Thursday, 20 May 2021

THURSDAY, 20 MAY 2021

THURSDAY, 20 MAY 2021

The Speaker took the Chair at 2 p.m.

Karakia/Prayers

Karakia/Prayers

ASSISTANT SPEAKER (Hon Jenny Salesa): Ke tau lotu. ‘E ‘Otua Māfimafi, kuo mau taa‘i mālie ‘i ho‘o ‘ofá mo e ngaahi tāpuaki hono kotoa. ‘Oku tuku homau lotó ka mau hū atu ke ke malu‘i ange mu‘a ‘a e Kuiní, mo tataki ange ‘emau fua fatongia ‘i he Fale Aleá ‘aki ‘a e poto Faka-e-‘Otua, ‘ofa pea mo e ‘ulungaanga malū, ko e ‘uhí ko e mo‘ui mo e melino ‘a e fonuá. ‘Oku mau kole atu ‘a e ngaahi me‘á ni hono kotoa ‘i he huafa ho ‘aló pē ‘e taha ko Sīsū Kalaisi ka ko homau fakamo‘uí, ‘Emeni.

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

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

SPEAKER: No papers have been presented.

Petitions have been delivered to the Clerk for presentation.

CLERK:

Petition of Nicholas Chapman, requesting that the House create an exemption in the Conservation Act 1987 and the Fisheries Act 1996 to allow trout farming for personal use

petition of Philippa Cameron, requesting that the House of Representatives pass legislation requiring that all school buses have seatbelts.

SPEAKER: Those petitions stand referred to the Petitions Committee.

Select committee reports have been delivered for presentation.

CLERK:

Report of the Education and Workforce Committee on the briefing on the 2019-20 performance and current operations of Immigration New Zealand,

reports of the Governance and Administration Committee on the petition of Hana Fisherova and the petitions of Geraldine Murphy.

SPEAKER: The briefing is set down for consideration.

The Clerk has been informed of the introduction of a bill.

CLERK: Appropriation (2020/21 Supplementary Estimates) Bill, introduction.

SPEAKER: That bill is set down for first reading.

Supplementary Estimates Documents

Supplementary Estimates Documents

Hon GRANT ROBERTSON (Minister of Finance): I hereby present the Supplementary Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2021.

SPEAKER: That paper is published under the authority of the House. The House now comes to the delivery of the Budget.

Budget Documents

Budget Documents

Hon GRANT ROBERTSON (Minister of Finance): I hereby present the 2021 Budget speech; the Budget at a Glance 2021; the Wellbeing Budget 2021, including reports on the fiscal strategy and on child poverty and the summary of initiatives; the Budget Economic and Fiscal Update 2021; and the Estimates of Appropriations for the Government of New Zealand for the year ending 30 June 2022.

SPEAKER: Those papers are published under the authority of the House.

Bills

Appropriation (2021/22 Estimates) Bill

First Reading

Hon GRANT ROBERTSON (Minister of Finance): I move, That the Appropriation (2021/22 Estimates) Bill be now read a first time.

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

Motion agreed to.

Bill read a first time.

SPEAKER: The Appropriation (2021/22 Estimates) Bill is set down for second reading forthwith.

Budget Statement

Second Reading

Hon GRANT ROBERTSON (Minister of Finance): I move, That the Appropriation (2021/22 Estimates) Bill be now read a second time.

It is an honour and a privilege to present the Wellbeing Budget 2021—Securing Our Recovery to the House. Today’s Budget is set against the backdrop of two previous Budgets, one delivered last year and one that was delivered 30 years ago. Budget 2020 was very much a COVID-19 Budget that provided the largest ever fiscal stimulus to support New Zealanders through the shock and impact of the global pandemic, and while the economy has outperformed predictions, the job is not yet done. This year’s Budget is still in the shadow of COVID-19, and its focus is to secure our recovery from its impact.

This Budget is also set against the Budget delivered 30 years ago this year, the so-called “mother of all Budgets”. It was the Budget that finalised the benefit cuts, which introduced the idea of hospitals being replaced by Crown health enterprises, that set in motion interest-bearing student loans, and that welcomed the passing of the Employment Contracts Act.

On the 30th anniversary of that Budget, our Government is undoing some of the damage done all those decades ago. In recent weeks, we’ve released the details of fair pay agreements to lift wages and conditions across the industries where some of our lowest-paid people work, and, today, we address the most inequitable of the changes made 30 years ago. We restore dignity and hope for those lowest-income New Zealanders by righting the wrong of those benefit cuts and by boosting main benefits by up to $55 per week. This not only continues our quest to reduce inequality; it also acts as further support and stimulus to our economy as we recover from COVID-19. I will return to the detail of this shortly, but it is to the economic impact of COVID-19 that I wish to turn first.

A great deal has happened since I stood in this Chamber, socially distanced, a year ago to deliver Budget 2020. Unemployment was forecast to peak at close to 10 percent; the Treasury had cut $100 billion out of its pre-COVID GDP forecast, with many economists saying it would take at least until 2023 for activity to return to previous levels. Government revenue was forecast to be lower than 2019 levels for nearly three years. The OBEGAL deficit was predicted to be at nearly $30 billion from 2020 to 2022, and our net debt was forecast to rise to near 55 percent of GDP in 2023.

In the face of this one-in-100-year shock, the New Zealand economy has proved to be remarkably resilient. Today’s Budget shows that the New Zealand economy is expected to build on this resilience as we secure our recovery. Unemployment is forecast to go back to 4.2 percent, and an extra 221,000 people will enter employment over the next four years.

GDP growth will rise from 2.9 percent this year to 4.4 percent in 2023. Exports are forecast to grow, on average, by 5.8 percent over the next four years.

Business investment is forecast to grow at nearly 6 percent a year. Wage growth, at nearly 3 percent a year, will outpace inflation, meaning more money in Kiwis’ back pockets.

Our stronger economy also means stronger Government books. Crown tax revenue is forecast to have fallen by only 1.6 percent between 2020 and 2021. The OBEGAL deficit in the current 2021 financial year is forecast to be about half of what was predicted a year ago. The operating balance and residual cash are forecast to be in surplus at the end of the forecast period, while the OBEGAL is projected to be in surplus from 2026-27—roughly the same time the previous Government took to get to surplus following the global financial crisis.

At no point now is net debt forecast to go above 50 percent of GDP. While the headline numbers show a peak of 48 percent, looking through the impact of the Reserve Bank’s Funding for Lending programme, net debt is forecast to be 41.4 percent in 2025.

New Zealanders can be proud of our response to COVID-19. It’s been recognised around the world as not only a successful, science-driven public health response but also as a strong economic response. In February, Standard & Poor’s global ratings gave New Zealand the first credit ratings upgrade of any sovereign since the pandemic, and the first for New Zealand since 2003.

I acknowledge that our stronger economic position will mean that there are people who argue we should be taking on more debt and running larger deficits than we present here today. There will also be people who argue we should be reducing debt faster, cutting Government services, and removing our support for the economy, even as the global pandemic continues to rage. I believe Budget 2021 gets the balance right. It protects New Zealand’s strong position by keeping a lid on debt and tracking a responsible return towards surplus while also giving us the ability to make targeted investments where they are needed most to secure our recovery.

This balanced approach is needed because, despite our success, the impact of COVID-19 is still very much present. The images of death and distress from India, the outbreaks in our own region in Fiji, the emergence of new variants, and the slow return to normality elsewhere are stark reminders that we are not through this. Every economic forecast, no matter how positive, is accompanied by frequent use of the words “uncertainty” and “volatility”.

At home, we have seen the impact of COVID-19 fall unevenly. Sectors such as tourism, international education, hospitality, and events have taken a hit, and regions reliant on them are struggling. The impact has also been disproportionate on groups within our society, with women, Māori, and Pacific peoples’ unemployment rising disproportionately during the worst of COVID-19. In the face of uncertainty and the ongoing impact of COVID-19, the Government needs to continue to support and stimulate the economy in order to secure our recovery.

New Zealanders’ wellbeing has held up relatively well during COVID-19. The Wellbeing Outlook released by the Government today shows life satisfaction has remained high during the pandemic, with 86 percent of respondents to the March wellbeing supplement of the household labour force survey reporting high satisfaction—the same as in December 2020, and slightly higher than in September and June 2020. In fact, life satisfaction levels reported across the past year during COVID-19 have actually remained higher than in the 2018 general social survey.

The data, however, does show the groups of New Zealanders with lower levels of wellbeing. Sole parents, unemployed people, and people not in the labour force due to injury, sickness, or disability are more likely to report lower life satisfaction and that they have felt lonely most or all of the time. Māori and Pacific people are also more likely to report fair or poor health and continue to face barriers to education. This data reinforces the importance of our wellbeing objectives.

As in the last two Budgets, our investments are in line with wellbeing objectives based on evidence, data, and advice from experts. The objectives are: making a just transition to a low-carbon economy, ensuring everyone benefits from the future of work, enhancing Māori and Pacific opportunities, improving child wellbeing, and a focus on mental and physical health. These objectives are enduring and require sustained investment in order to be met.

The initiatives in this year’s Budget were again subject to a wellbeing analysis, which includes assessment against these objectives, the domains of the Living Standards Framework, implementation readiness, and value for money. We are continuing to develop this approach to ensure it gives a true Aotearoa New Zealand view of wellbeing.

This is a Government that will provide progressive leadership, much-needed reform, and a strong and confident plan for our nation’s post - COVID-19 future. The Government has three goals this term: to keep New Zealanders safe from COVID-19, to accelerate our recovery and rebuild, and to tackle our foundational challenges—in particular, housing affordability, climate change, and child wellbeing.

Alongside this, we have an ambitious programme of system reform that will improve productivity, social outcomes, and wellbeing. This includes a complete overhaul of our health system, our planning laws, and the way we manage three waters.

The three Budgets that I present this term will drive this ambitious programme, and they do need to be seen as a package. The change that we are seeking is wide ranging. We cannot deliver everything in one Budget, including our manifesto commitments, but what I will lay out today are our plans in each of our goal areas, where we will seek to go across the three Budgets of this term.

New Zealand’s response to COVID-19 has saved lives and livelihoods. With the benefit of hindsight, there are many views of what we could or should have done differently. Not everything was perfect. We had to make decisions swiftly and without much of the information we now have. It was also expensive. But then there were no costless decisions in COVID-19. I stand by our approach. We’ve done well, and we’ve given ourselves a head start that we are determined to capitalise on.

Now is not the time to be complacent. Many countries around the world continue to have third and fourth waves of COVID-19. New variants are testing the health systems and responses in many places. Even where there have been successful responses, in places such as Vietnam and Taiwan, there have been significant recent outbreaks and restrictions. We need to continually adapt ourselves to the impacts of the virus and to building our defences against it.

First and foremost in that is our vaccine programme. We have allocated just under $1.5 billion to the COVID-19 vaccine and immunisation programme, including just over $1 billion for advanced purchase agreements for vaccines and $357 million for the immunisation programme, along with funding to support the provision and delivery of the vaccine in the Pacific. We have made a great start towards our goal of vaccinating all New Zealanders who wish, over the age of 16, free of charge by the end of the year. We will continually update this programme, and there is scope in the COVID-19 Response and Recovery Fund (CRRF) to increase spending if needed, including for expanding the programme to those under 16 if the scientific evidence supports doing so.

We are also continuing to invest in our managed isolation and quarantine and other border facilities. As recently announced, we’ve opened up 500 places every two weeks to support more critical workers to come to Aotearoa New Zealand, including through the Regional Seasonal Employer scheme and for cohorts of international students to return here.

The CRRF has continued to be a useful tool to support our response to COVID-19 and to manage it from a fiscal perspective as well. We are now moving more into the period where it is being used to support the recovery, as seen in a number of initiatives in this Budget. However, we have still maintained a buffer of just over $5 billion to support New Zealand in the now more unlikely event of a resurgence of COVID-19 that would lead to increased alert levels. It remains the responsible and precautionary thing to do.

We are also taking steps to reconnect ourselves at a people-to-people level with the rest of the world. The trans-Tasman and Cook Island bubbles are important steps forward and, as the Prime Minister said last week, we will continue to look for opportunities to add other countries to this list when it is safe and appropriate to do so.

We have also learned lessons from COVID-19. One of those is that, just as occurred after the Canterbury earthquakes and the GFC, the Government found itself having to put in place ad-hoc measures to protect the incomes of New Zealanders who had lost their jobs. We did this with the COVID-19 income relief payment. At the urging of Business New Zealand and the Council of Trade Unions (CTU), we have committed ourselves to the development of a social unemployment insurance scheme. Many countries around the world have such a scheme. We are investigating an ACC-style scheme that would provide 80 percent of income for a fixed period of time, with minimum and maximum caps, linked to training opportunities. This proposal is being developed by a tripartite working group with Business New Zealand and the CTU, and public consultation will occur later in the year.

Budget 2021 is a recovery Budget. Our strong economic response over the past year has given us an opportunity to push on with an investment to create jobs and address long-term productivity issues in the economy. In this term of Government, we have a clear and simple goal to diversify and lift the value of what we produce, and grow the range of places we sell our goods and services to.

To do this, we are developing industry transformation plans across seven areas of our economy where we believe we can get a global competitive advantage or where an industry sector needs to undergo transformation to significantly increase its level of productivity. These are in advanced manufacturing, agritech, food and beverage, digital, construction, tourism, forestry, and wood processing. These plans see an engagement with all stakeholders in the sectors so that the outcomes are well informed, aspirational, and achievable.

Underpinning this is an investment in our research and development and export promotion. In Budget 2020, additional resources were provided to New Zealand Trade and Enterprise to boost our in-market and online presence as the world begins to recover from COVID-19. Two years of funding remains in this allocation. The Government is also committed to continuing to prioritise the negotiation of free-trade agreements with the European Union and the United Kingdom, and trade Minister Damien O’Connor will soon travel to the Northern Hemisphere to further advance our case with these jurisdictions.

The centrepiece of investments to lift productivity in Budget 2021 is a $57.3 billion programme of infrastructure spending in the period 2021-25. This includes a $4 billion boost to the multi-year capital allowance, taking it to $12 billion over the four-year period. Across the four-year forecast period, there will be $10 billion of investment in roads and public transport projects through Waka Kotahi; $5.6 billion in education, including an additional $634.1 million in Budget 2021 for classrooms; and a further $700 million for district health board capital investment, taking the spend in that area across the four-year period to $6 billion.

This investment will create jobs, improve productivity, strengthen communities, and make a significant dent in the infrastructure deficit that has built up over decades in Aotearoa New Zealand. We will continue to work with Te Waihanga, the Infrastructure Commission to improve the efficiency and effectiveness of this spend, and to seek opportunities to partner with local government, iwi, and the private sector to deliver quality infrastructure to support wellbeing.

Budget 2021 continues our significant investment in rail. A total of $810 million is allocated to purchase new locomotives and wagons and upgrade existing stock, adding to the more than $4 billion we put into rail over the last term of Government. We are also fulfilling a commitment of the Labour Government to rebuild manufacturing in New Zealand. The rail allocation includes $85 million to build a local wagon assembly facility at the Hillside Workshops in South Dunedin. The facility will initially assemble 1,500 wagons, creating jobs and opportunities for apprenticeships, and for the first time in decades create some onshore resilience in our rail sector.

In addition, Budget 2021 also provides the final stage of investment for a new South Island mechanical maintenance hub to be built at Waltham, in Christchurch, creating around 300 jobs through its construction. Budget 2021 also funds a $306 million redevelopment of Scott Base to ensure our presence in Antarctica is safeguarded. This will support up to 700 jobs over the six-year time frame of its work.

A critical element of improving productivity is increasing the skills of our workforce. One of the major success stories of our economic response is the investment in apprenticeships and targeted trades training. Since we made them free from 1 July last year, we have seen more than 100,000 people take up that opportunity, including 57,000 apprentices. In addition, the Apprenticeship Boost programme has supported nearly 11,000 businesses to retain their apprentices to complete their qualifications. That programme is continuing, and today we add to it. Budget 2021 extends the Training Incentive Allowance from level 4 to level 7 qualifications. This will mean that 16,000 sole parents, disabled people, and carers will have financial support to get degree-level qualifications. The Budget continues investment in our reform of vocational education with $279.5 million to create a unified funding system that will see more New Zealanders get the skills and training they need to improve our productivity.

The Budget also funds other active labour market programmes, such as the further expansion of the Tupu Aotearoa programme to support around 7,500 Pacific peoples into employment, training, or education.

Small and medium enterprises (SMEs) are the heart of job creation in New Zealand. Through COVID-19, the Government has provided significant support to SMEs, including billions through the Wage Subsidy Scheme, $1.7 billion of low-interest loans through the Small Business Cashflow Scheme and $50 million in advisory support for businesses across the country. Budget 2021 builds on this with funding for a digital skills training programme for up to 60,000 small businesses. One of the main messages from small business in the wake of COVID-19 was the importance of having the knowledge and the tools to compete in a digital world. The Government is also supporting advisory services to help 30,000 businesses create digital business action plans.

Many of our SMEs are in the tourism sector, that has been hardest hit by COVID-19. We’ve recently announced further support of $200 million to drive a recovery and reset of the sector. There is a particular focus on the hardest hit regions of Kaikōura, Mackenzie District, Queenstown Lakes, Fiordland, and South Westland. This package also commits $15 million to support Māori tourism operators, which will be deployed by New Zealand Māori Tourism. Budget 2021 also establishes the new Regional Strategic Partnership Fund, as committed to in Labour’s manifesto.

As I noted earlier, the Government is undertaking some major system reforms over this term of Government that will accelerate our recovery. Reform of our planning system is long overdue. It has become confused, inconsistent, and unclear for almost all participants. Led by environment Minister David Parker, the Government has embarked on a once-in-a-generation project to reform our resource management system so that it is fit for purpose, and the Budget invests $131.8 million to see this reform through all its stages.

Alongside this major reform exercise is the Three Waters programme, led by local government Minister Nanaia Mahuta. Budget 2021 allocates a further $296 million to fund the costs of the creation of new entities to effectively, equitably, and efficiently manage water infrastructure and provide New Zealanders with safe supply wherever they live. The Government is committed to water remaining in public ownership, with local authorities, communities, iwi, and others playing a central role. We’re making good progress on this work and expect to make further announcements on the details and further support for the programme in the coming months.

Securing our recovery also requires a substantial investment so that the basic wellbeing needs of New Zealanders are being met and that we have world-class public services. At the centre of this in Budget 2021 is a record $4.7 billion increase in operating investment into Health over the forecast period. The total expenditure on health in the next financial year is $24 billion, some 45 percent higher than was spent by the National Government in its last year in office.

The Health reforms are another once-in-a-generation opportunity to see quality health services delivered to New Zealanders wherever they live. The Budget provides the initial funding for the transition and implementation. This includes the establishment of Health New Zealand and the Māori Health Authority. Both represent enormous opportunities to get more relevant and effective services to the people who need them the most.

While the reform process is being implemented, it is vital that the Health system continues to deliver quality services. Budget 2021 invests $2.7 billion operating funding into district health boards over the forecast period. It also makes good on a number of election commitments to public health services. An additional $200 million is allocated to Pharmac to widen access to existing medicines and invest in new medicines. Since we have been in Government, we have increased Pharmac’s budget by almost 25 percent, to over $1 billion per annum. The Budget almost doubles the number of cochlear implants available to adults. For those who receive these implants, it is a life-changing experience that can improve family and whānau and work life.

There is also a boost for health services for the Pacific community to implement the Ola Manuia Action Plan, further additional funding for air and road ambulances, and the roll-out of the Bowel Screening Programme to the last remaining six DHBs. This is in addition to the previously announced funding for cervical and breast cancer screening.

Budget 2021 makes significant investment in Education, including the already announced $170 million to take important steps to pay parity for early childhood teachers not in kindergarten settings. The Budget also commits funding to implement the system reform that education Minister Chris Hipkins started last term. This includes a new Education Service Agency and a flexible fund to support schools to identify and develop local solutions to meet the needs of learners. More than $110 million will support the development of the national curriculum, including a new curriculum centre. There’s funding to complete the National Certificate of Educational Achievement Change Programme and to increase the number of students receiving support from the Attendance Service to provide intensive support to those learners at risk of disengaging. An $11.6 million allocation will expand the highly successful Reading Together and Duffy Books in Homes schemes.

Educational opportunities for Māori and Pacific learners are also given a boost in Budget 2021. Over $150 million is allocated to support Māori education, including for boarding schools, lifting the pay of kōhanga reo teachers, and expanding Māori-medium education. There is also a lift of $20.8 million to support Pacific bilingual and immersion education.

It is essential that the recovery from COVID-19 is one that addresses inequality. Recessions typically see already marginalised groups made worse off, and there’s evidence that this has occurred in Aotearoa New Zealand in the wake of COVID-19. Budget 2021’s boost to main benefits is designed to reduce inequality, at the same time as providing further stimulus to the economy. For too long the incomes of those who receive income support from the Government have been too low. The Government established the Welfare Expert Advisory Group (WEAG), who made a clear argument for change.

Over the past few Budgets, we have made significant moves to improve the wellbeing of those receiving benefits: the Families Package, including Best Start, the winter energy payment, plus the $25 per week increase to main benefits as part of the initial COVID-19 response. We also made the critical decision to index main benefits to wages in Budget 2019. Today, we are announcing the biggest increases in main benefit rates for more than a generation. By April next year, we will have moved all main benefit rates to the level recommended by WEAG and, in the cases of families and whānau with children, beyond those rates. We will do this in two tranches: the first on 1 July this year, when all benefits will increase by $20 per week; the second on 1 April next year, where benefits will increase by a range of amounts to meet the levels recommended by WEAG. Student support payments both for allowances and loans will increase by $25 per week from 1 April next year as well.

These changes will make a significant difference to the wellbeing of our lowest-income earners. For a single Jobseeker 25 years or older, they will see a $48 per week increase as a result of the changes in this Budget. The total increase for them from changes implemented since we came into Government at the end of 2017 is $86 per week, representing a 38 percent increase in support. For a Jobseeker couple without children, they will see their support increase by $55 per adult as a result of this Budget, $77 more since 2017, representing a 40 percent increase.

Budget 2021 also funds the announced changes to abatement rates that will allow those receiving benefits to earn at least $160 a week before their benefits are affected. This is the equivalent of eight hours at the minimum wage. We know that undertaking some work is an important step for people re-entering the labour market, and we are now providing far better incentives to do so.

I want to recognise the work of the Prime Minister and the Hon Carmel Sepuloni in this package. Increases in main benefit rates will have a stimulatory effect on the economy. At a practical level, the stimulus will be felt in local businesses because we know that those on main benefits will spend in the communities in which they live.

But for me this is primarily a moral issue. I recently watched a documentary about the reforms pushed through in the late 1980s and early 1990s in New Zealand. One person in that documentary made the comment that New Zealand would likely be paying the price for the cuts made well into the next century. Well, more than 20 years into this century that person has been proved disturbingly correct. Levels of hardship and deprivation have grown, with some periods of plateau, over the decades. The intergenerational effect on wellbeing has been enormous.

Even in the constrained circumstances caused by the level of debt we’ve taken on to get through COVID-19, we have an obligation as a relatively wealthy nation not to accept the levels of inequality that are present in our society. Today is a major step in that direction but we are well aware that there is more for us to do. The Government has committed to tackling the foundational challenges in our economy and our society in this term of Government. In particular, we are focused on making significant progress in three areas: housing affordability, child wellbeing, and climate change. These will be a focus across all three Budgets this term.

It is the Government’s goal that all New Zealanders have warm, dry, safe, and affordable housing to live in. We’ve invested significantly towards this goal over recent Budgets. The Government is on track to deliver on our promise of over 18,000 new housing places—public and transitional—by the end of 2024. To date, since we took office in 2017, we have delivered 7,631 net new public housing places, of which 5,848 are brand new builds. We have a fully funded public house building programme right through to 2024. We also have 1,005 transitional housing places as at February this year to provide urgent support to those most in need.

In March this year, we announced a comprehensive package of measures to address both demand and supply issues in our housing market. In today’s Budget documents, the Treasury estimates that annual house price increases will peak this year at 17 percent before dropping in the 2021/22 year to 0.9 percent, as a result of both the Government’s interventions and macro-prudential tools such as loan-to-value ratios. This is a sharp adjustment but a very necessary one. The Government’s concern is not just that house price growth was unsustainable but also that the balance was too much in favour of speculators and investors and away from first-home buyers. Our interventions to remove interest deductibility and increase the brightline test were focused on this goal.

On the supply side, it is essential that we build more houses and, in particular, affordable houses and houses to rent. The reforms in March establish a tax incentive to build, with both the brightline extension and the removal of interest deductibility not applying to new builds. In today’s Budget, we have appropriated the funding to establish the $3.8 billion Housing Acceleration Fund. This is a critical fund to ensure that the infrastructure is in place to make land build-ready. It is the number one issue identified by councils and developers.

The Budget also invests $380 million in Māori housing through the initiative, Whai Kāinga Whai Oranga. We know that Māori are far less likely to own their own homes. In 2018, the Māori homeownership rate, including family trusts, was 31 percent whereas for the total population the rate was 52 percent. We have a responsibility to address this inequity, and today’s announcement makes an important start. To support the building of new homes, we have ring-fenced $350 million of the Housing Acceleration Fund to provide infrastructure to support this programme.

Budget 2021 also provides Kāinga Ora with substantial resources to acquire land and over $133 million to carry out its urban development functions, and it funds the increased support within First Home Products announced in March. Ongoing and sustained investment in housing is required to ensure that there is affordability for all.

The Budget is being delivered just under two weeks ahead of the planned release of the final report of the independent climate commission. The draft of the report of the commission makes sober and essential reading. It lays out the scale of the task for Aotearoa New Zealand to meet the emissions reductions required to meet our zero-carbon targets and our Paris Agreement commitments. Given the timing of the commission’s report, while this Budget takes some important steps forward, it will be in Budgets 2022 and 2023 that we will see further commitments being made. In recognition of that, I am announcing today that it is my intention that from Budget 2022 onwards we will hypothecate—or recycle—the revenue generated from the emissions trading scheme into emissions reductions programmes.

Climate change Minister James Shaw and I are currently working on a long-term plan for the financing of our climate change goals. My view is that the current way in which Budgets are required to be produced makes it difficult to make the sustained and long-term investments needed to fix an intergenerational, multi-faceted, complex problem like climate change. We will report back to Cabinet before the next Budget process gets under way on our proposals on this work.

In this Budget, we have allocated significant resources to help shift the dial on our emissions reductions—$300 million has been allocated to New Zealand Green Investment Finance Limited (NZGIF), the investment vehicle established in the Labour/Green confidence and supply agreement in our last term of Government. This is a quadrupling of the funding available. We will be asking NZGIF to have a particular focus on decarbonising public transport, and the waste and plastics sectors in using this new investment to reduce emissions.

Budget 2021 also establishes a $302 million tagged contingency to implement a regime to incentivise the uptake of low-emissions vehicles. This complements the implementation of a Clean Car Standard that is also funded through this Budget. As indicated in the consultation document released last week, there is a need for a more rapid move to sustainable vehicles if we are to have any hope of reaching our goals.

Other initiatives in Budget 2021 that contribute to our climate change programme include $67.4 million to implement the Carbon Neutral Government programme, the extension of the Warmer Kiwi Homes programme for another 47,700 homes, more support for the low emission vehicle fund, and more support for businesses to transition to low-emissions energy.

The primary sector also receives support through the Budget to tackle on-farm emissions. This includes ensuring up to 40,000 farmers and growers have the tools they need to improve on-farm performance and meet freshwater and greenhouse gas requirements by 2025.

As with the past two Budgets, today I am presenting a child poverty report as mandated by the Public Finance Act. The report shows that the Government’s actions to date have reduced child poverty rates, using the after-housing cost measure, to the extent that there are 43,000 fewer children in low-income households and 18,000 fewer children experiencing material hardship. This is one of the largest policy-driven falls in measured child poverty in decades. But, equally, we know that there is more to do to meet all the clear targets laid out in this report.

This Budget takes a significant step forward, in particular, through the main benefit increases. In addition to meeting the levels recommended by WEAG, the Budget provides an additional $15 per adult per week to families and whānau with children from 1 April next year. This will mean that up to another 33,000 children on the after-housing measure are projected to be lifted out of poverty as a result—109,000 families and whānau with children will be better off by $40 per week as a result of these changes and, on average, $175 per week in total better off as a result of the changes made by the Government since being elected in 2017. This represents an enormous change in the lives of these people. It will mean, as one person asked for on television as their Budget wish, that we will put shoes on the feet of our children and food in their stomachs.

Speaking of which, Budget 2021 funds the extension of the Ka Ora, Ka Ako Healthy School Lunch programme to the tune of $526.9 million. It also puts in place the indexation of childcare assistance income thresholds to the average wage, which will benefit over 1,000 families and whānau, or around 1,500 children. The Budget provides for 3,300 places for children in Out of School Care and Recreation services, supporting their parents or caregivers to transition into employment, education, or training.

As with all of the three foundational challenges, there is much more to do to achieve our goals. But the Government has a clear focus on making progress this term to tackle them.

This Budget is about securing our recovery. New Zealanders have done the hard work of coming together to fight COVID-19. Our success is the envy of many across the world. We have supported lives and livelihoods, we’ve found cash flow and confidence, and we’ve managed to have lives of relative normality when others have faced difficult and debilitating restrictions. Our economy has been resilient, and our people compassionate and strong. I say thank you to each and every person who has contributed to that—in business, as workers, in our communities, on our marae, and in every part of New Zealand. Ngā mihi nui ki a koutou.

The work continues as we build our recovery. This is no time to be complacent. We have the opportunity to build off our head start and we will not waste it. Our approach will continue to be a balanced one: investing where it’s needed the most, while keeping a careful hand on the books to keep a lid on debt and look out for future generations.

A year on from the 2020 COVID-19 Budget, we are well positioned and ready to tackle those longstanding challenges, and to take new opportunities. We are also here to right the wrongs of 30 years ago, to give each and every New Zealander hope and dignity. We owe each other nothing less.

As we have often said to one another over the last year, he waka eke noa—we are all in this together.

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

Budget Debate

Budget Debate

Hon JUDITH COLLINS (Leader of the Opposition): Thank you, Mr Speaker. I move, That all the words after “That” be omitted and the following substituted: “this House has no confidence in anything this Government promises, because after just four years its track record of failing to deliver, of broken promises, of spin over substance, and of announcements over results, speaks for itself.”

That was a Budget for benefits, not for jobs. The Budget is the time of year when hard-working New Zealanders look to the Government for hope and for a plan. They want some peace of mind that their tax dollars are being wisely spent, that the Government is investing on their behalf in the things that will create opportunity, that will generate growth, that will help them provide for their own families. Perhaps this year more than any they are looking for signs of hope on the horizon. They’re looking for some sign the Government has a plan for growth.

Instead, today what we saw is a Budget that’s light on hope and utterly lacking in ambition—that’s setting New Zealand up to fail. Our debt as a country is set to climb to $184 billion—more than $100,000 for every household. New Zealanders want to know what they’re getting for that debt. They understand that borrowing only makes sense if it’s invested well. The fact that our economy has held up better than feared gave the Government some options. They could have left our children with a smaller bill. They could have made it easier to hire or do business. They could have provided tax relief to hard-working families. They could have incentivised firms to invest in new technology and upgrade to more productive equipment. Instead, today all we heard of was 19th century technology and no plans for building technology for the future. They could have invested in infrastructure that would actually get the economy moving. Instead there’s Meccano lessons now going to be held in Dunedin to put together presumably Chinese-made products. That seems to be the answer.

But this Government doesn’t really care, actually, about our children, do they, or grandchildren? Because what they’re doing is they’re actually investing and hoping for the number of people who are going to become dependent on the State. That’s what this is all about. I’ll agree with the finance Minister that New Zealanders made huge sacrifices last year. Thousands lost their jobs and entire sectors of the economy were decimated, and they’re the ones looking for a reason to stay in New Zealand. But I’m sorry that under this Government and this Budget, New Zealand is going to lose more nurses, more teachers, and more engineers, and they’ll lose them to Australia, because they’ll be looking for a better life.

We’ve now seen four Budgets from Grant Robertson and zero evidence—it doesn’t matter what he promises; he will not deliver. The finance Minister knows it. He said right now, surrounded by Cabinet Ministers he’s openly admitted he’s got no faith in, that’s why he’s had to put himself in charge of an implementation unit. When we were in Government that was called Cabinet, and the person in charge was the Prime Minister. But not under this Government.

There’s a lot of talk on that side of the House, but there’s no action. There’s a lot of announcements. But let’s have a look at those results, because unless someone really does have a better idea for New Zealand—and we do—we’re going to just keep waving our kids and grandkids off to Australia, and we’ll Zoom them, because, actually, we just don’t have that much confidence in vaccinations ever being put in place in this country.

Let’s have a look at these results of the announcements. In 2017, Labour announced a $5.5 billion family welfare package. They were going to take 100,000 children out of poverty. That’s what they said. Let’s have a look at the Budget. I heard Grant Robertson talking about all these kids being lifted out of poverty. Page 31 of the Budget documents, in the child poverty report, acknowledged that economic conditions have gotten worse—and listen to this—“particularly inflation, rent, and unemployment”. So the figures he was talking about today forgot the rent. Well, I suppose it’s probably easy for him, isn’t it? Then they said that they would have $400 million for fees-free. Well, how long did that last? It’s now abandoned.

They announced in Budget 2018, $300 million for 1,800 new police. Then what they did is they shut the training college at the police college to stop the police reaching their target. They also said there was $2 billion for KiwiBuild. Well, I don’t want to gloat, but I think we all know what happened there. Three billion dollars for the Provincial Growth Fund—they’ve got a lot of debt, but not much else.

Actually, in 2019, the Budget had $1.9 billion for mental health, and I actually thought, yeah, that was good. But, actually, two years later and a lot of these projects haven’t yet received a dollar. So, no, that was a shame.

In 2020 the Budget was full of announcements. We had—this is one of my personal favourites—$1.2 billion for Jobs for Nature. So far, that’s cost taxpayers $830 for every hour of work it generated—for every hour. Not a day—for every hour. That’s better than the best Queen’s Counsel ever gets in the Supreme Court. Five billion dollars they announced for so-called shovel-ready projects, and a year later more than a hundred of them haven’t even got shovels, let alone the ground to stick them in. Then we had $6.8 billion for 36 New Zealand Upgrade transport projects. Well, just ask Chris Bishop on that one. Twenty-one of those 36 haven’t started.

So I’ve just outlined $26 billion worth of Labour spending announcements—$26 billion of failures—and still they keep announcing. It’s really easy making announcements and getting other people to pay for your public holidays, but how about some of those big campaign promises in 2017? Child poverty—well, we know that’s got worse. That’s why they’re doing this Budget today. Homelessness—worse. Mental health—worse. Climate change—worse. Housing—worse. Every single one of those promises—worse today.

Have a look at their four years—astonishing. There are 1,500 more children in poverty since Labour took over—that’s why they’re having to pay more in benefits. The Prime Minister said the end of homelessness. Remember her lecturing Bill English about it? “Oh, Bill, that’s just a failure of leadership,” she said. Guess what: 17,000 more on the State house waiting list under her Government; four thousand children growing up in motels—that’s a million dollars a day. The motel generation—a shocking indictment on a Government that just loves photo ops and announcements.

This Prime Minister said that climate change was her David Lange moment—nuclear-free moment. Well, what’s happened? Emissions have gone up. [Interruption] Oh, David Bennett, you’re wrong! They’ve gone up. Something’s happened. They said they’d improve the mental health system, and even the Mental Health Foundation said it’s got worse. Their answer to the Mental Health Foundation is to call the chief executive a liar—yeah.

They said they’d build 100,000 KiwiBuild homes. I know you want an update: 871 so far, four years in. They said house prices would stabilise; they’re up $300,000. They said that rent would be stabilised; that’s up a record $100 a week extra, on everything else. Then just last year Grant Robertson promised no new taxes, no taxes on housing, no changes to the brightline test. He even laughed at the suggestion from that pesky media person who asked the impertinent question. Well, no one’s laughing now, are they? Tenants have got more rent increases and fewer houses to rent because of his changes, and all because he’s desperate to look like he’s doing something.

The Prime Minister’s first announcement as Labour leader was to build light rail in Auckland by 2021. Oh, what’s this year? It’s 2021. They have delivered Aucklanders the fuel tax to pay for it, but where’s the train? Where’s the light rail?

Andrew Little—and this is actually quite sad—promised the Pike River families he’d retrieve their loved ones. That was a particularly cynical promise, because he must have known, on all the evidence, that there was no way, and yet he made that anyway—$50 million and four years. That was really cruel.

We’ve been promised multiple times by this Government and that Prime Minister that border workers are being tested, only to find out they weren’t. Chris Hipkins promised we’d be at the front of the queue for the vaccines. We’re second to last in the OECD. We’ve got 3 percent of our population vaccinated under this Government. The only Minister, though—and be fair, there is one Minister who has kept his promise. I know you want to know.

Hon Member: Yeah, who?

Hon JUDITH COLLINS: Kelvin Davis. I have been quite mean to Kelvin Davis over the years, but, actually, kinder than he deserved. He has promised to reduce the prison population, and that’s very good. Isn’t it nice? And he has. He’s dropped the prison population by around 20 percent. But did he achieve this by improving outcomes for young people? Is crime down 20 percent? No. But he did let a whole chunk of criminals out early, and that’s how he did it. He freed up the bunks. That’s one way to keep a promise. And, unsurprisingly, serious assaults have doubled and gang memberships are at a record high. Very soon we are going to have patched gang members outnumber sworn police officers. That is actually a shocking—shocking—indictment of that Government.

Well, the Prime Minister promised she would lead a transformational Government, and then she changed it to a promise to be foundational. Now, how about “aspirational”? How about a bit of ambition for the country? But, despite all their press releases, we know—and this is why they’ve had to put up benefits—that almost 200,000 New Zealanders are now on the dole. That is one in every nine New Zealanders are now on a benefit. In the last quarter, the last three months, New Zealand spent $33 million on emergency food grants, and last month, 360,000 New Zealanders relied on the accommodation supplement to afford a roof over their head. If anyone’s looking for a lack of leadership from the Government, it’s on that. That means there’s not enough places to rent.

Meanwhile, we’re borrowing millions of dollars a day just to deal with it. Grant Robertson said, “That’s not a big problem. Interest rates are low. It doesn’t really matter.” It doesn’t really matter if he’s worrying about wasting $100 million, $200 million, a few more million here! But, actually, every time they do that, it means there’s not enough money to buy the cancer drugs for Pharmac. So today they announced $200 million extra for Pharmac. Well, we announced $280 million at the election.

Hon Member: Way more.

Hon JUDITH COLLINS: We announced way more. It’s also one less dollar—every time he does that, there’s less money to train new teachers and nurses. There’s less money for infrastructure, research and development, or tax relief to grow the economy and help our hard-working families who are paying for this. And, ultimately, it means Kiwis get to keep less of what they earn and the Government gets to keep more. We’re spending $2.8 billion every single year on interest alone. That’s a heck of a lot of money. That’s a heck of a lot of training for nurses and doctors. That’s a heck of a lot of people, and that’s what they’re doing. That’s actually more than the entire cost of our early childhood education.

So today’s Budget—let’s have a look at it. They said it’s the “Securing our Recovery Budget”. I actually thought it was more like a “Cement New Zealand’s Stagnation Budget”. But it’s definitely a “Broken Compass Budget”, with nothing to take New Zealand forward. It’s another Budget full of empty announcements; another Budget with zero plan for growth; another Budget that shows us Labour’s planning for failure. Last year, our economy shrunk by almost 3 percent, the largest fall in GDP ever recorded, and, somehow, this Government thinks that’s a good thing.

So Grant Robertson thinks that COVID’s given him the blank cheque. So this is what he’s been doing. All this money being spent on restructuring a health system in the middle of a pandemic—he’s planning to pile more costs on to businesses, to insert the Government into more markets, to help unions hold small businesses to account and to ransom them. He’s the one who’s actually wanting compulsory unionism, to weigh down our economy with regulation, to push rents higher, and to keep New Zealanders in poverty—to make it harder to buy a house, to make it harder to start a business, and to take more of what New Zealanders earn.

We think Grant Robertson would have presented a plan to unleash the economy—well, we hoped, but he didn’t—to cut red tape and reduce the tax burden; to incentivise investment, innovation, and risk-taking; to attract foreign capital and fire up private sector job creation. And instead of bringing us any ideas to get the economy going again, what we’ve got now is a total lack of ambition. These people can’t even bring back the Recognised Seasonal Employer scheme. They can’t even get apricots picked. They can’t help the Pacific in the one way the Pacific wants it, which is, actually, money going into the Pacific earned by their own people, able to be spent by them. Instead, their answer is always more handouts—more money on Wellington bureaucrats.

The one thing I’d say that’s really gone up under this Government is the price of housing in Wellington. The reason why? Because there’s 10,000 more bureaucrats. I heard one of their Ministers—I can’t even bother to remember the name—say the other day that these are not bureaucrats; these are the people who secured our border. Oh, the jolly border’s actually secured by the Pacific Ocean and the Tasman Sea, haven’t they noticed? It’s a border where people have to come in either on a ship or in an aeroplane. It’s not like they’re running across the border. It’s not like we have to put up a big wall. They think they needed 10,000 more bureaucrats for that. What are they going to do? Stick them in the ocean? Stop the ships?

I mean, here, today, you don’t need a big complex Resource Management Act (RMA) reform. They were going to sort it out; they were going to do this; they were going to do that. Oh no, they don’t actually want to do that now, until 2024. And what’s in 2023? Oh, that would be an election. They don’t want to tell New Zealanders what’s in that RMA reform, because we know what they’re planning in that, and it’s is not about more development. It’s is not about getting more people into work. It’s not about growing our economy. It’s not about bringing more money into the country so that we can have more nurses, better hospitals, and so that we can get cancer drugs for our people. It is actually about shutting down development, shutting down our economy, shutting down people from having aspiration.

National has an alternative vision for New Zealand. We believe in ambition and we believe in people being able to do what they can do for themselves. And we’ll get results. We will move quickly to address the growing infrastructure deficit that Labour’s dithering has compounded. We’ll improve the key transport connections. We’ll all depend on getting around our cities. We won’t tell people how they’re allowed to go to work. We won’t tell them that they’re very naughty if they want to drive their own car. We won’t tell them that they have to wait for that light rail up Dominion Road that we’ve been waiting for for four years and still hasn’t occurred. We will, however, say to New Zealanders that we will back our New Zealanders, and we won’t say to our new migrant New Zealanders that we don’t want them because they’re not properly skilled. We will back our migrants and we will back our businesses.

When it comes to slashing red tape and backing Kiwis to take some risks and to innovate, we will welcome smart foreign investment and immigration so that our entrepreneurs have the capital and the talent they need to get things done. We know this: we back entrepreneurs well over ministries any day. We’ll invest heavily in science to give our farmers new tools to cut their emissions and meet their sustainability goals. We trust science. We trust technology. We trust our farmers. We’ll end the constant addition of new costs on businesses that drive up prices and lower productivity. Just think about what’s happening with electricity prices at the moment. We’ll eliminate the wasteful spending, let Kiwis keep more of their money, get them to be able to invest.

One of the great areas for investment is technology. This has enormous potential for us. But we’ve got a Government that wants to look backwards, wants to look at the way things were in either the 19th century or the 1970s. They don’t want to look to innovation. They don’t want to look to technology, apart from the fact, you understand, that they don’t understand anything of it. They’re threatened by it. What they don’t share is our vision for New Zealanders to have high-paid, highly skilled jobs that allow them to grow their own wealth and to keep more of it and to help their families.

Our emergency legislation on housing the Government has rejected. We said, “You want to get some housing built? Do what we did after Christchurch. Emergency housing, emergency powers. Get the planning rules sorted. Get it now, get it sorted, get houses built.”

Then have a look at hardship and what there is there. Their policies, in Labour, are always about welfare first; work second. Actually, one of the cruel things in the Budget is they’ve taken away prisoners’ ability to get work after they leave prison. That’s the shame. That’s the thing. So National does not grow dependency. We grow the economy. We grow New Zealanders, and we are ambitious for a better country, unlike that lot.

Rt Hon JACINDA ARDERN (Prime Minister): Over the last few weeks we’ve heard that the Leader of the Opposition has this habit of calling almost every document she happens upon a secret agenda—from a commissioned piece of work to something she finds on a website, to possibly even her own caucus minutes. I thought I’d get right in front of that claim for this Budget. Here is our agenda: good decent jobs—in fact, 221,000 people are projected to gain employment over the next four years. Unemployment is forecast to fall to 4.2 percent, lower than National ever got in the aftermath of the global financial crisis, when, apparently, they called our economy a rock star economy. Our agenda is an economy that is growing. Our strong recovery is expected to continue with annual average real GDP growth of 4.4 percent in 2023. That puts us back to pre-COVID levels, and, importantly, our agenda is to leave no one behind.

The changes we have made as a Government mean more than 100,000 families will be more than $175 per week better off, and child poverty will reduce. This is our agenda and I am proud of it. But the Leader of the Opposition in her rebuttal to the Budget shared what I can only describe as clearly a pre-scripted speech. That’s the most generous way that I can acknowledge that she clearly did not engage in the facts that were included in the Budget. The Leader of the Opposition talked about debt, and that completely ignores the fact that according to Treasury’s projection, our debt levels are forecast to be lower than they had previously been described. That is because of the decisions and the investment that we made.

And as if to make the point, the Leader of the Opposition decided to draw comparisons with Australia. Well, let’s do that, shall we? On real GDP, Australia’s four-year average is 2.9 percent; New Zealand’s is 3.5 percent. In terms of employment by 2024 not only are we currently lower, we are due to finish at 4.2 percent; they’re at 4.5 percent. Our operating balance is healthier and our net debt is lower—our net debt is lower.

I will tell members about my view on the idea of ambition and aspiration. Ours is not to be somebody else; ours is to carve our own path, and our own path has been successful. But I would also say it is time for us to look at debt in more than just fiscal terms. Decisions that we make, whether we choose to invest or whether we choose to cut, determine whether or not the next generation carries a social debt. Now, we saw the tendency of National Governments of old. The Budget in 1991 chose cuts. They chose user-pays and they left a burden of debt that generations have carried for decades. We are still paying for that decision.

From there I would’ve shared more rebuttal on the Leader of the Opposition’s speech, but once we got past roughly five minutes of describing the “Collins dictionary” definition of what a border is, I wasn’t left with very much, because, ultimately, I didn’t hear anything about how the Opposition would deal with those big challenges we have. What would they do about the housing crisis they left us? What would they do about child poverty? What would they do about climate change? They would do absolutely the same thing they did last time they were in office, which was nothing—absolutely nothing.

On climate change, yes, they went overseas and they signed New Zealand up to international targets, as they well should, but they never had a plan on achieving them. And now when they stand up in this House, all they tell us is we need to trust everyone in order to achieve them—trust every sector that’s involved—but they have shown a complete lack of trust in one of the most important things, and that is science. The science tells us that we cannot wait. When it comes to this issue we cannot wait and just hope, and that is a good message not only on climate change but on Opposition politics, I would say.

Yesterday, I want back to the Budget speech that our Minister of Finance, Grant Robertson, gave in 2018. It was our first Budget at that time as a Government and our first Budget for Minister Robertson as the Minister of Finance, and the title of that Budget he gave was “Foundations for the Future”, and in it he said, “Budget 2018 lays the foundations for New Zealanders to have better lives in the decades to come. … We want an economy, an environment and a society which are sustainable, productive and inclusive. … This means caring for our environment as a core value, not as an after-thought. … We have to work smarter, build our skills and resilience, explore new innovations and adapt to change. … Our economy must be more inclusive, too. This means a society where everyone has an equal chance to fulfil their potential, to contribute, and to live meaningful, connected … and fulfilling lives. … we want New Zealand to be a place where everyone has a fair go,”

Mr Speaker, much has changed in the last four years since Grant Robertson gave that speech—you have not! The Leader of the Opposition has a few times, and the world most certainly has, and yet for all of that, the driving force, the motivation, and the focus of our Minister of Finance has remained. I want to pay tribute to Grant Robertson. He has one of the hardest jobs in this place—one of—but never have I questioned what motivates him, what brings him here every day. He is here for people. He is here because he believes that the economy is there to serve our people, and he’s here to make changes that will leave the next generation better off than the last. Thank you, Grant.

It was no accident that that Budget at that time was titled, “Foundations for the Future.” Our intent as a Government was to make sure that that Budget and every one thereafter built on the legacy of the last. We have never viewed Budgets in isolation, because we are not just here to govern. We are here to make progress. So in 2017 we began. We cancelled the tax cuts that the then National Government had planned. We created the most substantive redesign of support for low and middle income New Zealanders that this country has seen in decades. We introduced the now much-loved winter energy payment. We brought in the payment for children called Best Start. We increased the family tax credit, and, of course, we extended paid parental leave. It was a $5.5 billion package, and it represented change for New Zealand families, and it represented change for children in poverty. But when we introduced the child poverty legislation and we started working on our targets to halve child poverty over the next decade, it became clear to us that much more was required, and so we kept going.

In Budget 2019 we made what the Children’s Commissioner has called one of the most significant changes you can make for the long-term health and wellbeing of our children in poverty, and it was to index benefits to wages. Then COVID hit. Some Governments might have seen this as a cause for, as I’ve said, austerity or cuts, but we saw it as a time to invest in our people. We lifted main benefit rates by $25 a week—the first time we’ve seen a general lift in benefit rates in decades. The last National Government, of course, targeted solely beneficiaries with children. We also made changes to the in-work tax credit in recognition that it would be likely that individuals may lose some of their working hours and we did not want them to lose that tax credit as well.

But as the reports that we released just in the last week have shown, our child poverty indicators show that there is still more work to do. In New Zealand we currently have nine measures of child poverty. They are a mixture of relative income measures that tell us how well our children and whānau are doing relative to others. They also include material deprivation measures. They tell us whether or not families have the basics that they need. In the last two years we have seen improvement across all nine of those measures. We have already exceeded our three-year target on one of our measures: 43,300 fewer children are in poverty since 2017-18, when we factor in their income after housing costs. But there is still much more to do.

More than 200,000 children live in poverty in New Zealand, and it isn’t just a number. It means, for instance, that 20 percent of children are in households where food runs out sometimes or often. This rises to 30 percent when we look at Māori children and a devastating 46 percent for Pasifika children. Now, some might ask the question, and I believe I heard the question being asked while finance Minister, Grant Robertson, was outlining our plans in this Budget: can we afford to take the next step in addressing child poverty in this country when we are in the middle of recovering from COVID-19? My answer is simple: we cannot afford not to.

