanders. I will not waste this opportunity, nor will I ever take the next three years for granted. Fa‘afetai tele lava. Tēnā koutou, tēnā koutou, tēnā koutou katoa.

[Applause]

Waiata

Dr ANAE NERU LEAVASA (Labour—Takanini): Kia ora koutou katoa. E te Atua, nāu te korōria. Te Whare e tū nei, tēnā koe. Te papa i waho nei, tēnā koe. Te mana whenua o tēnei rohe, tēnā koutou.

[Oh Lord, yours is the glory. To the House before me, greetings. To the land outside, greetings. To the tribes of this land, greetings.]

Fa’afetai mo le avanoa i lau susuga I le faipule. Ou te fa’atalofa atu I le paia ma le mamalu ua aofia mai lenei aso. Muamua ona ou fa’afetai I le Atua ona ua taunu’u lenei aso ma le manuia. Fa’atalofa ma fa’atulou atu I le ao o le malo, fa’atalofa I le palemia o Niu Sila. Talofa lava, mālō e lelei, tāloha ni, namaste, sat sri akaal ji, and warm greetings.

It is an honour and a privilege to stand here amongst representatives of the House, true representatives of Aotearoa New Zealand, who reflect the diverse and vibrant communities that we serve. I am privileged to work alongside those who honour and value our shared heritage, those who remember our history, and those who look to a brighter future for our families. I acknowledge the tangata whenua o Aotearoa; our Governor-General, the Rt Hon Dame Patsy Reddy; also our great Prime Minister, the Rt Hon Jacinda Ardern; and also further congratulate you, Mr Speaker, on your re-election in the House.

I want to say thanks to my family: my wife, Olivia, and son, Peter; my parents, Olita and Senara, Tauraa and Liz, and especially my late father Faleafa Pita. And to my nine siblings, those who could be here: Muliagatele Alaisalatemaota, Tauanuu Nicholas Backulich, Iutisone. And Vaifale Melvin and my siblings who couldn’t be here, their partners and children, who make up our beautiful, blended aiga. To my extended family, who have flown here as well, representatives from my Leavasa family, Tamasese family, and Vaifale family, also to my Takanini Labour Electorate Committee (LEC), Māngere LEC, and my church whānau, who have supported me. I honour them for all their hard work and prayers during these last few years. It has been an incredible journey to get to this moment, to be a new MP for the inaugural seat of Takanini. I want to show my appreciation to my Takanini community, to all those who placed their trust in me to be their first member of Parliament. I do not take this lightly. I will do my best to represent them and serve them well. I thank my campaign team and the Takanini LEC, some who were able to make it today: Namulauulu Anne Singh, Kharag Singh Sidhu, Tauanuu Nick Bakulich, Raj Singh, Liz Pale, and their families. I offer my deepest appreciation.

I acknowledge the history of Takanini. I pay tribute to Ihaka Takaanini, paramount chief of Te Ākitai Waiohua in the 1860s, who, along with his whānau, suffered great losses under the Crown. I pay homage to his whānau, to his hapū, and to his iwi. To those who have passed and those who continue to live today, I pray I can honour his people, the people of the great chief Ihaka Takaanini.

I want to acknowledge my Samoan heritage as I look to the plaque of Samoa right there in the Chamber, on the left-hand side, and share a little about my family’s part in that history. We too share a similar path with Chief Ihaka. When the New Zealand administration was in Samoa from the First World War, my great-grandfather Tupua Tamasese Lealofi III was one of the leaders of the Mau movement, the passive resistance movement for independence to colonial rule at that time. Tupua was arrested, stripped of his title, taken from his people and his homeland as a political prisoner in December 1928. He was sent to Mount Eden Prison for a term of six months. The administration had thought that prison time would have changed Tupua’s stance, even offering to bring him here to Wellington to appoint him as a fautua, an adviser; however, he declined this offer and was resolute in his position. I acknowledge the sacrifice that he and other Mau movement members made for independence. He died on what was called Black Saturday, when he was gunned down, shot in the back by police, trying to calm the crowd. His last words were, “Samoa filemu pea, ma si o’u toto ne’i ta’uvalea, a ia aoga lo’u ola mo lenei mea.” Translated: “My blood has been spilt for Samoa. I am proud to give it. Do not dream of avenging it, as it was spilt in peace. If I die, peace must be maintained at any price.”

For those who kept fighting for independence, it came to fruition 32 years after Lealofi’s death. I am deeply honoured to look back to where Samoa has come from, and where I stand here, a product of our history, a product of our joint relationship between our countries. I am proud to bear the name of Lealofioaana as my middle name, named after my great-grandfather. His brother Tupua Tamasese Meaole later became the first joint Head of State with Malietoa Tanumafili II, when Samoa gained independence in 1962. Later on, both my grand-uncles, Tui Atua Tupua Tamasese Dr Lealofi IV and Tui Atua Tupua Tamasese Efi, were both prime ministers of Samoa. Tui Atua Tupua Tamasese Efi later became head of State as well. My mother’s uncle was Minister of Education. My paternal grandfather was Minister of Agriculture. I share this history as I never thought I would be a politician, as I thought becoming a medical doctor would seal my fate for the rest of my life. However, my family will remind me of this family history of politics; so I am encouraged that I am in really good company.

My Samoan chief title is called “Anae”, from Falelatai, my grandmother’s village where our current head of State resides, His Highness Tuimalealiifano Vaaletoa Sualauvi II. I will continue to honour this Anae title, as do our Māori chiefs honour theirs, with service to our families, service to our community, and to our country. The Samoan proverb is very powerful in this sense: o le ala i le pule o le tautua, which means, “The pathway to leadership is through service.” Tautua I lau aiga, tautua I lau pitonu’u, tautua I lau atunu’u.

My parents migrated from the heart of the Pacific, Samoa, to Aotearoa in the early 1980s. My late father, Faleafa, comes from the villages of the Vaiala and Vaimoso. My mother, Olita, comes from Solosolo and Leau’va’a. They came to seek more opportunities for our family. They were very hard working, like all our Pacific families who migrated here during that time. I have been blessed to have hard-working parents who struggled earlier on so we would flourish later on.

Growing up in Aotearoa has been a blessing. I was brought up in South Auckland, Māngere, went to a local primary school, Viscount, and then went from form 1 to form 3 to Marsden College, then my later years at Auckland Grammar School. I wanted to become an All Black or professional athlete at a young age, but I suffered from left-knee bone cancer in my fourth form year. I remember playing a rugby game and afterwards seeing a lump on my left knee. After two weeks, this lump wasn’t resolving and was actually growing in size. My parents took me to the local doctors and I was sent to Middlemore for further tests. That’s when they diagnosed me with cancer. All I could think about was that my sporting hopes were dashed. As a teenager, I didn’t really understand what cancer was.

My second operation was to remove the tumour and place a metal knee-joint in it. But if the surgeon had found that the cancer was deeper and more widespread, they advised I could lose my whole leg. I remember waking up after that operation as a 14-year-old all dazed from the drugs, sore throat from where the breathing tube was, and immediately reached to touch my leg to see if it was still there. Well, my leg was numb from the anaesthetic, so I had to ask the recovery nurse, and she assured me that I still had my leg intact. I was so grateful that, even though I have a metal knee-joint with rods sticking up to my hip, my lower leg is still functioning well.

My parents took it hard, but I wanted to stay strong for them. The journey was difficult for my whole family—in and out of hospital for many years disrupted my college years and I had cancer spread to my left lung twice, which ended with my left lung being totally removed. So I stand here with one lung and a metal knee joint. So often you’ll see me limp. I call my limp my swag. And I often get short of breath, but I’m just pretty unfit. But I’m truly blessed to be here. I recall looking out of my hospital window—whether it be at Middlemore Hospital overlooking our friendly grammar rival school, King’s College, or Auckland Hospital with the Auckland Domain and that big, round chimney-looking object obscuring my view. I would always look out and imagine myself being that person running in the domain, that person walking towards the museum, or that person walking to school. All I wanted was to live a life that was normal, but now I look back and thank God for the many blessings that I’ve had along the way. Maybe normal was not part of my script.

So 2002 was my last year of chemotherapy. My hair grew back, the swellings throughout my body resolved after months of steroids, surgical wounds started to heal, and the following year I was able to attend Auckland medical school, then subsequently complete my specialty training in general practice, serve as a South Auckland doctor for 12 years, become the first Pacific health provider for Telehealth services, and serve my community on the Māngere-Ōtāhuhu Local Board this past year.

I dare to say: live a life that is not normal. Step out of your comfort zone, push the limits, shift your mind-set, and shift your future. I think about the huge amount of talent we have in South Auckland: our youth who aspire to do great things such as I did, despite what barriers we have in front of us. South Auckland is my home. It has shaped me; it has inspired me. The media often misrepresents us. Yes, we have our own issues, but we do have our own solutions. We have our own flavour. We will continue to shine; we will continue to rise.

As a South Auckland doctor, I have seen what poverty, poor housing conditions, and poor access to equitable healthcare can do to our families. I have many that come to clinic that struggle to provide for their families; struggle to work multiple jobs to make ends meet; and struggle to live in cold, damp, mouldy homes that impact on their health. That’s why health, for many people, takes a back seat as they try to deal with other urgent priorities.

As clinicians, we know that what underpins health and wellbeing are these social determinants of health. I find myself writing support letters in the clinic just as much as I’m treating my patients. It is so important that we get things right here at central government - level so we can get things right with the community as well. That’s why Labour values and policies are so pivotal with these issues: to increase the minimum wage, to improve access to healthcare, and to have access to warm, dry homes. It is why I am here to make a difference on a broader scale that will lead to better health outcomes for all New Zealanders and not just the few.

My new electorate of Takanini is vibrant and is diverse. I have done medical work for many years within parts of the electorate, so I am blessed to be elected to this position. I have had the privilege of meeting our colourful community, young and old. Our population is the second-fastest growing in New Zealand, and with it comes various challenges. We have some residential areas being developed at a fast rate, which means we need infrastructure to help to cope with this increase. I am grateful that our Labour-led Government is focusing on infrastructure projects that will help our population growth and also support jobs during this COVID-19 environment. I think about Ormiston Primary School, which has recently received over $10 million to help build more classrooms for our tamariki, and I also think about the $1.3 billion investment that will help Mill Road develop as another safe and reliable link between Manukau and Drury. My priority is to help ensure that our communities thrive and flourish, and, with our population growth, to ensure that our communities feel connected, feel safe, and feel at home.

There has been a lot of talk about borders in recent times; also new electorate borders as well. Our border stretches from the northern end of Mission Heights, Flat Bush—to name a few—coming down to our southern border: Wattle Downs and Takanini itself. I describe these suburbs, as we know each one has its own character and has its own history—every suburb is unique. I hope to bring unity in that diversity to help celebrate our differences and be united for prosperity for all people. We’ve made history with this electorate. I look to the future with hope, faith perseverance, patience, and lots of aroha.

We all know that there are seasons in life: the high seasons and the low seasons, a beginning and an end. One season I was looking out from my hospital window, and now I look outside from my parliamentary window. Every day is a bonus for me. There will be a time when our political season will end. When the time comes for my valedictory, I hope to look back and say, “I have fought the good fight, I have finished the race, I have kept the faith.” Malo ma faʻafetai, Mr Speaker. God bless and thank you.

[Applause]

Waiata

SPEAKER: I think we might have some people leaving and we’ve got some people coming through. I want to especially thank the Wainuiōmata part of that crew—they were most harmonious. At the conclusion of the next maiden statement the House will stand suspended until 7 o’clock. That just saves me interrupting afterwards.

BARBARA EDMONDS (Labour—Mana): Afioga, Mr Speaker. It is a privilege for me to stand here as the MP for Mana, a path walked before me by Graham Kelly, the Hon Luamanuvao Dame Winnie Laban, and by the Hon Kris Faafoi. Thank you for paving the way. Fa‘afetai tele lava to the people of Mana for entrusting me with your voice. Ngāti Toa Rangatira, tēnā koutou. Tamariki mā o Mana College, tēnā koutou. O’u aiga uma i Samoa, talofa lava.

Mr Speaker, I want to acknowledge your appointment as the father of the House. Over 12 years ago, after choosing to settle our family in Porirua, my auntie Freda Soe from Wainuiōmata said to me that I made the wrong choice. She said, “You should move to Wainui where there is a good local MP who got lights on the hill so you can see where you are driving at night.” State Highway 1 from Wellington to Mana is still not fully lit, so the bar has been set by my auntie as to what a good electorate MP must achieve.

Prime Minister, it has been a privilege to have served you as a Beehive staffer. I’ve seen you operate behind closed doors in some of our country’s darkest days: 15 March, Whakaari / White Island, and now through COVID. I’m in awe of your energy, your strength, your empathy, and your ability to critically analyse thousands of policy briefings that come before you. I stand ready to serve you now as a member of your caucus.

Today, I want to share a love story—more than one love story, actually: love stories weaved throughout my many names, from across the Pacific Ocean to the hills of Mana and into the waters of Te Awarua-o-Porirua, from Kāpiti Island in the North and Mana Island in the South. My name is Barbara Rachael Fati Palepa Edmonds. Fati is short for Fatimataaleniuoaana. It is my paternal great-grandmother’s name, who fell in love with a tama uli—a blackbird—indentured labourers who were abducted from the Solomon Islands or New Guinea to work as slaves in the copra fields of Samoa. The translation of our name means “to fetch the green coconuts from the district of A’ana”. It is the Civil War story of tactic and strategy by defeating your enemy through stealing their food supply. My great-grandmother Fati was the village midwife and nurse who was the centre of her village’s health response to the influenza pandemic that wiped out 22 percent of Samoa’s population in 1918. I note the apology given on behalf of the New Zealand Government by the Rt Hon Helen Clark in 2002 for the actions taken by the New Zealand authorities, who allowed the ship the Talune, carrying passengers with influenza, to dock in Apia in 1918. We must learn from our mistakes, so I echo the call in the Speech from the Throne that it is of great imperative that New Zealand’s obligations to the Pacific are a core part of the COVID-19 vaccine strategy.

Edmonds is my married name. My quiet, humble, supportive, and patient husband Chris hails from Ngāti Manu Kāretu and Ngāti Oneone Kaikohe; Ngāpuhi te iwi. We are high school sweethearts. Although we only planned to have seven children, it is possibly a tribute to my Chinese side of my family that we rounded it off at the luckiest number, the number most inviting of wealth: eight children. Acacia, Arkaid, Agape, Patience, Prayer, Salem, Yahzel, and Harmony, you are our greatest treasure, and you will always be our greatest achievement.

Rachael is the name given to me by my father, Selani. He was the eldest of Grandpa’s 19 children and the only child to go past fourth form and receive a tertiary education. In 1976, he crossed the Pacific Ocean with his wife and my two older sisters to Aotearoa, the land of milk and honey, to give his family a better life. Oute fa‘atalofa atu i aiga of lo‘u tin‘a, Fasitoo-Uta, Safotu ma Asau. Oute fa‘atalofa atu fo‘i i aiga o lo‘u tam`a Faleula ma Faleatiu.

My parents initially settled in a rat-infested place in Ponsonby, and like many Pacific Islanders of the 1970s, they moved with the Pacific tide and shifted to South Auckland where the housing was more affordable. However, my educated father knew it was not the place he wanted to bring up his children. Like many of my father’s generation, with their meagre savings and by capitalising their family scheme benefit—a Labour policy from the days of Walter Nash—they put down a deposit to build a home on Auckland’s North Shore. Little did my father know, though, he would have to leave his job soon after and go on the sickness benefit to care for his wife, who was diagnosed with cancer. Two years later, he would be a widower at the age of 40, with four children under the age of 11, living off the domestic purposes benefit.

Barbara, or Palepa, was my mother’s name, bestowed on me by my family chief, the late Timu Lafaele, on my fifth birthday, the same day we buried my mother. Our family was never alone, though. Like many Pacific migrant families, our house was the transit lounge for the scores of family members as they arrived from Samoa, worked, saved money, and moved on to set up their own houses. We had 24 people living in our house at one time, but there were always beds because as the night shift went out, the day shift came home. Most of my family worked at the plastics factory or the local hospital, where they did the laundry, were the kitchen hands, the cooks, the cleaners, or the orderlies. While they were in the bowels of the kitchen, they sent me and my siblings to the decile 10 school right next door.

I am the fruit of their struggle. This was a classic Labour story, and this is where I learnt my Labour values. If a Government could support low-income parents who worked hard so that their children could have a better and more secure life, it was all right by me. Opportunity in education, always a fundamental tenet of the Labour Party from the days of Michael Joseph Savage and Peter Fraser, became critical for making the most of my potential and giving me and my family choices. My father went back to school at the age of 48 to become a social worker, and he worked as one until he retired in 2017. The Training Incentive Allowance paid for his petrol so he could get to his lectures. It gives me great pride that this Government is reinstating the Training Incentive Allowance, a policy that I know not only impacts directly on the children of solo parents but, in my father’s case, the thousands of vulnerable children that he cared for as a social worker.

The education that my family had worked so hard to provide for me meant I understood that completing my tertiary education was an investment in our family’s future. With the help of the Edmonds whānau, I completed my law and arts degrees in 5½ years. By the end, Chris and I had four children and we were expecting our fifth. Like my father, my family depended on me. Failure was not an option. It was tough. Self-inflicted, of course, but still tough. We only had $8 in our hand at the end of the week as Chris worked as a low-paid timber machinist. That meant we had no cushion if our car broke down or it failed its warrant or if I needed an additional textbook. Our financial situation only improved in 2006 when a much-needed boost arrived through an increase in Working for Families. We were one of those families whom the Helen Clark - Labour Government assisted out of relative poverty and into a life of opportunities and choices. It made a real difference to our family.

And now I’m here, moulded and shaped by quintessential Labour values, saved from falling through the cracks as a child, through the Labour policies of Michael Joseph Savage, Walter Nash, Norman Kirk and, Helen Clark. At every difficult point in mine or my family’s life, there’s been a Labour Government that has been our safety net. I stand on the shoulders of those before me wanting to use those values to improve the lives of families in Mana. So it is my turn to serve my community, the community of Mana to promote and expand those values to ensure that these safety nets, opportunities, and choices remain or are reinstated.

My love affair with Mana started in October 2008. I secured a role with the IRD national office as their first Pacific tax policy analyst and we were looking for a home in Wellington. We started in Mana, the sun was shining and there was a rowing—a waka ama—regatta on Te Awarua-o-Porirua Harbour. As we moved south towards Johnsonville it started to pour down with rain—

Hon Members: Ha, ha!

BARBARA EDMONDS: —I’m just saying!—and then it hailed as we drove to Newtown. We didn’t even try to make it over the Wainui Hill, much to my Auntie Freda’s disappointment. We took it as a sign that Titahi Bay, Porirua, Mana was the place we would call home for our family. And what a home it is. Mana is an extremely diverse electorate, both in geography and people, a coastline that leads to Kāpiti Island in the north and Mana Island in the south, with rolling hills surrounding Paraparaumu, Paekākāriki, Pukerua Bay, Waitangirua, Cannons Creek, Plimmerton, and Judgeford.

Mana has the fifth-highest population of Pacific peoples, almost triple the national average. A fifth of our population are Māori and one-quarter of our population are born overseas. History shows that economic recessions hit Pacific, Māori, and migrant communities the hardest, so I’m proud to be part of a Government that not only represents our communities more but one that has Pacific, Māori, and migrants at the table to help make those decisions so that our people are not left behind.

Mana consistently rates above the national average for voter turnout at the general election. That is because the people in Mana know how much the decisions and policies made here in Wellington Central impact on their everyday lives—issues that matter, such as affordable warm, dry homes, homes that we can call our own; 24/7 access to healthcare; decent, paying jobs and decent conditions where workers’ rights are respected; quality local education so that our children do not have to leave the electorate to learn, with classrooms and buildings that match the mana of the students that learn within their walls; a thriving local economy where businesses small and significant can spend most of their time actually running their business rather than being unreasonably caught up in compliance; core infrastructure that is maintained or expanded to accommodate for population growth so that we can swim at our local beach and not fear the floods that come with rising sea levels and extreme weather patterns; a world that breathes for generations to come.

There is much work to do and we cannot do this alone. The Government cannot solve every problem, so we must depend on NGOs and community groups to help us, whether it be the Raumati village community gardens, Norths Rugby Club, potential wind turbines on the hill at Paekākāriki, the Linden Community Centre Friday lunch, or the one-stop shop for youth in the East. The dozens of community organisations, clubs, schools, and groups I visited during my campaign and those I’ve been a part of for the last 12 years have one clear, simple, and loud message to us in this House and to Government agencies: do not forget the communities that we serve because at the nub of it, the community knows what the community needs.

For us members, we must now turn our values into policy and policy, into to action. It would be remiss of me not to touch on the topic of tax. Contrary to popular belief and probably to the dismay of our small tax community here in New Zealand, I do not love tax, but I do believe in a fair, efficient, and cohesive tax system that has a broad base with low rates. I also believe that much of how we have a cohesive tax system is because of the generic tax policy process. This process is the model for all Government policy development if carried out genuinely.

My alofa to those who helped me get here is also appropriate at this time. My family from far and wide, especially Sela, my mum, who picked up where Palepa couldn’t continue, the Mana Labour Electorate Committee and E tū union, the scores of our dedicated, passionate volunteers and friends, the housewives of Titahi Bay, Paekākāriki, and Raumati who knocked on the doors, picked up phones, made food, messaged me with words of encouragement and siva-ed with me throughout the campaign—thank you. My core campaign team of Kieran, Josh, Brenda, Suzanne, Jim, Megan, Helen, Jamie, Baigent and Swann, Caroline and Geoff: you taught this political rookie the value of direct voter contact. I’m for ever grateful for your time, teachings, and friendship. Robin, Kathryn, Maryan, Dave, Dan, Jerome, Telea, Andrea, Neil, Janet Holborow, John Grundy, Carmel and Stuart: you always believed that I was capable of doing this even when I didn’t think so myself. Thank you for providing me with the soft landings that I needed.

My final thanks go to all those who work or worked these walls of Parliament and the Beehive. Most MPs leave this thanks for their valedictory speech, but I want to mark it twice knowing how hard it is. This is a unique place to work where we see the best of people and, on the rare occasions, the worst of people, and where a 40-hour week is a luxury. Staffers do not do their jobs for the love, for money, or for work-life balance, but because we know that change can be effected from within these walls. Fa’afetai, fa’afetai, fa’afetai tele lava.

I conclude with a love note to my dearest Mana. My commitment to you is that I will advocate with that same fighting spirit that is captured in my name, with the same humility and compassion my great-grandmother possessed as she helped care for the sick in her village, and with the tenacity to never give up, no matter what life throws at you, as taught to me by my father, because people don’t want much—just someone to love, somewhere to live, somewhere to work, and something to hope for. Nō reira, tēnā koutou, tēnā koutou, tēnā koutou katoa. Ia manuia le soifua.

[Applause]

Waiata

Sitting suspended from 6.15 p.m. to 7 p.m.

Hon NANAIA MAHUTA (Minister of Foreign Affairs): I move, That this debate be now adjourned.

Motion agreed to.

SPEAKER: This debate is set down for consideration next sitting day.

Urgency

Urgency

Hon CHRIS HIPKINS (Leader of the House): I move, That urgency be accorded the passing through all remaining stages of the Taxation (Income Tax Rate and Other Amendments) Bill.

I canvassed the reason for urgency in this when we moved urgency last time, which has now been interrupted, so I won’t re-canvass that again now.

SPEAKER: So ditto—good on you. The question is that the motion is agreed to.

A party vote was called for on the question, That urgency be accorded.

Ayes 74

New Zealand Labour 64; Green Party of Aotearoa New Zealand 10.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Motion agreed to.

Bills

Taxation (Income Tax Rate and Other Amendments) Bill

First Reading

Debate resumed from 1 December.

Hon MICHAEL WOODHOUSE (National): Thank you, Mr Speaker. When it comes to economic philosophy, I think it’s fair to say that I’m more in the camp of Hazlitt than Keynes. We have seen some very strong Keynesian economic responses to the recession, with the pumping of massive amounts of Government spending as part of the COVID-19 recovery. The great author and economic philosopher Henry Hazlitt would have a lot to say about that if he was still around. He was very much a supply side economist, recognising that each action needed to take into account not only the immediate but also the longer-term effects, so not only the people who were one group that was affected but a vast number of other groups.

But we have what we have. We have what the Government is doing, which is, effectively, pump-priming the economy, pouring a huge amount of money to stimulate the economy during a recession. That’s OK if it’s short-term bolus but not long term, and we have this for as far as the eye can see. But if you look at the importance of pump-priming, what should actually go along with that increased Government spending is interest rate reductions, and we have that. But the third leg of the pump-priming stool is tax cuts in order to stimulate the economy. Instead, we have the prospect of tax increases.

So the tax increases that are being proposed by this bill are actually a handbrake on the very thing the Government wants to do, which is to stimulate the economy. What the Government wants to do about its tax policy is two things: firstly, it has to be effective in achieving its goals, and, secondly, it has to be fair. Now, in order for it to be effective—

Hon Dr David Clark: That’s right.

Hon MICHAEL WOODHOUSE: Yep, Dr Clark agrees. But the academic literature is very split on whether or not tax cuts will stimulate an economy and whether tax increases slow the economy down. I favour the academics that say, actually, a tax cut will stimulate growth. There’s empirical evidence to that degree. I’m reminded of the words of Winston Churchill, actually, who said that “I contend that for a nation to try to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle.” That’s exactly what we’re trying to do with this bill.

Actually, I’m interested that many of the people in this House who believe that taxes are actually effective in stimulating the economy are the same MPs who would argue that imposing a tax on capital income is going to constrain capital growth. That’s what they want it to do. That’s what they want it to do, to dampen house price inflation. So if higher taxes on capital growth will blunt the effect of them, surely they’ve got to be consistent and acknowledge that higher taxes on income are going to have exactly the same effect.

I’m actually amazed that the Green Party intends to abstain on this bill. Apart from anything else, it lacks the sort of conviction that they would normally have about that. I would have thought that they would have supported any tax increase, but to say that they won’t support this tax increase because the Government is not considering another tax increase is hardly Green Party whakapapa, I would suggest.

The second leg of this is fairness, and I’m really interested in the fairness argument here, because it is only fair that those who earn more pay more, and I strongly agree with that. As an upper-income earner for most of my career, I’ve been very happy to do that, and we have an income tax system that has to be efficient and broad based - low rate. But it’s also highly distributive through things like Working for Families and accommodation supplements. The effect of that is that half of all households with children receive more in welfare payments and tax credits than they pay in tax, that single-income families with two children don’t pay a dollar of net income tax until their income exceeds $60,000, and that the top 9 percent of income earners are now paying a whopping 42 percent of the total personal income tax—42 percent. And you know what?

Dr Duncan Webb: That’s fair.

Hon MICHAEL WOODHOUSE: I think that’s fair—exactly, Dr Webb. It’s highly progressive when it’s described in those terms, but it’s fair. But it’s frankly not fair to burden the top 2 percent of taxpayers who are already paying about 20 percent of that tax burden with more.

As Mr Bayly indicated in his speech, it’s highly unlikely that this will actually raise more than a very small amount of revenue. If one looks at the impact assessment that has been tabled with this bill, the IRD agrees. It says that “the estimates are highly uncertain.” They arise because they “are sensitive to assumptions about how … people change their behaviour … There is significant uncertainty in these assumptions”. So not only does it not feel fair to me, it’s not going to make a blind bit of difference, particularly in the context of the massive, massive spending that the Government is doing. It should be cutting taxes, not increasing them, and the process has been appalling.

I can’t support the passage of this bill under urgency. I can’t support it in principle anyway, but to be driving this through under urgency is quite wrong. As a former Minister of Revenue, I became very familiar with the tax consultation process that IRD embark on, the generic tax policy process. The number of committees, the small-business tax advisory group, the larger corporate group, Chartered Accountants Australia & New Zealand, of which I am a member—all were heavily consulted on all of the policies that were being considered under my watch. So I went to the IRD website, and if one searches the IRD website at the moment for the page “How we develop tax policy”, this is what comes up: “Page not found!” You can’t even find out how IRD develops tax policy, because the internet’s broken. Maybe they took it down. And if you go to the consultation page, there’s nothing on it. It says “There are currently no items that we are … consulting on.”

As for the New Zealand Bill of Rights Act (BORA) vet that we have seen for the amendments to the Tax Administration Act, this is extraordinary, because the power to demand information has failed the New Zealand Bill of Rights Act and is considered by the Attorney-General to be inconsistent with the right to freedom of expression and the right to be secure against unreasonable search and seizure. Now, this is a classic. Who issues the BORA vet? The Attorney-General. Who is the Attorney-General? The Hon David Parker. Who does he issue the BORA vet to? The Minister of Revenue, who is the Minister in charge of this bill. Who is the Minister of Revenue? David Parker. [Interruption] Absolutely.