So today we lift main benefit rates by between $32 and $55 per adult in line with the recommendations of the Welfare Expert Advisory Group. And due to the urgency, we are beginning the increase on 1 July and completing them in April 2022. This is a major next step in our measures to address child poverty and inequality in New Zealand, and the reason for all of this work over the last four years is still quite simple: we must address need in this country. This is about the basics: the ability of someone to put food on the table, their ability to pay their power bill, or, as the Minister of Finance said, the basic need of just placing shoes on the feet of our children. We are targeting what we need to do in New Zealand with these decisions. They are the most basic of needs and it is the right thing to do.

This is also a bit of double duty, because we do it at a time when we need to maintain extra stimulus in the economy. We know that lifting the incomes of those who have the least discretionary income means we’ll see that effect on the economy. It will go to food, it will go to services, it will go towards the things our children need to thrive, and that will happen across the country, including in our local economies.

But there will be some who question whether the substantial changes we make today have gone too far, and I note from some of the interjections across the other side of the House that they are amongst those who would ask that question. To them I would answer with numbers: $315. With the changes we have announced today, that is still how much a job seeker will receive as their main benefit per week from April next year. No one can argue that we lack incentives to work in this country. We have those incentives. What we have been lacking is dignity, and that is what we are working to bring back today.

I would use another number, to the Opposition, and that is 30 years. That’s how long it has taken to get benefits back to the rates they were before the “mother of all Budgets”. Now, yes, we have made progress for families with children, but for those who are single or those who are couples with no dependants, it has taken us 30 long years. And I say to the Opposition: 20 percent. That is how much Treasury predicts that the number accessing a job seeker benefit and emergency benefits will fall over the forecast period. Finally, a last number: 33,000, the number of children that will be lifted out of poverty.

There are a number of other changes that we will make that will make a difference to children and families in this Budget. Of course, they include things like the training incentive allowance. It includes movement in childcare assistance to more low and middle income families and continuing investment in health and education. But we know job opportunities are critical too, and this is where once again our challenge becomes our opportunity.

We have a massive infrastructure deficit in this country. When we took office we saw it everywhere, be it public transport, classrooms, hospitals, or the lack of State housing. We continue to right that wrong today. Budget 2021 sees a 50 percent increase in the Government’s multi-year capital allowance to maintain momentum around job creation and to build critical infrastructure. If you want to see a graphic representation of what that means over the years, it looks a little like this [Holds up graph]—a significant increase in critical infrastructure, which is part of our recovery plan. It grows jobs, good jobs, up and down the country.

I do want to dwell on one particular infrastructure challenge we inherited, and it is housing. That is why we are pulling every lever that we have. We are building more public houses than any Government in decades. We are fully funding the 18,000 houses that we want to build, but also we’ve already delivered more than 7,600 public housing places. We have more building consents issued than at any other time in our history. We’ve closed tax loopholes. We’ve banned foreign buyers. We’ve extended the brightline test. We’ve introduced progressive homeownership. We’ve expanded support for first-home buyers. And meanwhile, one third of the 100,000 New Zealanders who have taken up the offer of free trades training are in the construction sector. They will pick up tools and work on the pipeline of infrastructure that we have created as a Government.

We’ve also brought in the healthy homes standard, supported insulation and home repair schemes. We’ve got rid of letting fees and limited rent increases to once per year. This House is well familiar with the $3.8 billion Housing Acceleration Fund to build the infrastructure we need to support new developments. Today we are ensuring that $350 million goes to greater partnerships with iwi to build houses on whenua Māori. And with Māori homeownership rates at a devastating 30 percent, these are exactly the partnerships we need.

The third long-term challenge that I want to address today is the issue of climate change. We’ve already seen the investment and the announcements we’ve made around decarbonisation of the public sector. We’re also working with industry, particularly agriculture, with $37 million going into integrated farm planning systems, $24 million into greenhouse gas mitigation research, and you have already heard, of course, the Minister of Finance make that really important signal that we will be hypothecating emissions trading scheme revenue into climate mitigation in the future, not to mention the quadrupling, of course, of Minister James Shaw’s established Green Investment Fund. That will continue to invest in green climate solutions.

The final and most present challenge, the issue of COVID-19. It has highlighted how critical it is that we have strong health services, but there is no question that people who work in health are exceptional, but they too know that our health system can and should be better. Our health system, for instance, is failing Māori. In this Budget we start the largest health reforms we have seen in this country in decades as we establish Health New Zealand and the Māori Health Authority. In total, a 45 percent increase in health funding when you compare this Budget to when we took office in 2017.

But the reason we can do all of this, the reason we are securing our recovery today, is because of the decisions we have made every day since 2018. It is because we have chosen to invest, to back our small businesses and our employers, to support vocational training and education, to invest in significant infrastructure. That is why we have unemployment rates that are half of what were estimated. It’s why we’re doing so well compared to the rest of the world and Australia. And in response to COVID-19 we banded together. Now we ask that we continue to do that as a nation as we take our next challenges. I am proud of this Budget. It will leave a legacy for the next generation and start to do undo the harm of the last.

Hon MARAMA DAVIDSON (Co-Leader—Green): Whakarongo ki te tangi a te manu o te taiao, nāna te tangi kia tuituia tātou ki te ao mārama. Tuia ki runga, tuia ki raro, tuia ki roto, tuia ki waho. Ka rongo te pō, ka rongo te ao. Tuia te whare e tū iho nei ki ngā muka here o te motu e!

Tēnā tātou e te Whare me ngā iho kōrero o ngā tōpito whenua o Aotearoa whānui. Tuia te muka here i huaina mai i te Tiriti o Waitangi, ko te muka o te pono e ōati ana e ngā mātua tūpuna kia mahi tahi tātou i roto i te ngākau pono, te mahi ngātahi hei oranga mō te whenua me ngā tāngata o te whenua i te Tiriti.

Me mihi ka tika ki a koutou ngā Minitā, ngā mema Pāremata. Āe, ko koe tērā, te Māngai o te Whare. Ki a ia hoki te Minita o te Pūtea tae noa ki a ia e te hoa, te Pirīmia. Tēnā koutou, otirā, tēnā tātou e te herenga Whare.

[I listen to the call of the bird of nature, the bird that binds us to our natural world. Bind us to our world above, our world below, our world within, our world outside. Let us feel the presence of those who have gone to the long night, let us feel the presence of those of the world of the living. Bind everyone of this country to this House!

Greetings to all in this House, the representatives of the many regions of New Zealand. Bind us to the Treaty of Waitangi, the truth that was honoured and pledged by our ancestors so that we could work together with integrity, so that we may work as one for the betterment of all of the people of this country under the Treaty.

It is only right that I acknowledge the Ministers and members of Parliament. Yes, that includes you, Mr Speaker. I would also like to acknowledge the Minister of Finance and my colleague, the Prime Minister. Greetings one and all in this House.]

When the Green Party and the Labour Party entered our cooperation agreement in November, we both knew we were building on the relationship we forged last term. It was important that the work we had started together continued together for our people and for our planet. We also promised to keep our independent voice for our longstanding kaupapa: our Green voice. And so, with our independent voice, I speak for the Green Party to say we will vote for this Budget. We don’t have to—we have that choice—but we will because right now there is too much at stake. Our communities and the natural world that sustain us need our Green voices in this House and in this Government so that we go further and faster.

This Budget takes important steps in the right direction. Raising core benefits will make a much-needed difference to the lives of the people in our communities who need it the most. People are struggling and they cannot wait. We welcome the Government taking urgent action to raise benefits in July and not waiting until next April. I want to mihi to all the people who have pushed for liveable incomes. Today, we can see that the Government is listening. And I want to acknowledge those who may say that what is in this Budget is not yet enough. The Welfare Expert Advisory Group gave the Government a plan last term, and today we see some of that plan being put into action. In households with children, this Budget goes beyond the benefit increases recommended by the advisory group, and we need to go further and faster for everyone. We also welcome the increases to student allowances and living costs. Twenty-five dollars a week can go a long way when you’re a student. We welcome the Government’s move to bring back the training incentive allowance, which is so important for supporting our rangatahi to access education and opportunities, which, of course, National cut.

It will take time to turn around from decades of Governments treating houses as commodities instead of seeing a home as a human right, but we will do that. Our rivers will take time to heal from decades of dirty dairying, but that process has begun. Our climate is on the edge, and here in the Green Party we are doing everything we can to pull it back from the edge. We will not sit by. We will always push for more. I am talking about economic transformation. We are still living within a world view where too many people say we need a balanced Budget. But how do we balance sick kids or kids walking to school in the rain with no jacket? What is the balance for the last remaining 63 Māui dolphins? How do we balance an existential threat like climate change? The economy is a way we choose to organise who gets what. Our response to COVID-19 showed us what we can achieve to keep people safe when we make bold choices. When we support each other, we can achieve great things.

The choice the Government has made today, to lift the incomes of the people who need it the most, is a choice we welcome and have long fought for. It will make an important difference for food on the table and for heating through the winter. Raising incomes for those who need it the most benefits us all. It makes our communities fairer and happier, and it improves people’s quality of life. I continually hear that one of the most important things we can do to increase community and whānau safety and wellbeing is make sure people have enough money. Raising incomes is good for people’s mental health. It means not having to make the choice between food and power. It means having a bit left over to save or to celebrate birthdays. Raising incomes is the kind of fiscal stimulus the Greens have been calling for since the pandemic struck. And it helps our local businesses because people spend their incomes locally.

This Budget includes $132 million going into initiatives to help communities lead whānau-centred holistic services focused on preventing family violence and sexual violence from happening in the first place, and also helping those using violence to stop. I believe that it’s Government’s role to enable our communities to not just meet the need of the problems we face as whānau and as a country but to strengthen our resilience, protective skills, and knowledge, to have enduring solutions for generations to come. We do this by supporting community-led whānau-centred programmes and services to provide sustained and holistic support, built around families and whānau. We are extending early support to help people stop using violence. We will ensure that Māori leadership, Te Ao Māori thinking, and the inclusive Te Tiriti framework are at the heart of our approach, to the benefit of everyone. We will support iwi and community leadership to design their own responses to family violence and sexual violence. We will ensure that families and whānau get the help they need, when they need it, how they need it, from people they know and trust. I acknowledge the work of Jan Logie who began this kaupapa.

Our Government has declared a climate change emergency and today’s Budget takes us a step closer towards confronting that emergency at the scale it needs. The Greens’ longstanding policy is that the revenue from polluting companies should be used to fund a just transition to a low emissions economy. The Minister of Finance has said he plans to ring-fence and recycle the revenue from the emissions trading scheme so it can fund urgent action on climate change. That is hundreds of millions of dollars every year for climate action, guaranteed until we hit net zero emissions: billions over time. That truly is a response that can meet the scale of the challenge.

Also in this Budget, we have $300 million for the Green Investment Fund: more clean energy to replace fossil fuels; $1.3 billion for rail; more good green jobs. We have over $50 million to roll out the Clean Car Standard and $302 million for new incentives for electric cars—work that the Hon Julie Anne Genter began last term.

We have done more to fight the climate crisis in the last 3½ years than the combined efforts of Governments over the last 3½ decades. Is it enough? No. There will always be more to do, which is why, when we get the Climate Change Commission’s final advice at the end of this month, we will immediately start putting the detail into an emissions reduction plan for every sector of our economy. There is a huge effort right across the Government to rise to the challenge of climate change, and I would like to quote the Minister for Climate Change: “Every Minister is a climate change Minister now.”—the Minister of Agriculture, the Minister of Energy and Resources, the Minister of Transport, the Minister for Economic and Regional Development, the housing Ministers, the Minister of Finance, and more. That is the zero carbon Act working, which the whole of Parliament passed unanimously.

We know what needs to happen to confront the climate crisis. The science tells us what we need to do. Our Pasifika relations tell us as they stand on the beach, watching the waves lap higher and higher. Tens of thousands of rangatahi and tamariki have marched in the streets to tell us. Next year’s Budget must have a lot more funding for climate action, and I’m not just saying that on behalf of the Green Party; I am saying that on behalf of Papatūānuku and on behalf of the people who will walk in our footsteps long after we are gone.

Finally, in this Budget, we have action to protect our taonga kauri trees from kauri dieback. When I go home—to my real home in Hokianga—I am reminded of the magnificence of our kauri and I’m reminded of the urgency of taking action to save them. The funding in this Budget to protect our kauri will help stop the spread of kauri dieback while work continues to find a cure.

Year after year, you will find the Green Party saying that warm, dry homes are the foundation of a decent life that everyone has a right to. We can talk about cost-benefit ratios, we can say it’s 1:4—or 1:6 if there are tamariki or kaumātua in the home—but, actually, this is one of those things where economics are instinctive. Anyone who has ever gone home to a cold, damp home knows it is bad, and anyone who has gone home to a warm, dry home knows it is good. We’ve worked with Labour Governments and we have worked with National Governments, and today there are more than 400,000 homes that are warmer and drier than they used to be.

Many years ago when the Green Party convinced the Government to start supporting people to insulate their homes, our co-leader Jeanette Fitzsimons said, “I don’t believe any Government is going to cancel this programme because I think it is going to be a very big success.” Jeanette was right, although National did start letting the funding run out last time they were in power—but then we changed the Government, and here we are. Today, there is $120 million in this Budget for Warmer Kiwi Homes—that’s going to fundamentally improve the lives of more than 47,000 households—an additional $30 million for the Healthy Homes Initiatives run by DHBs, and more homes overall. This Government is building more State homes than any Government has done since I was a child.

Last year, the Green Party campaigned on letting Kāinga Ora borrow more so it could build more homes for our people, and this Budget does that, relaxing the borrowing limit by $2 billion, and $380 million to support by Māori, for Māori housing, plus $350 million for the infrastructure to support those homes. We know what each one of those homes means to the whānau who live there.

We have $3 million in this Budget for the Election Access Fund. This will increase access to democracy for people with disabilities. It came from a Green Party member’s bill drafted by Mojo Mathers and passed by Chlöe Swarbrick.

The $1.1 billion Jobs for Nature package the Greens won in last year’s Budget is still rolling out, and it is continuing to fund vital, essential projects throughout the motu. We won significant increases to the conservation budget last term, and they are continuing to have a positive effect on this Budget today. We have a biodiversity crisis in Aotearoa, so nature still needs our help. Later this year, we will have the first national policy statement on indigenous biodiversity, in time for next year’s Budget, to properly address the biodiversity crisis in Aotearoa.

The Green Party will vote for this Budget because it does do a lot to make life better for the people in our communities who need it the most. It takes important steps to embrace clean energy and clean transport and confront the climate crisis. It puts hundreds of millions of dollars into the prevention of family violence and sexual violence. This Budget begins to deliver on many of the shared commitments in our cooperation agreement with Labour. Today, the Government is taking steps in the right direction for Aotearoa. They are steps that are big enough for the Green Party to choose to walk alongside, because we get further and we get there faster when we walk together. Kia ora tātou katoa.

DAVID SEYMOUR (Leader—ACT): Thank you, Mr Speaker. Each year, people try to name the Budget. I suspect that this one will be named in hindsight, several years hence, as the “la-la Budget”. The “la-la Budget” because the Government was in la-la land unaware of the circumstances surrounding it when it brought this Budget down. This Government has benefited from a tail wind like no other. We have, at this time, record low interest rates, an official cash rate of 0.25 percent. We have terms of trade, export prices, a milk price, as high as they’ll ever be. And yet, we are taking on Government debt at a rate of $100 billion, to the point where New Zealand’s average household will have $95,000 in Government debt to their name. That is the background. And all of those things that the Government has taken for granted are things that sooner or later will reverse. Nobody believes we’ll have an official cash rate of 0.25 percent, cheap Government borrowing funded by the Reserve Bank’s money printing programme, or mortgage rates at 2 percent, for ever. The cost of borrowing will increase, and the debt that this Government has taken on will seem very expensive when people look back at this Budget. Nobody believes terms of trade can stay high forever. They always go up and go down, and that boost will be gone.

But there’s another boost this Government’s had that they have taken the credit for and banked but they haven’t properly allowed for when they’ve assessed the situation around them, and that is COVID-19. So far, New Zealand has had the most extraordinary natural advantages when it comes to fighting a pandemic. We are isolated, we are young, we’re spread out, we’re First World, and we have a population that is so civilised that if the Prime Minister asks nicely, they’ll actually stay home for seven weeks. No other country went into a pandemic with that sort of advantage. I actually asked the Minister for COVID-19 Response if he could name one, and he couldn’t. But unfortunately for this country and this Government and this Budget, those natural advantages will erode as COVID-19 changes.

Four mega-trends underlie COVID at this point: new vaccines that are going to change the amount of risk people are prepared to take around the world, variants of the virus that may turn out to be vaccine-busters, then there’s new technologies for testing and tracing that make it easier for countries to open up, and finally, fatigue with COVID-19 measures. Public balance sheets, including ours, are fatigued. People, in general, just don’t feel like going home for five weeks and that learning about sourdough would be quite as appealing this time, let alone the fact that their private balance sheets are also stressed from last time. Terms of trade, interest rates, the COVID response—all of it is going to get harder, and this Government will have used a golden opportunity to rebuild a New Zealand we could all be proud of. But instead, we’ll have the same old policies, throwing more money at the problems we had, and the only change is—the problems are still there—the next generation gets a lot more debt with higher interest rates. That is why this Budget should be described as the “la-la Budget”, and the Government’s made no acknowledgment of that.

They’ve actually tried to claim the credit, saying that somehow it’s all them. Well, actually, even the forecasts that the Treasury have given them are absolutely heroic. You open up the Treasury documents at 2 o’clock today when they’re released to the world. You know, they’re saying that we’re going to have 4.4 percent economic growth and 4.4 percent unemployment in 2023. Really? When we consider what the Government is doing to people who are actually trying to grow businesses, provide for their customers, make a return on their capital, employ people—fair pay agreements, restrictions on oil and gas exploration, restrictions on mining, restrictions on farming, new public holidays, extra sick leave, a minimum wage that’s increasing at about 6 percent a year faster than any firm’s productivity. And this Government thinks that somehow the economy is going to be growing at 4.4 percent in a couple of years’ time? I don’t think so. Even the forecasts that the Government has are dire—$95,000 of debt for every household. But once you consider the direction of travel and the restrictions this Government is placing on people doing business and creating wealth, those assumptions—such as the economy growing at 4.4 percent and unemployment also being 4.4 percent in a couple of years’ time—are absolutely heroic. The reality is going to be much, much worse.

So what should the Government have done? Well, I’ll give you a couple of examples of what it shouldn’t have done. I’m always astonished to hear when Marama Davidson is allowed by her party to give a speech, and part of me wishes that they’d do it more often. She actually said—I couldn’t believe my ears. Marama Davidson said that the problem is too many people are saying Budgets should be balanced. I mean, what is the acceptable level of people wanting a balanced Budget in Marama Davidson’s world? You have to ask yourself. She seems to believe that somehow the Government can just continue to print money, endlessly hand-over-fist borrow. This is a party that’s supposed to care about kids. Borrowing money like that is a form of fiscal child abuse, because it’s the next generation that are going to pay for it.

Then I heard Grant Robertson get up. This is the guy—and we’ll come to this later. This is the guy whose example of economic development is to have a Government-sponsored train factory in Dunedin. I mean, what’s the theme song for this Budget? Something from the 1970s, is it going to be Led Zeppelin—Mr Speaker, you might know, did they do Dazed and Confused? He said they did. That should be the theme song for this Government’s Budget, because they want to take us back to the 1970s. Their idea of economic growth is a train factory sponsored by the Government and Dunedin. Even in Pyongyang, they are not taking on policies like that.

Then Grant Robertson came along and he said, “We’re raising Budgets because it’s the right thing to do. It’s morally the right thing to do. We’re going to reverse what Ruth Richardson’s Budget did in 1991.” And I thought, “I wonder if Grant Robertson has ever met Helen Clark.”, because I seem to remember—I was a bit younger, I was at school at the time, but I’m pretty sure she was the Prime Minister for nine years with the same level of benefits. Then the National Government a few years ago—I was a bit older by now, I’d graduated to Parliament at this point—raised benefits from Helen Clark’s levels. And Grant Robertson comes along and says he’s doing it because it’s the right thing to do. I’m pretty sure he was advising Helen Clark. Clearly, she didn’t listen to him, and I wish these Treasury officials wouldn’t either. Then Grant Robertson said he’s got to reverse what happened in 1991. Does he know any history? The reason there were Budget cuts in 1991 is because the country was broke, and that’s where this Budget is taking us back to.

The Treasury forecasts, the optimistic forecasts, say that spending on jobseeker support and emergency benefits is going to go up from $1.8 billion a year pre-COVID to $3.8 billion every year post-COVID. Let’s just think about that for a moment. This is when we have heroic assumptions that unemployment is going to be less than 5 percent or thereabouts every year. We’re going to be spending $3.8 billion on jobseeker support and emergency benefits each and every year. Now, is it really believable that you’re not going to have a few more work-shy people, where $55 in a remote part of New Zealand is actually a lot of money, and it’s going to be harder for employers to get people to come to work and use their skills. That’s how we got into trouble under Holyoake, and Kirk, and Muldoon. That’s the unsustainable model that necessitated the 1991 Budget, and this Government, myopically, is taking us back to it, because they don’t know their own history, they don’t remember Helen Clark’s Government, they don’t remember what she knew. We now have a much more radical Government than we had under Helen Clark.

But let’s talk a little bit about what we could have done—actually, let’s talk about a few more things we shouldn’t have done. I think there’s one part of this Budget that is an absolute disgrace, and that is the $200 million for Pharmac—for two reasons. Number one, I suspect, when people drill down into the detail, they’re going to find a lot of it is repurposed money, because Pharmac doesn’t have a budget; the DHBs decide what they will put into Pharmac. And, actually, I suspect the amount of money that Pharmac has in the pharmaceutical budget won’t increase by that much. But even if the Government is correct, why on earth would we put $200 million in a Budget for Pharmac? The right thing to do, the mature thing to do, that a Government that truly cared about those people suffering and in need of pharmaceuticals would have done, is they would have actually put funding in the Pharmac review.

So here’s the situation with pharmaceuticals. This Government won’t put funding in the Pharmac review. And what does that mean? It means that, when we’ve got a kid with Crohn’s and colitis, the Government will fund them to have operation after operation, slowly removing their intestines, making them live the rest of the life with a colostomy bag, but they won’t consider whether it might have been better to fund Ustekinumab. Pharmac is not allowed to consider those sorts of opportunity costs under the current model, and they’ve kept Pharmac funding out of the Pharmac review, so that we can wait “a few more sleeps”, as the finance Minister loves to gleefully say, before people find out if their medicines are funded in the political theatre of this Government’s Budget. That is an absolute disgrace.

Let’s say they’re spending $200 million on pharmaceuticals, they’re spending $486 million on restructuring the healthcare system—nothing that’s going to affect the quality of care that patients get—on changing the plumbing and wiring of the healthcare funding. Now, in every other sane world, restructuring saves money. Only under this Government does a restructure cost half a billion dollars. That’s what we’re dealing with.

And it’s no better in education. We had a report two years ago from a guy called Bali Haque called Our Schooling Futures, and it said we are going to take the control away from parent-elected boards of trustees and put new entities called “hubs” in charge of your child’s education—“Parents, stay at the gate.” And people up and down this country came out and protested and were outraged. Gary Hawke, Emeritus Professor of Economics from Victoria, pointed out that they were awfully like education service centres that had existed before and failed in the early 1990s. I was astonished to read the Government’s proposal that they they’re bringing back the hubs, and they’re going to be called Education Service Agencies. What an extraordinary thing. This Government is so myopic it’s bringing back a failed policy of the 1990s and telling the parents of this country, “Don’t bother getting elected to your board of trustees and take an interest in your kids’ education. Stay at the gate.”

The biggest beneficiaries of this policy are going to be the private school operators of New Zealand, because those who have money will get out, and those that don’t will be left with schools run by diktat by the neo Education Service Agencies that are a failed model from before. That is the standards that we’re faced with—nothing about improving the quality of principals and teachers, and teaching, and ensuring that teachers are experts in their subject matter, passing real information on to the next generation of students so that they can succeed in the 21st century. No, this Government is focused, in health and education, on restructuring the bureaucracy.

Now, let’s talk a little bit about the trains. This is a 1970s union fantasy that men—and it will be men; I can guarantee it—will be working away with hot steel and sledgehammers, banging together locomotives and wagons in a big warehouse in Dunedin. This is this Government’s idea of innovation! And it might be OK if people were actually going to use the trains, but has anyone heard of that initiative where thousands of people go up and down and commute between Hamilton and Auckland every year, every day? Actually, every year is about how often. Thousands of people a day are on the train between Hamilton and Auckland commuting to the future! Has anyone heard about those thousands of people? No, I haven’t either. Even John Campbell’s not taking that train any more.

Here is what the Government could have done and should have done, because the ACT Party is not only leading the Opposition, we are leading the proposition. We are the party that has put forward an alternative budget, showing what a responsible Government could do to look into our future and confront our challenges, solving the problems that New Zealand faces. And, under this budget, people whose main way of getting money is a concept called working, unbeknownst to anybody on the Labour Government—30 percent of Labour MPs used to be union organisers by the way. People whose main way of getting money is working, those people, working—yes, Barbara Kuriger is making eyes at me; yes, Barbara, working—get no relief. Under the ACT Party’s alternative budget, middle New Zealand, those who are being squeezed with rising electricity prices, rising rents, rising food prices, the people who know when they see reports of no inflation that that’s absolute BS, the people that need some relief, will get a 17.5 percent tax rate all the way up to $70,000. We’re going to cut that middle income tax rate from 30 percent down to 17.5 percent. And for middle income families who work for a living, that means you get $1,200 to $2,100 a year more in your pocket through working. That is the ACT Party idea of an alternative budget.

But we’re also going to reduce wasteful expenditure, stop handing out money to groups of voters that the Government thought it could curry favour with, and actually do something—here’s radical—for the next generation, the silent people, the ones that can’t vote in this election or for this Budget, but the ones that are going to be lumbered with the debt as interest rates rise and borrowing $100 billion, retrospectively, didn’t seem so smart. We can show how you balance the Budget by 2025, not never-never land or la-la land where this Government made its Budget.

Then there is a whole lot of initiatives to make it easier to do business. No fair-pay agreements. We allow oil and gas exploration. We allow mining. We allow people to develop their property. We fund infrastructure with comprehensive partnerships over 30 years between the central government and every city or region so that infrastructure actually gets built and people can afford a place of their own that’s connected to opportunity, by which I mean jobs and education. Those are the initiatives that a responsible Government would take, and then we’d implement our COVID 2.0 plan so that we can intelligently get out of this mess. The ACT Party would follow Taiwan, establish a central epidemic command centre, augment our COVID response with actual technology so we can test and trace like the best, and safely reconnect with this increasingly complex COVID world in a way that is sustainable, not just locking up, locking down, and hoping.

That would be a budget for the battlers, a budget for those people who wake up, make the kids’ lunches, go to work, pick them up from school, take them to practice, put them down to do their homework, and get up and do it again the next day—the people that pay the bills and actually make this country a great place to live. That is what this Budget is for, but sadly we do not have a Government at the moment that is this connected with reality. We have a Government dominated by former union organisers that is pursuing an agenda that is alien and unknown to the overwhelming majority of New Zealand. But unfortunately the tailwinds they’ve taken for granted are going to run out and eventually turn against them, and at that time, with rising interest rates and terms of trade not being as good as they have been, a whole lot of debt and no real preparation for COVID or raising productivity or skills or getting infrastructure and homes built, people will look back and ask “What was this Government up to?” They’ll say, “This Government was in la-la land. We wish we’d had ACT earlier.” Thank you, Mr Speaker.

RAWIRI WAITITI (Co-Leader—Te Paati Māori): Tēnā koe e te Pika, tēnā tātou e te Whare, tēnā koutou katoa e te iwi.

[Greetings, Mr Speaker, greetings to those in the House, greetings to one and all.]

I want to acknowledge the Government on the delivery of their Budget today. In particular, I acknowledge my whanaunga the Māori Ministers, who have secured some important funding decisions for our people. There is a lot to like in this Budget, particularly in relation to targeting Māori housing packages and the long overdue increase in baseline benefits. There are new initiatives that will make a real difference to the lives of tangata whenua. We give credit where credit is due.

Engari—but—let me contextualise for you what Budget day means to us. At the signing of Te Tiriti o Waitangi in 1840, my ancestors, and many others from around the motu, consented to Kāwanatanga and the establishment of this Parliament. But they also affirmed our existing rangatiratanga. As article 2 explicitly states, the Crown guaranteed to Māori the undisturbed possessions over our land, our rivers, our seas, our forests, our traditions, and practices—our people.

This covenant envisioned the relationship of equals, a partnership that would enrich Aotearoa. Rangatiratanga and Kāwanatanga must be working together based on a relationship of respect, partnership, and goodwill for the betterment of people, tangata whenua and tangata Tiriti. The only way this nation can work is where tangata whenua assert our right to tino rangatiratanga, our self-determination, our governance, and our self-sufficiency.

A new Aotearoa is on the rise. There is an unapologetic generation of tangata whenua who recognise that being forced to work within the system no longer suits our struggle for mana motuhake. That is what we must do—dismantle the system and create our own. Tangata whenua and tangata Tiriti living and working together in peace is the Aotearoa that Te Paati Māori is fighting for.

Our people sent us here to be the unapologetic voice for our tino rangatiratanga as tangata whenua: to rebalance the scales of power in Aotearoa and realise the partnership that was envisaged by our ancestors, tangata whenua and tangata Tiriti in Te Tiriti o Waitangi. You might be wondering, Mr Speaker, what on earth Te Tiriti o Waitangi has to do with the Budget. I can certainly hear that from my colleagues either side of me, and they have no idea, so let me enlighten you.

The covenant that gave consent to all Pākehā to live in Aotearoa is, and will always be, Te Tiriti o Waitangi. The realisation of our tangata whenua rights under the covenant will always be our benchmark. Te Tiriti o Waitangi demands that tangata whenua secure 50 percent of the resources and decision-making power. Equality demands that tangata whenua secure 16 percent of all the resources and decision-making power. Equity demands the tangata whenua secure 25 percent of the lion’s share. On every level, of those benchmark indicators, we fall short. One week of COVID subsidies to businesses added up to more than the total sum of Treaty settlements over 30 years. One year of corrections funding adds up to more than the total sum of Treaty settlements over 30 years. This is a disgrace.

I mentioned in my maiden speech about how we will no longer accept that the State continues to fund itself every year to steal more of our babies, to lock up more of our people, to keep our people sick, poor, and homeless. The point is that more money is not always the answer. Ultimately, we seek for our people to be at the decision-making table, with regard to where the resources are allocated, rather than being the recipient of. These are our rights under Te Tiriti o Waitangi.

Āperahama Taonui prophesised: “He taniwha kei te hāere mai. Ko ōna niho he hiriwā me te kōura. Ko tōna kai? He whenua. Kaua e mataku ki ōna niho hiriwā me te kōura, engari kaua e tukua te hiriwā me te kōura hei atuatanga mōu.”

[“There is a taniwha on its way, with teeth of silver and gold. What does it crave? It craves land. Do not fear the teeth of silver and gold, just do not allow it to become your God.”]

The key is not to allow ourselves to become intoxicated by the euphoria of the million-dollar signs, and look at the gains from a perspective of proportionality. Last year, Vote Māori received 0.3 percent of the entire operating Budget. This Budget announcement sees an increase to 0.37 percent going to Māori—a whopping 0.07 percent increase. It appears as though this Government has an obsession with putting zeroes and a decimal point in front of what they give Māori. Funding for Māori programmes will not work if those programmes are not conceptualised, designed, managed, and governed by Māori. Funding for Māori programmes will not work—mā te Māori ki te Māori mō te Māori e ai ki te Māori; by Māori to Māori, for Māori, according to Māori is the only way. This is what we mean when we talk about mana motuhake. Let us not confuse the oranga of our people with money and dollar signs or silver and gold; mana motuhake means we make our decisions, and receive our resource equally, because that is our Treaty right.

The Māori Health Authority is an important step—a start—but there is so much more to do. This Budget announced $240 million over four years, which also equates to 0.3 percent of the total health budget. There goes that 0.3 percent again. We have underfunded primary healthcare, underfunded dental care, ambulance services have had to beg for funding every year to stay operating, and the Government refuses to fund lifesaving cancer drugs that are funded in comparative countries. Far too many people simply can’t afford to go to their GP, let alone the dentist.

Just last week, we had people suffering from a life-threatening cancer on the steps of Parliament in the pouring rain, calling for Pharmac funding to be doubled to fund medicines that could save and extend their lives. The announcement today didn’t get anywhere near that. Recommendations to lower cancer screening ages for Māori have fallen on deaf ears. We need to ensure we have a health system that actually works in keeping our people well and protecting our whakapapa as tangata whenua. I am also perplexed as to why Whānau Ora received no additional funding, given it has the Minister on record telling us that it had the highest-performing portfolio in Government.

The disparities and inequities in income for Māori are disgraceful and are reaching new levels. Pākehā have a net worth almost five times higher than Māori, while non-Māori have a 13 percent higher median age. What we are seeing is the result of decades of under-investment, deregulation, and the slashing of the social security system. We welcome the increase to baseline benefit levels and the reinstatement of the Training Incentive Allowance. These have been long fought for by the grassroots. Since 1986, the number of Māori forced to rent has increased by 88.3 percent—70 percent of Māori cannot afford a home and are living in rentals. One third of Māori live in houses considered damp and overcrowded. Māori make up 50 percent of the waiting list for social housing.

Because I only get 10 minutes, I am going to go straight to the last page, the most important part of my speech. It is evident that we are already delivering real change, and that the Māori across this House, each coming from their own position and using their own platforms—we can succeed. Te Paati Māori will continue to play a constructive role in both working alongside this Government and holding them to account. Sitting on the cross-benches, we will oppose when our people’s interests are at stake, and we will support when support is warranted.

Today, I call on the Government to continue adopting policies from our manifesto. In only six months, we have already seen so many Te Paati Māori policies adopted: the purchase of Ihumātao; the removal of barriers to establishing Māori wards, with the procurement of 5 percent, which is still way off our 25 percent; the replacement of the Oranga Tamariki chief executive with a Māori leader; investigations into our broken criminal justice system; the public holiday recognition for Matariki; te reo Māori and Māori history in schools; new investment in kōhanga reo and Whānau Ora; ratings reform for whenua Māori; and, of course, as already mentioned, the Māori Health Authority and the Māori housing package. This is what we have achieved in Opposition in six months, and I can’t wait to see what we can achieve in the next Budget. Nō reira e hika mā, tēnā tātou.

[Finally, thank you one and all.]

SPEAKER: I’m going to call the Hon David Parker in a second, but I want to thank the member Rawiri Waititi for drawing my attention to the fact that he was reading his speech. I want to make it clear, going forward—normally, there’s some flexibility around the first day of a Budget debate vis-à-vis reading speeches, but going forward, the rules on reading speeches will be enforced, and I’m pleased that we have the whips, at least, from the major parties—and I’m sure Ms Davidson will pass that on to—and, of course, the ACT Party.

Hon Member: Oh!

SPEAKER: Well, I could—there’s some re-definition going on there, but anyway, the member will take it, all right? But I am going to enforce those rules going forward.

Hon DAVID PARKER (Minister for the Environment): I move, That this debate be now adjourned.

Motion agreed to.

SPEAKER: This debate is adjourned and set down for resumption next sitting day.

Urgency

Urgency

Hon CHRIS HIPKINS (Leader of the House): I move, That urgency be accorded the introduction and passing through all stages of the Taxation (Budget 2021 and Remedial Measures) Bill, COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill, and the introduction, first reading, and referral to select committee of the Education and Training (Grants—Budget Measures) Amendment Bill.

To briefly explain why each of those bills needs to be progressed under urgency, the first increases the minimum family tax credit from 1 July, so needs to come into force as soon as possible. The second deals with a technical issue around the lawful collection of managed isolation and quarantine fees from Australians who are not normally resident in New Zealand but, because of a technical issue with the way our immigration rules work, have been deemed to be such. And the third one allows the Government to implement the pay parity for early childhood education teacher commitments contained in the Budget.

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

Ayes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Noes 45

New Zealand National 33; ACT New Zealand 10; Te Paati Māori 2.

Motion agreed to.

Introduction of Bills

Introduction of Bills

SPEAKER: I understand it is the intention of the Government to introduce bills.

CLERK:

Taxation (Budget 2021 and Remedial Measures) Bill, introduction

COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill, introduction; and

Education and Training (Grants—Budget Measures) Amendment Bill, introduction.

SPEAKER: The Taxation (Budget 2021 and Remedial Measures) Bill is set down for first reading forthwith. The remaining bills in the urgency motion are set down for consideration presently.

Bills

Taxation (Budget 2021 and Remedial Measures) Bill

First Reading

Hon DAVID PARKER (Minister of Revenue): I present a legislative statement on the Taxation (Budget 2021 and Remedial Measures) Bill.

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

Hon DAVID PARKER: I move, That the Taxation (Budget 2021 and Remedial Measures) Bill be now read a first time.

This bill’s pretty short. It’s a four-page bill. It is necessary as a consequence of the Budget, which is why we’re passing it under urgency today. The Budget outlined by the Minister of Finance today is, of course, focused on securing the recovery of our economy and investing in the wellbeing of New Zealanders. As we heard from the Minister of Finance today, and the Prime Minister, we are rebuilding the economy to be better, stronger, and fairer, and the Budget documents show that there is a lower debt track than was previously forecast, lower unemployment, higher employment growth, and the ability to increase core benefit levels in a way that is necessary. This will speed our recovery from the impact of COVID-19, and the other initiatives in the Budget will also assist the economy to be more productive, more sustainable, and more equitable.

On the more equitable front, this really is important for our country. We know that the people hardest hit by the economic impact of COVID are often those least equipped to deal with it. Although I’ve heard criticisms today from the Opposition as to the increases in benefit levels, I would remind people on the other side of the House that even after these increases, someone who’s on the job seeker benefit earns less than $350 per week to pay for their rent, their clothing, their food. And, as the Prime Minister most eloquently said in her speech, it’s not as if—as we heard from the ACT Party’s David Seymour—people will not have an incentive to work, because the difference between benefit levels and work, for the vast majority of New Zealanders, remains a great difference. That said, we always, in this country, try to make sure that working families will be better off in work than on a benefit, and, at the margin, there always are a few people who are at that intersection. We take care of that in New Zealand in a number of ways, including through the minimum family tax credit. That’s what this bill is about. It changes the threshold for the minimum family tax credit.

The minimum family tax credit tops up the incomes of working families to ensure that they’re financially better off in work than being on a benefit. Therefore, when benefit rates and thresholds are increased, the tax credit must also be increased to maintain that margin. So what this bill does is propose an increase to the minimum family tax credit threshold from $30,576 per year, after tax, to $31,096 per year, after tax. It’s estimated that 4,800 people will be helped by this change, including 200 families who will be newly eligible to receive this tax credit. The increased minimum family tax credit threshold will apply from 1 July 2021.

The other measure in this bill is technical. It’s a minor remedial matter to correct a drafting error in the Child Support Amendment Act 2021. The Child Support Amendment Act 2021 mistakenly stated that the relevant child support late payment penalty changes would apply from 1 April 2021. It should’ve stated that those changes were to apply from the earlier of a date set by Order in Council, or 1 April 2022. Correcting the application date error will bring the law in line with what was originally intended. It’s a small drafting error but it’s important that it’s rectified as otherwise it creates significant practical implications for Inland Revenue’s systems.

In conclusion, as we rebuild our economy and adjust benefit rates in today’s Budget, this bill ensures that families remain better off when working, and, by receiving the minimum family tax credit, this means they’ll be better off than they would be on a benefit. I thank the House for giving this bill its urgent attention and commend it to the House.

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

Hon MICHAEL WOODHOUSE (National): There was a rebuke of the previous speaker in the Budget debate for reading his speech. Well, there will be no chance that anybody on this side of the House will be able to read a prepared speech, because we have literally had 3½ minutes to view and consider the bill.

I don’t think I have ever been as disappointed or disillusioned in speaking to a tax bill as I am right now, because it is so deeply disappointing and underwhelming in the context of a Budget that is deeply disappointing and underwhelming. And, boy, does it focus on the wrong things. Yes, it’s important to support low-income New Zealanders, and it’s no wonder we have to because of the complete mess that this Government has led the economy into with massive increases in rent, massive increases in electricity—and we haven’t even seen the start of that—significant increases in other household expenses that low-income New Zealanders cannot afford. So in the context of that, it was the right thing to do.

But I would love to be standing here to talk about changes under urgency after a Budget that at least had its eyes up, that had some aspiration for this country, that supported the innovators, that supported the entrepreneurs, that simply supported working New Zealanders. There wasn’t a thing in it for working New Zealanders; nothing for small businesses, the very backbone of our economy; and the people that actually create the jobs that create the Crown revenue that enables us to pay for our social services and infrastructure—nothing for them.

There could have been plenty to do. We could have been talking about a simple change—tax threshold changes—but no, we’re not doing that. This Government is too petty, too mean, too small-minded that they don’t understand who actually creates the wealth in this country, and it ain’t the Government. The Government creates wealth by doing one thing and one thing only: taking a very long hand into the pockets of hard-working New Zealanders and lifting their cash out of it. The obligation on Government is to keep that action to a minimum, but all this Government knows how to do is spend and borrow and hope.

The saddest thing about this is that the vast bulk of the people who are going to have to repay the eye-watering level of debt that is being incurred by this Government over the next few years have not even been born yet. I will be long gone before we make inroads into the $180-odd billion of debt that we will reach, if we’re lucky. And I say “if we’re lucky”, because this Budget gives no more money for the promises, the profligate promises that they splashed around in election year. Remember the New Zealand Upgrade Programme? Of the $12 billion, $6.8 billion was for transport projects. Most of that was for roading projects, very few of which will be able to be afforded within the funding envelope that they appropriated last year. No more money for upgrades, despite the fact that we know the Ministry of Transport and Treasury have said they’re not going to be able to come within a bull’s roar of doing those sorts of things with a—

Chris Bishop: That’s right. A 1 percent contingency.

Hon MICHAEL WOODHOUSE: —1 percent contingency. That’s right, Mr Bishop. So either of one of two things is going to happen. They either borrow more and leave a greater legacy of debt for our children and grandchildren, or they break that promise, and given that they’re very good at making announcements and not delivering, I think they’ll break that promise.

We could have been talking about relieving the regulatory burden, not just the tax burden, on hard-working New Zealanders, but no. This is bereft of any ideas to take our economy into the 21st century. The innovation, the technology, the automation that is now being actively pursued by some companies here in New Zealand and many more around the world—nothing for them. You know, they’re spending $44 million on small business support, which is less than half of what they’re spending on the Hillside engineering workshops.

DEPUTY SPEAKER: Order! This is not a Budget speech; it’s on taxation, so you need to link those to the bill.

Hon MICHAEL WOODHOUSE: The taxation pays for every single one of the things that I’m talking about—

DEPUTY SPEAKER: Yeah, but that’s not the bill.

Hon MICHAEL WOODHOUSE: —and I’m also talking about what we’re not talking about and what we should be, which is spending better and taxing less. But instead, we are having to lift the minimum family tax credit to maintain the separation between those who work and those who don’t. That’s appropriate, and the Minister said so. And the National Party strongly support—and, in fact, it is a core value that we reward hard-working New Zealanders while maintaining social supports for those who struggle to find work.

But we’re only having to do that because we have significantly increased benefits for those people who are not in work right now. Why are we having to do that? Because inflation on those core living costs for those low-income families is out of control. Rent is the number one. They were going to solve the housing crisis, remember? A hundred thousand homes—871 built. They talk about increasing social housing. The easiest way to do that is to buy existing houses, and that’s what they’ve done. That’s not increasing housing supply; it’s taking houses out of the rental market and increasing rents. Low-income New Zealanders are struggling. They’re struggling with their electricity bills, and given what wholesale electricity rates are doing right now, they can stand by for significantly higher costs for electricity—electricity, I have to say, that is now being generated by a substantial amount of imported Indonesian coal.

If that isn’t a metaphor for the abject failure of this Government to get on top of the issues facing our country this century, I don’t know what is. We’ve failed on COVID. We have failed to vaccinate our population fast enough so that we can open up our borders fast enough, so that the people who we are going to be supporting through this Budget and through this tax change can actually get jobs. They crow about 221,000 jobs in this Budget over five years—that’s the forecast period. That’s less than 40 percent of the jobs that were being created just 3½ short years ago. That, is a scandal.

We will be supporting this bill. It is the right thing to do. We need to maintain a separation between those who work and those who don’t. Work must always be better financially, socially for those people than not working. No one will find a pathway out of poverty on jobseeker support. That is the hopelessness that this Government is leaving them with—the sense of no hope, so we’re just going to beef up your supports and leave you on the scrap heap. That lacks imagination, it lacks ambition, and it’s deeply, deeply disappointing.

Actually, there’ll probably be more job seekers, not fewer. Some of the assumptions in Budget 2021 are, frankly, heroic in terms of Crown revenue projections, in terms of job seeker numbers. There is nothing in here that even supports the 221,000 jobs that they are projecting, however modest that figure might be, and that is also very disappointing. We’ll talk more about that as this bill progresses, and it will have to take in a broader context than just this, on the face of it, small change, because what it does is it speaks to a much, much broader failure. This is palliative, this is the ambulance at the bottom of the cliff, and that’s what this Budget is. It’s an ambulance for those desperately struggling people, struggling under the mountain of extra costs that this Government has inflicted on them. It really is an indictment on a Government that has no imagination except about how to make announcements.

Dr DEBORAH RUSSELL (Labour—New Lynn): This is a very narrow and very technical bill, but it is brought about because of a substantial change that this Government has made today, a change that sets right the disastrous impact of the “mother of all Budgets” from 30 years ago. Today, we have increased benefit rates. Why? Because it looks after the most vulnerable New Zealanders, because it addresses the key challenges of child poverty in our country.

We have taken the steps to increase benefits because it is necessary, because it is needed, because it is the right thing to do. But once we increase benefits, we do need to adjust the minimum family tax credit. That minimum family tax credit ensures that always people in work earn a tiny bit more than people on benefit. That is what this narrow bill does. It is a technical change that supports the major change we have today to support our poorest and most vulnerable New Zealanders. I commend this bill to the House.

DEPUTY SPEAKER: Oh, the question is that the motion be—I call the Hon Gerry Brownlee.

Hon GERRY BROWNLEE (National): The previous speaker—Dr Deborah Russell—was right to say that this bill comes about because of the changes that the Government has made to benefits. While it is interesting to note the relationship between benefits and family support, what’s more alarming is that you might have expected that the Government would have put a greater focus on people earning more and, therefore, the gap between those who are earning and those who are on a benefit being taken up by the wages that they’re able to earn out of this economy. But, no, there is just this simple, redistributive mentality that does not look at the benefits of a growing economy.

Now, the Minister of Finance, in delivering his Budget today, did mention some projections for growth moving forward. But there was not one thing in this Budget that would support that growth—

Hon David Parker: R & D tax credits.

Hon GERRY BROWNLEE: —not one thing in this Budget that would support that growth. Now, the Minister over there says, “Oh, there’s R & D tax credits.” Well, that requires them to spend money. It requires them to spend money and it requires them to be profitable in order to be able to do that. Don’t—

Hon David Parker: It’s a tax cut.

Hon GERRY BROWNLEE: While he’s over there saying that it’s a tax cut, that’s a tax cut you get if you spend your money—it’s not, at all. That kind of shows the convoluted, mixed-up logic that goes on on that side of the House.

So if we look at other aspects of this Budget—and I know, sir, we’re not debating the Budget. This bill is a direct consequence of a serious improvement in people’s beneficiary income, but it doesn’t deal with the fact that you need to get people back into the workforce, and standing up and just saying that “Oh well, unemployment is going to fall to a particular rate.”—it only does that if people invest in the economy, if people expand the economy, and people choose to employ more people in the economy.

We know that in the next short while, the State can’t be relied on to fill up that gap, because the extraordinary thing in this Budget was the Minister of Finance managed to increase the incomes of those who are on a benefit, while at the same time having previously announced a decrease in the incomes for those who are in work and in the employ of the State, because we’re looking at this over a four-year period. So while this is a Budget move that, on the face of it, might be well accepted by a lot of people, it does put a huge burden on to the economy.

We heard the Prime Minister saying that this can be afforded because we’ve got greater capacity now to borrow. But, in the end, a borrowing programme from a Government is a shifting and a shuffling of obligation from now until some time in the future—some time in the future—and it was interesting that the justification is that it’s undoing something that was done in a Budget 30 years ago. Well, in 30 years’ time, young New Zealanders now will still be paying for this. So where was the focus on closing that gap by increasing the earnings capacity of those who are currently relying on family support? It simply was not there.

When it comes to these sorts of things, the previous speaker described it as a purely technical bill, and that is true. It is a technical bill. It’s a very short bill—it’s just four pages long—but the consequences of it are what this House should be aware of. It’s what should be discussed here today.

I’m sure that people are going to stand up from the other side in a minute and say, “Lives are going to be improved. It’s all going to be fantastic.” Well, I suggest they go and read an article that’s published today by interest.co.nz, talking about the hidden inflation inside our economy. It makes the case that if a certain collection of grocery items were put into a basket similar to a Consumers Price Index basket, then the underlying inflation in New Zealand would be something like 7 percent. It makes the case that if there is a 1 percent move in mortgage rates in the next short while—just 1 percent; it doesn’t sound like much—on the average mortgage at the moment, that would be the equivalent of a 14 percent increase in payments required. That comes out of earnings.

So what you’ve got here is a proposal that simply, with its redistributive approach, increases costs all around. It increases costs all around—no question about that.

While people might say, “Oh look, lives are going to be so much better as a result of this.”—I appreciate how hard it is for people on low incomes like that. I can’t imagine what it’s like on those incomes to wander through a supermarket, wondering whether or not you can take something off the shelf, and, worse than that, looking at that high level of inflation on those basic staple products must be very, very demoralising. So there was a need for a different approach—a much different approach—to simply saying, “We will solve everything by putting in place an additional payment that takes us back to the levels that we were at 30 years ago.”

I would ask the question: why has it taken a Labour Government so long to get to this, given that half of that time, they were sitting on the Treasury benches? It’s only now—only now—because they’ve got the cover of COVID-19 and are able to commit the future generations of this country to enormous debt that they can sell their desire to have a freebie for people in difficult circumstances that it’s actually happening. It’s not based on “The country’s doing really well.” It’s not based on “The income coming into the Government from the productive sector is now so big that we can afford these things.” All it is is another layering on of cost to the productive part of the economy, and that’s sad because the people who suffer most when that happens are those who are on the bottom rung of society: the people who have the lowest of incomes.

Far from being kind, this is a cruel hoax, and while people will be happy for 12 months or so with the increased payments, it’s going to catch up and it’s going to catch up very, very quickly. So this is a bill that I think is totally misnamed, and at a later point in proceedings today, we’ll be able to discuss that aspect quite a bit further.

I just want to conclude my remarks on this bill by stating that there will be a number of questions that we will be putting to the Minister in the committee stage of this bill so that we can get some sense—some sense—of how it’s expected the economy might get to a position where this is a truly affordable thing. I don’t mean “affordable” in so much as the Government being able to afford it, because I’ve already explained that. The Government is just going out to borrow to pay for it—simple—and then they’ll transfer the cost of that borrowing on to everyone who’s working. The real question is: how long can we afford to keep people out of the workforce—keep people out of the economy, effectively—shoving them to one side, and not giving them a great deal of hope?

There are programmes in here that they’ll point to, and I can see one of the speakers that’s about to come from over the other side is getting very excited in preparation about how they’re going to rebut everything I’ve said. Well, answer these questions, when the opportunity arises: what is to be done about that underlying inflation in the food price sector? What is to be done about the $100-a-week increase in rents over the last three years? And what’s to be done about the massive gap now between the average income, the need to save a deposit, and the cost of a house? They are the real things that need to be dealt with. They are the real things that will make a difference in the lives of people who are on the bottom end of society.

I don’t begrudge them getting this—not one bit—but what I will say is they’re getting it because of the Government’s mismanagement. While they can take it, and that’s a good thing that they do, it is unfortunate that the country is being lured into a kind of fool’s paradise about where the economy sits, about what is an affordable thing, and about what is a reasonable way to treat people in this country. So, far from being a wonderful, beneficial, generous, kind thing, it is everything that is opposite to that. Those end my comments at this stage of this bill.

Dr DUNCAN WEBB (Labour—Christchurch Central): What a misery guts! That member, Gerry Brownlee, was so disinterested in what is actually going on that he almost forgot to stand up. He would have us not give the people who most need it, all of the assistance that we possibly can. He’d go back to Ruth Richardson’s Budget if he had his way. And members might have noticed that he didn’t actually speak about the bill before the House.

This bill is a tweak that is needed to make sure that the very incentives he talked about for people to get into work—that he said didn’t exist—do exist. This bill is simply about making sure the minimum family tax credit is raised so that there’s an appropriate distance between those on a maximum benefit and those who are in work. It makes perfect sense.

And, of course, it will tidy up a drafting error—probably, the IRD drafter wasn’t paying attention. We need to give that a tweak and make sure that it comes into force on 1 April 2022. That’s going to have to be a retrospective change, because it actually says 1 April 2021. But yet again, it is just making sure the system works.

What a fantastic Budget—a bright red Budget for a great day in the House. I commend this bill to the House.

RICARDO MENÉNDEZ MARCH (Green): Tēnā koe, Mr Speaker. I rise to, first and foremost, state that the Green Party supports an unconditional income support system that allows people to live with dignity. I’m quite appalled at the fact that members to the right have spoken lengthily about everything but what’s actually in the bill. I’m surprised that the National Party members are opposing a piece of legislation that, ultimately, supports people who are in employment.

But what the minimum family tax credit at its core fails to recognise is that our caregivers who are on the benefit who may not be in paid employment also deserve to have livable incomes, also deserve to live with dignity. I do not believe that we should be pitting our unemployed whānau who are doing massively important labour in our communities, who are doing caregiving, who are doing volunteering—I do not think that we should be saying that they deserve less income than those who are in paid employment.

Therein lies the fault of the minimum family tax credit. It puts this punitive narrative that people who are outside of paid employment deserve less income than those in paid employment, when most of us have been raised by caregivers who devoted their time and their efforts to ensure that we thrive.

So instead the Green Party supports replacing the minimum family tax credit with a family support credit that allows low and medium income families to live with dignity. It supports $190 a week for the first child payment and $120 a week for subsequent children, with a higher abatement threshold and lower abatement rate, which would also mean more money for low-income families.

So while this bill may seem technical, it actually continues to perpetuate a hurtful narrative that keeps many of our people on the benefit in poverty. The minimum family tax credit, at its core, tells our communities who are outside of paid employment, many who did volunteer work that was critical to our response to the pandemic, that they deserve to have less money in their pockets.

The Green Party believes that our welfare system needs to be built so that it provides unconditional support, which is why we’ve been campaigning not just to lift benefit levels—which is what led to this bill—but also remove punitive sanctions and ensure that we have adequate top-ups that mean that people don’t have to queue up at Work and Income for a food grant just to survive.

This is not to say that people in paid employment who are working part-time and are also looking after children don’t deserve to be supported, but we reject any narrative that says that our people on the benefit who are doing critical labour—and those living with disabilities who do not have enough money to live on currently, because, unfortunately, the increases to the supported living payment are not going up at a fast enough rate to ensure that people have enough to survive. What we are saying is simply that instead of the minimum family tax credit, we need to build an income support system that is fit for purpose.

So while this bill will address the number of people that qualify for the minimum family tax credit, we have not yet addressed the fact that we continue telling our people on the benefit that they deserve less income than those who are in paid employment. I hope that one day we move towards a society that recognises caregiving labour as worthy of livable incomes—that we honour our mums, our caregivers, who have done so much for our society. So the Green Party will continue advocating to overhaul our welfare system so that we eliminate hardship, not just alleviate it.

DAVID SEYMOUR (Leader—ACT): Thank you, Mr Speaker. There’s been a lot of commentary about my good friend the Hon Ruth Richardson and her Budget of 1991, and I have to say, given her venerated status—one of New Zealand’s most decisive and effective finance Ministers; first and still our only female finance Minister, but unable to speak in the House now—that she’s made a few replies, which I thought the House might like to hear. She says that Grant Robertson’s comments were a “predictable cheap shot, further reinforcing my point that the budget expenditure choices are driven more by politics than economics.” She goes on to say, “My Budget was driven by a desire to lift economic growth and to make employment attractive. Grant Robertson’s Budget is overtly driven by politics and the desire to pay off Labour supporters.”—and ain’t that the truth.

The ACT Party opposes this bill, for the fundamental reason that we oppose the underlying changes that make it necessary. We understand perfectly that the rationale is to ensure that more people receive the minimum family tax credit in order to maintain the difference between working and receiving a benefit. This legislation has been made necessary by a Government Budget that has nothing in it for people whose main way of getting money is actually working. It is a Budget of handouts; as Ruth Richardson would say, driven more by politics than economics, and this Government’s desire to pay off its political supporters.

The Government has increased benefits with no grasp of the economic problems that some of the poorest people in New Zealand face. If they were prepared to look at the data, then they would be able to figure out that the reason people are impoverished is not a reduction in incomes but an increase in the proportion of their income that goes to housing. For the same reason, mainly the inelasticity, the weak supply of housing and accommodation, these increases in money to people on benefits will mostly go to people who actually rent houses to them.

If people doubt that, if people would like a recent model—if, you know, basic economic theory is not enough for you—then you only need to look at what occurred recently when this Government increased the accommodation allowance for students. In a tight rental market where students were lining up around the corner to try and get a flat, guess what happened when each of them had an extra 50 bucks put in their pocket! Rents went up. It’s not difficult—you don’t even need to be an economist; you just have to ask yourself: if you’ve still got too many people chasing too few bedrooms, what is going to happen when they get more money? They’re going to bid the price up. There’s not going to be any more people accommodated, because you’ve still got the same amount of accommodation. You’ve just got people using more money in order to get that limited supply of accommodation. The only people that benefit in a supply inelastic market are the suppliers—in this case, the landlord.

That fundamental misunderstanding of what economics drive the lives of poorer people in New Zealand is why this Government is making changes that won’t have any serious beneficial effect for them. But what it will do is affect their children—actually, all children who grow up in this country and pay tax and are going to find that when it seems so easy to borrow cheap money, printed by Adrian in his printing press, actually, all of a sudden, with interest rates rising—and they will rise—that debt becomes costly.

So we are going from a pre-COVID expenditure level of $1.8 billion each year on jobseeker support and emergency benefits—$1.8 billion a year pre-COVID; after COVID; the forecasts are, every year, $3.8 billion. That’s an extra 2 billion bucks a year from a Government that is borrowing every extra dollar to be paid back by the next generation. And it’s worse than that. That extra $2 billion, that’s on assumptions made by Treasury—heroic assumptions, in my view—that unemployment is going to be 4.4 percent in a couple of years’ time, it’s going to be below 5 percent. Really?

So we have a Government that is, as far as I can tell, conducting an enormous experiment to see how much of a beating business can take before it stops. You know, it’s basically doing everything it can. They’re like, “If we just keep bashing private enterprise, maybe they’ll stop employing people. Have they done it yet? No. Let’s put in another dumb policy.” That seems to be their basic approach. You know, we’ve had increases in minimum wages at 6 percent—faster than any business can raise productivity—fair pay agreements. It’s like That ’70s Show in here. We should have Led Zeppelin playing in the House, because that’s the tenor of this Government’s policies.

Actually, it’s worse than that. You know, these fair pay agreements, they call them—it’s like going back to compulsory arbitration—

DEPUTY SPEAKER: And in the last four minutes of the member’s speech, he needs to come to the bill.

DAVID SEYMOUR: If you follow, this is very tightly linked to the bill because it’s about the cost.

DEPUTY SPEAKER: Well, you need to express that.

DAVID SEYMOUR: Well, how much simpler do I need to make it, because it actually is a pretty direct link, Mr Speaker, between—

DEPUTY SPEAKER: Yep, and I’m ruling that the statements you’ve made for the last three minutes have—you have not linked them to the bill, and I want you to. You’re experienced in the House—won’t take much for you to do that.

DAVID SEYMOUR: Well, Mr Speaker, I’d argue it wasn’t taking me very much, but let me spell it out: this bill is put in place to accommodate an increase in benefits. That increase in benefits has a fiscal cost: $1.8 billion before COVID; benefits will now cost $3.8 billion, and that assumes that we’re going to have 4.4 percent unemployment in two years’ time. The connection between the unemployment level and the forecast and the reality is that this Government is putting in place so many policies that, I believe, will make those forecasts unrealistic. That’s where we got to.

Now, I was just talking about Led Zeppelin and fair pay agreements in the 1970s, but that was inappropriate, because, actually, these fair pay agreements are better compared with the compulsory arbitration Act of 1896. I don’t even know what sort of music they had then, but actually—

Ricardo Menéndez March: Point of order. Mr Speaker, to my understanding—and I understand you have mentioned it—the bill has nothing to do with fair pay agreements, and it has to do with minimum family tax credits. I also know that the member is, basically, perpetuating a tax on low-income whānau instead of sticking to the bill.

DEPUTY SPEAKER: Yeah—

Chris Bishop: Speaking to the point of order—speaking to the point of order.

DEPUTY SPEAKER: No, I don’t need any help. That’s a debating point. The member is actually linking it to the bill. I asked him to do so, and he has done that.

DAVID SEYMOUR: Well, thank you, Mr Speaker, and I asked how much simpler would I have to make it—I don’t think I’m capable of making a point simple enough for Ricardo Menéndez March. In fact, I defy anyone to make a concept simple enough for Ricardo Menéndez March, especially when it involves economics, because that guy wouldn’t have a clue—wouldn’t have a clue. Not only does he not understand economics; he doesn’t understand the Standing Orders. How long’s he been in Parliament? Six months? Has he even opened the Standing Orders yet? I doubt it. Nice try, sunshine—try again later.

DEPUTY SPEAKER: And back to the bill.

DAVID SEYMOUR: And we’re here—yeah, yeah, yeah—to talk about a serious issue, and that is that this Government’s economic forecasts are unrealistic because they haven’t allowed for the effects of their policies, like fair pay agreements. They can’t be factored in by Treasury, so it’s forecast. But I predict that unemployment is going to be higher after the damage that this Government is doing to business, and when unemployment’s higher, the fiscal cost of these benefit increases is not going to be an extra $2 billion a year; it’s going to be a lot more than that. It’s actually going to be billions and billions and billions, and it’s going to be paid for by who? By the kids.

So the policy that’s put in place to try and help kids, well, that policy is actually going to harm them. That’s why I use another phrase—just to sew this together—that was first used in this House by Ruth Richardson, and that is that borrowing today and putting the debt on to kids tomorrow is a form of fiscal child abuse. It might be OK if it was going to alleviate child policy, but as we have argued, actually, the money’s going to end up in the pockets of the landlords, because until you fix housing, there’s no point in raising benefits to alleviate policy. That is the basic economics, and you can’t have real compassion unless you actually grasp economics—a point, I might add, that was well understood by our first female and, I would argue, one of our best ever finance Ministers, the Hon Ruth Richardson. Thank you, Mr Speaker.

BARBARA EDMONDS (Labour—Mana): There’s been a lot of talk about economics in this House, so I’m going to bring it back to some home economics, all right? Some people in the House have talked about how tough it is. They acknowledge how tough it is. Well, I know how tough it is when you only have $10 in the hand at the end of the week. You walk through the supermarkets and you know that you’re going to buy that $1.89 jar of Pams jam instead of the $2.25 Craig’s jam. Why is that? Because every cent counts. And, also, home economics says that when you don’t have enough income coming in, it’s your food budget, it’s the food expenses, that are most fungible, which is the one that you’re going to cut back on.

So the benefit increases that happened today—or the “handouts”, as some people would say—are going to put more food on children’s tables. We have to go back to why we are here, and those children need that extra food. So the bill that we’ve got before us today goes back to the policy purpose of Working for Families. It goes back to one of the policies, which is to ensure income adequacy to make sure work pays by supporting families with dependent children so that they’re awarded for their work effort. So I commend this bill to the House. That minimum family tax credit goes back to that purpose and that’s why we need to commend this bill to the House.

NICOLA WILLIS (National): This is a bill that increases the level at which the family tax credit comes in, because today we are increasing benefits. There’s been much discussion on the other side of the House about why we’re doing that. Here, in the National Party, we agree that lower income New Zealanders have been made particularly vulnerable by this Government. We have heard, on the other side, talk about the dignity and moral choices. Well, I want to talk about the moral issue that is the way costs have gone up by this Government. Because you can talk about the difference between different jars of jam, but what’s actually far more significant is the fact that, on average, rents have gone up more than $100 a week under this Government. If you want to look at what is driving poverty, what is driving problems for lower income New Zealanders, housing costs, and the extensive growth in them, is the actual number one reason why this Government is having to increase benefits.

It’s not just rents; it’s the price of mince. It’s the price of potatoes. It’s the price of sausages. It’s the price of bread, of cheese. It is the price of electricity. It is the price of fuel. These are the costs that are going up under a Labour Government. That is why any Government has an obligation to first consider how we are going to grow the real productive economy to ensure there are better jobs, they are better paid, and people can stay on top of costs.

Here, on this side of the House, we believe that work should pay. We believe there is more dignity in independence and more dignity in the ability to work than there will ever be in someone having to say, “I want to work, but there isn’t a job for me.” That is why we believe it is incumbent on any Government before it says, “I will pay you more for not having a job” to first say, “I will ensure we have an economy that can pay you more for the dignity of your work. I will ensure we have an economy that creates jobs. I will ensure we have an economy that creates pathways to independence, that creates pathways that allow people to get off a benefit and get into paid work.” All of that is absent from this Budget.

What this bill does is it makes a small but necessary correction to ensure that there is dignity in work, by making sure that work still pays, by increasing the family tax credit. So we on this side of the House say, well, that is necessary in the context of increasing benefits. But we say to the members opposite, unless you focus on keeping costs down through fundamental things like housing, this is simply running to catch up. It’s important that we remember here the callous disregard that members opposite have shown for the impact their policies have on the lowest income New Zealanders.

The biggest example we’ve had of that is the way they have approached housing policy, where they said, “We want to divide New Zealanders. We want to blame those mums and dads who’ve saved hard for the nest egg of a rental property. We want to call them ‘speculators’. We want to blame them for house price increases, so we will remove their interest deductibility. We will increase their costs. We will ignore the advice from the Treasury. We’ll ignore the advice from our officials saying ‘This is likely to increase rents with the biggest impact being on the lowest-income New Zealanders, who are most likely to be detrimentally impacted by rent increases by landlords facing increased costs.’ ” So they ignored that advice. They are quite happy to rob Peter to pay Paul, to pat themselves on the back and say that they’re the ones delivering dignity, when they’re the ones delivering increased costs to our most vulnerable New Zealanders.

As we consider this bill, and the reality of the need for there to be incentives so that families who are working are better off than families who choose not to work or are unable to get jobs, so that we actually have an economy that encourages people into work, we must consider the need for the Government to ensure that there are more jobs being created and that people are able to get into skilled employment. That is absent from this bill. It is absent from this Budget. And we, on this side of the House, say that work must pay. There must be dignity in work, and the economy should be grown.

KIERAN McANULTY (Labour—Wairarapa): Thank you, Madam Speaker. For the benefit of the people at home, the National Party’s actually supporting this bill, and you wouldn’t know it, because they can’t bring themselves to actually say, “Yes, this is a good thing.” They say we should do more for the poor, “but”; they say we should do more for the lowest paid, “but”—that’s the guts of it. They want this to happen, but when this bill is presented to them, they support it, but they want to spend their 10 minutes talking about all the other things that actually aren’t in the bill.

What this bill does is actually rewards and keeps that incentive, the gap between the increase in benefits—the desperately needed increase—and work. They spend their time saying that they are the party for work, but what it is, ladies and gentlemen and those watching at home, is that this is a good bill. They know it. They can’t bring themselves to actually come and say, “Good on the Government for doing something that should have been done a long time ago.”—when perhaps they were in Government.

Hon David Bennett: You’re a communist.

KIERAN McANULTY: So here we are—point of order.

ASSISTANT SPEAKER (Hon Jacqui Dean): A point of order—Kieran McAnulty.

KIERAN McANULTY: We are in urgency, Madam Speaker, and it’s going to be a long time. We may as well cut it off at the pass. The Hon David Bennett knows that it is unparliamentary to call another member a communist. I would ask that he be made to withdraw and apologise.

ASSISTANT SPEAKER (Hon Jacqui Dean): The member will withdraw and apologise.

Hon David Bennett: When did that become unparliamentary—

ASSISTANT SPEAKER (Hon Jacqui Dean): Ah, no.

Hon David Bennett: He hasn’t taken offence. He said it was unparliamentary.

ASSISTANT SPEAKER (Hon Jacqui Dean): No. The member will resume his seat. The member will withdraw and apologise.

Hon David Bennett: I withdraw and apologise.

KIERAN McANULTY: Thank you very much.

Hon Scott Simpson: He’s a socialist.

KIERAN McANULTY: Yes, I am a socialist and I’m proud of it. Yeah—there you go. [Applause] Thank you very much. Bring it on, and I’m very proud to say to the good people of the Wairarapa that they elected a proud socialist as their MP. I say to the Hon David Bennett they were very happy to elect a socialist in Hamilton East as well—and I know it hurts him. I know it hurts him, and I’d say that he may as well be a socialist, because his face is as red as a socialist, I can say that right now. Madam Speaker, I commend this bill to the House.

ANGIE WARREN-CLARK (Labour): Oh, what a pleasure it is to speak after my colleague, my comrade, Kieran McAnulty. This bill is something that’s set up wonderfully for us to support those people in work who are needing to have a little bit extra. We have put in place such a wonderful Budget supporting the additional needs of people on benefits.

I want to just very quickly raise something. We’ve heard about Ruth Richardson today from one of the members across the House. I was directly affected by the Ruth Richardson Budget. I was directly affected, and I would like to say that 30 years ago my life was affected and I would like to tell Ruth Richardson: it isn’t about politics; it’s about fairness. It’s about living with dignity. It’s about ensuring we have enough food in our cupboards to eat, and it’s about our children. I commend this bill to the House.

CHRIS BISHOP (National): You know, Rogernomics has, in the Labour Party history, attached itself to Labour as some sort of terrible, appalling time of Labour Party history that they’d rather forget. When they talk about the 1980s and 1990s, they don’t actually remember that it was their party from 1984 to 1990, and they kind of conflate Ruth Richardson and the benefit changes and the “mother of all Budgets” with Rogernomics. They forget that they were the people in charge and that the continuation of things that happened in the early 1990s were the continuation of their own Government’s time in office.

Grant Robertson’s obsessed with this period. When he was back in the dark days of Opposition and he was casting about for things to do, he rewrote the Labour Party constitution, and they tried to just whitewash the 1980s. They said “Governments in the 1980s took New Zealand down dark turns.” They didn’t mention it was them. They just kind of pretended and forgot about that.

So today we hear from the Government, in this debate but also repeatedly through Minister Robertson’s speeches, that this is like the chance to repent. Redemption is here. We’re going to make up for things that happened in the 1990s. Well, the funny thing was, who was in charge between 1999 and 2008? It was Helen Clark. In fact, Labour has been in charge, during the last 30 years, for 14 of those 30 years. But yet apparently it’s taken till today for the country to repent and redeem themselves.

The other interesting thing about all this talk about the 1991 benefit cuts is that they weren’t in the 1991 Budget. Grant Robertson is wrong. Grant Robertson said today in his speech that the 1991 Budget Economic and Fiscal Update cut benefits. It did not. There were benefit cuts, but they were in the December 1990 mini-Budget, after National came to Government back in 1990. I was seven. Grant was, I don’t know, 12 or something. Clearly, this is something he cares deeply about, but he’s wrong about when the benefit cuts actually happened. But, of course, he’ll just ignore all that because it doesn’t allow him to create the symmetry, the symbolism, of what he wants, which is 30 years on from 1991.

So he misremembers history, and, actually, there’s a lot of misremembering of history going on in the Labour Party at the moment, because in the Labour Party’s version of history, pre-1984, before that big bad Roger Douglas came along with his mates Caygill and Prebble, and then they were followed by Ruth Richardson, their other mate from the other party, in their version of history, pre-1984, New Zealand was a glorious country: unemployment was low—

Hon David Bennett: Milk and honey.

CHRIS BISHOP: —and milk and honey—

Hon Scott Simpson: No strikes.

CHRIS BISHOP: —there were no strikes. Whereas the reality is, as the smarter Labour Party members know, like David Parker, actually, New Zealand pre-1984 was a sclerotic economy, compared to a Polish shipyard—an economy that was on its knees.

Hon Michael Woodhouse: What did it have, though—it had wage and price freezes?

CHRIS BISHOP: Well, it did. It did have a wage and price freeze.

Hon Andrew Little: Who put those in place?

CHRIS BISHOP: Yeah, well, that’s right. I mean, here’s the thing. Andrew Little says, “Who put that in place?” Here’s the thing. I’m prepared to acknowledge that Rob Muldoon’s wage and price freeze was a mistake. Are you, Mr Little, prepared to acknowledge that the changes made from 1984 onwards—which, by the way, the fundamentals of which have never been reversed—have made New Zealand a more productive and prosperous economy?

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! The member will not bring the Speaker into the debate.

CHRIS BISHOP: I’m sorry. I’m sorry, Madam Speaker. I got very fired up there. So we’ll wait and see if Mr Little is prepared to acknowledge that.

So the Labour Party misremembers the past, because we did have a wage and price freeze from 1982 to 1984. I’ll tell you what else we had back in the 1970s—there’s been repeated references to it during the debate today and in previous days—which is a union system or an industrial relations system not so much focused on the flexibility of the labour market but on raw union power. David Seymour made reference earlier to the fair pay agreements being advanced by the Labour Party as being actually closer to the 1896 Industrial Conciliation and Arbitration Act, and there’s probably some truth in that.

The sad thing is that successive Labour Governments in both Australia and New Zealand, and social democratic Governments around the world, have realised that enterprise-based bargaining based on the productivity of a business is the way forward for higher wages, not productivity based on whatever a union boss and the employer boss decide in a smoke-filled—well, it won’t be smoke-filled any more, but a back room—

Hon Michael Woodhouse: A vape-filled room.

CHRIS BISHOP: —a vape-filled, closed room in the dead of night when they’re trying to strike an industrial bargain. We’ve long ago realised that. Paul Keating realised that. Bob Hawke realised that. Roger Douglas in New Zealand realised that. Stan Rodger, who was the Minister of labour in the 1980s under that Labour Government, realised that. Successful progressive social democratic parties know that, which is why none of them, including the Australian Labor Party, are trying to go back to the bad old days. I’ll tell you, the only party in the Western World, the only social democratic party in the Western World, trying to reverse 50 years of industrial progress is the New Zealand Labour Party. So they misremember the past.

Kieran McAnulty: Point of order. I’m actually finding that quite interesting, but none of it is in the bill.

CHRIS BISHOP: Speaking to the point of order, I accept the point that it is relatively wide-ranging, but I just make the point that it is responding largely to points made by members opposite, and it’s a robust debate.

ASSISTANT SPEAKER (Hon Jacqui Dean): OK, thank you. Thank you for those points of order. I’ve been following the bill closely as the debate has flowed, and it is a relatively narrowly focused debate, but there are the changes, consequential changes—increases to social welfare benefits—and I think, given the House is in urgency, I am happy that the member’s speech is within the scope of this bill. However, I would remind the House to be aware that this is still a first reading—second reading, you can spread your wings a little more.

CHRIS BISHOP: Thank you, Madam Speaker. So we support this, as members on this side of the House have—[Interruption] Well, we support it for the reasons that Nicola Willis, I think, neatly outlined, which is that you’ve got to maintain the gap between welfare and work. We agree and we absolutely believe you have got to maintain that gap between welfare and work to incentivise people to get into the labour market. So the general policy statement—“this bill proposes to increase the Minimum Family Tax Credit … as a consequence of increases to Social Welfare benefits”—is absolutely justified in light of the increases to benefits that the Government is providing.

But I would make the point that we will never do anything about inequality in this country—an admirable goal—until we sort out our housing market. The Minister of Finance in his speech today waxed lyrical about doing more for those on low incomes and creating a more equal New Zealand. Actually, if you want the truth, since the 1980s, since the terrible reforms that they like to demonise, the truth is, if you take out housing costs, inequality in New Zealand is flat. When you include housing costs, that’s when you start to get the pernicious effects of restrictive land laws, restrictive zoning requirements in our major cities, and a restrictive urban and outer urban planning regime that makes it nearly impossible to build a house in this country, and it makes it difficult—nearly impossible—to supply the infrastructure to build a house in this country.

If we’re talking about 30 years on, it was 30 years ago this year that Parliament passed the Resource Management Act (RMA) 1991. By God, if there was one thing this Government could do that would make a difference to reverse something bad that happened 30 years ago, for me, it probably wouldn’t be the benefit cuts. If I’m looking on 30 years and saying I want to do something progressive, I want to do something that will change things for the better in this country, I want to do something that will make it easier to build houses, I want to do something that will make it easier to create a more equal society, I want to do something that will make it easier for low-income people to get on the housing ladder, I want to do something that will make it easier to lower the social housing wait-list, make it easier for renters in this country, the one thing I would do would be wholesale Resource Management Act reform. Thirty years ago, Parliament passed the RMA, and 30 years—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! The member is just getting a little wide of the bill. Could he return to the bill, please.

CHRIS BISHOP: Oh, well, Madam Speaker, I’m making the point about how the Government’s argument is that lower-income people are doing it tough and therefore we have to increase benefit levels, and I’m making the point that one of the reasons lower-income people are doing it tough is because of the explosion in housing costs, particularly rental costs, driven by a restrictive housing market, driven by the Resource Management Act. This is a point that people often don’t understand: if you make it harder to build houses, you make it harder for people to get into the rental market and you make it easier for landlords. You mean that landlords can charge what they like.

We need a housing market where renters have the power, not landlords. At the moment, the situation is the reverse. You’ve got students near where I used to live lining up on Kelburn Parade and the streets running off it at 8 a.m. in the morning to get a student flat that’s smelly and mouldy, and they’re charged an arm and a leg and through the nose for it—to continue the clichés. It’s just appalling.

We’ve got to reverse all that, and once we reverse all that by actually making some changes that should be reversed from 30 years ago—i.e., the Resource Management Act—that’s when we’ll get a housing market that works for renters. We don’t need to increase benefit levels like that. That would be the single best thing we could do for low-income people in this country.

WILLOW-JEAN PRIME (Labour—Northland): Tēnā koe e te Māngai o te Whare. He tino Hōnore tēnei mōku ki te tū i tēnei ahiahi ki te kōrero e pā ana ki te Tahua Pūtea 2021. He mea nui ko au te kaikōrero whakamutunga o te pānuitanga tuatahi o tēnei pire i te ahiahi nei. E tino harikoa ana ahau kotahi piriona tāra i roto i tēnei tahua pūtea mō ngā kaupapa Māori, pērā i te whare, te manatū hauora Māori me te mātauranga Māori anō hoki. Ko te mea tuarua ko ngā penihana, ka piki ake te moni ka whiwhi i ngā tāngata e noho ana i runga i te penihana ia wiki, atu i te toru tekau mā rua tāra ki te rima tekau mā rima tāra ia wiki. Ka piki ake i te moni mō ngā whānau, ka heke iho ngā nama o ngā tamariki e noho i raro i te pōharatanga nō reira e mihi ana ki te Minitā.

Engari ko te kaupapa o tēnei pire, ko te tikanga ko te kaupapa mai rā anō kia nui ake te pūtea ka whiwhi i ngā whānau e mahi ana i te pūtea o ngā whānau e noho ana i runga i te penihana nō reira ko te kaupapa o tēnei—ka whiwhi i ngā whānau e mahi ana i tētahi wāhi pūtea atu i tō rātou nama kua whiwhi mō te mahi kia nui ake tō rātou pūtea ia wiki i ngā whānau i runga i ngā penihana. Nō reira, e tautoko ana ahau i tēnei pire. Pau te kaha.

[Greetings, Madam Speaker. It is a real honour to speak this afternoon about Budget 2021. It is also an honour that I am the final speaker on this first reading of the bill this afternoon. I am delighted that $1 billion of the Budget is for Māori, for housing, health, and Māori education. The second aspect is that for those on a weekly benefit, the money that they receive will go from $32 a week to $55 a week. There will be more money going into the pockets of families, which means a reduction in the number of children living in poverty, so I commend the Minister.

However, the main element of this bill, and it has been the primary purpose for a long time, was to ensure that families who worked had more money than those who were on benefits—that is to say that families in employment would receive additional money to what they earned, so that they would end up with more income than those on benefits. Therefore, I support this bill. Thank you.]

A party vote was called for on the question, That the Taxation (Budget 2021 and Remedial Measures) Bill be now read a first time.

Ayes 100

New Zealand Labour 65; New Zealand National 33; Te Paati Māori 2.

Noes 10

ACT New Zealand 10.

Abstentions 10

Motion agreed to.

Green Party of Aotearoa New Zealand 10.

Bill read a first time.

Result corrected after originally being announced as Ayes 100, Noes 10.

ASSISTANT SPEAKER (Hon Jacqui Dean): Can I just remind members if they wish to call for a party vote they do it very promptly.

Second Reading

Hon DAVID PARKER (Minister of Revenue): I move, That the Taxation (Budget 2021 and Remedial Measures) Bill be now read a second time.

Thank you, Madam Speaker. I rise to take a call on the second reading of the Taxation (Budget 2021 and Remedial Measures) Bill. I won’t restate what has just been stated in the first reading, but I will respond to the comments that the Chair ruled in order in respect of David Seymour and various members of the National Party about the effect on rents. The suggestion is being made by the Opposition that changes to benefit levels and changes to the in-work tax credit that this bill is about will all be absorbed in rents, and I want to explain why I don’t think that’s correct.

I do agree with Chris Bishop that we have got some problems with rigidities in land markets.

Nicola Willis: Hurry up and fix it.

Hon DAVID PARKER: Well, the member shouts out, “Hurry up and fix it.”, I would point out that nine years in Opposition, they made things worse. And, actually, I’m about to tell the member how we are fixing it and how the fixes are working.

Now, we know there’s been this rapid escalation in house prices and, related to that, rents in New Zealand. The good news is that—I think the members of the Opposition misheard it when the Minister of Finance and the Prime Minister both referred to the fact that Treasury’s projection is that house prices will go up in the year ended June 2021 by 17 percent. That’s actually the year that ends next month, and their projection, which is set out on pages 12 and 13 of the Budget Economic and Fiscal Update 2021, is that for the following year—i.e., for the year that commences on 1 July—the predicted increase in house prices is 0.9 percent for the year. Now, the reason for that is that housing policy is now working.

Nicola Willis: Ha, ha!

Hon DAVID PARKER: Well, it’s a fact-free zone on the other side of the—Opposition. This is the Opposition that denied we had a housing crisis for nine years, made it worse in everything they did to overly complicate the Resource Management Act and all of the other distortionary policies that they pursued.

Madam Speaker, I am referring in no more length to the issues that you gave other parties the latitude to—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Order! The Minister will resume his seat. We are in danger, here, of this bill becoming more about housing policy than the matter at hand. So I—[Interruption] There will be silence while I’m on my feet. I will invite the House, very warmly, to stick to the matters that are contained in this bill. There is latitude from the Chair to recognise that we are in urgency, but we are getting to the trading-blows stage of debate and I would prefer that members stick to the substance of this bill.

Hon DAVID PARKER: The reason why this bill will not result in higher rents is that this last year we had more than 40,000 consented houses, which is building houses ahead of population growth in typologies that are smaller houses, mainly two- and three-story semi-detached units in Auckland, and that’s why the projection in this Budget is that house price inflation, essentially, disappears from next year on. I commend this bill to the House.

ASSISTANT SPEAKER (Hon Jacqui Dean): Hon Michael Woodhouse.

Hon Michael Woodhouse: Oh, I thought you were going to ask if the question was going to be put.

ASSISTANT SPEAKER (Hon Jacqui Dean): Oh sure. The question is that the motion be agreed to.

Hon MICHAEL WOODHOUSE (National): In my nearly 13 years in this place, I thought I’d heard it all, and then the Greens abstained. I am still picking myself up off the floor—that here we are, with a consequential amendment to minimum family tax credits as a consequence of a very significant material increase in the incomes of our most vulnerable New Zealanders, and the Greens can’t support it. They can’t even say aye to that. Surely this is Green Party whakapapa? Surely this is their raison d’être, apart from saving the planet? It’s about saving the people from the quagmire of poverty, and they can’t bring themselves to support it. I am staggered. I had thought I’d heard it all, and then the Greens come along and surprise me once again.

If the Tui beermakers want a number of billboards, I think we heard a couple of doozy candidates from the Hon David Parker about how they have suddenly fixed the housing problem that the previous National Government had created! Suddenly, because he said it’s all over, it’s going to be fine! And, actually, that’s consistent with the narrative, because falling on the floor just a couple of minutes ago wasn’t the first time today; the first time actually was when Grant Robertson, in his Budget speech, said something about house prices—because they’re up 17 percent, but these guys are going to magic them back down to 0.9 percent! There’s a Tui billboard right there. And why is that relevant to this bill? It’s because the reason we are here is that the costs for those vulnerable New Zealanders, including dramatic increases in rent, have necessitated quite large increases in their income support, and this bill is a consequence of that.

I think we’re going to be on a treadmill because the benefit increases that the Government has announced in Budget 2021 were what was recommended to them to do two years ago, before those dramatic increases in rentals, before those significant increases in electricity prices and the other household expenses that struggling families are needing to find the money for. So we haven’t got ahead of the curve; we’re still well behind the curve, and the policies of this Government are going to continue to make life difficult for these non-working New Zealanders. And the most difficult thing they’re going to have to do is to try and find a job in an economy that, thanks to this Budget, there won’t be enough of. This is a seriously unimaginative, bland, spend-and-hope Budget, and we’ll be back here probably, having to palliative care the most vulnerable New Zealanders and increasing minimum family tax credits once again.

And that’s assuming the Budget projections for Crown revenue, job growth, economic growth, and unemployment are actually met. I have little confidence. Because they made a really good announcement, it probably dooms it to not being successful, because if there’s one thing this Government does, it’s announce and then fail—announce and fail. And I think they will fail to support our most vulnerable New Zealanders, because they’re putting the ambulance at the bottom of the cliff and not implementing measures that will prevent them from falling off that cliff in the first place. Those measures would have been support for business, for employing people, for increasing the incomes of middle-income New Zealanders, for reducing the tax burden—goodness knows we should be speaking today on a Taxation (Budget 2021 and Remedial Measures) Bill that actually remedied stuff around taxation, because it’s a bit of a misnomer; what’s on the tin isn’t actually what we’re debating.

But, in the spirit of that, National members will be moving amendments to this bill to take serious remedial measures. In the committee of the whole House, we’ll be suggesting what a really good taxation remedial measure should be, and we’ll be talking about them, I’m sure, after the dinner break.

Dr James McDowall: Will you be supporting that?

Hon MICHAEL WOODHOUSE: We are supporting that. Well, we’ll certainly be supporting our own amendments. That’s an interesting question. But what we won’t be doing is abstaining. And I hope the Greens can change their mind. They have time. There are two or three more votes to go. Perhaps they’ll have a road to Damascus experience and realise that the very people that they claim to support are, at least in part, people who would benefit from this bill when it’s passed. I’m gobsmacked. We will support it. I feel like a Green Party member at the moment!

Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Madam Chair. It’s good to see that we’re almost all on board here. Look, the fact of the matter is—

Hon David Bennett: Almost all on board here!

Dr DUNCAN WEBB: Well, there’s so many of us great socialists on this side of the House. You know, it just beggars belief that here we have a programme to lift children out of poverty by putting money where it is needed and at the same time doing, as the Prime Minister says, the double duty of stimulating the economy, and we’ve got naysayers in the House. It just really, quite frankly, flummoxes me.

This bill is just one piece of the puzzle to make sure that over the next days, months, and year, we can put this into place, keep New Zealand moving, and keep the economy recovering in the fantastic way it has. This is just to make sure that people who are getting family tax credits move commensurately with those who, of course, need it most—those who are unable to work—so that they can be looked after, but we still have that great incentive to get into work so that the unemployment rate under this Government continues to fall. I commend the bill to the House.

Hon DAVID BENNETT (National): Thank you, Madam Speaker. This bill is the result of a Budget that has its centrepiece in an increase in benefits. This is a good Budget for the National Party because it shows New Zealand the true intent of that Labour Party. It shows New Zealanders—if they didn’t already have a wake-up call—as to what that party intends for the New Zealand economy, and it is an economy that is bound to fail now. This economy cannot survive the three years of this Labour Government and the economic policies they will put in front of us. I actually think, good on the Labour Party for actually doing what they think, because the more they do that the more New Zealanders will lose jobs in the end, the more New Zealanders will have increased housing prices, and the more New Zealanders will realise what a failure that Government and their economic policies will be.

This is not something new that is just being traversed in this Parliament today. We’re not looking at a glorious Labour Party that has worked out the economic solutions for the world. That is not what we’re seeing here, to the public of New Zealand. What we’re seeing is a Labour Party that honestly believes in socialism. The Prime Minister’s speech at the end—she said it was a matter of dignity. It wasn’t a matter of economic support. It wasn’t a matter of helping people to get a future for themselves. It was a matter of dignity, because “I am a socialist at heart and I believe this, and they need to follow me. You need to follow me and understand that I am right, because socialism works and the Labour Party understands what people need. They understand how to solve the issues of the world.”

Those people there have never earned anything in their life, are lucky to be in this place, and most of them won’t be in this place at the end of the three years, because what will happen, as a result of this, is there will be a major tidal event in New Zealand politics, where the Labour Party will be destroyed and it will be destroyed for decades because they haven’t learnt the lessons of the past. And the lessons of the past are that big Government, socialism, and a Government that thinks it knows best always fail. That is the history of the world. It is a history that we are doomed to repeat, a history that every other country in our region is not doomed to repeat because they are smarter, more successful, and are saying no to those ideals.

The Australians have said no to those ideals. The Americans have said no to those ideals. The Canadians are saying no to those ideals. And what is more important, everybody that we want to trade with in our region never even thinks of believing in those ideals. The Asian communities that we want to trade with believe in capitalism and the right of individuals to get out there and make some money and to go for it. This is a Labour Government that is using the cloud of COVID to create an environment where they can bring about social and economic change that they see is their great job to do. They have never gotten over the fact that New Zealand changed its economic position 30 years ago. It actually adopted an economic philosophy that every country in the world now follows. Even the most autocratic Governments in the world do not have socialism anymore.

Hon Member: North Korea.

Hon DAVID BENNETT: There is no autocratic Government in the world that believes in the socialist—oh, maybe North Korea. But apart from that, there is none. Even the most savage leader of the world that could take over his or her own country does not—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Order! Order! The member will resume his seat. Second reading is slightly wider in scope than a first reading, but I would suggest that members stick to matters to do with the broad intention of the bill and the broad principles of the bill. Then, the member’s speech and all other members’ speeches will be within scope.

Hon DAVID BENNETT: Thank you, Madam Speaker. I was just going to get on to that, because when I looked at the first page of the Budget speech, what do I see as the second line? Today’s Budget is to deal with what happened 30 years ago. Then I go to the next paragraph: today’s Budget is to deal with what happened 30 years ago. I go to the fifth paragraph: today’s Budget is to deal with the inequitable changes 30 years ago. The first page of their Budget is all about how they want to throw out the reforms of 30 years ago. It’s not just the reforms of 30 years ago; it’s the reforms since then. It’s the reforms every other country has done around the world. Is the genius of Jacinda Ardern, the genius of David Parker, the genius of Damien O’Connor, the genius of Willie Jackson, and the genius of Greg O’Connor going to mean that we have a better economic system than any other country in the world? No way! They are leading New Zealand to failure. They are leading New Zealand to a position that will hurt the very—

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! Order! Order! I’ve warned the member that the purpose of a second reading is to explore the broad themes of the bill and broad principles contained in the bill. I’m accepting a bit of latitude, but unless the member sticks more broadly to the bill, I will have to warn him further.

Hon DAVID BENNETT: Madam Speaker, the broad theme—

ASSISTANT SPEAKER (Hon Jacqui Dean): No, the member will resume his seat. I have ruled.

Hon DAVID BENNETT: The bill talks about the tax system in relation to a benefit change that we have seen today in the Budget. We heard the Green Party talk about the need to look after beneficiaries. That’s their whole purpose of being in this House, if I get it right, you know? We heard David Parker talk about his great plan of how he’s going to change housing prices, but, in essence, the very people that this bill is about—you know, the beneficiaries that will be the ones that they are saying they’re looking after—are actually the people that will be most hurt from the economic policies that this bill represents. This bill represents economic policies that will destroy the New Zealand economy. They will destroy the private sector, and the private sector pays the bills for the social spending of this House. The day we forget that, and the day we think that there is some socialist utopia where we can just sit there and move money around and we can actually solve the problems of the world, is the day we do a disservice to the beneficiaries of New Zealand. That is what is happening in this bill today.

It’s great for the National Party because it is showing the failure of the Labour Party and how the Labour Party will take this country down. We see it with all their policies that they’ve done this year. They’re taking a very arrogant approach to their economic credentials and that will destroy the New Zealand economy. What we are doing is we are standing up for ordinary New Zealanders that want to see a prudent Government. If you look at the Australian Budget, guess what they did! They put down iron ore at $50 instead of $250. Even though they’re getting $250 in the market at the moment, they had a prudent Budget. There is no prudent Budget here today. What we see is a Budget that is based on ideological principles—ideological principles that have shown to fail time and time again.

The great socialist experiment that New Zealand is entering into will be a failure. It will be the end of the Labour Party. It will be the end of those Labour MPs that came in last time. They better enjoy it; they’ve only got three years. It’s going to be the last of the Labour Party. Then we can see the end of socialism. We can see the end of a Labour Party that has no right to govern in this country because it is out of touch with New Zealand. It is out of touch with the world and it’s out of touch with where we want to go.

Look at how out of touch they are. David Parker, in his speech, talked about consenting—because there’s 40,000 consented houses, there will be no increase in rent. Well, how does that work? How does that work? Should we consent 100,000 houses and then rent will halve? Is that what’s going to work? You know, it’s great economic theory, isn’t it? You know, maybe you should write a book about it? Maybe he should explain his economic theory, because the 40,000 consented houses are going to make jack difference to rent, David Parker. What will make a difference to rent is if the productive part of this economy is belted time and time again, and we have an economy that’s based on a party that thinks it can just redistribute income and it knows everything. And it does it with dignity and with heart because it is right, and the rest of the world is wrong. The history of New Zealand is wrong and all economic history is wrong under them.

Dr DEBORAH RUSSELL (Labour—New Lynn): I stand here as a very proud member of the great socialist democratic Labour Party—a Labour Party where the true intent is to look after New Zealanders, all New Zealanders; a Labour Party where the true intent is to ensure that children have enough food to eat—all children. It is a Labour Party where the true intent is create jobs—because we are “a labour party”; a Labour Party which has had the guts to reverse the horrendous cuts in the “mother of all Budgets”, and to increase benefits today. Why? Because we care about all New Zealanders.

This narrow, technical bill adjusts the minimum family tax credit because we have increased benefits today. It’s an increase that was recommended by the Welfare Expert Advisory Group, an increase that has been shown to be supported broadly by New Zealanders in the most recent opinion polls. This is an excellent bill. It is a bill that represents the true values of New Zealanders, and I commend it to the House.

RICARDO MENÉNDEZ MARCH (Green): Tēnā koe, Madam Speaker. The Green Party proudly supported this year’s Budget, because we support an increase in people having more income to live on and to move towards a livable world that protects against the effects of climate change. The reason why we are critical of this bill, and I think it’s really telling where the ideology of the National Party is coming from, is because what we have heard in previous speeches is that, ultimately, the purpose of the minimum family tax credit is about keeping a difference in incomes between those that are unemployed and in paid work. It’s telling that the National Party is railing against increasing benefits but somehow really proud to support a policy that continues keeping a gap between some of our most vulnerable members of society who have struggled so much for decades.

We are stoked that there’s been an increase to core benefits levels that will mean less people will need to get food grants to survive, and we’re clear that this doesn’t go far enough but it’s a step in the right direction. What we don’t support is a system that continues pitting our people in paid employment against those that are doing volunteering and caregiving and that accepts that they do not deserve to live with dignity. We should be having an income system that unconditionally supports people, and we, as proud socialists as well, will continue advocating for quality public services, for an income support system that works.

So going straight to the bill, ultimately what we are talking about is a policy that has perpetuated the narrative that caregiving isn’t labour that deserves to be supported equally to those in paid employment, that people who are receiving income support are somehow not as independent as those in paid employment. We do not believe that we should be working towards a system that perpetuates these divisive and stigmatising narratives. Instead, this is why we continue working to replace the minimum family tax credit to change it to a family support credit for all low-income and medium-income families that will create a $190 a week first child payment and $120 a week subsequent child payment, to lift people out of poverty.

That is the future we want for our income support system, and so while we are stoked to see core benefits being increased in this year’s Budget, we will continue campaigning for an income support system that provides unconditional support.

Dr JAMES McDOWALL (ACT): Thank you, Madam Speaker. I’ll just use this opportunity to take an extremely short, unexpected call. These sorts of policies are an ambulance at the bottom of the cliff. You can’t have a failed Government policy after so long increasing costs to New Zealanders, increasing living costs, and increasing housing, and failing at the housing market, and then saying we need to make these changes to make it all fairer and more affordable. That is why we’re opposing this bill. Thank you.

ANGELA ROBERTS (Labour): It’s been really interesting listening to these people on the other side of the House who, obviously, failed level 1 economics. They fail to understand the concept of circular flow. The increased money—[Interruption]—pay attention, because you obviously failed—through this bill that flows into our most vulnerable households doesn’t just disappear. What happens is it flows. It is spent in the local economy, at the supermarket—like we heard earlier—on jam, at the petrol station, at the chemist, and buying stationary for kids and school shoes. That in itself—

Hon David Bennett: Point of order. The member’s introducing a new concept into the debate of circular flow, and I’d be really interested if she would define that, because—

ASSISTANT SPEAKER (Hon Jacqui Dean): Thank you. [Interruption] Thank you. Thank you, the member will resume his seat. Angela Roberts.

ANGELA ROBERTS: Thank you. That, in itself, stimulates the local economy. It creates more jobs and more spending. Then, if you managed to make it all the way to level 3 economics, you would also understand the concept of fiscal multipliers: the positive impact on our economy and helping us to accelerate our recovery.

Hope and dignity and economic arguments can flow together. I commend this bill to the House.

ASSISTANT SPEAKER (Hon Jacqui Dean): I call Nicola Willis for a five-minute call.

NICOLA WILLIS (National): The purpose of this bill is to ensure that people are still better off in work earning a tax credit than they would be on a benefit, and that is why a lot of this debate has focused on housing policy, because you’re not better off in work if your rent keeps going up again and again, week after week, year after year under a Labour Government. And that’s what’s been happening. Rents have, on average, gone up $100 a week under Labour, and that is a lot more than wages have increased. But don’t worry, because David Parker has entered the debate to share some news with New Zealanders. His news is this: housing policy is now working! So good on David Parker! That’s the news he has for every first-home buyer in this country who is being asked to pay more for a house than in any other country in the Western World.

ASSISTANT SPEAKER (Hon Jacqui Dean): Come back to the bill—the member will come back to the bill.

NICOLA WILLIS: And this applies to the families earning the tax credit who we’re speaking about in this bill, who will be having to face increased housing costs into the future.

But I do want to just reply to a couple of the comments that Mr Parker made in relation to this bill in his contribution in the second reading, because what he said was that actually the reason it’s all going to be fine is that the Treasury have predicted that house prices, while they’ve increased 17 percent in the past year under his Government, will only increase 0.9 percent in the next year. Now, suddenly, David Parker has come to the mountain of the Treasury and said, “I worship at you, O Treasury. If you say it, it must be true.” And this is, of course, in quite stark contrast to where his colleague the Hon Phil Twyford has been on this, because when Treasury warned Phil Twyford, “Mate, you’re not going to be able to build 100,000 KiwiBuild homes. It’s not happening.”, at that point what he said was, “Well, those are just silly kids at Treasury. They don’t know what they’re talking about.” And, of course, we have 871 KiwiBuild homes.

But the next part of Mr Parker’s analysis that I just think we need to look at, apart from his undying, completely yielding adherence to everything that the Treasury says, is this idea that the housing policy is working because, actually, we’re building more houses now. Well, I would remind Mr Parker that in 1973 we were building 13 houses per 1,000 people of our population, and today we’ve managed to get it to about eight. So we are not building houses as fast as we have in the past, as a country, and it is completely false to claim that.

But the point of this bill is actually about making sure that work pays. And this is a very small step towards that. It deals with the threshold at which a family is eligible for a tax credit. And what we’ve been arguing on this side of the House is, yep, you’ve got to do those things, because otherwise you create a truly socialist economy where people are better off on benefits than they are in work—and I think from the tone of some of the contributions coming from the other side that that is actually the utopian vision that some Labour members have, as they ascribe their socialism and pin it to the wall. But we on this side of the House think that this should be a country of aspiration, of reward for achievement; a place where kids grow up knowing that if you get up in the morning and you go to work and you work hard, then there is a path to prosperity for you. The only way that we create that path to prosperity for every single child growing up in this country is if we create a productive economy with jobs, industries, businesses competing against the best in the world, because only when this country is earning its way in the world, and has businesses that can actually afford to hire more people and pay them more, will we truly give children a pathway of aspiration. And that is why, on this side of the House, we beg of the members opposite: you have to do more than think of clever ways to divide the pie.