I’m sure the new chair of the Privileges Committee, which has an item of business before it about the judicial role of inconsistency of legislation with the bill of rights Act, will be interested in this development. And who was the most recent chair of the Privileges Committee considering that business? The Hon David Parker. So it is a triangular muddle that one person is responsible for and one person can fix, and the way to fix it is to take clause 33 out of this bill, fix it, reintroduce it, and send it to the select committee so that those people that would normally be consulted on it are able to have their say.

I’ll have a lot more to say about this bill in subsequent readings and in the committee stage. In fact, I should say this: I will be introducing an amendment to the bill by a Supplementary Order Paper that actually deletes clause 33 altogether, because I think not only does it fail the BORA vet, it fails any sort of fairness—the fairness that the Government wants to talk about. It simply doesn’t pass muster. The bill is philosophically wrong. It’s ineffective, it’s not fair to those who already pay the lion’s share of income tax, it’s being rushed, it breaches the bill of rights, and National is going to oppose it.

Hon STUART NASH (Minister for Economic and Regional Development): Thank you very much, Madam Speaker. All I can say is thank goodness that we do not have a supply side economist as the Minister of Revenue—we would be in a hell of a lot of trouble as a country and an economy.

The last speaker, Michael Woodhouse, gave us, or tried to give us, a very brief philosophical lesson about what certain tax economics thought about this, and what has been—

Hon Dr David Clark: Not brief enough.

Hon STUART NASH: Dead right, Dr Clark. What has been proven over the years is that supply side economics simply do not work. They’re great in a textbook. Milton Friedman is so last century, I believe that even the Chicago school got rid of his name off the business school. Even Chicago have ignored Milton Friedman and said, “Sorry, we got this wrong.”

What demand side economics says is you give money to people who will spend it, because what that will do is create demand in an economy, and we absolutely believe that. We went out to the electorate, we stood there—I was with Minister Grant Robertson—and we signalled very, very clearly that the top 2 percent—not 98 percent; the top 2 percent—would pay a little bit more tax, because we understood we were in a unique situation and we were signalling that, you know, we’ve all got to play our part. We’ve all got to play our part. Ninety-eight percent will not see any difference whatsoever, and we’ve made that extremely clear.

But what we have also been very clear about is that in order to keep this economy going, we would provide money to people who found themselves in a really difficult situation in this one-in-100-year event. So we did that in the form of the wage subsidy. That is what demand side economics is about: 1.8 million Kiwis actually received money, because we knew if people who weren’t working or who found themselves in reduced hours, or businesses who found themselves in a position where they couldn’t trade—if money kept coming into the pockets of the workers, and that cycled through the economy, then we would do OK.

What have we seen? First of all, we were the first country in the OECD to get money out the door. Secondly, we are on about 5.8 percent unemployment. Now, sure, that is higher than it was pre-COVID. We knew that was going to be the case. But the Treasury forecast unemployment was going to be over 10 percent. In fact, I was reading a brief recently which was very early on in the pandemic that talked about between 13 and—worst case scenario—20 percent unemployment. But what we did is we got money out really fast to those who needed it so they would continue spending.

If Michael Woodhouse had been revenue Minister or had been part of the economic team, as he highlighted just in his last speech, what he would have done is he would have said to the top taxpayers, “We’re going to cut your tax.” and to those on the bottom, “You get nothing”—you get nothing.

Hon Michael Woodhouse: Straw man argument.

Hon STUART NASH: Mr Woodhouse, that is what you said—that is what you said.

ASSISTANT SPEAKER (Hon Jacqui Dean): Order!

Hon Michael Woodhouse: No, that’s not what I said. That is absolutely not what I said.

Hon STUART NASH: “We will cut taxes.”—we will cut taxes. That’s what you said—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! The member will resume his seat. In saying “you”, the member brings the Speaker into the debate.

Hon STUART NASH: Point of order, Madam Speaker. I understand that, but I thought there was a ruling from Speaker Mallard that said if you were using “you” in a context that was readily understood by everyone in the—anyway, I understand—

ASSISTANT SPEAKER (Hon Jacqui Dean): No, no. Thank you. The member is correct. “You” can be used to address the Chamber as a whole, but directing “you” at a member is against Speakers’ rulings.

Hon STUART NASH: Understood. Thank you. So all I am highlighting here is that what the House has seen in the last two speakers is two fundamentally different approaches to how separate Governments would deal with the situation we find ourselves in. Under Mr Woodhouse, taxes would have been cut and those at the bottom wouldn’t have got anything. Under this Labour Government, under Jacinda Ardern, under Grant Robertson, what we decided is we would give money to those who absolutely needed it in order to stimulate the economy—demand side economics—and those at the very top, that 2 percent, would pay just a little bit more. I believe that history will show that we have made the right decision—that Grant Robertson as the Minister of Finance, that Jacinda Ardern as the Prime Minister, made the right decision in the way that this Government handled the pandemic.

I am very proud to commend this bill to the House. It is the right thing to do. Thank you.

CHLÖE SWARBRICK (Green—Auckland Central): E te Māngai, tēnā koe. Tēnā koutou e te Whare. Just to foreshadow at the beginning of this contribution, the Green Party of Aotearoa New Zealand will be abstaining on this bill before the House today. The reason for that is that in the best-case scenario this bill enables us, by passage, by the majority of the Labour side and the Labour Government, to raise nowhere near enough revenue to meet the challenges of the borrowing that we have undertaken, and, importantly, to make the investments that are necessary to build back. But worst-case scenario, this further entrenches and exacerbates inequality.

We had the honourable Minister Stuart Nash referring particularly to history, and here I think it is important to refer to history and to our experiences with raising top income - tax brackets in the past. So we did just that when it was 2000, and the then Minister of Finance, Michael Cullen, increased the top tax bracket from, I believe, off the top of my head, 33 percent to 39 percent. In the subsequent years we saw an increase in house prices by approximately 17 percent. The reason for that, as was unpacked later by academics and experts and researchers, was that people were shuffling their money into trusts instead of the typical income which is taxed, and then into property, property being the major reason that we have the level of wealth inequality that we do in this country today. It then so happens that Sir Michael Cullen, after being the Minister of Finance, went on to be the chair of the Tax Working Group. He learnt from his mistakes, and he recommended a capital gains tax, a comprehensive one which would actually tackle the core of the issue of inequality in this country.

In his contribution earlier, the, I believe newly appointed—congratulations—spokesperson for finance for the National Party, Andrew Bayly, spoke to, and I believe he said the quiet part out loud when he said, and I quote, “There is such a thing as legitimate tax avoidance.” He was speaking to how we create systems which enable people with power and wealth and resources to shift their money into places and spaces that mean that they don’t end up being taxed in the way that they should. We have seen exactly that in the way that we have the highest rates of wealth inequality in this country since the 1980s, which, notably, is when we first started collecting detailed data.

To refer to some data, the wealthiest 10 percent—the top 10 percent wealthiest—New Zealanders own 59 percent, more than half, of all of the assets in this country. The poorest half—the poorest half—of New Zealanders own just 2 percent. The warning shot that the Greens are putting out there in discussing and debating this legislation today is that we risk doing exactly the same thing, repeating history, and entrenching and perpetuating and exacerbating these problems if we do not address the core root of this evil, which is that we do not equally tax capital as we do those who work for a living.

I’d also refer to the notes that have been prepared, the departmental disclosure statement and regulatory impact assessment, which speaks to the kind of problem definition and what the objectives, as outlined by the Labour Government, were in seeking to implement this piece of law ahead of Christmas. The reasons, as outlined, were, of course, to implement the Labour Party’s 2020 election manifesto, but also two key objectives—as bullet pointed at page one for those who are following. It is, firstly, a revenue objective, and secondly, a distributional objective. I’ll refer to both of those in turn.

So, on the first, around a revenue objective, that’s defined in this paper, in this advice, as “The Government is raising extra revenue to reduce the fiscal impact of higher operating allowances proposed in its fiscal strategy.” In there what we see, as outlined in the projections by officials, is that the amount of money that is projected to be raised by this will not touch the sides, again as I alluded to before, on the amount of borrowing that we are currently undertaking in order to recover from COVID-19. In fact, what is stipulated, and I quote from this very advice, is that “The revenue estimates are sensitive to assumptions about how much people change their behaviour in response to the tax (e.g., reducing hours, diverting income into another entity). There is significant uncertainty in these assumptions and changing them results in substantial changes in revenue.” That starts to unpick and casts seeds of doubt on that first objective, the revenue objective.

But more importantly, the concern for the Greens lies on the second outlined objective, which is a distributional objective. Of course, I alluded to inequality as rampant in wealth in this country just earlier, but here it’s defined as, “The Government is seeking to raise this additional revenue in a way which has as little as possible impact on low- and middle-income earners and thus increases the progressivity of the tax system.” Absolutely, you can see iron-clad in here that there is an intention, and, in fact, it will be achieved with regards to the progressivity of the income tax system, but not of the tax system as a whole. That’s because we aren’t, of course, increasing—by virtue of this legislation as drafted, there’s no proposed changes to anybody who is earning less than $180,000 per annum, on their income, on paper. But it doesn’t deal with, or grapple with, the fact that by virtue of potentially continuing to inflate this problem of rampant wealth inequality in this country, the costs, particularly the cost of housing, very well may go up in this country, which disproportionately impacts those low and middle income earners.

That is the crux of the problem that the Greens are having with this proposed law. At worst, it is going to make inequality worse. So it was put to us, and has been lauded as one of the potentially great things about this legislation, about the proposed tax changes, that only the top 2 percent of society is going to pay. Someone, actually, even mentioned earlier in the debate that it was something that we could celebrate that even MPs weren’t going to have to pay because even they wouldn’t be touched. I’d hazard a guess that most who sit in this Chamber have probably heard from their constituents about how disgruntled they are about the fact that back in the 1980s, the average backbench MP’s salary was the equivalent to that of a teacher, and we have seen that run-away inequality mirrored in the salaries of those in this Chamber, as we have in the wealth inequality. [Interruption] With regard to the barracking I just—yeah, I’m not even going to go there.

In order to actually meaningfully do and achieve the objectives, as outlined in the advice, the statement offered by officials, that is a revenue objective, a meaningful revenue objective, that’ll enable us to invest in the clean, green technology and infrastructure that was spoken to just earlier today when it came to the climate emergency declaration. In order to achieve a distributional objective for a more equal, for a more just New Zealand where everybody has the opportunity to thrive, we actually need to be doing the likes of which Sir Michael Cullen, as the chair of the Tax Working Group, having learnt from the mistakes of 2000, recommended only, I believe it was, earlier this year or late the last. Aotearoa New Zealand needs a wealth tax. We in this Chamber need to be bold enough to engage and debate that on the facts, on the evidence, and on the data.

Dr Duncan Webb: Not this bill.

CHLÖE SWARBRICK: And Dr Duncan Webb, I deeply respect you, my friend. It isn’t this bill, but it should be, because the Labour Party that prides itself on principles like justice and fairness and equal opportunity—I would hope to listen to the forebears that it placed in the chair of its own expert advisory Tax Working Group, because we have the opportunity to learn from the past and to do far better to those that we are passing down the future to.

The Greens will be abstaining from this bill. Thank you.

DAVID SEYMOUR (Leader—ACT): Thank you, Madam Speaker. I rise on behalf of ACT in opposition to this Taxation (Income Tax Rate and Other Amendments) Bill. But I have to say, I thought that was a very fine speech from Chlöe Swarbrick, and I greatly enjoyed listening to her gradually discovering how tax policy impacts behaviour and why introducing distortion isn’t always a particularly good idea. Although I should just say to Chlöe Swarbrick that the Tax Working Group report, amongst its many findings, said it didn’t think that introducing a capital gains tax would actually do much for house prices. Sometimes it pays to read the whole thing.

I think one of the many reasons to object to this bill is the total lack of imagination. Imagine 21 years and going nowhere, because that’s what this bill is about. In 1999, at a time when I was so interested in politics I got confused between Michael Cullen and Christian Cullen, the Minister of Finance, new elected, came in and said, “We won. You lost. Eat that, etc. The rich pricks have had it too good too long.”, and introduced—wait for it—a 39c tax rate for what were then called higher earners.

Hon David Parker: At what threshold?

DAVID SEYMOUR: At that time at a threshold of $60,000, as David Parker asks. And today, 21 years later, how far have they got? Well, now they’re just going to introduce it on people earning over $180,000. Imagine being so short of imagination that that was your big idea upon being elected?

Here’s another problem with this piece of legislation: the fact that it’s being done under urgency. Now, there are sometimes good practical reasons to put things through under urgency. The temporary bill to deregulate party pill testing for one summer, with an expiry date on the legislation—that was a good use of urgency, because it actually is urgent, because the problem is right before us. The reason for urgency that was given by the Leader of the House on this legislation is “Well, we campaigned on it and we want to do it really quickly.” So forget checks and balances. Forget the right of the public to have a say; it’s another case of “We won. You lost. Eat that.” Maybe the Labour Party think that’s kind of fun for now, but they should reflect on what sort of contribution that is to our democracy—what sort of leadership, what sort of kindness, dare I say it, are they bringing by putting a bill through under urgency for purely political purposes? I think that that is a great shame.

Another reason why you might oppose this bill is the unintended consequences. We heard a bit about that, perhaps inadvertently, from the previous speaker from the Green Party. One of them is that, of course, once people find that they are going to be liable to pay more tax, it’s in their interest to structure their affairs to avoid it. And, of course, there’s already speculation that the fringe benefit rate will have to be raised to disincentivise people to be paid more in benefits in kind rather than cash. There’s already speculation that the trust rate will have to be moved, and it’s already in this legislation that the trust regime will have to have greater powers for the IRD to request revenue information off people to make sure that they’re not using trusts to avoid this top tax rate.

Now, people have been quoting all sorts of intellectuals, and it’s kind of cute. So let me give you a bit of Adam Smith. The levying of an income tax would be an intolerable intrusion into the affairs of men—and I’m sure he meant women, too.

One of the implications of a complex tax regime is a greater incursion into privacy. What a great irony. Just as we’ve had a new Privacy Act, with more teeth to protect people’s privacy, come into effect, this Government, under urgency, is rushing through legislation that will further impinge upon people’s privacy.

But then there’s another reason why someone might be opposed to this legislation, and that is the morality of it. What I find really interesting is the constant reminder—subtle and not so subtle—from the Labour Party members on the hustings and the campaign trail and in this House: don’t worry; it’ll only affect a small number of people, OK? Just 2 percent. You know, the message is: it’s OK to go after people if they’re a minority. You know, that’s what they’re saying. It won’t affect many people. It won’t affect you; we’re just going to take it off someone else, and there’s not many of them. It’s OK to beat on a small group of people, just so long as they’re people that are successful.

That’s the problem here. It’s the morality of it. It’s the old-fashioned bully-boy tactics. In fact, it’s tall poppy syndrome in the tax code. That’s what this is. It’s OK to go after a small group of people and take their money off them. That’s the message that comes through, and, again, the Labour Party should reflect on the values in the leadership and, dare I say it, the kindness that they’re showing with such a message behind this legislation.

You see, the values that we try to teach our kids and hope that they’ll receive at school are very different. The values are: go to school, listen to your teacher, do your homework, get good grades that turn into qualifications that turn into jobs that turn into a career. And when you earn money, put a little bit of it aside—save it, invest it carefully. If you do all those things right, you might be comfortable and make a bit more money. Those are the values we try to teach our kids and hope they learn at school. Then the Labour Party comes along and says, “If you do all those things, if you do it too well, then we’re going to not just tax you more proportionally, we’re going to put in place an extra tax for that small number of people; we’re going to hit them disproportionally hard with this top tax rate.” I think that on a moral basis that is absolutely shameful and the opposite of the values of aspiration, thrift, and achievement that we should be celebrating in this country and in this Parliament.

This legislation is rushed. It lacks imagination. It will have unintended consequences. It doesn’t have a clear problem to be solved, and it is immoral in that it’s premised on it being OK to beat on a small group of people so long as they’re successful. Now, maybe that would be justified if there was a problem to be solved, if there was a need for revenue that could be solved by this legislation. But what do the documents—the regulatory impact statement and the departmental disclosure statement and the analysis that we’ve seen—tell us about this legislation? It says it’s going to raise about half a billion dollars. Now, once upon a time, that was a lot of money, but we’ve got a Government that just committed to borrow $140 billion. It’s not going to make any noticeable impact on the Government’s balance sheet. If the Government was truly worried about balancing its Budget and having money to spend, here’s a question: could they have found anywhere in the $100 billion - plus they spend each year just half a billion dollars’ worth of savings, to avoid all this? Of course they could have, but this tax is a solution looking for a problem.

This can’t be as good as it gets. Imagine if we actually had a better way. Imagine if the objective of this country was to grow its productivity and its wealth by having the best public policy that was the most efficient and was based on and encouraged the best values of the Kiwi spirit instead of putting tall poppy syndrome in the tax code. Imagine if we strove to have low, flat taxes that were efficient to administer, that did not encourage distorted behaviour, that were efficient to comply with, that did not have people running off to their tax accountants and tax lawyers to set up new schemes to avoid paying them, and, most importantly, sent a message that this country values success—this country thinks that if you do all those things we encourage our kids to do and you end up earning more than $180,000, we don’t say, “We’re going to take it off you.”; we say, “Good on you!” That would be the values of a country that I would like to see, not the values of a country that thinks it’s OK to beat on a minority so long as they’re successful, not a country that rushes through ineffective legislation that makes the tax system more complicated to solve no defined problem. We can do so much better than this, but, sadly, the Labour Party is stuck legislating like it’s 1999. What a shame.

JAMIE STRANGE (Labour—Hamilton East): Madam Speaker, thank you for the opportunity to take a call on this bill. My wife and I have four young children, and if there’s one thing that our children understand it’s fairness, and, if they feel something is not fair, they certainly tell us in quite loud language at times. If we go back a couple of months ago, the Labour Party took a manifesto document to the election—they took a manifesto document to the election—and part of that manifesto was this policy here, which is to increase the tax rate for people earning over $180,000 to 39c—now, only for those earning over $180,000. Now, the previous speaker, David Seymour, talks about those being successful people; I’m not sure how he defines success, because I would also say that teachers and nurses are also successful, but that’s up to the member to make that definition for himself. But the key aspect around this bill here is around fairness.

The country voted for this bill. The Labour Party took the manifesto—and this was an integral part of the manifesto—and one of the key arguments was the fact that we have increased debt to support the country during COVID, and this is a key aspect: the money that this bill raises supports the paying down of debt.

Now, I won’t go into the details, because the Minister of Transport spoke earlier on about this bill, but I just wanted to raise a couple of those key points there: that this is a Government who believe in fairness. This is a Government who believe in being fiscally responsible. We acknowledge that we have increased debt, just like the previous Government did through the global financial crisis, and they paid it down; just like we have during COVID, and we’re starting to pay that debt down.

So it is an excellent bill, I commend the Minister of Revenue, and I commend this bill to the House. Thank you.

ASSISTANT SPEAKER (Hon Jacqui Dean): I call the Hon Gerry Brownlee—five minutes.

Hon GERRY BROWNLEE (National): Well, the first thing I would like to point out to Mr Strange, who’s just resumed his seat, is that the Government has not started to pay down debt; the Government continues to borrow at an extraordinarily large rate—

Andrew Bayly: $110 million a day.

Hon GERRY BROWNLEE: —in fact, as my colleague points out, about $120 million a day. To suggest in any way that this bill is about paying back the debt is a total nonsense.

Let’s just have a look at it for a minute. The projections are over four years that this might bring in some $2.2 billion. It’s a lot of money—$2.2 billion over four years, of 2 percent of the taxpaying base—a lot of money; no question about that. But the debt in four years’ time is going to be some $214 billion. So this is, on a good day, when everyone pays up—no one avoids; everyone puts the cash in—1 percent of the debt. This is 1 percent of the debt. So this bill does not have anything to do with repaying debt. This bill is entirely about the—you would say—placation of those who are anxious about others who earn more than them through the election promise to increase to the 39c rate.

I think it was interesting when our colleague David Seymour pointed out that that’s exactly what Labour did 21 years ago. How long did it take before people started creeping up towards that income level? Now, of course, 21 years later, where that level was set is now below what the mean income is for New Zealanders. So you do get a lot of movement over a period of time, and it seems to me that the idea that you’re going to say, “Well, at the $180,000 mark you meet something magical and you must pay more tax.” denies the fact that everybody in this country wants, eventually, to see their incomes rise.

The other thing that is most worrying about this bill is the reach-back powers given to the commissioner into the private affairs of New Zealanders. For seven years, backwards—back as far as the 2013-14 year—the Commissioner of Inland Revenue can ask trustees to provide information about that trust income. Here’s one problem: why doesn’t he already have it? Why doesn’t the commissioner already have that information about income? He should be taxing any trust at the rate that they’re due to pay it.

Hon Stuart Nash: She.

Hon GERRY BROWNLEE: She—well, OK. In this case, I’m using it as a very generic term. She’s actually a very good State servant. But the question is: the information should be there, so what is the additional purpose here? Well, when we look at the bill, we find out it’s to help develop policy. So where’s the information going? Who’s taking that information? Who’s using that information, and what are they doing with it?

I think it was a very good point that was made earlier in the debate that we worry all the time about privacy in this country. We strengthen privacy laws constantly. But then, under urgency, to try and get enough money to pay 1 percent of the debt—if we’re lucky—each year for the next 200 years, we suddenly change privacy laws. It seems to me that this is a bill that’s very poorly conceived and that’s written in a hurry simply to accommodate the ability for Labour politicians, Labour members of Parliament, to go out and say, “We promised to put that top tax rate up, and we did it.”, and then, of course, to hope that no one asks them why, because the answer to why can only be because people earning over that much shouldn’t keep as much of the income as they’re earning. It can’t be anything else. It can’t be, “Oh, we want to reduce the debt.”, because it won’t do it.

We will not be supporting this bill. We don’t begrudge for one moment the spending that the Government has done to help New Zealanders through a difficult time, but we do not think that it is fair or that it’s kind to create the illusion that somehow this bill is going to solve the massive debt problem that this country is accumulating day by day. Only productivity will do that.

HELEN WHITE (Labour): It’s a very interesting and perverse thing to hear the use of terms like “minority” and “privacy” and see some sort of suggestion that there’s persecution in a bill like this. This is a bill which is designed to tax people who earn over $180,000, 39c in the dollar—they are well able to actually pay that and they’re willing to do so, and they voted to do so in their droves. That’s because it is the right thing to do. That is because most of us have moved on from Churchill and, in fact, Adam Smith; we are right up to date at the moment and we are reading Stiglitz. We are talking about how we have a gap between rich and poor, and this tax targets the top 2 percent. We have a gap which is all about the top 1 percent, so this is bang on the money for where it should be.

Hon Member: Well said.

HELEN WHITE: Thank you.

NICOLA WILLIS (National): I rise to oppose the Taxation (Income Tax Rate and Other Amendments) Bill. We here on the National side oppose it in principle because we believe that you can’t tax your way out of a recession, and that in fact, this is entirely the wrong time to be adding new taxes and new costs to those working hard in our economy.

I want to, in this contribution, put on the record for Hansard the shambles of a process by which this bill has come to the House. Because we all know the back story here—it’s been canvassed by other members—whereby Labour campaigned on raising the top tax rate, and as has been the case in the past, the tax experts came out, the economists came out, everyone came out and said, “Well, we’d like to warn you, Labour, that if you do that and you open up a massive gap between the trust tax rate and the top personal rate, then you are very likely to see some avoidance behaviour.” This was not new or revolutionary advice; this was very typical advice. And Labour said, “Oh no, no, no, nothing to see here. Let’s all move on.” And then, lo and behold, post the election, drafting the bill, Labour decides that, actually, it turns out all those experts were absolutely right. There is a significant risk here that people are going to try and avoid this tax by funnelling income through trusts.

So what does the Government do at that point? Does the Government say, “Well, we’ve made a commitment in the election that we are not going to introduce any new additional taxes and we must honour our commitment”?

Hon Stuart Nash: Penny and Hooper.

NICOLA WILLIS: Because, of course, that would be the position of integrity wouldn’t it, Mr Nash? That would be the position of honesty, of doing what you say you will, of campaigning on a promise and keeping to it. No, no. That was not the response that Labour decided to have. Instead, what Labour did was they said, “Hey, here is an opportunity for us to potentially introduce a sneaky additional tax. But we can’t do it straight away, we better trump up a bit more of a case. So let’s create some new powers.” Is it that surprising that Labour would create new powers for the commissioner? “Let’s create some new powers for the commissioner to keep an eye on it, and let’s make sure those powers are really strong and allow the commissioner to obtain information to watch what’s happening in trusts and to ensure that this information can be used to formulate policy in the future.”

Now, the problem with all of this is that this is all being done in a rush; we are debating this under urgency. So it appears that the Minister of Revenue didn’t really stop to think what the implications of introducing these significant new powers might be. That was, until he put on his other hat, as the Attorney-General. So at which point the Attorney-General assesses this bill against our New Zealand Bill of Rights Act and says, “Does it have any problems?” Oh yes, there are significant problems with this bill, because what it does is it actually creates a search and surveillance concern, and a freedom of expression concern—such that the Attorney-General has issued a section 7 report saying that it is inconsistent with the New Zealand Bill of Rights Act. So we have in this House a bill being debated that causes major concerns when it comes to the rights New Zealanders expect to be protected.

So what does the Attorney-General do, then, when he comes to this conclusion, that the bill is causing these major breaches? Does he perhaps have a word with his friendlier self, the Minister of Revenue, and say, “Well, you know, perhaps you need to amend that, perhaps you need to come up with something else?” No, no. Instead, what the Attorney-General does is suggest a clause that could be used to mitigate against this, and does absolutely nothing more. So we have this spectacle of a bill being introduced under urgency in this House, that most members in the Chamber only saw a few hours ago, that the Attorney-General is advising should be amended, but that hasn’t come to this House with any of the amendments.

I just want to say that that is a shambles of a process. And the new members opposite should be aware that this is not standard practice by a decent Government that knows how to get legislation through. This is shambolic and it speaks to a degree of confusion in the head of one Hon David Parker that I find concerning and somewhat bedazzling. Why you couldn’t just talk to your better self when you were putting this report together, I do not know.

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Leave the Speaker out of the debate.

NICOLA WILLIS: So having put these process issues on the record, let me turn now to three key areas where National has concern. The first that we have telegraphed consistently is that we are concerned that this bill will erode the integrity of our tax system. It will do that by encouraging taxpayers to find ways to avoid tax; this is a risk that occurs when there are large differentials between different rates. This will have a high differential—not only with the trust tax rate, but with the corporate tax rate—in fact, an 11-point differential between those two rates. When you see those big differentials opening up, the incentives are clear. The incentives are to find a way to somehow funnel income through the lower tax option. We are concerned that by further increasing these differentials, we will see a further erosion of the integrity of our tax system. And that is absolutely backed up by the advice of the IRD, who, in the papers tabled in this House, acknowledged that that is a major issue that does draw into question actually how much revenue this tax will earn at all, what behaviours we can expect to see, and what impact it will have. So that is what the official advice is telling us.

Our second concern that I have canvassed is around these new powers for the commissioner and what they mean in practice, and how they will be mitigated in order to comply with our New Zealand Bill of Rights. But the third area is actually how well this bill measures up with its own objectives, with the measures that, in fact, it sets for itself—because it does a very poor job on both. The first purpose that is stated for this bill is to increase revenue, and as some of the members have canvassed, it is really important here to think about these big numbers in a broader context, because it’s estimated that this bill may raise $550 million, but you need to think about that number in the context of the debt that New Zealand is currently acquiring, which is a much, much bigger figure: $140 billion by 2024.

When you consider the scale of this revenue, this tiny bug versus the enormous debt, you know very quickly that this has absolutely nothing to do, Jamie Strange, with paying down New Zealand’s debt or creating revenue. That’s a complete furphy of an argument. Grant Robertson may have hoodwinked you in caucus about that one, but there’s no substance to back it up when you look at the actual numbers. So then you turn to the second purpose, and I also want to point out on that revenue point that the advice in these papers is very clear, that officials are very concerned about what those revenue numbers will actually be, given all the behavioural issues that may be occurring.