This Budget lacks any focus on a path to prosperity, a growth vision for the New Zealand economy. It is not enough for a finance Minister to look in the rear-view mirror and say, “I remember something that upset people 30 years ago.” Well, we all remember that, but what we want to know is your vision for 30 years in the future. Where will this country be when my five-year-old is 35? Because I want her to see a country where if she works hard, she’ll get ahead. I want that for every single child. Every beneficiary’s child, every working parent’s child needs to be growing up in a country where if they work hard, there’s a high-paying job for them. It needs to be much more than just putting a little bit more in the benefit.

TANGI UTIKERE (Labour—Palmerston North): Thank you, Madam Speaker. I think that is just the ideal example as to why those members on the opposite side of the House are simply out of touch, out of touch with what this Budget will mean for hard-working New Zealanders up and down the country—out of touch. The message I would give to the Opposition is that, if that’s the song sheet they wish to continue, they’d better get comfortable on the Opposition benches, because that’s where they will be for some long, long time.

ASSISTANT SPEAKER (Hon Jacqui Dean): Order! The member is speaking on the Taxation (Budget 2021 and Remedial Measures) Bill, and I would invite him to mention the bill pretty soon.

TANGI UTIKERE: Yes, thank you, Madam Speaker. On that basis, I am delighted to commend the bill to the House.

Sitting suspended from 5.59 p.m. to 7 p.m.

SPEAKER: The House is resumed. When we adjourned for the dinner break, we were discussing the second reading of the Taxation (Budget 2021 and Remedial Measures) Bill.

Hon GERRY BROWNLEE (National): This is the second reading of this bill. There’s been an enormously wide-ranging second reading debate so far, a debate that, quite clearly, I think has confused itself between this bill and the Budget itself.

SPEAKER: Absolutely.

Hon GERRY BROWNLEE: But then—but then—you wouldn’t want to break, sir, with the—

Hon David Parker: Point of order, Mr Speaker. I was sat down for straying outside of the bill by the Speaker before dinner.

SPEAKER: Yes, yes. That is not a point of order. I think the member knows it’s not a point of order. I was watching the debate and that happened far too late.

Hon GERRY BROWNLEE: There is, of course, a loose connection to the debate at hand and then, of course, straying so widely as to be ridiculous. And I think that’s what the previous person in your seat identified with the Hon David—

SPEAKER: Right. Now we’ll get back to the bill and not reflect on the Chair’s ruling, all right?

Hon GERRY BROWNLEE: Oh, no, no, I wasn’t. I was being quite complimentary of the ruling.

SPEAKER: No. It doesn’t matter whether you’re complimentary or not, you’re still reflecting.

Hon GERRY BROWNLEE: So here’s the problem, everyone will be trying to make the case on the other side of the House that this is a good thing for New Zealanders who have jobs, who earn, but are still in receipt of family support. No one is going to deny that they need it. No one’s going to say, “Look, we’re not going to have that.” And no one wants to see the gap between someone who is living on a benefit and someone who is living in work so closed up that there is no incentive to go into work. So that’s a pretty easy principle to support.

The problem, though, is the fundamental reason why those people are on family support in the first place. The current Budget and the current initiatives from this Government do not see that number of people being recognised for the work—the contribution they make in the community.

We’ve just seen, a few minutes ago—we’re to see, I should say—the Prime Minister go on to TV and say that the benefit of this particular increase in family support won’t get swallowed up by rent increases. Well, why would anybody accept that, when, in the last three years, rents have gone up by $100, average rents? And what’s the reason for that? It’s a bit hard to explain because we’ve had low interest rates. We’ve had relatively low inflation recorded and published. But, in all reality, the costs of providing that rental accommodation have risen and are going to rise even further. So when it comes to trying to claim that there is a material benefit for people in this particular policy that’s coming out of this legislation, it’s wrong—quite wrong. When the next roll of rent roll comes round, this will get swallowed up very quickly because the deductibility of interest is going to go, and we’ve got rates that are going up across the country, and we have the precarious nature of low interest at the moment.

It’s very interesting also to look at some of the daily costs that people face. And I heard speakers earlier saying that they know what it’s like to be down at their last $2 going throughout the supermarket and having to make a choice about what to buy with that last $2. Well, I don’t have anything but sympathy for people who find themselves in that position. But just have a look at a simple basket of grocery products as demonstrated by interest.co.nz in their article today. Treat them as if they were a Consumers Price Index basket and you were assessing what the increase in those costs have been. It’ll show that in the last 12 months inflation’s running at about 7 percent. So it doesn’t take much to soak all this up.

The fundamental problem here is that whenever there is an effort to redistribute wealth, there is a looking away from the idea that it should be expanded, and that’s what a bill like this—it’s where a bill like this fails. If we are to raise the incomes of New Zealanders, it has to be based on production. It’s interesting going back and looking at great socialists of the past, and perhaps the greatest of all—Michael Joseph Savage—who said that whatever is able to be afforded by way of the welfare State has to be paid for by production. That’s the bit that’s missing here. Just a bill to say we’re going to lift the threshold of earnings by $520-something a year so that they can qualify for the family support and maintain it with a gap between those who are not in work. Well, the first thing is there’s a real problem with that. Perhaps there are too many people not having the opportunity to work because they are shut out of the economy for one reason or another. No one begrudges anyone the support of the welfare State when they need it. But some of the comments that have come from over the other side of the House today have suggested that there’s some big nirvana out there where everybody can just quietly go about their life with any amount of increase coming on a regular basis and not being in a productive position. I don’t think people who are genuinely in need of this support—and we saw some of them on TV tonight—will in any way not want to be part of that productive economy.

So this bill is a band-aid on the fundamental problem that we’ve got in New Zealand, which is an economy that does not accommodate enough people in the workforce. We are supporting this bill because it would be quite wrong to say that those people who are in work should not have a natural advantage over people who are not at work. And that’s not to be pernicious against people who aren’t in work; it’s just recognising that in the workforce there is a productive base—it ultimately provides the basis for our economy.

But I’d say, again, this is a redistributive bill looking at the collective wealth of the nation and deciding how it should be spread out. Well, most of that spread, in countries like ours, is in the services that people expect to make their life better on a daily basis. This bill doesn’t look at that; it simply looks at the idea of providing extra cash to those families who do need it. And I heard someone earlier saying, “Well, look, there are two economic theories that are in place here that make it absolutely acceptable.” The problem with all that is no one on the other side of the House has looked at where the funds come from. Yes, they do go into the economy. Yes, they do go round and round, and, yes, there is a multiplier effect, etc., etc. But where did the funds come from? It comes from a very, very heavily indebted New Zealand.

So there is a kind of a fool’s paradise being promoted with a bill like this that I think does not, should not, be considered a problem for those who are in receipt of the benefit of this particular expansion of the family support thresholds, but is the fault of politicians who are not looking at the root cause of our problems, and the reason that we have so many people in this country in receipt of Government assistance, whether it be for income supplement, for accommodation supplement, or for whatever it might be. The reality is that this bill comes because of a Budget that’s looked away from expanding the productive sector.

Voting Correction—First Reading

SPEAKER: Members, before we move forward we have a correction to a vote. The vote on the first reading of the Taxation (Budget 2021 and Remedial Measures) Bill was incorrectly announced as Ayes 100, Noes 10. The correct result is Ayes 100, Noes 10, Abstentions 10. The record will be corrected accordingly.

Second Reading

Debate resumed.

A party vote was called for on the question, That the Taxation (Budget 2021 and Remedial Measures) Bill be now read a second time.

Ayes 100

New Zealand Labour 65; New Zealand National 33; Te Paati Māori 2.

Noes 10

ACT New Zealand 10.

Abstentions 10

Green Party of Aotearoa New Zealand 10.

Motion agreed to.

Bill read a second time.

SPEAKER: The bill is set down for committee stage forthwith. I declare the House in committee for consideration of the Taxation (Budget 2021 and Remedial Measures) Bill.

In Committee

Part 1 Adjustments to Minimum Family Tax Credit

CHAIRPERSON (Adrian Rurawhe): Members, the House is in committee on the Taxation (Budget 2021 and Remedial Measures) Bill. The first debate is on Part 1, which is clauses 3 to 6, “Adjustments to Minimum Family Tax Credit”. The question is that Part 1 stand part.

Hon MICHAEL WOODHOUSE (National): Thank you, Mr Chair. I’m very pleased to take a call on the minimum family tax credit part of the Taxation (Budget 2021 and Remedial Measures) Bill. I think we’ve traversed the circumstances for this in a reasonably liberal fashion in the first two readings, and this will, obviously, be a little bit pointed. Although, I want to indicate to the committee that, because this bill is a bill about taxation and remedying things, I think there are a number of other remedies that we could put. Actually, what we have had is a long dissertation from the Minister of Finance and the Government of the day about fixing 30-year-old problems. Well, my aspirations in the committee of the whole House are a little more modest than that. I’d like to fix one problem that is a longstanding irritant, and that is the failure to amend the thresholds for the tax rates that are in the Income Tax Act 2007, and there is a tabled amendment now on the Table in the name of the Hon Simon Bridges to do just that—this would, I think, constitute a new part, and so I won’t elaborate on that too long; I’m just doing some introductory remarks—and a second tabled amendment is in my name to remedy the punitive changes that the Government made recently to punish higher-earning, hard-working New Zealanders, who are already paying a vastly disproportionate share of the income tax base in this country, by removing line 5 of Schedule 1 of the Income Tax Act—that is, the 39 percent threshold.

So I’m going to come and talk about that at the appropriate time, but I want to just ask the Minister, in regards to the minimum family tax credit change that we are debating, whether he felt it necessary—or why, rather, he didn’t feel it was necessary—to increase the threshold more than he has, or more than the Government intends to, because, effectively, what we are doing, if my calculus is correct, is that the adjustment rates that are set out in Part 1 in clause 4 are, effectively, a dollar change. But the higher the jobseeker support revenue becomes relative to the income earning threshold of workers, then the lower the proportion of difference there is. And we’re actually closing the gap in a percentage basis between the tax credit for those who work and the income for those who don’t.

Now, the Minister, in his first reading speech, made it very clear that it was—despite the proud shouts of socialism from the many speakers for Labour in this bill—still at least the Minister of Revenue’s intention that our framework should enable work to be more valuable than not working, and I think, despite the Greens’ interventions and then their abstention, almost every other member of this House would say that work is always better than not productively working, with all the qualifications that the Greens would put around the value of unpaid work, which nobody denies, and the importance of volunteerism and parenting and all of those things. But, actually, paid work is the thing that pays the bills. It pays the bills for the household, it pays the bills for the Crown, because the Crown doesn’t have any money except that which it taxes or borrows and then spends. So it strikes me that while there is this incremental adjustment, the gap in a proportionate basis has actually diminished a small amount and, therefore, the value of work as compared to income support for job seekers has actually closed, and I wonder if he could just explain whether or not that’s the case.

Hon DAVID PARKER (Minister of Revenue): I agree with the member that we should be having a gap between the earnings of people who are in work compared with those on benefits. It’s always difficult at the margins, but that’s what this bill attempts to remedy. The member is correct. It does it in numeric terms rather than percentage terms, but in terms of the rate at which wages are meant to grow relative to inflation, I’d refer the member to page 139 of Volume B.3 of the Budget Estimates, where it shows wages rising ahead of inflation. Benefits are, of course, indexed to wage rate growth, so whilst they will both increase by the same percentage, if wages go up by more than the Consumers Price Index, then so will benefits. The same percentage increase for both results in the gap between wages and benefits growing over time. So I think the member’s concern that there is a diminishing incentive to work, if that was his concern, should be allayed by that fact.

DAVID SEYMOUR (Leader—ACT): Mr Chair, thank you. I’d just like to ask a question for the Minister about the number of people that the Government anticipates will be affected by this change in the first year, and the fiscal impact of doing so. How many people will have an additional income top-up because they will be able to qualify for a minimum income tax credit, and when you add up the amounts of money that the Government anticipates or can at least forecast that they’ll receive, what is the fiscal impact of this change in the Government’s estimates?

Hon DAVID PARKER (Minister of Revenue): The advice I have is that 4,800 people will be affected by the change. I don’t have the total amount that that entails to hand. I don’t think—well, I’m not sure that officials have that to hand, either, but if the member puts down a written question, I could answer it. Suffice it to say that these are really things at the margin. It’s not a huge amount fiscally. But I’ll check that with officials, and if I can get him an answer, I will.

Hon GERRY BROWNLEE (National): We’re on Part 1, and in Part 1, there are the adjustments to the minimum family tax credit. Under new section MF 4H, inserted through clause 6—I might wait until the Minister, to be fair to him, is able to hear. In Part 1, section MF 4H, “Calculation of instalments: 1 April 2021 to 30 June 2021”, there’s a calculation there based on the old figure of $30,576 as the base amount. Then you have the calculation that is from 1 July 2021 to 31 March 2022, and that’s based on the new amount of $31,096.

My question, simply, is: what is the difference in weekly income for the current arrangement, for the period that is mentioned in section MF 4H, and for the bit that is mentioned in section MF 4I, for a family that has a dual income of $70,000 and three children? It’s not an unusual amount for people who are sharing an income, $70,000. It’s quite a modest income for a household, particularly if there are three children involved. So what are the three figures that they would currently be entitled to, that they’re entitled to between 1 April of this year and 1 July of this year, and, then, that they will be entitled to from 1 July of this year right through until 1 April of 2022?

Hon DAVID PARKER (Minister of Revenue): I’m not able to give him that figure, but, to put it in context, in table 5.2, on page 128 of the Budget Economic and Fiscal Update, the family tax credit is listed, and members will be able to see that the forecast for the 2021 year is slightly more than $2 million, $2 billion—oh. I’m going to need to check that figure and come back to the member. I might be—

Hon Gerry Brownlee: We don’t have that document.

Hon DAVID PARKER: Yes—

Hon Gerry Brownlee: That document’s not in the media pack that you put out today.

Hon DAVID PARKER: Well, this—

Hon Gerry Brownlee: Where do we get it?

Hon DAVID PARKER: Well, it will be on the web, if nowhere else. But I’m sure that the Budget and Fiscal Update I actually see sitting on the Table in front of me. So it is on the Table.

DAVID SEYMOUR (Leader—ACT): Thank you, Mr Chair. I just have a question about a matter I wonder if the Government’s considered: that the Government has raised the minimum wage to $20 per hour. The requirement to receive the minimum income family tax credit in a two-parent family is to work 30 hours a week; it seems to me that that would be $600. Now, with the new level, the income will be supplemented to about $608, and, I guess—actually, about $698. It seems to me that nobody could actually qualify on the 30-hour requirement unless they were earning less than the minimum wage.

I don’t know if perhaps I’ve missed something. Perhaps, taxation—income tax—means that people would still require a top-up to get their after-tax income to the right level. But it seems that it’s very possible that if the Government intends to continue increasing minimum wages at the rate it has, it may be that nobody can actually qualify for the minimum income tax credit, even at the rate that’s proposed. That’s not necessarily a bad thing, but I just wonder if the Government has actually considered the interaction between the minimum wage and the minimum income family tax credit.

Hon DAVID PARKER (Minister of Revenue): I thank David Seymour for the question. The figure that the member quoted was the after-tax figure—net of tax figure—which is how the tax credit is calculated. The before-tax figure is higher.

RICARDO MENÉNDEZ MARCH (Green): Kia ora, Mr Chair. In the spirit of discussing the minimum family tax credit thresholds, I’m interested in knowing, I guess, the political decision to set the threshold where it’s been set, because I guess one of the things—well, ideally, we would have liked to replace the minimum family tax threshold with a family support credit for all low-income families. We’re thinking about the decision to put the threshold in a way that prevents some families from acquiring it and where the rationale is coming from, in terms of setting that threshold, and also the consideration of perhaps expanding the minimum family tax credit to self-employed people and beneficiaries in recognition of some of the productive labour many of our people who are reliant on income support do.

Hon DAVID PARKER (Minister of Revenue): It’s the Government position that we intend that there be a differential between incomes for people who are on benefits and incomes for people who work. We think that it is appropriate that people who work do earn a bit more than those that are on a benefit. We think that is an appropriate incentive in society. We have had those debates in this Parliament for many years and the Labour Party was sometime criticised by people who hold a contrary view. We understand that view, but we disagree with it.

Hon SIMON BRIDGES (National—Tauranga): I want to seek to persuade the Minister in the chair to my tabled amendments. They are tabled amendments, of course, to this Taxation (Budget 2021 and Remedial Matters) Bill, which amends the Income Tax Act 2007. My contention is that this bill and its purposes don’t go far enough, and that these tabled amendments would be more than worthy amendments to be made. I do want to, on Budget day, put it within the context and the purpose of, really, the central part of this Budget, which is benefit increases. It’s a position where the Government is quite clearly acknowledging that we’ve got an issue, that there is an issue with incomes for lower income earners, but, of course, what has happened here today is announcements in relation to only those on benefits. What these tabled amendments, of course, would do would take that recognition of these huge cost of living pressures, inflationary pressures, that have, I accept, been the case now for some considerable time, and apply them in a more broad manner to more people who require that assistance.

Bluntly speaking, what I am talking about is not simply beneficiaries—because there’s a case been made for them—but also what I suppose we colloquially call today the working poor. Actually, I’d go even further than that. I think there is a case to be made for middle income earners, and I say that because, frankly speaking, when you’re earning $10,000, $20,000, $30,000, $40,000—actually, if you’re earning $80,000 in Auckland and you have dependants today, I think it’s hard to make the case that you’re somehow living large on the fat of the land. In fact, you may well, if you have children, depending on the Working for Families structure, for your particular circumstances be struggling as inflationary pressures and petrol, rent, energy, and other costs have gone up.

So the amendments that I am seeking in terms of tax indexation or what is often called bracket creep, would, I think, do three things that would greatly improve and be strong remedial changes to the Income Tax Act 2007. Firstly, of course, we would deal with that bracket creep. In that sense, with those inflationary costs of living pressures, as they go up—and, of course, what also happens is that incomes go up, people, though surreptitiously, move into a higher tax bracket, they are paying more tax, and, therefore, they are worse off. They have less disposable income in their pocket. This would, not in a huge way, but in a modest way, deal with that issue.

Secondly, what this bill would do is something related but subtly different, and it goes to the heart of income tax and the issues of income tax in this country. We have now—for certainly all of this century, but I’m sure I’m right to say, the last 30 or so years—seen the tax pie—

David Seymour: It’s a history lesson.

Hon SIMON BRIDGES: Well, they gave us one earlier today, despite the fact they got it entirely wrong about Ruth Richardson. They seem to forget the fact that they were in Government for nine years from 1999 to 2008—but, anyway, I digress. I do want to keep on track and focus on this bill. But I do just say to the member interjecting, it’s entirely unfair. It was an entirely cheap political shot from the Government, what they did.

But on this bill, that second point—the member says this is a history lesson; well, be that as it may—is that the tax pie over the last three or so decades has grown and grown and grown in comparison to the private incomes of New Zealanders. The Government’s sack of goodies, if you like, has grown, as there has been bracket creep, and they have taken more—my argument is—at the expense of everyday, ordinary New Zealanders, certainly the working poor and middle income New Zealanders. So that is the second thing.

There’s a third thing as well. There’s a third point in this as well that I want to make in my persuasion to the Minister and the Government about this and the tabled amendments to be made. And that’s this: Grant Robertson and the Hon David Parker—

Tāmati Coffey: Are awesome.

Hon SIMON BRIDGES: —may well—well, that’s a matter of debate, a debateable point, as the Speaker would say. They could say, I anticipate, that “Look, actually, well, we just can’t afford to do this. We can’t afford to do this because it might cost”—look at my last figures about two years ago—“$600 million or $700 million per annum to make these rather modest bracket changes once every three years, per annum.”, and I acknowledge that’s a significant amount of money. They can’t afford that. But the Prime Minister today said in relation to benefit increases, rhetorically, but I thought quite powerfully, “We can’t afford not to do this—we can’t afford not to do this.” That is the logic when it comes to beneficiaries. I say it’s also the logic when it comes to the working poor and even those in middle income.

But there’s also a more powerful point, actually, which makes this rather different from the situation when it comes to beneficiaries and what has happened there, where it’s, effectively, a transfer over, and it is this. It’s a conceptual point, but it seems to me it’s a significant point. This is not the absence of tax that the Government is getting, and was already getting; rather, what it is is simply the absence of an increase in tax take. It’s not money they were getting anyway. It is a pile that is growing as that bracket creep happens. So they’re not losing money. That’s simply the absence of growth properly understood, it seems to me.

I also want to make this point in relation to these tabled amendments that fit nicely here in this remedial matters bill, and would be a part of the logic. Another objection could be “Well, it’s not fiscally neutral.”, and, of course, in a bill process, there is a veto power that comes, I think, right at the end of the bill process that the Government or, indeed, actually—not the Government—the finance Minister personally must exercise. So you could think that. But strictly speaking, properly understood, these tabled amendments are not in that class, because my contention is that these tabled amendments are fiscally neutral.

All we are asking the Government to do is provide for a mechanism where once a term, at the start of a term, the Commissioner of Inland Revenue advises whether there has been bracket creep in terms of that Consumers Price Index basket of goods and what is happening there, and advises the finance and the revenue Ministers about that. But, crucially, according to these tabled amendments, the Ministers would, nevertheless, have the ability in terms of those provisions to say “No, we’re not going to do that.”, and all they would need to do—a bit like the Attorney-General’s New Zealand Bill of Rights Act reports, if you like—is provide their reasons for that.

So the Minister in the chair personally could provide reasons why it was not appropriate to change those brackets, and I’ll give you an example. For argument’s sake, with the current inflationary measures of around about, what is it, about 2 percent, you would see that 33c for the $70,000 tax bracket go up to something like, I’m not getting this to the dollar, but $72,000, $73,000—[Interruption]—yep—which, you know, is not huge, but is a meaningful cost of living measure for those on that income.

So that is, Minister in the chair, what we are asking for here. We think they would be good, sensible remedial measures, and very much, actually, in keeping with the kind of spirit that the Government is trying to put across in this Budget, other than that nasty, cheap shot they had at Ruth Richardson and the “mother of all Budgets”—a cheap political shot that it was.

Hon DAVID PARKER (Minister of Revenue): There’s nothing in the bill before the House about income tax rates and, therefore, I suppose it’s a question for the Chair as to whether introducing an amendment to the bill about income tax rates would be within scope. However, that decision has not yet been made by the Chair, and so I will advise the member that were that to be ruled in order, the Government would still be voting against it, for a number of reasons. I would note that, of course, not so long ago the Hon Simon Bridges was in Government for nine long years and didn’t put indexation of brackets in—

Hon Michael Woodhouse: That’s because inflation wasn’t out of control.

Hon DAVID PARKER: Well, he says, “Because inflation wasn’t out of control.” Inflation’s about 2 percent max at the moment.

Hon Michael Woodhouse: Wage inflation, I said.

Hon DAVID PARKER: In respect of—wage inflation’s out of control. No, actually, we quite like it in the Labour Party when people get paid more. We don’t call that wage—

Hon Simon Bridges: It doesn’t matter if their rent goes up a couple of hundy bucks.

Hon DAVID PARKER: Well, it’s not. So in respect of the issue—in respect of why the National Party chose not to index brackets—it’s because they preferred to give tax cuts to the top. Their most significant tax cuts gave 40 percent of the tax cut to the top 10 percent of income earners. The cost of those tax cuts was paid disproportionately by low to middle income earners, who suffered the increase in GST. We won’t be repeating that mistake, and if this amendment is ruled in order—

Hon Simon Bridges: Oh, nasty.

Hon DAVID PARKER: I don’t think that’s nasty. Is it nasty to put your amendment on the Table? It’s no more nasty for you to put your amendment on the Table than it is for me to speak against it. So if this amendment is in order, notwithstanding the fact that this bill isn’t about income tax, the Labour Party will be voting against it.

CHAIRPERSON (Adrian Rurawhe): Before I take the next call, I’m going to make a ruling. Just for clarity: we’ve heard from the member on his tabled amendment and we’ve heard a response from the Minister. I will be ruling that amendment out of scope of the bill as accepted by the House at second reading.

Hon GERRY BROWNLEE (National): Your ruling is, of course, absolutely accepted, but in his rebuttal the honourable Minister managed to open up quite a lot of other issues that clearly can’t just stand without some response. The first thing I would say is that much as he might want to criticise the last National Government, he should recognise what a huge mess a Government that he was part of left in 2008. It took years to straighten it all up. We finally got there. Somehow these guys have ended up with another opportunity to mess it all up again, and we’re looking at some of the most extraordinary debt the country has ever seen being piled up by these guys at the moment, with absolutely no plan for where they go from here.

My simple question on this part is: the Minister pointed us to page 128 in the Budget Economic and Fiscal Update and said the answer to my question about what the increases would be—what was the progression between now and that three-month period April through to July, and then July on right through the whole twelve months. Well, all that we’ve got here is actual figures from 2016, 2017, 2018, 2019, and 2020, a forecast for 2021, which is actually a drop on what was paid out last year, so less going to the people who are supposedly going to benefit from this particular bill. It drops even further next year, and then in the year 2023 suddenly bounces way up. It drops again in 2024 and then massively up again—or considerably up again, in 2025. So what are we to make of these figures? Why is there a trumpeting of this being great for New Zealand families, when in fact there is—let me just have a quick look here—about a $50 million, $60 million drop in actual payments expected to be made in the current year?

Now, it seems to me that there could be something wrong here. I’d ask a simple question: a family, two incomes, $70,000, three kids, what do each of those blocks of calculation—that initial period we’ve got now, the period that takes us through to 1 July from April, and then from April through to the end of next year—actually mean for that family? I would have thought that that would be something the officials would have had on a spreadsheet somewhere and could have at least said, “Well, we haven’t got it for $70,000. We’ve got it for $75,000. We’ve got it for $60,000. We’ve got it for $80,000 and $90,000.”, and so on, so that we could actually get an understanding of what’s being done here.

It seems to me that a simple movement of some $520 in the two thresholds is not going to make a huge amount of difference at all. There is no indication in the Budget Economic and Fiscal Update of what it actually means for families. I can’t help thinking that this is the usual story with the Government going out trumpeting something as being absolutely fantastic, amazing, and very good for people, and finding out that actually it’s very little, means nothing, and probably won’t happen.

So can the Minister tell us what was so persuasive about the information that was put to him by those who were wanting this increase that he was able to get Treasury to agree to it—not that that matters, actually. Treasury agreeing to something is of no great consequence at all; in fact, it’s probably a badge of honour if they disagree. But we just would very much like to know what that spreadsheet said.

Hon DAVID PARKER (Minister of Revenue): The effect of the minimum tax credit is to guarantee a minimum income to a single person that works 20 hours a week, or, if it is a two-person family, between them, 30 hours per week, and if they work either 20 hours or, between them, 30 hours, the minimum tax credit tops up their pay, if it is under the threshold, to the threshold. So the amount that any one person gets depends on how much they earn. If working for 20 hours they earned, say—to pick a figure—$30,000, then they would get a top-up of $1,096 so that their total income would be $31,096, which is the new amount.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much, Mr Chair. It’s been a fascinating debate, and I’d like to congratulate the Green Party for their passionate abstention in the matter. There is a march for apathy being arranged, and I hope they’ll join me and the procrastination society, and we’ll advise the date of that later—if it can be agreed.

I’ve got a couple of comments and then questions—it’s sort of like the kind of question you get at a public meeting, which is a long statement followed by “Don’t you reckon?” So in that spirit, I’ve got a couple of different lines of comment-question, and one is in relation to the different time frames and the different regimes that will apply in different quarters of this year and going into next year and beyond. The other line of questioning is in relation to the dollar amount at which the minimum family tax credit will kick in.

In relation to the dollar figures, we’ve heard some discussion about tax bracket creep, which is obviously not a derogatory term for a finance Minister one doesn’t like—it’s genuinely creep in the sense of increasing tax brackets. But I did wonder about the difference between those two numbers: the $31,000, roughly speaking, and the $30,500, and, obviously, I could ask you the difference between them, and, on the face of it, it would be roughly $500—or “five hundy”, in the name of a card game of that name. But leaving aside the arithmetic that underlines the difference, I wonder if the Minister can speak to the reasoning behind that change.

I understand, of course, from the explanatory note of the bill and from the legislative statement that’s come out in conjunction with the bill, that, of course, it’s in response to the increase in benefit rates. But I wonder if the Minister has considered other ways in which the amount might or might not be said to keep pace with current economic, fiscal, and, indeed, monetary trends. I refer, of course, to the spectre of inflation, which I think is a very real possibility and prospect following the Budget that we’ve heard today and in the context of other changes that the Government has announced and implemented recently. When wages are increased in an artificial or arbitrary manner, that is to say with no connection to increased production or productivity, then, of course, it’s only right to consider any legislation in the realm of taxation in connection with the possibility—indeed, some might say the likelihood—of inflation getting away on us as a nation and as an economy.

So my question to the Minister in relation to that increased threshold is whether it takes into account the possibility of inflation, and, if not, why not? I have a question too about whether any thought has been given to the possibility of the exchange rate—that is to say, the New Zealand dollar as compared with overseas currencies. New Zealand families are not immune to the fluctuations in the exchange rate. It’s not a particular area of expertise of mine, but I will note, of course, that in a pretty volatile global environment—I mean, New Zealand, I suppose, is doing its best to insulate itself from that by not entering into any new trade agreements, but that’s more in the category of cock-up than conspiracy, or perhaps accident rather than design. But, in any case, the reality is that it is at least theoretically possible that the exchange rate of various other currencies that are relevant to New Zealand families, directly or indirectly, should be considered, in my submission, and I want to know if the Minister has given any such consideration.

I will just add—I apologise to the Minister, who is prepared to answer those questions, and I do thank him for that, genuinely.

Simeon Brown: Is it a speech or a question?

CHRIS PENK: Well, it’s a bit of both. It’s a lot of one and not the other—that’s my answer to Simeon Brown, who’s asked whether I’m posing a question or giving a speech.

The cost of living, of course, is another factor, and we’ve got inflation with a capital “I”, but, of course, more generally, the cost of living in a way that might not be captured in the Consumers Price Index (CPI)—for example, when a Government excludes the cost of housing increases, whether that’s mortgage loan payments or rent, which have seen rise in a rampant fashion in the last 3½ years, and to be fair, to a lesser extent before that.

So I want to know, please, from the Minister, if he has considered the changes to the economic landscape in that regard when talking about those different thresholds. I give a heads-up or a warning, perhaps, that I do want to speak about and ask some questions in relation to the time frame, but I look forward to the opportunity to do that in a different contribution, and I request an answer from the Minister on those other points in the meantime.

Hon DAVID PARKER (Minister of Revenue): I won’t digress into either house price or rent inflation, because the Speaker sat me down during the second reading when I responded to incorrect statements by the Opposition on that same subject. So I don’t think it would be wise for me to raise those issues at the committee stage.

However, in respect of the wider inflationary concern the member Chris Penk has, I would observe that putting $20, $25 a week into the pockets of the lowest-income people in the country is not likely to lead to great pressures in the economy, because that’s likely to be spent on basics—food, clothing, and the like—and so I don’t see a huge inflationary risk there.

I would note that if there is an increase in underlying benefits occasioned by either inflation or by Consumers Price Index (CPI) inflation, or by wage inflation—given that benefits are now indexed to both, effectively—there is already a provision in the law that allows the minimum tax credit to be adjusted as a response to those benefits going up as a consequence of either CPI or wage inflation. That generally happens in December each year and is so regular that it’s occasioned by an adjustment to the members tax credit by Order in Council, rather than primary legislation.

Hon MICHAEL WOODHOUSE (National): I was fascinated at comments made by the Minister in the chair, David Parker, in his response to my colleague Chris Penk. I’m paraphrasing, but it’s close: he said that these changes were not likely to put pressure on the economy because the people who are benefiting from these changes are likely to be spending them on the essentials, on the basics. It conjures up some idea that people on higher incomes are somehow dashing to their gilt merchants and their sharebrokers, if indeed we were to give them some kind of tax break. Right? Well, I’ve got news for the Minister. They used to be supporters of the Labour Party. They used to be the union members of the teachers and the nurses and the police. They are middle-income New Zealanders, and they’re getting nothing from this Government, certainly not from this Budget. In a previous rebuttal to Mr Brownlee, he also implied—rather, to Mr Bridges, and Mr Brownlee—in refuting his tabled amendment to change the tax threshold changes, that he basically admitted that a Labour Government would never adjust the tax threshold changes because I would benefit from it as an upper-income earner. That is the level of jealousy that we see from this Government. They can’t possibly help somebody in the middle-income bracket—say, from $48,000 to $70,000.

Hon Dr David Clark: It was the National Government that didn’t do indexing.

Hon MICHAEL WOODHOUSE: Well, this Government reversed those changes, actually. He’s a bit tricky with history, that Dr Clark.

Simeon Brown: He likes his bike, though.

Hon MICHAEL WOODHOUSE: He sure does, and his beach walks, but he cannot bring himself to support tax threshold changes, because everybody benefits. Remember the slogan? This was a Government for all New Zealanders, only those who earn, say, more than $70,000 don’t get diddly—in fact, they get punished for their endeavours.

It’s also worth bearing in mind what the Minister said. Actually, who pays the income tax, because the Treasury documents from Budget 2020—and I haven’t analysed this year’s Budget—show unequivocally that the top 21 percent of income earners pay 64 percent of income tax, and the bottom 48 percent of income earners pay 8 percent of the income tax base, and do you know what? I’ve said it repeatedly: I think that’s fair. It’s quite progressive, and if it were adjusted for inflation, I think that’s fair enough. People who earn more should pay a higher proportion of their wages to tax, but not in the punitive way that this Government has done. We’ve punished endeavour. They’ve increased the top tax rate to 39 percent, and my tabled amendment seeks to remove the top tax rate, to undo that punishment.

Because here’s what’s going to happen: they’re not going to be paying tax; they’re going to be paying for their airline tickets to Australia, where incomes are higher and the lower thresholds are just that—the lower income thresholds are lower here—and the opportunities are better and the house prices are cheaper. Those doctors and those highly paid professionals will be looking at the job ads and the real estate pages in Australia.

I should add that we are going to have another go at improving things for middle-income New Zealanders. I’m aware that there will be tabled amendments in the names of my colleagues Nicola Willis and the Hon Gerry Brownlee.

Chris Bishop: Oh, they’ll be good ones.

Hon MICHAEL WOODHOUSE: They are very good ones. I’ve just had a look at the drafts and they’re excellent. I think we need to have that discussion. We need more remedial measures in this bill to make it fairer for hard-working middle-income New Zealanders to get ahead.

Hon DAVID PARKER (Minister of Revenue): I will take the opportunity to respond to the member’s tabled amendment, to which he referred, which purports to decrease the top tax rate from 39c in the dollar to 33c in the dollar—39c currently kicks in for incomes over $180,000. Now, again, if this was to be in order, we would be voting against it, but, again, I’m not sure how that could be within scope, given that there’s nothing in the bill about income tax rates.

CHAIRPERSON (Adrian Rurawhe): Similarly, as I ruled before, I’ll be ruling the member’s tabled amendment out of scope as well.

MAUREEN PUGH (National): Thank you very much, Mr Chair. It was a bit of a shame that I never got to speak to the Hon Michael Woodhouse’s amendment, because that is what I intended to do. So I’ll turn my mind back to Part 1, clause 4, “Section ME 1 amended (Minimum family tax credit)”, where it says, “In section ME 1(3)(a), replace ‘$30,576’ with ‘$31,096’.” Now, I understand what the Government is trying to achieve by increasing that family tax credit, but to my colleague Michael Woodhouse’s point: that margin is $520. So we have—

Hon Members: How much?

MAUREEN PUGH: What the Government has—it’s $520.

Simeon Brown: That’s like 10 bucks a week.

MAUREEN PUGH: It is $10 a week, exactly. So what we’re looking at here is a Government that is pretending to be very generous and supporting people to get an increase in their family tax credit, but the reality is that on one hand, they are losing 10 times that in the increased costs of living and that’s just for their rentals, and we know that in the last five years, rents have gone up 21 percent. But the staggering figure is into March 2021: the largest year-on-year increase in 2½ years, because it grew by 6 percent.

Now, it might seem very generous to deliver a $520 increase in the minimum family tax credit threshold, but it does not go anywhere near closing the gap in the expenditure those same families are being asked to fork out for, and we know that they are very hard-working families. That’s why we top them up—because we want to keep them in work. But I ask the Minister: what drove the decision to increase by $520 a year when the Minister will be very aware that the actual costs for those families at that threshold is, in effect, going backwards with the increased outlay that those families have?

Hon DAVID PARKER (Minister of Revenue): I’ve got great sympathy for people—as I’m sure members on all sides do, actually—on low incomes who manage weekly budgets, and I have great respect for people who sometimes do very mundane jobs, don’t earn a lot of money, and struggle to make ends meet. We as a Government have been, quite obviously—given the controversies in the House and elsewhere recently—trying to disproportionately lift the income of low-income earners, whether they are on benefits or in work. We’ve done that through minimum wage increases, the way we construct wage agreements in the public sector and also through the lifting of benefits and other prior changes like the Best Start package for children—previously for those families with children. And that is, in my opinion, all good.

This is not as significant as a lot of those other measurements, but it does ensure that we lift the minimum tax credit so that those families that are in work for 20 hours or more a week will earn a little bit more with their income being topped up if they happen to earn less than $31,096 per annum.

SIMEON BROWN (National—Pakuranga): Thank you, Mr Chair. I just appreciate the opportunity to take a short call on this Taxation (Budget 2021 and Remedial Measures) Bill. Just reflecting on the comments from the Minister there, where he talks about the crocodile tears of great sympathy and great respect for people who are trying to balance their budgets at home. I know there’ll be thousands of people listening and watching the Minister at home. They’ve probably all tuned out now—tuned out when they heard him talk about great respect for them and then doing nothing for them.

What this bill does, or appears to do, is pretty much diddly-squat. Here, he’s replacing $30,576 with $31,096. This is something which seems to be doing absolutely diddly-squat, and it just shows that this Government can talk a big game about its sympathy and respect, but it doesn’t actually deliver for those who are trying to make ends meet and those who are working hard, those who are trying to pay the bills, and those people who are trying to actually get ahead.

He’s talked about the fact that this Government’s trying to lift the incomes of those on the lowest, but it fails to take into account the actual increase in costs that this Government continues to pile upon these exact same families. It talks about trying to lift the incomes of our lowest-income earners, but the Minister has failed to talk about the increased cost of renting a house.

How much has the cost of renting a house increased under this Government’s time in office, Minister? How much has it cost in rent? How much more are families paying in rent every single week under this Government than when this Government first came into office? How much are families paying extra in tax on their petrol since this Government came into office? How much is this Government forcing—

Hon Dr David Clark: Got nothing to say about the bill.

SIMEON BROWN: Well, it does have something to say about this bill, because this Government talks a big game. This Minister got up and talked about the great sympathy—the great sympathy—that apparently you’ve all got towards all these families who are working hard and trying to balance their budgets—the great respect for people sitting at home right now trying to balance their budgets. They’ll be sitting at home having their dinner time meal, just about to put the kids to bed, and they’ll be thinking about the fact that this Government does nothing to help them balance their budgets—does nothing. All we get are some words about respect and sympathy. When I hear interjections from the other side of the House about “What’s this got to do with the bill?”, well, people at home will be asking the question of what’s this Government got for them—what’s this Government doing for them? And here we are, debating a piece of legislation which makes a small change here to the minimum family tax credit.

I go back to my line of questioning, which is around the cost of living, around what the cost of living has been under this Government—the increased rent that people sitting at home are having to pay.

People are having to look down the barrel of more costs being imposed upon them. Every time this Government passes new regulations around rentals, they fail to take into account the fact that landlords pass those costs on to their tenants. It’s almost like they don’t quite understand—like if you increase a cost on someone supplying a service or a product, somehow they’re just going to magically not pass that cost on. It’s like money grows on trees, if you live on the other side of the House. But, actually, if you’re a business, or you’re a family, or you’re trying to get ahead, you realise, actually, every single cost has to be paid by somebody.

This Government is putting forward pieces of legislation like this which, essentially, just fiddle around the edges but fail to address the real costs that working families sitting at home right now are truly, really challenged for. All we hear from the Minister is “I have great sympathy”. Great sympathy; great respect—great. Well, it’s not that great, is it?

SIMON WATTS (National—North Shore): Madam Chair, thank you very much for the opportunity to speak on Part 1, in regards to the adjustments to the minimum family tax credits changes. Look, I just wanted to pick up what I thought were some very insightful comments by my colleague Chris Penk—

Chris Penk: That’s right.

SIMON WATTS: —in regards to some of the amendments—stop, you’re kicking me in there. But, before I do that, I wanted to just raise that Business New Zealand has, obviously, come out with some comments about the Budget this evening. Their comment is “The Budget has a missed opportunity for growth.”, and I think that really sums up some of the aspects, but I want to get back to the amendment, because I know that’s why we’re here to chat about that at the moment.

Specifically, I’m looking at clause 4, and I’m looking at section ME 1(3)(a), the replacement of $30,576, up to $31,096. So we’ve talked a little bit about that. A colleague previously has just discussed the differential in the rate. Minister, what I’m interested in is that you mentioned that $25 a week is going to be the consequence. Most of that is going to go on to essential spend. You did actually note that that won’t impact inflation. I’d question that, considering some of that’ll go on rent, which we definitely know is going up. But getting back to the point around the question I want to raise: with that rate that you’ve set, I’d be interested, potentially from officials, in some comments around that. What type of scenario testing did you play out when you were coming up to land that number—

CHAIRPERSON (Hon Jacqui Dean): Order! The member will leave the Speaker out of the debate.

Tim van de Molen: You can’t say “you”.

SIMON WATTS: My apologies—sorry. To the Minister, so I’d just like to clarify with the Minister, when you were considering setting the number at $31,096, what range of sensitivities did you look at in regards to setting that number, and taking into account the point that you made before, Minister, in regards to what was a reasonably minor impact, what was some of the decision-making process that went around that?

I think the minimum family tax credit aspect is, as we know, a payment to make sure that families are getting a basic income—where parents are working—and we definitely acknowledge that that’s an important aspect, but I guess there must have been a little bit of consideration, and did you consider anything more? How did you land on that number? Can you give me a little bit of clarity around that? Thank you, Minister.

Hon DAVID PARKER (Minister of Revenue): We took advice from officials as to the appropriate number, and we were also mindful, as I think I said earlier, that there is a mechanism for the annual updating of the figure in response to increases in benefit levels that are occasioned by adjustment for inflation, whether it’s Consumers Price Index inflation or wage inflation. There’s an annual adjustment process by way of Order in Council in December each year, and we took that into account as well.

Hon GERRY BROWNLEE (National): Thank you, Madam Chair. Along the lines of the question that’s been just asked and answered by my colleague, I’ve got a question that would ask: was there consideration given to altering tax rates so that that minimum figure that’s in here, the now $31,096—or soon to be—would, in fact, be the after-tax earnings, which could come from a person in work who was paying a lesser tax rate? It seems to me that’s quite a simple way of doing things, and, of course, would mean that the person did not have to go almost cap in hand to the Government to be topped up to their particular income level. It would mean that they could maintain their dignity.

Now, I’ve put an amendment on the Table to achieve that. I appreciate that the previous Chair said that it’s likely, at the time we come to vote, to be knocked over, but it is a reality that we’re dealing with a system here that balances the lowest-income earners’ take-home dollars—and, in any event, there is a tax factor in that, because if they are working they will be paying tax. So my suggestion is, and the amendment that I’ve moved is, that the tax rate be moved to 10.5c between $0 and $17,000 and 17.5c between $17,000 and $48,000.

It would be interesting to know, under current rates, what does someone have to earn to actually be right on that cusp of $31,096, and are we, in fact, seeing a situation where they drop below that amount, because of the tax they’re paying on their income, and then have it rebated back to them? It would seem a simple thing to do would be to change the actual rates so that they don’t have to go through this exercise of saying, “Look, I’m sorry, I need to top myself up; would you please give me some of my tax money back?” For that to occur, of course, it would be a simple matter of the Government recognising that this might be a better way to do things and at least considering it. I suspect, though, that, despite the nature of this bill being fundamentally one that deals with a tax rate, it will probably be knocked out—ruled as inappropriate. I think that’s unfortunate.

So it is to ask Minister Parker again: what was the consideration given—or was there consideration given—to moving a tax rate so that those people who are in work would only be paying tax that would get them back to that $31,096? It seems to me that that would put them somewhere, under current tax rates, in the upper 40s, or perhaps just mid to upper 40s. If their rate was lower, then they may, in fact, keep a little bit more than the $31,096, but administratively it’s got to be a heck of a lot cheaper for the wider tax base.

Hon DAVID PARKER (Minister of Revenue): Well, the figures in clause 4 are after-tax figures, which was—

Hon Gerry Brownlee: That’s right.

Hon DAVID PARKER: Well, no, that’s actually what—the member didn’t say that at the start of his contribution. He might have mistakenly said it that way, but I had the impression that that’s not what he said.

In respect of the other issue that the member raised, as to whether we should change income tax rates, well, that’s not part of this bill. But I would also note, as the member did at the end, that, yes, that would be complicated, because it would have fiscal effects beyond this class of people who are being helped here, because, of course, those income tax changes would flow through to every other taxpayer as well, not just low-income people whose position is improved by this.

SIMEON BROWN (National—Pakuranga): Thank you, Madam Chair. I’d like to carry on from where my colleague Simon Watts was asking some questions before, which is around clause 4, regarding the replacement figure for the minimum family tax credit. Under this proposed piece of legislation, it proposes to replace the number “$30,576” with “$31,096”, and he had a very good question, which was asking what advice or formulas had the officials used to come up with the figure $31,096. I didn’t get an answer, Simon didn’t get an answer, Chris didn’t get an answer—none of us got an answer—and, Madam Chair, I don’t think you got an answer, either. I think it would be helpful to the committee if the Minister could actually answer that question.

What he said was something along the lines of “Well, that’s just what officials came up with.” Well, it’s nice. It’s nice that officials came up with a number—well done, thank you. But we’d like to actually have an answer to the question about how they came up with that number, because, as I think it was Michael Woodhouse or one of my colleagues earlier, or it might have been Maureen Pugh, actually—I think you said it. It’s a difference of $520 between those two, which is $10 a week. So was it that they thought, “Well, maybe we should increase it by 10 bucks a week. That’s a good number. That’s easily dividable: $520 divided by 52 equals 10. It sounds quite good.”? Or was there an actual formula applied—

Hon Poto Williams: Point of order, Madam Chairperson. I just raise this point of order, given that we have changed Speakers’ rulings around how we conduct committee stage debates, and they are much more attuned to asking questions of the Minister and receiving answers. Can I just say that that member in his last couple of contributions has taken four calls, has been repetitious, and has not actually, in my view—and this may be something that I would like you to think about—not really—

CHAIRPERSON (Hon Jacqui Dean): Thank you. I—

Chris Bishop: Point of order—

CHAIRPERSON (Hon Jacqui Dean): Thank you. I am ready to rule on this. We’re in urgency. This bill has not gone through a select committee stage, and so it is quite in order to allow detailed questions around what is provided for in this bill.

Chris Bishop: Point of order, Madam Chairperson. Just a point of order. I just want you to clarify and make it clear to the committee that despite our new practice being questions being encouraged during the committee of the whole House stage, members taking five-minute calls is acceptable and that you don’t need the encouragement and help from former Assistant Speakers who are no longer in that role.

CHAIRPERSON (Hon Jacqui Dean): I thank the member.

SIMEON BROWN: Well, thank you, Madam Chair, and thank you for the opportunity to continue with this line of questioning, which I think is actually very relevant and quite a detailed question. I know the Minister in the chair understands the nature of the question and is, I hope, going to be able to give a detailed answer to how that figure was come to. I make the point that this is the committee of the whole House—this is the only chance that this Parliament has to interrogate this piece of legislation.

The legislation was dropped by the Government at about 4.30 this afternoon. That was the first it was brought to Parliament. It hasn’t gone to a select committee, submitters haven’t been able to have an opportunity to submit on it, and this is my chance and the Opposition’s chance to be able to actually interrogate the detail. We haven’t even had an opportunity to be briefed by officials. Ministers should be coming down to the House and actually encouraging questions because, actually, this is the opportunity for the Opposition to hold this Government to account, and there’s so much in this bill which needs to be held to account.

So the answer is—the question is, sorry. The answer will come soon, I’m sure—I hope—and I hope it’s a good one, because otherwise, we’ll have more questions. The question is: what was the formula used to come to the difference between $30,576 and $31,096?

Also, I guess the other question would be whether the Minister is prepared to table the advice in relation to that on whether there’s some formula, or is there a formula that’s used? He’s talked about Consumers Price Index adjustments, which are used in other instances. If these changes are made in this way again, is there a formula that officials would use in a general way, or is it something which is just made up on a case by case basis?

Providing some of that assurance to us on this side of the House around how these decisions are made and how they’re come to would give us more confidence in the legislation which has been put forward. So, look, that is something that I do ask the Minister to address. A very important question, I do note—our right, our only opportunity here in this Parliament with this piece of legislation, to actually put these questions to the Minister.

Hon DAVID PARKER (Minister of Revenue): There’s no change in the underlying principle here, which has been around for a long time. The threshold is calculated to reflect the maximum income that someone on a benefit can earn, including their benefit plus their allowable earnings in addition to their benefit, taking into account the abatement of their benefit caused by those additional earnings. That overall figure is then calculated and the minimum family tax credit is calculated at $1 more than that figure so that, in theory, the person in work will always earn more than someone that is on a benefit.

DAVID SEYMOUR (Leader—ACT): Madam Chair, thank you. I’d like to ask the Minister, for somebody—there’s 4,800 people, he said, who will be affected by this change. Presumably, those are people whose income is currently between the current threshold and the new threshold. I wonder, for those 4,800 people, it would seem that until they get to the new amount of $31,096 total after-tax income and they get offered extra hours or an increase in their hourly rate, perhaps, they won’t actually get any more money. It seems as though, if I’m reading this right, those people have now been put in a position where, if they do work more, until they get to $31,096, the effective payment for those extra hours is nothing. Am I reading that correctly?

Hon DAVID PARKER (Minister of Revenue): At the intersection between work and benefit, there are always a small number of people whose circumstances are close to identical, whether they’re in work or on a benefit. That’s long been the case, and it’s a difficult area of intersection, because we want to maintain incentives to work. We also know that the amounts that are in issue when there is any change to benefits in terms of effect on the minimum family tax credit, they’re always very small. And people who are higher earners might sometimes think, “Gee, there’s not much in this.”, but it does matter. It’s a matter of principle, and $500 for someone in that situation can be significant, or is significant, and is important to them. The member is correct, though, that if someone was earning for their hours of work less than $31,096 and earned a little more, then the payment to take them up to that minimum level of income that’s effectively provided through the minimum family tax credit would mean that they would be no better off.