But the second issue you have is that the bill says that one of its purposes is to have a distribution impact. So this is Jamie Strange’s point: that somehow this is going to create a new dawn of fairness in New Zealand. Again, we do need to look at the objective numbers here, because what the analysis from Treasury says is that this will have a tiny, negligible impact on inequality. Absolutely tiny. There is that wonky way that Treasury measure this: it’s called the—I’m going to mispronounce this—the Gini coefficient, and what the analysis shows is that that number reduces from 0.493 to 0.491, a 0.2 percent reduction. It is absolutely tiny, and, again, what this does is it shows you that the high level argument, “Oh, it’s going to raise a lot of revenue to help pay down debt, it’s going to make New Zealand fairer.”—none of those arguments are backed up by the numbers.

The members opposite may not care when big rhetorical statements are not matched by numbers of substance. But we on this side of the House will continue to ask the Government to be clear—that if you’re going to do a bill that is going to create all sorts of compliance issues, it’s going to create all sorts of potential breaches to the New Zealand Bill of Rights Act, you’d better be clear that it will actually deliver on the grand purposes you have set for it.

So National opposes this bill. You can’t tax your way out of a recession. This is a shambles of a process, and this bill won’t achieve the purposes it sets out for itself.

GREG O’CONNOR (Labour—Ōhāriu): It was a real shame that there weren’t a few more people on the opposite side of the House tonight when we had some maiden speeches. There were some very moving speeches made tonight. We had my new colleagues from Sri Lanka, the Cook Islands, three from Samoa, and there was a consistency that ran through those speeches—they were all families that arrived—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! I do hope the member is going to come to the bill very soon.

GREG O’CONNOR: Oh, Madam Speaker, it will become very obvious if Madam Speaker would just take a little patience.

ASSISTANT SPEAKER (Hon Jacqui Dean): Well, very soon.

GREG O’CONNOR: What became very obvious was that the reason that these people were here, their families were able to succeed, was because of taxation, because the redistribution that taxation is—many of the arguments we’ve heard, whether it be Mr Seymour or the previous speaker, Nicola Willis, they’re really arguing against tax. They’re not arguing against this particular segment of the bill; they’re arguing against any tax in the first place.

What is important to understand is that we all benefit when those who are at the bottom, as these people’s families began, through a redistribution that tax is, are able to contribute fully, with their families and individually, to this country. So those who are so outraged by this provision, which will see those who earn over $180,000 a year pay 39c in the dollar, might just be drawn to the fact that without a fair tax system, we will end up with the very part of the world we all escaped from, which is somewhere where there was absolutely no equality or no equal distribution of wealth.

So I have no hesitation in standing and arguing and recommending this bill, because I think as most of us have just come off the hustings will have seen, there is very little opposition to it among those who will actually be those who will be paying the money. So I recommend this bill to the House.

A party vote was called for on the question, That the Taxation (Income Tax Rate and Other Amendments) Bill be now read a first time.

Ayes 64

New Zealand Labour 64.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Abstentions 10

Green Party of Aotearoa New Zealand 10.

Motion agreed to.

Bill read a first time.

Second Reading

Hon DAVID PARKER (Minister of Revenue): Thank you, Madam Speaker. This is the first time I’ve spoken since you’ve been in the Chair, so I congratulate you on your new office. I move, That the Taxation (Income Tax Rate and Other Amendments) Bill be now read a second time.

This is a good bill. It contains measures that will support working families through adjusting the minimum family tax credit—I’m going to come back to that. It helps our tax system raise revenue to fund important public services, and, though this is derided by the Opposition, debt will be lower in New Zealand as a consequence of this bill than it would be without it—Government debt. It also enables Inland Revenue to collect information to help monitor tax compliance to ensure that everyone’s paying a fair share of tax.

I’m going to provide a brief overview of the measures in the bill, starting with the minimum family tax credit. This is a measure that helps support lower-income families, and the role of the tax credit is to sort our ambition to encourage people into work. For that to happen, employment must be a better financial option than being on a benefit, so the minimum family tax credit is financial support to ensure that families are better off in the workforce than they would be on a benefit. As the benefit system adjusts, so too must schemes such as the minimum family tax credit, to make sure that the financial incentive it provides continues to meet its objectives.

As part of the Government’s response to the COVID crisis in March, the main benefit payments were increased by $25 per week. This bill proposes to retrospectively adjust the minimum family tax credit threshold as a result of those changes. The adjustment results in a $32 per week increase during the 2020-2021 tax year for recipients of the minimum family tax credit. We expect that approximately 3,600 families will benefit from this, by an average of $1,626. The effect of this can be received weekly by people from December, but at the end of the year they, effectively, get it backdated in their wash-up payments at the end of the year back to 1 April, which is when the benefit increase occurred. Making this change now allows Inland Revenue to begin paying that higher tax credit, as I’ve said, from later this month.

The tax rate change, which has had the most conversation in this Parliament, is the introduction of a new personal tax rate of 39c for personal incomes of over $180,000. To put that in perspective, if someone is earning $200,000, they pay an extra 6c in the dollar on the last $20,000 of income, so they would pay $1,200 extra a year in tax, which is just some cents over $23 per week. This does go some way to ensuring that programmes like the minimum family tax credit continue to be funded.

A fair tax system is a progressive one. Not every tax has to be progressive, but, overall, the tax system should be progressive. That means that people with higher incomes should pay a bit more as a percentage of their incomes in tax and they shouldn’t pay less. I’ve heard people complain that this is unfair to people earning higher incomes; in fact, the reverse is currently true. Middle-income people currently pay a higher overall rate of tax than higher-income people when GST is taken into account.

It is very easy to understand the arithmetic of this. If someone is earning, say, $120,000 per annum and they have a family to pay, other than either their rent or their interest payments, everything they spend will be incurring GST at the rate of 15 percent, which is, effectively, a tax on their income. For people who are on higher incomes, they save more of their earnings and they don’t pay GST on their savings, and no one’s suggesting they should. But the effect of that is that the effective tax paid by higher-income people, when you take into account both income tax and GST, is generally lower than is already being paid by middle-income people.

Hon Michael Woodhouse: As a proportion of income.

Hon DAVID PARKER: As a proportion of their income. Our top tax rate for personal income tax in New Zealand is currently 33 percent.

I’m going to make some international comparisons, because the countries that we traditionally compare ourselves with have higher personal income tax rates. Australia’s top personal income tax rate, for example, is 45 percent on incomes over A$180,000, while in the UK, the top personal tax rate of 45 percent is paid on incomes over £150,000. So the top personal tax rate of 39 percent proposed in this bill is not high compared with some other OECD countries that we generally compare ourselves with.

What the bill proposes is that the people who can most afford it pay a little more, which I think, overall, is a fairer proportion of tax, given that, overall, their taxes, including GST, are a lower proportion of their income than is paid by middle-income people who earn less than they do.

On information gathering, we know that most people will do the right thing and pay the tax that is due, but we also know that some people will be tempted to minimise their exposure to tax by using trusts taxed at 33c on the dollar of income. For the benefit of members who are concerned about the integrity of the tax system, I’ll briefly run through the measures in the bill aimed at monitoring tax compliance of trusts.

One problem that currently exists is incomplete information collected and held by the Inland Revenue Department on trusts. The bill therefore proposes that trusts will disclose additional information. I heard members complaining that this will result in a loss of privacy. I think most people in New Zealand know that the privacy provisions that apply to the Commissioner of Inland Revenue are rigorously policed by the Inland Revenue, and they guard their privacy obligations assiduously. So there are no privacy risks to people as a consequence of this information being made available to the Commissioner of Inland Revenue.

This information also provides information on beneficiaries and, of course, because New Zealand has a settlor-based trust taxation regime, information on settlements on the trusts. There will be some trusts to whom this requirement doesn’t apply: inactive trusts, trusts that don’t have high rates of income for beneficiaries, charitable trusts, Māori land trusts, and resident trustees of foreign trusts, which already have reporting requirements.

A further integrity measure allows Inland Revenue to gather information going back to the 2013-14 income year if requested. We’re reluctant to impose compliance costs, so, rather than requiring this for all trusts, Inland Revenue should be able to determine which trusts’ prior-year information is likely to be required from.

The other information-gathering powers are covered in the New Zealand Bill of Rights Act vet that, with my Attorney-General hat, I have provided to the House. I agree that the information-gathering power ought not to be used for prosecutorial purposes. There are other provisions to allow information to be gathered for those purposes, and there’s an amendment in my name already in the House to make that clear.

There is a lot at stake here. Our tax system relies on voluntary compliance, and people only comply so long as they feel the system is fair. If they can see other people who are clearly gaming the system—for example, through the use of trusts—then that threatens voluntary compliance.

The Taxation (Income Tax Rate and Other Amendments) Bill will make the tax system fairer and protects the tax base by helping to promote compliance.

The final point I would make is as to the need to pass this now under urgency. It has to be passed under urgency so that the computer software systems of the people who deduct tax can be amended and updated in accordance with these new tax rules in time for them to take effect on 1 April next year, which is what we said to the electorate we would do. It gives me great pleasure to commend this bill to the House.

ANDREW BAYLY (National—Port Waikato): Yes, it’s good to be talking on the second reading of the Taxation (Income Tax Rate and Other Amendments) Bill. Thank you to the Minister for addressing the bill. I’ve just got to say that I find it quite absurd the argument that the Minister is putting forward as to why we should be increasing the tax rate. He compared the top tax rate in New Zealand with a number of other jurisdictions and said, “Look, we are lower than them. They’re much higher than us, and therefore that gives us the basis for why we might increase it.” I’d have to say to the Minister that that is a very strange approach.

One of the things we have, and one of our competitive advantages, is that we have a very simple tax system that works well. We have only four levels of personal tax rates. We have GST and we have a company tax rate. And so the simplicity around our system is a hallmark and something that is the envy of the world. But to reason that because other countries have a higher tax rate, it’s fine for us to increase ours—I just think, one of the things, the lower the tax rate the better, and as the Minister no doubt is aware, virtually every country in the world is trying to do two things: first of all, lower their overall tax rate so that they become more attractive as a place for investment, and particularly to attract overseas people to come and live and work here in New Zealand, particularly highly skilled people, because they will look at their personal tax rate and will go, “Is this a country I want to go and live in—particularly if I’m highly taxed?” So the more you push up that tax, the less attractive we become to attract new people, and also far less attractive in terms of companies wanting to come here, and their staff. So I just think, rather than use our tax system to a competitive advantage, what the Minister was almost suggesting was that it’s better and OK to increase it because some other countries have a higher tax rate. I do not get that, and the other primary thing about this, the simple reason about why we principally oppose this, is the impact it will have on the integrity of the tax system. And I’ll talk more about that shortly.

But, as a number of my colleagues have noted, New Zealand is in an economic crisis. We’ve seen our debt go from $60 billion to just under $100 billion, and it’s going to double again to $200 billion over the next three or four years. This bill, I see, that will raise, on average, about $440 million a year will not significantly contribute to even paying down an ounce of debt, and is not even going to pay off most of the interest payment that we’re going to have to pay this year. As I said earlier today, our current interest bill on our debt is about $3.5 billion, which is the same cost as running the New Zealand Police Force, and if you’re raising only $440 million on average over the next five years—that’s on a per annum basis—you’re not even going anywhere near paying the interest, let alone paying off any debt. And I think the main reason about this is that you cannot tax, and the Government cannot tax, its way out of this economic crisis. We have to look at an economic recovery, which means getting our businesses and our people working much better. And, by doing this, by putting more tax on them, it doesn’t actually incentivise them to do that, Mr Nash. The Minister says we flagged this well in advance. Well, if that was flagged well in advance, why is it that the bill turned up on this desk here at about 12 o’clock today and we had our first reading 45 minutes later? Why is it that there were such poor procedures that it could turn up at the last minute so that the Opposition doesn’t even have the time to properly consider it? I think, as a process, that is not a good process, and I’m looking at the Minister.

The other thing is the lack of consultation around this bill, and, as the Minister knows, because he’s sat on the Finance and Expenditure Committee and has been a former finance spokesperson, getting tax bills right the first time is vitally, vitally important. And the rushed nature of this bill—and the officials are worried and have stated their clear concern about the implementation of this bill and the impact on the integrity, and I think this should have had the time to have a proper process through the Finance and Expenditure Committee. We could have asked for submissions over the Christmas break. We could have done it much more quickly. But I can almost guarantee that we in this Finance and Expenditure Committee will be looking at this bill again and doing fix-ups to it, and I note that the Minister, only a matter of—what?—two or three hours after tabling the bill this afternoon, has come up with his own Supplementary Order Paper, his own amendment already to the bill. It’s only just a matter of hours and he’s already putting up new amendments to the bill.

But I just want to talk about this integrity issue. I just think it is such a fundamental issue that the officials have noted in their report. So this is not being political; this is looking at what the IRD actually wrote about it. The first thing they said was that the estimate of the money that they’re going to achieve from this—the $2.2 billion over the five years—is “highly uncertain”. And they also go on to say, “There is significant uncertainty in the assumptions, and changing them results in substantial change in revenue.” So, first of all, we’ve got a question around whether, in fact, we’re even going to get the money that’s been talked about, but the second thing, in terms of the integrity, they state—and again I just want to quote—“This has non-monetary impacts as well, such as eroding public confidence in the tax system and voluntary compliance. This would have a negative impact on tax integrity.”

This is one of the big issues about this bill, and I noted this earlier in my speech today: this bill affects so many different aspects. We talked about its going to have an impact on the PAYE rules, the fringe benefit tax, resident withholding tax, employer superannuation contribution tax, residential land withholding tax, retirement scheme contribution tax, and tax for Māori authority distributions. It is a big bill. It has got far-reaching consequences, and I think the biggest issue is this disparity now that we have between the top tax rate, the company tax rate of 28 percent, and the trust tax rate today. So what we’ve learnt today from the Minister of Finance is that, yes, even though he said only a matter of two months ago that he wouldn’t introduce any more changes to the tax system other than this bill we’re debating tonight, he has made it clear that increasing the trust tax rate is on the table. And that is contrary to what he said two months prior and has been reconfirmed as policy after the election. So here we are: we’ve got the Minister turning back, changing his mind around it, and, in my view, breaking a promise to the electorate that he made back then. So one is the integrity, and I think this disparity between the top tax rate, the trust, and also PIE rates are something very, very substantial.

I’ll just go on. The other issue that the officials have noted is the issue of the efficiency costs with this, and they’re saying it’s going to have a number of impacts. They note, for instance, a higher tax rate would likely matter more in sectors where the ability of New Zealand firms to access foreign capital is limited, particularly smaller businesses, unlisted businesses, and rental property investment, and, further, it will reduce the number of highly skilled workers in New Zealand and reduce the efficiency of the allocation of labour. These are the facts and these are the issues that this bill will lead to.

I also just want to pick up on this Attorney-General thing. I think it’s quite significant. It’s very unusual for the Attorney-General to write to the committee and actually say the issue around the disclosure requirements—it looks like the Minister wants to send the IRD on a fishing trip to go and get information around trusts. That is a very, very significant part of this bill, which we will be debating very closely as we move through the next stages of this bill. But that privacy issue is something very, very significant, and I think, whilst you’ve put some limits around that, Minister, I think the fishing trip that this is going to entail is something that many people are going to be particularly worried about.

Dr DEBORAH RUSSELL (Labour—New Lynn): Thank you. I just want to address some of the issues, very briefly, which the previous speaker has raised. He raised a worry about people finding New Zealand less attractive because of the change in the income tax rate and raised that issue. That’s normally a worry that’s associated with the company tax rate rather than the individual income tax rates, and I just note that there is no change to the company tax rate.

He raised a concern that this tax rate would, in fact, be applied to a whole lot of different “taxes”, he called them, in the Income Tax Act. In fact, fringe benefit tax and employer superannuation contribution tax and resident withholding tax and the like, they are all mechanisms for collecting income tax in various forms. In order to keep the integrity of the 39 percent rate, it simply needs to be spread across the different mechanisms for collecting tax, and that is all that is going on in that space. So it just keeps that 39 percent rate consistent across all the collection methods for tax. There is no worry with that.

Inland Revenue and legislative drafters are quite used to putting through tax rate changes—it’s been done many, many times before—so the number of schedules in here is nothing complicated. That is well rehearsed and well achieved previously, and it’s something that does not really add to any complexity. It’s just a simple method for getting the 39 percent rate into the legislation.

I wanted to note just two further points. During the election campaign, when we campaigned on a 39 percent rate and New Zealand voted for a 39 percent rate, that’s what it means when you have an outright majority in the House. It was clearly endorsed by us. We also made it clear at that time that we would keep an eye on what was going on with other entities and, if necessary, revisit the issue of doing something in respect of those. So that’s a matter where we have a watching brief, and that is exactly what we are doing with the provisions in this bill. This is an excellent bill and I commend it to the House.

Hon MICHAEL WOODHOUSE (National): Well, what we heard there from Dr Deborah Russell was the kind way of saying “We won. You lost. Eat that.”, because that’s exactly what we heard. People voted for a tax increase; we got the super strong mandate—sit down, be quiet. She said something else, actually, that was quite revealing, and I doubt that she’ll be getting a muffin bought by David Parker for her at the next morning tea. Because what David Parker has been saying in his first intervention in this debate was that the reason we’re here in urgency is because it’s so hard and it takes so long to adjust the computer systems of payroll providers and the IRD, but Dr Russell just said, “Hang on. That’s pretty straightforward. It’s maths. They know maths; it’s all computers. You just update the schedules, upload them into the payroll system, and that’s it.”

And she’s right—she’s absolutely right. So why are we actually pushing this through with a regulatory impact statement and a risk impact assessment that talks about the level of consultation—but it’s pretty brief? Here’s what it said, and I talked about this in my first reading speech. The IRD had a very proud, actually, reputation for the degree of consultation that it would make over tax and tax policy changes—the generic tax policy process, the small business Tax Working Group, the corporate Tax Working Group, Chartered Accountants Australia and New Zealand. Where is all of that?

Well, the departmental disclosure statement provides some quite revealing insight into it. No external or general public consultation has been conducted regarding the new tax rate proposal. No external consultation has been undertaken on the information collection measures—none. Wouldn’t it have been OK to actually kick this to select committee? Get them over the Christmas break doing that consultation, coming back in February, passing it pretty quickly with a full couple of months to get what Dr Russell has just told us is a pretty straightforward process of upgrading the tax rate tables in payroll software—job done. But, oh no, what we have is a ham-fisted and rushed process. And when rushed processes are put in, we know in this House that mistakes are made and they’ll need to be fixed in the future.

In fact, it’s not even in the future. At the same time that the bill landed on the table, so did the Minister’s first amendment. It was an amendment that was necessary, because he got a very good telling off. Who did he get a good telling off from? The Attorney-General. Who’s the Attorney-General? Mr Parker. It must have been a slightly odd conversation, I have to say, in either the Attorney-General’s or the Minister of Revenue’s office.

But I’ve got to say, and I’m going to be raising these questions in the committee of the whole House, I think there are some really important questions and some amendments to debate around the part of this bill that failed the New Zealand Bill of Rights Act (BORA) vet. It’s clause 33, if memory serves me correctly. Mr Brownlee stole my bill so I’ll just steal it back.

Mr Parker’s own discussion about this is very interesting. So, firstly, Mr Parker, the Attorney-General, says that this is a breach of a couple of things. What are they, Mr Attorney-General? Freedoms and the right to something else—I’ll find them in a minute. So he says, in his own description of what the bill does, that what this amendment does is merely clarify the existing powers of the Commissioner of Inland Revenue, which begs a very important question: if this clause fails the BORA vet, but it’s only designed to clarify the powers the commissioner already has, are those original already-in-law powers also a breach of the New Zealand Bill of Rights Act 1990? I will be asking officials about that. If it’s bad once, it won’t matter. If it’s bad twice, it is a very, very poor way to pass what are quite strong measures of power of the commissioner to collect and require information to be provided.

The amendment that the Attorney-General has probably asked the Minister of Revenue to table basically says, “Well, don’t worry. The commissioner won’t be able to use that information when she gets it for policy or research purposes for any punitive purpose.” But I ask this: what stops officials from the Inland Revenue Department, who now know that incriminating information exists, to ask it again, through another vehicle, through another part of the Tax Administration Act, to say, “Well, actually, guess what? This time we’re going to ask it because we’re not sure you’ve complied with the law.” And, therefore, a prosecution is a secondary impact of the primary purpose of being compelled to provide that information, and when we come to the committee of the whole House, I’ll be asking the Minister to check with his officials about whether or not there is any prohibition on any further use of that information, because it’s a form of double jeopardy. I’m not a lawyer, and there’s probably a better term for it.

But one can’t say, “Oh no, it’s OK, because we only wanted it for research. And, by the way, we’re going to knock on your door on another day as part of another part of the Act and say we’ll want that information again, and this time you have the right to an attorney.” That’s what it looks like to me it’s doing. So I have tabled an amendment to clause 33 to delete it because I don’t believe we know enough about the impact of this, and that is exactly the sort of thing that the consultation process was designed and set up to do, and I think we have time to actually change that, because that’s not needed for 1 April 2021; it just isn’t.

The other thing that I want to talk about, and Mr Brownlee has already alluded to it, is the issue of retrospectivity. What the Commissioner of Inland Revenue is able to do is go back through records, and, in fact, taxpayers are required to keep records for at least seven, and in some situations I think up to 10, years. We’re being asked to consider a bill that will increase quite materially, on the face of it, the requirements of trusts to furnish information on an annual basis, with effect from 2021/22. But, actually, the commissioner has the power for some trusts, certain trusts, and I’m not sure which, because it’s very hard for me to see within the bill. What Mr Parker, the Minister, has put in his explanation is actually a list of the criteria. We can see when it’s not required—foreign trusts and so on—but I can’t see where the “certain trusts” is further defined. I think that will need clarification.

But, most importantly, we’re asking trusts potentially to retrospectively go back seven years and furnish a greater level of information than they were required to under the law when it existed in 2014. That’s retrospective legislation, and it may be physically impossible to comply with the law because they won’t have collected the information in the manner in which it would be required now because it wasn’t necessary then.

It’s really bad law, but it’s actually a terrible, terrible imposition which highlights, again, in the departmental disclosure statement, the question of costs and benefits for trusts, because there wasn’t an analysis done. IRD have simply said, apart from the 39 percent tax rate risk impact assessment, as indicated in another section, there is little or no publicly available analysis on the size of potential costs and benefits of this new trust reporting requirement. But the IRD proposes—or the risk impact assessment notes that Inland Revenue will conduct a post-implementation review of the proposed information requirements for trusts that will include a consultation with affected trustees to determine the compliance costs associated with the new requirements. So what we’re being asked to do is consider and pass a bill that will have a cost on trusts. They haven’t gone out to find out what that cost could be, and their only answer is to say, “Well, we’re going to do a post-implementation review and ask people how much it cost them to comply with the Act.” That is shabby in the extreme, and, frankly, for that reason, I’m inclined to think that clause 35 should also be deleted, but I’m open to the Minister’s and the officials’ comments about why that shouldn’t occur.

Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Madam Speaker. Well, what a shambles they are on the other side, floundering around, fishing for things to point out. This is a perfectly valid, well-drafted bill; a simple piece of tax legislation. Andrew Bayly there was trying to pretend that these tweaks were new taxes. We know that if you change the income tax rate, you’ve got to change fringe benefit tax and resident withholding tax. It goes as night follows day.

Andrew Bayly was talking about interest rates. Allegedly, he was once an international financier. He couldn’t even tell us what our own Reserve Bank could borrow money at. He does really need to do a little bit more research before he stands up. This is a bill we went to the electorate on. It’s a bill we have a mandate to pass. We would be dishonest and in breach of our election commitments if we didn’t do exactly this. This is a bill that makes New Zealand fairer, and I’m very proud to support it in this House.

Hon Julie Anne Genter: Madam Speaker?

ASSISTANT SPEAKER (Hon Jacqui Dean): Point of order, the Hon Julie Anne Genter.

Hon Julie Anne Genter: It’s not a point of order; I’m rising to take a call.

ASSISTANT SPEAKER (Hon Jacqui Dean): Oh, I see—the Hon Julie Anne Genter.

Hon JULIE ANNE GENTER (Green): Thank you very much, Madam Speaker. Congratulations on your appointment, and Mr Speaker, who is taking the Chair, congratulations on your appointment.

Look, I absolutely agree with the goals of this legislation, and I think we all would agree that we want New Zealand to be a fairer place. It’s absolutely fair to have progressive income taxation and to put up the top tax rate. The Green Party campaigned on two new top thresholds. Of course, that revenue buys us stuff that benefits us all. If it weren’t for tax, we wouldn’t have the amazing services that we have delivered by ACC if we have some sort of accident and have to go to the hospital—if we didn’t have the health services that have been able to keep us safe during a global pandemic. Tax pays for our teachers, our doctors—many of our doctors and nurses. It pays for infrastructure that we all share collectively that we couldn’t buy on our own, whether that is roads, footpaths, cycleways, or railways. There’s all manner of infrastructure and services that we buy collectively with our tax dollars, and it’s fair for those who have the most to give a little bit more.

The Green Party is abstaining on this bill because we cannot in good conscience vote for this bill without it taking the steps that are needed and have been recommended by experts for decades now to fix some of the holes in our tax system that lead to imbalances that mean that there is a perverse incentive for the highest income earners and the wealthiest to put more and more of their money into property, particularly at this moment in time, when we’ve seen house prices increase by nearly 20 percent in one year, and at a time when the country is entering a recession and facing increasing unemployment—that is almost unprecedented. We have good reason to believe that putting up the top tax rate, increasing the gap between that top tax rate and the rate of tax on assets and property—which is, you know, zero at the moment—will have the perverse outcome of increasing inequality. We cannot in good conscience vote for that. It’s really important, I think, that we raise this in this debate.

I have to speak now to some of the ridiculous arguments raised by the National Party spokesperson, Andrew Bayly, earlier in this debate about people being motivated by trying to minimise their tax—that people would literally move to other countries to pay less tax. If that is true, good luck to them in this global pandemic. Try moving to a country where the Government doesn’t have the resources it needs to respond to the global pandemic. I would say that people want to come to a country like New Zealand, which is well run, and particularly the billionaires—some of whom do their part and try to campaign for progressive tax change in the United States. But the billionaires who have benefited personally from an extremely unequal and unfair tax system in the United States are trying to flee that country because it is a disaster, because it is a mess, because there is a lack of public infrastructure, and there’s actually a breakdown in the social fabric.

Frankly, the slogans repeated by the National Party tonight and all the time on the campaign trail remind me so much of that country where I was born and grew up, because it went down an even more extreme route of creating inequality through cutting personal taxes, demonising the idea of tax, and that results in—

David Seymour: What’s the top federal and state rate if you live in California?

Hon JULIE ANNE GENTER: Well, actually, California’s doing quite well, but at a federal level, inequality is quite bad. What you find even in the United States, since we’re talking about this, is that people don’t move to the countries that have the lowest personal tax rate—at least, the majority of them don’t. You know why? Because most people aren’t selfish. Most people are generous. And in New Zealand in particular, we have a cultural value of manaakitanga. That is sharing. That is giving. When we are in a position to give, we are happy to give and we are proud to make a contribution to our community and to our country.

The idea that our competitive advantage is lowering tax is absurd, because the small countries that have high productivity and high standards of living that we would aspire to be like have more progressive taxation, they have a higher share of GDP as Government spending, and they benefit from that—everyone in those societies benefits from a more productive and inclusive economy.

I know that New Zealanders are generous and do want that, but I do have to mention that I think the role the National Party has played in this political debate to stop the types of tax reform that are desperately needed in New Zealand is irresponsible. Continually getting up and talking about rising house prices and how house prices are rising faster in New Zealand than in most other—all other—OECD countries this year—that is true, and there is no doubt our lack of any sort of capital gains tax or deemed income from capital and wealth is part of the reason why house prices have consistently risen faster here than any other country in the OECD.

So no one is saying that it’s a silver bullet or it’s going to solve the housing crisis to have a capital gains tax, but there is no doubt that it would take the edge off and remove the perverse incentive to constantly put more money into property, and, importantly, it is a fair thing to do. In the past three years, the owners of property and other assets made over $250 billion of tax-free capital gains—just in the last three years. Applying a pretty reasonable low tax rate to that would have easily covered the Government’s $50 billion COVID recovery fund, and it would have been fair. The wealthiest people, many of them know this and are begging Governments to tax them, because they know they can’t, on their own, with their personal wealth—they might be able to buy another personal jet or a few more houses or whatnot. One, that doesn’t buy you happiness, and, two, that doesn’t buy you a country where you can look around and see that your fellow country people have the same opportunities that you and your children do. Most people who value fairness and equality want to see that and want to contribute to that, and they know they can’t do it by themselves. It’s a systemic fix. It needs to happen, and we need our political debate in New Zealand to confront that.

And it won’t, as long as this tiny minority of people on the right go out there and demonise and scaremonger about tax so that it stops us from having a reasonable debate—like the capital gains tax that was recommended by the Tax Working Group. Eighty percent of New Zealanders would have been better off as a result of the tax changes that were recommended by that group. That’s the vast majority. The 20 percent who would pay a little bit more are the 20 percent who can most afford it. Fundamentally, I think we all want to live in a country where the child of poor parents has every opportunity, the same opportunity, as the child of rich parents. That is no longer the case in New Zealand, and it will get worse if we don’t confront these issues with rapidly rising house prices.

Some of the issue is supply, and, of course, the Government is doing what it can on that, but the Government does need more revenue in order to provide the infrastructure, in order to provide the services, and in order to play a proactive role in actually building houses and supporting community housing providers to have affordable rent.

So there are many opportunities, and I think there are many shared values within this House right now—obviously, just ignoring the extremists to my right, but—they’re just confused about—[Interruption] I know that 1980s economic ideology was so appealing to them that they’ve never had to confront the reality that the empirical evidence doesn’t support their ideological positions.

But the Green Party will be here to work constructively with and also challenge the Labour Government. I know we have many shared values, and I think that we have a really important role to play in raising the importance and urgency of addressing both the demand side and the supply side issues that are causing our current ramp-up in house prices. We don’t want this concentration of wealth to get even more extreme. Ultimately, if we believe in democracy, if we believe in fairness, then our tax system and our Government has to even up the playing field by taxing those untaxed capital gains, just like income, and using the revenue to pay for the public services and infrastructure that benefit us all.

DEPUTY SPEAKER: I call Damien Smith—hope I’ve got the right name.

DAMIEN SMITH (ACT): Thank you very much—yes, that is. Congratulations on your role. It’s amazing to be here a couple of weeks and listen to all the schools of economics that have been purported tonight. I’ll introduce a new one, which is the Lenin school of economics, and that’s pretty last century as well, OK? You know, this is a bit of an overreach in several areas, and I think it should be recommended to the Finance and Expenditure Committee. I think, also, the issue about the IRD having to have it all ready—we know it can be switched on pretty quickly, but we’ve got a couple of points that we wanted to make from the ACT Party, which is that we’ve been up and down the country as well, talking to these people who are actually getting this tax applied to them, and they don’t want it. So I know you’re saying you’ve got a mandate, but you’ve got a mandate by a popular vote of people who wanted to drive this into a minority group, and it is a minority because it’s a small amount of people. We think that that isn’t going to play well with the productive side of the economy.

We’ve been listening to the people out there, and we’re now 20th in the global setup for GDP. We’re now introducing a sort of low-in-innovation R & D approach and now a high-tax economy, and that’s not right. So what is the marginal incentive to this, because we know that this is five days of income for the Government’s books—what happens for the rest of the 360-so-odd days? So we want to actually incentivise people. We think this is a side goal. We don’t think it’s got legitimacy. It’s not fair, and it’s an imposition to taxpayers.

I caught Grant Robertson saying that it will improve the wellbeing and living standards of all New Zealanders to produce a sustainable and productive and inclusive economy as we deliver jobs with high wages and deliver an exciting and expanding economy. From ACT’s point of view, we see this is quite a different approach that you’re taking to this versus the approach that you took to Pharmac today, as an example. So we don’t support this. The Government’s moves to increase taxes, we believe, is—[Interruption] When you’ve got productivity higher and growth higher, we believe that you can talk about fairness, but there’s also another word: it’s called vindictiveness, right? So we want to balance out this whole fairness thing with actually giving people a fair go, and that includes people that are the most productive people in the economy as well. Why shouldn’t they get that?

So in terms of this tax reform, we think, at a time that we’re trying to grow the economy, this Government’s got its priorities all wrong. People are productive assets, too. The people that we’re talking about—and I’m relating back to the bill—who are getting punished for this are productive people, and we want to see them getting a fair go with a fair standard. They already pay most of the tax—you seem to forget that.

So what we’d like to do is ask the Government to consider taking this back through the proper processes, really addressing the issues on privacy. You know, the Finance and Expenditure Committee’s actually meeting in the morning, so we can get it on the agenda and do some work. Thank you.

GREG O’CONNOR (Labour—Ōhāriu): Again, a lot of the arguments we’re hearing from the other side of the House are not against this legislation; they’re against tax full stop. I look at the timing of this bill, and it couldn’t really be better. I think while the previous speaker, Damien Smith, spoke of combing the country and finding no one who was going to be affected by this tax being in favour of it, he’s not speaking to the same people that I am, because, actually, many of the people—in fact, most of the people—I’ve spoken to who are going to be affected by this tax actually agree with it, because what they’ve seen is how New Zealand has succeeded through a very collective approach through COVID. The countries that haven’t succeeded—and we don’t have to look very far across the Pacific to see one where what the very individualistic approach—low tax, devil take the hindmost approach—has seen is, I think, the death score up to about 250,000 and climbing. Because it’s only through this sort of co-operative society where those who actually—we understand that we all benefit. Again, in my first reading speech, I mentioned the quality of the speakers we’d heard during their maiden speeches tonight who invariably spoke of their journey from immigrants to being able to be highly productive members of New Zealand society through the investment that was made in their families through the tax system.

I have absolutely no hesitation in commending this bill to the House.

NICOLA WILLIS (National): The more I analyse this bill the more concerned I am and the more I fear that the lack of a select committee process is going to land the Minister of Revenue with court cases and with a very unhappy set of stakeholders, who have not even had the chance to consider some of the significant implications of this bill from a compliance and tax-filing perspective. I want to use this contribution to take you through some of measures that the Minister of Revenue has snuck into the back of this bill, which have nothing to do with increasing the top tax rate, have nothing to do with the mandate that Dr Deborah Russell spoke of earlier, granted, on the campaign trail, but are entirely new measures designed to equip him with the tools he needs to go on a fishing expedition for more information about the way trusts run in New Zealand. The trust implications of this bill are enormous. It is remarkably complicated, and it will definitely raise costs for people.

The Minister should listen up because the texts have started to come in. We may not have had a select committee process in which tax experts and those impacted by this bill and those with trusts are able to discuss what it will mean for them, but there are tax experts out there, they’ve got a copy of the bill, they’re reading it, and they’ve started texting me because they are very concerned. So I’d say to the IRD officials sitting over there, you might have a very busy day tomorrow if this bill is to pass, because there is a lot of concern in our community. This is precisely the sort of bill that should go to a select committee. I hear from tax experts that their suspicion is that the Minister is, basically, on a fishing expedition to find out how much wealth is in trusts and to see if he can cook up new ways to tax it. He wants all the information. It is a backdoor route to monitor the tax compliance of trusts.

Now, the first thing we need to understand is that when he talks about, “Oh, we need to compare what behaviour happens now that we’ve put up the top rate with what happened before”, of course, the reality is there is nothing to compare it with, because this information has never been asked for before. So there’s a significant rationale flaw in the Minister’s argument. The second thing we have to appreciate is that he is changing the law to get information about trusts, but it is highly unlikely to be helpful, actually, from a tax point of view. Instead, if we look particularly at new section 59BA in clause 35—and members opposite should look it up, because this is actually a very detailed section—the new law of section 59BA, which sets out numerous requirements that everyone involved in a trust is now going to have to file annually, the commissioner doesn’t just get these by discretion; the commissioner is “obliged” to get this brand new set of information. So this isn’t a set of discretionary powers to allow the commissioner to have a look if there could be an issue; this is a new obligation to collect a huge host of new information about trusts. And the Minister I don’t think has been entirely upfront in explaining why that is and for what purpose that is, and I am concerned and I am not the only one. There are many in the tax and broader commercial community who have cottoned on to what is happening here and who will be sending that Minister emails and messages tomorrow.

Let’s go through how this bill actually strengthens the powers of the commissioner. It introduces an amendment to ensure “the Commissioner of Inland Revenue can collect information solely for tax policy development purposes”, and I think that’s a pretty broad mandate, isn’t it? “For tax policy development purposes”—for any new tax policy development, for any new tax idea, the Inland Revenue Department now have a new power in this bill to go off and collect information. That is a very broad net, a very wide power. Then there is a further information-gathering measure to collect more information from trustees in order not just to see if the top personal rate of 39 percent is working but also—and this is set out very explicitly—“to provide better information to understand and monitor the use of structures and entities by trustees”.

So here we have, in what’s meant to be a bill about raising the top rate, a little exploration, a little bit of a fishing expedition by the Minister of Revenue, who wants to know a bit more about trusts. And we know the back story here, Minister—we all heard you back in Opposition, when you put trusts out there as the big bogeyman—but I’d invite you to reflect on the Tax Working Group, which your own Government put together, which said there weren’t major issues here. But what you’re prepared to do—what the Minister is prepared to do—is to create a massive compliance burden for every trust in the country, a huge new revenue boost for every tax lawyer in the country, just so that he can have a little bit of a nosy—not just a little bit of a nosy, a massive nosy. And I’d be interested to hear later on in this debate whether Inland Revenue Department have quite cottoned on to what the compliance requirements of this will be for them, and how many new people they’ll be having to hire to make sure that every trust in the country files this incredibly detailed list of new information.

Let me turn now to clause 33, because this, in its entirety, is the clause which inserts new section 17GB, “Commissioner may require information or production of documents for tax policy development”. So we’re not just saying information that you might already have in your office; we’re saying we can now have a commissioner asking you to produce particular documents because the Minister of Revenue is a bit excited about a new idea. They must produce any information that the commissioner deems relevant—any information that the commissioner deems relevant; this is a very wide scope to this power—“relating to the development of policy for the improvement … of the tax system.”

Returning to new section 59BA, this imposes a new obligation for a trustee to make a return of information for a trust—so a new form of compliance—and, as my colleague Michael Woodhouse pointed out earlier very significantly, and I will invite the Minister to address this later on, this includes a retrospective power, because new section 59BAB in clause 35 gives a power to the commissioner to, as of the passing of the bill, require trustees to provide information for income years as far back as 2013. So what he’s doing is he’s saying that the IRD is now going to have a power that never used to exist that means they can go back seven years, to anyone with a trust in New Zealand, and say, “I demand this information”, even though, at the time that those activities were happening, this power didn’t exist. So this section 59BAB creates a retrospective power.

Then I just want to spend a little bit of time on new section 59BA, around compliance, because the return for a trustee in each tax year now, under this bill, must be in the form prescribed by the commissioner. So, when we go through what sorts of things the Minister is interested in here, we can see that he is digging into information about the distributions being made to a whole host of taxpayers. So this isn’t just about people who manage trusts or are trustees; it’s about anyone who has ever had a distribution from a trust. That is a large number of New Zealanders, and I would like the officials to start thinking about this because, in the committee stage, we will be asking, from this side of the House, exactly how many thousands of New Zealanders you think could be caught up in these new section 59BA powers. Because here’s the information that people who have had a distribution from a trust will now be required by the Commissioner of Inland Revenue to provide: name, date of birth, jurisdiction of tax residence, tax file number, taxpayer identification number of the beneficiary who receives the distribution; the name, date of birth, jurisdiction of tax residence, tax file number, taxpayer identification number of each person having a power under the trust to appoint or dismiss a trustee, to add or remove a beneficiary, or to amend the trust deed; or any other information required by the commissioner.

The purpose of my contribution today has been to highlight that when we say this bill is adding a bit more compliance, we’re not just indulging in rhetoric; this is a very specific set of new powers, and I don’t think the Minister has done a good enough job of justifying these powers. And what I would invite him to consider is: if this bill is really what he says it is, which is that it has a purpose of raising revenue and doing more for your distribution, then why not just say, “Well, yes, all of these other new powers aren’t necessary today. They should go to a select committee so that we can get advice on what they’ll actually mean in practice.” Why don’t you, Minister, remove clause 35 altogether as a good faith initiative to show that you will invite experts and those affected to consider the compliance implications of this bill. These sections cast a very wide net; they imply that the Minister wants to dig into a huge host of tax measures. They will be corrosive to trust in the commission and corrosive to trust in the Government’s tax intentions, and we will continue to oppose this bill.

A party vote was called for on the question, That the Taxation (Income Tax Rate and Other Amendments) Bill be now read a second time.

Ayes 66

New Zealand Labour 64; Te Paati Māori 2.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Abstentions 10

Green Party of Aotearoa New Zealand 10.

Bill read a second time.

Motion agreed to.

ASSISTANT SPEAKER (Hon Jacqui Dean): I declare the House in committee for consideration of the Taxation (Income Tax Rate and Other Amendments) Bill.

In Committee

Part 1 Income tax rate amendments

CHAIRPERSON (Adrian Rurawhe): Members, the House is in committee on the Taxation (Income) Tax Rate and Other Amendments Bill. Members, we come first to Part 1. This is the debate on clauses 3 to 31, Income tax rate amendments. The question is that Part 1 stand part.

DAVID SEYMOUR (Leader—ACT): Well, thank you, Mr Chair. I think a lot of members in the House are looking forward to a thorough examination of this legislation, such is our duty, and particularly given we’ve got the extraordinary circumstance of tax legislation being pushed through under urgency for no apparent reason other than that the Government is a political party that campaigned for it and would like to do it quickly. Some people would say that’s not particularly good use of urgency, and others would go further and say it’s a constitutional outrage—people can pick their own level of concern—but certainly the facts are that this is not the reason that urgency is available in the Standing Orders. It is to deal with things that are practically urgent, not things that a political party thinks are politically urgent.

CHAIRPERSON (Adrian Rurawhe): On the other hand, the House did agree to it.

DAVID SEYMOUR: Be that as it may, we still have the opportunity to ask questions—

CHAIRPERSON (Adrian Rurawhe): The House did agree to it. The member should address the bill.

DAVID SEYMOUR: Well, that’s certainly true, Mr Chair, but that doesn’t mean that we’re not able to debate the position that members have taken on the House agreeing to a particular course of action, particularly when it impacts on the nature and urgency, or importance, of investigation through the committee stage, which, as it happens, is precisely what I was about to get to.

In particular, I’m very interested in the purpose of Part 1, which, of course, is to give effect to the new tax rate of 39 percent on income above $180,000. Now, it states the purpose is to raise revenue for the Government, but then we turn to the departmental disclosure statement—which I think is a very handy thing to look at—and it seems to outline a very high level of uncertainty over the projections for revenue.

In the tradition of these new Standing Orders that we have around the committee stage, I’m interested in whether or not the Minister has actually got any guidance for the committee about what he thinks the sensitivity will be to behavioural change. In other words: where does the Minister really think this is going to land? We say $550 million if there’s no behavioural change, but, of course, we know that once people see that they could save, perhaps, tens of thousands of dollars by changing the way they structure their affairs or their income over $180,000—as one wag on the National Party benches put it, another way to avoid tax is to stop working. Does the Minister have any conclusive sense over what levels of behavioural change there will be in response, and how much revenue will come from this?

Of course, this is a question the Minister should be very careful about answering, because, of course, we’re going to know the answer. One thing the IRD does is it publishes very good statistics about the amount of revenue that emerges. So I guess it would be helpful for the Minister to just tell the committee now: does he think that they’re going to get the $550 million, which is what we hope will be raised if there’s no behavioural change, or does he think that, actually, the amount of money raised will be quite a lot less? He’s asking the officials now—that’s a good sign. Do we think it will be less than that, or do we think, actually, there could somehow magically be more? Because one of the things that we heard in the second reading—from, I think it was, Greg O’Connor—is that, actually, there are people who are begging to pay more tax. So is it possible that the advice the Minister has received doesn’t capture the full amount of tax that might be paid? Because, actually, if we take some of the Labour members who spoke earlier seriously, this might be seen by taxpayers as an opportunity to pay even more tax than expected.

So perhaps the Minister might care to rise to his feet and just give the committee some sense of what he’s concluded, given the advice he’s received. Does he believe that it’ll be about half a billion dollars? Does he think it could be more because of the exuberance of people who Greg O’Connor’s talked to, who apparently want to pay more tax? Or is it possible that, in actual fact, there’s going to be significantly less than $550 million worth of revenue? If so, how much revenue does the Minister think will be brought in over each year over the next four years, based on his expert judgment and assessment of the advice he’s received?

Hon DAVID PARKER (Minister of Revenue): Thank you, Madam Chair. If I could respond to the questions that have been raised by David Seymour, the best estimate of the Commissioner of Inland Revenue is as set out in the statement that the member has already quoted. That includes an allowance for tax avoidance. The tax avoidance may be less; it may be more. But it is the best estimate of the commissioner as to the likely outcome; so the figures that are there include some allowance.

Why it’s a little bit difficult to be more accurate is that the—

David Seymour: More precise.

Hon DAVID PARKER: —more precise—jurisprudence on the income shifting that occurred under the prior iteration of the 39c in the dollar tax developed pretty late in the piece during the period when that higher rate applied. The case concerned was called Penny and Hooper. In Penny and Hooper, a professional taxpayer diverted quite a bit of his income through an alternative structure in order to minimise his own income and put income through another taxpaying entity. That was found to be tax avoidance, and we are confident that some of the behaviour that was effective at avoiding tax would now be determined to be tax evasion as a consequence of the Penny and Hooper decision, which will still have authority in respect of these changes.

However, there remains uncertainty as to how much trusts will be used as a way in which to divert income in other ways, and that’s one of the reasons why we’ve got these information-gathering powers, which other members have already spoken about.

DAVID SEYMOUR (Leader—ACT): Thank you, Madam Chair. Further to that, I appreciate the Minister’s answer about the amount of revenue that might be forgone compared with the estimates because of avoidance activity and because of the uncertainties around Penny and Hooper and the jurisprudence of whether or not people will be able to use particular vehicles to avoid tax, and we accept that the Minister is being quite candid that he can’t be very precise about how much avoidance activity might go on and, therefore, how much revenue might actually be raised, which, in fairness, is the whole purpose of the policy. But I’d like to ask if he’s got any advice or any wisdom on another question, which is around not so much people earning income and then structuring their affairs to avoid declaring it in a way that qualifies it to be, I guess, rated as or declared as income tax but actual behavioural change in the sense that people don’t actually carry out productive activity at all, given the reduced return for that activity. In other words, does he have an estimate for the dead-weight loss?

Traditionally, economists have tried to estimate what is the true cost of raising a dollar of revenue, allowing for the dead-weight loss that comes from people simply not undertaking activities that they might have, were there to be a lower tax rate—for example, when firms are trying to compete, and we hope soon that we’ll be able to be competing for skilled labour across the world and people will be able to move around again. The Minister will be interested to know the UK is going to be rolling out a vaccine next week, but the world is changing very quickly. I didn’t believe the Minister when he said at the University of Otago several months ago that there might be a vaccine in the first quarter of 2021. It turns out he was not only correct; he was a little bit late in what seemed to be a bold estimate at the time.

Now, we hope that we’ll get people moving around the world and firms will be competing for skilled labour for executives who might be affected by this tax rate. Has he had any estimates on what might be the impact on the ability of New Zealand firms to attract skilled people who are weighing up what the incomes are in New Zealand, what the tax rate is, and so on?

So I guess—just to conclude the questions—does he have any advice on it, and does he understand what the effect might be on the propensity of people to work and the propensity of people to migrate to New Zealand, because it really matters that we’re able to get people to work, save, and invest, and also come to this country. There’s at least a prima facie case that increasing the top marginal tax rate will discourage people from doing that and that there are wider dead-weight losses to the economy from having a higher tax rate. If the Minister can tell us whether he’s had any advice about those questions and what that advice was, I would be very grateful.

Hon DAVID PARKER (Minister of Revenue): Referring to the last point first, I thought Julie Anne Genter covered those issues well in her contribution in the second reading debate. She didn’t think there was going to be much change in the behaviour of international people coming to New Zealand caused by this rate difference, because people make choices for lots of other reasons, including the sort of country that they want to live in. In respect of countries such as Australia and Great Britain, of course, their marginal tax rates are higher than is proposed here at similar income levels that are proposed here for 39c in the dollar. People in the United Kingdom and Australia are paying 45c in the dollar; so I don’t think the member needs to have concern that people won’t want to move to New Zealand from those countries on the basis of this change.

In respect of the dead-weight cost and whether this will demotivate people to work, if the member really is concerned about that, far more people sit in the band below this rate than above it who pay an effective overall tax rate on income that is higher than the people even now at a 39c in the dollar income tax rate will pay overall as a percentage of their income when GST is taken into account, because savings in respect of higher-income people do not incur GST, whereas middle-income people pay a higher proportion of their income in GST, at 15c in the dollar, in addition to their income tax, whereas this 6c increase in income tax on incomes over $180,000 is often saved, avoiding GST at the rate of 15c in the dollar. I don’t say “avoiding” in any pejorative sense, but the effective tax rate of a lot of people that are in this higher tax bracket will still be lower than the effective tax rate paid on the taxable income of people at lower incomes.

DAVID SEYMOUR (Leader—ACT): Thank you, Madam Chair. In the absence of other people seeking the call, I’m quite happy to continue asking the Minister questions, and I thank him for his engagement and his answers. What he appeared to be saying is that we shouldn’t worry about the tax rate because people will come to New Zealand for many other reasons but we are competitive with other countries that have a higher tax rate than us because we have a lower tax rate than them, which, in fairness, I think seems a little bit like he was picking the argument to suit him in each case.

He also pointed to the effect of taxation on people in other areas of the tax spectrum or the income spectrum, and I agree with him that people are motivated, or at least demotivated, by the taxes that they pay, but that’s not in debate in this bill. What’s in debate in this bill is the effect of the tax rate on people earning income over $180,000, or at least on the income over that level. It seems to me that the real answer to the question is that the Minister’s not sure what the impacts will be on people’s motivation to work, but he said that he thinks not much, is the answer that we actually got, and that he thinks that won’t affect competition for skills and talent, but it wasn’t clear why he doesn’t think that.

I noticed that the regulatory impact statement says that an additional objective of the bill is to increase the, I guess, progressivity of the tax system and make New Zealand a more equal place. That is sort of a secondary objective. But I have to wonder—the Treasury has said in the departmental disclosure statement that the change in the Gini coefficient is going to be 0.2 percent if there’s no behavioural response. But, of course, the policy doesn’t actually make anyone better off directly; it just takes money off some people to achieve that. So I just wonder if the Minister can explain how this policy is supposed to work. Is it that it makes people more equal by taking money off some, and, if so, is it really worth a 0.2 percent change in the Gini coefficient?

Then, I guess, a sort of related question—I’ll give you two for one, because we wouldn’t want to be here all night. There are other ways to, I guess, reduce the Gini coefficient, if that’s one’s goal, and the other way from taking money off people that have it is to give to people that don’t, or at least take money off people that have more and give to those who have less. I wonder if the objective is to transfer half a billion dollars—although, as we’ve heard, it could be a lot less than that; we’re not sure. Did the Minister, in his discussions with his Cabinet colleagues, ask if maybe somewhere in the hundred billion - odd that the Government spends, rather than going down this route, it might be easier to find economies and efficiencies elsewhere, if the objective was to transfer cash and reduce the Gini coefficient? Could they have reduced Gini by more than 0.2 percent by finding greater efficiencies in other Government spending? Now, it may be that the question was asked and the answer was “No, there’s no inefficient spending in this Government”, but it would be helpful to know if the Minister asked that question first.

Then maybe if we get past that, who knows? Someone else might want to ask a question, but I do have some more if they don’t.

Hon DAVID PARKER (Minister of Revenue): Thank you, Madam Chair. In respect of the progressivity issue, progressivity is achieved both through transfer payments but also public services that are delivered to New Zealanders through funding that’s provided by the tax system. In respect of cost-saving measures, we are—as all Governments do—trying to avoid the waste of taxpayers’ money. No one wants to take more money in tax than is needed to meet the proper business of Government. At the moment, many Government departments have, in fact, suffered very large reductions in their normal fee revenue, particularly as a consequence of the disruptions to the economy caused by the COVID epidemic.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair. I was just listening to my colleague David Seymour, who’s rapidly traversed a whole range of issues, and I thought we just might go back and start to actually ask a few more detailed questions.

I think the line of questioning the member from ACT was talking about around the extent that you’re going to collect the $2.2 billion as set out in the report—the first thing I’d have to ask the Minister: if you average that by five years, it’s actually $440 million a year, and everyone seems to be quoting $550 million; so just one point of clarification. But the real bigger issue, I think, is the issue of uncertainty around that, and the advice that you’ve received from officials is pretty clear, saying these revenue estimates are highly uncertain—highly uncertain, they say. And what I would be keen to ascertain is they note that people may reduce and also may divert income to other entities. Does the Minister have a breakdown of what is the maximum possible that could be achieved under this arrangement, with this new arrangement? And, from there, how much has been deducted to arrive at this $2.2 billion figure, because what I’m interested to understand is to what extent are people diverting income to other entities, and that might be into company structures, it might be into trusts, it might be into a portfolio investment entity. So whether he’s got any figures around that.

Secondly, the issue around reducing hours and also the issue which was raised before: there is a specific comment in here about the issue around the impact it will have on people not wanting to come to New Zealand. Contrary to what Julie Anne Genter spoke about earlier, I was talking about people coming to New Zealand. She got us a little bit confused. My quote that I noted earlier was on page 29, and that was “will reduce the number of highly skilled workers and reduce the efficiency of their location.” So what is going to happen with people coming to New Zealand and the impacts of that? To what extent have all those aspects been taken into account? And what is the quantum of that assessment of loss of income which otherwise would have been achieved if this new tax policy had come into being and would not have had those other untoward consequences?

Hon DAVID PARKER (Minister of Revenue): In respect of have I had advice as to what would be the likely diversion into other vehicles like companies or trusts, I haven’t got the range in front of me. I’m sure that, in the calculations that the Revenue has made to get to their estimate of revenue, they will have commitments that they will—

Andrew Bayly: Can we ask them?

Hon DAVID PARKER: I’m happy to ask them. Now, I doubt if they’ll have that detail of figure yet, but I’m happy to ask my officials if they have got it there and provide it to the committee if they do have.

In respect of these arguments about the effect on differentials between different tax types, I do find it a little ironic that some people complain about the differential between income tax and the company rate being enlarged by a tax increase but they don’t make the same argument when the differential is enlarged by a decrease to the corporate tax rate, and yet the same argument would logically apply.

Hon Michael Woodhouse: Yes, they do. Exactly, we had that conversation when we were considering that.

Hon DAVID PARKER: Well, I was in this House when the National Government dropped the corporate tax rate to 28c in the dollar, which had previously been closer aligned to the highest rate of income tax, which was 33c in the dollar, and they increased the differential.

Nicola Willis: Cutting taxes is so much more fun.

Hon DAVID PARKER: “Cutting taxes is so much more fun.” That’s the response that I’ve just heard from Nicola—I’ve forgotten—Willis. Thank you. Sorry, Mrs Willis, I didn’t mean to forget your name, but I think that really sort of shows the simplicity of the arguments from the Opposition.

Hon MICHAEL WOODHOUSE (National): Thank you, Mr Chair. Just a quick supplementary—firstly, a comment on that and then a question about the estimated revenue from the new tax rate. The Minister in the chair, David Parker, is right that the previous conversation about this had a 5c differential between the company tax rate and the top personal income tax rate. We’re now talking about, potentially, 11c to 13c. Is the company tax rate still 28c, or has it gone to 26?

Hon David Parker: 28.

Hon MICHAEL WOODHOUSE: I think we looked at it, but—so it’s an 11c differential, which is a significant difference, more than double what the current differential is. The Penny and Hooper case was an extreme one—there’s no doubt about that—where surgeons were actually paying themselves the sorts of salaries a senior house officer or a junior registrar would get, and that was despite them having been consultants in private practice for a considerable period of time. But, even so, there was a dissenting view by Justice France, I think, in that case, and the question of whether that case will apply in all circumstances is an open one.

We’re not talking about orthopaedic surgeons earning a million dollars a year; we’re talking about Joe and Jill the plumber, the garden maintenance person, the electrician who may have been in a sole trader situation and had been given advice by their accountant or lawyer to say, well, look, that could lead you to a couple of situations, not the least of which is a personal liability that might accrue, which wouldn’t be the case under a limited liability company, but the effort that would be gone to, which would also have the secondary impact of a lower year-on-year tax rate, may now become very much in focus. I have no doubt that it’s not an avoidance strategy but simple tax planning and personal estate planning that the Minister himself, I’m sure, embarked on from time to time in his practice as a lawyer in Dunedin. That was just the observation; it went longer than I thought it would.

The question is this: if we can’t get the exact degree of analysis by officials on the degree to which the estimated revenues were calculated and in what scenarios, can we reverse the question, say, to what degree did that matter to the Government? To what degree was the collection of revenue a material factor in the increasing of the top personal tax rate? Might, if the advice from IRD had been that it was under a hundred million dollars a year, under $50 million a year, would the Government have turned around and said, “You know what? It’s not worth it.”? We may, as a consequence of increasing the top personal tax rate earn less revenue than we would otherwise because of the entity flipping that the Minister is so concerned about, particularly with trusts. So was revenue in itself a material factor in the decision to introduce this bill, or—and I believe that this is the case, in any event—is this a matter of principle that those who are earning over $180,000 should pay a top marginal tax rate of 39c regardless of whether the Crown benefited from it or not?