DAVID SEYMOUR (Leader—ACT): A further question for the Minister, then. I take the principle that this $31,096 threshold has been calculated by making sure that the maximum someone could theoretically get on a benefit is going to be $1 less than what they would get if they were working. Now, I just wondered, does that include a benefit for somebody that was not working at all, because it would seem that, in order to qualify for that $1, a person would have to work 20 hours a week, 52 weeks a year—make it 1,000 hours. They’d have to work 1,000 hours for $1, and I just did some quick mental arithmetic, and I wonder if you could confirm or get the Treasury officials to confirm that that amounts to working for 0.1c an hour. I know this Government is very committed to higher wages; that seems like a very small amount of money. It can’t be the case that the difference between the benefit and working is 0.1c an hour, but that sounds like the logical conclusion of what the Government’s saying.

Hon DAVID PARKER (Minister of Revenue): Well, if someone was on a job seeker benefit and they were receiving $350 per week, the member can see that that would roughly total about $17,500 a year, which, of course, is much, much less than the $31,096 minimum through the minimum family tax credit.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much, Madam Chair. Just to continue on that theme, of course, a person to be working for the nominal additional dollar would—or at least the additional dollar, to be fair—have to expend a certain amount of effort and energy and cost, even, to get to work and so on. Actually, I have a sort of related point, but it relates to the amount of the value of the tax credit versus the cost of calculating the jolly thing, because if we think about the amount of time and energy and perhaps even dollars it would take to make the calculation, to the Minister and Madam Chair, it’s actually a relatively small amount when one thinks about calculating the complicated regime where we’ve got several different time frames, several different amounts, and the extent of the credit would actually be relatively modest.

So the costs that could be incurred in working out how much extra one would get, or rather the lesser amount that would be taken away from one, would include potentially getting tax advice from an accountant or a lawyer or, if one was doing it oneself, counselling—or, if one was doing it through a spouse on the dining room table, marriage counselling. These things are not free, and so there is a cost, and there’s also an opportunity cost if one is spending time on one’s accounts on this extremely complicated matter when one could be selling more widgets or services. So the value of it, I think, should take that into account, and I’d be interested to know whether the Minister has run that real-world filter over what has been proposed in here and the policy underlying it. Personally, if I were to be calculating this myself, I’d run out of fingers pretty quickly—that’s the sort of digital calculation that I’m into.

David Seymour: How many does the member have?

CHRIS PENK: I think the question across the House was the number of fingers that the member has. Well, I’ve got fewer than if I’d been born in other parts of the country, and I won’t say any more than that for fear of offending provincial colleagues.

The different time frames involved in Part 1 are part of that complexity that I’ve referred to in relation to the cost of calculating the credit to which one might be entitled. We’ve got a system whereby, coming into 1 April, or rather looking back now to 1 April; so the 31st—no, anyway, before 1 April; I’m going to get myself confused here if I’m not careful—to 30 June of this year, retrospective though it may be. Then we’ve got 1 July 2021 to 31 March 2022. This is a genuine question—and I know I shouldn’t say that because it’ll make it sound like my other questions are not genuine; the Minister can make up his own mind on that—what is the regime that applies after 31 March 2022, because it doesn’t seem to be here? I may genuinely, as I say, be missing something obvious here, but that does seem a gap, at least in terms of what we’ve got in front of us. I’m sort of reading this as I go; I’m sure you can hardly tell, Madam Chair. This relatively new, or very new piece of legislation—it could hardly be newer; it’s existed, as far as we’re concerned, for less than four hours now—doesn’t seem to provide a regime beyond 31 March 2022. One presumes that the world will not come to an end at that—I’ve probably missed some memo about the end of the world at that time, but potentially, as I say, I’ve just missed it.

But my final question, and this is also very profound, is in relation to the phrase “1 week”, because in “weekly periods”, which is one of the defined items, we hear that this is the number of periods of one week. I wonder if the Minister can explain what one week means in this context. Is it the European idea of a week, which is Monday to Sunday; is it Sunday to Monday, as in US, Canada, Brazil, and Japan; or is it perhaps a more straightforward seven days in the Craig David sense of the phrase? I know the Minister gets that reference; he’s old enough but not too old, I’m sure. But it is actually a relevant question. You know, it’s definitely around the edges, but then again, this whole thing is. The seven-day period could start on 1 April, it could start on 1 July, and depending on what the calendar’s doing at that particular time, that might make a difference, albeit small. So I’d be grateful if the Minister can enlighten us on that point.

Hon DAVID PARKER (Minister of Revenue): I’m pleased to inform the member Chris Penk that the Government has computers and we actually don’t have people working this out on slide rules, nor do we have people doing it every week. Indeed, most people elect to get their minimum family tax credit annually at the end of the year. For some people, for whom the $20 dollars a week or whatever it amounts to is important, they elect to get it fortnightly, but once they make that election, generally we let computers do the accounting.

NICOLA WILLIS (National): I want to return to a line of questioning that other members have pursued, which the Minister hasn’t commented on in detail yet. I want to give him the opportunity to do so. It relates to exactly how these threshold amounts were chosen for this bill. I think the Minister has done a good job of explaining the principle that is applied, which is that the minimum family tax threshold is adjusted to reflect the changes in the benefit rates and abatement thresholds to ensure that those families who are in work are always guaranteed to get more income than those families who are not in work. And “in work” is defined as a single parent working at least 20 hours a week or both parents combined working 30 hours a week.

What I have done is I have gone back and I have looked at instances in the past when we have made similar adjustments, because, of course, each year the minimum family tax credit threshold has been adjusted to reflect these sorts of changes to benefit levels, to the minimum wage, and to abatement thresholds, and this has been happening each year since 2006. But the rate at which those thresholds have changed has not been uniform; it has been dependent on other things that are of import.

A particular recent example, which, it seems to me, is relevant here, is what we did in December last year, which was—members will recall—when benefit levels were lifted $25 a week in what was then termed as a response due to COVID-19. Now, at that time, the threshold adjustment that occurred was actually significantly larger than that which we are debating in the Chamber tonight, because, at that time, the threshold had been $27,768—so a minimum payment of $534 a week—and, in response to the $25 lift in the benefit, it was lifted to $29,432. So, in that case, what we saw was an increase in that threshold that amounted to $32 per week. Of course, the adjustment we’re debating tonight is rather less that that; it’s $10 a week.

What I am seeking to understand from the Minister—and what I think other members are trying to elicit—is why $10 is the amount. The context here, of course, is that we have had a Budget announced, which we will have the opportunity to pore over in more detail in the coming days, which, on the tin, says that it’s increasing benefits by $50 a week. So, intuitively, it seems to me that if it’s increasing benefits by significantly more than we did this time last year, then you would then expect a corresponding significantly larger increase in these thresholds.

The reason I ask this, and the reason, I think, other members are asking for a little bit more elucidation on these calculations, is that it is critical that we are not lessening the incentive for work. It may be that, yes, work still pays just more but it doesn’t have as big a gap between work and benefits as in the past. If that is the case—obviously, we’re debating this bill under urgency; we haven’t had a select committee process, and there hasn’t been the opportunity to seek detailed analysis from officials to do the accounting analysis of it—I would just invite the Minister to be utterly transparent about that and to explain the basis on which these calculations have been made.

It’s relevant because, actually, fundamentally, what this bill is about tonight is incentives. It is about the thresholds at which we set income tax adjustment payments to make sure that those families who are slogging it out—who are having to pay petrol for the car, having to organise childcare, having to pay for lunch at the canteen instead of eating at home, having to face all of those extra costs of working, and putting their effort in—are actually getting more ahead than those who are not making those sacrifices.

So my question to the Minister—and I just want to be very clear—is: how was the decision made to lift the threshold by what amounts to $10 a week when last year, when we made these similar adjustments, the amount was $32 a week? Why is there such a discrepancy in those two numbers in this case? If the Minister could explain that, I would be most grateful.

Hon DAVID PARKER (Minister of Revenue): On a number of occasions I’ve already described how the threshold is calculated, so I’m not going to repeat that. But in respect of why the calculation is different this year to last year, it’s because last year we changed the amount that someone on a benefit can earn before their benefit abates, and that therefore changed the maximum amount that a person on a benefit after abatement could earn, that had to be then reflected in the change to the minimum family tax credit so that a person who wasn’t on a benefit would not be worse off.

WILLOW-JEAN PRIME (Assistant Whip—Labour): I move, That the question be now put.

DAVID SEYMOUR (Leader—ACT): Thank you very much, Madam Chair. I thought I should just comment on a few things I’d heard from speakers in the National Party. They were advocating for more progressive taxation, and I thought I should just make the point that bracket indexation actually ensures that the portion of the tax burden that falls on lower-income earners remains low; the proportion of the tax burden that falls on higher-income earners remains higher than it would otherwise be. Fiscal drag actually has the effect of increasing the average tax rate and therefore reducing the relative progressivity. So, of course, I think it’s important we have an ACT Party to point these things out, otherwise we, on this side of the House, could inadvertently make the taxation system more progressive, and we’ve already got several parties on the left to do that. So I don’t think it’s something that the National Party should be advocating as well, or at least I’d hope that they wouldn’t.

Then I also just wanted to come back to this question about the incentives, or the marginal tax rates, that we’re facing. The Minister said, “Well, if somebody’s on $375 a week, 52 weeks a year, then I guess we can conclude it’s $17,000, $18,000 a year, and $31,000 is certainly more than that.” So I guess they would be getting an additional $13,000 a year, but they might have to work 30 hours a week—so 1,500 hours per year to get that $13,000. So would that mean that the marginal after-tax income of somebody who goes from being on a benefit to working 30 hours in order to get this credit would be somewhere around $8 or $9 a year—an hour, sorry; certainly not a year. But, you know, it’s interesting just to get a sense of what sort of policy we’re expanding here, and what real incentives people face, because, if you only get $8 or $9 an hour for choosing to go to work, you can understand why people might be reluctant to do so.

Hon DAVID PARKER (Minister of Revenue): I think the answer to that—and I expect the member already knows it—is a very small group of people who are actually affected by this; the vast majority of people who are in this income band, if they were coming off a benefit, they were at that abatement threshold, and they chose to work more, would actually earn more than this amount, except at the margins, and as they earned more, they would, if they were coming off a benefit and therefore affected by this, be capturing every dollar that they earned, less their tax rate.

SIMON WATTS (National—North Shore): Madam Chair, thank you very much for the opportunity. I just wanted to raise a new point, obviously, in regards to part A of this amendment, and that is in regards to the—and I refer to the departmental disclosure statement section 3.7, which obviously has considered, you know, that this bill has been through internal review of subject matter experts and looking at the administrative impacts of such a bill, and, obviously, the key department responsible around this bill is the Inland Revenue Department. I have a little bit of experience; I actually worked for the Inland Revenue Department back in the day. I don’t know if anyone else in the Chamber has ever done that. Back in the day—I was a student, actually. That’s how I paid for my university. But anyway, very good organisation, and I think very highly of them—

Hon Michael Woodhouse: All good IRD staff should be over this side of the House.

SIMON WATTS: But anyway—anyway—let’s get back. I’ll just try to stay on piste here, Mr Woodhouse—but anyway.

So what I want to get to the point on here, Minister, is a little bit more context, a little bit more picture, around some of that consideration that was put in around this bill. I’ve read and we know that Inland Revenue has had a transformation programme that has had significant delays, which have led to significant financial issues, so they’ve got staffing challenges. I’ve noticed that they’ve made staff redundant in their IT space only earlier this year. So that’s the context of a Government department under a lot of pressure, and we’ve seen the challenges of immigration as well. So I don’t want to, sort of, generalise, but I think we’ve got some challenges in terms of workforce.

So getting back to this, obviously any change in terms of bills and legislation is going to have an impact. It’s going to have an impact on people. I guess what I’m really wanting to get context of, because I know that this Minister and this Government—they say they care. So I want to get an understanding of this: what is the type of assessment that you went through? What are some of the findings that were given in terms of the costs and benefits of making this change, some of the challenges around how you weighed that up?

The other aspect is in regards to the IT systems. I’ll tell you what—and I, obviously, am the associate spokesperson for health—we’ve had some pretty significant announcements around IT, cyber-issues in Waikato DHB. Gosh, you know, I feel sorry—

Chris Bishop: Oh, don’t forget about Canterbury.

SIMON WATTS: —oh, and Canterbury. I mean, I’m sure there’s a few. But in terms of the IT system issues as well, any changes can have an impact on the system. I’m really keen to get an understanding at a high level around what that’s going to look like, and, yeah, if you could just paint us a little bit of a picture about that, Minister.

Hon DAVID PARKER (Minister of Revenue): I suggest that the member talks to the Hon Michael Woodhouse, who is former Minister of Revenue, who was one of the Ministers over a period of years now who’s overseen the Business Transformation project, which has been a huge and incredibly successful transformation of the IT systems at Inland Revenue. That’s been successfully handled by successive Governments, actually, going back to when the Hon Peter Dunne was the Minister. So it’s been under way for a while now, and the good news is it’s coming to an end and that huge spend and increase in IT staff that was necessary to see it through is coming to an end. Because we’re such an efficient Government, we’ve actually managed to land this project and bring it closer to conclusion. Because it’s closer to conclusion, some of those extra IT staff that were needed are no longer needed, and that’s what happens when you efficiently run a Government department. In fact, so efficient is it that I’m sure that the computer system is now better able to handle this not very complex change to the minimum family tax benefit.

Hon MICHAEL WOODHOUSE (National): Very quick call in response to the Minister’s quite rightly gloating about the success of Business Transformation. But instead, could I ask him, in light of that, that rather than making IT workers redundant, use those resources to actually staff the call centres, because tax agents up and down the country tell me the calls are not being answered. Yes, I know we want to drive so many of the inquiries to IRD online—I accept that—but guess what? The Income Tax Act is so large and complex and everybody’s situation is different that it is necessary for taxpayers and tax agents to call. How about the phones get answered?

Hon DAVID PARKER (Minister of Revenue): I am very confident that the small number of people that are affected by this change will not overrun the call centre at IRD.

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

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

Ayes 75

New Zealand Labour 65; 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 Hon Michael Woodhouse’s tabled amendment inserting new clause 6A amending the top rate of income tax is out of order as outside the scope of the bill. The Hon Simon Bridges’ tabled amendment inserting new clauses 6A and 6B concerning the indexation of tax brackets is out of order as outside the scope of the bill. The Hon Gerry Brownlee’s tabled amendment inserting new clause 6A increasing the lowest tax threshold is out of order as outside the scope of the bill. Nicola Willis’ tabled amendment inserting new clause 6A lowering the rate of income tax is out of order as outside the scope of the bill.

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

Ayes 98

New Zealand Labour 65; New Zealand National 33.

Noes 10

ACT New Zealand 10.

Abstentions 10

Green Party of Aotearoa New Zealand 10.

Part 1 agreed to.

Part 2 Remedial measures

CHAIRPERSON (Hon Jacqui Dean): Members, we come now to the debate on Part 2, which is clauses 7 to 9 and relates to remedial measures. The question is that Part 2—

Hon Members: Madam Chair.

CHAIRPERSON (Hon Jacqui Dean): Just let me get it out. The question is that Part 2 stand part.

DAVID SEYMOUR (Leader—ACT): Thank you very much, Madam Chair. We find ourselves again in the Chamber trying to fix up past mistakes. All of this should have been easier if the IRD had better computer systems. But, actually, this is in large part not the case due to Peter Dunne. Peter Dunne, with his silver bouffant and trade mark bow ties, easily underestimated by the untrained eye, was a weapon, and he often harboured agendas that were not easily detected by the less keen observers. He, actually, heroically ran down the IRD’s computer systems over a series of years, staying in Parliament for a total of 30 years to complete the task.

One of the effects of that was that it was actually much more difficult for medalling socialist Governments to introduce more complex policies that would surgically take money from hard-working taxpayers and give it to the lazy and indolent, and that’s why Peter Dunne is our hero of the day and someone who was always there to protect New Zealanders from the kind of medalling bureaucracy and socialism so common in New Zealand politics today. I just wanted to put the record straight in defence of my friend and hero Peter Dunne.

Hon LOUISE UPSTON (National—Taupō): Thank you, Madam Chair. I need to gather myself, just for a moment. Excuse me. Ha, ha! I’d like to just ask the Minister in charge of the bill, who is no longer the Hon Peter Dunne—

David Seymour: If only—if only.

Hon LOUISE UPSTON: Ha, ha! In all seriousness, I want to ask about the legislative statement and how it actually relates to what’s been drafted in Part 2 for the remedial measures. The legislative statement quite clearly refers to the fact that there was a drafting error with the application of the time frame being 1 April 2021, with the intention of it being 1 April 2022. I have a number of calls I’d like to take, but I’d like to start with the very basic, simple one of could Minister Parker please explain why the legislative statement doesn’t line up with the drafting of the bill.

Hon MICHAEL WOODHOUSE (National): Thank you, Madam Chair. I do agree with the Hon Louise Upston that this part actually does require something of an explanation. The introduction to this talks about a small drafting error, and I wonder if it’s as small as the bill actually suggests.

When I was the Minister of Revenue, the thing that struck me the most about the punitive nature and cumulative nature of penalties and use of money interest for late payments was that, in respect of child support payments that were in arrears, it was often initially a very small amount of money that the person who owed the money had not paid, often due to no fault of their own. It was usually discovered on a recalculation sometime after the payments were due, and, as a consequence of that, I saw small debts grow to very large debts—sometimes $1,000, $2,000, which might not sound much to some, but to those who were having to pay child support and for whom income was low, that was a devastating impact on them and they often couldn’t get out of it.

So I have two questions for the Minister. The first is at section 134(2) of the Child Support Act as amended by clause 8 of the bill. If my reading of the Child Support Act is correct, section 134(2), other than the heading, is replaced, basically, by this new section 134(2). Only I’ve read it several times and I can’t find a single word in this bill that’s different from what’s in the Child Support Act. So that’s one question.

The second question is in respect of section 134(3). What it’s doing is replacing the words “27th” with “seventh”, and effectively what we’re saying is that certain penalties, as I understand it, accrue 27 days after the arrears commence. So my question is: is the intention to remedy an error where this was due to line up with other late payment penalties that came owed on the seventh day after the arrears were accrued, and, if that’s the case, did the Minister actually give thought to leaving the error unchanged? Because I think having a larger window between the accrual of the arrears and the accrual of the penalties is actually not a bad idea for these people.

Now, hopefully, there’s been a substantial reduction in the number of people who find themselves in arrears, because one of the key benefits of the Business Transformation that the Minister refers to is to actually prevent this kind of underpayment happening in the first place. So a third leg of this might actually be: could the Minister give us an update about whether, in fact, now that the transformation is nearly complete—whether child support payment arrears have actually dropped as was predicted?

So those are the three things: is there actually a change to section 134(2)? Did he give consideration to leaving what was apparently an error in section 134(3) alone? And, thirdly, have we seen a reduction in the amount of child support arears accruing?

Hon DAVID PARKER (Minister of Revenue): I’ll try and answer the first question first, and if I haven’t properly answered the member, I’ll take further advice from officials in respect of the other issues. But, essentially, the wrong date for section 134(2) to come into effect was included in the most recent version of this legislation.

In order to make sense of clause 8 of the bill, members have to read the commencement clause, clause 2. Clause 2(2) says that “section 8(1) and (3)”, but subsection (1) is the one, if the member’s looking at the same version that I am—there’s grey scale about the new clause that’s at clause 8(2). By virtue of clause 2(2), that comes into effect on 1 April 2021. Then, that is effectively superseded on 1 April 2022 by the provisions that are at clause 8(2) in grey scale. It’s a little bit confusing because of the reliance on the grey scale to make sense of it, as I described it here. It’s easier when you see it on the page. In clause 2(4), it says that “Sections 8(2) and 8(4), and 9(2)” come into effect on 1 April 2022, if not brought into effect earlier by Order in Council.

Hon LOUISE UPSTON (National—Taupō): Thank you, Madam Chair, and I appreciate the Minister’s attempt to answer the question, but, I think, with that answer, it’s created more confusion than more clarity. So I do think, when legislation is being jammed through the House in urgency, it is going to be really important with Part 2 that everybody has a clear understanding exactly of what we’re doing.

So my first question, in terms of the Minister’s contribution, was the reference to the Child Support Amendment Act 2021, when I understood that Part 2 was amending the Child Support Act 1991, which is how I’m reading it, and the first grey scale is exactly what is in the 1991 Act, and it’s not clear to the members opposite whether that’s remaining as it is, or the second grey scale, which is also 8(2), is being included.

Simeon Brown: It’s black and white!

Hon LOUISE UPSTON: It is black and white! It’s definitely not black and white. So it is really important that these are fixed, because, at the end of the day, with the Child Support Amendment Bill, the select committee that I serve on actually spent a lot of time working through amendments to the Child Support Act 1991, and some of it is incredibly complicated. The intent behind it was to support more parents to fulfil their obligations and to make sure that they actually didn’t get into debt, and the recognition that debt to Inland Revenue can be incredibly distressing and, when it is related to child support, can also be intensely damaging for a family.

So, hopefully, I’ve filled in a bit of time. I do, in all seriousness, want the answer to both things, because it’s not clear from the legislative statement. The legislative statement of anything that we now provide in the House, should be the simplest way for the House to understand what is occurring. So I do want clarification on that, and I hate to point, but when we’re looking at this version of the bill, are we replacing it with the top grey scale, which is exactly as is drafted in the ’91 Act, or is it the intention that this one, the second one on the page, is what it really should be? And, therefore, what is the status of this, because it appears to be inaccurate?

Hon DAVID PARKER (Minister of Revenue): I don’t think it is inaccurate, but I’ll attempt to explain it, and I thank the member for her question. I accept that she understands these issues well, because she was involved in them. The intent of the changes to the underlying policy is the removal of the $5 rule, which was an additional $5 penalty, which, as the member has noted, is distressing and unnecessary. The other change that was also for the benefit of people making their child support payments was to give 27 days’ grace instead of seven days’ grace in respect of the first breach. That policy intention remains. The mistake that was made in the drafting of the legislation that was passed was to give effect to that from 1 April 2021 rather than from 1 April 2022, by which time the Business Transformation project can do it. Until then, and it might be a wee bit earlier than that—that’s why we’ve given ourselves the Order in Council right to bring it forward a bit earlier than that if we can do it earlier—until that time we have to restore the $5 rule from 1 April until the date the computer system in the Business Transformation project can handle it; and, similarly, for the change from the 27-day rule to the seven-day rule. So the policy intention remains the same. It was always intended to be done around 1 April 2022; it’s just that, in the statute as it was passed, it was done from 1 April 2021. So what this does is reinstate the old rule until the computer systems are able to implement the new.

Hon LOUISE UPSTON (National—Taupō): Thank you, Madam Chair. I thank the Minister for making those points, because it definitely makes it clearer. I would just put on notice for the committee that, when there is legislation that is before the Parliament that is going to be rushed through all stages under urgency, legislative statements are clearer than this one is, because where the difficulty is is clearly that those two dates aren’t included in the legislation. And so I want to be crystal clear with the Minister that the changes that were made in the Child Support Amendment Act 2021 are now being reversed. So the changes that were made in the Child Support Amendment Act 2021 are being reversed so that the existing manual system can cope with what was the previous rule, because the Business Transformation system can’t cope with it? And, if that is so, which of these 134(2)’s will be in the legislation, or is there intention that we have to change this law again?

Hon DAVID PARKER (Minister of Revenue): The date is actually in this amendment bill, and those dates are found in clause 2 of the bill, as I’ve previously read out; so they have to be read together in order to make sense. What’s, essentially, happening here is the law is being restored to where it was and then is changed again for the future from that 1 April 2022 date or such earlier date as is brought into effect by Order in Council. The only alternative to that would have put at risk the Business Transformation changes, because they would have been rushed, or the alternative would have been complex changes to the old legacy systems that we don’t really want to have to change, because they’re old and out of date, and we weren’t trying to do it through the legacy system; we were trying to do it through the new system. So, once this passes, we do as was, as I understand it, consulted upon and intended. We just fixed the drafting error.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you, Madam Chair. I hope I can just clarify that I’ve understood this correctly with reference to clause 8, which is to say, at subclause (1) we’ve got section 134(2), and at subclause (2) we’ve got section 134(2) too; whereas we should have section 134(2) under either subclause (1) or (2)—we’ve got two (2)s under (1) and (2). And clause 2 has two dates, whereas, if it only had one date, it would be much clearer. So if the Minister can confirm that, that would be really helpful, I think, to everyone’s mental health.

Hon Member: Can you repeat that question?

CHRIS PENK: No, I’m not going to repeat it. It was bad enough the first time.

But I do have another question, which is in relation to the grace period—as I think it could reasonably be called—which is the replacement of the number, or the ordinal, “seventh” with “27th”. Or perhaps it’s the other way around; I’m genuinely unsure. But I’m just asking the Minister to explain the logic behind that. So we’re now talking—just to be clear—about the amendment to section 134 of the Child Support Act 1991, I think as un-amended by the 2021 amendment legislation. But, in any case, just to express some curiosity at the policy reason behind that difference in the grace period—the 27th day or the seventh day being the point at which the calculation is made about a late payment and a penalty calculated at that point. I’d be grateful if the Minister could explain that.

Also, while I’ve got a bit more time to ask a further question: the basis for the amounts of $5 or 2 percent of the outstanding amount, whichever is the greater. There are relatively small amounts involved, and I don’t mean to trivialise that for families for whom that’s difficult. But, nevertheless, it would be good to place on the record—of course, without the benefit of a select committee process for the explanation thereof—in particular considering that that explanation doesn’t appear to occur within the legislative statement. So if the Minister could help me out on all those points, that would be much appreciated.

Hon DAVID PARKER (Minister of Revenue): Thank you, Madam Chair. The policy rationale that lies behind extending the late payment period for the first payment due by a liable parent from seven to 27 days is to enable the Inland Revenue Department to have more time to make contact with the liable parent before they fall into penalties. The experience both overseas and in New Zealand is, if you get these things on track at the start, when people become liable parents and penalties don’t start accruing too early, they’re more likely to meet their liable parent contributions not just for the first payment but also going forward. So in respect of the first liable parent contribution due, there is more latitude for lateness that is not extended in respect of subsequent liable parent contributions because people are expected by that time to have their affairs in order.

Hon MICHAEL WOODHOUSE (National): This is really confusing and I think we’ve got to the bottom of the first bit. One of the problems is that on the legislation website that many MPs use, the Child Support Amendment Act 2021 has disappeared, and you’ve got to go fishing to go back to the commencement clauses that the Minister was referring to. And I found them, so I understand now that the changes that we’re amending in clause 8 of this bill were actually in section 42 of the 2021 Act—and I’m getting nods from the officials, so that’s great. That said that the commencement of that section was 1 April 2021, and it should have been 1 April 2022. Clause 8(2) now is putting that back. I get that.

I’m still uncertain about how we then revert to the new language, which is the bit that I said hadn’t changed in wording. What is the link back to the amendment that makes that effective on 1 April 2022 or sooner by Order in Council, if the computer system enables it? So I’ve got the first bit—we’re there—but I just want to know whether we’ve actually got to come back and change the law again, or how do we link this new clause to a commencement date given that it’s hard to link back to the previous Act, if I’m making myself clear? I’m not sure if I am.

Hon DAVID PARKER (Minister of Revenue): The member is making himself clear and it’s a clearly made point. So what happens is that on 1 April, clause 8(1) comes into effect, and it says, “Replace section 134(2), other than the heading, with:” those words that are under clause 8(1) in grey scale, after “(2)”. And that’s all that then happens in respect of that particular provision until 1 April 2022, or an earlier date by Order in Council, brings into effect clause 8(2), which says, “Replace section 134(2)”, which by that time will be the one above, and that then has effect going forward.

Hon Michael Woodhouse: Does that have effect in the commencement clause of this bill?

Hon DAVID PARKER: No. No, it has effect from 1 April 2022 because of clause 2(4) of this bill.

Hon MICHAEL WOODHOUSE (National): We got there. I would just like to clarify what’s actually happening now. There’s two things. The Minister says—and technically correctly—that it would be expedient to wait until the computer system is up and running, but as I mentioned, this was a quite heavy burden for those people who fell into arrears and who didn’t really have great means to pay. Am I correct that, actually, the Commissioner of Inland Revenue does have a power to remit in circumstances and that, perhaps, a slightly long bow could be drawn in order to exercise her powers? And secondly, it was part of one of my first questions, which was: what’s actually happening with the degree to which child support arrears are being incurred? Because it would be quite nice to think that we’re seeing a reduction even before the new computer system takes full effect.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you, Madam Chair. I fear that my pearls may be cast if not before swine, then on non-fertile soil, but to be fair it’s probably just as well if the Minister can’t hear what will pass for questions in this contribution. Honestly, continue, Minister, please, whatever discussion you may be having while I gather my own thoughts.

I did just want to try to understand the way in which the amounts have been calculated. I did acknowledge in a previous contribution that they are relatively small. Again, I emphasise not to trivialise the fact that for some families in the situation it may be difficult to pay any amount. And, in fact, given that we’re in the realm of penalties, that’s almost certainly the case. But I wonder if there was a particular rationale for the calculation of $5 or, if greater, 2 percent of the outstanding amount at that time. I just pause to note the irony that we are passing in urgency a remedial measure whereby, of course, we are in danger of compounding the error by making further errors as a Parliament, and perhaps I should say, more accurately, as the Government, for it is they who introduced it in urgency as part of their Budget package. I do also want to acknowledge that point about the valiant efforts of the Hon Peter Dunne to bring down the system from the inside, libertarian hero that he was!

Hon DAVID PARKER (Minister of Revenue): I don’t know what the history of the $5 minimum was, and maybe its history goes back to when these things were a lot more manual and there was a lot more work to it. I don’t know, but I do know that there’s a policy agreement that is that it’s an unnecessary impediment to people maintaining compliance with their obligations, and the policy rationale is that it’s an unnecessary penalty that actually puts a lot more people in a material way in breach, and 2 percent without a $5 minimum is a better remedy, and so that’s where we end up.

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

Simon Watts: Madam Chair.

Hon Member: Stand up.

SIMON WATTS (National—North Shore): Madam Chair—sorry, I was just resting. Look, just wanting to raise a new point in regards to Part 2, and I guess I’m drawing a distinction between the legislative statement—and I refer to the last sentence, where it says, “If not corrected, the drafting error would have sizeable system ramifications for Inland Revenue.” And then I refer to another document which we’ve been provided, which is the departmental disclosure statement, and I refer to page 7. Within that, I refer to section 4.3. The last statement of 4.3 reads, “Not correcting this drafting error would introduce increased risk to Inland Revenue’s Business Transformation programme.” Maybe it’s just me, or maybe I’m misreading, but the legislative statement indicates that this would cause “sizeable system ramifications”—i.e., it is an issue; it will result in that outcome—yet the advice from officials indicates very clearly that this only introduces an increased risk.

I don’t think I need to necessarily define the difference between an issue and a risk, but I think for the people out there that’ll be watching this—and no doubt at 12 minutes past 9 on an evening they’ll be looking at this going, “Well, you know what? That guy makes a good point.” There is a clear distinction, and I’m just wondering—we’re here now trying to amend an error in legislation—an error in legislation which was probably rushed through, that no one actually did the checking on—and the piece of information that’s trying to correct this has actually got another discrepancy, quite a significant one, I guess, if you had the eyes of someone who understands that aspect.

I’m now getting reasonably confused around whether we are dealing with an issue, Minister Parker, or dealing with a risk. I’d really appreciate if you could provide some clarity and, actually, some context, so that you can give me—and I’m sure a number of other members on this side—a bit of comfort around substantiating, you know, what are we actually dealing with here. I don’t think the Waikato District Health Board is dealing with a “risk” of cyber-security. They are dealing with a significant issue, and don’t get me wrong, but there are a heck of a lot of our Government departments out there that are dealing with a lot of risks right now, and that is very, very different to dealing with an imminent issue. I think that is very important for the Minister to clarify. It might be just a simple typo by the officials—I doubt that—but I’d really appreciate a bit more context on that. Thank you.

Hon DAVID PARKER (Minister of Revenue): Thank you, Madam Chair. The new system doesn’t take over child support until November. Therefore, for this issue to be fixed from 1 April 2021, it would have to be done through the legacy system, and the legacy system, as members on all sides of the Chamber know, is very, very clunky and very difficult to change, and is not being changed because we’re sooner moving on to the new system. Therefore, it would create risks to the old system to try to change it quickly, and it would also be a waste of money. That’s why it’s better to do what was originally intended and make this have effect from 1 April next year at the latest, or such earlier date as we do it by way of Order in Council.

SIMEON BROWN (National—Pakuranga): Thank you, Madam Chair. My question relates to clause 9, which is Schedule 1 amended, application, transitional, and savings provisions. The question relates to the—and I understand this is probably another timing matter where “The amendments to section 134 made by sections 8(2) and (4) of the Taxation (Budget 2021 and Remedial Measures) Act 2021 apply to a financial support debt if the expiry of the seventh day after the due date falls on or after commencement of section 8(2) and (4) … but do not apply to a financial support debt if the expiry of the seventh day after the due date falls before …”. I just want to ask the Minister whether that’s another of these timing issues which relate to when the different provisions start, having the commencement of 8(2) and 8(4) come into force on 1 April, and I guess that relates to the fact that it goes back from a 27th date with a seventh. So if they had not been due until—if they’d been eight or nine days, then essentially that clock doesn’t start ticking, because at that point they’re only having to be due on the 27th, but then after that time on 1 April 2022, then they have to be within seven days. So just wanting the Minister to clarify that and whether that is a correct interpretation of that particular clause due to the nature of these quite clunky commencement dates and the fact that there hasn’t really been an explanation about that in the explanatory note or in the departmental disclosure statement, and just understanding how all this fits together would be very helpful. Thank you, Madam Chair.

Hon PEENI HENARE (Minister of Defence): I move, That the question be now put.

CHAIRPERSON (Hon Jenny Salesa): The question is that the question be now put.

Motion agreed to.

CHAIRPERSON (Hon Jenny Salesa): The question is, That Part 2 be agreed to.

Part 2 agreed to.

Clauses 1 and 2

CHAIRPERSON (Hon Jenny Salesa): Members, our final debate relates to clauses 1 and 2, the preliminary clauses. The question is that clauses 1 and 2 stand part.

Hon MICHAEL WOODHOUSE (National): Thank you, Madam Chair. I want to make a brief comment about the title and commencement, particularly given the conversation we’ve just had about commencement. My initial comment is I really hope we’ve got it right, because the likelihood is that we could be back here in two or three months’ time going, “Oh, clause 8 should have been clause 4, and section 134(2) was really meant to be ‘1 April 2020-whatever’.” This has been a very confusing conversation, so I implore the Government to get better at passing legislation so that we don’t have confusing commencement conversations like we’ve just had.

I’m not one, normally, to give trite speeches about what the title of a bill should be, or that it should be this bill or that bill, but I feel compelled on this occasion—

Anna Lorck: Come on!

Hon MICHAEL WOODHOUSE: It’s all right, Anna Lorck, I’ve had my Berocca. I can go all night. Don’t worry—no magnesium near me. But I think what’s on the tin is definitely what’s not in the bill—

Chris Bishop: She’s back—she’s b-b-b-b-back!

Hon MICHAEL WOODHOUSE: With a bounce in her step. It says it’s the Taxation (Budget 2021—

Hon Member: “B-B-B-Budget”.

Hon MICHAEL WOODHOUSE: —and Remedial Measures) “B-B-B-Bill”, but it’s got little to do with taxation and, in fact, now what we know is that this Government really wants to throw lots of taxes at people and never ever wants to cut them. We heard unequivocally that threshold changes, lowering the top tax rate, lifting the threshold for the bottom rates, cutting that gap between 17.5 percent and 30 percent is not even something they want to have a conversation about, and that’s because all they know how to do is tax.

“Remedial Measures”—well, I don’t know how remedial they really were. Sure, it was a muck-up. It’s a fixing of the muck-up that was made, and, boy, if that’s the way legislation is written, it’s no wonder that people get confused. It went through select committee. It went through expert submissions. Generally speaking, the IRD bill writers—who are not Parliamentary Counsel Office; they’re usually IRD staff themselves—do a heck of a good job. If anybody has read or scanned the Income Tax Act, it is a massive, massive document, and how on earth tax agents can actually fight their way through it, I don’t know, but that’s what they’re paid to do. So these are muck-up measures where “Remedial” is a euphemism for fixing muck-ups, and I hope that we don’t have to waste any more of this House’s time doing just that.

CHRIS PENK (National—Kaipara ki Mahurangi): Thank you very much, Madam Chair. My colleague Michael Woodhouse says he’s not one to give trite speeches on the title of bills. I, on the other hand, am exactly that person. And I know that I’ll receive great support across that side of the Chamber, and no doubt from all those watching at home or perhaps both of them by this stage, and greetings to both my parents.

The title of the bill is actually quite significant in this case. It’s a taxation Act—of course it is, because that’s the whole point of most Labour Budgets or Labour-led Budgets. We’re now into Labour-led rather than Labour led by the nose by New Zealand First Government. So I suppose some things have changed even though far too much has stayed the same.

So it’s not just a bill that’s taxing. It’s actually been very taxing tonight. And I think we’ve all done our best to get our head around it, and that’s been—

Hon Peeni Henare: Do us all a favour and call it quits, Chief.

CHRIS PENK: I beg your pardon? No, I’ve missed the contribution from Peeni Henare, the honourable, excuse me—

Hon Michael Woodhouse: You didn’t miss much.

CHRIS PENK: I didn’t miss much apparently. Well, I mean, I shouldn’t throw stones from inside a glass house, so we’ll leave it at that.

But it’s also a significant title of a bill because not only does it relate to taxation inevitably on this the day of Budget 2021 but it refers explicitly to Budget 2021, it’s giving effect to that, but I wonder if it could just about apply to any Budget that this Government passes. And the reason I say that is because no doubt in 12 months’ time we’re going to have yet another Budget from this Government that contains much of the same material because the good intentions haven’t changed, the lack of delivery hasn’t changed, and that is why we will, no doubt, be back legislating and re-legislating and unlegislating, in the case of some of these measures, and then re-unlegislating if there’s any errors compounding the errors, and maybe remedial measures may be needed for the remedial measures themselves. I think I can only conclude that by saying that—again, referencing the comments of the Hon Michael Woodhouse, he characterised that previous change as a “muck-up”. Some people at home might be watching Parliament and think that it characterises something that rhymes with muck-up, but I won’t, obviously, dwell on that, that would be—

Hon Peeni Henare: Stop being a suck up—stop being a suck up.

CHRIS PENK: That’s actually a very good comment. And I hope that Hansard has captured that from Peeni Henare. And I take it all back, what I endorsed before about his lack of contribution to the debate. It’s nice to have a Labour member in the Hansard on this bill other than mere closure motions.

So anyway, my final comment, and I do promise you it is my final one, is in relation to the commencement date. And it’s not that gnarly detail—[Interruption]—I’m being encouraged. I fear not in sincerity, but nevertheless. [Interruption] Oh, OK. No. I will nevertheless put us all out of our misery in relation to this contribution.

But I did want to make a serious point about the commencement, which is that it is entirely offensive to anyone who has any kinds of grammatical standards—and I expect others to cross the floor, and I’m not going to look at them but they know who they are—when I say that we should not have a phrase “come into force on 1 April 2021.” That date is in the past. It should read “Sections 5, 6, 8(1) and (3), and 9(1) came into force on 1 April 2021.” And I look to the Minister to propose or, perhaps, accept a Supplementary Order Paper that I might put to change—

Hon Michael Woodhouse: The whole Budget’s a great leap backwards, so why don’t we just go back in time?

CHRIS PENK: Well, that’s right. Well actually, Michael Woodhouse points out, again very perceptively, and I’m leaning a lot on his contributions tonight in making my own, that the whole Budget is a bit of a leap back. I sort of wonder if the Budget also contained an announcement about R & D tax credits for time travel. I think we’ll shortly have an announcement about “time travel is soon to be made possible last year” or something like that. But nevertheless, we’ve been in a sort of Back to the Future kind of frame today: we’ve had compulsory unionism, the creation of railway wagon construction yards, and a huge national debt. So it’s back to the future with Labour. But as far as this bill is concerned, we’re back, we’re forward, we’re in, we’re out, and it’s hard to know whether we’re up or down.

But, in any case, if the Minister could give some thought to the title of the bill, and also that very serious point about the tense and the tension, indeed, of the coming into force on a date that is in the past as opposed to the fact that it had come into force, or we should say came into force, that would be much appreciated.

BARBARA EDMONDS (Associate Whip—Labour): I move, That the question be now put.

Motion agreed to.

CHAIRPERSON (Hon Jenny Salesa): The question is that clause 1 stand part.

Clause 1 agreed to.

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

Ayes 100

New Zealand Labour 65; New Zealand National 33; Te Paati Māori 2.

Noes 10

ACT New Zealand 10.

Abstentions 10

Green Party of Aotearoa New Zealand 10.

Clause 2 agreed to.

House resumed.

CHAIRPERSON (Hon Jenny Salesa): Mr Speaker, the committee has considered the Taxation (Budget 2021 and Remedial Measures) Bill and reports it without amendment.

SPEAKER: The question is, That the report be adopted.

Motion agreed to.

Report adopted.

Third Reading

Hon DAVID PARKER (Minister of Revenue): Can I thank the members for their attention in the committee stage and their questions—particularly the Hon Michael Woodhouse, as he helped the House get their head around the complex provisions in respect of the very minor corrections being made in respect of the penalties for overdue child support payments.

I really don’t have anything else to add to the earlier speeches. There have been legislative statements already filed, there has been no amendment to the bill during the committee stage, and the speeches that have been given in earlier stages of the debate aptly described the legislation from the point of view of the Government.

ASSISTANT SPEAKER (Hon Jenny Salesa): Minister, my apologies: would you kindly move the taxation bill?

Hon DAVID PARKER: I move, That the Taxation (Budget 2021 and Remedial Measures) Bill be now read a third time.

ASSISTANT SPEAKER (Hon Jenny Salesa): The question is that the motion be agreed to.

Hon MICHAEL WOODHOUSE (National): Thank you, Madam Speaker. Well, we learnt a lot tonight. We learnt a great deal in the debates on this bill. We firstly learnt that the Labour Party have dropped any pretence of democracy. They’re all socialists. They all stood up one at a time proudly saying, “I’m a socialist.” And why wouldn’t they?

Chris Bishop: Anna Lorck didn’t.

Hon MICHAEL WOODHOUSE: It is—well, I wait for the call from Anna Lorck, because—

Anna Lorck: I’m a socialist!

Hon MICHAEL WOODHOUSE: Wa-hey! Thank you very much. There we go. Indeed, why wouldn’t they? It’s actually on the Labour Party website, under their values, that they want to educate—this is one of their values: it’s “To educate the public in the principles and objectives of democratic socialism”, and then “and economic and social cooperation”, as if socialism and economic cooperation are one and the same thing.

Actually, you know, we really need to remind ourselves what socialism is. It’s the public ownership of the means of production. So what they want to do is nationalise our businesses. It’s a long game, it’s a quiet game—or at least it was a quiet game until tonight; they’re singing from the rafters now. That’s probably what 52 percent in the polls gets one.

Chris Bishop: Anna Lorck owns a small business.

Hon MICHAEL WOODHOUSE: Well, there we go. Well, she should be donating it to the State. I can’t believe she hasn’t already given it to the State. So there we go. The socialist rhetoric is rising, and it will keep going.

Well, on the other side of the House, we actually believe in private property rights. We believe in aspiration, in innovation, in personal responsibility, in getting ahead, and in making a good life for one’s family, to the degree possible, independent of unnecessary intervention from the State. That’s the difference between two sides of the aisle. Actually, we’ve got the Greens on this side of the aisle—well, I think we need a third aisle, because what we learnt also tonight was that the Green Party can’t make a decision on one of the core principles of Green Party policy and value. They’ve abstained from this bill. I could not believe my ears: something that will improve the lot of low-income New Zealanders, and they abstain. They cannot support it—absolutely outrageous.

The third thing we learnt was that, under a Labour Government, no Kiwi can ever expect tax relief, because they give no time to even debating the merits of threshold changes, of lowering the top tax rate, or of reducing the gap between the income tax rates that most New Zealanders pay, 17.5 percent and 30 percent—didn’t even want to discuss it, and the reason they don’t want to discuss it is because of envy. They couldn’t possibly allow a tax threshold change that would benefit the vast majority of middle New Zealand because upper-income New Zealanders would also get it. Well, that’s what a progressive tax system is. It is not possible to give relief to middle-income New Zealanders without giving relief to all New Zealanders. Remember, they are meant to be governing for all New Zealand. Why not govern for the small number of people that pay the lion’s share of income tax in this country?

The next thing we learnt was that the housing crisis has been solved. Remember what Minister Parker said in his second reading speech: he told us the housing problem is solved. No wonder, because Grant Robertson told him in the Budget speech. Despite all of the out-of-control inflation in our housing market at the moment, which is currently at about 17 percent, they’re going to magic it down to 0.9 percent—never mind the fact that the foreign buyer ban, increasing the brightline test, threatening to remove the interest deductibility, and a raft of other measures have not done one jot to control house price inflation in this country, and probably had the opposite effect. They think they can magic house prices down to 0.9 percent.

He also told us that child poverty will decrease as a consequence of this bill. Well, if only that were true, because they came to Government promising to alleviate child poverty. It’s the very core of the ministerial responsibilities of the Prime Minister. But more and more children are becoming poorer and their families are becoming poorer as a consequence of the policies, the failed policies, of this Government, and nothing in this bill and nothing in this Budget is going to change that, because it’s creating a cycle of dependency that we will take years to break away from.

Those are disappointing elements. Those are the really, really regretful parts of what we’re doing here. We could be passing legislation that is aspirational for New Zealanders, that is fostering innovation, that is fostering enterprise, that is growing jobs. But instead, we are increasing the minimum family tax credit because we necessarily increase benefits because the cost of living for the lowest New Zealanders is out of control, and they know that that’s what is necessary. They’ve done nothing else in this Budget—nothing that would grow the economy, that would reduce our debt, that would give our children a reason to stay in this country, and that is a very, very sad thing. So we will support it, but we wish we were supporting much, much more positive legislation.

Dr DUNCAN WEBB (Labour—Christchurch Central): Tēnā koe, Madam Speaker. It’s a funny old day, isn’t it, when you get a moaning old speech like that and he then says “but we’ll support the bill” and sits down, not having mentioned the bill once in the entire speech.

I’m very proud of what this Government is doing in supporting the most needy New Zealanders and, at the same time, giving New Zealand the assets and the infrastructure to be prosperous and to succeed. This is a bill that is one small step in that direction. I absolutely support it. I commend it to the House.

NICOLA WILLIS (National): National is supporting this bill, the Taxation (Budget 2021 and Remedial Measures) Bill, and we’re supporting it for the simple reason that we believe in the principle that work should pay. This bill provides financial support to low-income working families who are not receiving a main benefit and ensures that those working families are always better off than they would be should they choose not to work and instead be on the benefit. That is a principle that we think is important, and so it is for that reason that we’re supporting this bill: because it maintains that gap between those who are not working and are receiving a benefit and those who are working. So we support it for that reason.

We have noted that this is a change that has been made every year since about 2006 in order to allow for changes in benefit rates, benefit abatement, and minimum wage changes. In this case, we’ve been informed by the Minister that around 4,800 families will be impacted to the tune of approximately $10 a week. We have noted, on this side of the House, that that is a small number of working families, and we know that the number of working families across our country who are doing it tough is much larger than that. We acknowledge those families in this House because the context in which this bill is passing is one in which New Zealand families have faced some of the biggest hikes in living costs that some of them will have ever experienced.

A particular aspect of the debate tonight has been around housing costs, because we know that rents have gone up under this Labour Government $100 a week. So even for these families who, as a result of this bill that we’re passing tonight, will have an extra $10 in their pay each week, that will, in most cases, not go anywhere near far enough to cover off the huge hikes in rent that they have faced and may continue to face.

My colleague Mr Woodhouse spoke about the reply from the Minister on this issue, and I do want to mention it in this third reading speech because it was quite extraordinary when the Minister, in explaining this Government’s housing policy, said that “housing policy is now working” and then went on to explain that, actually, everything’s fine because houses are being consented and because he’s read a Treasury forecast that house prices won’t increase so much in the next year.

These were incredibly heroic comments in one sense, because they betrayed an optimism that I would suggest is out of keeping with the facts. But, in another sense, they were actually quite tragic comments because for a Minister to stand in this House and claim that housing policy is working when, at the same time, there are more than 4,000 families raising their children in motel rooms seems a little bit rich—for the Minister to say that housing policy is working when we have families up and down this country, whether they’re receiving a tax credit, whether they’re receiving a benefit, or whether they’re just receiving wages, who have faced such huge hikes in their rent that there is very little left at the end of the week or who have been completely locked out of what used to be a commonly held aspiration of owning their own home. But that Minister and the members opposite say, “Don’t worry; it’s all working now. We’re perfectly content with the situation.” We on this side of the House put on the record, in this bill, that we are not content with the situation and we don’t think that housing policy is working.

The other area that we have canvassed in this debate is the other costs that working families face. It’s pretty relevant, because, of course, what we’re doing here with this piece of legislation is we’re acknowledging that, when you adjust one thing, other things get affected. You need to be worried about incentives. You need to look at the interaction between income, costs, benefits, the way the State impacts on a family’s pay packet overall. We note that this Government has taken policy action after policy action that has had callous disregard for the impact on a family’s costs, and therefore the amount of money they have to make choices with each week. So, while this bill is a small step in the right direction, we’d suggest that some other steps, when it comes to things like caring about the price of electricity, caring about the price of fuel, and considering the impact of actions on costs across the economy, are also necessary.

The other matter that has been debated as this bill has progressed under urgency tonight is that concept of making work pay. What we on this side of the House have said is “Yes, let’s make these threshold adjustments. Let’s make sure there are those gaps. Let’s acknowledge that actually supporting people’s incomes, supporting their choice to be working, supporting them to have dignity in that and to have enough income for their families is a good thing.” In doing all of that, let’s also acknowledge—and I’m sure members opposite would agree with this concept—that, yes, it’s one thing to lift benefits, and we acknowledge that for families on benefits it is tough. It is very tough. But I wager that, if you were to say to a typical family on a benefit, “What would you prefer: an increase to your benefit or a good-paying job?”, the answer would be, nine times out of 10—maybe 99 times out of 100—“I want a good-paying job, and I want the independence that comes with that. I want the dignity that comes with that. I want the aspiration that comes with that.”

And so it is always incumbent on every Government not to simply prioritise increases to thresholds, increases to benefit payments. That in itself is not enough. What Governments must always do as well is prioritise job creation, prioritise ensuring that we have the productive base within our economy not only to create more jobs today but to ensure that there are good-paying jobs for the future and to ensure that we are putting our economy in a state that means it can compete with the rest of the world, because the world does not owe New Zealand a free lunch. The world isn’t sitting by and saying, “Don’t worry, if you guys don’t want to compete, that’s fine.” No. The world is going after it, and we need to go after it too, so that our kids and the children of today’s beneficiaries have better opportunities than today’s beneficiaries, so that they have the opportunity not only just to get a job but to get a good-paying job.

What we have pointed out is this bill is all fine and good, but we are alarmed by the absence in their Budget today and in this Government’s agenda of a pathway to prosperity. What we’re seeing from the Minister of Finance is a much more passionate desire to look backwards 30 years—to look backwards 30 years at past grievances. They are much happier to do that than to look ahead 30 years and think of a vision for how this country can be many, many times better. We on this side of the House say Governments need to focus on making sure that our country has a pathway to productivity, to prosperity, so that every New Zealander, no matter what circumstances they are born into, can be confident that this is a country that will give them a job, that will reward them for hard work, that will reward them for achievement, and that will ensure they can meet their aspirations that they will be paid well and that they will have lives of dignity. And it will take much more than the Taxation (Budget 2021 and Remedial Measures) Bill to achieve that.

BARBARA EDMONDS (Labour—Mana): I’m going to keep my contribution really short—short like the bill; short as it is only four pages and corrects a drafting error in the Child Support Act, and sweet in the sense that it changes the minimum family tax credit threshold as a consequence of the awesome Budget benefit rate changes that happened earlier today. I commend this bill to the House.

RICARDO MENÉNDEZ MARCH (Green): Kia ora, Madam Speaker. As we wrap up this debate on the Taxation (Budget 2021 and Remedial Measures) Bill, I want to acknowledge that throughout the debate the concept of good socialist policy has been thrown around as if it was an insult. What we’ve seen, though, is an acknowledgment by all sides of the spectrum that people on low incomes are struggling, whether they’re in paid employment or otherwise. I think it’s a disservice for us to not acknowledge that people outside of paid employment also deserve to live with dignity. And in the nature of this bill, I think the main concern is the response by several members that people outside of paid employment do not deserve livable incomes. The Green Party believes that everyone has a right to have enough income to thrive, not just to survive.

The question here, as well, around the minimum family tax credit, the threshold amount, is that ultimately it provides OK incomes for some. We may be talking about people who don’t want to go into paid employment, and that’s used as a scapegoat by members to my right, but the truth is that the people who lose by having a policy that discriminates against unemployed people are the children of unemployed people. Why should we be punishing children because of a policy that has chosen to punish those that are unemployed? And those people that are unemployed, often it’s not just because they want to be in that situation. Often there’s just no employment that meets their aspirations. Often they’re actually already doing meaningful productive labour in their communities, via caregiving, via volunteering, and we should be recognising that labour and valuing it as such. So the issue that we take with the minimum family tax credit is the fact that children and whānau who are living on income support ultimately are discriminated against, and those families deserve to have livable incomes.

This bill comes in the context of the increase to baseline benefits we saw in this Budget, which we believe is a step in the right direction. But, like, many front-line groups who have been really authentic and honest with us, they’ve told us that the increases to benefits don’t go far enough so that our families can thrive. So we hope that in future Budgets we’ll be discussing a similar bill with a much different threshold because benefit levels have been increased substantially so that no one needs a food grant in order to survive.

I’m thinking right now, as we wrap up the debate, of all the front-line advocates who work really hard, day in day out, to get people’s full entitlements at Work and Income, people who work so hard to just get a food grant because we’ve kept incomes so low. So while this bill won’t provide livable incomes for all and continues a discriminatory policy, we will continue campaigning for an income support system that provides livable incomes for all and that it’s unconditional. The Green Party will continue working hard to offer our support to Labour to enact genuine bold socialist policy. Kia ora.

DAVID SEYMOUR (Leader—ACT): I rise on behalf of ACT in opposition to this Taxation (Budget 2021 and Remedial Measures) Bill. This is a piece of legislation that raises the threshold for people receiving the minimum family tax credit, and it’s been done to reflect the fact that this Budget this Government brought down, which ACT also opposes, has raised benefits so much that, if this change wasn’t made, there’d actually be a group of people who would find it was not only of marginal benefit to actually work, actually they would be worse off if they went and worked. That’s why this is necessary.

It was really interesting in the committee stage to find out how many people are affected by this change and what sort of income changes they get if they actually go from being on a benefit to working. Because unlike the Green Party, the ACT Party believes in human action. We believe people actually make choices, that their actions can make a difference in life, and that they respond to the incentives they face, including those created by Government policy. We actually see each person as a thinking and valuing individual with agency, not just fodder for the great social engineers, the philosopher kings of society. We analyse, “Well, how many people are affected?” Well, about 4,800 people, the Minister told us, would be affected by this change. That’s the number of people whose after-tax income is between about $30,500 and about $31,096. Those are the people who are affected by this legislation, because the amount that their income gets topped up to, if they work 20 or 30 hours a week—and the 20 or 30 depends on whether they are single or have a family—the people that work the necessary number of 20 or 30 hours, depending on their family status, they will get topped up to the new level of $31,096. There’s 4,800 people who are between the old threshold and the new threshold who are going to be affected. That’s what we learnt.

Then I asked the Minister, “Well, you know, what happens for people who are currently at the old threshold earning, say, $30,000 or $30,600 and if they get offered extra hours or a small pay increase that would increase their income up to $31,000?” Well, the answer is they will get no extra benefit from their extra work, because their incomes now are going to be topped up to $31,096 anyway. Not necessarily a reason not to do it or to be against it, but it’s a really interesting discussion because it shows that one of the impacts of the welfare system that we have is that a lot of people find themselves in positions where, actually, the effect of doing more work is that they are very little better off.

We heard that somebody who gets $375 a week on a benefit, if they were to go and start working, then they’d basically be getting an extra $8 or $9 for every hour that they went to work. So you start to understand why the changes that this Government is making to benefits are going to have the effect of giving people more money, but they are also going to change the incentives and change the amount of work that people do. That’s why, among other things, I think the Treasury’s forecasts of 4.4 percent unemployment in a couple of years’ time are rather heroic.

Besides that discussion that the committee stage had about the effects of benefits on people’s incentive to work, it’s also really interesting—we heard from the Minister that it’s people’s after-tax income that will be topped up by this minimum family tax credit. You know, what’s interesting is actually how much tax a person earning $31,000 pays. People might be astonished to know. I mean, I just did a little bit of work on it: on your first $14,000, you pay 10.5 percent. Well, that’s $1,470. On your remaining $17,000 or so, you’re going to pay 17.5 percent income tax on your money. That gives you about $3,010 if you’re earning 600 bucks a week, 30 hours a week minimum wage, which is the threshold to qualify for this thing. That means someone on $31,200 is paying $4,480 in income tax.

But then let’s imagine they have a car and they have a tank that’s 60 litres. They only fill it up half every week—30 litres; 95c a litre of tax is to the Government. Well, that means that they’re actually going to be paying—and that’s just the excise tax; that doesn’t include the GST—about $30 a week in petrol excise tax. Fifty-two weeks a year, that’s $1,500 in petrol tax that someone’s paying to half fill their tank each week. And then you’ve got GST. It’s 15 percent on the money they do spend. Now, we’ll guess someone on an income of that level, they’re going to be spending at least half their income on rent—and, thankfully, they don’t pay GST on that—but still, the 15 percent they’re going to pay, that’s $2,250 in GST. I was going to try and calculate how much they’d pay if they liked a cheeky ciggie, but the truth is they won’t be able to afford that at current tax rates, totally out of reach and actually becoming a status symbol because they’ve become so expensive. It’s true. Some people are laughing, but it’s actually a trend amongst younger people. Because it’s so expensive to smoke, they’ve become a status symbol. I’m not kidding. The perverse—

Hon David Parker: Sounds like an Epsom problem.

DAVID SEYMOUR: And David Parker is saying it sounds like an Epsom thing. I can tell you the percentage of people that smoke in the Epsom electorate—or, at least, admit to it to the Government officials—is 5 percent. I don’t know; the member over there, he’s from Dunedin, and I’ve seen a few people having a durry down there. But, anyway, that’s out of the question given the taxes for people on these incomes. But they might like the odd can of Lion Red.

Hon Peeni Henare: Heeey!

DAVID SEYMOUR: That’s right; Peeni Henare, he’s had a few Lion Reds in his time. And it’s not difficult to spot! You know, the excise tax is about $30 per litre on beer. So, if you have 20 beers, that’s a litre of alcohol. That’s $30 excise tax. It’s about 50c a can. If our friend in this example has a dozen Lion Reds each week, they’re going to be paying $300 in excise tax on their beer.

So, so far, we’ve talked about income tax, about $4,500; petrol tax, $1,500. That’s $6,000. GST, $2,250. That’s just over $8,000. We’re off the baccy but we’ve still got the beers. They’re actually paying about $8,500, or nearly 30 percent of their income goes to Government. And that is on a person who’s on a very low income, someone who works 30 hours a week on the minimum wage. So one of the reasons that we need this income tax credit, or at least the reason the Government argues we need it, is actually because so much of people’s money is taken away by Government in tax.

Now, I heard one of the Green members carping away, as they do—as they try and decide whether or not to vote for a bill and then fail and have to abstain—before, saying, “What about all the things you get for it?” And I think people, especially people on low incomes, wouldn’t resent paying so much tax if they were getting a lot of value out of it. But we see so much low quality spending. We’ve actually got a Government that is trying to take us back to the 1970s and have a State-funded train factory in Dunedin. There’s a billion bucks right there. That’s the kind of thing this Government is spending its money on. So you can understand why people have a certain amount of scepticism about paying their taxes, and that’s why this kind of policy is necessary.

I should also just comment briefly about the quality of debate. You know, you’ve got all these larrikins in the Labour Party getting up and saying that they’re socialists. They don’t know what words mean. To be a socialist is to believe that the State should actually own and control the means of production. They don’t believe in that. They all go and—

Anna Lorck: That’s communism.

Hon David Parker: That’s communism.

DAVID SEYMOUR: “No, no. Communism,” he says. “That’s communism.” Communism is socialism organised into little villages. Now, they don’t believe in that, because every single Labour member, I can guarantee you, gets up in the morning and goes and buys a latte or a flat white, probably with oat milk—and it comes from a global supply chain that gets the coffee to the small-business owner—and they happily hand over five bucks that they get paid by the taxpayer to buy their coffee in the morning, and then they come in here and they say they’re socialist. They don’t know what they’re talking about. They don’t know what the words that they use actually mean. The ACT Party opposes this bill.

ASSISTANT SPEAKER (Hon Jenny Salesa): This debate is interrupted. The House is suspended until 9 a.m. tomorrow. Pō mārie.

Debate interrupted.

Sitting suspended from 9.58 p.m. to 9 a.m. (Friday)

THURSDAY, 20 MAY 2021

(continued on Friday, 21 May 2021)

Bills

Taxation (Budget 2021 and Remedial Measures) Bill

Third Reading

Debate resumed.

DEPUTY SPEAKER: Kāti rā, tēnā rā tātou, ata mārie.

[If I may, greetings all, and good morning.]

The House is resumed. Members, when we adjourned last night we were debating the third reading of the Taxation (Budget 2021 and Remedial Measures) Bill. We are up to call number eight, which is a Labour Party call. I call Arena Williams.

ARENA WILLIAMS (Labour—Manurewa): Good morning, Mr Speaker and members of this House. It’s a brilliant day in Wellington and a Pink Shirt Day, acknowledging bullying in our schools. I acknowledge everyone here who has taken the opportunity to wear a pink shirt, and I will be donning one when I go back to my office.

I want to give a very short contribution on a very short bill, which contains amendments to the Income Tax Act 2007 and the Child Support Act 1991. The amendments to the Income Tax Act 2007 relate to an increase in the minimum family tax threshold. These changes are an important part of this Government’s plan and what we heard in the Budget yesterday. But it relates more broadly to the Government’s plan. Since 2017 it’s made changes which would see 109,000 families with kids better off by $175 per week on average. That’s an incredible change since that time, and these changes will do their part to do that.

What’s that going to mean for New Zealanders? Well, I know in my electorate of Manurewa this is going to be a massive investment in those families who need a Labour Government the most, and who need our representation here in this House. I’m proud to represent that community of Manurewa today.

Now, a quick note on the minimum family tax credit, for those who are new to this debate who might be following along, as a consequence of the benefit rate increase announced yesterday, the threshold for the minimum family tax credit is also being increased to ensure that on an annual basis, eligible low-income families continue to be better off in work receiving that tax credit than they would be on a benefit. We’ve heard contributions from that side of the House that we haven’t addressed the need for people to be in work, and this bill is an important part of doing that and making sure that families who are working can get ahead in this country and are incentivised to do so. I’m proud of that, and I want to speak to the people at home who are confused about that: that is simply not the case. By raising benefits we do, in fact, increase everyone’s ability to live a good life in the way that they conceive of it and to live with dignity and respect in our communities. That is why I commend this bill to the House.

DEPUTY SPEAKER: This call is a split call. I call Simon Watts, five minutes.

SIMON WATTS (National—North Shore): Mr Speaker, a very good morning. Everyone’s looking bright-eyed and bushy-tailed on this Friday morning. What a morning it is.

I tell you what, I’m going to talk today about the Taxation (Budget 2021 and Remedial Measures) Bill third reading. A couple of key changes in this Act, as we’ve discussed. We’ve heard a little bit of an overview over there. The minimum family tax credit going up by $520; we support this. The child support amendment—look, we’re fixing a number of mistakes made in this legislation, obviously, that’s needed to be done, so National supports this.

I want to cover three key areas this morning, because, I must say, last night in committee stage was an interesting process. I just wanted to reflect a little bit on that. And I’m so pleased to see the member for Wairarapa in the House, because he gave an absolutely stunning overview of champagne socialism. He was articulating how proud and all that they were and, I think, what that really reflected to us in this House is this Government wants to control—big Government is a cost and it’s negative on productivity.

What also was interesting was from the Greens. I must say, the Greens—I wasn’t too sure where they stood on this. They were abstaining from the vote, which basically means they refused to vote to support a minimum family tax credit increase, which seems at odds with where they’re coming from.

Hon Simon Bridges: Hey, one question, is the member proud to be a socialist?

SIMON WATTS: Absolutely not.

Look, the bill enables us, I guess, to reflect on the Budget. Look, I think we all woke up this morning and we were having a bit of a think about, well, what actually happened yesterday. I must say there was a little bit of good commentary.

But getting back to the bill: billions borrowed for benefits, a band-aid for Pharmac, no boost for business—and Business New Zealand’s comments about yesterday’s Budget: “a Budget that missed an opportunity for growth”. The Employers and Manufacturers Association: “No great benefits for business”. So I must say, a bit of a resounding comment around the feedback on yesterday’s Budget—which relates to this bill—that there was nothing there for business.

A little bit of conversation around the bill that we went through yesterday, because we spent quite a lot of time going through correcting a mistake. Let’s get it right. The child support aspect of the bill was correcting an error that was made. Nothing more than sloppy drafting of legislation. And, you know, the time that we have in this House matters and using that time to correct stuff like that is a missed opportunity. I’ll cover that a little bit later. The impact of that mistake was going to have sizable system ramifications for the Inland Revenue Department. So I don’t think that we can sort of brush it under to say that it wasn’t of significance.

You know, these errors, because of the fast pace at which these guys are trying to operate, without the attention to detail, can have significant risks and implications for our Government departments. And don’t get me wrong. Those Government departments are under a lot of pressure at the moment because they’re getting a lot of talk and not much direction from this Government.

So in summary: every moment in this House matters. I think I’d made that point around the correction of the mistakes. A missed opportunity to fix congestion in Auckland. A missed opportunity to build the second Waitematā Harbour crossing. A missed opportunity to deal with the healthcare workforce crisis in this country—4,183 vacancies in this country, and what did they get from this Budget yesterday? They got an additional $15 million.

DEPUTY SPEAKER: You realise this is not a Budget speech?

SIMON WATTS: Absolutely, Sir. I do appreciate that. I was just making the context around the errors in the bill. I commend this bill to the House.

INGRID LEARY (Labour—Taieri): The member opposite, Simon Watts, wanted to know what happened yesterday. Well, I’ll tell you what happened yesterday: we secured our economic recovery. Yesterday, we created the opportunity to lift between 19,000 and 33,000 of our children out of poverty. In my electorate in Taieri, the median income is $29,700. These changes will make an incredible difference to the people who live in the South. I am so proud of this Budget, I am so proud of the ability to be able to stand in support of this bill, which will enable us to increase benefits by $20 a week from 1 July this year, and then further increases from next April. This is a proud day for me.

I am so grateful on behalf of our constituents in Taieri to be able to take a call on this, support this, and say to those on the other side that we are securing the economic recovery of New Zealand. I commend this bill to the House.

Dr EMILY HENDERSON (Labour—Whangārei): I am so proud to be here to stand in support of this Taxation (Budget 2021 and Remedial Measures) Bill, which raises the benefit level and is going to benefit so many of our people. If you want to talk about this not just in terms of the impact it is going to have on the lives of those people for whom 20 bucks, come the middle of this year, and another raise next year—the impact it’s going to have on them. It is also, to talk over the other side of the House, talking about the impact it’s going to have on our whole society. Frankly, if we don’t get used to raising the living standards of those at the bottom of our country, then we may as well get used to raising our fences, because we either create an inclusive society or we create one that is divided, angry, and no way for a Kiwi to live. I am so proud of this bill.

I remember what it was like when the “mother of all Budgets” came in. I remember the immense impact it had on my clients in the Family Court. I remember seeing, for the first time in my life, children with mouths full of rotten teeth because their parents couldn’t afford the costs. I am therefore so proud to see that we are raising the benefits for those on the lowest incomes, not just because of what it will do for them but what it will do for our whole society.

I am also absolutely thrilled to see that we are adjusting the tax threshold for the working families, because, as the Prime Minister said yesterday, it’s not just about the making of dignity and good lives for those on the benefit; it is also about continuing to incentivise work. I am absolutely thrilled to commend this bill to the House.

Hon GERRY BROWNLEE (National): It is utterly ridiculous for that speaker to stand up, express great pride in the undoing of a Budget that was delivered 30 years ago, without recognising that it was the six years prior of utter debacle inside a Government that was the cause of that Budget’s delivery. Everyone knows that in 1990, the Labour Government at the time delivered a Budget that had, apparently, a surplus of $89 million—a wafer-thin surplus of $89 million. Then upon coming to Government, the opening of the books exercise that took place at that time—because we didn’t have the fiscal responsibility Act back then; we just had a Government able to do whatever it liked. When the books were opened, that $89 million surplus was almost a billion dollars of deficit, and you had the country’s largest banking institution teetering on the edge of failure, which would have taken most of the business community, most of the jobs in this country with it. So don’t come in here lecturing about how wonderful it is that we’ve gone back to the future in this sort of way. Because when you look at this Budget, you can’t help thinking that the next six years might look like those six years prior to the 1991 Budget.

While this bill does deliver an additional $10 a week to people earning on low incomes so that they can have a minimum income, effectively, of $31,096, the reality is that that $10 for working New Zealanders is just as little as 20 percent of what the Budget itself delivers for non-working New Zealanders. That’s an interesting sort of trend, if one were to think about what that might mean if this sort of logic was applied over a longer period of time.

When we were discussing this last time, through the committee stage, there was much claiming of how wonderful all this was, as if the march of time did not have some inevitable effect on incomes as it does on everything else. So there’s nothing particularly special about this. We’re supporting it because we want New Zealanders who are in work to have a clear differential between those who are not. But, more importantly, we want a better environment to get those New Zealanders who are not in work back into the workforce.

I think there is a glimmer of hope here, inside the Government’s own statistics, where they’re saying that if you look back to 2020, payments in this regard were $2.189 billion. But in this current year, it’s going to be $2.130 billion. So here we have a larger payment with a lower quantum. That must mean that there is a very heroic assumption about people’s incomes rising in this country. That’s the only way that works—if incomes rise.

But we’ve got a Government that’s gone out to the whole State sector and said, “Nothing for the next three years. You’re flat.” And wouldn’t you think that that might translate to the private sector? So there is a deliberate Government policy of income suppression, but in this bill, the heroic assumption that incomes are going to go up somehow against that sort of prediction.

When you look at the stats—and the Minister pointed us to these stats on page 128 of the Budget Economic and Fiscal Update document—2022 sees the payment drop to just over $2 billion. Well, what does that mean? It means less people are picking up this sort of support. The only way they pick up less support is by earning more, earning more in an environment where the Government is saying “Nope, no more pay rises.” Then when we have a really good close look at it, we see that by 2025, it’s blown right out to over $2.2 billion. So they don’t even believe in their own fiscal forecast the outcomes that they’re predicting for the next couple of years. I think that is a cruel hoax on the people of New Zealand who do have hope that our economy will recover and move forward.

The speaker before, saying that “We’d laid the groundwork for the recovery of the economy by increasing benefits and by increasing family support payments.” misses the point—that is, from the economic activity, the productive side of the economy that those things are affordable. So I really do have great concerns that the Government has gone out with a big flag, saying “Look how good we are. Look how wonderful we are. We’ve got a great battle going on against poverty in this country.”, but no army behind it to make it work.

I appreciate that this is not a Budget speech and I don’t want to incur your wrath by straying too much further into these things. But I know, the whole concept of this being a cornerstone of that Budget is completely ridiculous. As I said before, the march of time always has consequence. If it didn’t, then nothing would have changed since 1990. But it has and it does, and the base level of what we now consider to be the baseline for existence in New Zealand—$31,000—would have been a massive income back then, a massive income. So don’t make out that this is something special; it’s not. It’s just part of an obligation that a Government in a country like this takes on.

Rather than take more of the House’s time, let me simply say, we support this because we do want to see the incentive at a higher level for people who are in work to stay in work and to progress in their work. We do think that incomes for New Zealanders are too low. We’ve said that for a very long time. But you only get that increased income by increased productivity within the economy, increased activity in the economy and better prices for commodities—all of that sort of thing. That’s what creates jobs; it’s what creates higher income—no question.

So it’s unfortunate, then, I think, that that’s the part that’s missing in this particular debate. The other side have concentrated on how wonderful it is that they’re doing this, without any real explanation of where all the money comes from, and then, of course, presents the utter contradiction in the Budget Economic and Fiscal Update.

Can I simply conclude by saying that we’ll support it because working New Zealanders deserve it, in an environment such as we have at the moment. Can I just say too, if you look at what this means for people—an extra $10 a week, so that your income comes up to $31,096. Yesterday, interest.co.nz published a very interesting article, and it’s worth a look, because it talks about the underlying inflation that exists in the New Zealand economy. That’s a big, big challenge. For people on that sort of income, they’re not too worried about mortgage rates, other than the fact that those mortgage rates affect their rental rates. There’s no doubt there’s been enormous rental pressure in the last couple of years. But the most interesting thing about that article was it took a basket of ordinary, regular, everyday-use grocery items and compared it, price-wise, over a period of time, and came up with the conclusion that there is an underlying inflation, particularly in that sector, of around 7 percent—7 percent soaks up a lot. In $100, it’s $7, and this gives people $10 over and above about $30,000 a year. So it’s not a great value to them, as far as moving forward is concerned. It just barely holds people to where they are at the moment.

With that, I’ll conclude my remarks.

SHANAN HALBERT (Labour—Northcote): E te Māngai o te Whare, tēnā koe. You know, I’ve heard from the other side this morning just a whole bunch of grumbles and sadness, particularly from the member from the North Shore. Now, the reality—and I take Mr Brownlee’s point that there’s nothing special in our announcements yesterday and in this Budget, but the reality for the North Shore community: 10,000 people will have their benefits lifted—10,000 people on the north shore of Tāmaki-makau-rau. Now, that is very, very important to acknowledge. That’s 10,000 people that are getting a lift of $20 coming up in mid-year and then increasing from there thereafter. But that money—and people forget—that may not be much to us is spent in our local businesses on the North Shore, across Auckland, and across Aotearoa New Zealand. People forget those key important points.

This Budget is about securing our recovery, and the step today in this taxation bill, and why I’m supporting it in the House today, is because we want to secure our recovery. I’m proud to be a Labour member. I’m proud of this first Budget and the investment in our people, and I commend this bill to the House.

A party vote was called for on the question, That the Taxation (Budget 2021 and Remedial Measures) Bill be now read a third time.

Ayes 98

New Zealand Labour 65; New Zealand National 33.

Noes 10

ACT New Zealand 10.

Abstentions 10

Green Party of Aotearoa New Zealand 10.

Motion agreed to.

Bill read a third time.

Bills

COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill

First Reading

Hon CHRIS HIPKINS (Minister for COVID-19 Response): I present to the House a legislative statement on the COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill.

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

Hon CHRIS HIPKINS: I move, That the COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill be now read a first time.

This bill is a very simple bill. But by way of background first, the Parliament last year, in August last year, passed legislation in a hurry that allowed the Government to introduce charges for managed isolation and quarantine. Those coming into the country should be charged under certain circumstances. The policy intent there was that New Zealanders returning home—those who had been away for a period of time, a long period of time—should not be charged; those who were staying for a reasonable period of time—at that point, 90 days; subsequently increased to 180 days—should not be charged; but others should. So those coming in on essential work visas, those coming in short term—they should be charged. That was the intent of the Government and the intent that the Parliament endorsed.

What subsequently has come to light is that those Australians who have come to New Zealand on those visitor visas, on those short-term work visas and so on, regardless of the visa status that they came to New Zealand under, they automatically get converted to a residence class visa when they arrive in New Zealand. That was not made apparent to the Government, that that would have an implication on the charging regime at the time the charging regime was introduced. Therefore, this legislation corrects that anomaly and ensures that those who have been charged—and the advice that I have had is it’s impossible to estimate with precision exactly how many people could be affected, but it would be in the vicinity of around 600 to 650 people who could have been charged and could have paid. It makes clear that those charges should be validated—because that was the intent: to ensure that those people were charged and paid—and corrects this anomaly so that people in the future who are in that category can continue to be charged.

So it’s a very simple legislative fix. It is, of course, regrettable that this was not foreseen at the time the legislation was passed. I would remind the House of the circumstances under which it was passed back in August last year, which were that it was done in a rush. It was passed very quickly. This issue was not foreseen, was not identified, and has now been identified. It’s important that we fix it so that we can make sure that those people who had always intended to be charged and have been charged—to make sure that those fees are valid.

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

CHRIS BISHOP (National): Thank you, Mr Speaker, and I want to start my contribution by saying thank you to the Minister for COVID-19 Response for actually explaining what the problem is that we are dealing with here. I have read the bill, I have read his six-paragraph legislative statement, and I have read the departmental disclosure statement, and, for the life of me, it has been very difficult to actually understand why we are legislating, because all three documents that I’ve just referred to actually don’t explain, with the precision and clarity that he just did, what the actual problem is.

Hon Chris Hipkins: I’m from the Government; I’m here to help.

CHRIS BISHOP: Labour Governments always say they’re here to help; sometimes you find the help’s not so good. So thank you to the Minister for doing that.

Look, we’re going to oppose this bill, on the Opposition.

Hon Chris Hipkins: But you think everyone should be charged.

CHRIS BISHOP: No, no, no, no—just, no; well, we oppose it for a few reasons. The first is that it is still not clear that this is actually necessary. The second is, as a matter of principle, retrospective law is a bad thing. This is the second time this week that Parliament has been put into urgency to pass laws to make good something that should have been fixed in the first place. So we are going to oppose it, and unless there is a fuller explanation from the Government as to exactly what the problem is here that we are trying to solve, we don’t think that it is a good idea to pass retrospective legislation. What this does is, basically, change the law as it was when people came in from Australia, back to August last year. Very short bill, as the Minister makes clear, but it does it so retrospectively.

There are a lot of questions that I have, really, for the Government, and perhaps we can get into them in the second reading stage, which will follow forthwith, and perhaps in the committee of the whole House stage. But one obvious one is: when did the Government find out that this was an issue, this issue of Australians coming into New Zealand and having their—

Hon Chris Hipkins: About three weeks ago.

CHRIS BISHOP: What’s that?

Hon Chris Hipkins: About three weeks ago.

CHRIS BISHOP: “About three weeks ago”, OK. Three weeks ago. So it’s not so urgent that it had to be fixed three weeks ago or two weeks ago or one week ago, but it is apparently so significantly urgent that—and I can see my colleague Michael Woodhouse has gone over to talk to the Minister, because, no doubt, he has done what I’ve done, which is read the legislation and read the disclosure statement, and gone, “This is very confusing and it doesn’t actually explain what we’re trying to fix.” So apparently it wasn’t so urgent that we had to fix it three weeks ago or two weeks ago or one week ago. Instead, what’s really happened is the Government is embarrassed because, yet again, we are having to go and fix the law, to fix a stuff-up. The Government is embarrassed, so what they are going to do is ram it through under the cover of Budget urgency on a Friday morning. Here we are at 9.30 on a Friday morning, the press gallery is all hungover, and the front pages have been—

Shanan Halbert: Be kind.

CHRIS BISHOP: What’s that?

Shanan Halbert: Be kind about our press friends.

CHRIS BISHOP: I’m a truth teller, Mr Halbert; I’m a truth seeker on this side of the House. So the front pages have all been done. The Government has done their Budget thing. The front pages have been published. Happy days all round. Everyone is getting ready for the weekend. Instead, we’re here on Friday morning with Parliament still in session, unusually, ramming through this dirty little bill to fix something that the Government got wrong back in August last year. The Government’s hope is that no one will notice that it is for the second time this week that we are passing retrospective legislation, and, frankly, they are probably right: not that many people will notice, actually. But, you know, that is a little bit depressing.

So the Minister tells us that the Government found out three weeks ago that there was a mistake. My question is why they didn’t do something three weeks ago, because if it is something that is so urgent that we have to be in Budget urgency for it, you might have thought that it would have been done a few weeks ago. But instead we are here using the cover—it is really just an excuse—of Budget urgency to fix up this problem.

Hon Chris Hipkins: So cynical.

CHRIS BISHOP: Well, “So cynical”, says the Minister, with a big grin on his face. Well, having worked for the Leader of the House before, yes, I am that cynical, Mr Hipkins. I know exactly how these things work.

The second thing that, obviously, comes out of this is: how many people are actually affected by it? The Minister says 600 to 650. Again, I do have a genuine question: why is that not in any of the legislation or any of the material published? That material is useful for the House’s information, but it’s not—

Hon Chris Hipkins: That’s why I gave it to you.

CHRIS BISHOP: —in the legislative statement—I know that’s why you read it out, but, you know, we shouldn’t have to tune in to your first reading speech at 9.20 for the public to find out about it. It is not in the departmental disclosure statement, which has four appendices which all say “insert data here” and “more information to come” and “this information will come later”. It is not in any of the very, very poorly drafted departmental disclosure material. And it is not in the bill itself.

So it turns out it is 600 to 650; OK, fair enough. No idea of the quantum of the cost that we are being asked to fix. No idea about any of that. The Minister says it is impossible to estimate, with any exactitude, exactly how much money may have been charged that shouldn’t have been charged. So we’ve got no real idea about how many people are affected by this, and no idea about the quantum that is an issue for the Government.

So where are we at? This is a very strange situation where we have a bill that doesn’t make a lot of sense. The Government can’t really explain what problem is being fixed. It doesn’t know how many people are affected by the problem. It doesn’t know how much money is at issue. In fact, it can’t really articulate what the public policy problem is. But yet here we are on Friday morning, in Budget urgency, passing a bill that we don’t really know what it does. And I’m sorry, that is a terrible way to make law—I really think that is a terrible way to make law. And, as a matter of principle, I don’t think the Parliament should agree to it.

The first overriding principle is that Parliament should very rarely do things retrospectively. That is the first principle. This bill breaches that. For those newer members there on the other side, if you go and read the legislative guidelines, and you go and do your constitutional law 101, that is the first thing they’ll tell you. If you go and talk to people who are the experts in these things, they’ll say, “Be very hesitant, Parliament, before you make retrospective legislation.” Well, here we are on Friday morning, under Budget urgency, passing retrospective legislation. OK, sometimes it is justified, but you’ve got to have a good reason for it to be justified. So then you turn to the reasons. Well, what are the reasons here?

If you read the legislative statement, it says, “Cabinet’s policy intent with regard to charging MIQ fees for Australians is clear”—well, I mean, that is actually a debatable point; I’m not sure it is clear, to be honest—“Australians who are ordinarily residents of New Zealand, the same liability to MIQ fees, all other Australians are expected to be liable for fees under provisions in the COVID-19 Public Health Response Bill regulations related to temporary entry class visas, including critical workers and critical health workers.” But nowhere is there is an explanation as to what has actually happened.

Apparently, 600 or 650 people—we’re told; we’re not sure of the exact number—may have been charged fees that they shouldn’t have been charged. So Parliament’s solution to that is just to say, “Oh, well, that’s definitely the case; they shouldn’t have been charged in the first place, and we’re just going to retrospectively change the law to make sure that that was the case.” Well, does that public policy problem justify retrospective legislation? Frankly, I am utterly unconvinced that that is the case. I have no real idea why we are doing this. The Government, in a very short contribution, couldn’t really articulate much of a case for it, either, to be honest.

So, all in all, this is a weird little bill at a strange time in the Parliament. Doesn’t it say it all, really, about the Government’s priorities? We’re in Budget urgency—Budget urgency is like the one time when the Government can put the House into urgency and no one objects, because it’s the Budget, apparently; it is like a special carved-off time when urgency is justified for whatever you like—and the Government’s not using it to do anything particularly constructive; instead, the Government is using it to ram through a bill that will be finished by 1 o’clock this afternoon, to retrospectively change a law, to fix a problem that they can’t even articulate is actually an issue. What a strange little time in the nation’s history.

Hon DAMIEN O’CONNOR (Minister of Agriculture): I’m happy to take a call and offer a few comments in support of my colleague. He and his officials have done an exceptional job through COVID, I have to say, and put in place—very rapidly—the necessary legislation. He’s very, very good, but he’s not perfect. He’s not perfect, and so we have acknowledged that the intent of the bill in the legislation was really clear, but the implementation was not. So what we’re doing—and every Parliament has the responsibility to amend things that are clearly identified as being wrong

So the intent was quite clear, we did want to charge Australians who were coming in, but the ability to do that was not put in place through the legislation. So I think the Minister is doing the right thing—he’s come to the House to clarify any points that member of the Opposition want; we are here to help, always. So I think this is an appropriate thing to make the adjustments as necessary, as identified in hindsight as we’ve moved through this process. So I support the bill and its passage through the House.

Dr SHANE RETI (Deputy Leader—National): Thank you, Mr Speaker. I stand to lend my support to my colleague Chris Bishop, who has kicked off our approach to this bill. More specifically, we have concerns around the process that brings this bill to the House, and what’s rightly been asked is: why is it taking so long to address this? When did we first find out that this was an issue?

I think what that also talks to, if we look at the disclosure statement, the fact that any potential work or evaluation or supporting information around this is absolutely absent. If we look at the background material, are there any publicly available evaluations? No. Were there any regulatory impact statements? No. Has there been any impact analysis? No. Any cost benefit analysis? No. I mean, we could just make our way, page on page: had advice been provided from the Attorney-General around the New Zealand Bill of Rights Act? No. Any external consultation? No. And yet, here we are under urgency—let’s understand this: three weeks ago, they realised there was an issue, and none of those points have been taken into account. This looks very shoddy in the background.

I want to come back to the number that the Minister’s pointing towards—600 to 650. Why do we not know that number? How hard can it be to count people coming across the border, and to integrate information from the border, from customs and our border people, from the Ministry of Business, Innovation and Employment, from the Ministry of Foreign Affairs and Trade, and to get an absolute number for people that are involved? You know, maybe this also talks to why there’s some issue in recovering fees for those who should have paid their managed isolation and quarantine fees, because we’re just not doing appropriate data collection and data analysis at the border, and I think this bill just lends itself, this very shoddy bill, to that sort of inquiry, when we don’t really have any information and we don’t have any detail around how we come to be here discussing this sort of thing.

So I’m hoping in the second reading and in the committee of the whole House, the Minister can add further information to that. The key points that you’ve heard us put on the table today is: when did they first understand it, what wider information have they gathered around this, particularly around impact analysis and cost-benefit analysis, and then, thirdly, I guess, we’d have to look at it and say the argument is being made that this happened because it was done under urgency around about August. Have they run a fine-tooth comb through other parts of that legislation to make sure we’re not here again under urgency repairing similar faults? So it will be very interesting to see, as this progresses over the next few hours. Thank you.

HELEN WHITE (Labour): Helen White—good morning, Mr Speaker.

Kieran McAnulty: Is it Emily? Oh, it’s Helen!

HELEN WHITE: Ha, ha! We have a small problem of too many blondes on this side of the House. Listen, I just—

Hon Simon Bridges: Ha, ha! Can I say that? Am I allowed to say that?

HELEN WHITE: Ha, ha! I stand in support of this bill, and as a lawyer, I take note of the issues with regard to retrospectivity, but I would also say it’s one of the areas where I’m most comfortable with that kind of decision, because as we know as lawyers, proportionality’s pretty important. So is the fact that nobody in this situation was misled or deceived. This was a situation where the people who were going to be subject to this change actually expected to pay the fees that they’ve paid, and that is the way you cause least damage. So this is a law that will change just to meet the expectation of the people affected, and it’s a very sensible change. It’s also one that happened in a situation of great urgency, and I join my colleagues in commending the Minister for COVID-19 Response for the way that he handled an incredible crisis in our society. We have managed that extremely well, much to the chagrin of the Opposition. Thank you. I commend this bill to the House.

Hon JULIE ANNE GENTER (Green): Tēnā koe, Mr Speaker. Tēnā koutou e te Whare. I have to say I’ve never seen a better example of opposition for opposition’s sake than the National Party opposing a minor technical bill and making a deal about it being retrospective legislation.

Hon Simon Bridges: She couldn’t even work out how to vote on the last bill.

Hon JULIE ANNE GENTER: So I guess they’ll be here yelling all morning, but, honestly, this is a pretty simple technical fix. There’s no mystery. It makes perfect sense—[Interruption]

DEPUTY SPEAKER: Order! The Hon Simon Bridges and Kieran McAnulty—really difficult for me to hear the person speaking when you are having a conversation across the Chamber. You’re not meant to do it.

Hon Simon Bridges: I apologise. I get wound up by socialists.

DEPUTY SPEAKER: Yeah—order! You’re also not meant to comment while I’m making a ruling or on the ruling, Mr Bridges.

Hon JULIE ANNE GENTER: The vast majority of New Zealanders have been extremely pleased with how the Government has handled the COVID-19 situation. Obviously, a lot of things had to be done incredibly quickly and it’s not surprising that they’ve realised that the special relationship with Australia meant that their visa status was technically different than it should have been if they weren’t normally resident in New Zealand.

Hon Simon Bridges: Why are we here?

Hon JULIE ANNE GENTER: It sounds like the Hon Simon Bridges has some very deep philosophical questions about why he’s here—a good question. But anyway—look, the Green Party’s supporting the bill. There’s really no drama. I can’t believe they’re going to drag this out and make a big thing of it, but then I kind of can. Thanks.

Dr JAMES McDOWALL (ACT): Thank you, Mr Speaker. This bill confirms to me that the Ministry of Business, Innovation and Employment (MBIE) should put “unintended consequences” at the top of its mission statement for all to read. Whether it’s the disaster that is Immigration New Zealand or mistakes such as the one that we’re dealing with right now that has come about due to bad border policy, which I’ll get into very shortly, this is all just getting very, very predictable and familiar. The ACT Party is also not especially interested in fixing up the mistakes of MBIE, especially under an urgency motion, because there is always the risk that we have to come back and do it all over again when the next unintended consequence arises.

I think it’s important to briefly mention the nonsensical way in which Australians were treated by Immigration New Zealand prior to the travel bubble, because it’s quite relevant. In normal times, Australian citizens and permanent residents are automatically granted a residence class visa upon entry into New Zealand. They don’t get temporary entry class visas; that’s the whole point of the Trans-Tasman Travel Arrangement. But MBIE decided to do it quite differently under COVID, requiring Australians who could get a border exemption to obtain a Critical Purpose Visitor Visa prior to travelling, which is a temporary visa—that’s new. Why it had to be done like this I have no idea, because Australians still had to apply for a border exemption. There was still a process. So here we are with this bill, an unintended consequence of, frankly, weird policy.

The issue is, however, bigger than the technicalities of visa categories in my opinion. We have a very special relationship with Australia, as is enshrined in the Trans-Tasman Travel Arrangement and other agreements, of course. Australian citizens and permanent residents, particularly the former, are not subject to the usual Immigration New Zealand rigmarole that other migrants face. The usual visa pathways do not apply. They’re often not even trying to get New Zealand citizenship, because there’s no need. This is a very special status that is afforded to no one else in the world. So whether Australians are ordinarily a resident here or not, I actually think the relationship is above that when it comes to whether or not we treat New Zealanders and Australians with a border exemption differently. That concept is, of course, open to debate, and I’m perfectly happy to have my mind changed on this, but we can’t really give it justice under an urgency motion like this.

Clause 5(2) of the proposed amendment makes for pretty unfortunate reading in my opinion. It states: “The charge is and always has been validly imposed by regulations”. Now, I’m not a huge fan of retrospective legislation generally but, in this case, it’s particularly tricky and nasty because it’s financial. It is also unfair, I think, given the spirit of the Australian travel bubble that we have today. If an Australian managed to get a border exemption, then their status here in New Zealand, including in managed isolation and quarantine (MIQ), should revert to the spirit of the Trans-Tasman Travel Arrangement. In any normal year, Australians can come and go, work and live between the two countries if they wish. The Government shouldn’t use the technicality and unusual practice of granting temporary visas for the duration of a flight across the Tasman as an excuse to charge them, nor the fact that they may or may not be ordinarily resident here.

The one caveat to all of this, that I would say, is those that come to New Zealand, stay in MIQ, and refuse tests over and over again and they wind up staying for twice as long. But the bill doesn’t talk about that; that’s another story. It’s been a very long time since the underarm delivery and I think there’s no need for the Government to return the favour this morning. MBIE should move on and do better next time. We are opposing this bill. Thank you.

Dr ANAE NERU LEAVASA (Labour—Takanini): Fa‘afetai lava, Mr Speaker. It is a privilege again to rise to take a brief call on this first reading of the COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill, which is a mouthful! It is pretty much—and many of my colleagues have mentioned—something that is trying to correct a technical anomaly with the bill itself. So I commend our COVID-19 Minister and the work that he’s done, and the ministry that has done the work for our people and community in New Zealand. I thank, and take this opportunity also just to acknowledge, the managed isolation and quarantine (MIQ) workers and also those who go in and do the continual testing of our people. I acknowledge my wife and her team; they go into these MIQ places, as well, in Auckland. This is a simple bill, and that’s why I commend this bill to the House.

DEPUTY SPEAKER: This is a split call.

Dr EMILY HENDERSON (Labour—Whangārei): Mr Speaker, as my friend, as my colleague Mr Damien O’Connor mentioned, it’s hard to find the perfect man, and it turns out that even Chris Hipkins is not immune to imperfection. I said “imperfection”—he is human. We have done extraordinarily well. Chris Hipkins and his team, including the amazing border workers and the doctors, have done extraordinarily well. Every now and again you get a little technical hiccup. This is probably the moment to say that some of my best friends are Australians. They are our cousins, but they are not our brothers and sisters and they don’t get the same protection as New Zealanders do. This is probably a good moment to mention that my grandmother is Australian—

Kieran McAnulty: Oh, I’m sorry.

Dr EMILY HENDERSON: I know; it’s hard. But this is a good bill. It is a simple bill. It is technical, but there’s no fuss to be made over it, and I’m really surprised that anyone would be trying to get in the way of what’s been a superb response to COVID. I commend this bill to the House.

SIMON WATTS (National—North Shore): Mr Speaker, thank you very much for the opportunity to speak on the COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill. National oppose this bill. I think my colleague Mr Chris Bishop articulated very clearly in terms of some of the concerns and issues that we have with this bill. Once again this morning I’m standing up talking about trying to fix problems of sloppily drafted legislation, within about 20 minutes, and I must say this is not what I want to be doing on a Friday morning in this House. We should be focusing on the priorities for this country, which are about getting people into jobs and getting people out—

Chris Bishop: You could be on the North Shore.

SIMON WATTS: I could be in the North Shore and I could be focusing on my electorate, but I’m not.

Look, managed isolation and quarantine (MIQ) charging has been a travesty, effectively operating on an honesty box system. I grew up on an orchard, so I know a little bit about the honesty box. It has absolutely been a joke. I think it’s in the region of $7 million that’s currently outstanding in overdue fees for MIQ, and now we’re calling in the debt collectors. So while this bill works to clarify the procedure for Australian MIQ charges, and, admittedly, that is minor—it’s a technical change. But as we’ve heard this morning, and from the Minister, this was identified about three weeks ago. Nothing has been done in terms of providing us with any evidence or substantiation or background or consideration around costs and benefits, around impact. We’ve had three weeks. The Government’s had three weeks to do that, and now they’ve decided, under the guise of Budget urgency, that they’re going to slide this through, push it in under the carpet, and just basically take it off the radar—another example of error and mistake by this Government.

I guess the aspect that concerns me most about this is my reading of that is that we’ve unlawfully taken about $3 million off Australia—$3 million taken off Australians unlawfully. What we’re trying to now correct today in this House this morning, because of our “special relationship”, is we’re basically trying to retrospectively say, “Well, I’m sorry, we unlawfully took $3 million off Australians and now we’re going to change the law to say that that’s OK.” Well, that’s an absolute joke. Where was the review? Where was the advice from officials and the Ministers around this to look at some of this detail and just think, well, maybe taking money off people without any lawful basis to do that is not a good thing, yeah? Maybe they might have thought about that. But no—no, no, they haven’t. Six hundred to 650 people have been impacted by that. That’s no small number. Three million dollars—that’s not a small number, yeah?

Chris Bishop: We don’t know exactly how many.

SIMON WATTS: And of course—yeah. Well, I’m interested—I can’t wait for committee stage, where we can actually start getting into that detail. What was the cost-benefit? What was the impact on the New Zealand Bill of Rights Act? We haven’t had any of that stuff.

I think the other context that I want to raise is how many times, Mr Bishop, did we ask for a little bit of clarity in the Health Committee about getting some of these guys in to explain some of this information?

Chris Bishop: We’ll be asking about this one.

SIMON WATTS: Absolutely we have. Every single time—

Chris Bishop: Add it to the list, Mr Watts. Add it to a very long list of things we want to ask about.

SIMON WATTS: I’ll add it to my list. I’ll tell you what, it’s a long list here. It’s a long list, I must say—it’s a long list. Every single time, in the Health Committee, we asked to get some of these officials, the Ministers, to front on COVID-19 response, what’s the answer? We’re voted down—we’re voted down—a lack of transparency around the key issues that are facing this country week after week in that session. It’s becoming a little bit repetitious. I stand up and I say, “I want to propose a motion. I want to get these peoples in to explain the COVID-19 response. What’s happening around MIQ? What’s happening around all the issues that we’ve got in this country in that regard?” And we’re getting absolutely no answers. We’re getting stonewalled. I’ve even got the Greens supporting us on that call, and along with ACT. So it’s not just part of this House asking for transparency in regards to COVID-19.

I just want to use the last 44 seconds just to cover off one final point, and that is that too many of these MIQ breaches have resulted in impacts on our business community. Some of these legislative examples of errors and lack of drafting is just causing more compliance and impacting the confidence of our business community. We saw nothing yesterday in the Budget that helps our businesses, and that is a real, real disappointment. I’m really expecting a lot more from this Government. So far, I’ve been underwhelmed. We oppose this amendment.

INGRID LEARY (Labour—Taieri): Mr Speaker—[Interruption] Sorry, Mr Speaker, I must have been a little bit asleep during the ACT dissertation on the reasons—the deep philosophical reasons—why we should not be passing this legislation. And I can’t believe that the Opposition are seriously suggesting that we do a full impact report involving officials’ time and money on something that is correcting a piece of legislation. It is opposition for opposition’s sake. We’re not relitigating the border policy. It would be great if ACT and National actually put as much care into people and policy rather than these technical minutiae, which is putting some of us who had a rather large night celebrating an incredible Budget yesterday—it’s making it very difficult to sit here and listen to these dissertations. I’d just like to crack on and get through the day; so I commend this bill to the House.

Hon MICHAEL WOODHOUSE (National): Thank you, Mr Speaker. That’s the hard-working Government we’ve come to know and love. All they want to do is go home and put their feet up because they feel a bit tired.

Chris Bishop: Yeah, back home to Waiheke!

Hon MICHAEL WOODHOUSE: That’s right—will that be Waiheke or Dunedin? Quite, quite interested to know which direction the member is moving after the House lifts. I’m delighted to see Messrs O’Connor and Mahuta here, because they are—well, let’s just say they’ve been around this place for quite a while, and they must be chuckling at this debate, because they know that if the shoe was on the other foot and if a National Government had introduced two pieces of legislation in Budget urgency to correct mistakes that a National Government had made, we’d be here till Monday. I was here 12 years ago last week when, out of a fit of pique, a Labour Opposition put up 36,000 amendments to a bill that they didn’t like, and then they voted in English and Māori and we were here till doomsday. So for them to sit there and Dr Henderson and Ms Leary to say, “Oh, gosh, isn’t it terrible the Opposition is actually questioning the Government on their mistakes?” is kind of like a parallel universe.

I think there are some significant questions to be asked. We got three minutes from the Minister for COVID-19 Response, and we’ll be quizzing him more in the committee of the whole House, I think, because there are some really serious questions to ask.

Hon Simon Bridges: Mmm.

Hon MICHAEL WOODHOUSE: Mmm, yes, there are. But the staggering revelation that we got from Mr Hipkins—and these were the words that he said—the fact that Australians are granted a residence class visa on arrival at an international airport is “not made apparent to the Government”. It’s the Government that runs the immigration system. It’s the Government that actually decides who comes and goes and under what circumstances. That was a damning indictment on the Minister of Immigration, Kris Faafoi, who would’ve been sitting around the Cabinet table in COVID time saying, “This is what our visa system does.” The other thing he hasn’t explained—and it’s not explained in the departmental disclosure statement; it’s not in the purpose and explanatory note of the bill—is whether or not, actually, the Government was, as it says, issuing a visa to people who were allowed to come into New Zealand when there was the COVID lockdown, or whether it was a form of permission to enter that didn’t constitute a visa, because Australia is, essentially, not a visa-free country; it’s a visa on arrival country, and that visa is a residence class visa. But prior to that, no other entry permission is required, unless one might have a conviction or a character issue that would warrant them testing their eligibility for coming to New Zealand.