Hon DAVID PARKER (Minister of Revenue): The issue of revenue was first and foremost in the Government’s mind. A secondary consideration that I think I’ve already covered quite well—or it’s not for me to say whether I’ve covered well, but I’ve attempted to cover—is the issue of tax fairness.

In respect of trusts, while I’m on my feet I’ll address something that Nicola Willis raised in her second reading contribution, which she said she’d like me to address during the committee stage, which is why we have these powers to get further information from trusts. We’ve had very strong advice, which we’ve disclosed to the House in the associated documents, that there is a significant risk that trusts will be used increasingly as an avoidance mechanism. The advice that we had from revenue officials, which we have accepted, is that we should be looking into that. In order to look into that, we need the ability to gather the information, which is not gathered retrospectively; it is gathered prospectively. But the information that is gathered prospectively includes information from yesteryear to compare with current and future practices so that you can see whether there was a pattern of changed behaviour.

Where do the avoidance risks lie? Well, it’s not just in the fact that income could be earned through an alternative vehicle paying a lower rate than the 39c rate, namely the 33c in the dollar tax rate paid by trusts. It’s also the ability for trusts to declare some income to be beneficiary income rather than trustee income. Trustees under the tax Act can nominate that income that is earned through the trust is attributed to beneficiaries of the trust in that income year, which then flows that income through to the beneficiary of that trust at the tax rate payable by the beneficiary. Now, that’s often very proper; there are some very good and proper reasons to have trusts, for example, for the protection of a disabled child or for the delay in paying money to a child under an estate—for example, if their parent dies while they’re still young, it’s quite proper that the income accrued to the benefit of a child beneficiary until they gain a later age. Those are very proper uses of trusts, and we’re not concerned about that.

But it is also possible, and this is a pattern that’s not really a pattern of behaviour except for very wealthy people, to use trusts to, effectively, divert income from the primary taxpayer through a trust to a beneficiary on a lower tax rate. If that becomes a prevalent form of behaviour—it’s already possible to do that for reasons of tax advantage even with the tax rate at 33c in the dollar for trusts. It does become a greater incentive to do that, if you like, at a higher marginal tax rate elsewhere in the tax system of 39c in the dollar. If that behaviour is prevalent, we want to know about it. We want to know how much that’s currently happening in respect of this differential between a 33c in the dollar trustee rate and maximum income tax rate and some beneficiary trust rates. We’re pretty blind as to what is happening now. We think, for tax policy reasons, we need to know that.

NICOLA WILLIS (National): I welcome this back and forth. It’s actually very important for this bill, where there has been an absence of a select committee process, and where, by Minister Parker’s recent admission, there are significant matters relating to the way in which trusts pay tax that have not previously been canvassed in the public domain or in Labour Party manifesto policy. So it is very appropriate that we use this committee process to ask questions about those clauses.

Before I move to a question I want to ask, I do just want to address a comment that the Minister made where he talked about me saying that cutting taxes is more fun. I’ll remind the Minister—who I remember going to a shared dinner with Al Gore almost a decade ago; so I certainly remember his name—that having been a member of the National Party for a very long time it should come as no surprise to Minister Parker that I enjoy letting people keep more of their money far more than I do confiscating that money from them, and that is a principle that I hold dear to.

But, moving to my question on the bill, my first is a technical question, and it relates to the revenue that this new tax rate will raise. The reason this is important, of course, is we only need to go back to the purpose statement of the bill, which is explicit that the reason that we are here under urgency passing this bill is that this is all about raising revenue. So it is of some issue that the estimated revenue that the Inland Revenue Department have shared with us is incredibly lumpy. We’re looking at $95 million in revenue this next year, increasing to $160 million in 2021-22, then leaping up in the 2022-23 year to $830 million, and then dropping back again the next year to $540 million. I just invite the Minister: would he please address for me—would he elucidate, explain to this member—why we’re seeing such a lumpy pattern of revenue, and whether the Minister can explain why that is.

ANDREW BAYLY (National—Port Waikato): I was just fascinated with the Minister’s comments before. So the Minister of Finance said two months ago that there would be no new increases in tax other than the 39 percent change that we’re debating tonight. What I just heard from the Minister was his concern that trusts are being used so that money is diverted—using his words—or sent via a trust and then that is used as an arrangement to pay beneficiaries at a lower rate. Is he now saying to the House that that approach, which is legitimate at the moment, is very much of concern, and he will seek to change the trust tax rate and the trust rules to stop that practice from occurring in the future?

Hon DAVID PARKER (Minister of Revenue): Dealing with Nicola Willis’ question—and I apologise again for forgetting your surname. I sometimes, I think, do it with my own children, just about. I’m terrible with names. The revenue varies from year to year, in part because of provisional terminal tax payments. I think it peaks at about $800 million, is the prediction, but the average over the longer term is expected to be $550 million per annum, which is why that number’s been used by other members.

In respect of the trust issue, the Minister of Finance, when he was asked these questions during the election campaign, said we’re not campaigning on increasing the rate of the trust tax rate, but we will look at the issue if there’s a lot of tax avoidance. The advice that we got from the Commissioner of Inland Revenue and the department after we won the election—and this is disclosed in these papers—is that there is a heightened risk that they’re more worried about than perhaps we were. Therefore, they say that we need to keep an eye on it, and they need the powers that are in this bill in order to keep an eye on it. So we’ve got no current plan to increase the trust tax rate, but we’re not promising that we won’t. We’re just going to see what’s happening.

Whilst I’m on my feet, I want to deal with the amendment that sits in my name as having been filed at 12.21 p.m. It hasn’t got a number on it. It’s an amendment to clause 33.

CHAIRPERSON (Adrian Rurawhe): Order! That’s in Part 2.

Hon DAVID PARKER: Oh, sorry, Mr Chair.

Hon JAMES SHAW (Minister of Climate Change): Thank you, Mr Chair. Just a brief question to the Minister. In relation to the earlier line of questioning, he was talking about the powers that are in the bill to keep an eye on what’s happening in terms of behaviour change as related to people diverting income towards trusts and so on. The thing that I’m most worried about is actually the effect of that on asset values. So, whilst keeping an eye on what’s going on in terms of behaviour is useful, it’s somewhat too late if by the time it’s happened people have diverted some of their remuneration package into trusts, which then inflates property and other asset values and further increases the gap between people who have wealth on the one hand and people who earn a living but don’t have wealth on the other.

So I just wanted to ask for his thoughts on, I guess, the lag effect between being able to get the information using the powers that are in the bill and the actual effect of that on asset prices and asset value inflation and the potential, then, for that growing gap between people who have wealth, on the one hand, and people who work but don’t have wealth, on the other.

Hon DAVID PARKER (Minister of Revenue): These things are very hard to quantify to the extent that there are investment signals that are imperfect in New Zealand based on tax signals for certain forms of investment compared with others. My own view is that the change from 33c to 39c for incomes over $180,000 won’t have much of an effect on that. Those background issues are not resolved through this, but I don’t think they’re made much worse in it. I give the example of someone who earns $200,000. That would be $20,000 that would attract 6c higher tax, which would be $1,200 a year, which is $23 a week. I don’t think it would change investment behaviour much.

Andrew Bayly: Mr Chair?

CHAIRPERSON (Adrian Rurawhe): Order! Members shouldn’t seek the call until the person with the call has actually sat down.

DAVID SEYMOUR (Leader—ACT): Well, thank you very much, Mr Chair, and thank you to the Minister for his continued engagement. If I may, I’d like to speak to Andrew Bayly’s amendment on Supplementary Order Paper 1. It appears—as far as I can tell—to raise the threshold for the lowest tax rate from the present $14,000 to $17,000, having the effect that people will pay 10.5c of the first $17,000 and 17.5c thereafter—as opposed to the status quo where the threshold is $14,000. This, I have to say, is a most extraordinary proposition to come from the National Party.

We are in favour—or at least the ACT Party is—of broad based - low rate taxes. The reason that we’re opposing the bill that’s being debated tonight is that, while it doesn’t change the broadness of the tax base, it does raise the rate on a certain strata of personal income. We think that’s unhelpful because it’s distortionate. The point of broad based - low rate taxes is that people face the same rate of taxation regardless of their behavioural choices, so people can go about their lives seeking to use the knowledge that they have in their society to make their life better for themselves and their loved ones in their community, without having to spend a lot of time trying to change their behaviour to avoid the IRD. That’s the point of broad based - low rate taxes. So that’s why we’re opposed to a bill that, while leaving the base the same, increases the rate on higher incomes.

But this amendment by Andrew Bayly, on Supplementary Order Paper 1 that I’ve described, actually appears to narrow the base. What it does is it says: we’re not going to have tax to the same extent on the widest part of the tax base—that’s the income that everybody earns at the lower end of the spectrum at any given year—we’re actually going to cut the tax at the lower end and have higher taxes at the higher end. That’s the effect of this Andrew Bayly amendment. He’s actually going to make taxes more progressive. He should think very hard—

Hon Michael Woodhouse: Rubbish.

DAVID SEYMOUR: Well, I just heard “Rubbish.”, and I’m not sure if it was Andrew Bayly or Michael Woodhouse, and I apologise to Andrew Bayly for accusing him of saying that. If the policy is to actually narrow the tax base and make it more progressive, well, one reason that I’d really caution Andrew Bayly and ask him to think carefully about whether he really wants to advance this is that, in some future universe, when there’s a different Government in place, and that Government sets about saying, “How can we get to a lower, flatter tax regime that’s less distortionate?”, then the question that’s going to be asked is “Well, we could but, sadly, because we reduced the tax rates at the base, because we narrowed the tax base, our ability to have a lower, flatter tax regime is less than what it would otherwise be.”

And we’ve actually already been there, because the 2010 tax changes—reducing the 19.5c rate down to 10.5c—may have seemed like clever politics at the time, but the effect of it is that it has become almost impossible to get meaningful tax reform for lower, flatter taxes, because so much revenue is lost from that 9c drop on just about all income tax, because just about everyone who earns income tax earns that first $10,000 or $20,000. Of course, the problem with that is that you end up where Steven Joyce was come around 2016, where he was actually boasting that the National Party had made the tax system more progressive. Sadly, this amendment by Andrew Bayly is at it again.

So I’d just put it to the member, if he wants to put this forward and have it debated, is he in favour of broad based - low rate taxes? Is he in favour of less distortion? Is he in favour of low, flat taxes? Or does he actually want to be the guy that comes to Parliament and makes the tax system more progressive? Because if that’s what he wants to do, my suggestion to him is he should walk across the Chamber and join the other side, because that’s what they believe. The member’s confused; he’s sitting on the wrong side.

ANDREW BAYLY (National—Port Waikato): I want to return to what you were talking about before—I don’t think the Minister is suggesting this, but I want to check. Does the Minister have concern with trusts being used as a conduit where money is being paid into the trust, or incomes directed through the trust, and paid out to beneficiaries at a lower rate of tax? I’d just like him to, first of all, confirm whether or not he has concerns with that practice at the moment. But my second question, given his comments before: what, then, is his concern about the way that trusts are going to be used in the future that would give rise to the Minister contemplating increasing the trusts rate of tax?

NAISI CHEN (Labour): I move, That the question be now put.

NICOLA WILLIS (National): Mine is a very brief question. I know that there are members with a lot of questions to ask. My question is simply around this issue of the trustee rate and how much revenue that would increase. What I note in the documents is that there’s an estimate that increasing that rate would generate $1.5 billion in additional revenue. Obviously, that stands out as a particular temptation for any Minister that enjoys the revenue that comes from tax. The Minister of Revenue will be looking at that number and thinking “How do I get my hands on it?”, potentially, and I invite the Minister to disabuse me of that notion if it’s incorrect.

So my question is simply: at what point or what factors would lead the Minister to believe that the information he’s collected suggests there’s such a pattern of behaviour that he would be justified in taking that additional $1.5 billion in revenue and increasing that top tax rate? Can the Minister outline for us and illustrate more specifically what factors would be at play for the Government to choose to increase that trust rate?

Hon DAVID PARKER (Minister of Revenue): Trusts have many legitimate purposes. Tax avoidance is not one of them.

In respect of David Seymour’s points in respect of Mr Bayly’s Supplementary Order Paper 1, well, that’s not for me to argue for that on behalf of Mr Bayly, suffice to say that the Labour Party will be voting against that Supplementary Order Paper 1.

ANDREW BAYLY (National—Port Waikato): So can Minister Parker just clarify what he means by that statement about tax avoidance? Does he agree that using a trust structure where money is paid out to beneficiaries, albeit maybe at a lower tax rate—is that legitimate, that practice? But, secondly, what would stimulate the Minister contemplating an increase in the tax rate on trusts as a result of tax avoidance? What does he mean by the statement “tax avoidance”, other than the practice that would generally happen in a trust?

Hon DAVID PARKER (Minister of Revenue): I’ve already listed in detail the legitimate reasons why you can have trusts and have income being attributed to beneficiaries who pay a lower rate of tax than 33c in the dollar for good and proper reasons. In truth, I think most people in this country would be surprised that the Inland Revenue Department doesn’t really know the extent to which trusts are being used for tax avoidance purposes. It’s notable that, in a lot of other countries, Revenue does have that information. After tomorrow, after this legislation passes, the revenue authorities in New Zealand will be able to be in the same position as revenue authorities in other countries.

Dr DEBORAH RUSSELL (Labour—New Lynn): I move, That the question be now put.

ANDREW BAYLY (National—Port Waikato): Thank you, Mr Chair. I just want to turn to the question of the $180,000. First of all, we really never had a proper explanation around why $180,000 and a tax rate of 39 percent was decided on and put forward in this bill, and so it would be useful to have the context of why the rate of 39 percent—why it wasn’t 37 percent or why it wasn’t 40—and why it was struck at $180,000. But, just on the issue of the $180,000, I have put forward a Supplementary Order Paper because one of the issues that we’re worried about in the National Party, and we proposed it privately last election, is this issue of fiscal creep, or tax bracket creep, where people end up being pushed into higher tax rates as a result of inflation.

So my Supplementary Order Paper deals with this issue. If there’s to be consistent practice, then it would be appropriate that not only are other, lower forms of personal tax subject to a Consumers Price Index - type index so that they’re increased—otherwise hard-working New Zealanders will inevitably end up getting into a higher tax rate merely through the impact of inflation. I think it’s important that we make sure that hard-working New Zealanders aren’t subject to unnecessary tax just because of inflation. It should be as a result of genuine increases in their wages and salaries other than through the impact of inflation over time.

Hon DAVID PARKER (Minister of Revenue): Just before I reply to that, officials have just passed me a note in respect of minor beneficiaries as opposed to adult beneficiaries. There is already a provision that allows the Revenue to move against payments to minor beneficiaries to prevent that being used to pay out income at a low rate, but the rule doesn’t apply to adult beneficiaries. In respect of the issue as to inflation adjustment of the different thresholds at which different tax rates apply, we will be voting against that amendment also, and we would note that, in the nine years of the prior National Government, of which the member was part, they never introduced that rule when they had the opportunity to do so if they thought it being wise.

DAVID SEYMOUR (Leader—ACT): Thank you. Thank you very much, Mr Chair. Dr Webb, you shouldn’t be disappointed. You might get an education in spite of yourself. Listen up.

I just thought I should comment on Supplementary Order Paper (SOP) 2 and Andrew Bayly’s amendments on that. I’m afraid to say that they’re not quite as disappointing as the amendment he’s put forward on Supplementary Order Paper 2 but nearly, for a number of reasons.

As Lord Keynes, a beloved economist on the other side of the House, once said, “When the facts change, I change my mind. What do you do,”. I’ve actually changed my mind on indexation of tax thresholds. ACT advocated for them quite strongly in the 51st Parliament, when, of course, the National Party had the Treasury benches and refused to do indexation, presumably because, when one holds the Treasury benches, one is much less keen to erode revenue than they are when they’re in Opposition. So I’d say to Mr Bayly that there was a good opportunity to do indexation. You had a very willing Government support partner with, really, quite a lot of pluck and alacrity and potential telling you that actually you should do it. Of course, Mr Bayly’s party didn’t introduce indexation, as he proposes now, when it would have been much easier to do so.

But, actually, I think it’s for the better because, as I said earlier, we actually want broad based - low rate taxes. We want to have the same rate across all incomes so that we don’t distort people’s decisions. We don’t want to continually hollow out the tax base by giving an exemption on some income, necessitating tax rates on other incomes to be higher than they would otherwise be. In other words, we don’t want to keep raising the threshold for the bottom rate, because that means we have to have higher tax rates on higher incomes. That’s actually more distortionate. It’s less fair because it means that people who earn more income don’t just pay more tax because they earn more income; they pay disproportionately more. The more that tax thresholds are indexed to inflation, the more of the effect I’ve just described you get.

So these amendments on Supplementary Order Paper 2 are actually designed to give us a more progressive, more distortionate, more complex tax system than we would otherwise have. I’m glad that I didn’t succeed in lobbying for tax bracket indexation all those years ago, because having reflected and thought and read about tax policy over the years, I’ve recognised that it’s actually not a policy that will make New Zealand a fairer, more meritocratic, more prosperous country over time. It certainly sounds good, a lot of policies sound good, but this one won’t actually work.

But I would be concerned if I was to discover that the Minister’s intention was that the Government was going to adopt this retrograde and not regressive, but actually more progressive, amendment. I hope that the Minister is going to say that the Government will vote against it along with ACT, because we certainly don’t want to be involved in anything that would make the tax system more progressive than it already is. And we certainly don’t want to make it more complicated than it already is. We certainly don’t want to move away from broad based - low rate taxes to narrow bases and higher tax rates, and yet those are all the left-wing things that Andrew Bayly’s amendment on the SOP does.

I’d just be a little bit heartened, especially given some of the pretty out there speeches I heard—particularly between 4.30 p.m. and 6 p.m. today—that the Labour Party is still the party that has some reference to economic orthodoxy and won’t be supporting amendments to make the tax system even worse in terms of its progressivity. So I’d be very grateful to get an answer to that, from the Minister. Being very grateful to hear that he’s not going to support the amendment on SOP 1, which is certainly of the same ilk and takes us to a much greater level of progressivity and complexity in our tax system. Thank you.

CHAIRPERSON (Adrian Rurawhe): Members, I’m going to refer to the new Standing Orders that we can finish up to five minutes early. Therefore, the time has come for me to leave the Chair. The committee is suspended until 9 a.m. tomorrow morning.

Debate interrupted.

Sitting suspended from 9.57 p.m. to 9 a.m. (Thursday)

WEDNESDAY, 2 DECEMBER 2020

(continued on Thursday, 3 December 2020)

Bills

Taxation (Income Tax Rate and Other Amendments) Bill

In Committee

Debate resumed.

Part 1 Income tax rate amendments (continued)

CHAIRPERSON (Adrian Rurawhe): Mōrena, members. When we suspended last night, we were debating Part 1 of the Taxation (Income Tax Rate and Other Amendments) Bill, and the debate was on clauses 3 to 31, Income tax rate amendments.

ANDREW BAYLY (National—Port Waikato): Thank you, Mr Chair; very generous of you. Yes, we were having a very interesting debate last night, and I just want to acknowledge that the Minister who is in the chair, the Hon David Parker, has returned from last night. So thank you very much.

There are still quite a few issues we want to traverse, but I want to particularly ask the Minister about the level of consultation in preparing this bill. From what I understand from reading the documentation, it has been very, very minor—there have only been two or three parties, from what I understand, that have been consulted, and, in fact, not consulted on the whole of the bill. But I’m hoping the Minister will provide a more fulsome response. I understand the nature of the consultation that was involved was a sort of a general talk to people but without going through all the issues, and particularly some of the issues that we’re going to cover in Part 2.

I wonder if this is the case—whether that absence of consultation has led to this requirement, which is most unusual, for Inland Revenue to conduct a post-implementation review of the proposed information requirements and all that sort of stuff in 2021. I would have thought that most bills, if they’d gone through a consultation process prior to being introduced, particularly in urgency, would have had some of that work done. That, of course, is the advantage of taking it through the select committee, but, as the Minister said last night, the reason for the urgency is the IT system that is required in various organisations to be able to meet the requirement to have this in place by 1 April.

So if we accept the Minister’s view that the IT is driving this urgency of the bill, what is the nature of the consultation to date, and what is going to be the consultation during 2021, and are we going to actually have a proper process where this bill is going to be reviewed and looked at? Thank you very much.

Dr DEBORAH RUSSELL (Labour—New Lynn): I move, That the question be now put.

A party vote was called for on the question, That the question be now put.

Ayes 64

New Zealand Labour 64.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Abstentions 10

Green Party of Aotearoa New Zealand 10.

Motion agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that Andrew Bayly’s amendment inserting new clauses 15B and 15C set out on Supplementary Order Paper 2 be agreed to.

A party vote was called for on the question, That the amendment be agreed to.

Ayes 33

New Zealand National 33.

Noes 84

New Zealand Labour 64; Green Party of Aotearoa New Zealand 10; ACT New Zealand 10.

Amendment not agreed to.

CHAIRPERSON (Adrian Rurawhe): The question is that Andrew Bayly’s amendment to clause 16 set out on Supplementary Order Paper 1 be agreed to.

A party vote was called for on the question, That the amendment be agreed to.

Ayes 33

New Zealand National 33.

Noes 84

New Zealand Labour 64; Green Party of Aotearoa New Zealand 10; ACT New Zealand 10.

Amendment not agreed to.

A party vote was called for on the question, That Part 1 be agreed to.

Ayes 66

New Zealand Labour 64; Te Paati Māori 2.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Abstentions 10

Green Party of Aotearoa New Zealand 10.

Part 1 agreed to.

Part 2 Other amendments

CHAIRPERSON (Adrian Rurawhe): Members, we come now to the debate on Part 2, clauses 32 to 38, Other amendments.

Hon MICHAEL WOODHOUSE (National): Thank you, Mr Chair. I’m looking forward to getting into the debate on Part 2 and examining the motives for some quite extraordinary changes to the Tax Administration Act, which we touched on at first and second readings.

We have an extraordinary situation where a tax bill has been slammed by the Attorney-General, a particular clause on the powers of the Commissioner of Inland Revenue to just go and get whatever information she deems relevant for the purposes of developing policy, as if the Inland Revenue Department didn’t have enough policy staff. They’re great people, but it’s not as if there’s a shortage of them. So now the Minister of Revenue is giving the commissioner the power to go in and compel any relevant information for the purposes of developing a policy, and the Attorney-General, quite rightly, slams this by saying in his conclusion that it is a breach of the right to freedom of an expression and, most concerning, even for a tax bill, the breach of a right against unreasonable search and seizure that are affirmed by the New Zealand Bill of Rights Act. The Minister of Revenue was clearly quite rebuked by the Attorney-General and decided, before the bill had even hit the table, to prepare a Supplementary Order Paper, which says, in essence, that the commissioner must not use, as evidence in proceedings against a person, information provided by the person in response to a notice that’s been issued under that section.

But that protection doesn’t apply to any information subsequently obtained by the commissioner under another section of the Act. I’d like the Minister to just clarify whether I have got this right. Subsection (2) of the amendment to clause 33 is saying there’s an immunity against proceedings unless the Inland Revenue subsequently obtains information under another part of the Act, and I described what that meant in my second reading speech. I’m genuinely interested in the Minister’s view, or the Attorney-General’s view, for that matter, about whether or not that addresses the issues raised by the Attorney-General, whether or not this is a blanket prohibition on proceedings of the information gathered by the commissioner under the new power, or whether it is technically legally possible for the commissioner to then go and get subsequently obtained information under another part of the Act and then commence proceedings. I wonder if the Minister could first address that point, please.

Hon DAVID PARKER (Minister of Revenue): I will do so, but it will take me a little while to put this in context. Members may have read recent press articles about an ongoing dispute between Owen Glenn and Eric Watson. The financial affairs of Eric Watson are so complex—crossing international jurisdiction lines with many different investment vehicles—that it has taken Owen Glenn $100 million of expenditure to get to the bottom of it. I think that illustrates how complex the tax affairs are of some wealthy taxpayer groups.

The problem that is encountered by the Commissioner of Inland Revenue is that although the commissioner believes that she already has the power to gather information for policy purposes, sometimes tax intermediaries deny it, and I’m going to explain why. Section 17B(1)(b) of the Tax Administration Act 1994 provides that “A person must, when notified by the Commissioner in an information demand, provide any information that the Commissioner considers necessary or relevant for any purpose relating to—(b) the administration or enforcement of any matter arising from or connected with a function lawfully conferred on the Commissioner.”

Now, the New Zealand commissioner has a policy role. So the commissioner believes that already she has the right to collect information for policy purposes, not just for enforcement purposes. There are tax professionals who act as intermediaries for wealthy individuals who say that that is not a correct interpretation of that section and that the proper interpretation of that section is that the information has to be for administration or enforcement, which gives it an enforcement frame rather than a policy frame.

So rather than have that battle, which we could take up through the courts, but it would take years, we’ve chosen to clarify, as is clear in jurisdictions like the United Kingdom, that information that the commissioner needs for policy purposes can be collected by the commissioner. That’s why clause 33 of the bill is present now, because the commissioner and the collection of information by the commissioner under section 17B(1)(b) already carries with it the ability to use that information, in her view, for enforcement processes. So when the provision was drafted to make this clear in clause 33, nothing untoward was thought of the fact that criminal processes could follow from information-gathering, because, from the point of view of the commissioner, that’s already the case.

Having drafted the clause in that way, the mechanisms of Government had a look at it. I concluded as Attorney-General that that’s going too far in respect of information gathered for information purposes. That’s why I, with my Attorney-General hat on, put the Bill of Rights report on the floor of the House. That’s why the amendment, which is the tabled amendment in my name to clause 33, provides that the commissioner cannot use information collected under the proposed new section as evidence in court against the person who provided it.

However, that restriction does not apply, and should not apply, to information obtained by the commissioner under any other provision in the Tax Administration Act 1994, such as her main information-gathering power in section 17B.

It’s recognised that the proposed new section 17GB is primarily focused on obtaining information on tax policy purposes while ensuring that the Government’s other information-gathering powers are maintained and not diminished.

DAVID SEYMOUR (Leader—ACT): Well, thank you, Mr Chair, and I thank the Minister in the chair, David Parker, for engaging and recognising the sensitivity of the issue, particularly given the dual roles that he plays as, I guess, poacher, in the form of the Minister of Revenue, and gamekeeper as the Attorney-General, responsible for the section 7 report.

It does raise a question about whether or not it is necessary to make this change with urgency. I mean, we can have a debate about whether the Part 1 provisions raising the income tax rate really necessitated urgency when the only reason that the Leader of the House has given is “Well, we made a political promise and we’d like to do it quickly.” Now, I made the argument that that’s not a legitimate reason for the use of urgency in this Parliament. But quite separate from that is the question of what justifies the urgency behind section 33. I haven’t heard anything from anybody on the other side of the House of why it is necessary to urgently expand the powers of the commissioner to request information from people. What I’ve heard from the Minister just now is “Well, we have to do it because the commissioner thinks she can do it, so we should let her.” Well, I don’t think that it’s doing our duty as parliamentarians to make laws for the convenience of the Crown. Actually, a Parliament is supposed to be restraint on the Crown, on behalf of the people, standing up for their rights, such as the rights that the representatives in this House have put down in the New Zealand Bill of Rights Act and that have been embedded into our constitutional framework over the past 30 years.

When a piece of legislation rubs up against the Bill of Rights, when it challenges important precepts on which this whole country and society and culture is built—freedom of expression; the right to be secure from search and seizure—these are important rights, and I guess the question is: why does the Minister feel it’s necessary to do this part of the legislation under urgency? He’s already had to amend it on the fly with what appears to be a fairly hastily drafted and formatted amendment that he’s got on the Table. People might ask the question: if only we had, you know, more than 24 hours to pass this legislation, what other considerations might come up? What might be discovered if, for example, this legislation went before a select committee for six months and experts in tax law were allowed to submit on it, if experts in privacy and human rights—I mean, dare I say it, maybe the Human Rights Commission could make a helpful submission; unlikely, but I think it’s worth giving them the chance. You know, we should actually allow people—

Greg O’Connor: Oh, the irony.

DAVID SEYMOUR: —to submit. Well, you know, this is such an important cause, Greg O’Connor, that I’m prepared to consider the possibility that the Human Rights Commission might do something useful in this context. Based on their track record, it seems unlikely, but that’s how seriously we’re taking this.

I think it would be proper for the Minister to not only have an amendment that, you know, is welcome and restricts the use of information gathered under section 33, so that it can’t be taken for policy reasons and used for prosecution, but actually say, “Look, this is a step too far. Yep, we’ve got to raise the top tax rate for political reasons, but we’re not going to mess with really critical stuff that rubs up against the Bill of Rights under urgency.” There is at least one tax bill every year. As a long-suffering member of the Finance and Expenditure Committee, I can tell you they are robust, they are debated, and they attract high-quality submissions. The next tax bill that goes through the Finance and Expenditure Committee would be the place to consider expanding the powers with which the commissioner of the IRD can request information. That would be the right way to do it. But if the Minister can get up on his hind legs and tell us why it is necessary to urgently expand the powers of the IRD commissioner, then I think the committee will be all ears. If he doesn’t have a good reason, can I just suggest to him that maybe he should put up another amendment to strike out that particular part of the legislation.

Hon MICHAEL WOODHOUSE (National): Thank you, Mr Chair. Just on the matter of the Privacy Commissioner’s involvement in the collection of information for tax purposes, the departmental disclosure statement does reference that. So for Mr Seymour’s benefit, I’ll just quote: “Due to the insufficient information available on the specific use cases associated with the proposal to collect information for tax [privacy] purposes, the Privacy Commissioner is unable to assess the associated privacy risks.” So not only do we have the Attorney-General saying that this is an invasion on the right to protection from unwarranted search and seizure, and a breach of freedom of expression, the Privacy Commissioner is saying that we’re not even sure if the privacy issues that he is responsible for maintaining will be complied with. Certainly, the vast majority of the Minister’s answer and the contextualising of the reasons for this clause were certainly spoken to as the Minister of Revenue, not the Attorney-General—and I’m not sure that the Attorney-General would have been entirely satisfied with that explanation.

Now, I’m not over the details of the Owen Glenn and Eric Watson spat—and there has been a considerable amount spent in that dispute—but Inland Revenue, it seems to me, is on the sidelines of that dispute and now seeks to inject itself with what can only be described as a “stalking-horse clause.” We’re going to gather the information for policy purposes, but according to the new amended subsection (3), actually if we gather information subsequently obtained by the commissioner under another section of the Act, then that’s going to be OK for potentially investigation prosecutorial purposes.

Now, I don’t want to misunderstand what the Minister said in his answer, because the primary purpose of that intervention was the context, which was helpful, albeit just as concerning, I interpreted the answer as saying, “Yes, it is technically possible for the commissioner having identified evidence potentially for proceedings but prevented from being able to do it by subsection (2) can nevertheless regather that information, subsequently obtain it under another section of the Act, and use that for potential prosecution.” So I don’t want to misunderstand it. If I’ve got that wrong, if the Minister could explain why I got that wrong, that would be helpful; otherwise that’s the way I’m going to interpret the amended clause 33.

The other information that I would like is, actually, who asked for what, and I would like an explanation from the Minister about the broader context from a policy perspective and the conversations that have gone on between the Inland Revenue Department policy team and the Minister of Revenue since he took on the warrant. Did the Minister of Revenue receive submissions from the Inland Revenue Department saying, “We think there is a need to clarify the law around trusts and the gathering of information.”, or did he go to the Inland Revenue Department and say, “I think we’ve got a problem, I want to give the commissioner a new power.”? I’d like to know the answer to the question of that in the committee of the whole House, but, rest assured, whatever the Minister says, we will be seeking that information under the Official Information Act so that we can best understand the genesis of the need for this, because we’re hearing that “Oh well, this is just a tidy-up.” In fact, in the Minister’s own submission it says it’s a clarifying amendment to clarify that the commissioner’s information-gathering powers include being able to require persons to provide information solely for the purpose of tax policy and development. That suggests to me that they’re already getting that information and they want to use it for a different purpose. That’s not what the Minister just described in the Glenn v Watson issue. That’s like “Well, we’re on the sidelines of a spat, we want to inject ourselves into that; we may not use it for prosecutorial purposes but we’re going to take it and have a good look at it, see if it highlights a loophole in existing tax law, and then close that loophole. But if it also provides evidence or prima facie evidence of breaches of the Income Tax Act, we’re going to go and gather it under a different section of the Act and take proceedings against it.”

That’s my interpretation of this clause. If I’ve got any of that wrong, I’d appreciate the Minister just explaining how I’ve got that wrong. But definitely I’d like to know what the genesis of the discussion between him and the IRD was about why this was necessary.

Hon DAVID PARKER (Minister of Revenue): In respect to the question as to whether these provisions in respect of trusts, which was the member’s question, were raised as a matter of concern by the revenue department or by me, the revenue department, as is very clear from the information that’s already been released, have been concerned about avoidance risks in respect of trusts, which is the genesis of the trust provisions.

The comments that the member made in respect of Eric Watson, I’m not aware of whether Eric Watson is under investigation by the revenue department; I would not ask—and even if I asked, I would not be told. So the assertion that the revenue department is inserting themselves into that dispute is mere speculation, and I know nothing about that. The point I was making is that the complex affairs of wealthy people who want to avoid responsibilities for things can be very, very convoluted.

I would also make the point that I think the Opposition has to be very, very careful here that they don’t position themselves as being on the side of tax avoidance. [Interruption] Well, those were the arguments that I heard from them last night on the trust issues, which I thought erred on the wrong side of that argument. In respect—

David Seymour: What’s the difference between privacy and tax avoidance?

Hon DAVID PARKER: “What’s the difference between privacy and tax avoidance?”, the member for Epsom says; there is a difference.

David Seymour: Well, tell us.

Hon DAVID PARKER: What’s that?

David Seymour: Tell us.

Hon DAVID PARKER: There’s a difference. If the member—

David Seymour: Describe the difference.

Hon DAVID PARKER: Well, if the member doesn’t know the difference between right and wrong, I’m not sure I can teach him.

In respect of another point, I would say to David Seymour—David Seymour was saying last night that in his view we should have a broad based - low rate income tax system. Avoidance by people who don’t pay a broad, low rate threatens that principle.

David Seymour: Yeah, that’s right.

Hon DAVID PARKER: Thank you for agreeing with that.

CHLÖE SWARBRICK (Green—Auckland Central): E te Māngai, tēnā koe. Tēnā koutou e te Whare. I didn’t intend to actually take a call during this part of the debate, but the reason that I have is because of the type of debate that we’re presently having around taxation and around tax loopholes, and particularly with regard to trusts. So I have a direct question for the Minister here, and here I think it is really important to refer to what we are talking about in Part 2, which is what has, effectively, as alluded to by the National Party Opposition, been a part of this legislation that’s been flagged by the Minister with a different hat on as potentially in breach of the New Zealand Bill of Rights Act. Notably, the Privacy Commissioner has said that he’s not all too concerned about it because it is manageable, but none the less.

So here we have, in Part 2, effectively, a piece of the puzzle which enables greater transparency of trusts in Aotearoa New Zealand. That’s something that the Green Party welcomes. It’s something that is long overdue. The reason for that, as I alluded to just last night, is that the kind of situation that we ended up with in 2000, when then Minister of Finance Sir Michael Cullen brought in higher income tax rates without amending anything around capital gains or wealth tax or otherwise, is that eventually wealthy people—as, actually, interestingly, was just alluded to by the Minister in the chair—through convoluted means, were shifting their wealth into trusts and then purchasing property, which in turn resulted in a 17 percent inflation in the price of property in this country, which, I may add, is the major driver of inequality.

So I just want to ask, when the Minister has advice—which all of us now have access to, because it’s been tabled—for a preference for option five, as noted in this advice from officials—and I’ll quote it for those who don’t have the privilege of access immediately to this: “Option five is for the 39 percent personal rate to be implemented alongside a corresponding increase in the trustee income tax rate, the trustee rate, and with consideration of integrity measures. This is the Inland Revenue’s preferred option.” Why did the Minister take the track of attempting to make trusts all the more transparent—noting, as well, that he’s recently been in the media saying that this is potentially an avenue for tax avoidance and that he may potentially look at, further down the track, implementing that 39 percent rate on trusts themselves. If he already had this advice, why did he not pursue that to begin with?

Finally, I think it’s also really important to note that with the way that this is currently formulated, again—again—it must be emphasised that the bill is not going to achieve the Government’s own intended objectives: that of raising revenue. Here I would speak again to the point around trusts, where it has stated in this document from officials that the options which reduce the scope for behaviour—that is, of tax avoidance—will increase the benefits—the proposal as shown in table two. Raising the trustee rate at the same time as the top personal tax rate is expected to raise $3.7 billion in total over the forecast period. That’s $3.7 billion over the next five years, as opposed to the $2.2 billion. We’ve also been speaking about tax avoidance and we’re also here speaking about how trusts can be used as a part of that picture.

So I’m just really imploring the Minister to answer why he didn’t go for the simplest option, for what was already being recommended by officials. Was it simply a matter of what was the easiest thing to progress politically? Because, ultimately, there is a massive opportunity here, as outlined in his own documents, as recommended by officials, which would simplify the tax system, and it would not be necessary to actually engage in these transparency measures, although they are welcomed.

I’ll just conclude by referring to the Law Commission’s review and report of trusts. Here I quote: “One reason for the popularity of trusts is that there is favourable tax treatment of trusts in New Zealand compared with other jurisdictions … New Zealand now does not have any estate duty, gift duty, stamp duty or capital gains tax.” This is why we have these problems, and I look forward to hearing the responses and the answers from the Minister, who I know is a big fan of Thomas Piketty and understands why we have the massive wealth disparity that we do in this country today, which will not be resolved by this legislation.

Hon DAVID PARKER (Minister of Revenue): One of the main reasons why we have chosen to gather more information about what is happening with trusts rather than jumping to the conclusion that we should increase the trust rate to 39c in the dollar was that that was the promise that we made to the electorate during the election. We knew that if we were to not follow through in what we promised to the electorate, we would be criticised for doing so, and that some people would have felt that we had not honoured our promises to the electorate. We like to honour our promises to the electorate, so that’s the main reason.

There is another reason. At the moment, there are legitimate reasons for trusts. A thing that I think most members understand and feel sorry for the circumstance of is where you have a disadvantaged child, often through physical or intellectual disability. Trusts are used to protect the future interests of those children by putting aside money for them in the future when they need it, perhaps when their parents have passed on. At the moment, where that income, for reasons of the child not being entitled to that money until a later date, cannot be treated as beneficiary income, that child, despite their terrible circumstance, is already, effectively, in respect of the earnings to that trust, paying 33c in the dollar. If we were to have moved on that to move the trust rate to 39c in the dollar, we would have been making that problem worse.

So these things are complex. Those are some of the reasons why we’ve reached that.

ANDREW BAYLY (National—Port Waikato): I just want to pick up on that last point, because he raised that same example last night, so it gives rise to what is a legitimate trust. I’m glad he’s acknowledged that trusts are a legal structure and there are a lot of them and for legitimate purposes. So can I just put some scenarios to the Minister.

What happens if I’m Mr O’Flaherty and I own a farm on the West Coast, I’ve got family involved in it and I’ve got children involved in it, and I am not working at that farm, I have another job elsewhere and I put the farm in a trust because I don’t know which of the children I want to give that farm to, because I don’t know which one will be interested because they’re too young. Is that a type of trust structure that the Minister would be concerned about? That’s the first example—the farm.

The second example is that I’m a young man. I’ve done an engineering degree, and I’m very smart. I’ve worked in Government and overseas in a couple of places. I’ve come back and I’m freshly married, and I say to my new wife—we’ve just bought a house and we’ve got a mortgage—“Hey, guess what, honey, I’d like to set up a brand new business.”, and the wife says, “Well, actually, I don’t want you borrowing any money against the house. Therefore I’d like you to put it into a trust—the house—and you can go and borrow money from the bank separately for the business, because you’ve never worked in the private sector before.” So is that a legitimate purpose for a trust, Minister?

The third example is that I owned a house and my marriage broke up. Let’s say the house is in Dunedin. I’ve now got a new girlfriend in a different place and I want to protect my house structure because I don’t know whether I’m going to marry this person—I don’t know what the situation is. I’ve got a daughter who is living in the house, I’ve got a tenant, and I’ve decided to put it into a trust. Is that a legitimate purpose for a trust and is that something that the Minister is worried about?

So those are three examples. Each of those examples of trusts and how they are used—does he believe that they are an inappropriate use of those trusts?

Hon DAVID PARKER (Minister of Revenue): Without going into the detail of those, broadly no, they’re not. In respect of the last two examples, they would be excluded from the obligation to even have an annual return for a trust. New section 59BA(3)(a), inserted by clause 35, says that a trustee is excluded from the requirement to make a return if it’s a non-active trust. The trusts that he described which weren’t being used for tax avoidance purpose were being used for different purposes which I accept are proper.

In respect of the relationship property issues that the member referred to, the third issue, that’s not really within the ambit of this; that’s with property relationship legislation rather than tax legislation.

Hon GERRY BROWNLEE (National): First, Mr Chair, congratulations on your appointment as Deputy Speaker. I think your work in the last Parliament gives us all great confidence in the job that you’re about to do for this Parliament. So congratulations, sir, for that.

Look, the discussion that’s currently being had is sort of interesting insomuch as there are valid points being made by Opposition speakers and there are valid points in return being offered by the Minister. It does, I think, simply indicate that the Minister’s statement that this is a complex area of tax law is correct. But what sits over the top of us is the Minister’s position that the trust rate may, in fact, be lifted at some future time—not too far off, we would assume—to capture all of the benefit of the 39c tax rate.

So we know that if there is full compliance with the 39c rate, the income over the four years to the Government will be something like $2.2 billion. We know also that if you add in the 39c tax that would come off trusts as currently assessed by the IRD, you would add another considerable amount, taking it to around about $3.7 billion a year. So the question that sits out there is: what would be the threshold for the Minister considering that there is a need to have a look at that trust rate?

At the moment, there is an acceptance that that gap between $2.2 billion and $3.7 billion—so about $1.5 billion—is kind of accepted, it would seem. But if that $2.2 billion was to perhaps come in at $1 billion or $1.5 billion, what would be the threshold trigger that would make the Minister say, “OK, we’re going to have to have a look at this. We’re going to have to go for the doctor here. We’re going to have to increase the trust rate to make this truly effective.”?

Of course, I use that term “truly effective” somewhat euphemistically because we know that the value of this, even on a good day, is somewhere between 2 and 3 percent of the total debt loading that the Government is taking on as a result of COVID-19. So no answer to that problem, or that challenge you would say, in this bill, but our real question that I would like the Minister to perhaps give an indication of is where is the trigger point: if the $2.2 billion’s not coming in and you’ve given away the $3.7 billion, what’s the trigger point to go to that full 39 percent?

Hon DAVID PARKER (Minister of Revenue): No decision has been made by Cabinet in respect of that, nor asked for of Cabinet, and no advice has been provided to me by the Inland Revenue Department as to what that threshold might be.

Whilst I’m on my feet, if I may respond to an earlier issue that Michael Woodhouse raised. The Revenue officials passed me a note in respect of why, in their view, subsection (3) of section 17GB, which is referred to in the tabled amendment, is necessary, and I read out their note: “The Commissioner and her legal advisers considered that subsection (3) in the tabled amendment is critical to the existing administration of the tax Act.”

CHAIRPERSON (Adrian Rurawhe): I call Chris Penk.

Hon Gerry Brownlee: Point of order. I thought we were able to have an exchange where there was a response and otherwise. The Minister went on to answer another question, but I did get an answer to a question that I asked, and I didn’t take the five minutes to get to that point—it was salient to where I was heading. I’d ask you to consider whether I could have the balance of my time, perhaps, just to take that next step.

CHAIRPERSON (Adrian Rurawhe): The problem is that I already awarded the call to Mr Penk. But if your colleague decides to sit down now, I would actually give it to the honourable member.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you, Mr Chair. If it’s acceptable to you, I would yield the floor back to my colleague Gerry Brownlee to take another call.

Hon GERRY BROWNLEE (National): Thank you Mr Chair—thank you for resolving that. Thank you to my colleague too for that yield. Look, the Minister’s answer was interesting insomuch as it clearly hasn’t been considered at this point what that threshold point might be, but it does go to the heart of the reason why the bill is allowing the IRD to gather information about this particular level of compliance.

So one would expect that the IRD does know what tax is being paid by trusts—that shouldn’t be hard for them to assess. They would also know what individual trusts are paying. What the new bit will be is whether or not they now start digging into where does the income come from. And that’s quite a different area for the IRD to be going into. They might, at the moment, investigate someone, for example, if they are selling a whole lot of properties and they’re a trader, and claiming capital gains when they should be paying trading tax—that would be quite legitimate. There would be lots of other things that they will do around that. But in this case, they’re going to a trust, which might have an increased income for whatever reason, to assess whether or not there is some kind of a dodging of the 39c tax rate. That is a bit of a worry, and I think that is why we’ve seen the Privacy Commissioner reluctant to make any commitments around the validity of this particular piece of new law. It’s also why the Attorney-General himself has expressed concern about the way in which that information might be sought and might be used.

What I heard earlier this morning was that the IRD may be able to look at information through this particular provision but not use it for prosecution, but then use another provision in the Income Tax Act to affect that prosecution. Well, doesn’t that make this particular provision just another aspect of collecting evidence?

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much, Mr Chair. May I begin by congratulating you and your fellow presiding officers on your role, as this is the first opportunity that I’ve had to speak in Parliament other than briefly a moment ago, and I thank you for that. I also acknowledge the Minister in the chair and his colleagues, following the general election.

I do want to talk a little bit, and indeed ask a question of the Minister, in relation to clause 33 within the bill that we have in front of us. Others on this side of the House have already spoken, I think, really clearly about the absurdity that we have whereby the same natural person, the Hon David Parker, is on two sides of the argument—indeed, the poacher and gamekeeper roles that he is playing as the Attorney-General and as the Minister receiving advice, effectively, from himself about the inappropriateness of the legislation and its inconsistency with the New Zealand Bill of Rights Act. So I just did want to place that on the record, and particularly in the context of legislation that is somewhat incoherent, even in the terms of that particular clause that’s in front of us.

So we see that the Minister has justified the change, which others on this side have pointed out is surely not an urgent aspect of tax reform in relation to a particular case or a particular matter between two gentlemen. He’s based that on a view that he says is out there in relation to the matter on the part of some tax professionals. I take the Minister at his word that he’s heard such advice from at least some professionals, but there must surely be others out there who have a different view, or it is at least possible. This is exactly the kind of thing that should be thrashed out in a select committee process.

Others, too, on this side have spoken about the desirability of the Privacy Commissioner weighing in on the subject. The Hon Michael Woodhouse has clearly stated that the Privacy Commissioner, quite understandably, has not had a chance to reflect and form a considered view on this. But even just in terms of the Attorney-General’s advice, we have no assurance that the changes that are proposed in the tabled amendment by the Minister are going to do the things that the Minister believes they’re going to do and actually rectify the inconsistency with the New Zealand Bill of Rights Act. So even the terms of the bill are problematic.

We’ve got a person who has information demanded of him or her in an information demand. Well, that’s a self-licking ice cream, of course. And helpfully, I suppose in terms of the amendment, we’ve got the “information demand” phrase being removed. Well, that’s fine, but it just goes to the shoddy nature of the last minute, rushed process that we’re engaging in without the proper scrutiny.

We’ve got the development of policy for the improvement or reform of the tax system. Well, I’m intrigued to know what kind of reforms the Minister might be planning that don’t represent an improvement, in his view. We’ve also got information that the commissioner considers relevant through a purpose relating to the development of tax policy. Why are we one step removed? Why would it not be for the purpose of developing tax policy? Why would it be a purpose merely relating to the development? It seems to me that this is a much wider ambit than is safe in constitutional terms, indeed a fishing expedition in terms of the powers being given as well as the effect in any individual case for specific taxpayers or groups of taxpayers.

We’ve heard about particular cases that the Minister is concerned about. This is dangerous territory for us to be considering lawmaking in respect of specific cases, not the general principles involved. The rule of law is such that laws should be made in a way that is very general. And the confused nature of this is not only, as I’ve said, in the realm of tax and revenue, but also in terms of the way that the law has been put together. I, for one, would have welcomed the opportunity of the New Zealand Law Society—as well as the Privacy Commissioner and other tax experts who might have had competing ideas about the desirability of this policy—to be brought forward. It’s a real shame we’re not going to have that opportunity. So I’ll be listening very carefully, for what it’s worth, to the remainder of the commentary by the Minister in this time. It’s all we’re going to have to go on.

Hon DAVID PARKER (Minister of Revenue): In respect of the ability to gather information, I would make the comparison that I made in the second reading—and the member may not have heard me say it then—that under the Statistics Act there is a power of compulsion to gather information that’s needed for public policy purposes. In effect, the public policy work that is done in respect of taxation is done in large part by the Commissioner of Inland Revenue and her staff through information that they collect. So in some ways you can see them as being a comparator to the statistics department in respect of the income tax system where those powers exist.

In respect of whether this is some overreach, I would note that the UK legislation, and I have their Finance Act 2011 before me, has information-gathering powers. Over there, in Schedule 23, “1(1) An officer of Revenue and Customs may by notice in writing require a relevant data-holder to provide relevant data.” And clause 2(1), says “The power in paragraph 1(1) is exercisable to assist with the efficient and effective discharge of HMRC’s tax functions.” Then it says, “(a) whether a particular function or more generally, and (b) whether involving a particular taxpayer or taxpayers generally.” I think it’s absolutely clear that Inland Revenue needs information-gathering powers like this.

NICOLA WILLIS (National): Isn’t it extraordinary to be debating this under urgency, given the significance of the implications that are being raised in this committee, because what we have in Part 2 of this bill—and I’m very pleased to be debating this part—is what in hip hop terms would be called a series of Easter eggs. Of course what Easter eggs normally are, are the little bits you find in a great song when you pay a lot of attention that recall earlier hip-hop classics. But, of course, in this case, the Easter eggs aren’t tasty; the Easter eggs are pretty vicious. And I want to turn to one of them and ask the Minister in the chair, the Hon David Parker, questions about his amendment in mitigation.

The first of those is new section 17GB of the Tax Administration Act set out in clause 33, which has been the subject of some discussion. Now, of course, what this piece does is it creates a massive new power for the Commissioner of Inland Revenue to require information or documents for an incredibly broad purpose, which is tax policy development. And I want to distinguish that from the UK example, which the Minister just raised, acknowledging I haven’t looked at the UK legislation in detail, but basing my comments on his description, which is different, because in the UK example, the reason the information is being collected is for the discharge of tax functions—that is, existing tax functions—whereas what’s happening here with new section 17GB is collecting information in order to dream up potentially new tax functions in order to dream up new policy. And, of course, it casts an extraordinarily wide net because the commissioner can make an information demand that they consider relevant for the purpose relating to the development of policy or the improvement of reform of the tax system.

This is a massive invasion into people’s private financial affairs. And it’s not just me saying that; it is the Attorney-General, who views that it is such an extraordinary expansion of power for the Inland Revenue commissioner that it amounts to taking away New Zealanders’ constitutional right—well, our New Zealand Bill of Rights Act (NZBORA) right to be free from search and surveillance, and, furthermore, to be free from having our freedom of expression impugned. Now, what the Minister is arguing with the amendment before the House is that he can tidy all of this up by saying, “Well, don’t worry. We won’t use the information to prosecute you for criminal purposes.” And he’s gone down this whole line, which I think is beneath him, of saying, “Oh, look, you know, this is about the Eric Watsons of this world who do criminal stuff.” Well, Minister, your logic doesn’t add up, because if it’s about Eric Watson - type people doing tax dodgy stuff, then how does excluding the information from being used for prosecution help? Well, that seems a bit of a problem.

But secondly, and most importantly, and this is where I’m leading to the question I want the Minister to address: how does having an amendment which simply excludes the information being used for criminal purposes actually correct the broader breach of our privacy rights that exists with this sort of trawling mechanism, because such an extensive trawling mechanism is very new to New Zealand, in which anyone can have their personal financial affairs investigated just because it might help the IRD create some new tax policy in the future? And I put to the Minister that given this is going through under urgency, and the Privacy Commissioner hasn’t even had a look—and, you know, this week we saw the new Privacy Act coming on with quite a few new requirements—does he really feel comfortable that his amendment goes far enough in ensuring that this bill isn’t going to continue to be a breach of NZBORA rights? That’s my first question.

Secondly, why does new section 17GB need to be progressed via this bill? If this is such a new, important power for the commissioner, why can’t it be subject to a separate bill that goes through a thorough select committee process so that people like the Privacy Commission, people like the Law Society, can comment on its implications and what it means? So I invite the Minister to address those questions.

KIERAN McANULTY (Chief Whip—Labour): I move, That the question be now put.

Hon MICHAEL WOODHOUSE (National): Thank you, Mr Chair. I just want to make a final intervention on clause 33. There’s quite a bit to say about clause 35 in this part, but I think we’re coming to the clarity that we need about what’s going on with clause 33. But it’s inconsistent, I have to say. The Minister’s response to my last question—which was quite some time ago now—about whether this was a tidying-up provision or whether it was a new stalking horse didn’t comfort me at all. He said the IRD has long been concerned about avoidance risks for some time—or words to that effect. But that’s directly in contradiction to the comments on page 21 of the commentary on the bill in his name, which, basically, says this is a clarifying provision—it simply clarifies what the existing law was intended to do.

If that’s the case, why on earth are we doing this under urgency? I know the tax policy team sometimes takes a very long time to work up the sorts of technical amendments that the Minister portrays this is, and there is no good reason, if that’s actually the reason for the amendment, to be doing it under urgency. But I, frankly, think it’s not. I think the Minister revealed in his answer to my last question that he was concerned about avoidance risk for some time.

Now, Mr Parker may well say, “Well, both of those things can exist simultaneously.”, except he really let the veil slip when he talked about wealthy individuals using complex vehicles which raise the risk of tax avoidance. That is not a policy question; that is an enforcement question. The Commissioner of Inland Revenue already has the powers, when there is prima facie evidence of tax avoidance in breach of the Income Tax Act, to take action. It cannot use information-gathering powers as a stalking horse to go behind the veil and find out what’s going on, and that’s exactly what the Attorney-General said.

So while the Minister’s amendment is going to provide some comfort, Mr Seymour, Ms Willis, Mr Bayly, myself, and Mr Brownlee have no such comfort, and we know from the feedback that we got in the last 22 hours from the tax advisory community—the tax experts right around the country that are normally engaged in this process—that they’re far from comforted at all, not only with the provision, the amendment, but also with the fact that they have been left out of the tent.

Supplementary Order Paper 3, in my name, seeks to address that by deleting this clause altogether and resetting and starting again in the manner that IRD has such a good reputation of doing, and that is going out and talking to the community that knows this stuff best. If we don’t do that, we are letting taxpayers down, who, as the Attorney-General said, have a right to the protection and freedom from unwanted interference—freedom of expression.

I make one last point on this. I have been given advice from the Clerk’s Office that if the Minister’s amendment, in his name, is upheld, then that may rule mine out. I don’t want to have that argument when we get to the point, so I’ll just make the point that I think we’ve got a situation where some members will say, “Well, we don’t much like the clause, but it’s improved by David Parker’s amendment.”, but we still should consider the question about whether the clause should be in there in the first place, and, therefore, it’s a bit like an amendment to a motion before the substantive motion is put. I think that there is value in actually considering both amendments and at least having a vote on it.

I do have more to say—and, in fact, another amendment, which I’ve just tabled—on clause 35, which is the retrospective information-gathering of trusts, but I’ll leave my intervention there so we can tidy up clause 33.

Hon DAVID PARKER (Minister of Revenue): I’ve already dealt with Nicola Willis’ points earlier in my contributions so I’m not going to repeat those. In respect of the question from the Hon Michael Woodhouse as to whether the amendment proposed by me is sufficient, were it to go further it would undermine the administration of the tax Act. I believe it does go far enough, for the reasons that are set out in the Attorney-General report that I’ve tabled. If we don’t put in subsection (3), which is shown in my tabled amendment, I’m advised that some people—these are words that have been provided to me by officials—could aggressively argue that without subsection (3), the whole of the pool of IRD’s information could be tainted and therefore they would be seriously stymied in their tax administration. So subsection (2) puts a limit on the use of the information collected under new section 17GB, but then subsection (3) prevents the undermining of the whole of information that is held by the Revenue, either earlier information or later information.

In respect—[Interruption] Sorry, there was one other point.

CHAIRPERSON (Adrian Rurawhe): Can members wait till the Minister has sat—

Hon Michael Woodhouse: He’s kind of bobbing up and down.

CHAIRPERSON (Adrian Rurawhe): Yeah, but that doesn’t constitute sitting, so wait.

Hon Michael Woodhouse: Doing his deep knee bends.