The other question is: why are we even doing this, because for the number of people, the 600 or so—and it’s amazing that we don’t even know—that would be affected by this change, is that he said, “Well, you know, New Zealanders returning home permanently or New Zealanders coming home for 90 days”—and then it got changed to 180 days or more—“wouldn’t be charged.” But the high-skilled chief executive of a company who’s an Australian citizen, who’s about to take up a role at a tech company in Dunedin, who couldn’t even find a space in managed isolation and had to work from Melbourne for six months but who is dedicated to coming here permanently—why would that person? Is it fair that that person actually gets to pay the managed isolation and quarantine fees when a Kiwi who’s coming home for a holiday for three months and one day isn’t—may not have been in the country for years, decided to hunker down, stay here for 91 days to avoid managed isolation fees, and they get to do it for free.

The last thing that hasn’t been explained is, if the extension of time from 90 days to 180 days for Kiwis was not required to have a change to primary legislation, why is this? This is a simple commercial transaction. It’s an offer and acceptance. If you want to come in to managed isolation, in these circumstances you have to pay, and in other circumstances you don’t. The broad levying powers were already given under the emergency powers. So why are we here at 10 o’clock on a Friday morning fixing another mistake by the Government when, actually, primary legislation might not have been the vehicle for this in the first place? Far too many questions that haven’t had answers for the Minister to stand there for three minutes and say, “Nothing to see here. We’re just going to charge 600 people that we didn’t have the legal power to charge, and that’ll be fine.”

The Greens are fine with it. Greens don’t want to support people with minimum family tax credit increases, but they want to actually charge Australians who are coming here. I mean, that is the most confusing issue of all.

But there are way more questions that I have. Yes, we will get through this, but don’t think that this legislature is a plaything for the Government to fix up its mistakes without question.

KIERAN McANULTY (Labour—Wairarapa): I commend this bill to the House.

A party vote was called for on the question, That the COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill be now read a first time.

Ayes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Motion agreed to.

Bill read a first time.

Second Reading

Hon NANAIA MAHUTA (Minister of Foreign Affairs) on behalf of the Minister for COVID-19 Response: I move, That the COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill be now read a second time.

The bill does two things. First, the bill retrospectively validates the collection of managed isolation and quarantine (MIQ) charges from Australian temporary entry - class visa holders, including critical workers and critical health workers, as prescribed and collected under the COVID-19 Public Health Response Act 2020. This change is to ensure it is clear that previous charges are and always have been valid. This will be done by a new section inserted into the COVID-19 Public Health Response Act 2020.

Secondly, the bill amends the COVID-19 Public Health Response (Managed Isolation and Quarantine Charges) Regulations 2020 to clarify that MIQ charges should apply on the basis of the visa or border exception a person travels to New Zealand on, rather than the visa they are granted on entry if that is different. This change will help make sure this type of technical issue does not arise in the future.

I would like to, once again, state that this bill is purely technical and validates charges that were understood and intended to be lawful. The bill does not change Government policy around who is liable for MIQ charges or how much the charges are. I commend the bill to the House.

CHRIS BISHOP (National): Well, here we are on the second reading of this shoddy bill, shoddily put together by this shoddy Government. And it’s still not at all clear why we are actually doing this. We continue to oppose this legislation.

There were some wild claims made during the first reading debate on this bill, not the least of which is the member for Taieri’s contribution, which basically amounted to: “I’d really like to go home and Parliament doesn’t need to be in session. I’d like to go home and, surely, there are more important things we can be doing.” Well, I want to make a very serious point: there is nothing more important to this House than the making of law. It is right and proper that the Opposition scrutinise that legislation, particularly when the Parliament is being asked to do something retrospectively, because it is true to say that this bill is a technical anomaly in some senses—that is true in some senses—but it’s also worth noting that the bill retrospectively changes the law. So the behaviour that was of a particular type on 11 August last year, that will now be seen, in May 2021, in a different way. As Helen White knows, and Arena Williams sitting next to her, both lawyers, both fine lawyers, as they know—

Hon Simon Bridges: Steady on.

CHRIS BISHOP: Simon Bridges says “Steady on”. I think both got their law degrees from the University of Auckland—

Hon Michael Woodhouse: Oh, in that case, the second best university in the country.

CHRIS BISHOP: So they’re sort of adequate. Second best law faculty in New Zealand after the Victoria University of Wellington law school.

Hon Michael Woodhouse: What about Waikato?

CHRIS BISHOP: Well, I’d be a bit careful about what I say about Waikato University, given the Prime Minister got a degree from there.

But look, these two lawyers know that what we’re dealing with here is the serious stuff. And I want to make a serious point about the quality of the information given to the Parliament around helping us to decide whether or not to pass this legislation. It is pathetic in its paucity. It really is. There is nothing in the legislative statement, really. The legislative statement—as I may have mentioned in the first reading speech—says pretty much nothing. The departmental disclosure statement, at one point, says, in relation to Part 1—the general policy statement—“N.B. The text you provide to your PCO or IRD drafter for inclusion in the explanatory note should be identical to that presented here.” Well, it’s not and also that should clearly have been taken out.

There’s basically no analysis in “Part 2: Background Material and Policy Information. Are there any publicly available inquiry, review or evaluation reports that have informed … the policy to be given effect … ?” No. “Does this bill seek to give effect … in relation to international treaty?” No. Well, that’s probably fair enough. “Were any regulatory impact statements provided to inform the policy decisions that lead to this bill?” No. So no regulatory impact statement, no background policy information. And then, as I said earlier, the best explanation about what we’re actually doing here was given by the Minister in his first reading speech. And we had to wait until the Minister actually got up and, sort of, explained with some, at least, precision or clarity exactly what we were doing. That is not the right way to make law. If Parliament is being asked to do something retrospectively, it should be provided with the information well in advance of the bill being presented to the Parliament.

I don’t know which member it was opposite who said previously, “You know, you can’t really expect the Government to have done a full regulatory impact report.” Well, I’m sorry—yes, we can. Actually, we should demand that, because let’s be very clear about what we’re doing. If you read the general policy statement, it says “This visa-conversion process creates a technical issue where some Australians may have been charged an MIQ fee for which it could be argued that there was no lawful authority to charge.” So just reflect on that—Australians may have been charged a fee for which they shouldn’t have been charged. Basically, a bunch of people, we don’t know how many, a bunch of people were illegally charged a fee. So they’ve been subject to a penalty; not imprisonment or not, you know, a massive penalty. But they have been charged something that they shouldn’t have been charged. Well, the funny thing is the bill doesn’t even say that itself. It says “they may have been charged.” They don’t actually know. They don’t actually know. As Michael Woodhouse points out, it’s incredibly equivocal: “They may have been charged. We don’t know.” And that’s a whole other issue, as to why the Government doesn’t have any idea.

So Australians coming to New Zealand may have been, or probably were, charged fees they shouldn’t have been charged. So there’s sort of two things you can do in response to that: you can say, “We’ll refund them”, or “We can just do the easy—”—that’s the hard thing to do because then you’ve got to go and find them and then you’ve got to go and figure it all out.

Hon Michael Woodhouse: They probably haven’t paid yet.

CHRIS BISHOP: Yeah, they probably haven’t paid yet because seven million bucks is overdue, including, by the way, just while we’re on that—riffing on that—$4 million from August, September, October, and November last year. So we’re now six months in.

Hon Member: Honesty box MIQ.

CHRIS BISHOP: Honesty box MIQ. So Australians probably were charged money that they shouldn’t have been charged. So as I say, you’ve got two choices then: you can go and find them and refund them, or you can do the easy thing, which is just retrospectively change the law to say, “Oh, don’t worry, you should always have been charged.” Well, no surprises what this Government chose. This Government chose the easy option, which is—under the cover of Budget urgency—put the House into urgency on Friday morning.

I should at this point clarify my remarks from the first reading speech in which I said the press gallery were hung-over—I’ve had a number of texts from members of the gallery and it just shows that you think no one’s paying attention and it actually turns out they are. I should clarify my remarks. I almost—

Hon Member: Which is most of them.

CHRIS BISHOP: Yeah, well. I almost did a point of order and made a personal explanation in relation to clarifying them—not all of them are hung-over, only some.

So we’re in Friday morning, we’re now at 10 past 10 and we’ve had a school group come in to watch this unedifying process—hello to all of you—where the Government is retrospectively saying to Australians who were charged, “Potentially, you shouldn’t have been charged, but you were, and that’s legal.” So they’ve taken the easy option rather than just go and refund people who were charged illegally. They’ve just done the easy thing which is to ram something through retrospectively. I think it was Helen White in the first reading who actually mounted at least a decent defence of it when she said that “Retrospective law can be OK because no one’s being penalised.” Except that is wrong; that is just wrong. Retrospective law can be fine if it confers a benefit that wasn’t otherwise available to you. Of course, because, you know, no one’s actually worse off; in fact, you’re better off. So that’s fine. That’s an acceptable form of retrospective legislation sometimes, although the general principle is still that it’s wrong. But let’s be clear, this bill retrospectively validates illegal charging. So this is not conferring a benefit. This bill validates something that may or may not have been illegal at the time and says it is legal now. So it does actually penalise people.

If I’m an Australian resident who came in under a critical purpose visa or whatever in, I don’t know, November last year, I might be one of those 600-650 people and I may have been charged a managed isolation and quarantine (MIQ) fee for which there was no legal authority. Now, I’ve got to tell you, there is nothing more important to Parliament than working out whether or not people are charged fees and penalties appropriately. There is nothing more important to the power of Parliament. That is the whole purpose of Parliament—to allow the Government to raise revenue in a lawful way. What we are being asked to do, as a Parliament, is basically say that the Government made a booboo when they did the MIQ legislation last year, and then we’ve got to fix it up.

I’ve got a lot more to say about this. The other problem with the bill and the other reason we oppose it is we’re being asked to amend, through primary legislation, regulations. So clause 5 of the bill—regulations amended—means the regulations through the Schedule. Again, a shoddy way to make law. Regulations can be amended via the regulations. They’re made by the Governor-General through Order in Council made by Ministers. You’re not meant to put the House into urgency to put through one clause to amend regulations through primary legislation. That’s just totally inappropriate. The Government made a mistake. They should be upfront about that. And they should explain to the House exactly why this bill is so necessary and so justified. It’s a shoddy process and a shoddy way from a shoddy Government.

INGRID LEARY (Labour—Taieri): Madam Speaker, it’s a pleasure to see you in the Chair this morning. I thought I might recap on what’s been a riveting session where we had a dissertation read from an ACT member, we had the Greens accuse the Opposition of opposition for opposition’s sake, and then the lecturing from the other side became so intense that I fell asleep and nearly missed my call. We’re, effectively, litigating a technicality. And I’d just like to correct Mr Bishop. The best law school in New Zealand is the one I went to in Otago, as Mr Woodhouse knows. I commend this bill to the House.

Dr SHANE RETI (Deputy Leader—National): Thank you, Madam Speaker. We’d like to continue this discussion and raise some points that came up in the first reading. The argument was made that no one misleads or deceives, and so this is actually OK. That’s the new standard, clearly, for setting legislation by this Government. So long as you don’t mislead or deceive, it’s all good to go. So you can impose a badness as long as you tell people about it—you haven’t misled them; you haven’t deceived them. That explains the philosophy behind yesterday’s Budget. They weren’t misled or deceived by the bad things that came through in the Budget; therefore, it’s good to go. That’s the interpretation we should take from that contribution, saying, “Nothing to see here. No one was misled or deceived.” I think it sets a principle for the legislative reform for this Government.

I think there are other points in the second reading that just need a moment’s thought. One of my colleagues said, “Some of my best friends are Australian.” Surely that is my “ ‘I can see Russia from here.’ moment”—surely that is the equivalent for that. I’d have to say, the Minister’s first reading, where he led off with a legislative statement for three minutes—that’s not a legislative statement; that’s a haiku! That’s the only way you could call it. That was so brief; that’s a haiku. And, really, we need a lot more detail than what the Minister presented leading up to the first reading to make any sort of valid judgments here.

So a lot of work to do on this bill. I think my colleague Chris Bishop and others are pointing out a lot of faults and flaws that bring us here under urgency, for a bill that shouldn’t be under urgency and that is weak in its background and detail. Reluctantly, we will see this progressing through the House. Thank you, Madam Speaker.

SHANAN HALBERT (Labour—Northcote): Tēnā koe, Madam Speaker. Can I acknowledge everyone who is wearing their pink shirt this morning on this wonderful Friday morning, that I love to spend with you all. Now, Pink Shirt Day works to create schools, workplaces, communities, and whānau where everyone feels safe, everyone feels valued, and everyone feels respected.

Simon Court: Just not Australians!

SHANAN HALBERT: Just not Australians, in this discussion. But I do encourage those that are wearing pink shirts today to uphold those values in the work that we’re doing on this wonderful Friday morning.

But my support for the COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill this morning—I acknowledge our wonderful Minister and Prime Minister in the work that they’ve done on COVID-19. There are some steps that we’ve had to work through, and these are one of them—it’s a simple amendment, it’s nothing for us to sweat over, but it is something that we have to do.

And to the Opposition: I do encourage you to scrutinise the Government, scrutinise the work that we do, but today you are opposing this for opposition’s sake. That is not the style of politics that I want to participate in, and I’m calling you out for it. So, this morning, I commend this bill to the House.

Hon SIMON BRIDGES (National—Tauranga): I rise to take a call on this because I feel like on Friday morning there is about 85 other things we could be doing. I actually agree with the member for Taieri and the point Simon Watts said, but, instead, what we’re doing is we’re here debating an absolutely—it seems to me—pointless bill. I actually want to know—we haven’t had any good answers to this; I hope we will get them in the committee stage—whether this actually needs primary legislation. Does this even need that, given that it’s a regulatory matter? It’s in the rules and I wonder out loud, actually, whether this could have just been done regulatory-wise in secondary legislation—if it even needs the bill that we’re talking about.

I stand here and Julie Anne Genter thought I was getting rather metaphysical on things—why are we here? What are we doing? Are there paranormal activities going on in this Parliament? No, that’s not one of the things, but I do ask: why are we doing this right now in urgency, given that it seems this is pretty pointless? I note it’s retrospective. Actually, that’s not good enough. I thought Chris Bishop was rather generous in the way he approached this by saying there are occasions when retrospective law is appropriate; not many, actually. And, yes, for a supposedly busy Government that’s had a big Budget, spent a lot of money, has talked a big game, actually, in the 24 hours post that, on a Friday morning when some are tired and emotional, here we are right now doing this.

Shanan Halbert: Who’s tired and emotional?

Hon SIMON BRIDGES: Well, not me, but ask Chris Bishop because he got himself in a barrel of hot water, not naming names, but certainly throwing a few lines out in that regard. I say once again: this seems unnecessary. It’s wrong in principle that it’s retrospective. I hope Chris Hipkins, while he’s been out of the House, has found the paranormal activity, shown David Parker where the UFOs are—I don’t know, done something useful with his time because he’s certainly not on this day at this time, in bringing this little bill before the House that I question is even necessary.

Dr ELIZABETH KEREKERE (Green): Tēnā koe e te Māngai. Firstly, to everybody, happy Pink Shirt Day: Kōrero Mai, Kōrero Atu, Mauri Tū, Mauri Ora!

This bill makes a technical fix to the COVID-19 Public Health Response Act to retrospectively clarify that charging managed isolation and quarantine (MIQ) fees to Australians who have come here, who are not ordinarily resident, that it was actually legal.

In the 52nd Parliament, the Green Party supported Government policy and legislation in this area when we decided to apply charges to anybody re-entering this country. We had negotiated a few changes at that time, and we supported it. So when those were implemented—and we understand the policy intent very much was to be consistent—that Australian citizens, permanent residents, they would have to pay like everybody else. This bill also clarifies that those who arrive with temporary entry status were definitely liable for that. We note that it also amends regulations that tidies these things up. And so, because this is a technical fix, we are going to support it.

I would like to comment as a member of the Health Committee that I actually support some of the comments that were made earlier that perhaps we might have identified this earlier, and if the Health Committee were actually able to do our proper scrutiny and to speak to MIQ officials, we might have helped pick this up sooner and dealt with it sooner.

So the Greens do not normally support retrospective actions. In this case, we think it is technical, and urgency seems justified to us to get it sorted. The policy is in effect, it’s all happening. Let’s tidy up the mess and anything that’s untidy. So we commend this bill to the House. Kia ora.

Dr JAMES McDOWALL (ACT): Madam Speaker, thank you very much. It is a great shame that Ingrid Leary didn’t appreciate my opposition or “dissertation”, in her words. But I actually think it is important that Government MPs actually understand immigration and border law, because I suspect they’re getting their advice from the Minister of Immigration, and that really does worry me. Furthermore, based on some of the speeches that I’ve heard this morning from the Labour MPs, they possibly don’t seem to understand this bill either.

Bad immigration policy-making led to this point. There is so much bad immigration policy out there in the wild. The Ministry of Business, Innovation and Employment (MBIE) has changed their immigration policy towards Australia—well, they changed it during COVID, for God only knows what reasons. It was a very strange approach and unnecessary. But very obvious issues like this will arise, and, somehow, more than 4,000 staff at MBIE didn’t see this coming. I just think what else have they missed? My goodness.

So our opposition—

Hon Michael Woodhouse: All the Immigration staff missed it too, apparently.

Dr JAMES McDOWALL: Exactly, Mr Woodhouse. So our opposition is simple: retrospective charging is unfair, especially under urgency like this. MBIE’s bad policy-making towards Australians is their problem. They should move on and do better next time. Lastly, we should treat our Australian cousins in good faith and not do stuff like this. Thank you, Madam Speaker.

Dr EMILY HENDERSON (Labour—Whangārei): I commend this bill to the House.

ARENA WILLIAMS (Labour—Manurewa): I commend this bill to the House, Madam Speaker. Thank you.

HELEN WHITE (Labour): I just want to comment on the irony that is that the ACT Party is talking about actually holding the charge for this, when this actually is a prudent move in terms of tax. New Zealanders have paid for this and Australians don’t, and it’s really important that the cost lies with the people who actually ate the food and stayed in the hotels and came here knowing that they would be charged for it. So it’s an important and prudent move on the part of the Government. I commend this bill to the House.

Hon MICHAEL WOODHOUSE (National): Thank you, Madam Speaker. I’m delighted to talk, again, on the “fix” morning we’re having here, on the COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill. I just want to signal to the Minister that when he does assume chairing the committee of the whole House, there’ll be a number of questions about why on earth we have to do this. Members on this side of the House have raised questions about the relationship between primary and secondary legislation that I think are necessary to have answered.

But I want to go back to the question that Chris Bishop did—speculating on whether there were two options here: we could either change the law, validate it, or we could actually refund them the money, because, if the Minister believes his own officials, it was an unlawful levy at that time. The previous Government had to do that a couple of times. The choice was made that even with a reasonably substantial sum of money, we refund it. Mr Bishop speculated that perhaps we couldn’t find them. Well, it’s not that difficult to find people who may be due several thousand dollars in refunds. All you’d have to do is put an ad in the Herald, the Dominion Post, The Press, and the Otago Daily Times, and they’ll come running. Only, why on earth would the Government draw attention to their own failures by advertising that fact in major city daily papers? And, actually, they’d probably have to put one in The Australian and the Sydney Morning Herald as well, because those people might be back in Australia by now.

So rather than do the right thing and actually follow the law and refund the money, because it would be embarrassing for them, we’re here on a Friday morning, passing retrospective, validating legislation to justify the money having been taken out of the pockets of those people unlawfully, albeit that they’re not even sure that that’s the case, because the general policy statement is pretty equivocal. It could be argued that there was no lawful authority to charge. Well, argue it. They should test the question. I’d be interested to know, from the Minister—whether or not somebody’s actually asked for a refund on this basis—how it was drawn to the attention of the Government. Why? So that we didn’t have so many questions and only found out about the details of this yesterday afternoon—a paucity of information.

Did the Minister not think it appropriate to come and talk to other parties and say, “Look, this is the situation we had.”? He had three weeks. I think there has been a track record of constructive dialogue on matters like this in the past, and yet we have this popped up on a Thursday afternoon for debate on a Friday morning, which, frankly, is a bit disrespectful of this place. And that’s not like the Minister, who’s usually pretty good at engaging. He has responsibilities for the management of this place through the Business Committee and in this House, and this, I think, falls below the standard that he has set for himself.

So I am a bit disappointed about that. But, nevertheless, I think we can try and be as constructive as possible, despite the cries of “Let’s go home.”, wherever those homes are, and “Let’s get to the golf course or the beach.” But, actually, we’ve got a job to do. It’s called Opposition; it’s called proposition, and we’re going to continue to do it.

Dr ANAE NERU LEAVASA (Labour—Takanini): Thank you, Mr Speaker. I commend the bill to the House. Thank you.

A party vote was called for on the question, That the COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill be now read a second time.

Ayes 77

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10; Te Paati Māori 2.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Motion agreed to.

Bill read a second time.

DEPUTY SPEAKER: This bill is set down for committee stage forthwith. I declare the House in committee for consideration of the COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill.

In Committee

Clause 1 Title

CHAIRPERSON (Hon Jacqui Dean): The House is in committee on the COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill. The question is that clause 1 stand part.

Clause 1 agreed to.

Clause 2 Commencement

CHAIRPERSON (Hon Jacqui Dean): The question is that clause 2 stand part.

Hon MICHAEL WOODHOUSE (National): We are in a debate. We might not want to quibble too much about the title, but I am interested in the commencement of this, and I have some questions for the Minister, particularly around timing, so it may be appropriate to do that in this part of the bill.

If I interpret this correctly, because of the trans-Tasman bubble, the matter is, effectively, ended. No Australian citizen or resident coming from Australia would be required to spend time in managed isolation or quarantine at that time. So, effectively, we have closed the door on any future charging unless circumstances change. So I guess my question is: why the hurry? Why have we got a commencement date that is so immediate, two days after we even found out about the problem? Is he confident that he has sufficient information to retrospectively validate this in the manner in which he’s doing—and I’ll expand on that in clauses 3 and 4? Was consideration given to actually kicking this to a select committee for a week or, potentially, while the power might be given, having a back door out to say, “Well, we did get this wrong.”, and therefore not make the legislation effective quite so quickly?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): Madam Chair, if I could comment very briefly on that. I’m happy to get into that in more detail when we talk about clause 4, which I think is the main clause that the member is referring to, and clause 5, of course, which is about the amendment of regulations. But just very briefly on timing, the ultimate issue here is that we want to provide certainty. Everybody who entered the country and paid these fees expected when they came to New Zealand that they were going to be paying them. They came to the country on that basis and they have paid those fees, in large part, or they may have a fee outstanding, depending on the timing of their invoicing. So I don’t think anyone is going to be feeling aggrieved by this legislation, because it simply aligns a technical legal distinction with the policy and practice that has already been in place.

Hon MICHAEL WOODHOUSE (National): I appreciate the response from the Minister, but I would remind him that the strong democratic principle of no taxation without representation is really, really important, including for our Australian friends, who on arrival are granted a residence class visa, and therefore they become, to all intents and purposes, Kiwis. So they’re not being represented. Nobody is actually having an opportunity to have their say on this—the immigration agents, the immigration lawyers, the people who have supported those through managed isolation and quarantine—and I think it’s unfortunate that we are not giving them an opportunity to have a say.

Clause 2 agreed to.

Clause 3 Principal Act

Hon MICHAEL WOODHOUSE (National): On the face of it, we wouldn’t normally be debating clause 3. But in our discussions on both clause 3 and clause 4, I think the committee would benefit from an explanation about why we are amending primary legislation, and it may be necessary that the Minister could navigate the committee’s way through the relationship between the COVID-19 Public Health Response Act and the COVID-19 Public Health Response (Managed Isolation and Quarantine Charges) Regulations, because I have, in the very short time that we have been able to consider this bill, been trying to draw a nexus between the primary and secondary legislation, to satisfy myself that we even need to be here.

If one looks at the COVID-19 Public Health Response Act, it contains provisions for charging in managed isolation and quarantine—that’s understood—and it sets out the circumstances and the exceptions. But I can’t find in the primary legislation, which is related to clause 3, a place where we actually say that New Zealand citizens and residents are exempt from those charges in certain circumstances, and that’s the problem we’re trying to solve, because an Australian citizen becomes a New Zealand permanent resident on arrival.

But I can see it in the regulation, and, in particular, at clause 6 of that updated regulation, where it describes that a “specified person is anyone to whom 1 or more of the following applies:”, and therefore why don’t we just, by Order in Council, fix this up? If the Minister could point to the basis for the amendment being required inside the Act and not the regulation, I think the committee would be very grateful.

Hon CHRIS HIPKINS (Minister for COVID-19 Response): Just very briefly, having been in the House for a number of years myself, it’s not uncommon—in fact, it is standard and expected practice—that the Parliament has been asked to validate something that has happened where there may have been a technical question about whether there was a lawful authority to do that. It is common practice. It is standard practice for that to be done through legislation in the House.

Hon MICHAEL WOODHOUSE (National): So, if I might understand, what the Minister has told the committee is that indeed the definitions of who is eligible and required to pay the managed isolation and quarantine fees is actually in the regulation but that because this is a retrospective validation of a levy that’s been imposed, the Government felt it necessary to bring a bill to the House to enable that to occur. Is that what I heard the Minister say?

Hon CHRIS HIPKINS (Minister for COVID-19 Response): That is correct.

Hon MICHAEL WOODHOUSE (National): Right, so that’s very helpful. Well, it goes back to my question about the manner in which we’re doing that, because it seems rather superficial to be here on a Friday morning after Budget day, tidying up a technical error in primary legislation, but not giving anybody a say.

We’re hardly having a say, because the members on the other side want to shut down debate, and we represent good, constructive opposition and proposition when it comes to legislation, but I go back to the point of no taxation without representation. If the point was to change primary legislation so that the Government is not seen to be hiding—and I can understand that—well, then give it a week. Let’s have that conversation.

By their own general policy statement, they’re not even sure if it is unlawful—and I’ll come to that in the context of clause 4—but, surely, it undermines the Government’s efforts to be transparent about a mistake that was made if it then just rushes it through. It might as well have just rewritten the regulation, got the Governor-General to sign it, and we’d all move on. They could have issued a press release. They’d get accused of burying it after the Budget. They could’ve done that three weeks ago, actually, if the timeline by the Minister is correct.

So we now know we don’t have to be here. We’re only here so that the Government can appear transparent when they’re not transparent.

Clause 3 agreed to.

Clause 4 Schedule 1 amended

CHAIRPERSON (Hon Jacqui Dean): The question is that clause 4 stand part. Honourable Simon Watts—not—

SIMON WATTS (National—North Shore): Oh well, not quite.

CHAIRPERSON (Hon Jacqui Dean): —yet. Simon Watts.

Hon Member: It’s only a matter of time.

SIMON WATTS: Only a matter of time. But, anyway, let’s not get distracted, because this is an important phase of committee. Look, thank you, Minister for—I’ll just wait, because I know he is occupied, probably getting a little bit of advice about some of the questions that he knows I’m going to ask, because there is a lot of depth in terms of some of this.

Look, I want to have a conversation. I want to get a few answers. I’ve got a good eight or 10 questions here that I want to go through this morning, so I’ll do that in a couple of phases.

But in terms of the next aspect, I would like the Minister to clarify exactly how many people are affected and impacted by this change, and just articulate the manner in which, as an Opposition, we can be confident that the numbers that have been quoted today are accurate and are substantiated. I don’t think I got much confidence this morning in what was probably a 3½-second quote in terms of the number and what sounded to me like an estimate, and the fact that we’ve had 21 days, give or take, since this issue was identified to get to where we are today. I’d really appreciate it if the Minister could give us a little bit more background around that.

The second aspect that I’d like the Minister to provide some clarity on is this. My colleague, in front, Dr Shane Reti mentioned, when looking at the departmental disclosure statement, there’s a heck of a lot of gaps in terms of transparency, disclosure, and information. So what I’m interested in particularly, on the basis that we’ve unlawfully taken about $3 million off Australians as a result of this mistake in legislation, is what advice, if any, has the Minister had from Crown Law in regards to this. I’d appreciate it if he could share the responses to those questions, and then I’ll be back with more.

Hon CHRIS HIPKINS (Minister for COVID-19 Response): In answer to the latter part of the question: yes, I have had advice from Crown Law, and the only person that can share that is the Attorney-General. That’s the standard practice if we’re releasing advice that’s privileged—only the Attorney-General can do that—but, yes, we have received advice.

In terms of the number of people that could be affected, it is difficult to calculate because it would very much depend on the circumstances of each individual. Someone might have come into the country and have not paid a fee, so that will account for the majority of people who have come from Australia to New Zealand during the time in the question. Some will have come as a health worker, and they would have had to pay a lower fee. Some will have come as an essential worker and they would have had to pay a higher fee. Those are consistent with the fee-making decisions that the Government is talking about which fees apply to people.

Just to the very rough numbers that I have been given: about 4,600 Australian citizens have travelled to New Zealand during that time. The vast majority of those were normally resident in New Zealand, so therefore would not be covered by this. Around 1,700 Australian citizens applied for a border exemption. The advice that I’ve had based on the estimates, and, again, I just want to be clear that these are estimates, because without going through every individual application and then trying to identify exactly what has happened, it could be around 600—so 650 people. That sort of range is the number of people who could be affected.

Hon MICHAEL WOODHOUSE (National): Thank you, I appreciate that answer. I think I heard the Minister say that there were around 4,600 Australians who had travelled to New Zealand at that time, many of whom were “normally resident”. Now, if one looks at the Immigration New Zealand website for the special circumstances that apply to Australian citizens, they are granted a residence visa on arrival, but I’m pretty sure it also says that when they leave, the residence visa lapses. So if they have not gained New Zealand citizenship and they leave the country under the residence visa that’s granted, then they’re no longer New Zealand residents.

So your comment about “normally resident in New Zealand” is true, but from their visa status perspective, if we do this belts and braces correction, then anybody that you thought wasn’t eligible to pay for the fee because they were normally resident in New Zealand may be captured by the net of this legislative change. So it would be helpful for us to get some clarification on that—and I understand the Minister is getting some advice at the moment.

I do have a really, really important second question about process and a suggestion—and the Minister is back in, so I will give that second question. I think the process was that anybody who was given permission to come into New Zealand during this period was issued what was known as a critical purpose visitor visa, and that visa, for some, contained work rights—so it was a bit of an oxymoron, I think, that it would be called a visitor visa but it had work rights—and that would include Australians, who would not normally have to apply for a visa before departing in almost all circumstances but would be given a visa on arrival, and that was the residence visa that we’re having problems with.

Wouldn’t an easier way to have fixed this to simply have been to amend the regulation as to timing—the person’s visa status at the time the critical purpose visitor visa was issued—and amend that criteria then? Effectively, what we’re saying is that they’re not residents until they arrive, then they’re residents, and they get that status in the few minutes between picking up their bag and going to the car that’s taking them to managed isolation and quarantine. It seems like an odd window, and wouldn’t a better way to have fixed this simply to have been to change the definition of persons in respect of whom charges are payable by simply putting in a timing clause, rather than a status clause? That timing clause would’ve been the timing of the issuance of the permission to enter, which was the critical purpose visitor visa.

Hon CHRIS HIPKINS (Minister for COVID-19 Response): I think both of the questions the member asks are interrelated to one another and they turn on the same point. The issue is not so much how people are treated under immigration law but how they’re treated by the regulations. So the intention behind the regulations was that if someone had been living in New Zealand and had left and gone back to Australia and then come back to New Zealand, they would be treated as if they were ordinarily resident in New Zealand. Therefore, they should be treated that way, depending on what conditions they came back in. So someone who was coming back for a short period of time may have been charged; someone who was coming back to stay probably wouldn’t have been charged. The intention was that for people who were coming from Australia as a health worker or as a critical worker, they should be charged.

That’s the way the regulations were intended, that is the way that they have been applied, and the issue is then the inconsistency between the law and the regulations around the way that the visas convert on arrival. So the reason for bringing a bill rather than simply changing the regulations is in keeping with longstanding practice. Where the Government is validating something that has already happened, it is done by Parliament, not by Order in Council.

Hon MICHAEL WOODHOUSE (National): I appreciate that and I understand the intent, but we cannot ignore what actually happens. The term “normally resident in New Zealand”, as I understand it, is not one that’s used in our immigration framework. For an Australian who departs New Zealand having been here over a period of time, the fundamental question that I have is: do they lose their New Zealand residence, and, if they do, what stops them from being caught in that net when the Government has said, effectively, “We want to treat Australians who have been here and who are normally resident in New Zealand in the same way that we would treat New Zealand residents and New Zealand citizens,”—so we don’t charge them for coming back—“but we do want to charge Australian citizens and residents who come here for the first time who get residence on arrival. They should be charged the fees as persons under clause 6 of the regulation.”?

I understand the description the Minister has just made, but I’m still not clear whether their legal status puts them into the same class—that, effectively, being an Australian citizen with no New Zealand residence who is arriving into the country and could be captured by the change we’re about to make. I just want to get confidence that in our efforts to belts and braces the law for the people who the Government does want to charge and has charged, we’re not then unintentionally casting the net much wider to Australian citizens normally resident in New Zealand who lose their resident status if they had departed for a few months.

SIMON WATTS (National—North Shore): Just following on from my earlier questions, and I think the Hon Michael Woodhouse has actually raised some very important points, which I am interested also to hear a response from the Minister on, because obviously he’s considering that in a little bit of depth following those questions. The area that I want to explore is going back to my original question in which the Minister has articulated to us that he has received Crown Law advice. So I’m trying to get back to what was going on 21 days ago. What was going on which triggered this event? What was going on that actually brought this to the attention of the Government or officials?

What I’m seeking clarification from the Minister on is whether we did actually have people seeking refunds as a result of, potentially, they’ve done a little bit of research and worked out, “Actually, you know what? I don’t need to pay this amount of money because, you know what, it’s unlawfully being charged from me.” So what I’m interested in from the Minister is to articulate: was that actually the case—have we had anyone seeking refunds? Was that the trigger point that got this going, or was there another circumstance in which this was raised to our attention, and what were the processes and procedures that picked that aspect up?

The second question I’ve got—and I’ve got about three or four others after, but I’ll just keep doing it in this process—is that I did some quick calculations when I was sitting in the House here. I’m not too bad at adding up numbers. Managed isolation and quarantine is $3,100 for a person, and then there’s an additional $950, I think, for every additional adult, and then $475 per extra child. So when the Minister was estimating in the region of 600 to 650, and I know he’s provided some additional numbers there, and this seems to still be an estimate, and I think I’m still surprised—why is it an estimate after 21 days of consideration? We still can’t nail exactly what this number is. Considering we’ve got robust processes and systems—I mean, that’s what we’re being told in this House when we actually have an opportunity to question officials, the Minister, and the director-general around our COVID-19 response, which, I must say, doesn’t occur very often, but we’re doing our damned best to get answers.

So if you can articulate: what is the quantum of the fees that are potentially, in effect, being invoiced but are at risk of collection without making this change in legislation? I think, as we heard in the Budget yesterday in terms of the challenges around who gets what in terms of allocation of funding, if my calculation was correct and this is in the region of $3 million, that’s a heck of a lot of money. It’s a heck of a lot of money for the people on the North Shore that sit in my electorate. It’s a heck of a lot of money for a lot of Kiwis. What this comes back to, I think—and I’ll cover it in a couple of the questions I’ll ask in the next phase—is, once again, we’re making up and spending our time here on a Friday morning in urgency to fix mistakes of poorly drafted legislation. If there’s anything that can be taken from this, there is a learning here that, you know—get it right first time. So I look forward to hearing the response from the Minister on those questions.

Hon MICHAEL WOODHOUSE (National): I don’t want to labour the point—and I’m not sure if there’s still a consideration of the question that I have raised under way—but I refer the Minister to the Immigration New Zealand website for Australian residents and citizens. This is not related to COVID. This is the business-as-usual sort of advice that we give to Australians: the length of stay is indefinite, you can visit, live, work, and study in New Zealand, and you can travel to New Zealand without first applying for a visa, as long as you meet the character and entry permission requirements. Of course, that changed with the critical worker visa last year, but it’s back to that now.

Things to note: you can only apply for this visa when you arrive in New Zealand. You can’t apply for it before you travel, and here is the key: if you leave, your New Zealand residence visa will expire. You can apply for a variation of travel conditions to allow you to travel without affecting your New Zealand residence status, but it’s my understanding that most don’t do that. They don’t need to, because they just get it back on their return, and so they wouldn’t normally be thinking about this.

I understand that because of that policy, even longstanding Australian residents in New Zealand have a succession of: visa status as resident, and then not, when they leave. I may be wrong on that, but if I am not, then I’m still not confident that in our efforts to fix a problem for newly arriving Australians, we aren’t casting the net wider than that to include the potentially several thousand Australians normally resident here who left and then came back during this period.

Hon CHRIS HIPKINS (Minister for COVID-19 Response): Quickly, to run through some of those questions, working backwards for them. In terms of newly arriving Australians, I think the member answered his question himself earlier on—that quarantine-free travel largely avoids that issue unless there is a prolonged and significant delay to it.

In terms of the Immigration New Zealand website, as I indicated to the member before, it’s not so much an issue with immigration law. It’s the way the regulations interact with the immigration law that has been the problem.

In terms of how much this could be, as I’ve indicated before, without going through and addressing the records of every one of those individual people who has come from Australia and who could have been invoiced, my advice is that it could be anything in the vicinity of $1.5 million to $3.5 million, is roughly the range we could be talking about here. But those numbers are very approximate.

Has anyone asked for a refund? I’ve not been advised of that. When did I first find out about it: it was about three weeks ago in one of my regular meetings with the team at managed isolation and quarantine (MIQ). They have been doing quite significant fees reviews of the way the fees-charging regime is applied in MIQ, and my understanding is that this arose as a potential issue with that work that they have been doing, bearing in mind that the fees regime was established in a hurry back in August of last year.

SIMON WATTS (National—North Shore): I just want to thank the Minister for providing a response on my questions. I appreciate that. That brings me now to a follow-up question which I have and I’m referring to the departmental disclosure statement, page 7 and section 3.6. The question here is, “Has this bill had any external consultation on the policy to be given effect to the bill or the draft of the bill?” and the answer is no, and then it articulates below, actually, “Consultation has taken place with relevant Government agencies.”, which I’m conflicted—I mean, is it “No” or “Yes” in terms of that word?

I want a little bit of clarity from the Minister: what is the degree, if any, of consultation that has been going on in regards to this piece of legislation? Specifically, what departments have been engaged, and, in particular, because we’re dealing with our good friends across the Tasman in Australia, what conversations and dialogue have occurred at the Ministry of Foreign Affairs and Trade with our colleagues, our good friends, those members across the Tasman with which we have a special relationship? What conversations have been had at ministry and official level, particularly by the Ministry of Foreign Affairs and Trade, with those entities around this issue? You know, as the Minister has just articulated, it’s in the region of $1.5 million to $3.5 million, and we don’t baulk at those numbers; that’s a heck of a lot of money. I think, you know, in keeping with our close relationship with Australia, I would have expected at least a little bit of dialogue around “You know what, guys? We’ve made a mistake again—not the first time, but, you know, we’ve made a mistake. You know, this is how it’s going to look.” and at least getting their feedback in terms of consultation around what they consider.

So those are two questions I’d appreciate a little bit of clarity from the Minister on, and then I’ve got only a couple more after that.

Hon MICHAEL WOODHOUSE (National): Thank you, Madam Chair. I’m going to continue this line around “normally resident”, because I worry that we’ve got to get the black-letter law right. “Normally resident” is a nomenclature that’s used, but not in this legislation or, actually, in immigration legislation. We use it in places like for the Overseas Investment Act—“ordinarily resident”. We talk about it in the Income Tax Act and IRD policy on who is a tax resident. So there is a variety of different definitions of normally or ordinarily resident in New Zealand, but that doesn’t necessarily relate to their legal residency status.

So I go back to that fundamental question, because, as I said, neither of the COVID-19 Acts actually talk about “normally resident”; they talk about “residents”. “Residents” has a legal status in accordance with the Immigration Act 2009. The Minister was sort of saying “Oh, well, ‘residents’ is fine, but we don’t apply it to ‘normally resident’. We don’t apply the charge to ‘normally resident’.”, but that’s not what the law says, and there is no legal definition of “normally resident”. So, given that we are fixing a mistake of wording, we’ve got to make absolutely sure we get the wording right.

Hon CHRIS HIPKINS (Minister for COVID-19 Response): Just very quickly, in terms of who was consulted—was the Australian Government consulted? No, we didn’t discuss this with the—well, I certainly didn’t discuss it with the Australian Government. In terms of departmental agencies, it would be all those who were relevant to be involved in that. In terms of managed isolation and quarantine (MIQ), it’s the Ministry of Business, Innovation and Employment—the MIQ team there, the immigration team there. Various Crown Law will have been involved. The Treasury, of course, will have been involved, given the budgetary issues involved in that.

A party vote was called for on the question, That clause 4 be agreed to.

Ayes 77

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10; Te Paati Māori 2.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Clause 4 agreed to.

Clause 5 Regulations amended

A party vote was called for on the question, That clause 5 be agreed to.

Ayes 77

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10; Te Paati Māori 2.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Clause 5 agreed to.

Schedule agreed to.

House resumed.

CHAIRPERSON (Hon Jacqui Dean): Madam Speaker, the committee has considered the COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill and reports it without amendment.

ASSISTANT SPEAKER (Hon Jenny Salesa): The question is that the report be adopted.

Motion agreed to.

Report adopted.

Third Reading

Hon CHRIS HIPKINS (Minister for COVID-19 Response): I move—you’ve got to get the wording right, Madam Speaker. I move, That the COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill be now read a third time.

As I’ve indicated, this bill resolves a technical issue in the inconsistency between the way our immigration law has applied and the way managed isolation and quarantine charges have been applied. All those who have paid fees under this anomaly were expected to pay fees. There was a technical issue around whether or not they should have had to pay fees, although the intent always was that they should. They’ve paid them. This bill validates those fee charges.

Dr SHANE RETI (Deputy Leader—National): Thank you, Madam Speaker. The National Party has expressed their concerns around this bill, concerns around process, and concerns around why we’re covering this under urgency. The legislation was first created in 2020, and we have some further understanding that it was three weeks ago that it was first noted. It would be useful to know—there wasn’t a lot of clarity—about how it was exactly picked up. Was it by a working group that’s routinely looking at this? I think that would be useful so that we can also apply maybe those same tools to other parts of the response in August 2020, so that we’re not back in the House doing similar things.

We’ve expressed concerns around the numbers. We now understand, as the Minister has put on the Table, it is 600 to 650 people—maybe $1 million to $3 million. It raises the question, as we have pointed out in the disclosure statement, where it asked: has there been further impact analysis? That seems to be being done today, rather than being available to us through the disclosure statement.

We’ve commented on the other pieces of information that are lacking behind this and why that is the case and why we’re coming today without parts of the regulatory impact analysis, and, really, we have concern around the process, the information that brings us here. Let’s figure out what the learnings are that we can take from this—learning as to how it was picked up in the first place. How can we and might we apply it to other parts of the legislation that came through in August 2020? The learning as to why, so late in the piece, we’re finding out the data elements, and why that’s not as clear and as crisp as we need to have at the border. How can we extract that learning from the three hours we’ve been here this morning and apply it to other parts of our coronavirus response?

So, as my colleagues have described it, it is a relatively shoddy, loose sort of piece of legislation. We understand why it’s being done; we’re just not completely happy with the process. I think the best we could make of the morning is what learnings can we take from it and what can we apply to the rest of the coronavirus response—hopefully, with no further surprises on the pathway when we do that. Thank you, Madam Speaker.

Dr DUNCAN WEBB (Labour—Christchurch Central): Obviously, managing the COVID response has been a complex task, and when rules are made, sometimes with some urgency, there’s always going to be some tidying up to be done. This is simply that—to make sure the intent of the executive is properly implemented through law. It’s a perfectly sensible piece of legislation and it’s great to see that we’re making real progress with it here today. I commend it to the House.

CHRIS BISHOP (National): Thank you very much, Madam Speaker. This is an unedifying little time in the Parliament and, I have to say, it is disrespectful to the Parliament, what the Government has done here. I acknowledge the Government has the numbers, obviously, but it is disrespectful to Parliament, the way this has happened, on a couple of grounds.

The first is that to use Budget urgency for this is inappropriate. Normally, urgency following a Budget relates to the Budget. Now, that was OK yesterday. We had the taxation bill that adjusts the minimum family tax credit because of the changes to benefit levels in the Budget. That’s a consequential amendment in relation to it—fair enough. The House has gone into urgency for that. But, instead, what we’re doing here as a Parliament is considering something wholly unrelated to the Budget, or only, it would be fair to say, tangentially related to the Budget. It’s basically fixing a stuff-up by the officials from August last year—so that’s the first thing—and using the cloak of Budget urgency, I think, is inappropriate.

The second point in relation to the process and why it’s inappropriate is that this is something that I think should have been the subject of at least some cross-party consultation. Now, Michael Woodhouse, in his committee stage contribution, made reference to the fact that there’s actually been pretty good dialogue between the two major parties in relation to COVID. That’s something that I’ve tried to keep up as the COVID spokesperson now, and, to be fair to the Minister, he’s been pretty good at that as well. So for those that are listening out there in the public domain, there’s a lot of heat and a lot of back and forth in the public domain, but, actually, sort of behind the bike sheds, in the grindstone, there’s quite a bit of work that goes on in this place.

Hon Chris Hipkins: What are you accusing me of?

CHRIS BISHOP: Yeah, maybe that wasn’t the right language. I need one of Anna Lorck’s Beroccas to perk me up a bit.

Hon Chris Hipkins: It’d need more than a Berocca.

CHRIS BISHOP: More than a Berocca—I certainly only had one coffee this morning. But there’s actually quite a bit of work that goes on behind the scenes, and I think it would have been good for the Government to reach out to us and other parties as well in relation to this, and we could have facilitated a reasonably easy passage. I mean, it’s not like we were going to stop it, obviously. We weren’t going to vote against it.

The third point is this really should have gone to a select committee. The exigency of the situation doesn’t mean that we have to ram it through all stages immediately. It could have easily gone to a committee for a week or maybe two, or maybe even a month, because, actually, it is a tricky technical issue, and, as we’ve discovered through various stages of the debate, the Government is not really sure what they’re doing. They’re not actually really sure what they’re fixing. It took the Minister to explain in his first reading speech actually what the Parliament’s being asked to consider, because, as we’ve made reference to a number of times, the legislative statement is inadequate. There’s just no other way to describe it—it is inadequate. The departmental disclosure statement is inadequate and the explanatory note to the bill actually raises more questions than answers.

So I do want to make a point to the officials and to the Government that Parliament is entitled to expect better than what we have been dished up in terms of explanation, particularly when it comes to complicated issues to do with immigration law. No one is denying it’s a complicated area. It’s technical, it’s finicky, and of course the relationship between managed isolation and quarantine (MIQ) and the immigration regulations is a complicated one. But that needs to be explained to the Parliament so that Parliament can actually understand what we’re fixing, or at least looking to fix. So I think the process here has been very shoddy.

We learnt during the committee stage that no one has actually challenged this. The Minister admitted that he found out about it through the MIQ fees framework review, which seems to be taking for ever, because we’ve got 7 million bucks of overdue MIQ fees—if you define overdue as post - 90 days payment—$4 million of which, by the way, is from last year. So there’s quite a bit of money outstanding that the Government’s not going after. The Government’s been doing this review about how they’re going to do that, and in the process of doing that, which seems to be taking for ever, we learnt from the Minister that the Government discovered that people may have been charged things illegally.

As I said during I think it was my second reading speech, that presents a number of options for the Government. The most obvious option is to go back and find those people and refund them. We learnt from the Minister during the committee stage debate, which I was listening to outside the House, that, basically, the Government thinks that’s just too difficult, and then we further learnt that it’s too difficult because we don’t actually know who those people are. Simon Watts, my colleague from the North Shore—

Nicola Grigg: The honourable Simon Watts.

CHRIS BISHOP: —is doing a very good job. Well he’s not “the Hon” yet, Nicola Grigg, but he will be in time, we hope. But we learnt during the committee stage that the Government doesn’t actually know how many people are affected by it. I’ve got to say, I find that staggering. The Government’s turned up here on the Friday after the Budget and they’re asking us to retrospectively validate illegal activity, and they don’t know how many people it affects. It could be 600, it could be 650—we don’t actually know. We don’t know what the quantum is. It could be $1.5 million, it could be $3.5 million. We don’t actually know. I mean, that is an extraordinary thing for the—

Nicola Grigg: Embarrassing.

CHRIS BISHOP: —Government to do. It is embarrassing, as Nicola Grigg rightly notes. It’s deeply embarrassing.

I made some ill-judged remarks around the ability of the press gallery—

Hon Michael Woodhouse: That’ll be the headline tomorrow.

CHRIS BISHOP: —to notice. Well, I hope that’s not the headline tomorrow. I made some ill-judged remarks about that, but the reality is the Government will get away with it. We know that. They’ve got the numbers and, frankly, it’s all a bit technical and it’s pretty tricky, but it is wrong. Governments should not turn up to Parliament after Budget urgency and say, “Hey, by the way, it turns out our officials broke the law on a number of occasions. We can’t tell you how many people it affects. We don’t know how much money it involves. We don’t actually know how we made the mistake. But, hey, Parliament, would you mind fixing the law for us retrospectively?” I mean, that is just inappropriate, and that’s what the Government is asking the Parliament to do. I think it’s shameful, frankly, and we’re not going to vote for it.

The Act Party is on the side of principle and I congratulate them for that. [Interruption] Oh, there’s much gnashing of teeth, but they’re on the side of principle. But it’s very disappointing to see the Green Party, which likes to turn around all the time and—

Simon Court: You could just abstain.

CHRIS BISHOP: —rage on about principle. Well, at least they’re not abstaining—that’s a good point. That’s a good point that at least they’re not abstaining. In the first bill we did under urgency—the tax bill—the Greens said they were going to abstain, which was pretty amazing. They made this big song and dance during that debate around how the coalition agreement with the Labour Party says that they can either vote for or against or they can abstain in relation to their agreement with the Labour Party, and that was this great big victory, and rather than just make a decision and make a call for or against the Budget, they abstained, which I think, frankly, is a bit of a dereliction of duty. It’s a bit of a dereliction of duty. I mean, you’re sent to this place not to, basically, wave things through and just say, “Oh well, we actually can’t make up our minds.”; you’re actually sent to this place to make a positive or negative decision. So I think that’s a bit sad, and the Greens are voting for this as well.

Some of the arguments mustered by the Government during this debate have been woeful. They’ve been woeful. I mean, at one point we had Ingrid Leary saying, basically, “We’d rather just go on and do something else on our Friday.” Well, that is a pathetic argument. Administrative convenience for the Government is not a justification for retrospective validation of legislation.