Hon DAVID PARKER: Yeah, that’s right. I’m doing my pelvic floor exercises. In respect of clauses 35 and 38 and the amendments that Michael Woodhouse proposes in his most recently tabled Supplementary Order Paper, the Labour Party will be voting against that and his other one because it would render what we want to do less effective.

Hon DAVID BENNETT (National): To the Minister, you’ve made it clear that the income tax rates will probably require the Government to look at the trust tax rates to even that out if the situation arises where they feel that there is abuse of the process or tax take. The necessary part of that, then, would be that you would also have to look at the company tax rates as well, because, effectively, trusts are used as an asset ownership and a company is used as a delivery vehicle in most tax planning cases. So if the Minister’s indicating to the House and to the public and to the tax community that he’s willing to look at the trust rate, then, effectively, he’s also going to have to look at the company tax rate—and the company tax rate will have to go up.

So once there is a move on the trust rate, the company rate will go up, and that then will create a situation where New Zealand will be well out of kilter with our nearest neighbour—for example—Australia, that has reduced its company tax rate in recent years. That will cause a major dilemma for the Minister, because if he just does the trust tax rate by itself, then people will have a discrepancy between trust and company tax rate, and they will adjust their affairs accordingly, which will create some more tax compliance issues where he will actually lose some tax from the trust regime. Then if he has to follow that through and go on to the company tax rate, he will put the New Zealand economy at a very competitive disadvantage from our nearest neighbour, and many companies that are dually domiciled in both countries will decide that Australia is the place to be domiciled, not New Zealand.

So what is his plan in regard to the company tax rate? Is he also putting that on the table, as he has put on the table the trust tax rate? Is he going to give us a commitment that the company tax rate will be treated separately and will not be increased if the trust tax rate is increased? Then what would his implications be for the movement between trusts to companies or companies to overseas to avoid, essentially, his tax system that is getting very complicated and very out of kilter as soon as he changes that tax rate on the trusts?

Hon DAVID PARKER (Minister of Revenue): With respect, the member compares final taxes with provisional taxes. Income tax and trustee taxes are final taxes; company taxes are not. The final taxes paid by people are on the dividends they receive, not on company profits. We have no plan to change the company tax rate. We are not concerned about the differential between the company tax rate and the individual tax rate. The member already made the comparison with Australia. The Australian corporate tax rate has a much larger differential between their top income tax rate than ours does now and ours will in the future, because they, as the member has said, have a lower company tax rate and a higher income tax rate, their highest income tax rate being 45c in the dollar, not the 39c in the dollar that we propose here.

The final point I would make—and I feel this is getting repetitious, because this has been raised earlier—is that the National Party never seems to worry about increasing differentials when they drop the company tax rate, causing—

Hon Michael Woodhouse: Yes, we do. That’s not true at all.

Hon DAVID PARKER: Well, they do it anyway.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair. I must admit I didn’t quite understand the logic of that answer to the Hon David Bennett’s question. But I suppose the other part of this is the portfolio investment entity (PIE) tax rate, which has a top tax rate of 28 percent. PIE is, as you know, Minister of Revenue, used for investment in a whole lot of different asset classes. So what I think my learned colleague is actually highlighting, we are now giving rise to the highest differential in 20 years of tax, where we’ve got a high marginal tax rate and we’ve got a low company tax rate and a low PIE tax rate. Actually, that high differential is what the advice that the Minister has received is saying—that that cuts at the integrity of the tax system. So my first question is: are you also going to address the issue of the PIE tax rate?

The second thing I just want to ask you is quite specific. I’m aware that the Attorney-General made his report and came to an opinion that there was an issue with the clause around disclosure. The Minister of Revenue himself—in his capacity as the Minister of Revenue—then put a Supplementary Order Paper (SOP) on the table after the bill was lodged, which is surprising, in a matter of, I think, about an hour, an hour and a half, later. Has the Attorney-General opined on the Minister of Revenue’s SOP? So could we have a response to that? Because I think it’s very important that, given the gravity of the Attorney-General’s initial concerns, the solution that’s being put forward actually is an appropriate one.

I actually want to return to this whole issue about disclosure. I think once people become aware of the disclosure requirements contained in this bill, there is going to be an uproar. There’s going to be an uproar because it will ripple across all trusts, every accountant, and we’ve got many hundreds of thousands, in fact, of trusts. We’ve got accountants. The disclosure requirements that are set out in here quite significantly—the first point is that, and I don’t think we’ve ever had a proper response to it, the Commissioner of Inland Revenue already has the power to request information that allows her to undertake the roles, and here we are. We’ve got a bill that’s giving her, basically, unfettered right, on the pretence of policy development, to go and get a whole lot of information. I’m going to talk about the nature of that information. Why doesn’t the Minister also require some information from companies and other business taxpayers? Because I think if you’re talking about policy and tax integrity, there’s an argument that should be there, and whether, in fact, she already has this power for enforcement, as my colleague, the Hon Michael Woodhouse was talking about, as opposed to the policy development, which has been the excuse for this.

The second thing is the nature of the disclosure. Now, normally the commissioner’s power relates to tax matters. One of the huge additions to the disclosure requirements—the search and destroy type arrangements set out in this bill—is the providing for the commissioner to actually get a whole lot of information relating to non-taxable and exempt distributions from trusts. So normally, as a matter of course, the Minister wouldn’t be concerned about that type of information because it’s clearly not a tax matter. But this requirement, this part of the bill, starts to go into a whole area around what would normally not be a matter for the commissioner. If she had had concerns, she would have raised it previously. But, obviously, non-taxable distributions can include a distribution of the capital of the trust, and, of course, with the power to go back seven years, it now opens up a whole cesspit of transactions that the commissioner is going to be able to go in and understand and request information on, which just gives rise to an issue about why the commissioner will need all this information.

This is going to impose incredible compliance costs. I think this is what’s going to be the outrage about this whole new clause, because when you look at the actual annual returns for trusts, there’s now a whole profit and loss statement, financial position, amount in nature of each settlement that is not the provision of the trustee. There’s stuff about the income tax. There’s a whole requirement now around beneficiaries. We’ve never had this level of disclosure around beneficiaries—the name, date of birth, jurisdiction, tax residence. So, presumably, Owen Glenn and Eric Watson, which he quoted as the test case for why we need this provision—

CHAIRPERSON (Hon Jacqui Dean): Order! The member will not bring the Chair into the debate.

ANDREW BAYLY: Sorry, the Minister did. I presume they are not actually tax resident in New Zealand, neither case. But here we are. The commissioner is going to require—and this of course will have to be done annually—the name, date of birth, jurisdiction, tax residence, tax file number, taxpayer identification number. Each settlor makes a settlement on the trust in the income year, or whose details are not previously provided and presumably now have to go back seven years, and for each distribution, the amount of distribution, name, date, jurisdiction, etc., of the beneficiary. It just goes on. We’ve got this little rider in 59B, the other information required by the commissioner.

So where we’ve gone—this has gone beyond just policy, because if there was a real policy, it should be dealt with appropriately—

Kieran McAnulty: Point of order. Thank you, Madam Chair. Madam Chair, earlier in the week you, quite rightly, reminded members that the purpose of the committee stage now, after recent changes in the Standing Orders, was to have a free-flowing conversational question and answer session between Ministers and members. We’re now 6½ minutes into this contribution and I’m not sure the committee is sure what the question is.

CHAIRPERSON (Hon Jacqui Dean): Look, thank you for that. I was aware of that at the time, and there was a pause at the point where the Minister could have answered questions. There were further questions coming so I allowed the speech to move on.

ANDREW BAYLY: Just to help my colleague who just stood up there, I’ve already got two questions on the record, as he may recall, if he’s been listening carefully. So the third one is the extent of the disclosure—why the need for, particularly, distributions that are of a non-taxable or exempt nature? This bill has taken the commissioner into a whole new area of information requirements and it is extensive, Minister.

Hon MICHAEL WOODHOUSE (National): Thank you, Madam Chair. I’ve got a couple of comments and questions, too, along the same lines as my colleague Mr Bayly, particularly, firstly, the quantum of the information being required and from whom, then the retrospectivity issue, and then I’ll speak to my Supplementary Order Paper (SOP).

Now, the Minister of Revenue’s commentary on the bill talks about the proposed amendment as the commissioner being able to request information from certain trustees in relation to the prior seven years, but the clause itself—clause 35 inserting new section 59BAB—doesn’t appear to say what those certain trustees are. Now, I’d like to be clear what we’re talking about here, because it may be necessary—well, I don’t think it’s necessary, but if it’s appropriate to go back, for complex trust structures who have the mechanisms and the information, but the ma and pa trust for the disabled child that the Minister refers to earlier will have very little ability even to comply with new section 59BA, much less 59BAB. So I’d like to know what the definition of “certain trustees” is, because it doesn’t seem to be reflected in the specific clause that we are considering.

Now, this is an amendment, actually. It deletes current section—I think it’s—59(3). And all section 59(3) of the Act says is file a profit and loss statement, I think—something pretty straightforward. It’s a fairly rudimentary section. And then we’ve got this replacement which, frankly, looks like overkill to me. Mr Bayly pointed out the fact that, actually, the commissioner just says “the other information required”, which, for a section of this nature, is highly irregular. Usually the collection of tax information is very carefully prescribed because that’s why we have such a big Income Tax Act and a fairly sizable Tax Administration Act. So I’d just like to have those two questions answered.

Now I want to just talk about my SOP. My SOP is going to delete new section 59BAB. The Minister, as a lawyer and the Attorney-General, knows how retrospectivity is usually used. It’s usually used to fix an error. And as Minister I don’t think I had to do it, but Ministers have had to come to the House and go, “We got a piece of legislation wrong technically, and we’ve been charging a levy when we didn’t have the legal power to do so, and we have to retrospectively fix that.” Well, the Kaipara Harbour issues from some years ago required retrospective legislation. And certainly legal members of this House hold their noses and vote in favour of retrospective legislation. But the idea that we can dive back seven years from the point where a new requirement to report has been imposed on taxpayers, some of whom would not have collected the information in the way that they are now going to be required to going forward, provides a really, really onerous burden that I believe is unnecessary and should be deleted from this bill.

Now, in the Minister’s commentary again on page 19, he talks about this by saying, “The bill would allow the commissioner to collect information as part of the increased disclosures for prior years, where such information exists.” Now, assuming my SOP is defeated and this clause remains, what I’d like to know from the Minister is what the definition is of where such information exists, because it’s not clear in the clause whether or not the commissioner can accept or is able to accept or the taxpayer has the defence of not providing information retrospectively where a trustee may say, “Well, look, it’s just too hard for me to get that information. The information does not exist, so I cannot comply retrospectively.” Where in the bill does the commissioner have the power to go, “Oh, that’s all right.”? Or, more importantly, where do they have the power to prevent the commissioner from saying, “I don’t care. You have to find the information. It doesn’t matter what it costs. It doesn’t matter who you have to engage in terms of lawyers or accountants.”? Where the information does not exist, how does the Minister’s own commentary get reflected into new section 59BAB of the bill?

Dr DEBORAH RUSSELL (Labour—New Lynn): I move, That the question be now put.

A party vote was called for on the question, That the question be now put.

Ayes 74

New Zealand Labour 64; Green Party of Aotearoa New Zealand 10.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Motion agreed to.

CHAIRPERSON (Hon Jacqui Dean): The question is that the Minister’s tabled amendments to clause 33 be agreed to.

A party vote was called for on the question, That the amendments be agreed to.

Ayes 86

New Zealand Labour 64; Green Party of Aotearoa New Zealand 10; ACT New Zealand 10; Te Paati Māori 2.

Noes 33

New Zealand National 33.

Amendments agreed to.

The result corrected after originally being announced as Ayes 76, Noes 43.

CHAIRPERSON (Hon Jacqui Dean): The Hon Michael Woodhouse’s amendments amending clause 32 and deleting clause 33, set out on Supplementary Order Paper 3, is out of order as being inconsistent with a previous decision of the committee.

The question is that the Hon Michael Woodhouse’s tabled amendments to clauses 35 and 38, to delete new section 59BAB, be agreed to.

A party vote was called for on the question, That the amendments be agreed to.

Ayes 43

New Zealand National 33; ACT New Zealand 10.

Noes 76

New Zealand Labour 64; Green Party of Aotearoa New Zealand 10;

Te Paati Māori 2.

Amendments not agreed to.

A party vote was called for on the question, That Part 2 as amended be agreed to.

Ayes 76

New Zealand Labour 64; Green Party of Aotearoa New Zealand 10;

Te Paati Māori 2.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Part 2 as amended agreed to.

Clauses 1 and 2

CHAIRPERSON (Hon Jacqui Dean): Members, we now come to the debate on clauses 1 and 2, which are the title and commencement clauses. The question is that clauses 1 and 2 stand part.

Hon MICHAEL WOODHOUSE (National): This often affords us an opportunity to briefly round up the bill and then talk about what I think is very important: the commencement of this bill.

The bill is going to be made effective on 1 April 2021, which is customary for the tax year. What we do know, though, is that the changes that are being made firstly to the tax rates will affect individuals but the changes that are being made to the trust requirements actually affect trusts, and the tax year for trusts is often not 31 March. It can be any number of dates in the calendar year.

I wonder if the Minister has considered whether or not to delay the implementation. I haven’t got a tabled amendment on this, but I would like the Minister’s views on whether or not he would consider, or did consider, whether or not—despite the fact that he wasn’t prepared to allow people to have an opportunity to submit on Part 2 of this bill, or any part of this bill—he would now consider, or did consider, delaying the effective date of enactment past 1 April in order that the plethora of tax advisers and tax lawyers who have contacted Messieurs Bayly and myself and Nicola Willis can now say to IRD and to the Minister what they believe is wrong with these clauses. The Privacy Commissioner said in the departmental disclosure statement that he hasn’t even been asked for comment—well, he was asked whether he had been asked, and the answer was no, because he hadn’t had time.

The Attorney-General, it appears, has not had an opportunity to revise his opinion on whether or not those parts of the bill breach two fundamental human rights that the Attorney-General, at least, holds dear and has told the Minister of Revenue the right to freedom of expression and the right to prevention of unlawful search and seizure is fundamental and is being breached in this case. Now, the Minister of Revenue’s gone, “Well, here’s an amendment.” We are none the wiser about whether the Attorney-General is OK with that—whether he has moved in his opinion that this is a fundamental breach. And, actually, the Attorney-General should have an opportunity.

So even if we pass this bill this morning, delaying the enactment of Part 2 of this bill will give the plethora of tax advisers, the Privacy Commissioner, and the Attorney-General an opportunity to have a say on it.

As was pointed out by Mr Seymour, we do two or three tax bills a year. I don’t know what the hurry is with this. Well, I do know what the hurry is—the Minister’s not prepared to say what he really thinks, in my view. But we could come back if it was found that there was a better way to do Part 2, even though the bill would be passed. It’s not like an immigration bill, where you get one every 10 years. You get three a year chances to improve tax legislation. Let’s take that chance if it’s found that those advisers are of the view, and the Minister agrees, that this could have been done better, and delay the start date of Part 2 of this bill.

Hon DAVID PARKER (Minister of Revenue): In respect of whether the amendments that went through a tabled amendment in the last part meet the Attorney-General’s requirements, refer to paragraphs 20 and 32 of the report of the Attorney-General on the Table. They do.

In respect of the start date, I think it’s sensible that the information-gathering powers match the date when the incentive to avoid tax by diverting income through trusts start. As members have noted, from both sides, that starts on 1 April, and, therefore, the information-gathering powers should start on the same day.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Chair. Thank you for standing up—I think there was a little bit of confusion from both the Hon Michael Woodhouse and I as to your comment around the Attorney-General’s—

CHAIRPERSON (Hon Jacqui Dean): To the Minister of Revenue’s comment.

ANDREW BAYLY: Oh, the Minister’s comment; we didn’t quite hear it. But, anyway, in terms of the start date, the whole premise for putting this through for urgency, the Minister told us that that was because, principally, one, it was an election promise to put it in place early, but, secondly, there were IT issues, and if we didn’t pass it through quickly, there wouldn’t be sufficient time for all the IT work to be done so that this could be actioned and implemented from 1 April 2021. So it seems a pretty interesting approach that we have been driven around IT for a date.

In terms of the process of the bill passing through the House, I think it’s a real disappointment that Michael Woodhouse’s amendment wasn’t accepted, because that would have given some latitude around maybe having a differential start date. At the moment, we’ve got a hard start date of 1 April, but I do note there is also a subsequent date of 1 April 2022, because during the course of 2021 it is proposed to go out and actually do some consultation around the integrity issues of this bill, which is something some of the members from the Government side seem to just blush over. But, obviously, the Minister has regard for that and that’s why he has set out a process for further integrity measures to be implemented during the course of 2021, with a commencement date for those of 1 April 2022.

I just don’t think that this issue around urgency for this bill has been proven. I think there is a lot of concern, we’ve been hearing it, and once this bill finally finds the light of day, and people fully realise the implications of this from a technical and accounting perspective to try and do the accounting work to make sure that everything’s in order, we don’t know how the commissioner’s going to react and what she might do. I think, given that uncertainty, postponing the start date, in my view, would be not only advisable but preferable because that would give sufficient time for further consultation to make sure that there are no fish-hooks that have been embedded into this bill, and I think we’ve talked about that long and hard during the course of the last 24 hours, because there is a large potential for this. I think, on those grounds, there’s a strong reason why the commencement date of the bill should be deferred for a later date.

NICOLA WILLIS (National): I want to make a contribution on the title of this bill, and I’m wary that members have heard these sorts of contributions before and sometimes they can be frivolous. This is not a frivolous matter, because this bill is described as the Taxation (Income Tax Rate and Other Amendments) Bill, and I think that title’s misleading. I’d like to invite the Minister of Revenue, the Hon David Parker, to reconsider it. The reason I think it’s misleading is that it describes “other amendments” generically as if they’re a matter of small, administrative issues of no import—and, of course, that is absolutely not the case. The amendments in Part 2 of this bill, which relate to administration of the tax system, are hugely significant.

First of all, in clause 17GB, we have a new power for the Commissioner of Inland Revenue to require information or production of documents for tax policy development. Now, this requirement is a significant new requirement. It is a requirement that is of such significance that the Attorney-General has said, “Well, actually, that’s going to breach New Zealanders’ rights to be free from unreasonable search and surveillance; it is going to breach New Zealanders’ rights to freedom of expression and the right not to be compelled to say certain things or to provide certain information.” So this is an extraordinary new power for the Commissioner of Inland Revenue to gather information for policy-creation purposes, and I think that should be addressed in the title of the bill. Actually, this isn’t just a bill about increasing the top rate, the “Income Tax Rate”; this is the “Income Tax Rate and New Information-gathering Powers Bill”—that is what it actually is, and the Minister knows it.

I think that is the bit that members on this side of the House have been particularly concerned by, which is that the public thinks, “Oh, the Labour Government, they’ve campaigned on a top tax rate; fair enough, they’re rushing it through under urgency.” What the public didn’t expect is that under urgency the Government would also rush through extensive new information-gathering powers that potentially impinge on the privacy of every New Zealander whose financial affairs can now be looked into by the Commissioner of Inland Revenue on the basis that it might help with potential policy development—this is an extensive power and it should be addressed in the title of this bill so as not to mislead. That’s one power.

The other two powers, of course, that are contained are around new requirements for annual returns for trusts. These are extensive. So, actually, this is not just an income tax bill; this is the income tax rate and new information-gathering powers and new information-disclosure requirements for trusts. The new information-disclosure requirements are not just for the future—they are extensive for the future in terms of the returns that must be filed—they’re also retrospective. The commissioner, in this bill, is given the power to go back to 2013 to ask trusts to submit information in the prescribed form.

So what I am highlighting to you, Madam Chair, is that we have here a title that I think is misleading to New Zealanders about what this bill actually does. I would invite the Minister, as a gesture of good faith, to demonstrate that he is prepared to be upfront and transparent about what he is doing in this House today to rename this bill so as to highlight these matters. I make a prediction: over the next couple of days, tax lawyers around the country, New Zealanders with trusts—and there are 240,000 of them; so members opposite may laugh, but this is going to have an extensive effect—anyone who has ever had a payment from a trust or who has been the beneficiary of a trust, is going to find out that new filing requirements and new compliance is happening.

Every single New Zealander, not just those involved in trusts, is going to wake up to the fact that under urgency in this House, with no notice, no submissions by the Privacy Commissioner, no analysis by the Law Society, no second look by the Attorney-General, the Government has slipped through a bill to give the Commissioner of Inland Revenue the power to inquire into your personal financial affairs, and all she or he has to do to justify that is to say, “Well, it will help the Minister create policy in the future.” The only carve-out that that Minister has put forward is to say, “Well, it won’t be able to be used to prosecute you, but don’t worry we’re quite prepared to invade your privacy.” So, Minister, I invite you to reconsider the title of the bill.

Dr DEBORAH RUSSELL (Labour—New Lynn): I move, That the question be now put.

Clause 1 agreed to.

Clause 2 agreed to.

House resumed.

CHAIRPERSON (Hon Jacqui Dean): The committee has considered the Taxation (Income Tax Rate and Other Amendments) Bill and reports it with amendment. I move, That the report be adopted.

Motion agreed to.

Report adopted.

Third Reading

Hon DAVID PARKER (Minister of Revenue): I move, That the Taxation (Income Tax Rate and Other Amendments) Bill be now read a third time.

For the benefit of members, I will provide a brief recap of the measures in the bill. The bill introduces a new personal tax rate of 39c on incomes over $180,000. The new rate applies for the 2021-22 and later income years. In introducing this new rate, other rates will also need to be adjusted to maintain coherence. The bill, therefore, also amends the PAYE rules to introduce new codes for secondary earnings and for extra pay. There are similar amendments to the fringe benefit tax rate, the resident withholding tax on interest rate, employers’ superannuation contribution tax, retirement savings contribution tax, taxable Māori authority distributions non-declaration rate, and resident land withholding tax.

In considering such a change to tax rates, it is also important to consider the ability of who would choose to escape higher tax levels by sheltering their income in trusts. The bill therefore contains measures to allow Inland Revenue to obtain information about tax compliance amongst trusts. Some information is already able to be collected. In relation to other information requests, I want to put a particular point deliberately on the third reading speech record. Section 17B of the existing Tax Administration Act is not intended to be undermined or read down as a consequence of the new section 17GB.

Clause 33 of the bill inserts new section 17GB, giving the commissioner the power to collect information for tax policy purposes. As I addressed in earlier stages of this debate, it is contested by some taxpayers as to whether the section 17B powers already cover that. The enactment of this clause 33 of the bill is not intended to undermine the commissioner’s arguments in that regard.

We have also passed an amendment to the clause at the committee of the whole House stage to make it clear that the commissioner cannot use information collected pursuant to the new section 17GB as evidence in court against the person who provided it. However, this restriction will not apply to information obtained by the commissioner under any other provision in the Tax Administration Act 1994, such as her main information-gathering power in section 17B, whether that information is sought or collected before or after a section 17GB information collection occurs.

This section recognises that the primary purpose of section 17B is in obtaining information for tax policy purposes while ensuring that the commissioner’s other information-gathering powers are maintained. The new information-gathering powers to collect information from trustees in order to gain insight into whether the top personal tax rate of 39c is working effectively will provide better information to understand and monitor the use of structures and entities by trustees.

In respect of the minimum family tax credit, the threshold is reviewed regularly to ensure it remains effective in its policy objective of encouraging people off benefits and into paid income. This bill adjusts the minimum family tax credit for 2020-21 to reflect increases to the main benefits, which were made in March this year.

In bringing this important bill to its third reading, I must thank the House for giving its urgent attention to the bill. Can I thank the Opposition for their involvement in the committee of the whole House stage. Can I also thank officials from across the Public Service who worked on the detail of the bill, and the drafters. I commend the bill to the House.

ANDREW BAYLY (National—Port Waikato): Thank you, Madam Speaker, and, yes, we are talking on the third reading of this tax bill that has been pushed through under urgency. I think it sort of started with the Government making an election promise that they were going to increase the top marginal income tax rate, and that’s the prerogative of the Government. Where we have ended up, though, is something quite significantly different.

We have ended up with a bill that does include that, but much more significantly—I think for all the tax advisers or the accountants and all those who have a trust—and as my colleague quotes, 240,000 of them are all set up—they are a legitimate corporate structure, so there shouldn’t be any aspersion that they’re not there for proper legal means. But where we’ve ended up with this bill is some of the most Draconian information powers that have been assigned to the Commissioner of Inland Revenue, on the pretext that the Minister is concerned that there may be tax avoidance through some trusts, and giving rise to these amazing rights. Of course, the Minister of Revenue also has the dual role as Attorney-General, and these are so Draconian that, in fact, the Attorney-General had to write to himself actually subsequently outlining the Draconian nature of the information disclosure requirements. So the Minister of Revenue, the same David Parker, then had to go and make an amendment through an amendment on the Table after the bill was put on the Table just a couple of hours later. So this bill is much different from what was on the election campaign. There is no doubt that it is clear that this Government will be increasing the trust tax rate over time, and they’ve gone on a search and destroy mission to try and find that information.

So what sort of happened and what’s the result? The bill was presented to the House basically midday yesterday. Less than 24 hours later, what the primary object of this so-called bill was, was to raise money, as laid out in the departmental report, over the next five years, or raise about $440 million per annum, but in the first year it will raise about $90 million—$90 million of additional tax. What most of New Zealand doesn’t realise: we are already in the grips of an economic crisis. So in the time that we pass this bill to make $90 million of additional revenue to the country, this Government has borrowed about $110 million in a single day. In the last 24 hours that we have spent debating this bill, all the money that’s going to be gained through additional tax revenue this year has been used but hasn’t even paid for the additional debt that we’ve created in the last 24 hours.

I think the intent of this bill, to raise some additional money—I can understand why the Government wants to do it, but in the context of where New Zealand sits in its economic cycle, where it sits with a level of debt we have at the moment, this is not going to do something significantly to change the perilous financial state that we’re finding ourselves in. In fact, what we should have been debating today is about how we’re going to grow the economy and not about penalising the more successful members of our community.

The rationale behind it—it’s interesting. The Minister yesterday said, “Look, there are other countries around the world that have a higher tax rate than us”, and he quoted Australia and the UK. It was almost like a badge of honour, that because they’re higher it’s not a bad thing if we go higher.

Hon Member: Yeah, they’re better, apparently.

ANDREW BAYLY: Yeah. I could say to the Minister every country around the world is trying to decrease its tax. As my colleague the Hon David Bennett highlighted, the changes around reducing company tax rates is an example around the world—everyone is seeking to try and reduce those rates because they know they have to remain competitive. And here we’ve got a Government for some reason thinking, “Hey, it’s not a bad thing to increase them.” It’s interesting, and I’ve heard some of the speakers from across the House talk about it, but in the IRD report, they actually talk about it. So this is not a political statement; the advisers are talking about “If you do this, there will be difficulty in attracting foreign investment into New Zealand”. New Zealand needs foreign investment. It needs the right type of investment, but it needs foreign investment desperately to help for infrastructure, growing our businesses—all those sorts of things.

The other thing is we need to attract highly talented people. A lot of those people will come to New Zealand and help us to grow this economy. Of course they will look at the situation in New Zealand. I heard some absurd comments from members of the Government yesterday saying, “Well, you know, they’ll come here if they want to, and if not, they can go somewhere else.” Actually, New Zealand is part of a competitive situation, just like we are trying to attract new companies to New Zealand, and immigrants will look at our tax structure. We actually want to be attracting those types of people that can earn that type of money, because they’re the people who will also contribute as much as the other types of immigrants we have coming to New Zealand, to make sure that New Zealand can grow its way out of this financial hole that we now find ourselves in by a much quicker route and faster route.

So there’s some big parts in this bill, and I’m not going to cover them all here because there are other speakers. But I think the biggest issue around the first bit, which is raising the minimum tax rate to 39 percent, is that it strikes at the integrity of the tax bill. I listened, and we have got two PhDs in the House, both so-called tax experts, and both of them yesterday—I’m looking at Dr Deborah Russell and Dr Duncan Webb—who dismissed and said, “Hey, this is not a complicated bill. All you have to do is pass this bill, even though it affects seven or eight other pieces of legislation. Hey, it’s easy. We just do it and it’s no problem.” Well, actually, that’s not how tax systems work. Having been on the Finance and Expenditure Committee for the last six years, every year, as has been noted, we passed a number of tax bills trying to make sure that we maintain the integrity of the tax bill. We’ve got a fantastic system in New Zealand. It’s the envy of the world. But we continuously try and make sure that we capture as much income and there’s no leakage out of that system.