So what it all boils down to is this: no one challenged this law. It may actually not be illegal, because if you read the explanatory note, it’s equivocal on the point. So, assuming it is illegal, no one challenged it. The Government doesn’t know how many people it affects, they don’t know how much money it’s potentially cost the taxpayer and they don’t know exactly what went wrong and when it went wrong. All we know is that three weeks ago, the Minister discovered a potential anomaly in the MIQ regulations, and so here we are, on a Friday, going through all stages with no select committee, amending through primary legislation the regulations to fix something that may or may not actually be an issue. It’s bizarre, it’s unedifying, and we’re not going to stand for it.

GINNY ANDERSEN (Labour—Hutt South): Thank you very much, Madam Speaker. Well, that was an entertaining diatribe. I’m surprised Chris Bishop stretched that out for 10 minutes, to be frank, and the most entertaining thing I learnt was that the member likes to hang out behind the parliamentary bike sheds. I can only assume he’s having a cigarette behind the bike sheds.

So what we do in terms of doing this bill has happened quite a lot in the past, and I’d have to draw upon my experience as a public servant under both Labour and National Governments. The technical amendment that is being made right now has happened very many times, and it’s tidying up legislation so that it works properly—those members opposite know damn right that it happens frequently—to make sure that the legislation that’s been introduced to keep New Zealand safe, to keep our borders safe, is working appropriately.

So the managed isolation and quarantine (MIQ) fees regime that came into effect set up who’s liable, and there has to be a technical amendment to ensure that we are fair to our Australian brothers and sisters, and all other Australians. There is an agreement in place, and we are making sure that that is in place. The bill will resolve the technical issue by retrospectively validating the collection of MIQ charges from Australians in the temporary entry visa-holders class. It’s an appropriate thing to do to make sure the good laws that have been introduced under urgency are operating effectively, and I see it as a good and appropriate use of this House’s time. Therefore, I commend this bill to the House.

Hon JULIE ANNE GENTER (Green): I’ll just take a brief call but I’ll begin by responding to Mr Bishop’s confusion about whether or not we’ve voted on the Budget. We haven’t actually voted on the Budget; we voted on a piece of legislation which may be related to the Budget but actually is not the Budget, and we don’t have to agree with every piece of legislation.

I think that my colleagues would have given a very good explanation of why we weren’t voting for the previous piece of legislation. But what is confusing is why National’s making such a song and dance and big deal out of this, which makes perfect sense to me. You look at it and you’re like, “Well, OK, we had to suddenly close the border and set up a whole MIQ system while trying to deal with a pandemic here at home.” You know, we had the shutdown, the economic shock, and the Government’s dealing with things right across the board, trying to make sure we could still get supplies into and out of New Zealand when passengers are no longer really travelling between countries. The breadth and depth of work that had to be done to respond effectively to COVID-19 is almost impossible to describe and it’s generally gone very, very smoothly.

I thought everybody agreed with the process around the managed isolation and quarantine (MIQ) system fees. I mean, the Greens had some concerns about it, but, ultimately, I think we made changes so that it was only people who left after the law was passed who would be liable for MIQ fees when they came back. But I don’t think there’s any drama or debate or expectation on the part of Australians who are not resident in New Zealand that they would pay their share of MIQ fees.

It’s also perfectly understandable that there might need to be a technical change to make sure that’s the case, and that’s what everybody expected. That was the policy and that was very clear. But, as it is sometimes in legislation, because of the nature of our relationship with Australia in that they have a very unique classification of their visa, once they come into New Zealand, they are classified as residents. That then has to be rectified, because it was not intended that non-resident Australians would be treated as residents coming to New Zealand in that they wouldn’t be liable for the fees. I don’t think there’s any surprise about that. It’s not complicated, it’s not difficult, and we commend this bill to the House.

SIMON COURT (ACT): Thank you, Madam Speaker. I want to reflect more on the humanity, or the lack of it, that the Government has shown. Australians are people, too.

I want to take you back to a time when I was a primary school student. At my primary school, we had cultural day, and before cultural day our teacher asked, “Put up your hand if you were born in another country, not in New Zealand.” I put up my hand because I was born in Australia, and I’m proud of it—I’m proud of it. It turned out that that made me one of the others, and that was a great shock to me, in fact, because I’d always considered myself to be a New Zealander born in Australia but having a foot in both camps, and that’s pretty much how many New Zealanders and Australians with family on both sides of the Tasman feel. That is why this this amendment bill reeks of bad faith.

It demonstrates, again, that the Government, in pursuit of the crumbs that have fallen down the back of the couch in their clutching, desperate need to grab that little skerrick of revenue that’s going to prop up their wasteful spending, their “debt for ever Budget” that we heard about yesterday is now going after a few Australian cousins, fathers, mothers, brothers who no doubt were coming here to be with New Zealand family or to fulfil critical roles in New Zealand businesses. Yet, now, they’re the target of a clutching, desperate Government hungry for revenue, looking at decades of debt and an absolute rundown of all of the systems that they purport to care about.

Now, this bill is a classic example of bad faith. Australians assume, as we do, a right to live and work in New Zealand, as we do in Australia, assuming we pass a good-character test, which of course is a fundamental. The trans-Tasman travel arrangement sets out very clearly that Australians are not temporary migrants; they are special. They are equals, even though they are citizens of Australia. That is why this bill is not just unnecessary; it is unfair. This Government lacks humanity.

ACT do not support this bill. We believe in giving Australians a fair go. Thank you, Madam Speaker.

RACHEL BOYACK (Labour—Nelson): That was an interesting contribution. Look, it’s quite funny, because the previous member Simon Court has been talking about Australians, but actually I think we just need to remind everyone that New Zealanders returning to New Zealand from around the globe have to pay as part of managed isolation and quarantine (MIQ). So this is not some kind of discriminatory measure against Australians.

I was delighted to have dinner with two of my Australian friends—actually, one of them is a Kiwi living in Australia, but his wonderful wife is an Aussie—who returned the other day. They were able to come back through the trans-Tasman bubble and surprised their parents, Jim and Raewyn Wiseman, and some tears were shed at Nahm restaurant, having some Australians return to Nelson. So I’ll just get Bruce Wiseman’s and Jo Wiseman’s names on the Hansard today—let’s do that. It was wonderful to have them return to my electorate of Nelson.

I’ll just put a message to Dad over the airwaves today in the UK. My dad lives in the UK, and after he had his vaccination, he wrote to me to say can he skip MIQ and skip having to pay for it. Of course I said, “No, Dad, just because your daughter’s an MP, you don’t get to skip the rules. You still have to come through.”

So this is tidying up a piece of the rules that we need to tidy up, and what I will just remind the members is that we’ve been building the plane a bit as we fly it. Most New Zealanders are reasonable about that and they understand that, actually, there have been times when we do need to tidy up some legislation. We’ve been operating in a global pandemic. Most New Zealanders say to me that they are really happy with the rules that the Government have brought in, but they do understand that from time to time we will spot things and say, “Actually, here’s something we haven’t seen. There’s been multiple pieces of legislation being passed, and that we just need to do a quick tidy-up.”

So, on that note, this is a tidy-up. This is just to ensure that Cabinet’s intent is followed, and, on that note, I’m delighted to commend this bill to the House.

SIMON WATTS (National—North Shore): I must say, it was good to hear the good member Simon Court from Te Atatū, West Auckland, just giving us a little bit of an overview and a confession of being an Australian. I feel, for him, this legislation is really not doing anything.

Look, I’m here to speak in the third reading of the COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill. I must say, as we’ve heard, National oppose this bill. Why do we oppose this bill? Because this bill is shoddy—it is shoddy. It is shoddy legislation. It has got a shoddy process, and it is basically just a disgrace. What I am even more concerned about is that the Minister only today is still trying to estimate to try and work out how many people are impacted by this change, how many dollars are involved. He’s quoted in the—I mean, I added it up on the back of a piece of paper and I got to $3 million. He had to get officials to add it up. He gave me a range of between $1.5 million and $3.5 million. You know, these guys have not got a clue. They have had 21 days, at least, to undertake a whole lot of due diligence, a whole lot of background information, and a whole lot of assessment around the impact of that, but they have not used that opportunity to do that. I think that is disgraceful.

Managed isolation and quarantine (MIQ) in this country and the charging process around MIQ, which this bill relates to, has been an absolute travesty. It has been an honesty box process. How many people go into a hotel, stay a couple of weeks, and then go, “Actually, oh, can you just send me the invoice?” I mean, if you did that in real life, would you be surprised that a lot of people wouldn’t pay? Well, we’re under no illusion why we’ve got $7 million outstanding of overdue fees for MIQ that now we’re having to call in the debt collectors to follow up, with $4 million of that relating to last year. That is an absolute travesty.

The other aspect around this shoddy piece of legislation that I want to refer to is the fact around it being retrospective legislation. One of the key aspects within this country of the social contract is that people within this country are able to work and understand that the laws that they’re operating within—that’s what binds them—and the aspect here around retrospective legislation means that breaches of the law are either validated or the legal actions are done. In effect, what we’re making here is we’re saying that, basically, an illegal action is now legal, right? And that is just—I think the honourable Chris Bishop mentioned it before, in terms of the fact—

Chris Bishop: It’s not “Hon”—it’s not time.

SIMON WATTS: Not quite, but, you know, it seems to be a bit of a theme today, Chris Bishop—a little bit of a theme today. So we’ll keep on that, if I may.

Retrospective legislation should only be used in the most rarest of circumstances—OK? I think what we’re seeing here today in this House is another example of a Government that is not over the detail. They’re not over the process. They are absolutely back-pedalling here and there, trying to push through legislation under urgency—under Budget urgency. This is no more Budget urgency than flying to the moon. This is basically just using the opportunity on a Friday morning to try and push through a piece of legislation that has, once again, got errors in it. It’s not the first time this morning I’ve spoken on legislation to try and fix errors, but that seems to be what we’re doing instead of focusing on the key issues and the key aspects that this country needs focus on. Growing jobs, supporting business, maybe—that might be a nice thing. Helping our farmers up in Northland—that would be a good thing to do. But no—no, we’re not. We’re basically just trying to pass through retrospective legislation, and that is absolutely not what this House should be used to do.

Look, I want to finish off in only the short amount of time I’ve got just to basically say, I guess, what can we learn from this process? As a new MP within this House, I’ve only been here seven, eight months now, but I don’t know how many times—and I’m looking at my new colleagues all around me, and we’re going, “How many times have we been in this House to fix mistakes and not to do the thing that we’re actually here for?”, which is to actually put in place legislation that’s going to make this country better. But, no, let’s spend all our time, hours after hours, fixing mistakes, because we’re running too fast and haven’t got any idea of the detail and what we’re trying to do. I think that is a learning that that side of the House needs to take on board this morning and make a change.

STEPH LEWIS (Labour—Whanganui): Tēnā koe, Madam Speaker. It is a pleasure to be able to rise and take a brief call this morning. It is the first call I’ve taken since the Budget was introduced yesterday, so I just want to take this opportunity to particularly acknowledge the work of our Prime Minister, our Minister of Finance, and Minister Carmel Sepuloni as well for their contributions to supporting our most vulnerable members of the community.

Look, it is widely acknowledged that there is no playbook to COVID-19. There is no rule book on how to set up managed isolation and quarantine, so occasionally, from time to time, small mistakes will be made. This bill is a sensible amendment to fix one of those little mistakes. So for that reason, this morning, I commend this bill to the House.

GLEN BENNETT (Labour—New Plymouth): Kia ora, Madam Speaker. Some interesting language used in the House this morning: “clutching, desperate Government”, “bad faith”, “shoddy”, “disgraceful”. All this is about is clarifying some managed isolation and quarantine charges for a small number of Australians, and that’s also critical health workers. So, in that case, I commend this bill to the House.

Hon MICHAEL WOODHOUSE (National): I don’t know where to begin. Let’s start with Rachel Boyack. This was a contribution that basically said, “Oh, you know, nothing’s perfect. Sometimes we make mistakes. We’ve got to go back and tidy things up.” You know what this Government’s done? It’s normalised mediocrity. There is an absolute pattern emerging here of very, very poor legislation being introduced and passed and coming back. These poor luvvies on the other side don’t want to be here and they’re blaming us. Well, I’ve got a message for Labour backbenchers: if they want to blame anybody for being here on a Friday morning in Budget urgency, blame their own Government—they moved the urgency motion. We’re doing our job. The fact that they don’t want to be here is not our problem. We’ve got an opportunity, and it’s for the very reason Ms Boyack actually stated that we should: because there are too many mistakes.

One of the members who’s just returned to her seat, I think she said there’s no playbook to COVID-19, but there’s actually a playbook for writing good legislation and there’s actually pretty good precedent for doing so. It’s a pity they don’t follow it, because what we are considering is a piece of legislation that the Government is not sure if it’s unlawful, no one complained, and even if it was unlawful, the amendment shouldn’t be by primary legislation. By the Minister for COVID-19 Response’s admission, it should be an amendment to the regulation, only, he wants to be open and transparent. He doesn’t think the $2 million that the Government may have unlawfully levied should be fixed by a—

Simon Watts: $3.5 million.

Hon MICHAEL WOODHOUSE: $2.5 million, is it?

Simon Watts: $3.5 million.

Hon MICHAEL WOODHOUSE: $3.5 million—goodness me! It’s a bit more. Thank you to the accountant from North Shore. There’s some kind of virtue in actually doing this amendment under primary legislation, only what’s the point? Nobody got consulted on it; certainly not the Opposition, and I think it would be a sign of respect for the shadow Leader of the House and our COVID-19 recovery spokesperson to have at least been given a bit of an insight. There was no contribution by officials, by the look. This is a totally, totally inadequate disclosure statement. No regulatory impact statement. We know for the first time—I’m sure the $3.5 million figure isn’t written down anywhere. It’ll be in Hansard now. The figure of 600 to 650 affected Australians wasn’t written down anywhere. The reason we’re even here and the answers to the questions that I still have over the difference between a resident and “normally resident”, which the Minister attempted to explain, but he was unconvincing in my mind—and I won’t be surprised if we actually get back here to fix it up again, because we’ve inadvertently cast the net too wide so that Australian citizens who aren’t New Zealand citizens who could be resident but who lose that status on their departure from New Zealand are caught in the legislative net that we’ve just cast by this legislation. We’ll be back here again, tidying up, normalising mediocrity, and probably doing it in a really shabby fashion.

I agree with Mr Watts that, actually, we should be debating more aspirational post-Budget legislation that gave a break to small business, that supported middle New Zealand, and that had some kind of ambition for this country. Instead, we’re fixing muck-ups—that’s with an “m”, for the Hansard staff. We are fixing mistakes once again. I’m getting tired of it.

Dr GAURAV SHARMA (Labour—Hamilton West): It’s my pleasure today to take a call on the COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill, not only as a member of Parliament and a member of the Health Committee but also as a front-line healthcare worker last year.

You know what’s interesting as well? While I was working there, swabbing people, and this Government here was helping us set up a managed isolation and quarantine (MIQ) facility in the middle of a global pandemic, the other side of the House couldn’t figure out whether it should keep the borders open or not. We are lucky that there is an MIQ facility in place, because if it were for the other side, there would be COVID everywhere in this country. Parliament at the moment would probably be on Zoom and lots of New Zealanders would have died because the other side couldn’t figure out who the leader of the party would be and whether the border should be open or not. So what we are trying to do is own up to our technical issues here and the things that might not have gone the right way. We are owning up to it and fixing it, whereas the other side can’t figure out whether the border should have been open.

As somebody who was a front-line healthcare worker, I want to thank the Government for doing what they have done for the MIQ system, and I want to thank them for recognising that there is an issue here and fixing this loophole, compared to the other side. I think you should probably look at your own ideology before you comment on the Green Party’s ideology, because I’m not sure where you stand on this bill. I’m not sure where you stand on MIQ. With this, I would like to commend this bill to the next stage.

A party vote was called for on the question, That the COVID-19 Public Health Response (Validation of Managed Isolation and Quarantine Charges) Amendment Bill be now read a third time.

Ayes 77

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10; Te Paati Māori 2.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Motion agreed to.

Bill read a third time.

Bills

Education and Training (Grants—Budget Measures) Amendment Bill

First Reading

Hon CHRIS HIPKINS (Minister of Education): I present a legislative statement on the Education and Training (Grants—Budget Measures) Amendment Bill.

ASSISTANT SPEAKER (Hon Jenny Salesa): That legislative statement is published under the authority of the House, and can be found on the Parliament website.

Hon CHRIS HIPKINS: I move, That the Education and Training (Grants—Budget Measures) Amendment Bill be now read a first time. I nominate the Education and Workforce Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported to the House by 1 July, and that the committee have the authority to meet at any time while the House is sitting (except during oral questions), during any evening on a day in which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House, and outside the Wellington area, despite Standing Orders 193, 195, 196(1)(b) and (c).

ASSISTANT SPEAKER (Hon Jenny Salesa): The question is that the motion be agreed to.

Hon CHRIS HIPKINS: Thank you, Madam Speaker. This is a very simple bill. It allows for pay parity to start being delivered for teachers working in early childhood education centres in which the State is not their employer. Kindergarten teachers have had pay parity with their primary counterparts for some time. Those working in education and care services, such as a privately run centre or a community-based centre, have seen the wage gap between what they earn and what their kindergarten counterparts earn increase steadily over time. A variety of factors have contributed to that, but probably the single biggest one is that for the entire time they were in Government, the last National Government did not pass on any of the pay increases that kindergarten teachers got to those teachers working in those other centres.

Our Government has made the decision that we will adjust early childhood education funding rates regularly so that they keep up with the cost increases, and we have adjusted them every year that we have been in Government. Last year, we delivered the first significant funding increase around pay, to ensure that the pay rates of those working in non-State or non-public sector education and care services were lifted up to at least the minimum step on the kindergarten teacher salary scale. And we’ve announced in this year’s Budget the next big steps, which is to add new criteria to funding that says that centres will get higher rates of funding if they agree to pay their teaching staff, their registered qualified teachers, at least step 1 to 6 on the kindergarten teacher salary scale.

Under the current system, I can specify a minimum rate of pay for an early childhood education teacher, but I can’t go further than that without stretching beyond credibility the criteria for which I can attach funding decisions, and so this allows me to attach an additional funding condition to that extra funding so that it goes where it is intended to go, which is paying those teachers more.

The ultimate goal of this Government is to get to full parity. In order to do that last bit, steps 7, 8, 9, and 10—there’s a 10-step salary scale—we’re going to have to probably further redesign the funding system to make sure the funding gets to the right place. This bill allows us to deliver quickly the funding increase, the pay increase, that we know those teachers need.

In terms of the timing, we want to get this bill back into the House very quickly so that we can then work to develop the funding conditions required. We can make sure the sector is familiar with those, and then we can get those funding rates flowing from the beginning of next year. That’s quite a tight time frame to do that. We do want to do that in a collaborative way so that the sector’s consulted on those additional funding conditions, and that’s why we need the law change to happen quite quickly.

The select committee will have the opportunity to hear from the sector. I imagine that the main people who are interested in this won’t so much be the teachers who will be receiving the pay increases but the centres, and so the centres, I’m sure, will be submitting to the select committee, because, ultimately, they will want to know more about what those funding conditions are. That’s one of the reasons why we want to move quickly, so that we can give them that certainty.

Pay parity for early childhood education teachers is long overdue. This is something the Government wants to make haste on; these teachers have waited long enough.

Hon PAUL GOLDSMITH (National): Thank you, Madam Speaker. The National Party supports this bill at first reading but only with very considerable concerns that we will need to see addressed through this process. So we hold our right to reconsider this as it goes through the House, because there is a clear sort of line of logic where, I think, there’s universal agreement that further resources into improving incomes for early education teachers is a good thing, and we all understand the importance, from a social investment point of view, of making sure that young New Zealanders have the ability to get good education in their early years and to set them up well for the compulsory schooling sector. That’s why the previous National Government invested very heavily in early education. So we agree with that, and we do want to see better pay for those working in this sector.

But then we see this bill, and we’ve just been in this House this morning dealing with yet another case of bungled legislation from this Government in the COVID area, and the pattern has been well established that this Government doesn’t seem to think that it should follow the traditional, tried and true method of passing legislation, which is, first, to consult with the sector, and there has been very little of that in this place—it’s all just been blindsided with no detail—and then to rush through shortened select committee processes in order to ram through legislation very quickly, and then we’ll figure it out once it’s been passed!

So they rammed through very loose legislation, and, again, this is another classic example—it’s just a handful of pages. There’s a very, very loose and sloppy departmental report that comes along with it. It looks like they’ve given about two or three days’ consideration to the legislation. They throw it into the House. They haven’t worked out exactly how it’s going to work. They haven’t talked to the sector, but we’ll have a conversation through the select committee, in a short time, in a rush, and then, when we pass the bill, we’ll sort it out afterwards! And, surprisingly, we have to spend all our time in this House fixing legislation again when it comes round and when they realise that they’ve made a mistake. So we will be very interested to hear from the sector.

Given the fundamental issue around supporting our early education providers, we’re prepared to support this bill at first reading. We will be opposing rigorously the next debate, which is the shorter select committee time frame, because we don’t think that’s justified; we should actually allow proper investigation of this legislation by the sector. And we will be very interested to hear from the sector as to how they think this will work, because the overriding concern is that there is a centralising attitude in this Government and a well-explained desire towards national collective agreements in every area of industrial relations. This legislation all seems to fit with a pattern of more and more centralised control. The basic sort of point of this legislation is to say we don’t trust the sector to pass on the money that we’re going to give to them in terms of higher wages; therefore, we will make it much more clear that the Minister has powers to delve even more deeply into the employment matters.”

That’s the basic message of this legislation, and I would be surprised if the sector is very impressed by it. We talk about it being a high-trust model, but this legislation obviously says it will be a slightly lower-trust model going forward because we don’t fundamentally trust the providers to pass on the legislation. I suppose the natural fear in the sector will be that this is just one more step in a march towards a much more centralised, highly controlled sector.

Now, will that lead to better results? Well, I’m not so sure. We do, as a country, invest significant sums in early education, and all New Zealanders do have a very clear interest to make sure those significant sums are spent wisely and there are robust processes in place to ensure that early education providers are delivering good quality services, and that is a fundamental role of the ministry. I think there is a good argument that they should be more active and vigorous in ensuring that that quality is high. But it doesn’t necessarily follow that we should be moving more and more in the direction of national awards and everybody being dealt with exactly the same. That seems to be the approach of this Government.

So here we are, a day after a Budget, a Budget that provided very little to working New Zealanders, and for all the billions of dollars that have been spent, working New Zealanders haven’t seen very much in this Budget. And, in the education sector, we haven’t seen a great deal—for, particularly, the compulsory sector—but what we have seen is extra resources being sent in the direction of early education teachers. And we agree that, if we’re sure of the quality of that teaching, that is potentially a very useful thing in order to get kids better prepared to go to school.

I don’t like to divert too far, but I feel I’d be remiss if I didn’t make the point it’s all very well preparing them to go to school, but if they don’t actually go to school they’re not going to make any progress. We have a truancy crisis in this country, and I think it’s a tragedy that, for all the billions of dollars that have been spent on education, we only managed to come up with an extra $5 million a year to actually go out and ensure that kids go to school. I would have preferred to have seen more effort in that space.

Chlöe Swarbrick: You can’t punish them into school.

Hon PAUL GOLDSMITH: Pardon?

Chlöe Swarbrick: It’s a housing crisis issue. You can’t punish them into going to school.

Hon PAUL GOLDSMITH: Well, it’s very good to hear from the Greens.

Simeon Brown: Professor Swarbrick!

Hon PAUL GOLDSMITH: Ha, ha! From Professor Swarbrick and the Greens, who have focused very much on making it more and more difficult for private sector landlords to provide houses. Over the last few years, we’ve seen a massive increase in house prices and rent prices.

Chlöe Swarbrick: Stop being so patronising.

Hon PAUL GOLDSMITH: But now she feels the need to blame I’m not sure who for that problem. The only point I was making there was that good quality early education teaching is something that the National Party supports. We do not support the general process of this bill, and it is yet one more example of a Government that seems to be operating off the seat of its pants when it comes to legislation. It rushes stuff through, doesn’t talk to the sector entirely, has short processes, and, as a result, we spend most of our time fixing legislation six months later. And I have no doubt that we will be revisiting this topic again very soon. Thank you, Madam Speaker.

Hon JAN TINETTI (Minister of Internal Affairs): I think I heard in that contribution that the spokesperson for education for the National Party was actually saying that he was very supportive of early childhood education. If that’s the case, then I am really pleased to hear that. But I will say that just a little bit of caution there for him because he kind of, sort of, intimated that the sector weren’t asking for this. The sector’s been asking for this for a very, very long time. When we hear about that they don’t have to attest to a certain pay rate or talked about attesting for paying the teachers, they have to attest now for paying their teachers at a certain rate of pay. Just would be helpful, I guess, for this to be going to a select committee so that that member could actually learn a little bit more about how early childhood does work better.

As someone who marched and fought for pay parity for primary school teachers with secondary school teachers in the 1990s, I am absolutely delighted to stand in support of this bill. Education and care teachers, absolutely in the early childhood sector, effectively carry out the same work as those teachers in the kindergarten sector.

This is a matter of fairness. This is a small but important clarification to the Education and Training Act 2020 that will make that parity happen; the journey happen. As the Minister said, this is the beginning of the journey, or probably, I’m going to say, the middle part of the journey, because we did make a small step towards that in the last term of Government. But this is exciting. This is an exciting time for our teachers in that sector. This is about fairness. It’s the right thing to do. I’m very excited to see where we are heading with the early childhood sector, and I commend this bill to the House.

PENNY SIMMONDS (National—Invercargill): Madam Speaker, I rise to speak on this Education and Training (Grants—Budget Measures) Amendment Bill, and I do so on this Friday when it is Pink Shirt, anti-bullying, Day. And I say very clearly to the Government: stop bullying our farmers, stop bullying our hardworking primary sector which is working to keep this country afloat.

Getting back to the theme of the Budget and this amendment, this carries on giving nothing to business and middle New Zealanders except telling them what to do. We listened last night to members on the other side of the House, one by one popping up and proudly calling themselves socialists. I hope people looked up what that meant, because it means people who want to have everything controlled by the State. And here we are seeing more of this. The Government amending the Education and Training (Grants—Budget Measures) Amendment Bill are doing this so they can get the pay parity that they have promised. They are saying to all of the businesses, to all of the community groups that own childcare centres or run playgroups, “Don’t you dare think that you can use your business acumen or your business skills to run your business. Don’t you dare think that you know best for your early childhood centre or playgroup or the young children that are there.”, because it is only our self-confessed socialists on the other side of this House who know best for you. They know best for our little Long Bush playgroup and our Roslyn Bush playgroup in Southland and all over New Zealand that are run by communities, small businesses, groups of mums and dads. But you don’t know best, you people, it is the Government.

ASSISTANT SPEAKER (Hon Jenny Salesa): May I remind the member that when she uses the term “you” she’s bringing me into the debate. Thank you.

PENNY SIMMONDS: I was meaning “you” as in the community group. Sorry.

ASSISTANT SPEAKER (Hon Jenny Salesa): Please just don’t refer to the term. Thank you.

PENNY SIMMONDS: I’ll be careful. Thank you. So we go back to the Government knowing best, and this is a theme that we are seeing through education, whether it’s at early childhood level or at tertiary level. I noticed in the Budget this year the Minister of Tertiary Education has suddenly been able to find millions of dollars more for the vocational education sector from 2023 onwards. His outrageously expensive Reform of Vocational Education (RoVE)—tens of millions of dollars spent disrupting the whole vocational education sector to get it centralised. It was form before function, it was the cart before the horse. The Minister had to get it all nicely centralised so he could have control of it, because there was far too much innovation and entrepreneurship being exercised as it was. So he pulled them all together and then, hey presto, he can magic up millions of dollars more now that he’s got it centralised.

We’re seeing exactly the same thing at the early childhood level. Once they get control, they’ll put the money in. That money that he made available for the vocational education sector from 2023 onwards could have been made available three years ago for the vocational education sector. Instead, he turned it upside down. He caused anxiety right across every polytechnic and institute of technology in this country. But he did it as the most transparent Government in New Zealand’s history, ever.

He said he had to do this RoVE because they were in financial trouble. He said the polytechnics were in financial trouble so he had to turn it upside down and put it in a new form. But now he’s found the money to fix it. Well, why didn’t he do it before he spent tens of millions of dollars on consultants and his buddies in the directorships, turning it into a centralised system that he could control far better? So let’s see a little bit more transparency in the education sector. Let’s see a little bit more money available before you get that centralised control. Because, unlike the Minister, and unlike this Government, we on this side actually trust the people that used to run the polytechnics. It’s all run by Hamilton now. We trust the communities and the mums and dads and the business people that run the childcare centres, because they’ve done these things; the Ministers never run anything. I don’t think he’s run a bath for himself, let alone one of these institutions. So we trust people who can run early childhood centres and we trust communities and mums and dads who can run Playcentres. We trust people who used to be able to autonomously run and govern a polytechnic. But this transparent Government doesn’t trust anyone out there, because nobody out there knows best; you have to be a socialist and run it from the centre. The State has to control it.

So here we have those good people out running childhood centres, out running polytechnics, out running Playcentres—the other side is laughing, but actually, I’ve run a polytechnic and I’ve run an early childhood centre and I did it for years. If you haven’t run anything, I wouldn’t be laughing. So I would much, much rather have my faith in those people out there who know how to run education centres. I would much rather have that than the State thinking they know best.

So, while we will support this bill to the next stage, to the select committee stage, be very sure that we will be looking very, very closely at this, because I do not want this to be the thin end of the wedge—having seen what an absolute debacle and mess and unnecessary exercise RoVE was to spend millions of dollars of other people’s money. I do not want to see this as the thin end of the wedge for our early childhood sector, which is so incredibly important and so incredibly valuable in preparing our young people for the compulsory sector. So we will support it to select committee stage, but be very, very ready for the scrutiny we are going to give it.

Dr DUNCAN WEBB (Labour—Christchurch Central): Thank you, Mr Speaker. Now, that was the most incoherent ramble I have ever heard. Did the member know it’s the Education and Training (Grants—Budget Measures) Amendment Bill, nothing to do in there—this is about early childhood education and it’s about the Labour programme to make sure that our lowest-paid workers are paid better and paid fairly. This is a manifesto commitment for pay equity by early childhood teachers, and we’re absolutely committed to that. If ever there was an argument that members perhaps should be allowed to write a speech and read it, that was it, because I have no idea what it was about. A fantastic piece of legislation, great Ministers, great Associate Minister and Minister of Education. I commend this bill to the House.

JAN LOGIE (Green): Thank you, Mr Speaker. It’s a pleasure to rise on behalf of the Green Party to support this bill, the Education and Training (Grants—Budget Measures) Amendment Bill—and that’s not Grant Robertson. The Greens support pay parity and have for a long time, because we recognise that teachers’ work conditions are actually our kids’ learning conditions, and quality, affordable early childhood education (ECE) can provide a foundational learning experience for our children, can help identify specific learning needs early. It can support children’s positive socialisation, support families with parenting, and break the isolation that quite a lot of parents experience. It helps maintain women’s participation in the workforce and many women’s mental health by virtue of that participation. The gains from attending quality early childhood education are greatest for low-income families. There are so many social goods from quality, affordable early childhood education and it’s something we should all care about.

I can vividly remember my first experience trying to teach a group of 20 four-year-olds, and I’ve got to admit it was a complete disaster. I tried to teach them without having any experience of four-year-olds, and once you lose your nerve in front of a group of 20 four-year-olds it’s chaos. I’ve got to say, it was only 30 minutes but it’s seared into my memory as a complete horror. I hope that that wasn’t the experience of the kids, but the classroom was a mess at the end of that 30 minutes. So I have huge respect for the skill and the knowledge that goes into supporting our littlest learners.

In the words of one of our trained teachers, Holly, we teach little people how to be people. It’s the foundation of all future learning and relationship-building for their whole lives. We teach children expectations and kaupapa around life, how to be kind and caring and respectful people, and building their social skills, physical skills, problem-solving, and building resilience. So much respect to these teachers.

So this piece of legislation is, basically—to be technical, it will set a new section 548(5)(A), which will ensure that the Minister can direct funds to relate to matters that include employment conditions such as remuneration and be specified to help achieve employment relations aims specified by the Minister. This is necessary because at the moment our broader ECE picture is slightly, I think—understating it, possibly—messy. A 2020 survey found that more than one-quarter of ECE teachers wouldn’t put their own child into care of the centre that they worked in. They were highlighting concerns—and this was a survey of, I think, over 4,000 teachers that was shut off early because so many responded—with an overemphasis on occupancy rates and making money rather than providing quality care and education.

Other reports as well have found that the quality of ECE has been deeply affected by the trend towards private provision in the sector. On average, not-for-profit services are providing higher quality services than for-profit services. This is also consistent—not surprisingly, perhaps—with international findings as well. For-profit centres tend to pay their staff lower wages and have lower ratios of qualified staff, both of which are strong predictors of quality and factors that lead to higher staff turnover, which also impacts children’s learning. As I said at the beginning, the condition of the teachers is the condition of our children. ECE centres are struggling to retain qualified staff, particularly outside of kindergartens, because, since 2002, the Government has been funding kindergartens to pay for collective agreement costs that have been negotiated—obviously, “collective agreement”—collectively. That’s resulted in a massive difference and inequity in pay for those working within the kindergarten sector and those outside of it: up to, I understand, 48 or 49 percent difference in pay between people doing the exact same job in a kindergarten or a private ECE.

The Government has recognised this call for pay parity and there was a significant amount of money in the last Budget towards addressing this to get people on the same starting rate. But then not long after that, we saw articles in the media where the Minister was having to speak quite sternly to some of these private providers that his expectation was that that money would be sent to, and put towards, the salaries of the staff because that was what it was for. But there were concerns being raised through the unions and from teachers that that money was being spent—instead of on the wages, which is what it was intended for—on things like maintenance and actually shoring up the profit lines of those businesses. So when we’ve heard from members of the Opposition that this is—you know, really there should just be high levels of trust, well, there were high levels of trust. We have tested the environment of letting the market solve this problem and we are living with the results, and it is not serving our children. So this piece of legislation is an essential back up to ensure that we improve the conditions of our teachers and deliver on pay parity because that will deliver for our children.

The Greens are pleased that this legislation is going to a select committee and will be keen to understand what powers, exactly understand what powers, this will give the Minister that aren’t currently provided for in the legislation—I haven’t quite got my head around that—and to check that this will be future-proofed through different changes of Governments to make sure that we are always consistently ensuring pay parity wherever possible. The Greens believe that we do need to go further and faster, ensuring that teachers are involved with moving forward towards a centralised pay system and common core conditions right across the sector, as well as doing more to ensure profit motives do not continue to undermine the quality of our children’s learning.

CHRIS BAILLIE (ACT): Thank you, Mr Speaker. I rise on behalf of the ACT Party in support at the first reading of the Education and Training (Grants—Budget Measures) Amendment Bill. The ACT Party is well aware of the importance of early education, and it is of growing importance, increasingly as parents become busier and unable to provide the adequate grounding that their kids need. Anyone who has children—and I’ve had a couple—who have put them through early childhood centres appreciates the skills and abilities of the workers in the sector. Teachers of any age group—and I’ve been a teacher for 22 years in secondary school—certainly appreciate the good grounding that these students have when they come through.

We do have concerns, however, about the Government’s imposing legislation. Just looking at the pay scales, there doesn’t really appear to be any adequate inquiry work into the sector, prior to this. We believe, as much as possible, that schools should be run by the people on the ground, with as little interference as possible from the Government; they know best where the money should go. If it’s not a great centre, then teachers won’t want to teach there, and parents won’t want to send their kids there.

We are rightly concerned about how the Minister could use these powers, and I look forward to the select committee to flesh out a bit more of those. We’ve seen some pretty good examples of the abuse of power over the last six months.

There was a comment this morning from the Early Childhood Council, which I think is quite relevant. It said “Clearly linking funding to education outcomes will benefit children, parents and providers, and introduce much-needed fairness and transparency.” I think it is really important to have that in mind as we measure outcomes, and are able to measure the outcomes, with the increasing importance of this sector, and how this will be monitored is quite important. Productivity or outcomes are important over the wider education sector. While we are seeing more money into the sector, we’ve also seen declining results.

So, overall, ACT does support this. We appreciate the great work that our early childhood teachers give our kids. We look forward to the next reading and select committee. Thank you.

STEPH LEWIS (Labour—Whanganui): Tēnā koe, Mr Speaker. I’m delighted to stand and take a call on the Education and Training (Grants—Budget Measures) Amendment Bill. You see, I have friends who are early childhood education (ECE) teachers. Not only that, but my daughter is in ECE, and I am incredibly grateful for the support of the ECE teachers that we have. They work incredibly hard to nurture and support our young people, our future leaders, to help us parents build those really strong foundations for their future. It’s important that this bill recognises their hard work, their study, and their professionalism by ensuring that they get pay parity with their counterparts working in kindergartens. This is a matter of fairness and that is why I wholeheartedly commend this bill to the House.

SIMEON BROWN (National—Pakuranga): Thank you, Mr Speaker, for the opportunity to take a call on the Education and Training (Grants—Budget Measures) Amendment Bill. I thought the day after the Budget we’d be down here delivering something for New Zealanders, helping New Zealanders get ahead, helping to grow our economy, helping to make New Zealand a stronger place. But what we’re here debating is a bill which simply gives the Government more control. This is a bill which gives the Minister of Education more control, and we’ve seen over the last three and half years how this Minister of Education has come to this House and he’s grabbed more and more power in the education sector. Whether it’s amalgamating our polytechs, whether it’s doing this to the early childhood education (ECE) sector, every single piece of legislation that he brings down to the House is about trying to get more control—whether it’s the Tomorrow’s Schools reform. It’s about centralisation—

SPEAKER: Order! The member will resume his seat. This is about the narrowest sort of bill that you can have. The member’s speech would be barely relevant on a second reading; it certainly isn’t on a first.

SIMEON BROWN: Thank you, Mr Speaker. As I was saying, this bill is about the Minister grabbing more control in the education and training sector, and particularly when it comes to our early childhood education sector.

This legislation gives the Minister power when grants are paid to the management of a body corporate for establishing a licensed early childhood education centre. It directs how these grants should be funded. It takes away the ability for businesses to have flexibility. It takes away the opportunity for early childhood education centres to be able to make decisions for their business and be able to manage their businesses in the way they see fit. This is very much in line with the direction this Minister seems to want to take everything in the education sector.

The question needs to be asked: did the Minister consult with the early childhood education sector—

Hon Chris Hipkins: Yes.

SIMEON BROWN: OK, when did you consult on that?

SPEAKER: Order!

Hon Chris Hipkins: I meet with them every month.

SIMEON BROWN: Meet with them every month. Well, the education sector has told us that they have requested opportunities to be able to have consultation on this bill, and now we’re being told it’s going to go to a select committee for a very short period of time. This is something which, again, shows the Minister’s contempt for the sector—his willingness to come down to this House, to ram through legislation in urgency and then send it off to select committee for a very short period of time rather than giving the sector the opportunity to really engage in how this issue is going to impact on them and be able to actually have those concerns addressed.

The National Party will support this bill because this is a piece of legislation which we need to have interrogated at select committee. It needs to be looked at properly. We’re disappointed that it’s not getting the appropriate level of scrutiny that it should. But we do make the point that this piece of legislation is another piece of legislation in line with previous legislation from this Minister, constantly bringing more control around what decisions he gets to make instead of allowing the education sector to be able to manage their own affairs and to be able to get on with doing the important work that they do do, whether it’s helping our young students at school, whether it’s looking after our children at ECE. It should be about empowering them rather than constantly giving the power to the Minister of Education, which seems to be the constant power-grab that he continues to do.

RACHEL BOYACK (Labour—Nelson): I rise to take the Māori Party’s call, and I note that the Māori Party have chosen not to speak on this bill tonight—this morning, sorry. It’s been a long few days. I don’t need Berocca, I can assure you of that! But I do note that this bill will benefit our tamariki who attend our early childhood centres.

It’s a pleasure to take a call on this important piece of legislation that gives pay parity—I’ll just remind the members opposite of the bill that we’re speaking about—to early childhood education teachers. We’ve had some bizarre claims from the opposite side that the sector somehow don’t know about this or don’t want this. I can tell you, I’ve been meeting with members of the sector for the last three to four years about this particular issue, and I want to acknowledge a woman from my electorate, Virginia Oakley, who has led the nation-wide conversation and campaign on this issue on behalf of the New Zealand Educational Institute. I want to acknowledge that this is a win for her and her mahi, and also a special shout-out to the teachers at the Kiwi Treasures centre in Ranui Road in Stoke, who teach some of the tamariki known to me. I know that they are celebrating the introduction of this legislation, that they’ve looked across at their counterparts in the kindergarten next door, knowing that they are being paid less than people doing the exact same job. That is what this bill is about. It’s fundamentally about fairness. It continues with our programme of work to ensure that people doing the same job receive fair pay for what they are doing. On that note, Mr Speaker, I look forward to the select committee contributions and I commend this bill to the House.

NICOLA WILLIS (National): This bill is about the employment conditions of early childhood education teachers. I want to start my contribution by saying that I have huge appreciation for early childhood educators. I have had four children go through early childhood services, and to watch the patience, the care, and the dedication of the teachers that each of my children had in those services was a real joy, and I feel ongoing appreciation for that. Early childhood teachers shape our children’s expectations of education and their social interaction; they are incredibly important people. In fact, they also helped me, I believe, be a better parent by teaching me all sorts of things about how to get the best out of my kids. So I want to start my contribution by acknowledging the vital role of early childhood teachers.

I also want to affirm National’s commitment to this very important sector. While National was in Government, we more than doubled funding for early childhood education. We did that because we saw its vital importance as a foundation for all education and we wanted to ensure that more children from across our communities were able to access early childhood education, and that it wasn’t just the privilege of the few but it was something that was able to be accessed by people on all income levels and from all communities. We are very proud of the work that we did here.

Now, this bill deals with an issue that has been a long-time disparity and something that early childhood educators have long pointed out is just unfair, and that is the disparity between kindergarten teacher pay and other early childhood teachers; a disparity that has been reinforced by differential funding rates for kindergartens versus other types of early childhood services. I would be asked again and again, when I visited early childhood services in a previous role I held as National’s early childhood education spokesperson—they would say to me, “Why do kindergartens get funded more, when they do exactly the same thing as we do? They are required to meet exactly the same regulatory standards. They are required to follow exactly the same curriculum. They are required to teach children in exactly the same way. Why do they get funded more?” It was a very hard question to answer, because, actually, the only reason that kindergartens have been funded more is because that then allows their teachers to be paid more. But the work that those teachers do in kindergartens—incredibly important, valuable work—is not actually different in substance from the work done by early childhood teachers and other types of services. So we acknowledge that that disparity has been unfair and we acknowledge steps towards reducing that disparity.

But, as the Minister well knows, this is an issue that has been under discussion for years. In fact, the Minister himself has talked about the Government’s desire to address this disparity for months. So it is a very fair question for us to ask on this side of the House: given how long this issue has been talked about, discussed, why is it that a bill has suddenly been landed on the Table, under urgency, seemingly blind-siding the sector? Why is that the approach that is being taken, when the Minister has had ample opportunity to engage constructively on this? I would simply question: why the urgency? What is really going on here in the way that this mechanism has been created?

I am told by those who work in the early childhood sector that, yes, there have been discussions about what a mechanism could be for ensuring that additional funding intended for teacher pay is used in that way, but they were not expecting legislation of this sort, and believe that there has been miscommunication from the Ministry of Education, that there has not been clarity about why this is the mechanism that is being sought, or what is intended by it. I would point out that they have some genuine reason to be concerned about that.

When we look at the wording in this bill, it is actually very broad. What it says is that the Minister is allowed to put conditions around the funding that he gives centres, to help achieve aims that are, or include, employment relations aims. Now, the Minister, if we take him at his word, is intending for this to be funding—simply that it will flow through to particular funding rates for teachers. But the term “employment relation aims”, which is used in this bill, is much, much broader than that. It is fair, I think, for this side of the House to say, “Well, why are you using such a broad, broad phrase and why has it been sprung on the sector that this is the way you are going to do it? Is there a bigger agenda here, in terms of the way the Minister intends to use this legislation to dictate other aspects of employment relations that are important to him, that may challenge the basis on which privately owned early childhood centres and businesses wish to operate those businesses and wish to employ their staff?”

That is why we on this side of the House are very cautious and are very concerned that people in the early childhood sector look at this legislation, consider what it means for them, and have the opportunity to submit fully during a select committee process. We would not like to see a situation where the nature of the relationship between early childhood services and the Ministry of Education and its funding goals is inalterably changed through something which is framed up as something of good-faith in terms of paying teachers more.

So we on this side of the House cautiously support the bill at first reading. We acknowledge the disparity in pay between kindergarten teachers and other teachers, and the need for that to be addressed, and the benefits of addressing that. But we are very concerned that this has been introduced under urgency, that it is a broad provision. We think it is absolutely vital that the sector consider what this means for them and their future, and that the Minister listens to them carefully during the select committee process.

JO LUXTON (Labour—Rangitata): Thank you, Mr Speaker. Having been an early childhood teacher for over 20 years and an early childhood centre owner for over 10 years prior to coming into Parliament, I feel that I might be qualified to be able to say a little bit of something about this piece of fantastic legislation that we have before us today.

Teachers in this sector have been screaming out for this for as long as I can remember. We do the same study, for the same amount of time as those teachers that qualify also and who go on to work in kindergarten centres. So it is a matter of fairness because we do the exact same work and have done for many years, and so it is only right that teachers in early childhood education centres are given the ability to be paid at the same rate as their counterparts in kindergartens.

Now, currently, for those members opposite who are obviously very unaware of how things operate in early childhood centres, you have to attest that you pay your teachers a certain rate now, in order to receive a certain level of funding. So, in actual fact, this isn’t changing that aspect of it. You will just have to simply, again, attest that you are paying your teachers at a certain rate to receive that level of funding. Mr Brown mentioned that this Budget was disappointing and there was nothing in this piece of legislation for the public. Well, I suggest, Mr Brown, that he go out and speak to his early childhood teachers and find out just how much this will mean to them, because I’m pretty sure that for some of them it will mean they will be $16,000 better off. This means a heck of a lot to the teachers in the sector, and I absolutely wholeheartedly and very proudly commend this bill to the House.

Motion agreed to.

Bill read a first time.

SPEAKER: The question is, That the Education and Training (Grants—Budget Measures) Amendment Bill be considered by the Education and Workforce Committee.

Motion agreed to.

Bill referred to the Education and Workforce Committee.

Instruction to the Education and Workforce Committee

Hon CHRIS HIPKINS (Minister of Education): I move, That the Education and Training (Grants—Budget Measures) Amendment Bill be reported to the House by 1 July 2021 and that the committee have the authority to meet at any time while the House is sitting (except during oral questions), during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House and outside the Wellington area, despite Standing Orders 193, 195, and 196(1)(b) and (c).

The reason for moving this bill through the Parliament relatively quickly is to ensure that we can have the new funding system in place, or these extra funding measures in place, by 1 January next year. The bill’s quite a technical one. It simply allows us to add an additional funding condition. The advice that we have received is that we can add the funding condition, as we have done for some time, around the minimum rate of pay for an early childhood education teacher and still be consistent with the current provisions in the Education and Training Act, but to add additional steps would be stretching that existing power too far, and so hence this very technical amendment that allows us to add those extra conditions. It will be very consistent with the way the minimum rate of pay condition is applied at the moment, and so it’s relatively technical.

Once the bill has passed through Parliament, we also then want some time to be able to ensure that the sector understands the conditions that will apply to them and understands how the system is going to be implemented and that there is adequate time for consultation in that part of the process, hence the desire to have this bill through some time in July. So the report-back by 1 July will allow us the time to do that, also recognising that we have a bit of a long adjournment during that period of time as well. It means that we can get the bill through—passed—and then the new funding conditions out for consultation.

The sector has already been consulted quite extensively on the fact that pay parity is coming. They have been pushing for it. They know that it is coming. I imagine the people who will want to submit on this will be relatively narrow—probably, most likely, the people who run and operate the centres as opposed to the staff who are going to be receiving the extra pay increases—hence I think the committee should be able to do what is required to be done within the relatively constrained timetable they are being given.

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

Hon PAUL GOLDSMITH (National): We oppose this motion here. It’s just another example of a Government that isn’t well organised, and throws out the normal processes of this House, which is to allow—so what people might not understand is normally when legislation comes into this House, it gets referred to a select committee for at least six months, or longer, in order for submissions to be heard by the public and to have their say, with plenty of warning and plenty of consideration. Then, once the select committee members hear those submissions, they then go back to the Government department which is advising them—in this case, the Ministry of Education—get advice, ask questions, and then the select committee formulates an opinion and refers it back to the House.

Now, this Minister, who claims it all needs to be rushed so that we’re ready for next year—he wants to truncate that to a very short period of time and have it all done by 1 July. Well, the very obvious point would be to say that if the Minister and his Government had got their act together earlier and introduced this bill at the start of the year, or even late last year—they’ve known about this issue for a long time—then we wouldn’t have to be rushing it through in this normal manner.

Time and time again, this Government operates this way, and then just comes along casually into the House and says, “Well, you know, there’s a rush. We’ve got to get this done because we didn’t really sort of think about it. It’s all a bit of a hurry. Here’s the legislation. It’s loose, very poorly thought out, no real detail that’s been outlined, but we’ll just run it through. We’ll get it in, we’ll pass it, and then we’ll talk to the sector once it’s all finished and we’ll iron out the details, and probably we’ve a very good chance that we’ll make a mistake. We’ll come back and we’ll have another piece of legislation to fix that, and we’ll do that in urgency because there’ll be a rush.” This—

SPEAKER: Order! Very narrow.

Hon PAUL GOLDSMITH: I suppose this debate is really a debate about standards and it’s a debate about arrogance, because I would put it to the House and to the people of New Zealand that what we see here is an arrogant Government that’s got all these numbers in the House, and it can do whatever it likes and it wins every vote. “We’re the king of the castle and we’ll just do whatever we want.”—and if people only get a few days to consult or to have their views heard on legislation that affects an important sector, then so be it.

The point that we would make is that early childhood education is critical to this country, and we do want to see better investment so that teachers are well-paid in this sector. What we don’t want to see is slip, slob—what’s the word again? Slobby—

Matt Doocey: Slip, slop, slap.

Hon PAUL GOLDSMITH: Slip, slop slap—no. No, it’s slipshod—slipshod legislation brought through in a hurried fashion. On that basis, we oppose this motion.

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

Ayes 75

New Zealand Labour 65; Green Party of Aotearoa New Zealand 10.

Noes 43

New Zealand National 33; ACT New Zealand 10.

Motion agreed to.

The House adjourned at 12.36 p.m. (Friday)