This bill strikes at the integrity—and, again, you don’t have to listen to me; it’s written by the officials in the report highlighting this as a major, major issue. The reason why it’s becoming even more paramount is we have now got the highest differential—if this bill is going to go through, and I presume it will—between the top tax rate of 39 percent and a company tax rate of 28 percent. That’s 11 percent differential. What that means: that is the highest level of differential between those two rates for the last 20 years. That is the potential, unfortunately—and every country has the same issue; it’s not New Zealand. But that is the potential for the erosion of our tax system. That is what the officials have opined about and spoken about in the report. I think it’s a massive issue and no doubt we will be back at the Finance and Expenditure Committee in a certain time fixing this bill up.

It’s already sort of catered for in the bill, because in the bill there is a requirement that, actually, there’s going to be further consultation on integrity issues during the course of 2021, where further measures—and it just uses the words “further measures”—around improving the tax integrity will be implemented and will be effective in the year of 1 April 2022. That just tells you everything about this bill, and it’s had so little consultation the tax community is going to be in an outrage. There’s so many people going to be affected by it who have legitimately had their own structures, and I just think we are rushing through something that could have been done at much less haste. If the Government wanted to achieve it that’s fine, but we’re going to end up with some significant problems.

Dr DEBORAH RUSSELL (Labour—New Lynn): Thank you, Madam Speaker. One of the critical things about this excellent bill—this excellent bill—is that it quite straightforwardly fulfils a campaign promise, a campaign promise that we made and that New Zealanders voted for: to increase the top income tax rate to 39 percent. So that’s the basic concern of this bill, and that’s what it does, and, as appropriately done, it propagates that rate through the various mechanisms we have for collecting income tax, such as through the fringe benefit tax mechanism, the resident withholding tax mechanism, the employer superannuation contribution tax mechanism, and so on. So this is what this bill achieves.

It’s been done with reasonable haste because in order to have sufficient time for systems, IRD systems, business systems, and the like, to be up and running by 1 April, the rate needs to be confirmed now, and this is why this bill has gone through with urgency—in order to get that rate into law, which gives certainty to business, certainly to the revenue department. So there are two straightforward things going on with that.

When the new rate is in place, it will affect 2 percent of income earners, and it will only affect them if they earn more than $180,000, a threshold that is higher than the incomes of many people in this House. It’s a very small percentage of income earners. What it means is that if you earn over $180,000—an income that’s very high in comparison to the great majority of incomes in New Zealand. A person who earns that much will pay another $600 in tax for every $10,000 they earn over $180,000. It is a small extra contribution from our highest income earners, and it goes to issues of fairness and equity in the tax system, a tax system where over and over again New Zealanders have expressed the view that a fair income tax structure is a progressive income tax structure. This bill embodies that.

There is one final further important measure in this bill, and that is an increase to the minimum family tax credit, which is required most years to ensure that people who are in work do get some reward for that and that, in fact, their income just exceeds similar families who are on benefit. So that is straightforwardly a fairness measure as well.

This is an excellent bill and I commend it to the House.

Hon MICHAEL WOODHOUSE (National): Two minutes and 47 seconds—the former chair of the Finance and Expenditure Committee. Having left the Minister of Revenue to do all of the work last night and all of the work this morning, with no sign of the chair of the finance committee and no sign of the deputy chair of the finance committee, all that the Labour backbench can come up with is a two-minute, 47-second speech on a very, very important piece of legislation being rushed through under urgency, that the Attorney-General has said is an outrage—and all Dr Russell could come up with was two minutes and 47 seconds.

But that’s not the only thing that grinds my gears. The real thing that grinds my gears—and it’s particularly evident in this bill debate—is the straw man arguments that are thrown up by Labour members about what the National Party believes, and then they criticise it. After my first reading speech, Stuart Nash—I’d talked about pump-priming and the importance of actually adding a tax cut, not tax increases, to the strategy of the bolus of Government spending, and Mr Nash gets on his feet and claims that I want to give the top earners a tax cut. It’s rubbish, it’s wrong, and it’s very annoying—I was about to say something else then.

Look, tax cuts can come in a number of forms, and, actually, the campaign pledge that National made benefited low-income taxpayers. The threshold changes—one could have a tax-free threshold, and I think Mr Seymour needs to do a bit of a primer on what broad based and low rate was when he criticised Mr Bayly for his amendment under thresholds. Broad base isn’t about the level of tax rates; it’s about the breadth of what we tax. So he needs to go and perhaps grab a textbook.

Then we had Greg O’Connor saying that “They’re all against any sort of tax whatsoever.”, as if the National Party wants to get rid of the tax system. Well, if he’d listened to my first reading speech, he would have heard me say I am very happy to pay tax. I’ve been a higher-income earner for most of my working life. That’s fair, and I said that it was fair that the top 9 percent of income earners should carry the burden of 42 percent of the net income tax collected by the Crown—that’s fair. Mr O’Connor interprets that as me wanting to get rid of the tax system altogether.

Then, we heard from Mr Parker this morning that he thought that I had an unhealthy defence of tax avoidance structures of the wealthy. Well, guess what? I don’t. But what I do have is a healthy defence of the rule of law and the liberties that are provided through it, and the Attorney-General has said that the Commissioner of Inland Revenue’s new powers when this bill is passed are an affront to the right to freedom of expression and the right to be secure against unreasonable search and seizure.

Now, the New Zealand Bill of Rights Act isn’t some soft puppy thing, because while it talks about these things, it actually gives the power of the Crown to say, “Well, that may be reasonable in the circumstances.” But the Attorney-General has said, “That is not reasonable.”, and, actually, Mr Parker, in his third reading speech, when talking about section 17GB and its relationship with section 17G, makes me think that I was at cross-purposes with him in the committee of the whole House.

It wasn’t a controlling provision on the Commissioner of Inland Revenue; this is a strengthening provision. This enables her to go further, and that makes sense, because for all of his—he took his Attorney-General hat off and then put his revenue-gathering Minister’s hat on. The question was answered when he said that “Actually, this isn’t administrative. This isn’t information-gathering for policy purposes. The IRD was concerned about avoidance risks in trusts for some time.” Then, he said, “Wealthy individuals that use complex vehicles raise the risk of tax avoidance.”

Well, I’ve got a pretty good working knowledge of the Tax Administration Act and the Income Tax Act, and I’ve got to say the commissioner has the powers to look through those structures. It may take some time and it may be complex, but this is the lazy way out, and I don’t even believe this is the commissioner asking for it. I will be seeking all of the papers under the Official Information Act of the exchanges between the IRD and the Minister about why this was necessary, and I have every expectation that I won’t be seeing the tax policy team going “Minister, we need this because there’s a loophole.” I think we’ll be seeing “Minister has asked for this and we are responding to it.”, and he’s probably only asked for it in the last six weeks.

The question that I asked in the committee of the whole House, which was kind of fudgy-answered, was whether or not the Attorney-General would have been happy with the amendment that’s been made to clause 33. Well, it’s been emphatically answered: the Attorney-General will not be happy with that at all because it clarified the strengthened powers, not the constraining powers.

After COVID, we heard from the Government about a new normal—things will have to change, new approaches, new innovations—and I think that was quite good. That’s quite exciting. I think maybe we can actually break the mould a bit and think differently about creating new technologies, reducing the amount of travel we do, working from home strategies, innovations, encouraging high - net-worth individuals to use their creative talents for the betterment of the whole country, and do you know what the first new normal is? A futile gesture of an envy tax on the 2 percent of New Zealanders that create the most wealth. Remember, they already pay 20 percent of the tax base—the net income tax base, that is—so this is going to be an ineffective envy tax, and far from being innovative, far from being a new normal, this is absolutely the old normal from the left.

Not only is it ineffective; it’s not even going to pay for that other habit of the left, which is a bloated increase in bureaucracy. The public sector went up in cost between 2017 and 2019 by $700 million a year. I’m not talking about teachers and nurses and police officers. That’s just Wellington bureaucracy, which has gone up by 40 percent more than this tax will raise.

My suggestion to the Government is that if they are really concerned about the future generations and the burden of debt to be repaid, rather than imposing an envy tax, how about they actually get spending under control, because we have got, necessarily, significant extra increases and a now projected debt of $214 billion over the next four years—and that was another straw man argument? When the previous National finance spokesperson, Paul Goldsmith, suggested that we could actually get debt to GDP down faster than this Government, there was righteous indignation from the Minister of Finance, who thought that what we were saying was that we’ve got to cut spending. Rubbish! We do that by growing the economy faster, but this Government doesn’t even know how to do that.

So they go back to type. The new normal is the old normal: an envy tax on the people who create the wealth. That is wrong, it is ineffective, and it won’t improve fairness.

Now, I just want to finish on the retrospectivity issue. I just don’t accept the Minister’s explanation about why retrospective legislation is required for an information requirement that is being changed seven years after it was initially put in place. That’s exactly the sort of thing that citizens, taxpayers, should be protected from.

What would we do if we had a new criminal offence that was legal seven years ago and illegal today? Would we go back seven years and say, “Well, it doesn’t matter that you didn’t commit a crime seven years ago. Now, we’re going to say that you did.”? Well, that would be an outrage, but that’s exactly, in an administrative sense, what this is doing. It’s wrong.

It should never have been rushed through under urgency. The tax rates are futile, the trust inquiries are punitive, and the retrospective elements of this are quite wrong.

Debate interrupted.

Voting Correction—Tabled Amendment to Clause 33

DEPUTY SPEAKER: Before I call the next speaker, when the committee was considering the Taxation (Income Tax Rate and Other Amendments) Bill, the result of the vote on the question that the Minister’s tabled amendment to clause 33 was incorrectly recorded as Ayes 76, Noes 43. The correct result is Ayes 86, Noes 33.

Third Reading

Debate resumed.

KIERAN McANULTY (Labour—Wairarapa): Thank you, Mr Speaker. Look, I’m not going to take too long. It’s going to be very brief call because we’ve spent quite some time discussing this. To me, this is very simple, that in New Zealand we have a principle that for many, many decades we have had in place, that we have a progressive tax system. The more you earn, the more you are taxed, and on the whole we accept that and we understand the reasons why. For me, it’s very clear cut. I don’t believe that teachers and police officers should pay the same rate of tax as those earning $180,000 or more. I support this move, I think it’s fair, and given that it was in our manifesto and that the Labour Party received over 50 percent of the vote, I’d say the majority of New Zealanders think it’s fair also. I commend this bill to the House.

Hon JULIE ANNE GENTER (Green): Tēnā koe, Mr Speaker. As already made clear in the House through our speeches, the Green Party cannot in good conscience support this bill, even though we very much support a progressive tax system and we support a more equal society. Unfortunately, just lifting the top tax rate alone, without addressing the lack of a tax on capital gains and on wealth, will actually result in a less equal situation and exacerbate the current house price crisis that we have, where in the past year house prices have increased by nearly 20 percent.

This is unprecedented in a time of recession and increasing unemployment. Most, if not all, of the experts have recommended addressing the issues around taxation to address some of the demand side issues that are leading to a huge number of investors borrowing more money and bidding up house prices. The consequences of that are that it’s not just more difficult for first-time homebuyers—which it is, and that is a problem no matter how hard you work. If you’re paying rent, it is extremely difficult to save enough now to get a deposit if you didn’t already own property or if you’re not inheriting or receiving a gift from your parents who already own property.

I note, I have a family member in this situation. His in-laws sold their property five or six years ago and have been renting for five or six years in Wellington. Now he’s starting a family and they’re all looking to buy a home together, and it’s just completely out of reach. There are people who work hard and who save their money, but the reality is that the house price to income ratio has increased right across the country from 6.2 to 6.8 in one year, when it used to be 3. In some parts of the country, like Wellington and Auckland, I’ve no doubt median house price to median income ratio is much, much worse than that.

So this is a structural issue that requires taking on tax reform that addresses capital gains and/or deemed income from wealth from property. Of course, I hear the National Party and the ACT Party opposing this for completely different reasons, because they want to allow the rich and the wealthy to keep getting richer and wealthier and lock out even more people. They might not know that. They might say that they believe in equal opportunity. But the reality is the system we have is not fair, and it’s not fair and it’s not right that people who do some of the most important work for us in our society—the people who were on the front line when we were in the midst of a COVID outbreak—some of them are some of the lowest paid people and the hardest working people in our society.

Then we have people who were in the right place at the right time. Maybe they worked for a bank, maybe they are a real-estate agent. Look, I’m not saying they don’t work hard—they work hard too. But they’re making many times more money than our front-line workers, and that’s not right. So it’s fair that the people who earn the most—however they earn it—contribute back more to the shared pool of money that we use to pay for public services and infrastructure that we all benefit from. If people in this House say they believe in equal opportunity, then they have to believe in redistribution, because there’s no way that the child of poor parents is going to have the same opportunities as the child of parents who are well off, either because they worked hard or because they just happened to be at the right place at the right time and buy a house back when the median house price was only three times the median income.

So the Green Party absolutely believes that in this country we have to have a debate. This is a moment where we need leadership, and we can no longer put our head in the sand and ignore the fact that we are not taking all of the steps that are needed to address runaway house prices. Because of all of the quantitative easing putting all of that liquidity out there into the market, what it’s doing is it is driving up house prices and asset wealth for those who already have a lot. And it’s fair for those people to pay tax on that income, the same way a cleaner pays taxes on their wages, the same way our nurses pay taxes, our teachers pay taxes—that is fair. If that were included in this bill, we would wholeheartedly support that change.

This problem is not going away. Every person in this House has to confront this issue. The National Party has to confront the role that they played in scaremongering against totally sensible tax changes that were recommended by the Tax Working Group and causing the political climate to be such that now we have a majority Government who isn’t going to take the action that’s needed to achieve their aims because of the pollution of the political debate by the National Party, who used their money and their voice to mislead and spread absolute disinformation on social media to scare people and make them feel afraid.

This is a time in our country where we need everyone to continue coming together. We’ve confronted the crisis of COVID-19—we’ve done it really well. We put aside selfishness and fear that comes from the right. When New Zealanders come together, they are generous, and they are willing to work together to address the issue of inequality in this country. The Green Party will not stop talking about this issue. If we’re going to address inequality, we need to confront the imbalances in our tax system. We need a tax on capital gains and/or wealth.

BROOKE VAN VELDEN (Deputy Leader—ACT): Thank you, Mr Speaker. I rise on behalf of the ACT Party in opposition to this Taxation (Income Tax Rate and Other Amendments) Bill. There are many issues with this legislation. This bill should never have been put forward under urgency. There are many good reasons for using urgency, and this is just not one of them. What could be so urgent about putting forward a new tax law before Christmas that we give up the normal checks and balances that we expect under our democracy, such as the public having their say through public submissions on a proposed law? There isn’t a good reason. The use of urgency can only have been political, to give as little time for the ACT Party to scrutinise the proposed law before it was debated in the House. Unfortunately for this Government, the ACT Party didn’t need much time, and it wasn’t hard to notice the glaring issues with this bill.

The reason why we oppose this bill is unintended consequences. It is not clear that there is any clear objective or outcome that this bill is hoping to achieve. It’s unlikely to raise much revenue; so that can’t be the Government’s objective. The regulatory impact statement and the departmental disclosure statement say it will raise about half a billion dollars. That’s not much when you compare that to the $140 billion that this Government has just borrowed. Even if it did make a noticeable impact, I’d argue that this Government doesn’t have a good history of spending taxpayer money; so it’s clearly not for the revenue. It can’t be putting forward the bill for outcomes, because, of course, once people find out that they’re liable to be paying more tax, it’s in people’s interests to structure their affairs accordingly to avoid it. So will the fringe benefit tax rate have to be changed as a consequence? Will the trust rates have to be changed too? Unintended consequences.

This is not a simple law that can be passed under urgency and without the due scrutiny that we expect under our democracy. The reason this Government has put forward this bill can only be ideology. This is the only reason that they have, and this is why we oppose the bill. It is the message that it sends to New Zealanders. It says, “We don’t want people to take risks. We don’t want people to invest. And we don’t want people to become highly skilled.” The values of the ACT Party are in stark contrast. They are of aspiration and valuing success. They are that, when you earn a little bit of money, you put a little bit aside, you save it, and you invest carefully. Those are the values that we should seek to uphold in New Zealand. Labour says that, if you do well, we’ll tax you even more, we’ll take it off you.

Lastly, there are New Zealand Bill of Rights Act issues that should once again be scrutinised fully in a select committee that doesn’t exist under this urgency. I could go on, but I think I’ve made my point. The ACT Party is opposed to this bill. Thank you, Mr Speaker.

Dr DUNCAN WEBB (Labour—Christchurch Central): Mr Speaker, thank you for giving me the call. It’s great to hear the new member for the ACT Party has been to the David Seymour school of shouty. But, look, I just want to address one point, which is really the alleged New Zealand Bill of Rights Act issue, and just note that the Minister has put a Supplementary Order Paper (SOP) there to really make clear that the gathering of information is for a very limited purpose—for the purpose of developing policy and understanding the way the tax system works, and not for any administrative or enforcement purposes. It’s very clear that if the commissioner wants to inquire into a person’s affairs for enforcement or administration purposes, they’ll need to use powers that currently exist elsewhere in the legislation. So it’s very clear, very fair, and the New Zealand Bill of Rights Act issue really has been quite effectively dealt with by that SOP. So thank you, Mr Speaker. This is a great improvement to our legislation, one which means that those who can will help New Zealand a little bit more, and New Zealand will be better for it.

DEPUTY SPEAKER: This is a split call. I call the Hon Gerry Brownlee—five minutes.

Hon GERRY BROWNLEE (National): What an interesting contribution that was from Dr Webb, the constitutional lawyer who I think is probably changing his positions from what he might have lectured students on in the past, at a rapid rate. Let’s be very, very clear: this is, in some terms, if I may use the term, a complete muddle—an absolute muddle.

You have section 17B, which the Minister of Revenue came into the House today and said must not be read down because of section 17GB, in clause 33. Of course, this all sounds like terribly technical sort of stuff. You ask yourself: what does it mean? Well, we have a bill here in the House today that, primarily, raises the tax rate for those earning over $180,000 to 39c. If that was all it was, that would be simple, but it’s those other things that go with it that are the problem.

Firstly, you come to this ability for the IRD to now collect information from trust income to assess how the 39c tax rate is going. Is it working? Is it bringing in the money it should? Is it bringing in the whole $2.2 billion that it’s predicted to bring in over the four years? Is it on the track to do that? Or should there be a change to the rate that includes taxable income in taxes that would potentially raise that revenue figure to about $3.7 billion? So the hard thing to understand is: why has the Government, in this bill, decided to forgo the $1.5 billion in difference—income that they could have got if they just put a tax rate across trusts as well as income? Why have they done that? Secondly, are we being softened up for that to come in the future?

I asked the question today of the Minister: what will be the threshold where he goes to Cabinet and says, “Look, the money is not coming in at the rate it should. There’s something wrong with this. We’re not getting it out of trusts. Too many people are avoiding it.”—not recognising, of course, that he’s already given up $1.5 billion that won’t be covered and allowing the IRD to collect that information.

Dr Webb says that’s OK—it’s quite discrete, it’s quite different, and it doesn’t affect any other tools that the IRD have to bring cases against those who are dodging their tax responsibilities. The problem here is that the amendment says that if information is collected under section 17GB, it can’t be used for a prosecution. Well, that’s like telling the police that they can go out and look for criminals, and, if they find them under a particular clause of the law, they can’t prosecute them. That seems utterly ridiculous. Of course they’re going to use that information. That information is going to lead to the use of section 17GB that they’d be collecting the information under. They will use it under 17B to form an opinion about whether or not a prosecution should be brought. It’s ridiculous for anyone to stand in this House and say anything otherwise; although I did notice that Dr Webb gave it a fair go, and I did also notice that it equally sounded ridiculous. I wish we were still in committee of the whole House, because it would be a good question for the Minister to answer. Unfortunately, the committee was curtailed by the desire of the Government to move very quickly on this bill.

I accept that they did campaign on it—that they did say that they would raise the tax rate to 39c on income over $180,000. That’s fair enough. They come in here and they do it. That doesn’t mean we have to agree to it, and it doesn’t mean, as the Greens suggest, that we’re trying to push fear out there as a reason for not supporting it. If anyone’s creating fear in this country, it’s the people who supported that ridiculous motion yesterday on the climate change emergency. That’s what fear is about.

Anyway, where we come to on this is that too many Labour candidates went out in the last election saying this will be an answer to paying back the debt that New Zealand has had to incur as a result of COVID-19. It won’t. It is, at best, 2 percent per annum of the total debt that’s being accumulated by the current Government. No one’s arguing about that debt, but don’t mislead people that somehow taxing the top 2 percent of the country to gather 2 percent of the revenue that’s being borrowed is going to save us. That is completely ridiculous.

This is not a good bill. It should have been more discrete with its two issues. We will not be supporting it.

HELEN WHITE (Labour): This is a progressive tax that was traversed with the public and got its mandate. This is a straightforward, targeted tax contribution from the people who can afford it the most. The same bill makes sure that people at the bottom, who can least afford it, have an adjusted minimum family tax credit. It is mindful of possible avoidance in trusts, and, by adding transparency, it may well put on notice people who attempt to do so and avoid such behaviour. I am proud to commend a bill that targets the top 2 percent of income earners in this country and lets them pay their fair share of tax. Thank you.

NICOLA WILLIS (National): New Zealanders are going to wake up tomorrow to find out that under urgency, with less than 24 hours of this bill being in the House, the Government has created a new law that doesn’t just increase the top tax rate; it gives the Inland Revenue commissioner the power to seek the financial information of every single New Zealander, and the Privacy Commissioner hasn’t even had a chance to look at it. That is what New Zealanders are going to wake up to tomorrow because of this bill. They need to know that Big Brother is coming, and he just got more teeth.

So let us go through what this bill actually does, because it has three key things that it does. First, it increases the top rate of taxation, and National has put on the record our objection to that: first, we don’t think that you can tax your way out of a recession. This is exactly the wrong time to be asking New Zealanders to give up more cash. Second, in terms of the purpose, which is stated as increasing revenue and increasing equity, the bill’s own advisers say that there really won’t be much progress on either of those things. And third, this creates massive issues with the integrity of the tax system. I’ll return to these arguments.

The second thing that this bill does is that it creates these extensive new information-gathering powers, and the third thing that this bill does is it creates a massive new compliance burden for anyone involved in a trust in this country, including significant retrospective powers for the Inland Revenue commissioner to ask trusts to provide pretty much any information that the commissioner wants, back to 2013.

So let’s first have a look at these extensive new information-gathering powers, because the bill in new section 17GB, inserted by clause 33, gives the commissioner for Inland Revenue the power to require any New Zealander to provide information that the commissioner considers relevant to tax policy. This is a broad and sweeping power. Are the members opposite even aware of what their Government is seeking to do, because this power means that if the IRD thinks it’d be quite helpful to know how you manage your financial affairs for the purpose of them designing tax in the future, all they need to do is invoke 17GB and off they go. This is a huge invasion into the personal financial affairs of New Zealanders. It is such an invasion—it’s not just me saying that—into people’s privacy that the Attorney-General has issued a section 7 report under the New Zealand Bill of Rights Act to say that it amounts to a breach of our rights as New Zealanders to be free from unreasonable search and seizure, it amounts to a breach of our right to be able to freely express ourselves and not to be compelled to say certain things or to provide certain information just because the State thinks it would be useful for the creation of new tax policy. Do not be misled, because the Attorney-General, who also happens to be the Minister of Revenue, has tried to be too cute by half here. He said, “Oh, look, my advice to the Minister is you can just fix it up by saying, ‘Don’t worry, we won’t use the information to prosecute you.’ ” That’s all his little amendment does. But that does not mean that he can’t use the power for any range of other things to look into your personal affairs in order to create tax policy in the future.

So I have some questions. My first question is: what would the Privacy Commissioner think, because we don’t know that because there hasn’t been any select committee process whatsoever, so we haven’t actually had the opportunity to publicly engage with the Privacy Commissioner on this. It says in the regulatory impact statement that the Privacy Commissioner had insufficient information about how these powers might be used so was unable to assess it fully but would engage with officials later. Well, I think that that is shocking, because what we have here is a potentially massive breach of privacy, and the Privacy Commissioner hasn’t even had the ability to assess it. The New Zealand public is none the wiser. What a disgrace.

But the second thing that we need to consider here is that this power is not going to be used by the Inland commissioner just because they think you might’ve done something wrong—because you know what? Here on this side of the House, we think that’s fair enough. If you’re trying to avoid your tax liabilities, then, yeah, the IRD should have some powers to look into that. But this can be used for any range of purposes, so I want to know what the IRD thinks they’re going to get up to. What chats have they had with the Minister already about where his particular interests in tax affairs may lie? I mean, we know that the Green Party has some pretty wacky ideas on tax, as does David Parker, probably. So how is this going to be used? I want to know that. We don’t know that. We weren’t able to take this through a full parliamentary process.

Then we have the question of: how many people will end up being captured by this new information-gathering net? How many New Zealanders are going to have their personal financial information asked for underneath this power? Again, we do not know—no select committee process, no ability to get answers to these questions on the record.

Finally, what I want to know is: how burdensome will these information demands be, because there is no caveat in this bill, in 17GB, as to what the Inland Revenue commissioner could ask. So IRD could come after you for pretty much every bank statement, every financial transaction, everything you’ve ever been involved in, and there seems to be no limit to that. So, ladies and gentlemen opposite, you need to be aware that you have, in supporting this bill, empowered Big Brother at IRD to go after every Kiwi, and select committee hasn’t even looked at it.

Returning now to the other aspects of this bill that have been more widely telegraphed, relating to new sections 59BA and 59BAB, these are extensive new requirements for compliance and paperwork from trusts, because the Minister has realised, as we warned and as we continue to warn, that when you create a differential between the top tax rate and the trust rate, it is going to be logical that some people will then try and funnel income through trusts. So the response to this is to create massive new compliance requirements for annual returns relating to assets, liabilities, and distributions.

But it actually goes further. It’s not just about that differential. It is clear that it’s also about understanding and monitoring the structures and entities used by trusts so this information may be used for other purposes in the future. This power is retrospective, so this power allows the IRD to go back as far as 2013 to ask people for this additional information or, actually, to issue a notice at any time requiring trustees to provide any sort of information that IRD may decide in future that they want. So what we can see here is that the Minister has given himself and his department extensive new powers to trawl through the trust affairs of New Zealanders, and, mark my words, new taxes will be coming. This will be creating massive compliance for the 245,000 trustees who currently issue tax returns and the many more New Zealanders who will end up being caught in this net.

Finally, I said I would return to the issue of the increase to the top tax rate. Members in this House have heard National speak about this, and I acknowledge that there has been extensive public debate, but it is important that we look at some of the high-level claims that have been made by the Minister for this bill, because they don’t stack up. The purpose of this bill is stated as being a revenue-gathering measure, and yet what we know from the official advice that has been tabled is that this tax will get about $550 million in additional revenue a year. Now, that’s a big number, and eyes can glaze over, but you need to consider that in the context of the overall public debt that New Zealand is currently taking on. By 2024, we will have taken on $140 billion worth of debt—

Hon Michael Woodhouse: How much?

NICOLA WILLIS: A hundred and forty billion dollars. Just for those who may not be doing the maths in their head, what we’re talking here is multiples more than the revenue that will be gained. So this is not going to go in any substantive way to actually resolving the debt, and when you compare it on a comparative scale with what could be achieved by more efficiencies across the wider Public Service, by the Government bringing in its own belt and cutting its own cloth, by the Government, for example, not having to hire lots more people at IRD to run after your tax information, you do need to consider that the revenue claims made for this bill are limited.

Second, it doesn’t actually do much on the distributional equity front. The analysis says the Gini coefficient will only be 0.2 points lower. And, finally, it does raise massive issues with the integrity of the tax system. I say this: merry Christmas, New Zealand. The taxman is coming, and he just got more teeth. Thanks, Labour.

MARJA LUBECK (Labour): Tēnā koe e te Māngai o te Whare. Thank you, Mr Speaker. It’s great to be the last speaker because you can be succinct and it’s all been said in the previous debate. We made a campaign promise to increase the top rate to 39 percent, and that’s exactly what this bill achieves. It only affects a small portion of our income earners—those earning over $180,000. It’s consistent with a progressive tax system. It basically gives a very clear message: those who earn more pay a little bit more to help make Aotearoa New Zealand a better place. It seems fair, and I commend it to the House. Thank you, Mr Speaker.

A party vote was called for on the question, That the Taxation (Income Tax Rate and Other Amendments) Bill be now read a third time.

Ayes 66

New Zealand Labour 64; Te Paati Māori 2.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Abstentions 10

Green Party of Aotearoa New Zealand 10.

Motion agreed to.

Bill read a third time.

DEPUTY SPEAKER: Members, that concludes urgency. The House stands adjourned until 2 p.m.

The House adjourned at 11.37 a.m. (Thursday)